SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Continental Homes Holding Corporation
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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<PAGE>
CONTINENTAL HOMES HOLDING CORP.
7001 N. Scottsdale Road, Suite 2050, Scottsdale, Arizona 85253
(602) 483-0006
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held
August 28, 1997
------------------
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
to be held on August 28, 1997, at 9:00 A.M. (Phoenix time) at the Company's
executive offices located at 7001 N. Scottsdale Road, Suite 2050, Scottsdale,
Arizona 85253, for the following purposes:
(1) To elect eight directors.
(2) To approve an amendment to the Company's Amended and Restated 1988
Stock Incentive Plan (the "1988 Plan") to, among other things, increase by
500,000 the number of shares of the Company's Common Stock that may be issued
pursuant to the 1988 Plan and permit members of the Board of Directors and the
Stock Incentive Committee to participate in the 1988 Plan.
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of Common Stock of record at the close of business of July
8, 1997 will be entitled to receive notice of and to vote at the meeting or at
any adjournment thereof.
By Order of the Board of Directors
/s/ Julie E. Collins
Julie E. Collins
Secretary
Scottsdale, Arizona
July 8, 1997
Whether or not you intend to be present at the meeting, please date and
sign the enclosed proxy card and mail it promptly in the enclosed postage-paid,
addressed envelope.
<PAGE>
PROXY STATEMENT
The Annual Meeting of Stockholders of Continental Homes Holding Corp.
(the "Company") will be held at the Company's executive offices located at 7001
N. Scottsdale Road, Suite 2050, Scottsdale, Arizona 85253, on August 28, 1997 at
9:00 A.M. (Phoenix time) for the purposes set forth in the foregoing notice of
meeting. The accompanying form of proxy for use at the meeting and at any
adjournments thereof is solicited by the Board of Directors of the Company. Any
proxy may be revoked by the stockholder by written notice to the Secretary of
the Company, if such notice is actually received by her before such proxy is
exercised, or by attending and voting at the meeting in person.
The vote of a plurality of the shares held by persons present at the
meeting in person or by proxy is required for the election of directors as
outlined in Proposal One and the vote of a majority of shares of stock eligible
to vote at the meeting is required to amend the Company's Amended and Restated
1988 Stock Incentive Plan as outlined in Proposal Two. Abstentions and votes
withheld by brokers in the absence of instructions from street-name holders
(broker non-votes) will be counted for purposes of determining whether a quorum
is present, will have the effect of a vote against a proposal for which a
majority of the outstanding shares is required, and will have no effect on the
election of directors.
Proxies in the accompanying form which are properly executed by
stockholders, duly returned to the Company and not revoked will be voted in the
manner indicated below. This proxy statement, the attached Notice of Annual
Meeting and the accompanying proxy are being mailed to stockholders on or about
July 25, 1997.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the close of business on July 8, 1997, the record date for the
meeting, the Company had 6,852,580 shares of its common stock, par value $.01
per share (the "Common Shares") outstanding and entitled to vote at the meeting.
Each Common Share will be entitled to one vote on each matter presented at the
meeting. The presence in person or by proxy of a majority of Common Shares
entitled to vote at the meeting shall constitute a quorum.
The following table sets forth certain information as of the close of
business on July 8, 1997 concerning (i) the beneficial ownership of the Common
Shares by each director, nominee for director and named executive officer and by
all directors and executive officers of the Company as a group and (ii) each
person who, to the knowledge of the Company, is the beneficial owner of more
than 5% of the Common Shares.
1
<PAGE>
Number of Percent
Common Shares of
Name and Address Beneficially Common
of Beneficial Owner (1) Owned Shares
----------------------- ----- ------
Donald R. Loback 567,650 8.2%
Julie E. Collins 1,500 (2) *
W. Thomas Hickcox 40,500 (3) *
Robert B. Ryan 25,650 (4) *
Timothy C. Westfall 19,500 (5) *
Bradley S. Anderson 600 *
Peter D. O'Connor 2,000 *
Jo Ann Rudd -0- *
William Steinberg 500 *
Directors and officers as a group
(11 persons) 658,445 (6) 9.5%
FMR Corp. (7) 806,800 11.7%
Wellington Management Company (8) 687,900 10.0%
First Union Corporation (9) 501,000 7.2%
Dimensional Fund Advisors, Inc. (10) 416,448 6.0%
Barclays Global Investors (11) 395,806 5.7%
- ------------------
*Denotes less than 1% of outstanding Common Shares
(1) Except as set forth in Notes 7 through 11, the address for each
beneficial owner is c/o Continental Homes Holding Corp., 7001 N.
Scottsdale Road, Suite 2050, Scottsdale, Arizona 85253.
(2) Includes options to purchase 1,500 Common Shares granted under the
Amended and Restated 1988 Stock Incentive Plan.
(3) Includes options to purchase 27,000 Common Shares granted under the
Amended and Restated 1988 Stock Incentive Plan and the Restated 1986
Stock Incentive Plan.
(4) Includes options to purchase 9,750 Common Shares granted under the
Amended and Restated 1988 Stock Incentive Plan and the Restated 1986
Stock Incentive Plan.
(5) Includes options to purchase 19,500 Common Shares granted under the
Amended and Restated 1988 Stock Incentive Plan and the Restated 1986
Stock Incentive Plan.
(6) Includes options to purchase 58,250 Common Shares granted under the
Amended and Restated 1988 Stock Incentive Plan and the Restated 1986
Stock Incentive Plan.
(7) As reflected in Schedule 13-G dated February 14, 1997 filed by FMR
Corp. Their address is 82 Devonshire Street, Boston, Massachusetts
02109.
(8) As reflected in Schedule 13-G dated January 24, 1997 filed by
Wellington Management Company. Their address is 75 State Street,
Boston, Massachusetts 02109.
(9) As reflected in Schedule 13-G dated February 3, 1997 filed by First
Union Corporation. Their address is One First Union Center, Charlotte,
North Carolina, 28288.
2
<PAGE>
(10) As reflected in Schedule 13-G dated February 5, 1997 filed by
Dimensional Fund Advisors. Their address is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401.
(11) As reflected in Schedule 13-G dated February 12, 1997 filed by Barclays
Global Investors, N.A. Their address is 45 Fremont Street, San
Francisco, California 94105.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Eight Directors, constituting the entire Board of Directors, are to be
elected at the meeting to hold office until the next Annual Meeting of
Stockholders and until their successors are elected and qualified. The Board of
Directors proposes the elections of the following nominees and intends that the
persons named in the accompanying proxy will vote the shares represented by each
proxy for the election as Directors of such nominees unless a contrary direction
is indicated. If prior to the meeting any nominee is unable or unwilling to
serve as a Director, which the Board of Directors does not expect, the persons
named in the accompanying proxy will vote for such alternate nominee, if any, as
may be selected by them.
Certain information is given below for each nominee for Director.
<TABLE>
<CAPTION>
Position with the Company, Present Principal Occupation,
Nominee and Year First Principal Occupations During the
Elected as Director Age Last Five Years and Other Directorships
- ------------------------------- --- --------------------------------------------------------------------------------------
<S> <C> <C>
Donald R. Loback 45 Chairman and Chief Executive Officer of the Company since September 1995, Co-Chief
1985 Executive Officer since July 1986.
W. Thomas Hickcox 44 President and Chief Operating Officer of the Company since September 1995 and
1992 December 1994, respectively. Chief Executive Officer of Continental Homes, Inc., a
subsidiary of the Company ("CHI") since May 1997, President of CHI from September
1995 to May 1997, Senior Vice President of CHI from May 1991 to September 1995.
Robert B. Ryan 40 Vice President of Management Information Systems of the Company since September
1996 1995, Vice President of CHI since March 1986.
Timothy C. Westfall 51 Vice President and General Counsel of the Company since October 1994, Vice President
1996 and General Counsel of CHI since February 1990.
Bradley S. Anderson 36 Vice President, Commercial Properties Division of CB Commercial Real Estate Group,
1993 Inc., a real estate brokerage company in Phoenix, Arizona since January 1987.
Peter D. O'Connor 54 Vice President of First Highland, an industrial real estate development company
1996 since 1989.
Jo Ann Rudd 52 Owner/President of the accounting firm of Jo Ann Rudd CPA, P.C. in Phoenix, Arizona
1992 since April 1986.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Position with the Company, Present Principal Occupation,
Nominee and Year First Principal Occupations During the
Elected as Director Age Last Five Years and Other Directorships
- ------------------------------- --------------------------------------------------------------------------------------
<S> <C> <C>
William Steinberg 42 Vice President, AMB Institutional Realty Advisors, Inc., a pension fund advisor in
1992 Boston, Massachusetts since August 1994. President and Founder of Saxe Investments, a
real estate services and consulting company in Scottsdale, Arizona from February
1993 through July 1994, a Partner/Principal of Trammell Crow Company, a real estate
development company in Phoenix, Arizona from August 1988 through February 1993.
</TABLE>
During fiscal 1997, the Board of Directors had the following committees:
The Audit Committee is composed of Bradley S. Anderson, Peter D.
O'Connor, Jo Ann Rudd and William Steinberg. The function of the Audit Committee
is to review the Company's internal controls, its financial reporting and the
scope and results of the audit engagement. It meets with appropriate Company
financial personnel and independent public accountants in connection with these
reviews. The Committee also recommends to the Board the appointment of the
independent public accountants, who have access to the Committee at any time. In
fiscal 1997, one Audit Committee meeting was held.
The Compensation Committee is composed of Bradley S. Anderson, Peter D.
O'Connor, Jo Ann Rudd and William Steinberg. The function of the Compensation
Committee is to establish the amount and form of compensation awarded to Messrs.
Loback and Hickcox, including salary, bonuses and stock option awards and to
monitor compensation of the other executive officers of the Company. In fiscal
1997, two Compensation Committee meetings were held.
The Stock Incentive Committee and Incentive Compensation Committee are
comprised of Donald R. Loback, W. Thomas Hickcox and Timothy C. Westfall. The
function of the Stock Incentive and Incentive Compensation Committees is to
administer the Company's Amended and Restated 1988 Stock Incentive Plan and
Restated 1986 Stock Incentive Plan, respectively (except with respect to Messrs.
Loback and Hickcox). In fiscal 1997, the Stock Incentive Committee held two
meetings and the Incentive Compensation Committee held no meetings.
The Board of Directors does not have a nominating committee.
During fiscal 1997, the Board of Directors had a total of five
meetings. All of the directors attended more than 85% of the meetings of the
Board of Directors and meetings of each of the Committees on which they served.
The Company has established a policy that a portion of the non-employee
directors remuneration should be paid by granting non-qualified stock options in
accordance with the Company's Amended and Restated 1988 Stock Incentive Plan,
subject to receipt of stockholder approval of certain amendments to such Plan.
In fiscal 1997 each director who is not an employee was paid an annual fee of
$12,000, an additional $500 for each Board and Committee meeting attended and,
subject to receipt of stockholder approval, granted stock options representing
3,000 shares of the Company's Common Stock. In fiscal 1998 each non-employee
director will be paid an annual fee of $12,000, $500 for each Board and
Committee meeting attended and receive stock options as determined by the Stock
Incentive Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 1.
5
<PAGE>
EXECUTIVE OFFICERS
The following information is furnished with respect to executive
officers of the Company who are not nominees to serve on the Board of Directors.
<TABLE>
<CAPTION>
Position with the Company and
Name Age Principal Occupations During the Last Five Years
- ---- --- ---------------------------------------------------------------------------------------
<S> <C> <C>
Julie E. Collins 37 Chief Financial Officer of the Company since May 1997, Financial Vice President,
Treasurer and Secretary of the Company since July 1996, Controller of CHI from June
1990 to July 1996.
Don C. Merrell 34 Corporate Controller of the Company since May 1997, Controller of CHI from July 1996
to May 1997. Senior Accountant with Arthur Andersen LLP prior to that date.
Deborah L. Granado 41 Vice President of Personnel of the Company since May 1997, Personnel Manager from
April 1996 to May 1997, Computer Programmer of CHI from November 1994 to April 1996
and Administrative Assistant from June 1985 to October 1994.
</TABLE>
6
<PAGE>
The following table sets forth the annual compensation, long-term
compensation and all other compensation for the last three fiscal years for the
Company's Chief Executive Officer and the four next most highly compensated
executive officers (the "Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
Awards
--------------------------------------------------- ------
Name and Principal Fiscal Salary Bonus Other Annual Options All Other
Position Year $ $ Compensation (1) # Compensation (2)
- ----------------------- --------- -------------- --------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Loback 1997 $250,000 $692,000 $-- 20,000 $5,386
Chief Executive 1996 250,000 540,000 -- -0- 6,273
Officer 1995 200,000 100,000 -- -0- 4,415
W. Thomas Hickcox 1997 250,000 625,020 -- 15,000 4,786
President and 1996 232,692 368,000 -- -0- 4,623
Chief Operating 1995 192,308 125,000 -- 5,000 4,307
Officer
Timothy C. Westfall 1997 160,769 160,000 -- 10,000 4,862
Vice President and 1996 154,750 115,000 -- 5,000 4,493
General Counsel 1995 148,385 50,000 -- 3,000 4,409
Robert B. Ryan 1997 116,923 150,000 -- 10,000 4,160
Vice President 1996 108,712 100,000 -- 5,000 3,775
1995 103,654 40,000 -- 3,000 3,779
Julie E. Collins 1997 106,962 70,000 -- 10,000 5,557
Chief Financial 1996 82,462 20,000 -- -0- 2,655
Officer, Treasurer 1995 75,808 8,500 -- -0- 1,999
and Secretary
</TABLE>
(1) The amount of perquisites and other personal benefits received by each
of the Named Officers for a fiscal year does not exceed the lesser of
$50,000 or 10 percent of the total annual salary and bonus of such
Named Officer for such fiscal year.
(2) Includes Company contributions to the Company's 401(k) retirement plan
and premiums and administrative service fees paid by the Company under
the executive split dollar life insurance program. The Company is
entitled to recover the premiums and administrative service fees from
any amounts paid by the insurer on such split dollar life policies and
has retained a collateral interest in each policy to the extent of the
premiums and administrative service fees paid with respect to such
policy. The following table sets forth the value of all other
compensation:
7
<PAGE>
D.R. W.T. T.C. R.B. J.E.
Loback Hickcox Westfall Ryan Collins
Fiscal 1997 ------ ------- -------- ---- -------
401(K) Company Contribution $3,662 $3,325 $3,381 $3,522 $5,021
Economic Benefit of Split Dollar Plan 1,724 1,461 1,481 638 536
------ ------ ------ ------ ------
$5,386 $4,786 $4,862 $4,160 $5,557
====== ====== ====== ====== ======
Fiscal 1996
401(K) Company Contribution $5,115 $3,651 $3,299 $3,303 $2,284
Economic Benefit of Split Dollar Plan 1,158 972 1,194 472 371
------ ------ ------ ------ ------
$6,273 $4,623 $4,493 $3,775 $2,655
====== ====== ====== ====== ======
Fiscal 1995
401(K) Company Contribution $3,449 $3,396 $3,294 $3,309 $1,632
Economic Benefit of Split Dollar Plan 966 911 1,115 470 367
------ ------ ------ ------ ------
$4,415 $4,307 $4,409 $3,779 $1,999
====== ====== ====== ====== ======
The following table sets forth information on option grants in fiscal
1997 to each of the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------------------ ---------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options/SAR's Employees in Price Expiration
Name Granted (1) Fiscal Year(2) ($/Sh) Date 5% 10%
---- ----------- -------------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Donald R. Loback (3) 20,000 14.3 % $17.125 09/09/06 $215,396 $545,857
W. Thomas Hickcox (3) 15,000 10.7 17.125 09/09/06 161,547 409,393
Timothy C. Westfall (3) 5,000 3.6 18.750 07/24/06 58,959 149,413
Timothy C. Westfall (3) 5,000 3.6 15.875 04/04/07 49,919 126,503
Robert B. Ryan 5,000 3.6 18.750 07/24/06 58,959 149,413
Robert B. Ryan 5,000 3.6 15.875 04/04/07 49,919 126,503
Julie E. Collins 5,000 3.6 18.750 07/24/06 58,959 149,413
Julie E. Collins 5,000 3.6 15.875 04/04/07 49,919 126,503
</TABLE>
(1) All options granted are for Common Shares and are exercisable in
cumulative 25% installments commencing one year from the date of grant,
with full vesting occurring on the fourth anniversary date.
(2) The Company granted options representing 139,800 shares of Common Stock
to employees in fiscal 1997.
(3) These grants are subject to receipt of stockholder approval of the
amendments to the 1988 Plan.
8
<PAGE>
The following table sets forth information on option exercises in
fiscal 1997 by each of the Named Officers and the value of such officers'
unexercised options at May 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-The-Money
Options at Options at
Fiscal Year End Fiscal Year End ($)
---------------- -------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Loback -0- $ -- -0- 20,000 $ -- $ --
W. Thomas Hickcox -0- -- 27,000 17,250 147,875 3,281
Timothy C. Westfall -0- -- 19,500 15,250 100,188 4,469
Robert B. Ryan -0- -- 9,750 15,250 21,406 4,469
Julie E. Collins -0- -- 1,500 10,000 5,813 2,500
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is comprised of
four non-employee directors of the Company, currently Messrs. Anderson, O'Connor
and Steinberg and Ms. Rudd. The Committee is responsible for establishing the
compensation levels for Messrs. Loback and Hickcox. The Committee is also
responsible for reviewing and monitoring, but not approving, compensation to
other executives of the Company.
The Company's executive compensation programs are intended to enable
the Company to attract, retain and reward highly qualified executives while
maintaining a strong and direct link between executive pay, the Company's
financial performance and return on stockholders' equity.
In fiscal 1997 the Company had five Executive Officers excluding
Messrs. Loback and Hickcox. Compensation for executive officers is determined by
Messrs. Loback and Hickcox. Commencing in fiscal 1994, such compensation levels
were reviewed by the Compensation Committee. It is recognized that management is
most familiar with the individual employees, with prevailing levels for
compensation within certain markets and other factors affecting compensation.
However, Compensation Committee review is to ensure that compensation decisions
relative to executives of the Company are made responsibly.
The committee sets compensation for Messrs. Loback and Hickcox. In
keeping with the Company's compensation objectives, Messrs. Loback's and
Hickcox's compensation is largely driven by cash incentives that are directly
tied to the Company's financial performance. Accordingly, the Committee
determined in June 1996 that Mr. Loback's fiscal 1997 compensation would be
comprised of a base salary of $250,000 plus a cash bonus equal to 1.25% of the
Company's pre-tax, pre-incentive income. In addition, Mr. Loback was granted
stock options pursuant to the Company's Amended and Restated 1988 Stock
Incentive Plan, subject to receipt of stockholder approval, representing 20,000
shares of the Company's Common Stock. In fiscal 1998, Mr. Loback's base salary
will be increased to $450,000 and his cash bonus will be the same percentage.
9
<PAGE>
Mr. Hickcox's fiscal 1997 compensation was comprised of a base salary
of $250,000 plus a cash bonus equal to 1.00% of the Company's pre-tax,
pre-incentive income. In addition, Mr. Hickcox was granted stock options
pursuant to the Company's Amended and Restated 1988 Stock Incentive Plan,
subject to receipt of stockholder approval of the amendments to the Plan,
representing 15,000 shares of the Company's Common Stock. In fiscal 1998, Mr.
Hickcox's base salary will be increased to $300,000 and his cash bonus will be
the same percentage.
As a part of the decision making process, the Committee reviewed prior
years compensation of Chief Executive Officers and Presidents of selected
homebuilding companies deemed comparable to the Company, noting that during the
periods the average compensation paid to comparable officers had been in excess
of the compensation paid to Messrs.
Loback and Hickcox.
The only long-term incentive plans maintained by the Company are the
stock option plans. The compensation of the executive officers consists
principally of salary, annual bonus and income and potential gain from stock
options. The perquisites and other benefits received by executive officers are
incidental to employment.
Section 162(m) of the Internal Revenue Code generally disallows
deductions to public companies for executive compensation in excess of $1
million to named executive officers. The Committee will take appropriate steps
to optimize deductibility and believes that all current payments to named
executive officers are deductible.
The above Committee Report to Shareholders of the Compensation
Committee shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference and shall not otherwise be deemed under such acts.
COMPENSATION COMMITTEE
Bradley S. Anderson
Peter D. O'Connor
Jo Ann Rudd
William Steinberg
10
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total return of Continental
Homes Holding Corp., the S&P 500 Index and the S&P Homebuilding Index:
May-92 May-93 May-94 May-95 May-96 May-97
------ ------ ------ ------ ------ ------
Continental 100.00 113.46 122.38 136.54 222.59 149.68
S&P Homebuilding 100.00 135.68 111.53 122.80 129.07 139.78
S&P 500 100.00 111.61 116.36 139.86 179.63 232.47
The above graph is based upon common stock and index prices calculated
as of May 31 for each of the last five fiscal year-end periods. The Company's
May 30, 1997 closing price per Common Share was $16.375. As of July 2, 1997 the
Company's Common Shares closed at $17.75 per share. The stock price performance
of Continental Homes Holding Corp. depicted in the graph above represents past
performance only and is not indicative of future performance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of May 31, 1997, Mr. Hickcox owed $138,729.46 to the Company. The Company
paid invoices on behalf of Mr. Hickcox related to the construction of his
personal residence. Such amount will be paid by Mr. Hickcox in fiscal 1998.
11
<PAGE>
PROPOSAL TWO
In June 1997, the Board of Directors adopted amendments to the
Company's Amended and Restated 1988 Stock Incentive Plan (the "1988 Plan") which
require stockholder approval. The Board approved an increase in the number of
shares of Common Stock subject to the 1988 Plan from 500,000 shares to 1,000,000
shares. The Board took such action because at the end of fiscal 1997 there were
only 44,695 shares available under the 1988 Plan for future grants and the Board
believes that a stock option program is an important factor in attracting,
retaining and motivating key employees who will dedicate their maximum
productive efforts toward the advancement of the Company. The Board also
approved an amendment to the 1988 Plan which would permit members of the Board
of Directors and the Stock Incentive Committee to participate in the 1988 Plan.
The Board has granted options to purchase 3,000 shares of the Company's Common
Stock to each non-employee member of the Board of Directors, and options to
purchase 20,000, 15,000 and 10,000 shares of the Company's Common Stock to
Messrs. Loback, Hickcox and Westfall, respectively, subject to stockholder
approval. The Board believes that the above-mentioned amendments further these
objectives by assuring continuing availability of stock options in the
appropriate circumstances.
The principal aspects of the 1988 Plan are summarized below. The full
text of the Plan is annexed hereto as Exhibit A. Shareholders are urged to read
Exhibit A carefully. This description of the 1988 Plan is qualified in its
entirety by reference to Exhibit A.
The Company's 1988 Plan was adopted by the Board of Directors of the
Company on July 29, 1988 and the shareholders of the Company on August 26, 1988.
All officers and key employees of the Company and its subsidiaries who are in
positions which enable them to make contributions to the long-term performance
and growth of the Company are eligible to receive awards under the 1988 Plan. As
of July 8, 1997, approximately twenty-five employees of the Company and its
subsidiaries were eligible to participate in the 1988 Plan.
The 1988 Plan is administered by the Board of Directors. The Board has
delegated its authority under the Plan to a Stock Incentive Committee (the
"Incentive Committee"), which consists of at least three members of the Board.
Any further references in this section to the "Incentive Committee" shall mean
either the Board or the Stock Incentive Committee.
The 1988 Plan authorizes grants with respect to a maximum of 1,000,000
Common Shares (subject to adjustment in the event of stock dividends, stock
splits, reclassification of the Common Shares, recapitalization of the Company
or similar changes in the Company's capitalization). If the proposed amendments
to the 1988 Plan are approved by stockholders, the 1988 Plan would limit the
total grants of stock options or stock appreciation rights to any participant in
any fiscal year to 100,000, and the aggregate number of shares which may be
restricted stock to 100,000 shares. The Company has not granted any shares of
restricted stock to date under the 1988 Plan.
The Incentive Committee will have the authority to determine the
employees to whom options and awards will be granted under the 1988 Plan, the
type, number and terms of the options and awards to be granted, the time when
options and awards will be granted and the duration of the exercise period of
options. Awards pursuant to the 1988 Plan may take the form of ISOs, NQSOs, SARs
or restricted stock, or a combination of these forms of awards, each as
described below.
ISOs are options (a right to purchase a stated number of shares at a
specified price within a given period) intended to qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code
12
<PAGE>
of 1986, as amended (the "Code") and, therefore, are subject to certain special
restrictions. The exercise price of an ISO may not be less than the fair market
value of the Common Shares on the date of grant, except that the exercise price
of options held by any participant who owns more than 10% of the Common Shares
may not be less than 110% of such fair market value on the date of grant, and
the aggregate fair market value (determined as of the date of grant) of shares
covered by all ISOs that may first become exercisable by an optionee in a single
calendar year may not exceed $100,000. Unless the Incentive Committee provides
otherwise, ISOs granted under the 1988 Plan are exercisable on a cumulative
basis at a rate of 25% each year, beginning on the first anniversary of the date
of grant. Except as described below, if a participant ceases to be an employee,
an unexercised ISO will terminate. In the event of termination of a
participant's employment by the Company other than for cause, the participant
may exercise any ISO (to the extent otherwise exercisable by its terms) for a
period of three months after such termination unless the expiration date of the
ISO occurs sooner. If termination of a participant's employment is by reason of
death or disability, the ISO may be exercised for a period of one year after
such termination, unless the expiration date of the ISO occurs sooner.
NQSOs are options that may be granted without regard to the special
restrictions imposed on ISOs. Pursuant to the 1988 Plan, no NQSO will become
exercisable prior to six months after the date of grant; thereafter, NQSOs will
become exercisable at such time and for such number of the Common shares as the
Incentive Committee determines. The exercise price of an NQSO may not be less
than 85% of the fair market value of Common Shares on the date of grant. In
general, the unexercised portion of an NQSO terminates upon termination of the
participant's employment, unless the Incentive Committee in its sole discretion
determines otherwise. In the event of termination by reason of retirement at or
after age 65, disability or death, the unexercised portion of any NQSO shall
expire three months after retirement or disability or one year after death,
unless the expiration date of the NQSO occurs sooner and the participant, during
such three-month period, and the participant's legal representatives, heirs or
legatees, during such one-year period, may have the same right to exercise the
unexercised portion of the NQSO as the participant would have had if he were
still an employee of the Company.
A participant may exercise an option during the option period at such
time, and in such amounts (subject to a 100-share minimum), as he desires and
may pay the exercise price in cash or in such other consideration (which may be
other Common Shares) as the Incentive Committee may determine. Unless otherwise
provided in an option agreement, options granted under the 1988 Plan are
exercisable for a term of ten years from the date of grant, provided that ISOs
granted to a more-than-10% shareholder may only be exercisable for a period of
not more than five years from the date of grant.
An SAR is a right which under the 1988 Plan may only be granted (i) in
conjunction with an NQSO and (ii) in an amount not in excess of the number of
Common Shares granted in the related NQSO. An SAR provides a participant, with
respect to the number of Common Shares for which the SAR is exercised, with an
amount equal to the difference between the fair market value of the Common
Shares on the date the SAR is exercised and the exercise price of the NQSO. Such
amount may be paid in either cash, Common Shares or a combination of cash and
Common Shares, in the manner specified by the Stock Incentive Committee. Each
SAR is subject to the same conditions on termination of employment as the
related NQSO.
A recipient of Restricted Stock is entitled to receive Common Shares at
no out-of-pocket cost or to purchase Common Shares at a price determined by the
Incentive Committee, which is expected to be below the fair market value of the
shares. Such Common Shares will be nontransferable and subject to restrictions
which will render them subject to forfeiture upon the occurrence of certain
conditions. The time period of the restrictions and rate of lapse of such
restrictions will be determined by the Incentive
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Committee in its sole discretion. The restrictions may require a recipient's
continuing employment, and if any required period of continued employment is not
completed or is only partially completed, the shares will be partially or
completely forfeited to the Company.
Required Vote
In order to be adopted, this proposal must receive the affirmative vote
of the holders of a majority of the shares of stock eligible to vote at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 2.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent public accountants, to audit the consolidated financial statements
of the Company for the fiscal year ending May 31, 1998. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting of
Stockholders and to be available to respond to appropriate questions. Such
representatives will have the opportunity to make a statement at the Annual
Meeting if they desire to do so.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the next Annual
Meeting must be received by the Company on or before March 26, 1998 in order to
be included in the Proxy Statement and proxy for the 1998 meeting. The mailing
address of the Company for submission of any such proposals is 7001 N.
Scottsdale Road, Suite 2050, Scottsdale, Arizona 85253, Attn.: Secretary.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers, and persons who own more than
10 percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10 percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that during the year ended May 31, 1997, all filing
requirements applicable to its officers, directors and greater than 10 percent
beneficial owners were complied with.
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OTHER MATTERS
The Board of Directors knows of no matters other than those described
above which are likely to come before the meeting. If any other matters properly
come before the meeting, the persons named in the accompanying form of proxy
intend to vote the proxies in accordance with their best judgment.
The entire cost of solicitation of proxies in the accompanying form
will be borne by the Company. The Company will reimburse brokers for their costs
associated with transmitting these materials to persons from whom such brokers
hold Common Shares. In addition to the use of the mails, proxies may be
solicited by directors, officers and regular employees of the Company, by
personal interview, telephone and telecopy.
The Company's Annual Report to Stockholders (which is not a part of the
proxy solicitation material) is being mailed to stockholders together with the
Proxy Statement.
Stockholders wishing to receive a copy of the Company's Fiscal 1997
Annual Report on Form 10-K (including the financial statements and schedules
thereto) filed with the Securities and Exchange Commission may obtain one
without charge by making a written request to Investor Relations, Continental
Homes Holding Corp., 7001 N. Scottsdale Road, Suite 2050, Scottsdale, Arizona
85253.
By Order of the Board of Directors
JULIE E. COLLINS
Secretary
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EXHIBIT A
CONTINENTAL HOMES HOLDING CORP.
1988 STOCK INCENTIVE PLAN
(As amended and restated June 20, 1997)
1. Purposes:
The purposes of the Continental Homes Holding Corp. 1988 Stock
Incentive Plan (the "Plan") are (a) to provide incentives to those key employees
of Continental Homes Holding Corp. (the "Company") and its subsidiaries whose
performance will contribute to the long-term success and growth of the Company,
(b) to strengthen the ability of the Company to attract and retain employees of
high competence, (c) to increase the identity of interests of such employees
with those of the Company's stockholders, and (d) to help build loyalty to the
Company through recognition and the opportunity for stock ownership.
2. Elements of the Plan
The Plan provides the Company's Board of Directors (the "Board") with the
discretion to grant or award participants incentives relating to the Company's
common stock utilizing (a) incentive stock options, (b) nonqualified stock
options which may be coupled with stock appreciation rights and/or (c)
restricted stock. These benefits may be granted to participants singly or in any
combination which the Board deems appropriate.
3. Shares Subject to the Plan
The maximum aggregate number of shares as to which awards or options may at
any time be granted under this Plan shall be 1,000,000 shares of common stock,
par value $.01 per share (the "Common Shares"), subject to adjustment in
accordance with Section 9 hereof. Such Common Shares may be either authorized
but unissued shares or shares previously issued and reacquired by the Company.
If and to the extent options granted under the Plan terminate, expire or are
canceled without having been exercised, or if any shares of restricted stock are
forfeited, the shares subject to such option or award shall again be available
for purposes of the Plan. The maximum number of Common Shares with respect to
which stock options or stock appreciation rights may be granted to any
participant during any fiscal year shall be 100,000. The maximum number of
Common Shares which may be issued under the Plan as restricted stock shall be
100,000.
4. Plan Administration
The Plan shall be administered by the Board. The Board may delegate this or
any other authority granted to it hereunder to a committee which shall consist
of at least three members of the Board (the "Stock Incentive Committee").
Members of the Stock Incentive Committee shall be eligible to participate in the
Plan, so long as grants to such members are ratified by the Company's Board of
Directors other than the members of such Committee (any references herein to the
"Board" shall be deemed to refer to either the Board or the Stock Incentive
Committee if the Board has delegated administrative authority to such
Committee). The Board shall have the sole authority to determine (a) the
employees to whom options and awards shall be granted under the Plan; (b) the
type, size and terms of the options and awards to be granted to each employee
selected; (c) the time when options and awards will be granted and the duration
of the exercise period; and (d) any other matters arising under the Plan. The
Board shall have full power and authority to administer and interpret the Plan
and to adopt or amend
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such rules, regulations, agreements and instruments for implementing the Plan
and for conduct of its business as it deems necessary or advisable. The Board's
interpretations of the Plan and all determinations made by the Board pursuant to
the powers vested in it hereunder shall be conclusive and binding on all persons
having any interest in the Plan or in any options or awards granted hereunder.
A majority of the Board shall constitute a quorum for purposes of meetings
which may be held at such times and places and on such notice as the Board deems
appropriate. All actions and determinations of the Board shall be made by not
less than a majority of its members and may be made at a meeting or by written
consent in lieu of a meeting.
5. Eligibility for Participation
Officers, directors and other key employees of the Company or any
subsidiary (as defined in Section 424(f) of the Internal Revenue Code of 1986,
as amended (the "Code")), of the Company (a "Subsidiary") shall be eligible to
participate in the Plan (the "Participants"). Nothing contained in this Plan
shall be construed to limit the right of the Company or any Subsidiary to grant
options otherwise than under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation, or otherwise, of the business or assets
of any corporation, firm or association, including options granted to employees
thereof who become employees of the Company or a Subsidiary, or for other proper
corporate purposes.
6. Granting of Options
(a) As of the effective date set forth in Section 23 hereof, the Board
shall have the right to grant Participants options that are intended to be
"Incentive Stock Options" within the meaning of Section 422 of the Code until
the tenth anniversary of the date on which the Board approved the Plan and/or
other stock options on the terms and conditions set forth herein ("Nonqualified
Stock Options") or any combination of Incentive Stock Options and Nonqualified
Stock Options. The Purchase price of each Common Share to an Incentive Stock
Option shall be the Fair Market Value (as hereinafter defined) of a share of
such stock on the date the Incentive Stock Option is granted, provided, however,
that any Incentive Stock Option granted to a Participant who owns more than 10%
of the total combined voting power of all classes of stock of the Company or any
Subsidiary (a "10% Stockholder") shall not be less than 110% of such Fair Market
Value. The purchase price of each Common Share subject to a Nonqualified Stock
Option shall be determined by the Board on or before the date such Nonqualified
Stock Option is granted, but may not be less than 85% of the Fair Market Value
of the Common Shares on the date of grant. For purposes of this Plan, Fair
Market Value shall be deemed to be equal to the last reported sales price on the
applicable date, or if no sales price is available for such date, the average of
the closing bid and asked prices for such date, on (i) the New York Stock
Exchange ("NYSE"), if the Common Shares are then listed on such exchange, (ii)
if the Common Shares are not listed on the NYSE, on the principal national stock
exchange on which the Common Shares are then listed, or (iii) if not listed on
any national stock exchange, as reported by NASDAQ. If the Common Shares are not
then listed on any national stock exchange or reported by NASDAQ (or if no
current bid and asked price is available), then the Fair Market Value shall be
determined in any reasonable manner approved by the Board.
(b) The aggregate Fair Market Value (determined as of the date of grant) of
the Common Shares subject to Incentive Stock Options that first become
exercisable by a Participant in any calendar year under this Plan or any other
plan maintained by the Company or any Subsidiary may not exceed $100,000.
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(c) The Board may prescribe such other terms as it deems desirable or as
may be necessary to qualify the options granted hereunder as Incentive Stock
Options under the provisions of Section 422 of the Code. The Board may also
authorize acceleration of the exercise of an option or installment thereof.
7. Term of Options
Unless the option agreement pursuant to which options are granted (the
"Option Agreement") provides otherwise, options granted hereunder shall be
exercisable for a term of ten years from the date of grant (the "Expiration
Date"); provided, however, that any Incentive Stock Option granted to a 10%
Stockholder may not be exercisable for a term of more than five years from the
date of grant.
8. Exercise of Options
(a) Unless the Board provides otherwise and such provision is reflected in
the terms of the Option Agreement, Incentive Stock Options will become
exercisable in installments on a cumulative basis at a rate of twenty-five
percent (25%) each year beginning on the first anniversary of the date of grant.
No Nonqualifed Stock Option will become exercisable prior to six months after
the date of grant; thereafter, Nonqualified Stock Options will become
exercisable at such time and for such number of Common Shares as the Board, in
its sole discretion, shall determine.
(b) Unless the option agreement provides otherwise, options granted
hereunder shall be exercisable for cash or any other property (including Common
Shares or promissory notes) deemed acceptable by the Board; provided that, in
the case of payment by a promissory note, the Participant shall pay in cash or
other property an amount equal to at least the par value of the Common Shares
being purchased, and, if the option is an Incentive Stock Option, the note shall
bear a sufficient rate of interest so that the exercise price for the purposes
of the Code shall be no less than the Fair Market Value of the Common Shares
being purchased.
(c) Except as otherwise provided herein, no option may be exercised at any
time, unless the holder is then a regular employee of the Company or a
Subsidiary and has continuously remained an employee at all times (other than on
an absence for an approved leave of absence or service in the Armed Forces)
since the date of grant of such option.
(d) Options shall be exercised by a Participant giving written notice of
such exercise to the Company, provided that an option may not be exercised at
any one time as to less than 100 Common Shares ( or such number of Common Shares
as to which the option is then exercisable if less than 100). No fractional
shares, or cash in lieu thereof shall be issued under this Plan or under any
option granted hereunder.
(e) An Incentive Stock Option shall be exercisable during a Participant's
lifetime only by the Participant, or if the Participant has become disabled, by
his legal representative.
9. Adjustments for Certain Events
The total number of Common Shares available for options or awards under the
Plan and option rights (both as to the number of Common Shares and the per share
option price) shall be appropriately adjusted for any increase or decrease in
the number of outstanding Common Shares resulting from payment of a stock
dividend on the Common Shares, a subdivision or combination of Common Shares, or
a reclassification of the Common Shares, and (in accordance with the provisions
contained in the next
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paragraph) in the event of a recapitalization of the Company or a consolidation
or merger in which the Company shall be the surviving corporation.
After any merger of one or more corporations into the Company in which the
Company shall be the surviving corporation, or after any consolidation of the
Company and one or more corporations, or after any recapitalization of the
Company, each Participant shall, at no additional cost, be entitled, upon any
exercise of his option, to receive (subject to any required action by
stockholders), in lieu of the number of shares as to which such option shall
then be so exercised, the number and class of shares of stock or other
securities to which such Participant would have been entitled pursuant to the
terms of the agreement of merger or consolidation or the plan of
recapitalization if at the time of such merger or consolidation or
recapitalization such Participant had been a holder of record of a number of
Common Shares equal to the number of shares as to which such option shall then
be so exercised. Comparable rights shall accrue to each Participant in the event
of successive recapitalizations, mergers, or consolidations of the character
described above.
In the event of any sale of all or substantially all of the assets of the
Company, or any merger of the Company into another corporation in which the
Company is not the surviving corporation, or any merger in which the holders of
capital stock of the Company receive cash or other consideration in exchange for
their shares, or any dissolution or liquidation of the Company or, in the
discretion of the Board, any consolidation or other reorganization in which it
is impossible or impracticable to continue in effect options granted under the
Plan, the Company shall, at least 20 days prior to the scheduled closing of such
event, send a written notice to each Participant by registered or certified mail
or personal delivery stating that if such Participant's option is not exercised
by the close of business on the business day immediately preceding the date of
the scheduled closing of such event it shall terminate and the Board may, in its
discretion, determine (and if it does so the Company's notice shall so state)
that options granted under the Plan shall be exercisable in full during such
20-day period; provided that the Company has given the foregoing notice, any
portion of such Participant's option remaining unexercised at the close of
business on such day shall terminate unless the closing of such event shall not
occur (whether it occurs on the scheduled date or a later date), in which case
the Company's notice shall be of no further effect. However, the Board may, in
its discretion, require instead, if any corporation acquiring the stock or
assets of the Company or into which the Company merged is willing and able to
assume all outstanding options granted under the Plan and such options shall not
thereby lose their character as Incentive Stock Options, that such options to
the extent not previously exercised shall be assumed by such other corporation
and the preceding sentence shall not apply.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Board in its sole discretion. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become subject to an option, and, provided that any such adjustment
with respect to an Incentive Stock Option in connection with a transaction to
which Section 424(a) of the Code applies shall be done in accordance with the
provisions of such Section 424(a) unless the Board specifically determines
otherwise.
10. Exercise on Termination of Employment
(a) Incentive Stock Options
Except as provided in the next sentence, if a Participant ceases to be an
employee any unexercised Incentive Stock Option shall terminate. If prior to the
Expiration Date a Participant ceases to be an employee by reason of (i) death or
disability within the meaning of Section 22 (e)(3) of the Code, he (or,
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in the event of the Participant's death, his estate) may exercise any Incentive
Stock Options he holds for a period of one year after the date of cessation of
employment or (ii) termination by the Company other than "for cause," he may
exercise any Incentive Stock Options he holds for a period of three months after
the date of cessation of employment, in either case, to the extent that such
options were exercisable at the date of such cessation. Thereafter, any
unexercised portion of the option shall terminate. Notwithstanding the
foregoing, in no event shall Incentive Stock Options be exercisable after the
Expiration Date. For purposes of this Plan, termination "for cause" shall mean
cessation of employment due to (i) the Participant's failure to perform his
duties, (ii) the commission by the participant of an act of gross dishonesty or
willful and deliberate disloyalty in connection with this employment, or (iii)
the conviction of the Participant of any felony, whether or not involving or in
connection with his employment.
(b) Nonqualified Stock Options
(i) If a Participant ceases to be an employee by reason of his retirement
at or after age 65, permanent and total disability (as determined by the Board)
or termination by the Company other than "for cause", any unexercised portion of
his Nonqualified Stock Option shall expire three months after such retirement,
disability or termination, as the case may be, and during such three months'
period, the Participant shall have the same rights to exercise the unexercised
portion of his Nonqualified Stock Option as he would have had if he were still
an employee of the Company. Notwithstanding the foregoing, in no event shall
Nonqualified Stock Options be exercisable after the Expiration Date.
(ii)If, prior to the expiration of any Nonqualified Stock Option, a
Participant shall die while an employee of the Company, any unexercised portion
of such option shall expire one year after his death and during such one-year
period his legal representative, heirs or legatees shall have the same rights to
exercise the unexercised portion of the option as the Participant would have had
if he were still an employee of the Company. Notwithstanding the foregoing, in
no event shall nonqualifed Stock Options be exercisable after the Expiration
Date.
(iii) Except as provided in clauses (i) and (ii) of this Section 10(b), if
a Participant ceases employment for any reason prior to the Expiration Date of
any Nonqualified Stock Option, the unexercised portion of such option shall
automatically terminate, unless the Board in its sole discretion shall determine
otherwise.
11. Stock Appreciation Rights
(a) Concurrently with each grant of a Nonqualified Stock Option under this
Plan, the Board may grant a Participant a "Stock Appreciation Right" which shall
provide the Participant the right to receive cash or, subject to the provisions
of Section 11(c) hereof, Common Shares or a combination of cash and Common
Shares in lieu of the purchase of Common Shares under such option. Such rights
shall only be granted in conjunction with Nonqualified Stock Options and may not
be granted alone.
(b) The amount to which a Participant shall be entitled upon the exercise
of any Stock Appreciation Right shall be determined by multiplying (i) the
number of Common Shares with respect to which the Stock Appreciation Right is
exercised by (ii) the amount, if any, by which the Fair Market Value of a Common
Share on the exercise date exceeds the exercise price of the related
Nonqualified Stock Option. Subject to the provisions of Section 11(c) hereof,
such amount shall be paid, in either cash, Common Shares (valued at their Fair
Market Value on the date the Stock Appreciation Rights are exercised), or a
combination of cash and Common Shares, in the manner specified by the Board in
its sole discretion.
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(c) Unless the Board, in its sole discretion, provides otherwise, Stock
Appreciation Rights shall be exercisable upon the same conditions as the related
Nonqualifed Stock Option is exercisable under Sections 7, 8 and 10(b) hereof;
provided, however, that a Participant wishing to exercise a Stock Appreciation
Right shall give written notice of such exercise to the Board stating the number
of a Nonqualified Stock Options and Stock Appreciation Rights he wishes to
exercise at such time and the form of payment for the Stock Appreciation Rights
he wishes to receive. The Board, in its sole discretion, shall determine whether
to honor the Participant's request to receive cash upon the exercise of his
Stock Appreciation Rights. The Board (i) may condition exercise of Stock
Appreciation Rights on the Participant's written agreement to hold all Common
Shares received upon exercise of the related Nonqualified Stock Option for a
period of one year, (ii) in the case of any Participant whose status as a
director, officer or shareholder of the Company would subject him to liability
for "short swing" profits pursuant to Section 16(b) of the Securities Exchange
Act of 1934, as amended, to the extent then in force, shall limit the period
during which Stock Appreciation Rights may be exercised (in whole or in part)
for cash to the extent necessary to exempt the exercise of Stock Appreciation
Rights for cash from such liability and (iii) may impose any other term or
condition on exercise which the Board deems appropriate.
(d) The exercise of any Stock Appreciation Right shall reduce the number of
Common Shares subject to the related Nonqualified Stock Option.
12. Restricted Stock Awards
(a) The Board shall have the authority to award Participants Common Shares
which shall be restricted as provided herein to avoid immediate taxation under
the Code.
(b)Such restricted stock may not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated by a Participant, except
as provided below. As a condition to the receipt of any Common Shares awarded
under this Plan, a Participant shall execute and deliver to the Company an
instrument in writing, in form approved by the Board, wherein he agrees to the
above restrictions and the legending of the certificates representing his Common
Shares with respect thereto. Notwithstanding such restrictions, however, a
Participant shall be entitled to receive all dividends declared on and to vote
any Common Shares held by him and to all other rights of a stockholder with
respect thereto.
(c) If a Participant terminates his employment for any reason, his rights
with respect to any Common Shares which remain restricted hereunder shall be as
provided in a written agreement between the Participant and the Company relating
to the award and forfeiture of shares hereunder.
(d) Subject to subsection (c) hereof or to the extent provided in any
written agreement between the Participant and the Company relating to the award
of Common Shares hereunder, the restrictions set forth in this Section 12 on the
sale, transfer or other disposition and on the pledge or other hypothecation of
Common Shares awarded under this Plan shall lapse ratably over a period of five
years from the date of award.
13. Forfeiture of Benefits
Notwithstanding any other provision of this Plan, no payment of any unpaid
award shall be made, and any and all unexercised options and all rights under
the Plan of a Participant who received such award or
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option grant (or his designated beneficiary or legal representatives) to the
payment or exercise thereof, shall be forfeited if, prior to the time of such
payment or exercise, the Participant shall (i) be employed by a competitor of,
or shall be engaged in any activity in competition with, the Company without the
Company's consent, (ii) divulge without the Company's consent any secret or
confidential information belonging to the Company, or (iii) engage in any other
activities which would constitute grounds for termination "for cause," as
defined in Section 10 of this Plan.
14. Payments on Death
If a Participant dies before receiving full payment of all amounts to which
he is entitled under this Plan, the remaining payments shall be paid when due to
his designated beneficiary, as designated in such Participant's Option
Agreement, or, in the absence of such designation, to his estate.
15. Transferability of Options and Awards
A Participant's rights and interest under the Plan (including the right to
payment of unpaid installments of awards or the exercise of unexercised options)
may not be assigned or transferred except, in the case of a Participant's death,
to the person or persons to whom the option shall have been transferred by will
or the laws of descent and distribution.
16. Amendment and Termination
The Board may at any time and from time to time terminate, modify or amend
the Plan in any respect; provided, however, that unless also approved or
ratified by a vote of the holders of the outstanding shares of the capital stock
of the Company entitled to a majority of the voting power of the Company, any
such modification or amendment shall not (subject, however, to the provisions of
Section 9 hereof); (i) increase the maximum number of Common Shares for which
options and awards may be granted under the Plan; (ii) reduce the option price
at which options may be granted; (iii) extend the period during which options
may be granted or exercised beyond the times originally prescribed; (iv) change
the persons eligible to participate in the Plan; or (v) increase the number of
options or awards that may be granted to a Participant or materially increase
the benefits accruing to Participants under the Plan. No such termination,
modification or amendment may affect the rights of a Participant under an
outstanding option or the grantee of an award. Nevertheless, with the consent of
the Participant affected, the Committee may amend outstanding options and awards
in a manner not inconsistent with the terms of the Plan.
17. Funding of Plans
This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any option or award under this Plan and payment of options
and awards shall be subordinate to the claims of the Company's general
creditors. In no event shall interest be paid or accrued on any option or award,
including unpaid installments of options or awards.
18. Rights of Participant
No Participant or other person shall have any claim or right to be granted
an option or award under this Plan. Neither this Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be retained
in the employ of the Company.
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19. Rights as a Stockholder
A Participant or a transferee of an option shall have no rights as a
stockholder with respect to any Common Share covered by his option until he
shall have become the holder of record of such share, and except for stock
dividends as provided in Section 9 hereof, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights in respect of such share for which
the record date is prior to the date on which he shall become the holder of
record thereof.
20. Agreements with Participants
Each award or grant made under this Plan shall be evidenced by a written
instrument containing such terms and conditions as the Board shall approve. Each
such agreement shall provide that, as a condition to the award or grant
evidenced thereby, the Participant agrees that the Company shall arrange to
deduct from any payments of any kind otherwise due to the Participant from the
Company or a Subsidiary, the aggregate amount of federal, state or local taxes
of any kind required by law to be withheld with respect thereto, or if no such
payments are due or become due to the Participant, that the Participant shall
pay to the Company, or make arrangements satisfactory to the Company regarding
the payment to it of, the aggregate amount of such taxes.
21. Requirements for Issuance of Shares
No Common Shares shall be issued or transferred hereunder unless and until
all legal requirements applicable to the issuance or transfer of such shares
have been complied with to the satisfaction of the Board. The Board shall have
the right to condition any award or the issuance of Common Shares made to any
Participant hereunder on such Participant's undertaking in writing to comply
with such restrictions on his subsequent disposition of such shares as the Board
shall deem necessary or advisable as a result of any applicable law, regulation
or official interpretation thereof, and certificates representing such shares
may be legended to reflect any such restrictions.
22. Headings
Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.
23. Effective Date and Designation of the Board
Subject to the approval of the Company's stockholders entitled to vote
hereon, this Plan shall be effective as of September 1, 1988 and shall continue
in effect thereafter until terminated or suspended by the Board.
23
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CONTINENTAL HOMES HOLDING CORP.
7001 N. Scottsdale Road, Suite 2050, Scottsdale, AZ 85253
This Proxy is Solicited on Behalf of The Board of Directors The undersigned hereby appoints Donald R. Loback and W. Thomas
Hickcox, and each of them severally, as Proxies of the undersigned, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote as designated below all the shares of Common Stock of Continental Homes Holding Corp. (the
"Company") held of record by the undersigned on July 8, 1997, at the Annual Meeting of Stockholders to be held on August 28, 1997
and any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS ONE AND TWO
<S> <C>
(1) FOR ELECTION AS DIRECTORS OF ALL NOMINEES LISTED BELOW TO SERVE UNTIL THE 1998 ANNUAL MEETING OF STOCKHOLDERS (except as
indicated to the contrary below).
0 FOR all nominees listed below 0 WITHHOLD AUTHORITY to vote
(except as indicated to the contrary below) for all nominees listed below
Donald R. Loback, W. Thomas Hickcox, Robert B. Ryan, Timothy C. Westfall, Jo Ann Rudd, William Steinberg, Bradley S. Anderson, Peter
D. O'Connor (INSTRUCTION: To withhold authority to vote for any nominee, indicate the individual nominee's name on space provided
below.)
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(2) TO AMEND THE 1988 STOCK INCENTIVE PLAN (THE "1988 PLAN") TO, AMONG OTHER THINGS, INCREASE BY 500,000 THE NUMBER OF SHARES
OF THE COMPANY'S COMMON STOCK THAT MAY BE ISSUED PURSUANT TO THE 1988 PLAN AND PERMIT MEMBERS OF THE BOARD OF DIRECTORS AND
THE STOCK INCENTIVE COMMITTEE TO PARTICIPATE IN THE 1988 PLAN.
0 FOR 0 WITHHOLD AUTHORITY 0 ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or
any adjournment thereof.
This proxy when properly executed will be voted in the manner directed by the undersigned stockholder. If no direction is made, this
proxy will be voted FOR Proposals (1) and (2).
Please sign exactly as name appears below. When
Shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please sign your name and
indicate full title as such. If a corporation, an
authorized officer should sign his name and indicate
his title. If a partnership, please sign in
partnership name by authorized person.
Dates:
----------------------------------------------------
Receipt of Notice of Meeting and Proxy Statement
is hereby acknowledged. ----------------------------------------------------
Signature
----------------------------------------------------
Signature if held jointly
Please sign, date and mail in the enclosed envelope
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