Securities and Exchange Commission
Washington D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
- -_______________ to ________________.
Commission file number 0-22562
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<CAPTION>
CROSSMANN COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
<S> <C>
Indiana 35-1880120
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
9202 North Meridian Street, Suite 300
Indianapolis, IN 46260
(Address of principal executive offices) (Zip Code)
(317) 843-9514
(Registrant s telephone number, including area code)
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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 periods that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days: Yes X No
There were 6,169,785 Common Shares outstanding as of August 14, 1997. This
number does not reflect a three-for-two stock split to be effected by a share
dividend payable on August 25, 1997. As adjusted for the stock split, the
total number of Common Shares outstanding as of August 14, 1997 would have
been 9,254,678.
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CROSSMANN COMMUNITIES, INC.
FORM 10-Q
Index
Part I. Financial Information.
Item 1. Financial Statements.
Consolidated Balance Sheets as of June 30, 1997 (unaudited) and
December 31, 1996.
Consolidated Statements of Income (unaudited) for the Three
Months Ended June 30, 1997 and 1996 and for Six Months Ended
June 30, 1997 and 1996.
Consolidated Statements of Cash Flows (unaudited) for the Six
Months Ended June 30, 1997 and 1996.
Notes to Unaudited Consolidated Financial Statements for the
Six Months Ended June 30, 1997 and 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Part II. Other Information.
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
Signatures.
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PART I. FINANCIAL INFORMATION.
ITEM 1. FINANCIAL STATEMENTS.
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<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
June 30, 1997 December 31, 1996
(unaudited)
Assets
Cash and cash equivalents $ 100,000 $ 100,000
Retainages 1,514,650 1,151,700
Real estate inventories 137,561,653 113,202,107
Furniture and equipment, net 3,023,799 2,919,333
Investments in joint ventures 4,952,602 3,404,742
Goodwill, net 3,068,990 2,737,328
Other assets 5,758,371 4,821,259
Total assets $ 155,980,065 $ 128,336,469
Liabilities and shareholders' equity
Accounts payable $ 18,109,450 $ 14,110,634
Accrued expenses and other liabilities 5,437,101 5,250,256
Notes payable 66,101,609 49,326,220
Total liabilities 89,648,160 68,687,110
Commitments and contingencies
Shareholders' equity:
Common shares 25,290,069 24,400,903
Retained earnings 41,041,836 35,248,456
Total shareholders' equity 66,331,905 59,649,359
Total liabilities and shareholders' equity $ 155,980,065 $ 128,336,469
<FN>
See accompanying notes.
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<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
<S> <C> <C> <C> <C>
1997 1996 1997 1996
Sales of residential real estate $69,538,866 $45,240,555 $116,360,129 $82,809,121
Cost of residential real estate sold 55,564,577 35,809,354 92,638,587 65,845,422
Gross profit 13,974,289 9,431,201 23,721,542 16,963,699
Selling, general and
administrative expenses 7,588,432 5,235,159 13,941,742 10,347,450
Income from operations 6,385,857 4,196,042 9,779,800 6,616,249
Other income, net 236,775 189,499 550,300 424,437
Interest expense (303,630) (172,268) (589,250) (380,271)
(66,855) 17,231 (38,950) 44,166
Income before income taxes 6,319,002 4,213,273 9,740,850 6,660,415
Income taxes 2,578,739 1,589,561 3,947,470 2,666,850
Net income $ 3,740,263 $ 2,623,712 $ 5,793,380 $ 3,993,565
Weighted average number of
common shares outstanding 9,202,949 9,153,183 9,195,840 9,141,165
Net income per common share $ .41 $ .29 $ .63 $ .44
<FN>
See accompanying notes.
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<CAPTION>
CROSSMANN COMMUNITIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<S> <C> <C>
Six Months Six Months
Ended June 30, Ended June 30,
1997 1996
Operating activities:
Net income $ 5,793,380 $ 3,993,565
Adjustments to reconcile net income to net cash
Provided (used) by operating activities:
Depreciation 318,097 248,919
Amortization 81,148 (121,774)
Gain on sale of equipment (2,651) (3,880)
Cash provided (used) by changes in:
Retainages (362,950) (1,067,847)
Amounts due from related parties 2,787 (213,778)
Real estate inventories (20,552,886) (22,627,961)
Other assets (1,005,204) (1,134,352)
Accounts payable 3,742,955 7,182,855
Amounts due to related parties -0- 1,410
Accrued expenses and other liabilities (194,415) 1,080,114
Net cash flows provided (used) by operating activities (12,179,739) (12,662,729)
Investing activities:
Purchases of furniture and equipment (398,425) (1,862,079)
Proceeds from disposition of furniture and equipment 2,651 7,000
Investments in joint ventures (1,547,860) (607,699)
Business acquisition 124,840 -0-
Net cash used by investing activities (1,818,794) (2,462,778)
Financing activities:
Proceeds from bank borrowings 64,000,644 34,250,000
Principal payments on bank borrowings (49,663,000) (24,517,223)
Payments on notes and long-term debt (361,611) 128,780
Proceeds from sale of common shares 22,500 31,000
Net cash provided by financing activities 13,998,533 9,892,557
Net decrease in cash and cash equivalents -0- (5,232,950)
Cash and cash equivalents at beginning of period 100,000 5,232,950
Cash and cash equivalents at end of period $ 100,000 $ -0-
<FN>
See accompanying notes.
</TABLE>
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CROSSMANN COMMUNITIES, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
Basis of Presentation
Crossmann Communities, Inc. (the "Company") is engaged primarily in the
development, construction, marketing and sale of new single-family homes for
firsttime and first move-up buyers. The Company also acquires and develops
land for construction of such homes and originates mortgage loans for the
buyers. The Company operates in Indianapolis, Ft. Wayne, Lafayette, and
Southern Indiana; Cincinnati, Columbus, and Dayton, Ohio: and Louisville,
Kentucky. On June 13, 1997, the Company entered its newest market, Lexington,
Kentucky, with the acquisition of Cutter Homes, Ltd. This acquisition was not
a material transaction; therefore pro forma information has not been
presented.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, the unaudited consolidated financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the Company, all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the consolidated financial
statements have been included.
All per share disclosures have been retroactively adjusted to give effect to a
three-for-two stock split to be effected by a share dividend declared by the
Company's Board of Directors (the "Board") on August 7, 1997, and payable on
August 25, 1997 to holders of record on August 18, 1997.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
The Company's business and the homebuilding industry in general are subject to
changes in economic conditions, including, but not limited to, employment
levels, interest rates, the availability of credit, and consumer confidence.
The Company's success over the past several years has been influenced by a
variety of factors including favorable economic conditions in its principal
markets, the availability of capital for expansion, and low interest rates.
To the extent these conditions do not continue, the Company's operating
results may be adversely affected.
The Company's business is subject to weather-related seasonal factors that can
affect quarter-to-quarter results of operations. The number of sales
contracts signed tends to be higher during the first four months of the year,
creating a backlog that declines during the second half of the year. A home
is included in "backlog" upon execution of a sales contract by the customer,
and sales and cost of sales of a home are recognized when the title is
transferred and the home is delivered to the buyer at "closing." Adverse
weather conditions during the first and second quarters of the year usually
restrict site development work, and construction limitations generally result
in fewer closings during this period. Results of operation during the first
half of the year also tend to reflect increased costs associated with adverse
weather. Weather in the first half of 1997 was unusually mild and dry and
contributed to favorable comparisons between 1997 and 1996.
Three Months Ended June 30, 1997 Compared to the Three Months Ended June 30,
1996
Sales increased approximately $24.3 million, or 53.7%, to approximately $69.5
million in the second quarter of 1997 from approximately $45.2 million for the
same period in 1996. Sales were higher primarily as a result of increased
home sales (616 homes were sold in the second quarter of 1997 compared to 411
homes sold during the second quarter of 1996), and higher selling prices,
(approximately $113,000 per home for the second quarter of 1997 as compared to
approximately $110,000 during the same period in 1996). The Company achieved
higher closings in all its markets due principally to mild, dry weather in the
first and second quarters. Last year, the Company's markets were plagued by
a severe winter and heavy spring rains. Higher sales also resulted from
generally higher production levels in all divisions, adjusted upward to
address higher backlog.
Gross profit increased approximately $4.5 million, or 48.2%, to approximately
$14.0 million for the second quarter of 1997 from approximately $9.4 million
for the second quarter of 1996, representing 20.1% of sales in the second
quarter of 1997 as compared to 20.9% of sales in the second quarter of 1996.
Margins were depressed somewhat by relatively low margins in Dayton, Ohio.
The Dayton division was especially affected by heavier than normal rainfall
during the first and second quarters of 1996, which delayed land development
at some sites until late in the year. During the second quarter of 1997, many
of those homes finally closed. Margins were lower than normal in Dayton
because of cost increases as a result of late deliveries on homes for which
contracts were written, in some cases, a year earlier. The Company does not
anticipate that this situation will continue past the end of 1997. Margins in
the Company's other markets remained fairly consistent in 1997 compared to
1996.
Selling, general, and administrative expenses increased approximately $2.4
million, or 45.0%, to approximately $7.6 million for the second quarter of
1997 from approximately $5.2 million for the second quarter of 1996. This
increase reflects increased sales commissions on the higher sales volume and
increased overhead incurred to achieve higher production. The Company
incurred approximately $400,000 in non-recurring charges associated with the
negotiated release from an employment agreement with the seller of Tom Peebles
Builders, Inc. and legal and administrative expenses associated with a
terminated acquisition. Selling, general, and administrative expenses
decreased as a percentage of sales to 10.9% in the second quarter of 1997 from
11.6% in the second quarter of 1996.
Income before income taxes increased approximately $2.1 million, or 50.0%, to
approximately $6.3 million in the second quarter of 1997 from approximately
$4.2 million in the second quarter of 1996. This represents a decrease to
9.1% of sales in the second quarter of 1997 from 9.3% of sales in the second
quarter of 1996. Net income increased approximately $1.1 million, or 42.6 %,
to approximately $3.7 million in the second quarter of 1997 from approximately
$2.6 million in the second quarter of 1996. Net income as a percentage of
sales decreased to 5.4% in the second quarter of 1997 from 5.8% in the second
quarter of 1996. The Company's effective tax rate was 40.8% in the second
quarter of 1997 as compared to 37.7% in the second quarter of 1996.
Six Months Ended June 30, 1997 Compared to the Six Months Ended June 30, 1996
Sales increased approximately $33.6 million, or 40.5%, to approximately $116.4
million for the six months ended June 30, 1997 from approximately $82.8
million for the six months ended June 30, 1996. Sales were higher primarily
as a result of increased home sales (1,036 homes were sold in the six months
ended June 30, 1997 compared to 765 homes sold during the six months ended
June 30, 1996), and higher selling prices, (approximately $112,000 per home for
the six months ended June 30, 1997 as compared to approximately $108,000
during the same period in 1996). Mild weather and improving production
systems in the Company's newer divisions also contributed to the increase in
sales.
Gross profit increased approximately $6.8 million, or 39.8%, to approximately
$23.7 million for the six months ended June 30, 1997 from approximately $16.9
million for the six months ended June 30, 1996, representing 20.4% of sales in
the first six months of 1997 as compared to 20.5% of sales in the first six
months of 1996. This increase is attributable primarily to the increased
number of closings in the prior period. As a percentage of sales, gross
profit was relatively flat.
Selling, general, and administrative expenses increased approximately $3.6
million, or 34.7%, to approximately $13.9 million for the six months ended
June 30, 1997 from approximately $10.3 million for the six months ended June
30, 1996. This increase reflects increased sales commissions on the higher
sales volume and higher advertising and administrative expenses associated
with the Company's new divisions. The Company incurred approximately $400,000
in non-recurring charges associated with the negotiated release from an
employment agreement with the seller of Tom Peebles Builders, Inc. and legal
and administrative expenses associated with a terminated acquisition.
Selling, general, and administrative expenses decreased as a percentage of
sales to 12.0% in the first six months of 1997 from 12.5% in the first six
months of 1996.
Income before income taxes increased approximately $3.0 million, or 46.2%, to
approximately $9.7 million for the six months ended June 30, 1997 from
approximately $6.7 million for the six months ended June 30, 1996. This
represents an increase to 8.4% of sales in the first six months of 1997 from
8.0% of sales in the first six months of 1996. Net income increased
approximately $1.8 million, or 45.1%, to approximately $5.8 million in the
first six months of 1997 from approximately $4.0 million in the first six
months of 1996. Net income as a percentage of sales increased to 5.0% in the
first six months of 1997 from 4.8% in the first six months of 1996. The
Company's effective tax rate was 40.5% in the first six months 1997 as
compared to 40.0% in the first six months of 1996.
Backlog
The Company generally builds a home only upon the execution of a sales
contract by a customer and after approval of financing, although it also
builds a limited number of homes on speculation. The standard sales contract
used by the Company provides for an earnest money deposit of $1,000. The
contract usually includes a termination provision under which the earnest
money is refunded in the event that mortgage financing is not available on
terms specified in the contract, and may include other contingencies.
Cancellations by buyers with approved financing occur infrequently.
Backlog at June 30, 1997 was 1,638 homes with an aggregate sales value of
approximately $177.8 million, compared to 1,481 homes with an aggregate sales
value of approximately $158.0 million at June 30, 1996, an increase in the
number of homes in backlog of approximately 10.6%. This increase reflects a
higher year-end backlog (1,006 at December 31, 1996, compared to 757 at
December 31, 1995) and stronger orders in the first half of 1997 (1,668
contracts written in the first half of 1997, compared to 1,490 in the first
half of 1996, an increase of 12.0%). Indianapolis, Southern Indiana, and all
Ohio markets showed strong improvement in orders in the first half of 1997.
Louisville, which had no marketing presence in the first quarter of 1996, also
posted strong orders in the first half of 1997. On June 13, 1997, the Company
acquired a company in Lexington, Kentucky that had a backlog of 45 homes at
the time of purchase.
Changes in Financial Position
Income from operations and new borrowings on the $60.00 million unsecured line
of credit were used primarily to finance real estate inventories, which
increased approximately $24.4 million, or 21.5%, from their December 31, 1996
level. The expansion in inventory during the first half of the year is a
normal seasonal trend. Winter weather slows closings but does not prevent
work on houses under construction from continuing; therefore, investment in
inventory generally grows during the first half of the year. The trend was
exaggerated slightly this year because good weather permitted more
construction for closings in the second half of the year.
Retainages increased approximately $363,000 in the first half of the year, or
31.5%. This increase is also seasonal. Mortgage companies retain escrows for
the completion of exterior landscape items. As weather permits, yards will be
completed and retainages will be released to the Company during the second
half of the year.
Notes payable increased approximately $16.8 million during the first six
months of 1997 as the Company's line of credit was used to finance real estate
inventories.
Liquidity and Capital Resources
The Company's primary uses of capital are home construction costs and the
purchase and development of land. Real estate inventories were approximately
$137.6 million, or 88.2% of total assets, at June 30, 1997 compared to
approximately $113.2 million, or 88.2% of total assets, at June 30, 1996. To
ensure the availability of developed lots for future operations, from time to
time in the normal course of business the Company contracts to purchase a
portion of its developed lots from outside developers. At June 30, 1997,
total commitments for lot purchases were approximately [$153.8] million,
representing approximately [7,745] lots. The purchases of these lots are
subject to various conditions imposed on both the sellers and the Company.
Capital is also used for the addition and improvement of equipment used in
administering the business, for the building and development of multi-family
housing, and for model home furnishings.
At June 30, 1997, the Company had a cash balance of $100,000. During the
first six months of 1997, cash expenditures were financed with cash from
operations and with borrowings from a $60.0 million unsecured line of credit
with Bank One, Indianapolis, N.A. and its participant, NBD, Indianapolis, N.A.
The line of credit bears interest at the bank's prime lending rate, but
permits portions of the outstanding balance to be committed for fixed periods
of time at a rate equal to LIBOR plus 2.4%. For the first six months of 1997,
the interest rate on the line of credit was 8.3%. The credit facility matures
March 31, 1999. The Company also has approximately $22.2 million of senior
notes outstanding, payable over eight years at a fixed interest rate of
7.625%, held by the Minnesota Mutual Life Insurance Company and Combined
Insurance Company of America. On December 21, 1997, the Company will make a
scheduled reduction in the outstanding principal balance of the senior notes
of $2,777,778.
Both the note agreements and the bank line of credit require compliance with
certain financial and operating covenants and place certain limitations on the
Company's investments in land and unconsolidated joint ventures. The
agreements also restrict payments of cash dividends on the common shares by
the Company. The acquisition of Cutter Homes, Ltd. on June 13, 1997 caused
the Company to exceed the debt to tangible base requirements of the senior
notes. The Company's management believes that the Company will be in
compliance on the next measurement date, September 30, 1997, and the holders
of the senior notes have waived compliance with the covenant through that
date.
Multi-family Production
The Company has explored selected opportunities to construct multi-family
projects in the Company's markets either for sale or to hold and manage for
recurring cash flows. The total dollars invested in multi-family projects at
June 30, 1997, was approximately $6.4 million, representing three projects,
one of which is complete. The completed project is approximately 55.0% leased
as of June 30, 1997. Rental income and related expenses have had virtually no
effect on earnings of the Company to date.
The Company does not intend to invest a significant portion of its resources
in multi-family projects. The core single- family home building business will
continue to command first priority in capital and commitment by the Company.
Inflation
The Company, as well as the homebuilding industry in general, may be adversely
affected during periods of high inflation, primarily because of higher land
and construction costs. To date, inflation has not had a material adverse
effect on the Company's business, financial condition, and results of
operations. However, there is no assurance that inflation will not have a
material adverse impact on the Company's future business, financial condition,
and results of operations.
Seasonality
The Company's business is subject to weather-related seasonal factors which
can affect quarterly results of operations. During the first and second
quarters of the year, weather conditions usually restrict site development
work and limit construction. This generally results in fewer closings during
this period although the Company attempts to mitigate the effect of winter
weather by building an inventory of foundations in the fall. Results of
operations during the first half of the year may reflect increased costs
associated with adverse weather. The number of sales contracts signed tends
to rise during the first four months of the year, creating a backlog which
declines during the second half of the year. A home is included in "backlog"
upon the execution of a sales contract by the customer, and sales and cost of
sales of a home are recognized when title is transferred and the home is
delivered to the buyer at closing.
Recent Accounting Pronouncements
In February 1997, Statement of Financial Accounting Standards ("SFAS") No.
128, Earnings per Share, was issued which establishes new standards for
computing and presenting earnings per share ("EPS"). Specifically, SFAS No.
128 replaces the presentation of primary EPS with a presentation of basic EPS,
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures, and requires a
reconciliation of the numerator and denominator of the basic EPS computation
to the numerator and denominator of the diluted EPS computation. SFAS No. 128
is effective for financial statements issued for periods ending after December
15, 1997; earlier application is not permitted. Management has determined
that the adoption of SFAS No. 128 will not have a material effect on the
Company's consolidated financial statements.
In June 1997, SFAS No. 130, Comprehensive Income, was issued which becomes
effective in 1998 and requires reclassification of earlier financial
statements for comparative purposes. SFAS No. 130 requires that changes in
the amounts of certain items, including foreign currency translation
adjustments and gains and losses on certain securities, be shown in the
financial statements. SFAS No. 130 does not require a specific format for the
financial statement in which comprehensive income is reported, but does
require that an amount representing total comprehensive income be reported in
that statement. Management has not yet determined the effect, if any, of SFAS
No. 130 on the Company's consolidated financial statements.
Also in June 1997, SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information, was issued. This Statement will change the way
public companies report information about segments of their business in their
annual financial statements and requires them to report selected segment
information in their quarterly reports issued to shareholders. It also
requires entity-wide disclosures about the products and services an entity
provides, the material countries in which it holds assets and reports
revenues, and its major customers. SFAS No. 131 is effective for fiscal years
beginning after December 15, 1997. Management has not yet determined the
effect, if any, of SFAS No. 131 on the Company's consolidated financial
statements.
PART II. OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders.
At the Company's annual meeting on May 20, 1997, there were represented either
in person or by proxy 5,711,397 of the Company's common shares, representing
93.2% of the total common shares outstanding. At the meeting, 5,710,226 of
the common shares present in person or by proxy voted in favor of Jennifer A.
Holihen for election to the Board, and Messrs. John B. Scheumann, Richard H.
Crosser, James C. Shook, and Larry S. Wechter continued as members of the
Board. Additionally, 5,709,729 of the common shares present in person or by
proxy voted in favor of the ratification of Deloitte & Touche LLP as the
Company's independent accountants for the year ended December 31, 1997.
Item 5. Other Information.
On August 8, 1997, the Company issued a press release, a copy of which is
attached hereto as Exhibit 99.1, announcing a share dividend of .5 common
shares for each issued and outstanding common share to holders of record as of
August 18, 1997, payable on August 25, 1997.
The Company has entered into a non-binding letter of intent to acquire the
Memphis, Tennessee division of Heartland Homes LLC, a homebuilder based in
Oklahoma City, Oklahoma. Contingent on due diligence, negotiations of a
definitive agreement and receipt of various consents and approvals, the
Company intends to close this transaction in the fourth quarter of 1997.
The Company has also entered into a non-binding letter of intent to enter into
a joint venture with Trinity Homes, Inc., a home builder based in
Indianapolis, Indiana. Contingent on due diligence, negotiations of a
definitive agreement and receipt of various consents and approvals, the
Company intends to close this transaction in the fourth quarter of 1997.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following items for which provision is made in the applicable regulations of the Securities and Exchange
Commission are not required under the related explanations or are inapplicable and therefore have been omitted:
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
a) The following Exhibits are filed as a part of this report.
<S> <C> <C>
Number
Assigned in
Regulation
S-K Exhibit
Item 601 Number Description of Exhibit
(2) No Exhibit.
(3) 3.1 Amended and Restated Articles of Incorporation of Crossmann Communities, Inc.
(Incorporated by reference to Exhibit 3.1 to Form S-1 Registration Statement No. 33-68396.)
3.2 Bylaws of Crossmann Communities, Inc. (Incorporated by reference to Exhibit 3.2 to Form
S-1 Registration Statement No. 33-68396.)
(4) 4.1 Specimen Share Certificate for Common Shares. (Incorporated by reference to Exhibit 2.9
to Form S-1 Registration Statement No. 33-68396.)
(10) 10.1 1993 Outside Director Stock Option Plan (Incorporated by reference to Exhibit 10.2 to
Registration Statement on Form S-1, Registration No. 33-68396.)
10.2 Crossmann Communities, Inc. Employee Stock Option Plan.
10.3 Employee Stock Option Agreement, dated December 16, 1993 by and between Crossmann
Communities, Inc. and John Moody. (Incorporated by reference to Exhibit 10.14 to Form
10-K dated March 25, 1995.)
10.4 Employee Stock Option Agreement, dated June 28, 1994 by and between Crossmann
Communities, Inc. and John Moody. (Incorporated by reference to Exhibit 10.17 to
Form 10-K dated March 24, 1995.)
10.5 Director Stock Option Agreement, dated March 25, 1994 by and between Crossmann
Communities, Inc. and James C. Shook. (Incorporated by reference to Exhibit 10.20 to
Form 10-K dated March 24, 1995.)
10.6 Director Stock Option Agreement, dated March 25, 1994 by and between Crossmann
Communities, Inc. and Larry S. Wechter. (Incorporated by reference to Exhibit 10.21 to
Form 10-K dated March 24, 1995.)
10.7 Non-standardized Joinder Agreement for McCready and Keene, Inc. 40(k) Basic Regional
Prototype Plan (with Revised Options) for Crossmann Communities, Inc. (Incorporated by
reference to Exhibit 10.26 to Form 10-Q dated May 10, 1995.)
10.8 McCready and Keene, Inc. 401(k) Basic Regional Prototype Plan Basic Plan Document #03.
(Incorporated by reference to Exhibit 10.27 to Form 10-Q dated May 10, 1995.)
10.9 Trust Agreement for Crossmann Communities, Inc. 401(k) Profit Sharing Plan, by and
between Crossmann Communities, Inc. and Richard H. Crosser, John Scheumann, and
Jennifer Holihen, Trustees. (Incorporated by reference to Exhibit 10.28 to Form 10-Q dated
May 10, 1995.)
10.10 Employee Stock Option Agreement, dated June 28, 1994 by and between Crossmann
Communities, Inc. and Ronald W. Rooze. (Incorporated by reference to Exhibit 10.31 to
Form 10-K dated March 20, 1996.)
10.11 Employee Stock Option Agreement, dated March 2, 1995 by and between Crossmann
Communities, Inc. and John Moody. (Incorporated by reference to Exhibit 10.32 to Form 10-
K dated March 20, 1996.)
10.12 Employee Stock Option Agreement, dated March 2, 1995 by and between Crossmann
Communities, Inc. and Ronald W. Rooze. (Incorporated by reference to Exhibit 10.34 to
Form 10-K dated March 20, 1996.)
10.13 Director Stock Option Agreement, dated May 18, 1995 by and between Crossmann
Communities, Inc. and James C. Shook. (Incorporated by reference to Exhibit 10.35 to Form
10-K dated March 20, 1996.)
10.14 Director Stock Option Agreement, dated May 18, 1995 by and between Crossmann
Communities, Inc. and Larry S. Wechter. (Incorporated by reference to Exhibit 10.36 to Form
10-K dated March 20, 1996.)
10.15 Note Agreement dated as of December 19, 1995, $25,000,000 7.625% Senior Notes due
December 19, 2004, by Crossmann Communities, Inc., et al. (Incorporated by reference to
Exhibit 10.37 to Form 10-K dated March 20, 1996.)
10.16 7.625% Senior Note due December 19, 2004, issued to Combined Insurance Company of
America by Crossmann Communities, Inc., et al. (Incorporated by reference to Exhibit 10.38
to Form 10-K dated March 20, 1996.)
10.17 7.625% Senior Note due December 19, 2004, issued to The Minnesota Mutual Life Insurance
Company by Crossmann Communities, Inc., et al. (Incorporated by reference to Exhibit 10.39
to Form 10-K dated March 20, 1996.)
10.18 Amended and Restated Credit Agreement, dated December 22, 1995, by and between
Crossmann Communities, Inc., and Bank One, Indianapolis, N.A. (Incorporated by reference
to Exhibit 10.40 to Form 10-K dated March 20, 1996.)
10.19 First Amendment to Amended and Restated Credit Agreement, dated March 27, 1997.
(Incorporated by reference to Exhibit 10.41 to Form 10-Q dated May 13, 1997.)
10.20 Promissory Note, dated March 27, 1997, by and between Crossmann Communities, Inc. et al.
and Bank One, Indiana, N.A. (Incorporated by reference to Exhibit 10.42 to Form 10-Q dated
May 13, 1996.)
10.21 Employee Stock Option Agreement, dated March 13, 1996 by and between Crossmann
Communities, Inc. and John Moody. (Incorporated by reference to Exhibit 10.43 to Form 10-
K dated March 14, 1997.)
10.22 Employee Stock Option Agreement, dated March 13, 1996 by and between Crossmann
Communities, Inc. and Ronald W. Rooze. (Incorporated by reference to Exhibit 10.44 to
Form 10-K dated March 14, 1997.)
10.23 Director Stock Option Agreement, dated March 13, 1996 by and between Crossmann
Communities, Inc. and Larry S. Wechter. (Incorporated by reference to Exhibit 10.45 to Form
10-K dated March 14, 1997.)
10.24 Director Stock Option Agreement, dated March 13, 1996 by and between Crossmann
Communities, Inc. and James C. Shook. (Incorporated by reference to Exhibit 10.46 to Form
10-K dated March 14, 1997.)
10.25 Change of Control Severance Benefits Agreement, dated March 31, 1997 by and between
Crossman Communities, Inc. and Jennifer A. Holihen.
10.26 Change of Control Severance Benefits Agreement, dated March 31, 1997 by and between
Crossman Communities, Inc. and David McCormick.
(11) 11.1 Computation of Per Share Net Income.
(12) No Exhibit.
(15) No Exhibit.
(18) No Exhibit.
(19) No Exhibit.
(21) 21.1 Amended subsidiaries of the registrant, dated August 14, 1997.
(22) No Exhibit.
(23) No Exhibit.
(24) No Exhibit.
(27) 27.1 Financial Data Schedule for the quarter ended June 30, 1997.
99.1 Press Release issued on August 8, 1997, by Crossmann Communities, Inc. announcing a share
(99) dividend.
99.2 Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.
</TABLE>
(b) Reports on Form 8-K.
On May 13, 1997, the Company filed an 8-K with the Securities and Exchange
Commission announcing its intent to acquire Galloway Homes, Inc. and related
entities. On June 13, 1997 the Company allowed this letter of intent to
expire.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
CROSSMANN COMMUNITIES, INC.
/s/ Jennifer A. Holihen
Jennifer A. Holihen
Director; Chief Financial Officer;
Treasurer; Secretary
(Principal Financial and Accounting Officer)
Dated: August 14, 1997
CROSSMANN COMMUNITIES, INC.
EMPLOYEE STOCK OPTION PLAN
(as amended to reflect increase of shares available thereunder)
Crossmann Communities, Inc. (the "Company") sets forth the following
terms of this Crossmann Communities, Inc. Employee Stock Option Plan
(hereinafter referred to as the "Plan"):
1. PURPOSE. The Plan is intended to advance the interests of the
Company by providing key employees of the Company or of any "subsidiary
corporation" of the Company, as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), or the
corresponding provisions of any subsequently enacted tax statutes, with an
opportunity to acquire or increase a proprietary interest in the Company,
which thereby will create a stronger incentive to expend maximum effort for
the growth and success of the Company and its subsidiaries, and will encourage
such individuals to remain in the employ or service of the Company or of one
or more of its subsidiaries. The Company and all such subsidiary corporations
are hereinafter collectively referenced from time to time as the "Employer."
Each stock option granted under the Plan is intended to be an "incentive stock
option," as defined in Code Section 422 or the corresponding provisions of any
subsequently enacted tax statutes, and any provision of the Plan which does
not comply with the requirements of Code Section 422 shall be inoperative;
provided, however, than an option is not intended to be an incentive stock
option to the extent that (i) any such option would exceed the limitations set
forth in Section 5, and (ii) any such option is specifically designated as not
being an incentive stock option.
2. ADMINISTRATION.
a. COMMITTEE. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (hereinafter
referred to as the "Committee").
b. POWER AND AUTHORITY. The Committee shall have the full power
and authority to take all actions and make all determinations required or
provided for under the Plan, any option agreement, or any option granted under
the Plan; to interpret and construe the provisions of the Plan, any option
agreement, or any option granted under the Plan, which interpretation or
construction shall be final, conclusive, and binding on the Company, the
Employer, and the optionee; and to take any and all other actions and make any
and all other determinations not inconsistent with the specific terms and
provisions of the Plan which the Committee deems necessary or appropriate in
the administration of the Plan. The Committee may from time to time
prescribe, amend, and rescind rules and regulations applicable to the Plan.
c. ACTIONS AND DETERMINATIONS. The Committee may take action
and make determinations in the manner prescribed by the Board of Directors of
the Company, provided such action is permitted by the Articles of
Incorporation and Bylaws of the Company, the Indiana Business Corporation Law,
as amended, and all other applicable laws. A majority of the Committee shall
constitute a quorum for purposes of any action or determination by the
Committee. All actions and determinations of the Committee shall be made by
an affirmative vote by not less than a majority of its members.
d. NO LIABILITY. No member of the Committee shall be liable for
any action or determination made by the Committee or by such member in good
faith.
3. ELIGIBILITY
a. KEY EMPLOYEES. Only those persons who are key employees of
the Employer shall be eligible to participate in the Plan. The Committee
shall determine from time to time the particular employees of the Employer who
are "key employees" of the Employer and who shall be eligible to participate
in the Plan, and the terms and extent of their participation in the Plan.
b. 10% SHAREHOLDERS. No option shall be granted under the Plan
to any key employee of the Employer who, at the time such option is granted,
owns shares possessing more than 10% of the total combined voting power of all
classes of shares of the Company or of any parent corporation of the Company
(as defined in Code Section 424(e)) or subsidiary corporation of the Company
(such employee being hereinafter referred to as "10% Shareholder"), except as
expressly provided below. In determining whether the percentage limitations
of this Section 3(b) are met, an employee shall be considered as owning any
shares owned, directly or indirectly, by or for his or her brothers or sisters
(whether by the whole or half blood), spouse, ancestors, lineal descendants,
or by reason of any other relationships as contemplated by Code Section
422(b)(6). For purposes of this Section 3(b), shares owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust shall be
considered as being owned proportionately by or for its shareholders,
partners, or beneficiaries. The percentage limitations of this Section 3(b)
shall not apply, however, if at the time such option is granted the option
price is at least 110% of the fair market value of the shares subject to the
option and such option by its terms is not exercisable after the expiration of
five years from the date such option is granted.
4. SHARES. The shares subject to the options and other provisions of
the Plan shall be shares of the Company's authorized but unissued, or
reacquired, Common Shares (the "Common Shares"). The total number of Common
Shares with respect to which options may be granted shall not exceed in the
aggregate 600,000 Common Shares, except as such number of Common Shares shall
be adjusted in accordance with the provisions set forth in Section 6(g). In
the event any outstanding option under the Plan expires or is terminated in
whole or in part for any reason prior to the end of the period during which
options may be granted, the Common Shares allocable to the unexercisable
portion of such option may again be subject to an option granted under the
Plan. During the period that any options granted under the Plan are
outstanding, the Company shall reserve and keep available such number of
Common Shares as will be sufficient to satisfy all outstanding, unexercised
options.
5. MAXIMUM EXERCISE. The aggregate fair market value (determined at
the time the option is granted) of the Common Shares with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year (under all such plans of the Company and its parent
and subsidiary corporations within the meaning of Code Section 422(d)) shall
not exceed $100,000. In the event the fair market value of the Common Shares
subject to such options exceeds $100,000, the options in excess of such amount
shall be deemed to be nonstatutory stock options, and the character of all
relevant options shall be determined by taking options into account in the
order in which they were granted.
6. TERMS AND CONDITIONS OF OPTIONS. Subject to the terms and
conditions set forth in the Plan, the Committee may grant options to any
eligible individuals upon such terms and conditions as the Committee shall
determine. The date on which the Committee approves the grant of an option
shall be considered the date on which such option is granted. Options granted
pursuant to the Plan shall be evidenced by option agreements in such form
consistent with the Plan as the Committee shall prescribe from time to time.
Option agreements covering options granted from time to time or at the same
time need not contain similar provisions so long as all such option agreements
are consistent with the Plan. Such option agreements shall state whether the
options issued thereunder are incentive stock options or non-statutory stock
options, and shall comply with and be subject to the following terms and
conditions:
a. MEDIUM AND TIME OF PAYMENT
i. In General. An option may be exercised by delivery of
payment of the purchase price of the Common Shares subject to an option
accompanied by a properly executed written notice of exercise and subscription
agreement in such form as prescribed by the Committee. The notice of exercise
shall specify the number of Common Shares with respect to which the option is
being exercised. The Committee may prescribe in the option agreement a
minimum number of Common Shares with respect to which an option may be
exercised, in whole or in part. Except as provided in Section 6(a)(ii),
payment in full of the purchase price of the Common Shares for which the
option is being exercised shall be made either (i) in cash or in cash
equivalents; (ii) through the tender to the Company of Common Shares or the
withholding of Common Shares subject to the option, which Common Shares shall
be valued, for purposes of determining the extent to which the purchase price
has been paid, at their fair market value on the date of exercise as
determined under Section 6(c); or (iii) by a combination of the methods
prescribed in (i) and (ii); provided, however, that the Committee may in its
discretion impose and set forth in the option agreement pertaining to an
option such limitations or prohibitions on the use of Common Shares to
exercise options as it deems appropriate. Any attempt to exercise an option
granted under the Plan other than as set forth in this Section 6(a) shall be
invalid and of no force and effect.
ii. Use of Brokers. The Committee may provide, by
inclusion of appropriate language in an option agreement, that payment in full
of the purchase price need not accompany the written notice of exercise and
subscription agreement provided the notice of exercise and subscription
agreement directs that the certificate or certificates for such Common Shares
for which the option is exercised be delivered to a licensed broker acceptable
to the Company as the agent for the individual exercising the option and, at
the time such certificate or certificates are delivered, the broker tenders to
the Company cash or cash equivalents acceptable to the Company equal to the
purchase price for such Common Shares purchased pursuant to the exercise of
the option plus the amount (if any) of federal and other taxes which the
Company may, in its sole judgment, be required to withhold with respect to the
exercise of the option.
iii. Issuance of Certificates. Promptly after the exercise
of an option and the payment in full of the purchase price of the Common
Shares subject to the option, the individual exercising the option shall be
entitled to the issuance of a certificate or certificates evidencing ownership
of such Common Shares. The Company may issue separate certificates for any
Common Shares purchased pursuant to the exercise of an option which is an
incentive stock option and for Common Shares purchased pursuant to the
exercise of an option which is not an incentive stock option.
b. NUMBER OF SHARES. The option agreement shall state the total
number of Common Shares which may be purchased pursuant to the option
agreement.
c. OPTION PRICE. The purchase price of each Common Share
subject to an option shall be fixed by the Committee at an amount per Common
Share not less than the fair market value per Common Share on the date of
grant of the option. In the case of options granted to an employee of the
Employer who is a 10% Shareholder, the purchase price of each Common Share
subject to an option shall be an amount per Common Share not less than 110% of
the fair market value per Common Share on the date of grant of the option.
The fair market value of the Common Shares subject to an option shall be
determined by the Committee in good faith in accordance with such procedures
as the Committee shall prescribe from time to time. The Committee shall
consider those factors which the Committee reasonably believes to be relevant
in determining the fair market value of the Common Shares. The option
agreement shall state the purchase price of the Common Shares subject to the
option.
d. TERM OF OPTIONS. Each option granted under the Plan shall
expire within the period prescribed in the option agreement relating to the
option, which shall not be more than five years from the date the option is
granted if the optionee is a 10% Shareholder and not more than ten years from
the date the option is granted if the optionee is not a 10% Shareholder. The
option agreement shall state the date of the grant of the option.
e. TIME OF EXERCISE. The Committee may, in its discretion,
provide in an option agreement that an option granted under the Plan may not
be exercised in whole or in part until the expiration of such period or
periods of time as may be specified by the Committee; provided, however, that
any such limitation on the exercise of an option contained in an option
agreement may be rescinded, modified, or waived by the Committee, in its sole
discretion, at any time and from time to time after the date of grant of such
option so as to accelerate the time in which the option may be exercised.
Except as specifically restricted by the provisions of this Section 6(e) or by
the Committee in administering the Plan, any option may be exercised in whole
or in part at any time and from time to time during the period commencing with
the date of grant and ending upon the expiration or termination of the option.
Notwithstanding the preceding sentence, any person subject to Section 16 of
the Securities Act of 1934, as amended, who is granted an option shall not
exercise the option in whole or in part within the six month period
immediately following the date of grant unless the person agrees to hold the
securities acquired upon exercise until at least six months have elapsed from
the date of grant.
f. TERMINATION OF EMPLOYMENT
i. In General. Without limiting the applicability of
Section 6(h), in the event an optionee shall cease to be employed by the
Employer, a parent corporation of the Employer, or a corporation or a parent
corporation or a subsidiary corporation of such corporation issuing or
assuming an option in a transaction to which Code Section 424(a) applies, all
options outstanding in the hands of the optionee shall terminate immediately
as to any unexercised portion thereof; provided, however, that the Committee,
in its discretion, subject to the provisions of Section 6(d) and Section 6(e),
may permit a terminated optionee to exercise any unexercised options, at any
time within three months after the effective date of the cessation of the
optionee's employment with respect to the Common Shares for which such options
could have been exercised (i) on the effective date of the cessation of
employment, or (ii) during the three month period following such effective
date; provided further, that if any cessation of employment is due to
retirement with the consent of the Employer or permanent and total disability
(as defined in Code Section 22(e)(3)), the optionee shall have the right,
subject to the provisions of Section 6(d) and Section 6(e), to exercise the
option with respect to the Common Shares for which it could have been
exercised on the effective date of cessation of employment, at any time within
three months after such cessation of employment due to retirement with the
consent of the Employer or at any time within twelve months after such
cessation of employment due to permanent and total disability.
ii. Death. In the event of the death of an employee while
in the employ of the Employer or within the period following termination of
employment during which the option remains exercisable under this Section
6(f), the employee's personal representative shall have the right, subject to
the provisions of Section 6(d) and Section 6(e), to exercise the option with
respect to the Common Shares for which it could have been exercised on the
date of death, at any time within twelve months from the date of death.
iii. Determinations. For purposes of the Plan, whether a
cessation of employment is to be considered a retirement with the consent of
the Employer or due to permanent and total disability, and whether an
authorized leave of absence or absence on military or government service shall
be deemed to constitute termination of employment shall be determined by the
Committee, which determination shall be final, conclusive, and binding. For
purposes of the Plan, a termination of employment with the Company or a
subsidiary corporation shall not be deemed to occur if the optionee is
immediately thereafter employed with the Company or any subsidiary
corporation.
g. RECAPITALIZATION. The aggregate number of Common Shares as
to which options may be granted under the Plan, the number of Common Shares
covered by each outstanding option, and the price per Common Share with
respect to each such option, all shall be proportionately adjusted for any
increase or decrease in the number of issued Common Shares resulting from a
subdivision or consolidation of shares or any other capital adjustment, the
payment of a share dividend, or other increase or decrease in the Common
Shares effected without receipt of consideration by the Company. In the event
that, prior to the delivery by the Company of the Common Shares remaining
under any outstanding option under the Plan, there shall be a capital
reorganization or reclassification of the capital of the Company resulting in
a substitution of other shares for the Common Shares, there shall be
substituted the number of substitute shares which would have been issued in
exchange for the Common Shares then remaining under the option if such Common
Shares had been then issued and outstanding.
h. CHANGE OF CONTROL, DISSOLUTION, AND LIQUIDATION.
i. Change of Control. For purposes of the Plan, "change of
control event" shall be deemed to have occurred if:
(A) The Company shall become a party to an agreement
of merger, consolidation, or other reorganization pursuant to which the
Company will be a constituent corporation and the Company will not be the
surviving or resulting corporation, or which will result in less than 50% of
the outstanding voting securities of the surviving or resulting entity being
owned by the former shareholders of the Company;
(B) The Company shall become a party to an agreement
providing for the sale by the Company of all or substantially all of the
Company's assets to any individual, partnership, joint venture, association,
trust, corporation, or other entity ("Person") which is not a wholly-owned
subsidiary of the Company;
(C) The Company determines in its sole discretion that
any Person has become or is anticipated to become the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then outstanding securities, the
effect of which (as determined by the Company in its sole discretion) is to
take over control of the Company; or
(D) The Company determines that during any period of
two consecutive years, individuals who, at the beginning of such period,
constituted the Board of Directors of the Company, cease, for any reason, to
constitute at least a majority thereof, unless the election or nomination for
election for each new director was approved by the vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of the period.
ii. Effect of a Change of Control Event. Upon the
occurrence of a change of control event, the Company shall provide written
notice thereof (the "Notice") to the optionees. All unvested options shall
vest immediately upon delivery of the Notice to the optionees. The Company
shall have the right, but not the obligation, to terminate all outstanding
options as of the 30th day immediately following the date of the sending of
the Notice by including a statement to such effect in the Notice. Upon
delivery of the Notice and regardless of whether the Company elects to
terminate the outstanding options, and subject to Section 6(d) and Section
6(e), the optionees shall have the right to immediately exercise all
outstanding options in full during the 30-day period notwithstanding the other
terms and conditions otherwise set forth in the Plan or in any option
agreement.
iii. Dissolution and Liquidation. In the event the Company
adopts all necessary resolutions approving a plan to dissolve or liquidate the
Company, the Company shall provide written notice thereof (the "Notice") to
the optionees. All unvested options shall vest immediately upon delivery of
the Notice to the optionees. Upon delivery of the Notice, and subject to
Section 6(d) and Section 6(e), the optionees shall have the right to
immediately exercise all outstanding options in full during the 30-day period
immediately following the date of the sending of the Notice notwithstanding
the other terms and conditions otherwise set forth in the Plan or in any
option agreement. All unexercised options outstanding as of the 30th day
immediately following the date of the sending of the Notice shall terminate.
i. ASSIGNABILITY. No option shall be assignable or
transferable, except to the extent provided in Section 6(f) in the event of
the death of an optionee. During the lifetime of an optionee, the option
shall be exercisable only by the optionee to whom the option was granted (or,
in the event of the legal incapacity or incompetency of the optionee, the
optionee's legal guardian or legal representative on behalf of the optionee).
<PAGE>
j. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES LAWS
i. Conformity With Law. The Company shall not be required
to sell or issue any Common Shares in connection with any option granted under
the Plan and may postpone the issuance and delivery of certificates
representing Common Shares until (a) the admission of such Common Shares to
listing on any stock exchange on which Common Shares of the Company of the
same class are then listed and (b) the completion of such registration or
other qualification of such Common Shares under any state or federal law,
rule, or regulation as the Company shall determine to be necessary or
advisable, which registration or other qualification the Company shall use
reasonable efforts to complete. Any person purchasing Common Shares pursuant
to the Plan may be required to make such representations and furnish such
information as may, in the opinion of counsel for the Company, be appropriate
to permit the Company to determine the necessity of registration of the Common
Shares under the Securities Act of 1933, as amended from time to time, or any
similar state statute.
ii. Compliance with Rule 16b-3. The Plan is intended to
qualify for the exemption from the short-swing profits liability imposed by
Section 16(b) under the Securities Exchange Act of 1934, as amended from time
to time, provided by Rule 16b-3. To the extent any provision of the Plan or
action by the Committee does not comply with the requirements of Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Committee. In the event Rule 16b-3 is revised or replaced,
the Committee may exercise its discretion to modify the Plan in any respect
necessary to satisfy the requirements of the revised exemption or its
replacement provided such modification is made in accordance with Section 8.
k. RIGHTS AS A SHAREHOLDER. An optionee shall have no rights as
a shareholder with respect to Common Shares covered by an option until the
date of issuance of a certificate or certificates to the optionee and only
after the purchase price of such Common Shares is fully paid. No adjustment
will be made for dividends or other rights for which the record date is prior
to the date such certificate or certificates are issued.
l. OTHER PROVISIONS. The option agreements entered into under
the Plan shall contain such other provisions as the Committee shall deem
advisable, provided that such provisions are not inconsistent with the terms
of the Plan and Code Section 422.
7. TERM OF PLAN. The Plan is effective on September 1, 1993, which
is the date of the approval of the Plan by the unanimous written consent of
the holders of the issued and outstanding Common Shares of the Company. The
Plan shall terminate on August 31, 2002, or on such earlier date as the Board
of Directors may determine. No option may be granted under the Plan
thereafter.
8. AMENDMENT OF THE PLAN. The Board of Directors of the Company,
except any members participating in the Plan, may from time to time, alter,
amend, suspend, or discontinue the Plan with respect to any Common Shares as
to which options have not been granted; provided, however, that the Board of
Directors may not, without further approval by the holders of a majority of
the issued and outstanding Common Shares of the Company voting in person or by
proxy at a duly held shareholders' meeting:
(a) increase the maximum number of shares as to which options may be
granted under the Plan (other than as provided in Section 6(g));
(b) change the class of shares for which options may be granted under
the Plan;
(c) change the designation of the employees or class of employees
eligible to receive options under the Plan;
(d) change the provisions of Section 6(c) concerning the option
price;
(e) increase the maximum period during which options may be
exercised;
(f) extend the term of the Plan; or
(g) permit the granting of options to members of the Committee.
9. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Shares pursuant to options granted under the Plan will be
used for general corporate purposes.
10. NO OBLIGATION TO EXERCISE OPTION. The granting of an option
under the Plan shall impose no obligation upon the optionee to exercise any
such option.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the adoption of
the Plan nor the granting of an option under the Plan shall impose any
obligation on the Employer to provide any specified amount of compensation to,
or to continue the employment of, any optionee.
12. APPLICABILITY OF AMENDMENTS. Without the express written consent
of the Company and the optionee, no amendment, suspension, or termination of
the Plan shall alter, impair, or otherwise affect any rights or obligations of
the Company or an optionee with respect to any option previously granted to
such optionee.
13. WITHHOLDINGS. The Company shall have the right to require
optionees or their agents to remit to the Company amounts sufficient to
satisfy any federal, state or local income, employment, or other tax
withholding requirements (or make other arrangements satisfactory to the
Company with regard to such taxes) at such times as the Company deems
necessary or appropriate for compliance with such laws.
170625.1
CHANGE OF CONTROL
SEVERANCE BENEFITS AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st day of March,
1997, by and between Crossmann Communities, Inc. (the "Company") an Indiana
corporation, and Jennifer A. Holihen (the "Employee"), an employee of the
Company.
RECITAL
The Board of Directors of the Company (the "Board") have determined that
it is in the best interests of the Company to foster the continuous employment
of the Employee and that the Company should enter into this Agreement to
reinforce and encourage the continued attention and dedication of the Employee
to his duties, free from distractions which might arise in the event of a
Change of Control (as defined in this Agreement) of the Company or a proposed
Change of Control.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Company and the Employee agree as follows:
1. Effect. Anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless and until there has been a Change of Control of the Company.
Upon a Change of Control of the Company this Agreement shall become operative
immediately. If the Employee's employment with the Company is terminated
(other than as a result of Disability or Retirement or by reason of the
Employee's death) either by the Company (other than for Cause) or by the
Employee with Good Reason (as defined in Section 2(c)(5)) and if such
termination of employment occurs concurrently with or within six months (6)
immediately preceding or thirty-six (36) months immediately following a Change
of Control of the Company, then the Company shall provide to the Employee a
severance benefit (the "Severance Entitlement") in the manner and amount
provided in Section 2 of this Agreement.
2. Termination Benefits.
(a) If, within six (6) months immediately preceding or
thirty-six (36) months following a Change of Control, the Employee's
employment with the Company shall be terminated, the Employee shall be
entitled to the following compensation and benefits (in addition to any
compensation and benefits provided for under any of the Company's employee
benefit plans, policies and practices or as required by law:
(1) If the Employee's employment with the Company shall be
terminated (A) by reason of the Employee's Disability or Retirement, or (B)by
reason of the Employee's death, the Company shall within five (5) days after
the Release Effective Date (as defined in Section 5(a) below) pay the Employee
his full Base Salary through the Dare of Termination at the rate in effect
when the Notice of Termination is given (or the Date of Termination in the
case of the Employee's death), plus any bonuses or incentive compensation
which pursuant to the terms of any compensation or benefit plan have been
earned or have become payable as of the Date of Termination, but which have
not yet been paid.
(2) If the Employee's employment with the Company shall be
terminated by the Company for Cause, the Company shall pay the Employee his
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, and the Company shall have no further
obligations to the Employee under this Agreement.
(3) If the Employee's employment with the Company shall be
terminated by the Company (other than for Cause) or by the Employee for Good
Reason, the Company shall:
(i) within five (5) days after the Release Effective
Date pay the Employee his full Base Salary through the Date of Termination at
the greater of the rate in effect at the time the Change of Control occurs or
Notice of Termination is given, plus any bonuses or incentive compensation
which pursuant to the terms of any compensation or benefit plan have been
earned or have become payable as of the Date of Termination, but which have
not yet been paid;
(ii) within five (5) days after the Release Effective
Date pay the Employee a lump sum cash payment equal to the Severance
Entitlement. The aggregate dollar amount of the Severance Entitlement shall
be equal to three times the highest aggregate amount of base salary bonus and
other cash compensation paid by the Company to the Employee for any full
calendar year during which the Employee was employed by the Company; provided,
however, that if such Severance Entitlement, either alone or together with
other payments which the Employee has the right to receive from the Company or
any affiliate of the Company (the "Total Payments"), would constitute an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the Company shall pay an
additional amount of money (the "Gross-up Payment") to the Employee that will
equal (based upon the Employee's good faith representations of the Employee's
income tax position for the year(s) of payment(s)) the sum of (j) all excise
tax ("Excise Tax") imposed upon the Employee by Section 4999 of the Code and
(ii) all additional state and federal income taxes attributable to the
additional payments to the Employee pursuant to this proviso clause (including
all state and federal taxes on the additional income tax payments) such that
the net amount retained by Employee, after deduction of any Excise Tax on the
Total Payments and any federal, state and local income and employment taxes
and Excise Tax upon the Gross-up Payment, shall be equal to the Total
Payments. The determination of the amounts of such payments pursuant to the
immediately preceding proviso shall be made by the Company in good faith, and
such determination shall be conclusive and binding. The Company may at its
election pay such amount to the Employee in eighteen (18) equal monthly
installments commencing on the fifth day after the Release Effective Date and
on the same day of the next seventeen (17) months thereafter;
(iii) continue to provide for the Employee and his
dependents, for a period of eighteen (18) months following the Date of
Termination, life insurance, medical and hospitalization benefits comparable
to those provided by the Company to the Employee and his dependents
immediately prior to the Change of Control, provided that any coverage
provided pursuant to this subsection (iii) shall terminate to the extent that
the Employee obtains comparable life insurance, medical or hospitalization
benefits coverage from any other employer during such eighteen (18) month
period. The benefits provided under this subsection (iii) shall not be
materially less favorable to the Employee in terms of amounts, deductibles and
costs to him, if any, than such benefits provided by the Company to the
Employee and his dependents as of the date of the Change of Control. This
subsection (iii) shall not be interpreted so as to limit any benefits to which
the Employee or his dependents may be entitled under the Company's life
insurance, medical, hospitalization, dental or disability plans following the
Employee's Date of Termination and shall be in addition to any COBRA rights
under federal law; and
(iv) within five (5) days after the Release Effective
Date pay the Outplacement Assistance Payment to the Employee.
(b) The Employee shall not be required to mitigate the amount of
any payment provided for in this Section 2 by seeking other employment or
otherwise, nor, except as provided in Section 2(a)(3)(iii) above, shall the
amount of any payment or benefit provided for in Section 2 be reduced by any
compensation earned by the Employee or benefit made available to the Employee
as the result of employment by another employer after the Date of Termination
or otherwise.
(c) For purposes of this Agreement, the following definitions
shall apply:
(1) A "Change of Control" shall be deemed to occur (i) when
any person (as such term is used in Sections 13(e) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than John
Scheumann or Richard Crosser the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) directly or indirectly of securities of
the Company representing 40% or more of the combined voting power of the
Company's then outstanding securities (assuming conversion of all outstanding
nonvoting securities into voting securities and the exercise of all
outstanding options or other convertible securities); or (ii) upon the
approval by the Company's shareholders of (A) a merger or consolidation of the
Company with or into another Company (other than a merger or consolidation in
which the Company is the surviving corporation and which does not result in
any capital reorganization or reclassification or other change in the
ownership of the Company's then outstanding shares which would be deemed a
Change of Control pursuant to subsection(s) (i) or (ii) hereof), (B) a sale or
disposition of all or substantially all of the Company's assets, or (C) a plan
of liquidation or dissolution of the Company.
(2) "Disability" means the Employee is disabled as defined
in the Joinder Agreement to Crossmann Communities, Inc, 401(k) Profit Sharing
Plan
(3) "Retirement" means the voluntary retirement of the
Employee under the terms of the Joinder Agreement to Crossmann Communities,
Inc. 401 (k) Profit Sharing Plan.
(4) A termination for "Cause" means a termination by reason
of the Board's good faith determination that the Employee (i) willfully
engaging in conduct that constitutes willful gross misconduct in carrying out
the Employees s duties, resulting in either case, in material harm to the
Company, monetarily or otherwise, unless Employee reasonably believed in good
faith that such act or non-act was in (or not opposed to) the best interest of
the Company, (ii) willfully engaged in conduct which constituted a material
breach of Section 7 of this Agreement, (iii) engaged in conduct which
constituted a crime of moral turpitude, (iv) perpetuated a fraud or
embezzlement against the Company, or (v) willfully engaged in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
No act, or failure to act, on the Employee's part shall be considered
"willful" unless he has acted or failed to act with an absence of good faith
and without a reasonable belief that his action or failure to act was in or at
least not opposed to the best interests of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
unless there shall have been delivered to the Employee a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board.
(5) A termination for "Good Reason" means the voluntary
cessation of employment with the Company by the Employee within 90 days after
(i) the Employee's base salary was reduced to an amount less than the
Employee's base salary as of the date of this Agreement and/or (ii) the amount
of the targeted annual incentives available to the Employee (based on
realization of certain corporate and individual objectives) are materially
decreased from the amount of similar incentives available in prior years
and/or (iii) the nature and scope of the Employee's duties were materially
reduced and/or (iv) a significant adverse reduction or alteration in the scope
or status of the Employee's position, duties or responsibilities or the
conditions of the Employee's employment from those in effect immediately prior
to such Change of Control are effected, and/or (v) the Company fails to
continue this Agreement in effect or to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement.
(6) A "Notice of Termination" means a notice which shall
indicate the specific termination provision in this Agreement which is
applicable and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination shall be effective without such Notice of
Termination. Any purported termination by the Company or by the Employee
shall be communicated by written notice of termination to the other party
hereto in accordance with Section 6 hereof.
(7) "Date of Termination" means (i) if the Employee's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Employee shall not have returned to
the performance of his duties on a full-time basis during such thirty (30) day
period), and (ii) if the Employee's employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of
a termination for Cause shall not be less than thirty (30) days from the date
such Notice of Termination is given); provided that within thirty (30) days
after any such Notice of Termination is given the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, or by
the final judgment, order or degree of court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been taken).
(8) "Outplacement Assistance Payment" means the payment of
$20,000 to the Employee to be used at the Employee's discretion for
outplacement career counseling and job search costs and expenses.
(9) "Base Salary" means the annual base salary of the
Employee from the Company, but determined without regard to any salary
reduction agreement of the Employee under Sections 401(k) and 125 of the
Internal Revenue Code of 1986 (the Code") (or corresponding provisions of
subsequent federal income tax laws) or any salary deferral agreement of the
Employee under any non-qualified deferred compensation program that may be
available to the Employee from time to time, and excludes (i) incentive or
additional cash compensation; (ii) any amounts included in income because of
Sections 79 or 89 of the Code; and (iii) any amounts paid to the Employee for
reimbursement for expenses or discharging tax liabilities.
(10) "Severance Entitlement" is defined in Section 1 of
this Agreement.
3. Successors: Binding Agreement.
(a) This Agreement shall be binding on the Company and any
successor to all or substantially all of its business or assets. Without
limiting the effect of the prior sentence, the Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required
to perform it if no such succession or assignment had taken place. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor or assign to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement or which is otherwise obligated
under this Agreement by the first sentence of this Section 3, by oration of
law or otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Employee should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the Employee's devisee, legatee or other designee or if there is no such
devisee, legatee or designee, to the Employee's estate.
4. Fees and Expenses; Acceleration Right. The Company shall pay all
reasonable legal fees and related expenses (including the costs of experts,
evidence and counsel) incurred by the Employee as a result of the Employee
seeking to obtain or enforce any right or benefit provided by this Agreement
or by any other plan or arrangement maintained by the Company under which the
Employee is or may be entitled to receive benefits, unless the Company shall
ultimately prevail in establishing that the Company terminated Employee's
employment for Cause. In the event the Company fails to make any installment
payment due and payable under Section 2(a)(3)(ii) hereof, and such default
continues for a period of more than fifteen (15) days following written notice
from the Employee to the Company of such default, the entire balance of the
amount payable under Section 2(a)(3)(ii) hereof shall immediately become due
and payable to the Employee.
5. Release and Right to Employment.
(a) As a condition of receiving from the Company the payments
and benefits provided for hereunder, which payments and benefits the Employee
is not otherwise entitled to receive, the Employee understands and agrees that
he will be required to execute a release of all claims against the Company in
the form attached hereto as Exhibit 1 (the "Release") on the Date of
Termination. Employee acknowledges that he has been advised in writing to
consult with an attorney prior to executing the Release. The Employee agrees
that he will consult with his attorney prior to executing the Release. The
Employee and the Company agree that Employee has a period of seven (7) days
following the execution of the Release within which to revoke the Release.
The parties also acknowledge and agree that the Release shall not be effective
or enforceable until the seven (7) day revocation period expires. The date on
which this seven (7) day period expires shall be the effective date of the
Release (the "Release Effective Date").
(b) The Employee understands that as used in this Section 5, the
"Company" includes its past, present and future officers, directors, trustees,
shareholders, parent corporations, employees, agents, subsidiaries,
affiliates, distributors, successors, and assigns, and any other persons
related to the Company.
(c) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not affect the Company's right or ability to terminate
the employment of the Employee, subject to any other written contract between
the Company and the Employee to the contrary.
(d) The Employee agrees that execution and delivery to the
Company of any release or disclaimer agreement requested by the Company which
is consistent with the provisions of this Section 5 and the passage of all
necessary waiting periods in connection therewith shall be a condition to the
receipt of any payment or benefits to be provided by the Company following the
termination of the Employee's employment with the Company.
6. Notices. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid, or by expedited
(overnight) courier with established national reputation, shipping prepaid or
billed to sender, in either case addressed to the respective addresses last
given by each party to the other (provided that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary
of the Company) or to such other address as either party may have furnished to
the other in writing in accordance herewith. All notices and communication
shall be deemed to have been received on the date of delivery thereof, on the
third business day after the mailing thereof, or on the second day after
deposit thereof with an expedited courier service, except that notice of
change of address shall be effective only upon receipt.
7. Non-Competition. The Employee agrees that during the Employee's
employment with the Company and, in the event of termination of the Employee's
employment with the Company by reason of the Employee's Disability or
Retirement, by the Company for Cause or by the Employee within six (6) months
following a Change of Control, for an additional period of one (1) year
immediately following termination of the Employee's employment with the
Company, the Employee shall not directly or indirectly, as an individual or as
a director, officer, contractor, employee, consultant, partner, investor or in
any other capacity with any corporation, partnership or other person or
entity, other than the Company, engage in the business of homebuilding in
competition with the business of the Company or any of its subsidiaries as
such business are constitutes from time to time during the Employee's
employment with the Company, and thereafter, as such businesses are
constituted at the time of termination of the Employee's employment; provided,
however, in the event of a termination of the Employee's employment within six
(6) months following a Change of Control the foregoing restriction shall only
relate to the business of the Company or any of its subsidiaries as such
business existed immediately prior to the Change of Control. The restrictions
of this Section 7 shall not be deemed to prevent the Employee from owning less
than 5 % of the issued and outstanding shares of any class of securities of an
issuer whose securities are listed on a national securities exchange or
registered pursuant to Section 12(g) of the Exchange Act. The restrictions of
this Section 7, to the extent applicable following termination of the
Employee's employment with the Company, shall only apply within the
geographical area served either by the Company or its subsidiaries during the
two (2) years prior to termination of the Employee's employment with the
Company; provided, however, in the event of a termination of the Employee's
employment within six (6) months following a Change of Control the
geographical area shall only include the geographical area served by the
Company or any of its subsidiaries immediately prior to the Change of Control.
In the event a court of competent jurisdiction determines that the foregoing
restriction is unreasonable in terms of geographic scope or otherwise then the
court is hereby authorized to reduce the scope of said restriction and enforce
this Section 7 as so reduced. If any sentence, word or provision of this
Section 7 shall be determined to be unenforceable, the same shall be severed
herefrom and the remainder shall be enforced as if the unenforceable sentence
work or provision did not exist,
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Employee and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior to subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof that have been made by either party which are not expressly set forth
in this Agreement
9. Applicable Law and Forum. This Agreement has been entered into in
the State of Indiana and shall be governed by and construed in accordance with
the laws of the State of Indiana. The parties agree that any action in law or
equity brought by either party arising from or in connection with this
Agreement or arising from or in connection with the performance by either
party of its obligations hereunder shall be brought only in the United States
District Court for the Southern District of Indiana, Indianapolis Division or
the Circuit Court of Howard County, Indiana, and the parties hereto consent to
the jurisdiction of such forums.
10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior agreements
understandings and arrangements, oral or written, between the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Employee has executed this Agreement,
each as of the day and year first above written.
COMPANY:
CROSSMANN COMMUNITIES, INC.
By: /s/ John B. Scheumann
Title: Chief Executive Officer
ATTEST:
/s/ Jennifer A. Houlihan
Secretary
EMPLOYEE:
/s/ Jennifer A. Holihen
Jennifer A. Holihen
WITNESS
/s/ Judith M. Swihart
<PAGE>
RELEASE OF ALL CLAIMS
In consideration of receiving from Crossmann Communities, Inc. (the
"Company") the payments and benefits provided for in that certain Severance
Agreement dated as of March 31, 1997 (the Severance Agreement") between the
Company and the undersigned (the "Employee"), which payments and benefits the
Employee was not otherwise entitled to receive, the Employee unconditionally
releases and discharges the Company from any and all claims, causes of action,
demands, lawsuits or other charges whatsoever, known or unknown, directly or
indirectly related to the Employee's employment with the Company, except for
(i) a breach of the Company's obligations under the Severance Agreement, (ii)
any claims relating to, or rights of the Employee appurtenant to, any shares
of stock of, or options for shares of stock of Crossmann Communities, Inc.,
and (iii) the right of the Employee to elect continuation of group medical and
dental benefits for the Employee and his eligible dependents who are qualified
beneficiaries under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), at the Employee's expense, pursuant to COBRA. The
claims or actions released herein include, but are not limited to, those based
on allegations of wrongful discharge, breach of contract, promissory estoppel,
defamation, infliction of emotional distress, and those alleging
discrimination on the basis of race, color, sex, religion, national origin,
age, disability, or any other basis, including, but not limited to, any claim
or action under Title VII of die Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, the Equal Pay Act of 1963, the Civil
Rights Act of 1991, the Employee Retirement Income Security Act of 1974, or
any other federal, state, or local law, rule, ordinance, or regulation as
presently enacted or adopted and as each may hereafter be amended.
With respect to any claim that the Employee might have under the Age
Discrimination in Employment Act of 1967, as amended:
(i) The Employee does not waive rights or claims that may arise after
the date of this Release;
(ii) The Employee's waiver of said rights or claims under the Age
Discrimination Employment Act of 1967 is in exchange for the consideration
reflected in this Release;
(iii) The Employee acknowledges that he has been advised in writing
to consult with an attorney prior to executing this Release and that he has
consulted with his attorney prior to executing this Release;
(iv) The Employee acknowledges that he has been given a period of at
least twenty one (21) days within which to consider this Release; and
(v) The Employee and the Company agree that the Employee has a period
of seven (7) days following the execution of this Release within which to
revoke the Release.
The parties also acknowledge and agree that this Release shall not be
effective or enforceable until the seven (7) day revocation period expires.
The date on which this seven (7) day period expires shall be the effective
date of this Release.
The Employee further agrees, in consideration of receiving the payments
and benefits provided for in the Severance Agreement, not to initiate or
instigate any claims, causes of action or demands against the Company in any
way directly or indirectly related to the Employee's employment with the
Company or the termination of his employment except for a breach of the
Company's obligations under the Severance Agreement or claims or rights of the
Employee relating to any shares of stock of, or options for shares of stock of
Crossmann Communities, Inc., and the Employee agrees to reimburse defend, and
hold harmless the Company against any such claims, causes of action or
demands.
The Employee understands that as used in this Release, the "Company"
includes its past, present and future officers, directors, trustees,
shareholders, parent corporations, employees, agents, subsidiaries,
affiliates, distributors, successors, and assigns, any and all employee
benefit plans (and any fiduciary of such plans) sponsored by the Company, and
any other persons related to the Company.
Date
WITNESS:
212370.WP
CHANGE OF CONTROL
SEVERANCE BENEFITS AGREEMENT
THIS AGREEMENT is made and entered into as of the 31st day of March,
1997, by and between Crossmann Communities, Inc. (the "Company") an Indiana
corporation, and David McCormick (the "Employee"), an employee of the Company.
RECITAL
The Board of Directors of the Company (the "Board") have determined that
it is in the best interests of the Company to foster the continuous employment
of the Employee and that the Company should enter into this Agreement to
reinforce and encourage the continued attention and dedication of the Employee
to his duties, free from distractions which might arise in the event of a
Change of Control (as defined in this Agreement) of the Company or a proposed
Change of Control.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Company and the Employee agree as follows:
1. Effect. Anything in this Agreement to the contrary
notwithstanding, neither this Agreement nor any provision hereof shall be
operative unless and until there has been a Change of Control of the Company.
Upon a Change of Control of the Company this Agreement shall become operative
immediately. If the Employee's employment with the Company is terminated
(other than as a result of Disability or Retirement or by reason of the
Employee's death) either by the Company (other than for Cause) or by the
Employee with Good Reason (as defined in Section 2(c)(5)) and if such
termination of employment occurs concurrently with or within six months (6)
immediately preceding or thirty-six (36) months immediately following a Change
of Control of the Company, then the Company shall provide to the Employee a
severance benefit (the "Severance Entitlement") in the manner and amount
provided in Section 2 of this Agreement.
2. Termination Benefits.
(a) If, within six (6) months immediately preceding or
thirty-six (36) months following a Change of Control, the Employee's
employment with the Company shall be terminated, the Employee shall be
entitled to the following compensation and benefits (in addition to any
compensation and benefits provided for under any of the Company's employee
benefit plans, policies and practices or as required by law:
(1) If the Employee's employment with the Company shall be
terminated (A) by reason of the Employee's Disability or Retirement, or (B)by
reason of the Employee's death, the Company shall within five (5) days after
the Release Effective Date (as defined in Section 5(a) below) pay the Employee
his full Base Salary through the Dare of Termination at the rate in effect
when the Notice of Termination is given (or the Date of Termination in the
case of the Employee's death), plus any bonuses or incentive compensation
which pursuant to the terms of any compensation or benefit plan have been
earned or have become payable as of the Date of Termination, but which have
not yet been paid.
(2) If the Employee's employment with the Company shall be
terminated by the Company for Cause, the Company shall pay the Employee his
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, and the Company shall have no further
obligations to the Employee under this Agreement.
(3) If the Employee's employment with the Company shall be
terminated by the Company (other than for Cause) or by the Employee for Good
Reason, the Company shall:
(i) within five (5) days after the Release Effective
Date pay the Employee his full Base Salary through the Date of Termination at
the greater of the rate in effect at the time the Change of Control occurs or
Notice of Termination is given, plus any bonuses or incentive compensation
which pursuant to the terms of any compensation or benefit plan have been
earned or have become payable as of the Date of Termination, but which have
not yet been paid;
(ii) within five (5) days after the Release Effective
Date pay the Employee a lump sum cash payment equal to the Severance
Entitlement. The aggregate dollar amount of the Severance Entitlement shall
be equal to three times the highest aggregate amount of base salary bonus and
other cash compensation paid by the Company to the Employee for any full
calendar year during which the Employee was employed by the Company; provided,
however, that if such Severance Entitlement, either alone or together with
other payments which the Employee has the right to receive from the Company or
any affiliate of the Company (the "Total Payments"), would constitute an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the Company shall pay an
additional amount of money (the "Gross-up Payment") to the Employee that will
equal (based upon the Employee's good faith representations of the Employee's
income tax position for the year(s) of payment(s)) the sum of (j) all excise
tax ("Excise Tax") imposed upon the Employee by Section 4999 of the Code and
(ii) all additional state and federal income taxes attributable to the
additional payments to the Employee pursuant to this proviso clause (including
all state and federal taxes on the additional income tax payments) such that
the net amount retained by Employee, after deduction of any Excise Tax on the
Total Payments and any federal, state and local income and employment taxes
and Excise Tax upon the Gross-up Payment, shall be equal to the Total
Payments. The determination of the amounts of such payments pursuant to the
immediately preceding proviso shall be made by the Company in good faith, and
such determination shall be conclusive and binding. The Company may at its
election pay such amount to the Employee in eighteen (18) equal monthly
installments commencing on the fifth day after the Release Effective Date and
on the same day of the next seventeen (17) months thereafter;
(iii) continue to provide for the Employee and his
dependents, for a period of eighteen (18) months following the Date of
Termination, life insurance, medical and hospitalization benefits comparable
to those provided by the Company to the Employee and his dependents
immediately prior to the Change of Control, provided that any coverage
provided pursuant to this subsection (iii) shall terminate to the extent that
the Employee obtains comparable life insurance, medical or hospitalization
benefits coverage from any other employer during such eighteen (18) month
period. The benefits provided under this subsection (iii) shall not be
materially less favorable to the Employee in terms of amounts, deductibles and
costs to him, if any, than such benefits provided by the Company to the
Employee and his dependents as of the date of the Change of Control. This
subsection (iii) shall not be interpreted so as to limit any benefits to which
the Employee or his dependents may be entitled under the Company's life
insurance, medical, hospitalization, dental or disability plans following the
Employee's Date of Termination and shall be in addition to any COBRA rights
under federal law; and
(iv) within five (5) days after the Release Effective
Date pay the Outplacement Assistance Payment to the Employee.
(b) The Employee shall not be required to mitigate the amount of
any payment provided for in this Section 2 by seeking other employment or
otherwise, nor, except as provided in Section 2(a)(3)(iii) above, shall the
amount of any payment or benefit provided for in Section 2 be reduced by any
compensation earned by the Employee or benefit made available to the Employee
as the result of employment by another employer after the Date of Termination
or otherwise.
(c) For purposes of this Agreement, the following definitions
shall apply:
(1) A "Change of Control" shall be deemed to occur (i) when
any person (as such term is used in Sections 13(e) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than John
Scheumann or Richard Crosser the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) directly or indirectly of securities of
the Company representing 40% or more of the combined voting power of the
Company's then outstanding securities (assuming conversion of all outstanding
nonvoting securities into voting securities and the exercise of all
outstanding options or other convertible securities); or (ii) upon the
approval by the Company's shareholders of (A) a merger or consolidation of the
Company with or into another Company (other than a merger or consolidation in
which the Company is the surviving corporation and which does not result in
any capital reorganization or reclassification or other change in the
ownership of the Company's then outstanding shares which would be deemed a
Change of Control pursuant to subsection(s) (i) or (ii) hereof), (B) a sale or
disposition of all or substantially all of the Company's assets, or (C) a plan
of liquidation or dissolution of the Company.
(2) "Disability" means the Employee is disabled as defined
in the Joinder Agreement to Crossmann Communities, Inc, 401(k) Profit Sharing
Plan
(3) "Retirement" means the voluntary retirement of the
Employee under the terms of the Joinder Agreement to Crossmann Communities,
Inc. 401 (k) Profit Sharing Plan.
(4) A termination for "Cause" means a termination by reason
of the Board's good faith determination that the Employee (i) willfully
engaging in conduct that constitutes willful gross misconduct in carrying out
the Employees s duties, resulting in either case, in material harm to the
Company, monetarily or otherwise, unless Employee reasonably believed in good
faith that such act or non-act was in (or not opposed to) the best interest of
the Company, (ii) willfully engaged in conduct which constituted a material
breach of Section 7 of this Agreement, (iii) engaged in conduct which
constituted a crime of moral turpitude, (iv) perpetuated a fraud or
embezzlement against the Company, or (v) willfully engaged in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
No act, or failure to act, on the Employee's part shall be considered
"willful" unless he has acted or failed to act with an absence of good faith
and without a reasonable belief that his action or failure to act was in or at
least not opposed to the best interests of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
unless there shall have been delivered to the Employee a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board.
(5) A termination for "Good Reason" means the voluntary
cessation of employment with the Company by the Employee within 90 days after
(i) the Employee's base salary was reduced to an amount less than the
Employee's base salary as of the date of this Agreement and/or (ii) the amount
of the targeted annual incentives available to the Employee (based on
realization of certain corporate and individual objectives) are materially
decreased from the amount of similar incentives available in prior years
and/or (iii) the nature and scope of the Employee's duties were materially
reduced and/or (iv) a significant adverse reduction or alteration in the scope
or status of the Employee's position, duties or responsibilities or the
conditions of the Employee's employment from those in effect immediately prior
to such Change of Control are effected, and/or (v) the Company fails to
continue this Agreement in effect or to obtain a satisfactory agreement from
any successor to assume and agree to perform this Agreement.
(6) A "Notice of Termination" means a notice which shall
indicate the specific termination provision in this Agreement which is
applicable and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination shall be effective without such Notice of
Termination. Any purported termination by the Company or by the Employee
shall be communicated by written notice of termination to the other party
hereto in accordance with Section 6 hereof.
(7) "Date of Termination" means (i) if the Employee's
employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Employee shall not have returned to
the performance of his duties on a full-time basis during such thirty (30) day
period), and (ii) if the Employee's employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the case of
a termination for Cause shall not be less than thirty (30) days from the date
such Notice of Termination is given); provided that within thirty (30) days
after any such Notice of Termination is given the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, or by
the final judgment, order or degree of court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been taken).
(8) "Outplacement Assistance Payment" means the payment of
$20,000 to the Employee to be used at the Employee's discretion for
outplacement career counseling and job search costs and expenses.
(9) "Base Salary" means the annual base salary of the
Employee from the Company, but determined without regard to any salary
reduction agreement of the Employee under Sections 401(k) and 125 of the
Internal Revenue Code of 1986 (the Code") (or corresponding provisions of
subsequent federal income tax laws) or any salary deferral agreement of the
Employee under any non-qualified deferred compensation program that may be
available to the Employee from time to time, and excludes (i) incentive or
additional cash compensation; (ii) any amounts included in income because of
Sections 79 or 89 of the Code; and (iii) any amounts paid to the Employee for
reimbursement for expenses or discharging tax liabilities.
(10) "Severance Entitlement" is defined in Section 1 of
this Agreement.
3. Successors: Binding Agreement.
(a) This Agreement shall be binding on the Company and any
successor to all or substantially all of its business or assets. Without
limiting the effect of the prior sentence, the Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required
to perform it if no such succession or assignment had taken place. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor or assign to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement or which is otherwise obligated
under this Agreement by the first sentence of this Section 3, by oration of
law or otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Employee should die while any amounts would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the Employee's devisee, legatee or other designee or if there is no such
devisee, legatee or designee, to the Employee's estate.
4. Fees and Expenses; Acceleration Right. The Company shall pay all
reasonable legal fees and related expenses (including the costs of experts,
evidence and counsel) incurred by the Employee as a result of the Employee
seeking to obtain or enforce any right or benefit provided by this Agreement
or by any other plan or arrangement maintained by the Company under which the
Employee is or may be entitled to receive benefits, unless the Company shall
ultimately prevail in establishing that the Company terminated Employee's
employment for Cause. In the event the Company fails to make any installment
payment due and payable under Section 2(a)(3)(ii) hereof, and such default
continues for a period of more than fifteen (15) days following written notice
from the Employee to the Company of such default, the entire balance of the
amount payable under Section 2(a)(3)(ii) hereof shall immediately become due
and payable to the Employee.
5. Release and Right to Employment.
(a) As a condition of receiving from the Company the payments
and benefits provided for hereunder, which payments and benefits the Employee
is not otherwise entitled to receive, the Employee understands and agrees that
he will be required to execute a release of all claims against the Company in
the form attached hereto as Exhibit 1 (the "Release") on the Date of
Termination. Employee acknowledges that he has been advised in writing to
consult with an attorney prior to executing the Release. The Employee agrees
that he will consult with his attorney prior to executing the Release. The
Employee and the Company agree that Employee has a period of seven (7) days
following the execution of the Release within which to revoke the Release.
The parties also acknowledge and agree that the Release shall not be effective
or enforceable until the seven (7) day revocation period expires. The date on
which this seven (7) day period expires shall be the effective date of the
Release (the "Release Effective Date").
(b) The Employee understands that as used in this Section 5, the
"Company" includes its past, present and future officers, directors, trustees,
shareholders, parent corporations, employees, agents, subsidiaries,
affiliates, distributors, successors, and assigns, and any other persons
related to the Company.
(c) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not affect the Company's right or ability to terminate
the employment of the Employee, subject to any other written contract between
the Company and the Employee to the contrary.
(d) The Employee agrees that execution and delivery to the
Company of any release or disclaimer agreement requested by the Company which
is consistent with the provisions of this Section 5 and the passage of all
necessary waiting periods in connection therewith shall be a condition to the
receipt of any payment or benefits to be provided by the Company following the
termination of the Employee's employment with the Company.
6. Notices. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid, or by expedited
(overnight) courier with established national reputation, shipping prepaid or
billed to sender, in either case addressed to the respective addresses last
given by each party to the other (provided that all notices to the Company
shall be directed to the attention of the Board with a copy to the Secretary
of the Company) or to such other address as either party may have furnished to
the other in writing in accordance herewith. All notices and communication
shall be deemed to have been received on the date of delivery thereof, on the
third business day after the mailing thereof, or on the second day after
deposit thereof with an expedited courier service, except that notice of
change of address shall be effective only upon receipt.
7. Non-Competition. The Employee agrees that during the Employee's
employment with the Company and, in the event of termination of the Employee's
employment with the Company by reason of the Employee's Disability or
Retirement, by the Company for Cause or by the Employee within six (6) months
following a Change of Control, for an additional period of one (1) year
immediately following termination of the Employee's employment with the
Company, the Employee shall not directly or indirectly, as an individual or as
a director, officer, contractor, employee, consultant, partner, investor or in
any other capacity with any corporation, partnership or other person or
entity, other than the Company, engage in the business of homebuilding in
competition with the business of the Company or any of its subsidiaries as
such business are constitutes from time to time during the Employee's
employment with the Company, and thereafter, as such businesses are
constituted at the time of termination of the Employee's employment; provided,
however, in the event of a termination of the Employee's employment within six
(6) months following a Change of Control the foregoing restriction shall only
relate to the business of the Company or any of its subsidiaries as such
business existed immediately prior to the Change of Control. The restrictions
of this Section 7 shall not be deemed to prevent the Employee from owning less
than 5 % of the issued and outstanding shares of any class of securities of an
issuer whose securities are listed on a national securities exchange or
registered pursuant to Section 12(g) of the Exchange Act. The restrictions of
this Section 7, to the extent applicable following termination of the
Employee's employment with the Company, shall only apply within the
geographical area served either by the Company or its subsidiaries during the
two (2) years prior to termination of the Employee's employment with the
Company; provided, however, in the event of a termination of the Employee's
employment within six (6) months following a Change of Control the
geographical area shall only include the geographical area served by the
Company or any of its subsidiaries immediately prior to the Change of Control.
In the event a court of competent jurisdiction determines that the foregoing
restriction is unreasonable in terms of geographic scope or otherwise then the
court is hereby authorized to reduce the scope of said restriction and enforce
this Section 7 as so reduced. If any sentence, word or provision of this
Section 7 shall be determined to be unenforceable, the same shall be severed
herefrom and the remainder shall be enforced as if the unenforceable sentence
work or provision did not exist,
8. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Employee and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior to subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof that have been made by either party which are not expressly set forth
in this Agreement
9. Applicable Law and Forum. This Agreement has been entered into in
the State of Indiana and shall be governed by and construed in accordance with
the laws of the State of Indiana. The parties agree that any action in law or
equity brought by either party arising from or in connection with this
Agreement or arising from or in connection with the performance by either
party of its obligations hereunder shall be brought only in the United States
District Court for the Southern District of Indiana, Indianapolis Division or
the Circuit Court of Howard County, Indiana, and the parties hereto consent to
the jurisdiction of such forums.
10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
11. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior agreements
understandings and arrangements, oral or written, between the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Employee has executed this Agreement,
each as of the day and year first above written.
COMPANY:
CROSSMANN COMMUNITIES, INC.
By: /s/ John B. Scheumann
Title: Chief Executive Officer
ATTEST:
/s/ Jennifer A. Houlihan
Secretary
EMPLOYEE:
/s/ David McCormick
David McCormick
WITNESS
/s/ Judith M. Swihart
<PAGE>
RELEASE OF ALL CLAIMS
In consideration of receiving from Crossmann Communities, Inc. (the
"Company") the payments and benefits provided for in that certain Severance
Agreement dated as of March 31, 1997 (the Severance Agreement") between the
Company and the undersigned (the "Employee"), which payments and benefits the
Employee was not otherwise entitled to receive, the Employee unconditionally
releases and discharges the Company from any and all claims, causes of action,
demands, lawsuits or other charges whatsoever, known or unknown, directly or
indirectly related to the Employee's employment with the Company, except for
(i) a breach of the Company's obligations under the Severance Agreement, (ii)
any claims relating to, or rights of the Employee appurtenant to, any shares
of stock of, or options for shares of stock of Crossmann Communities, Inc.,
and (iii) the right of the Employee to elect continuation of group medical and
dental benefits for the Employee and his eligible dependents who are qualified
beneficiaries under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA"), at the Employee's expense, pursuant to COBRA. The
claims or actions released herein include, but are not limited to, those based
on allegations of wrongful discharge, breach of contract, promissory estoppel,
defamation, infliction of emotional distress, and those alleging
discrimination on the basis of race, color, sex, religion, national origin,
age, disability, or any other basis, including, but not limited to, any claim
or action under Title VII of die Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, the Equal Pay Act of 1963, the Civil
Rights Act of 1991, the Employee Retirement Income Security Act of 1974, or
any other federal, state, or local law, rule, ordinance, or regulation as
presently enacted or adopted and as each may hereafter be amended.
With respect to any claim that the Employee might have under the Age
Discrimination in Employment Act of 1967, as amended:
(i) The Employee does not waive rights or claims that may arise after
the date of this Release;
(ii) The Employee's waiver of said rights or claims under the Age
Discrimination Employment Act of 1967 is in exchange for the consideration
reflected in this Release;
(iii) The Employee acknowledges that he has been advised in writing
to consult with an attorney prior to executing this Release and that he has
consulted with his attorney prior to executing this Release;
(iv) The Employee acknowledges that he has been given a period of at
least twenty one (21) days within which to consider this Release; and
(v) The Employee and the Company agree that the Employee has a period
of seven (7) days following the execution of this Release within which to
revoke the Release.
The parties also acknowledge and agree that this Release shall not be
effective or enforceable until the seven (7) day revocation period expires.
The date on which this seven (7) day period expires shall be the effective
date of this Release.
The Employee further agrees, in consideration of receiving the payments
and benefits provided for in the Severance Agreement, not to initiate or
instigate any claims, causes of action or demands against the Company in any
way directly or indirectly related to the Employee's employment with the
Company or the termination of his employment except for a breach of the
Company's obligations under the Severance Agreement or claims or rights of the
Employee relating to any shares of stock of, or options for shares of stock of
Crossmann Communities, Inc., and the Employee agrees to reimburse defend, and
hold harmless the Company against any such claims, causes of action or
demands.
The Employee understands that as used in this Release, the "Company"
includes its past, present and future officers, directors, trustees,
shareholders, parent corporations, employees, agents, subsidiaries,
affiliates, distributors, successors, and assigns, any and all employee
benefit plans (and any fiduciary of such plans) sponsored by the Company, and
any other persons related to the Company.
Date
WITNESS:
<TABLE>
<CAPTION>
Crossmann Communities, Inc.
Exhibit 11.1 - Computation of Per Share Net Income
For the Period Ended
<S> <C> <C> <C> <C>
Three Months Three Months Six Months Ended Six Months Ended
Ended June 30, Ended June 30, June 30, June 30,
Primary 1997 1996 1997 1996
Weighted Average Number of Shares:
Average Common Shares Outstanding 9,202,948 (2) 9,153,183 (2) 9,195,840 (2) 9,141,165 (2)
Effect of Common Stock Equivalents 71,240 (2) 56,368 (2) 71,445 (2) 73,438 (2)
Weighted Average Shares Outstanding 9,274,188 9,209,551 9,267,285 9,214,603
Net Income $ 3,740,263 $ 2,623,712 $ 5,793,380 $ 3,993,565
Net Income per Common Share $ 0.40 (1) $ 0.28 (1) $ 0.63 (1) $ 0.43 (1)
Three Months Three Months Six Months Ended Six Months Ended
Ended June 30, Ended June 30, June 30, June 30,
Fully Diluted 1997 1996 1997 1996
Weighted Average Number of Shares:
Average Common Shares Outstanding 9,202,948 (2) 9,153,183 (2) 9,195,840 (2) 9,141,165 (2)
Effect of Common Stock Equivalents 79,739 (2) 56,901 (2) 79,952 (2) 68,261 (2)
Weighted Average Shares Outstanding 9,282,687 9,210,084 9,275,792 9,209,426
Net Income $ 3,740,263 $ 2,623,712 $ 5,793,380 $ 3,993,565
Net Income per Common Share $ 0.40 (1) $ 0.28 (1) $ 0.62 (1) $ 0.43 (1)
<FN>
(1) This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although not required by
footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
(2) Share amounts have been retroactively adjusted to give effect to a three-for-two stock split to be effected
by a share dividend declared by the Company's Board of Directors on August 7, 1997, and payable on
August 25, 1997 to holders of record on August 18, 1997.
</TABLE>
Amended Subsidiaries of the Registrant
- --------------------------------------
1. Merit Realty, Inc.
2. Crossmann Communities of Ohio, Inc.
3. Deluxe Homes of Lafayette, Inc.
4. Deluxe Homes, Inc.
5. Trimark Homes, Inc.
6. Trimark Development, Inc.
7. Crossmann Management, Inc.
8. Deluxe Aviation, Inc.
9. Crossmann Investments, Inc.
10. Crossmann Mortgage Corp.
11. Cutter Homes, LTD.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
CROSSMANN COMMUNITIES, INC.
ARTICLE 5 FINANCIAL DATA SCHEDULE FOR 1997
(dollars in thousands, except per share data)
The schedule contains summary financial information extracted from
the consolidated financial statements of Crossmann Communities, Inc.
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 100000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 137561653
<CURRENT-ASSETS> 0
<PP&E> 4986589
<DEPRECIATION> 1962790
<TOTAL-ASSETS> 155980065
<CURRENT-LIABILITIES> 0
<BONDS> 66101609
0
0
<COMMON> 25290069
<OTHER-SE> 41041836
<TOTAL-LIABILITY-AND-EQUITY> 155980065
<SALES> 116360129
<TOTAL-REVENUES> 116360129
<CGS> 92638587
<TOTAL-COSTS> 92638587
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 589250
<INCOME-PRETAX> 9740850
<INCOME-TAX> 3947470
<INCOME-CONTINUING> 5793380
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5793380
<EPS-PRIMARY> .63
<EPS-DILUTED> .62
</TABLE>
CROSSMANN COMMUNITIES, INC.
9202 N. Meridian Street, Suite 300
Indianapolis, IN 46260
Phone (317) 843-9514
Fax (317) 571-2210
NEWS
FOR IMMEDIATE RELEASE
Contact: Jennifer A. Holihen
Chief Financial Officer
Date: August 8, 1997
CROSSMANN COMMUNITIES, INC. ANNOUNCES SHARE DIVIDEND
Indianapolis, IN -- (August 8, 1997) -- Crossmann Communities, Inc. (Nasdaq:
:CROS) today announced that it declared a share dividend of .5 common shares,
no par value, on each issued and outstanding common share to holders of record
on August 18,1997, payable on August 25, 1997.
Crossmann Communities, Inc. is based in Indianapolis, Indiana and is a leading
regional builder of single-family homes in Indiana, Ohio and Kentucky.
# # #
Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995
From time to time, Crossmann Communities, Inc. (the "Company") may
publish forward- looking statements relating to such matters as anticipated
financial performance, business prospects,new product lines, entry into new
markets and similar matters. These statements may also be made from time to
time by Company spokespersons. The Private Securities Litigation Reform Act
of 1995 provides a safe harbor for forward-looking statements. Such
statements are usually identified by the use of words or phrases such as:
"may," "will," "believe," "anticipate," "expect," "estimate," "plan," "could,"
"intend," and "continue." Such statements reflect the current expectations
and assumptions of Company management. Because forward-looking statements
involve estimates, assumptions, and uncertainties, the Company's actual
results could differ materially. In order to comply with the terms of the
safe harbor, the Company is hereby filing cautionary statements identifying
important factors that could cause the Company's actual results and experience
to differ materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of the Company's business include the following:
(1) General economic factors over which the Company has no control,
including changes in employment levels, inflation, interest rates,
availability of financing, consumer confidence and housing demand.
(2) Any reduction in the scope or funding of financing programs for
first-time home buyers sponsored by the Federal Housing Administration and the
Veterans Administration.
(3) Adverse general economic conditions in any of the markets in which
the Company operates.
(4) The difficulties and uncertainties inherent in expansion into new
geographic areas.
(5) Ability to locate suitable acquisition candidates and to successfully
integrate and manage operations in new markets.
(6) Adverse weather conditions which may cause delays and slower sales.
(7) Competition in the homebuilding industry.
(8) Availability and cost of materials and labor.
(9) Ability to locate and acquire suitable undeveloped land and developed
lots at competitive prices.
(10) Local, state and federal statutes, ordinances, rules and regulations
concerning zoning, resource protection, building design, construction, density
requirements and similar matters.
(11) Internal factors such as retention of key employees, change in
business strategies and the impact of restructuring and business combinations.
(12) Changes in financial markets affecting the Company's financial
structure and the company's cost of capital and borrowed money.
(13) Control relationships and anti-takeover provisions which could
preclude or make it more difficult to effect an acquisition of the Company.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those described in the forward- looking statement. The Company does not
intend to update forward-looking statements.
