UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
---- Act of 1934. For the fiscal year July 1, 1994 to June 30, 1995.
---- Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from N/A to N/A .
------- --------
Commission File Number: 1-4785
DEL WEBB CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 86-0077724
(State of Incorporation) (IRS Employer Identification Number)
6001 North 24th Street, Phoenix, Arizona 85016
(Address of principal executive offices) (Zip Code)
(602) 808-8000
(Registrant's phone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
New York Stock Exchange
Common Stock (par value $.001 per share) Pacific Stock Exchange
10 7/8% Senior Notes due 2000 New York Stock Exchange
9 3/4% Senior Subordinated Debentures due 2003 New York Stock Exchange
9% Senior Subordinated Debentures due 2006 New York Stock Exchange
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. [ X ]
Registrant's Common Stock outstanding at August 21, 1995 was 17,396,007 shares.
At that date, the aggregate market value of Registrant's Common shares held by
non-affiliates, based upon the closing price of the Common Stock on the New York
Stock Exchange on that date, was approximately $339,200,000.
Documents Incorporated by Reference
Portions of Registrant's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on November 8, 1995 are incorporated herein as set forth
in Part III of this Annual Report.
<PAGE>
DEL WEBB CORPORATION
FORM 10-K ANNUAL REPORT
For the Fiscal Year Ended
June 30, 1995
TABLE OF CONTENTS
PART I
Item 1. PAGE
and
Item 2. Business and Properties
The Company..................................................... 1
Master-Planned Communities...................................... 1
Potential Future Communities.................................... 4
Conventional Homebuilding....................................... 4
Product Design.................................................. 5
Construction.................................................... 5
Sales Activities................................................ 5
Other Real Estate Activities.................................... 6
Competition..................................................... 6
Certain Factors Affecting the Company's Operations.............. 6
Executive Officers of the Company............................... 9
Employees.......................................................11
Item 3. Legal Proceedings...............................................11
Item 4. Submission of Matters to a Vote of Security Holders.............11
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters...................................12
Item 6. Selected Consolidated Financial Data............................13
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Certain Consolidated Financial and Operating Data...........15
Results of Operations.......................................17
Liquidity and Financial Condition of the Company............19
Impact of Inflation.........................................20
Accounting Standard Not Yet Adopted by the Company..........20
Item 8. Financial Statements and Supplementary Data.....................21
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........................21
PART III
Item 10. Directors and Executive Officers of the Registrant..............22
Item 11. Executive Compensation..........................................22
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................................22
Item 13. Certain Relationships and Related Transactions..................22
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K...........................................23
<PAGE>
PART I
Items 1 and 2. Business and Properties
THE COMPANY
Del Webb Corporation is one of the nation's leading developers of age-restricted
active adult communities. The Company has extensive experience in the active
adult community business, having built and sold more than 50,000 homes at its
Sun City communities over the past 35 years. The Company is also delivering
homes at Terravita, a gate-guarded, amenity-rich, master-planned residential
community in north Scottsdale, Arizona, that is not age-restricted. The Company
designs, develops and markets these large-scale, master-planned residential
communities, primarily for active adults age 55 and over, controlling all phases
of the master plan development process from land selection through the
construction and sale of homes. Within its communities, the Company is the
exclusive developer of homes. The Company also has significant conventional
subdivision homebuilding operations, which it conducts under the name "Coventry
Homes," in the Phoenix, Tucson and Las Vegas areas and southern California.
The Company was incorporated in 1946 under the laws of the State of Arizona and
reincorporated in 1994 under the laws of the State of Delaware. The Company's
principal executive offices are located at 6001 North 24th Street, Phoenix,
Arizona 85016 and its telephone number is (602) 808-8000. The Company conducts
substantially all of its activities through subsidiaries and, as used in this
Annual Report, the term "Company" includes Del Webb Corporation and its
subsidiaries unless the context indicates otherwise.
Statements in this Annual Report as to acreage, mileage, number and years supply
of future home sites, square feet and number of present and future residents,
employees and shareholders are approximations.
MASTER-PLANNED COMMUNITIES
At June 30, 1995 the Company had six master-planned communities at which home
closings were taking place, two master-planned communities at which it was
taking home sales orders, but at which closings had not yet commenced, and two
master-planned communities in earlier stages of development.
Communities Delivering Homes
The following table shows certain information concerning the six communities at
which the Company was delivering homes at June 30, 1995.
<TABLE>
<CAPTION>
Sun City Sun City Sun City Sun City Sun City
West Tucson Las Vegas Palm Springs Terravita Roseville
-------- -------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
First home closing....................... 1978 1987 1989 1992 1994 1995
Total acres.............................. 7,000 1,000 2,500 1,600 800 1,200
Homes at completion...................... 16,500 2,500 7,700 4,800 1,400 3,000
Home closings through June 30, 1995...... 14,247 2,092 4,994 885 425 293
Future home sites (including backlog).... 2,253 408 2,706 3,915 975 2,707
Years supply of future homes based on
current or estimated absorption........ 2-3 1-2 3-4 9-15 2-3 3-5
Base price range of homes
at June 30, 1995 (in thousands)........ $93-240 $91-224 $95-271 $105-291 $170-380 $126-272
</TABLE>
Sun City West
-------------
Sun City West is a self-contained active adult community located 25 miles
northwest of downtown Phoenix, Arizona. The focal point of Sun City West is its
central activities area, including a very large recreation center, the Sundome
(a 7,000-seat indoor theater owned by Arizona State University), a library, a
bowling alley, tennis courts, lawn bowling greens and a Company-owned 18-hole
championship golf course. Sun City West also has eight other 18-hole golf
courses (seven of which are owned by the residents' community association and
one of which is owned by a private club owned by residents) and three smaller
recreation centers. In addition, Sun City West has over 200 civic and social
organizations and clubs. Sun City West had a population of 27,000 at June 30,
1995.
Sun City Tucson
---------------
Sun City Tucson is located 20 miles north of downtown Tucson, Arizona. It is
developed around an 18-hole championship golf course. This active adult
community's 45,000-square foot primary recreation center includes a social hall,
arts and crafts rooms, a large kitchen and a sports and exercise facility. Its
outdoor recreational facilities include tennis courts, a swimming pool,
shuffleboard courts, bocci ball courts and a miniature golf course. Sun City
Tucson also has a smaller recreation facility (including a swimming pool, tennis
courts and activity rooms). Another smaller recreation center is under
construction. Sun City Tucson has numerous civic and social organizations and
clubs and had a population of 4,000 at June 30, 1995. This community will be
built out in the near future and the Company has no current plans to build
another community in the Tucson area.
Sun City Las Vegas
------------------
Sun City Las Vegas is located eight miles northwest of downtown Las Vegas,
Nevada. It has two 18-hole championship golf courses, with a third, executive
course scheduled to become operational in late 1995. Other amenities in this
active adult community include 100,000 total square feet of recreational
facilities at two large and one smaller recreation centers. Together, these
facilities include meeting halls, arts and crafts rooms and tennis,
shuffleboard, bocci ball and horseshoe courts, as well as sports and exercise
complexes that include indoor and outdoor swimming pools, saunas, weight
training and exercise rooms and a racquetball court. An additional 40,000 square
feet of similar facilities are being designed and are currently anticipated to
become operational in the Summer of 1996. Sun City Las Vegas has approximately
65 civic and social organizations and clubs and had a population of 9,000 at
June 30, 1995.
Sun City Palm Springs
---------------------
Sun City Palm Springs is located in the Coachella Valley 20 miles east of Palm
Springs and 130 miles east of downtown Los Angeles. It is a gate-guarded active
adult community that has an 18-hole championship golf course and a 62,000-square
foot recreation center with indoor and outdoor swimming pools and therapy spas,
tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts
studios, a 6,300-square foot ballroom and a full service restaurant and lounge.
Sun City Palm Springs had a population of 1,600 at June 30, 1995.
Terravita
---------
Terravita is a gate-guarded, amenity-rich, master-planned residential community
located in north Scottsdale, Arizona, that is not age-restricted. It has an
18-hole championship golf course, a 32,000-square foot clubhouse and fitness
center, a swimming pool, tennis courts and other recreational amenities. The
Company began delivering homes at Terravita in July 1994. Terravita had a
population of 1,000 at June 30, 1995.
Sun City Roseville
------------------
Sun City Roseville is located 20 miles northeast of downtown Sacramento,
California. This active adult community is planned to include 27 holes of
championship golf, nine holes of which are open and nine holes of which are
currently under construction, 40 acres of parks and a 52,000-square foot
recreation center with indoor and outdoor swimming pools and therapy spas,
tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts
studios, a ballroom and a full-service restaurant and lounge. Sun City Roseville
began home closings in February 1995 and had a population of 500 at June 30,
1995.
New Communities Taking Home Sales Orders
The following table shows certain information concerning the two communities at
which the Company was taking home sale orders at June 30, 1995, but at which
home deliveries had not then commenced.
Sun City Sun City
Hilton Head Georgetown
----------- ----------
Total acres................................. 5,600 5,300
Homes at completion......................... 8,000 9,500
New orders first taken...................... November 1994 June 1995
Net new orders through June 30, 1995........ 149 122
Anticipated
First home closing.......................... August 1995 Spring 1996
Base price range of homes at June 30, 1995
(in thousands)............................ $96-245 $101-235
Sun City Hilton Head
--------------------
Sun City Hilton Head is located inland 13 miles from Hilton Head Island, South
Carolina. It is a gate-guarded active adult community that is currently planned
for 8,000 homes, several golf courses, a complex of recreational buildings and
other amenities on 5,600 acres, of which 1,920 acres are owned by the Company
and 3,680 acres are subject to options expiring in various years through 2000.
The Company broke ground at Sun City Hilton Head in May 1994 and began taking
new home sales orders in November 1994. In part because Sun City Hilton Head is
located on the East Coast, distant from the Company's other communities, and
because of the location of Sun City Hilton Head in relation to major
metropolitan areas, there is not the same local pent-up demand for initial home
sales orders at this community as has existed with certain of the Company's
other communities. In addition, rains and flooding severely hampered development
and marketing at this community in fiscal 1995. At June 30, 1995 the Company had
a backlog of 149 home sale contracts at Sun City Hilton Head. Home closings at
Sun City Hilton Head began in August 1995. See "Sales Activities."
Sun City Georgetown
-------------------
Sun City Georgetown is an active adult community being developed 30 miles north
of downtown Austin, Texas. It is currently planned for 9,500 homes on 5,300
acres, of which 1,850 acres are owned by the Company and 3,450 acres are subject
to options expiring in various years through 1999. The Company broke ground at
Sun City Georgetown in the Spring of 1995 and began taking new home sales orders
at this community on June 15, 1995. At June 30, 1995 the Company had a backlog
of 122 home sale contracts at Sun City Georgetown. The Company believes that
this level of initial home sales activity is attributable to local pent-up
demand and will not continue in the future. Delivery of the first homes at this
community is currently anticipated in the Spring of 1996.
Communities in Earlier Stages of Development
The following table shows certain information concerning the two communities in
earlier stages of development at June 30, 1995.
Sun City
MacDonald Ranch Sun City Grand
--------------- --------------
Total acres................... 600 4,000
Homes at completion........... 2,300 9,500
Sun City MacDonald Ranch
------------------------
Sun City MacDonald Ranch is located in Henderson, Nevada, near Las Vegas. It is
being developed as an active adult community with fewer amenities (for example,
an executive golf course instead of a championship golf course) and higher
density than the Company's other active adult communities. This community is
currently planned for 2,300 homes on 600 acres. The Company broke ground at Sun
City MacDonald Ranch in the Spring of 1995 and plans to begin to take new home
sales orders at this community in the Fall of 1995. Home closings at Sun City
MacDonald Ranch are not currently anticipated to begin before the Spring of
1996.
Sun City Grand
--------------
Sun City Grand is located on 4,000 acres adjacent to Sun City West. It is
currently planned for 9,500 homes, several golf courses and amenities similar to
those in other Sun Cities. Development began in the Spring of 1995 and is being
coordinated with the build-out of Sun City West. The Company does not currently
anticipate that home sales activity will begin at Sun City Grand in fiscal 1996.
POTENTIAL FUTURE COMMUNITIES
The Company believes that the demographic attributes of its active adult target
market segment of people age 55 and over present significant opportunities for
carefully selected future active adult communities. The Company's plan is to
capitalize on those opportunities and its experience, expertise and reputation
by developing active adult communities in strategically selected locations. The
current business strategy of the Company includes conducting extensive market
research on prospective areas, including consumer surveys and supply and demand
analyses, in connection with its evaluation of sites for future active adult
communities. At any given time, the Company may have a number of land
acquisitions for potential communities under study and in various stages of
investigation or negotiation. The Company is currently considering acquiring the
land for communities to be located both in areas of the Country where the
Company has active adult communities and in other areas, including full
four-season areas (i.e., areas which experience cold winters), where it does not
have experience in developing communities.
In making significant land acquisitions, the Company generally endeavors to
acquire options on the land to mitigate the risk of holding the land during the
detailed feasibility and entitlement process. However, under certain
circumstances, the Company acquires such property directly.
In 1992 the Company purchased for $11 million, 5,600 acres of land north of
Phoenix (currently known as the Villages at Desert Hills) as the site for a
possible master-planned community. In April 1995 the Company received a general
plan amendment and development master plan approval (the initial governmental
planning approvals required) for 16,500 homes on this property. However,
development of this property remains subject to a number of uncertainties and
the planning, entitlement and permitting process is still in a relatively early
stage.
CONVENTIONAL HOMEBUILDING
The Company began its conventional subdivision homebuilding operations in the
Phoenix area in 1991. The Company expanded its conventional homebuilding
operations to Tucson in fiscal 1994 and to Las Vegas and southern California in
fiscal 1995. At June 30, 1995 the Company had a backlog of home sales orders at
26 subdivisions -- 18 in the Phoenix area, three in the Tucson area, two in the
Las Vegas area and three in southern California.
In order to capitalize on its market knowledge and organizational structure, the
Company's conventional homebuilding activities are primarily conducted in those
metropolitan or market areas in which the Company is developing an active adult
community. Through June 30, 1995 the Company's conventional homebuilding
operations have generally targeted first-time and move-up buyers, with the base
price of homes offered for sale at June 30, 1995 ranging from $80,000 to
$316,000. The Company expects homes in this price range to be its main target
segment in the future, but it intends to remain flexible when reviewing
potential sites in order to pursue attractive opportunities.
The Company currently expects that community development will continue to be its
primary business activity. For the year ended June 30, 1995, conventional
homebuilding operations generated 18 percent of the Company's revenues.
PRODUCT DESIGN
The Company designs homes to suit its market and endeavors to conform to the
popular home design characteristics in the particular geographic market
involved. Home designs are periodically reviewed and refined or changed to
reflect changing homebuyer tastes in each market.
Homes at the Company's communities generally range in size from 1,000 square
feet to 3,900 square feet and include two to five (predominantly two and three)
bedrooms, two or more baths, kitchen, living/dining area, family room or nook,
two-car garages and golf cart space. Built-in appliances are included. The
Company offers a program of interior and exterior upgrades, including different
styles of cabinetry and floor coverings and, at its communities, a program for
architectural changes to allow home buyers to further modify their homes.
CONSTRUCTION
The Company generally functions as its own general contractor. At all stages of
production, the Company's management personnel and on-site superintendents
coordinate the activities of subcontractors, consultants and suppliers and
subject their work to quality and cost controls. Consulting firms assist in
project planning and independent subcontractors are employed to perform almost
all of the site development and construction work. Within its active adult
communities and, generally, its conventional subdivisions, the Company is the
exclusive developer of homes and does not sell vacant lots to others for
residential construction purposes. The time required for construction of the
Company's homes depends on the weather, time of year, local labor situations,
availability of materials and supplies and other factors. The Company strives to
coordinate the construction of homes with home sales orders to control the costs
and risks associated with completed but unsold inventory. An inventory of unsold
homes under construction is maintained for immediate sale to customers.
SALES ACTIVITIES
At each of its communities the Company establishes a large and well-appointed
sales pavilion and an extensive complex of furnished model homes. These models
include a wide variety of single family homes, each of which is generally
available in several exterior styles.
The Company's homes are sold by its commissioned sales personnel, who are
available to provide prospective home buyers with floor plans, price
information, option selections and tours of models and lots. All communities
have co-brokerage programs with independent real estate brokers. Homes are sold
through sales contracts, some of which allow customers to purchase homes for
delivery up to one year or more in the future. The sales contracts generally
require an initial deposit and an additional deposit prior to commencement of
construction. The Company provides to all home buyers standardized warranties
subject to specified limitations.
While more than one factor may contribute to a given home sale, the Company's
experience indicates that a substantial portion of the home sales at its
communities are attributable to follow-ups on referrals from residents of its
communities and, at active adult communities, to the Company's "Vacation
Getaway" program. This program enables prospective purchasers to visit an active
adult community and stay (for a modest charge) in vacation homes for up to one
week to experience the Sun City lifestyle prior to deciding whether to purchase
a home.
The Company's information is that most homebuyers at its active adult
communities generally visit the community in which they purchase on more than
one occasion before buying. This may affect the success or initial success of
the sales effort at those communities at which a higher proportion of the
potential customers do not live within a several-hour driving distance from the
community.
The Company also markets its communities through billboards, television and
radio commercials, local and national print advertising, direct mailings and
telemarketing.
The Company offers mortgage financing for the purchasers of homes at its
communities and conventional subdivisions. The Company sells the mortgages it
generates to third parties.
OTHER REAL ESTATE ACTIVITIES
The Company is completing the development of The Foothills, a 4,140-acre
master-planned residential land development project located in Phoenix in which
individual land parcels and lots are being sold to other builder/developers for
conventional housing and related commercial developments. At June 30, 1995, 424
acres remained to be sold at The Foothills. Of these acres, 401 are zoned for
conventional housing and 23 are zoned for commercial development. At June 30,
1995 the Company's investment in The Foothills, net of a valuation allowance
recorded in fiscal 1991, was $25.9 million.
COMPETITION
The Company believes that it maintains a leading position within the active
adult community market in each of the metropolitan areas in which it has a
community that is currently generating revenues. The Company believes the major
competitive factors in active adult community home purchases include location,
lifestyle, price, value, recreational facilities and other amenities and
builder/developer reputation. The Company believes its reputation, established
by building and selling more than 50,000 homes over 35 years and providing an
attractive lifestyle for adults age 55 and over, enhances the Company's active
adult community marketing position.
All of the Company's real estate operations are subject to direct and indirect
competition. The Company competes with numerous homebuilders and developers,
certain of which have greater financial resources than the Company. The Company
also competes generally with most homebuilders and residential developers in its
geographic markets and with resales of homes in the general resale market for
such housing, including in its own communities.
For the Company's active adult communities, there are varying degrees of direct
and increasing competition from businesses engaged exclusively or primarily in
the sale of homes to buyers age 55 and older and from non-age-restricted,
master-planned communities in these areas. The Company competes with new home
sales and resales at these other communities. Sun City Hilton Head competes with
numerous homebuilders and community developers in the eastern seaboard,
including in the Hilton Head area and Florida. A large homebuilder recently
commenced developing a 1,300-home, age-restricted community in Indio,
California, which is near Sun City Palm Springs.
The Company believes there may be significant additional future competition in
active adult community development, including competition from conventional
community developers.
CERTAIN FACTORS AFFECTING THE COMPANY'S OPERATIONS
FUTURE COMMUNITIES. The Company's communities will be built out over time.
Therefore, the medium- and long-term future of the Company will be dependent on
the Company's ability to develop and market future communities successfully.
Acquiring land and committing the financial and managerial resources to develop
a community on that land involve significant risks. Before these communities
generate any revenues, they require material expenditures for, among other
things, acquiring land, obtaining development approvals and constructing project
infrastructure (such as roads and utilities), recreation centers, model homes
and sales facilities. It generally takes several years for communities to
achieve cumulative positive cash flow.
The Company believes that the development of Sun City Hilton Head presents
significant new development and marketing challenges, including acquiring the
necessary construction materials and labor in sufficient amounts and on
acceptable terms, adapting the Company's construction methods to a different
geography and climate, and attracting potential customers from areas and to a
market in which the Company has not had significant experience.
The Company will incur additional risks to the extent it develops communities in
climates or other geographic areas in which it does not have experience
developing communities or develops a different size or style of community. Among
other things, the Company believes that a significant portion of the home sales
at its active adult communities is attributable to referrals from, or sales to,
residents of those communities. The extent of such referrals or sales at new
communities, including communities developed in other areas of the Country, may
be less than the Company has enjoyed at the active adult communities where it
currently sells homes.
The Company currently is managing the development of a greater number of
projects in a wider geographical area than it has previously developed at any
given time.
LONG-TERM NATURE OF PROJECTS; REAL ESTATE, ECONOMIC AND OTHER CONDITIONS;
GEOGRAPHIC CONCENTRATION. The Company's communities are long-term projects.
Sales activity at the Company's communities varies from period to period, and
the ultimate success of any community cannot necessarily be judged by results in
any particular period or periods. A community may generate significantly higher
sales levels at inception (whether because of local pent-up demand in the area
or other reasons) than it does during later periods over the life of the
community.
The Company's communities and its other real estate operations are subject to
substantial existing and potential competition, real estate market conditions
(both where its communities, conventional homebuilding operations and other
projects are located and in areas where its potential customers reside), the
cyclical nature of the real estate business, general national economic
conditions and changing demographic conditions.
Company data indicate that, for the past several years, a significant number of
the home purchasers at its active adult communities in Arizona, Nevada and
southern California, particularly Sun City Palm Springs, were from southern
California. Four of the Company's conventional homebuilding subdivisions are
located in California, including two in Orange County. Any of those communities,
particularly Sun City Palm Springs, as well as the Company's southern California
conventional homebuilding subdivisions, may be affected by the continuing
adverse conditions in the southern California real estate market and the
southern California economy generally, including the financial difficulties of
certain southern California municipalities.
Most of the Company's primary business operations are concentrated in a limited
number of metropolitan areas in Arizona, California and Nevada. The Company's
geographic concentration and limited number of projects may create increased
vulnerability to regional economic downturns or other adverse project-specific
matters.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS. The Company's business
is subject to extensive federal, state and local regulatory requirements, the
broad discretion that governmental agencies have in administering those
requirements and "no growth" or "slow growth" political policies, all of which
can prevent, delay, make uneconomic or significantly increase the cost of its
developments. In addition, environmental concerns and related governmental
requirements have affected and will continue to affect all of the Company's
community development operations.
In connection with the development of the Company's communities and other real
estate projects, particularly those located in California, numerous governmental
approvals and permits are required throughout the development process, and no
assurance can be given as to the receipt (or timing of receipt) of these
approvals or permits. In addition, third parties can file lawsuits challenging
approvals or permits received, which could cause substantial uncertainties and
material delays for the project and, if successful, could result in approvals or
permits being voided.
FINANCING; LEVERAGE. Real estate development is dependent on the availability
and cost of financing. It generally takes several years for new communities to
achieve positive cumulative cash flow. In periods of significant growth,
therefore, the Company will require significant additional capital resources,
whether from issuances of equity or by incurring additional indebtedness. The
Company's principal credit facility and the indentures for its publicly-held
debt restrict the indebtedness the Company may incur. The availability of debt
financing is also dependent on governmental policies and other factors outside
the control of the Company. If the Company is at any time not successful in
obtaining sufficient capital to fund its development and expansion expenditures,
some or all of its projects may be significantly delayed, resulting in cost
increases and adverse effects on the Company's results of operations. No
assurance can be given as to the availability or cost of any future financing.
In addition, the Company's degree of leverage from time to time will affect its
interest incurred and may limit funds available for operations. As a result, the
Company may be more vulnerable to economic downturns, which could limit its
ability to withstand adverse changes or capitalize on business opportunities. If
the Company is at any time unable to generate sufficient cash flow from
operations to service its debt, refinancing of all or a portion of that debt or
obtaining additional financing may be required to avoid defaults (including
cross defaults) on some or all of its indebtedness. There can be no assurance
that any such refinancing would be possible or that any additional financing
could be obtained, or obtained on terms that are favorable or acceptable to the
Company.
The Company's real estate operations are also dependent upon the availability
and cost of mortgage financing for potential customers, to the extent they
finance their purchase, and for buyers of the potential customers' existing
homes.
CONSTRUCTION. The Company has from time to time experienced shortages of
materials or qualified tradespeople or volatile increases in the cost of certain
materials (particularly increases in the price of lumber and framing, which are
significant components of home construction costs), resulting in longer than
normal construction periods and increased costs not reflected in the prices of
homes for which home sale contracts had been entered into up to one year in
advance of scheduled closing. Generally, the Company's home sale contracts do
not contain, or contain limited, provisions for price increases if the Company's
costs of construction increase.
The Company relies heavily on local contractors, who may be inadequately
capitalized or understaffed. The inability or failure of one or more local
contractors to perform may result in construction delays, increased costs and
loss of some home sale contracts.
NATURAL RISKS. Sun City Roseville and Sun City Hilton Head are subject to
significant seasonal rainfall that can cause delays in construction and
development or that can increase costs. Both of these communities were adversely
affected by significantly higher than normal rainfall in fiscal 1995.
Earthquake faults, including the San Andreas fault, run through the Coachella
Valley, which includes Sun City Palm Springs and the communities of Palm
Springs, Indio, Palm Desert, La Quinta, Rancho Mirage and Indian Wells. A
portion of Sun City Palm Springs is also located in a flood plain. The Coachella
Valley Water District has approved the Company's conceptual flood control plan
for Sun City Palm Springs and has approved the Company's specific flood control
plan for the first phase of this project. A major earthquake or flood could have
a material adverse impact on the development of and results of operations for
Sun City Palm Springs. Sun City Hilton Head is located in an area which may be
subject to hurricanes. A major hurricane could have a material adverse impact on
the development of and results of operations for Sun City Hilton Head.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names and ages of all executive officers of the Company
and the offices held with the Company at July 31, 1995.
Years
Years as an Employed
Executive by the
Name Age Position Officer Company
--------------------------------------------------------------------------------
P. J. Dion 50 Chairman of the Board and 13 13
Chief Executive Officer
J. F. Contadino 53 Senior Vice President 3 4
and President of Coventry Homes
J. H. Gleason 53 Senior Vice President, 5 7
Project Planning and
Development
L. C. Hanneman, Jr. 48 Senior Vice President 6 23
and General Manager - Sun City
Las Vegas
F. D. Pankratz 45 Senior Vice President and 7 8
General Manager - Sun City Palm
Springs
C. T. Roach 48 Senior Vice President 6 16
and General Manager - Sun City
West
J. A. Spencer 46 Senior Vice President and 10 16
Chief Financial Officer
J. D. Wilkins 50 Senior Vice President 6 6
and General Manager - Sun City
Hilton Head
R. C. Jones 50 Vice President and General Counsel 3 3
A. L. Mariucci 38 Vice President and General 9 11
Manager - Terravita
D. V. Mickus 49 Vice President, Treasurer 9 12
and Secretary
D. E. Rau 38 Vice President and Controller 9 10
D. G. Schreiner 42 Vice President, Marketing 2 4
M. L. Schuttenberg 52 Vice President, Human Resources 2 9
R. R. Wagoner 54 Vice President, Land Development 1 3
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS OF THE COMPANY (Continued)
Mr. Dion has been Chairman of the Board and Chief Executive Officer of the
Company since November 1987.
Mr. Contadino has served as Senior Vice President since January 1994. Prior to
that time he served as Vice President from November 1991 to January 1994. He
became President of Coventry Homes in January 1991. From 1981 to January 1991,
Mr. Contadino was the owner, Chief Executive Officer and President of Coventry
Financial, Inc. ("CFI"), a Phoenix-based homebuilder. In January 1991 the
Company purchased certain assets from CFI.
Mr. Gleason has served as Senior Vice President, Project Planning and
Development, since January 1994. Prior to that time he served as Vice President,
Project Planning and Development, from June 1993 to January 1994. He became a
Vice President of the Company in January 1990.
Mr. Hanneman has served as a Senior Vice President of the Company since January
1994. Prior to that time he served as Vice President of the Company from January
1989 to January 1994. Since August 1987 he has served as General Manager of Sun
City Las Vegas.
Mr. Pankratz became General Manager of Sun City Palm Springs in February 1990.
Since September 1988 he has served as Senior Vice President of the Company.
Mr. Roach has served as a Senior Vice President of the Company since January
1994. Prior to that time he served as Vice President of the Company from January
1989 to January 1994. Since August 1987 he has served as General Manager of Sun
City West.
Mr. Spencer became Chief Financial Officer of the Company in April 1993. Since
February 1991 he has served as Senior Vice President of the Company. Prior to
that time he served as Vice President and Controller of the Company from January
1985 to February 1991.
Mr. Wilkins has served as a Senior Vice President of the Company and General
Manager of Sun City Hilton Head since January 1994. Prior to that time he served
as a Vice President of the Company and General Manager of Sun City Tucson from
July 1989 to January 1994.
Mr. Jones became Vice President and General Counsel of the Company in January
1992. From March 1990 to November 1991 he was a partner with the law firm of
Gaston & Snow.
Ms. Mariucci has served as Vice President of the Company since June 1986, when
she began serving as Vice President, Corporate Planning and Development. She
became General Manager of Terravita in December 1992.
Mr. Mickus has served as Vice President and Treasurer since November 1985 and as
Secretary commencing in June 1991.
Mr. Rau became Vice President and Controller in February 1991. Prior to that
time he served as Vice President, Taxes and Human Resources from May 1990 to
February 1991.
Mr. Schreiner became Vice President, Marketing in December 1992. Prior to that
time he served as Senior Vice President, Marketing and Operations, of Coventry
Homes from October 1992 to December 1992 and Vice President, Marketing and
Operations, of Coventry Homes from January 1991 to October 1992. Mr. Schreiner
was employed by CFI from April 1987 to January 1991.
Ms. Schuttenberg became Vice President, Human Resources, in April 1993. Prior to
that time she served as Director of Human Resources from March 1992 to April
1993 and as Director of Taxes from April 1989 to March 1992.
Mr. Wagoner became Vice President, Land Development, in January 1994. Prior to
that time he served as Director of Land Development from January 1992 to January
1994. Prior to 1992 Mr. Wagoner was employed by Collar, Williams and White
Engineering in Phoenix, where he held various positions, including President.
EMPLOYEES
At June 30, 1995 the Company had 1,800 employees. The Company currently has no
unionized employees. The Company believes that its employee relations are
generally satisfactory.
Item 3. Legal Proceedings
The Company is a party to various legal proceedings arising in the ordinary
course of business. While it is not feasible to predict the ultimate disposition
of these matters, it is the opinion of management that their outcome will not
have a material adverse effect on the financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock is listed on the New York Stock Exchange NYSE and
Pacific Stock Exchange under the trading symbol (WBB). The following table sets
forth the high and low sales prices of the Company's common stock on the New
York Stock Exchange for the two fiscal years ended June 30, 1995.
Sales Price
--------------------------------------------------------------------------------
Fiscal Year 1995 Fiscal Year 1994
--------------------------------------------------------------------------------
Quarter Ended High Low High Low
--------------------------------------------------------------------------------
September 30 17 3/8 13 5/8 16 11 3/4
December 31 17 5/8 14 1/4 16 1/2 11 5/8
March 31 20 17 18 3/8 14 1/2
June 30 23 5/8 16 5/8 17 1/2 14 1/2
--------------------------------------------------------------------------------
As of July 31, 1995 the number of shareholders of record of common stock of the
Company was 3,329.
The Company has paid regular quarterly dividends of $.05 per share for each
quarter in the last five fiscal years. The amount and timing of any future
dividends is subject to the discretion of the Board of Directors. Among the
factors which the Board of Directors may consider in determining the amount and
timing of dividends are the earnings, cash needs and capital resources of the
Company. In addition, the Company is party to a loan agreement and various
indentures that contain covenants restricting the Company's ability to pay
dividends and acquire its common stock. Under the most restrictive of these
covenants, at June 30, 1995 approximately $16.9 million of the Company's
retained earnings were available for payment of cash dividends and for the
acquisition by the Company of its common stock.
The Company repurchased 1,046,751 shares of its common stock in fiscal 1994 (for
an aggregate cost of $13.3 million) and 444 shares of its common stock in fiscal
1995 (for an aggregate cost of $8,000).
In August 1995 the Company publicly sold 2,474,900 shares of its common stock at
a price to the public of $19.50 per share.
Item 6. Selected Consolidated Financial Data (Not covered by report of
independent auditors)
The following tables set forth selected consolidated financial data of the
Company as of and for each of the five fiscal years ended June 30, 1995. They
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
<TABLE>
<CAPTION>
Dollars In Thousands Except Per Share Data
Year Ended June 30,
---------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of earnings information:
Revenues:
Home sales - communities $ 620,012 $ 405,462 $ 324,817 $ 226,014 $ 220,294
Home sales - conventional homebuilding 144,469 79,992 44,456 27,097 4,795
Land sales and other 38,638 24,607 21,313 7,761 2,973
---------------------------------------------------------------------------------------------------------------------
Total revenues $ 803,119 $ 510,061 $ 390,586 $ 260,872 $ 228,062
=====================================================================================================================
Earnings (loss):
Continuing operations (1) $ 28,491 $ 17,021 $ 16,863 $ 14,068 $ 7,111
Discontinued operations (2) - - (12,810) - -
Extraordinary gain (3) - - 458 3,039 5,006
Cumulative effect of accounting change (1) - - 20,000 - -
---------------------------------------------------------------------------------------------------------------------
Net earnings $ 28,491 $ 17,021 $ 24,511 $ 17,107 $ 12,117
=====================================================================================================================
Net earnings per share:
Continuing operations $ 1.87 $ 1.13 $ 1.05 $ 1.09 $ .75
Total 1.87 1.13 1.53 1.33 1.28
=====================================================================================================================
Cash dividends per share $ .20 $ .20 $ .20 $ .20 $ .20
=====================================================================================================================
(1) Earnings from continuing operations for fiscal 1995, 1994 and 1993 reflect
a higher income tax rate (a rate more closely approximating the statutory
rate) than for previous years as a result of the Company's adoption of
Statement of Financial Accounting Standards ("SFAS") No. 109 effective
July 1, 1992. In fiscal 1993 the Company recognized a $20 million increase
in net earnings as a result of a cumulative effect of an accounting change
from the adoption of SFAS No. 109. Earnings from continuing operations and
net earnings for fiscal 1991 were reduced by a $5 million pre-tax
valuation allowance related to the Company's residential land development
project.
(2) The loss from discontinued operations for fiscal 1993 primarily consisted
of additional loss provisions related to the Company's discontinued land
development projects.
(3) The extraordinary gains recognized by the Company in fiscal 1993, 1992 and
1991 resulted from the extinguishment of debt on discounted bases.
Dollars In Thousands
Year Ended June 30,
----------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance sheet information at year-end:
Total assets $ 925,050 $ 758,424 $ 555,586 $ 442,051 $ 261,939
Notes payable and senior debt $ 284,585 $ 189,657 $ 133,175 $ 159,637 $ 28,272
Subordinated debt 206,673 206,019 108,688 12,622 59,233
--------- --------- ---------- ---------- ----------
Total notes payable, senior and subordinated
debt $ 491,258 $ 395,676 $ 241,863 $ 172,259 $ 87,505
Shareholders' equity $ 229,342 $ 201,324 $ 199,446 $ 178,615 $ 112,350
Total notes payable, senior and subordinated
debt divided by total notes payable, senior and
subordinated debt and shareholders' equity 68.2% 66.3% 54.8% 49.1% 43.8%
======================================================================================================================
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion of results of operations and financial condition should
be read in conjunction with the Selected Consolidated Financial Data and the
Consolidated Financial Statements and Notes thereto.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
-------------------------------------------------
Set forth below is certain consolidated financial and operating data of the
Company as of and for each of the three fiscal years ended June 30, 1995.
<TABLE>
<CAPTION>
Year Ended Change Change
June 30, 1995 vs 1994 1994 vs 1993
------------------------------------------------------------ ------------------- -------------------
1995 1994 1993 Amount Percent Amount Percent
------------------------------------------------------------ ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of net new orders: (1)
Sun City West 946 1,156 1,031 (210) (18.2%) 125 12.1%
Sun City Tucson 310 357 305 (47) (13.2%) 52 17.0%
Sun City Las Vegas 770 863 801 (93) (10.8%) 62 7.7%
Sun City Palm Springs (2) 267 315 450 (48) (15.2%) (135) (30.0%)
Sun City Roseville (3) 515 349 N/A 166 47.6% 349 N/A
Sun City Hilton Head (3) 149 N/A N/A 149 N/A N/A N/A
Sun City Georgetown (3) 122 N/A N/A 122 N/A N/A N/A
Terravita (3) 392 331 N/A 61 18.4% 331 N/A
Coventry Homes 1,063 774 414 289 37.3% 360 87.0%
----------------------------------------------------------- ------------------ -------------------
Total 4,534 4,145 3,001 389 9.4% 1,144 38.1%
=========================================================== ================== ===================
Number of home closings:
Sun City West 1,104 1,161 850 (57) (4.9%) 311 36.6%
Sun City Tucson 444 342 263 102 29.8% 79 30.0%
Sun City Las Vegas 847 815 710 32 3.9% 105 14.8%
Sun City Palm Springs (2) 282 278 325 4 1.4% (47) (14.5%)
Sun City Roseville (3) 293 N/A N/A 293 N/A N/A N/A
Terravita (3) 425 N/A N/A 425 N/A N/A N/A
Coventry Homes 921 587 416 334 56.9% 171 41.1%
----------------------------------------------------------- ------------------ -------------------
Total 4,316 3,183 2,564 1,133 35.6% 619 24.1%
=========================================================== ================== ===================
BACKLOG DATA:
Homes under contract at June 30:
Sun City West 502 660 665 (158) (23.9%) (5) (0.8%)
Sun City Tucson 149 283 268 (134) (47.3%) 15 5.6%
Sun City Las Vegas 402 479 431 (77) (16.1%) 48 11.1%
Sun City Palm Springs (2) 147 162 125 (15) (9.3%) 37 29.6%
Sun City Roseville (3) 571 349 N/A 222 63.6% 349 N/A
Sun City Hilton Head (3) 149 N/A N/A 149 N/A N/A N/A
Sun City Georgetown (3) 122 N/A N/A 122 N/A N/A N/A
Terravita (3) 298 331 N/A (33) (10.0%) 331 N/A
Coventry Homes 540 398 211 142 35.7% 187 88.6%
----------------------------------------------------------- ------------------ -------------------
Total (4) 2,880 2,662 1,700 218 8.2% 962 56.6%
=========================================================== ================== ===================
Aggregate contract sales amount
(dollars in millions) $565 $471 $260 $94 20.0% $211 81.2%
Average contract sales amount
per home (dollars in thousands) $196 $177 $153 $19 10.7% $24 15.7%
=========================================================== ================== ===================
AVERAGE REVENUE PER
HOME CLOSING:
Sun City West $151,100 143,500 134,800 $ 7,600 5.3% $ 8,700 6.5%
Sun City Tucson 164,400 159,700 147,900 4,700 2.9% 11,800 8.0%
Sun City Las Vegas 180,700 160,800 151,800 19,900 12.4% 9,000 5.9%
Sun City Palm Springs 214,400 191,400 195,600 23,000 12.0% (4,200) (2.1%)
Sun City Roseville 201,100 N/A N/A N/A N/A N/A N/A
Terravita 253,700 N/A N/A N/A N/A N/A N/A
Coventry Homes 156,900 136,300 106,900 20,600 15.1% 29,400 27.5%
Weighted average $177,100 $152,400 $144,000 $24,600 16.1% $ 8,500 5.9%
=========================================================== ================== ===================
OPERATING STATISTICS:
Cost of sales as a percentage of
revenues 80.4% 79.2% 77.4% 1.2% 1.5% 1.8% 2.3%
Selling, general and
administrative expenses
as a percentage of revenues 14.1% 15.6% 16.0% (1.5%) (9.6%) (0.4%) (2.5%)
Earnings from continuing
operations before income taxes
as a percentage of revenues 5.5% 5.1% 6.3% 0.4% 7.8% (1.2%) (19.0%)
Ratio of home closings to homes
under contract in backlog
at beginning of year 162.1% 187.2% 203.0% (25.1%) (13.4%) (15.8%) (7.8%)
=========================================================== ================ ================
(1) Net of cancellations. The Company recognizes revenue at close of escrow.
(2) The Company began taking new home sales orders at Sun City Palm Springs in
July 1992. Of the 450 new orders taken in fiscal 1993 at Sun City Palm
Springs, 235 were to customers who had made non-binding reservations prior
to July 1, 1992. Home closings at Sun City Palm Springs began in October
1992.
(3) The Company began taking new home sales orders at Sun City Roseville in May
1994, at Sun City Hilton Head in November 1994, at Sun City Georgetown in
June 1995 and at Terravita in November 1993. Home closings at Sun City
Roseville began in February 1995 and at Terravita in July 1994.
(4) A majority of the backlog at June 30, 1995 is currently anticipated to
result in revenues in the next 12 months. However, a majority of the
backlog at June 30, 1995 is contingent upon the availability of financing
for the customer, sale of the customer's existing residence or other
factors. Also, as a practical matter, the Company's ability to obtain
damages for breach of contract by a potential home buyer are limited to
retaining all or a portion of the deposit received. In the years ended June
30, 1995, 1994 and 1993 cancellations of home sales orders as a percentage
of new home sales orders written during the year were 18.3 percent, 15.6
percent and 14.1 percent, respectively.
</TABLE>
RESULTS OF OPERATIONS
---------------------
REVENUES.
(Dollars in Millions)
--------------------------------------------------------------------------------
Fiscal Fiscal Fiscal
1995 Change 1994 Change 1993
--------------------------------------------------------------------------------
$803.1 57.5% $510.1 30.6% $390.6
Home closings at Terravita and Sun City Roseville accounted for $107.8 million
and $58.9 million, respectively, of the increase in revenues for the fiscal year
ended June 30, 1995 compared to the fiscal year ended June 30, 1994. The Company
had not yet begun delivering homes at these communities in fiscal 1994.
Increased home closings (due to a higher beginning backlog) at the Company's
more mature active adult communities (Sun City West, Sun City Tucson, Sun City
Las Vegas and Sun City Palm Springs) accounted for $14.0 million of the increase
in revenues. Increased home closings at Coventry Homes, the Company's
conventional homebuilding operation, accounted for $45.5 million of the increase
in revenues. Coventry Homes' increased home closings were due both to an
increase in Phoenix-area operations and to the expansion of operations in
the Tucson and Las Vegas areas and southern California.
Increases in the average revenue per home closing at the Company's more mature
active adult communities and Coventry Homes accounted for $33.8 million and
$19.0 million, respectively, of the increase in revenues. These increases in
average revenues per home closing were partially due to sales price increases
implemented by the Company and partially due to market-driven changes in product
mix.
Land sales and other revenues were $14.0 million higher in fiscal 1995 than in
fiscal 1994.
Increased home closings at the Company's active adult communities and Coventry
Homes accounted for $60.3 million and $18.3 million, respectively, of the
increase in revenues for fiscal 1994 compared to the fiscal year ended June 30,
1993. Increases in the average revenue per home closing at the Company's active
adult communities and Coventry Homes accounted for $20.2 million and $17.3
million, respectively, of the increase in revenues. These increases in average
revenue per home closing were partially due to sales price increases implemented
by the Company and partially due to a greater percentage of sales of larger
active adult community homes or at more expensive conventional homebuilding
subdivisions. The Company experienced decreased home closings and average
revenue per home closing at Sun City Palm Springs for fiscal 1994 compared to
fiscal 1993, primarily due to a decrease in net new orders and a greater
percentage of sales of smaller homes.
COST OF SALES. The increase in cost of sales to $646.1 million in fiscal 1995
compared to $404.2 million in fiscal 1994 was primarily due to the increase in
home closings. As a percentage of revenues, cost of sales increased to 80.4
percent for fiscal 1995 compared to 79.2 percent for fiscal 1994. This increase
was the result of a variety of factors, including changes in the mix of
contributions by various communities and Coventry Homes, increased amortization
of capitalized interest to cost of sales and decreased base housing margins at
Sun City Tucson. Increased borrowings and higher interest rates resulted in an
increase in amortization of capitalized interest to 4.8 percent of total cost of
sales for fiscal 1995 compared to 4.5 percent for fiscal 1994. Pricing
strategies employed by the Company to facilitate the completion of Sun City
Tucson resulted in a decrease in base housing margins at that community. On a
period-to-period basis, cost of sales as a percentage of revenues will vary due
to, among other things, changes in product mix, differences between individual
communities, lot premiums, upgrades and extras, price increases, changes in
construction costs and changes in the amortization of capitalized interest and
other common costs. Management anticipates that (i) continued increases in the
amortization of capitalized interest to cost of sales resulting from higher
levels of indebtedness and increases in land held for longer-term development
(with respect to which land the Company cannot allocate capitalized interest)
and (ii) changes in estimates on which the amortization of other common costs is
based will result in a greater percentage of capitalized interest and other
common costs being amortized to cost of sales in the next fiscal year than in
prior years.
Because the Company capitalizes interest and amortizes capitalized interest as
home closings occur over the lives of its projects and the Company has several
communities at which closings have not yet begun, a significant portion of the
reduction in interest costs resulting from the use of proceeds of the August
1995 public offering of 2,474,900 shares of common stock to repay indebtedness
will not be reflected in reported earnings for the Company's fiscal year ended
June 30, 1996 and some portion will not be reflected in the following year. See
"Liquidity and Financial Condition of the Company."
The increase in cost of sales in fiscal 1994 compared to fiscal 1993 was
primarily due to increased home closings at all locations other than Sun City
Palm Springs. The Company also experienced an increase in its cost of sales as a
percentage of revenues from 77.4 percent in fiscal 1993 to 79.2 percent in
fiscal 1994, primarily reflecting the impact of higher lumber costs. Average
framing lumber composite prices were 22 percent higher for the 12 months ended
June 30, 1994 than for the 12 months ended June 30, 1993. For the Company,
framing costs represented 14.8 percent of total cost of sales for fiscal 1994
compared to 12.1 percent for fiscal 1993. These lumber cost increases adversely
impacted the Company because homes with fixed sales prices established in sales
contracts entered into up to a year earlier were constructed and delivered at
higher than anticipated costs. In an effort to reduce the effects of rising
costs, the Company implemented sales price increases and entered into
fixed-price framing contracts for a significant portion of its homes constructed
through December 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in selling,
general and administrative expenses to $113.2 million in fiscal 1995 as compared
to $79.7 million in fiscal 1994, $9.2 million was attributable to higher sales
and marketing expenses and $7.9 million was attributable to increased
commissions on the higher revenues. The balance of the increase was attributable
to a variety of general and administrative expenses. Since a significant portion
of selling, general and administrative expenses is fixed, the increase in
revenues for fiscal 1995 resulted in a decrease in these expenses as a
percentage of revenues as compared to fiscal 1994.
Of the increase in selling, general and administrative expenses to $79.7 million
in fiscal 1994 as compared to $62.6 million in fiscal 1993, $3.0 million was
attributable to increased sales and marketing expenses and $3.8 million was
attributable to increased commissions on the increased revenues. The balance of
the increase was attributable to a variety of general and administrative
expenses. The increase in revenues from fiscal 1993 to fiscal 1994 also resulted
in a decrease in these expenses as a percentage of revenues.
OTHER EXPENSE, NET. Included in other expense, net in fiscal 1993 was $2.0
million of previously capitalized costs related to an option the Company had to
purchase land near Austin, Texas as the site of a potential active adult
community, partially offset by $1.1 million of other income.
INCOME TAXES. The increase in income taxes to $15.3 million in fiscal 1995 as
compared to $9.2 million in fiscal 1994 was due to the increase in earnings from
continuing operations before income taxes. The effective tax rate in both years
was 35 percent. The increase in income taxes to $9.2 million in fiscal 1994 as
compared to $7.9 million in fiscal 1993 was due to the increase in earnings from
continuing operations before income taxes and an increase in the effective tax
rate from 32 percent to 35 percent.
For financial reporting and cash flow purposes, a recent state tax law change
and, possibly, certain other matters are currently anticipated to result in the
Company's effective tax rate being less in future periods than it would
otherwise have been.
LOSS FROM DISCONTINUED OPERATIONS. The non-cash provision for discontinued
operations recorded by the Company in fiscal 1993 was attributable to the change
in carrying values of the Company's two commercial land development projects
from net realizable values to market values, net of anticipated holding and
disposal costs, and to the settlement of other matters.
EXTRAORDINARY GAIN. The extraordinary gain recognized by the Company in fiscal
1993 resulted from the extinguishment of a portion of notes payable on a
discounted basis.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. The $20 million cumulative effect of
accounting change in fiscal 1993 resulted from the Company's adoption of
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, effective July 1, 1992.
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 9.4 percent in
fiscal 1995 compared to fiscal 1994. This increase was attributable to new sales
orders at Sun City Roseville, Sun City Hilton Head, Sun City Georgetown and the
expansion of Coventry Homes' conventional subdivision homebuilding operations.
The Company did not have a full year of sales activity at Sun City Roseville in
fiscal 1994 and began home sales activity at Sun City Hilton Head and Sun City
Georgetown in fiscal 1995. At the more mature communities of Sun City West, Sun
City Las Vegas, Sun City Tucson and Sun City Palm Springs, net new orders
decreased by 14.8 percent, due primarily to exceptionally high new order
activity at Sun City West and Sun City Las Vegas in the prior year, the winding
down of new order activity at Sun City Tucson as build-out of that community
approaches and the effect on Sun City Palm Springs of continued adverse
conditions in the southern California economy.
Cancellations of home sales orders as a percentage of new home sales orders
written increased to 18.3 percent for fiscal 1995 compared to 15.6 percent for
fiscal 1994 and 14.1 percent for fiscal 1993. The increases were primarily
attributable to Sun City Roseville and Terravita, which experienced strong new
order activity but higher cancellation percentages than the Company's more
mature active adult communities. Management believes that cancellations at these
new communities may have been higher than they would otherwise have been as a
result of extended home delivery periods resulting from new orders taken prior
to site and amenity development.
The number of homes in backlog at June 30, 1995 was 8.2 percent higher than at
June 30, 1994. This increase was primarily attributable to the inclusion of
homes under contract at Sun City Hilton Head and Sun City Georgetown and
increases in backlog at Sun City Roseville and Coventry Homes, partially offset
by declines in homes under contract at the Company's more mature communities.
Net new orders increased 38.1 percent in fiscal 1994 compared to fiscal 1993,
primarily reflecting increased sales orders for Coventry Homes (resulting from a
larger number of subdivisions than in fiscal 1993), new sales orders at Sun City
Roseville (at which the Company began taking new sales orders in May 1994) and
new sales orders at Terravita (at which the Company began taking new sales
orders in November 1993). The Company also experienced increased sales orders
atall operating active adult communities except Sun City Palm Springs, where net
new orders were affected by continued adverse conditions in the southern
California economy. The number of homes under contract at June 30, 1994 was 56.6
percent higher than at June 30, 1993. This increase was primarily attributable
to the initial sales orders at Sun City Roseville and Terravita and to an 88.6
percent increase for Coventry Homes.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
------------------------------------------------
In November 1994 the Company negotiated an amendment to its senior unsecured
revolving credit facility to increase the amount of the facility from $125
million to $175 million. In June 1995 the senior unsecured revolving credit
facility was further amended to increase the amount of the facility to $300
million, which will provide greater flexibility in the nature and timing of
future development expenditures. In connection with this amendment, the Company
repaid its secured Coventry Homes bank debt and reduced the amount of its
short-term lines of credit from $20 million to $10 million. At June 30, 1995 the
Company had $18.9 million of cash and short-term investments and $141.5 million
and $8.3 million of unused borrowing capacity under its $300 million unsecured
revolving credit facility and $10 million of short-term lines of credit,
respectively.
In August 1995 the Company publicly sold 2,474,900 shares of its common stock.
The net proceeds of approximately $45 million were used to repay a portion of
the indebtedness outstanding under the Company's $300 million senior unsecured
revolving credit facility. The Company intends to reborrow under the senior
unsecured revolving credit agreement from time to time as necessary to fund
development of existing and new projects and for other general corporate
purposes.
Management believes that the Company's current borrowing capacity, when combined
with existing cash and short-term investments and currently anticipated cash
flows from the Company's operating communities, conventional homebuilding
activities and residential land development project, will provide the Company
with adequate capital resources to fund the Company's currently anticipated
operating requirements for the next 12 months. Cash flows from the Company's
operating communities, however, are expected to be negatively impacted by the
decline in net new order activity and backlog at the Company's more mature
active adult communities.
The Company's senior unsecured revolving credit facility and the indentures for
the Company's publicly-held debt contain restrictions which could, depending on
the circumstances, affect the Company's ability to borrow in the future. If the
Company at any time is not successful in obtaining sufficient capital to fund
its then planned development and expansion expenditures, some or all of its
projects may be significantly delayed. Any such delay could result in cost
increases and may adversely affect the Company's results of operations.
The cash flow for each of the Company's communities can differ substantially
from reported earnings, depending on the status of the development cycle. The
initial years of development or expansion require significant cash outlays for,
among other things, land acquisition, obtaining master plan and other approvals,
construction of amenities (including golf courses and recreation centers), model
homes, sales and administration facilities, major roads, utilities, general
landscaping and interest. Since these costs are capitalized, this can result in
income reported for financial statement purposes during those initial years
significantly exceeding cash flow. However, after the initial years of
development or expansion, when these expenditures are made, cash flow can
significantly exceed income reported for financial statement purposes, as costs
of sales includes amortization charges for substantial amounts of previously
expended costs.
During fiscal 1995 the Company generated $212.4 million of net cash from
community sales activities, used $100.3 million of cash for land and lot and
amenity development at operating communities, paid $98.2 million for costs
related to communities in the pre-operating stage, used $6.5 million of net cash
for conventional homebuilding operations and used $65.0 million of cash for
other operating activities.
The Company believes that, of the $820.4 million of cash spent by the Company
during fiscal 1995 for land acquisitions, lot and amenity development, home
construction and other operating activities, approximately $135.9 million was to
some extent discretionary as to timing and precedes the actual construction of
homes from which cash can be generated upon closing of home sale contracts. This
$135.9 million was comprised of $98.2 million related to projects in the
pre-operating stage and $37.7 million for land acquisitions and amenity
development at operating communities.
At June 30, 1995, under the most restrictive of the covenants in the Company's
debt agreements, $16.9 million of the Company's retained earnings was available
for payment of cash dividends and for the acquisition by the Company of its
common stock.
IMPACT OF INFLATION
-------------------
Operations of the Company can be impacted by inflation. Home and land sales
prices can increase, but inflation can also cause increases in interest costs
and the costs of land, raw materials and subcontracted labor. Unless such
increased costs are recovered through higher sales prices, operating margins
will decrease. High mortgage interest rates may also make it more difficult for
the Company's potential customers to sell their existing homes in order to move
to one of the Company's communities or to finance the purchases of their new
homes.
ACCOUNTING STANDARD NOT YET ADOPTED BY THE COMPANY
--------------------------------------------------
The Financial Accounting Standards Board recently issued SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, which the Company will be required to implement effective for
the fiscal year ending June 30, 1997.
This statement requires that long-lived assets must be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. If the sum of the expected future cash flows
(undiscounted and without interest charges) from an asset to be held and used is
less than the carrying value of the asset, an impairment loss must be recognized
in the amount of the difference between the carrying value and fair value.
Assets to be disposed of must be valued at the lower of carrying value or fair
value less costs to sell.
Management believes that if this standard were to be implemented currently,
there would not be an impairment loss; however, until it is implemented,
management will periodically reassess the Company's situation in relation to
SFAS No. 121.
Item 8. Financial Statements and Supplementary Data
The response to this item is submitted as a separate section of this report
below.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
For information with respect to the Executive Officers of the Registrant, see
"Item 1 -- Executive Officers of the Company" at the end of Part I of this
report. Information with respect to the Directors of the Registrant is
incorporated herein by reference to the Registrant's definitive proxy statement
to be filed pursuant to Regulation 14A within 120 days after the end of the most
recent fiscal year covered by this Form 10-K.
Item 11. Executive Compensation
Information in response to this Item is incorporated herein by reference to the
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after the end of the most recent fiscal year covered by this
Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information in response to this Item is incorporated herein by reference to the
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after the end of the most recent fiscal year covered by this
Form 10-K.
Item 13. Certain Relationships and Related Transactions
Information in response to this Item is incorporated herein by reference to the
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
within 120 days after the end of the most recent fiscal year covered by this
Form 10-K.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. and 2. The response to this portion of Item 14 is submitted as a
separate section of this report beginning on page 25.
3. Exhibits
The Exhibit Index attached to this Report is hereby incorporated
by reference.
(b) The Company did not file any reports on Form 8-K during the fourth quarter
of fiscal 1995.
<PAGE>
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, who is duly authorized to do so, in Phoenix, Arizona
on the 30th day of August, 1995.
DEL WEBB CORPORATION
(Registrant)
By: /s/ Philip J. Dion
------------------------------------
Philip J. Dion
Chairman and Chief Executive 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 in
the capacities and on the dates indicated.
Signature Title Date
--------------------------------------------------------------------------------
/s/ Philip J. Dion Chairman and Chief Executive August 30, 1995
---------------------------- Officer
(Philip J. Dion) (Principal Executive Officer)
/s/ John A. Spencer Senior Vice President and Chief August 30, 1995
---------------------------- Financial Officer
(John A. Spencer) (Principal Financial Officer)
/s/ David E. Rau Vice President and Controller August 30, 1995
---------------------------- (Principal Accounting Officer)
(David E. Rau)
/s/ D. Kent Anderson Director August 30, 1995
----------------------------
(D. Kent Anderson)
/s/ Robert Bennett Director August 30, 1995
----------------------------
(Robert Bennett)
/s/ Hugh F. Culverhouse, Jr. Director August 30, 1995
----------------------------
(Hugh F. Culverhouse, Jr.)
/s/ Kenny C. Guinn Director August 30, 1995
----------------------------
(Kenny C. Guinn)
/s/ J. Russell Nelson Director August 30, 1995
----------------------------
(J. Russell Nelson)
/s/ Peter A. Nelson Director August 30, 1995
----------------------------
(Peter A. Nelson)
/s/ Michael E. Rossi Director August 30, 1995
----------------------------
(Michael E. Rossi)
/s/ C. Anthony Wainwright Director August 30, 1995
----------------------------
(C. Anthony Wainwright)
/s/ Sam Yellen Director August 30, 1995
----------------------------
(Sam Yellen)
<PAGE>
DEL WEBB CORPORATION
FORM 10-K
Item 8, Item 14(a) (1) and (2)
Index of Consolidated Financial Statements and Schedule
The following financial statements required to be included in Item 8 and other
disclosures by the Registrant are listed below:
PAGE
Management's Report.......................................................... 26
Independent Auditors' Report................................................. 27
Consolidated Financial Statements:
Balance Sheets as of June 30, 1995 and 1994........................... 28
Statements of Earnings for each of the years in the three-year
period ended June 30, 1995.......................................... 29
Statements of Shareholders' Equity for each of the years in the
three-year period ended June 30, 1995............................... 30
Statements of Cash Flows for each of the years in the three-year
period ended June 30, 1995.......................................... 31
Notes to Consolidated Financial Statements............................ 33
Separate financial statements of the Company's subsidiaries that are guarantors
of the Company's 10 7/8% Senior Notes due 2000 are not included because those
subsidiaries are jointly and severally liable as guarantors of the Notes and the
aggregate assets, liabilities, earnings and equity of those subsidiaries are
substantially equivalent to the assets, liabilities, earnings and equity of the
Company and its subsidiaries on a consolidated basis.
The following financial statement schedule of the Registrant and its
subsidiaries is included in Item 14(a) (2):
consolidated Financial Statement Schedule: PAGE
II Valuation and Qualifying Accounts for each of the years in the
three-year period ended June 30, 1995............................. 46
Schedules other than the one listed above are omitted because the conditions
requiring their filing do not exist or because the required information is given
in the financial statements, including the notes thereto.
<PAGE>
MANAGEMENT'S REPORT
Financial Statements
Del Webb Corporation is responsible for the preparation, integrity and fair
presentation of its published financial statements. The financial statements
that follow have been prepared in accordance with generally accepted accounting
principles and, as such, include amounts based on judgements and estimates made
by management. The Company also prepared the other information included in the
annual report and is responsible for its accuracy and consistency with the
financial statements.
The financial statements have been audited by the independent accounting firm,
KPMG Peat Marwick LLP, which was given access to all financial records and
related data, including minutes of all meetings of shareholders, the board of
directors and committees of the board. The Company believes that all
representations made to the independent auditors during their audit were valid
and appropriate. KPMG Peat Marwick LLP's audit report is presented on the
following page.
Internal Control System
The Company maintains a system of internal control over financial reporting and
over safeguarding of assets against unauthorized acquisition, use or disposition
which is designed to provide reasonable assurance to the Company's management
and board of directors regarding the preparation of reliable published financial
statements and such asset safeguarding. The system includes a documented
organizational structure and division of responsibility, established policies
and procedures (including a code of conduct) which are communicated throughout
the Company, and the selection, training and development of employees. Internal
auditors monitor the operation of the internal control system and report
findings and recommendations to management and the board of directors, and
corrective actions are taken to correct deficiencies if and as they are
identified. The board, operating through its audit committee which is composed
of directors who are not officers or employees of the Company, provides
oversight to the financial reporting and asset safeguarding process.
Even an effective internal control system, no matter how well designed, has
inherent limitations -- including the possibility of the circumvention or
overriding of controls -- and therefore can provide only reasonable assurance
with respect to financial statement preparation and asset safeguarding. Further,
because of changes in conditions, internal control system effectiveness may vary
over time.
The Company assessed its internal control system as of June 30, 1995 in relation
to criteria for effective internal control over financial reporting described in
"Internal Control -- Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on its assessment, the Company
believes that, as of June 30, 1995, its system of internal control over
financial reporting and over safeguarding of assets against unauthorized
acquisition, use or disposition met those criteria.
/s/ Philip J. Dion
-------------------------------------
Philip J. Dion
Chairman and Chief Executive Officer
/s/ John A. Spencer
-------------------------------------
John A. Spencer
Senior Vice President and Chief Financial Officer
June 30, 1995
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Del Webb Corporation:
We have audited the consolidated financial statements of Del Webb Corporation
and subsidiaries as listed in the accompanying index. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule 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 Del Webb Corporation
and subsidiaries as of June 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 30, 1995 in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes effective July 1, 1992.
KPMG Peat Marwick LLP
Phoenix, Arizona
August 18, 1995
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and 1994
In Thousands
--------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------
Assets
--------------------------------------------------------------------------------
Real estate inventories (Notes 2, 5 and 11) $ 828,752 $ 662,613
Cash and short-term investments 18,900 6,474
Receivables (Note 3) 21,995 10,385
Property and equipment, net (Note 4) 29,326 36,773
Deferred income taxes (Note 6) -- 11,604
Other assets 26,077 30,575
--------------------------------------------------------------------------------
$ 925,050 $ 758,424
================================================================================
Liabilities and Shareholders' Equity
--------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 5) $ 491,258 $ 395,676
Subcontractor and trade accounts payable 76,421 45,443
Accrued liabilities and other payables 48,121 39,905
Home sale deposits 66,887 62,797
Income taxes payable (Note 6) 3,899 7,155
Deferred income taxes (Note 6) 5,197 --
Net liabilities of discontinued operations (Note 12) 3,925 6,124
--------------------------------------------------------------------------------
Total liabilities 695,708 557,100
--------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value at June 30, 1995,
without par value at June 30, 1994. Authorized
30,000,000 shares; issued 15,798,649 shares and
15,828,940 shares at June 30, 1995 and 1994,
respectively (Notes 7, 8 and 14) 16 112,944
Additional paid-in capital (Notes 7 and 14) 121,059 8,333
Retained earnings (Note 5) 122,153 96,630
--------------------------------------------------------------------------------
243,228 217,907
Less cost of common stock in treasury, 877,728
shares and 1,132,065 shares at June 30, 1995
and 1994, respectively (Note 14) (11,058) (14,600)
Less deferred compensation (Note 8) (2,828) (1,983)
--------------------------------------------------------------------------------
Total shareholders' equity 229,342 201,324
--------------------------------------------------------------------------------
$ 925,050 $ 758,424
================================================================================
See accompanying notes to consolidated financial statements.
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years ended June 30, 1995, 1994 and 1993
In Thousands
Except Per Share Data
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
Revenues (Note 10) $ 803,119 $ 510,061 $ 390,586
-------------------------------------------------------------------------------
Cost of sales (Note 10) 646,052 404,202 302,300
Selling, general and administrative
expenses 113,235 79,673 62,566
Other expense, net -- -- 922
-------------------------------------------------------------------------------
Earnings from continuing operations
before income taxes 43,832 26,186 24,798
Income taxes (Note 6) 15,341 9,165 7,935
-------------------------------------------------------------------------------
Earnings from continuing operations 28,491 17,021 16,863
Loss from discontinued operations
(net of tax) (Notes 6 and 12) -- -- (12,810)
Extraordinary gain from extinguishment
of debt (net of tax) (Note 6) -- -- 458
Cumulative effect of accounting change
(Note 6) -- -- 20,000
-------------------------------------------------------------------------------
Net earnings $ 28,491 $ 17,021 $ 24,511
===============================================================================
Weighted average shares outstanding 15,209 15,036 16,049
===============================================================================
Earnings (loss) per share:
Continuing operations $ 1.87 $ 1.13 $ 1.05
Discontinued operations -- -- (.80)
Extraordinary gain -- -- .03
Cumulative effect of accounting change -- -- 1.25
-------------------------------------------------------------------------------
Net earnings per share $ 1.87 $ 1.13 $ 1.53
===============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended June 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
In Thousands
------------------------------------------------------------------------------------------------------------------------
Additional Total
Common Paid-In Retained Treasury Deferred Shareholders'
Stock Capital Earnings Stock Compensation Equity
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1992 $ 112,059 $ 7,483 $ 61,230 $ (572) $ (1,585) $ 178,615
Shares issued for stock option and
restricted stock plans (68,600
shares of common stock and 45,600
shares of treasury stock), net of
amortization 1,230 536 - 248 (272) 1,742
Treasury stock acquired, 150,084
shares - - - (2,272) - (2,272)
Cash dividends ($ .20 per share) - - (3,150) - - (3,150)
Net earnings - - 24,511 - - 24,511
------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1993 113,289 8,019 82,591 (2,596) (1,857) 199,446
Shares issued and retired for stock
option and restricted stock plans
(123,167 shares of treasury stock
issued and 23,453 shares of common
stock retired), net of amortization (345) 314 - 1,322 (126) 1,165
Treasury stock acquired, 1,046,751
shares - - - (13,326) - (13,326)
Cash dividends ($ .20 per share) - - (2,982) - - (2,982)
Net earnings - - 17,021 - - 17,021
------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1994 112,944 8,333 96,630 (14,600) (1,983) 201,324
Shares issued and retired for stock
option, restricted stock and
retirement savings plans (254,781
shares of treasury stock issued and
30,291 shares of common stock
retired), net of amortization (202) - - 3,550 (845) 2,503
Treasury stock acquired, 444 shares - - - (8) - (8)
Change from common stock without
par value to $.001 par value common
stock (Note 7) (112,726) 112,726 - - - -
Cash dividends ($ .20 per share) - - (2,968) - - (2,968)
Net earnings - - 28,491 - - 28,491
------------------------------------------------------------------------------------------------------------------------
Balances at June 30, 1995 $ 16 $ 121,059 $ 122,153 $(11,058) $ (2,828) $ 229,342
========================================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 30, 1995, 1994 and 1993
(In Thousands)
1995 1994 1993
-------------------------------------------------------------------------------
Cash flows from operating activities:
Cash received from customers related to
community home sales $ 588,526 $ 415,090 $ 324,986
Cash received from commercial land
sales, net 1,599 3,730 945
Cash paid for costs related to community
home construction (377,735) (275,079) (218,773)
-------------------------------------------------------------------------------
Net cash provided by community
sales activities 212,390 143,741 107,158
Cash paid for land acquisitions at
operating communities (8,046) (5,212) (3,626)
Cash paid for lot development at
operating communities (62,612) (46,921) (34,563)
Cash paid for amenity development at
operating communities (29,683) (34,292) (28,389)
-------------------------------------------------------------------------------
Net cash provided by operating
communities 112,049 57,316 40,580
Cash paid for costs related to communities
in the pre-operating stage (98,183) (101,469) (32,260)
Cash received from customers related to
conventional homebuilding 146,210 79,282 44,070
Cash paid for land, development,
construction and other costs related
to conventional homebuilding (152,696) (102,726) (53,483)
Cash received from customers related
to residential land development
project 26,438 14,803 17,318
Cash paid for costs related to residential
land development project (16,129) (11,660) (6,746)
Cash paid for corporate activities (28,703) (22,056) (13,208)
Interest paid (44,104) (27,258) (20,760)
Cash received (paid) for income taxes (1,796) 759 (300)
Net operating activities of discontinued
operations (699) (2,376) (3,383)
-------------------------------------------------------------------------------
Net cash used for operating activities (57,613) (115,385) (28,172)
-------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (13,256) (13,380) (4,033)
Investments in life insurance policies (1,594) (2,511) (2,428)
-------------------------------------------------------------------------------
Net cash used for investing activities (14,850) (15,891) (6,461)
-------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowings 766,968 315,922 195,534
Repayments of debt (678,485) (192,206) (136,698)
Purchases of treasury stock (8) (13,326) (2,272)
Proceeds from exercise of common stock
options 882 164 465
Dividends paid (2,968) (2,982) (3,150)
Net financing activities of discontinued
operations (1,500) (3,500) (1,400)
-------------------------------------------------------------------------------
Net cash provided by financing
activities 84,889 104,072 52,479
-------------------------------------------------------------------------------
Net increase (decrease) in cash and
short-term investments 12,426 (27,204) 17,846
Cash and short-term investments at
beginning of year 6,474 33,678 15,832
-------------------------------------------------------------------------------
Cash and short-term investments at
end of year $ 18,900 $ 6,474 $ 33,678
===============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended June 30, 1995, 1994 and 1993
(In Thousands)
1995 1994 1993
-------------------------------------------------------------------------------
Reconciliation of net earnings to net
cash used for operating activities:
Net earnings $ 28,491 $ 17,021 $ 24,511
Amortization of common costs in
cost of sales, excluding interest 188,081 110,478 90,911
Amortization of capitalized interest
in cost of sales 31,205 18,003 14,513
Deferred compensation amortization 1,598 1,330 1,014
Depreciation and other amortization 5,243 3,698 2,528
Deferred income tax expense
attributable to operating earnings 16,801 9,061 7,160
Loss from discontinued operations
(net of tax) -- -- 12,810
Extraordinary gain from extinguishment
of debt (net of tax) -- -- (458)
Cumulative effect of accounting change -- -- (20,000)
Net increase in home construction costs (42,566) (34,192) (19,980)
Land acquisitions (39,332) (81,788) (25,721)
Lot development (154,864) (89,983) (55,103)
Amenity development (78,785) (62,621) (40,164)
Pre-acquisition costs (2,770) (5,228) (1,933)
Net change in other assets and
liabilities (10,016) 1,212 (14,877)
Net operating activities of discontinued
operations (699) (2,376) (3,383)
-------------------------------------------------------------------------------
Net cash used for operating activities $ (57,613) $(115,385) $ (28,172)
===============================================================================
See accompanying notes to consolidated financial statements.
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Del Webb
Corporation and its Subsidiaries ("Company"). All significant
intercompany transactions and accounts have been eliminated in
consolidation.
The Company's continuing operations include its communities,
conventional homebuilding operations and residential land development
project. The Company's communities are large-scale, master-planned
residential communities at which the Company controls all phases of
the master plan development process from land selection through the
construction and sale of homes. Within its communities, the Company is
the exclusive developer of homes. The Company's conventional
homebuilding operations encompass the construction and sale of homes
in subdivisions. The Company's residential land development project
operations include the sale of individual land parcels and lots to
other builders and developers for conventional housing and related
commercial development. The Company's commercial land development
projects are accounted for as discontinued operations.
(b) Real Estate Inventories
-----------------------
Real estate inventories include undeveloped land, partially improved
land, amenities and homes on finished lots, in various stages of
completion. These assets include direct construction costs for homes
and common costs. Common costs include land, general and subdivision
land development costs, model and vacation home costs in excess of
normal direct construction costs, costs of community sales centers,
costs of assets (such as golf courses and recreation centers)
contributed to the community associations, costs of subsidizing the
community associations, other costs (such as property taxes and
pre-operating costs) and development period interest, all of which are
capitalized. The capitalized costs and estimated future common costs
are allocated, on a community by community basis, to residential and
commercial lots based upon the estimated relative sales value that
each lot has to the estimated aggregate sales value of all lots in the
community. Cost of sales includes the direct construction costs of the
home and an allocation of common costs. Sales commissions, advertising
and other marketing expenses are included in selling, general and
administrative expenses. The Company recognizes revenue at close of
escrow.
The Company reviews the valuation of its real estate inventories on a
continual basis. For financial reporting purposes, real estate
inventories not held for bulk sale must be carried at the lower of
historical cost or estimated net realizable value. Real estate held
for bulk sale must be carried at the lower of historical cost or
estimated market value. Net realizable value differs from market value
in that, among other things, market value is based on the price
obtainable in a bulk cash sale at the present time, considers a
potential purchaser's requirement for future profit and discounts the
timing of expected cash receipts at a market rate of interest, whereas
net realizable value is the price obtainable in the future for
individual parcels as improved, net of disposal and holding costs
(including interest at an estimated cost of funds rate), without
provision for future profit and without discounting future cash
receipts to present value.
(c) Cash and Short-Term Investments
-------------------------------
The Company's policy is to invest its cash in high-grade,
income-producing short-term investments. Accordingly, uninvested cash
balances are generally kept at minimum levels. Short-term investments
are valued at the lower of cost or market and principally include
overnight repurchase agreements, certificates of deposit and
commercial paper with an original maturity of less than 90 days.
(d) Depreciation
------------
Depreciation is computed using principally the straight-line method
for financial statement purposes and accelerated methods for tax
purposes, over the estimated useful lives of the assets.
(e) Income Taxes
------------
Prior to July 1, 1992 the Company accounted for income taxes in
accordance with Statement of Financial Accounting Standards ("SFAS")
No. 96, Accounting for Income Taxes. In fiscal 1993 the Company
adopted SFAS No. 109, Accounting for Income Taxes. The cumulative
effect of this change in accounting for income taxes of $20 million is
reported in the consolidated statement of earnings for fiscal 1993.
Under the asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in future years in which
those temporary differences are expected to be recovered or settled.
Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in the consolidated statement
of earnings as an adjustment to the effective income tax rate in the
period that includes the enactment date.
(f) Earnings per Share
------------------
Earnings per share is determined by dividing net earnings by the
weighted average number of common and common equivalent shares
outstanding during the year. Common equivalent shares of 382,000,
219,000 and 292,000 included in the computation of earnings per share
for fiscal 1995, 1994 and 1993, respectively, represent the effect of
stock options.
(g) Statements of Cash Flows
------------------------
In the Statements of Cash Flows, the Company defines operating
communities as communities generating revenue through home closings.
Communities in the pre-operating stage are those not yet generating
home sales revenues.
(h) Warranty Costs
--------------
Estimated future warranty costs are charged to cost of sales when the
revenues from home closings are recognized.
(i) Financial Instruments
---------------------
In the normal course of business, the Company invests in various
financial assets and incurs various financial liabilities. The Company
does not trade in derivative financial instruments, although it
occasionally enters into agreements involving derivative financial
instruments for purposes other than trading. At June 30, 1995 the
Company had two financial instruments that are included within the
definition of derivative financial instruments. These financial
instruments are described below.
The Company has a currency exchange agreement entered into with a
major bank in 1986 simultaneously with the issuance outside of the
United States of 50 million Subordinated Swiss Franc Bonds ($24
million) due February 1996. The agreement was entered into to
eliminate the Company's exposure to foreign currency fluctuations. As
of June 30, 1995 the outstanding Bonds and the currency exchange
agreement have been reduced to 26.7 million Swiss Fancs ($12.8
million).
The Company also has an interest rate swap agreement which calls for
an interest rate conversion with a notional amount of $20 million.
This swap agreement was entered into to manage the Company's interest
rate risk. It requires fixed interest payments on the notional amount
at a rate of 10.5 percent annually until February 1996. The Company
receives semi-annual interest payments based on the six-month London
interbank offered rate (LIBOR) until February 1996. As a result of
this agreement, the Company incurred net interest of $1.0, $1.4
million and $1.4 million for the fiscal years ended June 30, 1995,
1994 and 1993, respectively. A one percent decrease (increase) in the
LIBOR would have resulted in a $200,000 increase (decrease) in
interest per year.
The fair value estimates of financial instruments presented in note 5
have been determined by the Company using available market information
and valuation methodologies deemed appropriate by the Company.
Considerable judgement is required in interpreting market data to
develop the estimates of fair value. Accordingly, these fair value
estimates are not necessarily indicative of the amounts the Company
might pay or receive in actual market transactions. Potential taxes
and other transaction costs have not been considered in estimating
fair value. As substantially all of the Company's assets (including
real estate inventories, property and equipment and deferred income
taxes) are not financial instruments, the disclosures in note 5 do not
reflect the value of the Company as a whole.
The fair values of the Company's publicly held debt are estimated
based on the quoted bid prices for these debt instruments on June 30,
1995. The carrying amounts of the Company's remaining debt approximate
the estimated fair values because they are at interest rates
comparable to rates currently available to the Company for debt with
similar terms and remaining maturities. The fair values of the
Company's interest rate swap agreement and foreign currency exchange
agreement are the amounts at which these off-balance sheet instruments
could be settled, based on estimates obtainedfrom financial
institutions. For all other financial instruments, the carrying
amounts approximate the fair values because of the short maturity of
these instruments.
(2) REAL ESTATE INVENTORIES
The components of real estate inventories are as follows:
In Thousands
at June 30,
--------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------
Home construction costs $142,355 $ 99,789
Unamortized improvement and amenity costs 356,457 246,536
Unamortized capitalized interest 55,793 40,357
Land held for housing 220,297 210,700
Land held for future development or sale 53,850 65,231
--------------------------------------------------------------------------------
$828,752 $662,613
================================================================================
At June 30, 1995, the Company had 366 completed homes (excluding models and
vacation homes) and 388 homes under construction that were not subject to a
sales contract. These completed homes and homes under construction
represented $26.3 million and $10.3 million, respectively, of home
construction costs at June 30, 1995. At June 30, 1994 the Company had 257
completed homes and 221 homes under construction (representing $16.9
million and $9.1 million, respectively, of home construction costs) that
were not subject to a sales contract. Included in land held for future
development or sale at June 30, 1995 were 184 acres of residential land,
325 acres of commercial land and 28 acres of worship sites that are
currently being marketed for sale at the Company's communities and
conventional homebuilding operations. Also included in land held for future
development or sale at June 30, 1995 were 401 acres of residential land and
23 acres of commercial land at the Company's residential land development
project.
(3) RECEIVABLES
Receivables are summarized as follows:
In Thousands
at June 30,
--------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------
Escrow funds from home sales $ 7,089 $ 4,148
Note from sale of commercial building 2,665 2,739
Mortgages held for sale 3,617 1,456
Notes from sales Of land 1,708 244
Other 6,916 1,798
--------------------------------------------------------------------------------
$ 21,995 $ 10,385
================================================================================
(4) PROPERTY AND EQUIPMENT, NET
Property and equipment, stated at cost, and related accumulated
depreciation are summarized as follows:
In Thousands
at June 30,
--------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------
Buildings and improvements $ 9,422 $ 13,337
Equipment 35,267 28,602
Land and improvements 2,839 8,157
--------------------------------------------------------------------------------
47,528 50,096
Less accumulated depreciation 18,202 13,323
--------------------------------------------------------------------------------
$ 29,326 $ 36,773
================================================================================
At June 30, 1994 the Company classified the unamortized cost of its
vacation homes (aggregating $16.6 million) as property and equipment as a
result of its intent to operate the homes. In fiscal 1995 the Company
decided to return to marketing the homes for sale as individual units.
Accordingly, the homes were reclassified from property and equipment to
real estate inventories.
(5) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT
Notes payable, senior and subordinated debt consists of the following:
In Thousands
at June 30,
--------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------
10 7/8% Senior Notes, net $ 96,787 $ 96,098
9 3/4% Senior Subordinated Debentures, net 96,847 96,436
9% Senior Subordinated Debentures, net 97,081 96,879
Subordinated Swiss Franc Bonds, net 12,745 12,704
Notes payable to banks under a revolving
credit facility and short-term lines of credit 160,200 18,000
Real estate and other notes, variable interest
rates from prime to prime plus 1% and fixed
rates from 7% to 10.2%, interest payable
quarterly, maturities to 2004 27,598 75,559
--------------------------------------------------------------------------------
$491,258 $395,676
================================================================================
In April 1992 the Company completed a public offering of $100 million of
Senior Notes, which are shown net of unamortized deferred financing costs
and discount. The Notes are due on March 31, 2000 and have a stated
interest rate of 10 percent per year. Interest is payable semi-annually on
March 31 and September 30. The annual effective interest rate of the Notes,
after giving effect to the amortization of deferred financing costs and
discount, is 11.6 percent. The Notes may be redeemed by the Company after
March 31, 1997 at 100 percent of the principal amount of the Notes
redeemed, plus accrued and unpaid interest to the redemption date.
In March 1993 the Company completed a public offering of $100 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs and discount. These Debentures are due on March 1, 2003 and
have a stated interest rate of 9 3/4 percent per year. Interest is payable
semi-annually on March 1 and September 1. The annual effective interest
rate of the Debentures, after giving effect to the amortization of deferred
financing costs and discount, is 10.3 percent. The Debentures may be
redeemed by the Company on or after March 1, 1998, 1999 and 2000 at 104.875
percent, 102.4375 percent and 100 percent, respectively, of the principal
amount of the Debentures redeemed, plus accrued and unpaid interest to the
redemption date.
In February 1994 the Company completed a public offering of $100 million of
Senior Subordinated Debentures, which are shown net of unamortized deferred
financing costs. These Debentures are due on February 15, 2006 and have a
stated interest rate of 9 percent per year. Interest is payable
semi-annually on February 15 and August 15. The annual effective interest
rate of the Debentures, after giving effect to the amortization of deferred
financing costs, is 9.3 percent. The Debentures may be redeemed by the
Company on or after February 15, 1999, 2000, 2001, 2002 and 2003 at
104.500, 103.375, 102.250, 101.125 and 100 percent, respectively, of the
principal amount of the Debentures redeemed, plus accrued and unpaid
interest to the redemption date.
In February 1986 the Company issued 50 million Subordinated Swiss Franc
Bonds ($24 million) outside of the United States and simultaneously entered
into a currency exchange agreement. The Bonds are due in February 1996 and
are shown net of unamortized deferred financing costs. The annual effective
interest rate of the Bonds, after giving effect to the amortization of
deferred financing costs and the cost of the currency exchange agreement,
is 12.5 percent.
In March 1994 the Company established a $125 million senior unsecured
revolving credit facility to replace a $50 million senior unsecured credit
agreement and a $28 million revolving credit agreement for the development
of one of the Company's active adult communities and to increase its
borrowing capacity under credit facilities. At the same time, the Company
also paid an $8.9 million term loan. In November 1994 the Company
negotiated an amendment to the senior unsecured revolving credit facility
to increase the amount of the facility from $125 million to $175 million.
In June 1995 the facility was futher amended to increase the amount of the
facility to $300 million. In connection with this amendment, the Company
repaid the secured bank debt of its conventional homebuilding operations
and reduced the amount of its short-term lines of credit from $20 million
to $10 million. If the revolving credit facility is not subsequently
amended, its capacity will begin declining in June 1997 through its
maturity in December 1999. Borrowings under this facility bear interest at
the prime rate or, if the Company selects, at the Eurodollar rate plus 1.95
percent.
The senior unsecured revolving credit facility and the indentures for the
Company's publicly-held debt contain covenants which, taken together and
among other things, limit investments in unentitled land and unsold homes
under construction, conventional homebuilding assets, dividends, stock
repurchases, incurrence of indebtedness and certain acquisitions, and which
could, depending on the circumstances, affect the Company's ability to
borrow in the future.
At June 30, 1995 the Company had $141.5 million and $8.3 million of unused
borrowing capacity under the $300 million unsecured revolving credit
facility and $10 million of short-term lines of credit, respectively.
At June 30, 1995, under the most restrictive of the covenants in the
Company's debt agreements, $16.9 million of the Company's retained earnings
was available for payment of cash dividends and for the acquisition by the
Company of its common stock.
The estimated fair values at June 30, 1995 of the Company's Senior Notes, 9
3/4% Senior Subordinated Debentures, 9% Senior Subordinated Debentures and
Subordinated Swiss Franc Bonds were $103.1 million, $96.6 million, $91.0
million and $23.2 million, respectively. The estimated fair value at June
30, 1995 of the interest rate swap agreement represented an unrealized loss
of $0.8 million. The estimated fair value at June 30, 1995 of the foreign
currency exchange agreement reflected an unrealized gain of $10.4 million,
although this was offset by the increase in the fair value over the book
value of the Subordinated Swiss Franc Bonds.
The principal payment requirements on debt for the next five years ended
June 30 are as follows:
1996 $ 28,323,000
1997 $ 9,205,000
1998 $ 566,000
1999 $ 99,018,000
2000 $ 157,355,000
(6) INCOME TAXES
Total Income Tax Expense
------------------------
Total income tax expense was allocated as follows:
In Thousands
Years Ended June 30,
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
Operating earnings $15,341 $ 9,165 $ 7,935
Discontinued operations -- -- (8,190)
Extraordinary item -- -- 292
-------------------------------------------------------------------------------
Total income tax expense $15,341 $ 9,165 $ 37
===============================================================================
Components of Deferred Income Tax Expense Related to Operating Earnings
-----------------------------------------------------------------------
The components of income tax expense related to operating earnings consist
of:
In Thousands
Years Ended June 30,
--------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------
Current:
Federal $ (3,336) $ 49 $ 167
State 1,876 55 608
--------------------------------------------------------------------------------
(1,460) 104 775
--------------------------------------------------------------------------------
Deferred:
Federal 15,953 7,364 6,441
State 848 1,697 719
--------------------------------------------------------------------------------
16,801 9,061 7,160
--------------------------------------------------------------------------------
Income tax expense $ 15,341 $ 9,165 $ 7,935
================================================================================
Components of Deferred Income Tax Expense
-----------------------------------------
The components of deferred income tax expense are as follows:
In Thousands
Years Ended June 30,
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
Change in net operating loss
carryforwards $ 15,164 $ (2,197) $ 3,446
Change in loss provisions for
discontinued operations 3,556 (2,260) (3,597)
Change in basis differences of
real estate 9,721 18,076 (1,129)
Deferred compensation (237) (1,356) (659)
Amortization of short period loss 76 262 274
Accelerated depreciation (6,037) (2,973) 273
Change in deferred tax asset
valuation allowance (2,744) (1,115) --
Other (2,698) 624 654
-------------------------------------------------------------------------------
Deferred income tax expense $ 16,801 $ 9,061 $ (738)
===============================================================================
Included in deferred income tax expense for fiscal 1995 and 1994 are
reductions in the deferred tax asset valuation allowance of $2.7 million
and $1.1 million, respectively. These reductions resulted from additional
years of operating earnings generated by the Company, which increased the
portion of the gross deferred tax asset that the Company believed would
more likely than not be realized.
Deferred Income Taxes
----------------------
Deferred tax assets and liabilities have been recognized in the
consolidated balance sheets due to temporary difference and carryforwards
as follows:
In Thousands
at June 30,
--------------------------------------------------------------------------------
1995 1994
--------------------------------------------------------------------------------
Deferred tax assets:
Net operating loss carryforwards $ -- $15,164
Tax credit carryforwards 4,649 3,158
Liabilities of discontinued operations,
principally due to loss provisions 9,433 12,989
Property and equipment, principally due
to differences in depreciation 11,469 5,432
State income taxes 2,948 1,789
Amortization of short period loss 486 562
Deferred compensation 4,287 4,050
Other loss provisions 4,519 1,544
Other 966 1,278
--------------------------------------------------------------------------------
38,757 45,966
Valuation allowance 3,862 6,606
--------------------------------------------------------------------------------
34,895 39,360
--------------------------------------------------------------------------------
Deferred tax liabilities:
Real estate, principally due to basis differences 36,499 26,778
Receivables, principally due to valuation
allowances -- 266
Other 3,593 712
--------------------------------------------------------------------------------
40,092 27,756
--------------------------------------------------------------------------------
Net deferred income taxes $(5,197) $11,604
================================================================================
Reconciliation of Operating Earnings Effective Income Tax Expense
-----------------------------------------------------------------
Income tax expense attributable to operating earnings differs from the
amounts computed using the federal statutory income tax rate as a result of
the following:
In Thousands
Year Ended June 30,
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
Expected tax at current federal
statutory income tax rate $ 15,341 $ 9,165 $ 8,431
State income taxes, net of federal
benefit 1,771 1,139 876
Changes in prior years' provisions
due to the settlement of audits
and resolution of issues 718 -- (1,043)
Change in deferred tax asset
valuation allowance (2,744) (1,115) --
Other 255 (24) (329)
-------------------------------------------------------------------------------
Total income tax expense $ 15,341 $ 9,165 $ 7,935
===============================================================================
Carryforwards
-------------
For federal income tax purposes, at June 30, 1995 the Company had tax
credit carryforwards of $4.6 million that expire beginning in the year
ending June 30, 1997.
(7) REINCORPORATION
In November 1994 the Company changed its state of incorporation from
Arizona to Delaware. In connection with this reincorporation, the common
stock changed from common stock without par value to common stock with a
par value of $.001 per share, which resulted in a consolidated balance
sheet reclassification within shareholders' equity from common stock to
additional paid-in capital. There was no impact on total shareholders'
equity as a result of the reincorporation.
(8) COMMON STOCK RESERVED
The Company has four stock option plans: the 1981 Stock Option Plan (under
which no grants can be made subsequent to December 31, 1991), the 1986
Stock Option and Stock Appreciation Rights (SAR) Plan and the 1991 and 1993
Executive Long-Term Incentive Plans (1991 ELTIP and 1993 ELTIP, which cover
both options and restricted stock grants). Options under each of these
plans are granted to key employees to purchase shares of the Company's
common stock at a price not less than the current market price at the date
of the grant. The options are exercisable over a ten-year period from the
date of the grant. In July 1991 the SAR component of the 1986 Stock Option
Plan was eliminated and all outstanding stand alone SARs were converted
into non-qualified stock options. For the 1981 and 1986 plans, 600,000
shares are authorized for grant. Shares authorized for grant under the 1991
ELTIP total 750,000. Shares authorized for grant under the 1993 ELTIP total
1,200,000, of which no more than 450,000 may be used for restricted stock
grants.
The Company has the 1991 Directors' Stock Plan, under which options may be
granted to the Directors of the Company to purchase shares of the Company's
common stock at a price not less than the current market price at the date
of grant. Under this plan the Directors may elect to defer some or all of
their annual retainers and receive restricted stock or stock options at
prices that, when combined with the amounts of deferred retainers, equal
the current market price at the date of the grant. Shares authorized under
this plan total 75,000.
The Company also has two restricted stock plans (the 1986 Restricted Stock
Plan and the 1989 Restricted stock Plan) under which the Company's common
stock is granted to key personnel under certain restrictions. For each
plan, 175,000 shares are authorized for grant. Grants are issued at no cost
to the employee.
Activity in the stock option plans for the years ended June 30, 1995, 1994
and 1993 is summarized as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------------------------------------------------------------
Price Range 1995 1994 1993
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding, beginning of year $5.63 - $17.69 1,248,019 1,002,218 862,400
Granted $9.89 - $17.69 325,720 276,548 181,352
Exercised $8.00 - $17.69 (72,785) (14,933) (41,534)
Cancelled $8.00 - $17.69 (60,384) (15,814) -
--------------------------------------------------------------------------------------------------------
Options outstanding, end of year $5.63 - $17.69 1,440,570 1,248,019 1,002,218
========================================================================================================
Number of options exercisable at
end of year 925,528 800,129 631,380
Number of options at end of year available
for future option or restricted stock grants 753,627 1,175,364 344,332
--------------------------------------------------------------------------------------------------------
</TABLE>
Shares granted, net of cancellations, under the 1986 and 1989 Restricted
Stock Plans, the 1991 and 1993 ELTIPs and the Directors' Stock Plan during
the years ended June 30, 1995, 1994 and 1993 aggregated 148,901 shares,
108,234 shares and 72,666 shares, respectively. At June 30, 1995 no shares
were available for future grants under the 1986 Restricted Stock Plan or
the 1989 Restricted Stock Plan.
The Company recognized compensation expense of $1.6 million, $1.3 million
and $1.0 million related to shares granted under the restricted stock plans
for the years ended June 30, 1995, 1994 and 1993, respectively.
(9) DEFINED CONTRIBUTION PLAN
The Company sponsors a defined contribution retirement savings plan that
covers substantially all employees of the Company after completion of six
months of service. Company contributions to this plan, which include
amounts based on a percentage of employee contributions as well as
discretionary contributions, were $1.5 million, $1.2 million and $0.9
million for the years ended June 30, 1995, 1994 and 1993, respectively.
(10) REVENUES AND COST OF SALES
The components of revenues and cost of sales are:
In Thousands
Year Ended June 30,
--------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------
Revenues:
Home sales - communities $620,012 $405,462 $324,817
Home sales - conventional homebuilding 144,469 79,992 44,456
Land sales and other 38,638 24,607 21,313
--------------------------------------------------------------------------------
$803,119 $510,061 $390,586
================================================================================
Cost of sales:
Home sales - communities $487,641 $317,844 $248,573
Home sales - conventional homebuilding 124,380 68,513 37,049
Land sales and other 34,031 17,845 16,678
--------------------------------------------------------------------------------
$646,052 $404,202 $302,300
================================================================================
(11) INTEREST
The following table shows the components of interest:
In Thousands
Year Ended June 30,
--------------------------------------------------------------------------------
1995 1994 1993
--------------------------------------------------------------------------------
Interest incurred $46,641 $33,677 $23,653
Less capitalized interest 46,641 33,677 23,653
--------------------------------------------------------------------------------
Interest expense -- -- --
================================================================================
Amortization of capitalized interest
included in cost of sales $31,205 $18,003 $14,513
================================================================================
Unamortized capitalized interest included
in real estate inventories at year end $55,793 $40,357 $24,683
================================================================================
Interest income $ 581 $ 1,056 $ 987
================================================================================
(12) DISCONTINUED OPERATIONS
At June 30, 1995 the Company's discontinued operations consisted of two
commercial land development projects in Arizona and Colorado. The
components of net liabilities of discontinued operations are as follows:
In Thousands
at June 30,
-------------------------------------------------------------------------------
1995 1994
-------------------------------------------------------------------------------
Assets, primarily real estate $ 28,045 $ 28,826
Valuation allowances (27,855) (29,155)
Real estate notes payable and other liabilities (4,115) (5,795)
-------------------------------------------------------------------------------
Net liabilities of discontinued operations $ (3,925) $ (6,124)
===============================================================================
In fiscal 1993 the Company recorded a non-cash loss provision for
discontinued operations of $12.8 million, net of a tax benefit of $8.2
million, to reflect the change in carrying values of its two commercial
land development projects from net realizable values to market values, net
of holding and disposal costs, and to provide for the settlement of other
matters.
The principal payment requirements on real estate notes payable of
discontinued operations are $1.1 million per year for each of the three
years ending June 30, 1998 and $0.8 million for the year ending June 30,
1999.
(13) CONTINGENT LIABILITIES AND COMMITMENTS
The Company is a party to various legal proceedings arising in the ordinary
course of business. While it is not feasible to predict the ultimate
disposition of these matters, it is the opinion of management that their
outcome will not have a material adverse effect on the financial condition
of the Company.
The Company has issued surety bonds, guarantees and standby letters of
credit aggregating $154.9 million at June 30, 1995.
The Company leases from third parties, under operating leases, office
space, apartment units which it rents to prospective customers at its
active adult communities, automobiles and certain other equipment. The
leases are generally renewable at the Company's option for additional
periods. Total rent expense incurred by the Company was $4.8 million, $3.7
million and $3.3 million for the years ended June 30, 1995, 1994 and 1993,
respectively.
Minimum lease payments to be made by the Company under non-cancellable
lease agreements are as follows:
1996 $ 3,967,000
1997 3,513,000
1998 2,384,000
1999 1,393,000
2000 1,545,000
Later years 6,568,000
------------
$ 19,370,000
============
(14) SUBSEQUENT EVENT
In August 1995 the Company publicly sold 2,474,900 shares of its treasury
and authorized but unissued common stock. The net proceeds of approximately
$45 million were used to repay a portion of the indebtedness outstanding
under the Company's $300 million senior unsecured revolving credit
facility.
(15) QUARTERLY FINANCIAL INFORMATION (Unaudited)
Quarterly financial information for the years ended June 30, 1995 and 1994
is presented below. The sum of the individual quarterly data may not equal
the annual data due to rounding.
In Thousands Except Per Share Data
Three Months Ended
--------------------------------------------------------------------------------
June 30, March 31, December 31, September 30,
1995 1995 1994 1994
--------------------------------------------------------------------------------
Revenues $ 268,796 $ 195,383 $ 176,058 $ 162,882
Net earnings 9,580 6,995 6,609 5,307
Net earnings per share .62 .46 .44 .35
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
June 30, March 31, December 31, September 30,
1994 1994 1993 1993
--------------------------------------------------------------------------------
Revenues $ 160,705 $ 136,259 $ 125,563 $ 87,534
Net earnings 6,385 4,587 4,215 1,834
Net earnings per share .43 .31 .28 .12
--------------------------------------------------------------------------------
<PAGE>
<TABLE>
DEL WEBB CORPORATION AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 1995, 1994 and 1993
<CAPTION>
In Thousands
-------------------------------------------------------------------------------------------------------------------------
Additions Additions
Balance at Charged to Charged to
Beginning of Costs and Other Accounts Balance at
Classification Year Expenses Deductions End of Year
-------------------------------------------------------------------------------------------------------------------------
1995
----
<S> <C> <C> <C> <C> <C>
Reserve for residential land development project $ 6,738 $ 1,526 $ - $ - $ 8,264
Deferred tax asset valuation allowance 6,606 - - 2,744 3,862
Reserves for disposal costs of discontinued
operations 29,155 - - 1,300 27,855
------------------------------------------------------------------------------------------------------------------------
$ 42,499 $ 1,526 $ - $ 4,044 $ 39,981
========================================================================================================================
1994
----
Reserve for residential land development project $ 7,710 $ - $ - $ 972 $ 6,738
Deferred tax asset valuation allowance 7,721 - - 1,115 6,606
Reserves for disposal costs of discontinued
operations 32,314 - - 3,159 29,155
------------------------------------------------------------------------------------------------------------------------
$ 47,745 $ - $ - $ 5,246 $ 42,499
========================================================================================================================
1993
----
Reserve for residential land development project $ 8,840 $ - $ - $ 1,130 $ 7,710
Deferred tax asset valuation allowance - - 7,721 - 7,721
Reserves for disposal costs of discontinued
operations 16,847 12,810 8,190 5,533 32,314
------------------------------------------------------------------------------------------------------------------------
$ 25,687 $ 12,810 $ 15,911 $ 6,663 $ 47,745
========================================================================================================================
</TABLE>
DEL WEBB CORPORATION
Report on Form 10-K For The
Year Ended June 30, 1995
10-K EXHIBIT INDEX
------------------
NON-FINANCIAL STATEMENT EXHIBITS
--------------------------------
Exhibit
Number
-------
3.0 Amended and Restated Certificate of Incorporation of the Registrant,
incorporated by reference to Exhibit 99.0 to Registrant's Report on
Form 10-Q for the quarter ended September 30, 1994.
3.1 The Bylaws of the Registrant, incorporated by reference to Exhibit
99.1 to Registrant's Report on Form 10-Q for the quarter ended June
30, 1994.
4.1 Indenture dated as of April 15, 1992 between Registrant and United
States Trust Company of New York, as Trustee, defining the rights of
holders of the 10 7/8% Senior Notes due 2000, incorporated by
reference to Registration Statement No. 33-45703.
4.2 Indenture dated as of March 8, 1993 between Registrant and Fidelity
Trust Company, New York, as Trustee, defining the rights of the
holders of the 9 3/4% Senior Subordinated Debentures due 2003,
incorporated by reference to Registration Statement No. 33-56898.
4.3 Indenture dated as of February 4, 1994, between Registrant and The
Bank of New York, as Trustee, defining the rights of the holders of
the 9% Senior Subordinated Debentures due 2006 incorporated by
reference to Registration Statement No. 33-68732.
10.1 Compensation Agreement dated May 20, 1988, as amended January 12,
1989, between the Registrant and Frank D. Pankratz, incorporated by
reference to Exhibit 10.4.6 to Registrant's Report on Form 10-K
dated December 31, 1988, as amended by a letter dated December 18,
1991, incorporated by reference to Exhibit 10.1 to Registrant's
Report on Form 10-K for the year ended June 30, 1992.
10.2 Employment Agreement dated May 18, 1988, as amended by a Letter
Agreement dated January 20, 1989, and an Amendment Number Two dated
May 17, 1989, between the Registrant and Philip J. Dion,
incorporated by reference to Exhibit 10.2 to Registrant's Report on
Form 10-K dated December 31, 1989; and Amendment Number Three dated
August 17, 1993, incorporated by reference to Exhibit 10.2 to
Registrant's Report on Form 10-K for the year ended June 30, 1993.
10.3 Compensation Agreement dated July 1, 1989 between the Registrant and
J. Dennis Wilkins, as amended by a letter dated December 18, 1991,
incorporated by reference to Exhibit 10.3 to Registrant's Report on
Form 10-K for the year ended June 30, 1992.
10.4 Compensation Agreement dated May 17, 1989, between the Registrant
and Charles T. Roach, and a Letter Amendment to the Compensation
Agreement dated December 18, 1991, incorporated by reference to
Exhibit 10.4 to Registrant's Report on Form 10-K for the year ended
June 30, 1993.
10.5 Compensation Agreement dated October 20, 1992, between the
Registrant and Joseph F. Contadino, incorporated by reference to
Exhibit 10.5 to Registrant's Report on Form 10-K for the year ended
June 30, 1993.
10.6 Office Lease Agreement between Western Plaza Investors, L.P. and
Registrant dated April 20, 1994 incorporated by reference to
Registrant's Report on Form 10-K for the year ended June 30, 1994.
10.7 Del Webb Corporation Deferred Compensation Plan effective June 1,
1993, incorporated by reference to Exhibit 10.7 to Registrant's
Report on Form 10-K for the year ended June 30, 1993.
10.8 Key Executive Life Insurance Plan II dated April 1, 1992,
incorporated by reference to Exhibit 10.8 to Registrant's Report on
Form 10-K for the year ended June 30, 1992.
10.9 Key Executive Life Insurance Plan dated May 15, 1991, incorporated
by reference to Exhibit 10.10 to Registrant's Report on Form 10-K
for the year ended June 30, 1991.
10.10 Del Webb Corporation Executive Long-Term Incentive Plan adopted
November 20, 1991, incorporated by reference to Registrant's Report
on Form 10-K for the year ended June 30, 1992; and First Amendment
to the Executive Long-Term Incentive Plan dated June 30, 1993,
incorporated by reference to Exhibit 10.10 to Registrant's Report on
Form 10-K for the year ended June 30, 1993.
10.11 Del Webb Corporation 1993 Executive Long Term Incentive Plan dated
March 17, 1994, incorporated by reference to Exhibit 10.11 to
Registrant's Report on Form 10- K for the year ended June 30, 1994.
10.12 Del Webb Corporation Management Incentive Plan Fiscal 1994 (July 1,
1993 - June 30, 1994), incorporated by reference to Exhibit 10.11 to
Registrant's Report on Form 10-K for the year ended June 30, 1993.
10.13 Del Webb Corporation Supplemental Executive Retirement Plan No. 1,
as amended and restated April 20, 1993, incorporated by reference to
Exhibit 10.12 to Registrant's Report on Form 10-K for the year ended
June 30, 1993; as amended by First Amendment to the Del Webb
Corporation Supplemental Executive Retirement Plan No. 1 effective
July 1, 1995.
10.14 Del Webb Corporation Director Stock Plan dated November 20, 1991,
incorporated by reference to Exhibit 10.13 to Registrant's Report on
Form 10-K for the year ended June 30, 1993.
10.15 Amended and Restated Revolving Loan Agreement by and among Del Webb
Corporation and Bank of America National Trust and Savings
Association as Agent, and Bank One Arizona, NA, as Co-Agent, dated
June 27, 1995.
10.16 Del Webb Corporation Supplemental Executive Retirement Plan No. 2,
as amended and restated April 20, 1993, incorporated by reference to
Exhibit 10.16 to Registrant's Report on Form 10-K for the year ended
June 30, 1993; as amended by First Amendment to the Del Webb
Corporation Supplemental Executive Retirement Plan No. 2 effective
July 1, 1995.
10.17 Senior Officer Medical and Dental Reimbursement Plan, as amended and
restated November 16, 1992, incorporated by reference to Exhibit
10.17 to Registrant's Report on Form 10-K for the year ended June
30, 1993.
10.18 1981 Stock Option Plan, as amended January 29, 1987, incorporated by
reference to Exhibit 10.18 of the Registrant's Report on Form 10-K
for the year ended June 30, 1990; and the Third Amendment to the Del
Webb Corporation 1981 Stock Option Plan dated June 30, 1993,
incorporated by reference to Exhibit 10.18 to Registrant's Report on
Form 10-K for the year ended June 30, 1993.
10.19 1986 Stock Option and SAR Plan of the Del Webb Corporation, as
amended January 27, 1987, incorporated by reference to Exhibit 10.19
of the Registrant's Report on Form 10-K for the year ended June 30,
1990; and the Second Amendment to the 1986 Stock Option and SAR Plan
dated June 30, 1993, incorporated by reference to Exhibit 10.19 to
Registrant's Report on Form 10-K for the year ended June 30, 1993.
10.20 1986 Restricted Stock Plan of the Del Webb Corporation, incorporated
by reference to Exhibit 10.20 of the Registrant's Report on Form
10-K for the year ended June 30, 1990; as amended by the First
Amendment to the 1986 Restricted Stock Plan dated June 30, 1993,
incorporated by reference to Exhibit 10.20 to Registrant's Report on
Form 10-K for the year ended June 30, 1993.
10.21 1989 Restricted Stock Plan of the Del Webb Corporation, incorporated
by reference to Exhibit 10.21 of the Registrant's Report on Form
10-K for the year ended June 30, 1990; as amended by the First
Amendment to the 1989 Restricted Stock Plan dated June 30, 1993,
incorporated by reference to Exhibit 10.21 to Registrant's Report on
Form 10-K for the year ended June 30, 1993.
10.22 Del Webb Corporation Retirement Savings Plan Amended and Restated
effective January 1, 1995.
10.23 Del E. Webb Corporation Umbrella Trust dated June 11, 1987, as
amended by Amendment Number One to the Del Webb Corporation Umbrella
Trust dated February 8,1989, incorporated by reference to Exhibit
10.26 of the Registrant's Report on Form 10-K for the year ended
June 30, 1990, and Amendment Number Two to Del Webb Corporation
Umbrella Trust dated March 14, 1990, incorporated by reference to
Exhibit 10.23 to Registrant's Report on Form 10-K for the year ended
June 30, 1992.
10.24 Sample Directors and Officers Indemnification Agreement between
Registrant and its directors and officers dated February 1, 1995
incorporated by reference to the Registrant's Report on Form 10-Q
for the quarter ended March 31, 1995.
10.25 Del Webb Corporation 1995 Executive Long-Term Incentive Plan adopted
July 13, 1995, subject to shareholder approval.
10.26 Del Webb Corporation 1995 Director Stock Plan adopted July 13, 1995,
subject to shareholder approval.
10.27 Del Webb Corporation 1995 Executive Management Incentive Plan
adopted July 13, 1995, subject to shareholder approval.
21.0 List of Active Subsidiaries and Associated Companies of Registrant.
23.0 Consent of Experts.
27.0 Financial Data Schedule.
FIRST AMENDMENT
TO THE DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1
The Del Webb Corporation Supplemental Executive Retirement Plan No. 1
(the "Plan"), which was originally effective as of January 1, 1986, and was
restated effective as of April 20, 1993, is hereby further amended as follows,
effective as of July 1, 1995:
1. Section 2.1(a) of the Plan is amended by the addition of the
following sentence to the end thereof:
Any Participation Agreement in effect prior to the adoption of this
amended and restated Plan shall continue in full force and effect
until subsequently modified or replaced.
2. Section 4.2(b) of the Plan is amended in its entirety to read as
follows:
(b) High Average Compensation. "High Average Compensation"
means the sum of the Participant's annual total of salary and
incentive compensation, before reduction for deferred
compensation and 401(k) contributions, in the five (5) calendar
years out of the seven (7) consecutive calendar years of
employment with the Employer in which such total is the highest
divided by five (5). Where the actual (not annualized)
compensation paid to a Participant during a partial calendar year
is greater than the compensation paid to the Participant during a
completed calendar year, such partial year may be utilized for
purposes of this provision. Notwithstanding the above, incentive
compensation payments made in July, 1991, for the period January
1, 1991, to June 30, 1991, shall not be included in the
computations of High Average Compensation.
3. Section 4.5(d) of the Plan is amended in its entirety to read as
follows:
(d) Accelerated Distribution. Notwithstanding any other
provision of the Plan, at any time after a Change in Control or
any time following termination of employment, a Participant shall
be entitled to receive, upon written request to the Committee, a
lump sum distribution of all or a portion of the Actuarial
Equivalent of the Participant's unpaid benefits under this Plan
on the date on which the Committee receives the written request.
Each accelerated distribution shall be subject to a penalty equal
to ten percent (10%) of the amount that would otherwise be
distributed and that amount shall be forfeited by the
Participant. The amount payable under this section shall be paid
in a lump sum within sixty-five (65) days following the receipt
of the notice by the Committee from the Participant. In the event
a Participant requests and obtains an accelerated distribution
under this Section 4.5(d) and remains employed by the Employer,
participation will cease and there will be no future benefit
accruals under this plan.
In the event of a Participant's death and subsequent benefit
payments to the designated beneficiary, such beneficiary may
request a distribution under this Section 4.5(d).
4. Article VIII is amended by adding the following new Section 8.3
to the end thereof:
8.3 Modifications for Particular Participants. In the
exercise of its discretion, the Board may modify or supplement
the provisions of this Plan as it applies to a particular
Participant. No modification or supplement will be effective,
however, unless it is reflected in the Participant's
Participation Agreement, or provided for in a resolution duly
adopted by the Board, or reflected in any other written document
which is executed by an officer of the Company who has been
specifically authorized to execute said written document pursuant
to a resolution duly adopted by the Board.
5. Except as otherwise provided above, the provisions of the Plan,
as amended and restated effective as of April 20, 1993, shall continue in full
force and effect.
IN WITNESS WHEREOF, Del Webb Corporation has caused this First
Amendment to be executed by its duly authorized representative on this 13th day
of July, 1995.
DEL WEBB CORPORATION
By: Robertson C. Jones
---------------------------------
Its: Vice President
---------------------------------
$300,000,000 REVOLVING CREDIT FACILITY
AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
among
DEL WEBB CORPORATION,
THE BANKS NAMED HEREIN,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Agent,
and
BANK ONE, ARIZONA, NA, as Co-Agent
Dated as of June 27, 1995
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 DEFINITIONS AND ACCOUNTING TERMS............................... 1
1.1 Defined Terms.................................................. 1
1.2 Use of Defined Terms........................................... 22
1.3 Accounting Terms............................................... 23
1.4 Rounding....................................................... 23
1.5 Exhibits and Schedules......................................... 23
1.6 References to "Borrower and its Subsidiaries".................. 23
1.7 Miscellaneous Terms............................................ 23
Article 2 LOANS.......................................................... 24
2.1 Loans-General.................................................. 24
2.2 Reference Rate Loans........................................... 25
2.3 Eurodollar Rate Loans.......................................... 25
2.4 Voluntary Reduction of Commitments............................. 26
2.5 Automatic Reduction of Commitments............................. 26
2.6 Optional Termination of Commitments............................ 26
2.7 Automatic Termination of Commitments........................... 26
2.8 Agent's Right to Assume Funds Available for Advances........... 26
2.9 Adjusting Purchase Payments.................................... 27
2.10 Substitute Credit Facility..................................... 27
2.11 Senior Debt.................................................... 27
2.12 Letters of Credit.............................................. 27
Article 3 PAYMENTS AND FEES.............................................. 32
3.1 Principal and Interest......................................... 32
3.2 Arrangement, Agency and Co-Agency Fees......................... 33
3.3 Underwriting Fee............................................... 33
3.4 Facility and Commitment Fees................................... 33
3.5 Increased Commitment Costs..................................... 34
3.6 Eurodollar Costs and Related Matters........................... 34
3.7 Late Payments.................................................. 37
3.8 Computation of Interest and Fees............................... 37
3.9 Non-Banking Days............................................... 38
3.10 Manner and Treatment of Payments............................... 38
3.11 Funding Sources................................................ 39
3.12 Failure to Charge Not Subsequent Waiver........................ 39
3.13 Agent's Right to Assume Payments Will be Made by Borrower...... 39
3.14 Fee Determination Detail....................................... 39
3.15 Survivability.................................................. 39
3.16 Accruals Under Original Loan Documents......................... 39
Article 4 REPRESENTATIONS AND WARRANTIES................................. 41
4.1 Existence and Qualification; Power; Compliance With Laws....... 41
4.2 Authority; Compliance With Other Agreements and Instruments
and Government Regulations..................................... 41
4.3 No Governmental Approvals Required............................. 42
4.4 Subsidiaries................................................... 42
4.5 Financial Statements........................................... 42
4.6 No Other Liabilities; No Material Adverse Changes.............. 43
4.7 Title to Property.............................................. 43
4.8 Intangible Assets.............................................. 43
4.9 Public Utility Holding Company Act............................. 43
4.10 Litigation..................................................... 43
4.11 Binding Obligations............................................ 43
4.12 No Default..................................................... 44
4.13 ERISA.......................................................... 44
4.14 Regulations G, T, U and X; Investment Company Act.............. 44
4.15 Disclosure..................................................... 44
4.16 Tax Liability.................................................. 44
4.17 Strategic Plan................................................. 45
4.18 Hazardous Materials............................................ 45
Article 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND
REPORTING REQUIREMENTS)........................................ 46
5.1 Payment of Taxes and Other Potential Liens..................... 46
5.2 Preservation of Existence...................................... 46
5.3 Maintenance of Properties...................................... 46
5.4 Maintenance of Insurance....................................... 46
5.5 Compliance With Laws........................................... 47
5.6 Inspection Rights.............................................. 47
5.7 Keeping of Records and Books of Account........................ 47
5.8 Compliance With Agreements..................................... 47
5.9 Use of Proceeds................................................ 47
5.10 New Guarantor Subsidiaries; Release of Certain Guaranties...... 47
5.11 Hazardous Materials Laws....................................... 47
5.12 Termination of GFB L/C......................................... 48
Article 6 NEGATIVE COVENANTS............................................. 49
6.1 Prepayment of Indebtedness..................................... 49
6.2 Payment of Subordinated Obligations............................ 49
6.3 Mergers and Sale of Assets..................................... 49
6.4 Hostile Tender Offers.......................................... 50
6.5 Distributions.................................................. 50
6.6 ERISA.......................................................... 50
6.7 Change in Nature of Business................................... 51
6.8 Liens.......................................................... 51
6.9 Indebtedness................................................... 52
6.10 Transactions with Affiliates................................... 53
6.11 Tangible Net Worth............................................. 53
6.12 Consolidated Fixed Charge Coverage............................. 53
6.13 Debt to Net Worth.............................................. 53
6.14 Adjusted Senior Debt to Net Worth.............................. 54
6.15 Liquidity...................................................... 54
6.16 Investments.................................................... 54
6.17 Unentitled Land................................................ 55
6.18 Unsold Homes in Production..................................... 55
6.19 Exempt Subsidiaries............................................ 56
6.20 Coventry Assets................................................ 56
Article 7 INFORMATION AND REPORTING REQUIREMENTS......................... 57
7.1 Financial and Business Information............................. 57
7.2 Compliance Certificates........................................ 59
Article 8 CONDITIONS..................................................... 60
8.1 Initial Advances, Etc.......................................... 60
8.2 Any Increasing Advance......................................... 61
8.3 Any Advance.................................................... 62
8.4 Return of Original Notes....................................... 62
Article 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT........... 63
9.1 Events of Default.............................................. 63
9.2 Remedies Upon Event of Default................................. 65
Article 10 THE AGENT...................................................... 67
10.1 Appointment and Authorization.................................. 67
10.2 Agent and Affiliates........................................... 67
10.3 Proportionate Interest in any Collateral....................... 67
10.4 Banks' Credit Decisions........................................ 67
10.5 Action by Agent................................................ 68
10.6 Liability of Agent............................................. 68
10.7 Indemnification................................................ 69
10.8 Successor Agent................................................ 70
10.9 No Obligations of Borrower..................................... 70
Article 11 MISCELLANEOUS.................................................. 71
11.1 Cumulative Remedies; No Waiver................................. 71
11.2 Amendments; Consents........................................... 71
11.3 Costs, Expenses and Taxes...................................... 71
11.4 Nature of Banks' Obligations................................... 72
11.5 Survival of Representations and Warranties..................... 73
11.6 Notices........................................................ 73
11.7 Execution of Loan Documents.................................... 73
11.8 Binding Effect; Assignment..................................... 73
11.9 Sharing of Setoffs............................................. 75
11.10 Indemnity by Borrower.......................................... 75
11.11 Nonliability of the Banks...................................... 76
11.12 No Third Parties Benefited..................................... 77
11.13 Further Assurances............................................. 77
11.14 Integration.................................................... 77
11.15 Governing Law.................................................. 78
11.16 Severability of Provisions..................................... 78
11.17 Headings....................................................... 78
11.18 Time of the Essence............................................ 78
11.19 Foreign Banks.................................................. 78
11.20 Hazardous Material Indemnity................................... 78
11.21 Reference to Arbitration....................................... 79
11.22 Confidentiality................................................ 80
11.23 Co-Agent....................................................... 80
<PAGE>
AMENDED AND RESTATED REVOLVING LOAN AGREEMENT
Dated as of June 27, 1995
This AMENDED AND RESTATED REVOLVING LOAN AGREEMENT ("Agreement")
is entered into by and among Del Webb Corporation, a Delaware corporation
("Borrower"), each bank whose name is set forth on the signature pages of this
Agreement and each lender which may hereafter become a party to this Agreement
pursuant to Section 11.8 (collectively, the "Banks" and individually, a "Bank"),
Bank of America National Trust and Savings Association, a national banking
association, as Agent (the "Agent") and Bank One, Arizona, NA, as Co-Agent (the
"Co-Agent").
This Agreement is intended by the parties hereto as an amendment
and restatement of the Original Loan Agreement as of the effective date of this
Agreement. Amounts outstanding and committed under the Original Loan Agreement
and evidenced by the Original Notes shall, upon the effectiveness of this
Agreement, be deemed to be outstanding and committed hereunder and evidenced by
the Notes, subject, however, to all terms and conditions hereunder and under the
other Loan Documents, including without limitation the allocation of the
Commitments among the Banks as provided herein.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
Article 1
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Adjusted Commitments" means the Commitments as reduced by the
Commitment Reduction Amount on the Commitment Reduction Date.
"Adjusted Senior Debt" means, as of any date of determination,
Senior Debt as of that date minus (to the extent included in Senior Debt,
and without duplication) Non-Recourse Debt as of that date.
"Adjusted Total Indebtedness" means, as of any date of
determination, Total Indebtedness as of that date minus the aggregate
outstanding principal balance (but not in excess of $20,000,000) of
Non-Recourse Debt for wihich a corresponding Lien is permitted pursuant
to Section 6.8(d).
"Adjusting Purchase Payment(s)" has the meaning given that term in
Section 2.9.
"Advance" means any advance made or to be made by any Bank to
Borrower as provided in Article 2, and includes each Reference Rate
Advance and Eurodollar Rate Advance.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and
the correlative terms, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise); provided that, in any event, any Person that owns, directly
or indirectly, 10% or more of the securities having ordinary voting power
for the election of directors or other governing body of a corporation
that has more than 100 record holders of such securities, or 10% or more
of the partnership or other ownership interests of any other Person that
has more than 100 record holders of such interests, will be deemed to
control such corporation or other Person.
"Agent" means Bank of America National Trust and Savings
Association, when acting in its capacity as the Agent under any of the
Loan Documents, or any successor Agent.
"Agent's Office" means the Agent's address as set forth on the
signature pages of this Agreement, or such other address as the Agent
hereafter may designate by written notice to Borrower and the Banks.
"Aggregate Effective Amount" means, as of any date of
determination, the sum of (a) the aggregate drawable face amount of all
Letters of Credit then outstanding plus (b) the aggregate amount paid by
the Issuing Bank under Letters of Credit that has not yet been reimbursed
to the Issuing Bank by Borrower pursuant to Section 2.12(d) or by way of
Advances made pursuant to Section 2.12(e).
"Agreement" means this Amended and Restated Revolving Loan
Agreement, either as originally executed or as it may from time to time
be supplemented, modified, amended, restated or extended.
"Bank of America" means Bank of America National Trust and Savings
Association.
"Banking Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday, other than a day on which banks are authorized or required to be
closed in Arizona, California, Massachusetts, New York, Texas or North
Carolina.
"Borrower" means Del Webb Corporation, a Delaware corporation, and
its successors and permitted assigns.
"Cancelled Debt Facilities" means the debt instruments and/or
credit facilities identified on Schedule 1.1.
"Capital Expenditure" means any expenditure that is considered a
capital expenditure under Generally Accepted Accounting Principles,
including any amount which is required to be treated as an asset subject
to a Capital Lease Obligation.
"Capital Lease Obligations" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance with
Generally Accepted Accounting Principles, is classified as a capital
lease.
"Cash" means, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated as
cash in accordance with Generally Accepted Accounting Principles,
consistently applied.
"Cash Equivalents" means, when used in connection with any Person,
that Person's Investments in:
(a) Government Securities due within one year after the date of
the making of the Investment;
(b) readily marketable direct obligations of any State of the
United States of America given on the date of such Investment a credit
rating of at least Aa by Moody's Investors Service, Inc. or AA by
Standard & Poor's Ratings Group, in each case due within one year from
the making of the Investment;
(c) certificates of deposit issued by, bank deposits in,
Eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any bank
incorporated under the Laws of the United States of America or any State
thereof and having on the date of such Investment combined capital,
surplus and undivided profits of at least $250,000,000, or total assets
of at least $5,000,000,000, in each case due within one year after the
date of the making of the Investment;
(d) certificates of deposit issued by, bank deposits in,
Eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any branch or
office located in the United States of America of a bank incorporated
under the Laws of any jurisdiction outside the United States of America
having on the date of such Investment combined capital, surplus and
undivided profits of at least $500,000,000, or total assets of at least
$15,000,000,000 in each case due within one year after the date of the
making of the Investment;
(e) repurchase agreements covering Government Securities executed
by a broker or dealer registered under Section 15(b) of the Securities
Exchange Act of 1934, as amended, having on the date of the Investment
capital of at least $100,000,000, due within 30 days after the date of
the making of the Investment; provided that the maker of the Investment
receives written confirmation of the transfer to it of record ownership
of the Government Securities on the books of a registered broker or
dealer, as soon as practicable after the making of the Investment;
(f) readily marketable commercial paper of corporations doing
business in and incorporated under the Laws of the United States of
America or any State thereof or of any corporation that is the holding
company for a bank described in clauses (c) or (d) above given on the
date of such Investment a credit rating of at least P-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Ratings Group, in
each case due within 90 days after the date of the making of the
Investment;
(g) "money market preferred stock" issued by a corporation
incorporated under the Laws of the United States of America or any State
thereof given on the date of such Investment a credit rating of at least
Aa by Moody's Investors Service, Inc. and AA by Standard & Poor's Ratings
Group, in each case having an investment period not exceeding 50 days;
provided that (i) the amount of all such Investments issued by the same
issuer does not exceed $5,000,000 and (ii) the aggregate amount of all
such Investments does not exceed $15,000,000; and
(h) a readily redeemable "money market mutual fund" sponsored by a
bank described in clauses (c) or (d) hereof, or a registered broker or
dealer described in clause (e) hereof, that has and maintains an
investment policy limiting its investments primarily to instruments of
the types described in clauses (a) through (g) hereof and having on the
date of such Investment total assets of at least $1,000,000,000.
"Cash Land Acquisition Costs" means, for any fiscal period, cash
paid by Borrower and its Subsidiaries for land acquisitions during such
fiscal period, calculated in a manner consistent with that used in the
calculation of "Land acquisitions" as shown under the heading
"Reconciliation of net earnings to net cash used for operating
activities" in the financial statements delivered to Banks for the Fiscal
Quarter ending September 30, 1993.
"Certificate of a Responsible Official" means a certificate signed
by a Responsible Official of the Person providing the certificate.
"Change in Control" means any transaction or series of related
transactions (a) in which any Unrelated Person or two or more Unrelated
Persons acting in concert acquire beneficial ownership (within the
meaning of Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of 50% or more of the Common Stock, (b)
in which any such Unrelated Person or Unrelated Persons acting in concert
acquire the concurrent beneficial ownership of 20% or more of the Common
Stock subsequent to the Closing Date if, while they continue to hold such
20% ownership, (i) at the first election for the board of directors of
Borrower subsequent to such acquisition, individuals who prior to such
election were directors of Borrower cease for any reason (other than
death or incapacity) to constitute 50% or more of the board of directors
of Borrower or (ii) if the terms of all directors of Borrower do not
expire at the date of such first election, then at the second election
for the board of directors of Borrower subsequent to such acquisition,
individuals who prior to such first election were directors of Borrower
cease for any reason (other than death or incapacity) to constitute 50%
or more of the board of directors of Borrower or (c) constituting a
"change in control" or other similar occurrence under documentation
evidencing or governing any Indebtedness of Borrower of $25,000,000 or
more which results in an obligation of Borrower to prepay, purchase,
offer to purchase, redeem or defease such Indebtedness. For purposes of
the foregoing, the term "Unrelated Person" means any Person other than
(a) a Subsidiary of Borrower or (b) an employee stock ownership plan or
other employee benefit plan covering the employees of Borrower and its
Subsidiaries.
"Closing Date" means the time and Banking Day on which the
conditions set forth in Section 8.1 are satisfied or waived. The Agent
shall notify Borrower and the Banks of the date that is the Closing Date.
"Co-Agent" means Bank One, Arizona, NA, when acting in its
capacity as the Co-Agent under any of the Loan Documents, or any
successor Co-Agent.
"Code" means the Internal Revenue Code of 1986, as amended or
replaced and as in effect from time to time.
"Commitments" means, collectively, the Line A Commitment and the
Line B Commitment. The respective Pro Rata Shares of the Banks with
respect to the Commitments are set forth in Schedule 1.2.
"Commitment Assignment and Acceptance" means a commitment
assignment and acceptance substantially in the form of Exhibit A.
"Commitment Reduction Amount" means the amount, determined as of
the Commitment Reduction Date, equal to the Commitments on that day minus
the sum of (a) the aggregate principal amount outstanding under the Notes
on that day plus (b) the maximum additional principal amount, if any,
that Borrower would be eligible to borrow hereunder on that day in
accordance with the provisions of Section 8.2.
"Commitment Reduction Date" means June 30, 1997.
"Common Stock" means the common stock of Borrower or its successor
by merger.
"Compliance Certificate" means a certificate in the form of
Exhibit B (or such modified form as the Agent may reasonably request),
properly completed and signed by a Senior Officer of Borrower.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to
any date of determination, the least of such value (a) as calculated in
the manner specified for such term in the Indenture for the Public Senior
Debt, (b) as calculated in the manner specified for such term in the
Indenture for the Public 9-3/4% Senior Subordinated Debt and (c) as
calculated in the manner specified for such term in the Indenture for the
Public 9.00% Senior Subordinated Debt. In each case, such calculation
shall be made in accordance with the terms of such indenture as were
effective on the date of the certification specified in Section 8.1(a)(6)
of the Original Loan Agreement. Should the manner of any such calculation
become subject to dispute between Borrower and the Banks due to questions
of interpretation of such indenture and the incorporation of such terms
herein, the reasonable interpretation of the manner of calculation made
by the Banks shall be binding on the parties with respect to Sections
8.2(c) and 8.2(d) unless and until the Agent shall have received written
advice from the then current independent auditors of Borrower, in form
reasonably acceptable to the Agent, stating their opinion as to the
calculation of such amount.
"Consolidated Total Assets" means, as of any date of
determination, the amount of the consolidated total assets that should be
reflected as such on a consolidated balance sheet of Borrower and its
Subsidiaries on that date, prepared in accordance with Generally Accepted
Accounting Principles, plus any amount by which such assets may have
theretofore been written down to reflect a perceived decrease in market
value other than customary depreciation or amortization.
"Contractual Obligation" means, as to any Person, any provision of
any outstanding security issued by that Person or of any material
agreement, instrument or undertaking to which that Person is a party or
by which it or any of its Property is bound.
"Coventry Assets" means, as of any date of determination, the
amount of the total assets that should be reflected on a consolidated
balance sheet prepared solely for the Coventry Subsidiaries on that date,
prepared in accordance with Generally Accepted Accounting Principles,
plus any amount by which such assets may have theretofore been written
down to reflect a perceived decrease in market value other than customary
depreciation or amortization.
"Coventry Homes Projects" means, as of any date of determination,
all land purchase and home building projects of the Coventry Subsidiaries
on that date.
"Coventry Land Assets" means, as of any date of determination, the
amount of the Land Assets that should be reflected on a consolidated
balance sheet prepared solely for the Coventry Subsidiaries on that date,
prepared in accordance with Generally Accepted Accounting Principles,
plus any amount by which such assets may have theretofore been written
down to reflect a perceived decrease in market value other than customary
depreciation or amortization.
"Coventry Subsidiaries" means Del Webb's Coventry Homes, Inc., Del
Webb Homes, Inc. and Coventry of California, Inc., and their Subsidiaries
from time to time which, on the date of this Agreement, are Del Webb's
Coventry Homes Construction of Tucson Co., Del Webb's Coventry Homes of
Tucson, Inc., Del Webb's Coventry Homes Construction Co., Trovas Company
and Trovas Construction Co. Each Subsidiary of any Coventry Subsidiary
from time to time shall be a Coventry Subsidiary.
"Current Operating Projects" means collectively (a) Del Webb
Construction, Inc.'s, Del E. Webb Development Co., L.P.'s and Del Webb
Communities, Inc.'s approximately 6,575 acre residential community
development located near Phoenix, Arizona and commonly known as Sun City
West, (b) Del Webb Communities, Inc.'s approximately 1,000 acre
residential community development located near Tucson, Arizona and
commonly known as Sun City Tucson, (c) Del Webb Communities, Inc.'s
approximately 1,892 acre residential community development located near
Las Vegas, Nevada and commonly known as Sun City Las Vegas, (d) Del Webb
California Corp.'s approximately 1,574 acre residential community
development located near Palm Springs, California and commonly known as
Sun City Palm Springs, (e) the Coventry Homes Projects, (f) Terravita
Corp.'s and Terravita Homes Construction Co.'s approximately 803 acre
master planned residential land development located in Scottsdale,
Arizona, (g) Del E. Webb Foothill Corp.'s approximately 4,140 acre land
development project located in Phoenix, Arizona, (h) Del Webb California
Corp.'s approximately 1,200 acre residential community development
located in Roseville, California and commonly known as Sun City
Roseville, (i) Del Webb Home Construction Inc.'s approximately 4,000 acre
(including interests in acres) residential community development located
in Surprise, Arizona and commonly known as Sun City Grand, (j) Del E.
Webb Development Co., L.P.'s approximately 5,300 acre residential
community development located near Austin, Texas and commonly known as
Sun City Georgetown, (k) Del Webb Communities, Inc.'s approximately 560
acre residential community development located in Henderson, Nevada and
commonly known as Sun City MacDonald Ranch and (l) Del Webb Communities,
Inc.'s approximately 5,500 acre residential community development located
ead Island, South Carolina and commonly known as Sun City Hilton Head.
"Current Operating Projects" shall mean such projects as they may be
altered or expanded from time to time provided that any such expansion is
on substantially adjacent real property and is operated as part of a
single project.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws
from time to time in effect affecting the rights of creditors generally.
"Default" means any event that, with the giving of any applicable
notice or passage of time specified in Section 9.1, or both, would be an
Event of Default.
"Default Rate" means the interest rate prescribed in Section 3.7.
"Designated Deposit Account" means a deposit account to be
maintained by Borrower with Bank of America, as from time to time
designated by Borrower by written notification to Bank of America.
"Designated Eurodollar Market" means, with respect to any
Eurodollar Rate Loan, (a) the London Eurodollar Market, or (b) if prime
banks in the London Eurodollar Market are at the relevant time not
accepting deposits of Dollars, the Cayman Islands Eurodollar Market or
(c) if prime banks in the London and Cayman Islands Eurodollar Markets
are at the relevant time not accepting deposits of Dollars, such other
Eurodollar Market as may from time to time be selected by the Agent.
"Disposition" means the sale, transfer or other disposition
("Transfer") of any asset of Borrower or any of its Subsidiaries other
than (a) a Transfer constituting an Investment or a Distribution, (b) a
Transfer of inventory or other assets in the ordinary course of business
of Borrower or a Subsidiary on terms Borrower reasonably believes are
fair market terms, (c) a Transfer of assets constituting all or part of
the Spring Creek Project or Glen Harbor Project, (d) in the case of a
residential community development being developed by Borrower (i) a
Transfer of, or the payment for, common amenities and common areas made
to or for the benefit of the community association of such development or
(ii) a Transfer of, or the payment for, roads, sewers, utilities, and
other on- and off-site improvements, infrastructure items and/or other
assets associated with such development made to or for the benefit of a
governmental entity or utility in connection with such development, in
either such case provided that such disposition is reasonably necessary
or appropriate for the development or betterment of such development and
whether or not Borrower may at some future date receive total or partial
reimbursement (with or without interest) of the cost (or value) of such
Transfer or payment, or (e) a Transfer of the capital stock of a
Subsidiary that holds solely the assets of the Spring Creek Project or
the Glen Harbor Project.
"Disqualified Stock" means any capital stock, warrants, options or
other rights to acquire capital stock (but excluding any debt security
which is convertible, or exchangeable, for capital stock), which, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is or may be redeemable at the option of the
holder thereof, in whole or in part.
"Distribution" means, with respect to any shares of capital stock
or any warrant or option to purchase an equity security or other equity
security issued by a Person, (i) the retirement, redemption, purchase, or
other acquisition for Cash or for Property (except capital stock that is
not Disqualified Stock) by such Person of any such security, (ii) the
declaration or (without duplication) payment by such Person of any
dividend in Cash or in Property (except capital stock that is not
Disqualified Stock) on or with respect to any such security, (iii) any
Investment by such Person in the holder of 5% or more of any such
security if a purpose of such Investment is to avoid characterization of
the transaction as a Distribution and (iv) any other payment in Cash or
Property (except capital stock that is not Disqualified Stock) by such
Person constituting a distribution under applicable Laws with respect to
such security.
"Dollars" or "$" means United States dollars.
"EBITDA" means, for any fiscal period, the sum of (a) Net Income
for that period, without taking into account any extraordinary loss
reflected in such Net Income, minus (b) any extraordinary gain reflected
in such Net Income, plus (c) depreciation, amortization and all other
non-cash expenses of Borrower and its Subsidiaries for that period, plus
(d) Interest Expense for that period, plus (e) the aggregate amount of
federal and state taxes on or measured by income of Borrower and its
Subsidiaries for that period (whether or not payable during that period),
in each case as determined in accordance with Generally Accepted
Accounting Principles and, in the case of items (c), (d) and (e), only to
the extent deducted in the determination of Net Income for that period.
"Eligible Assignee" means any commercial bank having a combined
capital and surplus of $100,000,000 or more that is (a) organized under
the Laws of the United States of America or any State thereof or (b)
organized under the Laws of any other country which is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of such a country, provided that (i) such bank is acting
through a branch or agency located in the United States of America and
(ii) is otherwise exempt from withholding of tax on interest and delivers
Form 1001 or Form 4224 pursuant to Section 11.19 at the time of any
assignment pursuant to Section 11.8.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and any regulations issued pursuant thereto, as amended or replaced and
as in effect from time to time.
"Eurodollar Banking Day" means any Banking Day on which dealings
in Dollar deposits are conducted by and among banks in the Designated
Eurodollar Market.
"Eurodollar Base Rate" means, with respect to any Eurodollar Rate
Loan, the average of the interest rates per annum (rounded upward to the
nearest 1/100 of 1%) at which deposits in Dollars are offered by the
Eurodollar Reference Bank to prime banks in the Designated Eurodollar
Market at or about 11:00 a.m., local time in the locale of the Designated
Eurodollar Market, two (2) Eurodollar Banking Days before the first day
of the applicable Eurodollar Period in an aggregate amount approximately
equal to the amount of the Advance made by the Eurodollar Reference Bank
with respect to such Eurodollar Rate Loan and for a period of time
comparable to the number of days in the applicable Eurodollar Period. The
determination of the Eurodollar Base Rate by the Agent shall be
conclusive in the absence of manifest error.
"Eurodollar Lending Office" means, as to each Bank, its office or
branch so designated by written notice to Borrower and the Agent as its
Eurodollar Lending Office. If no Eurodollar Lending Office is designated
by a Bank, its Eurodollar Lending Office shall be its office at its
address for purposes of notices hereunder.
"Eurodollar Market" means a regular established market located
outside the United States of America by and among banks for the
solicitation, offer and acceptance of Dollar deposits in such banks.
"Eurodollar Obligations" means eurocurrency liabilities, as
defined in Regulation D.
"Eurodollar Period" means, as to each Eurodollar Rate Loan, the
period commencing on the date specified by Borrower pursuant to Section
2.1(b) and ending 1, 2, 3 or 6 months (or, with the written consent of
all of the Banks, any other period) thereafter, as specified by Borrower
in the applicable Request for Loan; provided that:
(a) The first day of any Eurodollar Period shall be a
Eurodollar Banking Day;
(b) Any Eurodollar Period that would otherwise end on a day
that is not a Eurodollar Banking Day shall be extended to the next
succeeding Eurodollar Banking Day unless such Eurodollar Banking
Day falls in another calendar month, in which case such Eurodollar
Period shall end on the next preceding Eurodollar Banking Day;
(c) No Eurodollar Period with respect to a Loan requested
under the Line A Commitment or Line B Commitment, as applicable,
shall extend beyond the next date on which such Commitment is to
be reduced in accordance with Section 2.5 unless the principal
amount of the corresponding Eurodollar Rate Loan plus the
principal amount of all then outstanding Eurodollar Rate Loans
under such Commitment having a Eurodollar Period ending after said
reduction date is less than the amount to which such Commitment is
expected to be reduced on said reduction date; and
(d) No Eurodollar Period shall extend beyond the Maturity
Date.
"Eurodollar Rate" means, with respect to any Eurodollar Rate Loan,
an interest rate per annum (rounded upward to the nearest 1/100 of one
percent) determined pursuant to the following formula:
Eurodollar Base Rate
Eurodollar --------------------
Rate = 1.00 - Eurodollar Reserve
Percentage
"Eurodollar Rate Advance" means an Advance made hereunder and
specified to be a Eurodollar Rate Advance in accordance with Article 2.
"Eurodollar Rate Loan" means a Loan made hereunder and specified
to be a Eurodollar Rate Loan in accordance with Article 2.
"Eurodollar Reference Bank" means Bank of America.
"Eurodollar Reserve Percentage" means, with respect to any
Eurodollar Rate Loan, the maximum reserve percentage (expressed as a
decimal, rounded upward to the nearest 1/100th of 1%) in effect on the
date the Eurodollar Base Rate for that Eurodollar Rate Loan is determined
(whether or not applicable to any Bank) under regulations issued from
time to time by the Federal Reserve Board for determining the maximum
reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") having a term
comparable to the Interest Period for such Eurodollar Rate Loan. The
determination by the Agent of any applicable Eurodollar Reserve
Percentage shall be conclusive in the absence of manifest error.
"Event of Default" shall have the meaning provided in Section 9.1.
"Exempt Subsidiary" means a Subsidiary of Borrower that is created
after the Commitment Reduction Date (or that holds no material assets and
engages in no business activities prior to the Commitment Reduction Date)
and that has been (prior to the date such classification becomes
relevant) designated as such in writing by Borrower to the Banks provided
that no Subsidiary holding assets of any Current Operating Project may
become or remain an Exempt Subsidiary and provided further that no
Subsidiary holding real property that is (a) located within five (5)
miles of a Current Operating Project and (b) part of a master planned
residential community development, may become or remain an Exempt
Subsidiary.
"Federal Funds Rate" means, as of any date of determination, the
rate set forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such date opposite the
caption "Federal Funds (Effective)". If for any relevant date such rate
is not yet published in H.15(519), the rate for such date will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotations") for
such date under the caption "Federal Funds Effective Rate". If on any
relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such
date will be the arithmetic mean of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time)
on that date by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent. For purposes of this
Agreement, any change in the Federal Funds Rate shall be effective as of
the opening of business on the effective date of such change.
"Fiscal Quarter" means the fiscal quarter of Borrower consisting
of a three month fiscal period ending on each September 30, December 31,
March 31 and June 30.
"Fiscal Year" means the fiscal year of Borrower consisting of a
twelve month fiscal period ending on each June 30.
"Generally Accepted Accounting Principles" means, as of any date
of determination, accounting principles (a) set forth as generally
accepted in then currently effective Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants, (b) set forth as generally accepted in then currently
effective Statements of the Financial Accounting Standards Board or (c)
that are then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States of
America. The term "consistently applied," as used in connection
therewith, means that the accounting principles applied are consistent in
all material respects to those applied at prior dates or for prior
periods.
"Glen Harbor Project" means the approximately 416 acre industrial
business park located in Glendale, Arizona held in joint venture by Del
E. Webb Cactus Development Corp. and Del E. Webb Glen Harbor Development
Corporation.
"Government Securities" means readily marketable (a) direct full
faith and credit obligations of the United States of America or
obligations guaranteed by the full faith and credit of the United States
of America and (b) obligations of an agency or instrumentality of, or
corporation owned, controlled or sponsored by, the United States of
America that are generally considered in the securities industry to be
implicit obligations of the United States of America.
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body, or
(c) any court or administrative tribunal.
"Guarantor Subsidiary" means, as of any date of determination,
each Subsidiary of Borrower (a) that had on the last day of the Fiscal
Quarter then most recently ended total assets (determined in accordance
with Generally Accepted Accounting Principles) of $2,000,000 or more; or
(b) with respect to whose obligations any guaranty has been given by
Borrower or any other Subsidiary.
"Hazardous Materials" means substances defined as hazardous
substances pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., or as
hazardous, toxic or pollutant pursuant to the Hazardous Materials
Transportation Act, 49 U.S.C. ss. 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., the Hazardous
Waste Control Law, California Health & Safety Code ss. 25100, et seq., or
in any other applicable Hazardous Materials Law, in each case as such
Laws are amended from time to time.
"Hazardous Materials Laws" means all federal, state or local laws,
ordinances, rules or regulations governing the disposal of Hazardous
Materials applicable to any of the Real Property.
"Indebtedness" means, as to any Person, without duplication, (a)
indebtedness of such Person for borrowed money or for the deferred
purchase price of Property or services (excluding trade and other
accounts payable incurred in the ordinary course of business and in
accordance with Borrower's or the Subsidiary's in question customary
trade terms and further excluding obligations with respect to home-buyer
deposits and obligations for local governmental assessments for local
services based upon real property ownership), including any guaranty for
any such indebtedness, (b) indebtedness of such Person of the nature
described in clause (a) that is non-recourse to the credit of such Person
but is secured by assets of such Person, to the extent of the value of
such assets, (c) Capital Lease Obligations of such Person, (d)
indebtedness of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person but not
contingent reimbursement obligations of such Person associated with
surety bonds issued in the ordinary course of such Person's business and
(e) any direct or contingent obligations of such Person under letters of
credit issued for the account of such Person.
"Intangible Assets" means assets that are considered intangible
assets under Generally Accepted Accounting Principles, including customer
lists, goodwill, computer software, copyrights, trade names, trademarks
and patents.
"Interest Differential" means, with respect to any prepayment of a
Eurodollar Rate Loan on a day other than the last day of the applicable
Interest Period and with respect to any failure to borrow a Eurodollar
Rate Loan on the date or in the amount specified in any Request for Loan,
(a) the per annum interest rate payable pursuant to Section 3.1(c) with
respect to the Eurodollar Rate Loan minus (b) the Eurodollar Rate on, or
as near as practicable to the date of the prepayment or failure to borrow
for a Eurodollar Rate Loan commencing on such date and ending on the last
day of the Interest Period of the Eurodollar Rate Loan so prepaid or
which would have been borrowed on such date.
"Interest Expense" means, with respect to any fiscal period, the
sum of (a) all interest, fees, charges and related expenses paid or
payable by Borrower and its Subsidiaries (without duplication) for that
fiscal period to a lender or seller in connection with borrowed money or
the deferred purchase price of assets that are considered "interest
expense" under Generally Accepted Accounting Principles, plus (b) the
portion of rent paid or payable (without duplication) by Borrower and its
Subsidiaries for that fiscal period under Capital Lease Obligations that
should be treated as interest in accordance with Financial Accounting
Standards Board Statement No. 13, in each case determined on a
consolidated basis in accordance with Generally Accepted Accounting
Principles, consistently applied.
"Interest Period" means, with respect to any Eurodollar Rate Loan,
the related Eurodollar Period.
"Investment" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means
of a loan, advance creating a debt, capital contribution, guaranty or
other debt or equity participation or interest in any other Person,
including any partnership and joint venture interests of such Person.
Unless otherwise specified, the amount of any Investment shall be the
amount actually invested (or fair value thereof), without adjustment for
subsequent increases or decreases in the value of such Investment.
Notwithstanding the foregoing, the provision of credit to support a
surety bond issued to secure the performance of real estate development
work in the ordinary course of Borrower's or its Subsidiaries' business,
for the benefit of any Subsidiary of Borrower, shall not be considered an
Investment, although the payment by a Person providing credit on such a
surety bond shall be considered an Investment, nor shall any transaction
which is excluded from the definition of Disposition by virtue of clause
(d) thereof be considered an Investment.
"Issuing Bank" means Bank of America.
"Land Assets" means assets of a nature as have been historically
included by Borrower in the line items "Unamortized improvement and
amenity costs", "Unamortized capitalized interest", "Land held for
housing" and "Land held for future development or sale" in the notes to
its consolidated financial statements, provided that in any measurement
of Land Assets, only 75% of the amount of assets in the category
"Unamortized capitalized interest" shall be considered.
"Laws" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents.
"Letters of Credit" means the standby letters of credit issued by
the Issuing Bank under the Line A Commitment pursuant to Section 2.12,
either as originally issued or as the same may be supplemented, modified,
amended, renewed, extended or supplanted.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, claim, option,
lien or charge of any kind, whether voluntarily incurred or arising by
operation of Law or otherwise, affecting any Property, including any
agreement to grant any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature of a security
interest, and/or the filing of or agreement to give any financing
statement (other than a precautionary financing statement with respect to
a lease that is not in the nature of a security interest) under the
Uniform Commercial Code or comparable Law of any jurisdiction with
respect to any Property.
"Line A Commitment" means, subject to Sections 2.4 and 2.5,
$222,000,000. The respective Pro Rata Shares of the Banks with respect to
the Line A Commitment are set forth in Schedule 1.2.
"Line B Commitment" means, subject to Sections 2.4 and 2.5,
$78,000,000. The respective Pro Rata Shares of the Banks with respect to
the Line B Commitment are set forth in Schedule 1.2.
"Line A Note" means a promissory note made by Borrower to a Bank
evidencing the Advances under that Bank's Pro Rata Share of the Line A
Commitment, substantially in the form of Exhibit C, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted.
"Line B Note" means a promissory note made by Borrower to a Bank
evidencing the Advances under that Bank's Pro Rata Share of the Line B
Commitment, substantially in the form of Exhibit D, either as originally
executed or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted.
"Loan" means the aggregate of the Advances made at any one time by
the Banks pursuant to Article 2.
"Loan Compliance Certificate" means a certification by a Senior
Officer of Borrower or by C. Patrick Dempsey, as Assistant Treasurer of
Borrower, in the form of Exhibit E, or such other form as may reasonably
be required by the Agent from time to time, that is delivered in
connection with a Request for Loan in accordance with Section 8.2(g).
"Loan Documents" means, collectively, this Agreement, the Notes,
the Subsidiary Guaranty, any Request for Loan, any Compliance Certificate
and any other agreements of any type or nature hereafter executed and
delivered by Borrower or any of its Subsidiaries or Affiliates to the
Agent or to any Bank in any way relating to or in furtherance of this
Agreement, in each case either as originally executed or as the same may
from time to time be supplemented, modified, amended, restated, extended
or supplanted.
"Lot and Amenity Development Costs" means, for any fiscal period,
cash paid by Borrower and its Subsidiaries for lot development and
amenity development during such fiscal period, calculated in a manner
consistent with that used in the calculation of "Lot development" and
"Amenity development" as shown under the heading "Reconciliation of net
earnings to net cash used for operating activities" in the financial
statements delivered to Banks for the Fiscal Quarter ending September 30,
1993.
"Majority Banks" means (a) as of any date of determination if a
Commitment is then in effect, Banks having in the aggregate 66-2/3% or
more of the Commitments then in effect and (b) as of any date of
determination if the Commitments have then been terminated, Banks holding
Notes evidencing in the aggregate 66-2/3% or more of the aggregate
Indebtedness then evidenced by the Notes.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G or U.
"Material Adverse Effect" means any set of circumstances or events
which (a) has or could reasonably be expected to have a material adverse
effect upon the validity or enforceability of any material Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise) or business operations of Borrower and
its Subsidiaries, taken as a whole, or (c) materially impairs or could
reasonably be expected to materially impair the ability of Borrower and
its Guarantor Subsidiaries, taken as a whole, to perform the Obligations.
"Maturity Date" means December 31, 1999.
"Monthly Interest Period" means the first calendar day of each
month to the first calendar day of each succeeding month, calculated
from, and including, the first calendar day of each month to, but not
including, first calendar day of each succeeding month.
"Monthly Payment Date" means the fifth Banking Day of each
calendar month.
"Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA.
"Negative Pledge" means a Contractual Obligation that contains a
covenant binding on Borrower or any of its Subsidiaries that prohibits
Liens on any of its or their Property, other than (a) any such covenant
contained in a Contractual Obligation granting a Lien permitted under
Section 6.8 which affects only the Property that is the subject of such
permitted Lien and (b) any such covenant that does not apply to Liens
securing the Obligations.
"Net Change in Housing Inventory" means, for any fiscal period,
the net change in homes in production of Borrower and its Subsidiaries
during such fiscal period, calculated in a manner consistent with that
used in the calculation of "Net change in homes in production" as shown
under the heading "Reconciliation of net earnings to net cash used for
operating activities" in the financial statements delivered to Banks for
the Fiscal Quarter ending September 30, 1993.
"Net Income" means, with respect to any fiscal period, the
consolidated net income of Borrower and its Subsidiaries for that period,
determined in accordance with Generally Accepted Accounting Principles,
consistently applied.
"Non-Recourse Debt" means, as of any date of determination
(without duplication), any Indebtedness of Borrower or any of its
Subsidiaries on that date that is secured by a Lien on Property to the
extent the liability for such Indebtedness, and interest thereon, is
limited to the security of such Property, without the liability of any
Person for any such deficiency.
"Note" means any of the Line A Notes or Line B Notes.
"Obligations" means all present and future obligations of every
kind or nature of Borrower or any Party at any time and from time to time
owed to the Agent or the Banks or any one or more of them, under any one
or more of the Loan Documents, whether due or to become due, matured or
unmatured, liquidated or unliquidated, or contingent or noncontingent,
including obligations of performance as well as obligations of payment,
and including interest that accrues after the commencement of any
proceeding under any Debtor Relief Law by or against Borrower or any
Subsidiary or Affiliate of Borrower.
"Opinions of Counsel" means the favorable written legal opinions
of (a) Robertson C. Jones and (b) Gibson, Dunn & Crutcher, counsel to
Borrower and its Guarantor Subsidiaries, substantially in the form of
Exhibits F-1 and F-2, respectively, together with copies of all factual
certificates and legal opinions upon which such counsel has relied.
"Original Loan Agreement" means that certain Revolving Loan
Agreement, by and among Borrower, certain of the Banks and the Agent,
dated as of March 11, 1994, as amended by (i) that certain First
Amendment to Revolving Loan Agreement, dated as of July 1, 1994, (ii)
that certain Second Amendment to Revolving Loan Agreement, dated as of
August 10, 1994, (iii) that certain Third Amendment to Revolving Loan
Agreement, dated as of November 29, 1994 and (iv) that certain Fourth
Amendment to Revolving Loan Agreement, dated as of April 19, 1995,
pursuant to which certain of the Banks agreed to make revolving loans to
Borrower in the original aggregate principal amount of up to
$175,000,000.00, as such Original Loan Agreement existed immediately
prior to the effectiveness of this Agreement.
"Original Loan Documents" mean the Original Loan Agreement and the
Notes and the Subsidiary Guaranty delivered thereunder, as existing
immediately prior to the effectiveness of this Agreement.
"Original Notes" means those certain promissory notes delivered
under the Original Loan Agreement, as existing immediately prior to the
effectiveness of this Agreement.
"Party" means any Person other than the Agent, the Co-Agent and
the Banks, which now or hereafter is a party to any of the Loan
Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereof established under ERISA.
"Pension Plan" means any "employee pension benefit plan" (as such
term is defined in Section 3(2) of ERISA), other than a Multiemployer
Plan, which is subject to Title IV of ERISA and is maintained by Borrower
or any of its Subsidiaries or to which Borrower or any of its
Subsidiaries contributes or has an obligation to contribute.
"Permitted Encumbrances" means:
(a) inchoate Liens incident to construction or maintenance of
Real Property; or Liens incident to construction or maintenance of
Real Property now or hereafter filed of record for which adequate
reserves have been set aside (or deposits made pursuant to
applicable Law) and which are being contested in good faith by
appropriate proceedings and have not proceeded to judgment,
provided that no such Real Property is subject to a material risk
of loss or forfeiture;
(b) Liens for taxes and assessments on Real Property which
are not yet past due; or Liens for taxes and assessments on Real
Property for which adequate reserves have been set aside and are
being contested in good faith by appropriate proceedings and have
not proceeded to judgment, provided that no such Real Property is
subject to a material risk of loss or forfeiture;
(c) minor defects and irregularities in title to any Real
Property which in the aggregate do not materially impair the fair
market value or use of the Real Property for the purposes for
which it is or may reasonably be expected to be held;
(d) easements, exceptions, reservations, or other agreements
of any nature that are reasonable and appropriate for the
development of the Real Property of Borrower or a Subsidiary which
in the aggregate do not materially burden or impair the fair
market value or use of such Real Property (or the project to which
it is related) for the purposes for which it is or may reasonably
be expected to be held;
(e) easements, dedications, assessment district or similar
liens in connection with municipal financing and other similar
encumbrances or charges, in each case reasonably necessary or
appropriate for the development of Real Property of Borrower or a
Subsidiary, and which are granted in the ordinary course of the
business of such Borrower or Subsidiary, and which in the
aggregate do not materially burden or impair the fair market value
or use of such Real Property (or the project to which it is
related) for the purposes for which it is or may reasonably be
expected to be held;
(f) easements, exceptions, reservations, or other agreements
for the purpose of facilitating the joint or common use of
property in or adjacent to a commercial Real Property project
affecting Real Property which in the aggregate do not materially
burden or impair the fair market value or use of such property for
the purposes for which it is or may reasonably be expected to be
held;
(g) rights reserved to or vested in any Governmental Agency
to control or regulate, or obligations or duties to any
Governmental Agency with respect to, the use of any Real Property;
(h) rights reserved to or vested in any Governmental Agency
to control or regulate, or obligations or duties to any
Governmental Agency with respect to, any right, power, franchise,
grant, license, or permit;
(i) present or future zoning laws and ordinances or other
laws and ordinances restricting the occupancy, use, or enjoyment
of Real Property;
(j) statutory Liens, other than those described in clauses
(a) or (b) above, arising in the ordinary course of business with
respect to obligations which are not delinquent or are being
contested in good faith, provided that, if delinquent, appropriate
reserves have been set aside with respect thereto and no property
is subject to a material risk of loss or forfeiture;
(k) covenants, conditions, and restrictions affecting the use
of Real Property which in the aggregate do not materially impair
the fair market value or use of the Real Property for the purposes
for which it is or may reasonably be expected to be held;
(l) rights of tenants under leases and rental agreements
covering Real Property entered into in the ordinary course of
business of the Person owning such Real Property;
(m) Liens consisting of pledges or deposits to secure
obligations under workers' compensation laws or similar
legislation, including Liens of judgments thereunder which are not
currently dischargeable;
(n) Liens consisting of pledges or deposits of property to
secure performance in connection with operating leases made in the
ordinary course of business to which Borrower or a Subsidiary is a
party as lessee, provided the aggregate value of all such pledges
and deposits in connection with any such lease does not at any
time exceed 20% of the annual fixed rentals payable under such
lease;
(o) Liens consisting of deposits of property to secure bids
made with respect to, or performance of, contracts (other than
contracts creating or evidencing an extension of credit to the
depositor) in the ordinary course of business;
(p) Liens consisting of any right of offset, or statutory
bankers' lien, on bank deposit accounts maintained in the ordinary
course of business so long as such bank deposit accounts are not
established or maintained for the purpose of providing such right
of offset or bankers' lien;
(q) Liens consisting of deposits of property to secure
statutory obligations of Borrower or a Subsidiary of Borrower in
the ordinary course of its business;
(r) Liens, other than Liens for which the underlying
obligation calls for the payment of money, that were in existence
with respect to a parcel of Real Property prior to its acquisition
by Borrower or one of its Subsidiaries and that do not materially
impair the intended use of such Real Property;
(s) Liens created by or resulting from any litigation or
legal proceeding involving Borrower or a Subsidiary of Borrower in
the ordinary course of its business which is currently being
contested in good faith by appropriate proceedings, provided that
adequate reserves have been set aside and no material property is
subject to a material risk of loss or forfeiture;
(t) other non-consensual Liens incurred in the ordinary
course of business but not in connection with an extension of
credit, which do not in the aggregate, when taken together with
all other Liens, materially impair the value or use of the
Property of Borrower and its Subsidiaries, taken as a whole; and
(u) an interest, including an option, held by a Person under
a contract to purchase Real Property, the sale of which is not
prohibited under this Agreement.
"Person" means an individual or any entity, whether trustee,
corporation, general partnership, limited partnership, joint stock
company, trust, estate, unincorporated organization, business
association, firm, joint venture, Governmental Agency, or otherwise.
"Plant Expenditures" means, for any fiscal period, Borrower and
its Subsidiaries' aggregate cash expenditures made during such fiscal
period for the acquisition of furniture, fixtures and equipment.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Pro Rata Share" means, with respect to each Bank, the percentage
of the Commitments set forth opposite the name of that Bank on Schedule
1.2.
"Public 9.00% Senior Subordinated Debt" means the Indebtedness
outstanding under Borrower's Indenture, dated February 11, 1994 with
respect to $100,000,000 of 9.00% Senior Subordinated Debentures due 2006.
"Public 9-3/4% Senior Subordinated Debt" means the Indebtedness
outstanding under Borrower's Indenture, dated March 8, 1993 with respect
to $100,000,000 of 9-3/4% Senior Subordinated Debentures due 2003.
"Public Senior Debt" means the Indebtedness outstanding under
Borrower's Indenture, dated April 15, 1992, with respect to $100,000,000
of 10-7/8% Senior Notes due 2000.
"Quarterly Payment Date" means the fifth Banking Day of each
January, April, July and October.
"Quarterly Period" means a period from the Closing Date until the
earlier of the next following June 30 or September 30 and each subsequent
three (3) month period commencing on the first calendar day of each
April, July, October and January thereafter.
"Real Property" means, as of any date of determination, all real
property then or theretofore owned, leased or occupied by Borrower or any
of its Subsidiaries.
"Reference Rate" means the rate of interest publicly announced
from time to time by Bank of America as its "reference rate." It is a
rate set by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate. Any change in the
Reference Rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of
such change.
"Reference Rate Advance" means an Advance made hereunder and
specified to be a Reference Rate Advance in accordance with Article 2.
"Reference Rate Loan" means a Loan made hereunder and specified to
be a Reference Rate Loan in accordance with Article 2.
"Regulation D" means Regulation D, as at any time amended, of the
Board of Governors of the Federal Reserve System, or any other regulation
in substance substituted therefor.
"Regulations G, T, U and X" means Regulations G, T, U and X, as at
any time amended, of the Board of Governors of the Federal Reserve
System, or any other regulations in substance substituted therefor.
"Request for Letter of Credit" means a Request for Loan
accompanied by a written request for a Letter of Credit substantially in
the form of Exhibit G, signed by a Responsible Official of Borrower, on
behalf of Borrower, and properly completed to provide all information
required to be included therein.
"Request for Loan" means a written request for a Loan
substantially in the form of Exhibit H, signed by a Responsible Official
of Borrower, on behalf of Borrower, and properly completed to provide all
information required to be included therein.
"Requirement of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any Law, or judgment, award,
decree, writ or determination of a Governmental Agency, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Official" means (a) when used with reference to a
Person other than an individual, any corporate officer of such Person,
general partner of such Person, corporate officer of a corporate general
partner of such Person, or corporate officer of a corporate general
partner of a partnership that is a general partner of such Person, or any
other responsible official thereof duly acting on behalf thereof, and (b)
when used with reference to a Person who is an individual, such Person.
Any document or certificate hereunder that is signed or executed by a
Responsible Official of another Person shall be conclusively presumed to
have been authorized by all necessary corporate, partnership and/or other
action on the part of such other Person.
"Senior Debt" means, as of any date of determination, Total
Indebtedness as of that date, other than Subordinated Obligations.
"Senior Officer" means Borrower's (a) chief executive officer, (b)
president, (c) chief financial officer, (d) treasurer or (e) vice
president and controller.
"Special Eurodollar Circumstance" means the adoption, on or after
the date of this Agreement, of any Law or interpretation, or any change
therein or thereof, or any change in the interpretation or administration
thereof by any Governmental Agency, central bank or comparable authority
charged with the interpretation or administration thereof, or compliance
by any Bank or its Eurodollar Lending Office with any request or
directive (whether or not having the force of Law) of any such
Governmental Agency, central bank or comparable authority, or the
existence or occurrence of circumstances affecting the Designated
Eurodollar Market generally that are beyond the reasonable control of the
Banks.
"Specified Charges" means, as of the end of any Fiscal Quarter,
the sum of (a) Plant Expenditures for the four (4) Fiscal Quarters then
ending plus (b) Total Development Expenditures as of such date plus (c)
Interest Expense for the four (4) Fiscal Quarters then ending plus (d)
the aggregate amount of federal and state taxes on or measured by income
of Borrower and its Subsidiaries paid in Cash during the four (4) Fiscal
Quarters then ending.
"Spring Creek Project" means the approximately 473 acre mixed
use/industrial park in Colorado Springs, Colorado held by Del E. Webb
Spring Creek Corporation.
"Stockholders' Equity" means, as of any date of determination and
with respect to any Person, the consolidated stockholders' equity of the
Person as of that date determined in accordance with Generally Accepted
Accounting Principles; provided that there shall be excluded from
Stockholders' Equity any amount attributable to Disqualified Stock.
"Strategic Plan" means Borrower's 1995 Strategic Plan, delivered
to the Agent by Borrower under letter dated March 8, 1995.
"Subordinated Obligations" means, as of any date of determination
(without duplication), (a) the Public 9-3/4% Senior Subordinated Debt
outstanding as of such date, (b) the Public 9.00% Senior Subordinated
Debt outstanding as of such date, (c) the Swiss Franc Debt outstanding as
of such date and (d) any other Indebtedness of Borrower or any of its
Subsidiaries on that date which has been subordinated in right of payment
to the Obligations in a manner reasonably satisfactory to the Banks and
contains such other protective terms with respect to senior debt (such as
payment blockage) as the Banks may reasonably require. Subordination
provisions and protective terms with respect to senior debt under
Indebtedness issued publicly or pursuant to Securities and Exchange
Commission Rule 144A shall be deemed to be acceptable to the Banks if
they include all of those protections given to "Designated Senior Debt",
as that term is used in the Indentures for the Public 9-3/4% Senior
Subordinated Debt and the Public 9.00% Senior Subordinated Debt.
"Subsidiary" means, as of any date of determination and with
respect to any Person, any corporation or partnership (whether or not, in
either case, characterized as such or as a "joint venture"), whether now
existing or hereafter organized or acquired: (a) in the case of a
corporation, of which a majority of the securities having ordinary voting
power for the election of directors or other governing body (other than
securities having such power only by reason of the happening of a
contingency) are at the time beneficially owned by such Person and/or one
or more Subsidiaries of such Person, or (b) in the case of a partnership,
of which a majority of the partnership or other ownership interests are
at the time beneficially owned by such Person and/or one or more of its
Subsidiaries.
"Subsidiary Guaranty" means the continuing guaranty of the
Obligations to be executed and delivered by the Guarantor Subsidiaries
pursuant to Section 8.1(a)(3), in the form of Exhibit I, either as
originally executed or as it may from time to time be supplemented,
modified, amended, extended or supplemented.
"Substituted Credit Facilities" means (a) the Senior Credit
Agreement between Borrower and the Valley National Bank of Arizona, as
agent for certain lenders, dated July 17, 1989, as amended, and (b) the
Revolving Loan Agreement between Del Webb Communities Inc. and First
Interstate Bank of Nevada, as agent for certain lenders, dated June 23,
1988, as amended.
"Swiss Franc Debt" means the Indebtedness outstanding under
Borrower's Public Bond Issue Agreement, dated January 28, 1986, re Swiss
Francs 50'000'000 6-1/8% Subordinated Swiss Franc Bonds due 1996 and the
related Currency Exchange Agreement, dated January 28, 1986, between
Manufacturers Hanover Trust Company and Borrower.
"Tangible Net Worth" means, as of any date of determination, the
Stockholders' Equity of Borrower and its Subsidiaries on that date minus
the aggregate Intangible Assets (not including the value of any
intangible deferred tax assets that have been included in the calculation
of Intangible Assets for this purpose) of Borrower and its Subsidiaries
on that date.
"Total Development Expenditures" means, as of the last day of any
four (4) Fiscal Quarter period, Net Change in Housing Inventory plus Lot
and Amenity Development Costs plus Cash Land Acquisition Costs for such
four (4) Fiscal Quarter period, but in no event less than zero.
"Total Indebtedness" means, as of any date of determination
(without duplication), all Indebtedness of Borrower or any of its
Subsidiaries on that date.
"to the best knowledge of" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation
described therein is known by the Person (or, in the case of a Person
other than a natural Person, known by a Responsible Official of that
Person) making the representation, warranty or other statement, or with
the exercise of reasonable due diligence under the circumstances (in
accordance with the standard of what a reasonable Person in similar
circumstances would have done) should have been known by the Person (or,
in the case of a Person other than a natural Person, should have been
known by a Responsible Official of that Person).
"type", when used with respect to any Loan or Advance, means the
designation of whether such Loan or Advance is a Reference Rate Loan or
Advance, or a Eurodollar Rate Loan or Advance.
"Unentitled Land" means Real Property (other than Real Property
used and reasonably necessary for the general corporate and
administrative purposes of Borrower and its Subsidiaries) that does not
meet all of the following conditions: (a) its intended use is permissible
under the applicable General Plan, (b) its intended use is permissible
under the applicable Specific Plan, development agreement or by
applicable zoning, (c) the environmental impact report for the intended
use, if required, has been certified by the applicable Governmental
Agency, (d) the time to file any challenge to the environmental impact
report under the California Environmental Quality Act has passed without
such a lawsuit being filed or such a lawsuit has been finally resolved
successfully, and (e) in states other than California, a status
comparable to each of the foregoing, to the extent required, has been met
under applicable local Laws.
"Unsold Home" means a housing unit owned by Borrower or a
Guarantor Subsidiary with respect to which construction has begun
(measured by the laying of a foundation for such housing unit) and for
which a sales contract has not been entered into with, and a cash deposit
received from, a consumer purchaser of such housing unit.
1.2 Use of Defined Terms. Any defined term used in the plural shall refer
to all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined in
this Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity with,
Generally Accepted Accounting Principles applied on a consistent basis, except
as otherwise specifically prescribed herein. In the event that Generally
Accepted Accounting Principles change during the term of this Agreement such
that the covenants contained in Sections 6.11 through 6.15 would then be
calculated in a different manner or with different components, (a) Borrower and
the Banks agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in Generally Accepted Accounting Principles and (b) Borrower shall be
deemed to be in compliance with the covenants contained in the aforesaid
Sections during the 90 day period following any such change in Generally
Accepted Accounting Principles if and to the extent that Borrower would have
been in compliance therewith under Generally Accepted Accounting Principles as
in effect immediately prior to such change.
1.4 Rounding. Any financial ratios required to be maintained or achieved
by Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed in this
Agreement and rounding the result up or down to the nearest number (with a
round-up if there is no nearest number) to the number of places by which such
ratio is expressed in this Agreement.
1.5 Exhibits and Schedules. All Exhibits and Schedules to this Agreement,
either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by this reference. A
matter disclosed on any Schedule shall be deemed disclosed on all Schedules.
1.6 References to "Borrower and its Subsidiaries". Any reference herein
to "Borrower and its Subsidiaries" or the like shall refer solely to Borrower
during such times, if any, as Borrower shall have no Subsidiaries.
1.7 Miscellaneous Terms. The term "or" is disjunctive; the term "and" is
conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Masculine terms also apply to females; feminine terms also apply to males. The
term "including" is by way of example and not limitation. Unless otherwise
specified, reference to any document or agreement shall mean such document or
agreement as it may be amended or restated from time to time.
Article 2
LOANS
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2.1 Loans-General.
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Closing Date
through and including the Banking Day prior to the Maturity Date, each
Bank shall, pro rata according to that Bank's Pro Rata Share of the then
applicable Commitments, make Advances to Borrower in such amounts as
Borrower may request that do not exceed in the aggregate at any one time
outstanding the amount of that Bank's Pro Rata Share of the Commitments;
provided that, giving effect to the Loan of which such Advance is a part,
(i) the then outstanding principal indebtedness evidenced by the Line A
Notes plus the Aggregate Effective Amount shall not exceed the Line A
Commitment and (ii) the then outstanding principal indebtedness evidenced
by the Line B Notes shall not exceed the Line B Commitment. Subject to
the limitations set forth herein, Borrower may borrow, repay and reborrow
under the Commitments without premium or penalty.
(b) Subject to the next sentence, each Loan shall be made pursuant
to a Request for Loan which shall specify the requested (i) date of such
Loan, (ii) type of Loan, (iii) amount of such Loan, (iv) in the case of a
Eurodollar Rate Loan, the Interest Period for such Loan and (v) whether
such Loan is to be made under the Line A or Line B Commitment. Unless the
Agent has notified, in its sole and absolute discretion, Borrower to the
contrary, a Eurodollar Rate Loan (but not a Reference Rate Loan) may be
requested by telephone by a Responsible Official of Borrower, in which
case Borrower shall confirm such request by promptly delivering a Request
for Loan in person or by telecopier conforming to the preceding sentence
to the Agent. Borrower and the Agent may enter into a memorandum of
understanding setting forth specific procedures for such telephonic
requests; if the Agent complies with such procedures (or if no such
memorandum is entered into), Agent shall incur no liability whatsoever
hereunder in acting upon any telephonic request for loan purportedly made
by a Responsible Official of Borrower, which hereby agrees to indemnify
the Agent from any loss, cost, expense or liability as a result of so
acting.
(c) Promptly following receipt of a Request for Loan, the Agent
shall notify each Bank by telephone or telecopier (and if by telephone,
promptly confirmed by telecopier) of the date and type of the Loan, the
applicable Interest Period, the applicable Commitment, and that Bank's
Pro Rata Share of the Loan. Not later than 11:00 a.m., San Francisco
time, on the date specified for any Loan (which must be a Banking Day),
each Bank shall make its Pro Rata Share of the Loan in immediately
available funds available to the Agent at the Agent's Office. Upon
satisfaction or waiver of the applicable conditions set forth in Article
8, all Advances shall be credited on that date in immediately available
funds to the Designated Deposit Account.
(d) Unless the Majority Banks otherwise consent, each Reference
Rate Loan shall be an integral multiple of $1,000,000 and shall be not
less than $1,000,000 and each Eurodollar Loan shall be an integral
multiple of $1,000,000 and shall be not less than $10,000,000.
(e) The Advances made by each Bank shall be evidenced by that
Bank's Line A Note or Line B Note, as applicable.
(f) A Request for Loan shall be irrevocable upon the Agent's first
notification thereof.
(g) If no Request for Loan (or telephonic request for loan
referred to in the second sentence of Section 2.1(b), if applicable) has
been made within the requisite notice periods set forth in Sections 2.2
or 2.3 in connection with a Loan which, if made and giving effect to the
application of the proceeds thereof, would not increase the outstanding
principal Indebtedness evidenced by the Line A Notes or Line B Notes, as
applicable, then Borrower shall be deemed to have requested, as of the
date upon which the related then outstanding Loan is due pursuant to
Section 3.1(e)(i), a Reference Rate Loan under the Line A Commitment or
Line B Commitment, as applicable, in an amount equal to the amount
necessary to cause the outstanding principal Indebtedness evidenced by
the Notes to remain the same and the Banks shall make the Advances
necessary to make such Loan notwithstanding Sections 2.1(b) and 2.2.
(h) If a Loan is to be made on the same date that another Loan is
due and payable, Borrower or the Banks, as the case may be, shall make
available to the Agent the net amount of funds giving effect to both such
Loans and the effect for purposes of this Agreement shall be the same as
if separate transfers of funds had been made with respect to each such
Loan, provided that no such netting of payments shall be made of a Loan
under the Line A Commitment against the repayment of a Loan under the
Line B Commitment.
2.2 Reference Rate Loans. Each request by Borrower for a Reference Rate
Loan shall be made pursuant to a Request for Loan, with a concurrent telephone
notification, received by the Agent, at the Agent's Office (and such additional
office of the Agent as it may designate from time to time), not later than 1:00
p.m. San Francisco time, at least one (1) Banking Day before the date of the
requested Reference Rate Loan. All Loans shall constitute Reference Rate Loans
unless properly designated or redesignated as a Eurodollar Rate Loan pursuant to
Section 2.3.
2.3 Eurodollar Rate Loans.
(a) Each request by Borrower for a Eurodollar Rate Loan shall be
made pursuant to a Request for Loan (or telephonic or other request for
loan referred to in the second sentence of Section 2.1(b), if applicable)
received by the Agent, at the Agent's Office (and such additional office
of the Agent as it may designate from time to time), not later than 9:00
a.m., San Francisco time, at least three (3) Eurodollar Banking Days
before the first day of the applicable Eurodollar Period.
(b) On the date which is two (2) Eurodollar Banking Days before
the first day of the applicable Eurodollar Period, the Agent shall
confirm its determination of the applicable Eurodollar Rate (which
determination shall be conclusive in the absence of manifest error) and
promptly shall give notice of the same to Borrower and the Banks by
telephone or telecopier (and if by telephone, promptly confirmed by
telecopier).
(c) Unless the Agent and the Majority Banks otherwise consent, no
more than four (4) Eurodollar Rate Loans shall be outstanding at any one
time.
(d) Unless the Agent and the Majority Banks otherwise consent, no
Eurodollar Rate Loan may be requested during the existence of a Default
or Event of Default.
(e) Nothing contained herein shall require any Bank to fund any
Eurodollar Rate Advance in the Designated Eurodollar Market.
2.4 Voluntary Reduction of Commitments. Borrower shall have the right, at
any time and from time to time, without penalty or charge, upon at least three
(3) Banking Days prior written notice by a Responsible Official of Borrower to
the Agent, voluntarily to reduce, permanently and irrevocably, in aggregate
principal amounts in an integral multiple of $1,000,000 but not less than
$5,000,000, or to terminate, all of the then undisbursed portion of the Line A
Commitment or Line B Commitment, provided that any such reduction or termination
shall be accompanied by payment of all accrued and unpaid commitment fees with
respect to the portion of the Commitments being reduced or terminated. The Agent
shall promptly notify the Banks of any reduction of a Commitment under this
Section 2.4.
2.5 Automatic Reduction of Commitments. The Commitments shall
automatically reduce on the Commitment Reduction Date by an amount equal to the
Commitment Reduction Amount and shall further automatically reduce at the close
of business on each Quarterly Payment Date following the Commitment Reduction
Date by 10% of the Adjusted Commitments. For purposes of this Section 2.5, the
Line A Commitment shall first be reduced to zero, and thereafter the Line B
Commitment shall be reduced.
2.6 Optional Termination of Commitments. Following the occurrence of a
Change in Control, the Majority Banks may in their sole and absolute discretion
elect, at any time until sixty (60) days immediately subsequent to the later of
(a) such occurrence and (b) receipt of Borrower's written notice to the Agent of
such occurrence, to terminate the Commitments, in which case the Commitments
shall be terminated and reduced to zero effective on the date of such election.
2.7 Automatic Termination of Commitments. The Commitments shall
automatically terminate and be reduced to zero upon the occurrence of a
Disposition consisting of (a) all or substantially all of the assets of
Borrower, or (b) all or substantially all of the capital stock of any Guarantor
Subsidiary (except a Guarantor Subsidiary holding solely the assets of the Glen
Harbor Project or the Spring Creek Project), or (c) all or substantially all of
the assets of any Guarantor Subsidiary (not including those assets constituting
the Glen Harbor Project or Spring Creek Project).
2.8 Agent's Right to Assume Funds Available for Advances. Unless the
Agent shall have been notified by any Bank no later than the Banking Day or
Eurodollar Banking Day, as applicable, prior to the funding by the Agent of any
Loan that such Bank does not intend to make available to the Agent such Bank's
portion of the total amount of such Loan, the Agent may assume that such Bank
has made such amount available to the Agent on the date of the Loan and the
Agent may, in reliance upon such assumption, make available to Borrower a
corresponding amount. If the Agent has made funds available to Borrower based on
such assumption and such corresponding amount is not in fact made available to
the Agent by such Bank, the Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
promptly shall notify Borrower and Borrower shall pay such corresponding amount
to the Agent. The Agent also shall be entitled to recover from such Bank
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to Borrower to the date
such corresponding amount is recovered by the Agent, at a rate per annum equal
to the daily Federal Funds Rate. Nothing herein shall be deemed to relieve any
Bank from its obligation to fulfill its share of the Commitments or to prejudice
any rights which the Agent or Borrower may have against any Bank as a result of
any default by such Bank hereunder.
2.9 Adjusting Purchase Payments. Principal amounts outstanding under the
Line A Commitment or the Line B Commitment of the Original Loan Agreement on the
effective date of this Agreement (the "Carryover Principal Balance") remain
outstanding under the Line A Commitment or Line B Commitment, as applicable,
hereunder. Concurrently with the effectiveness of this Agreement and the making
of the initial Loan as provided in Section 8.1, the Banks agree to purchase and
sell undivided interests in the Carryover Principal Balance by making or
receiving Adjusting Purchase Payments as specified in Schedule 2.9 (the
"Adjusting Purchase Payment(s)") so that the Carryover Principal Balance will be
properly allocated and owing to the Banks under the Notes in accordance with the
Pro-Rata Shares specified in Schedule 1.2. Each Bank making an Adjusting
Purchase Payment shall deliver it to the Agent together with its funding of its
initial Advance, and the Agent shall forward such Adjusting Purchase Payments to
the Banks entitled thereto promptly after receipt in accordance with the
allocations specified in Schedule 2.9. On the effective date of this Agreement,
in addition to any other Advances that may be made, each Bank shall be deemed as
having made an Advance in the amount of its Pro-Rata Share of the Carryover
Principal Balance.
2.10 Substitute Credit Facility. Borrower hereby requests, and the
parties hereto agree, that the Line B Commitment constitutes a restatement of
the Line B Commitment under the Original Loan Agreement and, as such, shall be
made available as and shall be designated as a Substitute Credit Facility (as
that term is defined in the Indenture evidencing the Public Senior Debt) with
respect to the Substituted Credit Facilities.
2.11 Senior Debt. Without limitation, all outstanding principal and
interest under the Notes constitutes "Senior Debt", as that term is defined in
the Indenture for the Public 9-3/4% Senior Subordinated Debt, the Indenture for
the Public 9.00% Senior Subordinated Debt and the Public Bond Issue Agreement
for the Swiss Franc Debt.
2.12 Letters of Credit.
(a) Subject to the terms and conditions hereof, at any time and
from time to time from the Closing Date through the Maturity Date, the
Issuing Bank shall issue such Letters of Credit under the Line A
Commitment as Borrower may request by a Request for Letter of Credit;
provided that (i) giving effect to all such Letters of Credit, the sum of
(A) the aggregate principal amount outstanding under the Line A Notes
plus (B) the Aggregate Effective Amount does not exceed the then
applicable Line A Commitment and (ii) the Aggregate Effective Amount
shall not exceed $5,000,000. Each Letter of Credit shall be in a form
acceptable to the Issuing Bank. The expiry date of any Letter of Credit
shall not extend more than one (1) year beyond its issuance date (unless
otherwise agreed by the Issuing Bank) nor, in any event, beyond the
Maturity Date. A Request for Letter of Credit shall be irrevocable absent
the consent of the Issuing Bank.
(b) Each Request for Letter of Credit shall be submitted to the
Issuing Bank, with a copy to the Agent, at least five (5) Banking Days
prior to the date upon which the related Letter of Credit is proposed to
be issued. The Agent shall promptly notify the Issuing Bank whether such
Request for Letter of Credit, and the issuance of a Letter of Credit
pursuant thereto, conforms to the requirements of this Agreement. Upon
receipt of favorable notice from the Agent, and promptly after issuing
each Letter of Credit, the Issuing Bank shall promptly notify the Agent,
and the Agent shall promptly notify the Banks, of the amount and terms
thereof.
(c) Upon the issuance of a Letter of Credit, each Bank shall be
deemed to have purchased a participation in such Letter of Credit from
the Issuing Bank in a proportion of the total equal to that Bank's Pro
Rata Share. Without limiting the scope and nature of each Bank's
participation in any Letter of Credit, to the extent that the Issuing
Bank has not been reimbursed by Borrower for any payment required to be
made by the Issuing Bank under any Letter of Credit, each Bank shall, pro
rata according to its Pro Rata Share, reimburse the Issuing Bank through
the Agent promptly upon demand for the amount of such payment. The
obligation of each Bank to so reimburse the Issuing Bank shall be
absolute and unconditional and shall not be affected by the occurrence of
an Event of Default or any other occurrence or event. Any such
reimbursement shall not relieve or otherwise impair the obligation of
Borrower to reimburse the Issuing Bank for the amount of any payment made
by the Issuing Bank under any Letter of Credit together with interest as
hereinafter provided. Each Bank that has reimbursed the Issuing Bank
pursuant to this Section 2.12(c) for its Pro-Rata Share of any payment
made by the Issuing Bank under a Letter of Credit shall thereupon acquire
a pro-rata participation, to the extent of such reimbursement, in the
claim of the Issuing Bank against Borrower under Section 2.12(d) and
shall share, in accordance with that pro-rata participation, in any
payment made by Borrower with respect to such claim.
(d) Borrower agrees to pay to the Issuing Bank through the Agent
an amount equal to any payment made by the Issuing Bank with respect to
each Letter of Credit no later than one (1) Banking Day after demand made
by the Issuing Bank therefor, together with interest on such amount from
the date of any payment made by the Issuing Bank. Interest on such amount
shall accrue at the Reference Rate until the second Banking Day following
the payment made by the Issuing Bank with respect to the Letter of
Credit, and at the Default Rate thereafter. The principal amount of any
such payment by Borrower shall be used to reimburse the Issuing Bank for
the payment made by it under the Letter of Credit. Should Borrower
request a Loan under the Line A Commitment for the purpose of making such
payment and make written request to the Agent to pay the proceeds of the
Loan directly to the Issuing Bank, then the amount to be so paid shall be
deducted from the Aggregate Effective Amount for purposes of Section
2.1(a) in connection with such Request for Loan.
(e) If Borrower fails to make the payment required by Section
2.12(d) within the time period therein set forth, in lieu of the
reimbursement to the Issuing Bank under Section 2.12(c) the Issuing Bank
may (but is not required to), without notice to or the consent of
Borrower, instruct the Agent to cause Advances to be made by the Banks
under the Line A Commitment in an aggregate amount equal to the amount
paid by the Issuing Bank with respect to that Letter of Credit and, for
this purpose, the conditions precedent set forth in Articles 2 and 8
shall not apply. The proceeds of such Advances shall be paid to the
Issuing Bank to reimburse it for the payment made by it under the Letter
of Credit.
(f) The issuance of any supplement, modification, amendment,
renewal, or extension to or of any Letter of Credit shall be subject to
such preconditions as the Issuing Bank may establish.
(g) The obligation of Borrower to pay to the Issuing Bank the
amount of any payment made by the Issuing Bank under any Letter of Credit
shall be absolute, unconditional, and irrevocable, subject only to
performance by the Issuing Bank of its obligations to Borrower under
California Uniform Commercial Code Section 5109. Without limiting the
foregoing, subject to California Uniform Commercial Code Section 5109,
Borrower's obligations shall not be affected by any of the following
circumstances:
(1) any lack of validity or enforceability of the Letter of
Credit, this Agreement, or any other agreement or instrument
relating thereto;
(2) any amendment or waiver of or any consent to departure
from the Letter of Credit, this Agreement, or any other agreement
or instrument relating thereto, with the consent of Borrower;
(3) the existence of any claim, setoff, defense, or other
rights which Borrower may have at any time against the Issuing
Bank, the Agent, the Co-Agent or any Bank, any beneficiary of the
Letter of Credit (or any persons or entities for whom any such
beneficiary may be acting) or any other Person, whether in
connection with the Letter of Credit, this Agreement, or any other
agreement or instrument relating thereto, or any unrelated
transactions;
(4) any demand, statement, or any other document presented
under the Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect whatsoever so long as
any such document appeared to comply with the terms of the Letter
of Credit;
(5) payment by the Issuing Bank in good faith under the
Letter of Credit against presentation of a draft or any
accompanying document which does not strictly comply with the
terms of the Letter of Credit;
(6) the existence, character, quality, quantity, condition,
packing, value or delivery of any property purported to be
represented by documents presented in connection with any Letter
of Credit or for any difference between any such property and the
character, quality, quantity, condition, or value of such property
as described in such documents;
(7) the time, place, manner, order or contents of shipments
or deliveries of property as described in documents presented in
connection with any Letter of Credit or the existence, nature and
extent of any insurance relative thereto;
(8) the solvency or financial responsibility of any party
issuing any documents in connection with a Letter of Credit;
(9) any failure or delay in notice of shipments or arrival
of any property;
(10) any error in the transmission of any message relating
to a Letter of Credit not caused by the Issuing Bank, or any delay
or interruption in any such message;
(11) any error, neglect or default of any correspondent of
the Issuing Bank in connection with a Letter of Credit;
(12) any consequence arising from acts of God, war,
insurrection, civil unrest, disturbances, labor disputes,
emergency conditions or other causes beyond the control of the
Issuing Bank;
(13) so long as the Issuing Bank in good faith determines
that the contract or document appears to comply with the terms of
the Letter of Credit, the form, accuracy, genuineness or legal
effect of any contract or document referred to in any document
submitted to the Issuing Bank in connection with a Letter of
Credit; and
(14) where the Issuing Bank has acted in good faith and
observed general banking usage, any other circumstances
whatsoever.
(h) The Issuing Bank shall be entitled to the protection accorded
to the Agent pursuant to Section 10.7.
(i) The Uniform Code of Practice for Documentary Credits, as
published in its most current version by the International Chamber of
Commerce, shall be deemed a part of this Section and shall apply to all
Letters of Credit to the extent not inconsistent with applicable Law.
(j) Concurrently with the issuance of each Letter of Credit,
Borrower shall pay a letter of credit origination fee to the Issuing
Bank, for the sole account of the Issuing Bank, in an amount established
from time to time by the Issuing Bank. Borrower shall also pay to the
Agent for the ratable account of the Banks in accordance with their Pro
Rata Shares, a standby letter of credit fee in an amount equal to 1.25%
per annum times the face amount of such Letter of Credit, which fee shall
be payable quarterly in arrears on each Quarterly Payment Date after the
issuance of the Letter of Credit and on the termination or expiration of
such Letter of Credit. The Agent shall promptly make available to the
Banks in immediately available funds, pro-rata according to their Pro
Rata Shares, the standby letter of credit fees which are for the account
of the Banks. Borrower shall also pay transfer fees, check fees, foreign
currency exchange fees and costs, and such other fees as the Issuing Bank
normally charges in connection with standby letters of credit and
activity pursuant thereto, which fees shall be solely for the account of
the Issuing Bank.
(k) To the extent of any inconsistency between the provisions of
this Agreement regarding Letters of Credit and those of Exhibit G, the
provisions of this Agreement shall govern, provided that the grant of
additional (though not contrary) rights or remedies to the Issuing Bank
under Exhibit G shall not be construed as inconsistent with the
provisions of this Agreement.
<PAGE>
Article 3
PAYMENTS AND FEES
-----------------
3.1 Principal and Interest.
(a) Interest shall be payable on the outstanding daily unpaid
principal amount of each Advance from the date thereof until payment in
full is made and shall accrue and be payable at the rates set forth or
provided for herein before and after default, before and after maturity,
before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law, with interest on overdue interest
to bear interest at the Default Rate to the fullest extent permitted by
applicable Laws.
(b) Unless previously paid as provided in this Agreement, interest
accrued during each Monthly Interest Period on each Reference Rate Loan
shall be due and payable on the next succeeding Monthly Payment Date and
on the Maturity Date. Except as otherwise provided in Section 3.7, the
unpaid principal amount of any Reference Rate Loan shall bear interest at
a fluctuating rate per annum equal to the Reference Rate. Each change in
the interest rate under this Section 3.1(b) due to a change in the
Reference Rate shall take effect simultaneously with the corresponding
change in the Reference Rate.
(c) Unless previously paid as provided in this Agreement, interest
accrued during each Monthly Interest Period on each Eurodollar Rate Loan
shall be due and payable on the next succeeding Monthly Payment Date and
on the Maturity Date. Except as otherwise provided in Sections 3.1(d) and
3.7, the unpaid principal amount of any Eurodollar Rate Loan shall bear
interest at a rate per annum equal to the Eurodollar Rate for that
Eurodollar Rate Loan plus 1.95%.
(d) During the existence of a Default or Event of Default, the
Majority Banks may determine that any or all then outstanding Eurodollar
Rate Loans shall be converted to Reference Rate Loans. Such conversion
shall be effective upon notice to Borrower from the Majority Banks (or
from the Agent on behalf of the Majority Banks) and shall continue so
long as such Default or Event of Default continues to exist.
(e) If not sooner paid, the principal Indebtedness evidenced by
the Notes shall be payable as follows:
(i) the principal amount of each Eurodollar Rate Loan shall
be payable on the last day of the Interest Period for such Loan;
(ii) the amount, if any, by which (A) the outstanding
principal Indebtedness evidenced by the Line A Notes plus the
Aggregate Effective Amount at any time exceeds the Line A
Commitment or (B) the outstanding principal Indebtedness evidenced
by the Line B Notes at any time exceeds the Line B Commitment,
shall be payable immediately, and shall be applied to the
applicable Notes or, if no amount is then outstanding under the
applicable Notes, shall be applied and held in a manner specified
in Section 9.2(a)(2); and
(iii) the principal Indebtedness evidenced by the Notes shall
in any event be payable on the Maturity Date.
(f) The principal Indebtedness under the Notes may, at any time
and from time to time, voluntarily be paid or prepaid in whole or in part
without premium or penalty, except that with respect to any voluntary
prepayment under this Section 3.1(f), (i) any partial prepayment shall be
in an integral multiple of $1,000,000, (ii) the Agent shall have received
written notice of any prepayment by 9:00 a.m. San Francisco time on a
Banking Day on the date of prepayment in the case of a Reference Rate
Loan, and three (3) Banking Days, in the case of a Eurodollar Rate Loan,
before the date of prepayment, which notice shall identify the date and
amount of the prepayment and the Loan(s) being prepaid, and (iii) any
payment or prepayment of all or any part of any Eurodollar Rate Loan on a
day other than the last day of the applicable Interest Period shall be
subject to Section 3.6(d).
3.2 Arrangement, Agency and Co-Agency Fees. Borrower shall pay to Bank of
America arrangement and agency fees in amounts heretofore agreed upon in one or
more letter agreements between Borrower and Bank of America. Such fees are
solely for the account of Bank of America and are fully earned and nonrefundable
upon the applicable due dates. Borrower shall pay to the Co-Agent co-agency fees
in amounts heretofore agreed upon by letter agreement between Borrower and the
Co-Agent. Such fees are solely for the account of the Co-Agent and are fully
earned and nonrefundable upon the applicable due dates.
3.3 Underwriting Fee. On the Closing Date, Borrower shall pay to the
Agent, for the account of the Banks, allocated as indicated on Schedule 3.3
hereof, an underwriting fee equal to $156,250 (0.125% of $125,000,000). This
underwriting fee is fully earned on the Closing Date and is nonrefundable.
3.4 Facility and Commitment Fees.
(a) Facility Fee. From and after the Closing Date, Borrower shall
pay to the Agent, for the respective accounts of the Banks, pro rata
according to their Pro Rata Shares of the Commitments, a facility fee
equal to 0.125% per annum times the average daily amount of the
Commitments. The facility fee shall be payable quarterly in arrears on
each Quarterly Payment Date and on the Maturity Date.
(b) Commitment Fees. From and after the Closing Date, Borrower
shall pay to the Agent, for the respective accounts of the Banks, pro
rata according to their Pro Rata Shares of the Commitments, a commitment
fee equal to the following indicated percentage per annum times the
average daily amount by which the Commitments exceed the sum of the
aggregate principal Indebtedness evidenced by the Notes plus the
Aggregate Effective Amount. The commitment fee shall be payable quarterly
in arrears on each Quarterly Payment Date and on the Maturity Date.
For such days that the aggregate
principal indebtedness evidenced by the
Notes plus the Aggregate Effective
Amount exceeds 66% of the Commitments. 0.1875%
For such days that the aggregate
principal indebtedness evidenced by the
Notes plus the Aggregate Effective
Amount is less than or equal to 66% but
greater than 33% of the Commitments. 0.2500%
For such days that the aggregate
principal indebtedness evidenced by the
Notes plus the Aggregate Effective
Amount is equal to or less than 33%
of the Commitments. 0.3250%
3.5 Increased Commitment Costs. If any Bank shall determine that the
introduction after the Closing Date of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein or any change in the
interpretation or administration thereof by any central bank or other
Governmental Agency charged with the interpretation or administration thereof,
or compliance by such Bank (or its Eurodollar Lending Office) or any corporation
controlling the Bank, with any request, guidelines or directive regarding
capital adequacy (whether or not having the force of law) of any such central
bank or other authority, affects or would affect the amount of capital required
or expected to be maintained by such Bank or any corporation controlling such
Bank and (taking into consideration such Bank's or such corporation's policies
with respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased, or the rate of return
on capital is reduced, as a consequence of its obligations under this Agreement,
then, within five (5) Banking Days after demand of such Bank, Borrower shall pay
to such Bank, from time to time as specified by such Bank, additional amounts
sufficient to compensate such Bank in light of such circumstances, to the extent
reasonably allocable to such obligations under this Agreement. Each Bank agrees
to endeavor promptly to notify Borrower of any event of which it has actual
knowledge, occurring after the Closing Date, which will cause it to make a
demand hereunder.
3.6 Eurodollar Costs and Related Matters.
(a) If, after the date hereof, the existence or occurrence of any
Special Eurodollar Circumstance:
(1) shall subject any Bank or its Eurodollar Lending Office
to any tax, duty or other charge or cost with respect to any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar
Rate Loans or its obligation to make Eurodollar Rate Advances, or
shall change the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Rate Advance or any
other amounts due under this Agreement in respect of any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar
Rate Loans or its obligation to make Eurodollar Rate Advances,
excluding, in the case of each Bank, the Agent, and each Eligible
Assignee, and any Affiliate or Eurodollar Lending Office thereof,
(i) taxes imposed on or measured in whole or in part by its
overall net income, gross income or gross receipts or capital and
franchise taxes imposed on it, by (A) any jurisdiction (or
political subdivision thereof) in which it is organized or
maintains its principal office or Eurodollar Lending Office or (B)
any jurisdiction (or political subdivision thereof) in which it is
"doing business" (unless it would not be doing business in such
jurisdiction (or political subdivision thereof) absent the
transactions contemplated hereby), (ii) any withholding taxes or
other taxes based on gross income imposed by the United States of
America (other than withholding taxes and taxes based on gross
income resulting from or attributable to any change in any law,
rule or regulation or any change in the interpretation or
administration of any law, rule or regulation by any Governmental
Agency after the date of this Agreement) or (iii) any withholding
taxes or other taxes based on gross income imposed by the United
States of America for any period with respect to which it has
failed to provide Borrower with the appropriate form or forms
required by Section 11.19, to the extent such forms are then
required by applicable Laws;
(2) shall impose, modify or deem applicable any reserve not
applicable or deemed applicable on the date hereof (including,
without limitation, any reserve imposed by the Board of Governors
of the Federal Reserve System, but excluding the Eurodollar
Reserve Percentage taken into account in calculating the
Eurodollar Rate), special deposit, capital or similar requirements
against assets of, deposits with or for the account of, or credit
extended by, any Bank or its Eurodollar Lending Office; or
(3) shall impose on any Bank or its Eurodollar Lending Office
or the Designated Eurodollar Market any other condition affecting
any Eurodollar Rate Advance, any of its Notes evidencing
Eurodollar Rate Loans, its obligation to make Eurodollar Rate
Advances or this Agreement, or shall otherwise affect any of the
same;
and the result of any of the foregoing, as determined by such Bank,
increases the cost to such Bank or its Eurodollar Lending Office of
making or maintaining any Eurodollar Rate Advance or in respect of any
Eurodollar Rate Advance, any of its Notes evidencing Eurodollar Rate
Loans or its obligation to make Eurodollar Rate Advances or reduces the
amount of any sum received or receivable by such Bank or its Eurodollar
Lending Office with respect to any Eurodollar Rate Advance, any of its
Notes evidencing Eurodollar Rate Loans or its obligation to make
Eurodollar Rate Advances (assuming such Bank's Eurodollar Lending Office
had funded 100% of its Eurodollar Rate Advance in the Designated
Eurodollar Market), then, within five (5) Banking Days after demand by
such Bank (with a copy to the Agent), Borrower shall pay to such Bank
such additional amount or amounts as will compensate such Bank for such
increased cost or reduction (determined as though such Bank's Eurodollar
Lending Office had funded 100% of its Eurodollar Rate Advance in the
Designated Eurodollar Market). Borrower hereby indemnifies each Bank
against, and agrees to hold each Bank harmless from and reimburse such
Bank within five (5) Banking Days after demand for (without duplication)
all costs, expenses, claims, penalties, liabilities, losses, legal fees
and damages incurred or sustained by each Bank in connection with this
Agreement, or any of the rights, obligations or transactions provided for
or contemplated herein, as a result of the existence or occurrence of any
Special Eurodollar Circumstance. A statement of any Bank claiming
compensation under this subsection and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the
absence of manifest error. Each Bank agrees to endeavor promptly to
notify Borrower of any event of which it has actual knowledge, occurring
after the Closing Date, which will entitle such Bank to compensation
pursuant to this Section, and agrees to designate a different Eurodollar
Lending Office if such designation will avoid the need for or reduce the
amount of such compensation and will not, in the judgment of such Bank,
otherwise be materially disadvantageous to such Bank. If any Bank claims
compensation under this Section, Borrower may at any time, upon at least
four (4) Eurodollar Banking Days' prior notice to the Agent and such Bank
and upon payment in full of the amounts provided for in this Section
through the date of such payment plus any prepayment fee required by
Section 3.6(d), pay in full the affected Eurodollar Rate Advances of such
Bank or request that such Eurodollar Rate Advances be converted to
Reference Rate Advances.
(b) If, after the date hereof, the existence or occurrence of any
Special Eurodollar Circumstance shall, in the opinion of any Bank, make
it unlawful, impossible or impracticable for such Bank or its Eurodollar
Lending Office to make, maintain or fund its portion of any Eurodollar
Rate Loan, or materially restrict the authority of such Bank to purchase
or sell, or to take deposits of, Dollars in the Designated Eurodollar
Market, or to determine or charge interest rates based upon the
Eurodollar Rate, and such Bank shall so notify the Agent, then such
Bank's obligation to make Eurodollar Rate Advances shall be suspended for
the duration of such illegality, impossibility or impracticability and
the Agent forthwith shall give notice thereof to the other Banks and
Borrower. Upon receipt of such notice, the outstanding principal amount
of such Bank's Eurodollar Rate Advances, together with accrued interest
thereon, automatically shall be converted to Reference Rate Advances with
Interest Periods corresponding to the Eurodollar Loans of which such
Eurodollar Rate Advances were a part on either (1) the last day of the
Eurodollar Period(s) applicable to such Eurodollar Rate Advances if such
Bank may lawfully continue to maintain and fund such Eurodollar Rate
Advances to such day(s) or (2) immediately if such Bank may not lawfully
continue to fund and maintain such Eurodollar Rate Advances to such
day(s), provided that in such event the conversion shall not be subject
to payment of a prepayment fee under Section 3.6(d). Each Bank agrees to
endeavor promptly to notify Borrower of any event of which it has actual
knowledge, occurring after the Closing Date, which will cause that Bank
to notify the Agent under this Section 3.6(b), and agrees to designate a
different Eurodollar Lending Office if such designation will avoid the
need for such notice and will not, in the judgment of such Bank,
otherwise be disadvantageous to such Bank. In the event that any Bank is
unable, for the reasons set forth above, to make, maintain or fund its
portion of any Eurodollar Rate Loan, such Bank shall fund such amount as
a Reference Rate Advance for the same period of time, and such amount
shall be treated in all respects as a Reference Rate Advance. Any Bank
whose obligation to make Eurodollar Rate Advances has been suspended
under this Section 3.6(b) shall promptly notify the Agent and Borrower of
the cessation of the Special Eurodollar Circumstance which gave rise to
such suspension.
(c) If, with respect to any proposed Eurodollar Rate Loan:
(1) the Agent reasonably determines that, by reason of
circumstances affecting the Designated Eurodollar Market generally
that are beyond the reasonable control of the Banks, deposits in
Dollars (in the applicable amounts) are not being offered to any
Bank in the Designated Eurodollar Market for the applicable
Eurodollar Period; or
(2) the Majority Banks advise the Agent that the Eurodollar
Rate as determined by the Agent (i) does not represent the
effective pricing to such Banks for deposits in Dollars in the
Designated Eurodollar Market in the relevant amount for the
applicable Eurodollar Period, or (ii) will not adequately and
fairly reflect the cost to such Banks of making the applicable
Eurodollar Rate Advances;
then the Agent forthwith shall give notice thereof to Borrower and the
Banks, whereupon until the Agent notifies Borrower that the circumstances
giving rise to such suspension no longer exist, the obligation of the
Banks to make any future Eurodollar Rate Advances shall be suspended. If
at the time of such notice there is then pending a Request for Loan that
specifies a Eurodollar Rate Loan, such Request for Loan shall be deemed
to specify a Reference Rate Loan.
(d) Upon payment or prepayment of any Eurodollar Rate Advance,
(other than as the result of a conversion required under Section 3.6(b)),
on a day other than the last day in the applicable Eurodollar Period
(whether voluntarily, involuntarily, by reason of acceleration, or
otherwise), or upon the failure of Borrower (for a reason other than the
failure of a Bank to make an Advance) to borrow on the date or in the
amount specified for a Eurodollar Rate Loan in any Request for Loan,
Borrower shall pay to the appropriate Bank within five (5) Banking Days
after demand a prepayment fee or failure to borrow fee, as the case may
be, (determined as though 100% of the Eurodollar Rate Advance had been
funded in the Designated Eurodollar Market) equal to the sum of:
(1) principal amount of the Eurodollar Rate Advance prepaid
or not borrowed, as the case may be, times [number of days between
the date of prepayment or failure to borrow, as applicable, and
the last day in the applicable Eurodollar Period], divided by 360,
times the applicable Interest Differential (provided that the
product of the foregoing formula must be a positive number); plus
(2) all out-of-pocket expenses incurred by the Bank
reasonably attributable to such payment, prepayment or failure to
borrow.
Each Bank's determination of the amount of any prepayment fee payable
under this Section 3.6(d) shall be conclusive in the absence of manifest
error.
3.7 Late Payments. If any installment of principal or interest or any fee
or cost or other amount payable under any Loan Document to the Agent or any Bank
is not paid when due, it shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the sum of the Reference Rate plus
3%, to the fullest extent permitted by applicable Laws. Accrued and unpaid
interest on past due amounts (including, without limitation, interest on past
due interest) shall be compounded monthly, on the last day of each calendar
month, to the fullest extent permitted by applicable Laws.
3.8 Computation of Interest and Fees. Computation of interest on
Eurodollar Rate Loans, Reference Rate Loans and all fees under this Agreement
shall be calculated on the basis of a year of 360 days and the actual number of
days elapsed. Borrower acknowledges that such latter calculation method will
result in a higher yield to the Banks than a method based on a year of 365 or
366 days. Interest shall accrue on each Loan for the day on which the Loan is
made. Interest shall not accrue on a Loan, or any portion thereof, for the day
on which the Loan or such portion is paid, except that any Loan that is repaid
on the same day on which it is made shall bear interest for one day.
3.9 Non-Banking Days. If any payment to be made by Borrower or any other
Party under any Loan Document shall come due on a day other than a Banking Day,
payment shall instead be considered due on the next succeeding Banking Day and
the extension of time shall be reflected in computing interest and fees.
3.10 Manner and Treatment of Payments.
(a) Each payment hereunder (except payments pursuant to Sections
3.5, 3.6, 11.3, 11.10 and 11.20) or on the Notes or under any other Loan
Document shall be made to the Agent, at the Agent's Office, for the
account of each of the Banks or the Agent, as the case may be, in
immediately available funds (for which evidence may be given by
notification of a Fed Funds reference number) not later than 11:00 a.m.,
San Francisco time, on the day of payment (which must be a Banking Day).
All payments received after 11:00 a.m., San Francisco time, on any
Banking Day, shall be deemed received on the next succeeding Banking Day.
The amount of all payments received by the Agent for the account of each
Bank shall be immediately paid by the Agent to the applicable Bank in
immediately available funds and, if such payment was received by the
Agent by 11:00 a.m., San Francisco time, on a Banking Day and not so made
available to the account of a Bank on that Banking Day, the Agent shall
reimburse that Bank for the cost to such Bank of funding the amount of
such payment at the Federal Funds Rate. All payments shall be made in
lawful money of the United States of America.
(b) Each payment or prepayment on account of any Loan shall be
applied pro rata according to the outstanding Advances made by each Bank
comprising such Loan.
(c) Each payment of any amount payable by Borrower or any other
Party under this Agreement or any other Loan Document shall be made free
and clear of, and without reduction by reason of, any taxes, assessments
or other charges imposed by any Governmental Agency, central bank or
comparable authority, excluding, in the case of each Bank, the Agent, the
Co-Agent and each Eligible Assignee, and any Affiliate or Eurodollar
Lending Office thereof, (i) taxes imposed on or measured in whole or in
part by its overall net income, gross income or gross receipts or capital
and franchise taxes imposed on it, by (A) any jurisdiction (or political
subdivision thereof) in which it is organized or maintains its principal
office or Eurodollar Lending Office or (B) any jurisdiction (or political
subdivision thereof) in which it is "doing business" (unless it would not
be doing business in such jurisdiction (or political subdivision thereof)
absent the transactions contemplated hereby), (ii) any withholding taxes
or other taxes based on gross income imposed by the United States of
America (other than withholding taxes and taxes based on gross income
resulting from or attributable to any change in any law, rule or
regulation or any change in the interpretation or administration of any
law, rule or regulation by any Governmental Agency after the date of this
Agreement) or (iii) any withholding taxes or other taxes based on gross
income imposed by the United States of America for any period with
respect to which it has failed to provide Borrower with the appropriate
form or forms required by Section 11.19, to the extent such forms are
then required by applicable Laws, (all such non-excluded taxes,
assessments or other charges being hereinafter referred to as "Taxes").
To the extent that Borrower is obligated by applicable Laws to make any
deduction or withholding on account of Taxes from any amount payable to
any Bank under this Agreement, Borrower shall (i) make such deduction or
withholding and pay the same to the relevant Governmental Agency and (ii)
pay such additional amount to that Bank as is necessary to result in that
Bank's receiving a net after-Tax amount equal to the amount to which that
Bank would have been entitled under this Agreement absent such deduction
or withholding. If and when receipt of such payment results in an excess
payment or credit to that Bank on account of such Taxes, that Bank shall
promptly refund such excess to Borrower.
3.11 Funding Sources. Nothing in this Agreement shall be deemed to
obligate any Bank to obtain the funds for any Loan or Advance in any particular
place or manner or to constitute a representation by any Bank that it has
obtained or will obtain the funds for any Loan or Advance in any particular
place or manner.
3.12 Failure to Charge Not Subsequent Waiver. Any decision by the Agent
or any Bank not to require payment of any interest (including interest arising
under Section 3.7), fee, cost or other amount payable under any Loan Document,
or to calculate any amount payable by a particular method, on any occasion shall
in no way limit or be deemed a waiver of the Agent's or such Bank's right to
require full payment of any interest (including interest arising under Section
3.7), fee, cost or other amount payable under any Loan Document, or to calculate
an amount payable by another method that is not inconsistent with this
Agreement, on any other or subsequent occasion.
3.13 Agent's Right to Assume Payments Will be Made by Borrower. Unless
the Agent shall have been notified by Borrower prior to the date on which any
payment to be made by Borrower hereunder is due that Borrower does not intend to
remit such payment, the Agent may, in its discretion, assume that Borrower has
remitted such payment when so due and the Agent may, in its discretion and in
reliance upon such assumption, make available to each Bank on such payment date
an amount equal to such Bank's share of such assumed payment. If Borrower has
not in fact remitted such payment to the Agent, each Bank shall forthwith on
demand repay to the Agent the amount of such assumed payment made available to
such Bank, together with interest thereon in respect of each day from and
including the date such amount was made available by the Agent to such Bank to
the date such amount is repaid to the Agent at the Federal Funds Rate.
3.14 Fee Determination Detail. The Agent, and any Bank, shall provide
reasonable detail to Borrower regarding the manner in which the amount of any
payment to the Agent and the Banks, or that Bank, under Article 3 has been
determined, concurrently with demand for such payment.
3.15 Survivability. All of Borrower's obligations under Sections 3.5 and
3.6 shall survive for ninety (90) days following the date on which the
Commitments are terminated and all Loans hereunder are fully paid. Following
such termination and repayment, and the expiration of any bankruptcy preference
or similar period, each Bank shall cancel and return its Notes to Borrower.
3.16 Accruals Under Original Loan Documents.
(a) The accrual of interest and fees payable by Borrower under the
Original Loan Documents shall be calculated as provided therein through
the effective date of this Agreement. Such fees include, without
limitation, those specified in Sections 3.2, 3.3 and 3.4 of the Original
Loan Agreement. All such accrued interest and fees through the effective
date of this Agreement shall, notwithstanding any provision of the
Original Loan Documents or hereunder to the contrary, be due on the
effective date of this Agreement and shall be payable immediately upon
submission of an invoice therefor to Borrower by the Agent. Upon receipt
by the Agent, all such amounts shall be promptly distributed by the Agent
in accordance with the terms of the Original Loan Documents.
(b) To the extent that Borrower has prepaid a Facility Fee under
Section 3.3 of the Original Loan Agreement applicable to a period of time
following the Closing Date (and in place of the remedies specified in the
last sentence of such Section), Borrower shall be credited for such
prepayment against the first Facility Fee payment owing after the Closing
Date pursuant to Section 3.4(a) of this Agreement. The shares of such
first Facility Fee payment paid by the Agent to the Banks shall be
adjusted to reflect the shares of the prepayment credit that are
applicable to certain of the Banks.
<PAGE>
Article 4
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to the Banks, as of the date hereof and
as of the Closing Date, that:
4.1 Existence and Qualification; Power; Compliance With Laws. Borrower is
a corporation duly formed, validly existing and in good standing under the Laws
of Delaware. Borrower is duly qualified or registered to transact business and
is in good standing in each other jurisdiction in which the conduct of its
business or the ownership or leasing of its Properties makes such qualification
or registration necessary, except where the failure so to qualify or register
and to be in good standing would not constitute a Material Adverse Effect.
Borrower has all requisite corporate power and authority to conduct its
business, to own and lease its Properties and to execute and deliver each Loan
Document to which it is a Party and to perform its Obligations. All outstanding
shares of capital stock of Borrower are duly authorized, validly issued, fully
paid, non-assessable and no holder thereof has any enforceable right of
rescission under any applicable state or federal securities Laws. Borrower is in
compliance with all Laws and other legal requirements applicable to its
business, has obtained all authorizations, consents, approvals, orders, licenses
and permits from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing from, any
Governmental Agency that are necessary for the transaction of its business,
except where the failure so to comply, file, register, qualify or obtain
exemptions does not constitute a Material Adverse Effect.
4.2 Authority; Compliance With Other Agreements and Instruments and
Government Regulations. The execution, delivery and performance by Borrower and
each Guarantor Subsidiary of the Loan Documents to which it is a Party have been
duly authorized by all necessary corporate and/or partnership action, and do not
and will not:
(a) Require any consent or approval not heretofore obtained of any
partner, director, stockholder, security holder or creditor of such
Party;
(b) Violate or conflict with any provision of such Party's
charter, articles of incorporation or bylaws, as applicable;
(c) Result in or require the creation or imposition of any Lien
upon or with respect to any Property now owned or leased or hereafter
acquired by such Party;
(d) Violate any Requirement of Law applicable to such Party,
subject to obtaining the authorizations from, or filings with, the
Governmental Agencies described in Schedule 4.3;
(e) Result in a breach of or constitute a default under, or cause
or permit the acceleration of any obligation owed under, any indenture or
loan or credit agreement or any other Contractual Obligation to which
such Party is a party or by which such Party or any of its Property is
bound or affected;
and none of Borrower or any Guarantor Subsidiary is in violation of, or default
under, any Requirement of Law or Contractual Obligation, or any indenture, loan
or credit agreement described in Section 4.2(e), in any respect that constitutes
a Material Adverse Effect.
4.3 No Governmental Approvals Required. Except as set forth in Schedule
4.3 or previously obtained or made, no authorization, consent, approval, order,
license or permit from, or filing, registration or qualification with, any
Governmental Agency is or will be required to authorize or permit under
applicable Laws the execution, delivery and performance by Borrower and the
Guarantor Subsidiaries of the Loan Documents to which it is a Party. All
authorizations from, or filings with, any Governmental Agency described in
Schedule 4.3 will be accomplished as of the Closing Date or such other date as
is specified in Schedule 4.3.
4.4 Subsidiaries.
(a) Schedule 4.4 hereto correctly sets forth the names, form of
legal entity, number of shares of capital stock issued and outstanding,
number of shares owned by Borrower or a Subsidiary (specifying such
owner) and jurisdictions of organization of all Subsidiaries and
specifies which thereof, as of the Closing Date, are Guarantor
Subsidiaries. Except as described in Schedule 4.4, Borrower does not own
any capital stock, equity interest or debt security which is convertible,
or exchangeable, for capital stock or equity interests in any Person.
Unless otherwise indicated in Schedule 4.4, all of the outstanding shares
of capital stock, or all of the units of equity interest, as the case may
be, of each Subsidiary are owned of record and beneficially by Borrower,
there are no outstanding options, warrants or other rights to purchase
capital stock of any such Subsidiary, and all such shares or equity
interests so owned are duly authorized, validly issued, fully paid,
non-assessable, and were issued in compliance with all applicable state
and federal securities and other Laws, and are free and clear of all
Liens, except for Permitted Encumbrances.
(b) Each Subsidiary is a corporation or limited partnership duly
formed, validly existing and in good standing under the Laws of its
jurisdiction of organization, is duly qualified to do business as a
foreign organization and is in good standing as such in each jurisdiction
in which the conduct of its business or the ownership or leasing of its
properties makes such qualification necessary (except where the failure
to be so duly qualified and in good standing does not constitute a
Material Adverse Effect), and has all requisite power and authority to
conduct its business and to own and lease its Properties.
(c) Each Subsidiary is in compliance with all Laws and other
requirements applicable to its business and has obtained all
authorizations, consents, approvals, orders, licenses, and permits from,
and each such Subsidiary has accomplished all filings, registrations, and
qualifications with, or obtained exemptions from any of the foregoing
from, any Governmental Agency that are necessary for the transaction of
its business, except where the failure to be in such compliance, obtain
such authorizations, consents, approvals, orders, licenses, and permits,
accomplish such filings, registrations, and qualifications, or obtain
such exemptions, does not constitute a Material Adverse Effect.
4.5 Financial Statements. Borrower has furnished to the Banks (a) the
audited consolidated financial statements of Borrower and its Subsidiaries for
the Fiscal Year ended June 30, 1994 and (b) the unaudited consolidated financial
statements of Borrower and its Subsidiaries for the Fiscal Quarter ended March
31, 1995. The financial statements described in clauses (a) and (b) fairly
present in all material respects the financial condition, results of operations
and changes in financial position of Borrower and its Subsidiaries as of such
dates and for such periods, in conformity with Generally Accepted Accounting
Principles, consistently applied.
4.6 No Other Liabilities; No Material Adverse Changes. Borrower and its
Subsidiaries do not have any material liability or material contingent liability
not reflected or disclosed in the financial statements described in Section
4.5(b), other than liabilities and contingent liabilities arising in the
ordinary course of business since the date of such financial statements. Neither
Borrower nor any of its Subsidiaries has, as of the Closing Date, any
Indebtedness other than under the Loan Documents or as described on Schedule
4.6. As of the Closing Date, no circumstance or event has occurred that
constitutes a Material Adverse Effect since June 30, 1994, or, as of any date
subsequent to the Closing Date, since the Closing Date.
4.7 Title to Property. Borrower and its Subsidiaries have valid title to
the Property reflected in the financial statements described in Section 4.5(b),
other than immaterial items of Property and Property subsequently sold or
disposed of in the ordinary course of business, free and clear of all Liens,
other than Liens described in Schedule 6.8 or otherwise permitted by Section
6.8. Schedule 6.8 identifies, without limitation, all Liens on Property of
Borrower or any of its Subsidiaries securing an obligation to pay money.
4.8 Intangible Assets. Borrower and its Guarantor Subsidiaries own, or
possess the right to use to the extent necessary in their respective businesses,
all material trademarks, trade names, copyrights, patents, patent rights,
computer software, licenses and other Intangible Assets that are used in the
conduct of their businesses as now operated, and no such Intangible Asset, to
the best knowledge of Borrower, conflicts with the valid trademark, trade name,
copyright, patent, patent right or Intangible Asset of any other Person to the
extent that such conflict constitutes a Material Adverse Effect.
4.9 Public Utility Holding Company Act. Neither Borrower nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
4.10 Litigation. Except for (a) any matter fully covered as to subject
matter and amount (subject to applicable deductibles and retentions) by
insurance for which the insurance carrier has not asserted lack of subject
matter coverage or reserved its right to do so, (b) any matter, or series of
related matters, involving a claim against Borrower or any of its Subsidiaries
of less than $1,000,000, (c) matters of an administrative nature not involving a
claim or charge against Borrower or any of its Subsidiaries and (d) matters set
forth in Schedule 4.10, there are no actions, suits, proceedings or
investigations pending as to which Borrower or any of its Subsidiaries have been
served or have received notice or, to the best knowledge of Borrower, threatened
against or affecting Borrower or any of its Subsidiaries or any Property of any
of them before any Governmental Agency.
4.11 Binding Obligations. Each of the Loan Documents to which Borrower or
any of its Guarantor Subsidiaries is a Party will, when executed and delivered
by such Party, constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, except as
enforcement may be limited by Debtor Relief Laws or equitable principles
relating to the granting of specific performance and other equitable remedies as
a matter of judicial discretion.
4.12 No Default. No event has occurred and is continuing that is a
Default or Event of Default.
4.13 ERISA.
(a) With respect to each Pension Plan:
(i) such Pension Plan complies in all material respects with
ERISA and any other applicable Laws to the extent that
noncompliance could reasonably be expected to have a Material
Adverse Effect;
(ii) such Pension Plan has not incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA) that
could reasonably be expected to have a Material Adverse Effect;
(iii) no "reportable event" (as defined in Section 4043 of
ERISA) has occurred that could reasonably be expected to have a
Material Adverse Effect; and
(iv) neither Borrower nor any of its Subsidiaries has engaged
in any non-exempt "prohibited transaction" (as defined in Section
4975 of the Code) that could reasonably be expected to have a
Material Adverse Effect.
(b) Neither Borrower nor any of its Subsidiaries has incurred or
expects to incur any withdrawal liability to any Multiemployer Plan that
could reasonably be expected to have a Material Adverse Effect.
4.14 Regulations G. T. U and X; Investment Company Act. No part of the
proceeds of any Loan hereunder will be used to purchase or carry, or to extend
credit to others for the purpose of purchasing or carrying, any Margin Stock in
violation of Regulations G, T, U and X. Neither Borrower nor any of its
Subsidiaries is or is required to be registered as an "investment company" under
the Investment Company Act of 1940.
4.15 Disclosure. No written statement made by a Senior Officer to the
Agent or any Bank in connection with this Agreement, or in connection with any
Loan, as of the date thereof contained any untrue statement of a material fact
or omitted a material fact necessary to make the statement made not misleading
in light of all the circumstances existing at the date the statement was made.
4.16 Tax Liability. Borrower and its Subsidiaries have filed all tax
returns which are required to be filed, and have paid, or made provision for the
payment of, all taxes with respect to the periods, Property or transactions
covered by said returns, or pursuant to any assessment received by Borrower or
any of its Subsidiaries, except (a) such taxes, if any, as are being contested
in good faith by appropriate proceedings and as to which adequate reserves have
been established and maintained and (b) immaterial taxes so long as no material
item or portion of Property of Borrower or any of its Subsidiaries is in
jeopardy of being seized, levied upon or forfeited.
4.17 Strategic Plan. The Strategic Plan was prepared in accordance with
Borrower's customary procedures therefor and, in the case of the first year's
budget, was approved by Borrower's board of directors and, in the case of
subsequent years, represents the final version thereof for such years that was
reviewed by Borrower's board of directors.
4.18 Hazardous Materials. To the best knowledge of Borrower, no condition
exists that violates any Hazardous Material Law affecting any Real Property
except for such violations that would not individually or in the aggregate have
a Meterial Adverse Effect. No Real Property now owned by Borrower or any of its
Subsidiaries, or any portion thereof, is or has been utilized by Borrower or any
of its Subsidiaries as a site for the manufacture of any Hazardous Materials. To
the extent that any Hazardous Materials are used, generated or stored by
Borrower or any of its Subsidiaries on any Real Property, or transported from
such Real Property by Borrower or any of its Subsidiaries, such use, generation,
storage and transportation are in compliance in all material respects with all
Hazardous Materials Laws.
<PAGE>
Article 5
AFFIRMATIVE COVENANTS
---------------------
(OTHER THAN INFORMATION AND
--------------------------
REPORTING REQUIREMENTS)
----------------------
So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, or any portion of a Commitment remains in force, Borrower
shall, and shall cause each of its Subsidiaries to, unless the Agent (with the
written approval of the Majority Banks) otherwise consents:
5.1 Payment of Taxes and Other Potential Liens. Pay and discharge
promptly all taxes, assessments and governmental charges or levies imposed upon
any of them, upon their respective Property or any part thereof and upon their
respective income or profits or any part thereof, except that Borrower and its
Subsidiaries shall not be required to pay or cause to be paid (a) any tax,
assessment, charge or levy that is not yet past due, or is being contested in
good faith by appropriate proceedings so long as the relevant entity has
established and maintains adequate reserves for the payment of the same or (b)
any immaterial tax, assessment, governmental charge or levy so long as (i) no
material item or portion of Property of Borrower and any of its Subsidiaries,
taken as a whole, is in jeopardy of being seized, levied upon or forfeited and
(ii) the failure to make such payment would not constitute a Material Adverse
Effect.
5.2 Preservation of Existence. Preserve and maintain their respective
existences in the jurisdiction of their formation and all material
authorizations, rights, franchises, privileges, consents, approvals, orders,
licenses, permits, or registrations from any Governmental Agency that are
necessary for the transaction of their respective business ("Authorizations"),
except where the failure to so preserve and maintain the existence of any
Subsidiary and such Authorizations would not constitute a Material Adverse
Effect and except that a merger permitted by Section 6.3 shall not constitute a
violation of this covenant; and qualify and remain qualified to transact
business in each jurisdiction in which such qualification is necessary in view
of their respective business or the ownership or leasing of their respective
Properties except where the failure to so qualify or remain qualified would not
constitute a Material Adverse Effect.
5.3 Maintenance of Properties. Maintain, preserve and protect all of
their then owned respective depreciable Properties in good order and condition,
subject to wear and tear in the ordinary course of business, and not permit any
waste of their respective Properties, except that the failure to maintain,
preserve and protect a particular item of depreciable Property that is not of
significant value, either intrinsically or to the operations of Borrower and its
Subsidiaries, taken as a whole, shall not constitute a violation of this
covenant.
5.4 Maintenance of Insurance. Maintain liability, casualty and other
insurance (subject to customary deductibles and retentions) with responsible
insurance companies in such amounts and against such risks as is carried by
responsible companies engaged in similar businesses and owning similar assets in
the general areas in which Borrower and its Subsidiaries operate.
5.5 Compliance With Laws. Comply, within the time period, if any, given
for such compliance by the relevant Governmental Agency or Agencies with
enforcement authority, with all Requirements of Law noncompliance with which
constitutes a Material Adverse Effect, except that Borrower and its Subsidiaries
need not comply with a Requirement of Law then being contested by any of them in
good faith by appropriate proceedings.
5.6 Inspection Rights. Upon reasonable notice, at any time during regular
business hours and as often as requested (but not so as to materially interfere
with the business of Borrower or any of its Subsidiaries), permit the Agent or
any Bank, or any authorized employee, agent or representative thereof, to
examine, audit and make copies and abstracts from the records and books of
account of, and to visit and inspect the Properties of, Borrower and its
Subsidiaries and to discuss the affairs, finances and accounts of Borrower and
its Subsidiaries with any of their officers, key employees or accountants and,
upon request, furnish promptly to the Agent or any Bank true copies of all
financial information made available to the board of directors or audit
committee of the board of directors of Borrower.
5.7 Keeping of Records and Books of Account. Keep adequate records and
books of account reflecting all financial transactions in conformity with
Generally Accepted Accounting Principles, consistently applied, and in material
conformity with all applicable requirements of any Governmental Agency having
regulatory jurisdiction over Borrower or any of its Subsidiaries.
5.8 Compliance With Agreements. Promptly and fully comply with all
Contractual Obligations under all material agreements, indentures, leases and/or
instruments to which any one or more of them is a party, whether such material
agreements, indentures, leases or instruments are with a Bank or another Person,
except for any such Contractual Obligations (a) the performance of which would
cause a Default or (b) then being contested by any of them in good faith by
appropriate proceedings or if the failure to comply with such agreements,
indentures, leases or instruments does not constitute a Material Adverse Effect.
5.9 Use of Proceeds. Use the proceeds of Loans solely for (a) retirement
of outstanding Indebtedness under the Substituted Credit Facilities and the
Cancelled Debt Facilities and (b) general working capital and corporate purposes
of Borrower and its Subsidiaries, provided that in no event shall the proceeds
of a Loan under the Line A Commitment be used to repay an outstanding Loan under
the Line B Commitment.
5.10 New Guarantor Subsidiaries; Release of Certain Guaranties. Cause
each of its Subsidiaries which hereafter becomes a Guarantor Subsidiary to
immediately execute and deliver to the Agent an instrument of joinder of the
Subsidiary Guaranty. Should the stock of a Subsidiary holding only the assets of
the Glen Harbor Project or the Spring Creek Project be transferred or such a
Subsidiary be disposed of by merger in accordance herewith to an entity that is
not an Affiliate of Borrower, then, subject to receipt of reaffirmations of
other Guarantor Subsidiaries and such other documentation as the Agent may
reasonably request, the Banks will release such Subsidiary from the Subsidiary
Guaranty.
5.11 Hazardous Materials Laws. Keep and maintain all Real Property and
each portion thereof in compliance in all material respects with all applicable
Hazardous Materials Laws and promptly notify the Agent in writing of (a) any and
all material enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened in writing by a Governmental Agency
pursuant to any applicable Hazardous Materials Laws, (b) any and all material
claims made or threatened in writing by any Person against Borrower relating to
damage, contribution, cost recovery, compensation, loss or injury resulting from
any Hazardous Materials and (c) discovery by any Senior Officer of Borrower of
any material occurrence or condition on any real property adjoining or in the
vicinity of such Real Property that could reasonably be expected to cause such
Real Property or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use of such Real Property under any
applicable Hazardous Materials Laws.
5.12 Termination of GFB L/C. Cause, within sixty (60) days following the
Closing Date, the GFB L/C (as defined in Section 8.1(a)(8)) to be terminated and
cause any collateral security for the reimbursement obligation with respect
thereto to be released.
<PAGE>
Article 6
NEGATIVE COVENANTS
------------------
So long as any Advance remains unpaid, or any other Obligation remains
unpaid or unperformed, or any portion of a Commitment remains in force, Borrower
shall not, and shall not permit any of its Subsidiaries to, unless the Agent
(with the written approval of the Majority Banks or, if required by Section
11.2, of all of the Banks) otherwise consents:
6.1 Prepayment of Indebtedness. Pay any principal or interest on any
Indebtedness of Borrower or any of its Subsidiaries (other than Indebtedness
under the Notes) prior to the date when due, or make any payment or deposit with
any Person that has the effect of providing for the satisfaction of any
Indebtedness of Borrower or any of its Subsidiaries prior to the date when due,
in each case if an Event of Default then exists or would result therefrom.
6.2 Payment of Subordinated Obligations. Pay any (a) principal (including
sinking fund payments) or any other amount (other than scheduled interest
payments) with respect to any Subordinated Obligation except the Swiss Franc
Debt and as expressly permitted in the last sentence of this Section 6.2, or (b)
scheduled interest on any Subordinated Obligation, if an Event of Default
described in Sections 9.1(a) or 9.1(b) then exists or would result therefrom;
provided, however, that this Section 6.2 is in no way in limitation of any
additional rights the Banks may have to block payments with respect to any
Subordinated Obligation. In addition to the Swiss Franc Debt, the principal
amount of Subordinated Obligations may be prepaid or redeemed but only (A) if
(i) an Event of Default does not then exist and would not result therefrom and
(ii) Borrower has not received written notice from the Agent or a Bank that a
Default has occurred and such Default remains uncured; and (B) to the extent of
an amount equal to the sum of (x) the net cash proceeds from the issuance by
Borrower of its capital stock (that is not Disqualified Stock) after January 1,
1994 plus (y) the following percentages of new cash Subordinated Obligation
borrowings by Borrower after January 1, 1994, provided that such borrowings have
a maturity no earlier than one (1) year after the Maturity Date.
Principal Amount
Percentage Borrowed in Cash
---------- ----------------
-0- first $50,000,000
50% next $50,000,000
100% amounts over $100,000,000
6.3 Mergers and Sale of Assets.
(a) Merge or consolidate with or into any Person, except mergers
and consolidations of a Subsidiary of Borrower (other than a Coventry
Subsidiary or an Exempt Subsidiary) into Borrower or a Guarantor
Subsidiary (other than a Coventry Subsidiary or an Exempt Subsidiary)
with, if applicable, Borrower as the surviving entity, provided that
Borrower and each of its Subsidiaries has executed such amendments to the
Loan Documents as the Agent may reasonably determine are appropriate as a
result of such merger. This Section 6.3(a) shall not restrict a merger
implemented solely to effect a Disposition specified in clause (e) of the
definition of "Disposition."
(b) Make any Disposition of its Property other than the sale of
Property for cash and/or other Property which in the aggregate have the
fair equivalent value to the Property sold; provided, however, that no
Property shall be sold by way of Disposition (nor shall there be any
related sales of Property) if the value of the Property sold is in excess
of $5,000,000.
(c) Notwithstanding the foregoing provisions of this Section 6.3
or any other provision of this Agreement, the following Transfers of
Property (including Cash) for reasonably equivalent value are not
restricted:
(i) by and among Borrower and any of its wholly-owned
Subsidiaries that are not Coventry Subsidiaries or Exempt
Subsidiaries; or
(ii) by and among the Coventry Subsidiaries; or
(iii) by and among the Exempt Subsidiaries.
Notwithstanding the foregoing provisions of this Section 6.3 or any other
provision of this Agreement, Transfers of Property (including Cash) by
any directly or indirectly wholly-owned Subsidiary of Borrower to its
parent corporation(s) are not restricted.
6.4 Hostile Tender Offers. Make any offer to purchase or acquire, or
consummate a purchase or acquisition of, 5% or more of the capital stock of any
corporation or other business entity if the board of directors or management of
such corporation or business entity has notified Borrower that it opposes such
offer or purchase and such notice has not been withdrawn or superseded.
6.5 Distributions. As to Borrower and any Subsidiaries of Borrower which
are not wholly-owned Subsidiaries of Borrower, make any Distribution, whether
from capital, income or otherwise, and whether in Cash or other Property, unless
(a) such Distribution could have been made on the last day of the most recently
ended Fiscal Quarter without causing a violation of Section 6.11 as of such last
day of such Fiscal Quarter and (b) in the case of a Distribution by Borrower (i)
an Event of Default does not then exist and would not result therefrom and (ii)
Borrower has not theretofore received written notice from the Agent or a Bank
that a Default has occurred and such Default remains uncured, provided however
that a Distribution may be made if such Distribution constitutes a dividend on
capital stock of Borrower that was otherwise permissible to be made at the time
it was declared payable by Borrower's board of directors and that is in fact
paid within 60 days after such declaration.
6.6 ERISA.
(a) At any time, permit any Pension Plan to:
(i) engage in any non-exempt "prohibited transaction" (as
defined in Section 4975 of the Code);
(ii) fail to comply with ERISA or any other applicable Laws
to the extent that noncompliance could reasonably be expected to
have a Material Adverse Effect;
(iii) incur any material "accumulated funding deficiency" (as
defined in Section 302 of ERISA); or
(iv) terminate in any manner, which, with respect to each
event listed above, could reasonably be expected to result in a
Material Adverse Effect.
(b) Withdraw, completely or partially, from any Multiemployer Plan
if to do so could reasonably be expected to result in a Material Adverse
Effect.
6.7 Change in Nature of Business. Make any material change in the nature
of the business of Borrower and its Subsidiaries, taken as a whole. In addition,
Borrower shall not (except through a Subsidiary) engage, in any material
respect, in business activities other than acting as a holding company for its
Subsidiaries. In addition, no Coventry Subsidiary shall engage, in any material
respect, in business activities other than conventional single-family
residential home development and related activities (not to include
age-restricted planned community residential development).
6.8 Liens. Create, incur, assume or suffer to exist any Lien of any
nature upon or with respect to any of their respective Properties, whether now
owned or hereafter acquired, except:
(a) Permitted Encumbrances;
(b) Liens that may exist from time to time under the Loan
Documents;
(c) existing Liens disclosed in Schedule 6.8 and any renewals or
extensions thereof; provided that the obligations secured or benefited
thereby are not increased;
(d) Liens on Real Property acquired (whether before or after the
Closing Date) by Borrower or any of its Subsidiaries that (i) except as
permitted by clause (iii) of this Section 6.8(d), secure solely purchase
money indebtedness with respect to the Real Property, (ii) secure solely
Non-Recourse Debt and (iii) encumbered the Real Property at the time of
or in connection with its acquisition by Borrower or its Subsidiary or
were placed thereon to refinance or borrow an amount up to the purchase
price within 90 days after the acquisition;
(e) One or more Liens on Property of Coventry Subsidiaries that,
in each case, (i) secures solely Indebtedness of such Coventry
Subsidiaries that was incurred for the acquisition, development and/or
construction of the liened Property, or the refinancing thereof up to the
amount of the original borrowing, (ii) secures solely Indebtedness for
which the lender has recourse solely against such Coventry Subsidiaries
and the secured assets and not Borrower or any other Subsidiary of
Borrower, (iii) covers only Property that has a cost basis (calculated by
adding the acquisition cost to the cost of any capital improvements to
the Property) to Borrower and its Subsidiaries of not more than 150% of
the principal of the secured Indebtedness and (iv) was created after the
Commitment Reduction Date; and
(f) One or more Liens on Property of Exempt Subsidiaries that, in
each case, (i) secures solely Indebtedness of such Exempt Subsidiaries
that was incurred for the acquisition, development and/or construction of
the liened Property, or the refinancing thereof up to the amount of the
original borrowing, (ii) secures solely Non-Recourse Debt and (iii) was
created after the Commitment Reduction Date.
6.9 Indebtedness. Create, incur or assume any Indebtedness (other than
accrual of interest) except the following but only if a Default or Event of
Default does not then exist and would not result therefrom and only if such
Indebtedness is otherwise permissible under the Indenture for the Public Senior
Debt (as in existence on the date of this Agreement):
(a) Non-Recourse Debt for which the corresponding Lien is
otherwise permissible under Section 6.8(d) or 6.8(f), provided that such
Indebtedness is in compliance with the requirements of such Section,
(b) Indebtedness of a Coventry Subsidiary for which a
corresponding Lien is otherwise permissible under Section 6.8(e),
provided that all such Indebtedness is in compliance with the
requirements of such Section and provided further that the aggregate
principal amount of all such Indebtedness does not, on any date of
determination, exceed the total amount by which the Commitments have been
reduced through that date pursuant to Section 2.5,
(c) Indebtedness incurred pursuant to commitments and proposed
commitments therefor that are identified on Schedule 6.9 (including
replacements of such commitments), but only to the maximum amount
available shown on such Schedule,
(d) Indebtedness that constitutes Subordinated Obligations so long
as no principal repayment (or any nature of reserve therefor) is due
until at least one (1) year after the Maturity Date,
(e) Indebtedness outstanding under the Notes,
(f) Indebtedness constituting a refinancing on not materially less
favorable terms of Indebtedness permitted under this Section 6.9,
(g) Indebtedness constituting reimbursement obligations incurred
with respect to standby letters of credit issued in the ordinary course
of Borrower's and its Subsidiaries real estate development business,
(h) Indebtedness by and among Borrower and its Subsidiaries, so
long as such Indebtedness is not otherwise restricted hereunder (such as
under Section 6.16(d) with respect to certain Investments),
(i) Unsecured Indebtedness incurred by Borrower (and any guaranty
of such Indebtedness by a Subsidiary), provided that any such unsecured
Indebtedness having an initial maturity of one (1) year or less and
outstanding under either a working capital facility or a bid line of
credit shall be limited to an aggregate principal amount outstanding at
any one time of $25,000,000 and, provided further, that a guaranty of any
such unsecured Indebtedness by one or more Subsidiaries shall be
permissible only if such unsecured Indebtedness constitutes a loan of
money (or a reimbursement obligation under a letter of credit) and only
if the credit instrument evidencing such unsecured Indebtedness expressly
states that the funds loaned thereunder are being made available to
Borrower solely for the general working capital and corporate purposes of
Borrower and its Subsidiaries, without any portion thereof being required
to be used for any particular purpose, and
(j) A guaranty of the Public Senior Debt by a Guarantor
Subsidiary.
6.10 Transactions with Affiliates. After into any transaction of any kind
with any Affiliate of Borrower other than (a) salary, bonus, employee stock
option and other compensation arrangements and indemnification arrangements with
directors or officers in the ordinary course of business, (b) transactions
between or among Borrower and its Guarantor Subsidiaries (other than Coventry
Subsidiaries or Exempt Subsidiaries), (c) Investments in Subsidiaries
specifically permitted in Sections 6.16(d)(ii) and (iii) and (d) transactions on
overall terms at least as favorable to Borrower and its Guarantor Subsidiaries
as would be the case in an arm's-length transaction between unrelated parties of
equal bargaining power.
6.11 Tangible Net Worth. Permit Tangible Net Worth, as of the last day of
any Fiscal Quarter ending on or after June 30, 1995, to be less than the sum of
(a) $200,000,000 plus (b) an amount equal to 75% of the cumulative Net Income
earned in all Fiscal Quarters ending after December 31, 1994 (with no deduction
for a net loss in any such Fiscal Quarter), plus (c) an amount equal to 50% of
the aggregate cumulative increases in Stockholders' Equity after December 31,
1994 by reason of the issuance and sale of capital stock by Borrower (including
upon any conversion or exchange of debt securities of Borrower into such capital
stock).
6.12 Consolidated Fixed Charge Coverage. Permit the Consolidated Fixed
Charge Coverage Ratio, as of the last day of any Fiscal Quarter ending on or
after June 30, 1995, to be less than 1.75:1.00.
6.13 Debt to Net Worth. Permit the ratio of (a) Adjusted Total
Indebtedness to (b) Tangible Net Worth, each as of any Fiscal Quarter ending on
or after June 30, 1995, to be greater than the ratio set forth below opposite
the period during which such Fiscal Quarter ends:
Period Ratio
------ -----
June 30, 1995 through
March 31, 1996 2.75:1.00
April 1, 1996 through
March 31, 1997 2.35:1.00
April 1, 1997 and thereafter 2.15:1.00
6.14 Adjusted Senior Debt to Net Worth. Permit the ratio of Adjusted
Senior Debt to Tangible Net Worth, each as of any Fiscal Quarter ending on or
after June 30, 1995, to be greater than the ratio set forth below opposite the
period during which such Fiscal Quarter ends:
Period Ratio
------ -----
June 30, 1995 through
March 31, 1996 1.90:1.00
April 1, 1996 through
March 31, 1997 1.70:1.00
April 1, 1997 through
March 31, 1998 1.50:1.00
April 1, 1998 and thereafter 1.25:1.00
6.15 Liquidity. Permit, as of the last day of any Fiscal Year, beginning
June 30, 1995, the ratio of EBITDA for such Fiscal Year to Specified Charges for
such Fiscal Year to be less than (a) 0.50:1.00 for the Fiscal Year ending June
30, 1995 or (b) 0.75:1.00 for the Fiscal Years ending June 30, 1996 or
thereafter, provided that any such failing shall not constitute an Event of
Default under Section 9.1(c) unless and until Borrower shall also permit, as of
the last day of the immediately succeeding Fiscal Quarter, the ratio of EBITDA
for the four (4) Fiscal Quarter period then ending to Specified Charges for such
four (4) Fiscal Quarter period to also be less than said specified ratio.
6.16 Investments. Make or suffer to exist any Investment, other than:
(a) Investments in existence on the Closing Date and disclosed on
Schedule 6.16;
(b) Investments consisting of Cash and Cash Equivalents;
(c) Investments consisting of or evidencing the extension of
credit to customers of Borrower and its Subsidiaries in the ordinary
course of business and any Investments received in satisfaction or
partial satisfaction thereof;
(d) Investments of Borrower in any of its Subsidiaries and
Investments of any Subsidiary in Borrower or another Subsidiary provided
that (i) the book value of Investments in Subsidiaries that engage in
activities other than the acquisition, development, construction or
financing of residential real estate as a material portion of their
business activities shall not exceed, in the aggregate at any date of
determination, more than 10% of Tangible Net Worth as of the end of the
then most recently ended Fiscal Quarter (ii) the book value of
Investments in Subsidiaries that are not Guarantor Subsidiaries shall not
exceed, in the aggregate at any date of determination, $5,000,000; and
(iii) at no time shall the aggregate cumulative dollar amount of
Investments (net of cumulative cash payments made by Exempt Subsidiaries
to Borrower and its wholly-owned Subsidiaries which are not Coventry
Subsidiaries or Exempt Subsidiaries on account of such Investments) in
all Exempt Subsidiaries exceed the lesser of (A) $35,000,000 or (B) 50%
of the cumulative amount of Net Income (giving account to any net loss),
as of the most recently ended Fiscal Quarter, from and after the Fiscal
Quarter beginning January 1, 1996. All references to "Investments" in
clauses (i) through (iii) shall specifically include guaranties, as
provided in the definition of "Investments". The termination or release
(in whole or in part) of any such guaranty that is treated as an
Investment (in the absence of payment thereunder) shall thereupon result
in a corresponding reduction in the measured amount of such Investment;
(e) Investments received in connection with the settlement of a
bona fide dispute with another Person; and
(f) Investments representing all or a portion of the sales price
for Property sold to another Person.
(g) Investments (i) consisting of readily marketable securities
actively traded on a public exchange or (ii) in Persons (other than
Subsidiaries), each of which Persons does not, as a material portion of
its business, engage in activities other than those related to the
acquisition, development, construction or financing of residential real
estate, provided that (A) the cumulative dollar amount of Investments
under clause (i) (net of cumulative cash payments in respect of such
Investments) shall at no time exceed $2,000,000 and (B) the cumulative
dollar amount of Investments under clauses (i) and (ii) (net of
cumulative cash payments in respect of such Investments) shall at no time
exceed $10,000,000.
6.17 Unentitled Land.
(a) Permit the total amount of Borrower's and its Subsidiaries'
Cash investment in Unentitled Land that (i) is part of Current Operating
Projects other than Coventry Homes Projects or (ii) is part of a Coventry
Homes Project for which home sale closings have commenced (including in
either case, without limitation, all Cash expenditures reasonably
allocated to the acquisition, development, maintenance and holding of
such Unentitled Land) to exceed 25% of Tangible Net Worth at any time on
or after June 30, 1995; or
(b) Permit the total amount of Borrower's and its Subsidiaries
Cash investment in Unentitled Land that (i) is not part of Current
Operating Projects or (ii) is part of a Coventry Homes Project for which
home sale closings have not yet commenced (including in either case,
without limitation, all Cash expenditures reasonably allocated to the
acquisition, development, maintenance and holding of such Unentitled
Land) to exceed 10% of Tangible Net Worth at any time on or after June
30, 1995.
6.18 Unsold Homes in Production. For any two (2) consecutive Fiscal
Quarters, beginning with the Fiscal Quarter ending March 31, 1995:
(a) Permit the number of Unsold Homes (other than (i) Unsold Homes
that are part of the Coventry Homes Projects, (ii) Unsold Homes included
in development projects with respect to which, on the date of
determination, 12 months has not elapsed since the closing of the sale of
the first housing unit, (iii) Unsold Homes that are held by an Exempt
Subsidiary if such Unsold Home has been pledged to secure financing
described in Section 6.8(f) and (iv) Unsold Homes within any Current
Operating Project that are then being used as sales models or as vacation
apartments for marketing purposes (collectively, "Excluded Unsold
Homes")), as of the end of such Fiscal Quarters to exceed the applicable
percentage shown below of the number of housing unit sale closings of
Borrower and its Guarantor Subsidiaries (other than sale closings of
housing units that are Excluded Unsold Homes) that occurred in the twelve
(12) months immediately prior to each such Fiscal Quarter end:
Applicable
Any Fiscal Quarter Ending Percentage
------------------------- ----------
September 30th 35%
December 31st 35%
March 31st 30%
June 30th 25%; or
(b) Permit the number of Unsold Homes that are part of the
Coventry Homes Projects as of the end of such Fiscal Quarters to exceed
25% of the number of housing unit sale closings in the Coventry Homes
Projects that occurred in the twelve (12) months immediately prior to
each such Fiscal Quarter end.
6.19 Exempt Subsidiaries. Permit any Exempt Subsidiary to hold an
ownership interest in any Subsidiary that is not also an Exempt Subsidiary.
6.20 Coventry Assets. Permit, as of the last day of any Fiscal Quarter,
beginning June 30, 1995, the ratio of Coventry Assets to Consolidated Total
Assets to be greater than 0.20:1.00 or the ratio of Coventry Land Assets to
Consolidated Total Assets to be greater than 0.15:1.00.
<PAGE>
Article 7
INFORMATION AND REPORTING REQUIREMENTS
--------------------------------------
7.1 Financial and Business Information. So long as any Advance remains
unpaid, or any other Obligation remains unpaid or unperformed, or any portion of
a Commitment remains in force, Borrower shall, unless the Agent (with the
written approval of the Majority Banks) otherwise consents, deliver to the Agent
and the Banks, at Borrower's sole expense:
(a) As soon as practicable, and in any event within 60 days after
the end of each Fiscal Quarter (other than the fourth Fiscal Quarter in
any Fiscal Year), (i) the consolidated balance sheet of Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the consolidated
statement of operations for each Fiscal Quarter, and its statement of
cash flows for the portion of the Fiscal Year ended with such Fiscal
Quarter and (ii) the consolidating (in accordance with past consolidating
practices of Borrower) balance sheets and statements of operations as at
and for the portion of the Fiscal Year ended with such Fiscal Quarter,
all in reasonable detail. Such financial statements shall be certified by
a Senior Officer of Borrower as fairly presenting the financial
condition, results of operations and cash flows of Borrower and its
Subsidiaries in accordance with Generally Accepted Accounting Principles
(other than footnote disclosures), consistently applied, as at such date
and for such periods, subject only to normal year-end accruals and audit
adjustments;
(b) As soon as practicable, and in any event within 120 days after
the end of each Fiscal Year (including the Fiscal Year ending June 30,
1995), (i) the consolidated balance sheet of Borrower and its
Subsidiaries as at the end of such Fiscal Year and the consolidated
statements of operations, shareholders' equity and cash flows, in each
case of Borrower and its Subsidiaries for such Fiscal Year and (ii)
consolidating (in accordance with past consolidating practices of
Borrower) balance sheets and statements of operations, in each case as at
and for the Fiscal Year, all in reasonable detail. In the case of clause
(i), such financial statements shall be prepared in accordance with
Generally Accepted Accounting Principles, consistently applied, and such
consolidated balance sheet and consolidated statements shall be
accompanied by a report and opinion of KPMG Peat Marwick or other
independent public accountants of recognized standing selected by
Borrower and reasonably satisfactory to the Majority Banks, which report
and opinion shall be prepared in accordance with generally accepted
auditing standards as at such date, and shall not be subject to any
qualifications or exceptions as to the scope of the audit nor to any
other qualification or exception reasonably determined by the Majority
Banks in their good faith business judgment to be adverse to the
interests of the Banks. Such accountants' report and opinion shall be
accompanied by a certificate stating that, in making the examination
pursuant to generally accepted auditing standards necessary for the
certification of such financial statements and such report, such
accountants have obtained no knowledge of any Default or, if, in the
opinion of such accountants, any such Default shall exist, stating the
nature and status of such Default, and stating that such accountants have
reviewed Borrower's financial calculations as at the end of such Fiscal
Year (which shall accompany such certificate) under Sections 6.11 through
6.15, have read such Sections (including the definitions of all defined
terms used therein) and that nothing has come to the attention of such
accountants in the course of such examination that would cause them to
believe that the same were not calculated by Borrower in the manner
prescribed by this Agreement. In the case of clause (ii), such financial
statements shall be certified by a Senior Officer of Borrower as fairly
presenting the financial condition, results of operations and cash flows
of Borrower and its Subsidiaries in accordance with Generally Accepted
Accounting Principles (other than footnote disclosures), consistently
applied, as at such date and for such periods;
(c) As soon as practicable, and in any event within 60 days after
the commencement of each Fiscal Year (including the Fiscal Year beginning
July 1, 1995), a budget by Fiscal Quarter for that Fiscal Year and a
strategic plan by Fiscal Year for the three Fiscal Years following the
budgeted year, including for the Fiscal Year just commenced, projected
consolidated balance sheets, statements of operations and statements of
cash flow and, for the next three succeeding Fiscal Years, projected
consolidated condensed balance sheets and statements of operations and
cash flow, of Borrower and its Subsidiaries, all in reasonable detail;
(d) Promptly after request by the Agent or any Bank, copies of any
detailed audit reports, management letters or recommendations submitted
to the board of directors (or the audit committee of the board of
directors) of Borrower by independent accountants in connection with the
accounts or books of Borrower or any of its Subsidiaries, or any audit of
any of them;
(e) Promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication
sent to the shareholders of Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which Borrower
may file or be required to file with the Securities and Exchange
Commission under Sections 13 or 15(d) of the Securities Exchange Act of
1934 and not otherwise required to be delivered to the Banks pursuant to
other provisions of this Section 7.1;
(f) Except as prohibited by Law, promptly after request by the
Agent or any Bank, copies of any other report or other document that was
filed by Borrower or any of its Subsidiaries with any Governmental
Agency;
(g) Promptly upon a Senior Officer becoming aware, and in any
event within five (5) Banking Days after becoming aware, of the
occurrence of any (i) "reportable event" (as such term is defined in
Section 4043 of ERISA) or (ii) "prohibited transaction" (as such term is
defined in Section 406 of ERISA or Section 4975 of the Code) in
connection with any Pension Plan or any trust created thereunder,
telephonic notice specifying the nature thereof, and, no more than five
(5) Banking Days after such telephonic notice, written notice again
specifying the nature thereof and specifying what action Borrower or any
of its Subsidiaries is taking or proposes to take with respect thereto,
and, when known, any action taken by the Internal Revenue Service with
respect thereto;
(h) As soon as practicable, and in any event within two Banking
Days after a Senior Officer becomes aware of the existence of any
condition or event which constitutes a Default, telephonic notice
specifying the nature and period of existence thereof, and, no more than
two Banking Days after such telephonic notice, written notice again
specifying the nature and period of existence thereof and specifying what
action Borrower or any of its Subsidiaries are taking or propose to take
with respect thereto;
(i) Promptly upon a Senior Officer becoming aware that (i) any
Person commenced a legal proceeding with respect to a claim against
Borrower or any of its Subsidiaries that is $500,000 or more in excess of
the amount thereof that is fully covered by insurance, (ii) any creditor
or lessor under a written credit agreement or material lease has asserted
a default thereunder on the part of Borrower or any of its Subsidiaries,
(iii) any Person commenced a legal proceeding with respect to a claim
against Borrower or any of its Subsidiaries under a contract that is not
a credit agreement or material lease in excess of $500,000 or which
otherwise may reasonably be expected to result in a Material Adverse
Effect, or (iv) any labor union has notified Borrower of its intent to
strike Borrower or any of its Subsidiaries on a date certain and such
strike would involve more than 100 employees of Borrower and its
Subsidiaries, a written notice describing the pertinent facts relating
thereto and what action Borrower or its Subsidiaries are taking or
propose to take with respect thereto;
(j) No later than 7 days prior to its creation, written notice of
any Lien to be created pursuant to Section 6.8(e) or (f), together with a
reasonably detailed description of such Lien and the Indebtedness to be
secured thereby; and
(k) Such other data and information as from time to time may be
reasonably requested by the Agent, any Bank (through the Agent) or the
Majority Banks.
7.2 Compliance Certificates. So long as any Advance remains unpaid, or
any other Obligation remains unpaid or unperformed, or any portion of a
Commitment remains outstanding, Borrower shall deliver to the Agent and the
Banks, at Borrower's sole expense, concurrently with the financial statements
required pursuant to Sections 7.1(a) and 7.1(b), a Compliance Certificate signed
by a Senior Officer.
<PAGE>
Article 8
CONDITIONS
----------
8.1 Initial Advances, Etc. The effectiveness of this Agreement as an
amendment and restatement of the Original Loan Agreement, and the effectiveness
of the other Loan Documents as amendments and restatements of the other Original
Loan Documents, and the obligation of each Bank to make the initial Advance to
be made by it and, if applicable, to make or accept an Adjusting Purchase
Payment, and the obligation of the Issuing Bank to issue any Letter of Credit
are subject to the following conditions precedent, each of which must be
satisfied unless all of the Banks, in their sole and absolute discretion, shall
agree otherwise:
(a) The Agent shall have received all of the following, each of
which shall be originals unless otherwise specified, each properly
executed by a Responsible Official of each party thereto, each dated as
of the Closing Date and each in form and substance satisfactory to the
Agent and its legal counsel (unless otherwise specified or, in the case
of the date of any of the following, unless the Agent otherwise agrees or
directs):
(1) at least one (1) executed counterpart of this Agreement,
together with arrangements satisfactory to the Agent for
additional executed counterparts, sufficient in number for
distribution to the Banks and Borrower;
(2) a Line A Note and a Line B Note executed by Borrower in
favor of each Bank, each such Note in a principal amount equal to
that Bank's Pro Rata Share of the applicable Commitment;
(3) the Subsidiary Guaranty executed by each Guarantor
Subsidiary;
(4) with respect to Borrower and each Guarantor Subsidiary,
such documentation as may be required to establish the due
organization, valid existence and good standing of Borrower and
each such Subsidiary, its qualification to engage in business in
each material jurisdiction in which it is engaged in business or
required to be so qualified, its authority to execute, deliver and
perform any Loan Documents to which it is a Party, the identity,
authority and capacity of each Responsible Official thereof
authorized to act on its behalf, including certified copies of
articles of incorporation and amendments thereto, bylaws and
amendments thereto, certificates of good standing and/or
qualification to engage in business, tax clearance certificates,
certificates of corporate resolutions, incumbency certificates,
Certificates of Responsible Officials, and the like;
(5) the Opinions of Counsel;
(6) a Certificate of a Responsible Official certifying that
the attached copies of (i) the Indenture for the Public Senior
Debt, (ii) the Indenture for the Public 9-3/4% Senior Subordinated
Debt, (iii) the Public Bond Issue Agreement for the Swiss Franc
Debt and (iv) the Indenture for the Public 9.00% Senior
Subordinated Debt are true, current and complete copies;
(7) a Certificate of a Responsible Official signed by a
Senior Officer certifying that the conditions specified in
Sections 8.1(a)(8), 8.1(d) and 8.1(e) have been satisfied;
(8) evidence that:
(i) all indebtedness outstanding under the Cancelled
Debt Facilities is being repaid with proceeds of the initial
Advances, with the exception of the reimbursement obligation
under a letter of credit in the approximate amount of
$609,000 outstanding under Guaranty Federal Bank's facility
designated "Coventry Homes - PHX - Land Acquisition Loan"
(the "GFB L/C");
(ii) all further credit availability (and any
commitment therefor) under the Cancelled Debt Facilities is
being terminated concurrently with the initial Advances; and
(iii) all collateral security for and with respect to
the Cancelled Debt Facilities (except as may secure the
reimbursement obligation under the GFB L/C) will be released
promptly following the initial Advances,
such evidence may consist of payoff and collateral release demand
letters from applicable lenders and, if requested by the Agent,
the delivery of collateral release documents to the Agent or the
creation of satisfactory escrow arrangements for the payoff and
release of liens with respect to Cancelled Debt Facilities; and
(9) such other assurances, certificates, documents, consents
or opinions as the Agent reasonably may require.
(b) The fees payable pursuant to Sections 3.2 and 3.3 shall have
been paid and any accrued interest and fees under the Original Loan
Documents shall have been paid as specified in Section 3.16.
(c) The reasonable costs and expenses of the Agent in connection
with the preparation of the Loan Documents payable pursuant to Section
11.3, and invoiced to Borrower prior to the Closing Date, shall have been
paid.
(d) The representations and warranties of Borrower contained in
Article 4 shall be true and correct.
(e) Borrower and any other Parties shall be in compliance with all
the terms and provisions of the Loan Documents, and giving effect to the
initial Advance no Default or Event of Default shall have occurred and be
continuing.
(f) The Consolidated Fixed Charge Coverage Ratio shall be no less
than 3.00:1.00.
8.2 Any Increasing Advance. The obligation of each Bank to make any
Advance which would increase the principal amount outstanding under the Notes
and the obligation of the Issuing Bank to issue a Letter of Credit are subject
to the following conditions precedent:
(a) except (i) for representations and warranties which expressly
speak as of a particular date or are no longer true and correct as a
result of a change which is permitted by this Agreement or (ii) as
disclosed by Borrower and approved in writing by the Majority Banks, the
representations and warranties contained in Article 4 (other than
Sections 4.4(a), 4.6 (first sentence), and 4.10), shall be true and
complete on and as of the date of the Advance as though made on that
date;
(b) other than matters described in Schedule 4.10 or not
required as of the Closing Date to be therein described, there shall not
be then pending or threatened any action, suit, proceeding or
investigation against or affecting Borrower or any of its Subsidiaries or
any Property of any of them before any Governmental Agency that
constitutes a Material Adverse Effect;
(c) the Consolidated Fixed Charge Coverage Ratio shall be no less
than 2.25:1.00;
(d) in the case of any Letter of Credit or any Advance with
respect to the Line A Commitment, the Consolidated Fixed Charge Coverage
Ratio shall be no less than 3.00:1.00;
(e) the Agent shall have timely received a Request for Loan in
compliance with Article 2 (or telephonic or other request for loan
referred to in the second sentence of Section 2.1(b), if applicable) and
the Issuing Bank shall, in the case of a Letter of Credit, have received
a Request for Letter of Credit in compliance with Article 2;
(f) the Agent shall have received, in form and substance
satisfactory to the Agent, such other assurances, certificates, documents
or consents related to the foregoing as the Agent or Majority Banks
reasonably may require; and
(g) the Agent shall have received, concurrently with the
corresponding Request for Loan (or, if applicable, the telephonic notice
thereof, under Section 2.1(b)), a fully and accurately completed Loan
Compliance Certificate, dated the date the Loan is to be made, and, on
the date of the Loan, Borrower and its Subsidiaries shall be in
compliance with all requirements specified thereon with respect to the
nature and amount of the requested Loan.
8.3 Any Advance. The obligation of each Bank to make any Advance is
subject to the condition precedent that, except as provided for in Section
2.1(g), the Agent shall have timely received a Request for Loan in compliance
with Article 2 (or telephonic or other request for loan referred to in the
second sentence of Section 2.1(b), if applicable).
8.4 Return of Original Notes. Upon the effectiveness of this Agreement,
including the delivery by Borrower of all documents required under Section 8.1,
the Banks holding the Original Notes shall return them to Borrower, in each case
marked "Cancelled and Replaced."
<PAGE>
Article 9
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
----------------------------------------------------
9.1 Events of Default. The existence or occurrence of any one or more of
the following events, whatever the reason therefor and under any circumstances
whatsoever, shall constitute an Event of Default:
(a) Borrower fails to pay any principal Indebtedness on any Note
on the date when due or fails to pay to the Issuing Bank the amount drawn
under any Letter of Credit as required under Section 2.12(d); or
(b) Borrower fails to pay any interest on any Note, or any fees
under Sections 3.2, 3.3 or 3.4 or any portion thereof, within five (5)
Banking Days after the date when due; or fails to pay any other fee or
amount payable to the Banks under any Loan Document, or any portion
thereof, within five (5) Banking Days after written notice of such
failure; or
(c) Borrower fails to comply with any of the covenants contained
in Sections 5.2, 5.9, 6.1, 6.2, 6.3, 6.4, 6.5, 6.7, 6.11, 6.12, 6.13,
6.14, 6.15, 6.16, 6.18, or 7.1(h), and, in the case of Sections 6.4, 6.7
or 6.16 only, ten (10) days have elapsed without cure after either a
Senior Officer of Borrower has actual knowledge of such failing or the
Agent shall have given Borrower notice of such failing; or
(d) Borrower, any of its Guarantor Subsidiaries or any other Party
fails to perform or observe any other covenant or agreement (not
specified in clauses (a), (b) or (c) above) contained in any Loan
Document on its part to be performed or observed within ten (10) days
after the giving of notice by the Agent on behalf of the Majority Banks
of such Default; or
(e) Any representation or warranty of Borrower or any of its
Subsidiaries made in any Loan Document, or in any certificate or other
writing delivered by Borrower pursuant to any Loan Document, proves to
have been incorrect when made or reaffirmed in any material respect; or
(f) Borrower or any of its Guarantor Subsidiaries (i) fails to pay
the principal, or any principal installment, of any present or future
Indebtedness for borrowed money of $1,500,000 or more (other than
Non-Recourse Debt specified in Section 6.8(d)), or any guaranty of
present or future Indebtedness for borrowed money of $1,500,000 or more,
on its part to be paid, when due (or within any stated grace period),
whether at the stated maturity, upon acceleration, by reason of required
prepayment or otherwise or (ii) fails to perform or observe any other
term, covenant or agreement on its part to be performed or observed, or
suffers any event to occur, in connection with any present or future
indebtedness for borrowed money of $1,500,000 or more (other than
Non-Recourse Debt specified in Section 6.8(d)), or of any guaranty of
present or future indebtedness for borrowed money of $1,500,000 or more,
if as a result of such failure or sufferance any holder or holders
thereof (or an agent or trustee on its or their behalf) has the right to
declare such indebtedness due before the date on which it otherwise would
become due; or
(g) Any event occurs which gives the holder or holders of any
Subordinated Obligation (or an agent or trustee on its or their behalf)
the right to declare such indebtedness due before the date on which it
otherwise would become due, or the right to require the issuer thereof to
redeem or purchase, or offer to redeem or purchase, all or any portion of
any Subordinated Obligation; or
(h) Any Loan Document, at any time after its execution and
delivery and for any reason other than the agreement of the Banks or
satisfaction in full of all the Obligations ceases to be in full force
and effect or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable in any respect which, in any such
event in the reasonable opinion of the Majority Banks, is materially
adverse to the interests of the Banks; or any Party thereto denies that
it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind same; or
(i) A final judgment against Borrower or any of its Guarantor
Subsidiaries is entered for the payment of money in excess of $1,000,000
and, absent procurement of a stay of execution, such judgment remains
unsatisfied for thirty (30) calendar days after the date of entry of
judgment, or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or any writ or warrant of attachment or
execution or similar process is issued or levied against all or any
material part of the Property of any such Person and is not released,
vacated or fully bonded within thirty (30) calendar days after its issue
or levy; or
(j) Borrower or any of its Guarantor Subsidiaries (other than a
Guarantor Subsidiary that holds as its principal assets the Spring Creek
Project or the Glen Harbor Project) institutes or consents to the
institution of any proceeding under a Debtor Relief Law relating to it or
to all or any part of its Property, or is unable or admits in writing its
inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer for it or for all or any part of its Property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of that
Person and the appointment continues undischarged or unstayed for sixty
(60) calendar days; or any proceeding under a Debtor Relief Law relating
to any such Person or to all or any part of its Property is instituted
without the consent of that Person and continues undismissed or unstayed
for sixty (60) calendar days; or
(k) The occurrence of an Event of Default (as such term is or may
hereafter be specifically defined in any other Loan Document) under any
other Loan Document; or
(l) Any determination is made by a court of competent jurisdiction
that the Public 9-3/4% Senior Subordinated Debt, the Public 9.00% Senior
Subordinated Debt, the Swiss Franc Debt or any other Subordinated
Obligation is not subordinated in accordance with its terms to the
principal or interest under the Notes; or
(m) Any Pension Plan maintained by Borrower or any of its
Subsidiaries is determined to have a material "accumulated funding
deficiency" as that term is defined in Section 302 of ERISA and the
result is a Material Adverse Effect.
9.2 Remedies Upon Event of Default. Without limiting any other rights or
remedies of the Agent or the Banks provided for elsewhere in this Agreement, or
the Loan Documents, or by applicable Law, or in equity, or otherwise:
(a) Upon the occurrence, and during the continuance, of any Event
of Default other than an Event of Default described in Section 9.1(j):
(1) the commitment to make Advances and all other obligations
of the Agent or the Banks and all rights of Borrower and any other
Parties under the Loan Documents shall be suspended without notice
to or demand upon Borrower, which are expressly waived by
Borrower, except that all of the Banks or the Majority Banks (as
the case may be, in accordance with Section 11.2) may waive an
Event of Default or, without waiving, determine, upon terms and
conditions satisfactory to the Banks or Majority Banks, as the
case may be, to reinstate the Commitments and make further
Advances, which waiver or determination shall apply equally to,
and shall be binding upon, all the Banks;
(2) the Issuing Bank may, with the approval of the Majority
Banks, demand immediate payment by Borrower of an amount equal to
the aggregate drawable face amount of all then outstanding Letters
of Credit to be held by the Issuing Bank in an interest-bearing
cash collateral account as collateral hereunder, and Borrower
hereby grants to the Agent, on behalf of the Banks, a security
interest in such funds and any such account to secure the
Obligations; and
(3) the Majority Banks may request the Agent to, and the
Agent thereupon shall, terminate the Commitments and/or declare
all or any part of the unpaid principal of all Notes, all interest
accrued and unpaid thereon and all other amounts payable under the
Loan Documents to be forthwith due and payable, whereupon the same
shall become and be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any
kind, all of which are expressly waived by Borrower.
(b) Upon the occurrence of any Event of Default described in
Section 9.1(j):
(1) the commitment to make Advances and all other obligations
of the Agent or the Banks and all rights of Borrower and any other
Parties under the Loan Documents shall terminate without notice to
or demand upon Borrower, which are expressly waived by Borrower;
(2) an amount equal to the aggregate drawable face amount of
all then outstanding Letters of Credit shall be immediately due
and payable to the Issuing Bank without notice to or demand upon
Borrower, which are expressly waived by Borrower, to be held by
the Issuing Bank in an interest-bearing cash collateral account as
collateral hereunder, and Borrower hereby grants to the Agent, on
behalf of the Banks, a security interest in such funds and any
such account to secure the Obligations; and
(3) the unpaid principal of all Notes, all interest accrued
and unpaid thereon and all other amounts payable under the Loan
Documents shall be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any
kind, all of which are expressly waived by Borrower.
(c) Upon the occurrence of any Event of Default, the Agent or (but
only upon directive of the Majority Banks) any of the Banks, without
notice to (except as expressly provided for in any Loan Document) or
demand upon Borrower, which are expressly waived by Borrower (except as
to notices expressly provided for in any Loan Document), may proceed to
protect, exercise and enforce the rights and remedies of the Agent and
the Banks under the Loan Documents against Borrower and any other Party
and such other rights and remedies as are provided by Law or equity.
(d) The order and manner in which the Banks' rights and remedies
are to be exercised shall be determined by the Majority Banks in their
sole discretion, and all payments received by the Agent and the Banks, or
any of them, shall be applied first to the costs and expenses (including
attorneys' fees and disbursements and the allocated costs of attorneys
employed by the Agent) of the Agent and of the Banks, and thereafter paid
pro rata to the Banks in the same proportions that the aggregate
Obligations owed to each Bank under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all the Banks,
without priority or preference among the Banks. Regardless of how each
Bank may treat payments for the purpose of its own accounting, for the
purpose of computing Borrower's Obligations hereunder and under the
Notes, payments shall be applied first, to the costs and expenses of the
Agent and the Banks, as set forth above, second, to the payment of
accrued and unpaid interest due under any Loan Documents to and including
the date of such application (ratably, and without duplication, according
to the accrued and unpaid interest due under each of the Loan Documents),
and third, to the payment of all other amounts (including principal and
fees) then owing to the Agent or the Banks under the Loan Documents. No
application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the
Loan Documents, or prevent the exercise, or continued exercise, of rights
or remedies of the Banks hereunder or thereunder or at Law or in equity.
<PAGE>
Article 10
THE AGENT
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10.1 Appointment and Authorization. Subject to Section 10.8, each Bank
hereby irrevocably appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Documents as are
delegated to the Agent by the terms thereof or are reasonably incidental, as
determined by the Agent, thereto. This appointment and authorization is intended
solely for the purpose of facilitating the servicing of the Loans and does not
constitute appointment of the Agent as trustee for any Bank or as representative
of any Bank for any other purpose and, except as specifically set forth in the
Loan Documents to the contrary, the Agent shall take such action and exercise
such powers only in an administrative and ministerial capacity.
10.2 Agent and Affiliates. Bank of America (and each successor Agent) has
the same rights and powers under the Loan Documents as any other Bank and may
exercise the same as though it was not the Agent, and the term "Bank" or "Banks"
includes Bank of America in its individual capacity. Bank of America (and each
successor Agent) and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with Borrower,
any Subsidiary thereof, or any Affiliate of Borrower or any Subsidiary thereof,
as if it was not the Agent and without any duty to account therefor to the
Banks. Bank of America (and each successor Agent) need not account to any other
Bank for any monies received by it for reimbursement of its costs and expenses
as Agent hereunder, or (except as expressly provided elsewhere herein) for any
monies received by it in its capacity as a Bank hereunder. The Agent shall not
be deemed to hold a fiduciary relationship with any Bank and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent.
10.3 Proportionate Interest in any Collateral. The Agent, on behalf of
all the Banks, shall hold in accordance with the Loan Documents all items of any
collateral or interests therein received or held by the Agent. Subject to the
Agent's and the Banks' rights to reimbursement for their costs and expenses
hereunder (including attorneys' fees and disbursements and other professional
services and the allocated costs of attorneys employed by the Agent or a Bank)
and subject to the application of payments in accordance with Section 9.2(d),
each Bank shall have an interest in the Banks' interest in any collateral or
interests therein in the same proportions that the aggregate Obligations owed
such Bank under the Loan Documents bear to the aggregate Obligations owed under
the Loan Documents to all the Banks, without priority or preference among the
Banks.
10.4 Banks' Credit Decisions. Each Bank agrees that it has, independently
and without reliance upon the Agent, any other Bank or the directors, officers,
agents, employees or attorneys of the Agent or of any other Bank, and instead in
reliance upon information supplied to it by or on behalf of Borrower and upon
such other information as it has deemed appropriate, made its own independent
credit analysis and decision to enter into this Agreement. Each Bank also agrees
that it shall, independently and without reliance upon the Agent, any other Bank
or the directors, officers, agents, employees or attorneys of the Agent or of
any other Bank, continue to make its own independent credit analyses and
decisions in acting or not acting under the Loan Documents.
10.5 Action by Agent.
(a) The Agent may assume that no Default has occurred and is
continuing, unless the Agent has received notice from Borrower stating
the nature of the Default or has received notice from a Bank stating the
nature of the Default and that such Bank considers the Default to have
occurred and to be continuing.
(b) The Agent has only those obligations under the Loan Documents
as are expressly set forth therein.
(c) Both before and after any Default, the Agent shall be required
to act or not act upon the instructions of the Majority Banks (or all of
the Banks, to the extent required by Section 11.2) and those instructions
shall be binding upon the Agent and all the Banks, provided that the
Agent shall not be required to act or not act if to do so would be
contrary to any Loan Document or to applicable Law or would result, in
the reasonable judgment of the Agent, in a risk of liability to the
Agent. The Agent may, without the consent of the Majority Banks, take
such actions and exercise such discretion as is specified herein. In
addition, should the Agent propose a course of conduct with respect to
the administration of the Loan Documents in writing to the Banks and
should the Majority Banks (or any of the Banks, if unanimous approval of
such action is required under Section 11.2) fail, for five (5) Banking
Days after the receipt of notice from the Agent of the proposed course of
action, to instruct the Agent to the contrary, then the Agent, in its
sole discretion, may act or not act as the Agent deems advisable pursuant
to such course of conduct.
(d) The Agent shall have no liability to any Bank for acting, or
not acting, as instructed by the Majority Banks (or all the Banks, if
required under Section 11.2) or as permitted under clause (c), above,
notwithstanding any other provision hereof.
10.6 Liability of Agent. Either the Agent nor any of its directors,
officers, agents, employees or attorneys shall be liable for any action taken or
not taken by them under or in connection with the Loan Documents, except for
their own gross negligence or willful misconduct. Without limitation on the
foregoing, the Agent and its directors, officers, agents, employees and
attorneys:
(a) May treat the payee of any Note as the holder thereof until
the Agent receives notice of the assignment or transfer thereof, in form
satisfactory to the Agent, signed by the payee, and may treat each Bank
as the owner of that Bank's interest in the Obligations for all purposes
of this Agreement until the Agent receives notice of the assignment or
transfer thereof, in form satisfactory to the Agent, signed by that Bank.
(b) May consult with legal counsel (including in-house legal
counsel), accountants (including in-house accountants) and other
professionals or experts selected by it, or with legal counsel,
accountants or other professionals or experts for Borrower and/or its
Subsidiaries or the Banks, and shall not be liable for any action taken
or not taken by it in good faith in accordance with any advice of such
legal counsel, accountants or other professionals or experts.
(c) Shall not be responsible to any Bank for any statement,
warranty or representation made in any of the Loan Documents or in any
notice, certificate, report, request or other statement (written or oral)
given or made in connection with any of the Loan Documents.
(d) Except to the extent expressly set forth in the Loan
Documents, shall have no duty to ask or inquire as to the performance or
observance by Borrower or its Subsidiaries of any of the terms,
conditions or covenants of any of the Loan Documents or to inspect any
collateral or the Property, books or records of Borrower or its
Subsidiaries.
(e) Will not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, effectiveness,
sufficiency or value of any Loan Document, any other instrument or
writing furnished pursuant thereto or in connection therewith, or any
collateral.
(f) Will not incur any liability by acting or not acting in
reliance upon any Loan Document, notice, consent, certificate, statement,
request or other instrument or writing believed by it to be genuine and
signed or sent by the proper party or parties.
(g) Will not incur any liability for any arithmetical error in
computing any amount paid or payable by Borrower or any Subsidiary or
Affiliate thereof or paid or payable to or received or receivable from
any Bank under any Loan Document, including, without limitation,
principal, interest, commitment fees, Advances and other amounts;
provided that, promptly upon discovery of such an error in computation,
the Agent, the Banks and (to the extent applicable) Borrower and/or its
Subsidiaries or Affiliates shall make such adjustments as are necessary
to correct such error and to restore the parties to the position that
they would have occupied had the error not occurred.
10.7 Indemnification. Each Bank shall, ratably in accordance with its Pro
Rata Share of the Commitments, indemnify and hold the Agent and its directors,
officers, agents, employees and attorneys harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including,
without limitation, attorneys' fees and disbursements and allocated costs of
attorneys employed by the Agent) that may be imposed on, incurred by or asserted
against it or them in any way relating to or arising out of the Loan Documents
(other than losses incurred by reason of the failure of Borrower to pay the
indebtedness represented by the Notes) or any action taken or not taken by it as
Agent thereunder, except such as result from its own gross negligence or willful
misconduct. Without limitation on the foregoing, each Bank shall reimburse the
Agent upon demand for that Bank's Pro Rata Share of any out-of-pocket cost or
expense incurred by the Agent in connection with the negotiation, preparation,
execution, delivery, amendment, waiver, restructuring, reorganization (including
a bankruptcy reorganization), enforcement or attempted enforcement of the Loan
Documents, to the extent that Borrower or any other Party is required by Section
11.3 to pay that cost or expense but fails to do so upon demand. If payment is
made by Borrower or another Party to the Agent for such cost or expense after
reimbursement to the Agent by a Bank, the Agent shall reimburse such Bank, as
applicable. Nothing in this Section 10.7 shall entitle the Agent to recover any
amount from the Banks if and to the extent that such amount has theretofore been
recovered from Borrower or any of its Subsidiaries.
10.8 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon thirty (30) days notice to the Banks and
Borrower. If the Agent shall resign as Agent under this Agreement, the Majority
Banks shall appoint from among the Banks a successor managing agent for the
Banks, which successor managing agent shall be approved by Borrower (and such
approval shall not be unreasonably withheld). If no successor managing agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and Borrower, a successor managing
agent from among the Banks. Upon the acceptance of its appointment as successor
managing agent hereunder, such successor managing agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall mean
such successor managing agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article 10, and Sections 11.3, 11.10
and 11.20, shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
10.9 No Obligations of Borrower. Nothing contained in this Article 10
shall be deemed to impose upon Borrower any obligation in respect of the due and
punctual performance by the Agent of its obligations to the Banks under any
provision of this Agreement, and Borrower shall have no liability to the Agent
or any of the Banks in respect of any failure by the Agent or any Bank to
perform any of its obligations to the Agent or the Banks under this Agreement.
Without limiting the generality of the foregoing, where any provision of this
Agreement relating to the payment of any amounts due and owing under the Loan
Documents provides that such payments shall be made by Borrower to the Agent for
the account of the Banks, Borrower's obligations to the Banks in respect of such
payments shall be deemed to be satisfied upon the making of such payments to the
Agent in the manner provided by this Agreement.
<PAGE>
Article 11
MISCELLANEOUS
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11.1 Cumulative Remedies; No Waiver. The rights, powers, privileges and
remedies of the Agent and the Banks provided herein or in any Note or other Loan
Document are cumulative and not exclusive of any right, power, privilege or
remedy provided by Law or equity. No failure or delay on the part of the Agent
or any Bank in exercising any right, power, privilege or remedy may be, or may
be deemed to be, a waiver thereof; nor may any single or partial exercise of any
right, power, privilege or remedy preclude any other or further exercise of the
same or any other right, power, privilege or remedy. The terms and conditions of
Article 8 hereof are inserted for the sole benefit of the Agent and the Banks;
the same may be waived in whole or in part, with or without terms or conditions,
in respect of any Loan without prejudicing the Agent's or the Banks' rights to
assert them in whole or in part in respect of any other Loan.
11.2 Amendments; Consents. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Agreement or any other
Loan Document, no approval or consent thereunder, and no consent to any
departure by Borrower or any other Party therefrom, may in any event be
effective unless in writing signed by the Majority Banks (and, in the case of
any amendment, modification or supplement of or to any Loan Document to which
Borrower is a Party, signed by Borrower), and then only in the specific instance
and for the specific purpose given; and, without the approval in writing of all
the Banks, no amendment, modification, supplement, termination, waiver or
consent may be effective:
(a) To amend or modify (i) the amount or payment terms of
principal or interest payable on the Notes, (ii) the amount of the
Commitments, (iii) the amount or payment terms of any commitment or other
fee or amount payable to the Banks generally under the Loan Documents;
(b) To extend the term of the Commitments or to release a
guarantor under the Subsidiary Guaranty (except as provided in Section
5.10);
(c) To amend the provisions of the definition of "Majority Banks",
Section 9.2(d), 10.3, 11.2, 11.9 or 11.10; or
(d) To amend any provision of this Agreement that expressly
requires the consent or approval of all the Banks.
Any amendment, modification, supplement, termination, waiver or consent pursuant
to this Section 11.2 shall apply equally to, and shall be binding upon, all the
Banks and the Agent. The provisions of Article 10 and the provisions of the Loan
Documents dealing with the rights and responsibilities of the Agent may not be
amended without the consent of the Agent.
11.3 Costs, Expenses and Taxes. Borrower shall pay within five (5)
Banking Days after demand, accompanied by an invoice therefor, the reasonable
costs and expenses of the Agent in connection with the negotiation, preparation,
syndication, execution and delivery of the Loan Documents and any amendment
thereto or waiver thereof. Borrower shall also pay on demand, accompanied by an
invoice therefor, the reasonable costs and expenses of the Agent and the Banks
in connection with the refinancing, restructuring, reorganization (including a
bankruptcy reorganization) and enforcement or attempted enforcement of the Loan
Documents, and any matter related thereto. The foregoing costs and expenses
shall include filing fees, recording fees, title insurance fees, appraisal fees,
search fees, and other out-of-pocket expenses and the reasonable fees and
out-of-pocket expenses of any legal counsel (including allocated costs of
in-house legal counsel employed by the Agent or any Bank), independent public
accountants and other outside experts retained by the Agent or any Bank, whether
or not such costs and expenses are incurred or suffered by the Agent or any Bank
in connection with or during the course of any bankruptcy or insolvency
proceedings of Borrower or any Subsidiary thereof. Such costs and expenses shall
also include, in the case of any amendment or waiver of any Loan Document
requested by Borrower, the administrative costs of the Agent reasonably
attributable thereto. Borrower shall pay any and all documentary and other
taxes, excluding, in the case of each Bank, the Agent, and each Eligible
Assignee, and any Affiliate or Eurodollar Lending Office thereof, (i) taxes
imposed on or measured in whole or in part by its overall net income, gross
income or gross receipts or capital and franchise taxes imposed on its by (A)
any jurisdiction (or political subdivision thereof) in which it is organized or
maintains its principal office or Eurodollar Lending Office or (B) any
jurisdiction (or political subdivision thereof) in which it is "doing business"
(unless it would not be doing business in such jurisdiction (or political
subdivision thereof) absent the transactions contemplated hereby), (ii) any
withholding taxes or other taxes based on gross income imposed by the United
States of America (other than withholding taxes and taxes based on gross income
resulting from or attributable to any change in any law, rule or regulation or
any change in the interpretation or administration of any law, rule or
regulation by any governmental authority) or (iii) any withholding taxes or
other taxes based on gross income imposed by the United States of America for
any period with respect to which it has failed to provide Borrower with the
appropriate form or forms required by Section 11.19, to the extent such forms
are then required by applicable Laws, and all costs, expenses, fees and charges
payable or determined to be payable in connection with the filing or recording
of this Agreement, any other Loan Document or any other instrument or writing to
be delivered hereunder or thereunder, or in connection with any transaction
pursuant hereto or thereto, and shall reimburse, hold harmless and indemnify the
Agent and the Banks from and against any and all loss, liability or legal or
other expense with respect to or resulting from any delay in paying or failure
to pay any such tax, cost, expense, fee or charge or that any of them may suffer
or incur by reason of the failure of any Party to perform any of its
Obligations. Any amount payable to the Agent or any Bank under this Section 11.3
shall bear interest from the tenth day following the date of demand for payment
at the Default Rate.
11.4 Nature of Banks' Obligations. The obligations of the Banks hereunder
are several and not joint or joint and several. Nothing contained in this
Agreement or any other Loan Document and no action taken by the Agent or the
Banks or any of them pursuant hereto or thereto may, or may be deemed to, make
the Banks a partnership, an association, a joint venture or other entity, either
among themselves or with Borrower or any Affiliate of Borrower. Each Bank's
obligation to make any Advance pursuant hereto is several and not joint or joint
and several. A default by any Bank will not increase the Pro Rata Share of the
Commitments attributable to any other Bank. Any Bank not in default may, if it
desires, assume in such proportion as the nondefaulting Banks agree the
obligations of any Bank in default, but is not obligated to do so. The Agent
agrees that it will use its best efforts either to induce the other Banks to
assume the obligations of a Bank in default or to obtain another Bank,
reasonably satisfactory to Borrower, to replace such a Bank in default.
11.5 Survival of Representations and Warranties. All representations and
warranties contained herein or in any other Loan Document, or in any certificate
or other writing delivered by or on behalf of any one or more of the Parties to
any Loan Document, will survive the making of the Loans hereunder and the
execution and delivery of the Notes, and have been or will be relied upon by the
Agent and each Bank, notwithstanding any investigation made by the Agent or any
Bank or on their behalf.
11.6 Notices. Except as otherwise expressly provided in the Loan
Documents, all notices, requests, demands, directions and other communications
provided for hereunder or under any other Loan Document must be in writing and
must be mailed, telegraphed, telecopied or delivered to the appropriate party at
the address set forth on the signature pages of this Agreement or other
applicable Loan Document or, as to any party to any Loan Document, at any other
address as may be designated by it in a written notice sent to all other parties
to such Loan Document in accordance with this Section 11.6. Except as otherwise
expressly provided in any Loan Document, if any notice, request, demand,
direction or other communication required or permitted by any Loan Document is
given by mail it will be effective on the earlier of receipt or the third
calendar day after deposit in the United States mail with first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telecopier, when sent; or if given by
personal delivery (including delivery by courier), when delivered. If a notice
is being given of the occurrence of a Default or Event of Default, the Person
giving the notice shall use reasonable efforts to either give or supplement such
notice with a notice by telecopy.
11.7 Execution of Loan Documents. Unless the Agent otherwise specifies
with respect to any Loan Document, (a) this Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, when taken together will be
deemed to be but one and the same instrument and (b) execution of any such
counterpart may be evidenced by a telecopier transmission of the signature of
such party. The execution of this Agreement or any other Loan Document by any
party hereto or thereto will not become effective until counterparts hereof or
thereof, as the case may be, have been executed by all the parties hereto or
thereto.
11.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents to which Borrower
is a Party will be binding upon and inure to the benefit of Borrower, the
Agent, the Co-Agent, each of the Banks, and their respective successors
and assigns, except that Borrower may not assign its rights or
responsibilities hereunder or thereunder or any interest herein or
therein without the prior written consent of all the Banks. Each Bank
represents that it is not acquiring its Note with a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended (subject to any requirement that disposition of such Note must be
within the control of such Bank). Any Bank may at any time pledge its
Note or any other instrument evidencing its rights as a Bank under this
Agreement to a Federal Reserve Bank, but no such pledge shall release
that Bank from its obligations hereunder or grant to such Federal Reserve
Bank the rights of a Bank hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date, each Bank may
assign to one or more Eligible Assignees a portion of its Pro Rata Share
of the Commitments; provided that (i) in no event shall an assignment be
made that would reduce the remaining Pro Rata Share of the Commitment
held by the assigning Bank below $10,000,000 (ii) such Eligible Assignee
shall be subject to the prior reasonable approval of the Agent and
Borrower, (iii) such assignment shall be evidenced by a Commitment
Assignment and Acceptance, a copy of which shall be furnished to the
Agent as hereinbelow provided, (iv) the assignment shall not assign a Pro
Rata Share of the Commitments equivalent to less than $10,000,000, (v)
any such assignment must be made pro-rata with respect to the Line A and
Line B Commitments, and (vi) the effective date of any such assignment
shall be as specified in the Commitment Assignment and Acceptance, but
not earlier than the date which is five (5) Banking Days after the date
the Agent has received the Commitment Assignment and Acceptance. Upon the
effective date of such Commitment Assignment and Acceptance, the Eligible
Assignee named therein shall be a Bank for all purposes of this
Agreement, with the Pro Rata Share of the Commitments therein set forth
and, to the extent of such Pro Rata Share, the assigning Bank shall be
released from its further obligations under this Agreement. Borrower
agrees that it shall execute and deliver (against delivery by the
assigning Bank to Borrower of its Notes) to such assignee Bank, Notes
evidencing that assignee Bank's Pro Rata Share of the Line A and Line B
Commitments, and to the assigning Bank, Notes evidencing the remaining
balance Pro Rata Share retained by the assigning Bank. Other than as
specifically permitted under Sections 11.8(a), 11.8(b), or 11.8(e), or as
may be approved by the Majority Banks, no Bank shall be permitted to
assign or otherwise transfer (including by participation) its interest in
the Commitments, any Loan or any of the Loan Documents.
(c) By executing and delivering a Commitment Assignment and
Acceptance, the Eligible Assignee thereunder acknowledges and agrees
that: (i) other than the representation and warranty that it is the legal
and beneficial owner of the Pro Rata Share of the Commitments being
assigned thereby free and clear of any adverse claim, the assigning Bank
has made no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness or sufficiency of this Agreement or any other
Loan Document; (ii) the assigning Bank has made no representation or
warranty and assumes no responsibility with respect to the financial
condition of Borrower or the performance by Borrower of the Obligations;
(iii) it has received a copy of this Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 7.1
and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Commitment
Assignment and Acceptance; (iv) it will, independently and without
reliance upon the Agent, the Co-Agent or any Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) it appoints and authorizes the Agent to take
such action and to exercise such powers under this Agreement as are
delegated to the Agent by this Agreement; and (vi) it will perform in
accordance with their terms all of the obligations which by the terms of
this Agreement are required to be performed by it as a Bank.
(d) The Agent shall maintain at the Agent's Office a copy of each
Commitment Assignment and Acceptance delivered to it. After receipt of a
completed Commitment Assignment and Acceptance executed by any Bank and
an Eligible Assignee, and receipt of an assignment fee of $2,500 from
such Eligible Assignee, Agent shall, promptly following the effective
date thereof, provide to Borrower and the Banks a revised Schedule 1.2
giving effect thereto.
(e) Each Bank may from time to time grant participations to a
commercial bank Affiliate of such Bank in a portion of its Pro-Rata Share
of the Commitments; provided, however, that (i) such Bank's obligations
under this Agreement shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other financial
institutions shall not be a Bank hereunder for any purposes except, if
the participation agreement so provides, for the purposes of Sections
3.5, 3.6, 11.10 and 11.21, (iv) Borrower, the Agent and the other Banks
shall continue to deal solely and directly with such Bank in connection
such Bank's rights and obligations under this Agreement and (v) the
holder of such participation shall not be provided under its
participation agreement with consent or approval rights with respect to
any matters concerning the Loan Documents or the Loans except for those
matters designated as requiring the consent or approval of all of the
Banks under Section 11.2.
11.9 Sharing of Setoffs. Each Bank severally agrees that if it, through
the exercise of any right of setoff, banker's lien or counterclaim against
Borrower, or otherwise, receives payment of the Obligations held by it that is
ratably more than any other Bank, through any means, receives in payment of the
Obligations held by that Bank, then, subject to applicable Laws: (a) The Bank
exercising the right of setoff, banker's lien or counterclaim or otherwise
receiving such payment shall purchase, and shall be deemed to have
simultaneously purchased, from the other Bank a participation in the Obligations
held by the other Bank and shall pay to the other Bank a purchase price in an
amount so that the share of the Obligations held by each Bank after the exercise
of the right of setoff, banker's lien or counterclaim or receipt of payment
shall be in the same proportion that existed prior to the exercise of the right
of setoff, banker's lien or counterclaim or receipt of payment; and (b) Such
other adjustments and purchases of participations shall be made from time to
time as shall be equitable to ensure that all of the Banks share any payment
obtained in respect of the Obligations ratably in accordance with each Bank's
share of the Obligations immediately prior to, and without taking into account,
the payment; provided that, if all or any portion of a disproportionate payment
obtained as a result of the exercise of the right of setoff, banker's lien,
counterclaim or otherwise is thereafter recovered from the purchasing Bank by
Borrower or any Person claiming through or succeeding to the rights of Borrower,
the purchase of a participation shall be rescinded and the purchase price
thereof shall be restored to the extent of the recovery, but without interest.
Each Bank that purchases a participation in the Obligations pursuant to this
Section 11.9 shall from and after the purchase have the right to give all
notices, requests, demands, directions and other communications under this
Agreement with respect to the portion of the Obligations purchased to the same
extent as though the purchasing Bank were the original owner of the Obligations
purchased.
11.10 Indemnity by Borrower. Borrower agrees to indemnify, save and hold
harmless the Agent, the Co-Agent and each Bank and their directors, officers,
agents, and employees (collectively the "Indemnitees") from and against: (a) Any
and all claims, demands, actions or causes of action (except a claim, demand,
action, or cause of action for any amount excluded from the definition of
"Taxes" in Section 3.10(c)) if the claim, demand, action or cause of action
arises out of or relates to any act or omission (or alleged act or omission) of
Borrower, its Affiliates or any of its officers, directors or shareholders
relating to the Commitments, the use or contemplated use of proceeds of any
Loan, or the relationship of Borrower and the Banks under this Agreement; (b)
Any administrative or investigative proceeding by any Governmental Agency
arising out of or related to a claim, demand, action or cause of action
described in clause (a) above; and (c) Any and all liabilities, losses, costs or
expenses (including attorneys' fees and the allocated costs of attorneys
employed by any Indemnitee and disbursements of such attorneys and other
professional services) that any Indemnitee suffers or incurs as a result of the
assertion of any foregoing claim, demand, action or cause of action; provided
that no Indemnitee shall be entitled to indemnification for any loss caused by
its own gross negligence or willful misconduct or for any loss asserted against
it by another Indemnitee. If any claim, demand, action or cause of action is
asserted against any Indemnitee, such Indemnitee shall promptly notify Borrower,
but the failure to so promptly notify Borrower shall not affect Borrower's
obligations under this Section unless such failure materially prejudices
Borrower's right to participate in the contest of such claim, demand, action or
cause of action, as hereinafter provided. Such Indemnitee may (and shall, if
requested by Borrower in writing) contest the validity, applicability and amount
of such claim, demand, action or cause of action and shall permit Borrower to
participate in such contest. Any Indemnitee that proposes to settle or
compromise any claim or proceeding for which Borrower may be liable for payment
of indemnity hereunder shall give Borrower written notice of the terms of such
proposed settlement or compromise reasonably in advance of settling or
compromising such claim or proceeding and shall obtain Borrower's prior consent
(which shall not be unreasonably withheld). In connection with any claim,
demand, action or cause of action covered by this Section 11.10 against more
than one Indemnitee, all such Indemnitees shall be represented by the same legal
counsel (which may be a law firm engaged by the Indemnitees or attorneys
employed by an Indemnitee or a combination of the foregoing) selected by the
Indemnitees and reasonably acceptable to Borrower; provided, that if such legal
counsel determines in good faith that representing all such Indemnitees would or
could result in a conflict of interest under Laws or ethical principles
applicable to such legal counsel or that a defense or counterclaim is available
to an Indemnitee that is not available to all such Indemnitees, then to the
extent reasonably necessary to avoid such a conflict of interest or to permit
unqualified assertion of such a defense or counterclaim, each Indemnitee shall
be entitled to separate representation by legal counsel selected by that
Indemnitee and reasonably acceptable to Borrower, with all such legal counsel
using reasonable efforts to avoid unnecessary duplication of effort by counsel
for all Indemnitees; and further provided that the Agent (as an Indemnitee)
shall at all times be entitled to representation by separate legal counsel
(which may be a law firm or attorneys employed by the Agent or a combination of
the foregoing). Any obligation or liability of Borrower to any Indemnitee under
this Section 11.10 shall survive the expiration or termination of this Agreement
and the repayment of all Loans and the payment and performance of all other
Obligations owed to the Banks.
11.11 Nonliability of the Banks. Borrower acknowledges and agrees that:
(a) Any inspections of any Property of Borrower made by or through
the Agent or the Banks are for purposes of administration of the Loan
only and Borrower is not entitled to rely upon the same (whether or not
such inspections are at the expense of Borrower);
(b) By accepting or approving anything required to be observed,
performed, fulfilled or given to the Agent or the Banks pursuant to the
Loan Documents, neither the Agent nor the Banks shall be deemed to have
warranted or represented the sufficiency, legality, effectiveness or
legal effect of the same, or of any term, provision or condition thereof,
and such acceptance or approval thereof shall not constitute a warranty
or representation to anyone with respect thereto by the Agent or the
Banks;
(c) The relationship between Borrower, on the one hand, and the
Agent, the Co-Agent and/or any of the Banks, on the other, is, and shall
at all times remain, solely that of a borrower and lenders; neither the
Agent, the Co-Agent nor the Banks shall under any circumstance be
construed to be partners or joint venturers of Borrower or its
Affiliates; neither the Agent, the Co-Agent nor the Banks shall under any
circumstance be deemed to be in a relationship of confidence (other than
as specified in Section 11.22) or trust or a fiduciary relationship with
Borrower or its Affiliates, or to owe any fiduciary duty to Borrower or
its Affiliates; neither the Agent, the Co-Agent nor the Banks undertake
or assume any responsibility or duty to Borrower or its Affiliates to
select, review, inspect, supervise, pass judgment upon or inform Borrower
or its Affiliates of any matter in connection with their Property or the
operations of Borrower or its Affiliates; Borrower and its Affiliates
shall rely entirely upon their own judgment with respect to such matters;
and any review, inspection, supervision, exercise of judgment or supply
of information undertaken or assumed by the Agent, the Co-Agent or the
Banks in connection with such matters is solely for the protection of the
Agent, the Co-Agent and the Banks and neither Borrower nor any other
Person is entitled to rely thereon; and
(d) Neither the Agent, the Co-Agent nor the Banks shall be
responsible or liable to any Person for any loss, damage, liability or
claim of any kind relating to injury or death to Persons or damage to
Property caused by the actions, inaction or negligence of Borrower and/or
its Affiliates and Borrower hereby indemnifies and holds the Agent, the
Co-Agent and the Banks harmless from any such loss, damage, liability or
claim.
11.12 No Third Parties Benefited. This Agreement is made for the purpose
of defining and setting forth certain obligations, rights and duties of
Borrower, the Agent, the Co-Agent and the Banks in connection with the Loans,
and is made for the sole benefit of Borrower, the Agent, the Co-Agent and the
Banks, and the Agent's, the Co-Agent's and the Banks' successors and assigns.
Except as provided in Sections 11.8 and 11.10, no other Person shall have any
rights of any nature hereunder or by reason hereof.
11.13 Further Assurances. Borrower and its Subsidiaries shall, at their
expense and without expense to the Banks or the Agent, do, execute and deliver
such further acts and documents as any Bank or the Agent from time to time
reasonably requires for the assuring and confirming unto the Banks or the Agent
of the rights hereby created or intended now or hereafter so to be, or for
carrying out the intention or facilitating the performance of the terms of any
Loan Document.
11.14 Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. In the event of any conflict between the provisions
of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control and govern; provided that the inclusion of supplemental
rights or remedies in favor of the Agent or the Banks in any other Loan Document
shall not be deemed a conflict with this Agreement. Each Loan Document was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
11.15 Governing Law. Except to the extent otherwise provided therein,
each Loan Document shall be governed by, and construed and enforced in
accordance with, the local Laws of California.
11.16 Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable or invalid as to any party or in any
jurisdiction shall, as to that party or jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions or the
operation, enforceability or validity of that provision as to any other party or
in any other jurisdiction, and to this end the provisions of all Loan Documents
are declared to be severable.
11.17 Headings. Article and Section headings in this Agreement and the
other Loan Documents are included for convenience of reference only and are not
part of this Agreement or the other Loan Documents for any other purpose.
11.18 Time of the Essence. Time is of the essence of the Loan Documents.
11.19 Foreign Banks. Each Bank that is incorporated under the Laws of a
jurisdiction other than the United States of America or any state thereof shall
deliver to Borrower (with a copy to the Agent), within twenty days after the
Closing Date (or after accepting an assignment interest herein pursuant to
Section 11.8, if applicable) two duly completed copies, signed by a Responsible
Official, of either Form 1001 (relating to such Person and entitling it to a
complete exemption from withholding on all payments to be made to such Person by
Borrower pursuant to this Agreement) or Form 4224 (relating to all payments to
be made to such Person by Borrower pursuant to this Agreement) of the United
States Internal Revenue Service or such other evidence (including, if reasonably
necessary, Form W-9) satisfactory to Borrower and the Agent that no withholding
under the federal income tax laws is required with respect to such Person.
Thereafter and from time to time, each such Person shall (a) promptly submit to
Borrower (with a copy to the Agent), such additional duly completed and signed
copies of one of such forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) as may then be
available under then current United States laws and regulations to avoid, or
such evidence as is satisfactory to Borrower and the Agent of any available
exemption from, United States withholding taxes in respect of all payments to be
made to such Person by Borrower pursuant to this Agreement and (b) take such
steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Bank, and as may be reasonably necessary (including the
re-designation of its Eurodollar Lending Office, if any) to avoid any
requirement of applicable laws that Borrower make any deduction or withholding
for taxes from amounts payable to such Person.
11.20 Hazardous Material Indemnity. Borrower hereby agrees to indemnify,
hold harmless and defend (by counsel reasonably satisfactory to the Agent) the
Agent, the Co-Agent and each of the Banks and their respective directors,
officers, employees, agents, successors and assigns from and against any and all
claims, losses, damages, liabilities, fines, penalties, charges, administrative
and judicial proceedings and orders, judgments, remedial action requirements,
enforcement actions of any kind, and all costs and expenses incurred in
connection therewith (including but not limited to reasonable attorneys' fees
and the allocated costs of attorneys employed by the Agent, the Co-Agent or any
Bank, and expenses to the extent that the defense of any such action has not
been assumed by Borrower), arising directly or indirectly, in whole or in part,
out of (i) the presence on or under any Real Property of any Hazardous
Materials, or any releases or discharges of any Hazardous Materials on, under or
from any Real Property and (ii) any activity carried on or undertaken on or off
any Real Property by Borrower or any of its predecessors in title, whether prior
to or during the term of this Agreement, and whether by Borrower or any
predecessor in title or any employees, agents, contractors or subcontractors of
Borrower or any predecessor in title, or any third persons at any time occupying
or present on any Real Property, in connection with the handling, treatment,
removal, storage, decontamination, clean-up, transport or disposal of any
Hazardous Materials at any time located or present on or under any Real
Property. The foregoing indemnity shall further apply to any residual
contamination on or under any Real Property, or affecting any natural resources,
and to any contamination of any property or natural resources arising in
connection with the generation, use, handling, storage, transport or disposal of
any such Hazardous Materials, and irrespective of whether any of such activities
were or will be undertaken in accordance with applicable Laws, but the foregoing
indemnity shall not apply to Hazardous Materials on any Real Property, the
presence of which is caused solely by the Agent, the Co-Agent or the Banks.
Borrower hereby acknowledges and agrees that, notwithstanding any other
provision of this Agreement or any of the other Loan Documents to the contrary,
the obligations of Borrower under this Section shall be unlimited personal
corporate obligations of Borrower and shall not be secured by any deed of trust
on any Real Property.
11.21 Reference to Arbitration.
(a) Mandatory Arbitration. Any controversy or claim between any
Party or group of Parties, on the one hand, and the Agent, the Co-Agent
or any Bank, or any group thereof, on the other hand, including but not
limited to those arising out of or relating to this Agreement or any
agreements or instruments relating hereto or delivered in connection
herewith and any claim based on or arising from an alleged tort, shall at
the request of any party be determined by arbitration. The arbitration
shall be conducted in accordance with the United States Arbitration Act
(Title 9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrators shall give effect to statutes of
limitation in determining any claim. Any controversy concerning whether
an issue is arbitrable shall be determined by the arbitrators. Judgment
upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff,
to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.
(b) Real Property Collateral. Should real property collateral
hereafter be taken by the Banks to secure the Obligations, then,
notwithstanding the provisions of Section 11.21(a), no controversy or
claim shall be submitted to arbitration without the consent of all
parties if, at the time of the proposed submission, such controversy or
claim arises from or relates to an obligation to the Bank which is
secured by such real property collateral. If all parties do not consent
to submission of such a controversy or claim to arbitration, the
controversy or claim shall be determined as provided in Section 11.21(c).
(c) Judicial Reference. A controversy or claim which is not
submitted to arbitration as provided and limited in Sections 11.21(a) and
(b) shall, at the request of any party, be determined by a reference in
accordance with California Code of Civil Procedure Sections 638 et seq.
If such an election is made, the parties shall designate to the court a
referee or referees selected under the auspices of the AAA in the same
manner as arbitrators are selected in AAA-sponsored proceedings. The
presiding referee of the panel, or the referee if there is a single
referee, shall be an active attorney or retired judge. Judgment upon the
award rendered by such referee or referees shall be entered in the court
in which such proceeding was commenced in accordance with California Code
of Civil Procedure Sections 644 and 645.
(d) Provisional Remedies, Self-Help and Foreclosure. No provision
of this Section 11.21 shall limit the right of any party to this
Agreement to exercise self-help remedies such as setoff, to foreclose
against collateral or to obtain provisional or ancillary remedies from a
court of competent jurisdiction before, after, or during the pendency of
any arbitration or other proceeding. The exercise of a remedy does not
waive the right of any party to resort to arbitration or reference.
Should real property collateral hereafter be taken by the Banks to secure
the Obligations, then, at the Banks' option, foreclosure under any deed
of trust or mortgage may be accomplished either by exercise of power or
sale under the deed of trust or mortgage or by judicial foreclosure.
11.22 Confidentiality. Each Bank agrees to hold any confidential
information that it may receive from Borrower or Agent pursuant to this
Agreement in confidence, except for disclosure: (a) To other Banks; (b) To legal
counsel and accountants or other professional advisors to Borrower or any Bank,
provided that the recipient has accepted such information subject to a
confidentiality agreement substantially similar to this Section 11.22; (c) To
regulatory officials having jurisdiction over that Bank; (d) As required by Law
or legal process or in connection with any legal proceeding to which that Bank
is involved and that relates in some manner to the Loan Documents; and (e) To
another financial institution in connection with a disposition or proposed
disposition to that financial institution of all or part of that Bank's
interests hereunder or a participation interest in one of its Notes, provided
that the recipient has accepted such information subject to a confidentiality
agreement substantially similar to this Section 11.22. For purposes of the
foregoing, "confidential information" shall mean the Strategic Plan, the
information provided pursuant to Section 7.1(c) and any other written
information respecting Borrower or its Subsidiaries provided to the applicable
Bank and designated thereon to be confidential, other than (i) information
previously filed with any Governmental Agency and available to the public, (ii)
information previously published in any public medium from a source other than,
directly or indirectly, that Bank, and (iii) information disclosed by Borrower
to any Person not associated with Borrower without a confidentiality agreement
substantially similar to this Section 11.22. Nothing in this Section shall be
construed to create or give rise to any fiduciary duty on the part of the Agent
or the Banks to Borrower.
11.23 Co-Agent. Each Bank acknowledges that it has not relied, and will
not rely, upon the Co-Agent in deciding to enter into this Agreement or in
taking or not taking any action hereunder. The Co-Agent shall have no right,
power, obligation, liability, responsibility or duty under this Agreement or the
other Loan Documents other than those applicable to all Banks and in its
capacity as such.
11.24 Purported Oral Amendments. BORROWER EXPRESSLY ACKNOWLEDGES THAT
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR
THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN INSTRUMENT IN
WRITING THAT COMPLIES WITH SECTION 11.2. BORROWER AGREES THAT IT WILL NOT RELY
ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR WRITTEN STATEMENTS
BY ANY REPRESENTATIVE OF THE AGENT OR ANY BANK THAT DOES NOT COMPLY WITH SECTION
11.2 TO EFFECT AN AMENDMENT, MODIFICATION, WAIVER OR SUPPLEMENT TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
DEL WEBB CORPORATION BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Agent
By: /s/ John A. Spencer
-----------------------------------
John A. Spencer
Senior Vice President By: /s/ Daniel G. Farthing
---------------------------------
Daniel G. Farthing
Vice President
Address:
Del Webb Corporation Address:
2231 East Camelback Road, Suite 400
Phoenix, Arizona 85016 Bank of America National Trust and
Savings Association
Attention: Treasurer Agency Management Services
1455 Market Street, 13th Floor
Telephone: (602) 808-8000 San Francisco, California 94103
Telecopier: (602) 808-8097
Attention: Mr. Daniel G. Farthing
Vice President
With a copy to:
Telephone: (415) 622-4931
Del Webb Corporation Telecopier: (415) 622-4894
2231 East Camelback Road, Suite 400
Phoenix, Arizona 85016
Attn: General Counsel
Telephone: (602) 808-8000
Telecopier: (602) 808-8097
BANK ONE, ARIZONA, NA, as the Co-Agent BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as a Bank
By: /s/ Rhonda R. Williams
----------------------------------- By: /s/ Carol Smith
Rhonda R. Williams ---------------------------------
Assistant Vice President Carol Smith
Vice President
Address:
Address:
Bank One, Arizona, NA
Bank One Center Bank of America National Trust and
241 North Central Avenue, 20th Floor Savings Assocation
Phoenix, Arizona 85004-2267 CRESG-L.A. - Unit No. 1357
555 S. Flower Street, 6th Floor
Attention: Ms. Rhonda R. Williams, Los Angeles, California 90071
Assistant Vice President
Attention: Ms. Carol Smith,
Telephone: (602) 221-1783 Vice President
Telecopier: (602) 221-1372
Telephone: (213) 228-5286
Telecopier: (213) 228-5391
BANK ONE, ARIZONA, NA, as a Bank
THE FIRST NATIONAL BANK OF BOSTON,
a national banking association
By: /s/ Rhonda R. Williams
-----------------------------------
Rhonda R. Williams By: /s/ Kevin C. Hake
Assistant Vice President ---------------------------------
Kevin C. Hake
Vice President
Address:
Bank One, Arizona, NA
Bank One Center Address:
241 North Central Avenue, 20th Floor
Phoenix, Arizona 85004-2267 The First National Bank of Boston
400 Perimeter Center Terrace
Attention: Ms. Rhonda R. Williams, Atlanta, Georgia 30346
Assistant Vice President
Attention: Mr. Kevin C. Hake
Telephone: (602) 221-1783 Vice President
Telecopier: (602) 221-1372
Telephone: (404) 390-6584
Telecopier: (404) 391-9811
GUARANTY FEDERAL BANK, F.S.B. Eurodollar Lending Office
-------------------------
Credit Lyonnais Cayman Island Branch
By: /s/ Richard V. Thompson c/o Credit Lyonnais
----------------------------------- 515 South Flower Street, Suite 2200
Richard V. Thompson Los Angeles, California 90071
Vice President
Attention: Mr. David Miller,
Vice President
Address:
Telephone: (213) 362-5900
Guaranty Federal Bank, F.S.B. Telecopier: (213) 623-3437
8333 Douglas Avenue, 10th Floor
Dallas, Texas 75225
Attention: Mr. Richard V. Thompson, NATIONSBANK, N.A. (CAROLINAS),
Vice President formerly known as NationsBank of
South Carolina, N.A.
Telephone: (214) 360-1963
Telecopier: (214) 360-1661
By: /s/ Robert L. Whittemore
---------------------------------
Robert L. Whittemore
CREDIT LYONNAIS CAYMAN ISLAND BRANCH Vice President
Address:
By: /s/ Thierry F. Vincent
----------------------------------- NationsBank, N.A. (Carolinas)
Thierry F. Vincent 1901 Main Street, 4th Floor
Authorized Signatory Columbia, South Carolina 29201
Attention: Mr. Robert L. Whittemore
Vice President
CREDIT LYONNAIS LOS ANGELES BRANCH
Telephone: (803) 733-9650
Telecopier: (803) 733-9660
By: /s/ Thierry F. Vincent
--------------------------------------
Thierry F. Vincent
Vice President and Manager
Domestic Lending Office
-----------------------
Credit Lyonnais Los Angeles Branch
515 South Flower Street, Suite 2200
Los Angeles, California 90071
Attention: Mr. David Miller,
Vice President
BANK OF HAWAII FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ Joseph T. Donalson
----------------------------------- By: /s/ Carolyn Eskridge
Joseph T. Donalson ---------------------------------
Vice President Carolyn Eskridge
Vice President
Address:
Address:
Bank of Hawaii
c/o First National Bank of Arizona First Union National Bank of
1839 South Alma School Road, Suite 150 North Carolina
Mesa, Arizona 85210 301 South College Street, TW-8
Charlotte, North Carolina 28288-0600
Attention: Mr. Joseph T. Donalson
Vice President Attention: Ms. Carolyn Eskridge
Vice President
Telephone: (602) 752-8020
Telecopier: (602) 752-8007 Telephone: (704) 383-5374
Telecopier: (704) 374-7102
FIRST AMENDMENT
TO THE DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
The Del Webb Corporation Supplemental Executive Retirement Plan No. 2
(the "Plan"), which was originally effective as of January 1, 1989, and was
restated effective as of April 20, 1993, is hereby further amended as follows,
effective as of July 1, 1995:
1. Section 2.1(a) of the Plan is amended by the addition of the
following sentence to the end thereof:
Any Participation Agreement in effect prior to the adoption of
this amended and restated Plan shall continue in full force and
effect until subsequently modified or replaced.
2. Section 4.2(b) of the Plan is amended in its entirety to read as
follows:
(b) High Average Compensation. "High Average Compensation"
means the sum of the Participant's annual total of salary and
incentive compensation, before reduction for deferred
compensation and 401(k) contributions, in the five (5) calendar
years out of the seven (7) consecutive calendar years of
employment with the Employer in which such total is the highest
divided by five (5). Where the actual (not annualized)
compensation paid to a Participant during a partial calendar
year is greater than the compensation paid to the Participant
during a completed calendar year, such partial year may be
utilized for purposes of this provision. Notwithstanding the
above, incentive compensation payments made in July, 1991, for
the period January 1, 1991, to June 30, 1991, shall not be
included in the computations of High Average Compensation.
3. Section 4.5(d) of the Plan is amended in its entirety to read as
follows:
(d) Accelerated Distribution. Notwithstanding any other
provision of the Plan, at any time after a Change in Control or
any time following termination of employment, a Participant
shall be entitled to receive, upon written request to the
Committee, a lump sum distribution of all or a portion of the
Actuarial Equivalent of the Participant's unpaid benefits under
this Plan on the date on which the Committee receives the
written request. Each accelerated distribution shall be subject
to a penalty equal to ten percent (10%) of the amount that would
otherwise be distributed and that amount shall be forfeited by
the Participant. The amount payable under this section shall be
paid in a lump sum within sixty-five (65) days following the
receipt of the notice by the Committee from the Participant. In
the event a Participant requests and obtains an accelerated
distribution under this Section 4.5(d) and remains employed by
the Employer, participation will cease and there will be no
future benefit accruals under this plan.
In the event of a Participant's death and subsequent benefit
payments to the designated beneficiary, such beneficiary may
request a distribution under this Section 4.5(d).
4. Article VIII is amended by adding the following new Section 8.3
to the end thereof:
8.3 Modifications for Particular Participants. In the
exercise of its discretion, the Board may modify or supplement
the provisions of this Plan as it applies to a particular
Participant. No modification or supplement will be effective,
however, unless it is reflected in the Participant's
Participation Agreement, or provided for in a resolution duly
adopted by the Board, or reflected in any other written document
which is executed by an officer of the Company who has been
specifically authorized to execute said written document
pursuant to a resolution duly adopted by the Board.
5. Except as otherwise provided above, the provisions of the Plan,
as amended and restated effective as of April 20, 1993, shall continue in full
force and effect.
IN WITNESS WHEREOF, Del Webb Corporation has caused this First
Amendment to be executed by its duly authorized representative on this 13th day
of July, 1995.
DEL WEBB CORPORATION
By: Robertson C. Jones
----------------------------------
Its: Vice President
----------------------------------
DEL WEBB CORPORATION
RETIREMENT SAVINGS PLAN
Amended and Restated
Effective January 1, 1995
TABLE OF CONTENTS
Article Section Page
------- ------- ----
Article 1. Restatement of Plan . . . . . . . . . . . . . . . . . . . . . 1
1.1 Restatement of the Plan. . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose of the Plan. . . . . . . . . . . . . . . . . . . . . . 1
1.3 Applicability of the Plan. . . . . . . . . . . . . . . . . . . 1
Article 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Gender and Number . . . . . . . . . . . . . . . . . . . . . . 12
Article 3. Participation. . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Participation. . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Transferees. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article 4. Pretax Savings Contributions . . . . . . . . . . . . . . . . . 13
4.1 Deferral of Basic Pretax Savings Contributions . . . . . . . . 13
4.2 Deferral of Unmatched Pretax Savings Contributions . . . . . . 13
4.3 Deferral Election Procedures . . . . . . . . . . . . . . . . . 14
4.4 Deferral Election Changes. . . . . . . . . . . . . . . . . . . 14
4.5 Discontinuance of Basic and Unmatched Pretax Savings
Contributions . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Salary Reduction . . . . . . . . . . . . . . . . . . . . . . . 14
4.7 Limitation on Basic Pretax Savings Contributions and Unmatched
Pretax Savings Contributions . . . . . . . . . . . . . . . . . 14
4.8 Restrictions on Elections . . . . . . . . . . . . . . . . . . 15
4.9 Transfer of Pretax Savings Contributions . . . . . . . . . . . 17
4.10 Crediting of Pretax Savings Contributions. . . . . . . . . . . 17
4.11 Adjustment of Company Contributions Accoun . . . . . . . . . . 17
Article 5. Company Contributions . . . . . . . . . . . . . . . . . . . . 18
5.1 Matching Company Contributions . . . . . . . . . . . . . . . . 18
5.2 Discretionary Company Contributions . . . . . . . . . . . . . 18
5.3 Restrictions on Matching Company Contributions and Discretionary
Company Contributions . . . . . . . . . . . . . . . . . . . . 20
5.4 Corrective Contributions . . . . . . . . . . . . . . . . . . . 22
5.5 Transfer of Company Contributions . . . . . . . . . . . . . . 23
5.6 Allocation of Company Contributions to Company Contributions
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.8 Limitation on Annual Additions . . . . . . . . . . . . . . . . 24
5.9 Other Defined Contribution Plans . . . . . . . . . . . . . . . 24
5.10 Defined Benefit Plans . . . . . . . . . . . . . . . . . . . . 24
5.11 Adjusting Annual Additions . . . . . . . . . . . . . . . . . . 24
5.12 Deductibility Limitation . . . . . . . . . . . . . . . . . . . 26
5.13 Rollover Contributions and Prior Account Transfers . . . . . . 26
Article 6. Vesting and Benefits . . . . . . . . . . . . . . . . . . . . . 27
6.1 Vesting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Benefits Upon Termination of Employment. . . . . . . . . . . . 28
6.3 Forfeiture of Contingent Interests . . . . . . . . . . . . . . 28
6.4 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Designation of Beneficiary . . . . . . . . . . . . . . . . . . 29
6.7 Latest Time for Payment of Benefits. . . . . . . . . . . . . . 29
6.8 In-Service Distribution of Pretax Savings at Age 59-1/2. . . . 30
6.9 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . 30
6.10 Debiting of Investment Funds . . . . . . . . . . . . . . . . . 32
6.11 Loans to Participants . . . . . . . . . . . . . . . . . . . . 32
6.12 Requirement for Consent to Certain Distributions . . . . . . . 35
6.13 Eligible Rollover Distributions. . . . . . . . . . . . . . . . 35
Article 7. Investment Elections . . . . . . . . . . . . . . . . . . . . . 36
7.1 Participant Directed Individual Account Plan . . . . . . . . . 36
7.2 Employee Selected Investment Funds . . . . . . . . . . . . . . 37
7.3 Exercise of Control. . . . . . . . . . . . . . . . . . . . . . 37
7.4 Limitation of Liability and Responsibility . . . . . . . . . . 39
7.5 Former Participants and Beneficiaries. . . . . . . . . . . . . 39
7.6 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . 40
7.7 Voting, Tender Offers, or Similar Rights . . . . . . . . . . . 40
7.8 Investment Restrictions Due to Securities Laws . . . . . . . . 40
7.9 Confidentiality Requirements . . . . . . . . . . . . . . . . . 40
Article 8. Participant Accounts and Records of the Plan . . . . . . . . . 41
8.1 Accounts and Records . . . . . . . . . . . . . . . . . . . . . 41
8.2 Valuation of Investment Funds. . . . . . . . . . . . . . . . . 42
8.3 Valuation Adjustments. . . . . . . . . . . . . . . . . . . . . 42
Article 9. Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Company Contributions. . . . . . . . . . . . . . . . . . . . . 43
9.3 Non-Reversion. . . . . . . . . . . . . . . . . . . . . . . . . 43
Article 10. Administration . . . . . . . . . . . . . . . . . . . . . . . . 44
10.1 The Committee . . . . . . . . . . . . . . . . . . . . . . . . 44
10.2 Compensation and Expenses . . . . . . . . . . . . . . . . . . 44
10.3 Manner of Action . . . . . . . . . . . . . . . . . . . . . . . 44
10.4 Chairman, Secretary and Employment of Specialists. . . . . . . 45
10.5 Subcommittees. . . . . . . . . . . . . . . . . . . . . . . . . 45
10.6 Other Agents . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.7 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.8 Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.9 Committee's Powers and Duties . . . . . . . . . . . . . . . . 45
10.10 Committee's Decisions Conclusive . . . . . . . . . . . . . . . 46
10.11 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.12 Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.13 Notice of Address . . . . . . . . . . . . . . . . . . . . . . 48
10.14 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.15 Appeals from Denial of Claims . . . . . . . . . . . . . . . . 48
Article 11. Amendment And Termination . . . . . . . . . . . . . . . . . . 49
11.1 Amendment and Termination. . . . . . . . . . . . . . . . . . . 49
11.2 Distribution on Termination. . . . . . . . . . . . . . . . . . 49
11.3 Corporate Reorganization . . . . . . . . . . . . . . . . . . . 49
11.4 Plan Merger or Transfer. . . . . . . . . . . . . . . . . . . . 50
Article 12. Adoption by Affiliate . . . . . . . . . . . . . . . . . . . . 50
12.1 Affiliate Participation. . . . . . . . . . . . . . . . . . . . 50
12.2 Company Action Binding on Participating Affiliates . . . . . . 50
12.3 Termination of Participation of Affiliate. . . . . . . . . . . 50
Article 13. Top-Heavy Provisions . . . . . . . . . . . . . . . . . . . . . 51
13.1 Application. . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.2 Key Employees. . . . . . . . . . . . . . . . . . . . . . . . . 51
13.3 Top-Heavy Group. . . . . . . . . . . . . . . . . . . . . . . . 52
13.4 Additional Rules . . . . . . . . . . . . . . . . . . . . . . . 52
13.5 Code Section 415(h) Adjustment . . . . . . . . . . . . . . . . 53
13.6 Minimum Contribution Requirement . . . . . . . . . . . . . . . 53
Article 14. Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . 53
14.1 Employment Rights. . . . . . . . . . . . . . . . . . . . . . . 53
14.2 No Examination or Accounting . . . . . . . . . . . . . . . . . 53
14.3 Investment Risk. . . . . . . . . . . . . . . . . . . . . . . . 53
14.4 Non-Alienation . . . . . . . . . . . . . . . . . . . . . . . . 53
14.5 Incompetency . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.7 Missing Persons and Other Bars to Payment. . . . . . . . . . . 55
14.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 55
14.9 Service of Legal Process . . . . . . . . . . . . . . . . . . . 55
14.10 Headings of Articles and Sections . . . . . . . . . . . . . . 55
14.11 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 55
DEL WEBB CORPORATION
RETIREMENT SAVINGS PLAN
(Amended and Restated
Effective as of January 1, 1995)
Article 1. Restatement of Plan
------------------------------
1.1 RESTATEMENT OF THE PLAN. Effective January 1, 1976, DEL E. WEBB
CORPORATION established the "Retirement Savings Plan for the Employees of Del E.
Webb Corporation", now known as the "Retirement Savings Plan for the Employees
of Del Webb Corporation" (the "Plan"), covering its Employees and the Employees
of participating affiliates. DEL E. WEBB CORPORATION later changed its name to
DEL WEBB CORPORATION and it recently reincorporated in Delaware by merging into
a Delaware corporation that bears the same name, assumed its role as the sponsor
of the Plan, and is referred to in this document as the "Company." The Plan was
most recently amended and restated in its entirety, effective January 1, 1987.
The Plan was subsequently amended on six separate occasions. By execution of
this document, the Company hereby amends and restates the Plan in its entirety,
effective January 1, 1995.
1.2 PURPOSE OF THE PLAN. This Plan is intended to encourage and assist
Eligible Employees in adopting a regular program of savings to provide
additional security for their retirement. For tax purposes, this Plan is
intended to qualify as a profit sharing plan with a qualified cash or deferred
arrangement and nondiscriminatory matching contributions. In accordance with
Code section 401(a)(27), the determination that the Plan is a profit sharing
plan shall be made without regard to whether the Company actually has current or
accumulated profits.
1.3 APPLICABILITY OF THE PLAN. Except as otherwise stated herein, the
provisions of this restatement are applicable only to Eligible Employees in the
employ of the Company and Affiliates on or after January 1, 1995.
Article 2. Definitions
----------------------
2.1 DEFINITIONS. Whenever used in the Plan, the following terms shall have
the respective meanings set forth below unless otherwise required by the context
in which they are used:
(a) "Account, Accounts" shall mean the Account or Accounts maintained for
each Participant which represent the Participant's total proportionate
interest in the Trust Fund as of any date and which consist of the sum
of the following:
(1) "Basic Pretax Savings Account" shall mean a Participant's Account
to which Basic Pretax Savings Contributions have been credited
under the Plan, as adjusted from time to time as provided in
Article 8.
(2) "Company Contributions Account" shall mean a Participant's
Account to which Company Contributions made on behalf of the
Participant for periods beginning on and after July 1, 1983 have
been credited, as adjusted from time to time as provided in
Article 8.
(3) "Frozen Account" for purposes of this Plan shall mean the
Participant's account to which amounts have been transferred
directly from the predecessor profit sharing plan known as the
"Restated Profit Sharing Plan and Trust Agreement" that Del Webb
Corporation originally established in 1949 and later maintained
as a "frozen" plan following the discontinuance of all
contributions to such plan in 1976, as such Frozen Account may be
adjusted from time to time as provided in Article 8.
(4) "Loan Account" shall mean the account representing the
outstanding balance of any loan to a Participant as provided in
section 6.11.
(5) "Prior Account" shall mean a Participant's Account to which all
Company Contributions made on behalf of the Participant under the
prior version of this Plan for periods prior to July 1, 1983,
have been credited, and to which any amounts transferred to this
Plan on behalf of the Participant pursuant to a rollover
described in section 5.13 have also been credited, as such Prior
Account may be adjusted from time to time as provided in Article
8. The Committee may require that separate subaccounts be
maintained to differentiate amounts attributable to transfers
from the Prior Plan and other amounts credited to the Prior
Account, or it may instead use the Rollover Account in lieu of
the Prior Account to account for amounts attributable to
transfers from the Prior Plan and/or rollover contributions made
pursuant to section 5.13.
(6) "Rollover Account" shall mean a Participant's Account to which
rollover contributions made pursuant to section 5.13 have been
credited, as adjusted from time to time as provided in Article 8.
(7) "Unmatched Pretax Savings Account" shall mean a Participant's
Account to which Unmatched Pretax Savings Contributions have been
credited under the Plan, as adjusted from time to time as
provided in Article 8.
(b) "Active Participant" shall mean a Participant who (i) at any time
during the Plan Year is eligible to elect to make a Basic Pretax
Savings Contribution pursuant to section 4.1, and (ii) either (a)
continues to be an Employee (including one who is temporarily absent
due to seasonal adjustments or layoff) on the earlier of (1) the date
that a discretionary Company Contribution is made for a particular
Plan Year or (2) the last working day of the Plan Year, or (b) dies,
incurs a disability, or retires at or after age 65 during the
applicable period in subparagraph (a) above while still an Employee.
(c) "Affiliate" shall mean a corporation or other employer which is
controlled by or under common control with the Company, within the
meaning of sections 414 and 1563 of the Code. The determination of
control shall be made without reference to paragraphs (a)(4) and
(e)(3)(c) of section 1563, and solely for the purpose of applying the
limitations of sections 5.8 through 5.10 of this Plan, the phrase
"more than 50 percent" shall be substituted for the phrase "at least
80 percent" each place it appears in section 1563(a)(1). In addition,
"Affiliate" shall also mean, with respect to any Employer which has
adopted this Plan, an organization which is treated as a member of an
affiliated service group (as defined in Code section 414(m)) to which
such Employer belongs.
(d) "Alternate Payee" means a spouse, former spouse, child or other
dependent of a Participant who is recognized by a Qualified Domestic
Relations Order as having a right to receive all, or a portion of, the
benefits payable under the Plan with respect to a Participant.
(e) "Annual Addition" means with respect to any Participant, the sum of
the following amounts allocable for a Plan Year (which is also the
limitation year) to a Participant under this Plan or under any defined
contribution plan or defined benefit plan maintained by the Employer
or an Affiliate: (i) the Employer contributions allocable for a Plan
Year to the accounts of the Participant, including any amounts
allocable from a suspense account maintained pursuant to such plan on
account of a prior Plan Year; amounts deemed to be Employer
contributions pursuant to a cash or deferred arrangement qualified
under section 401(k) of the Code (including the Basic Pretax Savings
Contributions and Unmatched Pretax Savings contributions allocable to
a Participant pursuant to this Plan); and amounts allocable to a
medical account which must be treated as annual additions pursuant to
section 415(l)(1) or section 419A(d)(2) of the Code; (ii) all
nondeductible Employee contributions allocable during a Plan Year to
the accounts of Participant; and (iii) forfeitures allocable for a
Plan Year to the account of the Participant. Any rollover
contributions or transfers from other qualified plans, restorations or
forfeitures, or other items similarly enumerated in Treasury
Regulation section 1.415-6(b)(3) shall not be considered in
calculating a Participant's Annual Additions for any Plan Year. For
purposes of calculating the "defined contribution plan fraction" for
any Plan Year pursuant to section 415 of the Code, nondeductible
Employee contributions allocated to a Participant during any Plan Year
commencing on or before December 31, 1986, will be considered to be
part of the Annual Addition for that Plan Year only to the extent of
the lesser of (i) the amount of nondeductible contributions in excess
of 6% of the Participant's Compensation for that year or (ii) one-half
of the nondeductible contributions allocable during the year to the
Participant's accounts.
(f) "Basic Pretax Savings Contributions" shall mean the amount, determined
as a percentage of Compensation, a Participant requests the Employer
to contribute on the Participant's behalf to the Plan on a pretax
basis in accordance with section 4.1, which amount is subject to
matching by the Employer as provided in Article 5.
(g) "Beneficiary" shall mean the person or persons (who may be named
contingently or successively) designated by a Participant to receive
the Participant's Account in the event of the Participant's death.
Each designation shall be in the form prescribed by the Committee, and
will be effective only when filed in writing with the Committee and
shall revoke all prior designations by the same Participant. The
Committee shall require that a married Participant who designates a
Beneficiary other than the Participant's spouse obtain the spouse's
consent to the designation. In the case of a Participant with at least
one Hour of Service on or after August 23, 1984, such spousal consent
shall be in writing, acknowledge the effect of the Participant's
election, be properly witnessed by a Plan official or a notary public
under procedures approved by the Committee and be provided to the
Committee. If no Beneficiary is designated at the time of the
Participant's death, or if no person so designated shall survive the
Participant, the Beneficiary shall be the Participant's surviving
spouse, or if the deceased Participant has no surviving spouse, the
Participant's estate, provided that this order of preference shall not
supersede the former rules of the Plan with respect to any death
occurring prior to the adoption of this Plan restatement.
(h) "Board of Directors" or "Board" shall mean the Board of Directors of
the Company. The Board of Directors of the Company, pursuant to
specific resolutions or a general grant of authority, may delegate any
duty, power or responsibility assigned to it under the terms of this
Plan or the Trust Agreement to the Human Resources Committee or any
other committee.
(i) "Code" shall mean the Internal Revenue Code of 1986, as from time to
time amended. Where reference is made to an incorrect or outdated Code
section, the reference shall be reformed to indicate a proper Code
section that is consistent with the context and the intended meaning,
and any description in the Plan of the rules of such Code section
shall also be reformed accordingly.
(j) "Committee" shall mean the Benefits Advisory Committee of the Company
unless it is apparent that the term is referring to a different body
from the context in which it is used.
(k) "Company" shall mean Del Webb Corporation, a Delaware corporation.
(l) "Company Contributions" shall mean the contributions the Employer
makes on behalf of a Participant on a matched basis or on such other
basis as is provided in sections 5.1, 5.2, and 5.4.
(m) "Company Securities" or "Sponsor Securities" - shall mean "qualifying
employer securities", within the meaning of section 407(d)(5) of
ERISA, of the Company or an Affiliate.
(n) "Compensation" means a Participant's pay determined as follows:
(l) For all purposes of the Plan, except as otherwise specified,
Compensation means a Participant's total cash compensation,
excluding, however, bonuses, overtime, compensation of any type
earned or accrued prior to the date he/she becomes a Participant,
any "subsistence allowance" payments provided by the Employer,
any reimbursements for moving expenses and any other expense
reimbursements. Compensation, as so defined, shall be determined
prior to any election to defer Basic Pretax Savings Contributions
and Unmatched Pretax Savings Contributions as described in
sections 4.1 and 4.2 of this Plan.
(2) For purposes of applying the limits of section 415 of the Code as
described in sections 5.8 and 5.11, and application of the
top-heavy provisions of Article 13, Compensation means,
generally, an Employee's taxable W-2 earnings, and includes such
modifications as may be required to conform to the definition of
"participant's compensation" in Code section 415(c)(3) and the
regulations thereunder.
(3) For purposes of satisfying the limits on contributions described
in sections 4.7, 4.8 and 5.3 and for purposes of determining
whether an individual is a Highly Compensated Employee,
Compensation means a "participant's compensation," as defined in
section 415(c)(3) of the Code and the applicable Treasury
regulations thereunder and as adjusted in the following manner.
Except as prohibited by Treasury regulations, the Company may
include as Compensation for purposes of this subparagraph all
Basic Pretax Savings Contributions, Unmatched Pretax Savings
Contributions, and other Code section 401(k) elective deferrals
and all Code section 125 salary reduction amounts, if any, under
a plan maintained by the Company or an Affiliate provided that
such treatment and the determination of Compensation in general
shall be applied on a consistent basis in accordance with Code
section 414(s) and the regulations thereunder. In lieu of using
the foregoing definition of Compensation for purposes of
satisfying the limits on contributions described in sections 4.7,
4.8 and 5.3, any definition of Compensation that satisfies
section 414(s) of the Code, and the regulations issued
thereunder, may be used.
The annual Compensation taken into account under the Plan for any Plan
Year beginning on or after January 1, 1989, shall not exceed the
maximum dollar amount ($200,000 for the year beginning in 1989 and any
other amount that applies for a later year, including the limit of
$150,000 that applies for the year beginning in 1994) that is
permitted as of the beginning of the year under Code section
401(a)(17) (determined after giving effect to any statutory changes
affecting Code section 401(a)(17) and any indexing or other
adjustments pursuant to Code section 401(a)(17) that are applicable
for the year of the determination). In the case of a short Plan Year
or other period of less than 12 months requiring a reduction of the
Code section 401(a)(17) annual limit, the otherwise applicable limit
shall be prorated by multiplying it by a fraction, the numerator of
which is the number of months in the short period and the denominator
of which is 12. Moreover, in determining an Employee's Compensation
for purposes of the Code section 401(a)(17) limit, the rules of Code
section 414(q)(6) (requiring the aggregation of Compensation paid to
family members of certain five-percent owners and the ten most highly
compensated Employees) shall apply, except that in applying such
rules, the term "family" shall include only the spouse of the Employee
and any lineal descendants of the Employee who have not attained age
19 before the close of the year. If, as a result of the application of
such rules, the adjusted annual Code section 401(a)(17) Compensation
limit is exceeded, then (except for determining the portion of
Compensation up to the integration level if this Plan provides for
permitted disparity), such limit shall be prorated among the affected
individuals in proportion to each such individual's Compensation as
determined prior to the application of the Code section 401(a)(17)
limit.
(o) "Eligible Employee" means any Employee employed by an Employer,
but excluding (i) any Leased Employee, (ii) any Temporary
Employee, (iii) effective July 1, 1995, any On Call Employee, and
(iv) any Employee covered by a collective bargaining agreement
where retirement benefits were the subject of good faith
bargaining between representatives of the Employer and the union,
unless such agreement expressly provides for participation in the
Plan.
(p) "Employee" shall mean any employee of the Company or an
Affiliate, including any Leased Employee.
(q) "Employer" shall mean the Company and any Affiliate which adopts
this Plan in accordance with section 12.1.
(r) "Entry Date" shall mean the first day of each month.
(s) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as from time to time amended.
(t) "Highly Compensated Employee" means an Employee described in Code
section 414(q) and generally includes any Employee who, during
the current Plan Year or immediately preceding Plan Year:
(1) was at any time a 5-percent owner (as defined in subsection
13.2 of the Plan);
(2) received Compensation in excess of $75,000 (or such other
amount as may be prescribed under the Code);
(3) received Compensation in excess of $50,000 (or such other
amount as may be prescribed under the Code) and was in the
group of Employees consisting of the top 20 percent of all
active Employees when ranked on the basis of Compensation
paid for the Plan Year; or
(4) was at any time an officer and received Compensation in
excess of $45,000 (or such other amount as may be prescribed
under the Code) for the Plan Year; provided that for this
purpose no more than 50 Employees or, if lesser, the greater
of 3 Employees or 10 percent of all Employees shall be
considered officers and, if no officer has Compensation
exceeding $45,000, as adjusted, the officer with the highest
Compensation shall be treated as a Highly Compensated
Employee under this subparagraph.
For the Plan Year for which the determination is being made, a
person who during the preceding Plan Year was not an Employee
described in subparagraphs (2), (3) or (4) shall not be treated
as so described during the current Plan Year, unless he/she is
among the group of 100 Employees receiving the highest
Compensation. In determining the group of Employees consisting of
the top 20 percent of all active Employees under subparagraph
(3), the following Employees shall be disregarded: Employees who
have not attained age 21; Employees who normally work less than
17-1/2 hours per week or 6 months per year; Employees who are
nonresident aliens receiving no U.S.-source income from the
Company or an Affiliate; and, except as prohibited by Treasury
regulations, Employees who are covered by a collective bargaining
agreement shall be disregarded. A former Employee shall be
treated as a Highly Compensated Employee if he/she was a Highly
Compensated Employee when he/she incurred a termination of
employment or at any time after attaining age 55.
If an Employee is a family member of a 5-percent owner or a
Highly Compensated Employee among the group of 10 Employees
receiving the highest Compensation for the Plan Year, then such
Employee shall not be considered a separate Employee under this
subsection and any Compensation paid to him shall be treated as
having been paid to the Highly Compensated Employee. For this
purpose, "family member" means the Employee's spouse and lineal
ascendants or descendants and the spouses of such lineal
ascendants or descendants.
(u) "Hour of Service" shall mean the hours credited to an Employee under
the following rules. Each Employee shall receive credit for "Hours of
Service" with the Company or an Affiliate as follows:
(1) One hour for each hour for which the Employee is directly or
indirectly paid, or entitled to payment, by the Company or
an Affiliate for the performance of duties during the
applicable computation period for which the Employee's Hours
of Service are being determined under the Plan. (These hours
shall be credited to the Employee for the computation period
or periods in which the duties were performed, and shall
include hours for which back pay has been either awarded or
agreed to by the Company or an Affiliate as provided by
regulations under ERISA, with no duplication of credit for
hours.)
(2) One hour for each hour, in addition to the hours in
paragraph (l) above, for which the Employee is directly or
indirectly paid, or entitled to payment, by the Company or
an Affiliate for reasons other than for the performance of
duties during the applicable computation periods, such as
paid vacation, holidays, sickness, disability and similar
paid periods of non-working time. (These hours shall be
counted in the computation period or periods in which the
hours occur for which payment is made.)
(3) One hour for each hour of the normally scheduled work hours
during any period the Employee is on any leave of absence
from work with the Company or an Affiliate for military
service with the Armed Forces of the United States, but not
to exceed the period required under the law pertaining to
veterans' reemployment rights; provided, however, if the
Employee fails to report for work at the end of such leave
during the period in which the Employee has reemployment
rights, the Employee shall not receive credit for hours on
such leave.
(4) One hour for each of the normally scheduled work hours
during any period of authorized leave of absence or layoff
status granted by the Company or an Affiliate for which the
Employee is not compensated, as determined under the
Company's policy which is uniformly applicable to all
Employees in similar circumstances.
When no time records are available, the Employee shall be given
credit for ten Hours of Service for each day the Employee is on
the Company's or Affiliate's payroll. There shall be no
duplication of credit for hours under (1), (2), (3) or (4),
above, and all such hours shall be determined in accordance with
reasonable standards and policies from time to time adopted by
the Committee under Regulation sections 29 C.F.R. 2530.200b-2(b)
and (c) which are incorporated into this Plan by this reference.
(v) "Investment Fund" or "Fund" shall mean the investment funds, if any,
established pursuant to section 7.2(a).
(w) "Investment Manager" shall mean an investment manager within the
meaning of section 3(38) of ERISA who has been selected by the
Committee and has acknowledged a delegation by the Committee of
discretionary investment powers with respect to all or a portion of
the Trust Fund.
(x) "Leased Employee" means a person who is not a common law employee but
who performs services for the Company or an Affiliate pursuant to an
agreement with a leasing organization (within the meaning of Code
section 414(n)(2)) if such person has performed the services on
substantially a full-time basis for a period of at least one year, the
services are of a type historically performed by Employees, and the
person is required to be treated as an Employee pursuant to Code
section 414(n), but only for the period and the purposes to which such
requirements apply.
(y) "Maternity/Paternity Leave" shall mean an absence from work by an
Employee for any period by reason of (i) the pregnancy of the
Employee, (ii) the birth of a child of the Employee, (iii) the
placement of a child with the Employee in connection with the adoption
of such child by such Employee, or (iv) the caring for such child by
such Employee, beginning immediately following such birth or
placement.
(z) "On Call Employee" shall mean an Employee who does not have a regular
work schedule and who works on an as needed basis. An Employee who is
temporarily absent from work due to a seasonal adjustment or layoff is
not an On Call Employee. For the purposes of this Plan only, an "ask
me employee" shall also be considered to be an "On Call Employee". An
"ask me employee" is a resident of a community who is intermittently
available to answer questions of prospective residents.
(aa) "Participant" shall mean an Employee who has satisfied the eligibility
requirements of ----------- Article 3. In addition, the term
"Participant" shall refer to an Employee who previously was an Active
Participant who has been transferred to an employment classification
that is not eligible for participation in the Plan, a former Active
Participant whose employment has terminated but who has not yet
received a distribution of all of his/her Accounts, and with respect
to the Rollover Account of an Employee who would not otherwise be a
Participant, an Employee having a Rollover Account. Individuals other
than Active Participants may sometimes be referred to as Inactive
Participants or former Participants.
(bb) "Plan" shall mean the Retirement Savings Plan for the Employees of Del
Webb Corporation.
(cc) "Plan Administrator" shall mean the Company for purposes of ERISA, but
it delegates its duties as such to the Committee appointed in
accordance with Article 10.
(dd) "Plan Year" shall mean the calendar year.
(ee) "Qualified Domestic Relations Order" means a judgment, decree or order
(including approval of a property settlement agreement) pursuant to a
state domestic relations law (including a community property law) that
provides benefits to an Alternate Payee in accordance with Code
section 414(p) and subsection 10.9(o) and section 14.4 of this Plan
and the procedures established thereunder.
(ff) "Qualified Nonelective Contributions" means any nonforfeitable
contributions described in Code section 401(m)(4)(C), which
contributions are subject to withdrawal restrictions similar to those
applicable to Basic Pretax Savings Contributions and other Code
section 401(k) elective deferrals, but are not subject to an election
by the Participant to receive cash in lieu of a contribution to a
qualified plan on his/her behalf.
(gg) "Seasonal Employee" shall mean any Employee whose ordinary and
customary period of employment, measured in terms of 12 month periods,
by the Company or an Affiliate is less than 12 months during any such
consecutive 12 month period and who is expected to or has been offered
the opportunity to return to active employment with the Company or an
Affiliate at the commencement of his/her next succeeding customary
period of employment. Any determination as to whether or not an
Employee is a Seasonal Employee pursuant to the definition herein
shall be made by the Company or an Affiliate in a uniform and
nondiscriminatory manner. Any determination so made shall be final and
binding on all parties.
(hh) "Temporary Employee" shall mean any Employee who is employed in a
position that is not expected to be continued for a period of more
than 12 months, determined as of the date on which the Employee is
initially hired. Any determination as to whether an Employee is a
Temporary Employee shall be made in a uniform and nondiscriminatory
manner by the Company or the Affiliate that employs the Employee. Any
determination so made shall be final and binding on all parties.
(ii) "Trust or Trust Agreement" shall mean the Trust or Trust Agreement of
the Retirement Savings Plan for the Employees of Del Webb Corporation.
(jj) "Trust Fund" shall mean the assets held by the Trustee pursuant to
this Plan and the Trust.
(kk) "Trustee" shall mean one or more corporations or individuals selected
by the Company and acting as trustee under the Trust Agreement
governing the Trust Fund at any time of reference.
(ll) "Unmatched Pretax Savings Contributions" shall mean the amount,
determined as a percentage of Compensation, a Participant requests the
Employer to contribute on his/her behalf to the Plan on a pretax basis
in accordance with section 4.2, which amount is not matched by Company
Contributions.
(mm) "Valuation Date" shall mean the date for valuing the assets of the
Trust Fund, which shall be the last business day of the Plan Year and
any such other dates as the Committee may designate.
(nn) "Year of Eligibility Service" shall mean the computation period of 12
consecutive months in which an Employee completes 1,000 Hours of
Service. The first such computation period shall commence with the
date on which the Employee first receives credit for an Hour of
Service.
Each subsequent computation period shall be a Plan Year, beginning
with the Plan Year that commences within the first computation period.
In the case of an Employee who has not yet fulfilled the eligibility
requirements set forth in section 3.1 and who incurs a "break in
service", and then is reemployed by the Company or an Affiliate, a
"Year of Eligibility Service" shall be determined by reference to the
date upon which such Employee's reemployment begins. In the case of an
Employee who terminates employment and who is then reemployed by the
Company or an Affiliate without incurring a "break in service", a
"Year of Eligibility Service" shall be determined by reference to the
date on which such Employee's original employment began. If an
Employee does not complete 1,000 or more Hours of Service during the
first 12 month period during which he/she could complete a Year of
Eligibility Service, then "Year of Eligibility Service" shall mean a
Plan Year during which such Employee completes 1,000 or more Hours of
Service. For purposes of this section 2.1(nn), the term "break in
service" shall mean a twelve-month computation period as set forth in
this section during which an Employee performs 500 or fewer Hours of
Service. Solely for purposes of determining whether a break in service
has occurred in a computation period, an individual who is absent from
work by reason of a Maternity/Paternity Leave shall receive credit for
the Hours of Service which would otherwise have been credited to such
Employee but for such absence. The Hours of Service credited herein
shall be credited to the computation period in which the absence
begins if the crediting is necessary to prevent a break in service in
that period, or in all other cases, in the following computation
period.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the context, any
masculine or feminine terminology herein shall also include the other gender,
and the definition of any term herein in the singular or plural shall also
include the other form.
Article 3. Participation
------------------------
3.1 PARTICIPATION. Every Employee who was a Participant prior to December
31, 1994 shall remain a Participant in accordance with this Article. Every other
Employee who is in or is hired into employment as an Eligible Employee on or
after December 31, 1994 shall become a Participant in the Plan on the first
Entry Date coinciding with or next following the latest to occur of (a), (b), or
(c) below:
(a) The date the Employee attains age 21;
(b) The date the Employee completes One-Half Year of
Eligibility Service or, effective September 1, 1995,
six months of service; or
(c) The date the Employee becomes an Eligible Employee.
For purposes of this section, 'One-Half Year of Eligibility Service' means a
computation period of six consecutive months, measured from the date an Employee
first performs an Hour of Service or from a date that is six months (or an even
multiple of six months) thereafter, in which an Employee completes 500 Hours of
Service. Notwithstanding the foregoing, a person who became an Employee on or
before July 11, 1990 shall become a Participant no later than the Entry Date on
which he/she would do so if (b) above were applied by substituting 'one Year of
Eligibility Service' in place of 'One-Half Year of Eligibility Service'."
As provided above, effective September 1, 1995, an Eligible Employee must
complete six months of service rather than One-Half Year of Eligibility Service
as a condition of participation in the Plan. In order to complete six months of
service, an Eligible Employee must simply remain in the Employer's employ for
six months following the day on which he first performs an Hour of Service for
the Employer. The Eligible Employee need not complete any specific number of
Hours of Service during the six month period. If an Eligible Employee terminates
employment before completing six months of service and later returns to
employment with the Employer, he will be treated as a new Employee unless he
completes or completed 1,000 or more Hours of Service during the 12 month period
beginning on the day on which he first performed an Hour of Service, in which
case he shall become a Participant as of the later of his date of reemployment
or the first day of the month following the expiration of said 12 month period.
3.2 Reemployment. A Participant who has a termination of employment and who
is subsequently reemployed as an Employee shall become a Participant as of the
date he/she returns to employment as an Eligible Employee. An Employee who has a
termination of employment prior to the time he/she becomes eligible to
participate in the Plan shall become a Participant in the Plan upon rehire as an
Eligible Employee on the Entry Date coinciding with or next following the date
he/she fulfills the age and service requirements set forth in section 3.1.
Computation of such Employee's service shall be determined in accordance with
the provisions of section 2.1(nn).
3.3 Transferees. If an Employee who is not currently an Eligible Employee
transfers to a position as an Eligible Employee, he/she shall become a
Participant on the later of (i) the Entry Date coinciding with or next following
such transfer or (ii) the Entry Date upon which he/she would have satisfied the
requirements of section 3.1.
Any Participant who transfers to a status as an Employee who is not an Eligible
Employee shall no longer be an Active Participant as of the effective date of
the change in his employment classification. The Participant's Accounts will
continue to be held pursuant to the terms of this Plan and will be distributed
upon his/her subsequent termination of employment or the occurrence of some
other event permitting a distribution pursuant to the provisions of this Plan.
Article 4. Pretax Savings Contributions
---------------------------------------
4.1 DEFERRAL OF BASIC PRETAX SAVINGS CONTRIBUTIONS. Each Participant may
elect on a prospective basis to have the Employer contribute a portion of
his/her Compensation to the Plan on his/her behalf each Plan Year, measured in
whole percentage points of from two percent up to the applicable maximum
percentage described below, as a Basic Pretax Savings Contribution, in
accordance with the rules set forth in section 4.3 and such other rules as the
Committee may prescribe. The applicable maximum percentage shall be six percent
or such other percent as may be established by the Board of Directors for the
particular Plan Year, which percentages may vary for different groups of
Participants.
4.2 DEFERRAL OF UNMATCHED PRETAX SAVINGS CONTRIBUTIONS. In addition to a
Participant's Basic Pretax Savings Contributions as provided under section 4.1,
in any Plan Year, a Participant who has elected the maximum percentage available
to him under section 4.1 may also elect on a prospective basis to have the
Employer contribute a portion of his/her Compensation to the Plan on his/her
behalf, measured in whole percentage points of from one percent up to the
applicable maximum percentage described below, as an Unmatched Pretax Savings
Contribution, in accordance with the rules set forth in section 4.3 and such
other rules as the Committee may prescribe. The applicable maximum percentage
for any given Participant shall be the difference between 15 percent and the
maximum percentage that the Participant is allowed to elect as a Basic Pretax
Savings Contribution under section 4.1. Thus, for example, the applicable
maximum percentage is nine percent if the Participant is allowed to elect a
maximum Basic Pretax Savings Contribution of six percent, and it is ten percent
if the Participant is allowed to elect a maximum Basic Pretax Savings
Contribution of five percent.
4.3 DEFERRAL ELECTION PROCEDURES. Each Participant (or Employee expected to
become a Participant within the next 90 days) shall make the election or
elections described in sections 4.1 and 4.2 by completing an election form
obtained from the Committee. The Employee shall return the election form to the
Committee at least 30 days (or such shorter period as may be specified by the
Committee) preceding the Entry Date on which he/she expects to become a
Participant.
4.4 DEFERRAL ELECTION CHANGES. Elections made in accordance with section
4.3 shall remain in effect until a new election to increase or decrease the
deferral percentage becomes effective. Such new election must be filed at least
30 days (or such shorter period as may be specified by the Committee) prior to
the beginning of any payroll period in which the Participant desires the change
to become effective. Any new election so filed shall become effective on the
first day of such payroll period and shall remain in effect until changed under
the rules of this section 4.4.
4.5 DISCONTINUANCE OF BASIC AND UNMATCHED PRETAX SAVINGS CONTRIBUTIONS. A
Participant may discontinue his/her Basic and Unmatched Pretax Savings
Contributions to the Plan at any time by filing a written notice with the
Committee at least 15 days (or such other period as may be specified by the
Committee) prior to the beginning of the payroll period in which he/she desires
the discontinuance to become effective.
Such Participant shall thereafter be eligible to resume Pretax Savings
Contributions to the Plan, provided that at least six months have elapsed since
the effective date of his/her prior election to discontinue Pretax Savings
Contributions, upon filing a new election form with the Committee at least 30
days (or such shorter period as may be specified by the Committee) prior to the
beginning of the payroll period in which he/she desires his/her election to
become effective.
4.6 SALARY REDUCTION. Each Participant who makes an election described in
section 4.3 to have the Employer contribute a percentage of his/her Compensation
to this Plan shall, by the act of making such election, agree to have his/her
pay reduced by an equivalent percentage for so long as the election remains in
effect.
4.7 LIMITATION ON BASIC PRETAX SAVINGS CONTRIBUTIONS AND UNMATCHED PRETAX
SAVINGS CONTRIBUTIONS. This Plan is not intended to permit Basic Pretax Savings
Contributions plus Unmatched Pretax Savings Contributions for any calendar year,
with respect to any Participant, in excess of $7,000 (or such other amount as
may at the time be prescribed under Code section 402(g)(5)). The Committee shall
prescribe procedures designed to prevent this limit from being exceeded and to
cause such contributions that have been elected by a Participant to be stopped
at any time during the year when this limit has been reached under the Plan. The
Committee shall also adopt reasonable procedures to assist a Participant in
fulfilling his/her responsibility of ensuring that the Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions made on his/her behalf
for the Participant's taxable year do not exceed $7,000 (or such other amount as
may at the time be prescribed under Code section 402(g)(5)), less any other
elective deferrals (within the meaning of Code section 402(g)(3)) made on behalf
of the Participant. The Participant will be treated as having a calendar taxable
year and as having no elective deferrals other than Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions unless the Participant
notifies the Committee differently, in writing, before the beginning of his/her
taxable year.
If the Participant notifies the Committee in writing no later than March l
following his/her taxable year of the amount of any excess Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions under this section for
such taxable year, the Plan may, but need not, distribute such excess (and any
income and investment gain or loss allocable to such excess) to him no later
than April 15 following such taxable year and, if so distributed, such excess
shall not be included as an Annual Addition for the Participant for the
immediately preceding Plan Year. The Participant's income for the year of the
excess Basic Pretax Savings Contributions and Unmatched Pretax Savings
Contributions (or, the year of distribution or other year or years that may be
specified pursuant to Treasury rules and regulations) shall be increased by the
amount distributed under this section. The distribution described in this
section may be made notwithstanding any other Plan provision. The Committee
shall adopt reasonable procedures for coordinating distributions of excess Basic
Pretax Savings Contributions and Unmatched Pretax Savings Contributions under
this section and section 4.8, in accordance with any applicable Treasury rules
and regulations.
4.8 RESTRICTIONS ON ELECTIONS. In conjunction with Participant elections of
Basic Pretax Savings Contributions and Unmatched Pretax Savings Contributions or
at such other or additional times throughout the Plan Year as the Committee may
determine, the Committee shall require testing of the elections of Basic Pretax
Savings Contributions and Unmatched Pretax Savings Contributions by Participants
(and any other Employer contributions that the Company elects to include in the
testing under the conditions specified below) to assure that the average
deferral percentage for the Plan Year of Participants who are Highly Compensated
Employees will not exceed the greater of:
(a) 1.25 times the average deferral percentage for the Plan Year of
all other Participants who are non-Highly Compensated Employees,
or
(b) the lesser of (i) 2 percentage points more than, or (ii) 2 times
the average deferral percentage for the Plan Year of all other
Participants who are non-Highly Compensated Employees.
For purposes of this section, the term "average deferral percentage" for each
group of Participants for any period shall be the average of the percentages,
calculated separately for each Participant in such group, of the aggregate
amount of Compensation that each Participant elects to have contributed to the
Plan for the period as Basic Pretax Savings Contributions or Unmatched Pretax
Savings Contributions. As provided in Section 5.4, if the Company so elects,
Qualified Nonelective Contributions shall be added to Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions in computing each
Participant's deferral percentage. In addition, the Company may elect, in
accordance with such regulations as may be prescribed by the Secretary of the
Treasury, to aggregate Code section 401(m) matching contributions (including
matching and discretionary Company Contributions under this Plan) that meet the
withdrawal and vesting requirements of Code sections 401(k)(2)(B) and (C) with
the Basic Pretax Savings Contributions, Unmatched Pretax Savings Contributions
and Qualified Nonelective Contributions for purposes of computing each
Participant's deferral percentage. Except as provided in Treasury Regulations,
excess Basic Pretax Savings Contributions and Unmatched Pretax Savings
Contributions under section 4.7 shall be treated as an amount elected under
section 4.3 and contributed to the Plan, whether or not such excess contribution
is distributed.
Advance testing done under this section may be based on a Participant's annual
rate of Compensation in effect at the time of the test, and corrections to be
made to reduce the amount in excess of the maximum permissible deferral
percentage may be made from Compensation to be earned for the remainder of the
Plan Year. Final Plan Year compliance with the restrictions of this section
shall be based on the Participant's actual Compensation and Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions for the Plan Year.
If, at the end of the Plan Year, the percentage of Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions elected by Highly
Compensated Employees (and any other Company Contributions that are included in
the testing at the Company's election) would (if not distributed) cause the
average deferral percentage of such Participants to exceed the maximum deferral
percentage permitted for the Plan Year under this section, then, before the end
of the following Plan Year, the excess amount of such contributions (and income
and investment gain or loss attributable thereto) for the Highly Compensated
Employees shall be distributed to such Participants in the order of their
average deferral percentages, beginning with the Highly Compensated Employees
with the highest average deferral percentage until the limitations of this
section are met. The income and investment gain or loss attributable to excess
contributions is that portion of the income and investment gain or loss on the
Participant's Account for the Plan Year that bears the same ratio as the excess
Basic Pretax Savings Contributions and Unmatched Pretax Savings Contributions
bear to the total Account balance, determined as of the last day of the Plan
Year. To the extent required by Code section 401(k) and related regulations, any
amount distributed under this paragraph to a Highly Compensated Employee shall
be included in that Employee's taxable wages for the Plan Year for which the
contribution was made. The distribution described in this section may be made
notwithstanding any other Plan provision. The Committee shall adopt reasonable
procedures for coordinating distributions of excess contributions under this
section and section 4.7.
Moreover, notwithstanding the foregoing rules, the Committee shall take steps to
ensure that this section 4.8 is interpreted and administered so as to comply
with applicable legal requirements for the determination of what amounts
constitute excess Code section 401(k) elective deferrals and for the return of
such excess amounts and any income and investment gain or loss attributable
thereto. If two or more plans which include Code section 401(k) cash or deferred
arrangements are considered as one plan for purposes of Code section 401(a)(4)
or 410(b), the cash or deferred arrangements included in such plans shall be
treated as one arrangement for purposes of this section 4.8. If any Highly
Compensated Employee is a participant under two or more cash or deferred
arrangements of an Employer or Affiliate, all such cash or deferred arrangements
shall be treated as one such arrangement for purposes of determining the actual
deferral percentage with respect to such Employee. No benefits other than Code
section 401(m) matching contributions shall be conditioned on a Participant's
election of Basic Pretax Savings Contributions or Unmatched Pretax Savings
Contributions under this Plan.
4.9 TRANSFER OF PRETAX SAVINGS CONTRIBUTIONS. Any amount to be contributed
to the Plan because of a Participant's election and resulting salary reduction
under sections 4.3 or 4.6, respectively, shall be transferred to the Trust Fund
at such times as the Company may determine; provided, however, that the amounts
so contributed for any payroll period shall be transferred to the Trust Fund not
later than 30 days after the end of the month in which occurs the last day of
such payroll period.
4.10 CREDITING OF PRETAX SAVINGS CONTRIBUTIONS. Any amount contributed to
the Trust under section 4.1 or 4.2 on behalf of a Participant shall be credited,
as of the appropriate Valuation Date, to the Basic Pretax Savings Account or the
Unmatched Pretax Savings Account, as applicable, of each Participant on whose
behalf the contribution was made.
4.11 ADJUSTMENT OF COMPANY CONTRIBUTIONS ACCOUNT. In the event that a
distribution of excess Basic Pretax Savings Contributions is made pursuant to
section 4.7 or section 4.8 of the Plan, the Company Contributions Account will
be adjusted by the amount of any matching Company Contributions previously made
and allocated to the Company Contributions Account that are attributable to such
excess Basic Pretax Savings Contributions (the "excess matching contributions")
plus the income allocable to any such excess matching contributions. The income
allocable to the excess matching contributions shall be determined by the
Committee in accordance with any method permitted under Treasury Regulation
sections 1.401(m)-1(e)(3) or 1.401(k)-1(f)(4) as applicable. Any such excess
matching contributions (and earnings allocable thereto) will be forfeited and
reallocated among the unaffected Participant's Accounts, pursuant to such rules
as shall be adopted by the Committee, provided that such treatment is applied
uniformly to all Participants under the Plan for the Plan Year involved.
Alternatively if the Company chooses, the adjustment of the Company
Contributions Account will be made by an additional matching Company
Contribution, allocated to the Company Contributions Accounts of Participants
who are not Highly Compensated Employees.
Article 5. Company Contributions
--------------------------------
5.1 MATCHING COMPANY CONTRIBUTIONS. For each Plan Year, so long as this
Plan is in existence, and subject to the limitations set forth in section 5.8
below, the Employer shall make a matching Company Contribution on behalf of
every Participant for whom a Basic Pretax Savings Contribution was made to the
Plan under section 4.1. Any contribution made in accordance with this section
5.1 may be made in the form of cash or Company Securities in the discretion of
the Board of Directors.
The matching amount to be contributed on behalf of each Participant hereunder
shall be equal to a specified percentage of the Basic Pretax Savings
Contributions made on behalf of a Participant under section 4.1, as determined
by the Company's Board of Directors with respect to particular groups of
Participants, and subject to compliance with any regulations under Code section
401(a)(26) that prohibit separate benefit schedules covering less than 50
Participants under certain circumstances. The matching percentage shall be
specified in advance and shall remain in effect until changed by the Board or
its delegate on a prospective basis.
The amount of matching Company Contribution allocable to the Company
Contributions Account of any Participant in any Plan Year shall not exceed the
limitations of section 5.3 or the limitations of sections 5.8 through 5.10, as
determined after taking into account the amount of Basic Pretax Savings
Contributions and Unmatched Pretax Savings Contributions deferred by such
Participant for the Plan Year.
5.2 DISCRETIONARY COMPANY CONTRIBUTIONS. The Board of Directors in its
discretion may authorize and require the Employer to make a Company Contribution
to the Trust Fund for a Plan Year in addition to the matching Company
Contribution made under section 5.1. Any discretionary Company Contribution made
in accordance with this section 5.2 may be made in the form of cash or Company
Securities in the discretion of the Board of Directors. The contribution made
under this section shall be allocated in one or a combination of the following
methods, as the Board of Directors in its discretion may determine:
(a) discretionary Company Contributions may be allocated to the
Company Contributions Accounts of only those Active Participants
for whom a Basic Pretax Savings Contribution was made for the
Plan Year in the proportion that the Basic Pretax Savings
Contribution of each such Active Participant for the Plan Year up
to the effective date of the discretionary Company Contribution
bears to the total of such contributions for all such Active
Participants for the Plan Year up to the effective date of the
discretionary Company Contribution, and/or
(b) discretionary Company Contributions may be allocated to the
Company Contribution Accounts of all Active Participants
(regardless of whether or not they have deferred an amount under
section 4.1) in the proportion that the Compensation of each
Active Participant for the Plan Year up to the effective date of
the discretionary Company Contribution bears to the total
Compensation of all Active Participants for the Plan Year up to
the effective date of the discretionary Company Contribution,
and/or
(c) discretionary Company Contributions may be allocated to the
Company Contributions Accounts of only those Active Participants
who are not covered by any other Company incentive compensation
plan ("qualified participants"), regardless of whether or not
such qualified participants have deferred an amount under Section
4.1, in the proportion that the Compensation of each qualified
participant for the Plan Year up to the effective date of the
discretionary Company Contribution bears to the total covered
Compensation of all qualified participants up to the effective
date of the discretionary Company Contribution for the Plan Year,
and/or
(d) discretionary Company contributions may be allocated to the
Company Contributions Accounts of only those Active Participants
who do not meet the eligibility requirements for participation in
the Del Webb Corporation Deferred Compensation Plan ("qualified
participants"), regardless of whether or not such qualified
participants have deferred an amount under Section 4.1, in the
proportion that the Compensation of each qualified participant
for the Plan Year up to the effective date of the discretionary
Company Contribution bears to the total covered Compensation of
all qualified participants for the Plan Year up to the effective
date of the Company Contribution.
The amount of discretionary Company Contribution allocable to the
Company Contributions Account of any Active Participant in any Plan
Year shall not exceed the limitations of section 5.8 through 5.10, as
determined after taking into account the amount of Basic Pretax
Savings Contributions, Unmatched Pretax Savings Contributions, and
matching Company Contributions allocable to such Active Participant's
Company Contributions Account for the Plan Year.
5.3 RESTRICTIONS ON MATCHING COMPANY CONTRIBUTIONS AND DISCRETIONARY
COMPANY CONTRIBUTIONS. At such times throughout the Plan Year as the Committee
may determine, the Committee shall require testing to assure that the
contribution percentage for the Plan Year of Participants who are Highly
Compensated Employees will not exceed the greater of:
(a) 1.25 times the contribution percentage for the Plan Year of all
other Participants who are non-Highly Compensated Employees, or
(b) the lesser of (i) 2 percentage points more than, or (ii) 2 times
the contribution percentage for the Plan Year of all other
Participants who are non-Highly Compensated Employees.
For purposes of this section, the term "contribution percentage" for each group
of Participants shall be the average of the ratios, calculated separately for
each Participant in such group, of the aggregate amount of matching and
discretionary Company Contributions that are allocated pursuant to section
5.2(a), made by or on behalf of the Participant for the Plan Year to that
Participant's Compensation for the Plan Year. As provided in section 5.4, if the
Company so elects, Qualified Nonelective Contributions shall be added to the
matching Company Contributions and the discretionary Company Contributions
allocated pursuant to section 5.2(a) for the Plan Year for purposes of
calculating the contribution percentages. In addition, the Company may elect, in
accordance with such regulations as may be prescribed by the Secretary of
Treasury, to consider Code section 401(k) elective deferrals (including Basic
Pretax Savings Contributions and Unmatched Pretax Savings Contributions to this
Plan) for purposes of calculating contribution percentages.
Advance testing under this section may be based on a Participant's level of
Basic Pretax Savings Contributions and Unmatched Pretax Savings Contributions
and his/her annual rate of Compensation in effect at the time of the test, and
corrections to be made to reduce the amount in excess of the maximum permissible
contribution percentage may be from Company Contributions to be made for the
remainder of the Plan Year. Final Plan Year compliance with the restrictions of
this section shall be based on the Participant's actual contributions and
Compensation for the Plan Year.
If, at the end of the Plan Year, the contribution percentage of Highly
Compensated Employees exceeds the maximum contribution percentage permitted for
the Plan Year under this section, then simultaneously, before the end of the
following Plan Year:
(1) the excess nonforfeitable Company Contributions (and the income
and investment gain or loss attributable thereto) for Highly
Compensated Employees shall be distributed to such Participants,
and
(2) the excess Company Contributions that are forfeitable pursuant to
section 4.11 (and income and investment gain or loss attributable
thereto) for Highly Compensated Employees shall be forfeited, in
the order of the contribution percentages of such Participants
beginning with the Highly Compensated Employee with the highest
contribution percentage until the limitations of this section are
met. The income and investment gain or loss attributable to
excess contributions is that portion of income and investment
gain or loss on the Participant's Company Contributions Account
for the Plan Year that bears the same ratio as the excess
contributions bears to the total Company Contributions Account
balance, determined as of the last day of the Plan Year. To the
extent required by Code section 401(m) and related regulations,
any amount distributed under this paragraph to a Highly
Compensated Employee shall be included in that Employee's taxable
wages for the Plan Year for which the contribution was made. The
distribution described in this section may be made
notwithstanding any other Plan provision.
In the event that this Plan satisfies the requirements of section 410(b) of the
Code only if aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of section 410(b) of the Code only if aggregated
with this Plan, then this section 5.3 shall be applied by determining the
contribution percentages of eligible Participants as if all such plans were a
single plan. If a Highly Compensated Employee participates in two or more plans
of an Employer or Affiliate to which such contributions are made, all such
contributions shall be aggregated for purposes of this section.
Any Employee required to be taken into consideration under Code section
401(m)(5) shall be treated as an eligible Employee in accordance with such Code
section for purposes of the application of this section 5.3. Moreover, the
determination of excess contributions under this section 5.3 shall be made after
first determining the excess deferrals (within the meaning of Code section
402(g)) pursuant to section 4.7 of this Plan and then determining the excess
Code section 401(k) deferrals pursuant to section 4.8 of this Plan. All
determinations under this section 5.3 shall comply with Code section 401(m) and
the regulations thereunder, including any such regulations as may be necessary
to prevent the multiple use of the alternative percentage limitations in Code
sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) with respect to any Highly
Compensated Employee and also including regulations permitting appropriate
aggregation of plans and contributions.
The foregoing requirement to correct multiple use of the alternative percentage
limitations (by first reducing excess Code section 401(k) deferrals pursuant to
Plan section 4.8) applies to all Highly Compensated Employees who are eligible
for both Code section 401(k) deferrals under Article 4 and matching Company
Contributions under Article 5. This requirement accordingly extends to all such
Employees who are active Participants in the Plan at any time during the Plan
Year. In addition, if a matching Company Contribution for a Participant who is a
Highly Compensated Employee is made on account of a Basic Pretax Savings
Contribution that must be returned to such Participant as an amount in excess of
a limit specified in Article 4 (whether or not multiple use has occurred), such
matching Company Contribution shall be forfeited pursuant to Code section
411(a)(3)(G) and the forfeiture shall be used to reduce concurrent or subsequent
matching Company Contributions. If such matching Company Contribution is also in
excess of the amount permitted by the contribution percentage test in this
section 5.3, the first corrective step shall be the correction of the excess
Basic Pretax Savings Contribution pursuant to Article 4 and the forfeiture of
any related matching Company Contribution. The second corrective step shall then
be the distribution of any remaining excess matching Contribution that exceeds
the contribution percentage limit of this section 5.3 and has not been forfeited
in the first step.
5.4 CORRECTIVE CONTRIBUTIONS. In accordance with such regulations as may be
prescribed by the Secretary of the Treasury, the Company may elect to treat any
or all of the discretionary Company Contributions made pursuant to section 5.2
as Qualified Nonelective Contributions for purposes of complying with the
average deferral percentage requirements of section 4.8, the contribution
percentage requirements of section 5.3, or both.
In accordance with such regulations as may be prescribed by the Secretary of the
Treasury, the Company also may elect to make additional Qualified Nonelective
Contributions on behalf of Active Participants who are not Highly Compensated
Employees in an amount sufficient to satisfy either the average deferral
percentage requirements of section 4.8, the contribution percentage requirements
of section 5.3, or both. Such additional Qualified Nonelective Contributions
shall be allocated to the Company Contribution Accounts of those Active
Participants who are not Highly Compensated Employees in the proportion that the
Compensation of each such Active Participant bears to the total Compensation of
all such Active Participants for the relevant Plan Year.
If an Eligible Employee is inadvertently excluded from participation in the
Plan, the Company shall make special Qualified Nonelective Contributions and
special discretionary Company Contributions to the Plan on behalf of the
Eligible Employee. The special Qualified Nonelective Contributions shall be in
an amount equal to the sum of (i) the average deferral percentage for the group
of non-Highly Compensated Employee Participants or the group of Highly
Compensated Employee Participants (depending on whether the Eligible Employee
was a Highly Compensate Employee) for the Plan Year or Plan Years that includes
the period or periods during which the Eligible Employee was inadvertently
excluded from participation multiplied by the Eligible Employee's Compensation
for the same period or periods; and (ii) the matching Company Contributions that
would have been made pursuant to section 5.1 if the Eligible Employee
contributed the amount referred to in clause (i) on a pretax basis during the
relevant period or periods. The special discretionary Company Contribution
called for by this paragraph shall be in an amount equal to the discretionary
Company Contribution or Contributions that would have been allocated to the
Eligible Employee had he not been excluded. The Company also shall make a
special discretionary Company Contribution on behalf of the Eligible Employee in
an amount equal to the annual rate of return on Plan investments for the
relevant Plan Year or Plan Years multiplied by the amounts of Qualified
Nonelective Contributions or discretionary Company Contributions made pursuant
to this paragraph, adjusted to reflect partial years.
The Qualified Nonelective Contributions made pursuant to the preceding paragraph
shall be allocated to the Account or Accounts to which the contributions they
are replacing would have been allocated. For example, the portion of such
Qualified Nonelective Contribution that would have been characterized as a Basic
Pretax Savings Contribution if it had been made by the Eligible Employee during
the relevant Plan Year will be allocated to the Basic Pretax Savings Account.
The special discretionary Company Contribution shall be allocated to the Company
Contribution Account to the extent that the special discretionary Company
Contribution is replacing a discretionary Company Contribution that should have
previously been made. The special discretionary Company Contribution that is
replacing Plan investment earnings shall be allocated to the Accounts to which
the contributions to which the Plan investment earnings relate would be
allocated.
All contributions made pursuant to this section are subject to the limitations
of section 5.12. To the extent that the limitations of said section preclude the
making of the full special Qualified Nonelective Contributions or the full
special discretionary Company Contributions called for by the third paragraph of
this section, the balance of the special contributions will be made in later
years subject to the limitations of section 5.12. The special discretionary
Company Contribution that is intended to replace Plan investment earnings shall
be adjusted to reflect Plan investment earnings on the balance of said
contribution for the period of time during which contributions are limited.
In accordance with Treasury Regulations section 1.415-6(b)(2), for purposes of
applying the limitations of sections 5.8 through 5.11 of the Plan and section
415 of the Code, Qualified Nonelective Contributions and discretionary Company
Contributions made in accordance with this section 5.4 will not be considered
Annual Additions with respect to the Participant for the limitation year in
which said contributions are made, but, rather, will be considered Annual
Additions in the limitation year to which such contributions relate.
Furthermore, to the extent a discretionary Company Contribution made pursuant to
this section is intended to replace investment earnings, it will not be treated
as an Annual Addition for any limitation year.
5.5 TRANSFER OF COMPANY CONTRIBUTIONS. Matching Company Contributions
described in section 5.1 shall normally be transferred to the Trust Fund at the
same time Participant Basic Pretax Savings Contributions are transferred to the
Trust Fund and in any event shall be transferred to the Trust Fund prior to the
due date of the Company's federal income tax return (including extensions
thereof) for the taxable year coinciding with such Plan Year. Discretionary
Company Contributions described in section 5.2 shall be transferred to the Trust
Fund at such time as the Committee may determine but in no event shall they be
transferred to the Trust Fund later than the due date of the Company's federal
income tax return (including extensions thereof) for the taxable year coinciding
with such Plan Year.
5.6 ALLOCATION OF COMPANY CONTRIBUTIONS TO COMPANY CONTRIBUTIONS ACCOUNTS.
Matching Company Contributions and discretionary Company Contributions described
in sections 5.1 and 5.2 shall be allocated to the Company Contributions Accounts
of Participants, as of the appropriate Valuation Date to which it relates,
provided that in no event shall such contributions be treated as having been
made or allocated as of a date later than the last day of the Plan Year to which
they relate.
5.7 FORFEITURES. The nonvested portion of a Participant's Company
Contributions Account shall be forfeited in accordance with section 6.3. The
Committee shall use forfeitures occurring in any Plan Year to reduce subsequent
Company Contributions for such Plan Year and future Plan Years. If the amount of
forfeitures occurring in a Plan Year exceeds the amount of Company Contributions
for such year, then the excess shall be held in a separate account and allocated
to the extent that it reduces Company Contributions in succeeding Plan Years. No
Company Contributions shall be made while such a separate account exists, and if
the Plan terminates while such account is in existence, the balance shall be
allocated under section 5.2(b) not to exceed the limitations of sections 5.8
through 5.10.
5.8 LIMITATION ON ANNUAL ADDITIONS. Notwithstanding anything to the
contrary contained in this Plan, the total Annual Additions to be allocated to
the Accounts of a Participant for any Plan Year shall not exceed an amount equal
to the lesser of:
(a) $30,000 (or such greater amount as may be permitted under Code section
415(c)(1)(A)) or
(b) 25 percent of the Participant's Compensation for the limitation year.
5.9 OTHER DEFINED CONTRIBUTION PLANS. If the Company is contributing to any
other defined contribution plan, as defined in section 414(i) of the Code, for
its Employees, some or all of whom are Participants of this Plan, then any such
Participant's Annual Addition shall be aggregated with amounts credited to the
Participant under the other plan for purposes of applying the limitations and
reducing allocations under such other plan.
5.10 DEFINED BENEFIT PLANS. If a Participant in this Plan is also a
Participant in a defined benefit plan, as defined in section 414(j) of the Code,
to which contributions are made by the Employer, then in addition to the
limitations contained in section 5.8 of this Plan, the projected benefit of the
Participant under the defined benefit plan shall be limited to the extent
necessary to comply with the limitation set forth in section 415(e) of the Code.
5.11 ADJUSTING ANNUAL ADDITIONS. If at any time during the Plan Year the
Plan Administrator anticipates that the contributions to a Participant's Account
will exceed the limitations of section 5.8, the Plan Administrator may limit the
Participant's ability to make Unmatched Pretax Savings Contributions for the
remainder of the Plan Year. If after application of the preceding sentence the
Plan Administrator anticipates that the limitations of section 5.8 will still be
exceeded, the Plan Administrator may limit the Participant's ability to make
Basic Pretax Savings Contributions for the remainder of the Plan Year. If the
limitation of section 5.8 cannot be met by limiting future Unmatched or Basic
Pretax Savings Contributions in this manner, or, if the limitations of section
5.8 have been exceeded by contributions already made, the Plan Administrator
also shall take the following steps to limit Annual Additions:
(a) First, the Plan Administrator shall distribute to the Participant all
or a portion of the Unmatched Pretax Savings Contributions made by the
Participant to the extent necessary to reduce the Participant's Annual
Additions to the maximum amount permitted by section 5.8. Earnings
attributable to any such "excess Unmatched Pretax Savings
Contributions" also shall be distributed to the Participant. The
earnings allocable to any excess Unmatched Pretax Savings
Contributions shall be determined by the Plan Administrator in
accordance with any method permitted under Treasury Regulation section
1.401(k)-1(f)(4).
(b) Second, if after the application of paragraph (a) the Annual Additions
continue to exceed the limitations of section 5.8, the Plan
Administrator shall distribute to the Participant all or a portion of
the Basic Pretax Savings Contributions made by the Participant to the
extent necessary to reduce the Participant's Annual Additions to the
maximum amount permitted by section 5.8. Earnings attributable to such
"excess Basic Pretax Savings Contributions" also shall be distributed
to the Participant. The earnings attributable to any excess Basic
Pretax Savings Contributions shall be determined by the Plan
Administrator in accordance with any method permitted under Treasury
Regulation section 1.401(k)-1(f)(4). No matching Company Contribution
will be made with respect to Basic Pretax Savings Contributions
distributed to a Participant pursuant to this paragraph. If matching
Company Contributions have been made and allocated to the
Participant's Account before the excess Basic Pretax Savings
Contributions have been identified, the Plan Administrator shall
reallocate the matching Company Contributions attributable to such
excess Basic Pretax Savings Contributions to a suspense account. The
amounts allocated to the suspense account shall be held to be
allocated on a first-in-first-out basis in reduction of matching
Company Contributions due in future Plan Years prior to the allocation
of additional matching Company Contributions. In deciding the amount
of Basic Pretax Savings Contributions that must be distributed in
accordance with this paragraph, the Plan Administrator shall take into
consideration that no matching Company Contributions will be made (or
if previously made, will be reallocated), with respect to excess Basic
Pretax Savings Contributions that will be distributed.
(c) Third, if further limitation is required after the application of
paragraphs (a) and (b), the Plan Administrator shall allocate to a
suspense account all or a portion of the discretionary Company
Contributions made on behalf of the Participant to the extent
necessary to reduce the Participant's Annual Additions to the maximum
amount permitted by section 5.8. Discretionary Company Contributions
allocated to the suspense account shall be held to be allocated on a
first-in-first-out basis in reduction of discretionary Company
Contributions prior to the allocation of additional discretionary
Company Contributions in future Plan Years.
(d) Further reductions or adjustments to the methods described above for
adjusting the Accounts of Participants may be made pursuant to the
directions of the Plan Administrator and may be made pursuant to
priorities established under related defined contribution plans.
5.12 DEDUCTIBILITY LIMITATION. The dollar amount of Company Contributions,
as provided under sections 5.1, 5.2 and 5.4, shall be limited to the amount
deductible under section 404 of the Code for the taxable year for which such
contributions are paid.
5.13 ROLLOVER CONTRIBUTIONS AND PRIOR ACCOUNT TRANSFERS. As provided in
section 2.1(a)(5), this Plan may include amounts transferred directly to the
Prior Account of a Participant. In addition, subject to the Committee's
approval, amounts which an Eligible Employee has received from any other
employee benefit plan may, in accordance with uniform and nondiscriminatory
procedures adopted by the Committee, be transferred by such Employee to this
Plan, and if transferred, shall constitute such Employee's "Rollover Account"
hereunder: provided the following conditions are satisfied:
(a) The amounts tendered must have been received by the Employee from:
(l) A plan qualified under section 401(a) of the Code; or
(2) An individual retirement account or annuity ("IRA"), containing
amounts described in section 408(d)(3)(A)(ii) of the Code, to
which no deductible IRA contributions were made, or rolled over
from a qualified plan.
(b) The amounts tendered must not include amounts attributable to:
(1) After-tax contributions to a qualified plan by the Employee;
(2) Deductible IRA contributions; or
(3) A partial distribution from a qualified plan which is eligible
for rollover to an IRA but not to another qualified plan.
(c) In no event will a transfer to an Employee's Rollover Account be
permissible if it would cause this Plan to become a transferee plan
that is subject to the qualified plan survivor annuity requirements of
the Code with respect to the Employee.
(d) The transfer to this Plan of amounts described in paragraph (a) will
only be accepted if the Employee presents to the Committee such
information as the Committee may require to administer the rules of
this section 5.13 and to maintain the qualified status of the Plan.
Such information may include the Federal Form 1099, or equivalent, and
the original distribution check, or a copy thereof.
(e) Amounts must be received by the Committee not later than 60 days after
the distribution was received by the Employee.
The Committee shall establish such procedures, and may require such additional
information from the Employee, as it deems necessary or appropriate to determine
that a proposed transfer hereunder will satisfy the above requirements. Upon
approval by the Committee, rollover amounts shall be transmitted to the Trustee,
to be invested in such Investment Funds as the Employee may select in accordance
with such rules as are provided in Article 7.
No matching or discretionary Company Contributions shall be made with respect to
rollovers or amounts transferred to a Participant's Prior Account hereunder.
The Committee shall not be required to permit any rollover amount to be
transferred to or held under this Plan if the Committee determines, in its sole
discretion, that acceptance of any such rollover amount may adversely affect the
continued qualification of this Plan or may subject the Plan to burdensome
additional requirements for continued qualification, including without
limitation any requirement to provide a spousal survivor annuity or other forms
of distribution that are not otherwise available under the Plan.
An Employee who transfers a rollover amount into this Plan shall be eligible to
commence Pretax Savings to this Plan only when he/she satisfies the applicable
eligibility requirements in section 3.1.
Notwithstanding the foregoing, on and after January 1, 1993, a rollover
contribution under this section shall, to the extent required by Code section
402 (c), include and be limited to a contribution relating to an eligible
rollover distribution described in Code section 402 (c) (4), including a direct
rollover or a sixty-day rollover of such eligible rollover distribution. The
Committee may establish other uniform rules and procedures, consistent with the
requirements of the Code and this section 5.13, concerning the acceptance of
rollover contributions, including rules that limit or prohibit wire transfers
and other payments that are made directly to this Plan from another plan in lieu
of having the Participant receive a check payable to this Plan's Trustee for
delivery to a Plan representative who is authorized to receive rollover
contributions.
Article 6. Vesting and Benefits
-------------------------------
6.1 VESTING. The interest of a Participant in his/her Basic Pretax Savings
Account, Unmatched Pretax Savings Account, Prior Account, and Rollover Account
(if any) shall be fully vested at all times, and his/her rights and interests
therein shall not be forfeitable for any reason. The interest of a Participant
in his/her Company Contributions Account shall be fully vested in him/her at all
times if the Participant has ever received credit for an Hour of Service on or
after April 1, 1988. If a Participant terminated employment before April 1,
1988, his/her vested interest in his/her Company Contributions Account shall be
determined in accordance with the Plan provisions in effect when his/her
employment terminated.
6.2 BENEFITS UPON TERMINATION OF EMPLOYMENT. Every Participant who has a
termination of employment for any reason other than death or disability shall
have the value of his/her Basic Pretax Savings Account, Unmatched Pretax Savings
Account, Prior Account, Frozen Account, and Rollover Account, and the vested
portion of his/her Company Contributions Account, distributed pursuant to
section 8.1, in either:
(a) one lump sum within the time set forth in section 6.7; or
(b) substantially equal monthly, quarterly, or annual installments
(as selected by the Participant). The first such installment
shall be payable within 60 days after the end of the month in
which occurs the last day such Participant is paid by the
Company, unless such Participant elects to defer receipt of
his/her benefits as provided in section 6.7. Such Participant,
may specify the number of installments to be paid each year and
the number of years, not to exceed 10, over which the
installments will be paid; provided, however, that the balance
remaining in a Participant's Accounts at the end of the
designated installment payout period shall be distributed on the
last payment; and provided, further, that the Account balance of
such Participant shall be fully distributed within the lifetime
of such Participant or the lifetimes of the Participant or
his/her Beneficiary, or within a period not extending beyond the
life expectancy of the Participant or the life expectancy of the
Participant and his/her Beneficiary.
The Account balance of a Participant who has elected to receive
an installment distribution shall be invested per the
Participant's instructions. Should such a Participant die before
all of his/her installment payments have been distributed,
his/her Beneficiary shall receive the remainder of such unpaid
installments in one lump sum as soon as practicable and in no
event later than one year.
6.3 FORFEITURE OF CONTINGENT INTERESTS. The provisions of the Plan as in
effect on December 31, 1986, shall govern forfeitures occurring on or before
that date. The following provisions shall govern forfeitures that occur
thereafter as well as any reinstatements that may be required for such
forfeitures. Any portion of a Participant's Company Contributions Account that
is not vested under the provisions of section 6.1 upon his/her termination of
employment shall be held in a separate Company Contributions Account and shall
be forfeited as of the earlier of (i) a distribution of the Participant's vested
Account balance, or (ii) the Valuation Date next following the passage of five
consecutive years during which the Participant has not received credit for at
least one Hour of Service. If the Participant is rehired as an Employee and
receives credit for an Hour of Service before the passage of the number of years
specified in clause (ii) of the foregoing sentence, then the following rules
shall apply. Any unforfeited amount held in his/her Company Contributions
Account shall remain to his/her credit and/or any previously forfeited amount
shall be restored to his/her Company Contributions Account by means of a special
Employer contribution or a special allocation out of forfeitures available for
reallocation, as determined by the Committee. Prior to the Participant's full
vesting thereafter, the amount of any subsequent distribution from his/her
Company Contributions Account on any later termination of employment shall be
determined by adding to his/her Company Contributions Account the amount of the
previous distribution, multiplying this total by his/her vested percentage, and
then subtracting from the resulting product the amount of the previous
distribution.
6.4 DISABILITY. A Participant who becomes disabled while still in the
service of the Company or an Affiliate and who is entitled to disability
payments under the Del Webb Corporation Long Term Disability Plan (LTD Plan)
shall have his/her Account balance, valued as provided in section 8.1,
distributed to him in the form of a single lump sum as soon as practicable and
in no event later than three months after the end of the calendar quarter in
which the Participant is last paid by the Company, unless such Participant
elects to defer receipt of his/her Account balance as provided in section 6.7. A
Participant who becomes disabled but who is not entitled to disability payments
from the LTD Plan, however, shall have the option of receiving his/her Account
balance in the form of a single lump sum or in installments as provided in
section 6.2.
For purposes of this Article, "disability" shall mean (l) a physical or mental
condition which, in the judgment of the Committee, based on such competent
medical evidence as the Committee may require, renders an individual unable to
engage in any substantial gainful activity for the Company for which he/she is
reasonably fitted by education, training or experience and which impairment is
likely to result in death or to be of long continued duration for a period of at
least 12 months, or (2) a judicial declaration of incompetence.
6.5 DEATH BENEFITS. Should a Participant die while still in the service of
the Company or an Affiliate, said deceased Participant's Account balance shall
be distributed pursuant to section 8.1 to the Participant's Beneficiary in the
form of a single lump sum as soon as practicable and in no event later than the
latest date specified in section 6.7 for the distribution of benefits whose
payments have not commenced as of the Participant's date of death.
6.6 DESIGNATION OF BENEFICIARY. Subject to the requirements of section
2.1(g), a Participant may designate, in writing, the Beneficiary whom he/she
desires to receive the benefits provided by the Plan in the event of his/her
death. Such designation shall be filed on a form provided by the Committee for
that purpose. A Participant may change his/her designated Beneficiary from time
to time without the consent of anyone other than his/her spouse by filing a new
designation in writing with the Committee.
6.7 LATEST TIME FOR PAYMENT OF BENEFITS. To comply with legal restrictions
on the deferral of benefit commencement, all benefit payments must comply with
the following limits, notwithstanding any other provisions of the Plan. If the
Participant dies before the distribution of benefits, distribution of benefits
to the deceased Participant's spouse must be made by April 1 of the Plan Year
following the Plan Year in which the Participant would have reached age 70-1/2,
and distribution of benefits to any other Beneficiary must be made within one
year after the Participant's death (or such later date as may be prescribed by
regulations). If a Participant is still living, then unless he/she elects
otherwise in accordance with an option permitted under the Plan, the
distribution of benefits to him shall occur not later than the 60th day after
the close of the Plan Year in which occurs the latest of (i) the Participant's
termination of employment, (ii) the tenth anniversary of the year in which the
Participant commenced participation in the Plan, or (iii) the Participant's 65th
birthday.
Moreover, (a) if the Participant is a 5-percent owner, as defined in section
13.2, in any calendar year during which or after he/she attains age 66-1/2, or
(b) if the Participant attains age 70-1/2 after December 31, 1987, then
distribution of the Participant's vested Account must occur not later than the
April l following the calendar year in which the Participant attains age 70-1/2
even if the Participant has not incurred a termination of employment by such
date. For this purpose, the distribution of the Participant's vested account
means the payment of the entire vested balance in a lump sum in accordance with
subsection 6.7(a), except that an installment distribution under subsection
6.7(b) shall continue in the form in which it was elected if it started before
the Code section 401(a)(9) required beginning date and its continuation in this
manner will comply with the minimum distribution requirements of Code section
401(a)(9). Except for such continuing installments, recent additions to the
Participant's Account that have not been included in a prior distribution shall
be distributed in a lump sum on or before each December 31 due date following
the April 1 on which distributions are required to begin pursuant to this
paragraph and Code section 401(a)(9). All distributions under this paragraph
shall comply with the requirements of Code section 401(a)(9) and the regulations
thereunder.
If for any reason the amount which is required to be paid cannot be ascertained
on the date payment would be due hereunder, payment shall be made not later than
90 days after the earliest date on which the amount of such payment can be
ascertained.
6.8 IN-SERVICE DISTRIBUTION OF PRETAX SAVINGS AT AGE 59-1/2.
Notwithstanding any other provisions in the Plan to the contrary, an Active
Participant who has attained age 59-1/2 may elect, in accordance with such rules
as the Committee may prescribe, to have the vested value of his/her Basic Pretax
Savings Account, Unmatched Pretax Savings Account, Company Contributions
Account, Prior Account, Frozen Account, and Rollover Account distributed to him
pursuant to section 8.1 as of the end of any month on or after the date he/she
attains age 59-1/2 in the form of a single lump sum.
6.9 HARDSHIP WITHDRAWALS.
(a) Any Participant shall be permitted to make a cash withdrawal, in
any whole percentage increment or dollar amount, up to 100
percent of the amount in the Participant's Unmatched Pretax
Savings Account, Basic Pretax Savings Account (exclusive of
earnings on such amounts for withdrawals after December 31,
1988), and the vested portion of his/her Company Contributions
Account (except that for withdrawals after December 31, 1983,
Company Contributions, which have been used to satisfy the
testing requirements of sections 4.8 or 5.3, and earnings thereon
shall not be eligible for withdrawal), provided that the minimum
amount of a withdrawal under this section 6.9 shall be $1,000. No
Participant shall be permitted to withdraw any amount from
his/her Prior Account, Frozen Account, or Rollover Account. A
Participant wishing to withdraw any amount hereunder shall do so
by making application therefor which demonstrates to the
satisfaction of the Committee that the Participant is confronted
by a financial hardship.
(b) Subject to subparagraph (a) of this section 6.9, withdrawals must
be made of all amounts in each available category below (listed
in descending order) before amounts in a lower category may be
withdrawn:
(1) Unmatched Pretax Savings Account
(2) Basic Pretax Savings Account
(3) Company Contributions Account
(c) Application for withdrawals shall be made on such forms as the
Committee prescribes and may be made at any time. Distribution of
withdrawals shall be made in accordance with section 8.1 and
shall be paid in a lump sum as soon as is administratively
possible following such application.
(d) For purposes of this section 6.9, "financial hardship", means a
hardship occurring in the personal affairs of a Participant
because of:
(1) Illness of the Participant or any of his/her dependents
resulting in significant expenses not covered by the
Participant's medical benefit plan;
(2) Need for the purchase of/or substantial renovation of a
Participant's primary residence;
(3) The education of the Participant, the Participant's spouse
or children; or
(4) Family emergencies.
The amount of any distribution under this section shall be
limited to the amount necessary to defray the hardship expense
which is not reasonably available from other sources and not
covered by any other employee benefit plan maintained by the
Company or an Affiliate. For this purpose, the Committee may
accept the written statement of the Participant as to his/her
financial resources unless it has reason to believe the statement
is in error. In addition, effective January l, 1989, hardship
withdrawals shall be further limited to prevent the distribution
of earnings on Basic Pretax Savings Contributions and Unmatched
Pretax Savings Contributions to Participants who have not
attained age 59-1/2, and also to prevent the distribution of
earnings on Company Contributions to the extent necessary to
satisfy the withdrawal restrictions of Code section 401(k)(2)(B)
in the event that such Company Contributions have been used to
satisfy the average deferral percentage test of section 4.8 or
the contribution percentage test of section 5.3.
The foregoing notwithstanding, the Committee shall not approve a
hardship withdrawal for any of the reasons listed under this
paragraph (d) unless such hardship withdrawal complies with the
applicable regulations promulgated by the Department of Treasury.
The amount of any distribution under this section shall be
limited to the amount necessary to defray the hardship expense
which is not reasonably available from other reasonably liquid
assets from other sources outside the Plan. For this purpose, the
Committee may accept the written statement of the Participant
stating the nature of his/her immediate and heavy financial need,
his/her financial resources, and the fact that the amount of
withdrawal requested is not reasonably available from other
resources.
6.10 DEBITING OF INVESTMENT FUNDS. If a Participant making less than a
total withdrawal of his/her Accounts under section 6.8 and/or 6.9 has his/her
Accounts invested in more than one Investment Fund, the amount withdrawn from
such Accounts shall be debited against each of the Investment Funds in which
such Accounts are invested pro rata.
6.11 LOANS TO PARTICIPANTS. The Committee has instituted a loan program
whereby, upon written application of a Participant, the Committee may permit the
Plan to make a loan to such Participant, provided that all loans shall comply
with such rules and regulations as the Committee may establish for making Plan
loans and with the following terms and conditions:
(a) Loans shall be made available, on a nondiscriminatory and
reasonably equivalent basis, to all Participants, who are
actively employed by the Company or are otherwise required to be
eligible for loans under the Code or ERISA because of their
status as disqualified persons or parties in interest. No loan
shall be granted to a Participant who has a currently outstanding
loan or a prior loan that has not been repaid in full for a
period of at least three full months prior to the month of the
loan.
(b) A Participant, who receives a loan from the Plan, must sign a
note payable to the Trust in the proper amount on a form
prescribed by the Committee and authorize payroll deductions for
payment of interest and principal during any period of his/her
employment as an Employee in accordance with procedures adopted
by the Committee. The loan shall be evidenced by the
Participant's promissory note and shall be secured by an
assignment of the Participant's vested interest in his/her
Accounts and such additional collateral as the Committee may deem
necessary, provided that in no event shall the loan be secured by
an assignment of more than 50% of the Participant's vested (non-
forfeitable) interest in his/her Accounts. In determining whether
a pledge of additional collateral is necessary, the Committee
shall consider the Participant's credit worthiness and the impact
on the Plan in the event of default under the loan prior to the
Participant's benefit commencement date. To secure repayment of
the loan, the Participant shall, within the 90-day period before
the loan is made, consent to any distribution resulting from the
setoff of the loan against the Participant's Accounts under
subsection (g). Any loan processing fee (charged by a person
other than the Company) shall be deducted from the principal
amount available to the Participant.
(c) The amount of the loan shall not be less than $1,000 nor more
than the least of:
(1) $50,000, reduced by the highest outstanding balance of loans
to the Participant from the Plan during the 1-year period
ending on the day the loan is made;
(2) 50 percent of the vested balance in all of such
Participant's Accounts at the time of the loan; or
(3) 100 percent of the Participant's vested balance in all of
such Participant's Accounts (excluding any balances in
his/her Prior Account, Frozen Account, or Rollover Account)
at the time of the loan.
If such Participant is also covered under another qualified
plan maintained by the Company or an Affiliate, the
limitations of clauses (1) and (2) above shall be applied as
though all such qualified plans are one plan.
(d) The repayment period for any loan shall be determined by the
Committee and shall not extend beyond five years; provided,
however, that if the Participant can show, by proof satisfactory
to the Committee, that the loan will be used to acquire any
dwelling unit which, within a reasonable time, is to be used as
the principal residence of the Participant (a "Home Loan"), then
the repayment period may extend to 15 years. Moreover, the
Committee may, under uniform rules, limit the duration of loans
to a shorter period than the maximum periods specified above so
that, for example, the Plan does not grant any Home Loans and
grants regular loans for a maximum duration of 54 months to
part-time Employees or 30 months to Seasonal Employees so as to
comply with the foregoing maximum limits while allowing for the
possible effect of repayment suspensions during unpaid leaves of
absence.
(e) Each loan shall bear a reasonable interest rate as determined by
the Committee in accordance with the Code, ERISA, and applicable
rulings and regulations. Unless otherwise specified by the
Committee, the rate shall be equal to the average of the rates of
Phoenix banks for certificates of deposit with maturities
equivalent to the terms of the loan, as determined at the
beginning of the month in which the loan is granted. The interest
rate so determined shall be fixed for the term of the loan.
(f) The Committee shall establish a Loan Account for the Participant,
and shall credit the Loan Account with an amount equal to the
principal amount of the loan granted. Loans shall be processed on
a monthly basis. When a loan is made, the principal amount shall
be withdrawn pro rata from each Investment Fund in which the
Participant's Accounts (other than the Prior Account, the Frozen
Account or the Rollover Account) are invested as of the most
recent Valuation Date. Each repayment of principal on the loan
received by the Trustee from the Participant shall reduce the
balance credited to the Participant's Loan Account and each
payment of principal and interest shall increase pro rata the
amount invested in each Investment Fund in accordance with the
Participant's investment elections at the time of such repayment.
(g) Except in the case of lump sum prepayments described below,
repayment in substantially equal installments occurring not less
frequently than quarterly of interest and principal shall be
accomplished through regular payroll deductions (or by check or
other means of payment satisfactory to the Committee in the case
of a former Employee who continues his/her outstanding loan). The
Committee may restrict loan amounts if payroll withholdings for
repayment would exceed 20 percent of Compensation. The obligation
to make repayments of principal and interest shall be suspended
during the period a Participant is on seasonal leave of absence
(of less than 12 months) without pay. Repayment of the
substantially equal installments occurring not less frequently
than quarterly shall resume as of the date the Participant
returns to pay status, and any remaining unpaid balance at the
end of the maximum five-year term of the loan (or 15-year term in
the case of a Home Loan) shall be paid in a final lump sum
installment at such time. Except as may be prohibited by the
rules of particular Investment Funds from which loan amounts are
taken or to which loan repayments are directed, a Participant
shall be entitled at any time to prepay, without penalty, the
total accrued interest and outstanding principal amount of the
loan by direct payment, but shall not be allowed to make partial
prepayments of amounts that are not currently due under the
regular repayment schedule for the loan. If a Participant is in
default by more than 90 days on any loan payment that is due and
payable, the note in the Participant's Loan Account shall be
canceled and the principal deemed distributed to him by the Trust
Fund as soon as practicable thereafter, provided that the
Participant has had a hardship or a termination of employment or
is otherwise eligible for such deemed distribution and loan
cancellation under the Code and ERISA.
(h) The Plan's security interest in a Participant's Account shall be
superior to an Alternate Payee's right to receive a distribution
pursuant to a Qualified Domestic Relations Order. In the event
the Plan Administrator is presented with a Qualified Domestic
Relations Order with respect to a Participant having an
outstanding Participant loan, the Plan Administrator shall not be
required to make any distribution to the Alternate Payee if
immediately following said distribution the sum of the
Participant's share of Plan benefits awarded under the Qualified
Domestic Relations Order and the Alternate Payee's share of Plan
benefits awarded under the Qualified Domestic Relations Order is
less than two times the then outstanding balance of said loan(s).
All outstanding Participant loans shall be allocated to the
Participant's Account and treated as a separate investment of the
Participant's Account, and Participant shall be responsible for
the repayment of all loans from the Plan, except that Alternate
Payee's share of Plan benefits shall continue to serve as
security for outstanding loans.
(i) The foregoing provisions of this section 6.11 notwithstanding,
the Committee reserves the right to stop granting loans to
Participants at any time.
6.12 REQUIREMENT FOR CONSENT TO CERTAIN DISTRIBUTIONS. Notwithstanding any
other provision regarding the Plan distributions, the Plan may not immediately
distribute the balance of a Participant's Account that exceeds $3,500 without
the written consent of the Participant. Where the Participant does not consent
to a distribution that is subject to the foregoing requirement, this section
shall be interpreted and administered so as to comply with Code section
411(a)(11) by delaying any distribution that might otherwise be required under
the Plan to the extent necessary to comply with said Code section.
6.13 ELIGIBLE ROLLOVER DISTRIBUTIONS. Eligible rollover distributions from
the Plan shall comply with the requirements of Code section 401(a)(31) as
follows. This section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this section, a distributee may elect, at
the time and in the manner prescribed by the Committee, to have any portion of
an eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. For purposes of this section,
the following definitions shall apply.
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributes, except that an
"eligible rollover distribution" does not include: any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributes and the distributee's designated Beneficiary, or for
a specified period of ten years or more; any distribution to the extent
such distribution is required under section 401 (a) (9) of the Code;
and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and provided further
that the determination of what constitutes an "eligible rollover
distribution" shall at all times be made in accordance with the current
rules of Code section 402 (c), which shall be controlling for this
purpose.
An "eligible retirement plan" is an individual retirement account
(described in section 408(a) of the Code, an individual retirement
annuity described in section 408 (b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described
in section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an "eligible retirement plan" is
an individual retirement account or individual retirement annuity.
A "distributee" includes an Employee or former Employee. In addition,
the Employee's or former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee. In prescribing the
manner of making elections with respect to eligible rollover
distributions, as described above, the Committee may provide for the
uniform, nondiscriminatory application of any restrictions permitted
under applicable sections of the Code and related rules and
regulations, including a requirement that a distributee may not elect
a partial direct rollover in an amount less than $500 and a
requirement that a distributee may not elect to make a direct rollover
from a single eligible rollover distribution to more than one eligible
retirement plan. Moreover, if a distribution is one to which sections
401(a)(11) and 417 of the Code do not apply, such distribution may
commence less than 30 days after the notice required under section
1.411(a)-11(c) of the Income Tax Regulations is given, provided that:
(1) The Plan administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a
particular distribution option), and
(2) The Participant, after receiving the notice, affirmatively
elects a distribution.
Article 7. Investment Elections
-------------------------------
7.1 PARTICIPANT DIRECTED INDIVIDUAL ACCOUNT PLAN. This Plan is intended to
constitute a participant directed individual account plan under section 404(c)
of ERISA. As such, Participants shall be provided the opportunity to exercise
control over the investment of their Accounts and to choose from a broad range
of investment alternatives.
7.2 EMPLOYEE SELECTED INVESTMENT FUNDS.
(a) The Committee, pursuant to uniform and non-discriminatory rules, shall
establish three or more Investment Funds in accordance with the terms and
provisions of this Article 7. In establishing the Investment Funds, the
Committee shall select investment alternatives which provide each Participant
with a broad range of investment alternatives in accordance with Department of
Labor Regulation section 2550.404c-1(b)(3). The available Investment Funds may
be changed or supplemented from time to time by action of the Committee. One of
the investment alternatives will be a fund invested in Company Securities, which
shall be referred to as the "Company Stock Fund".
(b) Each Participant shall designate, on a form supplied by the Committee,
signed by the Participant and delivered to the Committee, the Investment Funds
established pursuant to paragraph (a), above, in which amounts held in his/her
Accounts are to be invested. The Committee, in its discretion, will invest the
portion of the Participant's Accounts for which the Participant has not issued
any investment directions in accordance with this Plan and the Trust Agreement.
The written investment directive of a Participant shall be effective until
another directive is received by the Committee.
7.3 EXERCISE OF CONTROL.
(a) Each Participant may direct that all of the amounts attributable to
his/her Accounts be invested in a single Investment Fund or may direct 5%
increments (falling within the range from 10% to 100%) of his/her Accounts to be
invested in such Investment Fund(s) as he/she shall desire in accordance with
uniform procedures promulgated by the Committee. Each Participant, in accordance
with such rules, may change investment directions to provide for the investment
of existing Account balances or future contributions among the various
Investment Funds in such increments, or all to any one of them, as the
Participant shall elect on a form provided by the Committee, signed by the
Participant and delivered to the Committee. The Committee shall provide
Participants the opportunity to receive written confirmation of any such
investment direction. The Trustee and Committee shall be obligated to comply
with such instruction except as provided in paragraph (d) below. The Committee
shall promulgate uniform and nondiscriminatory rules constituting the investment
direction policy under the Plan which shall be communicated to Participants
regarding:
(1) The frequency of change of investment direction of current account
balances among Investment Funds;
(2) The frequency of change of investment direction of future contributions
among Investment Funds;
(3) The effective dates of instructions regarding investment directions and
changes in investment directions;
(4) The fractional (percentage) limitations, if any, in which current
Account balances may be invested and/or transferred between Investment
Funds;
(5) The fractional (percentage) limitations, if any, in which future
contributions are to be invested between Investment Funds; and
(6) The periods within which direction must be given if it is to be
effective for a particular period.
Procedures with regard to any one or more Investment Funds may vary to reflect
the variable or contrasting characteristics of a particular investment
alternative, provided that Participants are given the opportunity to give
investment instructions with respect to each investment alternative available
under the Plan with a frequency which is appropriate in light of the market
volatility to which the investment alternative may reasonably be expected to be
subject and that any restrictions on the frequency of investment instructions
are in accordance with Department of Labor Regulation section
2550.404c-1(b)(2)(ii)(C).
Notwithstanding the foregoing or anything in the Plan or Trust Agreement to
the contrary, any discretionary Company Contributions made in the form of
Company Securities in accordance with section 5.2 shall be initially invested in
the Company Stock Fund. Any Participant whose share of discretionary Company
Contributions is invested in the Company Stock Fund in accordance with the
preceding sentence may elect to transfer such amounts among the other available
Investment Funds, in accordance with such uniform and nondiscriminatory
procedures as may be established by the Committee concerning matters such as the
timing and amount of transfers.
(b) The Committee shall provide each Participant with the opportunity to
obtain sufficient information to make informed decisions with regard to
investment alternatives available under the Plan, and incidents of ownership
related to such investment. The Committee shall promulgate and distribute to
Participants an explanation that the Plan is intended to comply with section
404(c) of ERISA and any relief from fiduciary liability resulting therefrom, a
description of investment alternatives available under the Plan, an explanation
of the circumstances under which Participants may give investment instructions
and any limitations thereon, along with all other information and explanations
required under Department of Labor Regulation section 2550.404c-1(b)(2)(B)(1).
In addition, the Committee shall provide information to Participants upon
request as required by Department of Labor Regulation section
2550.404c-1(b)(2)(B)(2). Neither the Employer, Committee, Trustee, nor any other
individual associated with the Plan or the Employer shall give investment advice
to Participants with respect to Plan investments. The providing of information
pursuant to this Article 7 shall not in any way be deemed to be the providing of
investment advice, and shall in no way obligate the Company, any other Employer,
the Committee, the Trustee or any other individual associated with the Plan to
provide any investment advice.
(c) The Committee, pursuant to uniform and nondiscriminatory rules, may
charge each Participant's Accounts for the reasonable expenses of carrying out
investment instructions directly related to such Account, provided that each
Participant is periodically (not less than quarterly) informed of such actual
expenses incurred with respect to his or her respective accounts.
(d) The Committee shall decline to implement any Participant instructions
if: (i) the instruction is inconsistent with any provisions of the Plan or Trust
Agreement; (ii) the instruction is inconsistent with any investment direction
policies adopted by the Committee from time to time; (iii) implementing the
instruction would not afford a Plan fiduciary protection under section 404(c) of
ERISA; (iv) implementing the instruction would result in a prohibited
transaction under section 406 of ERISA or section 4975 of the Code; (v)
implementing the instruction would result in taxable income to the Plan; (vi)
implementing the instruction would jeopardize the Plan's tax qualified status;
or (vii) implementing the instruction could result in a loss in excess of a
Participant's Account balance. The Committee, pursuant to uniform and
nondiscriminatory rules, may promulgate additional limitations on investment
instruction consistent with section 404(c) of ERISA from time to time.
(e) A Participant shall be given the opportunity to make independent
investment directions. No Plan fiduciary shall subject any Participant to
improper influence with respect to any investment decisions, and nor shall any
Plan fiduciary conceal any non-public facts regarding a Participant's Plan
investment unless disclosure is prohibited by law. Plan fiduciaries shall remain
completely neutral in all regards with respect to Participant investment
direction. A Plan fiduciary may not accept investment instructions from a
Participant known to be legally incompetent, and any transactions with a
fiduciary, otherwise permitted under this Article 7 and the uniform and
nondiscriminatory rules regarding investment direction promulgated by the
Committee, shall be fair and reasonable to the Participant in accordance with
Department of Labor Regulation section 404c- 1(c)(3).
7.4 LIMITATION OF LIABILITY AND RESPONSIBILITY. The Trustee, the Committee
and the Employer shall not be liable for acting in accordance with the
directions of a Participant pursuant to this Article 7 or for failing to act in
the absence of any such direction. The Trustee, the Committee and the Employer
shall not be responsible for any loss resulting from any direction made by a
Participant and shall have no duty to review any direction made by a
Participant. The Trustee shall have no obligation to consult with any
Participant regarding the propriety or advisability of any selection made by the
Participant.
7.5 FORMER PARTICIPANTS AND BENEFICIARIES. For purposes of this Article 7,
the term "Participant" shall be deemed to include former Participants and the
Beneficiaries of any deceased Participants.
7.6 TRANSFER OF ASSETS. If the Company is serving as an intermediary in
conveying the investment elections of Participants, the Committee shall direct
the Trustee to transfer moneys or other property to or from the various
Investment Funds as may be necessary to carry out the aggregate transfer
transactions after the Committee has caused the necessary entries to be made in
the Participants' Accounts in the Investment Funds and has reconciled offsetting
transfer elections, in accordance with uniform rules therefore established by
the Committee. The foregoing sentence shall be inapplicable if Participants are,
in accordance with current procedures for investment elections, communicating
their elections directly to the appropriate Investment Fund agent.
7.7 VOTING, TENDER OFFERS, OR SIMILAR RIGHTS. Unless passed through to the
Participants, the Trustee, in its discretion, shall vote all proxies relating to
the exercise of voting, tender or similar rights which are incidental to the
ownership of any asset which is held in any Investment Fund, other than the
Company Stock Fund. Subsequent to a Participant's investment in the Company
Stock Fund, the Participant shall be entitled to vote such shares in accordance
with section 4(e) of the Trust Agreement, and approve or reject any tender
offers in accordance with section 4(e) of the Trust Agreement. Except as
otherwise specified by the Board, the Committee shall have the duties and
responsibilities assigned to the Named Fiduciary in section 4(e) of the Trust
Agreement, and the Company shall have the duties and responsibilities assigned
to the Sponsor in that section 4(e).
7.8 INVESTMENT RESTRICTIONS DUE TO SECURITIES LAWS. No Participant or
Beneficiary who is a Company officer, director, or ten percent beneficial owner
subject to reporting and potential liability for short-swing profits under
section 16 of the Securities Exchange Act of 1934 (hereinafter, a "Section 16
Insider") shall be permitted to acquire or retain an Account balance that is
invested the Company Stock Fund. This investment restriction takes precedence
over other, more general investment rules stated elsewhere in the Plan. The
Committee shall provide for adequate coordination with the Plan's recordkeeper
and take other appropriate steps to ensure that this investment restriction will
be administered, consistent with applicable qualification and fiduciary
requirements under the Code and ERISA, in a manner that furthers the purpose of
eliminating the need for Section 16 Insiders to report Plan transactions
pursuant section 16 of the Securities Exchange Act of 1934. In addition to
prohibiting new Company Stock Fund investments by Participants and Beneficiaries
who are Section 16 Insiders, the Committee shall establish appropriate rules
under which a Participant or Beneficiary who has an existing balance in the
Company Stock Fund and is, or at some future time becomes, a Section 16 Insider
will be required to dispose of such balance as soon as practicable. This section
7.8 does not limit the Company Stock Fund investments of Participants and
Beneficiaries who are not now, and are not expected to become, Section 16
Insiders. Thus, it does not prevent the Trust from acquiring a level of
ownership in the Company's common stock that could cause the Trust to become a
Section 16 Insider.
7.9 CONFIDENTIALITY REQUIREMENTS. Because Participants are permitted to
invest in Company Securities, the Company must establish written procedures in
order to safeguard the confidentiality of information relating to the purchase,
holding and sale of Company Securities and the exercise of voting, tender and
similar rights. While the Committee may adopt expanded confidentiality
procedures, this section 7.9 shall constitute the confidentiality procedures for
the Plan until such time as expanded procedures, if any, are adopted.
Information relating to the purchase, holding and sale of Company Securities and
the exercise of voting, tender and similar rights shall be held in confidence
and not divulged to the Company, or any other officer or Employee thereof, or
any other person except to the extent necessary to ensure that a Participant's
directions to purchase, hold or sell Company Securities or the Participant's
exercise of voting, tender or similar rights are given effect. Any person who
willfully or negligently violates the confidentiality rules espoused in the
preceding sentence will be subject to disciplinary action, and, to the extent
the Committee deems it necessary, will be relieved of any duties which allow the
person to gain access to such confidential information. The Committee shall
appoint a person (the "confidentiality fiduciary") to monitor compliance with
the foregoing procedures, and/or any expanded procedures adopted by the
Committee. The confidentiality fiduciary shall appoint an independent fiduciary
to carry out activities relating to any situations that the confidentiality
fiduciary determines involve a potential for undue influence upon Participants
and Beneficiaries with regard to the direct or indirect exercise of shareholder
rights. For purposes of this section, a fiduciary is not independent if the
fiduciary is affiliated with the Company or its Affiliates.
Article 8. Participant Accounts and Records of the Plan
-------------------------------------------------------
8.1 ACCOUNTS AND RECORDS. The Committee shall maintain or cause to be
maintained, accounts and records which shall accurately disclose the status of
the Accounts of each Participant or his/her Beneficiary in the Plan. Each
Participant's Basic Pretax Savings Account, Unmatched Pretax Savings Account,
Prior Account, Frozen Account, Company Contributions Account, and Rollover
Account shall be assigned an appropriate share of each Investment Fund in which
the Participant's Accounts are invested, based on the times and the amounts of
the Participant's investments in, and withdrawals from, each such Investment
Fund with respect to each such Account. The records relative to a Participant's
Accounts shall permit a determination as of any Valuation Date of the current
value of his/her Accounts in the Trust Fund. Each Participant shall be advised
from time to time, at least once each Plan Year, as to the status of his/her
Accounts and the portions thereof attributable to his/her Basic Pretax Savings
Account, Unmatched Pretax Savings Account, Prior Account, Frozen Account,
Company Contributions Account, and Rollover Account. Nothing in this Plan shall
prevent the aggregation of the separate Accounts of any group of Participants
for recordkeeping purposes, provided that it is possible as of any Valuation
Date to determine the separate interest of each Participant in such aggregated
Account, as well as the vested and nonvested portions thereof, and the portion
that is attributable to each separate Investment Fund.
In general, disbursements on account of loans, withdrawals, or distributions
following a termination of employment shall be made monthly and shall be
accounted for as occurring as of the most current Valuation Date coinciding with
or immediately preceding the disbursement. Consequently, no adjustment shall be
made for earnings or investment gains or losses occurring since such Valuation
Date. However, at any time that Valuation Dates are occurring no more frequently
than monthly, the Committee may suspend the practice of making and accounting
for disbursements as of a prior Valuation Date whenever special circumstances
indicate that this step is necessary in order to protect the assets of the Plan
and the share of all Participants and Beneficiaries in such assets. An
indication of the existence of such special circumstances will occur if the
disbursements to be processed indicate that a reduction of more than 10 percent
will occur in the number of Participant Accounts invested in a particular
Investment Fund or if the market value of the principal investment assets of a
particular Investment Fund has declined by more than 20 percent since the last
Valuation Date. Moreover, at any such time, the Participant or Beneficiary
receiving the disbursement may, at his/her election, avoid the use of a prior
Valuation Date by delaying his/her disbursement until the next monthly (or
other, less frequent) Valuation Date. If a disbursement is delayed until the
next monthly (or other, less frequent) Valuation Date, the recipient shall
receive an adjustment to his/her Account for earnings and investment gains or
losses up to such next Valuation Date.
8.2 VALUATION OF INVESTMENT FUNDS. As of each Valuation Date, the Trustee
shall determine the fair market value of the assets of each Investment Fund,
including uninvested cash (if any), accrued interest and dividends, and shall
notify the Company of the value so determined. Assets for which there is a
readily ascertainable market shall be valued by the Trustee at their fair market
value, determined by the last known sale on the Valuation Date as of which the
market value is determined, provided that the use of average daily book value or
other similar method may be used to value any guaranteed investment contract
fund in accordance with established procedures that are generally followed for
purposes of arm's length transactions involving such a Fund. In the absence of a
sale on the Valuation Date, the fair market value of such assets, as well as
other assets for which there is no readily ascertainable fair market value,
shall be determined by the Trustee in such manner as the Trustee shall consider
appropriate.
8.3 VALUATION ADJUSTMENTS. As of each Valuation Date, the prior balances in
the Accounts of a Participant or Beneficiary shall be updated as follows if
transactions are not being processed on a daily basis. First, such prior
balances shall be reduced by the amount of any payouts due to loans,
withdrawals, or distributions occurring during the valuation period and shall be
increased by the amount of any contributions or loan repayments during such
period to the extent that such contributions or repayments are considered to be
available as of the first day of the valuation period under rules approved by
the Committee.
The adjusted prior Account balances, as described above, shall then be further
adjusted, upward or downward, in proportion to the adjusted Account balance of
each Participant or Beneficiary in each Investment Fund so as to reflect the
results of earnings and investment gains or losses during the valuation period.
Finally, the Account balances so obtained shall be increased by any
contributions or loan repayments during the valuation period (other than those
previously added as an Account adjustment) which are considered available as of
the new Valuation Date. The resulting net credit balances in the Accounts shall
reflect their current status as of the new Valuation Date and shall also become
the starting point for the adjustment of prior Account balances as adjusted for
transfers for purposes of the next following Valuation Date.
The sum of the net credit balances attributable to an Investment Fund shall
equal the net value of such Fund as of the current Valuation Date. The Committee
shall determine the net value of an Investment Fund by subtracting from the fair
market value of assets (as reported by the Trustee) held in such Investment Fund
any expenses, withdrawals, distributions and transfers chargeable to that
investment Fund which have been incurred but not yet paid. All determinations
made by the Trustee with respect to fair market values and determinations of the
Committee concerning net value shall be made in accordance with generally
accepted principles of trust accounting, and such determinations when so made by
the Trustee and the Committee shall be conclusive and binding upon all persons
having an interest under the Plan.
Article 9. Financing
--------------------
9.1 FINANCING. The Company shall maintain a Trust Fund to finance the
benefits under the Plan, by entering into one or more Trust Agreements or
insurance contracts approved by the Company, or by causing insurance contracts
to be held under a Trust Agreement. Any Trust Agreement or any insurance
contract that is not held in trust is designated as and shall constitute a part
of this Plan, and all rights which may accrue to any person under this Plan
shall be subject to all the terms and provisions of such Trust Agreement or
insurance contract. A Trustee shall be appointed by the Board of Directors and
shall have such powers as provided in the Trust Agreement.
The Committee shall have responsibility for selecting the Investment Managers,
if any, who shall direct the Trustee in the investment of the assets of any or
all of the available Investment Funds, and for selecting the insurance contracts
or securities issued by regulated investment companies or trusts that shall be
used by the Trustee in making investments under each Fund to the extent that the
Fund's assets are not to be invested by the Trustee acting in its own discretion
or pursuant to the direction of an Investment Manager. The Committee shall
instruct the Trustee as to the specific Investment Managers and/or regulated
investment company or trust securities or insurance contracts that it has
selected for each Fund. In the event that the Committee has not given the
Trustee or an Investment Manager responsibility for managing the assets of a
particular Fund and has not directed the Trustee to invest the assets of such
Fund in a particular insurance contract or in particular securities issued by a
regulated investment company or trust, the Trustee shall invest the assets of
such Fund according to its best judgment.
9.2 Company Contributions. The Company shall make such contributions to the
Trust Fund as are required by this Plan, subject to the right of the Company to
discontinue the Plan.
9.3 Non-Reversion. Anything in this Plan to the contrary notwithstanding,
it shall be impossible at any time for the contributions of the Company or any
part of the Trust Fund to revert to the Company or an Affiliate or to be used
for or diverted to any purpose other than the exclusive benefit of Participants
or their Beneficiaries, except that:
(a) If a contribution or portion thereof is made by the Company by
a mistake of fact, upon written request to the Committee, such
contribution or such portion and any increment thereon shall
be returned to the Company within one year after the date of
payment; and
(b) In the event that a deduction for any contributions made by
the Company is disallowed by the Internal Revenue Service in
any Plan Year, then that portion of the Company Contribution
that is not deductible shall be returned to the Company within
one year from the date of receipt of notice by the Internal
Revenue Service of the disallowance of the deduction.
Article 10. Administration
--------------------------
10.1 THE COMMITTEE. The Plan Administrator shall be the Company, but the
Company delegates its duties as such to the Benefits Advisory Committee (the
"Committee") appointed by the Board of Directors. The Committee shall be
composed of as many members as the Board of Directors may appoint from time to
time, but not fewer than 3 members, and shall hold office at the pleasure of the
Board of Directors. Such members may, but need not, be Employees of the Company.
Any member of the Committee may resign by delivering his/her written resignation
to the Board of Directors with 30 days' advance notice.
Vacancies in the Committee arising by resignation, death, removal or otherwise,
shall be filled by the Board of Directors. The Company shall be the Named
Fiduciary under the Plan and under the Trust Agreement, in accordance with
ERISA.
10.2 COMPENSATION AND EXPENSES. The members of the Committee shall serve
without compensation for services as such a member. Any member of the Committee
may receive reimbursement by the Company of expenses properly and actually
incurred. All expenses of the Committee shall be paid out of the Plan assets
unless paid directly by the Company. Such expenses shall include any expenses
incident to the functioning of the Committee, including, but not limited to,
fees of the Plan's accountants, outside counsel and other specialists and other
costs of administering the Plan.
10.3 MANNER OF ACTION. A majority of the members of the Committee at the
time in office shall constitute a quorum for the transaction of business. All
resolutions adopted, and other actions taken by the Committee at any meeting
shall be by the vote of a majority of those present at any such meeting. Upon
concurrence in writing of a majority of the members at the time in office,
action of the Committee may be taken otherwise than at a meeting.
A member of the Committee shall not vote or act upon any matter which relates
solely to such person as a Participant. If a matter arises affecting one of the
members of the Committee as a Participant and the other members of the Committee
are unable to agree as to the disposition of such matter, the Board of Directors
shall appoint a substitute member in the place and stead of the affected member,
for the sole and only purpose of passing upon and deciding the particular
matter.
10.4 CHAIRMAN, SECRETARY AND EMPLOYMENT OF SPECIALISTS. The members of the
Committee shall elect one of their number as Chairman and shall elect a
Secretary who may, but need not, be a member of the Committee. They may
authorize one or more of their number or any agent to execute or deliver any
instrument or instruments on their behalf, and may employ such counsel, which
may be in-house counsel of the Company, auditors, and other specialists and such
clerical, medical, actuarial and other services as they may require in carrying
out the provisions of the Plan.
10.5 SUBCOMMITTEES. The Committee may appoint one or more subcommittees and
delegate such of its power and duties as it deems desirable to any such
subcommittee, in which case every reference herein made to the Committee shall
be deemed to mean or include the subcommittees as to matters within their
jurisdiction. The members of any such subcommittee shall consist of such
officers or other employees of the Company and such other persons as the
Committee may appoint.
10.6 OTHER AGENTS. The Committee may also appoint one or more persons or
agents to aid it in carrying out its duties in administration of the Plan, and
delegate such of its powers and duties as it deems desirable to such persons or
agents.
10.7 RECORDS. All resolutions, proceedings, acts and determinations of the
Committee shall be recorded by the Secretary thereof or under his/her
supervision, and all such records, together with such documents and instruments
as may be necessary for the administration of the Plan, shall be preserved in
the custody of the Secretary.
10.8 RULES. Subject to the limitations contained in the Plan, the Committee
shall be empowered from time to time in its discretion to adopt by-laws and
establish rules for the conduct of its affairs and the exercise of the duties
imposed upon it under the Plan.
10.9 COMMITTEE'S POWERS AND DUTIES. The Committee shall have responsibility
for the general administration of the Plan and for carrying out its provisions.
The Committee shall have the power and discretion as may be necessary to
discharge its functions hereunder. Without limiting the generality of the
foregoing, the Committee shall have the discretionary authority:
(a) To construe and interpret the Plan, to decide all questions of
eligibility and determine the amount, manner and time of payment of
any benefits hereunder;
(b) To make a determination as to the right of any person to a benefit;
(c) To obtain from the participating Affiliates and from Employees such
information as shall be necessary for the proper administration of the
Plan and, when appropriate, to furnish such information promptly to
the Trustees or other persons entitled thereto;
(d) To prepare and distribute, in such manner as the Company determines to
be appropriate, information explaining the Plan;
(e) To furnish the participating Affiliates, upon request, such reports
with respect to the administration of the Plan as are reasonable and
appropriate;
(f) To establish and maintain such accounts in the name of the
participating Affiliates and of each Participant as are necessary;
(g) To instruct the Trustee with respect to the payment of benefits
hereunder;
(h) To provide for any required bonding of fiduciaries and other persons
who may from time to time handle Plan assets;
(i) To prepare and file any reports required by the ERISA;
(j) To engage an independent public accountant to conduct such
examinations and to render such opinions as may be required by the
ERISA;
(k) To allocate contributions and Trust Fund gains or losses to the
Accounts of Participants;
(l) To establish a funding policy and method consistent with the
objectives of the Plan and the requirements of ERISA;
(m) To correct any errors and remedy any defects in the administration of
this Plan, including, if necessary, by requiring any Employer to make
a Qualified Nonelective Contribution that prevents discrimination
under Code section 401(k) or 401(m) without materially increasing the
cost of the Plan;
(n) To establish reasonable claims procedures in accordance with the terms
of this Plan and ERISA; and
(o) To establish procedures for identifying and complying with Qualified
Domestic Relations Orders.
10.10 COMMITTEE'S DECISIONS CONCLUSIVE. The Committee shall exercise its
powers hereunder in a uniform and nondiscriminatory manner. Any and all disputes
with respect to the Plan which may arise involving Participants, or their
Beneficiaries shall be referred to the Committee and its decision shall be
final, conclusive and binding. Furthermore, if any question arises as to the
meaning, interpretation or application of any provision hereof, the decision of
the Committee with respect thereto shall be final.
10.11 INDEMNITY. To the extent permitted by law, Del Webb Corporation shall
and does hereby jointly and severally indemnify and agree to hold harmless its
employees, officers and directors who serve in fiduciary capacities with respect
to the Plan and Trust Agreement and each member of the Committee (which, for
purposes of this section, includes any Employee to whom the Committee has
delegated fiduciary or other duties) from all loss, damage, or liability, joint
or several, including payment of expenses in connection with defense against any
such claim, for their acts, omissions and conduct, and for the acts, omissions
and conduct of their duly appointed agents, which acts, omission or conduct
constitute or are alleged to constitute a breach of such individual's fiduciary
or other responsibilities under ERISA or any other law, except for those acts,
omissions or conduct resulting from his own willful misconduct, willful failure
to act, or gross negligence. The right of indemnity described in the preceding
sentence shall be conditioned upon (i) the timely receipt of notice by Del Webb
Corporation of any claim asserted against the member, which notice, in the event
of a lawsuit shall be given within 10 days after receipt by the member of the
complaint, and (ii) the receipt by Del Webb Corporation of an offer from the
Employee of an opportunity to participate in the settlement or defense of such
claim.
10.12 FIDUCIARIES. The fiduciaries named in this Article shall have only
those powers, duties, responsibilities and obligations as are specifically given
them under this Plan or the Trust. The Company and participating Affiliates
shall have the sole responsibility for making the contributions specified in
Article 5. The Board of Directors or the Company, acting through a duly
authorized representative (including the chairman of the Committee to the extent
provided in section 11.1 with respect to amendments) shall have the sole
authority to appoint and remove the Trustee and to amend or terminate, in whole
or in part, this Plan or the Trust. The Committee shall be the Named Fiduciary
under the Plan and shall have the sole responsibility for the administration of
this Plan, which responsibility is specifically described in this Plan and the
Trust Agreement. The officers and Employees of the Company shall have the
responsibility of implementing the Plan and carrying out its provisions as the
Committee shall direct. The Trustee, and any Investment Manager shall have the
sole responsibility for the administration of the Trust and the management of
the assets held under the Trust, to the extent provided in the Trust Agreement.
A fiduciary may rely upon any direction, information or action of another
fiduciary as being proper under this Plan or the Trust, and is not required
under this Plan or the Trust to inquire into the propriety of any such
direction, information or action. It is intended under this Plan and the Trust
that each fiduciary shall be responsible for the proper exercise of his/her or
its own powers, duties, responsibilities and obligations under this Plan and the
Trust and shall not be responsible for any act or failure to act of another
fiduciary. No fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value. Any party may serve in more than
one fiduciary capacity with respect to the Plan or Trust.
10.13 NOTICE OF ADDRESS. Each person entitled to benefits from the Plan
must file with the Committee or its agent, in writing, his/her post office
address and each change of post office address. Any communication, statement or
notice addressed to such a person at his/her latest reported post office address
will be binding upon him for all purposes of the Plan, and neither the Committee
nor the Company or any Trustee shall be obliged to search for or ascertain
his/her whereabouts.
10.14 DATA. All persons entitled to benefits from the Plan must furnish to
the Company such documents, evidence or information as the Company considers
necessary or desirable for the purpose of administering the Plan; and it shall
be a condition of the Plan that each such person must furnish such information
and sign such documents as the Company may require before any benefits become
payable from the Plan.
10.15 APPEALS FROM DENIAL OF CLAIMS. Benefits shall be provided from this
Plan through procedures initiated by the Committee, and the Participant need not
file a claim. However, if a Participant or Beneficiary believes he/she is
entitled to a benefit, or a benefit different from the one he/she receives, then
the Participant or Beneficiary may file a claim for the benefit by writing a
letter to the Committee. If any claim for benefits under the Plan is wholly or
partially denied, the claimant shall be given notice in writing of such denial
within 90 days after receipt of the claim or within an additional 90 days if
special circumstances require an extension of time, and written notice of the
extension shall be furnished to the claimant. Notice of the denial shall set
forth the following information:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which denial is
based;
(c) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary;
(d) An explanation that a full and fair review by the Committee of the
decision denying the claim may be requested by the claimant or his/her
authorized representative by filing with the Company, within 60 days
after such notice has been received, a written request for such
review; and
(e) If such request is so filed, the claimant or his/her authorized
representative may review pertinent documents and submit issues and
comments in writing within the same 60-day period specified in
paragraph (d) above.
The decision of the Committee upon review shall be made by the Committee's
delegate, and shall be made promptly, and not later than 60 days after the
Committee's receipt of the request for review, unless special circumstances
require an extension of time for processing, in which case the claimant shall be
so notified and a decision shall be rendered as soon as possible, but not later
than 120 days after receipt of the request for review. if the claim is denied,
wholly or in part, the claimant shall be given a copy of the decision promptly.
The decision shall be in writing and shall include specific reasons for the
denial, specific references to the pertinent Plan provisions on which the denial
is based and shall be written in a manner calculated to be understood by the
claimant.
Article 11. Amendment And Termination
-------------------------------------
11.1 AMENDMENT AND TERMINATION. The Company expects the Plan to be
permanent and continue indefinitely, but since future conditions affecting the
Company cannot be anticipated or foreseen, the Company must necessarily and does
hereby reserve the right to amend, modify or terminate the Plan at any time by
action of the Board of Directors or its Human Resources Committee. In addition,
the chair of the Benefits Advisory Committee may make any modifications or
amendments to the Plan that are necessary or appropriate to meet the
requirements of the Code or any other applicable law, as now in effect or
hereafter amended, or any amendment which does not significantly increase
benefit levels or costs. No amendment of the Plan shall cause any part of the
Trust Fund to be used for, or diverted to, purposes other than for the exclusive
benefit of the Participants or their Beneficiaries covered by the Plan.
Retroactive Plan amendments may not decrease the accrued benefits of any
Participant determined as of the beginning of the first Plan Year to which the
amendment applies, or, if later, as of the time the amendment was adopted.
11.2 DISTRIBUTION ON TERMINATION. Upon termination of the Plan in whole or
in part (after an initial determination has been obtained from the Internal
Revenue Service that the Plan constitutes a qualified defined contribution plan
with respect to the Employer), or upon complete discontinuance of Employer
contributions to the Plan (after such initial determination has been obtained),
the value of the proportionate interest in the Trust Fund of each Participant
affected by such termination having an interest in the Trust Fund shall be
determined by the Committee as of the date of such termination or
discontinuance.
The Accounts of such Participants shall be fully vested and nonforfeitable, and
thereafter distribution shall be made to such Participants as soon as is
practicable consistent with the requirement of section 6.7 to obtain the
Participant's consent to certain distributions and the restrictions of sections
6.8 and 6.9 limiting the ability of Participants who remain in service as
Employees to make withdrawals from the Plan.
11.3 CORPORATE REORGANIZATION. In the event the Company is dissolved or
liquidated or shall by appropriate legal proceedings be adjudged a bankrupt, or
in the event judicial proceedings of any kind result in the involuntary
dissolution of the Company, the Plan shall be terminated. The merger,
consolidation or reorganization of the Company, or the sale of the Company or of
all or substantially all of its assets or stock, shall not terminate the Plan if
there is delivery to the Company, by its successor or by the purchaser of all or
substantially all of its stock or assets, a written instrument requesting that
it be substituted for the Company and agreeing to perform all the provisions
hereof which the Company is required to perform. Upon the receipt of said
instrument, with the approval of the Company, the successor or the purchaser
shall be substituted for the Company herein, and each participating Affiliate
and the Company shall be relieved and released from all obligations of any kind,
character or description herein or in any trust agreement.
11.4 PLAN MERGER OR TRANSFER. This Plan shall not merge or consolidate
with, or transfer assets and liabilities to, or accept a transfer from, any
other employee benefit plan unless each Participant in this Plan will (if the
plan had then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is not less than the benefit the Participant
would have been entitled to receive immediately before the merger, consolidation
or transfer of assets (if this Plan had then terminated).
Article 12. Adoption by Affiliate
---------------------------------
12.1 AFFILIATE PARTICIPATION. An Affiliate may become a party to the Plan
and Trust Agreement by adopting the Plan for the benefit of any specified group
of its Employees, with such modifications of the basic Plan provisions as may be
approved by the Company, effective as of the date specified in such adoption.
Such adoption shall be accomplished by the Affiliate:
(a) By filing with the Company a certified copy of a resolution of its
Board of Directors to that effect, and such other instruments as the
Company may require; and
(b) By the Company's filing with the then Trustee a copy of such
resolution, and other instruments, together with a certified copy of
resolutions of the Company's Board of Directors approving such
adoption.
12.2 Company Action Binding on Participating Affiliates. As long as the
Company is a party to the Plan and the Trust Agreement it shall be empowered to
act thereunder for any participating Affiliate in all matters respecting the
Committee and the Trustee and the designation of Affiliates and any action taken
by the Company with respect thereto shall automatically include and be binding
upon any Affiliate which is a party to the Plan.
12.3 TERMINATION OF PARTICIPATION OF AFFILIATE. The Company reserves the
right, in its sole discretion and at any time, to terminate the participation in
this Plan of any or all Affiliates. Such termination shall be effective
immediately upon notice of such termination from the Company to the Trustee and
the Affiliate being terminated. In event of such termination, this Plan shall
not terminate, but the portion of the Plan attributable to the Affiliate shall
become a separate Plan, and the Company shall inform the Trustee of the portion
of the Trust Fund that is then attributable to the participation of such
terminated Affiliate. Such portion shall as soon thereafter as is
administratively feasible be set apart by the Trustee as a separate Trust which
shall be part of the separate Plan of such terminated Affiliate. Thereafter the
administration, control, and operation of the Plan with respect to such
terminated Affiliate shall be on a separate basis in accordance with the terms
hereof, or as such terms may be amended by appropriate action of such terminated
Affiliate in accordance with the provisions of Article 12.
Article 13. Top-Heavy Provisions
--------------------------------
13.1 APPLICATION. If in any Plan Year after 1983 (a) the sum of the Account
balances of Participants who are "Key Employees" for such Plan Year exceeds 60
percent of the sum of the Account balances of all Participants (excluding,
however, balances that are disregarded under the rules of this Article), or (b)
the Plan is part of a top-heavy group, then the following provisions under this
Article 13 shall apply for such Plan Year.
The date for determining the applicability of this Article 13 ("determination
date") is:
(a) For the first Plan Year, the last day of the Plan Year, and
(b) For any other Plan Year, the last day of the preceding Plan Year.
13.2 KEY EMPLOYEES. For purposes of this Article 13, the terms "Key
Employee" and an Employee who is not a Key Employee ("non-Key Employee") have
the meaning specified in Code section 416(i), where the term "Key Employee"
generally means any Employee (and the Beneficiary of such an Employee) who at
any time during a Plan Year or any of the four preceding Plan Years is:
(a) An officer of the Company or an Affiliate whose Compensation during
the relevant Plan Year exceeded 150 percent of the dollar limitation
under Code section 415(c)(1)(A); provided, however, no more than the
lesser of 50 Employees, or the greater of three Employees or 10
percent of all Employees are to be treated as officers,
(b) One of the 10 Employees having Compensation for the relevant Plan Year
in excess of the dollar limitation in effect under Code section
415(c)(1)(A) and owning (or considered as owning within the meaning of
Code section 318) the largest interests in the Company or an
Affiliate, then the Employee with the greater Compensation shall be
treated as having the larger interest,
(c) A 5 percent owner of the Company or an Affiliate, or
(d) A 1 percent owner of the Company or an Affiliate having annual
Compensation of more than $150,000.
An Employee is considered to be a "5 percent owner" if the Employee owns more
than 5 percent of the outstanding stock of the Company or an Affiliate or stock
possessing more than 5 percent of the total combined voting power of all of the
Company or Affiliates' stock. An Employee is also treated as owning stock owned
by certain members of the Employee's family as provided in Code section 318. The
same rules apply to determine whether an Employee is a 1 percent owner.
If a current Employee ceases to be a Key Employee, such Employee's Account
balance shall be disregarded under the top-heavy plan computation for any Plan
Year following the last Plan Year for which he/she was treated as a Key
Employee. For Plan Years beginning after 1984, the account balances and accrued
benefits of a Participant who has not performed any services for the Company or
any Affiliate at any time during the 5-year period ending on the determination
date will be disregarded. In addition, a Participant's Rollover Account balance
shall be disregarded to the extent that it consists of amounts attributable to a
rollover initiated by the Participant from a plan that is not maintained by the
Company or an Affiliate.
13.3 TOP-HEAVY GROUP. For purposes of determining whether the Plan is part
of a top-heavy group as described in section 13.1, the following rules shall
apply:
(a) Aggregation Group. All plans maintained by the Company or an Affiliate
are aggregated to determine whether the plans, as a group, are
top-heavy. The aggregation group shall include any plan which covers a
Key Employee and any other plan which enables a plan covering a Key
Employee to meet the requirements of section 401(a)(4) or 410 of the
Code.
(b) An aggregation group is a top-heavy group if, as of the determination
date, (1) the sum of the account balances of Key Employees under all
defined contribution plans included in the group exceeds 60 percent of
the account balances of all participants under all such plans in the
group, or (2) the present value of the accumulated accrued benefits
for Key Employees under all defined benefit plans in the group exceeds
60 percent of the present value of the accumulated accrued benefits
for all participants under all such plans in the group.
In any Plan Year, in testing for top-heaviness under section 13.3(a) or (b), the
Company may in its discretion take into account accumulated accrued benefits and
account balances in any other plan maintained by it or an Affiliate, so long as
such expanded aggregation group continues to meet the requirements of sections
401(a)(4) and 410 of the Code.
13.4 ADDITIONAL RULES. In determining the present value of the accumulated
accrued benefits under a defined benefit plan and the sum of the account
balances under a defined contribution plan, Company contributions and voluntary
employee contributions shall be taken into account. The present value of the
accrued benefit in a defined benefit plan or the account balance in a defined
contribution plan will include any amount distributed to a Participant within
the five year period ending on the determination date.
13.5 CODE SECTION 415(H) ADJUSTMENT. If the Plan is determined to be
top-heavy in any Plan Year, then the combined limits of Code section 415(e) and
section 5.11 of the Plan shall be applied in accordance with Code section
416(h)(1) by substituting "1.0" for "1.25" in computing the defined benefit
fraction and the defined contribution fraction under Plan section 5.10 and
paragraphs 2(B) and 3(B) of Code section 415(e).
13.6 MINIMUM CONTRIBUTION REQUIREMENT. If this Plan is determined to be
top-heavy in any Plan Year under the provisions of this Article, then the
Employer shall contribute and allocate the amount described below to the Account
of any person who was an Employee and a Participant at any time during the Plan
Year and is not treated as a Key Employee (such person or, if he/she is
deceased, his/her Beneficiary, being referred to as a "non-Key Employee") for
such Plan Year such amount shall be equal to the difference, if any, between (i)
3 percent of the Participant's Compensation for that Plan Year and (ii) the
amount of Employer contributions, expressed as a percentage of Compensation
allocated to the account of each non-Key Employee who was a participant under
this Plan or any other plan in the same aggregation group. For this purpose,
salary reduction contributions made at the election of the Participant to this
Plan or any other similar plan in the aggregation group for Plan Years beginning
before January 1, 1985, shall be disregarded, but such contributions for all
subsequent Plan Years shall be taken into account. The contributions under this
section 13.6 shall be accounted for and vested as Company Contributions.
Article 14. Miscellaneous Provisions
------------------------------------
14.1 EMPLOYMENT RIGHTS. Nothing contained in this Plan or any modification
of the same or act done in pursuance hereof shall be construed as giving any
person any legal or equitable right against the Company, the Trustee or the
Trust Fund, unless specifically provided herein, or as giving any person a right
to be retained in the employ of the Company. All Participants shall remain
subject to assignment, reassignment, promotion, transfer, layoff, reduction,
suspension and discharge to the same extent as if this Plan had never been
established.
14.2 NO EXAMINATION OR ACCOUNTING. Neither this Plan nor any action taken
thereunder shall be construed as giving any person the right to an accounting or
to examine the books or affairs of the Company.
14.3 INVESTMENT RISK. The Participants and their Beneficiaries shall assume
all risks in connection with any decrease in the value of any assets or funds
which may be invested or reinvested in the Trust Fund which supports this Plan.
14.4 NON-ALIENATION. Except as permitted under the Plan in accordance with
Code section 401(a)(13) and ERISA section 206(d) with respect to matters such as
loans to Participants and assignments to Alternate Payees under Qualified
Domestic Relations Orders, no benefit payable at any time under the Plan shall
be subject to the debts or liabilities of a Participant or his/her spouse or
Beneficiary, and any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any such benefit, whether presently or thereafter payable,
shall be void. Subject to the foregoing exception, no benefit under the Plan
shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment, garnishment or encumbrance of any kind. In accordance with
procedures consistent with Code section 414(p) that are established by the
Committee (including procedures requiring prompt notification of the affected
Participant and each Alternate Payee of the Plan's receipt of a domestic
relations order and its procedures for determining the qualified status of such
order), judicial orders for purposes of enforcing family support obligations or
pertaining to domestic relations (which orders do not alter the amount, timing
or form of benefit other than to have it commence at the earliest legally
permissible date) shall be honored by the Plan if the Committee determines that
they constitute Qualified Domestic Relations Orders. Except as may otherwise be
required by regulations of the Secretary of Labor, such orders may not require a
retroactive transfer of all or part of a Participant's Account to or for the
benefit of an Alternate Payee without permitting an appropriate adjustment for
earnings and investment gains or losses that have occurred in the interim, nor
shall such orders require the Plan to provide loans, self-directed investment
elections, or other rights to Alternate Payees that are not available to
Beneficiaries generally. To the full extent permitted by Code section 414(p)(10)
and by the terms of a Qualified Domestic Relations Order, amounts assigned to an
Alternate Payee may be paid as soon as possible in a lump sum, notwithstanding
the age, financial hardship, employment status, or other factors affecting the
ability of the Participant to make a withdrawal or otherwise receive a
distribution of balances to his/her credit under the Plan. In cases where such
full and prompt payment of amounts assigned to an Alternate Payee will not be
made, the assigned amounts will be transferred within a reasonable time to the
Income Fund and, pending payment, shall be maintained in a separate Account, for
the benefit of the Alternate Payee.
14.5 INCOMPETENCY. Every person receiving or claiming benefits under the
Plan shall be conclusively presumed to be mentally competent and of age until
the date on which the Committee receives a written notice, in a form and manner
acceptable to the Committee, that such person is incompetent or a minor, for
whom a guardian or other person legally vested with the care of his/her person
or estate has been appointed; provided, however, that if the Committee shall
find that any person to whom a benefit is payable under the Plan is unable to
care for his/her affairs because of incompetency, or is a minor, any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative) may be paid to the spouse, a child, a parent or a brother or
sister, or to any person or institution deemed by the Committee to have incurred
expense for such person otherwise entitled to payment. To the extent permitted
by law, any such payment so made shall be a complete discharge of liability
therefor under the Plan.
In the event a guardian of the estate of any person receiving or claiming
benefits under the Plan shall be appointed by a court of competent jurisdiction,
benefit payments may be made to such guardian provided that proper proof of
appointment and continuing qualification is furnished in a form and manner
acceptable to the Committee. To the extent permitted by law, any such payment so
made shall be a complete discharge of any liability therefor under the Plan.
14.6 SEVERABILITY. In the event any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of this Plan, and it shall be construed and enforced
as if such illegal or invalid provision had never been inserted herein.
14.7 MISSING PERSONS AND OTHER BARS TO PAYMENT. If the Committee shall be
unable to make payment to any Participant or Beneficiary because the whereabouts
of such person cannot be ascertained or because there is an unresolved question
about who is entitled to the payment or how the payment is to be made, the
Committee shall delay the payment until it can properly be made and, in the case
of a missing person or another situation where the Committee is unable to
provide an investment election to a person who is clearly entitled to direct the
investment of the Account balance, shall direct that the balance in the Account
from which the payment is due shall be invested in the Money Market Fund. After
an amount has been due and payable to a missing person for five years without
his/her coming forth or providing a current address to the Committee, the
Committee may mail a notice by registered mail to the last known address of such
person stating that unless such person makes written reply to the Committee
within 60 days from the mailing of such notice, the Committee will direct that
such amount and all further benefits with respect to such person shall be
discontinued and all liability for the payment thereof shall terminate;
provided, however, that in the event of the subsequent reappearance of the
Participant or Beneficiary prior to termination of the Plan, the benefits which
were due and payable and which such person missed shall be paid in a single sum,
and any future benefits due such person shall be reinstated in full.
The amount of any discontinued interest shall be used to reduce Company
Contributions at the end of the two-year period. The reinstatement of a benefit
shall be accomplished by the making of a special Company Contribution in an
amount sufficient to provide the Participant's benefit.
14.8 COUNTERPARTS. This Plan may be executed in any number of counterparts,
each of which shall be deemed to be an original. All the counterparts shall
constitute but one and the same instrument and may be sufficiently evidenced by
any one counterpart.
14.9 SERVICE OF LEGAL PROCESS. The members of the Committee and the
Secretary of the Company are hereby designated agent of the Plan for the purpose
of receiving service of summons, subpoena or other legal process.
14.10 HEADINGS OF ARTICLES AND SECTIONS. The headings of Articles and
Sections are included solely for convenience of reference, and if there is any
conflict between such headings and the text of the Plan, the text shall control.
14.11 APPLICABLE LAW. The Plan and all rights hereunder shall be governed,
construed and administered in accordance with the laws of the State of Arizona
with the exception that any Trust Agreement which may constitute a part of the
Plan shall be construed and enforced in all respects under and by the laws of
the State in which the Trustee thereunder is located.
* * * * * * * * * *
IN WITNESS WHEREOF, Del Webb Corporation has caused this instrument to be
executed by its duly authorized representative in a number of counterparts, each
of which shall be deemed an original even though the others are not produced and
all of which collectively shall be deemed to constitute one instrument.
DEL WEBB CORPORATION
By Lynn Schuttenberg, Vice President
------------------------------------------
Title Chairman, Benefits Advisory Committee
------------------------------------------
Date 6/29/95
------------------------------------------
ATTEST
By Robertson C. Jones
---------------------
Vice President
---------------------
EXHIBIT 10.25
DEL WEBB CORPORATION
1995 EXECUTIVE LONG-TERM INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Del Webb Corporation, a Delaware
corporation (hereinafter referred to as the "Company"), hereby establishes an
incentive compensation plan to be known as the "Del Webb Corporation 1995
Executive Long-Term Incentive Plan" (hereinafter referred to as the "Plan"), as
set forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Restricted Stock, Performance Units, and
Performance-Based Awards.
Upon approval by the Board of Directors of the Company and subject to
shareholder ratification, the Plan shall become effective as of November 8, 1995
(the "Effective Date"), and shall remain in effect as provided in Section 1.3
herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
success, and enhance the value, of the Company by linking the personal interests
of participants to those of Company shareholders, and by providing Participants
with an incentive for outstanding performance.
The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract, and retain the services of Participants upon
whose judgment, interest, and special effort the successful conduct of its
operation largely is dependent.
1.3 Duration of the Plan. Subject to approval by the Board of Directors
of the Company and ratification by the shareholders of the Company, the Plan
shall commence on the Effective Date, as described in Section 1.1 herein, and
shall remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 14 herein, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions. However, in no event may an Award be granted under the Plan on or
after November 7, 2005.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under
this Plan of Nonqualified Stock Options, Incentive Stock Options,
Restricted Stock, Performance Units, or Performance-Based Awards.
(b) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(c) "Board" or "Board of Directors" means the Board of
Directors of Del Webb Corporation.
(d) "Cause" means: (i) willful and gross misconduct on the
part of a Participant that is materially and demonstrably detrimental
to the Company; or (ii) the commission by a Participant of one or more
acts which constitute an indictable crime under United States Federal,
state, or local law. "Cause" under either (i) or (ii) shall be
determined in good faith by the Committee in the exercise of its
discretion.
(e) "Change in Control" of the Company shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the total voting
power represented by the Company's then outstanding Voting Securities
(defined as any securities of the Company which vote generally in the
election of directors), or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose election
by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80%
of the total voting power represented by the Voting Securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or a series
of transactions) all or substantially all the Company's assets.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means the committee, as specified in Article
3, appointed by the Board to administer the Plan with respect to grants
of Awards.
(h) "Company" means Del Webb Corporation, a Delaware
corporation (including any and all Subsidiaries), or any successor
thereto as provided in Article 16 herein.
(i) "Covered Employee" means an Employee who is a "covered
employee" within the meaning of Section 162(m) of the Code.
(j) "Director" means any individual who is a member of the
Board of Directors of the Company.
(k) "Disability" means a permanent and total disability,
within the meaning of Code Section 22(e)(3), as determined by the
Committee in good faith, upon receipt of sufficient competent medical
advice from one or more individuals, selected by the Committee, who are
qualified to give professional medical advice.
(l) "Employee" means any full-time, nonunion employee of the
Company. Directors who are not otherwise employed by the Company shall
not be considered Employees under this Plan.
(m) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor Act thereto.
(n) "Fair Market Value" means the average of the highest and
lowest quoted selling prices for Shares on the relevant date, or (if
there were no sales on such date) the weighted average of the means
between the highest and lowest quoted selling prices on the nearest day
before and the nearest day after the relevant date, as prescribed by
Treasury Regulation Section 20.2031-2(b)(2), as reported in the Wall
Street Journal or a similar publication selected by the Committee.
(o) "Incentive Stock Option" or "ISO" means an option to
purchase Shares, granted under Article 6 herein, which is designated as
an Incentive Stock Option and is intended to meet the requirements of
Section 422 of the Code.
(p) "Insider" shall mean an Employee who is, at the time an
Award is made under this Plan, an insider pursuant to Section 16 of the
Exchange Act.
(q) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Article 6 herein, which is not intended
to be an Incentive Stock Option.
(r) "Option" means an Incentive Stock Option or a Nonqualified
Stock Option.
(s) "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.
(t) "Parent" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act.
(u) "Participant" means an Employee of the Company who has
outstanding an Award granted under the Plan.
(v) "Performance-Based Awards" means the Restricted Stock
Awards and Performance Unit Awards granted to selected Covered
Employees pursuant to Articles 7 and 8, but which are subject to the
terms and conditions set forth in Article 9. All Performance-Based
Awards are intended to qualify as "performance-based compensation"
under Section 162(m) of the Code.
(w) "Performance Criteria" means the criteria that the
Committee selects for purposes of establishing the Performance Goal or
Performance Goals for a Participant for a Performance Period. The
Performance Criteria that will be used to establish Performance Goals
are limited to the following: pre- or after-tax net earnings, revenue
growth, operating income, operating cash flow, return on net assets,
return on shareholders' equity, return on assets, return on capital,
Share price growth, shareholder returns, gross or net profit margin,
earnings per share, price per Share, and market share, any of which may
be measured either in absolute terms or as compared to any incremental
increase or as compared to results of a peer group. The Committee
shall, within the time prescribed by Section 162(m) of the Code, define
in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such
Participant.
(x) "Performance Goals" means, for a Performance Period, the
goals established in writing by the Committee for the Performance
Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Goal, the Goal may be
expressed in terms of overall Company performance or the performance of
an operating unit or community. The Committee, in its discretion, may,
within the time prescribed by Section 162(m) of the Code, adjust or
modify the calculation of Performance Goals for such Performance Period
in order to prevent the dilution or enlargement of the rights of
Participants, (i) in the event of, or in anticipation of, any unusual
or extraordinary corporate item, transaction, event, or development;
and (ii) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial statements
of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions.
(y) "Performance Period" means the one or more periods of
time, which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant's right to, and the payment of, a Performance-Based Award.
(z) "Performance Unit" means an Award granted to an Employee
pursuant to Article 8 herein.
(aa) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way (based on
the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, at its
discretion), and the Shares are subject to a substantial risk of
forfeiture, as provided in Article 7 herein.
(bb) "Restricted Stock" means an Award granted to a
Participant pursuant to Article 7 herein.
(cc) "Retirement" means a voluntary termination of employment
by a Participant who has less than ten (10) years of service with the
Company at or after age sixty-five (65), or voluntary termination at or
after age fifty-five (55) for Participants who have at least ten (10)
years of service with the Company as of the date of employment
termination.
(dd) "Shares" means the shares of common stock of Del Webb
Corporation.
(ee) "Subsidiary" means any corporation in which the Company
owns directly, or indirectly through subsidiaries, at least fifty
percent (50%) of the total combined voting power of all classes of
stock, or any other entity (including, but not limited to, partnerships
and joint ventures) in which the Company owns at least fifty percent
(50%) of the combined equity thereof.
2.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
2.3 Severability. In the event that a court of competent jurisdiction
determines that any portion of this Plan is in violation of any statute, common
law, or public policy, then only the portions of this Plan that violate such
statute, common law, or public policy shall be stricken. All portions of this
Plan that do not violate any statute or public policy shall continue in full
force and effect. Further, any court order striking any portion of this Plan
shall modify the stricken terms as narrowly as possible to give as much effect
as possible to the intentions of the parties under this Plan.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Human
Resources Committee of the Board, or by any other Committee appointed by the
Board consisting of not less than two (2) Directors who are not Employees. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors.
Except as permitted under Section 16b-3(c)(2)(i)(A), (B), (C), and (D)
of the Exchange Act, no member of the Committee shall have received a grant of
an Award under the Plan or any similar Plan of the Company or any of its
Subsidiaries while serving on the Committee, or shall have so received such a
grant at any time within one (l) year prior to his or her service on the
Committee, or, if different, for the time period just necessary to fulfill the
then current Rule 16b-3 requirements under the Exchange Act. However, if for any
reason the Committee does not qualify to administer the Plan, as contemplated by
Rule 16b-3 of the Exchange Act, the Board of Directors may appoint a new
Committee so as to comply with Rule 16b-3.
3.2 Authority of the Committee. The Committee shall have full power
except as limited by law or by the Articles of Incorporation or Bylaws of the
Company, and subject to the provisions herein, to determine the size and types
of Awards; to determine the terms and conditions of such Awards in a manner
consistent with the Plan; to cancel and reissue any Awards granted hereunder in
the event the Award lapses for any reason (provided that the Committee shall not
have the authority to reprice previously issued and currently outstanding Awards
without shareholder approval); to construe and interpret the Plan and any
agreement or instrument entered into under the Plan; to establish, amend, or
waive rules and regulations for the Plan's administration; and (subject to the
provisions of Article 14 herein) to amend the terms and conditions of any
outstanding Award to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee
shall make all other determinations which may be necessary or advisable for the
administration of the Plan. As permitted by law, the Committee may delegate its
authorities as identified hereunder.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive, and binding on
all persons, including the Company, its stockholders, Employees, Participants,
and their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for grant under the Plan may not
exceed One Million Two Hundred Thousand (1,200,000). These One Million Two
Hundred Thousand (1,200,000) Shares may be either authorized but unissued or
reacquired Shares.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled,
terminates, expires, or lapses for any reason, any Shares subject to such Award
again shall be available for the grant of an Award under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, such adjustment shall be made in
the number and class of Shares which may be delivered under the Plan, and in the
number and class of and/or price of Shares subject to outstanding Options and
Restricted Stock granted under the Plan, as may be determined to be appropriate
and equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; and provided that the number of Shares subject to any
Award shall always be a whole number.
4.4 Limitation on Number of Shares Subject to Award. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares of Stock
that may be subject to one or more Awards granted to any one Participant over
the term of the Plan shall be 400,000.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include
all officers and key Employees of the Company, as determined by the Committee,
including Employees who are members of the Board, but excluding Directors who
are not Employees
5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees, those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No Employee shall have any right to be granted an Award under this Plan.
In addition, nothing in this Plan shall interfere with or limit in any way the
right of the Company to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employ of the Company.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time as shall
be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Participant.
The Committee may grant ISOs, NQSOs, or a combination thereof. Nothing in this
Article 6 shall be deemed to prevent the grant of NQSOs in excess of the maximum
established by Section 422(d) of the Code.
6.2 Option Agreement. Each Option grant shall be evidenced by an Option
Agreement that shall specify the Option Price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Committee shall determine. The Option Agreement also shall specify whether the
Option is intended to be an ISO within the meaning of Section 422 of the Code,
or a NQSO whose grant is intended not to fall under the provisions of Section
422 of the Code.
6.3 Option Price. The Option Price for each grant of an Option shall
not be less than one hundred percent (100%) of the Fair Market Value of such
Share on the date the Option is granted.
6.4 Duration of Options. Each Option shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th) anniversary date of its
grant.
6.5 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant. However, in no event may any Option granted
under this Plan become exercisable prior to six (6) months following the date of
its grant.
6.6 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Secretary of the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full
payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (a) in cash or its equivalent, or (b) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b).
The Committee also may allow cashless exercise as permitted under
Federal Reserve Board's Regulation T, subject to applicable securities law
restrictions, or by any other means which the Committee determines to be
consistent with the Plan's purpose and applicable law. The proceeds from such a
payment shall be added to the general funds of the Company and shall be used for
general corporate purposes.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s).
6.7 Restrictions on Share Transferability. The Committee shall impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan, as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.
6.8 Termination of Employment Due to Death, Disability, or Retirement.
(a) Termination by Death. In the event the employment of a
Participant is terminated by reason of death, any outstanding Options
granted to that Participant which are vested as of the date of death
shall remain exercisable at any time prior to their expiration date, or
for one (1) year after the date that employment was terminated,
whichever period is shorter, by such person or persons as shall have
been named as the Participant's beneficiary, or by such persons that
have acquired the Participant's rights under the Option by will or by
the laws of descent and distribution.
The portion of any outstanding Option which is deemed vested under this
Plan as of the date of employment termination shall be determined
according to the following guidelines:
(i) The portion of the Option which is exercisable as
of the date of employment termination shall remain exercisable;
(ii) The percentage vesting of the portion of the
Option which otherwise would have vested at the end of the calendar
year in which employment termination occurs, will equal a fraction, the
numerator of which is the number of full weeks of employment during the
calendar year in which employment termination occurs, and the
denominator of which is fifty-two (52); and
(iii) The portion of the Option which is scheduled to
vest in a year which begins after the end of the calendar year in which
employment termination occurs, and the portion of the Option that does
not vest in the year in which employment termination occurs, shall be
forfeited by the Participant and returned to the Company (and shall
once again be available for grant under the Plan).
Any Options which are not vested as of the date of employment
termination shall expire immediately, and may not be exercised following such
time.
(b) Termination by Disability. In the event the employment of
a Participant is terminated by reason of Disability, any outstanding
Options granted to that Participant which are vested as of the date the
Committee determines the definition of Disability to have been
satisfied, shall remain exercisable at any time prior to their
expiration date, or for one (l) year after the date that the Committee
determines the definition of Disability to have been satisfied,
whichever period is shorter.
The portion of any outstanding Option which is deemed vested as of the
date the definition of Disability is determined to have been satisfied by the
Committee shall be determined pursuant to the guidelines set forth in
Subparagraphs (a)(i) through (a)(iii) of this Section 6.8.
Any Options that are not vested as of the date that the Committee
determines the definition of Disability to have been satisfied, shall expire
immediately, and may not be exercised following such date.
(c) Termination by Retirement. In the event the employment of
a Participant is terminated by reason of Retirement, any outstanding
Options granted to that Participant which are vested as of the
effective date of Retirement, shall remain exercisable at any time
prior to their expiration date, or for three (3) years after the
effective date of Retirement, whichever period is shorter.
The portion of any outstanding Option which is deemed vested as of the
effective date of Retirement shall be determined pursuant to the guidelines set
forth in Subparagraphs a(i) through a(iii) of this Section 6.8.
Any Options which are not vested as of the effective date of Retirement
shall expire immediately, and may not be exercised following such date.
(d) Exercise Limitations on ISOs. In the case of ISOs, the tax
treatment prescribed under Section 422 of the Code may not be available
if the Options are not exercised within the Section 422 prescribed time
periods after each of the various types of employment termination.
Notwithstanding the exercise periods described in Subparagraphs (a),
(b), and (c) above, the Committee shall have the authority, in its sole
discretion, to accelerate the vesting of Options which are outstanding as of the
date of employment termination for one of the reasons described in this Section
6.8.
6.9 Termination of Employment for Other Reasons. If the employment of a
Participant shall terminate for any reason (other than the reasons set forth in
Section 6.8 or for Cause), all Options held by the Participant which are not
vested as of the effective date of employment termination immediately shall be
forfeited to the Company (and shall once again become available for grant under
the Plan). However, the Committee, in its sole discretion, shall have the right
to immediately vest all or any portion of such Options, subject to such terms as
the Committee, in its sole discretion, deems appropriate.
Options which are vested as of the effective date of employment
termination may be exercised by the Participant within the period beginning on
the effective date of employment termination, and ending three (3) months after
such date.
If the employment of a Participant shall terminate for Cause, all
outstanding Options held by the Participant immediately shall be forfeited to
the Company and no additional exercise period shall be allowed, regardless of
the vested status of the Options.
6.10 Nontransferability of Options. Each Incentive Stock Option granted
under the Plan may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution; each other Option granted under the Plan may be transferable
subject to the terms and conditions as may be established by the Committee in
accordance with the regulations promulgated under the Exchange Act, or any other
applicable law or regulation. Further, all Options granted to a Participant
under the Plan shall be exercisable during his or her lifetime only by such
Participant.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock to eligible Employees in such amounts as the Committee shall
determine; provided that the total number of Shares of Restricted Stock granted
under this Plan shall not exceed One Hundred Thousand (100,000) Shares of
Restricted Stock.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or Periods, the number of Restricted Stock Shares granted, and such
other provisions as the Committee shall determine.
7.3 Transferability. Except as provided in this Article 7, the Shares
of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock Agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock Agreement. However, in no event may any Restricted Stock
granted under the Plan become vested in a Participant prior to six (6) months
following the date of its grant. All rights with respect to the Restricted Stock
granted to a Participant under the Plan shall be available during his or her
lifetime only to such Participant.
7.4 Other Restrictions. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional, and/or
individual), and/or restrictions under applicable Federal or state securities
laws; and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions.
7.5 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan may bear the following
legend:
"The sale or other transfer of the Shares of Stock represented
by this certificate, whether voluntary, involuntary, or by operation of
law, is subject to certain restrictions on transfer as set forth in the
Del Webb Corporation 1995 Executive Long-Term Incentive Plan, and in a
Restricted Stock Agreement. A copy of the Plan and such Restricted
Stock Agreement may be obtained from the Secretary of Del Webb
Corporation."
7.6 Removal of Restrictions. Except as otherwise provided in this
Article 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 7.5 removed from his or her Share certificate.
7.7 Voting Rights. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
7.8 Dividends and Other Distributions. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those Shares while they are so held. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
7.9 Termination of Employment. If the employment of a Participant shall
terminate for any reason, except as determined by the Committee at the time of
such termination for any reason other than for Cause, all nonvested Shares of
Restricted Stock held by the Participant upon the effective date of employment
termination immediately shall be forfeited and returned to the Company (and
shall once again become available for grant under the Plan). The number of
Shares of Restricted Stock which are deemed vested as of the effective date of
employment termination shall be determined pursuant to the guidelines set forth
with respect to the vesting of Options, as specified in Sections 6.8 and 6.9
herein.
ARTICLE 8. PERFORMANCE UNITS
8.1 Grant of Performance Units. Subject to the terms of the Plan,
Performance Units may be granted to eligible Employees at any time and from time
to time, as shall be determined by the Committee. The Committee shall have
complete discretion in determining the number of Performance Units granted to
each Participant.
8.2 Value of Performance Units. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. The
Committee shall set performance goals in its discretion which, depending on the
extent to which they are met, will determine the number and/or value of
Performance Units that will be paid out to the Participants. The time period
during which the performance goals must be met shall, in all cases, exceed six
(6) months in length.
8.3 Earning of Performance Units. After the applicable time period
during which the goals must be met, the holder of Performance Units shall be
entitled to receive payout on the number of Performance Units earned by the
Participant over such period, to be determined as a function of the extent to
which the corresponding performance goals have been achieved.
8.4 Form and Timing of Payment of Performance Units. Payment of earned
Performance Units shall be made in a single lump sum, within forty-five (45)
calendar days following the close of the applicable time period during which the
goals must be met. The Committee, in its sole discretion, may pay earned
Performance Units in the form of cash or in Shares (or in a combination thereof)
which have an aggregate Fair Market Value equal to the value of the earned
Performance Units at the close of such period.
Prior to the beginning of each time period during which the goals must
be met, Participants may elect to defer the receipt of Performance Unit payout
upon such terms as the Committee deems appropriate.
8.5 Termination of Employment Due to Death, Disability, Retirement, or
Involuntary Termination (without Cause). In the event the employment of a
Participant is terminated by reason of death, Disability, Retirement, or
involuntary termination without Cause during a Performance Period, the
Participant shall receive a prorated payout of the Performance Units. The
prorated payout shall be determined by the Committee, in its sole discretion,
based upon the guidelines set forth with respect to the vesting of Options, as
specified in Sections 6.8 and 6.9 herein, and further adjusted based on the
achievement of the preestablished performance goals.
Payment of earned Performance Units shall be made at the same time
payments are made to Participants who did not terminate employment during the
applicable time period during which the goals must be met.
8.6 Termination of Employment for Other Reasons. In the event that a
Participant terminates employment with the Company for any reason other than
those reasons set forth in Section 8.5, all Performance Units shall be forfeited
by the Participant to the Company, and shall once again be available for grant
under the Plan.
8.7 Nontransferability. Performance Units may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further a Participant's rights under
the Plan shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
ARTICLE 9. PERFORMANCE-BASED AWARDS
9.1 Purpose. The purpose of this Article 9 is to provide the Committee
the ability to qualify the Restricted Stock Awards under Article 7 and the
Performance Unit Awards under Article 8 as "performance-based compensation"
under Section 162(m) of the Code. If the Committee, in its discretion, decides
to grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 9 shall control over any contrary provision contained in Articles 7 or
8.
9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
Committee may, in its discretion, grant Restricted Stock Awards or Performance
Unit Awards to Covered Employees that do not satisfy the requirements of this
Article 9. The designation of a Covered Employee as a Participant for a
Performance Period shall not in any manner entitle the Participant to receive an
Award for the period. Moreover, designation of a Covered Employee as a
Participant for a particular Performance Period shall not require designation of
such Covered Employee as a Participant in any subsequent Performance Period and
designation of one Covered Employee as a Participant shall not require
designation of any other Covered Employees as a Participant in such period or in
any other period.
9.3 Discretion of Committee with Respect to Performance Awards. With
regard to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period, the type of
Performance-Based Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary
or any division or business unit thereof.
9.4 Payment of Performance Awards. Unless otherwise provided in the
relevant Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the last day of the Performance Period to be eligible for a
Performance Award for such Performance Period. Furthermore, a Participant shall
be eligible to receive payment under a Performance- Based Award for a
Performance Period only if the Performance Goals for such period are achieved.
In determining the actual size of an individual Performance-Based
Award, the Committee may reduce or eliminate the amount of the Performance-Based
Award earned for the Performance Period, if in its sole and absolute discretion,
such reduction or elimination is appropriate.
9.5 Maximum Award Payable. Notwithstanding any provision contained in
the Plan to the contrary, the maximum Performance-Based Award payable to any one
Participant under the Plan for a Performance Period is Seventy-five Thousand
(75,000) Shares, or in the event the Performance-Based Award is paid in cash,
such maximum Performance-Based Award shall be determined by multiplying
Seventy-five Thousand (75,000) by the Fair Market Value of one Share as of the
date of grant of the Performance-Based Award.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Human Resource Department of the Company during
the Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to the Participant's
estate.
ARTICLE 11. DEFERRALS
The Committee may permit a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option, the lapse or
waiver of restrictions with respect to Restricted Stock, or the satisfaction of
any requirements or goals with respect to Performance Units. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
ARTICLE 12. RIGHTS OF EMPLOYEES
12.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
For purposes of the Plan, transfer of employment of a Participant
between the Company and any one of its Subsidiaries (or between Subsidiaries)
shall not be deemed a termination of employment.
12.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 13. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless otherwise
specifically prohibited by the terms of Article 17 herein:
(a) Any and all Options granted hereunder shall become
immediately exercisable;
(b) Any restriction periods and restrictions imposed on
Restricted Shares shall lapse, and within ten (10) business days after
the occurrence of a Change in Control, the stock certificates
representing Shares of Restricted Stock, without any restrictions or
legend thereon, shall be delivered to the applicable Participants;
(c) The target value attainable under all Performance Units
shall be deemed to have been fully earned for the entire Performance
Period as of the effective date of the Change in Control, except that
all Performance Units which shall have been outstanding less than six
(6) months on the effective date of the Change in Control shall not be
deemed to have earned the target value; and
(d) Subject to Article 14 herein, the Committee shall have the
authority to make any modifications to the Awards as determined by the
Committee to be appropriate before the effective date of the Change in
Control.
ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION
14.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend, or
modify the Plan. However, without the approval of the stockholders of the
Company (as may be required by the Code, by the insider trading rules of Section
16 of the Exchange Act, by any national securities exchange or system on which
the Shares are then listed or reported, or by a regulatory body having
jurisdiction with respect hereto) no such termination, amendment, or
modification may:
(a) Increase the total amount of Shares which may be issued
under this Plan, except as provided in Section 4.3 herein; or
(b) Change the class of Employees eligible to participate in
the Plan; or
(c) Materially increase the cost of the Plan or materially
increase the benefits to Participants; or
(d) Extend the maximum period after the date of grant during
which Options may be exercised.
14.2 Awards Previously Granted. No termination, amendment, or
modification of the Plan shall in any manner adversely affect any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.
ARTICLE 15. WITHHOLDING
15.1 Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state, and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of this Plan.
15.2 Share Withholding. With respect to withholding required upon the
exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon
any other taxable event, Participants shall satisfy all federal, state and local
tax withholding requirements by having the Company withhold Shares (to the
extent that Shares are issued pursuant to the Award) having a Fair Market Value
on the date the tax is to be determined equal to the maximum marginal total tax
which would be imposed on the transaction.
ARTICLE 16. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 17. REQUIREMENTS OF LAW
17.1 Requirements of Law. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
Notwithstanding any other provision set forth in the Plan, if required
by the then current Rule 16b-3 of the Exchange Act, any "derivative security or
equity security" offered pursuant to the Plan to any Insider may not be sold or
transferred for at least six (6) months after the date of grant of such Award,
except in the case of the death, disability, or termination of employment of the
Participant. The terms "equity security" and "derivative security" shall have
the meanings ascribed to them in the then current Rule 16b-3 of the Exchange
Act.
17.2 Governing Law. The Plan, and all agreements hereunder, shall be
governed by the laws of the State of Delaware.
EXHIBIT 10.26
DEL WEBB CORPORATION
1995 DIRECTOR STOCK PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Del Webb Corporation, a Delaware
corporation (the "Company"), hereby establishes a stock plan for Nonemployee
Directors, to be known as the "Del Webb Corporation 1995 Director Stock Plan"
(the "Plan"), as set forth in this document. The Plan permits the deferral of
Directors' Annual Retainers into grants of Nonqualified Stock Options and
Restricted Stock, and sets forth the terms of annual grants of Stock Options to
Nonemployee Directors, subject to the terms and provisions set forth herein.
Upon approval by the Board of Directors of the Company, and conditioned
upon subsequent approval of the Plan by the shareholders of the Company, the
Plan shall become effective as of November 8, 1995 (the "Effective Date"), and
shall remain in effect as provided in Section 1.3 herein. Without limiting the
immediately preceding sentence, the Plan and the grant of Awards thereunder will
be void ab initio, and of no force and effect, if the Plan is not approved by
the Company's shareholders on or before November 8, 1995.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of Company shareholders, and to
attract and retain Nonemployee Directors of outstanding competence.
1.3 Duration of the Plan. The Plan shall commence on the Effective
Date, as described in Section 1.1 herein, and shall remain in effect, subject to
the right of the Board of Directors to terminate the Plan at any time pursuant
to Article 9 or Section 10.3 herein, until all Shares subject to it shall have
been purchased or acquired according to the Plan's provisions. However, in no
event may an Award be granted under the Plan on or after November 7, 2005.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Annual Retainer" means the annual fee payable by the
Company to a Director, including amounts payable for service as a
chairperson of a committee of the Board, but excluding meeting fees.
(b) "Award" means, individually or collectively, a grant of
Nonqualified Stock Options or Restricted Stock under this Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(d) "Board" or "Board of Directors" means the Board of
Directors of Del Webb Corporation, and includes any committee of the
Board of Directors designated by the Board to administer part or all of
this Plan.
(e) "Change in Control" of the Company shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company, is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the total voting
power represented by the Company's then outstanding Voting Securities
(defined as any securities of the Company which vote generally in the
election of directors), or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the
Board of Directors of the Company and any new director whose election
by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80%
of the total voting power represented by the Voting Securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or a series
of transactions) all or substantially all the Company's assets.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means the Human Resources Committee of the
Board of Directors, or any other committee appointed by the Board to
administer this Plan.
(h) "Company" means Del Webb Corporation, a Delaware
corporation, or any successor thereto as provided in Section 10.2
herein.
(i) "Director" means any individual who is a member of the
Board of Directors of the Company.
(j) "Disability" means a permanent and total disability,
within the meaning of Code Section 22(e)(3). To the extent permitted
pursuant to Section 16 of the Exchange Act, Disability shall be
determined by the Board in good faith, upon receipt of sufficient
competent medical advice from one or more individuals, selected by the
Board, who are qualified to give professional medical advice.
(k) "Employee" means any full-time, nonunion, salaried
employee of the Company. For purposes of this Plan, an individual whose
only employment relationship with the Company is as a Director, shall
not be deemed to be an Employee.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor Act thereto.
(m) "Fair Market Value" means the average of the highest and
lowest quoted selling prices for Shares on the relevant date, or (if
there were no sales on such date) the weighted average of the means
between the highest and lowest quoted selling prices on the nearest day
before and the nearest day after the relevant date, as prescribed by
Treasury Regulation Section 20.2031-2(b)(2), as reported in the Wall
Street Journal or a similar publication selected by the Committee.
(n) "Grant Date" means the tenth (10th) day following the
public release of the Company's fiscal year-end earnings information.
(o) "Nonemployee Director" means any individual who is a
member of the Board of Directors of the Company, but who is not
otherwise an Employee of the Company.
(p) "Nonqualified Stock Option" or "NQSO" means an option to
purchase Shares, granted under Articles 6 or 7 herein, which is not
intended to be an incentive stock option qualifying under Code Section
422.
(q) "Option" means a Nonqualified Stock Option under this
Plan.
(r) "Participant" means a Nonemployee Director of the Company
who has outstanding an Award granted under the Plan.
(s) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way, and the
Shares are subject to a substantial risk of forfeiture, as provided in
Article 6 herein.
(t) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d).
(u) "Restricted Stock" means an Award granted to a Nonemployee
Director pursuant to Article 6 herein.
(v) "Shares" means the shares of common stock of Del Webb
Corporation.
2.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
2.3 Severability. In the event that a court of competent jurisdiction
determines that any portion of this Plan is in violation of any statute, common
law, or public policy, then only the portions of this Plan that violate such
statute, common law, or public policy shall be stricken. All portions of this
Plan that do not violate any statute or public policy shall continue in full
force and effect. Further, any court order striking any portion of this Plan
shall modify the stricken terms as narrowly as possible to give as much effect
as possible to the intentions of the parties under this Plan.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee,
subject to the restrictions set forth in this Plan.
3.2 Administration by the Committee. The Committee shall have full
power, discretion, and authority to interpret and administer this Plan in a
manner which is consistent with the Plan's provisions. However, in no event
shall the Committee have the power to (i) determine Plan eligibility, or to
determine the number, the price, the vesting period, or the timing of Awards to
be made under the Plan to any Participant, or (ii) take an action that would
result in the Awards not being treated as "formula awards" within the meaning of
Rule 16b- 3(c)(ii) or any successor provision promulgated pursuant to the
Exchange Act.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board, shall be final, conclusive, and binding on all
persons, including the Company, its stockholders, employees, Participants, and
their estates and beneficiaries.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for grant under the Plan may not
exceed Seventy-Five Thousand (75,000). The Shares issued as Restricted Stock and
the Shares issued pursuant to the Options exercised under this Plan may be
authorized and unissued Shares or Shares reacquired by the Company, as
determined by the Committee.
4.2 Lapsed Awards. If any Option or Share of Restricted Stock granted
under this Plan terminates, expires, or lapses for any reason, any Shares
subject to purchase pursuant to such Option and any such Shares of Restricted
Stock again shall be available for the grant under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, the number and/or type of Shares
subject to any outstanding Award, the Option exercise price per Share under any
outstanding Option, will be automatically adjusted so that the proportionate
interests of the Participants will be maintained as before the occurrence of
such event. Any adjustment pursuant to this Section 4.3 will be conclusive and
binding for all purposes of this Plan.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan are
limited to Nonemployee Directors.
5.2 Actual Participation. All eligible Nonemployee Directors shall
receive grants of Options pursuant to Article 7 herein, and shall be given the
opportunity to defer all or a portion of their Annual Retainers into Options
and/or Restricted Stock, pursuant to the terms and provisions set forth in
Article 6 herein.
ARTICLE 6. DEFERRAL OF ANNUAL RETAINERS
6.1 Deferral Election. On or before December 31 of each year during the
term of this Plan, each Nonemployee Director shall have the ability to elect to
defer any portion or all of his or her Annual Retainer, pursuant to the terms of
this Article 6. Deferrals may, at the discretion of the Director, be made in the
form of discounted Options or Restricted Stock, or combination thereof.
The deferral election shall be irrevocable, and shall be made by means
of a written notice delivered to the Secretary of the Company on or before
December 31 of the calendar year which ends prior to the beginning of the
applicable fiscal year. The deferral election shall state the percentage and/or
dollar amount of the Director's Annual Retainer, which is to be deferred, and
shall specify whether the deferral is to be in the form of discounted Stock
Options or Restricted Stock, or combination thereof.
Each deferral election by a Director shall correspond to the Annual
Retainer which is to be earned by the Director for the Company's fiscal year
which begins in the first calendar year following the calendar year in which the
deferral election is made. For example, a deferral election made by a Director
on December 31, 1995 will correspond to a deferral of an Annual Retainer which
is to be earned by the Director during the fiscal year beginning July 1, 1996,
and ending June 30, 1997.
The effective date of the Award grant relating to Annual Retainer
deferrals shall be the Grant Date which falls in the first calendar year
following the calendar year in which the applicable deferral election is made.
Accordingly, the Option price of Stock Options granted pursuant to Article 6 of
this Plan shall equal seventy-five percent (75%) of the Fair Market Value of
Shares on the Grant Date. Awards of Restricted Stock pursuant to Annual Retainer
deferrals under this Plan also shall be made on the Grant Date.
6.2 Terms of Stock Option Deferrals.
(a) Number of Shares under Option. The number of shares which
may be purchased under Options pursuant to Annual Retainer deferrals
shall be derived according to the following formula:
Number of Shares = Amount of Deferral
-------------------------------------------------------
0.25 x Fair Market Value of Shares at Grant Date
The Option price for each Share granted pursuant to an Annual
Retainer deferral shall equal seventy-five percent (75%) of the Fair
Market Value of a Share on the Grant Date. Options are issued using
this formula to give the Director who is deferring his or her Annual
Retainer an equivalent economic value.
(b) Vesting of Options. Options granted under this Article 6
shall vest one hundred percent (100%) at the end of the sixth month
following the date of grant of the Options.
(c) Individual Award Agreement. Each Option grant shall be
evidenced by an Individual Award Agreement that will not include any
terms or conditions that are inconsistent with the terms and conditions
of this Plan.
(d) Duration of Options. Unless earlier terminated, forfeited,
or surrendered pursuant to a provision of this Plan, each Option shall
expire on the tenth (10th) anniversary date of its grant.
(e) Payment. Options shall be exercised by the delivery of a
written notice of exercise to the Secretary of the Company, setting
forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.
The Option price upon exercise of any Option shall be payable
to the Company in full either: (a) in cash or its equivalent, or (b) by
tendering previously acquired Shares having a Fair Market Value at the
time of exercise equal to the total Option Price (provided that the
Shares tendered upon Option exercise have been held by the Participant
for at least six (6) months prior to their tender to satisfy the Option
Price), or (c) by a combination of (a) and (b). The proceeds from such
a payment shall be added to the general funds of the Company and shall
be used for general corporate purposes.
(f) Restrictions on Share Transferability. To the extent
necessary to ensure that Awards granted hereunder comply with
applicable law, the Committee shall impose restrictions on any Shares
acquired pursuant to the exercise of an Option under this Plan,
including, without limitation, restrictions under applicable Federal
securities laws, under the requirements of any stock exchange or market
upon which such Shares are then listed and/or traded, and under any
blue sky or state securities laws applicable to such Shares.
(g) Termination of Service on Board of Directors Due to Death,
Disability, or Retirement. In the event the service of a Participant on
the Board is terminated by reason of death, Disability, or retirement
from the Board after attaining age 72, and if a portion of the
Participant's Award is not fully vested as of the date of termination
of service on the Board, then the portion of the Participant's Award
which is exercisable as of the date of termination of service on the
Board shall be determined by prorating the Award according to the
following guidelines:
(i) The portion of the Award which is exercisable as
of the date of termination of service on the Board shall
remain exercisable;
(ii) The percentage vesting of the portion of the
Award which otherwise would have vested at the end of the
Company's fiscal year in which termination of service on the
Board occurs, will equal a fraction, the numerator of which is
the number of full weeks of service on the Board during the
Company's fiscal year in which termination occurs, and the
denominator of which is fifty-two (52); and
(iii) The portion of the Award which is scheduled to
vest in a year which begins after the end of the Company's
fiscal year in which termination of service on the Board
occurs, and the portion of the Award that does not vest in the
Company's fiscal year in which termination of service on the
Board occurs, shall be forfeited by the Participant, and
returned to the Company (and shall once again be available for
grant under the Plan).
To the extent an Option is exercisable as of the date of death
(or as of the date of termination by reason of Disability or retirement
from the Board after attaining age 72, as applicable), it shall remain
exercisable at any time prior to its expiration date, or for one (1)
year after the date of death (or the date of termination by reason of
Disability or retirement from the Board after attaining age 72, as
applicable), whichever period is shorter, by the Participant or such
person or persons as shall have been named as the Participant's legal
representative or beneficiary, or by such persons that have acquired
the Participant's rights under the Option by will or by the laws of
descent and distribution.
(h) Termination of Service on Board of Directors for Other
Reasons. If the service of the Participant on the Board shall terminate
for any reason other than death, Disability, or retirement from the
Board after attaining age 72, any outstanding Options held by the
Participant that are not exercisable as of the date of termination
immediately shall be forfeited to the Company (and shall once again
become available for grant under the Plan).
To the extent an Option is exercisable as of the date of
termination of the Participant's service on the Board under this
Section 6.2(h), it shall remain exercisable at any time prior to its
expiration date, or for one (1) year after the date the Participant's
service on the Board terminates, whichever period is shorter.
(i) Nontransferability of Options. No Option granted under
this Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will, by the laws of descent
and distribution, or pursuant to Section 10.1 herein. Further, all
Options granted to a Participant under this Plan shall be exercisable
during his or her lifetime only by such Participant.
6.3 Terms of Restricted Stock Deferrals.
(a) Grants of Restricted Stock. The number of shares of
Restricted Stock which shall be granted pursuant to an Annual Retainer
deferral shall be derived according to the following formula:
Number of Shares = Amount of Deferral
-------------------------------------------------------
Fair Market Value of Shares at Grant Date
Awards of Restricted Stock under this Plan shall be made on
the Grant Date which falls within the first (1st) calendar year
following the calendar year in which the applicable deferral election
was made.
(b) Restricted Stock Agreement. Each Restricted Stock grant
shall be evidenced by a Restricted Stock Agreement that shall specify
the Period of Restriction, or Periods, the number of Restricted Stock
Shares granted, and such other provisions as the Committee shall
determine.
(c) Transferability. Except as provided in this Section
6.3(c), the Shares of Restricted Stock granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated
(other than pursuant to Section 10.1 herein) until the end of the
applicable Period of Restriction, as specified in the Restricted Stock
Agreement.
The Period of Restriction for Shares of Restricted Stock
awarded pursuant to this Article 6 shall end six (6) months following
the Grant Date on which such Shares were issued. All rights with
respect to the Restricted Stock granted to a Director under the Plan
shall be available during his or her lifetime only to such Director.
(d) Certificate Legend. Each certificate representing Shares
of Restricted Stock granted pursuant to the Plan may bear the following
legend:
"The sale or other transfer of the Shares of Stock represented
by this certificate, whether voluntary, involuntary, or by operation of
law, is subject to certain restrictions on transfer as set forth in the
Del Webb Corporation 1995 Director Stock Plan, and in a Restricted
Stock Agreement. A copy of the Plan and such Restricted Stock Agreement
may be obtained from the Secretary of Del Webb Corporation."
(e) Removal of Restrictions. Except as otherwise provided in
this Plan, Shares of Restricted Stock covered by each Restricted Stock
grant made under the Plan shall become freely transferable by the
Participant after the last day of the Period of Restriction. Once the
Shares are released from the restrictions, the Director shall be
entitled to have the legend required by Section 6.3(d) removed from his
or her Share certificate.
(f) Voting Rights. During the Period of Restriction, Directors
holding Shares of Restricted Stock granted hereunder may exercise full
voting rights with respect to those Shares.
(g) Dividends and Other Distributions. During the Period of
Restriction, Directors holding Shares of Restricted Stock granted
hereunder shall be entitled to receive all dividends and other
distributions paid with respect to those Shares while they are so held.
If any such dividends or distributions are paid in Shares, the Shares
shall be subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to which
they were paid.
(h) Termination of Service on Board of Directors Due to Death,
Disability, or Retirement. In the event that a Director's service on
the Board terminates prior to the end of the Period of Restriction by
reason of death, Disability, or retirement from the Board after
attaining age 72, then the percentage vesting of the Shares of
Restricted Stock shall be determined according to a fraction; the
numerator of which is the number of full weeks of service on the Board
between the applicable Grant Date and the date the Director's service
on the Board terminates, and the denominator of which is twenty-six
(26).
Within thirty (30) days after termination of service on the
Board, the Director (or his or her legal representative) shall return
to the Company all of the certificates representing Shares of
Restricted Stock. As soon as practicable thereafter, the Company shall
issue a new certificate representing the number of vested Shares to
which the Director is entitled.
(i) Termination of Service on Board of Directors for Other
Reasons. If the service of a Director on the Board terminates prior to
the end of the Period of Restriction for reasons other than death,
Disability, or retirement from the Board after attaining age 72, then
all Shares of Restricted Stock that are not vested as of the date the
Director's service on the Board terminates shall be forfeited to the
Company (and shall once again become available for grant under the
Plan). Within thirty (30) days after the termination of service on the
Board, the Director shall return to the Company all of the certificates
representing his or her Shares of Restricted Stock.
ARTICLE 7. ANNUAL OPTION GRANTS
7.1 Annual Grant of Options. Subject to the limitation on the number of
Shares which may be awarded under this Plan, each Nonemployee Director shall be
granted an Option to purchase two thousand (2,000) Shares upon each November 20
of each calendar year commencing in 1995 (less the number of shares granted to
the Director under the Del Webb Corporation Director Stock Plan during each such
calendar year).
7.2 Limitation on Grant of Options. Other than the grant of Options set
forth in Article 6 and in Section 7.1, no additional Options shall be granted
under this Plan.
7.3 Individual Award Agreement. Each Option grant shall be evidenced by
an Individual Award Agreement that will not include any terms or conditions that
are inconsistent with the terms and conditions of this Plan.
7.4 Option Price. The purchase price per Share available for purchaser
under an Option granted pursuant to this Article 7 shall be equal to the Fair
Market Value of such Share on the date the Option is granted.
7.5 Duration of Options. Unless earlier terminated, forfeited, or
surrendered pursuant to a provision of this Plan, each Option granted under this
Article 7 shall expire on the tenth (10th) anniversary date of its grant.
7.6 Vesting of Shares Subject to Option. Participants shall be entitled
to exercise Options granted under this Article 7 at any time and from time to
time, within the time period beginning six (6) months after grant of the Option,
and ending ten (10) years after grant of the Option, and according to the
following vesting schedule: one-third of the Options shall vest on the
anniversary date of date of grant of the Options, and one-third of the Options
shall vest on each of the second and third anniversaries of the date of grant of
the Options.
7.7 Payment. Options granted under this Article 7 shall be exercised in
the manner set forth in Section 6.2(e) herein.
7.8 Restrictions on Share Transferability. To the extent necessary to
ensure that Options granted under this Article 7 comply with applicable law, the
Board shall impose restrictions on any Shares acquired pursuant to the exercise
of an Option under this Article 7, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
7.9 Termination of Employment Due to Death, Disability, or Retirement.
In the event the service of a Participant on the Board is terminated by reason
of death, Disability, or retirement from the Board after attaining age 72, and
if a portion of the Participant's Award is not fully vested as of the date of
termination of service on the Board, then the portion of the Participant's Award
which is exercisable as of the date of termination of service on the Board shall
be determined according to the guidelines set forth in Section 6.2(g) herein.
7.10 Termination of Service on the Board of Directors for Other
Reasons. If the service of a Participant on the Board shall terminate for any
reason other than for death, Disability or retirement from the Board after
attaining age 72, any outstanding Options held by the Participant that are not
exercisable as of the date of termination shall be governed by the guidelines
set forth in Section 6.2(h) herein.
7.11 Nontransferability of Options. No Option granted under this
Article 7 may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution, or
pursuant to Section 10.1 herein. Further, all Options granted to a Participant
under this Article 7 shall be exercisable during his or her lifetime only by
such Participant.
ARTICLE 8. CHANGE IN CONTROL
In the event of a Change in Control of the Company, all Awards granted
under this Plan that are still outstanding and not yet vested, shall become
immediately one hundred percent (100%) vested in each Participant, as of the
first date that the definition of Change in Control has been fulfilled, and
shall remain as such for the remaining life of the Award, as such life is
provided herein, and within the provisions of the related individual award
agreements entered into with each Participant. All Options that are exercisable
as of the effective date of the Change in Control shall remain as such for the
remaining life of the Options.
ARTICLE 9. AMENDMENT, MODIFICATION, AND TERMINATION
9.1 Amendment, Modification, and Termination. Subject to the terms set
forth in this Section 9.1, the Committee may terminate, amend, or modify this
Plan at any time and from time to time; provided, however, that shareholder
approval is required for any Plan amendment that would materially increase the
benefits accruing to Participants under this Plan, materially increase the
number of securities which may be issued under this Plan, or materially modify
the requirements with respect to eligibility for participation in this Plan; and
provided, further, that Plan provisions relating to the amount, price, and
timing of securities to be awarded under this Plan may not be amended more than
once every six (6) months, other than to comport with changes in the Code or the
regulations promulgated thereunder.
9.2 Awards Previously Granted. Unless required by law, no termination,
amendment, or modification of this Plan shall in any manner adversely affect any
Award previously granted under this Plan, without the written consent of the
Participant holding such Award.
ARTICLE 10. MISCELLANEOUS
10.1 Beneficiary Designation. Each Participant under this Plan may,
from time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Plan is to be paid
in the event of his or her death. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
10.2 Successors. All obligations of the Company under this Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
10.3 Requirements of Law. The granting of Awards under the Plan shall
be subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required. Notwithstanding any other provision set forth in this Plan, the
Committee may, at its sole discretion, terminate, amend, or modify this Plan in
any way necessary to comply with the applicable requirements of Rule 16b-3
promulgated by the Securities and Exchange Commission as interpreted pursuant to
no-action letters and interpretive releases.
10.4 Governing Law. This Plan, and all agreements hereunder, shall be
governed by the laws of the State of Delaware.
EXHIBIT 10.27
DEL WEBB CORPORATION
1995 EXECUTIVE MANAGEMENT INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, AND PURPOSE, AND DURATION
1.1 Establishment of the Plan. Del Webb Corporation, a Delaware
corporation (the "Company"), hereby establishes an annual incentive plan to be
known as the "Del Webb Corporation 1995 Executive Management Incentive Plan"
(the "Plan").
1.2 Purpose of the Plan. The Plan is designed to (i) recognize and
reward on an annual basis select Company executives for their contributions to
the overall success of the Company, and (ii) qualify compensation paid under the
Plan as "performance-based compensation" as that term is defined in Section
162(m) of the Internal Revenue Code of 1986 (the "Code") and the regulations
thereunder.
1.3 Duration of the Plan. Subject to approval by the Company's
stockholders, the Plan will commence as of July 1, 1995. If the Plan is not
approved by the Company's stockholders, the Plan will not be effective and any
grants made under the Plan prior to that date will be void. No award may be made
under the Plan after the date the Plan terminates, but awards made prior to that
date may extend beyond that date.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means the agreement of the Company to pay
compensation to a Participant upon the attainment of specified
Performance Goals.
(b) "Award Agreement" means the written agreement evidencing
the terms and conditions of an Award.
(c) "Board" or "Board of Directors" means the Board of
Directors of Del Webb Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" means the Human Resources Committee of the
Board or the committee appointed by the Board pursuant to Article 3 to
administer the Plan.
(f) "Company" means Del Webb Corporation, a Delaware
corporation, or any successor thereto.
(g) "Covered Employee" means an Employee who is a "covered
employee" within the meaning of Section 162(m) of the Code.
(h) "Director" means any individual who is a member of the
Board of Directors of the Company.
(i) "Employee" means any full-time, nonunion employee of the
Company. Directors who are not otherwise employed by the Company shall
not be considered Employees under this Plan.
(j) "Participant" means a Covered Employee who is designated
by the Committee to participate in the Plan for a Performance Period
pursuant to Article 4.
(k) "Performance Criteria" means the criteria that the
Committee selects for purposes of establishing the Performance Goal or
Performance Goals for a Participant for a Performance Period. The
Performance Criteria that will be used to establish Performance Goals
are limited to the following: pre- or after-tax net earnings, revenue
growth, operating income, operating cash flow, return on net assets,
return on shareholders' equity, return on assets, return on capital,
Share price growth, shareholder returns, gross or net profit margin,
earnings per Share, price per Share, and market share, any of which may
be measured either in absolute terms, or as compared to any incremental
increase, or as compared to results of a peer group. The Committee
shall, within the time prescribed by Section 162(m) of the Code, define
in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such
Participant.
(l) "Performance Goals" means, for a Performance Period, the
goals established in writing by the Committee for the Performance
Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Goal, the Goal may be
expressed in terms of overall Company performance or the performance of
an operating unit or community. The Committee, in its discretion, may,
within the time prescribed by Section 162(m) of the Code, adjust or
modify the calculation of Performance Goals for such Performance Period
in order to prevent the dilution or enlargement of the rights of
Participants, (i) in the event of, or in anticipation of, any unusual
or extraordinary corporate item, transaction, event, or development;
and (ii) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial statements
of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions.
(m) "Performance Period" means the one or more periods of
time, which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant's right to, and the payment of, compensation under the
Plan.
(n) "Shares" means the shares of common stock of Del Webb
Corporation.
2.2 Severability. In the event that a court of competent jurisdiction
determines that any portion of this Plan is in violation of any statute, common
law, or public policy, then only the portions of this Plan that violate such
statute, common law, or public policy shall be stricken. All portions of this
Plan that do not violate any statute or public policy shall continue in full
force and effect. Further, any court order striking any portion of this Plan
shall modify the stricken terms as narrowly as possible to give as much effect
as possible to the intentions of the parties under this Plan.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Human
Resources Committee of the Board, or by any other Committee appointed by the
Board consisting of not less than two (2) Directors who are not Employees. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors.
3.2 Authority of the Committee. The Committee shall have all the
authority that is necessary or helpful to enable it to discharge its
responsibilities under the Plan. Without limiting the generality of the
preceding sentence, the Committee shall have the exclusive right to interpret
the Plan, to determine eligibility for participation in the Plan, to decide all
questions concerning eligibility for and the amount of Awards payable under the
Plan, to establish and administer the Performance Goals and certify whether, and
to what extent, they are attained, to construe any ambiguous provisions of the
Plan, to correct any default, to supply any omission, to reconcile any
inconsistency, to issue administrative guidelines as an aide to the
administration of the Plan, to make regulations for carrying out the Plan, and
to decide any and all questions arising in the administration, interpretation,
and application of the Plan.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive, and binding on
all persons, including the Company, its stockholders, Employees, Participants,
and their estates and beneficiaries.
3.4 Section 162(m) Compliance. This Plan shall be administered to
comply with Section 162(m) of the Code and, if any provisions of the Plan cause
any Award to not qualify as performance-based compensation under Section 162(m)
of the Code, that provision shall be stricken from this Plan, but the other
provisions of this Plan shall remain in effect. Any action striking any portion
of this Plan shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Plan.
Furthermore, if any portion of the Plan or any Award Agreement conflicts with
Section 162(m) or the regulations issued thereunder, the provisions of Section
162(m) and such regulations shall control.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Participation is limited in any fiscal year to
Employees who the Committee concludes will be Covered Employees for such year.
4.2 Actual Participation. From among the Covered Employees eligible to
participate each year, the Committee may select those to receive Awards in any
one or more Performance Periods under the Plan.
ARTICLE 5. FORM OF AWARDS.
Awards shall be paid in cash. The Committee may, in its sole
discretion, subject any Award to such terms, conditions, restrictions, or
limitations (including but not limited to restrictions on transferability,
vesting, termination of employment for cause or otherwise, or change of control)
that the Committee deems to be appropriate, provided that such terms are not
inconsistent with the terms of the Plan or Section 162(m) of the Code. All
Awards will be evidenced by an Award Agreement.
ARTICLE 6. DETERMINATION AND LIMITATION OF AWARDS.
6.1 Determination of Awards. Within the time prescribed by Section
162(m) of the Code for each Performance Period, the Committee shall, in its sole
discretion, determine and establish:
(a) the Performance Goals applicable to the Performance Period
for each Participant;
(b) the total dollar amount payable to each Participant under
the Award based upon attaining the Performance Goals; and
(c) such other terms and conditions of such Award as the
Committee determines to be appropriate under the circumstances.
Such determinations shall be reflected in the minutes of a Committee meeting, or
in a written action adopted without the necessity of a meeting, and also shall
be documented in the Award Agreement.
6.2 Limitations of Awards. If only one Performance Goal is established
for a Performance Period, the Performance Goal for such Performance Period must
be achieved in order for a Participant to receive payment for an Award for such
Performance Period. If more than one Performance Goal is established for a
Performance Period, one or more of the Performance Goals for such Performance
Period must be achieved in order for a Participant to receive payment for an
Award for such Performance Period, all as set forth in accordance with the terms
of the Award Agreement. Furthermore, the Committee is authorized at any time
during or after a Performance Period to reduce or eliminate (but not to
increase) the amount of an Award payable to any Covered Employee for a
Performance Period for any reason.
6.3 Maximum Awards. Notwithstanding any provision in the Plan to the
contrary, the maximum Award payable to any Covered Employee under the Plan for a
Performance Period shall be $2,000,000.00.
6.4 Employment Continuation. Unless otherwise determined by the
Committee, provided in the Award Agreement, or required by applicable law, no
payment pursuant to this Plan shall be made to a Participant unless the
Participant is employed by the Company on the last day of the Performance
Period.
6.5 Deferrals of Payments. In the exercise of its discretion, the
Committee may allow a Participant to elect to defer the receipt of all or any
portion of an Award. Such deferral shall be made pursuant to the terms and
conditions set forth in the Del Webb Corporation Deferred Compensation Plan.
ARTICLE 7. RIGHTS OF EMPLOYEES
7.1 Employment. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
7.2 Participation. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 8. AMENDMENT, MODIFICATION, AND TERMINATION
The Committee may suspend or terminate the Plan at any time with or
without prior notice. In addition, the Committee may from time to time and with
or without prior notice, amend or modify the Plan in any manner, but may not
without shareholder approval adopt any amendment that would require the vote of
shareholders of the Company pursuant to Section 162(m) of the Code.
ARTICLE 9. WITHHOLDING
The Company shall have the power and the right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to
satisfy Federal, state, and local taxes (including the Participant's FICA
obligation) required by law to be withheld with respect to any grant, exercise,
or payment made under or as a result of this Plan.
ARTICLE 10. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 11. REQUIREMENTS OF LAW
11.1 Requirements of Law. The granting of Awards under the Plan shall
be subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies as may be required.
11.2 Governing Law. The Plan, and all agreements hereunder, shall be
governed by the laws of the State of Delaware.
ACTIVE SUBSIDIARIES AND ASSOCIATED COMPANIES
OF
DEL WEBB CORPORATION
as of August 30, 1995
Asset One Corp. DW Aviation Co.
Asset Four Corp. Fairmount Mortgage, Inc.
Coventry of California, Inc. Kingswood Parke Community
Del Webb California Corp. Association (Non-Profit)
Del Webb Architectural Services, Inc. The Foothills Community Association
Del Webb Commercial Properties (Non-Profit)
Corporation The Glen Harbor Business Park
Del Webb Communities, Inc. Property Owners Association
Del Webb Community Management Co. (Non-Profit)
Del Webb Conservation Holding Corp. Marina Operations Corp.
Del Webb Construction Services Co. New Mexico Asset Corporation
Del Webb Home Construction, Inc. North Central Development Co.
Del Webb Homes, Inc.
Del Webb Kingswood Parke, Inc. Sun City Hilton Head Community
Del Webb Lakeview Corporation Association, Inc. (Non-Profit)
Del Webb Midatlantic Corp. Sun City Palm Springs Charities,
Del Webb Property Corp. Inc. (Non-Profit)
Del Webb Southwest Corp. Sun City Palm Springs Community
Association (Non-Profit)
Del Webb's Contracting Services Inc. Sun City Roseville Community
Del Webb's Contracting Services of Association, Inc. (Non-Profit)
Tucson, Inc. Sun City Sales Corporation
Del Webb's Coventry Homes Construction Sun City Summerlin Community
Co. Association, Inc. (Non-Profit)
Del Webb's Coventry Homes, Inc. Sun City Title Agency Co.
Del Webb's Coventry Homes of Nevada, Sun City Vistoso Community
Inc. Association, Inc. (Non-Profit)
Del Webb's Coventry Homes Construction Sun State Insulation Co., Inc.
of Tucson Co.
Del Webb's Coventry Homes of Tucson, Terravita Commercial Corp.
Inc. Terravita Community Association,
Del Webb's Stetson Hills, Inc. Inc. (Non-Profit)
Del Webb's Sun City Realty, Inc. Terravita Corp.
Terravita Home Construction Co.
Del E. Webb Cactus Development Corp. Trovas Company
Del E. Webb Development Co., L.P. Trovas Construction Co.
Del E. Webb Finance Company
Del E. Webb Financial Corporation
Del E. Webb Foothills Corporation
Del E. Webb Glen Harbor Development
Corporation
Del E. Webb Jordan Development Corp.
Del E. Webb McIntyre Development Corp.
Del E. Webb McQueen Development Corp.
Del E. Webb Power Development Corp.
Del E. Webb Spring Creek Corporation
EXHIBIT 23
Consent of Independent Certified Public Accountants
---------------------------------------------------
The Board of Directors
Del Webb Corporation:
We consent to incorporation by reference in the Registration Statements (Nos.
33-12023, 2-78336, 33-32309, 33-10228, 33-46720, 33-46704, 33-6564 and 33-52725
on Forms S-8 and No. 33-60089 on Form S-3) of Del Webb Corporation of our report
dated August 18, 1995, relating to the consolidated balance sheets of Del Webb
Corporation and subsidiaries as of June 30, 1995 and 1994 and the related
consolidated statements of earnings, shareholders' equity and cash flows and
related schedule for each of the years in the three-year period ended June 30,
1995 which appears in the June 30, 1995 annual report on Form 10-K of Del Webb
Corporation. Our report refers to a change in the method of accounting for
income taxes.
KPMG Peat Marwick LLP
Phoenix, Arizona
September 5, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF
JUNE 30, 1995 AND THE CONSOLIDATED STATEMENT OF
EARNINGS FOR THE YEAR ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 18,900
<SECURITIES> 0
<RECEIVABLES> 21,995
<ALLOWANCES> 0
<INVENTORY> 828,752
<CURRENT-ASSETS> 0
<PP&E> 47,528
<DEPRECIATION> 18,202
<TOTAL-ASSETS> 925,050
<CURRENT-LIABILITIES> 0
<BONDS> 491,258
<COMMON> 16
0
0
<OTHER-SE> 229,326
<TOTAL-LIABILITY-AND-EQUITY> 925,050
<SALES> 800,574
<TOTAL-REVENUES> 803,119
<CGS> 645,985
<TOTAL-COSTS> 646,052
<OTHER-EXPENSES> 113,235
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 43,832
<INCOME-TAX> 15,341
<INCOME-CONTINUING> 28,491
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,491
<EPS-PRIMARY> 1.87
<EPS-DILUTED> 0
</TABLE>
