UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the period ended MARCH 31, 2000.
[ ] 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 or other jurisdiction (IRS Employer
of incorporation or organization) 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)
NONE
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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 [ ]
As of April 30, 2000 Registrant had outstanding 18,326,955 shares of common
stock.
<PAGE>
DEL WEBB CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 2000
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2000,
June 30, 1999 and March 31, 1999...................................... 1
Consolidated Statements of Earnings for the three and nine
months ended March 31, 2000 and 1999.................................. 2
Consolidated Statements of Cash Flows for the nine
months ended March 31, 2000 and 1999.................................. 3
Notes to Consolidated Financial Statements.............................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................. 21
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, March 31,
2000 June 30, 1999
(Unaudited) 1999 (Unaudited)
- -----------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real estate inventories (Notes 2, 3 and 6) $ 1,856,368 $ 1,622,581 $ 1,579,686
Cash and short-term investments 17,006 22,669 7,343
Receivables 36,674 33,529 42,796
Property and equipment, net 91,251 72,423 48,600
Other assets 74,102 115,595 114,629
- -----------------------------------------------------------------------------------------------------
$ 2,075,401 $ 1,866,797 $ 1,793,054
=====================================================================================================
LIABILITIES AND SHAREHOLDERS EQUITY
- -----------------------------------------------------------------------------------------------------
Notes payable, senior and subordinated debt (Note 3) $ 1,162,014 $ 1,040,613 $ 1,038,171
Contractor and trade accounts payable 119,556 115,456 104,112
Accrued liabilities and other payables 136,413 127,980 123,009
Home sale deposits 161,118 145,362 123,616
Deferred income taxes (Note 4) 42,908 22,510 17,123
Income taxes payable (Note 4) 1,987 10,082 6,806
- -----------------------------------------------------------------------------------------------------
Total liabilities 1,623,996 1,462,003 1,412,837
- -----------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock, $.001 par value. Authorized 30,000,000 shares;
issued 18,328,258 shares at March 31, 2000, 18,221,385
shares at June 30, 1999 and 18,216,364 shares at
March 31, 1999 18 18 18
Additional paid-in capital 170,326 168,865 168,620
Retained earnings 285,535 242,075 218,351
- -----------------------------------------------------------------------------------------------------
455,879 410,958 386,989
Less deferred compensation (4,474) (6,164) (6,772)
- -----------------------------------------------------------------------------------------------------
Total shareholders' equity 451,405 404,794 380,217
- -----------------------------------------------------------------------------------------------------
$ 2,075,401 $ 1,866,797 $ 1,793,054
=====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues (Note 5) $499,799 $ 324,428 $1,404,974 $947,323
- -----------------------------------------------------------------------------------------------------
Costs and expenses (Note 5):
Home construction, land and other 384,933 242,010 1,087,570 716,484
Selling, general and administrative 67,930 49,731 190,151 138,406
Interest (Note 6) 21,958 13,204 59,348 38,736
- -----------------------------------------------------------------------------------------------------
474,821 304,945 1,337,069 893,626
- -----------------------------------------------------------------------------------------------------
Earnings before income taxes 24,978 19,483 67,905 53,697
Income taxes (Note 4) 8,992 7,014 24,446 19,331
- -----------------------------------------------------------------------------------------------------
Net earnings $ 15,986 12,469 $ 43,459 $ 34,366
=====================================================================================================
Weighted average shares outstanding - basic 18,319 18,220 18,271 18,161
=====================================================================================================
Weighted average shares
outstanding - assuming dilution 18,530 18,752 18,598 18,717
=====================================================================================================
Net earnings per share - basic $ .87 $ .68 $ 2.38 $ 1.89
=====================================================================================================
Net earning per share - assuming dilution $ .86 $ .66 $ 2.34 $ 1.84
=====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
- --------------------------------------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers related to operating community home sales $ 1,344,579 $ 893,243
Cash received from commercial land and facility sales at operating communities 49,618 37,375
Cash paid for costs related to home construction at operating communities (866,202) (594,937)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating community sales activities 527,995 335,681
Cash paid for land acquisitions at operating communities (38,063) (20,247)
Cash paid for lot development at operating communities (231,810) (129,792)
Cash paid for amenity development at operating communities (169,865) (66,671)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating communities 88,257 118,971
Cash paid for costs related to communities in the pre-operating stage (14,716) (333,972)
Cash received from mortgage operations 5,176 7,497
Cash received from (paid for) residential land development project (1,907) 2,036
Cash paid for corporate activities (58,046) (56,567)
Interest paid (82,674) (57,840)
Cash received (paid) for income taxes (10,997) 1,502
- --------------------------------------------------------------------------------------------------------------
NET CASH USED FOR OPERATING ACTIVITIES (74,907) (318,373)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (13,177) (17,045)
Investments in life insurance policies (1,821) (974)
- --------------------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (14,998) (18,019)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings 340,797 628,996
Repayments of debt (257,319) (298,951)
Stock repurchases (3) (920)
Proceeds from exercise of common stock options 767 1,153
Dividends paid -- (905)
- --------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 84,242 329,373
- --------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (5,663) (7,019)
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 22,669 14,362
- --------------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 17,006 $ 7,343
==============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
DEL WEBB CORPORATION AND SUBIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
- -------------------------------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reconciliation of net earnings to net cash used for operating activities:
Net earnings $ 43,459 $ 34,366
Amortization of non-cash common costs in costs and expenses,
excluding interest 340,937 235,684
Amortization of capitalized interest in costs and expenses 59,348 38,736
Deferred compensation amortization 4,024 1,581
Depreciation and other amortization 9,678 6,072
Deferred income taxes 13,163 12,878
Net increase in home construction costs (41,467) (92,511)
Land acquisitions (38,063) (27,549)
Lot development (231,810) (319,262)
Amenity development (169,865) (208,543)
Net change in other assets and liabilities (64,311) 175
- --------------------------------------------------------------------------------------------------------
Net cash used for operating activities $ (74,907) $(318,373)
========================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Del Webb
Corporation and its subsidiaries (the "Company"). In the opinion of
management, the accompanying unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments,
primarily eliminations of all significant intercompany transactions and
accounts) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. Certain financial
statement items from the prior year have been reclassified to be consistent
with the current year financial statement presentation.
The consolidated financial statements should be read in conjunction with
the consolidated financial statements and the related disclosures contained
in the Company's Annual Report on Form 10-K for the year ended June 30,
1999, filed with the Securities and Exchange Commission.
In the Consolidated Statements of Cash Flows, the Company defines operating
communities as communities generating revenues from home closings.
Communities in the pre-operating stage are those not yet generating
revenues from home closings.
The results of operations for the nine months ended March 31, 2000 are not
necessarily indicative of the results to be expected for the full fiscal
year.
(2) REAL ESTATE INVENTORIES
The components of real estate inventories are:
<TABLE>
<CAPTION>
In Thousands
- ---------------------------------------------------------------------------------------------------
March 31, March 31,
2000 June 30, 1999
(Unaudited) 1999 (Unaudited)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Home construction costs $ 306,835 $ 265,368 $ 274,681
Unamortized improvement and amenity costs 1,158,704 977,867 971,391
Unamortized capitalized interest 103,305 85,007 80,658
Land held for housing 232,535 191,624 218,802
Land and facilities held for future development or sale 54,989 102,715 34,154
- ---------------------------------------------------------------------------------------------------
$1,856,368 $1,622,581 $1,579,686
===================================================================================================
</TABLE>
At March 31, 2000 the Company had 329 completed homes and 823 homes under
construction that were not subject to a sales contract. These homes
represented $61.4 million of home construction costs at March 31, 2000. At
March 31, 1999 the Company had 436 completed homes and 395 homes under
construction (representing $52.1 million of home construction costs) that
were not subject to a sales contract.
5
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) REAL ESTATE INVENTORIES (CONTINUED)
Included in land and facilities held for future development or sale at
March 31, 2000 were 272 acres of commercial land that are currently being
marketed for sale at the Company's active adult communities and 470 acres
of commercial land that are currently being marketed for sale at the
Company's Anthem Arizona project. Also included in land and facilities held
for future development or sale at March 31, 2000 were 77 lots on selected
residential land parcels in the Company's Arizona family community
operations and 998 lots in the Company's Nevada family communities.
(3) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT
Notes payable, senior and subordinated debt consists of:
<TABLE>
<CAPTION>
In Thousands
- --------------------------------------------------------------------------------------------------
March 31, March 31,
2000 June 30, 1999
(Unaudited) 1999 (Unaudited)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9 3/4% Senior Subordinated Debentures due 2003,
net, unsecured $ 98,801 $ 98,492 $ 98,390
9% Senior Subordinated Debentures due 2006,
net, unsecured 98,381 98,176 98,107
9 3/4% Senior Subordinated Debentures due 2008,
net, unsecured 146,217 145,854 145,733
9 3/8% Senior Subordinated Debentures due 2009,
net, unsecured 195,763 195,413 195,297
10 1/4% Senior Subordinated Debentures due 2010,
net, unsecured 144,073 143,622 143,409
Notes payable to banks under a revolving credit
facility and short-term lines of credit, unsecured 393,334 301,000 308,200
Real estate and other notes, primarily secured 85,445 58,056 49,035
- -------------------------------------------------------------------------------------------------
$1,162,014 $1,040,613 $1,038,171
=================================================================================================
</TABLE>
At March 31, 2000 the Company had $370.0 million outstanding under its $500
million senior unsecured revolving credit facility and $23.3 million
outstanding under its $25 million of short-term lines of credit.
At March 31, 2000, under the most restrictive of the covenants in the
Company's debt agreements, $65.2 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.
6
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) INCOME TAXES
The components of income taxes are:
In Thousands
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- --------------------------------------------------------------------------------
2000 1999 2000 1999
- --------------------------------------------------------------------------------
Current:
Federal $ (6,752) $ (1,312) $ 3,731 $ 6,064
State (329) (149) 317 389
- --------------------------------------------------------------------------------
(7,081) (1,461) 4,048 6,453
- --------------------------------------------------------------------------------
Deferred
Federal 17,398 7,881 21,207 11,749
State (1,325) 594 (809) 1,129
- --------------------------------------------------------------------------------
16,073 8,475 20,398 12,878
- --------------------------------------------------------------------------------
$ 8,992 $ 7,014 $24,446 $19,331
================================================================================
(5) REVENUES AND COSTS AND EXPENSES
The components of revenues and costs and expenses are:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- ----------------------------------------------------------------------------------------------
2000 1999 2000 1999
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Homebuilding:
Active adult communities $ 305,682 $ 238,658 $ 916,909 $ 704,434
- ----------------------------------------------------------------------------------------------
Family and country club communities 157,066 67,045 393,056 188,194
- ----------------------------------------------------------------------------------------------
462,748 305,703 1,309,965 892,628
Models/vacation getaway homes with
long-term leaseback * 6,538 -- 30,602 --
- ----------------------------------------------------------------------------------------------
Total homebuilding 469,286 305,703 1,340,567 892,628
Land and facility sales 24,040 12,333 49,689 42,011
Other 6,473 6,392 14,718 12,684
- ----------------------------------------------------------------------------------------------
$ 499,799 $ 324,428 $ 1,404,974 $ 947,323
==============================================================================================
</TABLE>
* For the three and nine months ended March 31, 2000, revenues from the sale
of models/vacation getaway homes with long-term leasebacks are net of
deferred profits of $3,549,000 and $13,659,000, respectively. These
deferred profits are being amortized as reductions of selling, general and
administrative expenses over the leaseback periods.
7
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) REVENUES AND COSTS AND EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- -------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Costs and expenses:
Home construction and land:
Active adult communities $ 231,768 $ 178,184 $ 693,027 $ 524,380
Family and country club communities 123,005 53,826 312,969 152,848
- -----------------------------------------------------------------------------------------------------
354,773 232,010 1,005,996 677,228
Models/vacation getaway homes with
long-term leaseback 6,538 -- 30,602 --
- -----------------------------------------------------------------------------------------------------
Total homebuilding 361,311 232,010 1,036,598 677,228
Cost of land and facility sales 19,393 8,683 40,950 34,227
Other cost of sales 4,229 1,317 10,022 5,029
- -----------------------------------------------------------------------------------------------------
Total home construction, land and other 384,933 242,010 1,087,570 716,484
Selling, general and administrative 67,930 49,731 190,151 138,406
Interest 21,958 13,204 59,348 38,736
- -----------------------------------------------------------------------------------------------------
$ 474,821 $ 304,945 $ 1,337,069 $ 893,626
=====================================================================================================
</TABLE>
(6) INTEREST
The following table shows the components of interest:
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- -----------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- -----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest incurred and capitalized $ 26,171 $ 22,346 $ 77,646 $ 57,939
=====================================================================================================
Amortization of capitalized interest
in costs and expenses $ 21,958 $ 13,204 $ 59,348 $ 38,736
=====================================================================================================
Unamortized capitalized interest
included in real estate inventories
at period end $ 103,305 $ 80,658
================================================= ======================
Interest income $ 205 $ 194 $ 639 $ 831
=====================================================================================================
</TABLE>
Interest income is included in other revenues.
8
<PAGE>
DEL WEBB CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) SEGMENT INFORMATION
The Company conducts its operations in two primary segments in Arizona,
California, Florida, Illinois, Nevada, South Carolina and Texas. Active
adult communities (primarily its Sun City communities) are generally
large-scale, master planned communities with extensive amenities for people
age 55 and over. Family and country club communities are open to people of
all ages and are generally developed in metropolitan or market areas in
which the Company is developing active adult communities. Within its
communities, the Company is usually the exclusive builder of homes.
Both of the Company's primary segments generate their revenues through the
sale of homes (and, to a much lesser extent, land and facilities) to
external customers in the United States. The Company is not dependent on
any major customer.
Information as to the operations of the Company in different business
segments is set forth below based on the nature of the Company's
communities and their customers. Certain information has not been included
by segment due to the immateriality of the amount to the segments or in
total. The Company evaluates segment performance based on several factors,
of which the primary financial measure is earnings before interest and
taxes ("EBIT"). The accounting policies of the business segments are the
same as those for the Company. There are no significant intersegment
transactions.
<TABLE>
<CAPTION>
In Thousands
(Unaudited)
- ----------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
- ----------------------------------------------------------------------------------------------------
2000 1999 2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Active adult communities $ 319,471 $ 244,741 $ 957,164 $ 719,817
Family and country club communities 179,190 75,492 444,381 218,875
Corporate and other 1,138 4,195 3,429 8,631
- ----------------------------------------------------------------------------------------------------
$ 499,799 $ 324,428 $ 1,404,974 $ 947,323
====================================================================================================
EBIT:
Active adult communities $ 43,024 $ 36,673 $ 131,381 $ 109,596
Family and country club
communities 22,989 9,140 50,657 24,184
Corporate and other (19,077) (13,126) (54,785) (41,347)
- ----------------------------------------------------------------------------------------------------
$ 46,936 $ 32,687 $ 127,253 $ 92,433
====================================================================================================
Amortization of Capitalized Interest:
Active adult communities $ 15,061 $ 9,989 $ 42,211 $ 29,687
Family and country club communities 6,897 3,215 17,137 9,049
Corporate and other -- -- -- --
- ----------------------------------------------------------------------------------------------------
$ 21,958 $ 13,204 $ 59,348 $ 38,736
====================================================================================================
Assets at Period End:
Active adult communities $ 1,421,647 $ 1,276,430
Family and country club communities 515,583 425,830
Corporate and other 138,171 90,794
- ------------------------------------------ ----------------------------
$ 2,075,401 $ 1,793,054
========================================== ============================
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of the results of operations and financial condition
should be read in conjunction with the accompanying consolidated financial
statements and notes thereto and the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1999, filed with the Securities and Exchange
Commission.
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, Change March 31, Change
- -----------------------------------------------------------------------------------------------------------------
2000 1999 Amount Percent 2000 1999 Amount Percent
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of net new orders:
Active adult communities:
Sun Cities Phoenix 407 387 20 5.2% 976 933 43 4.6%
Sun Cities Las Vegas 391 378 13 3.4% 877 910 (33) (3.6%)
Sun City Palm Desert 162 123 39 31.7% 322 353 (31) (8.8%)
Sun Cities Northern California 206 232 (26) (11.2%) 480 556 (76) (13.7%)
Sun City Hilton Head 97 141 (44) (31.2%) 272 332 (60) (18.1%)
Sun City Texas 105 104 1 1.0% 242 237 5 2.1%
Sun City at Huntley 71 130 (59) (45.4%) 264 505 (241) (47.7%)
Florida communities 97 86 11 12.8% 246 246 -- --
Other communities 89 82 7 8.5% 294 183 111 60.7%
- ----------------------------------------------------------------------------------------------------------------
Total active adult communities 1,625 1,663 (38) (2.3%) 3,973 4,255 (282) (6.6%)
- ----------------------------------------------------------------------------------------------------------------
Family and country club communities:
Arizona country club communities 127 148 (21) (14.2%) 233 148 85 57.4%
Nevada country club communities 112 60 52 86.7% 223 164 59 36.0%
Arizona family communities 324 502 (178) (35.5%) 763 913 (150) (16.4%)
Nevada family communities 107 149 (42) (28.2%) 224 407 (183) (45.0%)
- ----------------------------------------------------------------------------------------------------------------
Total family and country club
communities 670 859 (189) (22.0%) 1,443 1,632 (189) (11.6%)
- ----------------------------------------------------------------------------------------------------------------
Total 2,295 2,522 (227) (9.0%) 5,416 5,887 (471) (8.0%)
================================================================================================================
</TABLE>
Included in net new orders for the three and nine months ended March 31, 2000
are models and vacation getaway homes sold with long-term leasebacks. The Sun
Cities Phoenix had 17 such net new orders for the three month period and 162 for
the nine month period. The Sun Cities Las Vegas had 5 and 32 for the three and
nine months, respectively. The Nevada country club communities had 13 for the
nine month period.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, Change March 31, Change
- -------------------------------------------------------------------------------------------------------------
2000 1999 Amount Percent 2000 1999 Amount Percent
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of home closings:
Active adult communities:
Sun Cities Phoenix 323 304 19 6.3% 1,080 910 170 18.7%
Sun Cities Las Vegas 328 323 5 1.5% 840 833 7 0.8%
Sun City Palm Desert 118 109 9 8.3% 367 344 23 6.7%
Sun Cities Northern California 214 165 49 29.7% 554 518 36 6.9%
Sun City Hilton Head 81 71 10 14.1% 294 238 56 23.5%
Sun City Texas 56 84 (28) (33.3%) 189 268 (79) (29.5%)
Sun City at Huntley 120 N/A 120 N/A 534 N/A 534 N/A
Florida communities 64 89 (25) (28.1%) 193 334 (141) (42.2%)
Other communities 103 61 42 68.9% 253 161 92 57.1%
- -------------------------------------------------------------------------------------------------------------
Total active adult communities 1,407 1,206 201 16.7% 4,304 3,606 698 19.4%
- -------------------------------------------------------------------------------------------------------------
Family and country club communities:
Arizona country club communities 132 N/A 132 N/A 239 N/A 239 N/A
Nevada country club communities 48 13 35 269.2% 171 13 158 1,215.4%
Arizona family communities 383 220 163 74.1% 935 724 211 29.1%
Nevada family communities 81 74 7 9.5% 332 187 145 77.5%
- -------------------------------------------------------------------------------------------------------------
Total family and country club
communities 644 307 337 109.8% 1,677 924 753 81.5%
- -------------------------------------------------------------------------------------------------------------
Total 2,051 1,513 538 35.6% 5,981 4,530 1,451 32.0%
=============================================================================================================
</TABLE>
Included in home closings for the three and nine months ended March 31, 2000 are
models and vacation getaway homes sold with long-term leasebacks. Profits on the
closings of these units are deferred and amortized as reductions of selling,
general and administrative expenses over the leaseback periods. The Sun Cities
Phoenix had 35 such home closings for the three months and 160 for the nine
months. The Sun Cities Las Vegas had 5 and 32 for the three and nine months,
respectively. The Nevada country club communities had 13 for the nine months.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
At March 31, Change
- -------------------------------------------------------------------------------------------
2000 1999 Amount Percent
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BACKLOG DATA:
Homes under contract:
Active adult communities:
Sun Cities Phoenix 630 692 (62) (9.0%)
Sun Cities Las Vegas 582 625 (43) (6.9%)
Sun City Palm Desert 239 274 (35) (12.8%)
Sun Cities Northern California 334 420 (86) (20.5%)
Sun City Hilton Head 172 263 (91) (34.6%)
Sun City Texas 211 160 51 31.9%
Sun City at Huntley 235 505 (270) (53.5%)
Florida communities 186 187 (1) (0.5%)
Other communities 209 124 85 68.5%
- -------------------------------------------------------------------------------------------
Total active adult communities 2,798 3,250 (452) (13.9%)
- -------------------------------------------------------------------------------------------
Family and country club communities:
Arizona country club communities 238 148 90 60.8%
Nevada country club communities 187 151 36 23.8%
Arizona family communities 555 674 (119) (17.7%)
Nevada family communities 141 304 (163) (53.6%)
- -------------------------------------------------------------------------------------------
Total family and country club communities 1,121 1,277 (156) (12.2%)
- -------------------------------------------------------------------------------------------
Total 3,919 4,527 (608) (13.4%)
===========================================================================================
Aggregate contract sales amount
(dollars in millions) $1,009 $1,026 $ (17) (1.7%)
===========================================================================================
Average contract sales amount per home
(dollars in thousands) $ 258 $ 227 $ 31 13.7%
===========================================================================================
</TABLE>
Included in backlog at March 31, 2000 at the Sun Cities Phoenix were 2 models
and vacation getaway homes sold with long term leasebacks.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (CONTINUED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, Change March 31, Change
- -------------------------------------------------------------------------------------------------------------------------
2000 1999 Amount Percent 2000 1999 Amount Percent
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE REVENUE PER HOME CLOSING:
Active adult communities:
Sun Cities Phoenix $188,600 $174,900 $ 13,700 7.8% $178,000 $175,700 $ 2,300 1.3%
Sun Cities Las Vegas 224,900 204,900 20,000 9.8% 227,500 204,200 23,300 11.4%
Sun City Palm Desert 272,400 251,400 21,000 8.4% 275,400 243,500 31,900 13.1%
Sun Cities Northern California 275,200 249,100 26,100 10.5% 277,000 237,300 39,700 16.7%
Sun City Hilton Head 201,300 183,500 17,800 9.7% 199,500 187,600 11,900 6.3%
Sun City Texas 241,300 201,500 39,800 19.8% 231,100 214,100 17,000 7.9%
Sun City at Huntley 222,700 N/A N/A N/A 230,100 N/A N/A N/A
Florida communities 139,900 117,700 22,200 18.9% 138,300 110,500 27,800 25.2%
Other communities 204,000 169,700 34,300 20.2% 203,000 179,000 24,000 13.4%
Average active adult communities 221,900 197,900 24,000 12.1% 218,700 195,400 23,300 11.9%
Family and country club communities:
Arizona country club communities 289,500 N/A N/A N/A 272,100 N/A N/A N/A
Nevada country club communities 459,400 325,400 134,000 41.2% 431,600 325,400 106,200 32.6%
Arizona family communities 216,500 218,500 (2,000) (0.9%) 211,700 203,600 8,100 4.0%
Nevada family communities 171,500 199,200 (27,700) (13.9%) 188,600 195,400 (6,800) (3.5%)
Average family and country club
communities 243,900 218,400 25,500 11.7% 238,200 203,700 34,500 16.9%
Total average 228,800 202,100 26,700 13.2% 224,100 197,000 27,100 13.8%
=========================================================================================================================
</TABLE>
Average revenue per home closing for the models and vacation getaway homes with
long-term leasebacks at the Sun Cities Phoenix was $132,700 and $100,000 for the
three and nine months respectively ended March 31, 2000. At the Sun Cities Las
Vegas, the average revenue for these home closings was $378,600 for the three
months and $256,200 for the nine months. At the Nevada country club communities,
the average revenue for these home closings was $492,100 for the nine months.
<TABLE>
<CAPTION>
OPERATING STATISTICS:
Costs and expenses as a percentage of
revenues:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Home construction, land and other 77.0% 74.6% 2.4% 3.2% 77.4% 75.6% 1.8% 2.4%
Selling, general and administrative 13.6% 15.3% (1.7%) (11.1%) 13.5% 14.6% (1.1%) (7.5%)
Interest 4.4% 4.1% 0.3% 7.3% 4.2% 4.1% 0.1% 2.4%
Ratio of home closings to homes under
contract in backlog at beginning of
period 55.8% 43.0% 12.8% 29.8% 133.4% 142.9% (9.5%) (6.6%)
=========================================================================================================================
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
NOTES:
New orders are net of cancellations. The Company recognizes revenue at close of
escrow.
The Sun Cities Phoenix includes Sun City West, which is built out, and Sun City
Grand.
The Sun Cities Las Vegas include Sun City Summerlin, Sun City MacDonald Ranch
and Sun City Anthem. The Company began taking new home sales orders at Sun City
Anthem in July 1998. Home closings began at Sun City Anthem in December 1998.
The Sun Cities Northern California include Sun City Roseville and Sun City
Lincoln Hills. The Company began taking new home sales orders at Sun City
Lincoln Hills in February 1999. Home closings began at Sun City Lincoln Hills in
July 1999.
The Company began taking new home sales orders at Sun City at Huntley in
September 1998. Home closings began at Sun City at Huntley in April 1999.
Other active adult communities represent two smaller-scale communities in
Arizona and California.
The Company began taking new home sales orders at Anthem Country Club (an
Arizona country club community near Phoenix) in February 1999. Home closings
began at Anthem Arizona Country Club in September 1999.
The Company began taking new home sales orders at Anthem Country Club (a Nevada
country club community near Las Vegas) in July 1998. Home closings began at
Anthem Las Vegas Country Club in February 1999.
A substantial majority of the backlog at March 31, 2000 is currently anticipated
to result in revenues in the next 12 months. However, a majority of the backlog
is contingent primarily upon the availability of financing for the customer and,
in certain cases, 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 is limited to retaining all or a portion
of the deposit received. In the nine months ended March 31, 2000 and 1999,
cancellations of home sales orders as a percentage of new home sales orders
written during the period were 14.5 percent and 13.8 percent, respectively.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
REVENUES. Total revenues increased to $499.8 million for the three months ended
March 31, 2000 from $324.4 million for the three months ended March 31, 1999.
Total active adult community homebuilding revenues increased to $312.2 million
for the 2000 quarter from $238.7 million for the 1999 quarter. The Company
believes that the principal reasons for this increase were:
* The Company's Sun City at Huntley community near Chicago, which had
not yet begun home closings in the 1999 quarter, contributed $26.7
million to the increase.
* An increase in the average revenue per home closing contributed $24.5
million to the increase.
* The Sun Cities Northern California, which had not yet begun home
closings at Sun City Lincoln Hills in the 1999 quarter, contributed
$17.7 million to the increase.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Total family and country club community homebuilding revenues increased to
$157.1 million for the 2000 quarter from $67.0 million for the 1999 quarter. The
Company believes that the principal reasons for this increase were:
* The Company's Arizona country club communities, which had not yet
begun home closings at Anthem Arizona in the 1999 quarter, contributed
$38.2 million to the increase.
* The Company's Arizona family communities, which had not yet begun home
closings at Anthem Arizona in the 1999 quarter, contributed $26.9
million to the increase.
* An increase in the average revenue per home closing contributed $11.6
million to the increase.
* The Company's Nevada country club communities, which had just begun
home closings at Anthem Las Vegas in the 1999 quarter, contributed
$11.4 million to the increase.
Revenues from land and facility sales increased to $24.0 million for the 2000
quarter from $12.3 million for the 1999 quarter. The increase was primarily due
to the sale of land parcels in the Company's Nevada family community operations.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $384.9 million for the 2000 quarter from $242.0 million for
the 1999 quarter was largely due to the increase in home closings. As a
percentage of revenues, these costs increased to 77.0 percent for the 2000
quarter from 74.6 percent for the 1999 quarter.
This total cost increase as a percentage of revenues was largely due to a
decline in homebuilding gross margin from 24.1 percent for the 1999 quarter to
23.0 percent for the 2000 quarter. Of this 1.1 percent decline in homebuilding
gross margin, 0.3 percent was attributable to deferred profit recognition in the
2000 quarter on the sale and long-term leaseback of 40 model and vacation
getaway homes at two of the Company's communities. The balance was largely
attributable to changes in the mix of home closings between the Company's
various communities (in part due to the dilutive effect of lower initial pricing
at some of the Company's newer communities) and increased common cost
amortization at a number of the Company's active adult communities.
Also contributing to the cost increase as a percentage of revenues were
low-margin land sales in the Company's Nevada family communities in the 2000
quarter and a high-margin gain on an equipment sale in the 1999 quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses decreased to 13.6 percent for the
2000 quarter from 15.3 percent for the 1999 quarter. This decrease resulted from
spreading corporate overhead over significantly greater revenues.
INTEREST. As a percentage of revenues, amortization of capitalized interest
increased to 4.4 percent for the 2000 quarter from 4.1 percent for the 1999
quarter. This increase was primarily due to an increase in debt levels (see
"Liquidity and Financial Condition of the Company").
INCOME TAXES. The increase in income taxes to $9.0 million for the 2000 quarter
from $7.0 million in the 1999 quarter was proportionate to the increase in
earnings before income taxes. The effective tax rate in both quarters was 36
percent.
NET EARNINGS. The increase in net earnings to $16.0 million for the 2000 quarter
from $12.5 million for the 1999 quarter was primarily attributable to the
increase in home closings and homebuilding revenues and the decrease in selling,
general and administrative expenses as a percentage of revenues. These
improvements were partially offset by the decline in homebuilding gross margin
and the increase in interest as a percentage of revenues.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders in the 2000 quarter were 9.0
percent lower than in the 1999 quarter. The Company believes that this decrease
may be primarily attributable to the following:
* Sun City at Huntley, which the Company believes was still experiencing
significant pent-up demand in the 1999 quarter and has yet to
establish a normalized sales pattern, had a 45.4 percent decrease. The
Company also believes that lack of a full complement of product
offerings, which will be expanded in the future, contributed to the
low level of net new orders at this community in the 2000 quarter.
* The 35.5 percent decrease at the Arizona family communities was due to
a reduction in the number of subdivisions in the Phoenix area and to
the fact that the Company was experiencing significant pent-up demand
at its Anthem Arizona community in the 1999 quarter.
* Sun City Hilton Head, which experienced a higher-than-normal level of
net new orders in the 1999 quarter, had a 31.2 percent decrease.
* The 28.2 percent decrease at the Nevada family communities may be
largely attributable to the fact that the Company is selling a
substantial portion of its remaining lots at these communities to
other home builders, rather than building homes on them to sell.
* The Company had several communities which had net new orders in the
1999 quarter but have subsequently sold out and had no or minimal net
new orders in the 2000 quarter.
The Company has recently opened new recreational amenities at many of its
communities, which may help increase future sales activity at these communities.
Based on the factors mentioned above, the sale of family community land parcels
on which homes will not be built and sold by the Company (see "Liquidity and
Financial Condition of the Company"), increases in mortgage interest rates,
decreases in home resales nationally, and the fact that the Company's net new
orders in fiscal 1999 benefited from grand opening sales at a number of new
communities and were the highest in the Company's history, the Company currently
anticipates that its level of net new orders for fiscal 2000 will be below the
level for fiscal 1999.
The number of homes under contract at March 31, 2000 was 13.4 percent lower than
at March 31, 1999. The backlog decreases at Sun City at Huntley, the Arizona
family communities and the Nevada family communities were attributable to the
declines in net new orders discussed above. The Company believes that the
backlog decreases at most of the other active adult communities may be
attributable in part to increased sales prices, reduced advertising expenditures
in the first half of fiscal 2000, increased mortgage interest rates, decreased
home resales nationally and the pending opening of new recreational amenities at
many communities, all of which may have contributed to levels of net new orders
being below levels of home closings.
NINE MONTHS ENDED MARCH 31, 2000 AND 1999
REVENUES. Total revenues increased to $1.40 billion for the nine months ended
March 31, 2000 from $947.3 million for the nine months ended March 31, 1999.
Total active adult community homebuilding revenues increased to $941.1 million
for the 2000 period from $704.4 million for the 1999 period. The Company
believes that the principal reasons for this increase were:
* The Company's Sun City at Huntley community near Chicago, which had
not yet begun home closings in the 1999 period, contributed $122.9
million to the increase.
* An increase in the average revenue per home closing contributed $62.1
million to the increase.
* The Sun Cities Northern California, which had not yet begun home
closings at Sun City Lincoln Hills in the 1999 period, contributed
$28.8 million to the increase.
* $24.2 million was attributable to revenues from models and vacation
getaway homes sold with a long-term leaseback.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Total family and country club community homebuilding revenues increased to
$399.5 million for the 2000 period from $188.2 million for the 1999 period. The
Company believes that the principal reasons for this increase were:
* The Company's Arizona country club communities, which had not yet
begun home closings at Anthem Arizona in the 1999 period, contributed
$65.1 million to the increase.
* The Company's Nevada country club communities, which had just begun
home closings at Anthem Las Vegas late in the 1999 period, contributed
$51.4 million to the increase.
* An increase in the average revenue per home closing contributed $36.8
million to the increase.
* The Company's Arizona family communities, which had not yet begun home
closings at Anthem Arizona in the 1999 period, contributed $32.6
million to the increase.
* The Company's Nevada family communities, which had just begun home
closings at Anthem Las Vegas late in the 1999 period, contributed
$25.4 million to the increase.
HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land
and other costs to $1.09 billion for the 2000 period from $716.5 million for the
1999 period was largely due to the increase in home closings. As a percentage of
revenues, these costs increased to 77.4 percent for the 2000 period from 75.6
percent for the 1999 period. Large, low-margin land sales in the 2000 period at
the Company's Nevada family community operations contributed to the increase, as
did a high-margin gain on an equipment sale in the 1999 period.
This total cost increase as a percentage of revenues was also due to a decline
in homebuilding gross margin from 24.1 percent for the 1999 period to 22.7
percent for the 2000 period. Of this 1.4 percent decline in homebuilding gross
margin, 0.5 percent was attributable to deferred profit recognition in the 2000
period on the sale and long-term leaseback of 205 model and vacation getaway
homes at three of the Company's communities. The balance of the decline in
homebuilding gross margin was largely attributable to changes in the mix of home
closings between the Company's various communities (in part due to the dilutive
effect of lower initial pricing at some of the Company's newer communities) and
increased common cost amortization at a number of the Company's active adult
communities.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues,
selling, general and administrative expenses decreased to 13.5 percent for the
2000 period from 14.6 percent for the 1999 period. This decrease resulted from
spreading corporate overhead over significantly greater revenues.
INTEREST. As a percentage of revenues, amortization of capitalized interest
increased slightly to 4.2 percent for the 2000 period from 4.1 percent for the
1999 period. This increase was primarily due to an increase in debt levels (see
"Liquidity and Financial Condition of the Company").
INCOME TAXES. The increase in income taxes to $24.4 million for the 2000 period
from $19.3 million in the 1999 period was due to the increase in earnings before
income taxes. The effective tax rate in both periods was 36 percent.
NET EARNINGS. The increase in net earnings to $43.5 million for the 2000 period
from $34.4 million for the 1999 period was primarily attributable to the
increase in home closings and homebuilding revenues and the decrease in selling,
general and administrative expenses as a percentage of revenues, partially
offset by the decline in gross margin.
17
<PAGE>
NET NEW ORDER ACTIVITY. Net new orders in the 2000 period were 8.0 percent lower
than in the 1999 period. The Company believes that this decrease was primarily
attributable to the following:
* The Company reduced advertising expenditures in the first half of
fiscal 2000. In January 2000 it launched its new national
brand-building campaign. The reduced advertising expenditures may have
contributed to decreases in the Company's sales traffic and vacation
getaway program occupancy rates during the first half of the current
fiscal year.
* Sun City at Huntley, which the Company believes was experiencing
significant pent-up demand in the 1999 period and has yet to establish
a normalized sales pattern, had a 47.7 percent decrease.
* The 45.0 percent decrease at the Nevada family communities may be
largely attributable to the fact that the Company is selling a
substantial portion of its remaining lots at these communities to
other home builders, rather than building homes on them to sell.
* The 16.4 percent decrease at the Arizona family communities was due to
a reduction in the number of subdivisions in the Phoenix area.
LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY
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, acquiring large tracts of land, obtaining development
approvals, developing land and lots and constructing project infrastructure
(such as roads and utilities), large recreation centers, golf courses, model
homes and sales facilities. 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 earnings reported for financial statement purposes, as
costs and expenses include amortization charges for substantial amounts of
previously expended costs.
During the 2000 period the Company generated $528.0 million of net cash from
operating community sales activities, used $439.7 million for land and lot and
amenity development at operating communities, paid $14.7 million for costs
related to communities in the pre-operating stage and used $148.5 million for
interest, income taxes and other operating activities. The resulting $74.9
million of net cash used for operating activities was funded mainly through
borrowings under the Company's $500 million senior unsecured revolving credit
facility (the "Credit Facility") and $25 million short-term lines of credit
(together with the Credit Facility, the "Credit Facilities").
Real estate development is dependent on, among other things, the availability
and cost of financing. In periods of significant growth, the Company requires
significant additional capital resources, whether from issuances of equity or by
increasing its indebtedness. In fiscal 1999 and the first nine months of fiscal
2000, the Company had under development, among other projects: (i) Sun City
Lincoln Hills, the successor community to Sun City Roseville; (ii) Anthem Las
Vegas, which includes Sun City Anthem, country club and family communities;
(iii) Anthem Arizona, which includes country club and family communities; and
(iv) Sun City at Huntley. Given its assessment of market conditions and
appropriate timing for these new communities, the Company decided to engage in
substantial development at these communities and permit its indebtedness and
leverage to increase substantially.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
To date, material cash expenditures have been made for these communities. The
Company anticipates that it will make material additional development and
housing construction expenditures at these communities through the balance of
fiscal 2000. In order to provide adequate capital to meet the Company's
operating requirements, the Company in February 1999 completed a $150 million
public debt offering and negotiated an increase in the amount of its Credit
Facility from $450 million to $500 million. At March 31, 2000 the Company had
$393.3 million outstanding under the Credit Facilities. A portion of the unused
capacity under the Credit Facilities is expected to be unavailable at June 30,
2000; however, the unavailable portion is not expected to have an impact on the
Company's planned future expenditures.
As a result of public debt offerings and borrowings to fund development
expenditures, described above, the Company has considerably more indebtedness
and was considerably more highly leveraged at March 31, 2000 than it has been in
recent years. However, the Company reduced its leverage from September 30, 1999,
with debt to total capitalization declining from 72.5 percent at that date to
72.0 percent at March 31, 2000. The Company currently intends to further reduce
its ratio of debt to total capitalization to approximately 67 percent or lower
before incurring material development (excluding land acquisition) expenditures
for any significant new communities. The Company's current goal is to reach
approximately 67 percent debt to total capitalization by June 30, 2001.
The Company expects to have adequate capital resources to meet its needs for the
next 12 months. In addition, the Company is selling to other home builders
certain land parcels in its Arizona family community operations and a
substantial portion of the remaining lots in its Nevada family communities and
is planning to otherwise manage its expenditures to meet its needs and available
resources over this time period. If there is a significant downturn in the
Company's anticipated operations, however, the Company will need to further
modify its business plan to operate with lower capital resources. Modifications
of the business plan could include, among other things, delaying development
expenditures at its communities.
The Company's indebtedness and leverage from time to time will affect its
interest incurred and capital resources, which could limit its ability to
capitalize on business opportunities or withstand adverse changes. Additionally,
the availability and cost of debt financing depends on governmental policies and
other factors outside the Company's control. If the Company cannot at any time
obtain sufficient capital resources to fund its development and expansion
expenditures, its projects may be delayed, resulting in cost increases, adverse
effects on the Company's results of operations and possible material adverse
effects on the Company. No assurance can be given as to the terms, availability
or cost of any future financing the Company may need. If the Company is at any
time unable to service its debt, refinancing or obtaining additional financing
may be required and may not be available or available on terms acceptable to the
Company.
At March 31, 2000, under the most restrictive of the covenants in the Company's
debt agreements, $65.2 million of the Company's retained earnings was available
for payment of cash dividends and the acquisition by the Company of its common
stock.
19
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that are not historical results are forward
looking statements. They involve risks and uncertainties. Certain forward
looking statements are based on assumptions as to future events. Some of these
assumptions will prove inaccurate; actual results will differ from those set
forth or implied in the forward looking statements and the variances may be
material. Risks and uncertainties include: financing and leverage; the
development of future communities, including in new geographic markets;
governmental regulation, including growth management controls; environmental
considerations; competition; the geographic concentration of the Company's
operations; the cyclical nature of real estate operations; interest rate
increases; fluctuations in labor and material costs; natural risks in certain
market areas; and other matters in the Company's Annual Report on Form 10-K for
the year ended June 30, 1999.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 3.1 Amendments Resolution for Bylaws of Del Webb Corporation
effective April 2000.
Exhibit 10.1 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and John A. Spencer.
Exhibit 10.2 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and Charles T. Roach.
Exhibit 10.3 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and David G. Schreiner.
Exhibit 10.4 Employment Agreement entered into as of January 1, 2000
between Del Webb Corporation and Frank D. Pankratz.
Exhibit 10.5 Not used
Exhibit 10.6 Supplemental Executive Retirement Plan No. 2 amended and
restated Participation Agreement entered into as of
January 1, 2000 between Del Webb Corporation and
Charles T. Roach.
Exhibit 10.7 Supplemental Executive Retirement Plan No. 2 amended and
restated Participation Agreement entered into as of
January 1, 2000 between Del Webb Corporation and David G.
Schreiner.
Exhibit 10.8 Supplemental Executive Retirement Plan No. 2 amended and
restated Participation Agreement entered into as of
January 1, 2000 between Del Webb Corporation and Frank D.
Pankratz.
Exhibit 10.9 Second Amendment to Employment and Consulting Agreement
entered into as of February 28, 2000 between Del Webb
Corporation and Philip J. Dion.
Exhibit 27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the period covered
by this report.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, who are duly authorized to do so.
DEL WEBB CORPORATION
(REGISTRANT)
Date: May 9, 2000 /s/ Leroy C. Hanneman, Jr.
----------- ----------------------------------------------------
LeRoy C. Hanneman, Jr.
Chief Executive Officer
Date: May 9, 2000 /s/ John A. Spencer
----------- ----------------------------------------------------
John A. Spencer
Executive Vice President and Chief Financial Officer
22
BY LAW AMENDMENTS
RESOLUTION
RESOLVED, that Section 4.4 and 4.5 of the By-Laws of the Corporation are
deleted, and replaced in their entirety by the following:
"SECTION 4.4 CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, if there be one, shall preside at all
meetings of the stockholders and of the Board of Directors.
During the absence or disability of the President, the Chairman
of the Board of Directors shall exercise all the powers and
discharge all the duties of the President. The Chairman of the
Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned
to the Chairman by these By-Laws or by the Board of Directors.
"SECTION 4.5 PRESIDENT. The President, if there shall be one,
shall, subject to the control of the Board of Directors and, if
there be one, the Chairman of the Board of Directors, have
general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are
carried into effect. In the absence or disability of the Chairman
of the Board of Directors, or if there be none, the President
shall preside at all meetings of the stockholders and the Board
of Directors. The President shall also perform such other duties
and may exercise such other powers as from time to time may be
assigned to the President by these By-Laws, by the Board of
Directors or by the Chairman.
"SECTION 4.6 CHIEF EXECUTIVE OFFICER. There shall be a Chief
Executive Officer appointed by the Board of Directors. The
Chairman of the Board of Directors or the President shall be the
Chief Executive Officer. Subject to the control of the Board of
Directors, the Chief Executive Officer shall be the principal
executive of the Corporation, responsible for supervision and
direction of the business of the Corporation. All officers of the
Corporation shall be under the supervision of the Chief Executive
Officer, and shall perform all such duties as shall be assigned
by the Chief Executive Officer."
<PAGE>
Existing Section 4.6 and the remaining sections of Article 4
shall be renumbered beginning at Section 4.7.
FURTHER RESOLVED, that the officers of this Corporation, and each of them,
are authorized to negotiate, complete and execute any amendments, revisions or
modifications to documents or instruments regarding the subject matter of the
foregoing resolutions which they believe to be consistent with the overall
intent of the actions taken, and in the best interests of the Corporation.
FURTHER RESOLVED, that the officers of this Corporation, and each of them
are authorized to sign such documents and other instruments, and take other
actions as they may deem necessary, advisable, convenient or proper, on behalf
of the Corporation, to carry out the intent of the foregoing resolutions; and
FURTHER RESOLVED, that the Board of Directors adopts any resolutions
required by any party with whom the Corporation may conduct business in
connection with the foregoing resolutions, and incorporates such resolutions
herein. Such resolutions shall be considered as passed at a duly held meeting,
and the Secretary or/and Assistant Secretary is authorized to so certify, so
long as such resolutions are, in the opinion of the certifying person, fully
consistent with the scope and limitations of the foregoing resolutions.
DEL WEBB CORPORATION
JOHN A. SPENCER
EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 1st
day of January, 2000 between DEL WEBB CORPORATION, a Delaware corporation (the
"Company"), and John A. Spencer (the "Employee").
1. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
2. TERM OF AGREEMENT; DUTIES
(a) INITIAL TERM; RENEWAL; EMPLOYMENT PERIOD DEFINED
Employee shall be employed by Company for the duties set forth below for
the period beginning as of January 1, 2000 and ending on December 31, 2000 (the
"Initial Term"), unless sooner terminated in accordance with the provisions of
this Agreement. This Agreement shall be automatically renewed at the end of the
Initial Term for additional one-year periods commencing on each January 1 and
ending on the next following December 31 ( a "Renewal Term"), unless either
party serves notice of desire to terminate or modify this Agreement on the
other. Such notice must be given at least 30 days before the end of the Initial
Term or the applicable Renewal Term.
The period of time commencing as of the first day of the Initial Term and
ending on the effective date of the termination of employment of Employee under
this or any successor agreement shall be referred to as the "Employment Period".
(b) DUTIES
Employee shall be employed as Executive Vice President. As Executive Vice
President, Employee shall act as Chief Financial Officer and senior financial
and administrative officer, responsible for direction of financial, legal, human
resources, information systems, internal audit, marketing research, and
Fairmount Mortgage operations. Employee's responsibilities shall include, but
are not limited to, the duties and responsibilities described in the Job
Description on file with Company; recognizing, however, that the Job Description
may from time to time not reflect the responsibilities of the Employee, because
the Job Description is updated only periodically. Employee also shall perform
such additional duties related to the business and affairs of Company and its
Subsidiaries as may be delegated to Employee from time to time by the Board of
Directors of Company (the "Board") or Company's Chief Executive Officer. Any
additional duties delegated to Employee shall be reasonably consistent with
Employee's position. For purposes of this Agreement, the term "Subsidiary" shall
mean any corporation, partnership, joint venture, or other entity in which
Company directly or indirectly has a 20% or greater equity interest.
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(c) EMPLOYEE COMMITMENTS
Employee agrees that Employee will faithfully, industriously, and to the
best of Employee's ability, experience, and talents, perform all of the duties
that may be required of and from Employee and fulfill all of Employee's
responsibilities hereunder pursuant to the express and explicit terms hereof, to
the reasonable satisfaction of the Board and the Chief Executive Officer of
Company. Employee also agrees that Employee will devote substantially all of
Employee's undivided time, attention, knowledge, and skills, during customary
business hours, to the business and interests of Company, subject to such
reasonable vacations and sick leave as are provided under the general policies
of Company, as they may exist from time to time, and consistent with past
practice.
(d) OTHER PROGRAMS
As a general rule, this Agreement is intended to supplement and enhance the
rights and benefits available to Employee as a senior executive officer of the
Company. Accordingly, unless this Agreement or any other agreement or plan of
Company specifically indicates otherwise, none of the rights and benefits
provided to Employee pursuant to this Agreement are intended to replace the
rights and benefits made available generally to other senior executive officers
of the Company.
3. COMPENSATION
Employee shall receive the following compensation for services:
(a) BASE SALARY
Employee shall receive "Base Salary" at the rate of $255,000 per year. Base
Salary shall be payable as nearly as possible in equal bi-weekly installments
(or in such other installments as the Company shall determine). The Base Salary
may be adjusted from time to time in accordance with the procedures established
by Company for salary adjustments for executive officers.
(b) INCENTIVE AND BENEFIT PLANS
Employee shall participate in any incentive compensation plans maintained
by the Company for "Senior Executive Officers", as such term is defined below.
For the 2000 fiscal year, Employee's "Target Bonus," as that term is customarily
used in conjunction with the Company's Annual Management Incentive Plan (the
"MIP"), shall be 65% of Employee's Base Salary, with the actual amount of the
bonus payment to be determined in accordance with all of the terms and
provisions of the MIP, as it may be amended from time to time. The Employee's
Target Bonus, and all other terms and conditions of Employee's participation in
the MIP (including other bonus levels and performance goals) may be changed from
time to time by the Company's Board of Directors or a Committee thereof in the
exercise of its discretion. Employee also shall have the right to participate in
any and all pension or profit sharing plans, stock purchase plans, executive
retirement plans, any annuity or group benefit plans and any medical plans and
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other benefit plans that are now or in the future may be maintained by Company
for its Senior Executive Officers, all in accordance with the terms and
conditions of the plans. Company will provide Employee with an automobile and an
active membership in a country club of Employee's choice in accordance with the
policies and practices applicable to Senior Executive Officers. The automobile
and country club policies for Senior Executive Officers may be modified from
time to time. For purposes of this Agreement, the term "Senior Executive
Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice
President or Vice President.
(c) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Employee is a participant in the Company's Supplemental Executive
Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be
entered into between Employee and Company pursuant to which Employee shall
receive enhanced treatment for purposes of the SERP.
4. CONFIDENTIALITY
Employee covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or corporation, without the express written consent
of Company, any and all of Company's or any Subsidiary's "Confidential
Information". The term "Confidential Information" includes, but is not limited
to, information and documents concerning Company's or any Subsidiary's business,
customers, and suppliers, market methods, files, trade secrets, or other
"know-how" or techniques or information not of a published nature which shall
come into Employee's possession, knowledge, or custody concerning the business
of Company or any Subsidiary, except as such disclosure may be required by law
or in connection with Employee's employment hereunder. The term "Confidential
Information" does not include any material that Company has already disclosed to
the public and is in the public domain. This covenant and agreement of Employee
shall survive this Agreement and continue to be binding upon Employee after the
expiration or termination of this Agreement, whether by passage of time or
otherwise so long as such information and data shall remain confidential.
Employee acknowledges that, in the event of Employee's breach of the
confidentiality provisions of this Section 4, money damages will not
sufficiently compensate Company or the applicable Subsidiary for its injury.
Employee accordingly agrees that in addition to such money damages, Employee may
be restrained and enjoined from continuing breach of the provisions of this
Section 4 without any bond or other security. Employee also acknowledges that
any breach of this Section 4 would result in irreparable damage to Company or
the applicable Subsidiary.
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5. TERMINATION DUE TO DEATH OR DISABILITY
(a) DEATH
This Agreement shall terminate upon Employee's death. Employee's estate
shall be entitled to receive the Base Salary due through the date of Employee's
death. In addition, Employee's Base Salary (as determined pursuant to Section 3)
as in effect at the time of Employee's death will be continued for a period of
12 calendar months following the date of Employee's death. The continued salary
payments will be made to Employee's spouse, if Employee is married and living
with Employee's spouse on the date of death. If Employee is not married and
living with Employee's spouse on the date of death, the continued salary
payments will be made to Employee's estate. Payments under this paragraph may be
made to a designated beneficiary, in lieu of Employee's estate, where Employee
has made a written request to Company designating a beneficiary, and the
Company, in its discretion, has approved the requested designation made by
Employee. The death benefit provided pursuant to this Section 5 replaces and
supersedes any Executive Spouse Benefit provided generally to executives of
Company.
(b) PERMANENT DISABILITY
At Company's option, this Agreement also shall terminate in the event of
Employee's "Permanent Disability" upon notice in writing to Employee to that
effect. For purposes of this Agreement, "Permanent Disability" shall mean that
because of physical or mental illness or disability, with or without
accommodation, Employee shall have been continuously unable to perform
Employee's duties hereunder for a consecutive period of 180 days.
If this Agreement is terminated due to Employee's Permanent Disability,
Employee shall receive the Severance Benefits provided by Section 8.
(c) SALARY CONTINUATION
If Employee is absent from work and unable to perform Employee's duties due
to physical or mental illness or disability, Employee shall continue to receive
Base Salary until such time as this Agreement is terminated. Company may not
terminate Employee's Agreement without Cause pursuant to Section 6(c) during the
period of absence. Rather, Company may only terminate this Agreement because of
Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section
6(a). The period of time during which Employee's Base Salary is continued
pursuant to this Section 5(c) shall be charged against Employee's available sick
leave and then against Employee's available vacation.
(d) LAPSE OF PROVISIONS
This Section 5 shall cease to apply following the termination of Employee's
employment pursuant to Sections 6, 7, or 9.
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6. TERMINATION BY COMPANY
(a) TERMINATION FOR CAUSE
Company may terminate this Agreement for "Cause" upon written notice to
Employee. If Company terminates this Agreement for "Cause", Employee shall be
entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
(b) "CAUSE" DEFINED
Termination of this Agreement for "Cause" shall mean (i) breach of any
material provision of this Agreement by Employee which is not cured within a
reasonable time after receipt by Employee of written notice of such breach from
Company, or (ii) conviction, by a court of competent jurisdiction, of Employee
of any felony or any other crime involving gross depravity or dishonesty.
(c) TERMINATION WITHOUT CAUSE
Termination of this Agreement by Company for reasons other than (i) death,
(ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial
Term or any Renewal Term shall be referred to as a termination "without Cause."
If this Agreement is terminated without Cause, Employee is entitled to receive
30 days advance written notice. This Agreement shall continue during such notice
period. The termination of this Agreement shall be effective on the 30th day
(the "Termination Date") following the day on which the notice is given (the
"Notice Date"). In the exercise of its discretion, the Company may place
Employee on a paid administrative leave during all or any part of the 30-day
notice period. During such administrative leave, Company may bar Employee from
access to any Company facility or may allow such access on such terms as Company
deems appropriate. If this Agreement is terminated without Cause, Employee shall
be entitled to receive the Severance Benefits provided by Section 8.
7. TERMINATION BY EMPLOYEE
(a) GENERAL
Employee may terminate this Agreement at any time, with or without "Good
Reason". If Employee terminates this Agreement without "Good Reason," Employee
shall provide Company with 60 days advance written notice. If Employee
terminates this Agreement with Good Reason, Employee shall provide Company with
30 days advance written notice, which notice shall clearly identify the action
or omission that Employee claims gives rise to Good Reason for termination of
this Agreement. In order to terminate this Agreement for Good Reason, the notice
of termination must be given to Company by Employee within 30 days of Employee's
receipt of notice, whether written or oral, or actual knowledge of the action or
omission that gave rise to Employee's Good Reason for termination. The
termination of this Agreement shall be effective on the last day of the required
notice period (the "Termination Date"). In the exercise of its discretion, the
Company may place Employee on a paid administrative leave during all or any part
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of the 30-day or 60-day notice period. During such administrative leave, the
Company may bar Employee from access to any Company facility or may allow such
access on such terms as Company deems appropriate.
(b) GOOD REASON DEFINED
For purposes of this Agreement, "Good Reason" shall mean and include any of
the following:
(1) Without Employee's express written consent, the assignment to
Employee of any duties that are not reasonably consistent with
Employee's positions, duties, responsibilities, and status with
Company as in effect on the "Relevant Date", or demotion, or a
change in Employee's titles or offices as in effect on the
Relevant Date (except as specifically contemplated by this
Agreement), or any removal of Employee from or any failure to
re-appoint or re-elect Employee to any of such positions, except
in connection with the termination of this Agreement for Cause,
Permanent Disability, as a result of Employee's death, by
Employee other than for Good Reason, or by Company upon the
expiration of the Initial Term or any applicable Renewal Term.
(2) A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time, other than a reduction of no more than 15% which applies to
all Senior Executive Officers of Company.
(3) The taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any thrift, incentive, or compensation plan, or
any pension, life insurance, health and accident or disability
plan in which Employee is participating on the Relevant Date,
whether such plan is qualified for favorable tax treatment or
otherwise, unless a comparable replacement program is offered to
Employee or unless such action applies to all Senior Executive
Officers.
(4) The termination of this Agreement by Company without Cause or any
attempted termination by Company purportedly for Cause if it is
thereafter determined that Cause did not exist under this
Agreement with respect to the termination.
(5) Breach of any material provisions of this Agreement by Company.
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For purposes of this Section 7, the "Relevant Date" is the date of execution of
this Agreement. For purposes of Section 9 , the "Relevant Date" is the date
specified in Section 9(e).
(c) COMPANY MAY CURE GOOD REASON
Within the 30 day notice period called for by Section 7(a), Company may
rescind or otherwise cure any action or omission relied upon by Employee as
constituting Good Reason for termination. If Company rescinds or otherwise cures
such action or omission within this period, Employee's notice of termination
will be automatically withdrawn and this Agreement will continue.
(d) EFFECT OF GOOD REASON TERMINATION
If Employee terminates this Agreement for Good Reason, Employee shall be
entitled to receive the Severance Benefits provided by Section 8 to the same
extent as if this Agreement had been terminated by Company without Cause.
(e) EFFECT OF TERMINATION WITHOUT GOOD REASON
If Employee terminates this Agreement without Good Reason, Employee shall
be entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
8. SEVERANCE BENEFITS
(a) ELIGIBILITY
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if Employee's employment is terminated due to
Permanent Disability pursuant to Section 5(b), if this Agreement is terminated
by Company without Cause pursuant to Section 6(c), or if this Agreement is
terminated by Employee for Good Reason pursuant to Section 7. In addition,
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if the Company notifies Employee of its desire to
terminate this Agreement pursuant to Section 2(a) and at the time such notice is
given the Company does not have "Cause" to terminate Employee's employment
pursuant to Section 6. Similarly, if Company notifies Employee of its desire to
modify this Agreement and such modification provides Employee with "Good Reason"
to terminate this Agreement pursuant to Section 7 and Employee rejects such
modification, Employee shall be entitled to receive the Severance Benefits
called for by paragraph (b).
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(b) SEVERANCE BENEFITS
The "Severance Benefits" to which an eligible Employee shall be entitled
pursuant to this section are limited to the following payments, benefits and
reimbursements, which will continue throughout the "Severance Period" referred
to in Section 8(c):
Company will continue to pay Employee Employee's Base Salary as set forth
in Section 3 (or as it may be adjusted from time to time), in equal
bi-weekly installments.
(2) Company also shall make a single "Incentive Compensation Payment" to
Employee. The "Incentive Compensation Payment" shall equal the amount
that would have been payable to Employee pursuant to all of the terms
and provisions of the Company's MIP, as it may be amended or replaced
from time to time, had Employee's employment continued until the end
of the fiscal year of the Company in which Employee's Termination Date
occurs. (This payment shall be in addition to any payment for a prior
fiscal year which has not yet been paid.) For purposes of calculating
the amount that would have been due to Employee pursuant to the MIP
(i) any provision of the MIP requiring continued employment will be
disregarded; (ii) the Company shall assume that Employee's Base Salary
would continue throughout the end of such fiscal year at the same rate
in effect on the Termination Date; (iii) the actual performance of the
Company shall be utilized; (iv) the Company shall assume that any
subjective performance criteria or requirements were satisfied; and
(v) all other factors impacting the calculation of the amounts due
will be determined by the Company's Board of Directors or a Committee
thereof in the exercise of its discretion. The Incentive Compensation
Payment will be paid at the same time as similar payments are paid to
active employees. The Employee shall not be entitled to receive any
compensation or grants pursuant to the Company's Long Term Incentive
Plan, or any successor plan or program, following the Termination
Date.
Company also intends that life, disability, accident and group health
benefits and coverages (each an "Insurance Benefit" and collectively
the "Insurance Benefits") substantially similar to those which
Employee was receiving immediately prior to the Notice Date be made
available to Employee following the Notice Date, but Company does not
intend to duplicate Insurance Benefits provided by a successor
employer. If and to the extent that and so long as such Insurance
Benefits (or an Insurance Benefit) is not provided by a successor
employer, Company will arrange to provide such Insurance Benefit or
Insurance Benefits to Employee at a cost to Employee of not more than
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the cost to Employee of similar coverage immediately prior to the
Notice Date. If an Insurance Benefit is not provided by a successor
employer and Company, after a good faith effort, is unable to provide
continued coverage to Employee with respect to one or more of such
Insurance Benefits because of restrictions imposed by any insurance
carrier that provides such Insurance Benefit or Benefits, in lieu of
the unavailable Insurance Benefit or Benefits Company may pay Employee
a monthly amount equal to 150% of the Company's share of the cost of
providing such unavailable Insurance Benefit or Benefits to comparable
executives in comparable circumstances. Such cost shall be determined
conclusively by Company. Employee shall provide Company with such
information concerning the Insurance Benefits provided to
Employee by a successor employer as Company shall reasonably request
and Company may decline to provide any Insurance Benefits to Employee
unless and until Employee provides such information. Whether a
particular Insurance Benefit provided by a successor employer is
"substantially similar" to a benefit provided to Employee prior to the
Notice Date shall be determined by Company in the exercise of its
discretion.
(4) Company will continue to provide Employee with an automobile and an
active membership in a country club in accordance with Section 3(b)
and the policies and practices applicable to Senior Executive
Officers, as such policies may be modified from time to time.
(5) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable but which would become exercisable within 12
months from the Termination Date if Employee's employment were
continued, shall on the Notice Date automatically become exercisable
and shall remain exercisable for 90 days thereafter.
(6) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which are subject to restrictions on the Notice
Date shall, as of the Notice Date, automatically become free of all
restrictions if and to the extent that such restrictions would have
lapsed within 12 months of the Termination Date if Employee's
employment were continued.
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(c) SEVERANCE PERIOD
The Severance Benefits will continue throughout the "Severance Period."
Generally, the Severance Period will be the 12 month period beginning on the
Termination Date. If the Severance Benefits are due because this Agreement was
not renewed by the Company, the Severance Period will be the 12 month period
beginning on Employee's last day of active work.
(d) COBRA
Employee has the right to continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA
continuation period shall commence on Employee's Termination Date, but Company
may be obligated to pay a portion of the cost of continued health care coverage
during the Severance Period pursuant to Section 8(b)(3).
9. CHANGE IN CONTROL OF COMPANY
(a) GENERAL
The Board recognizes that the continuing possibility of a "Change in
Control" of Company is unsettling to Employee and other senior executives of
Company. Therefore, the arrangements set forth below are being made to help
assure a continuing dedication by Employee to Employee's duties to Company,
notwithstanding the occurrence or potential occurrence of a "Change in Control."
In particular, the Board believes it important, should Company receive proposals
from third parties with respect to its future, to enable Employee, without being
influenced by the uncertainties of Employee's own situation, to assess and
advise the Board whether such proposals would be in the best interests of
Company and its stockholders and to take such other action regarding such
proposals as the Board might determine to be appropriate. The Board also wishes
to demonstrate to executives of Company that Company is concerned with the
welfare of its executives and intends to see that loyal executives are treated
fairly.
(b) ELIGIBILITY TO RECEIVE A SEVERANCE BENEFIT
In view of the foregoing and in further consideration of Employee's
continued employment with Company, Company agrees that if a Change in Control of
Company occurs during the Initial Term or any Renewal Term Employee shall be
entitled to the special severance benefits provided in subparagraph (g) of this
Section 9 if prior to the expiration of 24 months after the Change in Control of
Company Employee terminates Employee's employment with Company for Good Reason
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or Company terminates Employee's employment without Cause. If Employee triggers
the application of this Section by terminating employment for Good Reason,
Employee must do so within 120 days following Employee's actual knowledge or
receipt of notice, whether written or oral, of the occurrence of the last event
that constitutes Good Reason.
(c) PERMANENT DISABILITY
Any attempted termination of Employee's employment by Company for reasons
of Permanent Disability pursuant to Section 5(b) following a Change in Control
shall be treated as a termination by Company without Cause unless Employee is
approved for and receives long term disability payments under Company's long
term disability plan. In addition, following a Change in Control this Agreement
may not be terminated pursuant to Section 5(b) due to Employee's Permanent
Disability unless the incapacity giving rise to the Permanent Disability occurs
prior to the occurrence of an event that might cause amounts to be payable to
Employee pursuant to this Section 9. Once payments begin pursuant to this
Section 9, this Agreement may not be terminated by Company pursuant to Section
5(b) due to Permanent Disability and any payments due pursuant to this Section 9
shall not cease or diminish on account of Employee's Permanent Disability.
(d) CHANGE IN CONTROL DEFINED
For purposes of this Agreement, a "Change in Control" shall include both an
"Actual Change in Control" and a "Potential Change in Control".
An "Actual Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the stockholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding Voting Securities (as defined below);
or
(2) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
Company and any new director whose election by the Board of
Directors or nomination for election by Company's stockholders
was approved by a vote of at least two-thirds of the directors
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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
(3) The stockholders of Company approve a merger or consolidation of
Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of
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
Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(4) The stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or
disposition by Company of (in one transaction or a series of
transactions) all or substantially all Company's assets.
A "Potential Change in Control" shall be deemed to have occurred in any or
all of the following instances:
Company enters into an agreement, the consummation of which would
result in the occurrence of an Actual Change in Control;
Any person (including Company) publicly announces an intention to
take or to consider taking actions which if consummated would
constitute a Change in Control;
(3) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership
of stock of Company who is or becomes the beneficial owner,
directly or indirectly, of securities of Company representing 10%
or more of the combined voting power of the Company's then
outstanding Voting Securities, increases such person's beneficial
ownership of such securities by five percentage points (5%) or
more over the percentage so owned by such person; or
(4) The Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
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For purposes of this Section, the term "Voting Securities" shall mean and
include any securities of the Company which vote generally for the election of
directors.
(e) GOOD REASON DEFINED
For purposes of this Section, "Good Reason" shall have the meaning assigned
to it in Section 7, with the following modifications:
(1) The "Relevant Date" shall be the day prior to the Change in
Control.
(2) Paragraph (2) of Section 7(b) shall read as follows:
A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time.
(3) Paragraph (3) of Section 7(b) shall read as follows:
The failure by Company to continue in effect any thrift,
incentive, or compensation plan, or any pension, life insurance,
health and accident or disability plan in which Employee is
participating on the Relevant Date, whether such plan is
qualified for favorable tax treatment or otherwise, (or plans
providing Employee with substantially similar benefits), the
taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee as of the Relevant
Date or any later date, or the failure of the Company to provide
Employee with the number of paid vacation days to which Employee
is then entitled on the basis of Employee's years of service with
the Company in accordance with the Company's normal vacation
policy as in effect on the Relevant Date;
(4) Two additional elements of Good Reason shall be added as follows:
(6) Employee is assigned to, or Company's office at which
Employee is principally employed on the Relevant Date is
relocated to, a location which would require a round-trip
commute to work from Employee's principal residence on the
Relevant Date of more than 100 miles per day.
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(7) Failure of Company to obtain an agreement satisfactory to
Employee from any successor to the business, or
substantially all the assets, of Company to assume this
Agreement or issue a substantially similar agreement.
(f) NOTICE OF TERMINATION BY EMPLOYEE
Any termination by Employee under this Section 9 shall be communicated by
written notice to Company which shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination.
(g) EFFECT OF TERMINATION; SPECIAL SEVERANCE BENEFITS
If Employee is entitled to receive a special severance benefit pursuant to
Section 9(b) hereof, Company will provide Employee with the following special
severance benefits in addition to the Severance Benefits to which Employee is
entitled pursuant to Section 8:
Within five days following Employee's termination, a lump sum
severance payment will be made to Employee. The lump sum severance
payment shall be in an amount equal to: (i) 2.5 times Employee's
yearly Base Salary as set forth in Section 3 or as it may be increased
from time to time; plus (ii) the greatest of (a) 2.5 times the average
annual incentive compensation paid to Employee pursuant to the MIP (or
any predecessor or successor plan) during the five fiscal years
preceding the fiscal year in which the Change in Control occurs, or
(b) an amount equal to 100% of the incentive compensation paid to
Employee pursuant to the MIP (or any predecessor or successor plan)
during the 12 month period prior to the Termination Date, or (c) an
amount equal to 35% of Employee's Base Salary as set forth in Section
3 or as it may be increased from time to time; minus (iii) the total
amounts due to Employee, if any, pursuant to Sections 8(b)(1) and (2).
(2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2) will
be accelerated and paid to Employee in one lump sum within five days
following Employee's termination without any discount for early
payment. For purposes of calculating the amounts due to Employee
pursuant to Section 8(b)(2) the Company shall assume that the
Company's performance and all other relevant factors for all future
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fiscal years will be the same as for the fiscal year prior to the
fiscal year in which the Change in Control occurs.
(3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be
provided for 30 months following Employee's Termination Date rather
than for the period specified in Section 8(c). In lieu of all fringe
benefits other than those referred to in Sections 8(b)(3) and (4),
Employee shall receive a lump sum payment equal to 20% of Employee's
Base Salary as set forth in Section 3 as it may be increased from time
to time.
(4) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable and which do not become exercisable pursuant to
Section 8(b)(5), shall on the Notice Date automatically become
exercisable and shall remain exercisable for 90 days thereafter.
(5) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which on the Notice Date are subject to
restrictions which do not lapse pursuant to Section 8(b)(6) shall, as
of that date, automatically become free of all restrictions.
Company shall amend, if necessary, any option or restricted stock agreements
entered into between Company and Employee to be consistent with paragraphs (4)
and (5).
(h) OTHER AGREEMENTS
On execution of this Agreement, the letter agreement between Employee and
Company concerning change in control benefits dated as of March 16, 1999 shall
be null and void and of no further force or effect. Nothing in this Agreement is
intended to modify any change of control provisions or protections provided to
Employee by the SERP.
(i) LEGAL EXPENSES
If Employee, at any time, takes any legal action against Company for breach
of this Section 9 or Section 10, Company shall reimburse Employee for all costs
and expenses incurred by Employee to pursue such legal action, regardless of the
outcome, unless the arbitrators appointed pursuant to Section 12(d) find
Employee's action to have been frivolous and without merit. Although the dispute
resolution provisions of Section 12 shall apply to any legal action involving a
breach of this Section 9 and Section 10, the provisions of this Section 9(i)
shall supersede conflicting provisions of Section 12(e).
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10. EXCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes significant tax
burdens on Employee and Company if the total amounts received by Employee due to
a Change in Control exceed prescribed limits. These tax burdens include a
requirement that Employee pay a 20% excise tax on certain amounts received in
excess of the prescribed limits and a loss of deduction for Company. If, as a
result of these Code provisions, Employee is required to pay such excise tax,
then upon written notice from Employee to Company, Company shall pay Employee an
amount equal to the total excise tax imposed on Employee (including the excise
tax on reimbursements due pursuant to this sentence and the excise taxes on any
federal and state tax reimbursements due pursuant to the next sentence). If
Company is obligated to pay Employee pursuant to the preceding sentence, Company
also shall pay Employee an amount equal to the "total presumed federal and state
taxes" that could be imposed on Employee with respect to the excise tax
reimbursements due to Employee pursuant to the preceding sentence and the
federal and state tax reimbursements due to Employee pursuant to this sentence.
For purposes of the preceding sentence, the "total presumed federal and states
taxes" that could be imposed on Employee shall be conclusively calculated using
a combined tax rate equal to the sum of (a) the highest individual income tax
rate in effect under (i) Federal tax law and (ii) the tax laws of the state in
which Employee resides on the date that the payment under this Section 10 is
computed and (b) the hospital insurance portion of FICA. No adjustments will be
made in this combined rate for the deduction of state taxes on the federal
return, the loss of itemized deductions or exemptions, or for any other purpose.
Employee shall be responsible for paying the actual taxes. The amounts payable
to Employee pursuant to this or any other agreement or arrangement with Company
shall not be limited in any way by the amount that may be paid pursuant to the
Code without the imposition of an excise tax or the loss of Company deductions.
Either Employee or Company may elect to challenge any excise taxes imposed by
the Internal Revenue Service and Employee and Company agree to cooperate with
each other in prosecuting such challenges. If Employee elects to litigate or
otherwise challenge the imposition of such excise tax, however, Company will
join Employee in such litigation or challenge only if Company's General Counsel
determines in good faith that Employee's position has substantial merit and that
the issues should be litigated from the standpoint of Company's best interest.
11. COMPETITION
(a) RESTRICTIVE COVENANT
In consideration of Company's agreements contained herein and the payments
to be made by it to Employee pursuant hereto, Employee agrees that, during the
duration of this restrictive covenant Employee will not:
(1) Without the prior written consent of the Board of Directors of
Company, engage in a Competing Business within 100 miles of the
outer boundaries of any Standard Metropolitan Statistical Area
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(or such lesser geographical area as may be set by a court of
competent jurisdiction or an arbitrator) in which any of the
businesses of Company are being conducted on the date of
termination of this Agreement or within 100 miles of the outer
boundaries of any Standard Metropolitan Statistical Area (or such
lesser geographical area as may be set by a court of competent
jurisdiction or an arbitrator) in which the Company's strategic
plan or any replacement plan (the "Strategic Plan"), as in effect
on the earlier of the date of the competitive activity by
Employee or the date of termination of this Agreement, discusses
the possibility of Company conducting business within two years
following the date of termination of this Agreement; or
(2) Directly or indirectly, for Employee, or on behalf of, or in
conjunction with, any other person or entity, seek to hire and/or
hire any individual who was employed by Company or any Subsidiary
immediately prior to such hiring or solicitation or during the
prior one-year period.
(b) DURATION OF COVENANT
Generally, this restrictive covenant shall apply during the Initial Term
and any Renewal Term and for the one-year period following the date of
termination of this Agreement and any renewals thereof (or such lesser period as
may be set by a court of competent jurisdiction or an arbitrator). If the
Competing Business in which Employee engages or intends to engage is a business
involving the development or management of an age-restricted community, however,
the limitations of Section 11(a)(1) shall apply during the Initial Term, any
Renewal Term and for the two-year period following the date of the termination
of this Agreement and any renewals thereof (or such lesser period as may be set
by a court of competent jurisdiction or an arbitrator). This Restrictive
Covenant shall not apply should the Agreement terminate on or after the date on
which Employee attains age 65.
(c) REMEDIES; REASONABLENESS
Employee acknowledges and agrees that a breach by Employee of the
provisions of this Section will constitute such damage as will be irreparable
and the exact amount of which will be impossible to ascertain and, for that
reason, agrees that Company will be entitled to an injunction restraining and
enjoining Employee from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Employee.
Employee expressly acknowledges and agrees that (i) this Restrictive
Covenant is reasonable as to time and geographical area and does not place any
unreasonable burden upon Employee; (ii) the general public will not be harmed as
a result of enforcement of this restrictive covenant; and (iii) Employee
understands and hereby agrees to each and every term and condition of this
Restrictive Covenant.
(d) SURVIVAL OF PROVISION
Termination of this Agreement, whether by passage of time or any other
cause, shall not constitute a waiver of Company's rights under this Section 11,
nor a release of Employee from Employee's obligations thereunder.
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(e) COMPETING BUSINESS
For purposes of this Agreement, Employee shall be deemed to be engaged in a
"Competing Business" if, in any capacity, including but not limited to
proprietor, partner, officer, director, or employee, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity which
competes, in whole or in part, with the then actual business of Company or any
business contemplated by Company's Strategic Plan as in effect on the earlier of
the date of the competitive activity by Employee or the date of termination of
this Agreement. Indirect participation in the operation or ownership of any such
entity shall include any investment by Employee in any such entity, by way of
loan, guaranty, or stock ownership (other than ownership of 1% or less of any
class of equity or other securities of a company which is listed and regularly
traded on any national securities exchange or which is regularly traded
over-the-counter). Employee shall not be deemed to be engaged in a "Competing
Business" if, in any capacity enumerated above, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity where
Employee or the business entity in which Employee may be involved, either
directly or indirectly, and together with any related individuals or entities,
builds fewer than 25 homes per calendar year (with the number of homes to be
determined by the number of permits pulled for such homes). At the written
request of Employee from time to time, Company shall furnish Employee with a
written description of the business or businesses in which Company is then
actively engaged.
(f) CHANGE IN CONTROL
The provisions of this Section shall lapse and be of no further force or
effect if Employee's employment is terminated by Company without Cause, or by
Employee for Good Reason following a Change in Control, or if Company gives
notice that it is involved in voluntary liquidation proceedings pursuant to
Chapter 7 of the United States Bankruptcy Code (11 U.S.C. ss.701 et seq.) or
that the trustee has been ordered by the United States Bankruptcy Court,
pursuant to a final and non-appealable order, to cease Company's operations
pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code.
12. DISPUTE RESOLUTION
(a) MEDIATION
Any and all disputes arising under, pertaining to or touching upon this
Agreement or the statutory rights or obligations of either party hereto, shall,
if not settled by negotiation, be subject to non-binding mediation. Excepted
from this Section 12 is the right of Company or Employee to seek preliminary
judicial relief with respect to a dispute should such action be necessary to
avoid immediate, irreparable harm or damage pending the proceedings provided for
in this Section 12. Mediation shall be before an independent mediator selected
by the parties pursuant to Section 12(d). Any demand for mediation shall be made
in writing and served upon the other party to the dispute, by certified mail,
return receipt requested, at the address specified in Section 16. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties in Maricopa County, Arizona, within 30 days of the date of
selection or appointment of the mediator.
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(b) ARBITRATION
In the event that the dispute is not settled through mediation, the parties
shall then proceed to binding arbitration before a panel of three independent
arbitrators selected pursuant to Section 12(d). The mediator shall not serve as
an arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT
DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED
EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING
CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC
POLICY, SHALL BE RESOLVED PURSUANT TO THIS SECTION 12 AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION
12(a). The arbitration hearing shall occur at a time and place convenient to the
parties in Maricopa County, Arizona, within 30 days of selection or appointment
of the last of the three arbitrators. If Company has adopted a policy that is
applicable to arbitrations with executives, the arbitration shall be conducted
in accordance with said policy to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. ss.ss. 1-16. If no such
policy has been adopted, the arbitration shall be governed by the then current
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association or its successor. Notwithstanding any provisions in such
rules to the contrary, the arbitrators shall issue findings of fact and
conclusions of law, and an award, within 15 days of the date of the hearing
unless the parties otherwise agree.
(c) DAMAGES
In case of breach of contract or policy, damages shall be limited to
contract damages. In cases of intentional discrimination claims prohibited by
statute, the arbitrators may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrators may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. ss.ss. 1-16, except that Court review of the arbitrators' award shall be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
The arbitrators may not award reinstatement. Instead, if the arbitrators
find that the termination by Company was not for Permanent Disability or not for
Cause or that the termination by Employee was for Good Reason, Employee shall
only be entitled to the Severance Benefits provided by Section 8 (or the special
Change in Control severance benefits provided by Section 9 in the event of a
Change in Control), and, in either case, payment of Employee's reasonable legal
expenses in such arbitration. Until a final, binding determination has been
entered relieving Company of its duty to provide payments hereunder, Company
shall pay Employee all amounts to which Employee would be entitled under Section
8 if a Change in Control has not occurred or Section 9 if a Change in Control
has occurred, calculated in either case on the assumption that Employee's
employment had been terminated without Cause.
(d) SELECTION OF MEDIATOR OR ARBITRATORS
The parties shall select the mediator from a panel list made available by
the Association. If the parties are unable to agree to a mediator within ten
days of receipt of a demand for mediation, the mediator will be chosen by
alternatively striking from a list of five mediators obtained by Company from
the Association. Employee shall have the first strike.
The parties also shall select the arbitrators from a panel list made
available by the Association. Company and Employee each shall select one
arbitrator from such panel list within ten days of receipt of such list. After
Company and Employee have each selected an arbitrator, the two arbitrators so
selected shall select the third arbitrator from such list within the next ten
days.
(e) EXPENSES
The costs and expenses of any mediator shall be borne by Company. The costs
and expenses of any arbitration shall be borne by the losing party, unless the
arbitrator allocates such costs and expenses in a different manner in the
arbitration award.
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13. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon Company,
its successors and assigns, including but not limited to any corporation,
person, or other entity which may acquire all or substantially all of the assets
and business of Company or any corporation with or into which Company may be
consolidated or merged, and Employee, Employee's heirs, executors,
administrators, and legal representatives, provided that the obligations of
Employee may not be delegated.
14. NON-DISPARAGEMENT
Employee will not publicly disparage Company or its officers, directors,
employees, or agents and will refrain from any action which would reasonably be
expected to cause material adverse public relations or embarrassment to Company
or to any of such persons. Similarly, Company (including its officers,
directors, employees, and agents) will not disparage Employee and will refrain
from any action which would reasonably be expected to result in embarrassment to
Employee or to materially and adversely affect Employee's opportunities for
employment. The preceding two sentences shall not apply to statements or
allegations made in any pleading filed in connection with any legal proceeding
or to disclosures required by applicable law, regulation, or order of court or
governmental agency.
15. OTHER AGREEMENTS OF EMPLOYEE
Employee represents that the execution and performance of this Agreement
will not result in a breach of any of the terms and conditions of any employment
or other agreement between Employee and any third party.
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16. NOTICES
All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid:
If to Company, to: Del Webb Corporation
6001 North 24th Street
Phoenix, Arizona 85016
Attention: General Counsel
If to Employee, to: John A. Spencer
10426 N. 44th St.
Phoenix, AZ 85028
Either party may change the address to which notices are to be sent to it by
giving 10 days' written notice of such change of address to the other party in
the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
17. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Employee and Company with respect to the
relationship of Employee with Company.
18. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Arizona.
19. CAPTIONS
The captions included herein are for convenience and shall not constitute a
part of this Agreement.
20. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Employee and Company.
21. MITIGATION
In the event that Employee's employment is terminated and payments become
due to Employee pursuant to this Agreement, Employee shall have no duty to
mitigate damages or to become re-employed by another employer.
22. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Employee's employment relationship with Company in the absence of
an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
23. NO CONSTRUCTION AGAINST COMPANY
This Agreement is the result of negotiation between Company and Employee
and both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Employee, regardless of which party drafted the
provision at issue.
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DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Its:
------------------------------------
COMPANY
/s/ John A. Spencer
----------------------------------------
John A. Spencer EMPLOYEE
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DEL WEBB CORPORATION
CHARLES T. ROACH
EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 1st
day of January, 2000 between DEL WEBB CORPORATION, a Delaware corporation (the
"Company"), and Charles T. Roach (the "Employee").
1. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
2. TERM OF AGREEMENT; DUTIES
(a) INITIAL TERM; RENEWAL; EMPLOYMENT PERIOD DEFINED
Employee shall be employed by Company for the duties set forth below for
the period beginning as of January 1, 2000 and ending on December 31, 2000 (the
"Initial Term"), unless sooner terminated in accordance with the provisions of
this Agreement. This Agreement shall be automatically renewed at the end of the
Initial Term for additional one-year periods commencing on each January 1 and
ending on the next following December 31 ( a "Renewal Term"), unless either
party serves notice of desire to terminate or modify this Agreement on the
other. Such notice must be given at least 30 days before the end of the Initial
Term or the applicable Renewal Term.
The period of time commencing as of the first day of the Initial Term and
ending on the effective date of the termination of employment of Employee under
this or any successor agreement shall be referred to as the "Employment Period".
(b) DUTIES
Employee shall be employed as Senior Vice President. As Senior Vice
President, Employee shall act as General Manager, Sun Cities Phoenix, and shall
oversee the operations of Sunflower and Sun City Georgetown. Employee's
responsibilities shall include, but are not limited to, the duties and
responsibilities described in the Job Description on file with Company;
recognizing, however, that the Job Description may from time to time not reflect
the responsibilities of the Employee, because the Job Description is updated
only periodically. Employee also shall perform such additional duties related to
the business and affairs of Company and its Subsidiaries as may be delegated to
Employee from time to time by the Board of Directors of Company (the "Board") or
Company's Chief Executive Officer. Any additional duties delegated to Employee
shall be reasonably consistent with Employee's position. For purposes of this
Agreement, the term "Subsidiary" shall mean any corporation, partnership, joint
venture, or other entity in which Company directly or indirectly has a 20% or
greater equity interest.
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(c) EMPLOYEE COMMITMENTS
Employee agrees that Employee will faithfully, industriously, and to the
best of Employee's ability, experience, and talents, perform all of the duties
that may be required of and from Employee and fulfill all of Employee's
responsibilities hereunder pursuant to the express and explicit terms hereof, to
the reasonable satisfaction of the Board and the Chief Executive Officer of
Company. Employee also agrees that Employee will devote substantially all of
Employee's undivided time, attention, knowledge, and skills, during customary
business hours, to the business and interests of Company, subject to such
reasonable vacations and sick leave as are provided under the general policies
of Company, as they may exist from time to time, and consistent with past
practice.
(d) OTHER PROGRAMS
As a general rule, this Agreement is intended to supplement and enhance the
rights and benefits available to Employee as a senior executive officer of the
Company. Accordingly, unless this Agreement or any other agreement or plan of
Company specifically indicates otherwise, none of the rights and benefits
provided to Employee pursuant to this Agreement are intended to replace the
rights and benefits made available generally to other senior executive officers
of the Company.
3. COMPENSATION
Employee shall receive the following compensation for services:
(a) BASE SALARY
Employee shall receive "Base Salary" at the rate of $265,000 per year. Base
Salary shall be payable as nearly as possible in equal bi-weekly installments
(or in such other installments as the Company shall determine). The Base Salary
may be adjusted from time to time in accordance with the procedures established
by Company for salary adjustments for executive officers.
(b) INCENTIVE AND BENEFIT PLANS
Employee shall participate in any incentive compensation plans maintained
by the Company for "Senior Executive Officers", as such term is defined below.
For the 2000 fiscal year, Employee's "Target Bonus," as that term is customarily
used in conjunction with the Company's Annual Management Incentive Plan (the
"MIP"), shall be 65% of Employee's Base Salary, with the actual amount of the
bonus payment to be determined in accordance with all of the terms and
provisions of the MIP, as it may be amended from time to time. The Employee's
Target Bonus, and all other terms and conditions of Employee's participation in
the MIP (including other bonus levels and performance goals) may be changed from
time to time by the Company's Board of Directors or a Committee thereof in the
exercise of its discretion. Employee also shall have the right to participate in
any and all pension or profit sharing plans, stock purchase plans, executive
retirement plans, any annuity or group benefit plans and any medical plans and
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other benefit plans that are now or in the future may be maintained by Company
for its Senior Executive Officers, all in accordance with the terms and
conditions of the plans. Company will provide Employee with an automobile and an
active membership in a country club of Employee's choice in accordance with the
policies and practices applicable to Senior Executive Officers. The automobile
and country club policies for Senior Executive Officers may be modified from
time to time. For purposes of this Agreement, the term "Senior Executive
Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice
President or Vice President.
(c) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Employee is a participant in the Company's Supplemental Executive
Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be
entered into between Employee and Company pursuant to which Employee shall
receive enhanced treatment for purposes of the SERP.
4. CONFIDENTIALITY
Employee covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or corporation, without the express written consent
of Company, any and all of Company's or any Subsidiary's "Confidential
Information". The term "Confidential Information" includes, but is not limited
to, information and documents concerning Company's or any Subsidiary's business,
customers, and suppliers, market methods, files, trade secrets, or other
"know-how" or techniques or information not of a published nature which shall
come into Employee's possession, knowledge, or custody concerning the business
of Company or any Subsidiary, except as such disclosure may be required by law
or in connection with Employee's employment hereunder. The term "Confidential
Information" does not include any material that Company has already disclosed to
the public and is in the public domain. This covenant and agreement of Employee
shall survive this Agreement and continue to be binding upon Employee after the
expiration or termination of this Agreement, whether by passage of time or
otherwise so long as such information and data shall remain confidential.
Employee acknowledges that, in the event of Employee's breach of the
confidentiality provisions of this Section 4, money damages will not
sufficiently compensate Company or the applicable Subsidiary for its injury.
Employee accordingly agrees that in addition to such money damages, Employee may
be restrained and enjoined from continuing breach of the provisions of this
Section 4 without any bond or other security. Employee also acknowledges that
any breach of this Section 4 would result in irreparable damage to Company or
the applicable Subsidiary.
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5. TERMINATION DUE TO DEATH OR DISABILITY
(a) DEATH
This Agreement shall terminate upon Employee's death. Employee's estate
shall be entitled to receive the Base Salary due through the date of Employee's
death. In addition, Employee's Base Salary (as determined pursuant to Section 3)
as in effect at the time of Employee's death will be continued for a period of
12 calendar months following the date of Employee's death. The continued salary
payments will be made to Employee's spouse, if Employee is married and living
with Employee's spouse on the date of death. If Employee is not married and
living with Employee's spouse on the date of death, the continued salary
payments will be made to Employee's estate. Payments under this paragraph may be
made to a designated beneficiary, in lieu of Employee's estate, where Employee
has made a written request to Company designating a beneficiary, and the
Company, in its discretion, has approved the requested designation made by
Employee. The death benefit provided pursuant to this Section 5 replaces and
supersedes any Executive Spouse Benefit provided generally to executives of
Company.
(b) PERMANENT DISABILITY
At Company's option, this Agreement also shall terminate in the event of
Employee's "Permanent Disability" upon notice in writing to Employee to that
effect. For purposes of this Agreement, "Permanent Disability" shall mean that
because of physical or mental illness or disability, with or without
accommodation, Employee shall have been continuously unable to perform
Employee's duties hereunder for a consecutive period of 180 days.
If this Agreement is terminated due to Employee's Permanent Disability,
Employee shall receive the Severance Benefits provided by Section 8.
(c) SALARY CONTINUATION
If Employee is absent from work and unable to perform Employee's duties due
to physical or mental illness or disability, Employee shall continue to receive
Base Salary until such time as this Agreement is terminated. Company may not
terminate Employee's Agreement without Cause pursuant to Section 6(c) during the
period of absence. Rather, Company may only terminate this Agreement because of
Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section
6(a). The period of time during which Employee's Base Salary is continued
pursuant to this Section 5(c) shall be charged against Employee's available sick
leave and then against Employee's available vacation.
(d) LAPSE OF PROVISIONS
This Section 5 shall cease to apply following the termination of Employee's
employment pursuant to Sections 6, 7, or 9.
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6. TERMINATION BY COMPANY
(a) TERMINATION FOR CAUSE
Company may terminate this Agreement for "Cause" upon written notice to
Employee. If Company terminates this Agreement for "Cause", Employee shall be
entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
(b) "CAUSE" DEFINED
Termination of this Agreement for "Cause" shall mean (i) breach of any
material provision of this Agreement by Employee which is not cured within a
reasonable time after receipt by Employee of written notice of such breach from
Company, or (ii) conviction, by a court of competent jurisdiction, of Employee
of any felony or any other crime involving gross depravity or dishonesty.
(c) TERMINATION WITHOUT CAUSE
Termination of this Agreement by Company for reasons other than (i) death,
(ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial
Term or any Renewal Term shall be referred to as a termination "without Cause."
If this Agreement is terminated without Cause, Employee is entitled to receive
30 days advance written notice. This Agreement shall continue during such notice
period. The termination of this Agreement shall be effective on the 30th day
(the "Termination Date") following the day on which the notice is given (the
"Notice Date"). In the exercise of its discretion, the Company may place
Employee on a paid administrative leave during all or any part of the 30-day
notice period. During such administrative leave, Company may bar Employee from
access to any Company facility or may allow such access on such terms as Company
deems appropriate. If this Agreement is terminated without Cause, Employee shall
be entitled to receive the Severance Benefits provided by Section 8.
7. TERMINATION BY EMPLOYEE
(a) GENERAL
Employee may terminate this Agreement at any time, with or without "Good
Reason". If Employee terminates this Agreement without "Good Reason," Employee
shall provide Company with 60 days advance written notice. If Employee
terminates this Agreement with Good Reason, Employee shall provide Company with
30 days advance written notice, which notice shall clearly identify the action
or omission that Employee claims gives rise to Good Reason for termination of
this Agreement. In order to terminate this Agreement for Good Reason, the notice
of termination must be given to Company by Employee within 30 days of Employee's
receipt of notice, whether written or oral, or actual knowledge of the action or
omission that gave rise to Employee's Good Reason for termination. The
termination of this Agreement shall be effective on the last day of the required
notice period (the "Termination Date"). In the exercise of its discretion, the
Company may place Employee on a paid administrative leave during all or any part
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of the 30-day or 60-day notice period. During such administrative leave, the
Company may bar Employee from access to any Company facility or may allow such
access on such terms as Company deems appropriate.
(b) GOOD REASON DEFINED
For purposes of this Agreement, "Good Reason" shall mean and include any of
the following:
(1) Without Employee's express written consent, the assignment to
Employee of any duties that are not reasonably consistent with
Employee's positions, duties, responsibilities, and status with
Company as in effect on the "Relevant Date", or demotion, or a
change in Employee's titles or offices as in effect on the
Relevant Date (except as specifically contemplated by this
Agreement), or any removal of Employee from or any failure to
re-appoint or re-elect Employee to any of such positions, except
in connection with the termination of this Agreement for Cause,
Permanent Disability, as a result of Employee's death, by
Employee other than for Good Reason, or by Company upon the
expiration of the Initial Term or any applicable Renewal Term.
(2) A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time, other than a reduction of no more than 15% which applies to
all Senior Executive Officers of Company.
(3) The taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any thrift, incentive, or compensation plan, or
any pension, life insurance, health and accident or disability
plan in which Employee is participating on the Relevant Date,
whether such plan is qualified for favorable tax treatment or
otherwise, unless a comparable replacement program is offered to
Employee or unless such action applies to all Senior Executive
Officers.
(4) The termination of this Agreement by Company without Cause or any
attempted termination by Company purportedly for Cause if it is
thereafter determined that Cause did not exist under this
Agreement with respect to the termination.
(5) Breach of any material provisions of this Agreement by Company.
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For purposes of this Section 7, the "Relevant Date" is the date of execution of
this Agreement. For purposes of Section 9 , the "Relevant Date" is the date
specified in Section 9(e).
(c) COMPANY MAY CURE GOOD REASON
Within the 30 day notice period called for by Section 7(a), Company may
rescind or otherwise cure any action or omission relied upon by Employee as
constituting Good Reason for termination. If Company rescinds or otherwise cures
such action or omission within this period, Employee's notice of termination
will be automatically withdrawn and this Agreement will continue.
(d) EFFECT OF GOOD REASON TERMINATION
If Employee terminates this Agreement for Good Reason, Employee shall be
entitled to receive the Severance Benefits provided by Section 8 to the same
extent as if this Agreement had been terminated by Company without Cause.
(e) EFFECT OF TERMINATION WITHOUT GOOD REASON
If Employee terminates this Agreement without Good Reason, Employee shall
be entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
8. SEVERANCE BENEFITS
(a) ELIGIBILITY
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if Employee's employment is terminated due to
Permanent Disability pursuant to Section 5(b), if this Agreement is terminated
by Company without Cause pursuant to Section 6(c), or if this Agreement is
terminated by Employee for Good Reason pursuant to Section 7. In addition,
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if the Company notifies Employee of its desire to
terminate this Agreement pursuant to Section 2(a) and at the time such notice is
given the Company does not have "Cause" to terminate Employee's employment
pursuant to Section 6. Similarly, if Company notifies Employee of its desire to
modify this Agreement and such modification provides Employee with "Good Reason"
to terminate this Agreement pursuant to Section 7 and Employee rejects such
modification, Employee shall be entitled to receive the Severance Benefits
called for by paragraph (b).
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(b) SEVERANCE BENEFITS
The "Severance Benefits" to which an eligible Employee shall be entitled
pursuant to this section are limited to the following payments, benefits and
reimbursements, which will continue throughout the "Severance Period" referred
to in Section 8(c):
Company will continue to pay Employee Employee's Base Salary as set forth
in Section 3 (or as it may be adjusted from time to time), in equal
bi-weekly installments.
(2) Company also shall make a single "Incentive Compensation Payment" to
Employee. The "Incentive Compensation Payment" shall equal the amount
that would have been payable to Employee pursuant to all of the terms
and provisions of the Company's MIP, as it may be amended or replaced
from time to time, had Employee's employment continued until the end
of the fiscal year of the Company in which Employee's Termination Date
occurs. (This payment shall be in addition to any payment for a prior
fiscal year which has not yet been paid.) For purposes of calculating
the amount that would have been due to Employee pursuant to the MIP
(i) any provision of the MIP requiring continued employment will be
disregarded; (ii) the Company shall assume that Employee's Base Salary
would continue throughout the end of such fiscal year at the same rate
in effect on the Termination Date; (iii) the actual performance of the
Company shall be utilized; (iv) the Company shall assume that any
subjective performance criteria or requirements were satisfied; and
(v) all other factors impacting the calculation of the amounts due
will be determined by the Company's Board of Directors or a Committee
thereof in the exercise of its discretion. The Incentive Compensation
Payment will be paid at the same time as similar payments are paid to
active employees. The Employee shall not be entitled to receive any
compensation or grants pursuant to the Company's Long Term Incentive
Plan, or any successor plan or program, following the Termination
Date.
Company also intends that life, disability, accident and group health
benefits and coverages (each an "Insurance Benefit" and collectively
the "Insurance Benefits") substantially similar to those which
Employee was receiving immediately prior to the Notice Date be made
available to Employee following the Notice Date, but Company does not
intend to duplicate Insurance Benefits provided by a successor
employer. If and to the extent that and so long as such Insurance
Benefits (or an Insurance Benefit) is not provided by a successor
employer, Company will arrange to provide such Insurance Benefit or
Insurance Benefits to Employee at a cost to Employee of not more than
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the cost to Employee of similar coverage immediately prior to the
Notice Date. If an Insurance Benefit is not provided by a successor
employer and Company, after a good faith effort, is unable to provide
continued coverage to Employee with respect to one or more of such
Insurance Benefits because of restrictions imposed by any insurance
carrier that provides such Insurance Benefit or Benefits, in lieu of
the unavailable Insurance Benefit or Benefits Company may pay Employee
a monthly amount equal to 150% of the Company's share of the cost of
providing such unavailable Insurance Benefit or Benefits to comparable
executives in comparable circumstances. Such cost shall be determined
conclusively by Company. Employee shall provide Company with such
information concerning the Insurance Benefits provided to
Employee by a successor employer as Company shall reasonably request
and Company may decline to provide any Insurance Benefits to Employee
unless and until Employee provides such information. Whether a
particular Insurance Benefit provided by a successor employer is
"substantially similar" to a benefit provided to Employee prior to the
Notice Date shall be determined by Company in the exercise of its
discretion.
(4) Company will continue to provide Employee with an automobile and an
active membership in a country club in accordance with Section 3(b)
and the policies and practices applicable to Senior Executive
Officers, as such policies may be modified from time to time.
(5) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable but which would become exercisable within 12
months from the Termination Date if Employee's employment were
continued, shall on the Notice Date automatically become exercisable
and shall remain exercisable for 90 days thereafter.
(6) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which are subject to restrictions on the Notice
Date shall, as of the Notice Date, automatically become free of all
restrictions if and to the extent that such restrictions would have
lapsed within 12 months of the Termination Date if Employee's
employment were continued.
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(c) SEVERANCE PERIOD
The Severance Benefits will continue throughout the "Severance Period."
Generally, the Severance Period will be the 12 month period beginning on the
Termination Date. If the Severance Benefits are due because this Agreement was
not renewed by the Company, the Severance Period will be the 12 month period
beginning on Employee's last day of active work.
(d) COBRA
Employee has the right to continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA
continuation period shall commence on Employee's Termination Date, but Company
may be obligated to pay a portion of the cost of continued health care coverage
during the Severance Period pursuant to Section 8(b)(3).
9. CHANGE IN CONTROL OF COMPANY
(a) GENERAL
The Board recognizes that the continuing possibility of a "Change in
Control" of Company is unsettling to Employee and other senior executives of
Company. Therefore, the arrangements set forth below are being made to help
assure a continuing dedication by Employee to Employee's duties to Company,
notwithstanding the occurrence or potential occurrence of a "Change in Control."
In particular, the Board believes it important, should Company receive proposals
from third parties with respect to its future, to enable Employee, without being
influenced by the uncertainties of Employee's own situation, to assess and
advise the Board whether such proposals would be in the best interests of
Company and its stockholders and to take such other action regarding such
proposals as the Board might determine to be appropriate. The Board also wishes
to demonstrate to executives of Company that Company is concerned with the
welfare of its executives and intends to see that loyal executives are treated
fairly.
(b) ELIGIBILITY TO RECEIVE A SEVERANCE BENEFIT
In view of the foregoing and in further consideration of Employee's
continued employment with Company, Company agrees that if a Change in Control of
Company occurs during the Initial Term or any Renewal Term Employee shall be
entitled to the special severance benefits provided in subparagraph (g) of this
Section 9 if prior to the expiration of 24 months after the Change in Control of
Company Employee terminates Employee's employment with Company for Good Reason
or Company terminates Employee's employment without Cause. If Employee triggers
the application of this Section by terminating employment for Good Reason,
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Employee must do so within 120 days following Employee's actual knowledge or
receipt of notice, whether written or oral, of the occurrence of the last event
that constitutes Good Reason.
(c) PERMANENT DISABILITY
Any attempted termination of Employee's employment by Company for reasons
of Permanent Disability pursuant to Section 5(b) following a Change in Control
shall be treated as a termination by Company without Cause unless Employee is
approved for and receives long term disability payments under Company's long
term disability plan. In addition, following a Change in Control this Agreement
may not be terminated pursuant to Section 5(b) due to Employee's Permanent
Disability unless the incapacity giving rise to the Permanent Disability occurs
prior to the occurrence of an event that might cause amounts to be payable to
Employee pursuant to this Section 9. Once payments begin pursuant to this
Section 9, this Agreement may not be terminated by Company pursuant to Section
5(b) due to Permanent Disability and any payments due pursuant to this Section 9
shall not cease or diminish on account of Employee's Permanent Disability.
(d) CHANGE IN CONTROL DEFINED
For purposes of this Agreement, a "Change in Control" shall include both an
"Actual Change in Control" and a "Potential Change in Control".
An "Actual Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the stockholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding Voting Securities (as defined below);
or
(2) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
Company and any new director whose election by the Board of
Directors or nomination for election by Company's stockholders
was approved by a vote of at least two-thirds of the directors
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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
(3) The stockholders of Company approve a merger or consolidation of
Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of
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
Company or such surviving entity outstanding immediately after
such merger or consolidation; or
(4) The stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or
disposition by Company of (in one transaction or a series of
transactions) all or substantially all Company's assets.
A "Potential Change in Control" shall be deemed to have occurred in any or
all of the following instances:
Company enters into an agreement, the consummation of which would
result in the occurrence of an Actual Change in Control;
Any person (including Company) publicly announces an intention to
take or to consider taking actions which if consummated would
constitute a Change in Control;
(3) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership
of stock of Company who is or becomes the beneficial owner,
directly or indirectly, of securities of Company representing 10%
or more of the combined voting power of the Company's then
outstanding Voting Securities, increases such person's beneficial
ownership of such securities by five percentage points (5%) or
more over the percentage so owned by such person; or
(4) The Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
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For purposes of this Section, the term "Voting Securities" shall mean and
include any securities of the Company which vote generally for the election of
directors.
(e) GOOD REASON DEFINED
For purposes of this Section, "Good Reason" shall have the meaning assigned
to it in Section 7, with the following modifications:
(1) The "Relevant Date" shall be the day prior to the Change in
Control.
(2) Paragraph (2) of Section 7(b) shall read as follows:
A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time.
(3) Paragraph (3) of Section 7(b) shall read as follows:
The failure by Company to continue in effect any thrift,
incentive, or compensation plan, or any pension, life insurance,
health and accident or disability plan in which Employee is
participating on the Relevant Date, whether such plan is
qualified for favorable tax treatment or otherwise, (or plans
providing Employee with substantially similar benefits), the
taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee as of the Relevant
Date or any later date, or the failure of the Company to provide
Employee with the number of paid vacation days to which Employee
is then entitled on the basis of Employee's years of service with
the Company in accordance with the Company's normal vacation
policy as in effect on the Relevant Date;
(4) Two additional elements of Good Reason shall be added as follows:
(6) Employee is assigned to, or Company's office at which
Employee is principally employed on the Relevant Date is
relocated to, a location which would require a round-trip
commute to work from Employee's principal residence on the
Relevant Date of more than 100 miles per day.
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(7) Failure of Company to obtain an agreement satisfactory to
Employee from any successor to the business, or
substantially all the assets, of Company to assume this
Agreement or issue a substantially similar agreement.
(f) NOTICE OF TERMINATION BY EMPLOYEE
Any termination by Employee under this Section 9 shall be communicated by
written notice to Company which shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination.
(g) EFFECT OF TERMINATION; SPECIAL SEVERANCE BENEFITS
If Employee is entitled to receive a special severance benefit pursuant to
Section 9(b) hereof, Company will provide Employee with the following special
severance benefits in addition to the Severance Benefits to which Employee is
entitled pursuant to Section 8:
Within five days following Employee's termination, a lump sum
severance payment will be made to Employee. The lump sum severance
payment shall be in an amount equal to: (i) 2.5 times Employee's
yearly Base Salary as set forth in Section 3 or as it may be increased
from time to time; plus (ii) the greatest of (a) 2.5 times the average
annual incentive compensation paid to Employee pursuant to the MIP (or
any predecessor or successor plan) during the five fiscal years
preceding the fiscal year in which the Change in Control occurs, or
(b) an amount equal to 100% of the incentive compensation paid to
Employee pursuant to the MIP (or any predecessor or successor plan)
during the 12 month period prior to the Termination Date, or (c) an
amount equal to 35% of Employee's Base Salary as set forth in Section
3 or as it may be increased from time to time; minus (iii) the total
amounts due to Employee, if any, pursuant to Sections 8(b)(1) and (2).
(2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2) will
be accelerated and paid to Employee in one lump sum within five days
following Employee's termination without any discount for early
payment. For purposes of calculating the amounts due to Employee
pursuant to Section 8(b)(2) the Company shall assume that the
Company's performance and all other relevant factors for all future
fiscal years will be the same as for the fiscal year prior to the
fiscal year in which the Change in Control occurs.
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(3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be
provided for 30 months following Employee's Termination Date rather
than for the period specified in Section 8(c). In lieu of all fringe
benefits other than those referred to in Sections 8(b)(3) and (4),
Employee shall receive a lump sum payment equal to 20% of Employee's
Base Salary as set forth in Section 3 as it may be increased from time
to time.
(4) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable and which do not become exercisable pursuant to
Section 8(b)(5), shall on the Notice Date automatically become
exercisable and shall remain exercisable for 90 days thereafter.
(5) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which on the Notice Date are subject to
restrictions which do not lapse pursuant to Section 8(b)(6) shall, as
of that date, automatically become free of all restrictions.
Company shall amend, if necessary, any option or restricted stock agreements
entered into between Company and Employee to be consistent with paragraphs (4)
and (5).
(h) OTHER AGREEMENTS
On execution of this Agreement, the letter agreement between Employee and
Company concerning change in control benefits dated as of March 23, 1999 shall
be null and void and of no further force or effect. Nothing in this Agreement is
intended to modify any change of control provisions or protections provided to
Employee by the SERP.
(i) LEGAL EXPENSES
If Employee, at any time, takes any legal action against Company for breach
of this Section 9 or Section 10, Company shall reimburse Employee for all costs
and expenses incurred by Employee to pursue such legal action, regardless of the
outcome, unless the arbitrators appointed pursuant to Section 12(d) find
Employee's action to have been frivolous and without merit. Although the dispute
resolution provisions of Section 12 shall apply to any legal action involving a
breach of this Section 9 and Section 10, the provisions of this Section 9(i)
shall supersede conflicting provisions of Section 12(e).
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10. EXCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes significant tax
burdens on Employee and Company if the total amounts received by Employee due to
a Change in Control exceed prescribed limits. These tax burdens include a
requirement that Employee pay a 20% excise tax on certain amounts received in
excess of the prescribed limits and a loss of deduction for Company. If, as a
result of these Code provisions, Employee is required to pay such excise tax,
then upon written notice from Employee to Company, Company shall pay Employee an
amount equal to the total excise tax imposed on Employee (including the excise
tax on reimbursements due pursuant to this sentence and the excise taxes on any
federal and state tax reimbursements due pursuant to the next sentence). If
Company is obligated to pay Employee pursuant to the preceding sentence, Company
also shall pay Employee an amount equal to the "total presumed federal and state
taxes" that could be imposed on Employee with respect to the excise tax
reimbursements due to Employee pursuant to the preceding sentence and the
federal and state tax reimbursements due to Employee pursuant to this sentence.
For purposes of the preceding sentence, the "total presumed federal and states
taxes" that could be imposed on Employee shall be conclusively calculated using
a combined tax rate equal to the sum of (a) the highest individual income tax
rate in effect under (i) Federal tax law and (ii) the tax laws of the state in
which Employee resides on the date that the payment under this Section 10 is
computed and (b) the hospital insurance portion of FICA. No adjustments will be
made in this combined rate for the deduction of state taxes on the federal
return, the loss of itemized deductions or exemptions, or for any other purpose.
Employee shall be responsible for paying the actual taxes. The amounts payable
to Employee pursuant to this or any other agreement or arrangement with Company
shall not be limited in any way by the amount that may be paid pursuant to the
Code without the imposition of an excise tax or the loss of Company deductions.
Either Employee or Company may elect to challenge any excise taxes imposed by
the Internal Revenue Service and Employee and Company agree to cooperate with
each other in prosecuting such challenges. If Employee elects to litigate or
otherwise challenge the imposition of such excise tax, however, Company will
join Employee in such litigation or challenge only if Company's General Counsel
determines in good faith that Employee's position has substantial merit and that
the issues should be litigated from the standpoint of Company's best interest.
11. COMPETITION
(a) RESTRICTIVE COVENANT
In consideration of Company's agreements contained herein and the payments
to be made by it to Employee pursuant hereto, Employee agrees that, during the
duration of this restrictive covenant Employee will not:
(1) Without the prior written consent of the Board of Directors of
Company, engage in a Competing Business within 100 miles of the
outer boundaries of any Standard Metropolitan Statistical Area
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(or such lesser geographical area as may be set by a court of
competent jurisdiction or an arbitrator) in which any of the
businesses of Company are being conducted on the date of
termination of this Agreement or within 100 miles of the outer
boundaries of any Standard Metropolitan Statistical Area (or such
lesser geographical area as may be set by a court of competent
jurisdiction or an arbitrator) in which the Company's strategic
plan or any replacement plan (the "Strategic Plan"), as in effect
on the earlier of the date of the competitive activity by
Employee or the date of termination of this Agreement, discusses
the possibility of Company conducting business within two years
following the date of termination of this Agreement; or
(2) Directly or indirectly, for Employee, or on behalf of, or in
conjunction with, any other person or entity, seek to hire and/or
hire any individual who was employed by Company or any Subsidiary
immediately prior to such hiring or solicitation or during the
prior one-year period.
(b) DURATION OF COVENANT
Generally, this restrictive covenant shall apply during the Initial Term
and any Renewal Term and for the one-year period following the date of
termination of this Agreement and any renewals thereof (or such lesser period as
may be set by a court of competent jurisdiction or an arbitrator). If the
Competing Business in which Employee engages or intends to engage is a business
involving the development or management of an age-restricted community, however,
the limitations of Section 11(a)(1) shall apply during the Initial Term, any
Renewal Term and for the two-year period following the date of the termination
of this Agreement and any renewals thereof (or such lesser period as may be set
by a court of competent jurisdiction or an arbitrator). This Restrictive
Covenant shall not apply should the Agreement terminate on or after the date on
which Employee attains age 65.
(c) REMEDIES; REASONABLENESS
Employee acknowledges and agrees that a breach by Employee of the
provisions of this Section will constitute such damage as will be irreparable
and the exact amount of which will be impossible to ascertain and, for that
reason, agrees that Company will be entitled to an injunction restraining and
enjoining Employee from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Employee.
Employee expressly acknowledges and agrees that (i) this Restrictive
Covenant is reasonable as to time and geographical area and does not place any
unreasonable burden upon Employee; (ii) the general public will not be harmed as
a result of enforcement of this restrictive covenant; and (iii) Employee
understands and hereby agrees to each and every term and condition of this
Restrictive Covenant.
(d) SURVIVAL OF PROVISION
Termination of this Agreement, whether by passage of time or any other
cause, shall not constitute a waiver of Company's rights under this Section 11,
nor a release of Employee from Employee's obligations thereunder.
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(e) COMPETING BUSINESS
For purposes of this Agreement, Employee shall be deemed to be engaged in a
"Competing Business" if, in any capacity, including but not limited to
proprietor, partner, officer, director, or employee, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity which
competes, in whole or in part, with the then actual business of Company or any
business contemplated by Company's Strategic Plan as in effect on the earlier of
the date of the competitive activity by Employee or the date of termination of
this Agreement. Indirect participation in the operation or ownership of any such
entity shall include any investment by Employee in any such entity, by way of
loan, guaranty, or stock ownership (other than ownership of 1% or less of any
class of equity or other securities of a company which is listed and regularly
traded on any national securities exchange or which is regularly traded
over-the-counter). Employee shall not be deemed to be engaged in a "Competing
Business" if, in any capacity enumerated above, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity where
Employee or the business entity in which Employee may be involved, either
directly or indirectly, and together with any related individuals or entities,
builds fewer than 25 homes per calendar year (with the number of homes to be
determined by the number of permits pulled for such homes). At the written
request of Employee from time to time, Company shall furnish Employee with a
written description of the business or businesses in which Company is then
actively engaged.
(f) CHANGE IN CONTROL
The provisions of this Section shall lapse and be of no further force or
effect if Employee's employment is terminated by Company without Cause, or by
Employee for Good Reason following a Change in Control, or if Company gives
notice that it is involved in voluntary liquidation proceedings pursuant to
Chapter 7 of the United States Bankruptcy Code (11 U.S.C. ss.701 et seq.) or
that the trustee has been ordered by the United States Bankruptcy Court,
pursuant to a final and non-appealable order, to cease Company's operations
pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code.
12. DISPUTE RESOLUTION
(a) MEDIATION
Any and all disputes arising under, pertaining to or touching upon this
Agreement or the statutory rights or obligations of either party hereto, shall,
if not settled by negotiation, be subject to non-binding mediation. Excepted
from this Section 12 is the right of Company or Employee to seek preliminary
judicial relief with respect to a dispute should such action be necessary to
avoid immediate, irreparable harm or damage pending the proceedings provided for
in this Section 12. Mediation shall be before an independent mediator selected
by the parties pursuant to Section 12(d). Any demand for mediation shall be made
in writing and served upon the other party to the dispute, by certified mail,
return receipt requested, at the address specified in Section 16. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties in Maricopa County, Arizona, within 30 days of the date of
selection or appointment of the mediator.
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(b) ARBITRATION
In the event that the dispute is not settled through mediation, the parties
shall then proceed to binding arbitration before a panel of three independent
arbitrators selected pursuant to Section 12(d). The mediator shall not serve as
an arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT
DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED
EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING
CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC
POLICY, SHALL BE RESOLVED PURSUANT TO THIS SECTION 12 AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION
12(a). The arbitration hearing shall occur at a time and place convenient to the
parties in Maricopa County, Arizona, within 30 days of selection or appointment
of the last of the three arbitrators. If Company has adopted a policy that is
applicable to arbitrations with executives, the arbitration shall be conducted
in accordance with said policy to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. ss.ss. 1-16. If no such
policy has been adopted, the arbitration shall be governed by the then current
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association or its successor. Notwithstanding any provisions in such
rules to the contrary, the arbitrators shall issue findings of fact and
conclusions of law, and an award, within 15 days of the date of the hearing
unless the parties otherwise agree.
(c) DAMAGES
In case of breach of contract or policy, damages shall be limited to
contract damages. In cases of intentional discrimination claims prohibited by
statute, the arbitrators may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrators may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. ss.ss. 1-16, except that Court review of the arbitrators' award shall be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
The arbitrators may not award reinstatement. Instead, if the arbitrators
find that the termination by Company was not for Permanent Disability or not for
Cause or that the termination by Employee was for Good Reason, Employee shall
only be entitled to the Severance Benefits provided by Section 8 (or the special
Change in Control severance benefits provided by Section 9 in the event of a
Change in Control), and, in either case, payment of Employee's reasonable legal
expenses in such arbitration. Until a final, binding determination has been
entered relieving Company of its duty to provide payments hereunder, Company
shall pay Employee all amounts to which Employee would be entitled under Section
8 if a Change in Control has not occurred or Section 9 if a Change in Control
has occurred, calculated in either case on the assumption that Employee's
employment had been terminated without Cause.
(d) SELECTION OF MEDIATOR OR ARBITRATORS
The parties shall select the mediator from a panel list made available by
the Association. If the parties are unable to agree to a mediator within ten
days of receipt of a demand for mediation, the mediator will be chosen by
alternatively striking from a list of five mediators obtained by Company from
the Association. Employee shall have the first strike.
The parties also shall select the arbitrators from a panel list made
available by the Association. Company and Employee each shall select one
arbitrator from such panel list within ten days of receipt of such list. After
Company and Employee have each selected an arbitrator, the two arbitrators so
selected shall select the third arbitrator from such list within the next ten
days.
(e) EXPENSES
The costs and expenses of any mediator shall be borne by Company. The costs
and expenses of any arbitration shall be borne by the losing party, unless the
arbitrator allocates such costs and expenses in a different manner in the
arbitration award.
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13. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon Company,
its successors and assigns, including but not limited to any corporation,
person, or other entity which may acquire all or substantially all of the assets
and business of Company or any corporation with or into which Company may be
consolidated or merged, and Employee, Employee's heirs, executors,
administrators, and legal representatives, provided that the obligations of
Employee may not be delegated.
14. NON-DISPARAGEMENT
Employee will not publicly disparage Company or its officers, directors,
employees, or agents and will refrain from any action which would reasonably be
expected to cause material adverse public relations or embarrassment to Company
or to any of such persons. Similarly, Company (including its officers,
directors, employees, and agents) will not disparage Employee and will refrain
from any action which would reasonably be expected to result in embarrassment to
Employee or to materially and adversely affect Employee's opportunities for
employment. The preceding two sentences shall not apply to statements or
allegations made in any pleading filed in connection with any legal proceeding
or to disclosures required by applicable law, regulation, or order of court or
governmental agency.
15. OTHER AGREEMENTS OF EMPLOYEE
Employee represents that the execution and performance of this Agreement
will not result in a breach of any of the terms and conditions of any employment
or other agreement between Employee and any third party.
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16. NOTICES
All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid:
If to Company, to: Del Webb Corporation
6001 North 24th Street
Phoenix, Arizona 85016
Attention: General Counsel
If to Employee, to: Charles T. Roach
1202 W. Aster
Phoenix, AZ 85029
Either party may change the address to which notices are to be sent to it by
giving 10 days' written notice of such change of address to the other party in
the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
17. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Employee and Company with respect to the
relationship of Employee with Company.
18. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Arizona.
19. CAPTIONS
The captions included herein are for convenience and shall not constitute a
part of this Agreement.
20. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Employee and Company.
21. MITIGATION
In the event that Employee's employment is terminated and payments become
due to Employee pursuant to this Agreement, Employee shall have no duty to
mitigate damages or to become re-employed by another employer.
22. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Employee's employment relationship with Company in the absence of
an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
23. NO CONSTRUCTION AGAINST COMPANY
This Agreement is the result of negotiation between Company and Employee
and both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Employee, regardless of which party drafted the
provision at issue.
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DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Its:
------------------------------------
COMPANY
/s/ Charles T. Roach
----------------------------------------
Charles T. Roach EMPLOYEE
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DEL WEBB CORPORATION
DAVID G. SCHREINER
EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 1st
day of January, 2000 between DEL WEBB CORPORATION, a Delaware corporation (the
"Company"), and David G. Schreiner (the "Employee").
1. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
2. TERM OF AGREEMENT; DUTIES
(a) INITIAL TERM; RENEWAL; EMPLOYMENT PERIOD DEFINED
Employee shall be employed by Company for the duties set forth below for
the period beginning as of January 1, 2000 and ending on December 31, 2000 (the
"Initial Term"), unless sooner terminated in accordance with the provisions of
this Agreement. This Agreement shall be automatically renewed at the end of the
Initial Term for additional one-year periods commencing on each January 1 and
ending on the next following December 31 ( a "Renewal Term"), unless either
party serves notice of desire to terminate or modify this Agreement on the
other. Such notice must be given at least 30 days before the end of the Initial
Term or the applicable Renewal Term.
The period of time commencing as of the first day of the Initial Term and
ending on the effective date of the termination of employment of Employee under
this or any successor agreement shall be referred to as the "Employment Period".
(b) DUTIES
Employee shall be employed as Senior Vice President. As Senior Vice
President, Employee shall act as General Manager, Sun City at Huntley, and shall
oversee the operations of Sun City Hilton Head and the Spruce Creek Communities.
Employee's responsibilities shall include, but are not limited to, the duties
and responsibilities described in the Job Description on file with Company;
recognizing, however, that the Job Description may from time to time not reflect
the responsibilities of the Employee, because the Job Description is updated
only periodically. Employee also shall perform such additional duties related to
the business and affairs of Company and its Subsidiaries as may be delegated to
Employee from time to time by the Board of Directors of Company (the "Board") or
Company's Chief Executive Officer. Any additional duties delegated to Employee
shall be reasonably consistent with Employee's position. For purposes of this
Agreement, the term "Subsidiary" shall mean any corporation, partnership, joint
venture, or other entity in which Company directly or indirectly has a 20% or
greater equity interest.
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(c) EMPLOYEE COMMITMENTS
Employee agrees that Employee will faithfully, industriously, and to the
best of Employee's ability, experience, and talents, perform all of the duties
that may be required of and from Employee and fulfill all of Employee's
responsibilities hereunder pursuant to the express and explicit terms hereof, to
the reasonable satisfaction of the Board and the Chief Executive Officer of
Company. Employee also agrees that Employee will devote substantially all of
Employee's undivided time, attention, knowledge, and skills, during customary
business hours, to the business and interests of Company, subject to such
reasonable vacations and sick leave as are provided under the general policies
of Company, as they may exist from time to time, and consistent with past
practice.
(d) OTHER PROGRAMS
As a general rule, this Agreement is intended to supplement and enhance the
rights and benefits available to Employee as a senior executive officer of the
Company. Accordingly, unless this Agreement or any other agreement or plan of
Company specifically indicates otherwise, none of the rights and benefits
provided to Employee pursuant to this Agreement are intended to replace the
rights and benefits made available generally to other senior executive officers
of the Company.
3. COMPENSATION
Employee shall receive the following compensation for services:
(a) BASE SALARY
Employee shall receive "Base Salary" at the rate of $250,000 per year. Base
Salary shall be payable as nearly as possible in equal bi-weekly installments
(or in such other installments as the Company shall determine). The Base Salary
may be adjusted from time to time in accordance with the procedures established
by Company for salary adjustments for executive officers.
(b) INCENTIVE AND BENEFIT PLANS
Employee shall participate in any incentive compensation plans maintained
by the Company for "Senior Executive Officers", as such term is defined below.
For the 2000 fiscal year, Employee's "Target Bonus," as that term is customarily
used in conjunction with the Company's Annual Management Incentive Plan (the
"MIP"), shall be 65% of Employee's Base Salary, with the actual amount of the
bonus payment to be determined in accordance with all of the terms and
provisions of the MIP, as it may be amended from time to time. The Employee's
Target Bonus, and all other terms and conditions of Employee's participation in
the MIP (including other bonus levels and performance goals) may be changed from
time to time by the Company's Board of Directors or a Committee thereof in the
exercise of its discretion. Employee also shall have the right to participate in
any and all pension or profit sharing plans, stock purchase plans, executive
retirement plans, any annuity or group benefit plans and any medical plans and
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other benefit plans that are now or in the future may be maintained by Company
for its Senior Executive Officers, all in accordance with the terms and
conditions of the plans. Company will provide Employee with an automobile and an
active membership in a country club of Employee's choice in accordance with the
policies and practices applicable to Senior Executive Officers. The automobile
and country club policies for Senior Executive Officers may be modified from
time to time. For purposes of this Agreement, the term "Senior Executive
Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice
President or Vice President.
(c) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Employee is a participant in the Company's Supplemental Executive
Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be
entered into between Employee and Company pursuant to which Employee shall
receive enhanced treatment for purposes of the SERP.
4. CONFIDENTIALITY
Employee covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or corporation, without the express written consent
of Company, any and all of Company's or any Subsidiary's "Confidential
Information". The term "Confidential Information" includes, but is not limited
to, information and documents concerning Company's or any Subsidiary's business,
customers, and suppliers, market methods, files, trade secrets, or other
"know-how" or techniques or information not of a published nature which shall
come into Employee's possession, knowledge, or custody concerning the business
of Company or any Subsidiary, except as such disclosure may be required by law
or in connection with Employee's employment hereunder. The term "Confidential
Information" does not include any material that Company has already disclosed to
the public and is in the public domain. This covenant and agreement of Employee
shall survive this Agreement and continue to be binding upon Employee after the
expiration or termination of this Agreement, whether by passage of time or
otherwise so long as such information and data shall remain confidential.
Employee acknowledges that, in the event of Employee's breach of the
confidentiality provisions of this Section 4, money damages will not
sufficiently compensate Company or the applicable Subsidiary for its injury.
Employee accordingly agrees that in addition to such money damages, Employee may
be restrained and enjoined from continuing breach of the provisions of this
Section 4 without any bond or other security. Employee also acknowledges that
any breach of this Section 4 would result in irreparable damage to Company or
the applicable Subsidiary.
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5. TERMINATION DUE TO DEATH OR DISABILITY
(a) DEATH
This Agreement shall terminate upon Employee's death. Employee's estate
shall be entitled to receive the Base Salary due through the date of Employee's
death. In addition, Employee's Base Salary (as determined pursuant to Section 3)
as in effect at the time of Employee's death will be continued for a period of
12 calendar months following the date of Employee's death. The continued salary
payments will be made to Employee's spouse, if Employee is married and living
with Employee's spouse on the date of death. If Employee is not married and
living with Employee's spouse on the date of death, the continued salary
payments will be made to Employee's estate. Payments under this paragraph may be
made to a designated beneficiary, in lieu of Employee's estate, where Employee
has made a written request to Company designating a beneficiary, and the
Company, in its discretion, has approved the requested designation made by
Employee. The death benefit provided pursuant to this Section 5 replaces and
supersedes any Executive Spouse Benefit provided generally to executives of
Company.
(b) PERMANENT DISABILITY
At Company's option, this Agreement also shall terminate in the event of
Employee's "Permanent Disability" upon notice in writing to Employee to that
effect. For purposes of this Agreement, "Permanent Disability" shall mean that
because of physical or mental illness or disability, with or without
accommodation, Employee shall have been continuously unable to perform
Employee's duties hereunder for a consecutive period of 180 days.
If this Agreement is terminated due to Employee's Permanent Disability,
Employee shall receive the Severance Benefits provided by Section 8.
(c) SALARY CONTINUATION
If Employee is absent from work and unable to perform Employee's duties due
to physical or mental illness or disability, Employee shall continue to receive
Base Salary until such time as this Agreement is terminated. Company may not
terminate Employee's Agreement without Cause pursuant to Section 6(c) during the
period of absence. Rather, Company may only terminate this Agreement because of
Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section
6(a). The period of time during which Employee's Base Salary is continued
pursuant to this Section 5(c) shall be charged against Employee's available sick
leave and then against Employee's available vacation.
(d) LAPSE OF PROVISIONS
This Section 5 shall cease to apply following the termination of Employee's
employment pursuant to Sections 6, 7, or 9.
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6. TERMINATION BY COMPANY
(a) TERMINATION FOR CAUSE
Company may terminate this Agreement for "Cause" upon written notice to
Employee. If Company terminates this Agreement for "Cause", Employee shall be
entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
(b) "CAUSE" DEFINED
Termination of this Agreement for "Cause" shall mean (i) breach of any
material provision of this Agreement by Employee which is not cured within a
reasonable time after receipt by Employee of written notice of such breach from
Company, or (ii) conviction, by a court of competent jurisdiction, of Employee
of any felony or any other crime involving gross depravity or dishonesty.
(c) TERMINATION WITHOUT CAUSE
Termination of this Agreement by Company for reasons other than (i) death,
(ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial
Term or any Renewal Term shall be referred to as a termination "without Cause."
If this Agreement is terminated without Cause, Employee is entitled to receive
30 days advance written notice. This Agreement shall continue during such notice
period. The termination of this Agreement shall be effective on the 30th day
(the "Termination Date") following the day on which the notice is given (the
"Notice Date"). In the exercise of its discretion, the Company may place
Employee on a paid administrative leave during all or any part of the 30-day
notice period. During such administrative leave, Company may bar Employee from
access to any Company facility or may allow such access on such terms as Company
deems appropriate. If this Agreement is terminated without Cause, Employee shall
be entitled to receive the Severance Benefits provided by Section 8.
7. TERMINATION BY EMPLOYEE
(a) GENERAL
Employee may terminate this Agreement at any time, with or without "Good
Reason". If Employee terminates this Agreement without "Good Reason," Employee
shall provide Company with 60 days advance written notice. If Employee
terminates this Agreement with Good Reason, Employee shall provide Company with
30 days advance written notice, which notice shall clearly identify the action
or omission that Employee claims gives rise to Good Reason for termination of
this Agreement. In order to terminate this Agreement for Good Reason, the notice
of termination must be given to Company by Employee within 30 days of Employee's
receipt of notice, whether written or oral, or actual knowledge of the action or
omission that gave rise to Employee's Good Reason for termination. The
termination of this Agreement shall be effective on the last day of the required
notice period (the "Termination Date"). In the exercise of its discretion, the
Company may place Employee on a paid administrative leave during all or any part
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of the 30-day or 60-day notice period. During such administrative leave, the
Company may bar Employee from access to any Company facility or may allow such
access on such terms as Company deems appropriate.
(b) GOOD REASON DEFINED
For purposes of this Agreement, "Good Reason" shall mean and include any of
the following:
(1) Without Employee's express written consent, the assignment to
Employee of any duties that are not reasonably consistent with
Employee's positions, duties, responsibilities, and status with
Company as in effect on the "Relevant Date", or demotion, or a
change in Employee's titles or offices as in effect on the
Relevant Date (except as specifically contemplated by this
Agreement), or any removal of Employee from or any failure to
re-appoint or re-elect Employee to any of such positions, except
in connection with the termination of this Agreement for Cause,
Permanent Disability, as a result of Employee's death, by
Employee other than for Good Reason, or by Company upon the
expiration of the Initial Term or any applicable Renewal Term.
(2) A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time, other than a reduction of no more than 15% which applies to
all Senior Executive Officers of Company.
(3) The taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any thrift, incentive, or compensation plan, or
any pension, life insurance, health and accident or disability
plan in which Employee is participating on the Relevant Date,
whether such plan is qualified for favorable tax treatment or
otherwise, unless a comparable replacement program is offered to
Employee or unless such action applies to all Senior Executive
Officers.
(4) The termination of this Agreement by Company without Cause or any
attempted termination by Company purportedly for Cause if it is
thereafter determined that Cause did not exist under this
Agreement with respect to the termination.
(5) Breach of any material provisions of this Agreement by Company.
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For purposes of this Section 7, the "Relevant Date" is the date of execution of
this Agreement. For purposes of Section 9 , the "Relevant Date" is the date
specified in Section 9(e).
(c) COMPANY MAY CURE GOOD REASON
Within the 30 day notice period called for by Section 7(a), Company may
rescind or otherwise cure any action or omission relied upon by Employee as
constituting Good Reason for termination. If Company rescinds or otherwise cures
such action or omission within this period, Employee's notice of termination
will be automatically withdrawn and this Agreement will continue.
(d) EFFECT OF GOOD REASON TERMINATION
If Employee terminates this Agreement for Good Reason, Employee shall be
entitled to receive the Severance Benefits provided by Section 8 to the same
extent as if this Agreement had been terminated by Company without Cause.
(e) EFFECT OF TERMINATION WITHOUT GOOD REASON
If Employee terminates this Agreement without Good Reason, Employee shall
be entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
8. SEVERANCE BENEFITS
(a) ELIGIBILITY
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if Employee's employment is terminated due to
Permanent Disability pursuant to Section 5(b), if this Agreement is terminated
by Company without Cause pursuant to Section 6(c), or if this Agreement is
terminated by Employee for Good Reason pursuant to Section 7. In addition,
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if the Company notifies Employee of its desire to
terminate this Agreement pursuant to Section 2(a) and at the time such notice is
given the Company does not have "Cause" to terminate Employee's employment
pursuant to Section 6. Similarly, if Company notifies Employee of its desire to
modify this Agreement and such modification provides Employee with "Good Reason"
to terminate this Agreement pursuant to Section 7 and Employee rejects such
modification, Employee shall be entitled to receive the Severance Benefits
called for by paragraph (b).
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(b) SEVERANCE BENEFITS
The "Severance Benefits" to which an eligible Employee shall be entitled
pursuant to this section are limited to the following payments, benefits and
reimbursements, which will continue throughout the "Severance Period" referred
to in Section 8(c):
Company will continue to pay Employee Employee's Base Salary as set forth
in Section 3 (or as it may be adjusted from time to time), in equal
bi-weekly installments.
(2) Company also shall make a single "Incentive Compensation Payment" to
Employee. The "Incentive Compensation Payment" shall equal the amount
that would have been payable to Employee pursuant to all of the terms
and provisions of the Company's MIP, as it may be amended or replaced
from time to time, had Employee's employment continued until the end
of the fiscal year of the Company in which Employee's Termination Date
occurs. (This payment shall be in addition to any payment for a prior
fiscal year which has not yet been paid.) For purposes of calculating
the amount that would have been due to Employee pursuant to the MIP
(i) any provision of the MIP requiring continued employment will be
disregarded; (ii) the Company shall assume that Employee's Base Salary
would continue throughout the end of such fiscal year at the same rate
in effect on the Termination Date; (iii) the actual performance of the
Company shall be utilized; (iv) the Company shall assume that any
subjective performance criteria or requirements were satisfied; and
(v) all other factors impacting the calculation of the amounts due
will be determined by the Company's Board of Directors or a Committee
thereof in the exercise of its discretion. The Incentive Compensation
Payment will be paid at the same time as similar payments are paid to
active employees. The Employee shall not be entitled to receive any
compensation or grants pursuant to the Company's Long Term Incentive
Plan, or any successor plan or program, following the Termination
Date.
Company also intends that life, disability, accident and group health
benefits and coverages (each an "Insurance Benefit" and collectively
the "Insurance Benefits") substantially similar to those which
Employee was receiving immediately prior to the Notice Date be made
available to Employee following the Notice Date, but Company does not
intend to duplicate Insurance Benefits provided by a successor
employer. If and to the extent that and so long as such Insurance
Benefits (or an Insurance Benefit) is not provided by a successor
employer, Company will arrange to provide such Insurance Benefit or
Insurance Benefits to Employee at a cost to Employee of not more than
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the cost to Employee of similar coverage immediately prior to the
Notice Date. If an Insurance Benefit is not provided by a successor
employer and Company, after a good faith effort, is unable to provide
continued coverage to Employee with respect to one or more of such
Insurance Benefits because of restrictions imposed by any insurance
carrier that provides such Insurance Benefit or Benefits, in lieu of
the unavailable Insurance Benefit or Benefits Company may pay Employee
a monthly amount equal to 150% of the Company's share of the cost of
providing such unavailable Insurance Benefit or Benefits to comparable
executives in comparable circumstances. Such cost shall be determined
conclusively by Company. Employee shall provide Company with such
information concerning the Insurance Benefits provided to
Employee by a successor employer as Company shall reasonably request
and Company may decline to provide any Insurance Benefits to Employee
unless and until Employee provides such information. Whether a
particular Insurance Benefit provided by a successor employer is
"substantially similar" to a benefit provided to Employee prior to the
Notice Date shall be determined by Company in the exercise of its
discretion.
(4) Company will continue to provide Employee with an automobile and an
active membership in a country club in accordance with Section 3(b)
and the policies and practices applicable to Senior Executive
Officers, as such policies may be modified from time to time.
(5) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable but which would become exercisable within 12
months from the Termination Date if Employee's employment were
continued, shall on the Notice Date automatically become exercisable
and shall remain exercisable for 90 days thereafter.
(6) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which are subject to restrictions on the Notice
Date shall, as of the Notice Date, automatically become free of all
restrictions if and to the extent that such restrictions would have
lapsed within 12 months of the Termination Date if Employee's
employment were continued.
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(c) SEVERANCE PERIOD
The Severance Benefits will continue throughout the "Severance Period."
Generally, the Severance Period will be the 12 month period beginning on the
Termination Date. If the Severance Benefits are due because this Agreement was
not renewed by the Company, the Severance Period will be the 12 month period
beginning on Employee's last day of active work.
(d) COBRA
Employee has the right to continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA
continuation period shall commence on Employee's Termination Date, but Company
may be obligated to pay a portion of the cost of continued health care coverage
during the Severance Period pursuant to Section 8(b)(3).
9. CHANGE IN CONTROL OF COMPANY
(a) GENERAL
The Board recognizes that the continuing possibility of a "Change in
Control" of Company is unsettling to Employee and other senior executives of
Company. Therefore, the arrangements set forth below are being made to help
assure a continuing dedication by Employee to Employee's duties to Company,
notwithstanding the occurrence or potential occurrence of a "Change in Control."
In particular, the Board believes it important, should Company receive proposals
from third parties with respect to its future, to enable Employee, without being
influenced by the uncertainties of Employee's own situation, to assess and
advise the Board whether such proposals would be in the best interests of
Company and its stockholders and to take such other action regarding such
proposals as the Board might determine to be appropriate. The Board also wishes
to demonstrate to executives of Company that Company is concerned with the
welfare of its executives and intends to see that loyal executives are treated
fairly.
(b) ELIGIBILITY TO RECEIVE A SEVERANCE BENEFIT
In view of the foregoing and in further consideration of Employee's
continued employment with Company, Company agrees that if a Change in Control of
Company occurs during the Initial Term or any Renewal Term Employee shall be
entitled to the special severance benefits provided in subparagraph (g) of this
Section 9 if prior to the expiration of 24 months after the Change in Control of
Company Employee terminates Employee's employment with Company for Good Reason
or Company terminates Employee's employment without Cause. If Employee triggers
the application of this Section by terminating employment for Good Reason,
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Employee must do so within 120 days following Employee's actual knowledge or
receipt of notice, whether written or oral, of the occurrence of the last event
that constitutes Good Reason.
(c) PERMANENT DISABILITY
Any attempted termination of Employee's employment by Company for reasons
of Permanent Disability pursuant to Section 5(b) following a Change in Control
shall be treated as a termination by Company without Cause unless Employee is
approved for and receives long term disability payments under Company's long
term disability plan. In addition, following a Change in Control this Agreement
may not be terminated pursuant to Section 5(b) due to Employee's Permanent
Disability unless the incapacity giving rise to the Permanent Disability occurs
prior to the occurrence of an event that might cause amounts to be payable to
Employee pursuant to this Section 9. Once payments begin pursuant to this
Section 9, this Agreement may not be terminated by Company pursuant to Section
5(b) due to Permanent Disability and any payments due pursuant to this Section 9
shall not cease or diminish on account of Employee's Permanent Disability.
(d) CHANGE IN CONTROL DEFINED
For purposes of this Agreement, a "Change in Control" shall include both an
"Actual Change in Control" and a "Potential Change in Control".
An "Actual Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the stockholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding Voting Securities (as defined below);
or
(2) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
Company and any new director whose election by the Board of
Directors or nomination for election by Company's stockholders
was approved by a vote of at least two-thirds of the directors
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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
(3) The stockholders of Company approve a merger or consolidation of
Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of
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
Company or such surviving entity outstanding immediately after
such merger or consolidation; or (4) The stockholders of Company
approve a plan of complete liquidation of Company or an agreement
for the sale or disposition by Company of (in one transaction or
a series of transactions) all or substantially all Company's
assets.
A "Potential Change in Control" shall be deemed to have occurred in any or
all of the following instances:
Company enters into an agreement, the consummation of which would
result in the occurrence of an Actual Change in Control;
Any person (including Company) publicly announces an intention to
take or to consider taking actions which if consummated would
constitute a Change in Control;
(3) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership
of stock of Company who is or becomes the beneficial owner,
directly or indirectly, of securities of Company representing 10%
or more of the combined voting power of the Company's then
outstanding Voting Securities, increases such person's beneficial
ownership of such securities by five percentage points (5%) or
more over the percentage so owned by such person; or
(4) The Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
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For purposes of this Section, the term "Voting Securities" shall mean and
include any securities of the Company which vote generally for the election of
directors.
(e) GOOD REASON DEFINED(e) GOOD REASON DEFINED
For purposes of this Section, "Good Reason" shall have the meaning assigned
to it in Section 7, with the following modifications:
(1) The "Relevant Date" shall be the day prior to the Change in
Control.
(2) Paragraph (2) of Section 7(b) shall read as follows:
A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time.
(3) Paragraph (3) of Section 7(b) shall read as follows:
The failure by Company to continue in effect any thrift,
incentive, or compensation plan, or any pension, life insurance,
health and accident or disability plan in which Employee is
participating on the Relevant Date, whether such plan is
qualified for favorable tax treatment or otherwise, (or plans
providing Employee with substantially similar benefits), the
taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee as of the Relevant
Date or any later date, or the failure of the Company to provide
Employee with the number of paid vacation days to which Employee
is then entitled on the basis of Employee's years of service with
the Company in accordance with the Company's normal vacation
policy as in effect on the Relevant Date;
(4) Two additional elements of Good Reason shall be added as follows:
(6) Employee is assigned to, or Company's office at which
Employee is principally employed on the Relevant Date is
relocated to, a location which would require a round-trip
commute to work from Employee's principal residence on the
Relevant Date of more than 100 miles per day.
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(7) Failure of Company to obtain an agreement satisfactory to
Employee from any successor to the business, or
substantially all the assets, of Company to assume this
Agreement or issue a substantially similar agreement.
(f) NOTICE OF TERMINATION BY EMPLOYEE
Any termination by Employee under this Section 9 shall be communicated by
written notice to Company which shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination.
(g) EFFECT OF TERMINATION; SPECIAL SEVERANCE BENEFITS
If Employee is entitled to receive a special severance benefit pursuant to
Section 9(b) hereof, Company will provide Employee with the following special
severance benefits in addition to the Severance Benefits to which Employee is
entitled pursuant to Section 8:
Within five days following Employee's termination, a lump sum
severance payment will be made to Employee. The lump sum
severance payment shall be in an amount equal to: (i) 2.5 times
Employee's yearly Base Salary as set forth in Section 3 or as it
may be increased from time to time; plus (ii) the greatest of (a)
2.5 times the average annual incentive compensation paid to
Employee pursuant to the MIP (or any predecessor or successor
plan) during the five fiscal years preceding the fiscal year in
which the Change in Control occurs, or (b) an amount equal to
100% of the incentive compensation paid to Employee pursuant to
the MIP (or any predecessor or successor plan) during the 12
month period prior to the Termination Date, or (c) an amount
equal to 35% of Employee's Base Salary as set forth in Section 3
or as it may be increased from time to time; minus (iii) the
total amounts due to Employee, if any, pursuant to Sections
8(b)(1) and (2).
(2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2)
will be accelerated and paid to Employee in one lump sum within
five days following Employee's termination without any discount
for early payment. For purposes of calculating the amounts due to
Employee pursuant to Section 8(b)(2) the Company shall assume
that the Company's performance and all other relevant factors for
all future fiscal years will be the same as for the fiscal year
prior to the fiscal year in which the Change in Control occurs.
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(3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be
provided for 30 months following Employee's Termination Date
rather than for the period specified in Section 8(c). In lieu of
all fringe benefits other than those referred to in Sections
8(b)(3) and (4), Employee shall receive a lump sum payment equal
to 20% of Employee's Base Salary as set forth in Section 3 as it
may be increased from time to time.
(4) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable and which do not become exercisable
pursuant to Section 8(b)(5), shall on the Notice Date
automatically become exercisable and shall remain exercisable for
90 days thereafter.
(5) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which on the Notice Date are subject to
restrictions which do not lapse pursuant to Section 8(b)(6)
shall, as of that date, automatically become free of all
restrictions.
Company shall amend, if necessary, any option or restricted stock agreements
entered into between Company and Employee to be consistent with paragraphs (4)
and (5).
(h) OTHER AGREEMENTS
On execution of this Agreement, the letter agreement between Employee and
Company concerning change in control benefits dated as of March 22, 1999 shall
be null and void and of no further force or effect. Nothing in this Agreement is
intended to modify any change of control provisions or protections provided to
Employee by the SERP.
(i) LEGAL EXPENSES
If Employee, at any time, takes any legal action against Company for breach
of this Section 9 or Section 10, Company shall reimburse Employee for all costs
and expenses incurred by Employee to pursue such legal action, regardless of the
outcome, unless the arbitrators appointed pursuant to Section 12(d) find
Employee's action to have been frivolous and without merit. Although the dispute
resolution provisions of Section 12 shall apply to any legal action involving a
breach of this Section 9 and Section 10, the provisions of this Section 9(i)
shall supersede conflicting provisions of Section 12(e).
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10. EXCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes significant tax
burdens on Employee and Company if the total amounts received by Employee due to
a Change in Control exceed prescribed limits. These tax burdens include a
requirement that Employee pay a 20% excise tax on certain amounts received in
excess of the prescribed limits and a loss of deduction for Company. If, as a
result of these Code provisions, Employee is required to pay such excise tax,
then upon written notice from Employee to Company, Company shall pay Employee an
amount equal to the total excise tax imposed on Employee (including the excise
tax on reimbursements due pursuant to this sentence and the excise taxes on any
federal and state tax reimbursements due pursuant to the next sentence). If
Company is obligated to pay Employee pursuant to the preceding sentence, Company
also shall pay Employee an amount equal to the "total presumed federal and state
taxes" that could be imposed on Employee with respect to the excise tax
reimbursements due to Employee pursuant to the preceding sentence and the
federal and state tax reimbursements due to Employee pursuant to this sentence.
For purposes of the preceding sentence, the "total presumed federal and states
taxes" that could be imposed on Employee shall be conclusively calculated using
a combined tax rate equal to the sum of (a) the highest individual income tax
rate in effect under (i) Federal tax law and (ii) the tax laws of the state in
which Employee resides on the date that the payment under this Section 10 is
computed and (b) the hospital insurance portion of FICA. No adjustments will be
made in this combined rate for the deduction of state taxes on the federal
return, the loss of itemized deductions or exemptions, or for any other purpose.
Employee shall be responsible for paying the actual taxes. The amounts payable
to Employee pursuant to this or any other agreement or arrangement with Company
shall not be limited in any way by the amount that may be paid pursuant to the
Code without the imposition of an excise tax or the loss of Company deductions.
Either Employee or Company may elect to challenge any excise taxes imposed by
the Internal Revenue Service and Employee and Company agree to cooperate with
each other in prosecuting such challenges. If Employee elects to litigate or
otherwise challenge the imposition of such excise tax, however, Company will
join Employee in such litigation or challenge only if Company's General Counsel
determines in good faith that Employee's position has substantial merit and that
the issues should be litigated from the standpoint of Company's best interest.
11. COMPETITION
(a) RESTRICTIVE COVENANT
In consideration of Company's agreements contained herein and the payments
to be made by it to Employee pursuant hereto, Employee agrees that, during the
duration of this restrictive covenant Employee will not:
(1) Without the prior written consent of the Board of Directors of
Company, engage in a Competing Business within 100 miles of the
outer boundaries of any Standard Metropolitan Statistical Area
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(or such lesser geographical area as may be set by a court of
competent jurisdiction or an arbitrator) in which any of the
businesses of Company are being conducted on the date of
termination of this Agreement or within 100 miles of the outer
boundaries of any Standard Metropolitan Statistical Area (or such
lesser geographical area as may be set by a court of competent
jurisdiction or an arbitrator) in which the Company's strategic
plan or any replacement plan (the "Strategic Plan"), as in effect
on the earlier of the date of the competitive activity by
Employee or the date of termination of this Agreement, discusses
the possibility of Company conducting business within two years
following the date of termination of this Agreement; or
(2) Directly or indirectly, for Employee, or on behalf of, or in
conjunction with, any other person or entity, seek to hire and/or
hire any individual who was employed by Company or any Subsidiary
immediately prior to such hiring or solicitation or during the
prior one-year period.
(b) DURATION OF COVENANT
Generally, this restrictive covenant shall apply during the Initial Term
and any Renewal Term and for the one-year period following the date of
termination of this Agreement and any renewals thereof (or such lesser period as
may be set by a court of competent jurisdiction or an arbitrator). If the
Competing Business in which Employee engages or intends to engage is a business
involving the development or management of an age-restricted community, however,
the limitations of Section 11(a)(1) shall apply during the Initial Term, any
Renewal Term and for the two-year period following the date of the termination
of this Agreement and any renewals thereof (or such lesser period as may be set
by a court of competent jurisdiction or an arbitrator). This Restrictive
Covenant shall not apply should the Agreement terminate on or after the date on
which Employee attains age 65.
(c) REMEDIES; REASONABLENESS
Employee acknowledges and agrees that a breach by Employee of the
provisions of this Section will constitute such damage as will be irreparable
and the exact amount of which will be impossible to ascertain and, for that
reason, agrees that Company will be entitled to an injunction restraining and
enjoining Employee from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Employee.
Employee expressly acknowledges and agrees that (i) this Restrictive
Covenant is reasonable as to time and geographical area and does not place any
unreasonable burden upon Employee; (ii) the general public will not be harmed as
a result of enforcement of this restrictive covenant; and (iii) Employee
understands and hereby agrees to each and every term and condition of this
Restrictive Covenant.
(d) SURVIVAL OF PROVISION
Termination of this Agreement, whether by passage of time or any other
cause, shall not constitute a waiver of Company's rights under this Section 11,
nor a release of Employee from Employee's obligations thereunder.
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(e) COMPETING BUSINESS
For purposes of this Agreement, Employee shall be deemed to be engaged in a
"Competing Business" if, in any capacity, including but not limited to
proprietor, partner, officer, director, or employee, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity which
competes, in whole or in part, with the then actual business of Company or any
business contemplated by Company's Strategic Plan as in effect on the earlier of
the date of the competitive activity by Employee or the date of termination of
this Agreement. Indirect participation in the operation or ownership of any such
entity shall include any investment by Employee in any such entity, by way of
loan, guaranty, or stock ownership (other than ownership of 1% or less of any
class of equity or other securities of a company which is listed and regularly
traded on any national securities exchange or which is regularly traded
over-the-counter). Employee shall not be deemed to be engaged in a "Competing
Business" if, in any capacity enumerated above, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity where
Employee or the business entity in which Employee may be involved, either
directly or indirectly, and together with any related individuals or entities,
builds fewer than 25 homes per calendar year (with the number of homes to be
determined by the number of permits pulled for such homes). At the written
request of Employee from time to time, Company shall furnish Employee with a
written description of the business or businesses in which Company is then
actively engaged.
(f) CHANGE IN CONTROL
The provisions of this Section shall lapse and be of no further force or
effect if Employee's employment is terminated by Company without Cause, or by
Employee for Good Reason following a Change in Control, or if Company gives
notice that it is involved in voluntary liquidation proceedings pursuant to
Chapter 7 of the United States Bankruptcy Code (11 U.S.C. ss.701 et seq.) or
that the trustee has been ordered by the United States Bankruptcy Court,
pursuant to a final and non-appealable order, to cease Company's operations
pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code.
12. DISPUTE RESOLUTION
(a) MEDIATION
Any and all disputes arising under, pertaining to or touching upon this
Agreement or the statutory rights or obligations of either party hereto, shall,
if not settled by negotiation, be subject to non-binding mediation. Excepted
from this Section 12 is the right of Company or Employee to seek preliminary
judicial relief with respect to a dispute should such action be necessary to
avoid immediate, irreparable harm or damage pending the proceedings provided for
in this Section 12. Mediation shall be before an independent mediator selected
by the parties pursuant to Section 12(d). Any demand for mediation shall be made
in writing and served upon the other party to the dispute, by certified mail,
return receipt requested, at the address specified in Section 16. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties in Maricopa County, Arizona, within 30 days of the date of
selection or appointment of the mediator.
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(b) ARBITRATION
In the event that the dispute is not settled through mediation, the parties
shall then proceed to binding arbitration before a panel of three independent
arbitrators selected pursuant to Section 12(d). The mediator shall not serve as
an arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT
DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED
EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING
CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC
POLICY, SHALL BE RESOLVED PURSUANT TO THIS SECTION 12 AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION
12(a). The arbitration hearing shall occur at a time and place convenient to the
parties in Maricopa County, Arizona, within 30 days of selection or appointment
of the last of the three arbitrators. If Company has adopted a policy that is
applicable to arbitrations with executives, the arbitration shall be conducted
in accordance with said policy to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. ss.ss. 1-16. If no such
policy has been adopted, the arbitration shall be governed by the then current
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association or its successor. Notwithstanding any provisions in such
rules to the contrary, the arbitrators shall issue findings of fact and
conclusions of law, and an award, within 15 days of the date of the hearing
unless the parties otherwise agree.
(c) DAMAGES
In case of breach of contract or policy, damages shall be limited to
contract damages. In cases of intentional discrimination claims prohibited by
statute, the arbitrators may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrators may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. ss.ss. 1-16, except that Court review of the arbitrators' award shall be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
The arbitrators may not award reinstatement. Instead, if the arbitrators
find that the termination by Company was not for Permanent Disability or not for
Cause or that the termination by Employee was for Good Reason, Employee shall
only be entitled to the Severance Benefits provided by Section 8 (or the special
Change in Control severance benefits provided by Section 9 in the event of a
Change in Control), and, in either case, payment of Employee's reasonable legal
expenses in such arbitration. Until a final, binding determination has been
entered relieving Company of its duty to provide payments hereunder, Company
shall pay Employee all amounts to which Employee would be entitled under Section
8 if a Change in Control has not occurred or Section 9 if a Change in Control
has occurred, calculated in either case on the assumption that Employee's
employment had been terminated without Cause.
(d) SELECTION OF MEDIATOR OR ARBITRATORS
The parties shall select the mediator from a panel list made available by
the Association. If the parties are unable to agree to a mediator within ten
days of receipt of a demand for mediation, the mediator will be chosen by
alternatively striking from a list of five mediators obtained by Company from
the Association. Employee shall have the first strike.
The parties also shall select the arbitrators from a panel list made
available by the Association. Company and Employee each shall select one
arbitrator from such panel list within ten days of receipt of such list. After
Company and Employee have each selected an arbitrator, the two arbitrators so
selected shall select the third arbitrator from such list within the next ten
days.
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(e) EXPENSES
The costs and expenses of any mediator shall be borne by Company. The costs
and expenses of any arbitration shall be borne by the losing party, unless the
arbitrator allocates such costs and expenses in a different manner in the
arbitration award.
13. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon Company,
its successors and assigns, including but not limited to any corporation,
person, or other entity which may acquire all or substantially all of the assets
and business of Company or any corporation with or into which Company may be
consolidated or merged, and Employee, Employee's heirs, executors,
administrators, and legal representatives, provided that the obligations of
Employee may not be delegated.
14. NON-DISPARAGEMENT
Employee will not publicly disparage Company or its officers, directors,
employees, or agents and will refrain from any action which would reasonably be
expected to cause material adverse public relations or embarrassment to Company
or to any of such persons. Similarly, Company (including its officers,
directors, employees, and agents) will not disparage Employee and will refrain
from any action which would reasonably be expected to result in embarrassment to
Employee or to materially and adversely affect Employee's opportunities for
employment. The preceding two sentences shall not apply to statements or
allegations made in any pleading filed in connection with any legal proceeding
or to disclosures required by applicable law, regulation, or order of court or
governmental agency.
15. OTHER AGREEMENTS OF EMPLOYEE
Employee represents that the execution and performance of this Agreement
will not result in a breach of any of the terms and conditions of any employment
or other agreement between Employee and any third party.
16. NOTICES
All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid:
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If to Company, to: Del Webb Corporation
6001 North 24th Street
Phoenix, Arizona 85016
Attention: General Counsel
If to Employee, to: David G. Schreiner
1419 Bull Valley Dr.
Woodstock, IL 60098
Either party may change the address to which notices are to be sent to it by
giving 10 days' written notice of such change of address to the other party in
the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
17. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Employee and Company with respect to the
relationship of Employee with Company.
18. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Arizona.
19. CAPTIONS
The captions included herein are for convenience and shall not constitute a
part of this Agreement.
20. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Employee and Company.
21. MITIGATION
In the event that Employee's employment is terminated and payments become
due to Employee pursuant to this Agreement, Employee shall have no duty to
mitigate damages or to become re-employed by another employer.
22. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Employee's employment relationship with Company in the absence of
an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
23. NO CONSTRUCTION AGAINST COMPANY
This Agreement is the result of negotiation between Company and Employee
and both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Employee, regardless of which party drafted the
provision at issue.
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DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Its:
------------------------------------
COMPANY
/s/ David G. Schreiner
------------------------------------
David G. Schreiner EMPLOYEE
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DEL WEBB CORPORATION
FRANK D. PANKRATZ
EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 1st
day of January, 2000 between DEL WEBB CORPORATION, a Delaware corporation (the
"Company"), and Frank D. Pankratz (the "Employee").
1. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
2. TERM OF AGREEMENT; DUTIES
(a) INITIAL TERM; RENEWAL; EMPLOYMENT PERIOD DEFINED
Employee shall be employed by Company for the duties set forth below for
the period beginning as of January 1, 2000 and ending on December 31, 2000 (the
"Initial Term"), unless sooner terminated in accordance with the provisions of
this Agreement. This Agreement shall be automatically renewed at the end of the
Initial Term for additional one-year periods commencing on each January 1 and
ending on the next following December 31 ( a "Renewal Term"), unless either
party serves notice of desire to terminate or modify this Agreement on the
other. Such notice must be given at least 30 days before the end of the Initial
Term or the applicable Renewal Term.
The period of time commencing as of the first day of the Initial Term and
ending on the effective date of the termination of employment of Employee under
this or any successor agreement shall be referred to as the "Employment Period".
(b) DUTIES
Employee shall be employed as Senior Vice President. As Senior Vice
President, Employee shall act as General Manager, Sun Cities Las Vegas, and
shall oversee the operations of Sun City Palm Desert and Sun City Lincoln Hills.
Employee's responsibilities shall include, but are not limited to, the duties
and responsibilities described in the Job Description on file with Company;
recognizing, however, that the Job Description may from time to time not reflect
the responsibilities of the Employee, because the Job Description is updated
only periodically. Employee also shall perform such additional duties related to
the business and affairs of Company and its Subsidiaries as may be delegated to
Employee from time to time by the Board of Directors of Company (the "Board") or
Company's Chief Executive Officer. Any additional duties delegated to Employee
shall be reasonably consistent with Employee's position. For purposes of this
Agreement, the term "Subsidiary" shall mean any corporation, partnership, joint
venture, or other entity in which Company directly or indirectly has a 20% or
greater equity interest.
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(c) EMPLOYEE COMMITMENTS
Employee agrees that Employee will faithfully, industriously, and to the
best of Employee's ability, experience, and talents, perform all of the duties
that may be required of and from Employee and fulfill all of Employee's
responsibilities hereunder pursuant to the express and explicit terms hereof, to
the reasonable satisfaction of the Board and the Chief Executive Officer of
Company. Employee also agrees that Employee will devote substantially all of
Employee's undivided time, attention, knowledge, and skills, during customary
business hours, to the business and interests of Company, subject to such
reasonable vacations and sick leave as are provided under the general policies
of Company, as they may exist from time to time, and consistent with past
practice.
(d) OTHER PROGRAMS
As a general rule, this Agreement is intended to supplement and enhance the
rights and benefits available to Employee as a senior executive officer of the
Company. Accordingly, unless this Agreement or any other agreement or plan of
Company specifically indicates otherwise, none of the rights and benefits
provided to Employee pursuant to this Agreement are intended to replace the
rights and benefits made available generally to other senior executive officers
of the Company.
3. COMPENSATION
Employee shall receive the following compensation for services:
(a) BASE SALARY
Employee shall receive "Base Salary" at the rate of $265,000 per year. Base
Salary shall be payable as nearly as possible in equal bi-weekly installments
(or in such other installments as the Company shall determine). The Base Salary
may be adjusted from time to time in accordance with the procedures established
by Company for salary adjustments for executive officers.
(b) INCENTIVE AND BENEFIT PLANS
Employee shall participate in any incentive compensation plans maintained
by the Company for "Senior Executive Officers", as such term is defined below.
For the 2000 fiscal year, Employee's "Target Bonus," as that term is customarily
used in conjunction with the Company's Annual Management Incentive Plan (the
"MIP"), shall be 65% of Employee's Base Salary, with the actual amount of the
bonus payment to be determined in accordance with all of the terms and
provisions of the MIP, as it may be amended from time to time. The Employee's
Target Bonus, and all other terms and conditions of Employee's participation in
the MIP (including other bonus levels and performance goals) may be changed from
time to time by the Company's Board of Directors or a Committee thereof in the
exercise of its discretion. Employee also shall have the right to participate in
any and all pension or profit sharing plans, stock purchase plans, executive
retirement plans, any annuity or group benefit plans and any medical plans and
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other benefit plans that are now or in the future may be maintained by Company
for its Senior Executive Officers, all in accordance with the terms and
conditions of the plans. Company will provide Employee with an automobile and an
active membership in a country club of Employee's choice in accordance with the
policies and practices applicable to Senior Executive Officers. The automobile
and country club policies for Senior Executive Officers may be modified from
time to time. For purposes of this Agreement, the term "Senior Executive
Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice
President or Vice President.
(c) SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Employee is a participant in the Company's Supplemental Executive
Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be
entered into between Employee and Company pursuant to which Employee shall
receive enhanced treatment for purposes of the SERP.
4. CONFIDENTIALITY
Employee covenants and agrees to hold in strictest confidence, and not
disclose to any person, firm or corporation, without the express written consent
of Company, any and all of Company's or any Subsidiary's "Confidential
Information". The term "Confidential Information" includes, but is not limited
to, information and documents concerning Company's or any Subsidiary's business,
customers, and suppliers, market methods, files, trade secrets, or other
"know-how" or techniques or information not of a published nature which shall
come into Employee's possession, knowledge, or custody concerning the business
of Company or any Subsidiary, except as such disclosure may be required by law
or in connection with Employee's employment hereunder. The term "Confidential
Information" does not include any material that Company has already disclosed to
the public and is in the public domain. This covenant and agreement of Employee
shall survive this Agreement and continue to be binding upon Employee after the
expiration or termination of this Agreement, whether by passage of time or
otherwise so long as such information and data shall remain confidential.
Employee acknowledges that, in the event of Employee's breach of the
confidentiality provisions of this Section 4, money damages will not
sufficiently compensate Company or the applicable Subsidiary for its injury.
Employee accordingly agrees that in addition to such money damages, Employee may
be restrained and enjoined from continuing breach of the provisions of this
Section 4 without any bond or other security. Employee also acknowledges that
any breach of this Section 4 would result in irreparable damage to Company or
the applicable Subsidiary.
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5. TERMINATION DUE TO DEATH OR DISABILITY
(a) DEATH
This Agreement shall terminate upon Employee's death. Employee's estate
shall be entitled to receive the Base Salary due through the date of Employee's
death. In addition, Employee's Base Salary (as determined pursuant to Section 3)
as in effect at the time of Employee's death will be continued for a period of
12 calendar months following the date of Employee's death. The continued salary
payments will be made to Employee's spouse, if Employee is married and living
with Employee's spouse on the date of death. If Employee is not married and
living with Employee's spouse on the date of death, the continued salary
payments will be made to Employee's estate. Payments under this paragraph may be
made to a designated beneficiary, in lieu of Employee's estate, where Employee
has made a written request to Company designating a beneficiary, and the
Company, in its discretion, has approved the requested designation made by
Employee. The death benefit provided pursuant to this Section 5 replaces and
supersedes any Executive Spouse Benefit provided generally to executives of
Company.
(b) PERMANENT DISABILITY
At Company's option, this Agreement also shall terminate in the event of
Employee's "Permanent Disability" upon notice in writing to Employee to that
effect. For purposes of this Agreement, "Permanent Disability" shall mean that
because of physical or mental illness or disability, with or without
accommodation, Employee shall have been continuously unable to perform
Employee's duties hereunder for a consecutive period of 180 days.
If this Agreement is terminated due to Employee's Permanent Disability,
Employee shall receive the Severance Benefits provided by Section 8.
(c) SALARY CONTINUATION
If Employee is absent from work and unable to perform Employee's duties due
to physical or mental illness or disability, Employee shall continue to receive
Base Salary until such time as this Agreement is terminated. Company may not
terminate Employee's Agreement without Cause pursuant to Section 6(c) during the
period of absence. Rather, Company may only terminate this Agreement because of
Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section
6(a). The period of time during which Employee's Base Salary is continued
pursuant to this Section 5(c) shall be charged against Employee's available sick
leave and then against Employee's available vacation.
(d) LAPSE OF PROVISIONS
This Section 5 shall cease to apply following the termination of Employee's
employment pursuant to Sections 6, 7, or 9.
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6. TERMINATION BY COMPANY
(a) TERMINATION FOR CAUSE
Company may terminate this Agreement for "Cause" upon written notice to
Employee. If Company terminates this Agreement for "Cause", Employee shall be
entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
(b) "CAUSE" DEFINED
Termination of this Agreement for "Cause" shall mean (i) breach of any
material provision of this Agreement by Employee which is not cured within a
reasonable time after receipt by Employee of written notice of such breach from
Company, or (ii) conviction, by a court of competent jurisdiction, of Employee
of any felony or any other crime involving gross depravity or dishonesty.
(c) TERMINATION WITHOUT CAUSE
Termination of this Agreement by Company for reasons other than (i) death,
(ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial
Term or any Renewal Term shall be referred to as a termination "without Cause."
If this Agreement is terminated without Cause, Employee is entitled to receive
30 days advance written notice. This Agreement shall continue during such notice
period. The termination of this Agreement shall be effective on the 30th day
(the "Termination Date") following the day on which the notice is given (the
"Notice Date"). In the exercise of its discretion, the Company may place
Employee on a paid administrative leave during all or any part of the 30-day
notice period. During such administrative leave, Company may bar Employee from
access to any Company facility or may allow such access on such terms as Company
deems appropriate. If this Agreement is terminated without Cause, Employee shall
be entitled to receive the Severance Benefits provided by Section 8.
7. TERMINATION BY EMPLOYEE
(a) GENERAL
Employee may terminate this Agreement at any time, with or without "Good
Reason". If Employee terminates this Agreement without "Good Reason," Employee
shall provide Company with 60 days advance written notice. If Employee
terminates this Agreement with Good Reason, Employee shall provide Company with
30 days advance written notice, which notice shall clearly identify the action
or omission that Employee claims gives rise to Good Reason for termination of
this Agreement. In order to terminate this Agreement for Good Reason, the notice
of termination must be given to Company by Employee within 30 days of Employee's
receipt of notice, whether written or oral, or actual knowledge of the action or
omission that gave rise to Employee's Good Reason for termination. The
termination of this Agreement shall be effective on the last day of the required
notice period (the "Termination Date"). In the exercise of its discretion, the
Company may place Employee on a paid administrative leave during all or any part
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of the 30-day or 60-day notice period. During such administrative leave, the
Company may bar Employee from access to any Company facility or may allow such
access on such terms as Company deems appropriate.
(b) GOOD REASON DEFINED
For purposes of this Agreement, "Good Reason" shall mean and include any of
the following:
(1) Without Employee's express written consent, the assignment to
Employee of any duties that are not reasonably consistent with
Employee's positions, duties, responsibilities, and status with
Company as in effect on the "Relevant Date", or demotion, or a
change in Employee's titles or offices as in effect on the
Relevant Date (except as specifically contemplated by this
Agreement), or any removal of Employee from or any failure to
re-appoint or re-elect Employee to any of such positions, except
in connection with the termination of this Agreement for Cause,
Permanent Disability, as a result of Employee's death, by
Employee other than for Good Reason, or by Company upon the
expiration of the Initial Term or any applicable Renewal Term.
(2) A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time, other than a reduction of no more than 15% which applies to
all Senior Executive Officers of Company.
(3) The taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any thrift, incentive, or compensation plan, or
any pension, life insurance, health and accident or disability
plan in which Employee is participating on the Relevant Date,
whether such plan is qualified for favorable tax treatment or
otherwise, unless a comparable replacement program is offered to
Employee or unless such action applies to all Senior Executive
Officers.
(4) The termination of this Agreement by Company without Cause or any
attempted termination by Company purportedly for Cause if it is
thereafter determined that Cause did not exist under this
Agreement with respect to the termination.
(5) Breach of any material provisions of this Agreement by Company.
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For purposes of this Section 7, the "Relevant Date" is the date of execution of
this Agreement. For purposes of Section 9 , the "Relevant Date" is the date
specified in Section 9(e).
(c) COMPANY MAY CURE GOOD REASON
Within the 30 day notice period called for by Section 7(a), Company may
rescind or otherwise cure any action or omission relied upon by Employee as
constituting Good Reason for termination. If Company rescinds or otherwise cures
such action or omission within this period, Employee's notice of termination
will be automatically withdrawn and this Agreement will continue.
(d) EFFECT OF GOOD REASON TERMINATION
If Employee terminates this Agreement for Good Reason, Employee shall be
entitled to receive the Severance Benefits provided by Section 8 to the same
extent as if this Agreement had been terminated by Company without Cause.
(e) EFFECT OF TERMINATION WITHOUT GOOD REASON
If Employee terminates this Agreement without Good Reason, Employee shall
be entitled to receive Employee's Base Salary through the effective date of
Employee's termination. Employee's entitlement to receive any other amount shall
be determined in accordance with the provisions of any incentive or benefit
plans in which Employee participates on the effective date of the termination.
8. SEVERANCE BENEFITS
(a) ELIGIBILITY
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if Employee's employment is terminated due to
Permanent Disability pursuant to Section 5(b), if this Agreement is terminated
by Company without Cause pursuant to Section 6(c), or if this Agreement is
terminated by Employee for Good Reason pursuant to Section 7. In addition,
Employee shall be eligible and entitled to receive the Severance Benefits
provided by paragraph (b) if the Company notifies Employee of its desire to
terminate this Agreement pursuant to Section 2(a) and at the time such notice is
given the Company does not have "Cause" to terminate Employee's employment
pursuant to Section 6. Similarly, if Company notifies Employee of its desire to
modify this Agreement and such modification provides Employee with "Good Reason"
to terminate this Agreement pursuant to Section 7 and Employee rejects such
modification, Employee shall be entitled to receive the Severance Benefits
called for by paragraph (b).
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(b) SEVERANCE BENEFITS
The "Severance Benefits" to which an eligible Employee shall be entitled
pursuant to this section are limited to the following payments, benefits and
reimbursements, which will continue throughout the "Severance Period" referred
to in Section 8(c):
Company will continue to pay Employee Employee's Base Salary as set forth
in Section 3 (or as it may be adjusted from time to time), in equal
bi-weekly installments.
Company also shall make a single "Incentive Compensation Payment" to
Employee. The "Incentive Compensation Payment" shall equal the amount
that would have been payable to Employee pursuant to all of the terms
and provisions of the Company's MIP, as it may be amended or replaced
from time to time, had Employee's employment continued until the end
of the fiscal year of the Company in which Employee's Termination Date
occurs. (This payment shall be in addition to any payment for a prior
fiscal year which has not yet been paid.) For purposes of calculating
the amount that would have been due to Employee pursuant to the MIP
(i) any provision of the MIP requiring continued employment will be
disregarded; (ii) the Company shall assume that Employee's Base Salary
would continue throughout the end of such fiscal year at the same rate
in effect on the Termination Date; (iii) the actual performance of the
Company shall be utilized; (iv) the Company shall assume that any
subjective performance criteria or requirements were satisfied; and
(v) all other factors impacting the calculation of the amounts due
will be determined by the Company's Board of Directors or a Committee
thereof in the exercise of its discretion. The Incentive Compensation
Payment will be paid at the same time as similar payments are paid to
active employees. The Employee shall not be entitled to receive any
compensation or grants pursuant to the Company's Long Term Incentive
Plan, or any successor plan or program, following the Termination
Date.
Company also intends that life, disability, accident and group health
benefits and coverages (each an "Insurance Benefit" and collectively
the "Insurance Benefits") substantially similar to those which
Employee was receiving immediately prior to the Notice Date be made
available to Employee following the Notice Date, but Company does not
intend to duplicate Insurance Benefits provided by a successor
employer. If and to the extent that and so long as such Insurance
Benefits (or an Insurance Benefit) is not provided by a successor
employer, Company will arrange to provide such Insurance Benefit or
Insurance Benefits to Employee at a cost to Employee of not more than
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the cost to Employee of similar coverage immediately prior to the
Notice Date. If an Insurance Benefit is not provided by a successor
employer and Company, after a good faith effort, is unable to provide
continued coverage to Employee with respect to one or more of such
Insurance Benefits because of restrictions imposed by any insurance
carrier that provides such Insurance Benefit or Benefits, in lieu of
the unavailable Insurance Benefit or Benefits Company may pay Employee
a monthly amount equal to 150% of the Company's share of the cost of
providing such unavailable Insurance Benefit or Benefits to comparable
executives in comparable circumstances. Such cost shall be determined
conclusively by Company. Employee shall provide Company with such
information concerning the Insurance Benefits provided to
Employee by a successor employer as Company shall reasonably request
and Company may decline to provide any Insurance Benefits to Employee
unless and until Employee provides such information. Whether a
particular Insurance Benefit provided by a successor employer is
"substantially similar" to a benefit provided to Employee prior to the
Notice Date shall be determined by Company in the exercise of its
discretion.
(4) Company will continue to provide Employee with an automobile and an
active membership in a country club in accordance with Section 3(b)
and the policies and practices applicable to Senior Executive
Officers, as such policies may be modified from time to time.
(5) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable but which would become exercisable within 12
months from the Termination Date if Employee's employment were
continued, shall on the Notice Date automatically become exercisable
and shall remain exercisable for 90 days thereafter.
(6) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which are subject to restrictions on the Notice
Date shall, as of the Notice Date, automatically become free of all
restrictions if and to the extent that such restrictions would have
lapsed within 12 months of the Termination Date if Employee's
employment were continued.
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(c) SEVERANCE PERIOD
The Severance Benefits will continue throughout the "Severance Period."
Generally, the Severance Period will be the 12 month period beginning on the
Termination Date. If the Severance Benefits are due because this Agreement was
not renewed by the Company, the Severance Period will be the 12 month period
beginning on Employee's last day of active work.
(d) COBRA
Employee has the right to continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA
continuation period shall commence on Employee's Termination Date, but Company
may be obligated to pay a portion of the cost of continued health care coverage
during the Severance Period pursuant to Section 8(b)(3).
9. CHANGE IN CONTROL OF COMPANY
(a) GENERAL
The Board recognizes that the continuing possibility of a "Change in
Control" of Company is unsettling to Employee and other senior executives of
Company. Therefore, the arrangements set forth below are being made to help
assure a continuing dedication by Employee to Employee's duties to Company,
notwithstanding the occurrence or potential occurrence of a "Change in Control."
In particular, the Board believes it important, should Company receive proposals
from third parties with respect to its future, to enable Employee, without being
influenced by the uncertainties of Employee's own situation, to assess and
advise the Board whether such proposals would be in the best interests of
Company and its stockholders and to take such other action regarding such
proposals as the Board might determine to be appropriate. The Board also wishes
to demonstrate to executives of Company that Company is concerned with the
welfare of its executives and intends to see that loyal executives are treated
fairly.
(b) ELIGIBILITY TO RECEIVE A SEVERANCE BENEFIT
In view of the foregoing and in further consideration of Employee's
continued employment with Company, Company agrees that if a Change in Control of
Company occurs during the Initial Term or any Renewal Term Employee shall be
entitled to the special severance benefits provided in subparagraph (g) of this
Section 9 if prior to the expiration of 24 months after the Change in Control of
Company Employee terminates Employee's employment with Company for Good Reason
or Company terminates Employee's employment without Cause. If Employee triggers
the application of this Section by terminating employment for Good Reason,
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Employee must do so within 120 days following Employee's actual knowledge or
receipt of notice, whether written or oral, of the occurrence of the last event
that constitutes Good Reason.
(c) PERMANENT DISABILITY
Any attempted termination of Employee's employment by Company for reasons
of Permanent Disability pursuant to Section 5(b) following a Change in Control
shall be treated as a termination by Company without Cause unless Employee is
approved for and receives long term disability payments under Company's long
term disability plan. In addition, following a Change in Control this Agreement
may not be terminated pursuant to Section 5(b) due to Employee's Permanent
Disability unless the incapacity giving rise to the Permanent Disability occurs
prior to the occurrence of an event that might cause amounts to be payable to
Employee pursuant to this Section 9. Once payments begin pursuant to this
Section 9, this Agreement may not be terminated by Company pursuant to Section
5(b) due to Permanent Disability and any payments due pursuant to this Section 9
shall not cease or diminish on account of Employee's Permanent Disability.
(d) CHANGE IN CONTROL DEFINED
For purposes of this Agreement, a "Change in Control" shall include both an
"Actual Change in Control" and a "Potential Change in Control".
An "Actual Change in Control" shall be deemed to have occurred in any or
all of the following instances:
(1) Any "person" as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended, other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Company or a corporation owned directly or
indirectly by the stockholders of Company in substantially the
same proportions as their ownership of stock of Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of Company
representing 20% or more of the total voting power represented by
Company's then outstanding Voting Securities (as defined below);
or
(2) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of
Company and any new director whose election by the Board of
Directors or nomination for election by Company's stockholders
was approved by a vote of at least two-thirds of the directors
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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
(3) The stockholders of Company approve a merger or consolidation of
Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of
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
Company or such surviving entity outstanding immediately after
such merger or consolidation; or (4) The stockholders of Company
approve a plan of complete liquidation of Company or an agreement
for the sale or disposition by Company of (in one transaction or
a series of transactions) all or substantially all Company's
assets.
A "Potential Change in Control" shall be deemed to have occurred in any or
all of the following instances:
Company enters into an agreement, the consummation of which would
result in the occurrence of an Actual Change in Control;
Any person (including Company) publicly announces an intention to
take or to consider taking actions which if consummated would
constitute a Change in Control;
(3) Any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of Company or a
corporation owned, directly or indirectly, by the stockholders of
Company in substantially the same proportions as their ownership
of stock of Company who is or becomes the beneficial owner,
directly or indirectly, of securities of Company representing 10%
or more of the combined voting power of the Company's then
outstanding Voting Securities, increases such person's beneficial
ownership of such securities by five percentage points (5%) or
more over the percentage so owned by such person; or
(4) The Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
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For purposes of this Section, the term "Voting Securities" shall mean and
include any securities of the Company which vote generally for the election of
directors.
(e) GOOD REASON DEFINED(e) GOOD REASON DEFINED
For purposes of this Section, "Good Reason" shall have the meaning assigned
to it in Section 7, with the following modifications:
(1) The "Relevant Date" shall be the day prior to the Change in
Control.
(2) Paragraph (2) of Section 7(b) shall read as follows:
A reduction by Company in Employee's Base Salary as in effect on
the date hereof or as the same may be increased from time to
time.
(3) Paragraph (3) of Section 7(b) shall read as follows:
The failure by Company to continue in effect any thrift,
incentive, or compensation plan, or any pension, life insurance,
health and accident or disability plan in which Employee is
participating on the Relevant Date, whether such plan is
qualified for favorable tax treatment or otherwise, (or plans
providing Employee with substantially similar benefits), the
taking of any action by Company which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee as of the Relevant
Date or any later date, or the failure of the Company to provide
Employee with the number of paid vacation days to which Employee
is then entitled on the basis of Employee's years of service with
the Company in accordance with the Company's normal vacation
policy as in effect on the Relevant Date;
(4) Two additional elements of Good Reason shall be added as follows:
(6) Employee is assigned to, or Company's office at which
Employee is principally employed on the Relevant Date is
relocated to, a location which would require a round-trip
commute to work from Employee's principal residence on the
Relevant Date of more than 100 miles per day.
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(7) Failure of Company to obtain an agreement satisfactory to
Employee from any successor to the business, or
substantially all the assets, of Company to assume this
Agreement or issue a substantially similar agreement.
(f) NOTICE OF TERMINATION BY EMPLOYEE
Any termination by Employee under this Section 9 shall be communicated by
written notice to Company which shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for such termination.
(g) EFFECT OF TERMINATION; SPECIAL SEVERANCE BENEFITS
If Employee is entitled to receive a special severance benefit pursuant to
Section 9(b) hereof, Company will provide Employee with the following special
severance benefits in addition to the Severance Benefits to which Employee is
entitled pursuant to Section 8:
Within five days following Employee's termination, a lump sum
severance payment will be made to Employee. The lump sum
severance payment shall be in an amount equal to: (i) 2.5 times
Employee's yearly Base Salary as set forth in Section 3 or as it
may be increased from time to time; plus (ii) the greatest of (a)
2.5 times the average annual incentive compensation paid to
Employee pursuant to the MIP (or any predecessor or successor
plan) during the five fiscal years preceding the fiscal year in
which the Change in Control occurs, or (b) an amount equal to
100% of the incentive compensation paid to Employee pursuant to
the MIP (or any predecessor or successor plan) during the 12
month period prior to the Termination Date, or (c) an amount
equal to 35% of Employee's Base Salary as set forth in Section 3
or as it may be increased from time to time; minus (iii) the
total amounts due to Employee, if any, pursuant to Sections
8(b)(1) and (2).
(2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2)
will be accelerated and paid to Employee in one lump sum within
five days following Employee's termination without any discount
for early payment. For purposes of calculating the amounts due to
Employee pursuant to Section 8(b)(2) the Company shall assume
that the Company's performance and all other relevant factors for
all future fiscal years will be the same as for the fiscal year
prior to the fiscal year in which the Change in Control occurs.
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(3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be
provided for 30 months following Employee's Termination Date
rather than for the period specified in Section 8(c). In lieu of
all fringe benefits other than those referred to in Sections
8(b)(3) and (4), Employee shall receive a lump sum payment equal
to 20% of Employee's Base Salary as set forth in Section 3 as it
may be increased from time to time.
(4) Any stock options to purchase Common Stock of Company or stock
appreciation rights relating to Common Stock of Company held by
Employee on the Notice Date, which are not at the Notice Date
currently exercisable and which do not become exercisable
pursuant to Section 8(b)(5), shall on the Notice Date
automatically become exercisable and shall remain exercisable for
90 days thereafter.
(5) All shares of Common Stock of Company held by Employee under any
Restricted Stock Plan which on the Notice Date are subject to
restrictions which do not lapse pursuant to Section 8(b)(6)
shall, as of that date, automatically become free of all
restrictions.
Company shall amend, if necessary, any option or restricted stock agreements
entered into between Company and Employee to be consistent with paragraphs (4)
and (5).
(h) OTHER AGREEMENTS
On execution of this Agreement, the letter agreement between Employee and
Company concerning change in control benefits dated as of March 18, 1999 shall
be null and void and of no further force or effect. Nothing in this Agreement is
intended to modify any change of control provisions or protections provided to
Employee by the SERP.
(i) LEGAL EXPENSES
If Employee, at any time, takes any legal action against Company for breach
of this Section 9 or Section 10, Company shall reimburse Employee for all costs
and expenses incurred by Employee to pursue such legal action, regardless of the
outcome, unless the arbitrators appointed pursuant to Section 12(d) find
Employee's action to have been frivolous and without merit. Although the dispute
resolution provisions of Section 12 shall apply to any legal action involving a
breach of this Section 9 and Section 10, the provisions of this Section 9(i)
shall supersede conflicting provisions of Section 12(e).
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10. EXCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes significant tax
burdens on Employee and Company if the total amounts received by Employee due to
a Change in Control exceed prescribed limits. These tax burdens include a
requirement that Employee pay a 20% excise tax on certain amounts received in
excess of the prescribed limits and a loss of deduction for Company. If, as a
result of these Code provisions, Employee is required to pay such excise tax,
then upon written notice from Employee to Company, Company shall pay Employee an
amount equal to the total excise tax imposed on Employee (including the excise
tax on reimbursements due pursuant to this sentence and the excise taxes on any
federal and state tax reimbursements due pursuant to the next sentence). If
Company is obligated to pay Employee pursuant to the preceding sentence, Company
also shall pay Employee an amount equal to the "total presumed federal and state
taxes" that could be imposed on Employee with respect to the excise tax
reimbursements due to Employee pursuant to the preceding sentence and the
federal and state tax reimbursements due to Employee pursuant to this sentence.
For purposes of the preceding sentence, the "total presumed federal and states
taxes" that could be imposed on Employee shall be conclusively calculated using
a combined tax rate equal to the sum of (a) the highest individual income tax
rate in effect under (i) Federal tax law and (ii) the tax laws of the state in
which Employee resides on the date that the payment under this Section 10 is
computed and (b) the hospital insurance portion of FICA. No adjustments will be
made in this combined rate for the deduction of state taxes on the federal
return, the loss of itemized deductions or exemptions, or for any other purpose.
Employee shall be responsible for paying the actual taxes. The amounts payable
to Employee pursuant to this or any other agreement or arrangement with Company
shall not be limited in any way by the amount that may be paid pursuant to the
Code without the imposition of an excise tax or the loss of Company deductions.
Either Employee or Company may elect to challenge any excise taxes imposed by
the Internal Revenue Service and Employee and Company agree to cooperate with
each other in prosecuting such challenges. If Employee elects to litigate or
otherwise challenge the imposition of such excise tax, however, Company will
join Employee in such litigation or challenge only if Company's General Counsel
determines in good faith that Employee's position has substantial merit and that
the issues should be litigated from the standpoint of Company's best interest.
11. COMPETITION
(a) RESTRICTIVE COVENANT
In consideration of Company's agreements contained herein and the payments
to be made by it to Employee pursuant hereto, Employee agrees that, during the
duration of this restrictive covenant Employee will not:
(1) Without the prior written consent of the Board of Directors of
Company, engage in a Competing Business within 100 miles of the
outer boundaries of any Standard Metropolitan Statistical Area
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(or such lesser geographical area as may be set by a court of
competent jurisdiction or an arbitrator) in which any of the
businesses of Company are being conducted on the date of
termination of this Agreement or within 100 miles of the outer
boundaries of any Standard Metropolitan Statistical Area (or such
lesser geographical area as may be set by a court of competent
jurisdiction or an arbitrator) in which the Company's strategic
plan or any replacement plan (the "Strategic Plan"), as in effect
on the earlier of the date of the competitive activity by
Employee or the date of termination of this Agreement, discusses
the possibility of Company conducting business within two years
following the date of termination of this Agreement; or
(2) Directly or indirectly, for Employee, or on behalf of, or in
conjunction with, any other person or entity, seek to hire and/or
hire any individual who was employed by Company or any Subsidiary
immediately prior to such hiring or solicitation or during the
prior one-year period.
(b) DURATION OF COVENANT
Generally, this restrictive covenant shall apply during the Initial Term
and any Renewal Term and for the one-year period following the date of
termination of this Agreement and any renewals thereof (or such lesser period as
may be set by a court of competent jurisdiction or an arbitrator). If the
Competing Business in which Employee engages or intends to engage is a business
involving the development or management of an age-restricted community, however,
the limitations of Section 11(a)(1) shall apply during the Initial Term, any
Renewal Term and for the two-year period following the date of the termination
of this Agreement and any renewals thereof (or such lesser period as may be set
by a court of competent jurisdiction or an arbitrator). This Restrictive
Covenant shall not apply should the Agreement terminate on or after the date on
which Employee attains age 65.
(c) REMEDIES; REASONABLENESS
Employee acknowledges and agrees that a breach by Employee of the
provisions of this Section will constitute such damage as will be irreparable
and the exact amount of which will be impossible to ascertain and, for that
reason, agrees that Company will be entitled to an injunction restraining and
enjoining Employee from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Employee.
Employee expressly acknowledges and agrees that (i) this Restrictive
Covenant is reasonable as to time and geographical area and does not place any
unreasonable burden upon Employee; (ii) the general public will not be harmed as
a result of enforcement of this restrictive covenant; and (iii) Employee
understands and hereby agrees to each and every term and condition of this
Restrictive Covenant.
(d) SURVIVAL OF PROVISION
Termination of this Agreement, whether by passage of time or any other
cause, shall not constitute a waiver of Company's rights under this Section 11,
nor a release of Employee from Employee's obligations thereunder.
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(e) COMPETING BUSINESS
For purposes of this Agreement, Employee shall be deemed to be engaged in a
"Competing Business" if, in any capacity, including but not limited to
proprietor, partner, officer, director, or employee, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity which
competes, in whole or in part, with the then actual business of Company or any
business contemplated by Company's Strategic Plan as in effect on the earlier of
the date of the competitive activity by Employee or the date of termination of
this Agreement. Indirect participation in the operation or ownership of any such
entity shall include any investment by Employee in any such entity, by way of
loan, guaranty, or stock ownership (other than ownership of 1% or less of any
class of equity or other securities of a company which is listed and regularly
traded on any national securities exchange or which is regularly traded
over-the-counter). Employee shall not be deemed to be engaged in a "Competing
Business" if, in any capacity enumerated above, Employee engages or
participates, directly or indirectly, in the operation, ownership, or management
of any proprietorship, partnership, corporation, or other business entity where
Employee or the business entity in which Employee may be involved, either
directly or indirectly, and together with any related individuals or entities,
builds fewer than 25 homes per calendar year (with the number of homes to be
determined by the number of permits pulled for such homes). At the written
request of Employee from time to time, Company shall furnish Employee with a
written description of the business or businesses in which Company is then
actively engaged.
(f) CHANGE IN CONTROL
The provisions of this Section shall lapse and be of no further force or
effect if Employee's employment is terminated by Company without Cause, or by
Employee for Good Reason following a Change in Control, or if Company gives
notice that it is involved in voluntary liquidation proceedings pursuant to
Chapter 7 of the United States Bankruptcy Code (11 U.S.C. ss.701 et seq.) or
that the trustee has been ordered by the United States Bankruptcy Court,
pursuant to a final and non-appealable order, to cease Company's operations
pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code.
12. DISPUTE RESOLUTION
(a) MEDIATION
Any and all disputes arising under, pertaining to or touching upon this
Agreement or the statutory rights or obligations of either party hereto, shall,
if not settled by negotiation, be subject to non-binding mediation. Excepted
from this Section 12 is the right of Company or Employee to seek preliminary
judicial relief with respect to a dispute should such action be necessary to
avoid immediate, irreparable harm or damage pending the proceedings provided for
in this Section 12. Mediation shall be before an independent mediator selected
by the parties pursuant to Section 12(d). Any demand for mediation shall be made
in writing and served upon the other party to the dispute, by certified mail,
return receipt requested, at the address specified in Section 16. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties in Maricopa County, Arizona, within 30 days of the date of
selection or appointment of the mediator.
18
<PAGE>
(b) ARBITRATION
In the event that the dispute is not settled through mediation, the parties
shall then proceed to binding arbitration before a panel of three independent
arbitrators selected pursuant to Section 12(d). The mediator shall not serve as
an arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT
DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED
EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING
CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC
POLICY, SHALL BE RESOLVED PURSUANT TO THIS SECTION 12 AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION
12(a). The arbitration hearing shall occur at a time and place convenient to the
parties in Maricopa County, Arizona, within 30 days of selection or appointment
of the last of the three arbitrators. If Company has adopted a policy that is
applicable to arbitrations with executives, the arbitration shall be conducted
in accordance with said policy to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. ss.ss. 1-16. If no such
policy has been adopted, the arbitration shall be governed by the then current
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association or its successor. Notwithstanding any provisions in such
rules to the contrary, the arbitrators shall issue findings of fact and
conclusions of law, and an award, within 15 days of the date of the hearing
unless the parties otherwise agree.
(c) DAMAGES
In case of breach of contract or policy, damages shall be limited to
contract damages. In cases of intentional discrimination claims prohibited by
statute, the arbitrators may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrators may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. ss.ss. 1-16, except that Court review of the arbitrators' award shall be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
The arbitrators may not award reinstatement. Instead, if the arbitrators
find that the termination by Company was not for Permanent Disability or not for
Cause or that the termination by Employee was for Good Reason, Employee shall
only be entitled to the Severance Benefits provided by Section 8 (or the special
Change in Control severance benefits provided by Section 9 in the event of a
Change in Control), and, in either case, payment of Employee's reasonable legal
expenses in such arbitration. Until a final, binding determination has been
entered relieving Company of its duty to provide payments hereunder, Company
shall pay Employee all amounts to which Employee would be entitled under Section
8 if a Change in Control has not occurred or Section 9 if a Change in Control
has occurred, calculated in either case on the assumption that Employee's
employment had been terminated without Cause.
(d) SELECTION OF MEDIATOR OR ARBITRATORS
The parties shall select the mediator from a panel list made available by
the Association. If the parties are unable to agree to a mediator within ten
days of receipt of a demand for mediation, the mediator will be chosen by
alternatively striking from a list of five mediators obtained by Company from
the Association. Employee shall have the first strike.
The parties also shall select the arbitrators from a panel list made
available by the Association. Company and Employee each shall select one
arbitrator from such panel list within ten days of receipt of such list. After
Company and Employee have each selected an arbitrator, the two arbitrators so
selected shall select the third arbitrator from such list within the next ten
days.
19
<PAGE>
(e) EXPENSES
The costs and expenses of any mediator shall be borne by Company. The costs
and expenses of any arbitration shall be borne by the losing party, unless the
arbitrator allocates such costs and expenses in a different manner in the
arbitration award.
13. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon Company,
its successors and assigns, including but not limited to any corporation,
person, or other entity which may acquire all or substantially all of the assets
and business of Company or any corporation with or into which Company may be
consolidated or merged, and Employee, Employee's heirs, executors,
administrators, and legal representatives, provided that the obligations of
Employee may not be delegated.
14. NON-DISPARAGEMENT
Employee will not publicly disparage Company or its officers, directors,
employees, or agents and will refrain from any action which would reasonably be
expected to cause material adverse public relations or embarrassment to Company
or to any of such persons. Similarly, Company (including its officers,
directors, employees, and agents) will not disparage Employee and will refrain
from any action which would reasonably be expected to result in embarrassment to
Employee or to materially and adversely affect Employee's opportunities for
employment. The preceding two sentences shall not apply to statements or
allegations made in any pleading filed in connection with any legal proceeding
or to disclosures required by applicable law, regulation, or order of court or
governmental agency.
15. OTHER AGREEMENTS OF EMPLOYEE
Employee represents that the execution and performance of this Agreement
will not result in a breach of any of the terms and conditions of any employment
or other agreement between Employee and any third party.
16. NOTICES
All notices hereunder shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid:
20
<PAGE>
If to Company, to: Del Webb Corporation
6001 North 24th Street
Phoenix, Arizona 85016
Attention: General Counsel
If to Employee, to: Frank D. Pankratz
8805 Cortile Dr.
Las Vegas, NV 89134
Either party may change the address to which notices are to be sent to it by
giving 10 days' written notice of such change of address to the other party in
the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
17. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been
incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Employee and Company with respect to the
relationship of Employee with Company.
18. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of Arizona.
19. CAPTIONS
The captions included herein are for convenience and shall not constitute a
part of this Agreement.
20. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Employee and Company.
21. MITIGATION
In the event that Employee's employment is terminated and payments become
due to Employee pursuant to this Agreement, Employee shall have no duty to
mitigate damages or to become re-employed by another employer.
22. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Employee's employment relationship with Company in the absence of
an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
23. NO CONSTRUCTION AGAINST COMPANY
This Agreement is the result of negotiation between Company and Employee
and both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Employee, regardless of which party drafted the
provision at issue.
21
<PAGE>
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Its:
------------------------------------
COMPANY
/s/ Frank D. Pankratz
------------------------------------
Frank D. Pankratz EMPLOYEE
22
DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
PARTICIPATION AGREEMENT
(Amended and Restated Effective
as of January 1, 2000)
This amended and restated Participation Agreement is entered into as of this 1st
day of January, 2000, between Del Webb Corporation, a Delaware corporation
("Employer"), and Charles T. Roach ("Participant").
RECITALS
A. Employer and Participant previously entered into a Participation
Agreement dated as of April 12, 1989 providing for participation by Participant
beginning on January 1, 1989, in the Del Webb Corporation Supplemental Executive
Retirement Plan No. 2 (the "Plan").
B. The Plan was originally adopted as of January 1, 1989 and was amended
and restated as of April 20, 1993. The Plan also has been amended on four
separate occasions since its 1993 restatement.
C. Employer and Participant desire to amend and restate the Participation
Agreement and to modify and supplement the Plan as it relates to Participant,
all as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. GENERAL
This Agreement restates and reaffirms Participant's original Participation
Agreement, which was entered into on April 12, 1989, and which was effective as
of January 1, 1989. Participant's participation in the Plan is hereby
reaffirmed.
2. THE PLAN
This Participation Agreement is subject to all of the terms and provisions of
the Plan, except to the extent that the Plan is modified and supplemented below
as it applies to Participant. The Plan is expressly incorporated by reference
into this Participation Agreement. By signing this
-1-
<PAGE>
Participation Agreement, Participant acknowledges receipt of a copy of the Plan
and confirms his understanding and acceptance of all of the terms, conditions
and provisions of the Plan.
3. MODIFICATIONS
Pursuant to paragraph 8.3 of the Plan, which was added by the First Amendment,
the provisions of the Plan as they apply to Participant are modified and
supplemented as follows:
(a) Early Retirement. If Participant's employment is continued until
Participant has attained age sixty-two (62), the reduction called for by
paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall
imply that retirement is expected at any particular age.
(b) Definitions. For purposes of the Plan and this Participation Agreement,
the terms "Cause," "Change in Control," and "Good Reason" shall have the
meanings ascribed to those terms in the Employment Agreement entered into
between Employer and Participant, dated as of the date hereof, as it may be
amended from time to time, rather than the definitions included in paragraph 4.6
of the Plan. The Employment Agreement includes two definitions of Good Reason,
the standard definition that applies prior to a Change in Control and a modified
definition that applies after a Change in Control. The standard definition will
apply for purposes of the Plan and this Participation Agreement unless and until
a Change in Control occurs, after which the special post-Change in Control
definition will apply.
EMPLOYER:
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Title: Vice President
PARTICIPANT:
/s/ Charles T. Roach
----------------------------------------
Charles T. Roach
-2-
DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
PARTICIPATION AGREEMENT
(Amended and Restated Effective
as of January 1, 2000)
This amended and restated Participation Agreement is entered into as of this 1st
day of January, 2000, between Del Webb Corporation, a Delaware corporation
("Employer"), and David G. Schreiner ("Participant").
RECITALS
A. Employer and Participant previously entered into a Participation
Agreement dated as of February 3, 1993 providing for participation by
Participant beginning on January 1, 1993, in the Del Webb Corporation
Supplemental Executive Retirement Plan No. 2 (the "Plan").
B. The Plan was originally adopted as of January 1, 1989 and was amended
and restated as of April 20, 1993. The Plan also has been amended on four
separate occasions since its 1993 restatement.
C. Employer and Participant desire to amend and restate the Participation
Agreement and to modify and supplement the Plan as it relates to Participant,
all as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. GENERAL
This Agreement restates and reaffirms Participant's original Participation
Agreement, which was entered into on February 3, 1993, and which was effective
as of January 1, 1993. Participant's participation in the Plan is hereby
reaffirmed.
2. THE PLAN
This Participation Agreement is subject to all of the terms and provisions of
the Plan, except to the extent that the Plan is modified and supplemented below
as it applies to Participant. The Plan is expressly incorporated by reference
into this Participation Agreement. By signing this
-1-
<PAGE>
Participation Agreement, Participant acknowledges receipt of a copy of the Plan
and confirms his understanding and acceptance of all of the terms, conditions
and provisions of the Plan.
3. MODIFICATIONS
Pursuant to paragraph 8.3 of the Plan, which was added by the First
Amendment, the provisions of the Plan as they apply to Participant are modified
and supplemented as follows:
(a) Early Retirement. If Participant's employment is continued until
Participant has attained age sixty-two (62), the reduction called for by
paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall
imply that retirement is expected at any particular age.
(b) Definitions. For purposes of the Plan and this Participation Agreement,
the terms "Cause," "Change in Control," and "Good Reason" shall have the
meanings ascribed to those terms in the Employment Agreement entered into
between Employer and Participant, dated as of the date hereof, as it may be
amended from time to time, rather than the definitions included in paragraph 4.6
of the Plan. The Employment Agreement includes two definitions of Good Reason,
the standard definition that applies prior to a Change in Control and a modified
definition that applies after a Change in Control. The standard definition will
apply for purposes of the Plan and this Participation Agreement unless and until
a Change in Control occurs, after which the special post-Change in Control
definition will apply.
EMPLOYER:
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Title: Vice President
PARTICIPANT:
/s/ David G. Schreiner
----------------------------------------
David G. Schreiner
-2-
DEL WEBB CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2
PARTICIPATION AGREEMENT
(Amended and Restated Effective
as of January 1, 2000)
This amended and restated Participation Agreement is entered into as of this 1st
day of January, 2000, between Del Webb Corporation, a Delaware corporation
("Employer"), and Frank D. Pankratz ("Participant").
RECITALS
A. Employer and Participant previously entered into a Participation
Agreement dated as of April 20, 1989 providing for participation by Participant
beginning on January 1, 1989, in the Del Webb Corporation Supplemental Executive
Retirement Plan No. 2 (the "Plan").
B. The Plan was originally adopted as of January 1, 1989 and was amended
and restated as of April 20, 1993. The Plan also has been amended on four
separate occasions since its 1993 restatement.
C. Employer and Participant desire to amend and restate the Participation
Agreement and to modify and supplement the Plan as it relates to Participant,
all as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. GENERAL
This Agreement restates and reaffirms Participant's original Participation
Agreement, which was entered into on April 20, 1989, and which was effective as
of January 1, 1989. Participant's participation in the Plan is hereby
reaffirmed.
2. THE PLAN
This Participation Agreement is subject to all of the terms and provisions
of the Plan, except to the extent that the Plan is modified and supplemented
below as it applies to Participant. The Plan is expressly incorporated by
reference into this Participation Agreement. By signing this
-1-
<PAGE>
Participation Agreement, Participant acknowledges receipt of a copy of the Plan
and confirms his understanding and acceptance of all of the terms, conditions
and provisions of the Plan.
3. MODIFICATIONS
Pursuant to paragraph 8.3 of the Plan, which was added by the First
Amendment, the provisions of the Plan as they apply to Participant are modified
and supplemented as follows:
(a) Early Retirement. If Participant's employment is continued until
Participant has attained age sixty-two (62), the reduction called for by
paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall
imply that retirement is expected at any particular age.
(b) Definitions. For purposes of the Plan and this Participation Agreement,
the terms "Cause," "Change in Control," and "Good Reason" shall have the
meanings ascribed to those terms in the Employment Agreement entered into
between Employer and Participant, dated as of the date hereof, as it may be
amended from time to time, rather than the definitions included in paragraph 4.6
of the Plan. The Employment Agreement includes two definitions of Good Reason,
the standard definition that applies prior to a Change in Control and a modified
definition that applies after a Change in Control. The standard definition will
apply for purposes of the Plan and this Participation Agreement unless and until
a Change in Control occurs, after which the special post-Change in Control
definition will apply.
EMPLOYER:
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Title: Vice President
PARTICIPANT:
/s/ Frank D. Pankratz
----------------------------------------
Frank D. Pankratz
-2-
SECOND AMENDMENT TO
EMPLOYMENT AND CONSULTING AGREEMENT
This is the Second Amendment to an Employment and Consulting Agreement dated as
of July 10, 1996, and amended as of March 9, 1999 (the "Amended Agreement"),
between Del Webb Corporation ("Company") and Philip J. Dion ("Dion"). It is
pursuant to a resolution of the Board of Directors of Company adopted on
February 10, 2000.
The Amended Agreement is further amended as follows:
Section 2(b) shall be deleted and replaced in its entirety by the following:
"(b) CONSULTING PERIOD
Dion's status as an "employee" of Company shall end on November 30,
1999, the last day of the Employment Period, unless this Agreement is
terminated previously pursuant to the provisions hereof. If this Agreement
has not been previously terminated, Dion shall become a part-time
consultant to Company on December 1, 1999 and shall continue to serve as a
part-time consultant to Company until November 30, 2001. The period
beginning on December 1, 1999 and ending on November 30, 2001 shall be
referred to as the "Consulting Period". During the Consulting Period, Dion
shall serve as Chairman of the Board of Company if he is elected to the
Board of Directors by the stockholders and is appointed as Chairman by the
directors, in each case pursuant to Company's Bylaws. In such case, Dion
shall perform the duties assigned to the Chairman of the Board by Company's
Bylaws. If he is serving as a member of the Board of Directors during the
Consulting Period Mr. Dion shall receive, in addition to the Consulting Fee
set forth in Section 5, the same fees for Board Meeting and Committee
meeting attendance as other non-employee Board members, $100,000 per year
while serving as Chairman, and no additional fee for service on, or
chairing, committees. Regardless of whether Dion is serving as Chairman of
the Board during the Consulting Period, Dion shall perform such additional
or other duties as may be assigned to him by the Board as long as such
duties are of the type customarily assigned to a retired Chief Executive
Officer acting as a part-time consultant to a comparable corporation. Dion
shall not be required to perform more than 250 hours of consulting services
in either of the 12-month periods (December 1, 1999 to November 30, 2000
and December 1, 2000 to November 30, 2001) included in the Consulting
Period. Should an extraordinary situation require significant unanticipated
time on the part of Dion, the Board will consider additional compensation
related to that situation. The Consulting Period may be extended for an
additional one-year period on such terms and conditions as the parties may
agree to."
<PAGE>
The first sentence of Section 5 shall be deleted and the following inserted in
its place:
"Dion shall receive a "Consulting Fee" of $250,000 per year during the
Consulting Period."
This Second Amendment shall be effective as of December 1, 1999. Company shall
promptly forward to Dion any payments which may be due as a result of the
effective date.
Except as set forth in this Second Amendment, the provisions of the Amended
Agreement shall continue in full force and effect.
DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Robertson C. Jones
Its: Senior Vice President
Date: February 23, 2000
/s/ Philip J. Dion
----------------------------------------
Philip J. Dion
Date: February 28, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999 AND THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 17,006
<SECURITIES> 0
<RECEIVABLES> 36,674
<ALLOWANCES> 0
<INVENTORY> 1,856,368
<CURRENT-ASSETS> 0
<PP&E> 91,251
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,075,401
<CURRENT-LIABILITIES> 0
<BONDS> 1,162,014
0
0
<COMMON> 18
<OTHER-SE> 451,387
<TOTAL-LIABILITY-AND-EQUITY> 2,075,401
<SALES> 0
<TOTAL-REVENUES> 1,404,974
<CGS> 0
<TOTAL-COSTS> 1,146,918
<OTHER-EXPENSES> 190,151
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 67,905
<INCOME-TAX> 24,446
<INCOME-CONTINUING> 43,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,459
<EPS-BASIC> 2.38
<EPS-DILUTED> 2.34
</TABLE>
