SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended November 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file no. 1-8846
CALTON, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2433361
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
500 Craig Road
Manalapan, New Jersey 07726-8790
(Addresses of principal executive offices) Zip Code
Registrant's telephone number,
including area code: (908) 780-1800
Securities registered pursuant to Section 12(b) of the Act:
Title of Class
Name of each exchange
Title of each class on which registered
------------------------ -----------------------
Common Stock,
$.01 par value per share American Stock Exchange
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 No X
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K X.
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No X
The aggregate market value (based upon the last sales price reported by the
American Stock Exchange) of voting shares held by non-affiliates of the
registrant as of February 3, 1997 was $8,489,000.
As of February 3, 1997, 26,533,000 shares of Common Stock were outstanding.
Part III is incorporated by reference to the Proxy Statement for the annual
meeting of shareholders.
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Disclosure Concerning Forward-Looking Statements
All statements, other than statements of historical fact, included in this Form
10-K, including without limitation the statements under "Business," are, or
may be deemed to be, "Forward-Looking Statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Such forward-looking statements, including the statements pertaining to
the proposed extension of the Company's revolving credit facility which are
set forth under "Business - Recent Developments" involve assumptions, known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements contained in this Form 10-K. Such potential
risks and uncertainties, include without limitation, matters related to national
and local economic conditions, the effect of governmental regulation on the
Company, the competitive environment in which the Company operates, changes in
interest rates, home prices, availability and cost of land for future growth,
the timing of land acquisition and product development, availability of working
capital and the availability and cost of labor and materials, and other risk
factors detailed herein and in other of the Company's Securities and Exchange
Commission filings. The forward-looking statements are made as of the date of
this Form 10-K and the Company assumes no obligation to update the forward-
looking statements or to update the reasons actual results could differ from
those projected in such forward-looking statements.
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PART I
Item 1. BUSINESS
(a) General Development of Business
General
Calton, Inc. (the "Company" or "Calton") and its subsidiaries design, construct
and sell single family detached homes primarily in central New Jersey and
central Florida. The Company markets primarily to first and second time move-up
buyers with the 549 homes delivered in fiscal 1996 having an average sales
price of approximately $201,000.
The Company's current homebuilding activities are conducted primarily through
two divisions: the Northeast and the Florida division.
Calton was incorporated in 1981 for the purpose of acquiring all of the issued
and outstanding capital stock of Kaufman and Broad of New Jersey, Inc., a New
Jersey corporation, from Kaufman and Broad, Inc., a Maryland corporation. After
the acquisition, the name of Kaufman and Broad of New Jersey, Inc. was changed
to Calton Homes, Inc. ("Calton Homes") which continues as a wholly owned
subsidiary of Calton. Calton maintains its executive offices at 500 Craig Road,
Manalapan, New Jersey 07726 and its telephone number is (908) 780-1800.
On March 9, 1993, Calton and certain of its subsidiaries filed petitions under
Chapter 11 of the United States Bankruptcy Code. The United States Bankruptcy
Court confirmed the Plan of Reorganization (the "Reorganization") on May 6,
1993 and the Reorganization was consummated on May 28, 1993. The Reorganization
resulted in the discharge of approximately $61.5 million of indebtedness and
$22.8 million of interest payments owed to certain creditors. In exchange for
the discharge of these obligations, these creditors were issued a combination
of cash, equity securities and short-term debt instruments which were retired
in September 1993. The equity securities issued to the creditors represented
approximately 93.5% of the voting power of the Company's capital stock.
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On November 21, 1995, the Company had a significant shift in stock ownership
and voting rights. In addition, changes occurred on the Board of Directors and
in the Company's management.
Since 1969, the Company and its predecessor have constructed and sold
approximately 17,200 units in 143 residential developments in New Jersey,
Florida, Pennsylvania, California and Illinois. At November 30, 1996, the
Company had 20 communities open for sales. The Company builds single-family
detached homes ranging in base price from $96,000 to $199,000 in the Florida
division and $180,000 to $515,000 in the Northeast division. The average base
selling price of homes to be built on unsold lots, as of November 30, 1996, was
approximately $148,000 and $285,000 for the Florida and Northeast divisions,
respectively. Because of the timing of home deliveries, the average base
selling price of homes under development may not be indicative of the average
revenue per home sold in any fiscal year. See Item 1(c), "Residential
Development."
In 1996, the Company began its entry into the active adult housing market
in Ocean County, New Jersey. Through this community, marketed under the name
Renaissance, the Company will offer nine different single-family detached home
types. The Company has the contractual right to purchase up to 2,000 finished
lots on a rolling-option basis with the land seller funding the construction of
the amenities. This community is anticipated to be a major part of the
Northeast division's future deliveries and results. At Renaissance, a wide
array of amenities, including a 24-hour attended gatehouse, a 25,000 square
foot clubhouse and an eighteen-hole golf course, is planned.
Recent Developments
The maturity date of the Company's revolving credit facility (the "Facility")
has been extended from February 28, 1997 to March 31, 1997. The Company and
its lending group are in the process of finalizing the terms and conditions
of an amendment of the Facility which would extend the term through February
28, 1998 and, if certain milestones are attained, August 31, 1998. The
Company's disclosures with respect to capital resources and liquidity cannot
be finalized until negotiations with the lenders are completed. As a result,
certain portions of this report (including the Company's financial statements
for fiscal 1996 and "Management's Discussion and Analysis of Financial Condition
and Results of Operations") will be filed by amendment after the execution of
the amended Facility. No assurances can be given that an amended Facility will
be executed on terms favorable to the Company. The Company has been advised
by the American Stock Exchange that trading in the Company's Common Stock has
been suspended pending the filing of the financial statements.
(b) Financial Information About Industry Segments
Substantially all revenues and equity in earnings, operating profits and assets
of the Company and its subsidiaries are attributable to one line of business,
the development and sale of residential housing and the acquisition and sale of
real property.
(c) Description of Business
General
The Company designs, constructs and sells single family detached homes,
primarily in central New Jersey and central Florida. The Company markets
primarily to first and second time move-up buyers with the 549 homes delivered
in fiscal 1996 having an average sales price of approximately $201,000.
Corporate Operations
The Company operates through separate divisions, which are located within or
near the markets in which they operate. Each division is managed by an
executive with substantial experience in the markets served. In addition, each
division is staffed with personnel equipped with the skills to complete the
functions of land acquisition, entitlement processing, land development,
construction, marketing, sales and product service.
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The Company's corporate staff is responsible for: (i) evaluating the
suitability of and selecting geographic markets; (ii) allocating capital
resources among divisions; (iii) maintaining the Company's relations with its
lenders to regulate the flow of financial resources; and (iv) monitoring the
divisional operations. Capital commitments are determined through consultation
among senior management and division managers. Centralized financial controls
are also maintained through the standardization of accounting and financial
policies and procedures, which are applied uniformly throughout the Company.
The Company's operating strategy generally consists of: (i) targeting primarily
the second and third time move-up buyer and, beginning in 1997, the active
adult community buyer in New Jersey; (ii) conducting homebuilding activities in
markets that, based on economic and demographic trends, demonstrate strong
growth potential; (iii) designing each residential community to meet the needs
of the particular market based on local conditions and demographic factors;
(iv) minimizing land risks by purchasing entitled tracts of well-located
property through options or contingent purchase contracts and limiting land
holdings to those which can be developed within two years from the date of
purchase or where available purchasing finished lots on a rolling option basis;
(v) developing residential communities in phases which enables the Company to
reduce financial exposure, control construction and operating expenses and
adapt quickly to changes in customer demands and other market conditions; (vi)
utilizing subcontractors to perform land development and home construction on a
fixed price basis; and (vii) emphasizing the quality, features and value of its
homes.
Geographic Markets
The Company's current business operations are principally located in central
New Jersey and the greater Orlando, Florida area. Generally, the Company has
organized divisions that are located in markets that demonstrate a strong
growth profile. The Company selects locations within these markets for its
residential housing communities that have ready access to metropolitan areas by
public transportation and major arterial highways and which have experienced
increased housing demand.
In March 1995, the Company consolidated its New Jersey-North and New Jersey-
South divisions into the Northeast division. The Northeast division conducts
homebuilding activities in Burlington, Hunterdon, Monmouth, Middlesex, Ocean
and Mercer counties in New Jersey. The Company's Florida division conducts
homebuilding activities in the Orange and Seminole County areas, concentrating
in the suburban Orlando area.
The Company does not anticipate that it will expand into any new geographic
areas in fiscal 1997 and, therefore, plans to focus its operating locations and
available capital in the Northeast and Florida divisions.
Products
The Company offers a variety of homestyles tailored to meet the specific needs
of the particular geographic and demographic markets served, including the
second and third time move-up buyer and, to a lesser extent, the first time and
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first time move-up buyer. Homestyles, prices and sizes are tailored to each
community based upon the Company's assessment of specific market conditions and
the restrictions imposed by local jurisdictions. In certain projects,
recreational amenities such as tennis courts and playground areas are
constructed by the Company. The Company believes that its current product
strategy which primarily focuses on the second and third time move up and
active adult buyer enables it to mitigate some of the risks inherent in the
homebuilding industry by providing it with a product mix that supplies
particular markets that are not as susceptible to changing market conditions
including interest rate changes.
The Company generally standardizes its product line within geographic markets
it serves. This standardization improves the quality of construction and
permits efficient production techniques and bulk purchasing of materials and
components, thus reducing construction costs and the time required to build a
home. See "Sales and Marketing."
Land Acquisition, Planning and Development
Substantially all of the land acquired by the Company is purchased only after
necessary entitlements have been obtained so that the Company has certain
rights to begin development or construction as market conditions dictate. The
term "entitlements" refers to developmental approvals, tentative maps or
recorded plats, depending on the jurisdiction within which the land is located.
Entitlements generally give a developer the right to obtain building permits
upon compliance with certain conditions that are usually within the developer's
control. Although entitlements are ordinarily obtained prior to the Company's
purchase of the land, the Company is still required to obtain a variety of
other governmental approvals and permits during the development process. The
Company primarily buys finished lots that are ready for construction in the
Florida market. Although finished lots are generally not available in the
Northeast markets, the Company has entered into a contract to purchase up to
2,000 finished lots on a rolling option basis in Ocean County, New Jersey, in
its active adult community marketed under the name Renaissance.
The Company's general policy has been to control land for future development or
sale through the use of purchase options or contingent purchase contracts
whenever practicable and where market conditions permit. The Company endeavors
to acquire property for development either (i) on an installment method, with
closings on a portion of a project on a periodic basis or (ii) through the use
of purchase money mortgages. In certain cases, when available, the Company
acquires finished lots on a rolling option basis. These policies enable the
Company to limit its financial commitments, including cash expenditures and
interest and other carrying costs, and avoid large land inventories which
exceed the Company's near term development needs. At the same time, the Company
retains any appreciation in the value of the parcel prior to exercising the
option or closing the contingent purchase contract. During the option or
contingency period, the Company performs feasibility studies, technical,
engineering and environmental surveys and obtains the entitlements.
In making land acquisitions, the Company considers such factors as: (i) current
market conditions; (ii) internal and external demographic and marketing
studies; (iii) environmental conditions; (iv) proximity to developed and
recreational areas; (v) availability of mass transportation and major arterial
highways and ready access to metropolitan areas and other employment centers;
(vi) industrial and commercial growth patterns; (vii) financial review as to
the feasibility of the proposed community, including projected profit margins,
returns on capital employed and payback periods; (viii) the ability to secure
governmental approvals and entitlements; (ix) customer preferences; (x) access
to materials and subcontractors; and (xi) management's judgement as to the real
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estate market, economic trends and the Company's experience in a particular
market. The Company's development activities include land planning and securing
entitlements. These activities are performed by the Company's employees,
together with independent engineers, architects and other consultants. The
Company's employees also develop long-term planning of future communities.
Construction
The Company employs production managers who are responsible for coordinating
all functions pertaining to the construction process. All construction work for
the Company is performed by subcontractors on a fixed price basis, with the
Company acting as general contractor. In order to maintain control over costs,
quality and work schedules, the Company employs an on-site superintendent who
is responsible for supervising subcontractor work at each project.
The Company's housing is constructed according to standardized design plans
that are then customized to each individual contract preference. Generally, the
Company seeks to develop communities having a number of lots to absorb
deliveries over a minimum one year period in order to reduce the per unit cost
of the housing products which it sells. Advantages achieved by volume building
include lower unit prices paid to subcontractors and reduced material costs per
unit.
Generally, the Company's policy is to commence construction of a detached
housing unit beyond the foundation after a sales contract for that unit has
been signed. The Company does, however, ordinarily attempt to maintain a
predetermined inventory of homes in-process in order to match the construction
times of homes with the mortgage application process and to accommodate
customers who require immediate occupancy, such as relocation buyers. In
addition, in order to permit construction and delivery of housing units on a
year round basis, the Company, in anticipation of winter in the Northeast, will
start construction of foundations prior to having signed sales contracts.
Materials and Subcontractors
The Company attempts to maintain efficient operations by utilizing standardized
material available from a variety of sources. Prices for materials may
fluctuate due to various factors, including demand levels or supply shortages.
During 1996, major building material prices for lumber, asphalt and appliances
remained relatively flat while prices for concrete increased modestly. The
price of gypsum remained flat overall, increasing during the first half of the
year with a corresponding decrease during the second half.
The Company enters into contracts with numerous subcontractors representing all
building trades in connection with the construction of its homes, and has
established long-term relationships with a number of subcontractors. These
subcontractors bid competitively for each phase of the work at each project and
are selected based on quality, price and reliability. Subcontractor bids are
solicited after an internal job cost budget estimate has been prepared based on
estimated material quantities. These internal estimates serve as the formal
baseline budget against which the cost of each trade is measured. Each division
is responsible for contracting all trades in each of its communities.
Production costs are monitored monthly to assess actual versus contracted
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amounts. The Company closely monitors subcontractor performance and
expenditures on each community to assess project profitability. Additionally,
the Company is generally able to obtain reduced prices from many of its
subcontractors due to the volume of work it provides to its subcontractors.
Agreements with subcontractors generally are for three to twelve months, and
provide a fixed price for labor and materials.
The Company has, from time to time, experienced minor temporary construction
delays due to shortages of materials or availability of subcontractors. Such
construction delays may extend the period of time between the signing of a
purchase contract and the receipt of revenues by the Company at the time of
delivery of the home to the buyer. To date, the Company has experienced no
material adverse financial effects as a result of construction delays.
Currently, sufficient materials and subcontractors are available to meet the
Company's demands; however, the Company cannot predict the extent to which
shortages in necessary materials or labor may occur in the future.
Sales and Marketing
Each division establishes marketing objectives, determines retail pricing,
formulates sales strategies and develops advertising programs, which in each
case, are subject to periodic market analyses conducted by the division. The
Company typically constructs, furnishes and landscapes model homes for each
community and maintains an on-site sales office staffed with its own sales
personnel. The Company makes use of newspaper, billboard and direct mail
advertising, special promotional events and illustrated brochures in a
comprehensive marketing program. The Company has established a web site on the
Internet (http://www.caltonhomes.com) to provide its customers with additional
information on the Company's communities and homes. In marketing its products,
the Company emphasizes quality, features and value and provides a 15 year
limited warranty on its homes. In addition, the Company offers a customization
program in order to make the products the Company builds more attractive to
homebuyers by tailoring them to individual customer needs.
The Company's sales personnel participate in an intensive sales training
program to develop their skills and knowledge. The Company consults with these
personnel in the product development process to obtain and consider feedback
from customers and information with respect to the Company's competitors.
Sales of the Company's homes are made pursuant to standard sales contracts that
are customary in the markets served by the Company. Such contracts require a
customer deposit (generally up to 5% of the base selling price unless limited
by local law) at time of contract signing and provide the customer with a
mortgage contingency, if necessary. The contingency period typically is sixty
(60) days following execution of the contract. In certain instances, contracts
are contingent on the sale of a purchaser's existing home. In such cases, the
Company retains the right to sell the home to a different buyer during the
period in which the "house-to-sell" condition is not satisfied. The
cancellation rate for new contracts signed was approximately 22% for fiscal
1996. Cancellation rates may vary from year to year. The Company attempts to
limit cancellations by training its sales force to determine at the sales
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office the qualifications of potential homebuyers and by obtaining financial
information about the prospective purchaser.
At February 3, 1997, the Company employed 48 full-time and part-time sales
personnel who are paid on a salary and/or sales commission basis. The Company
also utilizes the services of independent real estate brokers through a
cooperative broker referral plan.
Customer Financing
The Company sells its homes to customers who generally finance their purchase
through conventional and government insured mortgages. The Company provides its
customers with information on a wide selection of conventional mortgage
products and various mortgage lenders to assist the homebuyer through the
mortgage process. Mortgages arranged by mortgage providers in recent years have
been mortgage loans underwritten and made directly by a lending institution to
the customer. The Company is not liable for repayment of any mortgage loans.
Backlog
At November 30, 1996, the Company had a backlog of signed contracts for 165
homes with an aggregate sales price of $40.2 million as compared to a backlog
of signed contracts for 166 homes with an aggregate sales price of
$36.0 million at November 30, 1995. All of the November 30, 1996 backlog is
expected to be completed and delivered by November 30, 1997. Backlog includes
contracts containing financing and certain other contingencies, including, in
certain instances, contracts which are contingent on the buyer selling their
homes. Due to changes in product offerings, the uncertainty of future market
conditions and the general economic environment, the sales backlog achieved in
the current period may not be indicative of those to be realized in succeeding
periods.
Residential Development
The Company markets and sells varying types of residential homes ranging in
base selling prices from $96,000 to $199,000 in the Florida division and
$180,000 to $515,000 in the Northeast division. Current average base selling
prices for the Company's homes are approximately $262,000 in New Jersey and
$154,000 in Florida. Average base selling prices of homes sold in any period or
unsold at any point in time will vary depending on the specific projects and
style of homes under development. The Company continually monitors prevailing
market conditions, including interest rates and the level of resale activity in
the markets in which it operates. The Company may, from time to time, sell all
or a portion of a residential project prior to its development by the Company.
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As of November 30, 1996, the Company had 20 residential communities open for
sales which include an aggregate of 1,150 single family detached homes to be
delivered. The following sets forth certain information as of November 30, 1996
with respect to communities being developed by each of the Company's operating
divisions:
Homes
Deliv- Homes
Homes ered Un-
Year Deliv- Year der
of Lots ered Ended Con-
First Ap- Incept- Nov. tract Un-
Deliv- proved ion to 30, (Back- sold
ery (a) Date 1996 log) Lots Price Range
Northeast ------ ----- ----- ---- ---- ---- -----------------
Belmont at Steeple-
chase (Burlington) 1995 291 55 31 8 228 $179,990-$231,990
Bey Brook Estates
(Dover) 1997 31 0 0 4 27 $396,990-$424,990
Crown Pointe
(West Windsor) 1996 94 3 3 13 78 $384,990-$475,990
Jockey Club at
Steeplechase
(Burlington) 1995 177 88 41 15 74 $137,990-$171,990
Manalapan Chase
(Manalapan) 1996 52 19 19 22 11 $328,990-$406,990
Monmouth Ridings
(Howell) 1994 144 125 38 9 10 $184,990-$223,990
Regency Oaks (Marlboro) 1995 39 26 9 8 5 $338,990-$429,990
Stanton Ridge
(Readington) 1997 14 0 0 2 12 $415,990-$514,990
Other (communities
with fewer than 5
homes unsold) 754 752 119 1 1
----- ----- --- --- ---
Total 1,596 1,068 260 82 446
----- ----- --- --- ---
Orlando, Florida
Beechwoods
(Altamonte Springs) 1995 57 38 27 3 16 $133,900-$174,990
Brookhaven Oaks
(Ocoee) 1996 42 5 5 23 14 $145,990-$179,990
Cambridge Commons
(Apopka) 1995 87 52 29 9 26 $ 99,990-$121,990
Cheshire Woods (Ocoee) 1996 100 20 20 7 73 $108,990-$127,990
Conway Harbor
(Orlando) 1997 63 0 0 1 62 $119,990-$139,990
Crescent Park
(Orlando) 1995 108 33 21 5 70 $156,990-$185,990
Cypress Lakes
(Orlando) 1996 79 24 24 6 49 $ 95,990-$114,990
Heather Glen @
Eastwood (Orlando) 1997 28 0 0 1 27 $139,990-$171,990
Longwood Club
(Longwood) 1997 52 0 0 2 50 $159,990-$198,990
The Meadows (Oviedo) 1995 49 22 13 8 19 $140,990-$176,990
Saddlebrook (Gotha) 1995 52 45 27 1 6 $130,990-$173,990
Sand Lake Cove
(Dr. Phillips) 1996 97 26 26 9 62 $164,990-$198,990
Other (communities
with fewer than 5
homes unsold) 295 282 66 8 5
----- ----- --- --- ---
Total 1,109 547 258 83 479
----- ----- --- --- ---
Chicago, Illinois 1995 78 74 31 0 4
----- ----- --- --- ---
TOTAL 2,783 1,689 549 165 929
===== ===== === === ===
(a) Includes dwelling units completed and delivered, units under construction
and units designated on subdivision or site plans where preliminary and final
subdivision or site plan approvals, which in certain instances may be subject
to the fulfillment of certain conditions imposed thereby, have been received.
Also includes approximately 252 planned homes under rolling options in 6
communities in New Jersey and Florida currently being developed and marketed by
the Company, which will require cash payments of $4.8 million in 1997,
$3.6 million in 1998 and $390,000 in 1999.
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Land Inventory
The Company acquires options or contingent purchase contracts on land where
practicable and where market conditions and lending availability permit. In
other instances, the Company has endeavored to acquire property either subject
to purchase money mortgages, or on an installment method, with closings on a
portion of a project on a periodic basis. In order to ensure the availability
of land for future development, the Company believes it is necessary to control
land in New Jersey at an earlier point in time than in other markets. As of
November 30, 1996, if all of the options held by the Company were exercised and
all of the contingent purchase contracts to which the Company is a party were
closed, the Company would have sufficient land to maintain its anticipated
level of deliveries for the next five years in the Northeast market. The
Company believes that additional acquisitions of new communities will be
required for anticipated deliveries in 1999 and beyond in the Florida market.
The Company's revolving credit facility (the "Facility") contains provisions
limiting the amount of land which the Company may acquire in any one year.
The following table sets forth certain information, as of November 30, 1996,
with respect to options held by the Company and contingent purchase contracts
to which the Company is a party:
Number of
Proposed
Residential Planned
Options by Division Communities Homes(1)
Northeast 10 3,459
Orlando, Florida 2 152
-- -----
Total 12 3,611
== =====
(1) Final development approvals have not been obtained with respect to certain
properties included in the above table. Accordingly, the number of units
approved for development, if any, may differ from the number of planned units
reflected in the table. In addition, prior to exercising an option or closing a
contingent purchase contract, the Company conducts feasibility studies and
other analyses with respect to a proposed community. In certain instances, a
determination may be made by the Company not to proceed with certain
communities. Accordingly, no assurance can be given that the Company will
ultimately pursue the development of every community reflected in the table
above.
As of November 30, 1996, the Company held options or was a party to contingent
contracts to purchase 12 parcels of land in New Jersey and Florida for which it
has paid options fees and earnest money aggregating $2.1 million (which
includes $900,000 applied to the purchase price of a property acquired in
December, 1996). A total of 3,611 homes, of which 3,297 homes are single family
and 314 are townhomes, are planned for these parcels. Through November 30,
1996, the Company has spent an additional $3.7 million in predevelopment costs
on such land, $2.6 million of which costs would not be recoverable in the event
these options were not exercised or the contracts were not closed, as the case
may be. Assuming that in each year the Company makes payments with respect to
either options or contingent contracts, exercises options, or closes such
contracts with respect to the minimum amount of land necessary to retain its
rights to acquire the remainder of the subject properties, the aggregate amount
required to retain or exercise such options or close or extend such contingent
contracts in periods subsequent to November 30, 1996 is approximately
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$11.7 million in 1997, $13.3 million in 1998, $9.7 million in 1999,
$11.9 million in 2000, $8.3 million in 2001 and $59.8 million thereafter.
Assuming the Company exercises such options and contingent contracts, the
Company will be in a position to acquire title to approximately 313, 469, 425,
618, and 293 lots during fiscal years 1997 through 2001, respectively, and
1,493 lots thereafter. The Renaissance community represents the majority of the
capital requirements and lots which are currently planned for development
subsequent to the year 2001.
Commercial Land and Buildings
Pursuant to management's continued focus on its core homebuilding business, the
Company sold four of its commercial properties in 1996 for approximately
$3.2 million. The sales resulted in an aggregate pre-tax gain of approximately
$1.1 million and provided approximately $1.8 million of additional cash for
operations.
The Company owns certain undeveloped properties in New Jersey, Florida,
California and Pennsylvania. These properties include 60 acres of commercial
property in Manalapan, New Jersey; 14 acres consisting of two parcels in Orange
County, Florida; and three other properties, two in Pennsylvania and one in
California. Each of these properties are currently available for sale except
for one of the Pennsylvania properties, which has certain acreage under
contract for sale.
Joint Ventures
The Company has participated in joint ventures in the past that were engaged in
land and residential housing development. However, as of November 30, 1996, the
Company had no involvement in any active joint ventures. In 1996, the Company
received $460,000 of a fully reserved note receivable from a previous joint
venture.
Competition
The Company's business is highly competitive. Homebuilders compete for
desirable properties, financing, raw materials and skilled labor among other
things. The Company competes in each of the geographic areas in which it
operates with numerous real estate developers, ranging from small local to
larger regional and national builders and developers, some of which have
greater sales and financial resources than the Company. Resales of housing
provide additional competition. The Company competes primarily on the basis of
quality, features, value, reputation, price, location, design and amenities.
Regulation and Environmental Matters
The Company is subject to various local state and federal statutes, ordinances,
rules and regulations concerning zoning, building design, construction and
similar matters, including local regulation which imposes restrictive zoning
and density requirements in order to limit the number of homes that can
eventually be built within the boundaries of a particular locality. In
addition, the Company is subject to registration and filing requirements in
connection with the construction, advertisement and sale of its communities in
certain states and localities in which it operates even if any or all necessary
government approvals have been obtained. Generally, the Company must obtain
numerous government approvals, licenses, permits, and agreements before it can
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commence development and construction. Certain governmental authorities impose
fees as a means of defraying the cost of providing certain governmental
services to developing areas, or have required developers to donate land to the
municipality or make certain off-site land improvements. The Company may also
be subject to periodic delays or may be precluded entirely from developing
communities due to building moratoriums that could be implemented in the future
in the states in which it operates. Generally, such moratoriums relate to
insufficient water or sewage facilities.
The Company is also subject to a variety of local, state and federal statutes,
ordinances, rules and regulations concerning protection of health and the
environment ("environmental laws"). The particular environmental laws which
apply to any given community vary greatly according to the community site, the
site's environmental conditions and the present and former uses of the site.
These environmental laws may result in delays, may cause the Company to incur
substantial compliance and other costs, and can prohibit or severely restrict
development in certain environmentally sensitive regions or areas. For example,
in July 1987, New Jersey adopted the Fresh Water Wetlands Protection Act which
restricts building in or near certain protected geographic areas designated as
fresh water wetlands. The preservation of wetlands located within a project may
lessen the number of units that may be built in a particular project. The
Company has planned all of its projects containing wetlands to comply with the
regulations adopted under the Fresh Water Wetlands Protection Act and does not
believe that this legislation will adversely affect its present development
activities in New Jersey.
The State of Florida has adopted a wide variety of other environmental
protection laws. The laws regulate developments of substantial size and
developments in or near certain specified geographic areas within the State of
Florida, including the Big Cypress, Green Swamp and Florida Keys areas,
imposing requirements for development approvals which are more stringent than
those which the Company would have to meet in Florida for development outside
of these geographic areas. Further, the State of Florida regulates certain
types of developments located in or near certain types of geographic areas,
plant life or animal life. The Company does not believe that any land owned by
it that is planned for development is the site of any protected plant or animal
life. Although the Company owns land in or near certain protected types of
geographic areas, the Company designs its various communities to avoid
disturbing such areas so that certain regulations with respect to these areas
are not applicable. When the Company undertakes development activity in or near
or which may have an impact on any protected areas, it is required to satisfy
more stringent requirements for developmental approval than would otherwise be
applicable. In addition, the laws of the State of Florida require the use of
construction materials which reduce the energy consumption required for heating
and cooling.
The Florida Growth Management Act of 1985 requires that an infrastructure,
including roads, sewer and water lines, must be in existence or funded
concurrently with the construction of the development. If such infrastructure
will not be concurrently available or funded, then the project cannot be
developed. This will have an effect on limiting the amount of land available
for development and may delay construction and completion of some developments.
-11-
In July 1985, New Jersey adopted the Fair Housing Act which established an
administrative agency to adopt criteria by which municipalities will determine
and provide for their fair share of low and moderate income housing ("Mt.
Laurel" housing). This agency promulgated regulations with respect to such
criteria effective August 1986.
The Company may be required to set aside Mt. Laurel housing in certain
municipalities in which it owns or has the right to acquire land. In order to
comply with such requirements, the Company may be required to (i) sell some
homes at prices which would result in no gain or loss and an operating margin
less than would have resulted otherwise, or (ii) contribute to public funding
of affordable housing, which contribution will increase the costs of homes to
be developed in a community. The Company attempts to recover some of these
potential losses or reduced margins through increased density, certain cost
saving construction and land development measures and reduced land prices for
the sellers of property.
Despite the Company's past ability to obtain necessary permits and development
approvals for its communities, it can be anticipated that increasingly
stringent requirements will be imposed on developers and homebuilders in the
future. Although the Company cannot predict the effect of these requirements,
they could result in time consuming and expensive compliance programs and
substantial expenditures for pollution and water quality control, which could
materially adversely affect the Company. In addition, the continued
effectiveness of permits already granted or development approvals already
obtained is dependent upon many factors, some of which are beyond the Company's
control, such as changes in policies, rules and regulations and their
interpretation and application.
The foregoing does not purport to be a full description of all of the
legislation and regulations impacting the business of the Company. The Company
may be subject to numerous other governmental rules and regulations regarding
building standards, labor practices, environmental matters and other aspects of
real estate development in each jurisdiction in which it does business.
Employees
As of February 3, 1997, the Company employed approximately 118 full-time
personnel, including 15 corporate employees, 62 employees in the Northeast
division and 41 employees in the Florida division. The Company also employs
approximately 20 part-time employees in various locations. The Company believes
its employee relations are satisfactory.
Item 2. COMPANY FACILITIES
The Company leases approximately 19,413 square feet of office space (of which
3,629 square feet are sublet to tenants) and 6,200 square feet of storage space
in a two-story office building in Manalapan, New Jersey, which houses the
Company's corporate headquarters and its Northeast division. In addition, the
Company leases 5,280 square feet of office space in Florida. Management
believes that these arrangements provide adequate space for the Company to
conduct its operations.
-12-
The Company also has remote sales offices when not utilizing a model home and
construction offices on each of its project sites, some of which include mobile
units which are leased for terms varying from one month to one year. From time
to time the Company also leases model homes in some of its communities which
the Company has previously sold to third parties under a lease-back
arrangement. The current leases on model homes have terms up to two years.
Item 3. LEGAL PROCEEDINGS
In July 1994, an action was filed against Calton Homes, Inc., the Township of
Plainsboro, New Jersey and its planning board, certain real estate brokers and
certain unnamed officers of Calton Homes, Inc., by approximately 60 purchasers
in the Company's Princeton Manor development seeking compensatory and punitive
damages arising out of an alleged failure to disclose that a portion of the
property adjacent to the community could be developed by Plainsboro Township as
a public works site. The Company is vigorously contesting this matter and,
although there can be no assurances, does not believe that the case will have
any material effect on the financial position, results of operations or cash
flows of the Company. In addition, the Company believes that it is
contractually entitled to indemnification from Plainsboro Township in the event
that any liability should arise.
In June 1996, the Federal Deposit Insurance Corporation (the "FDIC"), in its
capacity as Liquidating Agent/Receiver of Eliot Savings Bank, instituted an
action in the United States District Court, District of Massachusetts, seeking
recovery of amounts owed under a $5.7 million promissory note (the "Note")
issued to Eliot Savings Bank by the Residences at the Surf joint venture (the
"Joint Venture"), an entity in which a Talcon, L.P. ("Talcon") subsidiary had
an interest. This action relates to a loan on property owned by the Joint
Venture. The loan was placed on the property before Talcon was formed.
Accordingly, in connection with the creation of Talcon, the interest in the
Joint Venture was transferred upstream to Calton, Inc. and then transferred
downstream into Talcon, and eventually into the Talcon subsidiary. In its suit,
the FDIC alleges, among other things, that Calton, by virtue of the assignment
of the interest in the Joint Venture to Calton in 1987, has liability as a
general partner in the Joint Venture and is seeking to collect approximately
$8.7 million in principal and interest from Calton and other parties. While no
discovery has occurred to date, based upon a preliminary analysis of this
matter, Calton believes that the FDIC's position is contrary to applicable law
and that Calton does not have any obligations under the Note by virtue of the
assignment of the interest in the Joint Venture to Calton or otherwise. The
Company will vigorously contest this matter but there can be no assurances that
the case will not have a material adverse effect on the Company's financial
position, results of operations or cash flows.
Calton and its subsidiaries are involved from time to time in routine
litigation. Management does not believes that any of this litigation is
material to the financial position, results of operations or cash flows of the
Company.
Calton's by-laws contain provisions which provide indemnification rights to
officers, directors and employees under certain circumstances with respect to
-13-
liabilities and damages incurred in connection with any proceedings brought
against such persons by reason of their being officers, directors or employees
of Calton.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of 1996, no matter was submitted to a vote of
security holders through the solicitation of proxies or otherwise.
Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive officers of the Company as of February 3, 1997 are listed below
and brief summaries of their business experience and certain other information
with respect to them is set forth in the following table and in the information
which follows the table.
Name Age Position
Anthony J. Caldarone 59 Chairman, President and Chief Executive Officer
Robert A. Fourniadis 39 Senior Vice President-Legal and Secretary
Bradley A. Little 46 Senior Vice President-Finance, Treasurer and
Chief Financial Officer
Mr. Caldarone was reappointed as Chairman, President and Chief Executive
Officer of Calton in November 1995, having previously served in such capacities
from the inception of the Company in 1981 through May 1993 when the Company
consummated the Reorganization. From June 1993 through October 1995, Mr.
Caldarone served as a Director of the Company.
Mr. Fourniadis was named Senior Vice President, Secretary and Corporate Counsel
of Calton in June 1993 following the consummation of the Reorganization. Prior
thereto, Mr. Fourniadis served as Vice President and Corporate Counsel of
Calton Homes from 1988 to 1993.
Mr. Little was named Senior Vice President, Treasurer and Chief Financial
Officer of Calton in June 1993 following the consummation of the
Reorganization. Prior thereto, Mr. Little had served as Vice President of
Accounting of Calton from 1989 to June 1993.
-14-
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common stock is traded on the American Stock Exchange
("AMEX") under the symbol CN. The following reflects the high and
low sales prices of the common stock during fiscal 1996 and 1995.
High Low
Fiscal 1996
1st Quarter 7/16 5/16
2nd Quarter 3/4 3/8
3rd Quarter 1/2 5/16
4th Quarter 3/8 1/4
Fiscal 1995
1st Quarter 1-1/8 5/8
2nd Quarter 11/16 3/8
3rd Quarter 1/2 3/8
4th Quarter 9/16 5/16
At February 3, 1997, there were approximately 648 holders of the
Company's common stock.
The Company has not paid dividends on its capital stock in the past. In
addition, the terms of the Facility prohibits the payment of dividends.
Item 6. SELECTED FINANCIAL DATA
To be filed by amendment.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
To be filed by amendment.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
To be filed by amendment.
Item 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-15-
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to Directors is incorporated herein by reference
to "Election of Directors" contained in the Registrant's definitive
proxy statement for the annual meeting of shareholders. Certain
information relating to executive officers of the Company is set
forth in Item 4A of Part I of this Form 10-K under the caption
"Executive Officers of the Registrant."
Item 11. EXECUTIVE COMPENSATION
Information pertaining to executive compensation is incorporated
herein by reference to "Election of Directors-Executive Compensation"
contained in the Registrant's definitive proxy statement for the
annual meeting of shareholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information pertaining to security ownership of certain beneficial
owners and management is incorporated herein by reference to
"Principal Shareholders" and "Security Ownership of Management" from
the Registrant's definitive proxy statement for the annual meeting
of shareholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
None.
-16-
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Page
(a) 1. and 2. Financial statements and financial statement schedules*
Reference is made to the Index of Financial Statements and
Financial Statement Schedules hereinafter contained F-1
3. Exhibits
Reference is made to the Index of
Exhibits hereinafter contained F-2
and
F-3
(b) Reports on Form 8-K
None
* To be filed by amendment.
-17-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CALTON, INC.
(Registrant)
By: /s/ Bradley A. Little
BRADLEY A. LITTLE,
Senior Vice President-Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ Anthony J. Caldarone Chairman, Chief Executive March 17, 1997
(Anthony J. Caldarone) Officer and President
(Principal Executive Officer)
/s/ Bradley A. Little Senior Vice President - Finance March 17, 1997
(Bradley A. Little) & Treasurer (Principal
Financial & Accounting Officer)
/s/ J. Ernest Brophy Director March 17, 1997
(J. Ernest Brophy)
/s/ Mark N. Fessel Director March 17, 1997
(Mark N. Fessel)
/s/ Frank Cavell Smith, Jr. Director March 17, 1997
(Frank Cavell Smith, Jr.)
-18-
CALTON, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page Number
Consolidated Balance Sheet at November 30, 1996 and 1995. . . . . . . . . . . *
Consolidated Statement of Operations for the years ended
November 30, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . *
Consolidated Statement of Cash Flows for the years
ended November 30, 1996, 1995 and 1994. . . . . . . . . . . . . . . . . . . *
Consolidated Statement of Shareholders' Equity for
the years ended November 30, 1996, 1995 and 1994. . . . . . . . . . . . . . *
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . *
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . *
Consent of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . *
Schedules**
II-Valuation and Qualifying Accounts. . . . . . . . . . . . . . . . . . . . . *
* To be filed by amendment.
** Schedules other than the schedule listed above have been omitted because of
the absence of the conditions under which they are required or because the
required information is presented in the financial statements or the notes
thereto.
F-1
INDEX TO EXHIBITS
2. Plan of Reorganization of the Registrant and Subsidiaries
incorporated by reference to Exhibit 2 to Amendment No. 1 to Form S-1
Registration Statement under the Securities act of 1933, Registration
No. 33-60022.
3.1 Amended and Restated Certificate of Incorporation of the Registrant
filed with the Secretary of State, State of New Jersey on May 28,
1993, incorporated by reference to Exhibit 3.2 to Amendment No. 1 to
Form S-1 Registration Statement under the Securities Act of 1933,
Registration No. 33-60022 and Certificate Amendment to Amended and
Restated Certificate of Incorporation of Registrant filed with the
Secretary of State, State of New Jersey on April 27, 1994,
incorporated by reference to Exhibit 3(b) to Form S-1 Registration
Statement under the Securities Act of 1933, Registration No. 33-
76312.
3.2 By Laws of Registrant, as amended, incorporated by reference to
Exhibit 3.1 of Form 10-K of Registrant for the fiscal year ended
November 30, 1990.
4. Amended and Restated Loan and Security Agreement dated as of May 28,
1993, among the Registrant, Calton Funding, Inc. and a group of
financial institutions, incorporated by reference to Exhibit 4 to
Amendment No. 1 to Form S-1 Registration Statement under the
Securities Act of 1933, Registration No. 33-60022, the First, Second
and Third Amendments to such Amended and Restated Loan and Security
Agreement, incorporated by reference to Exhibit 4 to Form 10-K of
Registrant for the fiscal year ended November 30, 1993, Fourth
Amendment to such Amended and Restated Loan Agreement, incorporated
by reference to Exhibit 10.7(b) to Amendment No. 2 to Form S-1
Registration Statement under the Securities Act of 1933, Registration
No. 33-76312, Fifth Amendment to such Amended and Restated Loan and
Security Agreement incorporated by reference to Exhibit 4 to Form 10-
K of Registrant for the fiscal year ended November 30, 1994, Sixth
Amendment to such Loan and Security Agreement, incorporated by
reference to Exhibit 4 to Form 10-K of Registrant for the fiscal year
ended November 30, 1995, Seventh Amendment to such Loan and Security
Agreement, incorporated by reference to Exhibit 4 to Form 10-K of
Registrant for the fiscal year ended November 30, 1995, Eighth
Amendment to such Loan and Security Agreement and Ninth Amendment to
such Loan and Security Agreement.
(*)10.1 1996 Equity Incentive Plan.
(*)10.3 Registrant's Amended and Restated 1993 Non-Qualified Stock Option
Plan, incorporated by reference to Exhibit 10.3 to Form 10-K of
Registrant for the fiscal year ended November 30, 1995.
(*)10.4 Incentive Compensation Plan of Registrant.
(*)10.6 Severance Policy for Senior Executives of Registrant incorporated by
reference to Exhibit 10.6 of Form 10-K of Registrant for the fiscal
year ended November 30, 1994.
F-2
(**)10.7 Executive Employment Agreement dated as of November 21, 1995 between
Registrant and Anthony J. Caldarone, incorporated by reference to
Exhibit 10.7 to Form 10-K of Registrant for the fiscal year ended
November 30, 1995.
(**)10.8 Supplemental Executive Compensation Agreement dated as of May 12,
1995 between the Registrant and Douglas T. Noakes, incorporated by
reference to Exhibit 10.8 to Form 10-K of Registrant for the fiscal
year ended November 30, 1995.
(**)10.9 Supplemental Executive Compensation Agreement dated as of May 12,
1995 between the Registrant and Bradley A. Little, incorporated by
reference to Exhibit 10.9 to Form 10-K of Registrant for the fiscal
year ended November 30, 1995. An agreement substantially identical in
term and content and executed by the Registrant and Robert A.
Fourniadis has not been reproduced herein.
13. Certain pages of Registrant's 1996 Annual Report to Shareholders
which, except for those portions expressly incorporated herein by
reference, are not deemed filed a part hereof - to be filed by
amendment.
21. Subsidiaries of the Registrant.
27. Financial Data Schedule - to be filed by amendment.
(*) Constitutes a compensatory plan required to be filed as an exhibit
pursuant to Item 14(c) of Form 10-K.
(**) Constitutes a management contract required to be filed pursuant to
Item 14(c) of Form 10-K.
F-3
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
EXHIBITS
FILED WITH
ANNUAL REPORT
ON
FORM 10-K
CALTON, INC.
1996
CALTON, INC.
FORM 10-K
FOR FISCAL YEAR ENDED NOVEMBER 30, 1996
EXHIBIT 4
EIGHTH AND NINTH AMENDMENTS TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
EIGHTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This EIGHTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Eighth Amendment") is dated as of January 31, 1997, and
entered into by and among Calton, Inc., a New Jersey corporation ("Company"),
Calton Funding, Inc., a New Jersey corporation (together with Company, the
"Borrowers"), the subsidiaries of Company listed on the signature pages hereof
as guarantors (the "Guarantors"), the financial institutions listed on the
signature pages hereof ("Lenders") and The Chase Manhattan Bank (formerly known
as Chemical Bank), as agent for Lenders ("Agent") and as collateral agent for
Lenders ("Collateral Agent") and is made with reference to that certain Amended
and Restated Loan and Security Agreement dated as of May 28, 1993 (such
agreement, as amended through the date hereof and as it may hereafter be
amended from time to time, the "Amended Loan Agreement"), by and among
Borrowers, Guarantors, Lenders, Agent and Collateral Agent. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Amended Loan Agreement.
RECITALS
WHEREAS, the Amended Loan Agreement has heretofore been amended by
the First Amendment to Amended and Restated Loan and Security Agreement dated
as of September 27, 1993; the Second Amendment to Amended and Restated Loan and
Security Agreement dated as of October 14, 1993: the Limited Waiver, Release
and Consent Regarding Sale of Lancot Mortgage Co., Inc., dated as of
October 14, 1993; the Third Amendment to Amended and Restated Loan and Security
Agreement dated as of January 19, 1994; the Fourth Amendment to Amended and
Restated Loan and Security Agreement dated as of February 28, 1994; the Joinder
Agreement dated as of June 1, 1994 entered into by Pennway Joint Venture, L.P.
in favor of the Collateral Agent (for the benefit of the Lenders); the Joinder
Agreement, Amendment and Limited Waiver (Calton Homes of Chicago, Inc.) dated
as of September 12, 1994; the Fifth Amendment to Amended and Restated Loan and
Security Agreement dated as of February 23, 1995; the Sixth Amendment to
Amended and Restated Loan and Security Agreement dated as of May 31, 1995; and
the Seventh Amendment to Amended and Restated Loan and Security Agreement dated
as of February 23, 1996;
WHEREAS, subsection 2.8A of the Amended Loan Agreement provides that
the Issuing Lender shall not issue any Letter of Credit with an expiration date
later than the earlier of (x) the Commitment Termination Date and (y) the date
that is one year from the date of issuance of such Letter of Credit;
WHEREAS, Credit Parties and Lenders desire to amend the Amended Loan
Agreement in order to allow the Issuing Lender to extend the expiration date of
the Letters of Credit identified on Schedule 1 hereto beyond the Commitment
Termination Date, to February 28, 1998, and to provide that the reimbursement
obligations of any Letters of Credit that remain outstanding on the Commitment
Termination Date shall be cash collateralized by the Borrowers;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE AMENDED LOAN AGREEMENT
1.1 Amendments to Section 1: Provisions Relating to Defined Terms.
A. Subsection 1.1 of the Amended Loan Agreement is hereby amended by
adding the following definitions thereto in alphabetical order:
"Eighth Amendment" means the Eighth Amendment to Amended and Restated
Loan and Security Agreement dated as of January 31, 1997, by and among
Borrowers, Guarantors, Lenders, Agent and Collateral Agent.
1.2 Amendments to Section 2: Amounts and Terms of Loans.
A. Subsection 2.8A of the Amended Loan Agreement is hereby amended
by deleting the second sentence therefrom in its entirety and substituting the
following two sentences therefor:
"In no event shall the Issuing Lender issue any Letter of Credit
having an expiration date later than the earlier of (x) the Commitment
Termination Date and (y) the date which is one year from the date of
issuance of such Letter of Credit; provided that (i) clause (y) of this
sentence shall not prevent the Issuing Lender from agreeing that a Letter
of Credit will be automatically extended for a period not to exceed one
year unless the Issuing Lender elects not to extend for such additional
period and (ii) this sentence shall not prevent the Issuing Lender from
agreeing to extend the expiration date of the Letters of Credit identified
on Schedule 1 to the Eighth Amendment to a date not later than February
28, 1998. On the Commitment Termination Date, an amount equal to the
maximum amount that may at any time be drawn on all Letters of Credit then
outstanding (including, without limitation, Letters of Credit with
expiration dates after the Commitment Termination Date, and whether or not
any beneficiary under any Letter of Credit shall have presented or shall
be entitled to present, the drafts and other documents required to draw
under the Letter of Credit) shall automatically become immediately due and
payable, without presentment, demand, protest or other requirement of any
kind, all of which are hereby expressly waived by each Borrower. Such
amount shall be held by the Issuing Lender, pursuant to such documentation
as the Issuing Lender shall request, as cash collateral for the obligation
of Borrowers to reimburse the Issuing Lender in the event of any drawing
upon such Letters of Credit. Such cash collateral shall be held and
applied by the Issuing Lender as described in the final paragraph of
Section 8."
Section 2. CONDITIONS TO EFFECTIVENESS OF AMENDMENTS
Section 1 of this Eighth Amendment shall become effective only upon
the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Eighth
Amendment Effective Date"):
A. On or before the Eighth Amendment Effective Date, Credit Parties
shall deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its
counsel) the following, each, unless otherwise noted, dated the Eighth
Amendment Effective Date:
1. Resolutions of its Board of Directors or, in the case of a
Credit Party which is not a corporation, resolutions of the Board of
Directors of the general partner or other Person authorized to act on
its behalf, approving and authorizing the execution, delivery and
performance of this Eighth Amendment, certified as of the Eighth
Amendment Effective Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or
amendment; and
2. Signature and incumbency certificates of its officers
executing this Eighth Amendment, certified as of the Eighth Amendment
Effective Date by its corporate secretary or assistant secretary;
3. Executed copies of this Eighth Amendment.
B. Borrowers shall have paid all fees, costs and expenses of Agent
(including fees and expenses of counsel for Agent) and Lenders accrued and
unpaid as of the Eighth Amendment Effective Date.
C. On or before the Eighth Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and such
counsel, and Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Agent may
reasonably request.
Section 3. CREDIT PARTIES' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Eighth Amendment and to
amend the Amended Loan Agreement in the manner provided herein, each Credit
Party represents and warrants to each Lender that the following statements are
true, correct and complete:
A. Corporate Power and Authority. Such Credit Party has all
requisite corporate or partnership power and authority to enter into this
Eighth Amendment and to carry out the transactions contemplated by, and perform
its obligations under, the Amended Loan Agreement as amended by this Eighth
Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery by such
Credit Party of this Eighth Amendment and the performance by such Credit Party
of the Amended Agreement have been duly authorized by all necessary corporate
or partnership action on the part of such Credit Party, as the case may be.
C. No Conflict. The execution and delivery by such Credit Party of
this Eighth Amendment and the performance by such Credit Party of the Amended
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to such Credit Party or any of its
Subsidiaries, or any order, judgment or decree of any court or other agency of
government binding on such Credit Party or any of its Subsidiaries, (ii)
violate any provision of the Certificate or Articles of Incorporation or Bylaws
of such Credit Party if it is a corporation or of its general partner or such
other person or persons authorized to act on its behalf if it is not a
corporation, (iii) violate any provision of its partnership, joint venture or
similar organizational agreement if it is not a corporation, (iv) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of such Credit Party or any of
its Subsidiaries, (v) result in or require the creation or imposition of any
Lien upon any of the properties or assets of such Credit Party or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Collateral Agent on behalf of Lenders), or (vi) require any approval
of stockholders or partners or any approval or consent of any Person under any
Contractual Obligation of such Credit Party or any of its Subsidiaries, except
for such approvals or consents which have been obtained on or before the Eighth
Amendment Effective Date and disclosed in writing to Lenders.
D. Governmental Consents. The execution and delivery by such
Credit Party of this Eighth Amendment and the performance by such Credit Party
of the Amended Agreement do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
E. Binding Obligation. This Eighth Amendment and the Amended
Agreement have been duly executed and delivered by each of the Credit Parties
party thereto and are the legally valid and binding obligations of each such
Credit Party, enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. Incorporation of Representations and Warranties From Amended
Loan Agreement. The representations and warranties contained in Section 5 of
the Amended Loan Agreement are and will be true, correct and complete in all
material respects on and as of the Eighth Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Eighth Amendment that would constitute an Event of Default or a Potential Event
of Default.
H. Subsidiaries of Borrowers. Other than the Guarantors listed on
the signature pages hereof, no Subsidiary of the Borrowers owns assets with any
material value.
Section 4. ACKNOWLEDGEMENT AND CONSENT
Borrowers are each party to the Borrower Security Agreement, the
Borrower Pledge Agreement, the Account Collateral Security Agreement and
certain other Security Documents, in each case as amended through the Eighth
Amendment Effective Date, pursuant to which Borrowers have created Liens in
favor of Collateral Agent on certain Collateral to secure the Obligations of
the Borrowers. Each Guarantor is a party to the Amended Guaranty Agreement and
certain Guarantors are parties to the Guarantor Security Agreement, the
Guarantor Pledge Agreement, the Account Collateral Security Agreement, certain
Mortgages, and/or certain other Security Documents, in each case as amended
through the Eighth Amendment Effective Date, pursuant to which such Guarantor
has (i) guarantied the Obligations of the Borrowers and (ii) created Liens in
favor of Collateral Agent on certain Collateral to secure the Obligations of
such Guarantor under the Amended Guaranty Agreement. Borrowers and Guarantors
are collectively referred to herein as the "Credit Support Parties", and the
Amended Guaranty Agreement and the Security Documents are collectively referred
to herein as the "Credit Support Documents".
Each Credit Support Party hereby acknowledges that it has reviewed
the terms and provisions of this Eighth Amendment and consents to the
amendments and limited waiver effected pursuant to this Eighth Amendment. Each
Credit Support Party hereby confirms that each Credit Support Document to which
it is a party or otherwise bound and all Collateral encumbered thereby will
continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as
such terms are defined in the applicable Credit Support Document), including
without limitation the payment and performance of all such "Obligations,"
"Guarantied Obligations" or "Secured Obligations," as the case may be, in
respect of the Obligations of Borrowers now or hereafter existing under or in
respect of the Amended Agreement and the other Loan Documents.
Each Credit Support Party acknowledges and agrees that each of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Eighth Amendment.
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Amended Loan Agreement and the
Other Loan Documents.
(i) On and after the Eighth Amendment Effective Date, each reference
in the Amended Loan Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Amended Loan Agreement,
and each reference in the other Loan Documents to the "Amended Loan
Agreement", "thereunder", "thereof" or words of like import referring to
the Amended Loan Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by Section 1 of this Eighth
Amendment, the Amended Loan Agreement and the other Loan Documents shall
remain in full force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Eighth
Amendment shall not constitute a waiver of any provision of, or operate as
a waiver of any right, power or remedy of Agent, Collateral Agent or any
Lender under, the Amended Loan Agreement or any of the other Loan
Documents.
(iv) Nothing herein shall constitute a waiver or forbearance with
respect to any Events of Default and/or Potential Events of Default
existing on the date hereof.
B. Fees and Expenses. Borrowers acknowledge that all costs, fees
and expenses as described in subsection 11.2 of the Amended Loan Agreement
incurred by Agent, Collateral Agent, Lenders and their counsel with respect to
this Eighth Amendment and the documents and transactions contemplated hereby
shall be for the account of Borrowers.
C. Headings. Section and subsection headings in this Eighth
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Eighth Amendment for any other purpose or be given
any substantive effect.
D. Applicable Law. THIS EIGHTH AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Eighth Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Eighth Amendment shall
become effective upon the execution of a counterpart hereof by each Lender and
each of the other parties hereto, receipt by Company and Agent of written or
telephonic notification of such execution and authorization of delivery thereof
and satisfaction or waiver by each Lender of the conditions to effectiveness
set forth in Section 2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
BORROWERS:
CALTON, INC.
By: /s/ Robert A. Fourniadis
Title: Senior Vice President
CALTON FUNDING, INC.
By: /s/ Robert A. Fourniadis
Title: Senior Vice President
GUARANTORS:
Calton California Equity Corp.
Calton Capital, Inc.
Calton Capital II, Inc.
Calton General, Inc.
Calton Homes, Inc.
Calton Homes of California, Inc.
Calton Homes of Florida, Inc.
Calton Homes of Pennsylvania, Inc.
Calton Homes of Pennsylvania
at Pennway, Inc.
Calton Homes of Tampa, Inc.
Calton Lindenwood Corporation
Calton Manzanita Corporation
Calton Tamarack Corporation
Calcap Commercial Management, Inc.
Calcap X, Inc.
Calcap XV, Inc.
Calcap XXXI, Inc.
Calcap XXXII, Inc.
Calcap XXXIII, Inc.
Calcap 36, Inc.
Calcap 42, Inc.
Calcap 48, Inc.
Calton Homes of Chicago, Inc.
Each by: /s/ Robert A. Fourniadis
Title: President
Calton Homes Finance, Inc.
Calton Homes Finance II, Inc.
Each by: /s/ Robert A. Fourniadis
Title: Senior Vice President
Talcon Title Agency, L.P.
By: Calton General, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 31, L.P.
By: Calcap XXXI, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 32, L.P.
By: Calcap XXXII, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 33, L.P.
By: Calcap XXXIII, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 48, L.P.
By: Calcap 48, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 36, L.P.
By: Calcap 36, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
LENDERS:
THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank), Individually
and as Agent and Collateral Agent
By: /s/ Jane P. Orndahl
Title: Vice President
DRESDNER KLEINWORT BENSON LIMITED,
as a Lender
By: /s/ Iain Leigh
Title: Senior Vice President
FOOTHILL CAPITAL CORPORATION,
as a Lender
By: /s/ Karen S. Sandler
Title: Vice President
GOLDMAN SACHS CREDIT PARTNERS, L.P.
(formerly known as Pearl Street, L.P.),
as a Lender
By: /s/ John E. Urban
Title: Authorized Signer
SCHEDULE 1
LETTERS OF CREDIT
1. Letter of Credit Number T-218170 in the amount of $500,000.00.
2. Letter of Credit Number T-218171 in the amount of $500,000.00.
3. Letter of Credit Number T-228642 in the amount of $235,585.76.
4. Letter of Credit Number T-241136 in the amount of $158,225.38.
NINTH AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This NINTH AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Ninth Amendment") is dated as of February 28, 1997, and
entered into by and among Calton, Inc., a New Jersey corporation ("Company"),
Calton Funding, Inc., a New Jersey corporation (together with Company, the
"Borrowers"), the subsidiaries of Company listed on the signature pages hereof
as guarantors (the "Guarantors"), the financial institutions listed on the
signature pages hereof ("Lenders") and The Chase Manhattan Bank (formerly known
as Chemical Bank), as agent for Lenders ("Agent") and as collateral agent for
Lenders ("Collateral Agent") and is made with reference to that certain Amended
and Restated Loan and Security Agreement dated as of May 28, 1993 (such
agreement, as amended through the date hereof and as it may hereafter be
amended from time to time, the "Amended Loan Agreement"), by and among
Borrowers, Guarantors, Lenders, Agent and Collateral Agent. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Amended Loan Agreement.
RECITALS
WHEREAS, the Amended Loan Agreement has heretofore been amended by
the First Amendment to Amended and Restated Loan and Security Agreement dated
as of September 27, 1993; the Second Amendment to Amended and Restated Loan and
Security Agreement dated as of October 14, 1993: the Limited Waiver, Release
and Consent Regarding Sale of Lancot Mortgage Co., Inc., dated as of
October 14, 1993; the Third Amendment to Amended and Restated Loan and Security
Agreement dated as of January 19, 1994; the Fourth Amendment to Amended and
Restated Loan and Security Agreement dated as of February 28, 1994; the Joinder
Agreement dated as of June 1, 1994 entered into by Pennway Joint Venture, L.P.
in favor of the Collateral Agent (for the benefit of the Lenders); the Joinder
Agreement, Amendment and Limited Waiver (Calton Homes of Chicago, Inc.) dated
as of September 12, 1994; the Fifth Amendment to Amended and Restated Loan and
Security Agreement dated as of February 23, 1995; the Sixth Amendment to
Amended and Restated Loan and Security Agreement dated as of May 31, 1995; the
Seventh Amendment to Amended and Restated Loan and Security Agreement dated as
of February 23, 1996; and the Eighth Amendment to Amended and Restated Loan and
Security Agreement dated as of January 31, 1997;
WHEREAS, the parties hereto wish to amend the definition of
"Commitment Termination Date" in order to extend the scheduled expiration of
the Commitments from February 28, 1997 to March 31, 1997;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE AMENDED LOAN AGREEMENT
1.1 Amendments to Section 1: Provisions Relating to Defined Terms.
Subsection 1.1 of the Amended Loan Agreement is hereby amended by
deleting the reference to "February 28, 1997" in the definition of "Commitment
Termination Date" and substituting therefor a reference to "March 31, 1997".
Section 2. CONDITIONS TO EFFECTIVENESS OF AMENDMENTS
Section 1 of this Ninth Amendment shall become effective only upon
the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Ninth
Amendment Effective Date"):
A. On or before the Ninth Amendment Effective Date, Credit Parties
shall deliver to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its
counsel) the following, each, unless otherwise noted, dated the Ninth
Amendment Effective Date:
1. Resolutions of its Board of Directors or, in the case of a
Credit Party which is not a corporation, resolutions of the Board of
Directors of the general partner or other Person authorized to act on
its behalf, approving and authorizing the execution, delivery and
performance of this Ninth Amendment, certified as of the Ninth
Amendment Effective Date by its corporate secretary or an assistant
secretary as being in full force and effect without modification or
amendment; and
2. Signature and incumbency certificates of its officers
executing this Ninth Amendment, certified as of the Ninth Amendment
Effective Date by its corporate secretary or assistant secretary;
3. Executed copies of this Ninth Amendment.
B. Borrowers shall have paid all fees, costs and expenses of Agent
(including fees and expenses of counsel for Agent) and Lenders accrued and
unpaid as of the Ninth Amendment Effective Date.
C. On or before the Ninth Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and such
counsel, and Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Agent may
reasonably request.
Section 3. CREDIT PARTIES' REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Ninth Amendment and to
amend the Amended Loan Agreement in the manner provided herein, each Credit
Party represents and warrants to each Lender that the following statements are
true, correct and complete:
A. Corporate Power and Authority. Such Credit Party has all
requisite corporate or partnership power and authority to enter into this Ninth
Amendment and to carry out the transactions contemplated by, and perform its
obligations under, the Amended Loan Agreement as amended by this Ninth
Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery by such
Credit Party of this Ninth Amendment and the performance by such Credit Party
of the Amended Agreement have been duly authorized by all necessary corporate
or partnership action on the part of such Credit Party, as the case may be.
C. No Conflict. The execution and delivery by such Credit Party of
this Ninth Amendment and the performance by such Credit Party of the Amended
Agreement do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to such Credit Party or any of its
Subsidiaries, or any order, judgment or decree of any court or other agency of
government binding on such Credit Party or any of its Subsidiaries, (ii)
violate any provision of the Certificate or Articles of Incorporation or Bylaws
of such Credit Party if it is a corporation or of its general partner or such
other person or persons authorized to act on its behalf if it is not a
corporation, (iii) violate any provision of its partnership, joint venture or
similar organizational agreement if it is not a corporation, (iv) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of such Credit Party or any of
its Subsidiaries, (v) result in or require the creation or imposition of any
Lien upon any of the properties or assets of such Credit Party or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Collateral Agent on behalf of Lenders), or (vi) require any approval
of stockholders or partners or any approval or consent of any Person under any
Contractual Obligation of such Credit Party or any of its Subsidiaries, except
for such approvals or consents which have been obtained on or before the Ninth
Amendment Effective Date and disclosed in writing to Lenders.
D. Governmental Consents. The execution and delivery by such
Credit Party of this Ninth Amendment and the performance by such Credit Party
of the Amended Agreement do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body.
E. Binding Obligation. This Ninth Amendment and the Amended
Agreement have been duly executed and delivered by each of the Credit Parties
party thereto and are the legally valid and binding obligations of each such
Credit Party, enforceable against such Credit Party in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. Incorporation of Representations and Warranties From Amended
Loan Agreement. The representations and warranties contained in Section 5 of
the Amended Loan Agreement are and will be true, correct and complete in all
material respects on and as of the Ninth Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Ninth Amendment that would constitute an Event of Default or a Potential Event
of Default.
H. Subsidiaries of Borrowers. Other than the Guarantors listed on
the signature pages hereof, no Subsidiary of the Borrowers owns assets with any
material value.
Section 4. ACKNOWLEDGEMENT AND CONSENT
Borrowers are each party to the Borrower Security Agreement, the
Borrower Pledge Agreement, the Account Collateral Security Agreement and
certain other Security Documents, in each case as amended through the Ninth
Amendment Effective Date, pursuant to which Borrowers have created Liens in
favor of Collateral Agent on certain Collateral to secure the Obligations of
the Borrowers. Each Guarantor is a party to the Amended Guaranty Agreement and
certain Guarantors are parties to the Guarantor Security Agreement, the
Guarantor Pledge Agreement, the Account Collateral Security Agreement, certain
Mortgages, and/or certain other Security Documents, in each case as amended
through the Ninth Amendment Effective Date, pursuant to which such Guarantor
has (i) guarantied the Obligations of the Borrowers and (ii) created Liens in
favor of Collateral Agent on certain Collateral to secure the Obligations of
such Guarantor under the Amended Guaranty Agreement. Borrowers and Guarantors
are collectively referred to herein as the "Credit Support Parties", and the
Amended Guaranty Agreement and the Security Documents are collectively referred
to herein as the "Credit Support Documents".
Each Credit Support Party hereby acknowledges that it has reviewed
the terms and provisions of this Ninth Amendment and consents to the amendments
and limited waiver effected pursuant to this Ninth Amendment. Each Credit
Support Party hereby confirms that each Credit Support Document to which it is
a party or otherwise bound and all Collateral encumbered thereby will continue
to guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all "Obligations," "Guarantied Obligations" and
"Secured Obligations," as the case may be (in each case as such terms are
defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Borrowers now or hereafter existing under or in respect of the
Amended Agreement and the other Loan Documents.
Each Credit Support Party acknowledges and agrees that each of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Ninth Amendment.
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Amended Loan Agreement and the
Other Loan Documents.
(i) On and after the Ninth Amendment Effective Date, each reference
in the Amended Loan Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Amended Loan Agreement,
and each reference in the other Loan Documents to the "Amended Loan
Agreement", "thereunder", "thereof" or words of like import referring to
the Amended Loan Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by Section 1 of this Ninth
Amendment, the Amended Loan Agreement and the other Loan Documents shall
remain in full force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Ninth
Amendment shall not constitute a waiver of any provision of, or operate as
a waiver of any right, power or remedy of Agent, Collateral Agent or any
Lender under, the Amended Loan Agreement or any of the other Loan
Documents.
(iv) Nothing herein shall constitute a waiver or forbearance with
respect to any Events of Default and/or Potential Events of Default
existing on the date hereof.
B. Fees and Expenses. Borrowers acknowledge that all costs, fees
and expenses as described in subsection 11.2 of the Amended Loan Agreement
incurred by Agent, Collateral Agent, Lenders and their counsel with respect to
this Ninth Amendment and the documents and transactions contemplated hereby
shall be for the account of Borrowers.
C. Headings. Section and subsection headings in this Ninth
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Ninth Amendment for any other purpose or be given any
substantive effect.
D. Applicable Law. THIS NINTH AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Ninth Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Ninth Amendment shall
become effective upon the execution of a counterpart hereof by each Lender and
each of the other parties hereto, receipt by Company and Agent of written or
telephonic notification of such execution and authorization of delivery thereof
and satisfaction or waiver by each Lender of the conditions to effectiveness
set forth in Section 2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Ninth
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
BORROWERS:
CALTON, INC.
By: /s/ Robert A. Fourniadis
Title: Senior Vice President
CALTON FUNDING, INC.
By: /s/ Robert A. Fourniadis
Title: Senior Vice President
GUARANTORS:
Calton California Equity Corp.
Calton Capital, Inc.
Calton Capital II, Inc.
Calton General, Inc.
Calton Homes, Inc.
Calton Homes of California, Inc.
Calton Homes of Florida, Inc.
Calton Homes of Pennsylvania, Inc.
Calton Homes of Pennsylvania
at Pennway, Inc.
Calton Homes of Tampa, Inc.
Calton Lindenwood Corporation
Calton Manzanita Corporation
Calton Tamarack Corporation
Calcap Commercial Management, Inc.
Calcap X, Inc.
Calcap XV, Inc.
Calcap XXXI, Inc.
Calcap XXXII, Inc.
Calcap XXXIII, Inc.
Calcap 36, Inc.
Calcap 42, Inc.
Calcap 48, Inc.
Calton Homes of Chicago, Inc.
Each by: /s/ Robert A. Fourniadis
Title: President
Calton Homes Finance, Inc.
Calton Homes Finance II, Inc.
Each by: /s/ Robert A. Fourniadis
Title: Senior Vice President
Talcon Title Agency, L.P.
By: Calton General, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 31, L.P.
By: Calcap XXXI, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 32, L.P.
By: Calcap XXXII, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 33, L.P.
By: Calcap XXXIII, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 48, L.P.
By: Calcap 48, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
Talpro 36, L.P.
By: Calcap 36, Inc.,
its General Partner
By: /s/ Robert A. Fourniadis
Title: President
LENDERS:
THE CHASE MANHATTAN BANK (formerly
known as Chemical Bank), Individually
and as Agent and Collateral Agent
By: /s/ Jane P. Orndahl
Title: Vice President
DRESDNER KLEINWORT BENSON LIMITED,
as a Lender
By: /s/ Iain Leigh
Title: Senior Vice President
FOOTHILL CAPITAL CORPORATION,
as a Lender
By: /s/ Karen S. Sandler
Title: Vice President
GOLDMAN SACHS CREDIT PARTNERS, L.P.
(formerly known as Pearl Street, L.P.),
as a Lender
By: /s/ John E. Urban
Title: Authorized Signer
CALTON, INC.
FORM 10-K
FOR FISCAL YEAR ENDED NOVEMBER 30, 1996
EXHIBIT 10.1
1996 EQUITY INCENTIVE PLAN
1. Definitions.
In this Plan, the following definitions apply:
1.01. "Appreciation Rights Election" means the method of exercising an
Option pursuant to which shares of Common Stock subject to the Option are sold
to cover the payment to the Company of the Option's aggregate exercise price
and the payment of fifty percent (50%) of the Appreciated Value in cash to the
Participant, with the Participant receiving the remaining fifty percent (50%)
of the amount of the Appreciated Value in shares of Common Stock (as such
proportion may be adjusted by the Committee pursuant to Section 10 of the
Plan).
1.02. "Appreciated Value" means an amount equal to the difference between
the aggregate fair market value of the shares of Common Stock subject to the
Option and the aggregate exercise price of the Option on the date of exercise.
For purposes of this definition, fair market value of the shares of the Common
Stock shall be the price at which such shares are sold on the date of exercise.
1.03. "Board" means the Board of Directors of the Company.
1.04. "Change in Control" means (a) an event or series of events by which
any "person" (as such term is defined in Section 2(2) of the Securities Act of
1933, as amended), or any affiliate of such Person (when applied to any Person,
an affiliate shall mean any other Person directly or indirectly controlling,
controlled by, or under common control with that Person), or Persons and
affiliates of such Persons acting in concert, shall, whether in a single
transaction or a series of related transactions, acquire directly or indirectly
an amount of the Company's voting stock representing thirty-five percent (35%)
or more of the total voting power of the outstanding voting securities of the
Company having the right under ordinary circumstances to vote in an election of
the Board, or (b) the consummation of a merger, reorganization or
recapitalization in which the Company is the surviving entity, and in which,
after the consummation of the transaction, the shareholders of the Company
immediately prior to the consummation of the transaction shall not continue to
beneficially own securities representing sixty-five percent (65%) or more of
the total voting power of the outstanding voting securities of the Company
having the right under ordinary circumstances to vote in an election of the
Board.
1.05. "Code" means the Internal Revenue Code of 1986, as amended, and the
rule and regulations promulgated thereunder.
1.06. "Committee" means the Compensation Committee of the Board, all of
the members of which shall be "disinterested persons" as defined in Rule
16b-3(c)(2)(i) under the Securities Exchange Act of 1934, as amended, or any
similar successor rule, and "outside directors" as defined in proposed rule
1.162-27(e)(3) under the Code or any final or similar successor rule.
1.07. "Company" means Calton, Inc.
1.08. "Corporate Transaction" means a transaction such as a merger (other
than a merger intended solely to change the Company's jurisdiction of
incorporation), consolidation, reorganization, recapitalization, or sale of all
or substantially all of the Company's assets (other than a sale of assets to a
Subsidiary or other affiliated entity of the Company).
1.09. "Director" shall mean a member of the Company's Board.
1.10. "Exercise Sell" means the method of exercising an Option pursuant
to which shares of Common Stock subject to the Option are sold to cover payment
of the Option's aggregate exercise price.
1.11. "Fair Market Value" means the arithmetic average of the highest and
lowest sales prices of the Common Stock reported by the American Stock Exchange
on a particular date, or if there is no sale on such date, then the average of
such high and low sales prices on the last previous date on which a sale of the
Common Stock is reported.
1.12. "Incentive Stock Option" means an option granted under the Plan
that qualifies as an incentive stock option under Section 422 of the Code and
that the Committee designates as such when granting the option.
1.13. "Just Cause" shall mean: (i) a Participant's conviction for a
felony or for fraud; (ii) a Participant engaging in any conduct, by way of act
or omission, which in the opinion of the Board has the potential to cause, or
does cause, a material adverse effect on the Company's business; (iii) a
Participant failing to return from authorized leave from the Company; (iv) a
Participant being found to be under the influence of, or to have distributed,
any illegal narcotic substance while on the Company's premises, including any
project site of the Company; (v) a Participant acting dishonestly or committing
theft of Company property; or (vi) the work performance of a Participant
failing to meet Company standards.
1.14. "Nonqualified Stock Option" means an Option granted under the Plan
that is not an Incentive Stock Option and that the Committee designates as such
when granting the Option, or an Option granted under the Plan that does not
qualify as an Incentive Stock Option.
1.15. "Option" means an option to purchase shares of Common Stock granted
under the Plan in accordance with the terms of the Plan and related Option
Agreement, if any.
1.16. "Option Agreement" means a written agreement which the Committee
may authorize the Company to enter into with a Participant in order to
implement a grant of an Option by the Committee.
1.17. "Participant" means an employee of the Company or a Director to
whom an Option has been granted.
1.18. "Plan" means the Calton, Inc. 1996 Equity Incentive Plan.
1.19. "Subsidiary" means a corporation in which the Company owns a
majority of the total combined voting power of all classes of stock, either
directly or through one or more other Subsidiaries.
1.20. "Tax Withholding Amount" means the amount, if any, which, upon the
exercise of an Option or an election by a Participant under Section 83(b) of
the Code, the Company or a Subsidiary may be required to withhold in order to
obtain a federal and/or state income tax deduction, such amount which shall be
paid to the Company by the Participant.
1.21. "Tender Offer" means a tender offer for fifty percent (50%) or more
of the Company's voting stock regardless of whether or not the Company will
continue as a separate entity upon the consummation of the Tender Offer.
2. Purpose.
The purpose of this Plan is to advance the interests of the shareholders
of the Company by enhancing the ability of the Company to (i) induce certain
employees, who are in a position to make significant contributions to the
Company and its Subsidiaries, to remain in the employ of the Company and its
Subsidiaries; (ii) attract and retain new employees who can make significant
contributions to the success of the Company and its Subsidiaries; (iii) attract
and retain the services of experienced and knowledgeable Directors; and (iv)
more closely align the interests of such employees and Directors with the
Company's shareholders and to encourage such employees and Directors to take
into account the long-term interests of the Company by securing or increasing
on reasonable terms their stock ownership in the Company. The Plan will also
serve as a vehicle for the issuance of registered shares of Common Stock to any
Director who elects to receive the annual retainer fee, Board meeting fees and
Board committee fees in the form of shares of Common Stock as provided for in
Section 17 of this Plan.
3. Shares Subject to Plan.
The aggregate number of shares of Common Stock reserved for issuance under
the Plan shall be two million (2,000,000), subject to any adjustment pursuant
to Section 11 herein. The shares of Common Stock to be issued under the Plan
upon the exercise of an Option shall be made available either from authorized
but unissued shares of the Company's Common Stock or from shares of the
Company's Common Stock held by the Company as treasury shares, including shares
of Common Stock acquired by the Company in open market and private
transactions.
The shares of Common Stock issued under the Plan shall be subject to the
terms and conditions specified in the Plan and related Option Agreements, if
any, and to such other terms and conditions as the Committee may provide. If
any Option expires or terminates for any reason without having been exercised
in full, a new Option may thereafter be granted to acquire the unpurchased
shares of Common Stock subject to such expired or terminated Option.
4. Administration.
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have complete authority, in its
discretion, to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and provisions of any
related Option Agreements, to determine the employees of the Company and its
Subsidiaries who will be selected as Participants under the Plan, to determine
the terms and prices at which Options shall be granted, the number of shares of
Common Stock to be subject to each Option, the periods during which each Option
shall be exercisable, whether such Option shall be an Incentive Stock Option or
a Nonqualified Stock Option, and to make all other determinations necessary or
advisable for the administration of the Plan. In making such determinations,
the Committee may take into account the nature of the services rendered by the
Participants to the Company and its Subsidiaries, their present and potential
contributions to the success of the Company and its Subsidiaries and such other
factors as the Committee, in its discretion, shall deem relevant.
The Committee's determination of the matters referred to herein shall be
final and conclusive. Any dispute or disagreement which may arise under or as
a result of or with respect to any Option shall be determined by the Committee,
in its sole discretion, and any interpretations by the Committee of the terms
of any Option shall be final, binding and conclusive.
No member of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan. In addition to such other rights
of indemnification as they may have as members of the Board or as members of
the Committee, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney's fees, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, in which any Committee
member may be a party by reason of any action taken or failure to act in
connection with the Plan or any Option granted under the Plan, and against all
amounts reasonably paid by them in settlement thereof or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, if such
Committee member acted in good faith and in a manner which the member believed
to be in, and not opposed to, the best interests of the Company and its
shareholders.
5. Eligibility.
The Committee may grant Options under the Plan to (a) employees of the
Company or a Subsidiary, including employees who are members of the Board, and
(b) employees of a corporation or noncorporate entity which has been acquired
by the Company or a Subsidiary, who hold options with respect to the stock or
other equity interests of such corporation or noncorporate entity which the
Company or a Subsidiary has agreed to assume. Nonqualified Stock Options shall
be granted to non-employee Directors as formula awards pursuant to the terms
set forth in Section 18 of this Plan. Further, the Committee can authorize the
issuance of shares of Common Stock to any member of the Board who has elected
to receive the annual retainer fee for serving on the Board, Board meeting fees
or Board committee fees in the form of shares of the Company's Common Stock as
provided for in Section 17 of this Plan.
6. Option Price.
The exercise price of an Option shall be equal to the Fair Market Value of
the Common Stock on the date of grant; provided, however, that (i) with respect
to a Participant who owns more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, the option price of an
Incentive Stock Option granted to such Participant shall not be less than one
hundred and ten percent (110%) of the Fair Market Value of the Common Stock on
the date of grant, and (ii) with respect to any Option repriced by the
Committee, the exercise price shall be equal to the Fair Market Value of the
Common Stock on the date such Option is repriced.
7. Option Term.
Except as otherwise provided in Section 18 hereof, an Option shall be
granted for such term as the Committee shall determine, not in excess of ten
(10) years from the date of grant thereof; provided, however, that a
Participant who owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company may not be granted an Incentive
Stock Option with a term greater than five (5) years from the date of grant.
8. Limitation on Amount of Options Granted.
The Chief Executive Officer of the Company, may not be granted Options for
more than fifty percent (50%) of all shares of Common Stock reserved for
issuance under the Plan. Each other Participant under the Plan may not be
granted options for more than thirty-five percent (35%) of all shares of Common
Stock reserved for issuance under the Plan.
9. Exercise of Options.
Except as otherwise provided in Sections 11, 12 and 18 hereof, and except
as otherwise provided below with respect to an Incentive Stock Option, upon
granting an Option, the Committee shall determine the date or dates on which
such Option shall become exercisable. The Options and the shares issuable upon
the exercise of such Options may be subject to such conditions and forfeiture
provisions as the Committee may determine, including, but not limited to, the
achievement of business objectives and individual, division and Company
performance. To the extent exercisable, an Option may be exercised either in
whole at any time or in part from time to time. With respect to an Incentive
Stock Option granted to a Participant, the Fair Market Value of the shares of
Common Stock on the date of grant which are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
10. Methods of Exercise and Payment of Option Price.
An Option may be exercised only by a written notice of intent to exercise
such Option with respect to a specific number of shares of Common Stock subject
to such Option and payment to the Company of the aggregate amount of the
exercise price for the number of shares of Common Stock so specified in the
notice. Payment of the Option's exercise price can be made in cash, by
cashier's check or certified bank check, in kind by the delivery of shares of
Common Stock having a Fair Market Value on the date preceding the date of
exercise equal to the portion of the option price so paid and which have been
owned and held by the Participant for a period not less than six (6) months.
Upon receipt of written notice evidencing a Participant's intent to exercise an
Option, or an election by a Participant under Section 83(b) of the Code, the
Company will inform the Participant of the Amount of the Tax Withholding
Amount, if any, which the Participant shall be required to remit to the Company
before the shares of Common Stock will be issued to the Participant.
With respect to Nonqualified Stock Options granted under the Plan and held
by the Participant for six (6) months or longer, a Participant can also pay all
or part of any such Option's exercise price pursuant to the Exercise Sell or
Appreciation Rights Election methods; provided, however, that if a Participant
chooses to pay all or part of the exercise price pursuant to the Appreciation
Rights Election method, the Committee shall have the sole discretion to
determine the form in which payment of the Appreciated Value will be made to
the Participant, including all cash, all shares of Common Stock or any other
combination thereof. Fractional shares will not be issued to a Participant who
exercises an Option pursuant to the Appreciation Rights Election method. The
value of any fractional shares shall be paid in cash to the Participants.
The shares of Common Stock to be sold in order to pay (i) the exercise
price under the Exercise Sell method, or (ii) the exercise price and amount of
the cash payment of the Appreciated Value under the Appreciation Rights
Election method shall be sold by or on behalf of the Participant in an open
market transaction on the date of exercise and the Participant shall not be
liable for any cost of such sale. If a Participant elects to exercise an
Option pursuant to the Exercise Sell or Appreciation Rights Election method,
then the Tax Withholding Amount, if any, shall, in the Participant's
discretion, also be covered by the sale of shares of Common Stock subject to
the Option being exercised. The Participant shall be entitled to receive any
remaining proceeds from the sale of shares of Common Stock which are not
applied against the exercise price and Tax Withholding Amount under the
Exercise Sell method, or the exercise price, cash portion of the Appreciated
Value and the Tax Withholding Amount under the Appreciation Rights Election
method.
11. Adjustment of Shares.
11.01. In the event there is any change in the capital stock of the
Company pursuant to a stock split, share combination, stock dividend or
Corporate Transaction in which the Company is the surviving entity, except as
otherwise provided in Subsection 11.02 below, each outstanding Option shall
apply to the securities to which a holder of the number of shares of Common
Stock subject to an Option shall be entitled to receive in connection with any
such transaction. The Committee shall also have the discretion to make any
other changes to an Option, including, without limitation, additional changes
in the number or character of the shares of Common Stock subject to an Option,
or in the exercise price of an Option, in order to protect such Option from
dilution or diminution in value upon the occurrence of any of the above
transactions.
11.02. In the event of a Corporate Transaction in which the Company is not
the surviving entity, or a Corporate Transaction in which the Company is the
surviving entity and in which the outstanding shares of Common Stock shall be,
pursuant to the operation of law or terms of the Corporate Transaction, changed
into or exchanged for securities of another corporation, interests in a
noncorporate entity, other property (including cash), or any combination of the
foregoing, a Participant can elect within thirty (30) days of receipt of notice
of such Corporate Transaction to accelerate all unvested Options and exercise
them or any part thereof. The Participant's exercise of any Options and the
issuance of shares of Common Stock to the Participant in connection with any
such Corporate Transaction shall be conditioned upon the consummation of the
Corporate Transaction; provided, however, that such condition shall not
preclude the Participant from receiving, with respect to the shares of Common
Stock issuable upon the exercise of such Option, the consideration issuable or
payable in respect of the shares of Common Stock pursuant to such Corporate
Transaction. If, in exercising a Nonqualified Stock Option as a result of a
Corporate Transaction, the Exercise Sell or Appreciation Rights Election method
is not available to a Participant for any reason including, without limitation,
the absence of a trading market for the Common Stock on the date of
consummation of the Corporate Transaction, the Participant shall be entitled to
receive, without the payment of consideration, the number of shares of Common
Stock issuable upon exercise of the Option less the number of shares having an
aggregate Fair Market Value equal to the aggregate exercise price on the date
the election to exercise the Option is made by the Participant.
Alternatively, within ten (10) days of receiving notice of the Company's
decision to enter into any such Corporate Transaction, a Participant may
provide the Company with written notice that the Board shall provide that the
surviving entity will grant the Participant substitute options to purchase
securities of the surviving entity in exchange for the Participant's Options.
The underlying securities of such substitute options shall have a fair market
value equal to the highest aggregate Fair Market Value of all shares of Common
Stock subject to the Participant's Options, whether exercisable or not, for the
period commencing with the date of the public announcement of the Corporate
Transaction and ending with the effective date of the Corporate Transaction.
The substitute options shall be issued with an aggregate exercise price equal
to the aggregate exercise price of the shares of Common Stock subject to the
Participant's Options and with terms and conditions comparable to the terms and
conditions of the Plan and any related Option Agreement.
However, if a Participant elects to have the Board provide substitute
options, the Board, in its discretion, may elect, within ten (10) days of
receiving notice from the Participant, to repurchase all of the Participant's
Options, whether exercisable or not, within sixty (60) days of the effective
date of the Corporate Transaction. The amount paid the Participant for the
repurchase of the Participant's Options shall be equal to the difference
between the highest aggregate Fair Market Value of the shares of Common Stock
subject to the Participant's Options for the period commencing with the date of
public announcement of the Corporate Transaction and ending with the effective
date of the Corporate Transaction and the aggregate exercise price of the
Participant's Options. This repurchase right can also be exercised by the
surviving entity.
If the Board notifies a Participant of its decision to exercise this
repurchase right, then a Participant shall be entitled to elect to exercise all
of the Participant's Options during the remainder of the thirty (30) day period
from the receipt of notice of the Corporate Transaction as described in the
first paragraph of this Subsection 11.02.
11.03. In the event of a Tender Offer, all of a Participant's Options
shall become immediately exercisable, and may be exercised at any time prior to
the expiration date of such Options. Alternatively, within ten (10) days of
receiving notice of the commencement of a Tender Offer, the Participant can
provide the Company with written notice that the Company shall repurchase all
of the Participant's Options, whether exercisable or not, for an amount equal
to the difference between the highest aggregate Fair Market Value of the shares
of Common Stock subject to the Participant's Options for the period commencing
with the date of public announcement of the Tender Offer and ending with the
effective date of the Tender Offer and the aggregate exercise price of the
Participant's Options. The Company's obligation to repurchase the
Participant's Options shall be subject to any restriction, limitation, or
prohibition contained in any agreement to which the Company is a party.
11.04. In the event of a Change in Control, all of a Participant's Options
shall become immediately exercisable and may be exercised at any time prior to
the expiration dates of such Options. Alternatively, within ten (10) days of
receipt of notice from the Company of a Change in Control, such notice which
shall be furnished promptly upon the Company receiving notice thereof, the
Participant can provide the Company with written notice that the Company shall
repurchase all of the Participant's Options, whether exercisable or not, for an
amount equal to the difference between the aggregate Fair Market Value of the
shares of Common Stock subject to the Participant's Options on the date of the
Change in Control and the aggregate exercise price of the Participant's
Options. The Company's obligation to repurchase the Participant's Options
shall be subject to any restriction, limitation or prohibition contained in any
agreement to which the Company is a party.
11.05. In the event of the dissolution or liquidation of the Company
(except a dissolution or liquidation relating to a sale of assets or other
reorganization of the Company referred to in Subsection 11.02 of this Section),
all outstanding Options under the Plan shall terminate as of a date fixed by
the Committee; provided, however, that not less than thirty (30) days written
notice of the date so fixed shall be given to each Participant, and each such
Participant shall have the right during such period to exercise all of the
Participant's outstanding Options, whether exercisable or not.
11.06. Notwithstanding the exercise provisions in Subsections 11.01 -
11.05 of this Section 11, if the Company's legal counsel should determine that
an extension of time for the exercise of any Option is necessary in order to
allow the Participant to acquire the shares of Common Stock subject to the
option in compliance with federal and state securities laws, the Committee
shall extend said time of exercise for whatever additional period of time is
necessary, in counsel's judgment, to allow such compliance. In the event the
treatment of any Incentive Stock Option under Subsections 11.01 - 11.05 of this
Section 11 could be determined to be a disqualifying disposition with respect
to the favorable tax consequences of Incentive Stock Options under Sections 421
and 422 of the Code, the Company shall promptly notify each Participant as to
whether or not the desired treatment of the Participant's Incentive Stock
Options could result in a disqualifying disposition and the effect thereof.
12. Death, Disability, Retirement and Termination.
12.01. In the event the employment relationship between the Participant
and the Company or any of its Subsidiaries is terminated by reason of the
Participant's death or "disability" (as such term is defined in Section
22(e)(3) of the Code), all of the Participant's Options shall become
immediately exercisable. The Participant, or the Participant's designated
beneficiary or estate, shall have two (2) years from such date of termination
to exercise all or any part of a Nonqualified Stock Option, and one (1) year
from such date of termination to exercise all or any part of an Incentive Stock
Option.
12.02. If a Participant resigns as an employee from the Company or any
Subsidiary, the Participant shall have one (1) year for a Nonqualified Stock
Option, or three (3) months for an Incentive Stock Option, from such date of
termination to exercise all or any part of such Option which is fully vested on
or before the date of termination.
12.03. In the event a Participant, who has been employed by the Company or
a Subsidiary for one (1) year or more, is terminated by the Company for any
reason other than for Just Cause, each Option, or any part thereof, scheduled
to vest on the succeeding anniversary date of the grant of the Option following
the date of termination shall become immediately exercisable, and the
Participant shall have two (2) years from the date of termination to exercise
all or any part of a Nonqualified Stock Option, or three (3) months from such
date of termination to exercise all of any part of an Incentive Stock Option.
For any Participant who has been employed by the Company or a Subsidiary for
less than one (1) year, the Participant shall have thirty (30) days, or seven
(7) months (except for an Incentive Stock Option) if the Participant is an
officer, Director or more than ten percent (10%) beneficial owner of the
Company, from the date of such termination in which to exercise all or part of
those Options which is fully vested on or before such date of termination.
12.04. If the Participant is terminated by the Company for Just Cause, the
Participant shall have thirty (30) days, or seven (7) months (except for an
Incentive Stock Option) if such Participant is an officer, Director or ten
percent (10%) beneficial owner of the Company, from the date of termination to
exercise all or part of those Options which is fully vested on or before the
date of termination.
12.05. With respect to Nonqualified Stock Options granted to non-employee
Directors as formula awards pursuant to Section 18 of this Plan, upon the death
or "disability" (as such term is defined in Section 22(e)(3) of the Code) of
the Director, the Director, or the Director's designated beneficiary or Estate,
shall have two (2) years from the date of death or disability to exercise all
or any part of a Nonqualified Stock Option. If a non-employee Director resigns
from the Board or does not stand for reelection to the Board, or, if a
non-employee Director is removed from the Board for any reason, including if
the Director is not reelected to the Board by the shareholders, the Director
shall have ninety (90) days from the date on which the Director ceases to be a
member of the Board to exercise any portion of a Nonqualified Stock Option
which is fully vested on or before such date the Director ceases to be a member
of the Board.
13. Non-Transferability of Option.
No Option shall be transferable (including pledged or encumbered) by a
Participant otherwise than by will or by the laws of descent and distribution,
and each Option shall be exercisable during a Participant's lifetime only by
the Participant.
14. Amendments and Discontinuance.
Except as provided for in Section 18 of this Plan with respect to the
formula award provisions, the Board may amend, suspend, discontinue, or
terminate the Plan, subject to shareholder approval if so required by any
applicable federal or state securities laws, tax laws or corporate statute. No
action of the Board, however, may, without the consent of a Participant alter
or impair any Option previously granted to the Participant under the Plan.
15. Successors and Assigns.
The provisions of the Plan shall be binding upon all successors and
assigns of any Participant acquiring shares of Common Stock under the Plan,
including, without limitation, the estate of any such Participant and the
executors, administrators or trustees of such estate, and any receiver, trustee
in bankruptcy or representative of the creditors of any such Participant.
16. Effective Date and Termination Date of the Plan.
The Plan shall be effective as of January 31, 1996, and shall terminate on
January 30, 2006. No Options shall be granted under the Plan subsequent to
such date. Options granted on or before the termination date shall remain
exercisable after the termination of the Plan in accordance with their
respective terms.
17. Director's Fees.
Subject to the limitation contained in Section 3 of this Plan on the
number of shares of Common Stock which may be issued pursuant to this Plan, any
member of the Board who provides written notice to the Company shall be
entitled to receive all or a portion of the member's annual board retainer fee,
Board meeting fees, and Board committee fees in the form of shares of the
Company's Common Stock. Any member of the Board who desires to receive all or
any part of such Board fees in shares of Common Stock must provide the Chief
Financial Officer of the Company with written notice of the member's election
(an "Election") to receive payment of Board fees in this form no later than
five (5) business days prior to the payment of such fees. Shares of Common
Stock with an aggregate Fair Market Value, on the date preceding the date of
payment of Board fees, equal to the aggregate amount of such Board fees shall
be issued to the Board member no later than fifteen (15) business days
following the date of payment of such Board fees by the Company.
18. Formula Awards.
Each time an individual, who is not an employee of the Company or any
Subsidiary, is elected or reelected as a Director by the shareholders of the
Company, the Director shall receive, on such date of election or reelection as
the case may be, a grant of Nonqualified Stock Options to acquire ten thousand
(10,000) shares of Common Stock, and each such Option shall have a per share
exercise price equal to the Fair Market Value of the Common Stock on such date
of grant. Each Nonqualified Stock Option granted to a non-employee Director
pursuant to this Section 18 shall have a term of five (5) years from the date
of grant and shall vest and become fully exercisable on the first anniversary
of such date of grant. In order for a non-employee Director to be granted the
Nonqualified Stock Options upon reelection to the Board, the Director must have
attended seventy-five percent (75%) of all Board meetings and seventy-five
percent (75%) of all Board committee meetings, of which the Director is a
member, called and held during the previous twelve (12) months while such
Director was a member of the Board and committee(s). The provisions of this
Section 18 of the Plan shall not be amended more than once every six (6)
months, other than to comport with changes in the Internal Revenue Code of
1986, as amended, the Employee Retirement Income Security Act of 1974, or the
rules thereunder.
19. Miscellaneous.
19.01. Any and all funds held by the Company under the Plan may be used
for any corporate purpose.
19.02. Nothing contained in the Plan, any Option Agreement executed in
connection with the Plan, or any Option granted under the Plan, shall confer
upon a Participant any right to be continued in the employment of the Company
or any Subsidiary, or interfere in any way with the right of the Company or its
Subsidiaries to terminate the employment relationship at any time.
19.03. No Options may be granted nor may Common Stock be purchased under
this Plan until the Company has taken all actions then required to comply with
the Securities Act of 1933, as amended, and any other applicable state
securities laws and any exchange on which the Common Stock may be listed.
19.04. The Company shall take any reasonable and appropriate action which
is necessary, including, without limitation, the filing of a Form S-8
Registration Statement with the Securities and Exchange Commission, to effect
the registration of the shares of Common Stock reserved for issuance under this
Plan under the Securities Act of 1933, as amended.
As Amended through January 30, 1997
CALTON, INC.
FORM 10-K
FOR FISCAL YEAR ENDED NOVEMBER 30, 1996
EXHIBIT 10.4
CALTON, INC. INCENTIVE COMPENSATION PLAN
1. PURPOSE
Pursuant to Calton's ("Calton" or the "Company") philosophy of providing
compensation to its employees which is competitive with the compensation
offered by similar companies operating in the same regions and emphasizing
incentive compensation as a result of the cyclical nature of the Company's
business, the Company has established the Calton, Inc. Incentive Compensation
Plan (the "Plan") to promote the interests of Calton and its shareholders by
enhancing the Company's ability to attract, retain and motivate highly
qualified individuals to serve the Company and its subsidiaries by providing
such individuals the opportunity to earn meaningful additional compensation
based on the operating results of the Company.
2. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall be effective as of June 1, 1993, subject to the approval of
the Company's Board of Directors (the "Board"), and it shall terminate on
November 30, 1998 (the "Term"). The Board, in its sole discretion, may renew,
for up to two (2) fiscal years upon each such renewal, the Term of the Plan and
the provisions hereunder.
3. PARTICIPATION
All officers of the Company and its subsidiaries and all managers that
participate in the Company's Management Objective Bonus Program are eligible
for participation in the Plan. In addition, up to 10% of the Incentive Pool
(as defined below) may be used for bonuses to other full time employees of the
Company and its subsidiaries who are not otherwise eligible for commissions or
bonuses. The employees that are eligible to participate in the Plan (the
"Eligible Employees") shall be determined each fiscal year by the Compensation
Committee of the Board (the "Committee") based on the recommendations of the
President and Chief Executive Officer of the Company. The determination of
Eligible Employees entitled to participate in the Plan shall be made by the
Committee no later than the end of the first quarter of any fiscal year;
provided, however, that an Eligible Employee hired after the end of the first
quarter of any fiscal year may be considered by the Committee for participation
in the Plan. Participation in the Plan during any one fiscal year does not
imply or guarantee participation in any other fiscal year during the Term of
the Plan.
4. INCENTIVE COMPENSATION
The available pool of incentive compensation (the "Incentive Pool") under
this Plan during any particular fiscal year shall be equal to ten percent (10%)
of the Company's pre-tax income as reported in the Company's Form 10-K for a
particular fiscal year, subject to certain non-operating adjustments (the
"Adjustments") that may be made to the Incentive Pool at the discretion of the
Committee to remove the effect of events or transactions not in the ordinary
course of the Company's operations.
5. DISTRIBUTION OF INCENTIVE COMPENSATION
The President and Chief Executive Officer of the Company shall recommend
the dollar amount of an award from the Incentive Pool (the "Incentive Award")
to be granted to each Eligible Employee participating in the Plan; provided,
however, that an Eligible Employee participating in the Plan may not receive an
Incentive Award during any particular fiscal year that exceeds the lesser of
twenty (20%) of the Incentive Pool or one hundred percent (100%) of the
Eligible Employee's base salary compensation for the same fiscal year;
provided, however, that the Committee reserves the right to make special,
supplemental grants that exceed one hundred percent (100%) of an Eligible
Employee's base salary for a particular fiscal year. The Committee shall then
review and approve, with the power to alter, modify or disapprove in whole or
in part, the proposed Incentive Award for each Eligible Employee participating
in the Plan no later than February 15 of the succeeding fiscal year, or the
fifteenth day of the last month of the first quarter of the succeeding fiscal
year if the end of such preceding fiscal year is other than November 30. An
Eligible Employee selected for participation in the Plan who was hired by the
Company or one of its subsidiaries subsequent to the commencement of the
relevant fiscal year shall only be entitled to a pro-rata portion of any
Incentive Award. An Eligible Employee participating in the Plan shall not be
entitled to receive any Incentive Award until the grant of any such Incentive
Award has been approved by the Committee. Any Incentive Award shall be
distributed and paid to an Eligible Employee in accordance with the Company's
ordinary payroll policies and procedures during the last pay period of February
of each fiscal year, or during the last pay period of the last month of the
first quarter of the fiscal year if the end of such preceding fiscal year is
other than November 30. All approved and paid Incentive Awards shall be
subject to all tax withholding and reporting requirements.
6. TERMINATION
(a) Upon termination of employment without just cause of an Eligible
Employee selected to participate in the Plan, the Eligible Employee, in the
sole discretion of the Committee, shall be entitled to receive an Incentive
Award for the year of such termination in an amount not to exceed fifty percent
(50%) of the average Incentive Award made to Eligible Employees for the
particular fiscal year in which such termination occurred; provided, however,
that if any Incentive Award is granted, such Incentive Award shall be prorated
for the actual number of days the Eligible Employee was employed by the Company
during the particular fiscal year. For purposes of the Plan, termination of an
Eligible Employee "without just cause" shall include, without limitation,
retirement with consent of the Company, death, permanent disability, and
termination by the Company for any reason other than for just cause as defined
in (b) hereinbelow.
(b) Upon the termination of employment of an Eligible Employee selected
to participate in the plan for a particular fiscal year for just cause by the
Company, the Committee shall not grant, and the Eligible Employee shall not be
entitled to, an Incentive Award for the fiscal year in which termination
occurred. For purposes of the Plan, the term "just cause" includes: (i) an
Eligible Employee's conviction for a felony or for fraud; (ii) an Eligible
Employee engaging in any conduct, by way of act or omission, which in the
opinion of the Company's Board has the potential to cause, or does cause, a
material adverse effect on the Company's business; (iii) an Eligible Employee
failing to return from authorized leave from the Company; (iv) an Eligible
Employee being found to be under the influence of, or to have distributed, any
illegal narcotic substance while on the Company's premises, including any
project site of the Company; (v) an Eligible Employee acting dishonestly or
committing theft of Company property; or (vi) the work performance of an
Eligible Employee failing to meet established Company standards; provided,
however, that the definition of "just cause" in any employment agreement
between an Eligible Employee and the Company, if any, shall supersede and take
the place of the preceding definition.
7. AMENDMENT OR DISCONTINUANCE
At any time during the Term of the Plan, the Committee may alter, amend,
suspend or discontinue the Plan.
8. OTHER AGREEMENTS
In the event that any term or condition of this Plan varies from, or is in
any way dissimilar to or in contrast with, any term, condition or provision of
any other agreement between the Company and an Eligible Employee, such as an
employment agreement, the relevant terms, conditions and/or provisions of such
other agreement will control.
9. SUCCESSORS
The provisions of the Plan shall be binding upon all successors of any
Eligible Employee granted an Incentive Award under the Plan, including, without
limitation, the estate of any such Eligible Employee and the executors,
administrators or trustees of such estate, and any receiver, trustee in
bankruptcy or representative of the creditors of any such Eligible Employee.
Any obligations with respect to Incentive Awards granted pursuant to the Plan
shall be expressly assumed by any successor in interest to the Company.
10. GOVERNING LAW AND JURISDICTION OF NEW JERSEY COURTS
This Plan and any agreement entered into in connection therewith shall be
construed and its provisions enforced and administered in accordance with the
laws of the State of New Jersey.
The foregoing reflects amendments made through January 30, 1996.
EXHIBIT 21
SUBSIDIARIES OF CALTON, INC.
Calton Homes, Inc. Calcap XV, Inc.
Calcap Commercial Management, Inc. Calcap XXXI, Inc.
Calton Homes of Florida, Inc. (1) Calcap XXXII, Inc.
Calton Homes of Pennsylvania, Inc. (2) Calcap XXXIII, Inc.
Calton Homes of Pennsylvania at Calcap XXXIV, Inc.
Pennway, Inc. (2) Calcap 36, Inc.
Calton Homes of California, Inc. (3) Calcap 42, Inc.
Calton California Equity Corp. (3) Calcap 46, Inc.
Calton Manzanita Corp. (3) Calcap 48, Inc.
Calton Tamarack Corp. (3) Calton General, Inc.
Calton Lindenwood Corp. (3) Calton Funding, Inc.
Calton Homes Finance, Inc. Talcon Assignment, Inc.
Calton Homes Finance II, Inc. Calton Homes of Chicago, Inc. (4)
Calton Capital, Inc. Haddon Group of Virginia, Inc.
Calton Capital II, Inc. Wagner Joint Venture
Calcap X, Inc. Pennway Joint Venture
All subsidiaries are incorporated or organized under the laws of the State of
New Jersey, except those marked with a (1), (2), (3) and (4), which are
incorporated under the laws of Florida, Pennsylvania, California and Illinois,
respectively.
