<PAGE> 1
AS FILED WITH SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 2000.
REGISTRATION NO. 333-32860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LENNAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 1520 59-1281887
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>
700 NORTHWEST 107TH AVENUE, MIAMI, FL 33172 (305) 559-4000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAVID B. MCCAIN, VICE PRESIDENT AND GENERAL COUNSEL
700 NORTHWEST 107TH AVENUE, MIAMI, FL 33172
(305) 559-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
DAVID W. BERNSTEIN STEPHEN C. KOVAL
KATHLEEN L. WERNER KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
CLIFFORD CHANCE ROGERS & WELLS LLP 425 PARK AVENUE
200 PARK AVENUE NEW YORK, NEW YORK 10022
NEW YORK, NEW YORK 10166 (212) 836-8000
(212) 878-8000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective and all other
conditions to the merger of U.S. Home Corporation with a subsidiary of Lennar
Corporation pursuant to the Plan and Agreement of Merger described in the
enclosed Joint Proxy Statement/Prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
LENNAR CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 2000
To Our Stockholders:
NOTICE IS HEREBY GIVEN that Lennar Corporation is holding a special meeting
of its stockholders at 10:00 a.m., local time, on April 28, 2000, at the Doral
Park Golf and Country Club, 5001 N.W. 104th Avenue, Miami, Florida, for the
following purposes:
1. To consider and vote on a proposal to approve the acquisition of U.S.
Home Corporation through a merger of U.S. Home into a wholly-owned
subsidiary of Lennar; and
2. To transact any other business that properly comes before the meeting or
any adjournment or postponement of the meeting.
The holder of shares entitled to more than 50% of the votes that may be
cast at the meeting has agreed to vote in favor of the proposal to approve the
acquisition of U.S. Home. Therefore, as long as there is a quorum present at the
meeting, approval of the acquisition of U.S. Home is assured.
Only stockholders of record at the close of business on March 30, 2000 will
be entitled to notice of or to vote at the meeting or any adjournment or
postponement of the meeting.
You are urged to attend the meeting. Whether or not you plan to attend,
please fill in, date and sign the enclosed proxy card and return it promptly in
the enclosed envelope. You may revoke your proxy at any time before it is voted
by following the directions on page 15 of the enclosed Joint Proxy Statement/
Prospectus.
BY ORDER OF THE BOARD OF DIRECTORS
DAVID B. McCAIN
Secretary
March 31, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE FILL IN, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
U.S. HOME CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 2000
To Our Stockholders:
NOTICE IS HEREBY GIVEN that U.S. Home Corporation is holding a special
meeting of its stockholders at 10:00 a.m., local time, on April 28, 2000, at
10707 Clay Road, Houston, Texas, for the following purposes:
1. To consider and vote on a proposal to adopt a Plan and Agreement of
Merger dated as of February 16, 2000 among U.S. Home, Lennar Corporation
and a wholly-owned subsidiary of Lennar Corporation and to approve the
merger which is the subject of that merger agreement.
2. To transact any other business that properly comes before the meeting or
any adjournment or postponement of the meeting.
Only stockholders of record at the close of business on March 30, 2000 will
be entitled to notice of or to vote at the meeting or any adjournment or
postponement of that meeting.
You are urged to attend the meeting. Whether or not you plan to attend,
please fill in, date and sign the enclosed proxy card and return it promptly in
the enclosed envelope. You may revoke your proxy at any time prior to the time
it is voted by following the directions on page 15 of the enclosed Joint Proxy
Statement/Prospectus.
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD G. SLAUGHTER
Secretary
March 31, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE FILL IN, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
LENNAR CORPORATION -- U.S. HOME CORPORATION
JOINT PROXY STATEMENT/PROSPECTUS
MERGER PROPOSED: YOUR VOTE IS IMPORTANT
The boards of directors of Lennar Corporation (with one director absent)
and U.S. Home Corporation have unanimously approved a transaction in which
Lennar will acquire U.S. Home. Under the terms of a merger agreement, which was
signed on February 16, 2000 and amended as of March 17, 2000, U.S. Home will
merge into a wholly-owned subsidiary of Lennar. As a result, U.S. Home will, in
effect, become a wholly-owned subsidiary of Lennar.
Subject to the adjustments, elections and limitations described in this
Joint Proxy Statement/ Prospectus, if the merger is completed, U.S. Home
stockholders will receive an expected $36.00 for each share of U.S. Home common
stock that they own, of which half will be in cash and half will be in Lennar
common stock. This Joint Proxy Statement/Prospectus constitutes a prospectus of
Lennar with respect to the shares of its common stock to be issued to the
stockholders of U.S. Home in connection with the merger.
We cannot complete the transaction unless Lennar's stockholders approve the
acquisition of U.S. Home and U.S. Home's stockholders adopt the merger agreement
and approve the merger. Special meetings of the stockholders of Lennar and U.S.
Home will be held on April 28, 2000. In connection with those meetings, you
should read this Joint Proxy Statement/Prospectus carefully, including "The
Terms of Lennar's Acquisition of U.S. Home" beginning on page 39.
EACH COMPANY'S BOARD OF DIRECTORS (WITH ONE LENNAR DIRECTOR ABSENT) HAS
UNANIMOUSLY APPROVED LENNAR'S ACQUISITION OF U.S. HOME AND RECOMMENDS THAT YOU
VOTE FOR THAT TRANSACTION.
Leonard Miller, Lennar's Chairman of the Board, owns through a family
partnership approximately 99.7% of Lennar's class B common stock, which entitles
him to approximately 72% of the votes that may be cast with regard to Lennar's
acquisition of U.S. Home. Mr. Miller and that partnership have agreed to vote
all of his class B common stock in favor of that transaction. Therefore, if
there is a quorum present at the Lennar stockholders meeting, the proposal
regarding the transaction will be approved by the Lennar stockholders even if no
other Lennar stockholders vote in favor of it. However, it is important that as
many as possible of Lennar's stockholders be present or represented at the
meeting to be sure there will be a quorum.
There is no agreement or arrangement regarding voting by U.S. Home
stockholders. Approval of the merger by U.S. Home stockholders requires the
affirmative vote of the holders of a majority of the outstanding shares of U.S.
Home common stock. BECAUSE APPROVAL REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY
OF THE OUTSTANDING SHARES, FAILURE TO VOTE IS THE SAME AS A VOTE AGAINST THE
MERGER. Therefore, it is very important that all U.S. Home stockholders vote
with regard to the merger.
This document provides you with detailed information about the proposed
merger. We encourage you to read this entire document carefully.
On February 16, 2000, the day before the transaction between Lennar and
U.S. Home was announced, Lennar's common stock, which is traded on the New York
Stock Exchange under the symbol "LEN", closed at $16.00. On the same day, U.S.
Home's common stock, which is traded on the New York Stock Exchange under the
symbol "UH", closed at $24.875. On March 28, 2000, Lennar's common stock closed
at $20.63 and U.S. Home's common stock closed at $37.25.
All information contained in this Joint Proxy Statement/Prospectus with
respect to U.S. Home has been provided by U.S. Home. All information contained
in this Joint Proxy Statement/Prospectus with respect to Lennar has been
provided by Lennar.
<PAGE> 5
FOR RISK FACTORS INVOLVED IN LENNAR'S ACQUISITION OF U.S. HOME TO WHICH YOU
MAY WANT TO GIVE PARTICULAR CONSIDERATION, SEE THE SECTION OF THIS JOINT PROXY
STATEMENT/PROSPECTUS CAPTIONED "RISK FACTORS" BEGINNING ON PAGE 9.
THE LENNAR SECURITIES TO BE ISSUED PURSUANT TO THIS JOINT PROXY
STATEMENT/PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Joint Proxy Statement/Prospectus is dated March 30, 2000 and is first
being mailed to stockholders of U.S. Home and Lennar on or about March 31, 2000.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary............................. 1
General........................... 1
The Companies..................... 1
The Transaction................... 1
The Merger Consideration.......... 1
Reasons for the Transaction....... 2
Required Vote..................... 3
Recommendations of the Boards of
Directors...................... 3
Federal Income Tax Consequences... 4
Dissenters' Appraisal Rights...... 4
Risk Factors...................... 4
Selected Historical Financial
Data.............................. 5
Unaudited Pro Forma Selected
Consolidated Financial Data....... 7
Market Price and Dividend Data...... 8
Risk Factors........................ 9
The value of the merger
consideration a U.S. Home
stockholder will receive will
depend on the market value of
Lennar's common stock.......... 9
U.S. Home is being sold at a time
when the price of its stock is
at a relatively low level...... 9
The merger consideration a U.S.
Home stockholder will receive
is less than the book value of
a share of U.S. Home common
stock.......................... 9
Lennar is subject to the cyclical
nature of the homebuilding
market and other problems that
affect homebuilders............ 9
Lennar's business can be
substantially affected by the
cost and availability of home
mortgage financing............. 10
Lennar may have difficulty
integrating U.S. Home.......... 10
There is a very competitive market
for experienced homebuilding
executives..................... 10
Leonard Miller's voting control
could discourage takeover
attempts....................... 10
Forward-looking statements may
prove inaccurate............... 10
If the merger fails to qualify as
a reorganization, U.S. Home
stockholders will recognize
additional gains or losses on
their U.S. Home shares......... 11
The substantial indebtedness and
high leverage of U.S. Home
could adversely affect
Lennar......................... 11
The Special Meetings of
Stockholders...................... 12
The Lennar Special Meeting........ 12
The U.S. Home Special Meeting..... 13
Proxies........................... 14
Adjournments...................... 15
Other Matters..................... 15
Comparative Rights of
Stockholders...................... 16
Capitalization.................... 16
Number, Election, Vacancy and
Removal of Directors........... 16
Voting Rights..................... 17
Amendments to Bylaws.............. 18
Amendments to Certificate of
Incorporation.................. 18
Stockholder Action................ 18
Special Stockholder Meetings...... 18
Liquidation....................... 19
Dividends......................... 19
Conversion of Class B Common
Stock.......................... 19
Background of the Transaction....... 20
Recommendations of the Boards of
Directors and Reasons for the
Transaction....................... 23
Opinion of Lennar's Financial
Advisor........................... 28
Opinion of U.S. Home's Financial
Advisor........................... 34
The Terms of Lennar's Acquisition of
U.S. Home......................... 39
General........................... 39
Effective Time.................... 39
Exchange of Shares................ 39
U.S. Home Stockholder Election
Regarding Merger
Consideration.................. 40
Stock Options and Warrants........ 41
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
Representations and Warranties.... 41
Restrictions on Activities of U.S.
Home and Lennar Pending the
Merger......................... 42
Facilitating the Merger........... 43
Conditions to the Merger.......... 43
Provisions Relating to
Transactions with Persons Other
than Lennar.................... 44
Termination of the Merger
Agreement...................... 45
Amendments........................ 45
Compensation and Benefits......... 46
Indemnification of U.S. Home
Directors and Officers......... 46
Dissenters' Appraisal Rights........ 46
Voting Agreement.................... 48
Interests of Certain Persons in the
Merger............................ 49
Anticipated Accounting Treatment.... 51
New York Stock Exchange Listing..... 51
Unaudited Pro Forma Combined
Condensed Financial Statements.... 52
Business of Lennar.................. 56
Business of U.S. Home............... 58
Business of the Combined
Companies......................... 60
New Debt Financing.................. 61
Management of Lennar Following the
Merger............................ 61
Material U.S. Federal Income Tax
Consequences of the Merger........ 62
Legal Matters....................... 65
Experts............................. 65
Where You Can Find More
Information....................... 66
Incorporation of Certain Documents
By Reference...................... 67
</TABLE>
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES AND THE MERGER
Q: What will happen in the proposed transaction?
A: U.S. Home will, in effect, become a direct wholly-owned subsidiary of Lennar
by merging into Len Acquisition Corporation, a wholly-owned subsidiary of
Lennar. As discussed below, a U.S. Home stockholder will receive a
combination of cash and Lennar common stock.
Q: Why are Lennar and U.S. Home merging? How will I benefit?
A: The combined company will benefit from, among other things, an increased
geographical market and a broader product offering. Geographically, the
combined company will operate in 13 states, six of which are among the states
with the largest or fastest growing populations in the nation. Lennar's
product offering will be materially enhanced by U.S. Home's expertise and
strategic position in the retirement/active adult segment of the homebuilding
market. Lennar will continue to build homes for the first-time, first-time
move-up, second-time move-up and active adult homebuyers under both the
Lennar and U.S. Home brand names. The enhanced size and scope of Lennar's
business will allow Lennar to further solidify its position in its principal
markets. The acquisition also will help Lennar pursue new homebuilding and
mortgage-related Internet and broadband opportunities.
Q: When do you expect to complete the merger?
A: We are working to complete the merger as quickly as possible. Currently, we
expect to complete the merger by the end of May 2000.
Q: Assuming I receive shares of Lennar stock in the merger, will my rights as a
Lennar stockholder be different from what they were as a U.S. Home
stockholder?
A: Yes. For a summary of material differences between the rights of U.S. Home
stockholders and the rights of Lennar stockholders, see "Comparative Rights
of Stockholders" beginning on page 16.
Q: What do I do to vote?
A: After reading this Joint Proxy Statement/Prospectus, you should fill out and
sign your proxy card. Then mail your signed proxy card in the enclosed return
envelope as soon as possible so that your shares will be represented at the
meeting.
Q: What happens if I don't return a proxy card or vote at the meeting?
A: If you are a U.S. Home stockholder, your failure to return your proxy card or
vote at the meeting will have the same effect as voting against the merger.
If you are a Lennar stockholder, your failure to return a proxy card may
affect whether there will be a quorum.
Q: May I vote in person?
A: Yes. You may attend the meeting and vote your shares in person, whether or
not you have sent in a proxy card.
Q: Can I change my vote after I have mailed my signed proxy card?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do that by:
-- attending the special meeting and voting in person, which will
automatically revoke your proxy;
-- completing and sending in a new proxy card; or
i
<PAGE> 9
-- sending a written notice stating you would like to revoke your proxy to:
<TABLE>
<S> <C>
LENNAR STOCKHOLDERS: U.S. HOME STOCKHOLDERS:
Lennar Corporation U.S. Home Corporation
700 Northwest 107th Avenue 10707 Clay Road
Miami, FL 33172 Houston, TX 77041
Attn: Corporate Secretary Attn: Corporate Secretary
</TABLE>
Q: If my shares are held in "street name," will my broker vote them for me?
A: Yes, but only if you instruct your broker how to vote. Your broker cannot
vote your shares without your instruction (although your broker can cause
your shares to be present for quorum purposes even if you do not give an
instruction). Remember, U.S. Home shares that are not voted will have the
same effect as U.S. Home shares that are voted against the merger.
Q: What does it mean if I get more than one proxy card?
A: You may own both Lennar and U.S. Home shares, or your shares may be
registered in different names or at different addresses or may be in more
than one account. Sign and return all proxy cards to be sure that all your
shares of Lennar stock and U.S. Home stock are voted.
Q: What will I receive in the merger?
A: A U.S. Home stockholder will receive for each share of U.S. Home common stock
$18.00 in cash and a number of shares of Lennar common stock with a market
value of $18.00 (based on the average last sale price on the New York Stock
Exchange of Lennar's common stock during the 20 trading days ending on and
including the last trading day prior to the date of the special meetings), if
that 20 day average last sale price is between $18.75 and $14.125. The market
value of the Lennar shares a U.S. Home stockholder will receive will be
greater than $18.00 if the 20 day average last sale price of Lennar's stock
is above $18.75, but under no circumstances will U.S. Home stockholders
receive Lennar shares with a market value above $23.00 (which would make the
total merger consideration $41 per U.S. Home share). The market value of the
Lennar shares a U.S. Home stockholder will receive will be lower than $18.00
if the 20 day average last sale price of Lennar's stock is below $14.125.
However, either U.S. Home or Lennar will have the right to terminate the
merger agreement if the 20 day average last sale price of the Lennar shares
is $11.55 or less, unless Lennar agrees to increase the shares included in
the merger consideration to the number of shares having a market value of
$14.72 (which would make the total merger consideration $32.72 per U.S. Home
share).
The following is the market value of the Lennar stock a U.S. Home stockholder
will receive for each share of U.S. Home stock, at various average last sale
prices of Lennar stock:
<TABLE>
<CAPTION>
IF THE AVERAGE LAST SALE PRICE OF A LENNAR SHARE IS LENNAR SHARES ISSUED WITH REGARD TO EACH U.S. HOME SHARE
- --------------------------------------------------- --------------------------------------------------------
<S> <C>
More than $23.96 Shares with a market value of $23.00
Between $23.96 and $18.75 .9600 shares
Between $18.75 and $14.125 Shares with a market value of $18.00
Between $14.125 and $11.55 1.27434 shares
$11.55 or less Each of U.S. Home or Lennar has the right to terminate
the merger agreement unless Lennar agrees to increase
the number of shares to the number which has a market
value of $14.72
</TABLE>
Q:Will a U.S. Home stockholder have to take part cash and part Lennar shares?
A: Not necessarily. A U.S. Home stockholder can elect to receive all cash or all
Lennar stock for each share of U.S. Home stock. Theoretically, a U.S. Home
stockholder who elects to receive all cash would receive $36 in cash, but no
Lennar stock and a U.S. Home stockholder who elects to receive all
ii
<PAGE> 10
Lennar stock, would receive twice the number of shares indicated in the table
above, but no cash, subject to proration. However, if elections would cause
the number of Lennar shares to be greater than they would have been if no
elections had been made, U.S. Home stockholders who elect to receive all
stock will receive as much Lennar stock as possible without making the total
number of shares issued in the merger greater than they would have been if no
elections had been made, and will receive cash for the remainder of the
merger consideration. If elections would cause more than 55% of the total
merger consideration to be cash, U.S. Home stockholders who elect to receive
all cash will receive as much cash as is possible without making the total
cash distributed in the merger greater than 55% of the total merger
consideration, and will receive shares of Lennar stock for the remainder of
the merger consideration. If a U.S. Home stockholder does not make an
election, or does not make an election properly, that stockholder will
receive $18 of the merger consideration in cash and the remainder in Lennar
stock.
Q: How long do I have to elect my preferred form of merger consideration?
A: Until the day before the U.S. Home stockholders meeting.
Q: How do I make an election?
A: At least 25 days before the U.S. Home stockholders meeting, we will mail to
each U.S. Home stockholder a form with which to make the election and
instructions about how to use the form. If you do not make an election, you
will receive part cash and part stock for each of your U.S. Home shares.
Q: Should I send in my stock certificates now?
A: No. If you are a U.S. Home stockholder, you should continue to hold your
stock certificates until we send you a form that you can use to indicate your
preference as to the type of payment you would like to receive in the merger.
We will mail this notice at least 25 days before the U.S. Home special
meeting. At that time, you will be given instructions for sending in your
certificates.
Lennar stockholders will not need to do anything. Lennar stock certificates
will remain the same.
Q: Will I have dissenters' rights?
A: U.S. Home stockholders who do not wish to accept the cash and shares of
Lennar common stock to be distributed in the merger will have the right under
the Delaware corporate statute to be paid the appraised value of their
shares. That appraised value will not include any value arising from the
prospects of Lennar's acquisition of U.S. Home under the merger agreement.
The appraised value may be more or less than the amount of cash and the
market value of the Lennar shares a U.S. Home stockholder would receive as a
result of the merger if the stockholder did not exercise dissenters' rights.
Lennar stockholders will not be entitled to dissenters' rights in connection
with the merger.
Exercise of dissenters' rights is subject to a number of technical and
procedural requirements. Generally, in order to exercise dissenters' rights,
a U.S. Home stockholder must:
-- be a stockholder of record and hold the shares of U.S. Home common stock
through the time of the merger;
-- before the vote on the merger, state in writing that the stockholder
objects to the merger and intends to demand payment for the
stockholder's shares; and
-- not vote in favor of the merger.
Merely voting against the merger will not protect a U.S. Home stockholder's
right of appraisal. Annex IV contains the text of the Delaware dissenters'
rights statute.
Please note that U.S. Home has the right not to proceed with the merger if
holders of 4% or more of the U.S. Home common stock exercise dissenters'
rights and that increases the cash payable to all U.S. Home stockholders
above 55% of the total merger consideration.
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<PAGE> 11
Q: Will the cash and stock I receive in the merger be taxed?
A: Cash received in the merger will be taxable when you receive it, but only to
the extent that the total value of the Lennar common stock (determined at the
effective time of the merger) and cash you receive in the merger exceeds your
tax basis in your U.S. Home stock. Because the merger is intended to qualify
as a reorganization under federal tax laws, you will not have taxable income
at the time of the merger in excess of the amount of cash that you receive.
Any income that is attributable to the value of the Lennar common stock you
receive in the merger will not be taxable until you sell the stock.
Q: Who can help answer any questions I may have?
A: If you have questions about the merger or the stockholders meetings you
should contact:
<TABLE>
<S> <C>
LENNAR STOCKHOLDERS: U.S. HOME STOCKHOLDERS:
Lennar Corporation U.S. Home Corporation
700 Northwest 107th Avenue 10707 Clay Road
Miami, FL 33172 Houston, TX 77041
Attn: Investor Relations Attn: Vice President -- Investor Relations
(305) 559-4000 (713) 877-2311
</TABLE>
Q: Where can I find more information about U.S. Home and Lennar?
A: The discussion under "Where You Can Find More Information" on page 66 of this
Joint Proxy Statement/Prospectus explains how you can obtain further
information.
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<PAGE> 12
SUMMARY
The following is a brief summary of certain information contained in this
Joint Proxy Statement/ Prospectus. To understand Lennar's acquisition of U.S.
Home more fully, and for a more complete description of the terms of the
transaction, you should read this entire document and the documents to which we
refer you. See the section entitled "Where You Can Find More Information" on
page 66 for sources of additional information and how to get copies of documents
to which we refer you.
GENERAL
This Joint Proxy Statement/Prospectus relates to the proposed acquisition
of U.S. Home by Lennar through a merger of U.S. Home with a wholly-owned
subsidiary of Lennar.
THE COMPANIES
Lennar
We are one of the nation's largest homebuilders. For over 40 years we have
been selling and building single family homes to first-time, first-time move-up,
second-time move-up and active adult homebuyers. We currently operate in
Florida, California, Texas, Arizona and Nevada. In our homebuilding operations,
we sell and construct homes, we purchase, develop and sell residential land and
we provide mortgage financing, title insurance, closing services and other
services to homebuyers and homeowners. In addition, we package and resell
mortgage loans, perform mortgage loan servicing activities and provide cable
television and alarm monitoring services to residents of our communities and
others. References to "Lennar," or to "we" or "us" in sections of this Joint
Proxy Statement/Prospectus about Lennar refer to Lennar Corporation and its
subsidiaries, unless the context indicates we are referring only to Lennar
Corporation. Our principal executive offices are located at 700 Northwest 107th
Avenue, Miami, Florida 33172, and our telephone number is (305) 559-4000.
U.S. Home
We are one of the largest single family homebuilders in the United States,
based on homes delivered. We target our homes primarily to the affordable,
move-up and retirement and active adult buyers. In addition to building and
selling single family homes, we provide mortgage banking services to our
customers. We originate, process and sell mortgages. However, we do not retain
or service the mortgages that we originate. Instead, we sell the mortgages and
related servicing rights to investors. References to "U.S. Home," or to "we" or
"us" in sections of this Joint Proxy Statement/Prospectus about U.S. Home, refer
to U.S. Home Corporation and its subsidiaries, unless the context indicates we
are referring only to U.S. Home Corporation. Our principal executive offices are
located at 10707 Clay Road, Houston, Texas 77041, and our telephone number is
(713) 877-2311.
THE TRANSACTION
U.S. Home will be merged into a wholly-owned subsidiary of Lennar. The
resulting company will be renamed "U.S. Home Corporation" and will be a
wholly-owned subsidiary of Lennar.
THE MERGER CONSIDERATION
A U.S. Home stockholder will receive for each U.S. Home share (a) $18 in
cash plus (b) a number of shares of Lennar common stock with a market value
(based on the average of the last sale price of
<PAGE> 13
Lennar's common stock on the New York Stock Exchange on each of the 20 trading
days before the day of the special meetings) as follows:
<TABLE>
<CAPTION>
IF THE AVERAGE LAST SALE PRICE OF A LENNAR SHARE IS LENNAR SHARES ISSUED WITH REGARD TO EACH U.S. HOME SHARE
--------------------------------------------------- --------------------------------------------------------
<S> <C>
More than $23.96 Shares with a market value of $23.00
Between $23.96 and $18.75 .9600 shares
Between $18.75 and $14.125 Shares with a market value of $18.00
Between $14.125 and $11.55 1.27434 shares
$11.55 or less Each of U.S. Home or Lennar has the right to terminate
the merger agreement unless Lennar agrees to increase
the number of shares to the number which has a market
value of $14.72
</TABLE>
Because of the formula for determining the number of shares of Lennar stock
that will be included in the merger consideration, the total merger
consideration (i.e., cash and market value of Lennar stock) will be between $41
and $32.72 per U.S. Home share.
As an alternative to receiving the cash and Lennar stock described above, a
U.S. Home stockholder may elect to receive all cash, but no Lennar stock, or all
Lennar stock, but no cash, for all or a portion of their U.S. Home shares. The
procedures for doing this are described beginning on page 40. If a U.S. Home
stockholder elects to receive all cash, that stockholder would receive $36 in
cash, but no Lennar stock. If a U.S. Home stockholder elects to receive all
Lennar stock, that stockholder would receive twice the Lennar stock indicated in
the table above, but no cash, subject to proration. However, elections will be
honored only to the extent they do not cause the number of Lennar shares to be
issued to all the U.S. Home stockholders to exceed what it would have been if no
elections had been made, and they do not cause the cash distributed as a result
of the merger to exceed 55% of the total merger consideration payable to all the
U.S. Home stockholders. The cash or shares of Lennar stock paid or issued to
U.S. Home stockholders who elect to receive all cash or all stock will be
prorated (and replaced with stock or cash) to the extent necessary to meet these
limitations, but not below what they would have received if they had made no
elections. If a U.S. Home stockholder does not make an election, or does not
make an election properly, that stockholder will receive $18 in cash and the
remainder of the merger consideration in Lennar stock.
There is a description of the procedures for computing the number of shares
of Lennar common stock to be delivered, and the elections available to U.S. Home
stockholders, under the caption "The Terms of Lennar's Acquisition of U.S.
Home -- Exchange of Shares" beginning on page 39. In addition, a copy of the
merger agreement is attached as Annex I to this Joint Proxy
Statement/Prospectus.
REASONS FOR THE TRANSACTION
Both Lennar and U.S. Home are engaged in homebuilding and related
activities. The merger will create a homebuilding company that, based on
information in homebuilding industry publications, during 1999 would have been
the largest in the United States based on homebuilding revenues, domestic homes
delivered and homebuilding EBITDA (which stands for earnings before interest,
taxes, depreciation and amortization). The acquisition of U.S. Home will:
- strengthen Lennar's market position in the states in which we already
have homebuilding operations, including Florida, California, Texas,
Arizona and Nevada;
- expand our homebuilding activities into new markets, including Colorado,
Maryland, Michigan, Minnesota, New Jersey, North Carolina, Ohio and
Virginia;
- enhance our overall land position;
- expand our product offerings and expertise;
2
<PAGE> 14
- increase our presence in the retirement/active adult market segments of
the homebuilding industry;
- permit us to capture greater financial services revenues and other
ancillary revenues;
- increase our size in terms of revenue, earnings and earnings before
interest, taxes, depreciation and amortization;
- provide us with operational savings from enhanced purchasing systems; and
- help us with homebuilding and mortgage related Internet and broadband
activities.
The reasons for the transaction are discussed in greater detail in the
section of this Joint Proxy Statement/Prospectus captioned "Recommendations of
the Boards of Directors and Reasons for the Transaction" beginning on page 23.
Some risks of the transaction are discussed in the section of this Joint Proxy
Statement/Prospectus captioned "Risk Factors" beginning on page 9.
REQUIRED VOTE
Lennar
The affirmative vote of holders of a majority in voting power of the shares
of Lennar common stock and Lennar class B common stock that are present at the
meeting, voting as a single class, is required for the approval of the
acquisition of U.S. Home. Leonard Miller, who, through a family partnership,
owns approximately 99.7% of the Lennar class B common stock, and therefore is
entitled to approximately 72% of all the votes that may be cast at the Lennar
stockholders meeting, has agreed to vote those shares in favor of the
transaction. Therefore, if there is a quorum present at that meeting, the
proposal to approve the acquisition will be approved even if no other Lennar
stockholders vote in favor of it.
Stuart A. Miller, President and Chief Executive Officer of Lennar, who owns
73,894 shares of Lennar common stock, has also agreed to vote in favor of the
transaction. None of the other Lennar directors is contractually obligated to
vote for the transaction, but each of them has indicated he intends to vote in
favor of the transaction. In addition, Warburg, Pincus Investors, L.P., has
consented to the transaction, as required to keep the transaction from violating
an agreement between Lennar and Warburg, Pincus Investors, L.P. Two of Lennar's
directors are partners in the general partner of Warburg, Pincus Investors, L.P.
Warburg, Pincus Investors, L.P. is not affiliated with Warburg Dillon Read LLC,
U.S. Home's financial advisor.
U.S. Home
The affirmative vote of holders of a majority of the outstanding shares of
U.S. Home common stock is required for adoption of the merger agreement and
approval of the merger. There is no agreement or arrangement regarding voting by
U.S. Home stockholders.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The U.S. Home board has determined that the terms of the merger are fair to
and in the best interests of U.S. Home and its stockholders and unanimously
recommends that the U.S. Home stockholders vote to approve the merger.
The Lennar board has determined that the acquisition of U.S. Home on the
terms provided in the merger agreement will be beneficial to Lennar and that the
merger consideration is fair to Lennar from a financial point of view. The
Lennar board, with one director absent, unanimously recommends that the Lennar
stockholders vote to approve the transaction.
3
<PAGE> 15
FEDERAL INCOME TAX CONSEQUENCES
The merger has been structured to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986. More detailed
information about anticipated tax consequences of the merger is contained in the
section of this Joint Proxy Statement/Prospectus captioned "Material U.S.
Federal Income Tax Consequences of the Merger," beginning on page 62.
DISSENTERS' APPRAISAL RIGHTS
Holders of U.S. Home common stock will be entitled to dissenters' appraisal
rights under Section 262 of the Delaware General Corporation Law in connection
with the merger. The requirements and procedures for exercising dissenters'
appraisal rights are described in detail in the section of this Joint Proxy
Statement/Prospectus captioned "Dissenters' Appraisal Rights" beginning on page
46. A copy of the dissenters' appraisal rights provisions of Delaware corporate
law is attached as Annex IV to this Joint Proxy Statement/Prospectus.
Holders of Lennar common stock and Lennar class B common stock are not
entitled to dissenters' appraisal rights in connection with the merger.
RISK FACTORS
Lennar's acquisition of U.S. Home is subject to certain risks to which you
should give particular consideration in evaluating whether to vote for the
transaction. They are discussed in the section of this Joint Proxy
Statement/Prospectus captioned "Risk Factors" beginning on page 9.
4
<PAGE> 16
SELECTED HISTORICAL FINANCIAL DATA
The following tables set forth selected historical financial data of Lennar
and U.S. Home for each of their respective fiscal years from 1995 through 1999.
The selected historical financial data has been derived from the consolidated
financial statements of Lennar and U.S. Home. This data should be read in
conjunction with those financial statements and the notes to them and with the
information set forth under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Lennar and U.S. Home 1999
Annual Reports on Form 10-K, which are incorporated by reference in this Joint
Proxy Statement/Prospectus.
LENNAR CORPORATION AND SUBSIDIARIES(1)
<TABLE>
<CAPTION>
AT AND FOR THE YEARS ENDED NOVEMBER 30,
----------------------------------------------------------
1999 1998 1997 1996 1995
---------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues:
Homebuilding............................... $2,849,207 2,204,428 1,208,570 952,648 665,510
Financial services......................... $ 269,307 212,437 94,512 89,013 65,476
Total revenues........................ $3,118,514 2,416,865 1,303,082 1,041,661 730,986
Operating earnings -- business segments:
Homebuilding............................... $ 340,803 283,369 120,240 91,066 58,530
Financial services......................... $ 31,096 33,335 35,545 28,650 19,015
Corporate general and administrative
expenses................................... $ 37,563 28,962 15,850 12,396 10,523
Earnings from continuing operations before
income taxes............................... $ 285,477 240,114 85,727 84,429 53,310
Earnings from continuing operations.......... $ 172,714 144,068 50,605 51,502 32,519
Earnings from discontinued operations........ $ -- -- 33,826 36,484 37,908
Net earnings................................. $ 172,714 144,068 84,431 87,986 70,427
Per share amounts (diluted):
Earnings from continuing operations........ $ 2.74 2.49 1.34 1.42 0.90
Earnings from discontinued operations...... $ -- -- 0.89 1.01 1.05
Net earnings per share..................... $ 2.74 2.49 2.23 2.43 1.95
Cash dividends per share -- common stock..... $ 0.05 0.05 0.088 0.10 0.10
Cash dividends per share -- class B common
stock...................................... $ 0.045 0.045 0.079 0.09 0.09
FINANCIAL POSITION:
Total assets................................. $2,057,647 1,917,834 1,343,284 1,589,593 1,341,065
Total debt................................... $ 802,295 798,838 661,695 689,159 557,055
Stockholders' equity......................... $ 881,499 715,665 438,999 695,456 607,794
Shares outstanding (000's)................... 57,917 58,151 53,160 35,928 35,864
Stockholders' equity per share............... $ 15.22 12.31 8.26 19.36 16.95
DELIVERY AND BACKLOG INFORMATION:
Number of homes delivered.................... 12,589 10,777 6,702 5,968 4,680
Backlog of home sales contracts(2)........... 2,891 4,100 3,318 1,929 1,802
Dollar value of backlog(2)................... $ 652,000 840,000 665,000 312,000 255,000
</TABLE>
- ---------------
(1) As a result of Lennar's 1997 spin-off of its commercial real estate
investment and management business, including its former Investment Division
business segment, the selected financial data presented for 1996 and 1995
has been restated to reflect Lennar's former Investment Division as a
discontinued operation.
(2) Backlog is the number of homes subject to pending sales contracts, some of
which are subject to contingencies. Although contracts relating to these
homes were executed, there can be no assurance that the sales will be
completed.
5
<PAGE> 17
U.S. HOME CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating Revenues....................... $1,824,456 $1,497,649 $1,319,752 $1,211,450 $1,107,945
Income Before Income Taxes and
Extraordinary Loss..................... 115,832 89,293 74,900 55,901 59,072
Income Taxes............................. 43,437 25,564 27,713 11,713 22,152
---------- ---------- ---------- ---------- ----------
Income Before Extraordinary Loss......... 72,395 63,729 47,187 44,188 36,920
Extraordinary Loss, Net of Income Tax
Benefit................................ -- 3,026 8,650 -- --
---------- ---------- ---------- ---------- ----------
Net Income........................... $ 72,395 $ 60,703 $ 38,537 $ 44,188 $ 36,920
========== ========== ========== ========== ==========
Basic Earnings Per Share:
Income before extraordinary loss....... $ 5.41 $ 4.99(1) $ 4.08 $ 3.88(2) $ 3.29
Extraordinary loss..................... $ -- $ (.24) $ (.75) $ -- $ --
Net Income............................. $ 5.41 $ 4.75(1) $ 3.33 $ 3.88(2) $ 3.29
Diluted Earnings Per Share:
Income before extraordinary loss....... $ 5.30 $ 4.68(1) $ 3.50 $ 3.28(2) $ 2.78
Extraordinary loss..................... $ -- $ (.22) $ (.62) $ -- $ --
Net Income............................. $ 5.30 $ 4.46(1) $ 2.88 $ 3.28(2) $ 2.78
Dividends Per Share...................... $ -- $ -- $ -- $ -- $ --
BALANCE SHEET DATA (AT YEAR END):
Total Assets............................. $1,602,640 $1,352,976 $1,067,114 $ 947,411 $ 842,084
========== ========== ========== ========== ==========
Revolving Credit Facilities --
Corporate and Housing.................. $ 97,000 $ 130,000 $ 29,000 $ -- $ 24,000
Financial Services..................... 83,485 33,112 40,343 42,414 35,371
---------- ---------- ---------- ---------- ----------
$ 180,485 $ 163,112 $ 69,343 $ 42,414 $ 59,371
========== ========== ========== ========== ==========
Long-Term Debt -- Corporate and
Housing................................ $ 553,089 $ 424,980 $ 395,918 $ 362,887 $ 300,599
========== ========== ========== ========== ==========
Stockholders' equity..................... $ 578,649 $ 514,241 $ 419,778 $ 373,690 $ 328,992
Shares outstanding (000's)............... 13,289 13,502 11,763 11,571 11,562
Stockholders' equity per share........... $ 43.54 $ 38.09 $ 35.69 $ 32.30 $ 28.45
DELIVERY AND BACKLOG INFORMATION:
Number of homes delivered(4)............. 9,069 8,258 7,496 7,099 6,779
Backlog(3)(4)............................ 4,343 4,305 3,435 3,038 2,731
Dollar value of backlog(3)(4)............ $ 946,557 $ 834,072 $ 608,974 $ 530,857 $ 463,337
</TABLE>
- ---------------
(1) In 1998, basic earnings per share included $.59 per share and diluted
earnings per share included $.54 per share due to the effect of a $7,474 tax
benefit.
(2) In 1996, basic earnings per share included $.04 per share and diluted
earnings per share included $.03 per share due to the net effect of an
$8,233, net of tax, provision for impairment of land inventories and an
$8,691 tax benefit.
(3) Homes under contract for sale but not delivered at end of year.
(4) Excludes joint venture activity.
6
<PAGE> 18
UNAUDITED PRO FORMA SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents unaudited pro forma selected consolidated
financial data for Lennar and its subsidiaries after giving effect to the
merger. This pro forma data is not necessarily indicative of the results that
would have been obtained if the merger had been consummated at the beginning of
the periods presented (in the case of income statement items) or at the date of
the balance sheet (in the case of balance sheet items), or that may be obtained
in the future. The pro forma data is derived from the Unaudited Pro Forma
Combined Condensed Financial Statements beginning on page 52 of this Joint Proxy
Statement/Prospectus and should be read in conjunction with those financial
statements and the notes to them. The unaudited pro forma data presented below
reflect the operations of Lennar and U.S. Home at and for the year ended
November 30, 1999, in the case of Lennar, and December 31, 1999, in the case of
U.S. Home.
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30, /
DECEMBER 31, 1999
-----------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C>
PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS DATA:
Revenues.................................................... $4,945,733
Net earnings................................................ $ 239,672
Net earnings per common share (diluted)..................... $ 3.08
Common shares used in calculation of per common share
amount.................................................... 79,585
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, /
DECEMBER 31, 1999
-----------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C>
PRO FORMA COMBINED CONDENSED BALANCE SHEET DATA:
Assets...................................................... $3,622,246
Mortgage notes and other debts payable...................... $1,465,704
Stockholders' equity........................................ $1,120,703
Book value per common share................................. $ 15.47
Common shares used in calculation of per common share
amount.................................................... 72,467
</TABLE>
7
<PAGE> 19
MARKET PRICE AND DIVIDEND DATA
The shares of Lennar common stock and the shares of U.S. Home common stock
are listed on the New York Stock Exchange. The following table sets forth for
the periods indicated the high and low sale prices of Lennar common stock and
U.S. Home common stock, as reported on the New York Stock Exchange composite
tape, and the cash dividends paid per share by Lennar. U.S. Home has not paid
dividends during the periods indicated. For purposes of this table, we have used
quarter references based upon Lennar's November 30 fiscal year end and U.S.
Home's December 31 year end.
<TABLE>
<CAPTION>
U.S. HOME
LENNAR COMMON STOCK COMMON STOCK
------------------------------- --------------
HIGH LOW DIVIDENDS HIGH LOW
------ ----- ------------ ----- -----
<S> <C> <C> <C> <C> <C>
1998
First Quarter.............................. $28.75 19.00 0.0125 46.50 36.44
Second Quarter............................. $36.19 24.19 0.0125 47.88 36.81
Third Quarter.............................. $34.38 18.13 0.0125 44.19 26.75
Fourth Quarter............................. $24.38 14.88 0.0125 36.19 25.56
1999
First Quarter.............................. $27.88 21.63 0.0125 38.44 30.63
Second Quarter............................. $27.81 20.50 0.0125 35.63 29.75
Third Quarter.............................. $24.94 17.50 0.0125 36.19 26.19
Fourth Quarter............................. $19.44 13.06 0.0125 29.81 24.18
2000
First Quarter (through March 28, 2000 for
U.S. Home).............................. $18.63 15.25 0.0125 37.50 23.94
Second Quarter through March 28, 2000...... $21.31 16.25 -- -- --
</TABLE>
On February 16, 2000, the last trading day prior to public announcement of
the merger, the last reported sale price of U.S. Home common stock on the NYSE
composite tape was $24.875 per share and the last reported sale price of Lennar
common stock on the NYSE composite tape was $16.00 per share.
On March 28, 2000, the last reported sale price of U.S. Home common stock
on the NYSE composite tape was $37.25 per share and the last reported sale price
of Lennar common stock on the NYSE composite tape was $20.63 per share.
Lennar's board has declared a dividend of $0.0125 per share, payable on May
15, 2000 to holders of record at the close of business on May 5, 2000. That
dividend will be payable with regard to shares issued as a result of the merger,
but not until certificates representing U.S. Home stock and election forms or
letters of transmittal are delivered to the distributing agent.
8
<PAGE> 20
RISK FACTORS
You should carefully consider the following risk factors, in evaluating
whether to vote in favor of the merger. You should also read the documents
incorporated by reference in this Joint Proxy Statement/Prospectus.
THE VALUE OF THE MERGER CONSIDERATION A U.S. HOME STOCKHOLDER WILL RECEIVE WILL
DEPEND ON THE MARKET VALUE OF LENNAR'S COMMON STOCK.
Even though half of what the U.S. Home stockholders receive as a result of
the merger will be cash, the other half will be Lennar common stock. Although
the merger consideration was structured so that, within a range of prices of
Lennar's stock, a U.S. Home stockholder will receive $18.00 worth of Lennar
stock, it is possible that the value of the Lennar stock a U.S. Home stockholder
receives will be as low as $14.72 per share of U.S. Home common stock (reducing
the total merger consideration to $32.72 per share). Further, regardless of what
the price of Lennar's stock may be at the time of the merger, the price of
Lennar stock could fall after the merger, particularly if a substantial number
of U.S. Home stockholders decide to sell their Lennar stock shortly after the
merger.
U.S. HOME IS BEING SOLD AT A TIME WHEN THE PRICE OF ITS STOCK IS AT A RELATIVELY
LOW LEVEL.
During much of 1999 and the early part of 2000, stocks of most publicly
traded homebuilding companies have been trading at prices which reflect a
multiple of earnings substantially below that of companies in many other
industries, and substantially below the multiples at which they traded in prior
years. The last reported sale price of U.S. Home common stock on February 16,
2000, the last trading day before the merger was announced, was $24.875 per
share, compared with a price as high as $38.438 per share during 1999 and as
high as $47.88 per share during 1998. The price of Lennar's stock is also low
compared with what it has been in recent years. The price of Lennar's common
stock on February 16, 2000 was $16.00 per share, compared with a price as high
as $27.88 per share during 1999 and as high as $36.19 per share during 1998.
THE MERGER CONSIDERATION A U.S. HOME STOCKHOLDER WILL RECEIVE IS LESS THAN THE
BOOK VALUE OF A SHARE OF U.S. HOME COMMON STOCK.
U.S. Home's book value per share at December 31, 1999 was $43.54. That may
be substantially higher than the merger consideration a U.S. Home stockholder
will receive for each of their shares (which under most circumstances will not
exceed $41 per U.S. Home share, and will not reach that level unless the price
of Lennar common stock reaches or exceeds $23.96 per share).
LENNAR IS SUBJECT TO THE CYCLICAL NATURE OF THE HOMEBUILDING MARKET AND OTHER
PROBLEMS THAT AFFECT HOMEBUILDERS.
The residential homebuilding industry is cyclical and is highly sensitive
to changes in general economic conditions, such as levels of employment,
consumer confidence and income, availability of financing for acquisitions, and
of construction and permanent mortgages, interest rate levels and demand for
housing. Sales of new homes are also affected by the condition of the resale
market for used homes, including foreclosed homes.
The residential homebuilding industry has, from time to time, experienced
fluctuating lumber prices and supply, as well as shortages of labor and other
materials, including insulation, drywall, concrete, carpenters, electricians and
plumbers. Delays in construction of homes due to these factors or to inclement
weather conditions could have an adverse effect upon Lennar's operations.
Inflation can increase the cost of homebuilding materials, labor and other
construction related costs. Conversely, deflation can reduce the value of
homebuilders' inventories and can make it more difficult to include the full
cost of previously purchased land in home sale prices.
9
<PAGE> 21
LENNAR'S BUSINESS CAN BE SUBSTANTIALLY AFFECTED BY THE COST AND AVAILABILITY OF
HOME MORTGAGE FINANCING.
Most home buyers obtain mortgage loans to finance a substantial portion of
the purchase price of their homes. In general, housing demand is adversely
affected by increases in interest rates, housing costs and unemployment and by
decreases in the availability of mortgage financing. In addition, there have
been discussions of possible changes in the federal income tax laws which would
remove or limit the deduction for home mortgage interest. If effective mortgage
interest rates increase and the ability or willingness of prospective buyers to
finance home purchases is adversely affected, Lennar's operating results may
also be negatively affected. Lennar's homebuilding activities also are dependent
upon the availability and cost of mortgage financing for buyers of homes owned
by potential customers permitting those customers to sell their existing homes
and purchase homes from Lennar. Any limitations or restrictions on the
availability of such financing could adversely affect Lennar's sales.
LENNAR MAY HAVE DIFFICULTY INTEGRATING U.S. HOME.
U.S. Home is a large company. It is engaged in some aspects of the
homebuilding business (such as building homes targeted at the affordable,
retirement and active adult markets) in which Lennar has only limited
experience, and in some locations in which we have not previously had
homebuilding operations. We view this as an opportunity and a benefit of the
acquisition of U.S. Home. However, if we are unable to integrate U.S. Home's
activities with our own, we could lose much of the anticipated benefit of the
acquisition.
THERE IS A VERY COMPETITIVE MARKET FOR EXPERIENCED HOMEBUILDING EXECUTIVES.
There are relatively few people with the training and experience to be
effective senior managers of a large homebuilding company. Our success is
dependent to a significant degree on the efforts of our senior management,
including our chief executive officer. The acquisition of U.S. Home will bring
us additional experienced homebuilding company executives. If, however, a
significant number of members of U.S. Home's senior management, or of our senior
management, were to leave, we might have difficulty replacing them with capable
and experienced executives.
LEONARD MILLER'S VOTING CONTROL COULD DISCOURAGE TAKEOVER ATTEMPTS.
We have two classes of stock: common stock, which is entitled to one vote
per share, and class B common stock, which is entitled to ten votes per share.
Leonard Miller owns, through a family partnership, class B common stock which is
entitled to approximately 72% of the combined votes of the holders of the common
stock and the class B common stock, and even after the merger, Mr. Miller will
be entitled to approximately 65% of the combined votes of those two classes of
stock. That gives Mr. Miller the power to elect all our directors and to approve
most matters which are presented to our stockholders, even if no other
stockholders vote in favor of them. Mr. Miller's ownership of class B common
stock would make it impossible for anyone to acquire shares which have voting
control of Lennar as long as the total outstanding class B common stock is at
least 10% of the combined common stock of both classes (if the class B common
stock is less than 10%, it will automatically be converted into common stock).
Therefore, while Mr. Miller owns class B common stock, his ownership of that
stock probably would discourage anyone from trying to acquire us without Mr.
Miller's approval.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.
Lennar and U.S. Home each has made forward-looking statements in this Joint
Proxy Statement/Prospectus. By their nature, forward-looking statements are
subject to risks and uncertainties. There are many factors which could affect
the combined Lennar and U.S. Home in the future, and could cause events to occur
which were not anticipated in the forward-looking statements in this Joint Proxy
Statement/Prospectus. They include many of the factors discussed in the
preceding paragraphs of this Risk Factors section.
10
<PAGE> 22
IF THE MERGER FAILS TO QUALIFY AS A REORGANIZATION, U.S. HOME STOCKHOLDERS WILL
RECOGNIZE ADDITIONAL GAINS OR LOSSES ON THEIR U.S. HOME SHARES.
Lennar and U.S. Home have structured the merger to qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. Although it has not sought a ruling from the IRS on the matter, U.S. Home
has obtained a legal opinion from its counsel, Kaye, Scholer, Fierman, Hays &
Handler, LLP, that the merger constitutes a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. That opinion is based upon certain
assumptions and representations of fact, including the assumption that U.S. Home
will not proceed with the merger if the cash payable to all U.S. Home
stockholders is greater than 60% of the total merger consideration (including
cash paid to U.S. Home stockholders who exercise dissenters' rights, cash paid
with respect to fractional Lennar shares received in the merger and cash equal
to the value of U.S. Home shares owned by Lennar immediately prior to the
merger), and representations of fact contained in certificates of officers of
Lennar, its wholly-owned subsidiary and U.S. Home. The opinion neither binds the
IRS nor prevents the IRS from taking a contrary position. If the merger takes
place, but fails to qualify as a reorganization, a stockholder of U.S. Home will
generally recognize gain or loss on each U.S. Home share surrendered. The amount
of the gain or loss will be the amount of the difference between the
stockholder's tax basis in that share and the consideration the U.S. Home
stockholder receives in exchange for that share as a result of the merger (with
Lennar shares valued at their fair market value at the effective time of the
merger).
THE SUBSTANTIAL INDEBTEDNESS AND HIGH LEVERAGE OF U.S. HOME COULD ADVERSELY
AFFECT LENNAR.
We intend to refinance U.S. Home's existing indebtedness in connection with
the merger. As of December 31, 1999, U.S. Home's total corporate and housing
debt was approximately $650 million and the ratio of its total corporate and
housing debt to its stockholders' equity was approximately 1.12 to 1. We have
commitments for $1.8 billion of debt financing to replace both our and U.S.
Home's corporate credit facilities and to help pay costs related to the merger
(including the cost of a required offer to repurchase U.S. Home's publicly
traded debt).
Our ability to pay the principal and interest on our debt as it comes due
will depend upon our current and future performance. Our performance is affected
by general economic conditions and by financial, competitive, political,
business and other factors. Many of these factors are beyond our control. We
believe that cash generated by our business will be sufficient to enable us to
make our debt payments as they become due. If, however, we do not generate
enough cash to make our debt payments as they become due, we may be required to
refinance some or all of our debt or to incur additional debt. We cannot assure
you that a refinancing will be possible or that we will be able to negotiate
favorable or acceptable terms if we refinance our debt or borrow additional
money. In addition, our access to capital is affected by prevailing conditions
in the financial and capital markets.
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THE SPECIAL MEETINGS OF STOCKHOLDERS
We are sending you this Joint Proxy Statement/Prospectus in order to
provide you with important information regarding Lennar's acquisition of U.S.
Home and in connection with the solicitation of proxies by the respective boards
of directors of Lennar and U.S. Home for use at the special meetings of
stockholders described below. This Joint Proxy Statement/Prospectus also
constitutes the Prospectus of Lennar with respect to the shares of Lennar common
stock to be issued to the stockholders of U.S. Home in the merger.
THE LENNAR SPECIAL MEETING
Purpose of the Meeting
The Lennar meeting is scheduled to be held on April 28, 2000, at 10:00
a.m., local time, at the Doral Park Golf and Country Club, 5001 N.W. 104th
Avenue, Miami, Florida. The only matter scheduled to come before the meeting is
a proposal to approve Lennar's acquisition of U.S. Home.
Board of Directors Recommendation
THE LENNAR BOARD OF DIRECTORS (WITH ONE DIRECTOR ABSENT) HAS UNANIMOUSLY
APPROVED THE ACQUISITION OF U.S. HOME AND RECOMMENDS THAT THE HOLDERS OF LENNAR
COMMON STOCK AND LENNAR CLASS B COMMON STOCK VOTE "FOR" THE PROPOSAL TO APPROVE
THAT TRANSACTION. See "Recommendations of the Boards of Directors and Reasons
for the Transaction -- Lennar" beginning on page 23 for a discussion of the
reasons the Lennar board of directors recommends the acquisition.
Vote Required at Lennar Special Meeting
The affirmative vote of holders of a majority in voting power of the shares
of Lennar common stock and Lennar class B common stock which are voted is
required for approval of the acquisition of U.S. Home.
The holders of Lennar common stock will be entitled to one vote for each
share they hold and the holders of Lennar class B common stock will be entitled
to ten votes for each share they hold.
Leonard Miller, Lennar's Chairman of the Board, owns through a family
partnership approximately 99.7% of Lennar's class B common stock, which entitles
him to approximately 72% of the votes that may be cast with regard to Lennar's
acquisition of U.S. Home. Mr. Miller has agreed to vote all of his class B
common stock in favor of that transaction. Stuart Miller, Lennar's President and
Chief Executive Officer, has also agreed to vote all shares of Lennar stock he
owns in favor of the transaction. Therefore, if there is a quorum present at the
Lennar stockholders meeting, the proposal regarding the transaction will be
approved by the Lennar stockholders even if no other Lennar stockholders vote in
favor of it. None of the other Lennar directors is contractually obligated to
vote for the transaction, but each of them has indicated he intends to vote in
favor of the transaction. For more information concerning the voting agreement,
see the section of this Joint Proxy Statement/Prospectus captioned "Voting
Agreement" beginning on page 47.
Record Date
The board of directors of Lennar has fixed the close of business on March
30, 2000 as the record date for the determination of stockholders entitled to
vote at the meeting or any adjournments or postponements of the meeting. At
March 30, 2000, 38,833,205 shares of Lennar common stock and 9,848,112 shares of
Lennar class B common stock were outstanding.
Quorum
The presence in person or by proxy of the holders of a majority in voting
power, but not less than one-third in number, of the outstanding shares of
Lennar common and class B common stock is required
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to constitute a quorum at the meeting. Shares represented by proxies which
indicate the stockholders want to abstain will be treated as being present for
the purpose of determining the presence of a quorum, but will not be voted with
regard to Lennar's acquisition of U.S. Home. If a broker indicates on a proxy
that it does not have authority to vote certain shares, those shares will not be
considered as present. To the extent a proxy does not indicate a broker does not
have authority to vote the shares to which the proxy relates, those shares will
be considered present even if the broker states they are not to be voted with
regard to the transaction between Lennar and U.S. Home.
If a quorum is not present, the stockholders present, by vote of a majority
of the votes cast by stockholders who are present, may adjourn the meeting, and
any business which might have been transacted at the special meeting as
originally called may be transacted at the adjourned meeting.
Shareholdings
Information with respect to the beneficial ownership of Lennar's common
stock and its class B common stock by each of Lennar's directors and certain of
its executive officers, by all directors and executive officers of Lennar as a
group and by each person known to Lennar to be the beneficial owner of more than
5% of the outstanding shares of Lennar common stock or Lennar class B common
stock, appears in the proxy statement for Lennar's 2000 Annual Meeting of
Stockholders, which is incorporated into this Joint Proxy Statement/Prospectus
by reference.
THE U.S. HOME SPECIAL MEETING
Purpose of the Meeting
The U.S. Home special meeting of stockholders is scheduled to be held on
April 28, 2000, at 10:00 a.m., local time, at 10707 Clay Road, Houston, Texas.
The only business scheduled to come before the meeting is a proposal to adopt
the merger agreement and approve the merger.
Board of Directors Recommendation
THE U.S. HOME BOARD OF DIRECTORS HAS APPROVED AND DECLARED ADVISABLE THE
MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
U.S. HOME COMMON STOCK VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT AND APPROVAL
OF THE MERGER. See "Recommendations of the Boards of Directors and Reasons for
the Transaction -- U.S. Home" beginning on page 24, for a discussion of the
reasons the U.S. Home board of directors recommends the merger and adoption of
the merger agreement.
Vote Required at U.S. Home Special Meeting
The affirmative vote of holders of a majority of the outstanding shares of
U.S. Home common stock is required for the adoption of the merger agreement and
approval of the merger. Although abstentions and broker non-votes will be
counted for purposes of determining the presence of a quorum, abstentions and
broker non-votes will have the same effect as votes against the proposal to
adopt the merger agreement and approve the merger.
The holders of U.S. Home common stock will be entitled to one vote for each
share of U.S. Home common stock they hold.
Record Date
The U.S. Home board of directors has fixed the close of business on March
30, 2000 as the record date for determining the stockholders entitled to vote at
the U.S. Home special meeting. At March 30, 2000, 13,204,504 shares of U.S. Home
common stock were issued and outstanding.
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Quorum
The presence in person or by proxy of the holders of shares of stock of
U.S. Home having a majority of the votes which could be cast by the holders of
all the issued and outstanding shares of stock of U.S. Home is required for
there to be a quorum at the U.S. Home special meeting. Abstentions and broker
non-votes will be counted as shares present for purposes of determining whether
a quorum is present.
If a quorum is not present, the stockholders who are present may adjourn
the meeting. Any business may be transacted at an adjourned meeting, which might
have been transacted at the special meeting as originally called.
Shareholdings
For information with respect to the beneficial ownership of U.S. Home
common stock by each of U.S. Home's directors and certain of its executive
officers, by all directors and executive officers of U.S. Home as a group and by
each person known by U.S. Home to be the beneficial owner of more than 5% of the
outstanding shares of U.S. Home common stock, see U.S. Home's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, which is incorporated
into this Joint Proxy Statement/ Prospectus by reference.
PROXIES
Proxy Cards
The U.S. Home and Lennar boards of directors are soliciting proxies by
which holders of U.S. Home and Lennar common stock and holders of Lennar class B
common stock can vote on the proposals regarding Lennar's acquiring U.S. Home
(as to Lennar stockholders) and regarding the merger and the merger agreement by
which that will occur (as to U.S. Home stockholders). The shares that a properly
completed proxy card represents will be voted in accordance with the
instructions on the proxy card. If a U.S. Home or Lennar stockholder does not
return a signed proxy card, that stockholder's shares will not be voted. With
respect to U.S. Home, that will have the same effect as a vote against adoption
of the merger agreement and approval of the merger.
Stockholders are urged to mark the box on the proxy card to indicate how
their shares are to be voted. IF A STOCKHOLDER RETURNS A SIGNED PROXY CARD, BUT
DOES NOT INDICATE HOW THE SHARES ARE TO BE VOTED, THE SHARES REPRESENTED BY THE
PROXY CARD WILL BE VOTED "FOR" APPROVAL OF THE ACQUISITION OF U.S. HOME (AS TO
LENNAR STOCKHOLDERS) AND "FOR" ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF
THE MERGER (AS TO U.S. HOME STOCKHOLDERS).
The proxy card also authorizes the persons named on the proxy card to vote
in their discretion with regard to any matter other than the transaction between
Lennar and U.S. Home that is properly presented for action at the special
meeting.
Solicitation of Proxies
Directors, officers and employees of Lennar and U.S. Home may solicit
proxies from their respective stockholders personally or by letter, telephone or
facsimile transmission. Each company will bear the expenses of any solicitation
on its behalf. Directors, officers and other employees of Lennar and U.S. Home
will not be specifically compensated for soliciting proxies. Brokerage houses
and other custodians, nominees and fiduciaries will be requested to forward
soliciting materials to the beneficial owners of Lennar common stock, Lennar
class B common stock and U.S. Home common stock owned of record by those
organizations, and Lennar and U.S. Home will pay the reasonable expenses of
forwarding the materials.
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Lennar and U.S. Home have retained D.F. King to assist in soliciting
proxies. Lennar will pay D.F. King its customary fees (estimated at $11,500) and
will reimburse it for expenses it incurs in soliciting proxies.
How to Revoke a Proxy
You can revoke a proxy at any time before it is voted. However, attendance
at the applicable stockholders meeting will not itself revoke a proxy. To revoke
a proxy you must either:
- notify the Corporate Secretary of the applicable one of U.S. Home or
Lennar, at the address specified on the proxy card, that you are revoking
the proxy;
- sign and mail a subsequent proxy card (in time so it is received before
the meeting); or
- appear in person and vote at the meeting.
The death or incapacity of a stockholder will not revoke a proxy, unless
the fiduciary having control of the shares represented by the proxy notifies the
applicable one of Lennar or U.S. Home in writing of the death or incapacity.
ADJOURNMENTS
The stockholders who are present at the Lennar or U.S. Home meeting can
adjourn or postpone the meeting. Among other things, they could do this to
permit solicitation of additional proxies. The proxies that are being solicited
by this Joint Proxy Statement/Prospectus give the proxy holders discretion that
would enable them to vote to adjourn or postpone the meeting to which the
proxies relate.
OTHER MATTERS
At the date of this Joint Proxy Statement/Prospectus, the respective boards
of directors of Lennar and U.S. Home do not know of any business which will be
presented at either meeting, other than the proposals regarding Lennar's
acquisition of U.S. Home and the merger and the merger agreement. If any other
matters properly come before either of the meetings, the proxy holders will vote
the shares represented by proxies with respect to those matters in accordance
with the proxy holders' judgment.
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COMPARATIVE RIGHTS OF STOCKHOLDERS
If the merger is consummated, most holders of U.S. Home common stock will
become holders of Lennar common stock. The certificate of incorporation and
bylaws of Lennar will govern the rights of all Lennar's stockholders, including
the former U.S. Home stockholders. The current rights of U.S. Home stockholders
differ in certain respects from the rights of Lennar stockholders. The following
is a summary of the material differences in the rights of stockholders of Lennar
and U.S. Home. Unless otherwise noted, the rights of Lennar's stockholders are
the same as those of U.S. Home's stockholders.
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CAPITALIZATION
Lennar U.S. Home
Lennar is authorized to issue 100,000,000 U.S. Home is authorized to issue 50,000,000
shares of common stock, 30,000,000 shares of shares of common stock, par value $.01 per
class B common stock, 100,000,000 shares of share, and 10,000,000 shares of preferred
participating preferred stock, par value stock, par value $.10 per share.
$.10 per share, and 500,000 shares of
preferred stock, par value $10.00 per share. The board of directors of U.S. Home can
Lennar may not issue any additional shares authorize the issuance of preferred stock in
of its class B common stock except as a part one or more series and can fix the number of
of a stock dividend. There is no preferred shares, voting powers, designations,
stock or participating preferred stock preferences and the relative, optional or
outstanding at this time. other special rights of any series prior to
its issuance without any vote or action by
Lennar's board of directors can authorize its stockholders.
the issuance of Lennar preferred stock in
one or more series and fix the designation,
dividend rate, terms of redemption,
preferences, sinking fund provisions, terms
of conversion, voting rights and any other
rights, preferences, powers and restrictions
of each series without any further vote or
action by the holders of Lennar common stock
or Lennar class B common stock.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
Lennar U.S. Home
Lennar's board of directors may consist of
between three and fifteen persons. The The board of directors of U.S. Home may
current number of directors is nine. In consist of between seven and fifteen
connection with the acquisition of U.S. persons. The current number of directors is
Home, Lennar's board of directors will be ten.
expanded to 13 persons.
U.S. Home's directors are elected at its
Lennar's board of directors must appoint an annual meeting of stockholders and serve
independent directors committee consisting until the following annual meeting of
of three or more independent directors, none stockholders and until their successors are
of whom is an officer or employee of Lennar elected and qualified. Vacancies on the U.S.
or a subsidiary of Lennar nor a director, Home board may only be filled by a majority
officer or employee of LNR Property Corpo- vote of the remaining directors. Directors
ration or a subsidiary of LNR. Lennar and elected to fill vacancies serve until the
its subsidiaries may not, without the next annual meeting of stockholders and
approval of the independent directors until their successors are elected and
committee, (a) take certain actions regard- qualified.
ing LNR or a land partnership between Lennar
and LNR, or (b) incur, guarantee or Any director of U.S. Home may be removed by
otherwise become obligated with regard to the vote of a majority of the shares
indebtedness which will cause Lennar to have entitled to vote.
a consolidated ratio of debt to tangible net
worth above 2.5:1 or a ratio of earnings to
fixed
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charges below 2:1. The requirement of an
independent directors committee will end on
November 30, 2002.
Directors are divided into three classes,
serving staggered three-year terms.
Vacancies on the board of directors, other
than a vacancy caused by removal of a
director, may be filled by a majority vote
of the board of directors or the Lennar
stockholders. A vacancy due to removal of a
director may only be filled by the
stockholders at an annual meeting.
Directors may be removed only for cause.
Removal requires a majority vote of the
stockholders who are present at a meeting
called for that purpose.
VOTING RIGHTS
Lennar U.S. Home
The holders of Lennar's common stock, Each holder of U.S. Home common stock is
participating preferred stock and class B entitled to one vote for every share held.
common stock vote together without regard to
class. Each holder of common stock and
participating preferred stock is entitled to
one vote for each share held. Each holder of
class B common stock is entitled to ten
votes for each share held.
The holders of the common stock and
participating preferred stock voting
separately (as well as holders of a majority
in voting power of the outstanding common
stock, class B common stock and partici-
pating preferred stock, voting together)
must approve (a) changes to the certificate
of incorporation relating to any of the
three classes of stock, or (b) any merger or
business combination in which the holders of
the three classes do not receive the same
type and per share amount of consideration.
Lennar has an agreement with Warburg, Pincus
Investors, L.P. which provides that for so
long as Warburg and its affiliates own at
least 5% of Lennar's common stock of both
classes, Lennar will not, without Warburg's
consent (1) issue shares of common stock in
excess of 20% of its outstanding stock
during any three year period, or (2) acquire
in any transaction or series of related
transactions assets or properties with a
fair market value of more than $100 million,
other than in the ordinary course of
business.
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AMENDMENTS TO BYLAWS
Lennar U.S. Home
Lennar's bylaws may be amended by its board U.S. Home's bylaws may be altered, amended
of directors or by holders of the common or repealed by the stockholders or by a
stock, participating preferred stock and majority of its board of directors.
class B common stock which is voted at a
meeting called for that purpose, except that
the provisions regarding the independent
directors committee may only be amended with
the approval of the independent directors
committee or by a majority of the holders of
common stock and participating preferred
stock which are voted with respect to the
amendment. The Lennar class B common
stockholders do not vote on amendments to
provisions regarding the independent
directors committee.
AMENDMENTS TO CERTIFICATE OF INCORPORATION
Lennar U.S. Home
Changes to the certificate of incorporation Changes to the certificate of incorporation
must be approved by holders of a majority in are governed by applicable provisions of the
voting power of the outstanding common Delaware corporate law.
stock, class B common stock and
participating preferred stock, voting to-
gether. In addition, the holders of common
stock and participating preferred stock,
voting as a single class, must approve
changes to the certificate of incorporation
relating to the common stock, the class B
common stock or the participating preferred
stock.
STOCKHOLDER ACTION
Lennar U.S. Home
Stockholders may act by written consent of The stockholders of U.S. Home may only act
the holders of shares entitled to a majority by vote at a meeting and may not act by
of votes that may be cast with regard to a written consent without a meeting.
matter or by vote at a meeting.
SPECIAL STOCKHOLDER MEETINGS
Lennar U.S. Home
Special meetings of stockholders may be Special meetings of U.S. Home stockholders
called by Lennar's president, by majority may only be called by a majority of the
vote of its board of directors or at the entire board of directors of U.S. Home.
written request of stockholders owning a
majority of any class of stock.
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LIQUIDATION
Lennar U.S. Home
If Lennar is liquidated, none of its assets If U.S. Home is liquidated, a distribution
may be distributed to the holders of the will be made to the holders of its common
common stock or class B common stock until stock.
the holders of the participating preferred
stock have received assets totaling $10 per
share, then no assets may be distributed to
the holders of the participating preferred
stock until the holders of the common stock
and the class B common stock have received
assets totaling $10 per share, and then any
further liquidating distributions will be
made on an equal per share basis to the
holders of the common stock, the class B
common stock and the participating pre-
ferred stock.
Holders of preferred stock will be entitled
to the liquidation preference specified in
the terms of the preferred stock. Currently,
there is no preferred stock outstanding.
DIVIDENDS
Lennar U.S. Home
Cash dividends paid with regard to a share U.S. Home may pay dividends to its
of class B common stock in a calendar year stockholders subject to the relevant
may not be more than 90% of the cash provisions of the Delaware corporate law.
dividends paid with regard to a share of
common stock in that calendar year.
Dividends and distributions other than cash
dividends are made to the holders of common
stock and class B common stock without
regard to class, except that in the case of
dividends or other distributions payable in
stock (other than Lennar preferred stock),
the stock distributed with respect to common
stock will be additional shares of common
stock and the stock distributed with respect
to class B common stock will be additional
shares of class B common stock.
CONVERSION OF CLASS B COMMON STOCK
Lennar U.S. Home
A holder of class B common stock may at any U.S. Home does not have separate classes of
time convert shares of class B common stock stock.
into a like number of shares of common
stock. Common stock may not be converted
into class B common stock. If, at any time,
the number of outstanding shares of class B
common stock is less than 10% of the
outstanding shares of common stock and class
B common stock taken together, the class B
common stock will automatically be converted
into common stock.
</TABLE>
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BACKGROUND OF THE TRANSACTION
In May 1998 at a homebuilding industry conference, Stuart Miller, Lennar's
President and Chief Executive Officer, and Bruce Gross, Lennar's Chief Financial
Officer, had a conversation with Robert J. Strudler, U.S. Home's Chairman and
Co-Chief Executive Officer, during which Mr. Miller suggested that the parties
meet to discuss the homebuilding industry generally and possible opportunities
which the two companies might pursue. The parties had an initial meeting in
Houston, Texas in the summer of 1998 which focused on the strong results of both
companies and the potential benefits that could be realized from combining two
homebuilding companies with strong franchises in their respective markets. The
parties discussed possible management roles and discussed the similar cultures
of the companies. The parties acknowledged that a significant amount of analysis
would have to be done before either side could more seriously consider a
transaction. No specific financial terms were discussed at this meeting,
although Mr. Strudler stated that he did not believe U.S. Home's board would
consider any transaction that did not provide stockholders with a significant
premium to U.S. Home's market price. The parties continued these general
conversations at an industry conference in Fort Lauderdale, Florida in November
1998.
In January 1999, Stuart Miller met with Mr. Strudler on two occasions in
Houston to explore generally the prospect of a business combination. These
discussions primarily focused on the complementary nature of the two companies'
product lines and geographical strengths.
At an industry conference in early May 1999, Stuart Miller and Leonard
Miller, Lennar's Chairman, had conversations with Mr. Strudler and Isaac
Heimbinder, U.S. Home's President and Co-Chief Executive Officer, during which
the Messrs. Miller reiterated Lennar's interest in a business combination.
During these conversations, the parties discussed the cyclical nature of the
homebuilding industry and the long histories which the two companies had in the
industry. Shortly after these conferences, Stuart Miller met with a
representative of U.S. Home's financial advisor, Warburg Dillon Read LLC. Again,
no specific financial terms of a possible transaction were discussed, although
the Warburg Dillon Read LLC representative reiterated U.S. Home's position that
the terms of any transaction would need to represent a premium to U.S. Home's
market price, and would also need to include a significant component of Lennar
stock, which was perceived to be undervalued due primarily to declines in
homebuilding stock prices generally, in order to offset the similarly low value
at which U.S. Home stock was trading.
Stuart Miller met again with Messrs. Strudler and Heimbinder in early July
1999. The parties again discussed the strong cultural fit of the two companies.
There were preliminary discussions regarding financial terms, but no specific
proposals were made. The parties discussed Lennar's stock price and Lennar's
view that it was significantly undervalued. The parties agreed to meet again to
discuss financial terms more specifically.
On July 8, 1999, Lennar asked Deutsche Bank Securities, which on a number
of occasions had advised Lennar with regard to possible acquisitions, to assist
Lennar in evaluating a transaction with U.S. Home.
On July 15, 1999, Stuart Miller met with a representative of Warburg Dillon
Read LLC in New York to begin exploring a range of values and possible types of
consideration for U.S. Home common stock which might be acceptable to the
companies. These discussions were very preliminary and no agreements were
reached.
No further discussions were held by the parties until September 1999.
However, there were discussions between representatives of Deutsche Bank
Securities and representatives of Warburg Dillon Read LLC. During July and
August 1999, the market prices of homebuilding stocks declined significantly.
In early September 1999, Stuart Miller met with a representative of Warburg
Dillon Read LLC in New York. They discussed the decline in the price of
homebuilding stocks. The representative of Warburg Dillon Read LLC stated that
U.S. Home's board was not willing to consider a transaction that was not at a
premium to U.S. Home's market price. Stuart Miller and the Warburg Dillon Read
LLC representative met again in Houston later in September, when Mr. Miller was
giving a presentation to a group of investment bankers. They discussed a
possible transaction generally. These general conversations continued a few days
later at an industry conference in California.
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There were three additional brief meetings among Stuart Miller, Bruce
Gross, and the Warburg Dillon Read LLC representative in October and November
1999 when Messrs. Miller and Gross were in New York for business meetings. No
specific financial terms were discussed at the meetings.
In January 2000, Stuart Miller and Leonard Miller met with Messrs. Strudler
and Heimbinder at an industry conference in Dallas. All of the parties
reconfirmed their view that a combination of Lennar and U.S. Home would be
beneficial to both companies' shareholders and their employees primarily because
the combined company would have strong growth prospects. At this meeting, Stuart
Miller stated that Lennar might be prepared to pay between $29.00 and $32.00 in
a combination of cash and stock for each outstanding share of U.S. Home common
stock. Mr. Strudler said that would not be a proposal that U.S. Home's board
would consider.
Stuart Miller had several subsequent telephone conversations with Messrs.
Strudler and Heimbinder during January 2000. The discussions centered on the
good cultural fit of the two organizations and the complementary nature of their
geographic markets and product lines. There were also discussions of a possible
$36.00 price.
On February 6, 2000, Stuart Miller met with Messrs. Strudler and Heimbinder
in Houston. The parties had further discussions regarding possible financial
terms and discussed personnel issues more specifically, including proposed
employment arrangements for Messrs. Strudler and Heimbinder. It was clear from
the discussions that there was a significant gap in their views of acceptable
financial terms for the merger.
During a series of telephone conversations on February 8, 2000, Stuart and
Leonard Miller told Mr. Strudler that Lennar would be prepared to pay $36.00 of
value (of which 50% would be cash and 50% would be Lennar stock) for each
outstanding share of U.S. Home common stock. Mr. Strudler said that he would
discuss Lennar's proposal with the U.S. Home board.
At a meeting of U.S. Home's board of directors held on February 9, 2000,
Messrs. Strudler and Heimbinder reviewed Lennar's proposal with the board.
Representatives of U.S. Home's legal and financial advisors were also present,
in person and by video conference. After discussion, the U.S. Home board
authorized Messrs. Strudler and Heimbinder to enter into negotiations with
Lennar with a view to entering into a definitive merger agreement on terms
acceptable to the U.S. Home board. Following this meeting, Lennar and U.S. Home
also visited each other's headquarters with their respective legal and financial
advisors to conduct due diligence investigations.
On February 10, 2000, drafts of a merger agreement and related documents
were circulated by Lennar's counsel. The parties conducted negotiations with
respect to the terms of these agreements over the next several days. The
principal issues discussed during these negotiations were the "cap" and "collar"
arrangements for changing the number of shares of Lennar stock to be issued to
reflect fluctuations in market value, the maximum amount of cash that would be
included in the merger consideration in order to preserve the tax-free nature of
the transaction, the termination fees and expense reimbursement Lennar would
receive if the transaction did not take place, the circumstances under which
they would be payable, and the circumstances under which U.S. Home would be
entitled to terminate the merger agreement to accept what its board viewed as a
superior proposal from somebody other than Lennar. U.S. Home also requested that
Leonard Miller and Stuart Miller enter into a voting agreement with U.S. Home
under which they would agree to vote all of their shares of Lennar stock in
favor of the transaction with U.S. Home.
On February 16, 2000, Lennar's board of directors met, with one member
participating by video conference and one member absent due to illness, to
approve the transaction with U.S. Home. Deutsche Bank Securities delivered to
the Lennar board its oral opinion that, as of the date of its opinion and based
upon and subject to the matters described in its opinion, the merger
consideration to be paid by Lennar was fair to Lennar from a financial point of
view. Deutsche Bank Securities later confirmed its oral opinion by delivery of a
written opinion dated February 16, 2000. The Lennar board unanimously (with one
member absent) approved the transaction with U.S. Home.
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<PAGE> 33
On February 16, 2000, U.S. Home's board of directors met (with three
members participating by conference telephone) to discuss the proposed terms of
the merger agreement. At this meeting, representatives of Warburg Dillon Read
LLC presented to the U.S. Home board Warburg Dillon Read LLC's review of the
proposed transaction, including, but not limited to, Warburg Dillon Read LLC's
belief that the deal protection features included in the merger agreement would
not in and of themselves deter suitably motivated third parties from proposing
alternative transactions. In addition, U.S. Home's legal advisors reviewed with
the U.S. Home board the legal parameters surrounding the transaction, the terms
and provisions of the merger agreement and the board members' fiduciary duties
with respect to the transaction. The U.S. Home board was also made aware of the
proposed terms of the employment agreements to be entered into between Lennar
and each of Messrs. Strudler and Heimbinder. Warburg Dillon Read LLC then
delivered to the U.S. Home board its written opinion that, based upon and
subject to the matters described in its opinion, the merger consideration to be
received by the U.S. Home stockholders was fair, from a financial point of view,
to those stockholders.
At the February 16, 2000 U.S. Home board meeting, the U.S. Home board was
made aware that U.S. Home's poison pill rights plan would be triggered by the
transactions contemplated by the merger agreement, which would prevent the
merger from being consummated as contemplated by the merger agreement. As a
result, the U.S. Home board unanimously approved a resolution authorizing the
rights agreement to be amended to prevent it from being triggered by the merger,
and the amended rights agreement was then executed by U.S. Home and the rights
agent.
After further discussion and consideration of the terms and provisions of
the merger agreement and the advisability of consummating the merger, the U.S.
Home board unanimously approved the transaction with Lennar.
On February 16, 2000, the parties entered into the merger agreement. In
addition, Leonard Miller, his family partnership and Stuart Miller executed a
voting agreement with U.S. Home. Also, Lennar entered into employment agreements
with Messrs. Strudler and Heimbinder, to take effect when the transaction is
completed. See "Interests of Certain Persons in the Merger" beginning on page
48.
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<PAGE> 34
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS AND
REASONS FOR THE TRANSACTION
LENNAR
The Lennar board of directors believes the acquisition of U.S. Home on the
terms contained in the merger agreement will be beneficial to Lennar and its
stockholders and that the merger consideration to be paid under the merger
agreement is fair to Lennar. Accordingly, Lennar's board of directors (with one
director absent) has unanimously approved the transaction and recommends that
holders of Lennar common stock and Lennar class B common stock vote to approve
the transaction.
The Lennar Board believes that the merger will make Lennar a stronger
homebuilding company. In particular, the merger will:
- strengthen our position in the nation's fastest growing homebuilding
markets;
- expand our homebuilding activities into a number of new markets,
including Colorado, Maryland, Michigan, Minnesota, New Jersey, North
Carolina, Ohio and Virginia;
- enhance our overall land position;
- increase our presence in the retirement/active adult market segments of
the homebuilding industry;
- enable us to capture greater financial services revenues and other
ancillary revenues;
- increase our size in terms of revenue, earnings and EBITDA and enhance
our competitive position and economies of scale;
- provide us with operational savings from enhancing purchasing systems;
and
- help us with homebuilding and mortgage related Internet and broadband
activities.
According to homebuilding industry publications, a combined Lennar and U.S.
Home would have been the nation's largest homebuilder in 1999 based on
homebuilding revenues, domestic homes delivered and homebuilding EBITDA. On a
combined pro forma basis, Lennar and U.S. Home would have reported revenues of
$4.9 billion and EBITDA of $551 million in 1999.
Prior to recommending action on the merger, the Lennar board of directors
reviewed various materials regarding the businesses, operations and financial
condition of U.S. Home.
The members of Lennar's board had been made aware at least as early as
April 1999 that Lennar might be interested in acquiring U.S. Home. On February
15, 2000, the members of the board were alerted that there was a substantial
likelihood a transaction would take place, and arrangements were made for a
board meeting to be held on February 16, 2000. In preparation for that board
meeting, the directors were sent materials regarding U.S. Home, which had been
prepared by Lennar's management with the assistance of Deutsche Bank, and a
draft of the merger agreement. The meeting was held on February 16, with all the
members of the board other than Reuben Leibowitz (who was ill), as well as
representatives of Deutsche Bank and Lennar's legal counsel, participating by
video teleconference from the company's offices in Miami and the offices of its
legal counsel in New York. At the meeting, Lennar's senior management explained
the rationale for the transaction and noted that, even in the short term, the
transaction should be accretive to Lennar's earnings. Representatives of
Deutsche Bank then presented an overview of its financial analyses with respect
to the merger consideration and delivered its oral opinion, subsequently
confirmed in writing, as to the fairness, from a financial point of view, of the
merger consideration, to Lennar. Deutsche Bank's analysis and opinion are
discussed in detail under the caption "Opinion of Lennar's Financial Advisor,"
which begins at page 28. During the board meeting, Lennar's legal counsel also
discussed with the board various terms of the merger agreement. In its
considerations, Lennar's board did not take account of any benefit of operating
synergies that might result from the transaction.
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<PAGE> 35
In deciding to approve the acquisition of U.S. Home, the Lennar directors
considered the items described in the preceding paragraph and a number of other
factors, including:
- the current and historical market price of Lennar common stock;
- the continued expansion of Lennar's homebuilding business in high growth
markets and its expansion into new geographic markets;
- the strong financial condition of the combined company;
- the expected accounting treatment of the merger;
- the terms and conditions of the merger agreement; and
- the presentations and advice of its financial advisors and legal counsel,
as discussed above.
The Lennar Board did not assign any relative or specific weights to these
factors and individual directors may have given different weights to different
factors.
BASED ON THE CONSIDERATIONS DESCRIBED ABOVE, THE LENNAR DIRECTORS WHO WERE
PRESENT UNANIMOUSLY RECOMMEND THAT LENNAR'S STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE ACQUISITION OF U.S. HOME.
U.S. HOME
The board of directors of U.S. Home believes the merger enhances U.S.
Home's ability to increase stockholder value in a shorter period of time and
with less risk than it could on its own. The U.S. Home board of directors has
determined that the terms of the merger and the merger agreement are fair to,
and in the best interests of, U.S. Home and its stockholders. Accordingly, the
U.S. Home board of directors has approved the merger agreement and the
consummation of the merger and recommends that U.S. Home stockholders vote FOR
approval of the merger agreement and the merger.
In reaching its decision to approve the merger agreement and the
transactions contemplated by the merger agreement, including the merger, the
U.S. Home board of directors consulted with U.S. Home's senior management as
well as Kaye, Scholer, Fierman, Hays & Handler, LLP and Richards, Layton &
Finger, P.A., its legal counsel, Arthur Andersen LLP, its independent public
accountants, and Warburg Dillon Read LLC, its independent financial advisor. The
material factors considered by the U.S. Home board in its deliberations were the
following:
- Notwithstanding U.S. Home's excellent record of sustained increases in
revenues and net income, its product and geographic diversification,
including its significant growth in the active adult/retirement community
sector and its widely recognized management development program, U.S.
Home's small market capitalization has resulted in historically low
market valuations for its common stock as compared with the larger
capitalized homebuilders;
- The U.S. Home board's review of the current market conditions and
historical trading information with respect to Lennar's and U.S. Home's
common stock;
- The U.S. Home board's knowledge and analysis of the current homebuilding
industry environment, characterized by evolving trends toward
consolidation and increasing competition;
- The U.S. Home board's observation that depressed price/earnings multiples
for all homebuilders over the past year have compressed the range of
price/earnings ratios among both large and small homebuilders and provide
an opportunity for a favorable transaction in which U.S. Home stock would
be exchanged for the stock of a company, such as Lennar, which has
enjoyed historically higher valuations;
- The U.S. Home board's belief that the long-term prospects for U.S. Home
stockholders are greater owning Lennar stock as compared to holding U.S.
Home stock with its historical low valuation, particularly if
homebuilding stocks return to their historical valuation levels;
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<PAGE> 36
- The U.S. Home board's review of other business combinations in the
homebuilding industry;
- Industry trends in land acquisition and development and the purchasing of
materials and labor are placing a premium on increased size of the
homebuilding company and its financial wherewithal;
- The U.S. Home board's belief that the combination with Lennar presents
opportunities to create greater economies of scale, by combining
personnel resources, technology and land resources;
- The lack of significant geographic overlap between the operations of
Lennar and U.S. Home, contributing both to better utilization of
personnel and decreased portfolio land risk;
- Industry trends that emerging electronic commerce initiatives, both
business-to-consumer and business-to-business, significantly benefit from
increased size of the industry participants;
- The financial terms of the merger, including the amount of the cash and
stock comprising the merger consideration and the fact that this
consideration represented a significant premium over prevailing market
prices of U.S. Home common stock as of the date the merger agreement was
signed;
- The fact that the risk to U.S. Home stockholders is reduced by the
limitations on the effect fluctuations in the market price of Lennar's
common stock will have on the consideration payable to them;
- The U.S. Home board's belief that Lennar's higher stock valuation will be
further enhanced by the merger resulting in an even larger market
capitalization and by becoming a larger, more diverse and more
competitive homebuilder with greater financial and management resources
enabling it to compete more effectively in an industry which is
consolidating and becoming more competitive for land and markets;
- Lennar's investment grade credit rating and superior borrowing capacity
would enable it to structure a transaction with a significant cash
component, which the U.S. Home stockholders could choose to access in the
merger;
- The benefits of the U.S. Home stockholders' opportunity to elect to
receive the merger consideration in 50% stock and 50% cash, all stock or
all cash as opposed to an alternate transaction in which those
stockholders may have been forced to accept all stock in exchange for
their shares of U.S. Home common stock;
- The U.S. Home board's belief that increased competition for land among
the large homebuilders, with increased land costs and longer development
periods, requires financial resources and expenditures beyond U.S. Home's
present capacity, and that the merger will permit both companies to take
greater advantage of opportunities in all their markets and product
lines, particularly in the active adult/retirement sector;
- The expected tax-free treatment to U.S. Home and the expected partial
tax-free treatment for its stockholders;
- The terms of the merger agreement as negotiated, including the
possibility that the merger agreement might discourage other parties that
might have an interest in a business combination with U.S. Home, but
taking into account the ability of the U.S. Home board to consider a
superior proposal, if made, as required by their fiduciary duties and as
permitted by the merger agreement;
- The U.S. Home board's consideration and evaluation of the management team
of Lennar, and the fact that U.S. Home would be entitled to designate
four representatives to serve on Lennar's board of directors after the
merger;
- The U.S. Home board's review of Lennar's management and business
performance, including its record in land development and land sales;
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<PAGE> 37
- The U.S. Home board's belief that the merger will provide greater
management depth for the long-term growth of Lennar aided by U.S. Home's
widely recognized management development program;
- The presentation of Warburg Dillon Read LLC to the U.S. Home board of
directors regarding the homebuilding industry and markets;
- The presentations of Kaye, Scholer, Fierman, Hays & Handler, LLP and
Richards, Layton & Finger, P.A. to the U.S. Home board of directors
regarding their fiduciary duties;
- The opinion of Warburg Dillon Read LLC to the U.S. Home board that the
merger consideration was fair, from a financial point of view, to the
U.S. Home stockholders;
- The U.S. Home board's consideration of the change in control payments
which might be made to certain senior executive officers of U.S. Home
upon consummation of the merger, as more fully explained in "Interests of
Certain Persons in the Merger" beginning on page 48;
- The review conducted by the U.S. Home board of the strategic options
available to U.S. Home and the assessment of the U.S. Home board that
none of these options presented superior opportunities, or were likely to
create greater value for U.S. Home stockholders, than the prospects
presented by the merger;
- The U.S. Home board's belief that, while no assurance can be given, the
level of execution risk in connection with the merger was relatively low
and that the business and financial advantages contemplated in connection
with the merger were likely to be achieved within a reasonable time
frame; and
- The fact that the further effect of the merger on U.S. Home's
constituencies other than its stockholders, including the customers
served by U.S. Home and its employees, including management would be
favorable.
The U.S. Home board also identified and considered a variety of potential
negative factors in its deliberations concerning the merger, including the
following:
- The loss of control over the future operations of U.S. Home following the
merger;
- The impact of the loss of U.S. Home's status as an independent company on
U.S. Home's stockholders, employees, suppliers and customers;
- The risk that the potential benefits sought in the merger might not be
fully realized;
- The inability to acquire a control premium in the future due to the
Millers' ownership of Lennar's stock;
- The fact that the borrowings to be made by Lennar in order to consummate
the transaction would increase Lennar's debt-to-equity ratio, which could
affect Lennar's investment grade rating;
- The possibility that the merger might not be consummated and the
potential adverse effects of the public announcement of the merger on:
-- U.S. Home's sales and operating results;
-- U.S. Home's ability to attract and obtain key employees;
-- U.S. Home's overall competitive position; and
- The risk that, despite the efforts of Lennar and U.S. Home, key personnel
might not remain employees of Lennar and U.S. Home following the closing
of the merger.
After due consideration, the U.S. Home board concluded that the potential
benefits of the merger outweighed the risks outlined above on U.S. Home's
stockholders.
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<PAGE> 38
The foregoing discussion of the information and factors considered by the
U.S. Home board is not intended to be exhaustive but is believed to include all
material factors considered by the U.S. Home board. In view of the complexity
and wide variety of information and factors, both positive and negative,
considered by the U.S. Home board, the U.S. Home board did not find it practical
to quantify, rank or otherwise assign relative or specific weights to the
factors considered. In addition, the U.S. Home board did not reach any specific
conclusion with respect to each of the factors considered, or any aspect of any
particular factor, but, rather, conducted an overall analysis of the factors
described above, including thorough discussions with U.S. Home's management and
legal, financial and accounting advisors. In considering the factors described
above, individual members of the U.S. Home board may have given different weight
to different factors. The U.S. Home board considered all these factors as a
whole and believed the factors supported its decision to approve the merger.
After taking into consideration all of the factors set forth above, the U.S.
Home board concluded that the merger was fair to, and in the best interests of,
U.S. Home and its stockholders and that U.S. Home should proceed with the
merger.
BASED ON THE FACTORS DESCRIBED ABOVE, THE U.S. HOME BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT U.S. HOME STOCKHOLDERS VOTE "FOR" ADOPTION OF THE
MERGER AGREEMENT AND APPROVAL OF THE MERGER.
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<PAGE> 39
OPINION OF LENNAR'S FINANCIAL ADVISOR
Deutsche Bank has acted as financial advisor to Lennar in connection with
the transaction. At the February 16, 2000 meeting of the Lennar board of
directors, Deutsche Bank delivered to the Lennar board of directors its oral
opinion, subsequently confirmed by delivery of a written opinion dated February
16, 2000, to the effect that, as of the date of such opinion, based upon and
subject to the assumptions made, matters considered and limits of the review
undertaken by Deutsche Bank, the merger consideration was fair, from a financial
point of view, to Lennar.
THE FULL TEXT OF DEUTSCHE BANK'S WRITTEN OPINION, DATED FEBRUARY 16, 2000,
WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITS ON THE REVIEW UNDERTAKEN BY DEUTSCHE BANK IN CONNECTION WITH THE
OPINION, IS ATTACHED AS ANNEX II TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. LENNAR STOCKHOLDERS ARE URGED TO READ DEUTSCHE
BANK'S OPINION IN ITS ENTIRETY. THE SUMMARY OF DEUTSCHE BANK'S OPINION SET FORTH
IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF DEUTSCHE BANK'S OPINION.
In connection with Deutsche Bank's role as financial advisor to Lennar, and
in arriving at its opinion, Deutsche Bank, among other things, reviewed certain
publicly available financial information and other information concerning Lennar
and U.S. Home and certain internal analyses and other information furnished to
it by Lennar and U.S. Home. Deutsche Bank also held discussions with the members
of the senior management of Lennar and U.S. Home regarding the businesses and
prospects of their respective companies and the joint prospects of a combined
enterprise. In addition, Deutsche Bank
- reviewed the reported prices and trading activity for the common stock of
both Lennar and U.S. Home,
- compared certain financial and stock market information for Lennar and
U.S. Home with similar information for selected companies whose
securities are publicly traded,
- reviewed the financial terms of selected recent business combinations
which it deemed comparable in whole or in part,
- reviewed the terms of a draft of the merger agreement distributed on
February 15, 2000, and
- performed such other studies and analyses and considered such other
factors as it deemed appropriate.
In preparing its opinion, Deutsche Bank did not assume responsibility for
the independent verification of, and did not independently verify, any
information, whether publicly available or furnished to it, concerning Lennar or
U.S. Home, including, without limitation, any financial information, forecasts
or projections, considered in connection with the rendering of its opinion.
Accordingly, for purposes of its opinion, Deutsche Bank assumed and relied upon
the accuracy and completeness of all such information. Deutsche Bank did not
conduct a physical inspection of any of the properties or assets, and did not
prepare or obtain any independent evaluation or appraisal of any of the assets
or liabilities, of Lennar or U.S. Home. With respect to the financial forecasts
and projections made available to Deutsche Bank and used in its analysis,
Deutsche Bank assumed that they were reasonably prepared based on the best
currently available estimates and judgments of the management of Lennar or U.S.
Home as to the matters covered thereby. In rendering its opinion, Deutsche Bank
expressed no view as to the reasonableness of such forecasts and projections, or
the assumptions on which they are based. Deutsche Bank's opinion was necessarily
based upon economic, market and other conditions as in effect on, and the
information made available to Deutsche Bank as of, the date of its opinion.
For purposes of rendering its opinion, Deutsche Bank assumed that, in all
respects material to its analysis, the representations and warranties of Lennar
and U.S. Home contained in the merger agreement are true and correct, that
Lennar and U.S. Home will each perform all of the covenants and agreements to be
performed by it under the merger agreement and all conditions to the obligation
of each of Lennar and U.S. Home to consummate the merger will be satisfied
without any waiver thereof. Deutsche Bank also assumed that all material
governmental, regulatory or other approvals and consents required in connection
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<PAGE> 40
with the consummation of the transactions contemplated by the merger agreement
will be obtained and that in connection with obtaining any necessary
governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which
either Lennar or U.S. Home is a party or subject or by which it is bound, no
limitations, restrictions or conditions will be imposed or amendments,
modifications or waivers made that would have a material adverse effect on
Lennar or U.S. Home or materially reduce the contemplated benefits of the merger
to Lennar. In addition, Deutsche Bank was advised by Lennar, and accordingly
assumed for purposes of its opinion, that the merger will be tax-free to each of
Lennar and U.S. Home.
Set forth below is a brief summary of the material financial analyses
performed by Deutsche Bank in connection with its opinion and reviewed with the
Lennar board of directors at its meeting on February 16, 2000. THE FINANCIAL
ANALYSES SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN
ORDER TO FULLY UNDERSTAND DEUTSCHE BANK'S FINANCIAL ANALYSES, THE TABLES MUST BE
READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE
A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE DATA SET FORTH
BELOW WITHOUT CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE FINANCIAL
ANALYSES, INCLUDING THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE ANALYSES,
COULD CREATE A MISLEADING OR INCOMPLETE VIEW OF DEUTSCHE BANK'S FINANCIAL
ANALYSES.
HISTORICAL STOCK PERFORMANCE
Deutsche Bank reviewed and analyzed recent and historical market prices and
trading volume for U.S. Home's common stock and Lennar's common stock and
compared such market prices to certain industry indices.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
Deutsche Bank compared certain financial information for U.S. Home and the
following eight selected publicly held companies (collectively, the "Selected
Companies") in the homebuilding industry:
- Centex Corporation
- D. R. Horton, Inc.
- Kaufman and Broad Home Corporation
- Pulte Corporation
- Toll Brothers, Inc.
- The Ryland Group, Inc.
- Standard Pacific Corp.
- M.D.C. Holdings, Inc.
Such financial information and valuation measurements included, among other
things,
- common equity market valuation;
- capitalization ratios;
- operating performance;
- ratios of common equity market value as adjusted for debt and cash
("Enterprise Value") to earnings before interest expense, income taxes
and depreciation and amortization ("EBITDA"); and
- ratios of common equity market prices per share ("Equity Value") to last
twelve months net income, calendarized projected earnings per share
("EPS") and most recently reported book value per share ("Book Value").
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<PAGE> 41
To calculate the trading multiples for U.S. Home, Lennar and the Selected
Companies, Deutsche Bank used publicly available information concerning
historical and projected financial performance, including published historical
financial information and earnings estimates reported by the Institutional
Brokers Estimate System ("IBES"). IBES is a data service that monitors and
publishes compilations of earnings estimates by selected research analysts
regarding companies of interest to institutional investors. All multiples were
based on closing stock prices on February 11, 2000. This analysis indicated the
following multiples for the Selected Companies, as compared to the multiples for
Lennar and U.S. Home:
<TABLE>
<CAPTION>
MULTIPLES OF SELECTED COMPANIES
U.S. ---------------------------------
LENNAR HOME MEAN MEDIAN RANGE
------ ----- ------ ------- --------------
<S> <C> <C> <C> <C> <C>
Enterprise value to last 12 months EBITDA....... 3.65x 5.48x 4.22x 4.35x 2.46x - 5.65x
Equity value to last 12 months net income....... 4.45x 4.52x 4.66x 4.45x 3.31x - 6.55x
Equity value to calendarized 2000 EPS........... 5.59x 4.35x 4.50x 4.44x 3.48x - 5.40x
Equity value to last reported book value........ 1.05x 0.58x 0.82x 0.80x 0.57x - 0.97x
</TABLE>
None of the companies utilized as a comparison are identical to U.S. Home
or Lennar. Accordingly, Deutsche Bank believes the analysis of its publicly
traded comparable companies is not simply mathematical. Rather, it involves
complex considerations and qualitative judgments, reflected in Deutsche Bank's
opinion, concerning differences in financial and operating characteristics of
the comparable companies and other factors that could affect the public trading
value of the comparable companies.
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS
Deutsche Bank reviewed the financial terms, to the extent publicly
available, of the following five proposed, pending or completed merger and
acquisition transactions since 1997 involving companies in the homebuilding
industry (the "Selected Transactions"):
<TABLE>
<CAPTION>
DATE ANNOUNCED ACQUIROR TARGET
-------------- -------- ------
<S> <C> <C>
January 31, 2000 Standard Pacific Corp. The Writer Corp.
October 4, 1999 Technical Olympic USA, Inc. Newmark Homes Corp.
September 2, 1998 Centex Corporation Calton Homes, Inc.
December 19, 1997 D.R. Horton, Inc. Continental Homes Holding Corp.
June 11, 1997 Lennar Corporation Pacific Greystone Corporation
</TABLE>
Deutsche Bank calculated various financial multiples and premiums over
market value based on certain publicly available information for each of the
Selected Transactions and compared them to corresponding financial multiples and
premiums over market value for the merger, assuming a purchase price of $36.00
per share. This analysis indicated the following implied multiples for
enterprise value, EBITDA and equity value for the Selected Transactions, as
compared to the multiples for the transaction:
<TABLE>
<CAPTION>
MULTIPLES FOR
U.S. HOME
IMPLIED BY MULTIPLES OF SELECTED COMPANIES
MERGER ---------------------------------
CONSIDERATION MEAN MEDIAN RANGE
------------- ----- ------ --------------
<S> <C> <C> <C> <C>
Enterprise value to last 12 months EBITDA...... 6.4x 8.59x 8.73x 5.35x - 11.25x
Equity value to last 12 months net income...... 6.8x 9.39x 9.31x 6.71x - 12.25x
Equity value to last reported tangible book
value........................................ 0.9x 1.67x 1.65x 1.28x - 2.09x
</TABLE>
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Deutsche Bank also determined that the Selected Transactions were effected
at a premium to the acquired companies' per share market price 30 days, 7 days
and 1 day prior to the announcement of the transaction. The following table
summarizes the results of this analysis:
<TABLE>
<CAPTION>
PREMIUM BASED ON STOCK PRICES PRIOR TO ANNOUNCEMENT
----------------------------------------------------
30 DAYS 7 DAYS 1 DAY
--------------- --------------- --------------
<S> <C> <C> <C>
Selected Transactions
Mean................................. 43.8% 38.9% 29.8%
Median............................... 32.2% 31.5% 29.7%
Range................................ 18.7% - 92.0% 13.0% - 79.4% 8.0% - 52.0%
U.S. Home(1) 33.6% 34.9% 48.8%
</TABLE>
- ---------------
(1) Based on the per share market price 30 days, 7 days, and 1 day prior to
February 16, 2000, the date on which Lennar's board of directors approved
the transaction with U.S. Home.
All multiples for the Selected Transactions were based on public
information available at the time of announcement of such transaction, without
taking into account differing market and other conditions during the thirty-day
period during which the Selected Transactions occurred.
Because the reasons for, and circumstances surrounding, each of the
precedent transactions analyzed were so diverse, and due to the inherent
differences between the operations and financial condition of U.S. Home and the
companies involved in the Selected Transactions, Deutsche Bank believes that a
comparable transaction analysis is not simply mathematical. Rather, it involves
complex considerations and qualitative judgments, reflected in Deutsche Bank's
opinion, concerning differences between the characteristics of these
transactions and the merger that could affect the value of the subject companies
and businesses and U.S. Home and Lennar.
HISTORICAL EXCHANGE RATIO ANALYSIS
Deutsche Bank reviewed the historical ratio of the daily per share market
closing prices of U.S. Home common stock divided by the corresponding prices of
Lennar common stock over the one-year, 180-day, 90-day and 30-day periods prior
to February 15, 2000 and as of February 15, 2000 (two business days prior to the
announcement of the merger). The average price ratios for these time periods and
as of such date were 1.56x, 1.65x, 1.59x, and 1.59x, respectively. Deutsche Bank
then compared such ratios to the ratio implied by U.S. Home's and Lennar's stock
prices as of February 15, 2000 and determined that such historical ratios
represented a premium to the current ratio of 7.2%, 13.7%, 9.5%, and 9.2%,
respectively.
DISCOUNTED CASH FLOW ANALYSIS
Deutsche Bank performed a discounted cash flow analysis for U.S. Home.
Deutsche Bank calculated the discounted cash flow values for U.S. Home as the
sum of the net present values of
- the estimated future cash flows that U.S. Home will generate for the
years 2000 through 2004, plus
- the value of U.S. Home at the end of such period.
The estimated future cash flows were based on the financial projections for
U.S. Home for the years 2000 through 2002 prepared by U.S. Home's management.
Projections for fiscal years 2003 and 2004 were based on guidance from Lennar
management and assumed revenue growth of 11.0% for each of the two years and
constant operating margins consistent with U.S. Home's 2002 projections. The
terminal values of U.S. Home were calculated based on projected EBITDA for 2004
and a range of multiples from 4.0x to 6.0x. Deutsche Bank used discount rates
ranging from 9.0% to 11.0%. Deutsche Bank used such discount rates based on its
judgment of the estimated weighted average cost of capital of U.S. Home, and
used such multiples based on its review of the trading characteristics of the
common stock of the Selected
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<PAGE> 43
Companies. This analysis yielded the following equity values per share ranging
between $15.85 to $53.53 per share:
<TABLE>
<CAPTION>
EQUITY VALUE PER SHARE
EBITDA MULTIPLES
--------------------------
DISCOUNT RATE 4.0x 5.0x 6.0x
------------- ------ ------ ------
<S> <C> <C> <C>
9.0%............................................... $21.21 $37.27 $53.53
10.0%.............................................. $18.46 $33.80 $49.14
11.0%.............................................. $15.85 $30.52 $45.18
</TABLE>
PRO FORMA COMBINED EARNINGS ANALYSIS
Deutsche Bank analyzed certain pro forma effects of the merger. Based upon
management earnings estimates for each of Lennar and U.S. Home, Deutsche Bank
computed the resulting dilution/accretion to the combined company's estimated
EPS for the fiscal years ending 2000 and 2001, before taking into account any
potential cost savings and other synergies identified by management that U.S.
Home and Lennar could achieve if the merger were consummated and before
non-recurring costs relating to the merger. This computation also assumes, for
fiscal year 2000, that the merger had been consummated as of the beginning of
Lennar's fiscal year. Deutsche Bank noted that before taking into account any
potential cost savings and other synergies and before such non-recurring costs,
based on a purchase price of $36.00 per share, the merger would be approximately
14.6% accretive and 21.7% accretive to the combined company's EPS for the fiscal
years ending 2000 and 2001, respectively. Deutsche Bank noted that before taking
into account any potential cost savings and other synergies and before such
non-recurring costs, based on a purchase price of $41.00 per share, the merger
would be approximately 7.1% accretive and 14.9% accretive to the combined
company's EPS for the fiscal years ending 2000 and 2001, respectively. Deutsche
Bank noted that before taking into account any potential cost savings and other
synergies and before such non-recurring costs, based on a purchase price of
$32.72 per share, the merger would be approximately 17.4% accretive and 23.9%
accretive to the combined company's EPS for the fiscal years ending 2000 and
2001, respectively. The combination effects to Lennar EPS based upon different
purchase price scenarios are summarized as follows:
<TABLE>
<CAPTION>
EPS ACCRETION TO
LENNAR
SHAREHOLDERS
----------------
2000E 2001E
------ ------
<S> <C> <C>
$41.00 Purchase Price....................................... 7.1% 14.9%
$36.00 Purchase Price....................................... 14.6% 21.7%
$32.72 Purchase Price....................................... 17.4% 23.9%
</TABLE>
The foregoing summary describes all analyses and factors that Deutsche Bank
deemed material in its presentation to the Lennar board of directors, but is not
a comprehensive description of all analyses performed and factors considered by
Deutsche Bank in connection with preparing its opinion. The preparation of a
fairness opinion is a complex process involving the application of subjective
business judgment in determining the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, is not readily susceptible to summary description.
Deutsche Bank believes that its analyses must be considered as a whole and that
considering any portion of such analyses and of the factors considered without
considering all analyses and factors could create a misleading view of the
process underlying the opinion. In arriving at its fairness determination,
Deutsche Bank did not assign specific weights to any particular analyses.
In conducting its analyses and arriving at its opinions, Deutsche Bank
utilized a variety of generally accepted valuation methods. The analyses were
prepared solely for the purpose of enabling Deutsche Bank to provide its opinion
to the Lennar board of directors as to the fairness to Lennar of the merger
consideration from a financial point of view and does not purport to be
appraisals or necessarily reflect the prices at which businesses or securities
actually may be sold, which are inherently subject to uncertainty.
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<PAGE> 44
In connection with its analyses, Deutsche Bank made, and was provided by Lennar
management with, numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond Lennar's or U.S. Home's control. Analyses based on estimates or forecasts
of future results are not necessarily indicative of actual past or future values
or results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of Lennar, U.S.
Home or their respective advisors, neither Lennar nor Deutsche Bank nor any
other person assumes responsibility if future results or actual values are
materially different from these forecasts or assumptions.
The terms of the merger were determined through negotiations between Lennar
and U.S. Home and were approved by the Lennar board of directors. Although
Deutsche Bank provided advice to Lennar during the course of these negotiations,
the decision to enter into the merger was solely that of the Lennar board of
directors. As described above, the opinion and presentation of Deutsche Bank to
the Lennar board of directors was only one of a number of factors taken into
consideration by the Lennar board of directors in making its determination to
approve the transaction. Deutsche Bank's opinion was provided to the Lennar
board of directors to assist it in connection with its consideration of the
merger and does not constitute a recommendation to any holder of Lennar common
stock as to how to vote with respect to the merger.
Lennar selected Deutsche Bank as financial advisor in connection with the
merger based on Deutsche Bank's qualifications, expertise, reputation and
experience in mergers and acquisitions. Lennar retained Deutsche Bank
Securities, Inc. pursuant to an engagement letter dated February 10, 2000. As
compensation for Deutsche Bank's services in connection with the merger, Lennar
agreed to pay Deutsche Bank $100,000 as a retainer fee in connection with the
transaction, $1.0 million for delivery of its Fairness Opinion and an additional
cash fee of $3.9 million if the merger is consummated. Regardless of whether the
merger is consummated, Lennar has agreed to reimburse Deutsche Bank for
reasonable fees and disbursements of Deutsche Bank's counsel and all of Deutsche
Bank's reasonable travel and other out-of-pocket expenses incurred in connection
with the merger or otherwise arising out of the retention of Deutsche Bank under
the engagement letter. Lennar has also agreed to indemnify Deutsche Bank and
certain related persons to the full extent lawful against certain liabilities,
including certain liabilities under the federal securities laws arising out of
its engagement or the merger.
Deutsche Bank is an internationally recognized investment banking firm
experienced in providing advice in connection with mergers and acquisitions and
related transactions. Deutsche Bank is an affiliate of Deutsche Bank AG
(together with its affiliates, the "DB Group"). One or more members of the DB
Group have, from time to time, provided investment banking, commercial banking
and other financial services to Lennar or its affiliates for which it has
received compensation. During the past two years, the aggregate amount of the
compensation received from Lennar by the members of the DB Group was
approximately $5.8 million. The DB Group advised Lennar in connection with its
merger with Pacific Greystone Corporation in October 1997, acted as lead manager
for its offering of Zero-Coupon Senior Convertible Debentures due 2018 in July
1998 and $282 million of Senior Notes due 2009 in February 1999. In addition,
the DB Group has provided investment banking and other financial services to LNR
Property Corp., a company spun off by Lennar in 1997, for which customary
compensation has been received. One or more members of the DB Group may provide
financing to Lennar in connection with the merger. A member of the DB Group has
committed to be one of the principal banks in $1.3 billion of financing for
Lennar. Other members of the DB Group have committed to co-lead an underwriting
or placement of Lennar debt securities and to participate in a $500 million
bridge loan until the debt securities are sold. The members of the DB Group will
receive fees in connection with those financing transactions. Deutsche Bank and
its affiliates may actively trade securities of Lennar or U.S. Home for their
own account or the account of their customers and, accordingly, may from time to
time hold a long or short position in such securities.
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<PAGE> 45
OPINION OF U.S. HOME'S FINANCIAL ADVISOR
In February 2000, U.S. Home retained Warburg Dillon Read LLC as financial
advisor to explore a possible transaction between Lennar and U.S. Home. In its
capacity as financial advisor, Warburg Dillon Read LLC was retained to act as
exclusive agent to attempt to arrange the sale of the stock of U.S. Home or
substantially all of its assets to Lennar or, possibly, a party other than
Lennar. At that time U.S. Home was considering a transaction which it had
originated with Lennar. In its role as financial advisor to U.S. Home, Warburg
Dillon Read LLC was not requested to, and did not, solicit third party
indications of interest in acquiring U.S. Home. On February 16, 2000, Warburg
Dillon Read LLC delivered its oral opinion, subsequently confirmed in writing,
to U.S. Home's board of directors to the effect that, based upon and subject to
certain matters stated in that opinion, as of February 16, 2000, the
consideration to be received by holders of U.S. Home's common stock in the
merger is fair, from a financial point of view, to those holders.
The full text of the written opinion of Warburg Dillon Read LLC, dated
February 16, 2000, which sets forth the procedures followed, assumptions and
qualifications made, matters considered and limitations of the review undertaken
in connection with that opinion, is attached as Annex III to this Joint Proxy
Statement/Prospectus and is incorporated into this Joint Proxy
Statement/Prospectus by reference. The Warburg Dillon Read LLC opinion is
directed only to the fairness from a financial point of view to the holders of
the common shares of U.S. Home as of the date thereof and it does not address
any other aspect of the transactions contemplated by the merger agreement. The
Warburg Dillon Read LLC opinion does not constitute a recommendation to any
shareholder with respect to how that shareholder should vote with respect to the
merger. Holders of shares of U.S. Home common stock are urged to read the
Warburg Dillon Read LLC opinion carefully in its entirety for information with
respect to the procedures followed, assumptions and qualifications made, matters
considered and limitations of the review undertaken in connection with that
opinion. References to the Warburg Dillon Read LLC opinion in this Joint Proxy
Statement/Prospectus and the summary of the Warburg Dillon Read LLC opinion set
forth below are qualified in their entirety by reference to the full text of
that opinion.
In arriving at its opinion, Warburg Dillon Read LLC has, among other
things:
- reviewed publicly available business and historical financial information
relating to U.S. Home and Lennar;
- reviewed internal financial information and other data relating to the
business and financial prospects of U.S. Home, including estimates and
financial forecasts prepared by management of U.S. Home, that were
provided to Warburg Dillon Read LLC by U.S. Home and not publicly
available;
- reviewed internal financial information and other data relating to the
business and financial prospects of Lennar, including estimates and
financial forecasts prepared by the management of Lennar, that were
provided to Warburg Dillon Read LLC by Lennar and not publicly available;
- conducted discussions with members of the senior management of U.S. Home
and Lennar;
- reviewed publicly available financial and stock market data with respect
to other companies in lines of business Warburg Dillon Read LLC believe
to be generally comparable to those of Lennar and U.S. Home;
- compared the financial terms of the merger with the publicly available
financial terms of other transactions which Warburg Dillon Read LLC
believes to be generally relevant;
- considered the pro forma effects of the merger on Lennar's financial
statements;
- reviewed drafts of the merger agreement; and
- conducted other financial studies, analyses and investigations, and
considered other information, as Warburg Dillon Read LLC deemed necessary
or appropriate.
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<PAGE> 46
In connection with Warburg Dillon Read LLC's review, at the direction of
U.S. Home, Warburg Dillon Read LLC has not assumed any responsibility for
independent verification for any of the information reviewed by it for the
purpose of its opinion and has, at U.S. Home's direction, relied on it being
complete and accurate in all material respects. In addition, at U.S. Home's
direction, Warburg Dillon Read LLC has not made any independent evaluation or
appraisal of any of the assets or liabilities, contingent or otherwise, of U.S.
Home or Lennar, nor has it been furnished with any evaluation or appraisal. With
respect to the financial forecasts, estimates and pro forma effects, Warburg
Dillon Read LLC has assumed, at U.S. Home's direction, that they have been
reasonably prepared on a basis reflecting the best currently available estimates
and judgments of the management of each company as to the future performance of
their respective companies. The Warburg Dillon Read LLC opinion is necessarily
based on economic, monetary, market and other conditions as in effect on, and
the information made available to it as of, the date of the opinion. In
addition, Warburg Dillon Read LLC was not asked to and did not express any
opinion as to the tax consequences of the merger to any holder of U.S. Home
common shares.
In rendering its opinion, Warburg Dillon Read LLC assumed, with U.S. Home's
consent, that the final executed form of the merger agreement did not differ in
any material respect from the draft that Warburg Dillon Read LLC examined, and
that U.S. Home and Lennar will comply with all the material terms of the merger
agreement.
The Warburg Dillon Read LLC opinion did not address U.S. Home's underlying
business decision to effect the merger. Except as expressly set forth in this
Joint Proxy Statement/Prospectus, no special instructions were given to Warburg
Dillon Read LLC relating to its review, and no limitations were imposed with
respect to investigations made or procedures followed by Warburg Dillon Read LLC
in rendering the Warburg Dillon Read LLC opinion. Warburg Dillon Read LLC was
not requested to recommend the amount of consideration to be paid in the merger.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant methods of financial and comparative analysis
and the application of those methods to the particular circumstances. Therefore,
a fairness opinion is not readily susceptible to summary description.
Furthermore, in arriving at its opinion, Warburg Dillon Read LLC did not assign
any particular weight to any analysis or factor considered by it, but rather
made qualitative judgments based on its experience in rendering fairness
opinions and on then existing economic, monetary and market conditions as to the
significance and relevance of each analysis and factor. Accordingly, Warburg
Dillon Read LLC believes that its analyses must be considered as a whole and
that considering any portions of those analyses and of the factors considered,
without considering all analyses and factors, could create a misleading or
incomplete view of the processes underlying those analyses and its opinion. In
performing its analysis, Warburg Dillon Read LLC relied on numerous assumptions
made by U.S. Home's management and Lennar's management and made numerous
judgments of its own with regard to U.S. Home's performance, industry
performance, general business and economic conditions and other matters, many of
which are beyond U.S. Home's ability to control. Any estimates contained in
Warburg Dillon Read LLC's analyses are not necessarily indicative of actual
values or predictive of future results or values, which may be significantly
more or less favorable than as suggested in those analyses. In addition,
analyses relating to values of companies do not purport to be appraisals or to
reflect the prices at which businesses or securities may actually be sold. Since
estimates are inherently subject to uncertainty, none of U.S. Home, Warburg
Dillon Read LLC and any other person assumes responsibility for their accuracy.
The summary of Warburg Dillon Read LLC's analyses set forth below does not
purport to be a complete description of the analyses underlying Warburg Dillon
Read LLC's opinion or presentation to U.S. Home's board of directors. The
summary analysis set forth below contains information presented in tabular
format. The tables must be read in conjunction with the full narrative
description of the financial analysis.
Acquisition Summary. Warburg Dillon Read LLC noted that with an offer
price of $36.00 per share for each share of U.S. Home common stock, including
in-the-money options, as of February 16, 2000, the merger would provide for a
total implied equity value of $489.8 million. With the assumption of $643.9
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<PAGE> 47
million in net debt as of December 31, 1999, the merger would provide for an
implied enterprise value of $1,133.8 million. Warburg Dillon Read LLC summarized
certain acquisition multiples by observing that the offer for equity as a
multiple of net income was 6.8x based upon 1999 net income, and 5.9x based upon
U.S. Home management's estimated 2000 net income. The offer for equity as a
multiple of book value was 0.8x based upon 1999 book value. Warburg Dillon Read
LLC also noted that the enterprise value as a multiple of revenues was 0.6x
based upon 1999 revenues, 6.4x based upon 1999 earnings before interest, taxes,
depreciation and amortization, and 5.8x based upon U.S. Home management's
estimated 2000 earnings before interest, taxes, depreciation and amortization.
The enterprise value as a multiple of net assets was 0.9x based upon 1999 net
assets.
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE IMPLIED ENTERPRISE VALUE
AS A MULTIPLE OF: AS A MULTIPLE OF:
--------------------------- --------------------------------------
IMPLIED IMPLIED 1999 2000E 1999 1999
EQUITY ENTERPRISE NET NET BOOK 1999 1999 2000E NET
VALUE VALUE INCOME INCOME VALUE REVENUES EBITDA EBITDA ASSETS
------- ---------- ------- ------- ------- -------- ------- ------- -------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Home............ $489.8 $1,133.8 6.8x 5.9x 0.8x 0.6x 6.4x 5.8x 0.9x
</TABLE>
Historical Stock Trading Analysis. To provide contextual and comparative
market data, Warburg Dillon Read LLC examined the history of the trading prices
for the shares of U.S. Home common stock in relation to a mid-capitalization
homebuilder index consisting of Beazer Homes USA, Inc., Crossmann Communities
Inc., M.D.C. Holdings, Inc., NVR, Inc., The Ryland Group, Inc., Standard Pacific
Corp. and Del Webb Corporation. The trading performance of U.S. Home common
stock, on an indexed basis, based on closing prices, under-performed the index
defined above over the past five years, the past three years and over the last
twelve months, respectively. Warburg Dillon Read LLC noted that over the last
twelve months, U.S. Home common stock had a high of $37.31, a low of $23.94, an
average price of $30.57 and an average daily volume of 32,706 shares. In
addition, Warburg Dillon Read LLC noted that on a forward price/earnings basis,
the multiple implied by the offer price of $36.00 per U.S. Home share was in
excess of the forward price/earnings multiple implied by the current trading
price of U.S. Home as of February 11, 2000, whether the Institutional Brokers
Estimate System, also known as IBES, earnings per share estimates were used or
U.S. Home management earnings per share estimates were used.
Analysis of Selected Publicly Traded Comparable Companies. Using publicly
available information, Warburg Dillon Read LLC compared selected financial data
of U.S. Home with similar data of selected companies, the securities of which
are publicly traded and which are engaged in businesses that Warburg Dillon Read
LLC believed to be generally comparable in some respects to those of U.S. Home.
The comparable companies were as follows: M.D.C. Holdings, Inc., NVR, Inc., The
Ryland Group, Inc., Standard Pacific Corp. and Del Webb Corporation. Warburg
Dillon Read LLC determined the total market value of equity, which is defined as
shares outstanding multiplied by the share price as of February 11, 2000, and
derived an enterprise value, which is defined as total market value of equity
plus the book value of debt, preferred stock and minority interests less cash
and cash equivalents, for each of the comparable companies.
Warburg Dillon Read LLC calculated a range of such market values of equity
as a multiple of latest twelve months' net income and latest book value. For the
comparable companies, market value of equity as a multiple of latest twelve
months' net income averaged 4.5x and market value of equity as a multiple of the
latest book value averaged 1.0x. In addition, Warburg Dillon Read LLC calculated
a range of such enterprise values as a multiple of latest twelve months' sales,
earnings before interest, taxes, depreciation and amortization and earnings
before interest and taxes and latest net assets. For the comparable companies,
enterprise value as a multiple of latest twelve months' revenues averaged 0.5x;
enterprise value as a multiple of latest twelve months' earnings before
interest, taxes, depreciation and amortization averaged 4.5x; enterprise value
as a multiple of latest twelve months' earnings before interest and taxes
averaged 4.9x; and enterprise value as a multiple of latest net assets averaged
1.0x. Warburg Dillon Read LLC noted that, based on the transaction contemplated
by the merger agreement at an offer price of $36.00 per share of U.S. Home
common stock, including in-the-money options, the implied market value of equity
for U.S. Home represented 6.8x 1999 net income and 0.8x 1999 book value.
Further, the implied
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<PAGE> 48
enterprise value for U.S. Home represented 0.6x 1999 revenues, 6.4x 1999
earnings before interest, taxes, depreciation and amortization, 7.0x 1999
earnings before interest and taxes and 0.9x 1999 net assets.
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE IMPLIED ENTERPRISE VALUE
AS A MULTIPLE OF: AS A MULTIPLE OF:
----------------------- -------------------------------------
LTM LTM LTM LTM LTM LTM
NET INCOME BOOK VALUE REVENUES EBITDA EBIT NET ASSETS
---------- ---------- -------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Comparable Companies Average............ 4.5x 1.0x 0.5x 4.5x 4.9x 1.0x
</TABLE>
Analysis of Selected Comparable Acquisitions. Using publicly available
information, Warburg Dillon Read LLC compared selected financial data of U.S.
Home with similar data of companies and/or businesses that have been acquired in
the past six years engaged in businesses that Warburg Dillon Read LLC believed
to be relevant or comparable in some respects to that of U.S. Home. For the
comparable acquired companies, multiples of the total consideration offered for
equity, to the latest twelve months net income of acquired companies and/or
businesses prior to closing for which public information was available averaged
9.3x. For the comparable acquired companies, multiples of the total
consideration offered for equity, to the latest book value of acquired companies
and/or businesses prior to closing for which public information was available
averaged 1.9x. For the comparable acquired companies, multiples of the
enterprise value of the transaction, meaning the total consideration offered for
equity plus the book value of debt, preferred stock and minority interests less
cash and cash equivalents, to the latest twelve months' revenues of the acquired
companies and/or businesses prior to closing for which public information was
available averaged 0.8x. Multiples of the enterprise value of the transactions
to the latest twelve months' earnings before interest, taxes, depreciation and
amortization of the acquired companies and/or businesses prior to closing for
which public information was available averaged 6.3x. Multiples of the
enterprise value of the transactions to the latest twelve months' earnings
before interest and taxes of the acquired companies and/or businesses prior to
closing for which public information was available averaged 6.4x. Multiples of
the enterprise value of the transactions to the latest net assets of the
acquired companies and/or businesses prior to closing for which public
information was available averaged 1.6x. Warburg Dillon Read LLC noted that,
based on the transactions contemplated by the merger agreement, the implied
market value of equity for U.S. Home, including in-the-money options,
represented 6.8x 1999 net income and 0.8x 1999 book value. Further, Warburg
Dillon Read LLC noted that, based on the transactions contemplated by the merger
agreement, the implied enterprise value for U.S. Home represented 0.6x 1999
revenues, 6.4x 1999 earnings before interest, taxes, depreciation and
amortization, 7.0x 1999 earnings before interest and taxes and 0.9x 1999 net
assets.
<TABLE>
<CAPTION>
CONSIDERATION OFFERED FOR ENTERPRISE VALUE OF THE TRANSACTION
EQUITY AS A MULTIPLE OF: AS A MULTIPLE OF:
-------------------------- ----------------------------------------
LTM LTM LTM LTM LTM LTM
NET INCOME BOOK VALUE REVENUES EBITDA EBIT NET ASSETS
----------- ----------- -------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Comparable Acquisitions Average... 9.3x 1.9x 0.8x 6.3x 6.4x 1.6x
</TABLE>
No company, transaction or business used in the analyses described under
"Analysis of Selected Comparable Acquisitions" and "Analysis of Selected
Publicly Traded Comparable Companies" is identical to U.S. Home or the
transactions contemplated by the merger agreement. Accordingly, an evaluation of
the results of the analyses necessarily involves complex considerations and
judgments concerning the differences in financial and operating characteristics
and other factors that could affect the transaction or the public trading price
or other values of U.S. Home or companies or businesses to which it is being
compared. Mathematical analysis, such as determining the average or median, is
not in itself a meaningful method of using comparable acquisition or comparable
company data.
Premium Analysis. Warburg Dillon Read LLC analyzed the premium to be paid
in the merger per share of U.S. Home common stock over selected periods and
compared it to the average historical transaction premium of selected similarly
sized transactions which included transactions that were all stock
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<PAGE> 49
transactions, all cash transactions and cash and stock transactions over similar
time periods. For the average of the historical transactions the following
premiums were noted:
- for all stock transactions; the premium to one day prior was 22.3%, to
one week prior was 25.1% and to one month prior was 31.8%;
- for all cash transactions; the premium to one day prior was 27.4%, to one
week prior was 31.7% and to one month prior was 35.9%; and
- for cash and stock transactions; the premium to one day prior was 22.8%,
to one week prior was 33.3% and to one month prior was 37.1%.
Discounted Cash Flow Analysis. Warburg Dillon Read LLC performed a
discounted cash flow analysis of U.S. Home using operating projections provided
by U.S. Home's management. In performing its discounted cash flow analysis,
Warburg Dillon Read LLC considered various assumptions and applied valuation
parameters that it deemed appropriate. Utilizing the projections provided by
management, Warburg Dillon Read LLC calculated the theoretical discounted
present value per share for U.S. Home by adding together (a) the projected
future stream of unlevered free cash flow through the fiscal year ending
December 31, 2004 and (b) the projected continuing value of U.S. Home at the end
of the fiscal year ended December 31, 2004 defined as the terminal value. The
terminal value was calculated based on earnings before interest, taxes,
depreciation and amortization multiples of 4.5x to 5.5x. The cash flow streams
and the terminal values were then discounted to present values using a range of
discount rates from 10% to 12%. By adding the present value of the cash flow
streams and terminal value and subtracting the net debt at December 31, 1999, a
range of implied equity values for U.S. Home was determined. Based on the
analysis above, Warburg Dillon Read LLC arrived at an implied equity value per
share valuation range of $14.62 to $35.45 per share.
In addition to the above outlined analyses, Warburg Dillon Read LLC
performed such other valuation analyses as it deemed appropriate in determining
the fairness from a financial point of view of the consideration to be offered
to the holders of shares of U.S. Home common stock in the merger.
Warburg Dillon Read LLC is an internationally recognized investment banking
firm which, as a part of its investment banking business, regularly is engaged
in the evaluation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. U.S. Home retained Warburg
Dillon Read LLC because it is an internationally recognized investment banking
firm and because of its experience in the valuation of companies. In the past,
Warburg Dillon Read LLC and its predecessors have provided investment banking
services to U.S. Home and Lennar and received customary compensation for the
rendering of such services. During the past two years, the aggregate amount of
compensation received from U.S. Home by Warburg Dillon Read LLC and its
predecessors was approximately $2.77 million. During the past two years, Warburg
Dillon Read LLC and its predecessors also received compensation totaling
$373,387 for services rendered to Lennar. In the ordinary course of business,
Warburg Dillon Read LLC, its predecessors and affiliates may have traded
securities of U.S. Home or Lennar for their own accounts and, accordingly, may
at any time hold a long or short position in those securities.
Terms of Warburg Dillon Read LLC's Engagement. Pursuant to the terms of an
engagement letter, dated February 12, 2000, between U.S. Home and Warburg Dillon
Read LLC, U.S. Home agreed to pay Warburg Dillon Read LLC a fee of $5.25 million
upon consummation of a sale of U.S. Home or other similar transaction with
Lennar, 25% of which became payable upon delivery by Warburg Dillon Read LLC of
its fairness opinion. U.S. Home also agreed to reimburse Warburg Dillon Read
LLC's reasonable expenses, including the fees and disbursements of its counsel,
and to indemnify and defend Warburg Dillon Read LLC and certain related persons
against certain liabilities and expenses, including certain liabilities under
the federal securities laws, relating to or arising out of the engagement.
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THE TERMS OF LENNAR'S ACQUISITION OF U.S. HOME
GENERAL
The merger agreement provides the legal framework for Lennar's acquisition
of U.S. Home through a merger of U.S. Home into a newly formed wholly-owned
subsidiary of Lennar. It covers, among other things:
- the effective time and effects of the merger;
- what U.S. Home stockholders will receive;
- the treatment of outstanding U.S. Home options and warrants;
- representations and warranties as to various facts regarding the parties;
- agreements as to what the parties must do and not do prior to the
effective time of the merger;
- conditions that must be fulfilled before each party is obligated to
effect the merger; and
- the circumstances under which the merger agreement may be terminated and
the effect of termination.
The following sections briefly summarize each of the above categories. For
a more complete understanding of the contents of the merger agreement, please
see the merger agreement itself, which is attached to this Joint Proxy
Statement/Prospectus as Annex I and is incorporated into this document by
reference.
EFFECTIVE TIME
The merger will become effective at 11:59 p.m. on the day a certificate of
merger is filed with the Secretary of State of Delaware. The latest this is
expected to occur is on the second business day after the day on which all the
conditions to the obligations of the parties specified in the merger agreement
are fulfilled, but the day may be changed by the parties. It is likely the last
substantive conditions to be fulfilled will be the votes at the stockholder
meetings that are the subject of this Joint Proxy Statement/ Prospectus.
Therefore it is likely that the latest time at which the merger will be
effective will be 11:59 p.m. on the second business day after the day on which
the stockholders meetings are held. At the effective time of the merger, U.S.
Home will be merged with and into a wholly-owned subsidiary of Lennar and the
separate corporate existence of U.S. Home will terminate. The Lennar subsidiary
will be the surviving corporation in the merger.
After the merger, the certificate of incorporation and by-laws of the
Lennar subsidiary will remain in effect, except that the name of the corporation
will be changed to U.S. Home Corporation.
EXCHANGE OF SHARES
As a result of the merger, each share of U.S. Home common stock that is
outstanding immediately before the merger will be converted into the right to
receive
- $18 in cash, plus
- the number of shares of Lennar common stock with a market value equal to
$18 (subject to adjustment as described below), but not more than 1.27434
shares of Lennar common stock and not fewer than 0.9600 shares of Lennar
common stock.
The value of the Lennar shares a U.S. Home stockholder will receive will be
greater than $18.00 if the market price of Lennar's stock is above $18.75, but
under no circumstances will the basic merger consideration U.S. Home
stockholders receive Lennar shares with a 20 day average last sale price above
$23.00 (which would make the total merger consideration $41 per U.S. Home
share). The value of the Lennar shares a U.S. Home stockholder will receive will
be lower than $18.00 if the market price of
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Lennar's stock is below $14.125. However, either U.S. Home or Lennar will have
the right to cancel the merger agreement if the 20 day average last sale price
of the Lennar shares is $11.55 or less, unless Lennar agrees to increase the
shares included in the merger consideration to the number of shares having a 20
day average last sale price of $14.72 (which would make the total merger
consideration $32.72 per U.S. Home share).
The following is the value of what a U.S. Home stockholder will receive for
each share of U.S. Home stock, at various market values of Lennar stock:
<TABLE>
<CAPTION>
IF THE AVERAGE LAST SALE PRICE OF A LENNAR SHARE IS LENNAR SHARES ISSUED WITH REGARD TO EACH U.S. HOME SHARE
- --------------------------------------------------- --------------------------------------------------------
<S> <C>
More than $23.96 Shares with a market value of $23.00
Between $23.96 and $18.75 .9600 shares
Between $18.75 and $14.125 Shares with a market value of $18.00
Between $14.125 and $11.55 1.27434 shares
$11.55 or less Each of U.S. Home or Lennar has the right to terminate
the merger agreement unless Lennar agrees to increase
the number of shares to the number which has a market
value of $14.72
</TABLE>
With respect to the calculations under the merger agreement, the market
value of a share of Lennar common stock will be the average of the last sale
price of Lennar's common stock reported on the New York Stock Exchange on each
of the 20 trading days ending on, and including, the last trading day before the
date of the U.S. Home stockholders meeting.
No fractional shares of Lennar common stock will be issued as merger
consideration. Instead, any fractional share that would be issued will be
converted into cash based upon the average last sale price of Lennar common
stock described above.
In order to receive the merger consideration, a U.S. Home stockholder will
have to complete and sign a letter of transmittal and return it, together with
the stockholder's U.S. Home shares, to EquiServe Trust Company, N.A., which will
act as Distributing Agent with regard to the merger consideration.
U.S. HOME STOCKHOLDER ELECTION REGARDING MERGER CONSIDERATION
A U.S. Home stockholder may elect to receive, instead of the cash and
shares of Lennar stock described above, either (a) $36 in cash, but no Lennar
stock, or (b) a number of shares of Lennar common stock which is twice the
number of shares the U.S. Home stockholder otherwise would receive, but no cash.
However, under no circumstances may elections by U.S. Home stockholders cause
(x) the total number of shares of Lennar common stock to be issued to be more
than the total number of shares Lennar would issue if no U.S. Home stockholders
made any elections, or (y) more than 55% of the total value of the merger
consideration for all the shares of U.S. Home common stock to be cash (assuming
all U.S. Home stockholders who exercise dissenters' appraisal rights will
receive $36 per share in cash). If elections would cause the number of shares to
exceed that maximum number, the number of shares to be issued to U.S. Home
stockholders who elect to receive the merger consideration entirely in Lennar
stock will be reduced (but not below the number of shares they would have
received if they had not made those elections), and they will receive cash equal
to the percentage of $18 per share of U.S. Home common stock as to which they
elected to receive entirely Lennar stock that the reduction in shares is of the
total additional shares which would have been issued as a result of elections to
receive entirely Lennar stock if there had been no reduction. Similarly, if
elections would cause more than 55% of the total merger consideration to be
cash, the cash which will be paid to U.S. Home stockholders who elect to receive
their entire merger consideration in cash will be reduced so that 55% of the
total value of the merger consideration will be cash (but not below $18 per U.S.
Home share), and those stockholders will receive Lennar common stock instead of
the cash they do not receive, at the rate of one share of Lennar common stock
for each $18 which is not received.
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Theoretically, if the market value of Lennar common stock were $23.96 or
more, a person's election to receive the entire merger consideration in Lennar
common stock could increase the market value of that person's merger
consideration to $46 per U.S. Home share. However, because elections to receive
all Lennar common stock will not be recognized to the extent they would increase
the total shares Lennar would be required to issue above the number of shares if
there were no elections, elections by U.S. Home stockholders to receive all
stock will be effective only to the extent other U.S. Home stockholders elect to
receive entirely cash. It is unlikely that if the market value of Lennar's
common stock were significantly more than $18.75 per share (and therefore U.S.
Home stockholders who do not make all cash elections would receive merger
consideration worth significantly more than the $36 they would receive if they
made all cash elections), many, if any, U.S. Home stockholders would make all
cash elections. Therefore, it is unlikely that U.S. Home stockholders will be
able to use all stock elections to receive significantly greater value than they
would receive if they made no elections.
Also theoretically, if the market value of Lennar common stock were $11.55
per share, a U.S. Home stockholder's election to receive the entire merger
consideration in Lennar common stock would reduce the market value of the U.S.
Home stockholder's merger consideration to $29.44 per U.S. Home share. However,
it is unlikely that any U.S. Home stockholder would make an all stock election
if the market value of Lennar common stock were significantly below $14.125 per
share (at which point the market value of the merger consideration a U.S. Home
stockholder would receive by making an all stock election would be less than
what the U.S. Home stockholder would receive by making no election).
In order to make an election, a U.S. Home stockholder will have to complete
an election form which will be mailed to U.S. Home stockholders no later than 25
days before the date of the special meetings. Each U.S. Home stockholder who
wants to make an election will have to complete this form and return it to the
distributing agent no later than 5:00 p.m. New York City time on the business
day immediately before the day of the special meetings.
An election may be rescinded at any point prior to 5:00 p.m. New York City
time on the business day immediately before the day of the special meeting.
After that, an election will be irrevocable. Shares will be returned promptly
after an election is rescinded. After an election is rescinded, a new election
may be made with regard to the same shares, if the new election is received
before the time to make elections expires. However, the new election cannot be
made until the shares have been returned and can be submitted with the new
election. That may not be possible if an election is rescinded shortly before
the time to make elections expires.
STOCK OPTIONS AND WARRANTS
Each option or warrant to purchase U.S. Home common stock which is
outstanding at the effective time of the merger will become the right to receive
cash equal to $36.00 minus the per share exercise price of the option or warrant
times the number of shares of U.S. Home common stock issuable upon exercise of
the option or warrant in full (irrespective of vesting provisions).
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various representations and warranties of the
parties. They are similar as to Lennar, on the one hand, and U.S. Home, on the
other hand, except to the extent they relate to specific elements of the
transaction that apply to only one or the other of them. The representations and
warranties are designed to provide a snapshot of the companies as they existed
at the time the merger agreement was signed and will exist at the time of the
merger. They will not be a basis for claims after the merger takes place. The
representations and warranties include the following:
- confirmation that each company has the corporate power to conduct its
business and is in good standing in its state of incorporation;
- confirmation of the authorized and issued capital stock of each company;
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- confirmation that each company has all licenses and permits which are
material to it and has complied in all material respects with applicable
laws;
- confirmation that reports filed with the Securities and Exchange
Commission, including the financial statements in them, were complete and
accurate and, as to the financial statements, in accordance with
generally accepted accounting principles -- because these reports contain
detailed descriptions of the companies, they are, in effect,
representations and warranties as to the nature of the businesses of
Lennar and U.S. Home and as to the material facts relating to those
businesses;
- confirmation that each company has been conducting its business in the
ordinary course consistent with past practice;
- confirmation that each company has filed all tax returns in a timely
manner and has paid all taxes when they were due; and
- confirmation that each company has complied in all material respects with
applicable environmental laws.
Other representations and warranties involve the authority of the parties
to enter into the merger agreement, the enforceability of the agreement,
Lennar's and U.S. Home's board of directors' approvals and recommendations to
stockholders and other representations and warranties typically in agreements of
this type.
Lennar represented and warranted that it has, or has access under existing
credit lines to, sufficient funds to pay the cash portion of the merger
consideration. It also presented a letter from Deutsche Bank Securities, Inc.
and Bank One Capital Markets regarding financing of the cash which will be
required to refinance U.S. Home's existing debt and for related fees and
expenses.
RESTRICTIONS ON ACTIVITIES OF U.S. HOME AND LENNAR PENDING THE MERGER
The merger agreement contains restrictions on the conduct of the business
of each of Lennar and U.S. Home pending the merger. They are designed to prevent
major changes in either of the companies until the merger takes place (except to
the extent the other company consents to the changes). In general, the merger
agreement provides that Lennar and U.S. Home and each of their respective
subsidiaries will, except as consented to by the other of them:
- operate its business in the ordinary course and in a manner consistent
with the way it was being operated on the date of the merger agreement;
- take all reasonable steps to maintain the goodwill of its business and
the continued employment of its executive officers and other employees
and to maintain good relationships with its vendors, suppliers,
contractors and others;
- maintain its assets in good repair and condition;
- maintain its books and records in the usual manner, in accordance with
generally accepted accounting principles;
- comply in all material respects with all applicable laws and regulations;
- not make any borrowings other than borrowings in the ordinary course of
business under existing working capital lines (U.S. Home only);
- not enter into any contractual commitments involving capital
expenditures, loans or advances, and not voluntarily incur any contingent
liabilities, except in the ordinary course of business (U.S. Home only);
- not redeem or purchase any of its stock or declare or pay any dividends
(other than, in the case of Lennar, regular quarterly dividends) or make
any other distributions to its stockholders;
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- not make any loans or advances (other than advances for travel and normal
business expenses) to stockholders, officers, directors or employees
(U.S. Home only);
- not purchase, sell or otherwise dispose of or encumber any property or
assets, except in the ordinary course of business;
- not enter into or amend any employment, severance or similar agreements
or arrangements, or increase the salaries of any employees, other than
through normal annual increases (U.S. Home only);
- not adopt, become an employer with respect to, or amend any employee
compensation, employee benefit or post-employment benefit plan (U.S. Home
only);
- not amend its certificate of incorporation or by-laws;
- not issue or sell any of its stock (except upon exercise of options which
were outstanding, or in accordance with the U.S. Home stock purchase plan
or Lennar's stock option plans, as applicable, which were in effect, on
the date of the merger agreement) or securities convertible into shares
of its stock, and not split, combine or reclassify its stock; and
- not knowingly take any action that would prevent the merger from
qualifying as a reorganization under Section 368(a) of the Code.
The merger agreement also prohibits Lennar from purchasing shares of U.S.
Home common stock that would cause Lennar and its affiliates to own more than 5%
of U.S. Home's common stock.
FACILITATING THE MERGER
The merger agreement requires Lennar and U.S. Home to take various steps to
facilitate completion of the merger, including:
- obtaining necessary consents;
- making necessary filings (including filings, if required, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976);
- affording the other party access to information; and
- using its best efforts to cause the conditions to the other party's
obligations to be fulfilled.
CONDITIONS TO THE MERGER
The parties' obligations to carry out the merger are subject to the
satisfaction of various conditions. These conditions are:
With regard to each party:
- the approvals of Lennar's and U.S. Home's stockholders;
- the accuracy of the other party's representation and warranties;
- the fulfillment of the other party's obligations;
- the absence of governmental action that prohibits the merger;
- nothing having occurred which had or is likely to have a material adverse
effect on the business or assets of the other party;
- any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 having expired;
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- authorization from the New York Stock Exchange to list the shares of
Lennar common stock issuable to U.S. Home stockholders in the merger;
- effectiveness of the registration statement of which this Joint Proxy
Statement/Prospectus is a part; and
- the market value of Lennar's common stock exceeding $11.55 per share,
except that this will not be a condition to U.S. Home's obligations if
Lennar agrees to issue shares with a market value of $14.72 with regard
to each U.S. Home share.
With regard to U.S. Home:
- the opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP to the effect
that the merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code and that Lennar, its
subsidiary and U.S. Home will be parties to that reorganization will
continue to be valid;
- U.S. Home shares as to which dissenters' rights are exercised not
exceeding 4% of U.S. Home's outstanding stock, unless, even if all
stockholders who exercise dissenters' appraisal rights receive $36 per
share in cash, the total cash paid to all U.S. Home stockholders will not
exceed 55% of the total merger consideration;
- Warburg, Pincus Investors, L.P. having consented to the merger; and
- Robert Strudler, Isaac Heimbinder, and two other designees of U.S. Home
having been elected to Lennar's board of directors, effective immediately
after consummation of the merger.
Either Lennar or U.S. Home may waive any of the conditions to its obligations.
PROVISIONS RELATING TO TRANSACTIONS WITH PERSONS OTHER THAN LENNAR
Neither U.S. Home nor anyone acting on its behalf may solicit, encourage or
enter into discussions or negotiations with regard to, an acquisition proposal
from anyone other than Lennar, except that U.S. Home may furnish information to,
and enter into discussions or negotiations with, a person who makes an
unsolicited proposal if U.S. Home's board determines in good faith, after
consultation with a nationally recognized financial advisor, that the person is
financially able to complete the transaction it has proposed and if completed,
that transaction would be more favorable to U.S. Home and its stockholders than
the merger. U.S. Home will have to notify Lennar (a) when U.S. Home receives an
acquisition proposal, and (b) of any determination to furnish information to, or
engage in discussions or negotiations with, the person who makes the proposal.
U.S. Home also must keep Lennar informed of the progress of any discussions or
negotiations with anyone who makes a possible acquisition proposal.
If U.S. Home receives an acquisition proposal, or someone commences a
tender offer or an exchange offer, which U.S. Home's board determines, within 15
business days after U.S. Home receives the proposal or the tender offer or
exchange offer is commenced, constitutes a superior proposal, U.S. Home may
terminate the merger agreement if (a) it notifies Lennar of the superior
proposal, including the value of the consideration the U.S. Home stockholders
would receive as a result of the superior proposal, and tells Lennar that unless
within five business days Lennar increases the merger consideration to an amount
at least equal to the value of what the U.S. Home stockholders would receive as
a result of the superior proposal, the merger agreement will terminate, (b)
Lennar does not increase the merger consideration to that amount within the five
business day period, and (c) U.S. Home pays Lennar $19 million and reimburses,
or agrees to reimburse, Lennar's expenses in connection with the transactions
which are the subject of the merger agreement up to $6 million. If U.S. Home
notifies Lennar that it will terminate the merger agreement unless Lennar
increases the merger consideration within five business days, U.S. Home may not
withdraw that notice without Lennar's consent.
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A superior proposal is defined in the merger agreement as an acquisition
proposal, tender offer or exchange offer which (a) would result in U.S. Home's
stockholders receiving consideration which is greater than the merger
consideration, (b) is not subject to the outcome of due diligence or other
investigation, (c) is not subject to a financing contingency and is from a
person which the U.S. Home board determines in good faith, after consultation
with its independent financial advisor, has the financial resources to carry out
the transaction and (d) U.S. Home's board determines in good faith after
consultation with its independent financial advisor to be more favorable to U.S.
Home's stockholders than the merger.
U.S. Home has agreed to recommend that its stockholders vote in favor of
the merger unless its board of directors determines in good faith, after
consultation with its counsel about the nature of its fiduciary obligations,
that it is required by its fiduciary duties to state that it no longer
recommends that stockholders vote in favor of the merger.
Lennar also will be entitled to a payment of $19 million and reimbursement
of its expenses up to $6 million if (a) the U.S. Home board withdraws its
recommendation of the merger and the merger is not approved at the U.S. Home
stockholders meeting or (b) Lennar terminates the merger agreement because U.S.
Home has materially violated its obligations under the merger agreement and
within 12 months there is a transaction which results in the U.S. Home
stockholders immediately before the transaction owning less than 50% of the
equity or voting power of the entity which results from the transaction.
If the U.S. Home board does not withdraw its recommendation that its
stockholders approve the merger, but nonetheless the U.S. Home stockholders do
not approve the merger, U.S. Home will have to reimburse Lennar for its
expenses, up to $6 million.
TERMINATION OF THE MERGER AGREEMENT
The parties may terminate the merger agreement by mutual written consent,
even after the stockholders have approved it. The merger agreement also may be
terminated:
-- BY EITHER U.S. HOME OR LENNAR IF:
- the other party's representations and warranties were not complete and
accurate in all material respects (or, in certain circumstances, all
respects) when they were made;
- any of the conditions to its obligation to complete the merger is not
fulfilled;
- the other party breaches in a material respect any covenant or
agreement contained in the agreement and does not cure that breach
within 10 business days after notice from the other party (or by the
effective time of the merger, if earlier);
- without fault of the terminating party, the merger is not completed by
August 31, 2000;
- a court or other governmental authority enjoins or otherwise prohibits
the merger; or
- the terminating party's stockholders do not approve the merger.
-- BY LENNAR if U.S. Home's board of directors withdraws or changes its
recommendation that its stockholders vote to adopt the merger agreement and
approve the merger, or U.S. Home's board of directors authorizes or recommends a
different transaction to its stockholders; or
-- BY U.S. HOME in order to accept what its board determines to be a
superior proposal, as described under the caption "Provisions Relating to
Transactions with Persons Other Than Lennar."
AMENDMENTS
The merger agreement may be amended by an agreement in writing signed by
both Lennar and U.S. Home.
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COMPENSATION AND BENEFITS
Lennar has agreed to consult with the senior executives of U.S. Home prior
to the effective time of the merger to develop employee benefit plans that will
provide U.S. Home's employees with benefits substantially as great as those they
are currently receiving under U.S. Home's employee benefit plans and to maintain
those plans for at least one year following the consummation of the merger.
In addition, Lennar has agreed to discuss with the senior executives of
U.S. Home, prior to the effective time of the merger, a program under which
employees of U.S. Home who have options to purchase U.S. Home common stock with
an exercise price above the merger consideration, and therefore will not receive
payments when their options are cancelled in the merger, will be granted options
to purchase Lennar common stock.
INDEMNIFICATION OF U.S. HOME DIRECTORS AND OFFICERS
Lennar will indemnify anyone who was a director, officer or employee of
U.S. Home or any of its subsidiaries, to the fullest extent permitted by law,
against liabilities and expenses relating to acts or omissions in those
capacities before the effective time of the merger, to the same extent provided
in U.S. Home's certificate of incorporation or by-laws, or any indemnification
agreements, in effect at the date of the merger agreement.
Lennar also must require the corporation which results from the merger to
keep U.S. Home's directors and officers liability insurance policies in effect
for six years after that effective time, or if the premiums for that insurance
would exceed three times the premiums currently being paid by U.S. Home, to
provide the maximum coverage which can be obtained for three times the current
premiums.
Lennar will be required to pay all reasonable expenses, including
attorney's fees, incurred by an indemnified person to enforce the indemnity
obligations of Lennar and the surviving corporation.
DISSENTERS' APPRAISAL RIGHTS
Except as described below, a holder of record of U.S. Home common stock may
elect to exercise appraisal rights under Section 262 of the Delaware General
Corporation Law. To do so, the U.S. Home stockholder must deliver a written
demand for appraisal of the stockholder's shares to U.S. Home prior to the vote
on the merger. The written demand must identify the stockholder of record and
state the stockholder's intention to demand appraisal of his shares. All demands
should be delivered to U.S. Home Corporation, Attention: Corporate Secretary.
Only a person who is the holder of record of shares of U.S. Home common
stock on the date the person makes a written demand for appraisal and who
continuously holds those shares through the effective time of the merger may
seek appraisal. The demand for appraisal must be executed by the holder of
record or by an agent acting on the holder's behalf. If U.S. Home common stock
is owned of record in a fiduciary capacity, such as by a trustee, guardian or
custodian, the demand should be made in that capacity, and if U.S. Home common
stock is owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand should be made by or for all owners of record. If
a demand for appraisal is executed by an agent for the holder of record, the
agent must identify the record owner and expressly disclose in the demand that
the agent is acting as agent for the record owner.
A record holder such as a broker who holds shares of U.S. Home common stock
as a nominee for beneficial owners, some of whom desire to demand appraisal,
must exercise appraisal rights on behalf of those beneficial owners with respect
to the shares held for them. In that case, the written demand for appraisal
should set forth the number of shares of U.S. Home common stock to which it
relates. Unless a demand for appraisal specifies a number of shares, the demand
will be presumed to cover all shares of U.S. Home common stock held in the name
of the record owner.
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BENEFICIAL OWNERS WHO ARE NOT RECORD OWNERS AND WHO WANT TO EXERCISE
APPRAISAL RIGHTS SHOULD INSTRUCT THE RECORD OWNER TO COMPLY WITH THE STATUTORY
REQUIREMENTS FOR EXERCISE OF APPRAISAL RIGHTS BEFORE THE DATE OF THE U.S. HOME
SPECIAL MEETING OF STOCKHOLDERS.
Within 10 days after the effective time of the merger, the surviving
corporation is required to send notice of the effectiveness of the merger to
each stockholder who prior to the effective time of the merger complies with the
requirements of Section 262.
Within 120 days after the effective time of the merger, the surviving
corporation or any stockholder who has complied with the requirements of Section
262 may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares of Lennar common stock held by all
stockholders seeking appraisal. A dissenting stockholder must serve a copy of
the petition on the surviving corporation. If no petition is filed by either the
surviving corporation or a dissenting stockholder within the 120-day period, the
dissenting stockholders' right to appraisal will cease. Stockholders seeking to
exercise appraisal rights should not assume that the surviving corporation will
file a petition with respect to the appraisal of the fair value of their shares
or that it will initiate any negotiations with respect to the fair value of
those shares. The surviving corporation is under no obligation, and has no
present intention, to do so. Accordingly, stockholders who wish to seek
appraisal of their shares should initiate all necessary action with respect to
the perfection of their appraisal rights within the time periods and in the
manner prescribed in Section 262. FAILURE TO FILE A PETITION ON A TIMELY BASIS
WILL CAUSE THE STOCKHOLDERS' RIGHTS TO AN APPRAISAL TO CEASE.
Within 120 days after the effective time of the merger, any stockholder who
has complied with subsections (a) and (d) of Section 262 is entitled, upon
written request, to receive from the surviving corporation a statement setting
forth the aggregate number of shares of U.S. Home common stock not voted in
favor of the merger with respect to which demands for appraisal have been
received by U.S. Home and the number of holders of those shares. The statement
must be mailed within 10 days after the written request has been received by the
surviving corporation or within 10 days after expiration of the time for
delivery of demands for appraisal under subsection (d) of Section 262, whichever
is later.
If a petition for an appraisal is filed in a timely manner, at the hearing
on the petition, the Delaware Court of Chancery will determine which
stockholders are entitled to appraisal rights and will appraise the shares of
U.S. Home common stock owned by those stockholders, determining the fair value
of those shares, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid, upon the amount determined to be the fair value.
In determining fair value, the court is to take into account all relevant
factors. The Delaware Supreme Court has stated that "proof of value by any
techniques or methods that are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in the
appraisal proceedings. The Delaware Supreme Court also held that "elements of
future value, including the nature of the enterprise, which are known or
susceptible of proof as of the date of the merger and not the product of
speculation, may be considered." In addition, Delaware courts have decided that
the statutory appraisal remedy, depending on factual circumstances, may or may
not be a dissenter's exclusive remedy.
Stockholders considering seeking appraisal should consider that the fair
value of their shares determined under Section 262 could be more than, the same
as, or less than, the value of the consideration provided for in the merger
agreement without the exercise of appraisal rights, and that investment banking
opinions as to fairness from a financial point of view are not necessarily
opinions as to fair value as determined under Section 262. The cost of the
appraisal proceeding may be determined by the Court of Chancery and assessed
against the parties, as the Court deems equitable in the circumstances. Upon
application of a dissenting stockholder, the court may order that all or a
portion of the expenses incurred by any dissenting stockholder in connection
with the appraisal proceeding (including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts) be charged proportionately
against the value of all shares of U.S. Home common stock entitled to appraisal.
In the absence of such a determination or assessment, each party bears its own
expenses.
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Any stockholder who has fully demanded appraisal in compliance with Section
262 will not, after the effective time of the merger, be entitled to receive
payment of dividends or other distributions on the U.S. Home common stock,
except for dividends or distributions payable to stockholders of record at a
date prior to the effective time of the merger.
A stockholder may withdraw a demand for appraisal and accept the merger
consideration at any time within 60 days after the effective time of the merger,
or thereafter may withdraw such a demand with the written approval of the
surviving corporation. If an appraisal proceeding is properly instituted, the
proceeding may not be dismissed as to any stockholder without the approval of
the Delaware Court of Chancery, and any such approval may be conditioned on the
Court of Chancery's deeming the terms to be just. If, after the effective time
of the merger, a holder of U.S. Home common stock who had demanded appraisal for
the holder's shares fails to perfect or loses his right to appraisal, those
shares will be treated under the merger agreement as if they had been converted
as of the effective time of the merger into the merger consideration.
IN VIEW OF THE COMPLEXITY OF THESE PROVISIONS OF DELAWARE LAW, ANY U.S.
HOME STOCKHOLDER WHO IS CONSIDERING EXERCISING APPRAISAL RIGHTS SHOULD CONSULT A
LAWYER.
VOTING AGREEMENT
In order to induce U.S. Home to enter into the merger agreement, Leonard
Miller, his family partnership and Stuart Miller agreed in a voting agreement to
vote all the Lennar class B common stock and Lennar common stock they own in
favor of the merger and the other transactions contemplated by the merger
agreement and against any change in Lennar's board of directors, changes in
Lennar's capital structure or amendments to Lennar's certificate of
incorporation or bylaws and any other proposal or transaction which would impede
or prevent or would reasonably be likely to result in any of the conditions to
Lennar's obligations under the merger agreement not being fulfilled or the
transactions contemplated by the merger agreement to be impeded.
In addition, Leonard Miller, Stuart Miller and the partnership agreed:
- not to sell or otherwise transfer their Lennar shares until the effective
time of the merger;
- not to enter into any voting arrangement prior to the effective time of
the merger, other than for the purpose of voting as required by the
voting agreement;
- to vote all Lennar equity securities they own, and take any other
necessary actions, to cause Lennar's board of directors to be increased
by four members and to elect Robert J. Strudler, Isaac Heimbinder and two
other designees of U.S. Home to the vacancies created by that increase,
effective upon completion of the merger; and
- not to purchase shares of U.S. Home common stock prior to the merger if
the purchase would result in Leonard Miller, his family partnership,
Stuart Miller, Lennar and Lennar's subsidiaries owning in the aggregate
more than 5% of U.S. Home's outstanding common stock.
Leonard Miller, through the partnership, owns approximately 99.7% of the
outstanding Lennar class B common stock, and is entitled to approximately 72% of
the votes that may be cast with regard to the merger. Therefore, if there is a
quorum at applicable stockholder meetings, their compliance with the voting
agreement will ensure that all the stockholder actions to which it relates will
be approved by Lennar's stockholders.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Lennar board of directors and the
U.S. Home board of directors with respect to the merger, stockholders should be
aware that certain directors and executive officers of Lennar and U.S. Home may
have interests in the merger different from the interests of the other
stockholders including the following:
CHANGE IN CONTROL PROVISIONS
Robert J. Strudler entered into an Employment and Consulting Agreement with
U.S. Home on May 12, 1986, which was amended and restated as of February 9,
1999. Isaac Heimbinder entered into a similar Employment and Consulting
Agreement with U.S. Home on the same date, which was amended and restated as of
February 9, 1999. Each of the employment agreements was subsequently amended as
of February 9, 2000. Under those employment agreements, if a control change
(which the merger would be) is followed within two years by a material change,
either or both of Messrs. Strudler and Heimbinder may terminate his employment
and receive the payments referred to below.
Under the employment agreements, a material change occurs as to Mr.
Strudler or Mr. Heimbinder if, among other things:
- his employment is terminated without cause;
- his functions, duties or responsibilities are adversely changed;
- his base salary is reduced; or
- he is assigned to a place of employment which is more than ten miles from
his present place of employment and which is not the corporate
headquarters of U.S. Home.
The payments to which Messrs. Strudler or Heimbinder will become entitled
if a material change occurs are as follows:
- the balance of the base salary which he would have been paid during the
remaining months of his employment term, but not less than thirty-six
months;
- an amount equal to the bonuses he earned, including any amounts deferred
pursuant to agreement with U.S. Home, during the most recently completed
three calendar years;
- an amount equal to the actuarial present value of the retirement benefits
to which he was entitled under the employment agreement, or, at his
option, payment of the retirement benefits in monthly installments in
accordance with the employment agreement; and
- an amount equal to any consulting fee payable under the employment
agreements.
In addition, if a control change occurs, each of Mr. Strudler and Mr.
Heimbinder may terminate his employment even if a material change has not
occurred, but, in such case, he will not be entitled to all of the payments
referred to above. However, he will immediately begin to serve as a consultant
to U.S. Home at annual compensation equal to $153,280 for Mr. Strudler and
$143,390 for Mr. Heimbinder (assuming a termination occurred in 1999), subject
to cost of living increases, for five years, and he will be entitled to payment
of retirement and other benefits as provided in his employment agreement.
Under the February 9, 2000 amendments to the employment agreements, each of
Messrs. Strudler and Heimbinder is entitled to a tax "gross-up" in the event
that payments received by him due to a control change followed by a material
change (together with amounts payable in connection with any other arrangements
maintained by U.S. Home) are subject to the excise tax imposed by Section 4999
of the Internal Revenue Code. In that event, U.S. Home will pay to Mr. Strudler
or Mr. Heimbinder, as applicable, an additional lump sum cash amount such that
the net amount retained by him after deduction of the excise tax and the tax and
excise tax payable with respect to the gross up payment will place him in the
same net position he would have been in if no excise tax were payable.
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Messrs. Strudler and Heimbinder will agree to terminate their employment
agreements at the effective time of the merger, except to the extent that
certain provisions, including, without limitation, those relating to retirement
benefits, will survive pursuant to their employment agreements with Lennar.
Each of the directors and officers of U.S. Home currently holds options to
acquire shares of U.S. Home common stock. Each such person may exercise at least
portions of those options prior to the merger, which will entitle them to
receive the merger consideration in respect of those shares. Options which are
not exercised prior to the consummation of the merger will entitle the holder to
receive in the merger cash per option share of $36 minus the option exercise
price.
One of the outside directors of U.S. Home is a participant in U.S. Home's
Retirement Plan for Non-Employee Directors. Under that retirement plan, the
present value of that director's retirement benefits will be paid in cash upon
the merger in lieu of being paid upon retirement.
LENNAR EMPLOYMENT AGREEMENTS
Lennar entered into three year employment agreements with each of Messrs.
Strudler and Heimbinder which will become effective at the effective time of the
merger. Under these agreements, Mr. Strudler will become the Co-Chief Operating
Officer of Lennar and Vice-Chairman of its board of directors, and Mr.
Heimbinder will become the Executive Vice President of E-Commerce Initiatives of
Lennar and a member of its board of directors. In addition, Mr. Heimbinder will
become the Chief Executive Officer and the Chairman of the board of directors of
Strategic Technologies, Inc., an indirect subsidiary of Lennar. Each of Messrs.
Strudler and Heimbinder will receive a cash payment of $10,000,000 at the
effective time of the merger. The annual base salary payable to each of Messrs.
Strudler and Heimbinder will be at least $800,000 per year, and they each will
be entitled to receive a cash bonus of $1,200,000 for calendar year 2000 and
bonuses of at least $1,000,000 for calendar years 2001 and 2002. At the
effective time of the merger, each of Messrs. Strudler and Heimbinder will be
granted an option, which vests over three years, to purchase 100,000 shares of
Lennar common stock at the closing price per share on that date. Under the
employment agreements, Lennar agreed to maintain the retirement benefits for
which Messrs. Strudler and Heimbinder were eligible under their employment
agreements with U.S. Home prior to the merger (which benefits will be payable in
whole or in part from an existing trust fund). In addition, Messrs. Strudler and
Heimbinder will be eligible to participate in Lennar's employee benefit plans in
which Lennar's senior executive officers participate, including medical plans.
If Lennar terminates the employment of either Mr. Strudler or Mr.
Heimbinder during the term of his agreement (and, in the case of Mr. Heimbinder,
if he terminates his employment voluntarily), he will be entitled to receive:
- the amount of the base salary that has accrued but not been paid up to
the date of termination;
- unless the termination is for cause (or, in the case of Mr. Strudler,
other than for good reason), a pro rata portion of the bonus payable for
the year of termination; and
- a lump sum in cash for all accrued but unpaid vacation days.
If Lennar terminates either employment agreement without cause, or if Mr.
Strudler or Mr. Heimbinder terminates his employment with Lennar for good
reason, Mr. Strudler or Mr. Heimbinder, as the case may be, will be entitled to
(a) receive a lump sum payment equal to the sum of his highest monthly base
salary and one-twelfth of the bonus paid in the preceding calendar year
multiplied by the number of months remaining in the employment term, and (b)
have the options granted to him under the employment agreement become
immediately exercisable.
The employment agreements also provide that Messrs. Strudler and Heimbinder
will each be entitled to receive an amount equal to his respective base salary
and bonus he would have received during the remainder of the employment term if
his employment is terminated for any reason other than death, disability or
cause prior to the first anniversary of a change in control of Lennar.
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In addition, the employment agreements provide for a "gross-up" payment to
Messrs. Strudler and/or Heimbinder if any amount received by him is subject to
excise tax under Section 4999 of the Internal Revenue Code.
The Lennar and U.S. Home boards of directors were aware of the interests
described above when they approved the transaction between Lennar and U.S. Home.
ANTICIPATED ACCOUNTING TREATMENT
The merger will be treated as a purchase for financial accounting purposes.
NEW YORK STOCK EXCHANGE LISTING
Both the Lennar common stock and the U.S. Home common stock are listed on
the New York Stock Exchange. As a result of the merger, U.S. Home will be
delisted from the New York Stock Exchange and will no longer have an active
trading market. It is expected, and is a condition to the consummation of the
merger, that Lennar's common stock that will be issued to U.S. Home stockholders
in the merger will be listed on the New York Stock Exchange.
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UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger. The merger will be accounted for as a purchase of
U.S. Home by Lennar. The unaudited pro forma combined condensed financial
statements reflect the operations of Lennar and U.S. Home for the years ended
November 30, 1999 and December 31, 1999, respectively. The unaudited pro forma
combined condensed balance sheet assumes the merger occurred on the date of the
balance sheet. The unaudited pro forma combined condensed statement of earnings
assumes the merger occurred at the beginning of the periods presented.
The historical financial information about Lennar for the year ended
November 30, 1999 and the historical financial information about U.S. Home for
the year ended December 31, 1999 has been derived from the Lennar and U.S. Home
audited financial statements which are incorporated into this Joint Proxy
Statement/Prospectus by reference. The unaudited pro forma combined condensed
financial statements should be read in conjunction with the accompanying notes
and with the historical consolidated financial statements of Lennar and U.S.
Home, which are incorporated into this Joint Proxy Statement/Prospectus by
reference.
The unaudited pro forma combined condensed financial statements have been
included for comparative purposes only. As further discussed in the accompanying
notes, the unaudited pro forma combined condensed financial statements do not
purport to show what the financial position or operating results would have been
if the merger had been consummated as of the dates indicated and should not be
construed as representative of future financial position or operating results.
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PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
(UNAUDITED)
YEAR ENDED NOVEMBER 30, / DECEMBER 31, 1999
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL U.S. HOME ACQUISITION PRO FORMA
LENNAR CORPORATION ADJUSTMENTS COMBINED
CORPORATION (1) (2) CORPORATION
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Homebuilding.............................. $2,849,207 1,788,750 -- 4,637,957
Financial services........................ 269,307 38,469 -- 307,776
---------- --------- ------- ---------
Total revenues.................... 3,118,514 1,827,219 -- 4,945,733
---------- --------- ------- ---------
Costs and expenses:
Homebuilding.............................. 2,508,404 1,629,398 -- 4,137,802
Financial services........................ 238,211 22,297 -- 260,508
Corporate general and administrative...... 37,563 14,202 1,356(3) 53,121
Interest.................................. 48,859 45,490 6,690(3) 101,039
---------- --------- ------- ---------
Total costs and expenses.......... 2,833,037 1,711,387 8,046 4,552,470
---------- --------- ------- ---------
Earnings before income taxes................ 285,477 115,832 (8,046) 393,263
Provision for income taxes.................. 112,763 43,437 (2,609)(3) 153,591
---------- --------- ------- ---------
Net earnings................................ $ 172,714 72,395 (5,437) 239,672
========== ========= ======= =========
Earnings per share:
Basic..................................... $ 2.97 5.41 3.29
Diluted................................... $ 2.74 5.30 3.08
Weighted average shares outstanding:
Basic..................................... 58,246 13,379 72,796(4)(5)
Diluted................................... 65,035 13,669 79,585(4)(5)
</TABLE>
- ---------------
(1) Amounts have been reclassified to conform to Lennar Corporation's historical
presentation.
(2) As of November 30, 1999, the Acquisition Adjustments in the Pro Forma
Combined Condensed Balance Sheet reflect an increase in certain of the
inventories of U.S. Home Corporation (primarily homes in backlog) of
approximately $22 million. The effects of this preliminary purchase
adjustment are not included in the Acquisition Adjustments to the Statement
of Earnings above. It will increase cost of sales and decrease gross margin
by approximately $22 million and will decrease net earnings by approximately
$13 million ($0.17 per share diluted) in the first three to six months after
the acquisition is completed.
(3) Represents preliminary purchase adjustments for the amortization of the
estimated excess of purchase price over the net assets acquired over a 20
year period (included in corporate general and administrative expenses), and
the effect of the additional financing to complete the acquisition (included
in interest expense) and its related tax effect (at 39%), as if the
acquisition had occurred on December 1, 1998. Actual purchase adjustments
will be based on the assets and liabilities of U.S. Home Corporation at the
time of the consummation of the acquisition in accordance with Accounting
Principles Board Opinion No. 16 ("APB 16"). In addition, the historical net
assets of U.S. Home Corporation will increase by the amount of its net
earnings from January 1, 2000 through the time of the consummation of the
acquisition.
(4) The pro forma weighted average shares represent the weighted average shares
for Lennar Corporation plus the estimated shares to be issued (approximately
14,550,000 shares) to U.S. Home Corporation stockholders to complete the
acquisition. The actual number of Lennar Corporation shares to be issued is
subject to adjustment as discussed in the section of this Joint Proxy
Statement/Prospectus captioned "Summary-The Merger Consideration" beginning
on page 1.
(5) From October 1999 through February 2000, Lennar Corporation repurchased
approximately 9,700,000 shares of its outstanding common stock for an
average price of slightly more than $16 per share. The Pro Forma Combined
Condensed Financial Statements do not reflect the repurchase of the portion
of those shares (approximately 9,300,000 shares) which occurred after
November 30, 1999.
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PRO FORMA COMBINED CONDENSED BALANCE SHEET
(UNAUDITED)
NOVEMBER 30, / DECEMBER 31, 1999
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL U.S. HOME ACQUISITION PRO FORMA
LENNAR CORPORATION ADJUSTMENTS COMBINED
CORPORATION (1) (2) CORPORATION
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Homebuilding:
Cash and cash equivalents................ $ 83,256 20,204 -- 103,460
Receivables, net......................... 11,162 12,969 -- 24,131
Inventories
Construction in progress and model
homes............................... 1,234,213 1,299,051 (93,415)(3) 2,439,849
Land held for development............. 40,338 7,052 -- 47,390
---------- ---------- -------- ----------
Total inventories................ 1,274,551 1,306,103 (93,415) 2,487,239
Investments in partnerships.............. 173,310 41,516 -- 214,826
Other assets............................. 97,826 113,845 55,374(4) 267,045
---------- ---------- -------- ----------
1,640,105 1,494,637 (38,041) 3,096,701
Financial services assets.................. 417,542 108,003 -- 525,545
---------- ---------- -------- ----------
$2,057,647 1,602,640 (38,041) 3,622,246
========== ========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Homebuilding:
Accounts payable and other liabilities... $ 333,532 277,740 9,450(5) 620,722
Mortgage notes and other debts payable,
net................................... 523,661 650,089 291,954(6) 1,465,704
---------- ---------- -------- ----------
857,193 927,829 301,404 2,086,426
Financial services liabilities............. 318,955 96,162 -- 415,117
---------- ---------- -------- ----------
1,176,148 1,023,991 301,404 2,501,543
Stockholders' equity....................... 881,499 578,649 (339,445)(7) 1,120,703
---------- ---------- -------- ----------
$2,057,647 1,602,640 (38,041) 3,622,246
========== ========== ======== ==========
</TABLE>
- ---------------
(1) Amounts have been reclassified to conform to Lennar Corporation's historical
presentation.
(2) Represents preliminary purchase adjustments to reflect the assets and
liabilities of U.S. Home Corporation as if the acquisition had occurred on
November 30, 1999. Actual purchase adjustments will be based on the assets
and liabilities of U.S. Home Corporation at the time of the consummation of
the acquisition in accordance with Accounting Principles Board Opinion No.
16 ("APB 16"). In addition, the historical net assets of U.S. Home
Corporation will increase by the amount of its net earnings from January 1,
2000 through the time of the consummation of the acquisition.
(3) To adjust inventories of U.S. Home Corporation in accordance with APB 16.
This preliminary purchase adjustment primarily results from certain
long-term land holdings of U.S. Home Corporation that have estimated rates
of return that are below market, based upon Lennar's historical practices
for determining market returns. However, the land holdings are estimated to
be profitable even at their historical carrying values over the lives of the
projects. Therefore, no adjustment to their carrying values are required
under generally accepted accounting principles in the historical financial
statements of U.S. Home Corporation.
(4) To write-off certain assets of U.S. Home Corporation in the amount of
$19,336,000 that will have no continuing economic benefit (primarily
goodwill and deferred loan costs); to record the estimated
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purchase price in excess of net assets acquired of $27,112,000; and to
record the deferred tax effect of $47,598,000 related to the preliminary
purchase adjustments. The estimated purchase price in excess of net assets
acquired was calculated as follows:
<TABLE>
<S> <C> <C>
ESTIMATED PURCHASE PRICE:
Lennar Corporation shares issued........................ $ 239,204,000
Cash paid............................................... 239,204,000
--------------
Total estimated purchase price.......................... $478,408,000
Estimated assets acquired (in accordance with APB 16)... $1,537,487,000
Estimated liabilities acquired (in accordance with APB
16)................................................... 1,086,191,000
--------------
Estimated net assets acquired........................... $451,296,000
------------
Estimated excess of purchase price over net assets
acquired.............................................. $ 27,112,000
============
</TABLE>
Certain merger related costs may be payable in the future if certain events
occur. Such amounts are not significant and are not included in the
estimated amounts above.
(5) To record an estimate of costs of $4,750,000 to conform management
information systems and to record other transaction related liabilities of
$4,700,000.
(6) To record $286,715,000 of additional financing at an interest rate of
approximately 8% to complete the acquisition (including certain acquisition
related costs) and to adjust U.S. Home Corporation's senior notes and senior
subordinated notes by $5,239,000 in accordance with APB 16.
(7) To record the estimated value of the Lennar Corporation common stock
consideration to be given to purchase U.S. Home Corporation (approximately
14,550,000 shares at an estimated market price of $16.44 per share), minus
the historical equity of U.S. Home Corporation of $578,649,000. The actual
number of Lennar Corporation shares to be issued is subject to adjustment as
discussed in the section of this Joint Proxy Statement/Prospectus captioned
"Summary-The Merger Consideration" beginning on page 1.
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BUSINESS OF LENNAR
GENERAL
We are one of the nation's largest homebuilders. We have been selling and
building single family homes to first-time, first-time move-up, second-time
move-up and active adult for over 40 years. We currently operate in Florida,
California, Texas, Arizona and Nevada. According to data from the Bureau of the
Census, these states accounted for approximately 33% of residential building
permits issued in the U.S. during 1999.
Our revenues from homebuilding operations increased to $2.8 billion in
fiscal 1999 from $666 million in fiscal 1995, which represents a compound annual
growth rate of 44%. Over the same period, our earnings before interest and
taxes, referred to as "EBIT," grew to $334 million from $135 million, a compound
annual growth rate of 26%. We delivered 12,589 homes in fiscal 1999 compared
with 10,777 homes in fiscal 1998 and 4,680 homes in fiscal 1995. At November 30,
1999, the dollar value of our backlog of homes under contract totaled $652
million (2,891 homes), compared with $840 million (4,100 homes) at November 30,
1998.
Our financial services subsidiaries provide mortgage financing, title
insurance and closing services to people who buy our homes and others. These
subsidiaries also package and resell mortgage loans, perform mortgage loan
servicing activities and provide cable television and alarm monitoring services
to residents of our communities and others. Our subsidiaries sell their loans in
the secondary mortgage market, but usually retain the servicing rights. In
fiscal 1999, we originated $2.2 billion of mortgage loans compared with $1.0
billion in the prior year. Approximately 51% of the loans we originated in
fiscal 1999 were to persons buying our homes compared with 77% in fiscal 1998.
BUSINESS STRATEGY
We use a number of strategies to grow our business. They include the
following:
ACQUIRE LAND AT ADVANTAGEOUS PRICES
Throughout our history, we have acquired land at what we believed to be
favorable prices and benefited from appreciation in its value before we
incorporated it into finished homes. We have done this by (a) acquiring land in
areas which are in early stages of becoming homebuilding growth markets, or
which we believe will shortly begin to emerge as growth markets, (b) entering
major growth markets when they are recovering from homebuilding slowdowns and
(c) actively acquiring land during low points in the real estate cycle. We
employed this strategy in Florida and Arizona during the 1970's and 1980's, and
we have employed it in making major acquisitions in Texas and California during
the past several years. Appreciation in the price of land between the time we
acquire it and the time we build homes on it increases our gross profit margins
and often gives us an advantage over competing homebuilders.
Our recent expansion into California typifies our approach toward entering
new markets. We entered California in 1995 by acquiring Bramalea California,
Inc. which gave us a land position of 3,000 homesites. At that time, the
California housing market was beginning to emerge from a slowdown that had begun
in 1989. During 1996 and 1997, we increased our California position by acquiring
other homebuilders and attractive land parcels. In October 1997, we acquired
Pacific Greystone Corporation, a leading homebuilder in both Northern and
Southern California, with operations also in Arizona and Nevada. The Pacific
Greystone acquisition substantially increased our California inventory and
brought us the management structure we needed to conduct a major homebuilding
operation in California and elsewhere in the West. Since the Pacific Greystone
transaction, we have acquired the properties of three more companies: Winncrest
Homes, ColRich Communities and Polygon Communities. These acquisitions gave us
new opportunities in the recovering Inland Empire area of California, and
strengthened our positions in Orange County, California, and in the Sacramento
and San Diego areas of California. In total, the three acquisitions provided us
approximately 6,000 owned homesites, 7,600 controlled homesites and a $170
million backlog of home sales contracts, and at November 30, 1999, we had
approximately 32,000 owned and controlled homesites in California. As a result
of our expansion strategy, we believe we currently are one of the
best-positioned builders in California.
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We do not use all the land we acquire in our homebuilding operations. We
often reduce our inventory by selling parcels to other developers to help
achieve a higher return on our investment.
GROW THROUGH ACQUISITIONS
We have frequently acquired companies or their assets to expand our
homebuilding and financial services activities. This has included acquiring
homebuilding companies in order to obtain their inventories and homebuilding
operations. We did that with the acquisition of H. Miller & Sons in 1984,
Development Corporation of America in 1986, Bramalea California, Inc. in 1995,
Village Builders, Friendswood Development Company, Renaissance Homes and Regency
Title in 1996, Pacific Greystone Corporation in 1997, North American Title,
Winncrest Homes, ColRich Communities and Polygon Communities in 1998, and Eagle
Home Mortgage Company and Southwest Land Title Company in 1999.
Our acquisition of U.S. Home would be another significant use of an
acquisition to expand our homebuilding and mortgage finance activities.
FOCUS ON FASTEST GROWING HOME MARKETS
From our origin in South Florida to our expansion into Arizona, Texas,
California and Nevada, we have concentrated on the Sun Belt States. Demand for
new homes has been substantially greater in those states than in most other
areas of the country. The five states in which we currently operate collectively
accounted for approximately 33% of all residential building permits issued in
the United States in 1999.
The acquisition of U.S. Home will bring us into states that accounted for
an additional 24% of residential building permits issued in 1999, as well as
bringing us into new areas of states in which we already build homes.
GENERATE EARNINGS FROM FINANCIAL SERVICES SUBSIDIARIES
Our financial services subsidiaries generate significant earnings by
originating and servicing mortgage loans, providing title insurance and closing
services for homebuyers and packaging and reselling mortgage loans. Because the
financial services subsidiaries rapidly resell the loans they originate into the
secondary mortgage market, generally on a non-recourse basis, our financial
services activities involve a relatively low capital investment.
The acquisition of U.S. Home will significantly expand our mortgage finance
business.
FOCUS ON CUSTOMER CARE AND SATISFACTION
We are dedicated to providing each homebuyer with high quality, service and
value. We have a program called "Zero Defects(SM)" to ensure that each Lennar
home is as close as possible to defect-free before the home sale closes. We also
have a "TLC(SM)" Program ("Total Lennar Care(SM)"), through which we provide
proactive, customer-driven post sale service, which ultimately leads to enhanced
customer retention and referrals. Our focus on customer care has made customer
referrals a major source of new customer leads.
Like us, U.S. Home has made quality products the centerpiece of its
homebuilding business.
OPERATIONS
We have two business segments: homebuilding and financial services. Assets
and results of operations of our reportable segments are separately disclosed in
the Consolidated Financial Statements.
HOMEBUILDING OPERATIONS
Our homebuilding operations include the sale and construction of
single-family attached and detached homes in Florida, California, Texas, Arizona
and Nevada. During 1999, our product mix consisted of
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deliveries of approximately 30% affordable homes, 65% move-up homes and 5%
retirement and active adult homes. Our homebuilding activities also include the
purchase, development and sale of residential land. We have a 50% interest in
two general partnerships with LNR Property Corporation, which acquire and
develop land and sell land to us and to others. We manage the day-to-day
operations of the partnerships and receive a management fee.
FINANCIAL SERVICES
Our financial services activities are conducted primarily through Lennar
Financial Services, Inc. and its subsidiaries. Our financial services
subsidiaries make conventional, FHA-insured and VA-guaranteed mortgage loans
available to qualified purchasers of our homes and others from offices located
in Florida, California, Arizona, Texas, Nevada, Oregon, Utah and Washington. In
1999, loans to buyers of our homes represented approximately 51% of our $2.2
billion of loan originations, compared to 77% in 1998. In addition, these
companies provide title insurance and closing services for Lennar homebuyers and
others, package and resell residential mortgage loans and mortgage-backed
securities, perform mortgage loan servicing activities and provide cable
television and alarm monitoring services to residents of Lennar communities and
others. During our fiscal 1998 year, we acquired North American Title Group.
This acquisition, together with our 1996 acquisition of Regency Title Company,
significantly expanded our title insurance and closing business in Texas and
expanded our title insurance business into California, Arizona and Colorado.
During fiscal 1999, we acquired Eagle Home Mortgage Company and Southwest Land
Title Company.
For more information regarding Lennar, see the Lennar documents referenced
under "Incorporation of Certain Documents by Reference" on page 66.
BUSINESS OF U.S. HOME
GENERAL
Organized in 1954 and incorporated in Delaware in 1959, we are one of the
largest single-family homebuilders in the United States based on homes
delivered. We currently build and sell homes in more than 240 new home
communities in 33 market areas in 13 states. Since our formation, we have
delivered over 292,000 homes. In 1998, we were the seventh largest single-family
on-site homebuilder in the United States based on homes completed and delivered
and we have been among the ten largest single-family on-site homebuilders in the
United States for over 20 years. In 1999 we had total revenues of $1.82 billion
and net income of $72.4 million and we delivered 9,246 homes during that year.
We conduct substantially all of our homebuilding business through U.S. Home, our
parent company.
BUSINESS STRATEGY
FOCUS ON POPULAR GROWTH CORRIDORS
In each of the 33 markets in which we operate, we strive to build quality
homes offering prospective homebuyers a high level of new home value. We offer a
wide variety of moderately priced homes that are designed to appeal to the
affordable, move-up and retirement and active adult buyers. Because we believe
that many home purchasers compare homes on the basis of location, perceived
quality and dollars of purchase price per square foot of living area, we have
focused our community development efforts on popular growth corridors.
Development in these corridors allows us to appeal to a wide variety of buyers
by designing homes of high quality, value and flexibility. We design our homes
for maximum living space and provide opportunities to buyers in each of our
markets to choose interior and exterior features to enhance their homes through
our U.S. Home Custom Design Studios.
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FOCUS ON HIGH QUALITY AND CUSTOMER SERVICE STANDARDS
As a service to our homebuyers, we market homes in "model home parks"
featuring one or more model homes, attractively furnished and decorated and
staffed by our sales consultants. These consultants provide information
regarding floor plans, the various elevations available and decorating options,
as well as assisting with mortgage financing information. A model home may
include a variety of options and upgrades that the customer may request at an
additional cost, and includes items such as special floor and window treatments,
custom cabinetry, pools, fireplaces and decks. We constantly study aesthetic
design and architectural trends, as well as quality construction and engineering
trends, in order to provide customers with high quality and customer service. We
also have received numerous awards in various markets for outstanding housing
design.
OPERATIONS
We are engaged in two related industries: homebuilding and financial
services. Assets and results of operations of our reportable segments are
separately disclosed in our Consolidated Financial Statements incorporated in
this document by reference.
HOMEBUILDING OPERATIONS
Our primary business is the on-site development of single-family
residential communities in or near major metropolitan areas of Arizona,
California, Colorado, Florida, Maryland/Virginia, Michigan, Minnesota, Nevada,
New Jersey, North Carolina, Ohio and Texas. Our product line includes both
single-family detached and attached homes. During 1999, approximately 81% of the
homes we delivered were single-family detached homes, as compared to 78% in 1998
and 80% in 1997. During 1999, our product mix consisted of deliveries of
approximately 35% affordable homes, 40% move-up homes and 25% retirement and
active adult homes.
For a number of years, we have developed a significant portion of our
residential communities (primarily in the affordable and move-up communities)
through rolling lot options. We purchase finished lots through these options,
which enable us to initially pay a small fraction of the total lot cost and then
purchase the lots on a scheduled basis. During 1999, 31% of our unit deliveries
were from lots acquired by the exercise of rolling lot options, as compared with
36% in 1998. At December 31, 1999, our land and finished lot inventories totaled
$679.3 million, excluding option deposits. At that time, our refundable and
nonrefundable deposits totaled $47.2 million for options and contracts to
purchase undeveloped land and finished lots for homebuilding operations for a
total purchase price of approximately $539.1 million. We had incurred
pre-development costs of approximately $56.0 million relating to these
properties.
FINANCIAL SERVICES
Our financial services activities consist primarily of our mortgage banking
activities and are conducted primarily through our wholly-owned subsidiary U.S.
Home Mortgage Corporation, a Florida corporation. Our subsidiary originates
conventional, FHA-insured and VA-guaranteed mortgage loans to qualified
purchasers of our homes from 22 branch and satellite offices which serve most of
the market areas where we conduct our homebuilding operations. We do not retain
or service the mortgages that we originate but, rather, process and sell the
mortgages and related servicing rights to third party investors. Loans and
servicing rights are generally sold and funded by investors within 30 days after
the home is delivered. Our "capture rate" for providing financing to buyers of
homes we delivered was 82% in 1999 compared to 83% in 1998 and 76% in 1997.
For more information regarding U.S. Home, see the U.S. Home documents
referenced under "Incorporation of Certain Documents by Reference," and in
particular the portion of the U.S. Home Form 10-K captioned "Cautionary
Disclosure Regarding Forward-Looking Statements."
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BUSINESS OF THE COMBINED COMPANIES
Based on information in homebuilding industry publications, a combined
Lennar and U.S. Home would have been the nation's largest homebuilder in 1999
based on homebuilding revenues, domestic homes delivered and homebuilding
EBITDA. On a combined pro forma basis, Lennar and U.S. Home would have reported
revenues of $4.9 billion and earnings before interest, taxes, depreciation and
amortization of $551 million in 1999.
The combined company will benefit from, among other things, an increased
geographic market and a broader product offering. Geographically, the combined
company will operate in 13 states, including the six states that have either the
largest or the fastest growing population in the nation (Florida, California,
Texas, Colorado, Arizona and Nevada). Our product offering will be materially
enhanced by the U.S. Home strategic position in the retirement/active adult
segment of the market. We will build homes for the first-time, first-time
move-up, second-time move-up and retirement purchasers under both the Lennar and
U.S. Home brand names. The enhanced size and scope of our business will allow us
to solidify further our position in our principal current markets, as well as
helping us to expand the areas of our activities and to pursue new Internet and
broadband opportunities for the homebuilding and residential mortgage
industries.
The following table provides data, on a state-by-state basis, regarding the
combined homebuilding operations of Lennar and U.S. Home at or for the year
ended November 30, 1999 as to Lennar and December 31, 1999 as to U.S. Home.
PRO FORMA HOMESITES OWNED AND CONTROLLED AND LAST 12 MONTH DELIVERIES(1)(2)
<TABLE>
<CAPTION>
HOMESITES
---------------------------------
TOTAL 1999
STATE OWNED CONTROLLED HOMESITES DELIVERIES
- ----- ------ ---------- --------- ----------
<S> <C> <C> <C> <C>
Florida............................................ 16,036 33,716 49,752 6,715
California......................................... 15,277 21,353 36,630 4,508
Texas.............................................. 10,356 7,923 18,279 4,381
Colorado........................................... 5,759 3,732 9,491 1,178
Arizona............................................ 4,397 1,309 5,706 2,429
Minnesota.......................................... 1,605 2,842 4,447 753
Maryland/Virginia.................................. 2,504 915 3,419 589
New Jersey......................................... 820 2,007 2,827 304
Nevada............................................. 1,212 169 1,381 724
Ohio............................................... 350 82 432 77
------ ------ ------- ------
Total.............................................. 58,316 74,048 132,364 21,658
====== ====== ======= ======
</TABLE>
- ---------------
(1) Lennar homesite positions and deliveries are presented as of or for the
fiscal year ended November 30, 1999. U.S. Home homesite positions and
deliveries are presented as of or for the fiscal year ended December 31,
1999.
(2) Excludes U.S. Home joint venture activity in Michigan and North Carolina.
COMPETITION
The housing industry is highly competitive. In their activities, each of
Lennar and U.S. Home has competed, and the combined companies will continue to
compete, with numerous developers and builders in and near the areas where
Lennar's and U.S. Home's communities are located. Competition is on the basis of
location, design, quality, amenities and price. Some of the principal
competitors of Lennar and U.S. Home include Kaufman and Broad Home Corporation,
Centex Corporation, D.R. Horton, Inc., M.D.C. Holdings, Inc., Pulte Corporation
and The Ryland Group, Inc. However, a substantial portion of Lennar's and U.S.
Home's competition in all their markets is, and will continue to be, independent
local and regional homebuilders.
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NEW DEBT FINANCING
As a result of the merger, holders of approximately $525 million of
publicly held U.S. Home debt will be entitled to require U.S. Home to repurchase
that debt within approximately 90 days after the transaction takes place. In
addition, as a result of the transaction, the outstanding balances under U.S.
Home's principal credit agreement will become due. At February 29, 2000, the
outstanding balance under this credit agreement was $228 million.
Lennar has received commitments from financial institutions to provide a
total of $1.8 billion of financing, which will be available to be used by U.S.
Home to refinance that debt and by Lennar for merger related purposes and for
its (including U.S. Home's) ongoing operating and general corporate needs. A
portion of the $1.8 billion of financing may be public or institutional sales of
medium or long-term debt securities, which would reduce our reliance on bank
financing. However, the commitments we have received include bank or
institutional financing for the entire $1.8 billion, in case we are not able to
complete the sales of debt securities.
In addition, Lennar intends to commence a cash tender offer for the
approximately $525 million of publicly held U.S. Home debt. The tender offer
will be conditioned on, among other things, the consummation of the merger. A
portion of the $1.8 billion of financing described above will be used to finance
the tender offer and the related costs and expenses.
MANAGEMENT OF LENNAR FOLLOWING THE MERGER
The directors and executive officers of Lennar following the merger will be
as follows:
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Leonard Miller....................... Chairman of the Board and Director
Stuart A. Miller..................... President, Chief Executive Officer, Co-Chief Operating
Officer and Director
Robert J. Strudler................... Vice-Chairman of the Board, Co-Chief Operating Officer and
Director
Isaac Heimbinder..................... Executive Vice President of E-Commerce Initiatives and
Director
Bruce E. Gross....................... Vice President and Chief Financial Officer
Allan J. Pekor....................... Vice President
Marshall H. Ames..................... Vice President
Jonathan M. Jaffe.................... Vice President and Director
David B. McCain...................... Vice President, General Counsel and Secretary
Waynewright Malcolm.................. Vice President and Treasurer
Diane J. Bessette.................... Vice President and Controller
Irving Bolotin....................... Director
R. Kirk Landon....................... Director
Sidney Lapidus....................... Director
Reuben S. Leibowitz.................. Director
Steven J. Saiontz.................... Director
Arnold P. Rosen...................... Director
Steven L. Gerard..................... Director
Herve Ripault........................ Director
</TABLE>
For information regarding the ages and business backgrounds of the
executive officers of Lennar, please refer to the caption "Directors and
Executive Officers of the Registrant" in Part III of Lennar's Annual Report on
Form 10-K for the fiscal year ended November 30, 1999. Similar information
regarding Lennar's directors appears in Lennar's proxy statement for its 2000
Annual Meeting of Stockholders, which is incorporated into this Joint Proxy
Statement/Prospectus by reference. Information regarding Robert J. Strudler,
Isaac Heimbinder, Steven L. Gerard and Herve Ripault is incorporated by
reference to U.S. Home's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, which is incorporated into this Joint Proxy
Statement/Prospectus by reference.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion is a summary description of the material U.S.
federal income tax consequences of the merger generally applicable to all U.S.
Home stockholders. This discussion is for general information only and does not
purport to consider all aspects of U.S. federal income taxation that may be
relevant to a particular U.S. Home stockholder. For example, this discussion
does not address the effect, if any, of the Foreign Investment in Real Property
Tax Act on non-U.S. persons who hold U.S. Home stock. This discussion is based
upon the provisions of the Internal Revenue Code and administrative and judicial
interpretations of the Internal Revenue Code, all as in effect as of the date of
this Joint Proxy Statement/Prospectus and all of which are subject to change,
possibly with retroactive effect. This discussion applies only to U.S. Home
stockholders who are:
- individuals who are citizens or residents of the United States;
- corporations, partnerships or other entities created or organized under
the laws of the United States or any state or any political subdivision;
- estates otherwise subject to U.S. federal income taxation on their
worldwide income; or
- trusts if (a) a court within the United States is able to exercise
primary supervision of the administration of any such trust and one or
more United States persons have the authority to control all substantial
decisions of the trust, or (b) they were in existence on August 20, 1996
and elected to be treated as U.S. persons for federal income tax
purposes.
Any stockholder who meets one of the above criteria is referred to in this
discussion as a U.S. holder. A non-U.S. holder is any stockholder other than a
U.S. holder.
The discussion set forth below does not address all aspects of U.S. federal
income taxation that may be relevant to a particular holder of shares of U.S.
Home stock in light of that holder's particular circumstances or to holders
subject to special treatment under U.S. federal income tax laws, such as:
- non-U.S. holders, banks, other financial institutions, insurance
companies, dealers or traders in securities, tax-exempt entities and
stockholders subject to the alternative minimum tax;
- stockholders who hold U.S. Home stock as part of a "straddle," "hedge,"
"conversion transaction," "synthetic security" or other integrated
investment;
- stockholders who acquired their U.S. Home stock pursuant to the exercise
of employee stock options, incentive stock options or similar securities
or otherwise as compensation; and
- stockholders whose functional currency is not the U.S. dollar.
This discussion assumes that the holders of U.S. Home stock hold their shares of
stock as capital assets within the meaning of Section 1221 of the Internal
Revenue Code. This discussion also does not consider the effect of any foreign,
state or local laws or any U.S. federal laws other than those pertaining to the
income tax.
THE INDIVIDUAL CIRCUMSTANCES OF EACH U.S. HOME STOCKHOLDER MAY AFFECT THE
TAX CONSEQUENCES OF THE MERGER TO THAT U.S. HOME STOCKHOLDER. THE PARTICULAR
FACTS OR CIRCUMSTANCES OF A U.S. HOME STOCKHOLDER THAT MAY SO AFFECT THE
CONSEQUENCES ARE NOT DISCUSSED HERE. ACCORDINGLY, YOU SHOULD CONSULT YOUR TAX
ADVISOR TO DETERMINE THE TAX EFFECT TO YOU OF THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF FOREIGN, OR U.S. FEDERAL, STATE, LOCAL OR OTHER TAX
LAW. NON-U.S. STOCKHOLDERS, IF ANY, WHO HOLD OR HAVE HELD, DIRECTLY,
CONSTRUCTIVELY, OR BY ATTRIBUTION, MORE THAN 5% OF THE OUTSTANDING U.S. HOME
STOCK SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE CONSEQUENCE TO THEM OF THE
MERGER UNDER THE FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT, INCLUDING ANY TAX
FILING REQUIREMENTS THAT MAY APPLY.
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U.S. Home has obtained an opinion from its counsel, Kaye, Scholer, Fierman,
Hays & Handler, LLP, to the effect that the merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, and that Lennar, its subsidiary and U.S. Home will each be a party to a
reorganization within the meaning of Section 368(b) of the Internal Revenue
Code. The opinion is based upon the continuing validity of certain assumptions,
representations of fact and covenants, including the assumption that U.S. Home
will not proceed with the merger if the cash payable to all U.S. Home
stockholders is greater than 60% of the total merger consideration (including
cash paid to U.S. Home stockholders who exercise dissenters' rights, cash paid
with respect to fractional Lennar shares received in the merger and cash equal
to the value of U.S. Home shares owned by Lennar immediately prior to the
merger), and representations of fact contained in certificates of officers of
Lennar, its wholly-owned subsidiary and U.S. Home. Based upon the opinion of
Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to U.S. Home, that the
merger will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code, and subject to the assumptions set forth therein, it
is the further opinion of such counsel that the description of the material U.S.
federal income tax consequences of the merger set forth under the caption
"Material U.S. Federal Income Tax Consequences of the Merger" is correct in all
material respects. No ruling has or will be sought from the Internal Revenue
Service as to the U.S. federal income tax consequences of the merger, and the
opinions of counsel are not binding upon the Internal Revenue Service or any
court. Accordingly, we cannot assure you that the Internal Revenue Service will
not contest the conclusions expressed in the opinion or that a court will not
sustain any contest.
The following discussion of U.S. federal income tax consequences of the
merger to U.S. Home stockholders assumes that the merger is consummated and
qualifies as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. As discussed below, the U.S. federal income tax
consequences of the merger to a U.S. Home stockholder depend on the form of
consideration received by the stockholder.
Stockholders Who Receive Solely Lennar Common Stock. A U.S. Home
stockholder who exchanges shares of U.S. Home common stock solely for shares of
Lennar common stock will not recognize any gain or loss on that exchange, except
to the extent the stockholder receives cash in lieu of fractional shares of
Lennar, as discussed below. The aggregate adjusted tax basis of Lennar shares
received will equal the U.S. Home stockholder's aggregate adjusted tax basis in
the U.S. Home shares surrendered, reduced by the tax basis allocable to any
fractional shares of Lennar received in the merger. The holding period of the
Lennar shares received in the merger will include the holding period of the U.S.
Home shares surrendered.
Stockholders Who Receive Cash and Lennar Common Stock. If the
consideration received in the merger by a U.S. Home stockholder consists of part
cash and part Lennar shares and the stockholder's adjusted tax basis in the U.S.
Home shares surrendered in the transaction is less than the sum of the fair
market value, as of the effective time of the merger, of the Lennar shares and
the amount of cash received by the stockholder, then the stockholder will
recognize a gain. This recognized gain will equal the lesser of (a) the sum of
the amount of cash and the fair market value, as of the effective time of the
merger, of the Lennar shares received, minus the adjusted tax basis of the U.S.
Home shares surrendered in exchange for such aggregate consideration, and (b)
the amount of cash received by the stockholder in the exchange. However, if a
U.S. Home stockholder's adjusted tax basis in the U.S. Home shares surrendered
in the transaction is greater than the sum of the amount of cash and the fair
market value of the Lennar shares received, the U.S. Home stockholder's loss
will not be currently allowed or recognized for U.S. federal income tax
purposes.
In the case of a U.S. Home stockholder who recognizes gain on the exchange,
if the exchange sufficiently reduces the stockholder's proportionate stock
interest, as discussed below, the gain will be characterized as a capital gain.
If the exchange does not sufficiently reduce the stockholder's proportionate
stock interest, the gain will be taxable as a dividend to the extent of the
stockholder's ratable share of available earnings and profits, and the
remainder, if any, of that recognized gain will be capital gain.
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The determination of whether the exchange sufficiently reduces a U.S. Home
stockholder's proportionate stock interest will be made in accordance with
Section 302 of the Internal Revenue Code, taking into account the stock
ownership attribution rules of Section 318 of the Internal Revenue Code. Under
those rules, for purposes of determining whether the exchange sufficiently
reduces a stockholder's proportionate stock interest, a U.S. Home stockholder is
treated as if (a) all that stockholder's U.S. Home shares were first exchanged
in the merger for Lennar shares and (b) a portion of those Lennar shares were
then redeemed for the cash actually received in the merger. The U.S. Home
stockholder's hypothetical stock interest in Lennar, both actual and
constructive, after hypothetical step (b) is compared to that U.S. Home
stockholder's hypothetical stock interest in Lennar, both actual and
constructive, after hypothetical step (a). Dividend treatment will apply unless
either the stockholder's stock interest in Lennar has been completely
terminated, there has been a "substantially disproportionate" reduction in the
stockholder's stock interest in Lennar, generally meaning that the interest
after hypothetical step (b) is less than 80% of the interest after hypothetical
step (a), or the exchange is not "essentially equivalent to a dividend." While
the determination is based on a U.S. Home stockholder's particular facts and
circumstances, the Internal Revenue Service has indicated in published rulings
that a distribution is not "essentially equivalent to a dividend," and will
therefore result in capital gain treatment, if the distribution results in any
actual reduction in the stock interest of an extremely small minority
stockholder in a publicly held corporation and the stockholder exercises no
control with respect to corporate affairs.
BECAUSE THE DETERMINATION OF WHETHER A PAYMENT WILL BE TREATED AS HAVING
THE EFFECT OF THE DISTRIBUTION OF A DIVIDEND GENERALLY WILL DEPEND UPON THE
FACTS AND CIRCUMSTANCES OF EACH U.S. HOME STOCKHOLDER, U.S. HOME STOCKHOLDERS
ARE STRONGLY ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX
TREATMENT OF CASH RECEIVED IN THE MERGER, INCLUDING THE APPLICATION OF THE
CONSTRUCTIVE OWNERSHIP RULES OF THE INTERNAL REVENUE CODE AND THE EFFECT OF ANY
TRANSACTIONS IN LENNAR SHARES OR U.S. HOME SHARES BY THE U.S. HOME STOCKHOLDER.
The basis of a U.S. Home stockholder who receives cash and Lennar shares in
the merger in the Lennar shares received will equal that stockholder's adjusted
tax basis in the stockholder's U.S. Home shares increased by any gain recognized
as a result of the merger and reduced by the amount of cash received in the
merger. The holding period of the Lennar shares received will include the
holding period of the U.S. Home shares surrendered.
Stockholders Who Receive Solely Cash. The exchange of U.S. Home shares
solely for cash generally will result in recognition of gain or loss by the
stockholder in an amount equal to the difference between the amount of cash
received and the stockholder's adjusted tax basis in the U.S. Home shares
surrendered. The gain or loss recognized will be long-term capital gain or loss
if the stockholder's holding period for the U.S. Home shares surrendered exceeds
one year. There are limitations on the extent to which stockholders may deduct
capital losses from ordinary income.
Dissenting U.S. Home Stockholders. U.S. Home stockholders who elect to
exercise their right to dissent from the merger pursuant to the Delaware General
Corporation Law with respect to all of their U.S. Home shares and paid the
appraised value of those shares will generally recognize gain or loss equal to
the difference between the amount of cash received and the stockholder's
adjusted tax basis in the shares transferred in connection with the exercise of
the dissenters' rights. U.S. Home stockholders who elect to exercise their right
to dissent from the merger should consult their tax advisors as to the tax
consequences to them of the merger and the exercise of dissenters' rights,
including the timing of gain or loss recognition and the treatment of any
interest that may be awarded pursuant to an appraisal proceeding.
Cash Received in Lieu of Fractional Shares. A U.S. Home stockholder who
receives cash in lieu of a fractional Lennar share will be treated as having
first received that fractional Lennar share in the merger and then as having
received cash in exchange for the fractional share interest. Thus, a U.S. Home
stockholder generally will recognize gain or loss in an amount equal to the
difference between the amount
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of cash received in lieu of the fractional Lennar share and the portion of the
adjusted tax basis in the U.S. Home shares allocable to that fractional
interest.
Backup Withholding. Payments in connection with the merger may be subject
to "backup withholding" at a rate of 31%, unless a U.S. Home stockholder (a)
provides a correct taxpayer identification number, which, for an individual
stockholder, generally is the stockholder's social security number, and any
other required information to the paying agent, or (b) is a corporation or comes
within certain exempt categories and, when required, demonstrates that fact and
otherwise complies with applicable requirements of the backup withholding rules.
A U.S. Home stockholder who does not provide a correct taxpayer identification
number may be subject to penalties imposed by the Internal Revenue Service. Any
amount paid as backup withholding does not constitute an additional tax and will
be creditable against the stockholder's U.S. federal income tax liability. Each
U.S. Home stockholder should consult with his own tax advisor as to his
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. U.S. HOME STOCKHOLDERS MAY PREVENT BACKUP WITHHOLDING
BY COMPLETING A SUBSTITUTE FORM W-9 AND SUBMITTING IT TO THE PAYING AGENT FOR
THE MERGER WHEN THEY SUBMIT THEIR U.S. HOME SHARE CERTIFICATES.
LEGAL MATTERS
The validity of the shares of Lennar common stock to be issued in
connection with the merger will be passed upon for Lennar by Clifford Chance
Rogers & Wells LLP, New York, New York.
Certain of the tax consequences of the merger to U.S. Home stockholders
will be passed upon by Kaye, Scholer, Fierman, Hays & Handler, LLP, New York,
New York.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of Lennar incorporated in this Joint Proxy Statement/Prospectus by
reference from Lennar's 1999 Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports, which are incorporated by
reference and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of U.S. Home appearing in U.S. Home's
1999 Form 10-K have been audited by Arthur Andersen LLP, independent auditors,
as set forth in their reports, which are incorporated by reference. Those
consolidated financial statements have been incorporated by reference in
reliance upon the reports of that firm given upon its authority as experts in
accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
Lennar and U.S. Home each file reports, proxy statements and other
important business and financial information with the Securities and Exchange
Commission. The public may read and copy any materials either of us files with
the SEC at the public reference facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission located at 7 World Trade Center, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The public may obtain information on the operation of the public reference room
by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants (including each of us) that file electronically with the SEC
(including each of us). The SEC's web site can be accessed at
http://www.sec.gov. U.S. Home's common stock and Lennar's common stock are both
listed on the New York Stock Exchange. Reports, proxy statements and other
information we file can also be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
Lennar has filed with the SEC a Registration Statement on Form S-4 under
the Securities Act of 1933, as amended, of which this Joint Proxy
Statement/Prospectus is a part, with respect to the shares of Lennar common
stock to be issued to U.S. Home stockholders as a result of the merger. This
Joint Proxy Statement/Prospectus does not contain all the information set forth
in that registration statement. For further information, please refer to the
registration statement, which may be inspected and copied, or obtained from, the
SEC or the NYSE in the manner described above.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by U.S. Home with the SEC under
the File Number 1-5899 are incorporated by reference in this Joint Proxy
Statement/Prospectus:
(a) U.S. Home's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999; and
(b) U.S. Home's Current Report on Form 8-K dated February 28, 2000.
The following documents previously filed by Lennar with the SEC under the
File Number 1-11749 are incorporated by reference in this Joint Proxy
Statement/Prospectus:
(a) Lennar's Annual Report on Form 10-K for the fiscal year ended
November 30, 1999;
(b) Lennar's Current Report on Form 8-K dated February 23, 2000.
(c) Lennar's Definitive Proxy Statement dated March 9, 2000 and
(d) the description of Lennar's common stock contained in Lennar's
registration statement filed under Section 12 of the Securities Exchange
Act of 1934, and any amendment or report filed for the purpose of updating
that description.
All documents filed by U.S. Home under Section 13(a), 13(c), 14 of 15(d) of
the Securities Exchange Act of 1934, after the date of this Joint Proxy
Statement/Prospectus and before the date of the U.S. Home special meeting, are
incorporated into this Joint Proxy Statement/Prospectus by reference and will
constitute a part of this Joint Proxy Statement/Prospectus from the date they
are filed. All documents filed by Lennar under Section 13(a), 13(c), 14 of 15(d)
of the Securities Exchange Act of 1934, after the date of this Joint Proxy
Statement/Prospectus and before the date of the Lennar special meeting, are
incorporated into this Joint Proxy Statement/Prospectus by reference and will
constitute a part of this Joint Proxy Statement/Prospectus from the date they
are filed.
U.S. Home or Lennar will provide each person to whom a copy of this Joint
Proxy Statement/ Prospectus is delivered a copy of any or all of the information
that has been incorporated by reference in this Joint Proxy
Statement/Prospectus, but not delivered in this Joint Proxy
Statement/Prospectus. We will provide this information by first class mail at no
cost within one business day of written or oral request thereupon addressed to:
700 Northwest 107th Avenue, Miami, Florida 33172, Attention: Investor Relations
(telephone: (305) 559-4000), in the case of Lennar and 10707 Clay Road, Houston,
Texas 77041, Attention: Corporate Secretary (telephone: (713) 877-2311), in the
case of U.S. Home. TO ENSURE TIMELY DELIVERY, WE SUGGEST YOU REQUEST THE
INFORMATION AT LEAST FIVE BUSINESS DAYS BEFORE THE DATE YOU MUST MAKE YOUR
INVESTMENT DECISION (I.E., MAKE YOUR REQUEST BY APRIL 21, 2000).
NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE
OFFERING OF SECURITIES MADE BY THIS JOINT PROXY STATEMENT/PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY U.S. HOME, LENNAR OR ANY OTHER PERSON ON THEIR BEHALF. THIS
JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY,
IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES TO WHICH IT
RELATES WILL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF U.S. HOME OR LENNAR SINCE THE DATE OF THIS JOINT
PROXY STATEMENT/PROSPECTUS OR THAT THE INFORMATION IN IT IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
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ANNEX I
AMENDED AND RESTATED PLAN AND AGREEMENT OF MERGER
DATED AS OF
MARCH 17, 2000
AMONG
U.S. HOME CORPORATION,
LENNAR CORPORATION
AND
LEN ACQUISITION CORPORATION
<PAGE> 80
AMENDED AND RESTATED PLAN AND AGREEMENT OF MERGER
This is a Plan and Agreement of Merger dated as of February 16, 2000, among
U.S. Home Corporation (the "Company"), a Delaware corporation, Lennar
Corporation ("Lennar"), a Delaware corporation, and Len Acquisition Corporation
("Acquisition"), a Delaware corporation and a wholly-owned subsidiary of Lennar,
relating to a merger (the "Merger") of the Company into Acquisition, as amended
by an Amendment to Merger Agreement dated as of March 17, 2000.
ARTICLE I
MERGER OF ACQUISITION AND THE COMPANY
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), at the Effective Time (as defined in Paragraph 2.3),
the Company will be merged with and into Acquisition, which will be the
surviving corporation of the Merger (the "Surviving Corporation"). Except as
specifically provided in this Agreement, when the Merger becomes effective, (i)
the real and personal property, other assets, rights, privileges, immunities,
powers, purposes and franchises of Acquisition will continue as those of the
Surviving Corporation, unaffected and unimpaired by the Merger, (ii) the
separate existence of the Company will terminate, and the Company's real and
personal property, other assets, rights, privileges, immunities, powers,
purposes and franchises will be merged into the Surviving Corporation, which
will succeed to and assume all the rights and obligations of the Company in
accordance with the DGCL, and (iii) the Merger will have the other effects
specified in the DGCL (including, without limitation, Section 259 of the DGCL).
1.2 Certificate of Incorporation. From the Effective Time until
subsequently amended in accordance with applicable law, the Certificate of
Incorporation of Acquisition immediately before the Effective Time will be the
Certificate of Incorporation of the Surviving Corporation, except that the
Merger will effect an amendment to that Certificate of Incorporation changing
the name of the Surviving Corporation to "U.S. Home Corporation." The
Certificate of Incorporation of Acquisition, as so amended, separate and apart
from this Agreement, may be certified as the Certificate of Incorporation of the
Surviving Corporation.
1.3 By-Laws. The By-Laws of Acquisition immediately before the Effective
Time will be the By-Laws of the Surviving Corporation from the Effective Time
until they are amended in accordance with their terms, the Certificate of
Incorporation of the Surviving Corporation and applicable law.
1.4 Directors. The directors of Acquisition immediately prior to the
Effective Time will be the directors of the Surviving Corporation after the
Effective Time and will serve in accordance with the By-Laws of the Surviving
Corporation until their respective successors are elected and qualified, or
until such earlier time as they resign or are removed in accordance with the
By-Laws.
1.5 Officers. The officers of the Company immediately before the
Effective Time will be the officers of the Surviving Corporation after the
Effective Time and will hold office at the pleasure of the Board of Directors,
and in accordance with the By-Laws, of the Surviving Corporation.
1.6 Further Assurances. If at any time after the Effective Time, the
Surviving Corporation determines or is advised that any deeds, bills of sale,
assignments, assurances or other actions or things are necessary or desirable to
vest, perfect or confirm of record or otherwise in the Surviving Corporation its
right, obligation, title or interest in, to or under any of the rights,
properties or assets of either the Company or Acquisition acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out the transactions which are the subject of this
Agreement, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver all documents, in the name and behalf of the
Company, Acquisition or otherwise, and to take all other actions and do all
other things as may be necessary or desirable to vest, perfect or confirm any
and all right, obligation, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out the
transactions contemplated by this Agreement.
<PAGE> 81
1.7 Stock of the Company. (a) Except as provided in subparagraphs (d),
(f) and (g) and Paragraph 1.9, at the Effective Time each share of Common Stock
of the Company ("U.S. Home Common Stock"), par value $.01 per share, which is
outstanding immediately before the Effective Time will be converted into and
become the right to receive, (i) the number of shares of common stock of Lennar
("Lennar Common Stock"), par value $.10 per share, described in subparagraph (b)
(the "Stock Consideration"), plus (ii) $18 in cash (the "Cash Consideration").
Each share which receives that consideration is a "Non-Election Share."
(b) The Stock Consideration for a share of U.S. Home Common Stock will be
the number of shares of Lennar Common Stock with a Market Value (computed as
provided in subparagraph (c)) equal to $18, except that in no event will the
Stock Consideration (i) be more than 1.27434 shares of Lennar Common Stock or
(ii) be fewer than 0.9600 shares of Lennar Common Stock. Notwithstanding the
foregoing, if the Market Value of a share of Lennar Common Stock is (x) $11.55
or less, and neither the Company nor Lennar terminates this Agreement pursuant
to Article VI, the Stock Consideration for a share of U.S. Home Common Stock
will be the number of shares of Lennar Common Stock which has a Market Value of
$14.72, or (y) more than $23.96, the Stock Consideration for a share of U.S.
Home Common Stock will be the number of shares of Lennar Common Stock which has
a Market Value of $23.00.
(c) The "Market Value" of a share of Lennar Common Stock will be the
average of the Last Sale Price of a share of Lennar Common Stock on each of the
twenty New York Stock Exchange trading days ending on, and including, the last
New York Stock Exchange trading day prior to the day of the meeting at which the
stockholders of the Company vote upon the Merger. The "Last Sale Price" of a
share of Lennar Common Stock on a day will be the last sale price of a share of
Lennar Common Stock reported on the New York Stock Exchange consolidated tape
prior to 4:00 p.m. on that day.
(d) Any holder of U.S. Home Common Stock may elect to receive with regard
to specified shares of U.S. Home Common Stock, instead of the combination of
Stock Consideration and Cash Consideration described in subparagraph (a), either
(i) a number of shares of Lennar Common Stock which is twice the Stock
Consideration per share of U.S. Home Common Stock described in subparagraph (a),
but no cash (a "Stock Election") or (ii) an amount of cash which is twice the
Cash Consideration described in subparagraph (a), but no shares of Lennar Common
Stock (a "Cash Election"), except that
(x) if Stock Elections would cause the total number of shares of
Lennar Common Stock which are to be issued to holders of U.S. Home Common
Stock to be more than the Maximum Shares, (i) the number of shares of
Lennar Common Stock which a holder of U.S. Home Common Stock who makes a
Stock Election will receive for each share of U.S. Home Common Stock as to
which the Stock Election is made will be reduced on a pro rata basis with
all other such holders to the number such that the total number of shares
of Lennar Common Stock to be issued to holders of U.S. Home Common Stock
will be the Maximum Shares (assuming no Company stockholders exercise
dissenters' rights or receive cash in lieu of fractional shares), and (ii)
the holder will receive in lieu of the shares of Lennar Common Stock the
holder does not receive because of the reduction, cash equal to (w) $18,
times (x) the number of shares of U.S. Home Common Stock as to which the
holder made the Stock Election, times (y) the total number of shares of
Lennar Common Stock which holders of U.S. Home Common Stock did not receive
because of the reduction, all divided by (z) the total number of shares of
Lennar Common Stock (in excess of the Stock Consideration described in
clause (i) of Paragraph 1.7(a) and in Paragraph 1.7(b)) which holders of
U.S. Home Common Stock who made Stock Elections would have received as a
result of the Stock Elections if there had been no reduction, and
(y) if Cash Elections would cause more than 55% of the total value of
the Merger Consideration for all the outstanding shares of U.S. Home Common
Stock to be cash (treating all stockholders who give the Company a timely
and proper notice of intention to exercise dissenters' rights as receiving
Merger Consideration consisting of cash equal to $36 per share as to which
the notices relate), (i) the cash which a holder of a share of U.S. Home
Common Stock who makes a Cash Election
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<PAGE> 82
will receive will be reduced on a pro rata basis with all other such
holders to the amount such that 55% of the total value of the Merger
Consideration will be cash (treating all stockholders who give the Company
timely and proper notice of intention to exercise dissenters' rights as
receiving Merger Consideration consisting of cash equal to $36 per share as
to which the notices relate), but not below $18 per share of U.S. Home
Common Stock and (ii) the holder of U.S. Home Common Stock will receive for
each $0.01 of the reduction of cash a fraction of a share of Lennar Common
Stock equal to the number of shares constituting the Stock Consideration
divided by 1800.
(e) The Lennar Common Stock and cash into which a share of U.S. Home Common
Stock is converted in the Merger as provided in subparagraph (a) (i.e., the
Market Value of the Stock Consideration and the Cash Consideration) is referred
to in this Agreement as the "Merger Price." The Lennar Common Stock and cash
into which a share of U.S. Home Common Stock is converted in the Merger as
provided in either subparagraph (a) or subparagraph (d) is referred to in this
Agreement as the "Merger Consideration." The term "Maximum Shares" as used in
subparagraph (d) means the number of shares of Lennar Common Stock which would
be issued if all holders of U.S. Home Common Stock received the Stock
Consideration provided for in subparagraph (a).
(f) Each share of U.S. Home Common Stock held in the treasury of the
Company, by Lennar or by any direct or indirect wholly -- owned subsidiary of
the Company or Lennar, immediately before the Effective Time will, at the
Effective Time, be canceled and cease to exist and no payment will be made with
respect to any of those shares.
(g) No fractional shares of Lennar Common Stock will be issued as a result
of the Merger. Any holder of U.S. Home Common Stock who, but for this
subparagraph, would be entitled to receive a fraction of a share of Lennar
Common Stock as a result of the Merger will receive, instead of that fraction of
a share, cash equal to the Market Value of a share of Lennar Common Stock times
the fraction.
1.8 Stock of Acquisition. At the Effective Time, each share of stock of
Acquisition ("Acquisition stock") which is outstanding immediately before the
Effective Time will remain outstanding and will become one share of common stock
of the Surviving Corporation. At the Effective Time, a certificate which
represented Acquisition stock will automatically become and be a certificate
representing the number of shares of Surviving Corporation common stock into
which the Acquisition stock represented by the certificate was converted.
1.9 Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, U.S. Home Common Stock that is outstanding
immediately prior to the Effective Time which is held by stockholders who have
complied with Section 262 of the DGCL (including making a timely demand for
appraisal and not voting in favor of or consenting to the Merger) and who, as of
the Effective Time, have not withdrawn or lost their right to appraisal, will
not be converted into or represent the right to receive the Merger Price.
Instead, if the Merger takes place, the Surviving Corporation will pay the
holders of those shares the fair value of the shares of U.S. Home Common Stock
determined as provided in Section 262 of the DGCL. Shares held by stockholders
who fail to perfect, or who otherwise properly withdraw or lose, their rights to
receive the fair value of their shares of U.S. Home Common Stock determined
under Section 262 of the DGCL will be deemed to have been converted, at the
later of the Effective Time or the time they withdraw or lose their rights to
receive the fair value of their shares, into the right to receive the Merger
Price provided in Paragraph 1.7(a), without any interest.
(b) The Company will promptly give Lennar (i) notice of any demands for
appraisal received by the Company, any withdrawals of any such demands, and any
other communications required by, or relating to, Section 262 of the DGCL which
the Company receives and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL. The Company
will not, except with the prior written consent of Lennar, make any payment with
respect to any demand for payment of the fair value of shares or offer to settle
or settle any such demand.
1.10 Adjustments. If between the date of this Agreement and the Effective
Time, the outstanding shares of U.S. Home Common Stock or Lennar Common Stock
are changed into a different number of
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<PAGE> 83
shares by reason of a reclassification, recapitalization, split up, combination
or exchange of shares, or any dividend payable in stock or other securities is
declared with regard to the U.S. Home Common Stock or Lennar Common Stock with a
record date between the date of this Agreement and the Effective Time, the
Merger Consideration will be adjusted to provide the holders of U.S. Home Common
Stock the same economic effect as that contemplated by this Agreement if the
reclassification, recapitalization, split-up, combination, exchange or dividend
had not taken place.
1.11 Election Notices. (a) Not later than 25 days before the scheduled
date of the meeting of the Company's stockholders at which they are to vote upon
the Merger (the Company's "Merger Stockholders Meeting"), the Company will
distribute to its stockholders a form (an "Election Form"), which has been
prepared by the Company and approved by Lennar, with which the Company's
stockholders can make the election described in Paragraph 1.7(d). The Company
will make additional Election Forms available to its stockholders upon request
throughout the period during which elections can be made.
(b) To make an election under Paragraph 1.7(d), a holder of U.S. Home
Common Stock or a holder of an option to purchase U.S. Home Common Stock must
complete an Election Form and send or deliver it, accompanied by either the
shares of U.S. Home Common Stock to which it relates or a completed and signed
option exercise notice, to the address specified in the instructions to the
Election Form, and the Election Form and shares or option exercise notice must
be received at that address not later than 5:00 p.m. New York City time on the
day before the day on which the Company's Merger Stockholders Meeting is held.
(c) An election under Paragraph 1.7(d) may be rescinded, and a new election
delivered at any time before 5:00 p.m. New York City time on the day before the
day on which the Company's Merger Stockholders Meeting is held in the manner
which will be specified in the instructions to the Election Form. The latest
Election Form which has been delivered and not rescinded by a holder of U.S.
Home Common Stock shall be treated as the valid Election Form of that holder. If
an election is rescinded but no new election is timely delivered, the shares of
U.S. Home Common Stock as to which the election was made (i) will be treated as
Non-Election Shares and (ii) will be returned promptly to the stockholder who
made the election.
(d) The Company will keep Lennar informed of the results of elections made
by its stockholders and will permit Lennar or its representatives to inspect the
Election Forms during normal business hours.
1.12 Distributions with Regard to U.S. Home Common Stock. (a) Prior to
the Effective Time, Acquisition and the Company will jointly designate a bank or
trust company to act as Distributing Agent in connection with the Merger (the
"Distributing Agent"). Immediately before the Effective Time, Lennar will
provide the Distributing Agent with the shares of Lennar Common Stock and funds
which will have to be distributed to holders of U.S. Home Common Stock under
Paragraph 1.7(a) (assuming for this purpose that no holder of shares of U.S.
Home Common Stock will perfect the right under Section 262 of the DGCL to
receive the appraised value of shares of U.S. Home Common Stock). If it is
subsequently determined that, because of elections made as described in
Paragraph 1.7(d), holders of U.S. Home Common Stock will be entitled to more
cash, but fewer shares of Lennar Common Stock, than what the Distributing Agent
is holding, Lennar will promptly provide the additional funds to the
Distributing Agent and the Distributing Agent will return the excess shares to
Lennar.
(b) Until they are distributed, the shares of Lennar Common Stock held by
the Distributing Agent will be deemed to be outstanding, (except that excess
shares returned to Lennar as provided in subparagraph (a) will be deemed never
to have been outstanding) but the Distributing Agent will not vote those shares
or exercise any rights of a shareholder with regard to them. If any dividends
are paid with regard to shares of Lennar Common Stock while they are held by the
Distributing Agent, the Distributing Agent will hold the dividends, uninvested,
until shares of Lennar Common Stock are distributed to particular former holders
of U.S. Home Common Stock, at which time the dividends which have been paid with
regard to the shares of Lennar Common Stock which are being distributed will be
paid to the persons to whom the shares are being distributed.
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<PAGE> 84
(c) While the Distributing Agent is holding funds provided by Lennar under
subparagraph (a), the Distributing Agent will invest the funds, as directed by
Lennar, in obligations of or guaranteed by the United States of America or
obligations of an agency of the United States of America which are backed by the
full faith and credit of the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Moody's Investors Services Inc. or
Standard & Poors' Corporation, or in deposit accounts, certificates of deposit
or banker's acceptances of, repurchase or reverse repurchase agreements with, or
Eurodollar time deposits purchased from, commercial banks with capital, surplus
and undivided profits aggregating more than $500 million (based on the most
recent financial statements of the banks which are then publicly available at
the Securities and Exchange Commission ("SEC") or otherwise).
(d) Promptly after the Effective Time, the Surviving Corporation will cause
the Distributing Agent to mail to each person who was a record holder of U.S.
Home Common Stock at the Effective Time and who has not previously delivered
their stock certificates with an Election Form, a form of letter of transmittal
for use in effecting the surrender of stock certificates representing U.S. Home
Common Stock ("Certificates"). Surrender of Certificates with an Election Form
or a letter of transmittal will enable a holder of U.S. Home Common Stock to
receive payment of the Merger Consideration. The Distributing Agent will
distribute the Merger Consideration with regard to the shares represented by the
Certificate, to, or as otherwise directed in the Election Form or letter of
transmittal by, the holder of each Certificate who has delivered a properly
completed and executed Election Form, letter of transmittal and any other
required document, and the Certificate will be canceled. No interest will be
paid or accrued on the cash payable upon the surrender of Certificates. If
payment is to be made to a person other than the person in whose name a
surrendered Certificate is registered, the surrendered Certificate must be
properly endorsed or otherwise be in proper form for transfer, and the person
who surrenders the Certificate must provide funds for payment of any transfer or
other taxes required by reason of the distribution to a person other than the
registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that the tax has been paid. After the
Effective Time, a Certificate which has not been surrendered will represent only
the right to receive the Merger Consideration (and any dividends paid after the
Effective Time with regard to shares of Lennar Common Stock included in the
Merger Consideration), without any interest.
(e) If a Certificate has been lost, stolen or destroyed, the Surviving
Corporation will accept an affidavit and indemnification reasonably satisfactory
to it instead of the Certificate and will pay the Merger Consideration to the
holder of the shares of U.S. Home Common Stock which had been represented by the
Certificate.
(f) At any time which is more than six months after the Effective Time,
Lennar may require the Distributing Agent to deliver to it any shares of Lennar
Common Stock and any funds which had been made available to the Distributing
Agent and have not been disbursed to former holders of U.S. Home Common Stock
(including, without limitation, interest and other income received by the
Distributing Agent in respect of the funds made available to it), and after the
funds have been delivered to Lennar, former stockholders of the Company must
look to Lennar for payment of the cash portion of the Merger Consideration upon
surrender of the Certificates held by them. None of Lennar, the Surviving
Corporation or the Distributing Agent will be liable to any former stockholder
of the Company for any Merger Consideration which is delivered to a public
official pursuant to any abandoned property, escheat or similar law.
(g) After the Effective Time, the Surviving Corporation will not record any
transfers of shares of U.S. Home Common Stock on the stock transfer books of the
Company or the Surviving Corporation, and the stock ledger of the Company will
be closed. If, after the Effective Time, Certificates are presented for
transfer, they will be canceled and treated as having been surrendered for the
Merger Price described in Paragraph 1.7(a).
1.13 Determinations Regarding Documents. The Company (or, after the
Merger, the Surviving Corporation) will have the discretion, which it may
delegate in whole or in part, to determine whether Election Notices and letters
of transmittal accompanying Certificates have been properly and timely
completed, signed and submitted and to determine whether or not to disregard
immaterial defects in
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<PAGE> 85
particular Election Notices or letters of transmittal. The decision of the
Company (or, after the Merger, the Surviving Corporation) with regard to those
matters will be conclusive and binding. None of Lennar, the Company, the
Surviving Corporation or the Distributing Agent will have any obligation to
notify any person of any defect in an Election Form or a letter of transmittal
submitted to the Company, the Surviving Corporation or Lennar, as applicable.
The Distributing Agent or another person or entity agreed to by the Company and
Lennar will make all computations contemplated by Paragraph 1.7 and those
computations will be conclusive and binding on the holders of U.S. Home Common
Stock.
1.14 Options and Warrants. At the Effective Time, each option or warrant
issued by the Company which is outstanding at the Effective Time (a) will become
the right to receive a sum in cash equal to (i) the amount, if any, by which the
per share exercise price of the option or warrant is less than $36.00, times
(ii) the number of shares of U.S. Home Common Stock issuable upon exercise of
the option or warrant in full (irrespective of vesting provisions), and (b)
except as described in clause (a), will be canceled. In order to receive the
amount to which a holder of an option or warrant is entitled under this
Paragraph, the holder must deliver to the Surviving Corporation (i) any
certificate or option agreement relating to the option or warrant and (ii) a
document in which the holder acknowledges that the payment the holder is
receiving is in full satisfaction of any rights the holder may have under or
with regard to the option or warrant. Lennar or the Surviving Corporation will
pay the amount due under this Paragraph to a holder of an option promptly after
the Surviving Corporation receives from the holder the items described in
clauses (i) and (ii) of the preceding sentence.
1.15 Withholding. Lennar may withhold from the Merger Consideration
payable to any holder of U.S. Home Common Stock and pay to the appropriate
taxing authorities, any amounts which Lennar may be required (or may reasonably
believe it is required) to withhold under the Internal Revenue Code of 1986, as
amended (the "Code"), or any provision of state, local or foreign tax law. Any
portion of the Merger Consideration which is withheld as permitted by this
Paragraph will be deemed to have been paid to the holder of U.S. Home Common
Stock with respect to whom it is withheld.
ARTICLE II
EFFECTIVE TIME OF MERGER
2.1 Date of the Merger. Unless this Agreement is terminated prior to the
Effective Time in accordance with Article VI, the day on which the Merger is to
take place (the "Merger Date") will be the business day after the latest of (i)
the day on which the Merger is approved by the holders of a majority of the
outstanding shares of U.S. Home Common Stock, (ii) the day on which the Merger
is approved by the holders of a majority in voting power of the outstanding
shares of Lennar Common Stock and Lennar's class B common stock voting as a
single class, and (iii) the second business day after the day on which all the
conditions set forth in Article V (other than conditions which are contemplated
to be satisfied on or after the Merger Date) have been satisfied or waived. The
Merger Date may be changed with the consent of the Company and Lennar.
2.2 Execution of Certificate of Merger. On the day before the Merger
Date, Acquisition and the Company will each execute a certificate of merger (the
"Certificate of Merger"), which will be in proper form for filing under the
DGCL, and deliver it to Clifford Chance Rogers & Wells LLP for filing with the
Secretary of State of Delaware. When all the conditions in Article V have been
satisfied or waived, Lennar and the Company will (i) cause the Certificate of
Merger to be filed with the Secretary of State of Delaware on the Merger Date
and (ii) cause all other documents which must be recorded or filed as a result
of the Merger to be recorded or filed.
2.3 Effective Time of the Merger. The Merger will become effective at
11:59 P.M. on the day when the Certificate of Merger is filed with the Secretary
of State of Delaware, or at such other time and date as are agreed upon by
Lennar and the Company and specified in the Certificate of Merger (that being
the "Effective Time").
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company represents
and warrants to Lennar and Acquisition as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) The Company has all corporate power and authority necessary to enable
it to enter into this Agreement and carry out the transactions contemplated by
this Agreement. All corporate actions necessary to authorize the Company to
enter into this Agreement and carry out the transactions contemplated by it,
other than approval of the Merger and adoption of this Agreement by the
stockholders of the Company, have been taken. This Agreement has been duly
executed by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms. The Company's
Board of Directors has determined that the Merger is advisable and fair to the
Company's stockholders and has voted to recommend to the Company's stockholders
that they vote in favor of approving the Merger and adopting this Agreement.
(c) Neither the execution and delivery of this Agreement or of any document
to be delivered in accordance with this Agreement nor the consummation of the
transactions contemplated by this Agreement or by any document to be delivered
in accordance with this Agreement will violate, result in a breach of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, the Certificate of Incorporation or By-Laws
of the Company.
(d) Except as shown on Exhibit 3.1-D, no governmental filings,
authorizations, approvals, or consents, or other governmental action, other than
the expiration or termination of waiting periods under the Hart-Scott Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if any, are
required to permit the Company to fulfill all its obligations under this
Agreement, other than governmental filings, authorizations, approvals, consents
or other governmental actions the absence of which would not have a Material
Adverse Effect on the Company.
(e) The Company and each of its subsidiaries is qualified to do business as
a foreign corporation in each state in which it is required to be qualified,
except states in which the failure to qualify, in the aggregate, would not have
a Material Adverse Effect on the Company. As used in this Agreement, the term
"Material Adverse Effect" on a company means a material adverse effect on (i)
the business, operations, results of operations, properties, assets, liabilities
or condition (financial or otherwise) of that company and its subsidiaries taken
as a whole or (ii) the ability of that company to consummate the Merger or the
other transactions contemplated by this Agreement, other than a material adverse
effect resulting from (w) a change in laws, rules or regulations of governmental
agencies, (x) a change in United States generally accepted accounting principles
("GAAP"), (y) a change or occurrence affecting the homebuilding industry
generally, or (z) a change in general economic conditions (including, without
limitation, a change in interest rates).
(f) The only authorized stock of the Company is 50,000,000 shares of U.S.
Home Common Stock, and 10,000,000 shares of preferred stock, par value $.10 per
share. At the date of this Agreement, the only outstanding stock of the Company
is not more than 13,500,000 shares of U.S. Home Common Stock. All the
outstanding shares of U.S. Home Common Stock have been duly authorized and
issued and are fully paid and non-assessable. Except as shown on Exhibit 3.1-F,
the Company has not issued any options, warrants or convertible or exchangeable
securities, and is not a party to any other agreements, which require, or upon
the passage of time, the payment of money or the occurrence of any other event
may require, the Company to issue or sell any of its stock.
(g) The number of shares of U.S. Home Common Stock which the Company
repurchased between January 1, 1999 and the date of this Agreement did not
exceed 405,600 shares and the total amount the Company paid for those shares did
not exceed $12,400,000.
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(h) The Board of Directors of the Company has approved an amendment to the
Rights Agreement (the "Rights Agreement") dated as of November 7, 1996 between
the Company and First Chicago Trust, to exclude Lennar and Acquisition from the
definition of "Acquiring Person" in the Rights Agreement from and after the
Effective Time, and prior to the Effective Time so long as this Agreement has
not been terminated in accordance with its terms (the "Suspension Period").
During the Suspension Period, no acquisition of U.S. Home Common Stock by Lennar
or Acquisition will result in there being a Distribution Date under the Rights
Agreement or otherwise entitle anyone to exercise Rights under the Rights
Agreement.
(i) Except as shown on Exhibit 3.1-I, (i) each of the corporations and
other entities of which the Company owns directly or indirectly 51% or more of
the equity (each corporation or other entity of which a company owns directly or
indirectly 51% or more of the equity being a "subsidiary" of that company) has
been duly organized, and is validly existing and in good standing under the laws
of its state of incorporation, (ii) all the shares of stock owned by the Company
or a subsidiary of each of the Company's subsidiaries which is a corporation are
duly authorized, validly issued, fully paid and non-assessable and are not
subject to any preemptive rights, and (iii) neither the Company nor any of its
subsidiaries has issued any options, warrants or convertible or exchangeable
securities, or is a party to any other agreements, which require, or upon the
passage of time, the payment of money or the occurrence of any other event may
require, the Company or any subsidiary to issue or sell any stock or other
equity interests in any of the Company's subsidiaries and, there are no
registration covenants or transfer or voting restrictions with respect to
outstanding securities of any of the Company's subsidiaries.
(j) Since February 1, 1997, the Company has filed with the SEC all forms,
statements, reports and documents it has been required to file under the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or the rules under them.
(k) The Company's Annual Report on Form 10-K for the year ended December
31, 1998 (the "U.S. Home 1998 10-K") and its Quarterly Report on Form 10-Q for
the period ended September 30, 1999 (the "U.S. Home September 10-Q") which the
Company filed with the SEC, including the documents incorporated by reference in
each of them, each contained all the information required to be included in it
and, when it was filed, did not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
in it, in light of the circumstances under which they were made, not misleading.
Without limiting what is said in the preceding sentence, the financial
statements included in the U.S. Home 1998 10-K all were prepared, and the
financial information included in the U.S. Home September 10-Q was derived from
financial statements which were prepared, in accordance with GAAP applied on a
consistent basis (except that financial information included in the U.S. Home
September 10-Q does not contain notes and is subject to normal year-end
adjustments) and present fairly the consolidated financial condition and the
consolidated results of operations of the Company and its subsidiaries at the
dates, and for the periods, to which they relate. The Company has not filed any
reports with the SEC with regard to any period which ended, or any event which
occurred, after September 30, 1999. The Company's consolidated revenues and net
income for the quarter ended December 31, 1999 and for the year ended December
31, 1999 were as stated in a press release issued by the Company on February 2,
2000.
(l) Since September 30, 1999, (i) the Company and its subsidiaries have
conducted their respective businesses in the ordinary course and in the same
manner in which they were conducted prior to September 30, 1999, and (ii)
nothing has occurred which, individually or in aggregate, has had a Material
Adverse Effect on the Company, except purchases by the Company of 292,000 shares
of U.S. Home Common Stock, which, among other things, reduced the Company's
working capital, tangible net worth and net assets.
(m) The assets of the Company and its subsidiaries constitute, in the
aggregate, all the assets (including, but not limited to, intellectual property
rights) used in or necessary to the conduct of their businesses as they
currently are being conducted. They are substantially all of the assets with
which the Company has conducted its historical business.
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<PAGE> 88
(n) The Company and it subsidiaries have at all times complied, and
currently are complying, with all applicable Federal, state, local and foreign
laws and regulations, except failures to comply which would not reasonably be
expected, in the aggregate, to have a Material Adverse Effect on the Company.
(o) Except as shown on Exhibit 3.1-O, the Company and its subsidiaries have
all licenses and permits which are required at the date of this Agreement to
enable them to conduct their businesses as they currently are being conducted,
except licenses or permits the lack of which would not reasonably be expected,
in the aggregate, to have a Material Adverse Effect on the Company.
(p) The Company and each of its subsidiaries has filed when due (taking
account of extensions) all Tax Returns (as defined below) relating to Federal
income taxes, and all other material Tax Returns, which it has been required to
file and has paid all Taxes shown on those returns to be due. Those Tax Returns
are true, correct and complete in all material respects and accurately reflect
all Taxes required to have been paid, except to the extent of items which may be
disputed by applicable taxing authorities but for which there is substantial
authority to support the position taken by the Company or the subsidiary and
which have been adequately reserved against in accordance with GAAP on the
balance sheet at September 30, 1999 included in the U.S. Home September 10-Q.
The Company has maintained all documents, books and records as are required to
be maintained by it and its subsidiaries under applicable Tax laws. Except as
shown on Exhibit 3.1-P, (i) no extension of time given by the Company or any of
its subsidiaries for completion of the audit of any of its Federal income Tax
Returns or other material Tax Returns is in effect, (ii) no tax lien has been
filed by any taxing authority against the Company or any of its subsidiaries or
any of their assets relating to Taxes, penalties and interest in excess of
$100,000 in any instance, or $1,000,000 in aggregate, (iii) no Federal income
Tax Return, or material state, local or foreign Tax Return, of the Company or
any subsidiary, is the subject of a pending audit or other administrative
proceeding or court proceeding, (iv) except as shown on Exhibit 3.1-P, neither
the Company nor any subsidiary is a party to any agreement providing for the
allocation or sharing of Taxes (other than agreements solely between the Company
and its direct or indirect wholly owned subsidiaries or among direct or indirect
wholly owned subsidiaries of the Company), (v) neither the Company nor any
subsidiary has participated in or cooperated with an international boycott as
that term is used in Section 999 of the Code, (vi) the liabilities and reserves
for Taxes reflected in the consolidated balance sheet at September 30, 1999
included in the U.S. Home September 10-Q cover all Taxes for all periods ended
at or prior to the date of such balance sheet and have been determined in
accordance with GAAP and there is no material liability for Taxes for any period
beginning after the date of such balance sheet other than Taxes arising in the
ordinary course of business, other than Tax liabilities assumed or incurred in
the purchase of real estate in the ordinary course of business which are not
material in the aggregate, (vii) no event, transaction, act or omission has
occurred which could result in the Company's becoming liable to pay or to bear
any Tax as a transferee, successor or otherwise which is primarily or directly
chargeable or attributable to any other person, firm or company, and the Company
has no actual or contingent liability (whether by reason of any indemnity,
warranty or otherwise) to any other person in respect of any actual, contingent
or deferred liability of such person for Taxes, (viii) the Company is not
required to include in income any adjustment pursuant to Section 481(a) of the
Code by reason of a voluntary change in accounting method initiated by the
Company, and the Internal Revenue Service (the "IRS") has not proposed any such
adjustment or change in accounting method, and (ix) neither the Company nor any
subsidiary has filed a consent pursuant to Section 341(f) of the Code or agreed
to have Section 341(f)(2) of the Code apply to any disposition of a Subsection
(f) asset (as that term is defined in Section 341(f)(4) of the Code) owned by
the Company or any subsidiary. For the purposes of this Agreement, the term
"Taxes" means all taxes (including, but not limited to, withholding taxes),
assessments, fees, levies and other governmental charges, and any related
interest or penalties. For the purposes of this Agreement, the term "Tax Return"
means any report, return or other information required to be supplied to a
taxing authority in connection with Taxes. Neither the Company nor any of its
affiliates has taken or agreed to take any action, nor do any of the executive
officers of the Company have knowledge of any fact or circumstance relating to
the Company, that would prevent the Merger from qualifying as a "reorganization"
under Section 368(a)(2)(D) of the Code.
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(q) (i) The Company and its subsidiaries have all material environmental
permits which are necessary to enable them to conduct their businesses as they
currently are being conducted without violating any Environmental Laws in a
manner which would have a Material Adverse Effect on the Company, (ii) except as
shown on Exhibit 3.1-Q, neither the Company nor any subsidiary has received any
written notice of material noncompliance or material liability under any
Environmental Law which is now pending, (iii) neither the Company nor any
subsidiary has performed any acts, including but not limited to releasing,
storing or disposing of hazardous materials, there is no condition on any
property owned or leased by the Company or a subsidiary, and there was no
condition on any property formerly owned or leased by the Company or a
subsidiary while the Company or a subsidiary owned or leased that property, that
would be a basis for liability of the Company or a subsidiary under any
Environmental Law which would have a Material Adverse Effect on the Company and
(iv) except as shown on Exhibit 3.1-Q, and except for those which would not have
a Material Adverse Effect on the Company, neither the Company nor any subsidiary
is subject to any order of any court or governmental agency requiring the
Company or any subsidiary to take, or refrain from taking, any actions in order
to comply with any Environmental Law and no action or proceeding seeking such an
order is pending or, insofar as any officer of the Company is aware, threatened
against the Company. As used in this Agreement, the term "Environmental Law"
means any Federal, state or local law, rule, regulation, guideline or other
legally enforceable requirement of a governmental authority relating to
protection of the environment or to environmental conditions which affect human
health or safety.
(r) Failures of items sold by the Company or its subsidiaries to have been
Y2K Compliant will not result in liabilities or costs to the Company which, in
aggregate, will have a Material Adverse Effect on the Company. As used in this
Agreement, items failed to be Y2K compliant if they failed to function properly
because they were not capable of recognizing that dates in the year 2000 are
subsequent to December 31, 1999 or otherwise were not able to operate without
being adversely affected by the change from the twentieth to the twenty-first
century.
(s) The Board of Directors of the Company has received the written opinion
of Warburg Dillon Read LLC its financial advisor, dated not earlier than the day
before the date of this Agreement, in form satisfactory to the Company and its
Board of Directors, to the effect that, as of the date of such opinion, the
Merger Price was fair from a financial point of view to the holders of U.S. Home
Common Stock.
(t) Except as shown on Exhibit 3.1-T, there are no contracts, agreements or
other arrangements which could result in the payment by the Company or by any
subsidiary of an "Excess Parachute Payment" as that term is used in Section 280G
of the Code or the payment by the Company or any of its subsidiaries of
compensation which will not be deductible because of Section 162(m) of the Code.
(u) Except as is described in the U.S. Home 1998 10-K or a subsequent
report filed with the SEC, neither the Company nor any subsidiary is a party to
any litigation which is required to be disclosed in an Annual Report on Form
10-K of the Company.
3.2 Representations and Warranties of Lennar and Acquisition. Each of
Lennar and Acquisition represents and warrants to the Company as follows:
(a) Each of Lennar and Acquisition is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Acquisition is a wholly owned subsidiary of Lennar.
(b) Each of Lennar and Acquisition has all corporate power and
authority necessary to enable it to enter into this Agreement and carry out
the transactions contemplated by this Agreement. All corporate actions
necessary to authorize each of Lennar and Acquisition to enter into this
Agreement and carry out the transactions contemplated by it, other than
adoption of this Agreement by the stockholders of Lennar, have been taken.
This Agreement has been duly executed by each of Lennar and Acquisition and
is a valid and binding agreement of each of Lennar and Acquisition,
enforceable against each of Lennar and Acquisition in accordance with its
terms.
(c) Neither the execution and delivery of this Agreement or of any
document to be delivered in accordance with this Agreement nor the
consummation of the transactions contemplated by this
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Agreement or by any document to be delivered in accordance with this
Agreement will violate, result in a breach of, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, the Certificate of Incorporation or By-Laws of either
Lennar or Acquisition, any agreement or instrument to which either Lennar
or Acquisition or any other subsidiary of Lennar is a party or by which any
of them is bound, any law, or any order, rule or regulation of any court or
governmental agency or other regulatory organization having jurisdiction
over Lennar or any of its subsidiaries, including Acquisition, except
violations or breaches of, or defaults under, agreements or instruments
which would not have a Material Adverse Effect on Lennar.
(d) Except as shown on Exhibit 3.2-D, no governmental filings,
authorizations, approvals, or consents, or other governmental action, other
than the expiration or termination of waiting periods under the HSR Act, if
any, are required to permit each of Lennar and Acquisition to fulfill all
its obligations under this Agreement.
(e) Lennar and each of its subsidiaries is qualified to do business as
a foreign corporation in each state in which it is required to be
qualified, except states in which the failure to qualify, in the aggregate,
would not have a Material Adverse Effect upon Lennar.
(f) The only authorized stock of Lennar is 100,000,000 shares of
Lennar Common Stock, 30,000,000 shares of class B common stock, par value
$.10 per share, 100,000,000 shares of participating preferred stock, par
value $.10 per share, and 500,000 shares of preferred stock, par value
$10.00 per share. At the date of this Agreement, the only outstanding stock
of Lennar is not more than 40,000,000 shares of Lennar Common Stock and not
more than 9,850,000 shares of class B common stock. All the outstanding
shares have been duly authorized and issued and are fully paid and
non-assessable. Except as shown on Exhibit 3.2-F, Lennar has not issued any
options, warrants or convertible or exchangeable securities, and is not a
party to any other agreements, which require, or upon the passage of time,
the payment of money or the occurrence of any other event may require,
Lennar to issue or sell any of its stock.
(g) Except as shown on Exhibit 3.2-G, (i) each of Lennar's
subsidiaries has been duly organized, and is validly existing and in good
standing under the laws of its state of incorporation, (ii) all the shares
of stock owned by Lennar or a subsidiary of each of Lennar's subsidiaries
which are corporations are duly authorized, validly issued, fully paid and
non-assessable and are not subject to any preemptive rights, and (iii)
neither Lennar nor any of its subsidiaries has issued any options, warrants
or convertible or exchangeable securities, or is a party to any other
agreements, which require, or upon the passage of time, the payment of
money or the occurrence of any other event may require, Lennar or any
subsidiary to issue or sell any stock or other equity interests in any of
Lennar's subsidiaries and, there are no registration covenants or transfer
or voting restrictions with respect to outstanding securities of any of
Lennar's subsidiaries.
(h) Since February 1, 1997, Lennar has filed with the SEC all forms,
statements, reports and documents it has been required to file under the
Securities Act, the Exchange Act or the rules under either of them.
(i) Lennar's Annual Report on Form 10-K for the year ended November
30, 1998 (the "Lennar 1998 10-K") and its Quarterly Report on Form 10-Q for
the period ended August 31, 1999 (the "Lennar August 10-Q") which Lennar
filed with the SEC, including the documents incorporated by reference in
each of them, each contained all the information required to be included in
it and, when it was filed, did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements made in it, in light of the circumstances under which they
were made, not misleading. Without limiting what is said in the preceding
sentence, the financial statements included in the Lennar 1998 10-K all
were prepared, and the financial information included in the Lennar August
10-Q was derived from financial statements which were prepared, in
accordance with GAAP applied on a consistent basis (except that financial
information included in the Lennar August 10-Q does not contain notes and
is subject to normal year end adjustments) and
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present fairly the consolidated financial condition and the consolidated
results of operations of Lennar and its subsidiaries at the dates, and for
the periods, to which they relate. Lennar has not filed any reports with
the SEC with regard to any period which ended, or any event which occurred,
after August 31, 1999. Lennar's consolidated revenues and net income for
the quarter ended November 30, 1999 and for the year ended November 30,
1999 were as stated in a press release issued by Lennar on January 11,
2000.
(j) Since August 31, 1999, (i) Lennar and its subsidiaries have
conducted their businesses in the ordinary course and in the same manner in
which they were conducted prior to August 31, 1999, and (ii) nothing has
occurred which, individually or in aggregate, has had a Material Adverse
Effect on Lennar, except purchases by Lennar of not more than 10,000,000
shares of Lennar Common Stock, which, among other things, reduced Lennar's
working capital, tangible net worth and net assets.
(k) The assets of Lennar and its subsidiaries constitute, in the
aggregate, all the assets (including, but not limited to, intellectual
property rights) used in or necessary to the conduct of their businesses as
they currently are being conducted.
(l) Lennar and its subsidiaries have at all times complied, and
currently are complying, with all applicable Federal, state, local and
foreign laws and regulations, except failures to comply which would not
reasonably be expected, in the aggregate, to have a Material Averse Effect
on Lennar.
(m) Lennar and its subsidiaries have all licenses and permits which
are required at the date of this Agreement to enable them to conduct their
businesses as they currently are being conducted, except licenses or
permits the lack of which would not reasonably be expected, in the
aggregate, to have a Material Adverse Effect on Lennar.
(n) Lennar and each of its subsidiaries has filed when due (taking
account of extensions) all Tax Returns relating to Federal income taxes,
and all other material Tax Returns, which it has been required to file and
has paid all Taxes shown on those returns to be due. Those Tax Returns are
true, correct and complete in all material respects and accurately reflect
all Taxes required to have been paid, except to the extent of items which
may be disputed by applicable taxing authorities but for which there is
substantial authority to support the position taken by Lennar or the
subsidiary and which have been adequately reserved against in accordance
with GAAP on the balance sheet at August 31, 1999 included in the Lennar
August 10-Q. None of Lennar, Acquisition or any other of Lennar's
subsidiaries has any plan or arrangement to acquire shares of Lennar Common
Stock which will be issued to stockholders of the Company as a result of
the Merger, other than purchases in the open market pursuant to a stock
repurchase program of Lennar which was announced before the date of this
Agreement. It is the present intention of Lennar to cause the Surviving
Corporation and its subsidiaries or other companies which are part of a
qualified group (as defined in Treasury Regulation Section
1.368-1(d)(4)(ii)) which includes the Surviving Corporation, to continue to
run at least one significant historic business line of the Company, or to
use a significant portion of the Company's historic business assets in its
business.
(o) (i) Lennar and its subsidiaries have all material environmental
permits which are necessary to enable them to conduct their businesses as
they currently are being conducted without violating any Environmental
Laws, (ii) neither Lennar nor any subsidiary has received any notice of
material noncompliance or material liability under any Environmental Law,
(iii) neither Lennar nor any subsidiary has performed any acts, including
but not limited to releasing, storing or disposing of hazardous materials,
there is no condition on any property owned or leased by Lennar or a
subsidiary, and there was no condition on any property formerly owned or
leased by Lennar or a subsidiary while Lennar or a subsidiary owned or
leased that property, that could result in material liability by Lennar or
a subsidiary under any Environmental Law and (iv) neither Lennar nor any
subsidiary is subject to any order of any court or governmental agency
requiring Lennar or any subsidiary to take, or refrain from taking, any
actions in order to comply with any Environmental Law and no action or
proceeding seeking such an order is pending or, insofar as any officer of
Lennar is aware, threatened against Lennar or a subsidiary.
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(p) Failures of items sold by Lennar or its subsidiaries to have been
Y2K Compliant will not result in liabilities or costs to Lennar or its
subsidiaries which, in aggregate, will have a Material Adverse Effect on
Lennar.
(q) Lennar has, or has access under existing credit lines to,
sufficient funds to pay the maximum cash portion of the Merger
Consideration. Lennar has provided to the Company a true and complete copy
of a letter from Deutsche Bank Securities, Inc. regarding financing of the
cash required for the Merger, to refinance the Company's existing debt and
for related fees and expenses.
(r) When shares of Lennar Common Stock are issued as Stock
Consideration, or otherwise as a result of the Merger with regard to shares
of U.S. Home Common Stock, those shares of Lennar Common Stock will be duly
authorized and issued, fully paid and non-assessable, and will not be
subject to preemptive rights of any stockholders of Lennar.
(s) Except as is described in the Lennar 1998 10-K or a subsequent
report filed with the SEC, neither Lennar nor any subsidiary is a party to
any litigation which is required to be disclosed in an Annual Report on
Form 10-K of Lennar.
3.3 Termination of Representations and Warranties. The representations
and warranties in this Agreement or in any certificate delivered pursuant to
this Agreement will terminate at the Effective Time, and none of the Company,
Lennar or Acquisition, nor any of their respective stockholders, will have any
rights or claims as a result of any of those representations or warranties after
the Effective Time.
ARTICLE IV
ACTIONS PRIOR TO THE MERGER
4.1 Company's Activities Until Effective Time. From the date of this
Agreement to the Effective Time, or such earlier time as this Agreement is
terminated in accordance with Article VI, the Company will, and will cause each
of its subsidiaries to, except with the written consent of Lennar:
(a) Operate its business in the ordinary course and in a manner
consistent with the manner in which it is being operated at the date of
this Agreement.
(b) Take all reasonable steps available to it to maintain the goodwill
of its business and the continued employment of its executives and other
employees and to maintain good relationships with the vendors, suppliers,
contractors and others with which it does business.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by
fire or other casualty.
(d) Not make any borrowings other than borrowings in the ordinary
course of business under working capital lines which are disclosed in the
notes to the consolidated balance sheet at December 31, 1998 included in
the U.S. Home 1998 10-K or under the Company's Fourth Amended and Restated
Credit Agreement with lenders for which Bank One, N.A. is the agent (the
"Fourth Amended Agreement").
(e) Not enter into any contractual commitments (other than the Fourth
Amended Agreement) involving capital expenditures, loans or advances, and
not voluntarily incur any contingent liabilities, except in each case in
the ordinary course of business.
(f) Not redeem or purchase any of its stock and not declare or pay any
dividends, or make any other distributions or repayments of debt to its
stockholders (other than payments by subsidiaries of the Company to the
Company or to other wholly owned subsidiaries of the Company).
(g) Not make any loans or advances (other than advances for travel and
other normal business expenses) to stockholders, directors, officers or
employees.
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(h) Maintain its books of account and records in the usual manner, in
accordance with GAAP applied on a basis consistent with the basis on which
they were applied in prior years, subject to normal year-end adjustments
and accruals.
(i) Comply in all material respects with all applicable laws and
regulations of governmental agencies.
(j) Not purchase, sell or otherwise dispose of or encumber any
property or assets, or engage in any activities or transactions, except in
each case in the ordinary course of business.
(k) Not enter into or amend any employment, severance or similar
agreements or arrangements, or increase the salaries of any employees,
other than through normal annual increases.
(l) Not adopt, become an employer with regard to, or amend any
employee compensation, employee benefit or post-employment benefit plan.
(m) Not amend its certificate of incorporation or by-laws.
(n) Not (i) issue or sell any of its stock (except upon exercise of
options which are outstanding on the date of this Agreement or in
accordance with the Company's Stock Payment Plan as in effect on the date
of this Agreement) or any options, warrants or convertible or exchangeable
securities or (ii) split, combine, or reclassify its outstanding stock.
(o) Not knowingly take any action that would prevent the Merger from
qualifying as a "reorganization" under Section 368 (a) of the Code.
(p) Not authorize or enter into any agreement to take any of the
actions referred to in subparagraphs (a) through (o) above.
4.2 Lennar's Activities Until Effective Time. From the date of this
Agreement to the Effective Time, or such earlier time as this Agreement is
terminated in accordance with Article VI, Lennar will, and will cause each of
its subsidiaries to, except with the written consent of the Company:
(a) Operate its business in the ordinary course and in a manner
consistent with the manner in which it is being operated at the date of
this Agreement.
(b) Take all reasonable steps available to it to maintain the goodwill
of its business and the continued employment of its executives and other
employees and to maintain good relationships with the vendors, suppliers,
contractors and others with which it does business.
(c) At its expense, maintain all its assets in good repair and
condition, except to the extent of reasonable wear and use and damage by
fire or other casualty.
(d) Maintain its books of account and records in the usual manner, in
accordance with GAAP applied on a basis consistent with the basis on which
they were applied in prior years, subject to normal year-end adjustments
and accruals.
(e) Comply in all material respects with all applicable laws and
regulations of governmental agencies.
(f) Not purchase, sell or otherwise dispose of or encumber any
property or assets, or engage in any activities or transactions, except in
each case in the ordinary course of business.
(g) Not redeem or purchase any of its stock and not declare or pay any
dividends (other than regular quarterly dividends at the rate prevailing
prior to the date of this Agreement) or make any other distributions or
repayments of debt to its stockholders (other than payments by subsidiaries
of Lennar to Lennar or to other wholly-owned subsidiaries of Lennar).
(h) Not issue or sell any of its stock (except upon exercise of
options which are outstanding on the date of this Agreement or in
accordance with Lennar's stock option plans which are in effect on the date
of this Agreement) or any options, warrants or convertible or exchangeable
securities.
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(i) Not split, combine or reclassify its outstanding stock.
(j) Not knowingly take any action that would prevent the Merger from
qualifying as a "reorganization" under Section 368 (a) of the Code.
(k) Not amend its certificate of incorporation or by-laws.
(l) Not purchase shares of U.S. Home Common Stock if the purchase
would cause Lennar and its subsidiaries and affiliates to own in aggregate
more than 5% of the U.S. Home Common Stock which is then outstanding.
(m) Not authorize or enter into any agreement to take any of the
actions referred to in subparagraphs (a) through (l) above.
4.3 Amendment to Rights Plan. Not later than February 29, 2000, the
Company, and First Chicago Trust will enter into the amendment to the Rights
Plan described in Paragraph 3.1(h).
4.4 HSR Act Filings. The Company and Lennar will each make as promptly as
practicable the filing it is required to make under the HSR Act with regard to
the transactions which are the subject of this Agreement and each of them will
take all reasonable steps within its control (including providing information to
the Federal Trade Commission and the Department of Justice) to cause the waiting
periods required by the HSR Act to be terminated or to expire as promptly as
practicable. The Company and Lennar will each provide information and cooperate
in all other respects to assist the other of them in making its filing under the
HSR Act.
4.5 Stockholders' Meeting. Each of Lennar and the Company will take all
action which is necessary in accordance with applicable law and its Certificate
of Incorporation and By-Laws to call and convene a special meeting of its
stockholders (a "Merger Stockholders Meeting") as soon as practicable to
consider and vote upon adoption of this Agreement and approval of the Merger.
The proxy statement distributed by each of Lennar and the Company with respect
to its Merger Stockholders Meeting will include the recommendation of its Board
of Directors that its stockholders vote to adopt this Agreement and approve the
Merger, unless the Board of Directors of Lennar or the Company determines in
good faith, after consultation with its counsel about the nature of the
directors' fiduciary duties, that it is required by its fiduciary duties to
state that it no longer recommends that the stockholders of Lennar or the
Company, as the case may be, vote in favor of adoption of this Agreement and the
Merger. Each of Lennar and the Company will use all commercially reasonable
efforts to solicit from its stockholders proxies or votes in favor of adoption
of this Agreement and approval of the Merger.
4.6 Registration Statement and Proxy Statement. (a) Lennar will prepare
and file with SEC as soon as practicable after the date of this Agreement a
Registration Statement on Form S-4 relating to the shares of Lennar Common Stock
to be issued as a result of the Merger (the "Registration Statement"). The
Registration Statement will include a joint proxy statement (the "Joint Proxy
Statement/Prospectus") of Lennar and the Company relating to the Merger
Stockholders Meetings. Lennar and the Company will cooperate to provide all
information which is required to be included in the Registration Statement or in
the Joint Proxy Statement/Prospectus in a timely manner so the Registration
Statement can be filed with the SEC as soon as reasonably practicable. Lennar
will cause the Registration Statement, and Lennar and the Company will cause the
Joint Proxy Statement/Prospectus, to comply as to form in all material respects
with the applicable provisions of the Securities Act and the Exchange Act and
the rules under them. Lennar will use its best efforts, and the Company will
cooperate with Lennar, to cause the Registration Statement to be declared
effective by the staff of the SEC as promptly as practicable after it is filed
(including without limitation, responding to any comments received from the SEC
with respect to the Registration Statement) and to keep the Registration
Statement effective as long as is necessary to consummate the Merger. Each of
Lennar and the Company will, as promptly as practicable, provide to the other of
them copies of any written comments received from the SEC with regard to the
Registration Statement or the Joint Proxy Statement/Prospectus and will advise
the other of them of any comments with respect to the Registration Statement or
the Joint Proxy Statement/Prospectus which are received orally from the staff of
the SEC. Lennar will use its best efforts to obtain, prior to the effective date
of
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Registration Statement, any qualifications, permits or approvals which are
necessary under any state securities laws in order to carry out the Merger and
Lennar will pay all expenses incident to obtaining those qualifications, permits
or approvals.
(b) Lennar and Acquisition each represents and warrants to the Company, and
the Company represents and warrants to Lennar, that none of the information
supplied by it for inclusion, or included in a document filed by it which is
incorporated by reference, in the Registration Statement or the Joint Proxy
Statement/Prospectus will (i) in the case of the Registration Statement and each
amendment, at the time the Registration Statement is filed or becomes effective
and at the Effective Time, and (ii) in the case of the Joint Proxy
Statement/Prospectus and each amendment or supplement to it, at the time it is
mailed to stockholders and at the time of the Merger Stockholders Meetings,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If at any
time before the Effective Time an event occurs with respect to the Company or
any of its subsidiaries, or with respect to Lennar or any of its subsidiaries,
as the case may be, which is required to be described in the Registration
Statement or in the Joint Proxy Statement/Prospectus, an amendment or supplement
to the Registration Statement or the Joint Proxy Statement/Prospectus will be
filed with the SEC as promptly as practicable and, to the extent required by
law, will be distributed to the stockholders of Lennar, the Company or both of
them. Neither Lennar nor the Company will make any amendment or supplement to
the Registration Statement or the Joint Proxy Statement/Prospectus without the
approval of the other of them, which approval will not be unreasonably withheld
(and will under no circumstances be withheld to the extent the amendment or
supplement is required to cause the Registration Statement or the Joint Proxy
Statement/Prospectus to comply with applicable law). Lennar will advise the
Company promptly after it receives notice that the Registration Statement has
become effective or that any supplement or amendment to it has been filed, that
any stop order relating to the Registration Statement has been issued, or that
the qualification or registration of the Lennar Common Stock issuable in
connection with the Merger under any state securities law has been suspended, of
any request by the staff of the SEC for an amendment of the Registration
Statement or the Joint Proxy Statement/Prospectus, or of the receipt of comments
or requests for additional information from the staff of the SEC or the response
to any such comments or requests for additional information.
(c) The Company and Lennar each will cause its Merger Stockholders Meetings
to be held not later than 45 days after the day on which the Registration
Statement becomes effective.
(d) The Company's Board of Directors will not take any action, other than
causing the Company to terminate this Agreement if it is entitled to do so under
Article VI, which prevents the Company's stockholders from voting upon the
Merger, and Lennar's Board of Directors will not take any action, other than
causing Lennar to terminate this Agreement if it is entitled to do so under
Article VI, which prevents Lennar's stockholders from voting upon the Merger.
4.7 No Solicitation of Offers; Notice of Proposals from Others. (a)
Neither the Company nor any of its subsidiaries will, and the Company will use
its best efforts to cause its and its subsidiaries' respective directors,
officers, employees, investment bankers, attorneys and other agents and
representatives not to, directly or indirectly (x) solicit, initiate or
knowingly facilitate or encourage (including by way of furnishing or disclosing
information) any inquiry or the making of any offer or proposal by any
corporation, partnership, trust, person or other entity or group (a "Third
Party") with respect to, or that could reasonably be expected to lead to, any
merger, consolidation, share acquisition, asset purchase, share exchange,
business combination, tender offer, exchange offer or similar transaction
involving the acquisition of all or a substantial portion of the assets of the
Company and its subsidiaries, taken as a whole, or a significant equity interest
in (including by way of tender offer), or a recapitalization or restructuring
of, the Company or any of its material subsidiaries (any of those transactions
being an "Acquisition Transaction", or (y) negotiate, explore or otherwise
communicate in any way with any Third Party with respect to any possible
Acquisition Transaction, or enter into, approve or recommend any agreement,
arrangement or understanding requiring it to abandon, terminate or otherwise
fail to consummate the Merger or any other of the transactions contemplated by
this Agreement; provided however, that the Company may, in response
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to a proposal which was not solicited after the date of this Agreement furnish
information to, and engage in discussions or negotiations with, a Third Party,
if, but only if, (A) the Company's Board of Directors determines in good faith,
after consultation with a financial advisor of nationally recognized reputation,
that the Third Party is financially capable of completing the transaction which
is the subject of the proposal and that, if completed, that transaction would
result in greater value to the Company's stockholders than the Merger and would
be more favorable to the Company and its stockholders than the Merger and (B)
before furnishing or disclosing any non-public information to, or entering into
discussions or negotiations with, the Third Party, the Company receives from the
Third Party an executed confidentiality agreement with terms no less favorable
in the aggregate to the Company than those contained in the Confidentiality
Agreements, each dated as of February 11, 2000, between Lennar and the Company,
which confidentiality agreement does not provide for any exclusive right to
negotiate with the Company or any payments by the Company. Nothing in this
Paragraph will prohibit the Board of Directors of the Company from complying
with Rule 14e-2 and Rule 14d-9 under the Exchange Act with regard to a tender
offer or an exchange offer or prohibit the Company from selling assets or
properties in the ordinary course of business.
(b) The Company will (w) no later than the end of the first business day
after the Company receives an inquiry, proposal or offer with respect to a
possible Acquisition Transaction or a request for non-public information
relating to the Company in connection with a possible Acquisition Transaction or
for access to its or any of its subsidiaries' properties, books or records by
any Third Party that informs the Company's Board of Directors that the Third
Party is considering making, or has made, a proposal or offer with respect to an
Acquisition Transaction (any such inquiry proposal, offer or request being an
"Acquisition Proposal"), notify Lennar in writing of the inquiry, proposal,
offer or request, (x) in that written notice, indicate in reasonable detail the
identity of the Third Party (including the name of the Third Party) and the
terms and conditions of the proposal or offer, (y) promptly notify Lennar of any
determination by the Company's Board of Directors that the Company should
furnish information to, or engage in discussions of negotiations with, any Third
Party, and (z) keep Lennar informed of the progress of any discussions or
negotiations with any Third Party.
(c) The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties (other than
Lennar) which have been conducted before the date of this Agreement with respect
to any possible Acquisition Transaction, and will inform any such parties of the
Company's obligations under this Paragraph 4.6.
4.8 Lennar's and Acquisition's Efforts to Fulfill Conditions. Lennar and
Acquisition each will use its best efforts to cause all the conditions set forth
in Paragraph 5.1 to be fulfilled on or before the Merger Date.
4.9 Company's Efforts to Fulfill Conditions. The Company will use its
best efforts to cause all the conditions set forth in Paragraph 5.2 to be
fulfilled on or before the Merger Date.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.1 Conditions to the Company's Obligations. The obligations of the
Company to complete the Merger are subject to satisfaction on or before the
Merger Date of the following conditions (any or all of which may be waived by
the Company):
(a) The representations and warranties of Lennar and Acquisition
contained in this Agreement will, except as contemplated by this Agreement,
be true and correct in all material respects (except that the
representations and warranties of Lennar and Acquisition which are
qualified as to materiality, or absence of Material Adverse Effect, will be
true and correct in all respects) on the Merger Date with the same effect
as though made on that date (except that representations or warranties
which relate expressly to a specified date or a specified period need only
have been true and correct with regard to the specified date or period and
except to the extent that the
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representations and warranties in Paragraph 3.2(j) are not true and correct
on the Merger Date because of occurrences or conditions which are
attributable to, or result directly from, the public announcement or the
pendency of the Merger), and Lennar will have delivered to the Company a
certificate dated that date and signed by the President or a Vice President
of Lennar to that effect.
(b) Lennar and Acquisition will have fulfilled in all material
respects all their obligations under this Agreement required to have been
fulfilled on or before the Merger Date, and Lennar will have delivered to
the Company a certificate dated that date and signed by the President or a
Vice President of Lennar to that effect.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains the
Company from completing the transactions which are the subject of this
Agreement.
(d) The Merger will have been approved by the holders of a majority of
the outstanding shares of U.S. Home Common Stock.
(e) Since the date of this Agreement, no events shall have occurred
and no circumstances shall have occurred that, individually or in the
aggregate, have resulted in or would reasonably be expected to result in a
Material Adverse Effect on Lennar, except occurrences or circumstances
which are attributable to, or result directly from, the public announcement
or the pendency of the Merger or will result from the Merger.
(f) Any waiting period under the HSR Act with regard to the Merger
will have expired or been terminated.
(g) The shares of Lennar Common Stock issuable to the Company's
stockholders as a result of the Merger will have been authorized for
listing on the New York Stock Exchange, subject to official notice of
issuance.
(h) The Registration Statement will have become effective under the
Securities Act and will not be the subject of any stop order or any pending
proceeding seeking a stop order, and any other federal and material state
securities laws applicable to the issuance of Lennar Common Stock as a
result of the Merger have been complied with.
(i) Kaye, Scholer, Fierman, Hays & Handler, LLP shall have delivered
to the Company its written opinion, in form and substance reasonably
satisfactory to the Company, to the effect that the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Code, and that
Lennar, Acquisition and the Company will each be a party to a
reorganization within the meaning of Section 368(b) of the Code, and Kaye,
Scholer, Fierman, Hays & Handler, LLP shall have confirmed to the Company
the continuing validity of its opinion as of the Merger Date. In rendering
this opinion, counsel shall be entitled to rely upon, among other things,
reasonable assumptions as well as customary representations of Lennar,
Acquisition and the Company.
(j) The Market Value of a share of Lennar Common Stock will not be
$11.55 or less, unless Lennar has delivered its written agreement prior to
the Effective Time stating that the Stock Consideration with regard to a
share of U.S. Home Common Stock pursuant to Paragraph 1.7(a) and 1.7(b)
will be the number of shares of Lennar Common Stock with a Market Value of
$14.72.
(k) The number of shares of U.S. Home Common Stock as to which the
holders give timely and proper notice of intention to exercise dissenters'
rights will not exceed 4% of the shares of U.S. Home Common Stock which are
outstanding on the date of this Agreement, provided that the foregoing will
be a condition to the Merger only if the total cash which holders of U.S.
Home Common Stock would receive as Merger Consideration (treating all
stockholders who give the Company timely and proper notices of intention to
exercise dissenters' rights as receiving Merger Consideration consisting of
cash equal to $36 per share to which the notices relate) would exceed 55%
of the total Merger Consideration.
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(l) Warburg Pincus Investors L.P. will have consented in writing to
the transactions contemplated by this Agreement, including, without
limitation, the Merger.
(m) Robert J. Strudler, Isaac Heimbinder and two other members of the
Board of Directors of the Company designated by the Company will have been
elected to the Board of Directors of Lennar, effective immediately after
the Effective Time. One of these directors will be in the class the term of
which expires at the 2001 Annual Meeting of Stockholders of Lennar, one
will be in the class the term of which expires at the 2002 Annual Meeting
of Stockholders of Lennar, and two will be in the class the term of which
expires at the 2003 Annual Meeting of Stockholders of Lennar (with the
person or persons in each class to be as specified by the Company).
5.2 Conditions to Lennar's and Acquisition's Obligations. The obligations
of Lennar and Acquisition to complete the Merger are subject to satisfaction on
or before the Merger Date of the following conditions (any or all of which may
be waived by Lennar):
(a) The representations and warranties of the Company contained in
this Agreement will, except as contemplated by this Agreement, be true and
correct in all material respects (except that the representations and
warranties of the Company which are qualified as to materiality, or absence
of Material Adverse Effect, will be true and correct in all respects) on
the Merger Date with the same effect as though made on that date (except
that representations or warranties which relate expressly to a specified
date or a specified period need only have been true and correct with regard
to the specified date or period and except to the extent that the
representations and warranties in Paragraph 3.1(l) are not true and correct
on the Merger Date because of occurrences or conditions which are
attributable to, or result directly from, the public announcement or the
pendency of the Merger), and the Company will have delivered to Lennar a
certificate dated that date and signed by the President or a Vice President
of the Company to that effect.
(b) The Company will have fulfilled in all material respects all its
obligations under this Agreement required to have been fulfilled on or
before the Merger Date.
(c) No order will have been entered by any court or governmental
authority and be in force which invalidates this Agreement or restrains
Lennar or Acquisition from completing the transactions which are the
subject of this Agreement and no action will be pending against the
Company, Lennar or Acquisition relating to the transactions which are the
subject of this Agreement which presents a reasonable likelihood of
resulting in an award of damages against the Company, Lennar or Acquisition
which would be material after the Merger to Lennar and its subsidiaries
taken as a whole.
(d) The Merger will have been approved by the holders of at least a
majority in voting power of the outstanding shares of Lennar Common Stock
and Lennar class B common stock, voting together as a single class.
(e) Since the date of this Agreement, no events shall have occurred
and no circumstances shall have occurred that, individually or in the
aggregate, have resulted in or would reasonably be expected to result in a
Material Adverse Effect on the Company, except occurrences or circumstances
which are attributable to, or result directly from, the public announcement
or the pendency of the Merger or will result from the Merger.
(f) Any waiting period under the HSR Act with regard to the Merger
will have expired or been terminated.
(g) The shares of Lennar Common Stock issuable to the Company's
stockholders as a result of the Merger will have been authorized for
listing on the New York Stock Exchange, subject to official notice of
issuance.
(h) The Registration Statement will have become effective under the
Securities Act and will not be the subject of any stop order to any pending
proceeding seeking a stop order.
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(i) The Market Value of a share of Lennar Common Stock will not be
$11.55 or less, unless Lennar has delivered its written agreement prior to
the Effective Time stating that the Stock Consideration with regard to a
share of U.S. Home Common Stock pursuant to Paragraph 1.7(a) and 1.7(b)
will be the number of shares of Lennar Common Stock with a Market Value of
$14.72.
ARTICLE VI
TERMINATION
6.1 Right to Terminate. This Agreement may be terminated at any time
prior to the Effective Time (whether or not the Company's or Lennar's
stockholders have approved the Merger):
(a) By mutual written consent of the Company and Lennar.
(b) By the Company if (i) it is determined that any of the
representations and warranties of Lennar and Acquisition contained in this
Agreement was not complete and accurate in all material respects (or that
any of those representations and warranties which are qualified as to
materiality or absence of Material Adverse Effect were not true and correct
in all respects) on the date of this Agreement, (ii) any of the conditions
in Paragraph 5.1 is not satisfied or waived by the Company on or before the
Merger Date or (iii) if Lennar or Acquisition has breached in a material
respect any covenant or agreement contained in this Agreement and has not
cured that breach within ten business days after written notice from the
Company, or by the Merger Date, if earlier.
(c) By Lennar if (i) it is determined that any of the representations
and warranties of the Company contained in this Agreement was not complete
and accurate in all material respects (or that any of those representations
and warranties which are qualified as to materiality or absence of Material
Adverse Effect were not true and correct in all respects) on the date of
this Agreement, (ii) any of the conditions in Paragraph 5.2 is not
satisfied or waived by Lennar on or before the Merger Date or (iii) if the
Company has breached in a material respect any covenant or agreement
contained in this Agreement and has not cured that breach within ten
business days after written notice from Lennar, or by the Merger Date, if
earlier.
(d) By either Lennar or the Company if, without fault of the
terminating party, the Merger Date is later than August 31, 2000, which
date may be extended by mutual consent of the parties; provided, however,
that the right to terminate this Agreement pursuant to this subparagraph
will not be available to any party whose failure to perform or observe in
any material respect any of its obligations under this Agreement has been
the cause of, or resulted in, the failure of the Merger Date to occur on or
before that date.
(e) By either Lennar or the Company if any court of competent
jurisdiction or other governmental authority issues an order (other than a
temporary restraining order), decree or ruling, or takes any other action,
restraining, enjoining or otherwise prohibiting the Merger, and that order,
decree, ruling or other action becomes final and nonappealable.
(f) By either Lennar or the Company, if its stockholders fail to adopt
this Agreement and approve the Merger at the applicable Merger Stockholders
Meeting.
(g) By Lennar if the Company's Board of Directors (i) withdraws,
changes or modifies in any manner its recommendation that its stockholders
vote to adopt this Agreement and approve the Merger or (ii) adopts
resolutions approving or otherwise authorizing or recommending an
Acquisition Transaction (other than the Merger) to its stockholders; or
(h) By the Company if (i) before this Agreement is adopted by the
Company's stockholders, the Company receives an Acquisition Proposal in
which a person or group (a "Potential Acquiror") makes a specific proposal
for an Acquisition Transaction on specific terms (a "Firm Proposal"), or a
Potential Acquiror commences a cash tender offer or exchange offer for all
the Company's outstanding stock (other than any already owned by the
Potential Acquiror), (ii) within 15 business
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days after the Company receives the Firm Proposal or the tender offer or
exchange offer is commenced, the Company's Board of Directors determines
that the Firm Proposal or the tender offer or exchange offer is a Superior
Proposal and resolves to accept the Superior Proposal, or to recommend that
stockholders vote for, authorize, or tender their shares in response to,
the Superior Proposal, unless Lennar and Acquisition agree within five
business days to increase the Merger Price to an amount per share at least
as great as the consideration per share the Company's stockholders would
receive as a result of the Superior Proposal, (iii) the Company has given
Lennar at least five business days' prior notice (A) of the terms of the
Superior Proposal (including the consideration per share, valuing non-cash
consideration as described below, which the Company's stockholders would
receive as a result of the Superior Proposal), and (B) that unless Lennar
agrees in writing within the five business day period to increase the
Merger Price to an amount per share at least as great as the consideration
per share the Company's stockholders would receive as a result of the
Superior Proposal, as set forth in the notice, this Agreement will
terminate, and (iv) the Company has (x) paid Lennar $19 million, (y)
reimbursed Lennar for all the expenses which Lennar or its subsidiaries
(including Acquisition) incurred in connection with this Agreement and the
transactions contemplated by it (including reasonable fees and expenses of
professionals and other consultants, commitment fees and other financing
costs, and out of pocket costs incurred by employees in investigating the
business and financial condition of the Company and in connection with the
negotiation of this Agreement and efforts to carry out the transactions
which are the subject of this Agreement) ("Lennar Expenses") regarding
which Lennar has presented reasonable documentation to the Company, and (z)
agreed in writing to reimburse Lennar for all Lennar Expenses for which
Lennar subsequently presents reasonable documentation to the Company (up to
a total reimbursement of Lennar Expenses under clauses (y) and (z) not
exceeding $6 million). A "Superior Proposal" is a proposal for an
Acquisition Transaction or a tender offer or exchange offer which (A) would
result in the Company's stockholders' receiving consideration which is
greater than the Merger Price (valuing non-cash consideration at its fair
value as determined in good faith by the Company's Board of Directors after
consultation with its financial advisor), (B) is not subject to the outcome
of due diligence or any other form of investigation, and (C) is not subject
to a financing contingency and is from a Proposed Acquiror which the
Company's Board of Directors determines in good faith after consultation
with its independent financial advisor has the financial resources
necessary to carry out the transaction and (D) the Company's Board of
Directors determines in good faith after consultation with its independent
financial advisor to be more favorable to the Company's stockholders than
the Merger. A notice that this Agreement will terminate given pursuant to
clause (iii) of the first sentence of this subparagraph will be irrevocable
(unless Lennar consents in writing to its being withdrawn by the Company)
and will result in the termination of this Agreement on the later of the
date specified in the notice or the date the Company makes the payments and
provides the agreement described in clause (iv) of the first sentence of
this subparagraph.
6.2 Manner of Terminating Agreement. If at any time the Company or Lennar
has the right under Paragraph 6.1 to terminate this Agreement, it can terminate
this Agreement by a written notice to the other of them that it is terminating
this Agreement.
6.3 Effect of Termination. If this Agreement is terminated pursuant to
Paragraph 6.1, after this Agreement is terminated, neither party will have any
further rights or obligations under this Agreement other than the Company's
obligations under (i) Paragraph 8.1, and (ii) the agreement to reimburse
expenses described in Paragraph 6.1(h). Nothing contained in this Paragraph
will, however, relieve either party of liability for any breach of this
Agreement which occurs before this Agreement is terminated.
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ARTICLE VII
ABSENCE OF BROKERS
7.1 Representations and Warranties Regarding Brokers and Others. The
Company and Lennar each represents and warrants to the other of them that nobody
acted as a broker, a finder or in any similar capacity in connection with the
transactions which are the subject of this Agreement, except that Deutsche Bank
Securities Inc. acted as a financial adviser to Lennar and Acquisition and
Warburg Dillon Read LLC acted as a financial advisor to the Company. Lennar will
pay all the fees and other charges of Deutsche Bank Securities Inc. and the
Company will pay all the fees and other charges of Warburg Dillon Read LLC. The
Company indemnifies Lennar and Acquisition against, and agrees to hold each of
them harmless from, all losses, liabilities and expenses (including, but not
limited to, reasonable fees and expenses of counsel and costs of investigation)
incurred because of any claim by anyone for compensation as a broker, a finder
or in any similar capacity by reason of services allegedly rendered to the
Company in connection with the transactions which are the subject of this
Agreement. Lennar indemnifies the Company against, and agrees to hold it
harmless from, all losses, liabilities and expenses (including, but not limited
to, reasonable fees and expenses of counsel and costs of investigation) incurred
because of any claim by anyone for compensation as a broker, a finder or any
similar capacity by reason of services allegedly rendered to Lennar or
Acquisition in connection with the transactions which are the subject of this
Agreement.
ARTICLE VIII
OTHER AGREEMENTS
8.1 Payment to Lennar. (a) If at any time prior to or at the meeting of
the Company's stockholders at which the Company's stockholders vote upon the
Merger (i) the Company's Board of Directors withdraws its recommendation that
the Company's stockholders vote in favor of the Merger, but (ii) the Company
does not terminate this Agreement before the Company's Merger Stockholders
Meeting and (iii) at that Merger Stockholders Meeting, the Merger is not
approved by holders of the majority of the outstanding shares of the U.S. Home
Common Stock, within three business days after the day on which that Merger
Stockholders Meeting is held, the Company will (x) pay Lennar $19 million, (y)
reimburse Lennar for all the Lennar Expenses regarding which Lennar has
presented reasonable documentation to the Company and (z) agree in writing to
reimburse Lennar for all Lennar Expenses for which Lennar subsequently presents
reasonable documentation to the Company (up to a total reimbursement of Lennar
Expenses under clauses (y) and (z) not exceeding $6 million).
(b) If this Agreement is terminated by Lennar pursuant to clause (iii) of
Section 6.1(c) and within 12 months after such termination the Company
consummates a transaction constituting a change of control transaction or enters
into a definitive agreement for such a transaction, then within three business
days after consummation of the change of control transaction, the Company shall
pay Lennar $19 million. A "change of control transaction" means an Acquisition
Transaction which results in the common stockholders of the Company immediately
prior to the transaction owning less than 50% of the equity or voting power of
the surviving or successor entity resulting from the transaction.
(c) If the Company's Board of Directors does not withdraw its
recommendation that the Company's stockholders adopt this Agreement and approve
the Merger, but nonetheless, at the Company's Merger Stockholders Meeting, the
Merger is not approved by holders of a majority of the outstanding shares of
U.S. Home Common Stock, within three business days after the day on which the
Company's Merger Stockholder Meeting is held, the Company will reimburse Lennar
for all the Lennar Expenses regarding which Lennar has presented reasonable
documentation to the Company and will agree in writing to reimburse Lennar for
all Lennar Expenses for which Lennar subsequently presents reasonable
documentation to the Company (up to a total reimbursement of Lennar Expenses not
exceeding $6 million).
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<PAGE> 102
(d) If Lennar recovers damages for breach of this Agreement, the amount
recovered by Lennar will be credited against the payment the Company is required
to make under Paragraph 8.1.
8.2 Protection of Reorganization. Neither Lennar nor the Company will
take, or cause or permit to be taken, any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
8.3 Stock Exchange Listing. Lennar will promptly file a listing
application with the New York Stock Exchange with regard to the shares of Lennar
Common Stock which will be issued as a result of the Merger and will use its
best efforts to cause the listing of those shares to be approved by the New York
Stock Exchange, subject to official notice of issuance, prior to the Merger
Date.
8.4 Other Actions; Filings; Consents. Subject to the terms and conditions
contained in this Agreement, Lennar and the Company each will (i) use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all other things, which are necessary, proper or
appropriate under applicable laws and regulations, or are required to be taken
by any governmental authorities, to consummate the Merger as promptly as
practicable, (ii) use its commercially reasonable efforts to make as promptly as
practicable all necessary filings, and subsequently make any other required
submissions, with regard to this Agreement or the Merger under (A) the
Securities Act, the Exchange Act and any other applicable federal or state
securities laws or regulations, (B) the HSR Act and any related governmental
requests under that Act and (C) any other applicable or federal, state, local or
foreign statutes, laws, rules or regulations, (iii) use its commercially
reasonable efforts to obtain from governmental authorities any consents,
licenses, permits, waivers, approvals, authorizations and orders required to be
obtained by the Company or Lennar or any of their respective subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Merger and the other transactions contemplated by this
Agreement, (iv) use its commercially reasonable efforts to resolve any
objections which may be asserted by any governmental authority with regard to
the Merger or any other transactions contemplated by this Agreement under any
anti-trust, trade or regulatory laws or regulations, (v) furnish the other of
them, upon request, with copies of all correspondence, filings and
communications between it and its affiliates and representatives, on the one
hand, and any governmental authority or member of the staff of any governmental
authority, on the other hand, with respect to this Agreement, the Merger or any
other of the transactions contemplated by this Agreement, (vi) furnish the other
of them with all information and reasonable assistance which the other of them
may reasonably request in connection with the preparation of filings,
registrations or submissions of information required by any governmental
authorities and (vii) use its commercially reasonable efforts to cause any
injunction, restraining order or other order of any court or governmental
authority which adversely effects the ability of the parties to consummate the
Merger to be dissolved, and to defend vigorously any litigation seeking to
enjoin, prevent or delay the consummation of the Merger or seeking material
changes in the terms of the Merger or any other transaction which is the subject
to this Agreement.
8.5 Notification of Certain Matters. Each party will cause one or more of
its representatives to confer on a regular and frequent basis with
representatives of the other party and to report to the other party on the
general status of its ongoing operations. Each party will give prompt notice to
the other party of (i) any written notice or other communication from any third
party alleging that the consent of that third party is or may be required in
connection with the Merger or other transactions contemplated by this Agreement,
(ii) its receipt of written notice of any governmental complaint, investigation
or hearing, or any litigation, which may impair the parties' ability to
consummate the Merger or any of the other transactions contemplated by this
Agreement or may have a Material Adverse Effect on the Company or Lennar, as the
case may be, (iii) any change or event that in the party's good faith judgment
is reasonably likely to impair the party's ability to consummate the Merger or
is reasonably likely to have a Material Adverse Effect on the party or (iv) the
occurrence or the existence of any event that would, or could with a passage of
time or otherwise, make any representation or warranty in this Agreement untrue.
23
<PAGE> 103
ARTICLE IX
GENERAL
9.1 Expenses. Except as provided in Paragraphs 6.1(h) and 8.1, the
Company and Lennar will each pay its own expenses (and Lennar will pay
Acquisition's expenses) in connection with the transactions which are the
subject of this Agreement, including legal fees.
9.2 Employee Benefit Plans. Lennar agrees to consult with the senior
executive officers of the Company between the date of this Agreement and the
Merger Date to develop employee benefit plans (which may be continuations of
some or all of the Company's current employee benefit plans) which will provide
the Company's employees with benefits which are substantially as great as those
they are receiving under the Company's employee benefit plans which exist at the
date of this Agreement and to maintain those plans in effect for at least one
year. Lennar also agrees to discuss with the senior executive officers of the
Company between the date of this Agreement and the Merger Date a program under
which employees of the Company or its subsidiaries who hold options granted
under the Company's stock option plans which have an exercise price greater than
the Merger Price, and therefore which will be cancelled as a result of the
Merger without any payment to the employees, will be granted options to purchase
Lennar Common Stock which will be reasonably equivalent to the options to
purchase U.S. Home Common Stock which those employees hold at the date of this
Agreement. The Surviving Corporation will fulfill the obligations of the Company
under its Severance Pay Plan.
9.3 Directors' and Officers' Insurance and Indemnification. (a) Lennar
and the Surviving Corporation will at all times after the Effective Time
indemnify and hold harmless each person who is at the date of this Agreement, or
has been at any time prior to the date of this Agreement, a director, officer or
employee of the Company or any of its subsidiaries ("Indemnified Parties"), in
each case to the fullest extent permitted by applicable law, with respect to any
claim, liability, loss, damage, cost or expense (whenever asserted or claimed)
based in whole or in part, or arising in whole or in part out of, any act or
omission by that person at or prior to the Effective Time in connection with
that person's duties as a director, officer or employee of the Company or any of
its subsidiaries or affiliates, to the same extent and on the same terms
(including with respect to advancement of expenses) provided in the Company's
Certificate of Incorporation or By-Laws, or in any indemnification agreements,
in effect on the date of this Agreement. Lennar or the Surviving Corporation
will pay all reasonable expenses, including attorney's fees, that may be
incurred by any Indemnified Party in enforcing the indemnity and other
obligations of Lennar and the Surviving Corporation under this Paragraph.
(b) Lennar will cause the Surviving Corporation to keep in effect for at
least six years after the Effective Time the policies of directors' and
officers' liability insurance maintained by the Company and its subsidiaries at
the date of this Agreement; provided that (i) Lennar may substitute policies
having the same coverage and amounts and containing terms and conditions which
are no less advantageous to the persons who are currently covered by the
Company's policies and with carriers comparable in terms of credit worthiness to
those which have written the policies maintained by the Company at the date of
this Agreement and (ii) neither Lennar nor the Surviving Corporation will be
required to pay an annual premium for that insurance in excess of three times
the annual premium relating to the year during which this Agreement is executed,
but if they are not able to maintain the required insurance for an annual
premium for that amount, they will purchase as much coverage as it can obtain
for that amount.
9.4 Benefit of Provisions. The provisions of Paragraphs 9.1, 9.2 and 9.3
are intended for the benefit of, and shall be enforceable by, the parties who
are entitled to benefits or rights under those Paragraphs.
9.5 Reorganization. The Merger is intended to be a "reorganization"
within the meaning of Section 368(a) of the Code. Lennar and the Company each
agrees not to take any position on any Tax Return or otherwise which is
inconsistent with that intention.
9.6 Access to Properties, Books and Records. From the date of this
Agreement until the Effective Time, the Company will, and will cause each of its
subsidiaries to, give representatives of Lennar full access during normal
business hours to all of their respective properties, books and records. Lennar
will,
24
<PAGE> 104
and will cause its representatives to, hold all information it receives as a
result of its access to the properties, books and records of the Company or its
subsidiaries in confidence, except to the extent that information (i) is or
becomes available to the public (other than through a breach of this Agreement),
(ii) becomes available to Lennar or a subsidiary from a third party which,
insofar as Lennar is aware, is not under an obligation to the Company, or to a
subsidiary of the Company, to keep the information confidential, (iii) was known
to Lennar or a subsidiary before it was made available to Lennar or its
representative by the Company or a subsidiary, (iv) otherwise is independently
developed by Lennar or a subsidiary, or (v) Lennar reasonably believes is
required to be included in the Registration Statement. If this Agreement is
terminated prior to the Effective Time, Lennar will, at the request of the
Company, deliver to the Company all documents and other material obtained by
Lennar from the Company or a subsidiary in connection with the transactions
which are the subject of this Agreement or evidence that that material has been
destroyed by Lennar.
9.7 Press Releases. The Company and Lennar will consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the Merger, except that nothing in this Paragraph
will prevent either party from making any statement when and as required by law
or by the rules of any securities exchange or securities quotation or trading
system on which securities of that party or an affiliate are listed, quoted or
traded.
9.8 Entire Agreement. This Agreement and the documents to be delivered in
accordance with this Agreement contain the entire agreement among the Company,
Lennar and Acquisition relating to the transactions which are the subject of
this Agreement and those other documents, all prior negotiations, understandings
and agreements between the Company and either Lennar or Acquisition are
superseded by this Agreement and those other documents, and there are no
representations, warranties, understandings or agreements concerning the
transactions which are the subject of this Agreement or those other documents
other than those expressly set forth in this Agreement or those other documents.
9.9 Effect of Disclosures. Any information disclosed by a party in any
representation or warranty contained in this Agreement (including exhibits to
this Agreement) will be treated as having been disclosed in connection with each
representation and warranty made by that party in this Agreement.
9.10 Captions. The captions of the articles and paragraphs of this
Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
9.11 Prohibition Against Assignment. Neither this Agreement nor any right
of any party under it may be assigned.
9.12 Notices and Other Communications. Any notice or other communication
under this Agreement must be in writing and will be deemed given when it is
delivered in person or sent by facsimile (with proof of receipt at the number to
which it is required to be sent), on the business day after the day on which it
is sent by a major nationwide overnight delivery service, or on the third
business day after the day on which it is mailed by first class mail from within
the United States of America, to the following addresses (or such other address
as may be specified after the date of this Agreement by the party to which the
notice or communication is sent):
If to Lennar or Acquisition:
Lennar Corporation
700 N.W. 107th Avenue
Miami, Florida 33172
Attention: Bruce Gross
Facsimile No.: 305-227-7115
and
Attention: David McCain
Facsimile No.: 305-229-6650
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<PAGE> 105
with a copy to:
David W. Bernstein
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Facsimile: 212-878-8375
If to the Company.:
U.S. Home Corporation
10707 Clay Road
Houston, Texas 77041
Attention: Robert J. Strudler
Facsimile No.: 713-877-2335
with a copy to:
Stephen C. Koval
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Facsimile: 212-836-8689
9.13 Governing Law. This Agreement will be governed by, and construed
under, the substantive laws of the State of Delaware.
9.14 Amendments. This Agreement may be amended only by a document in
writing signed by both the Company and Lennar.
9.15 Counterparts. This Agreement may be executed in two or more
counterparts, some of which may be signed by fewer than all the parties or may
contain facsimile copies of pages signed by some of the parties. Each of those
counterparts will be deemed to be an original copy of this Agreement, but all of
them together will constitute one and the same agreement.
IN WITNESS WHEREOF, the Company, Lennar and Acquisition have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
U.S. HOME CORPORATION
By: /s/ ROBERT J. STRUDLER
------------------------------------
Title: Co-Chief Executive Officer
LENNAR CORPORATION
By: /s/ STUART A. MILLER
------------------------------------
Title: President and Chief
Executive Officer
LEN ACQUISITION CORPORATION
By: /s/ STUART A. MILLER
------------------------------------
Title: President
26
<PAGE> 106
ANNEX II
February 16, 2000
Board of Directors
Lennar Corporation
700 N.W. 107th Avenue
Miami, FL 33172
Gentlemen:
Deutsche Bank Securities Inc. ("Deutsche Bank") has acted as financial
advisor to Lennar Corporation ("Lennar") in connection with the proposed
transaction involving Lennar and U.S. Home Corporation (the "Company") pursuant
to the Plan and Agreement of Merger, to be dated as of February 16, 2000, among
Lennar and LEN Acquisition Corp., a wholly owned subsidiary of Lennar ("Merger
Sub"), and U.S. Home Corporation (the "Merger Agreement"), which provides, among
other things, for the merger of the Company with and into Merger Sub (the
"Transaction").
As set forth more fully in the Merger Agreement, as a result of the
Transaction, each share of the Common Stock, par value $0.01 per share, of the
Company ("Company Common Stock") not owned directly or indirectly by the Company
or Lennar will be converted into the right to receive the number of shares of
common stock, par value $0.10 per share of Lennar ("Lennar Common Stock") equal
to the Exchange Ratio (as determined below) (the "Stock Consideration"), and
$18.00 in cash per share (the "Cash Consideration"). The Stock Consideration and
Cash Consideration, together, constitute the "Merger Consideration."
Notwithstanding the foregoing, a holder of shares of Company Common Stock
may instead elect, subject to the limitations in the Merger Agreement, that any
shares of the holder's Company Common Stock be converted in the Transaction into
either (i) a number of shares of Lennar Common Stock which is twice the Stock
Consideration (a "Stock Election") or (ii) an amount of cash which is twice the
Cash Consideration (a "Cash Election").
The "Exchange Ratio" shall be the number of shares determined as follows:
(i) if the Lennar Stock Value (as defined below), is greater than or equal to
$14.125 and less than or equal to $18.75, then the Exchange Ratio shall be the
quotient of $18.00 and the Lennar Stock Value; (ii) if the Lennar Stock Value is
greater than $11.55 and less than $14.125, then the Exchange Ratio will be
1.2743; (iii) if the Lennar Stock Value is less than $11.55, then the Exchange
Ratio shall be the quotient of $14.72 and the Lennar Stock Value; (iv) if the
Lennar Stock Value is greater than $18.75 and less than or equal to $23.96, then
the Exchange Ratio will be .9600; and (v) if the Lennar Stock Value is greater
than $23.96, then the Exchange Ratio shall be the quotient of $23.00 and the
Lennar Stock Value. The term "Lennar Stock Value" means the average of the
closing prices of the Lennar Common Stock on the New York Stock Exchange for the
20 trading days ending on the trading date that is immediately prior to the
meeting at which the stockholders of the Company vote upon the Transaction.
If the Cash Elections cause more than 55% of the Merger Consideration
(valuing the aggregate Stock Consideration at the Lennar Stock Value) to be
cash, the Cash Consideration of the shares for which Cash Elections have been
made will be reduced and replaced with Stock Consideration, such that the
aggregate Cash Consideration equals 55% of the total Merger Consideration. If
Stock Elections cause more than 50% of the Merger Consideration (valuing the
aggregate Stock Consideration at the Lennar Stock Value) to be stock, the Stock
Consideration of the shares for which Stock Elections have been made will be
reduced and replaced with Cash Consideration, such that the aggregate Stock
Consideration equals 50% of the total Merger Consideration. The terms and
conditions of the Transaction are more fully set forth in the Merger Agreement.
You have requested Deutsche Bank's opinion, as investment bankers, as to
the fairness, from a financial point of view, to Lennar of the Merger
Consideration.
<PAGE> 107
In connection with Deutsche Bank's role as financial advisor to Lennar, and
in arriving at its opinion, Deutsche Bank has reviewed certain publicly
available financial and other information concerning the Company and Lennar and
certain internal analyses and other information furnished to it by the Company,
Lennar and their respective advisors. Deutsche Bank has also held discussions
with members of the senior managements of the Company and Lennar regarding the
businesses and prospects of their respective companies and the joint prospects
of a combined company. In addition, Deutsche Bank has (i) reviewed the reported
prices and trading activity for Company Common Stock and Lennar Common Stock,
(ii) compared certain financial and stock market information for the Company and
Lennar with similar information for certain other companies whose securities are
publicly traded, (iii) reviewed the financial terms of certain recent business
combinations which it deemed comparable in whole or in part, (iv) reviewed the
terms of the draft Merger Agreement, assuming with your consent that the final
terms of the Merger Agreement will not vary materially from the draft Merger
Agreement reviewed by us, and (v) performed such other studies and analyses and
considered such other factors as it deemed appropriate.
Deutsche Bank has not assumed responsibility for independent verification
of, and has not independently verified, any information, whether publicly
available or furnished to it, concerning the Company or Lennar, including,
without limitation, any financial information, forecasts or projections
considered in connection with the rendering of its opinion. Accordingly, for
purposes of its opinion, Deutsche Bank has assumed and relied upon the accuracy
and completeness of all such information and Deutsche Bank has not conducted a
physical inspection of any of the properties or assets, and has not prepared or
obtained any independent evaluation or appraisal of any of the assets or
liabilities, of the Company or Lennar. With respect to the financial forecasts
and projections made available to Deutsche Bank and used in its analyses,
Deutsche Bank has assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
management of the Company or Lennar, as the case may be, as to the matters
covered thereby. In rendering its opinion, Deutsche Bank expresses no view as to
the reasonableness of such forecasts and projections or the assumptions on which
they are based. Deutsche Bank's opinion is necessarily based upon economic,
market and other conditions as in effect on, and the information made available
to it as of, the date hereof.
For purposes of rendering its opinion, Deutsche Bank has assumed that, in
all respects material to its analysis, the representations and warranties of
Lennar, Merger Sub and the Company contained in the Merger Agreement are true
and correct, Lennar, Merger Sub and the Company will each perform all of the
covenants and agreements to be performed by it under the Merger Agreement and
all conditions to the obligations of each of Lennar, Merger Sub and the Company
to consummate the Transaction will be satisfied without any waiver thereof.
Deutsche Bank has also assumed that all material governmental, regulatory or
other approvals and consents required in connection with the consummation of the
Transaction will be obtained and that in connection with obtaining any necessary
governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which
either Lennar or the Company is a party or is subject or by which it is bound,
no limitations, restrictions or conditions will be imposed or amendments,
modifications or waivers made that would have a material adverse effect on
Lennar or the Company or materially reduce the contemplated benefits of the
Transaction to Lennar. In addition, Lennar has informed Deutsche Bank, and
accordingly for purposes of rendering its opinion Deutsche Bank has assumed,
that the Transaction will be tax-free to each of Lennar and the Company.
This opinion is addressed to, and for the use and benefit of, the Board of
Directors of Lennar and is not a recommendation to the stockholders of Lennar to
approve the Transaction. This opinion is limited to the fairness, from a
financial point of view, to Lennar of the Merger Consideration, and Deutsche
Bank expresses no opinion as to the merits of the underlying decision by Lennar
to engage in the Transaction.
Deutsche Bank will be paid a fee for its services as financial advisor to
Lennar in connection with the Transaction, a substantial portion of which is
contingent upon consummation of the Transaction. We are an affiliate of Deutsche
Bank AG (together with its affiliates, the "DB Group"). One or more members of
the DB Group have, from time to time, provided investment banking, commercial
banking and other financial services to Lennar or its affiliates for which it
has received compensation. We advised Lennar in
<PAGE> 108
connection with its merger with Pacific Greystone Corporation in October 1997,
acted as lead manager for its offering of Zero-Coupon Senior Convertible
Debentures due 2018 in July 1998 and $282 million of Senior Notes due 2009 in
February 1999. In addition, the DB Group has provided investment banking and
other financial services to LNR Property Corp., an affiliate of Lennar, for
which we have received customary compensation. One or more members of the DB
Group may provide financing to Lennar in connection with the Merger. In the
ordinary course of business, members of the DB Group may actively trade in the
securities and other instruments and obligations of Lennar and the Company for
their own accounts and for the accounts of their customers. Accordingly, the DB
Group may at any time hold a long or short position in such securities,
instruments and obligations.
Based upon and subject to the foregoing, it is Deutsche Bank's opinion as
investment bankers that the Merger Consideration is fair, from a financial point
of view, to Lennar.
Very truly yours,
DEUTSCHE BANK SECURITIES INC.
<PAGE> 109
ANNEX III
February 16, 2000
The Board of Directors
U.S. Home Corporation
10707 Clay Road
Houston, TX 77041
Dear Members of the Board:
We understand that U.S. Home Corporation, a Delaware corporation ("U.S.
Home" or the "Company") is considering a transaction whereby the Company will be
merged into LEN Acquisition Corporation ("Acquisition"), a Delaware corporation
and a direct, wholly-owned subsidiary of Lennar Corporation, a Delaware
corporation ("Lennar") (the "Merger"). Upon the effectiveness of the Merger,
each issued and outstanding share of Company common stock, par value $.01 per
share (the "Company Common Stock"), will be converted into and become the right
to receive (i) the number of shares of Lennar common stock (the "Stock
Consideration"), par value $.10 per share (the "Lennar Common Stock") with a
market value equal to $18, plus (ii) $18 in cash (the "Cash Consideration",
together with the Stock Consideration, the "Consideration"); provided that a
holder of Company Common Stock may elect to receive only the Stock Consideration
or the Cash Consideration, subject to adjustment so that, as nearly practicable,
the Stock Consideration and Cash Consideration shall each comprise 50% of the
Consideration; and further provided, that the number of shares of Lennar Common
Stock comprising the Stock Consideration shall be subject to adjustment pursuant
to a formula based upon the average trading price of Lennar Common Stock prior
to closing of the Merger. The terms and conditions of the Merger are more fully
set forth in the Plan and Agreement of Merger, dated as of February 16, 2000
among U.S. Home, Lennar and Acquisition (the "Merger Agreement").
You have requested our opinion as to the fairness, from a financial point
of view, of the Consideration to be received in the Merger by holders of Company
Common Stock.
Warburg Dillon Read LLC ("WDR") has acted as financial advisor to the
Company in connection with the Merger and will receive a fee upon the
consummation thereof. In the past, WDR and its predecessors have provided
investment banking services to the Company and received customary compensation
for the rendering of such services. In the ordinary course of business, WDR, its
predecessors and affiliates may have traded securities of the Company and Lennar
for their own accounts and WDR, its successors and affiliates may trade such
securities for their own accounts in the future. Accordingly, such persons have
in the past and may currently or in the future hold a long or short position in
such securities.
Our opinion does not address the Company's underlying business decision to
effect the Merger nor constitute a recommendation to any shareholder of the
Company as to how such shareholder should vote with respect to the Merger. At
your direction, we have not been asked to, nor do we, offer any opinion as to
the material terms of the Merger Agreement or the form of the Merger. In
rendering this opinion, we have assumed, with your consent, that the final
executed form of the Merger Agreement does not differ in any material respect
from the draft that we have examined, and that Lennar, Acquisition and the
Company will comply with all the material terms of the Merger Agreement and that
the Merger will be validly consummated in accordance with its terms. We express
no opinion as to what the value of Lennar Common Stock will be when issued
pursuant to the Merger or the price at which Lennar Common Stock will trade or
otherwise be transferable subsequent to the Merger. In connection with our
engagement, at your direction, we were not requested to, and we did not, solicit
third party indications of interest with respect to the acquisition of all or a
part of the Company.
<PAGE> 110
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to the Company and Lennar, (ii) reviewed certain internal financial
information and other data relating to the business and financial prospects of
the Company, including estimates and financial forecasts prepared by management
of the Company, that were provided to us by the Company and not publicly
available, (iii) reviewed certain internal financial information and other data
relating to the business and financial prospects of Lennar, including estimates
and financial forecasts prepared by the management of Lennar, that were provided
to us by Lennar and not publicly available, (iv) conducted discussions with
members of the senior management of the Company and Lennar, (v) reviewed
publicly available financial and stock market data with respect to certain other
companies in lines of business we believe to be generally comparable to those of
Lennar and the Company, (vi) compared the financial terms of the Merger with the
publicly available financial terms of certain other transactions which we
believe to be generally relevant, (vii) considered certain pro forma effects of
the Merger on Lennar financial statements, (viii) reviewed drafts of the Merger
Agreement, and (ix) conducted such other financial studies, analyses, and
investigations, and considered such other information, as we deemed necessary or
appropriate.
In connection with our review, at your direction, we have not assumed any
responsibility for independent verification for any of the information reviewed
by us for the purpose of this opinion and have, at your direction, relied on its
being complete and accurate in all material respects. In addition, at your
direction, we have not made any independent evaluation or appraisal of any of
the assets or liabilities (contingent or otherwise) of the Company or Lennar,
nor have we been furnished with any such evaluation or appraisal. With respect
to the financial forecasts, estimates and pro forma effects, we have assumed, at
your direction, that they have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the management of each
company as to the future performance of their respective companies. Our opinion
is necessarily based on economic, monetary, market and other conditions as in
effect on, and the information made available to us, as of the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as the
date hereof, the Consideration to be received by holders of the Company Common
Stock in the Merger is fair, from a financial point of view, to such holders.
Very truly yours,
WARBURG DILLON READ LLC
<TABLE>
<S> <C>
By: /s/ ALLAN P. MERRILL By: /s/ DAVID M. DICKSON, JR.
------------------------------------------ ------------------------------------------
Allan P. Merrill David M. Dickson, Jr.
Managing Director Managing Director
</TABLE>
2
<PAGE> 111
ANNEX IV
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec.228 of this title shall be entitled to an appraisal by the Court
of Chancery of the fair value of the stockholders' shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of
<PAGE> 112
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
2
<PAGE> 113
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitle to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
3
<PAGE> 114
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
4
<PAGE> 115
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the Delaware General Corporation Law (the
"DGCL") empowers a corporation to indemnify any director or officer, or former
director or officer, who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit or proceeding provided that such director
or officer acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, provided that such director or officer had no
cause to believe his or her conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses actually and reasonably incurred in
connection with the defense or settlement of such action or suit provided that
such director or officer acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such director or officer shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action was brought shall determine that despite the
adjudication of liability such director or officer is fairly and reasonably
entitled to indemnity for such expenses as the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) or (b) or in the defense of any
claim, issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith; that indemnification provided for in Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation shall have power to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or her or incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Article Five of Lennar's Certificate of Incorporation provides that no
director shall be personally liable to Lennar or to its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to Lennar or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL or (iv) for any transaction from which the director derived an improper
personal benefit. In addition, Lennar maintains director and officer liability
insurance policies.
II-1
<PAGE> 116
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
3(a) -- Certificate of Amendment of Certificate of Incorporation,
dated April 9, 1999. Incorporated by reference to Annual
Report on Form 10-K for the fiscal year ended November 30,
1999, file number 1-11749.
3(b) -- Amended and Restated Certificate of Incorporation, dated
April 28, 1998. -- Incorporated by reference to Annual
Report on Form 10-K for the fiscal year ended November 30,
1998, file number 1-11749.
3(c) -- Bylaws -- Incorporated by reference to Form 8-K dated
October 31, 1997, file number 1-11749.
4(a) -- Indenture, dated as of December 31, 1997, between Lennar
Corporation and First National Bank of Chicago, as
trustee -- Incorporated by reference to Registration
Statement No. 333-45527.
4(b) -- First Supplemental Indenture, dated as of July 29, 1998,
between Lennar Corporation and First National Bank of
Chicago, as trustee (relating to Lennar's Zero Coupon Senior
Convertible Debentures due 2018) -- Incorporated by
reference to Form 8-K dated July 24, 1998, file number
1-11749.
4(c) -- Second Supplemental Indenture, dated as of February 19,
1999, between Lennar Corporation and First National Bank of
Chicago, as trustee (relating to Lennar's 7 5/8% Senior
Notes due 2009) -- Incorporated by reference to Form 8-K
dated February 19, 1999, file number 1-11749.
5.1 -- Opinion of Clifford Chance Rogers & Wells LLP regarding
legality of securities to be issued.**
8.1 -- Opinion of Kaye, Scholer, Fierman, Hays & Handler LLP
regarding federal income tax matters.*
10(a) -- Amended and Restated Lennar Corporation 1997 Stock Option
Plan -- Incorporated by reference to Annual Report on Form
10-K for the year ended November 30, 1997.
10(b) -- Lennar Corporation 1991 Stock Option Plan -- Incorporated by
reference to Registration Statement No. 33-45442.
10(c) -- Lennar Corporation Employee Stock Ownership Plan and
Trust -- Incorporated by reference to Registration Statement
No. 2-89104.
10(d) -- Amendment dated December 13, 1989 to Lennar Corporation
Employee Stock Ownership Plan -- Incorporated by reference
to Annual Report on Form 10-K for the year ended November
30, 1990.
10(e) -- Lennar Corporation Employee Stock Ownership/401k Trust
Agreement dated December 13, 1989 -- Incorporated by
reference to Annual Report on Form 10-K for the year ended
November 30, 1990.
10(f) -- Amendment dated April 18, 1990 to Lennar Corporation
Employee Stock Ownership/401k Plan -- Incorporated by
reference to Annual Report on Form 10-K for the year ended
November 30, 1990.
10(g) -- Partnership Agreement for Lennar Land Partners by and
between Lennar Land Partners Sub, Inc. and LNR Land Partners
Sub, Inc., dated October 24, 1997 -- Incorporated by
reference to Annual Report on Form 10-K for the year ended
November 30, 1997. Lennar Land Partners Sub II, Inc. and LNR
Land Partners Sub II, Inc. entered into an identical
Partnership Agreement for Lennar Land Partners II on June
28, 1999.
10(h) -- Separation and Distribution Agreement, dated June 10, 1997,
between Lennar Corporation and LNR Property
Corporation -- Incorporated by reference to Registration
Statement No. 333-35671.
10(i) -- Credit Agreement, dated October 31, 1997, by and among
Lennar Land Partners and the Lenders named therein and a
Guaranty Agreement of Lennar Corporation, dated October 31,
1997 -- Incorporated by reference to Annual Report on Form
10-K for the year ended November 30, 1997. Lennar Land
Partners II was added as a borrower to this agreement
effective July 1, 1999.
</TABLE>
II-2
<PAGE> 117
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
10(j) -- Revolving Credit Agreement (Facilities A and B), dated
October 31, 1997, among Lennar Corporation and Certain
Subsidiaries and the First National Bank of Chicago, as
agent -- Incorporated by reference to Annual Report on Form
10-K for the year ended November 30, 1997.
10(k) -- First Amendment to Revolving Credit Agreement (Facilities A
and B) dated January 20, 1998, among Lennar Corporation and
Certain Subsidiaries and the First National Bank of Chicago,
as agent -- Incorporated by reference to Annual Report on
Form 10-K for the year ended November 30, 1997.
10(l) -- Equity Draw-Down Agreement, dated March 25, 1998, between
Lennar Corporation and HSBC James Capel Canada,
Inc. -- Incorporated by reference to Annual Report on Form
10-K for the year ended November 30, 1998.
10(m) -- Voting Agreement, dated June 10, 1997, between Lennar
Corporation, Warburg, Pincus Investors, L.P. and Pacific
Greystone Corporation -- Incorporated by reference to Form
8-K dated June 10, 1997, file number 1-11749.
10(n) -- Plan and Agreement of Merger, dated as of February 16, 2000,
between Lennar Corporation, U.S. Home Corporation and Len
Acquisition Corporation -- Incorporated by reference to Form
8-K dated February 23, 2000, file number 1-11749.
10(o) -- Voting Agreement, dated as of February 16, 2000, among LMM
Family Partnership, L.P., Leonard Miller, Stuart Miller and
U.S. Home Corporation -- Incorporated by reference to Form
8-K dated February 23, 2000, file number 1-11749.
10(p) -- Employment Agreement, dated as of February 16, 2000, between
Robert J. Strudler and Lennar Corporation.**
10(q) -- Employment Agreement, dated as of February 16, 2000, between
Isaac Heimbinder and Lennar Corporation.**
10(r) -- Commitment Letter dated March 10, 2000 by and among Bank
One, N.A., Bank One Capital Markets, Inc., Bankers Trust
Company, Deutsche Bank Securities, Inc. and Lennar
Corporation.**
10(s) -- Commitment Letter dated March 15, 2000 by and among Bankers
Trust Corporation, First Chicago Capital Corporation and
Lennar Corporation.**
23.1 -- Consent of Kaye, Scholer, Fierman, Hays & Handler LLP
(contained in Exhibit 8.1).*
23.2 -- Consent of Clifford Chance Rogers & Wells LLP (contained in
Exhibit 5.1)**
23.3 -- Consent of Arthur Andersen LLP (relating to financial
statements of U.S. Home)*
23.4 -- Consent of Deloitte & Touche LLP (relating to financial
statements of Lennar)*
99.1 -- Consent of Deutsche Bank Securities Inc.*
99.2 -- Consent of Warburg Dillon Read LLC.*
99.3 -- Form of U.S. Home's Proxy Card.*
99.4 -- Form of Lennar's Proxy Card.**
</TABLE>
(b) Financial Statement Schedule:
Independent Auditors' Report on Schedule
Schedule II -- Valuation and Qualifying Accounts for the years ended
November 30, 1999, 1998 and 1997 of Lennar Corporation -- Incorporated by
reference to Annual Report on Form 10-K for the year ended November 30, 1999.
- ------------------------
* Filed herewith.
** Previously filed.
II-3
<PAGE> 118
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(c) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (b) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a) (3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 20 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) as asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless,
in the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 119
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Lennar Corporation has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Miami, Florida on the 29th day of March, 2000.
LENNAR CORPORATION
By: /s/ STUART A. MILLER
------------------------------------
Stuart A. Miller
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
/s/ STUART A. MILLER President, Chief Executive Date: March 29, 2000
- --------------------------------------------- Officer and Director (Principal
Stuart A. Miller Executive Officer)
/s/ BRUCE GROSS Vice President and Chief Date: March 29, 2000
- --------------------------------------------- Financial Officer (Principal
Bruce Gross Financial Officer)
/s/ DIANE J. BESSETTE* Vice President and Controller Date: March 29, 2000
- --------------------------------------------- (Principal Accounting Officer)
Diane J. Bessette
/s/ IRVING BOLOTIN* Director Date: March 29, 2000
- ---------------------------------------------
Irving Bolotin
/s/ JONATHAN M. JAFFE* Director Date: March 29, 2000
- ---------------------------------------------
Jonathan M. Jaffe
Director Date: March , 2000
- ---------------------------------------------
R. Kirk Landon
Director Date: March , 2000
- ---------------------------------------------
Sidney Lapidus
/s/ REUBEN S. LEIBOWITZ* Director Date: March 29, 2000
- ---------------------------------------------
Reuben S. Leibowitz
</TABLE>
II-5
<PAGE> 120
<TABLE>
<C> <S> <C>
/s/ LEONARD MILLER* Director Date: March 29, 2000
- ---------------------------------------------
Leonard Miller
/s/ ARNOLD P. ROSEN* Director Date: March 29, 2000
- ---------------------------------------------
Arnold P. Rosen
/s/ STEVEN J. SAIONTZ* Director Date: March 29, 2000
- ---------------------------------------------
Steven J. Saiontz
*By /s/ STUART A. MILLER
- ---------------------------------------------
Stuart A. Miller
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 121
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
8.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler LLP
regarding federal income tax matters.
23.1 Consent of Kaye, Scholer, Fierman, Hays & Handler LLP
(contained in Exhibit 8.1).
23.3 Consent of Arthur Andersen LLP (relating to financial
statements of U.S. Home).
23.4 Consent of Deloitte & Touche LLP (relating to financial
statements of Lennar).
99.1 Consent of Deutsche Bank Securities Inc.
99.2 Consent of Warburg Dillon Read LLC.
99.3 Form of U.S. Home's Proxy Card.
</TABLE>
<PAGE> 1
EXHIBIT 8.1
(212) 836-8000
fax (212) 836-8689
March 29, 2000
U.S. Home Corporation
10707 Clay Road
Houston, Texas 77041
Re: Merger among U.S. Home Corporation, Lennar Corporation and LEN
Acquisition Corporation
Ladies and Gentlemen:
We have served as counsel for U.S. Home Corporation ("U.S. Home"), a
Delaware corporation, in connection with the proposed acquisition of U.S. Home
by Lennar Corporation ("Lennar"), a Delaware corporation, pursuant to a Plan and
Agreement of Merger, dated February 16, 2000, as amended (the "Merger
Agreement"), among U.S. Home, Lennar and LEN Acquisition Corporation
("Acquisition"), a newly formed Delaware corporation and a wholly-owned
subsidiary of Lennar. Unless otherwise defined, capitalized terms used herein
shall have the meanings ascribed to such terms in the Merger Agreement.
You have requested our opinion regarding certain U.S. income tax matters
with respect to the transactions described in the Merger Agreement (the
"Merger"). This opinion is being delivered to you in response to such request
and pursuant to Section 5.1(i) of the Merger Agreement.
In connection with this opinion, we have examined documents relating to the
Merger, including the Merger Agreement and the Lennar - U.S. Home Joint Proxy
Statement/Prospectus that was furnished to holders of U.S. Home Common Stock in
order to obtain the approval of such holders for the Merger. We have also
reviewed the relevant provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, judicial decisions and Internal
Revenue Service rulings, procedures and notices.
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U.S. Home Corporation 2 March 29, 2000
We understand the facts relating to the Merger to be as follows:
Pursuant to the Merger Agreement, U.S. Home will be merged with and into
Acquisition, which will be the surviving corporation ("Surviving Corporation")
of the Merger. At the Effective Time, if no election is made otherwise, each
outstanding share of U.S. Home Common Stock will be converted into and become
the right to receive the Merger Consideration, which consists of (i) $18 in cash
("Cash Consideration") and (ii) the number of shares of Lennar Common Stock with
a Market Value equal to $18 ("Stock Consideration"), except that in no event
will the number of shares of Lennar Common Stock (a) be more than 1.27434 shares
of Lennar Common Stock or (b) be fewer than 0.9600 shares of Lennar Common
Stock. If, however, the Market Value of a share of Lennar Common Stock is $11.55
or less, each of U.S. Home or Lennar has the right to terminate the Merger
Agreement, unless Lennar increases the Stock Consideration to the number of
shares of Lennar Common Stock which has a Market Value of $14.72.(1) For these
purposes, Market Value equals the average of the Last Sale Price of a share of
Lennar Common Stock on each of the twenty New York Stock Exchange trading days
ending on, and including, the last New York Stock Exchange trading day prior to
the day of the meeting at which the holders of U.S. Home Common Stock vote upon
the Merger. The Last Sale Price of a share of Lennar Common Stock on a day will
be the last sale price of a share of Lennar Common Stock reported on the New
York Stock Exchange consolidated tape prior to 4:00 p.m. on that day.
Notwithstanding the foregoing, instead of the combination of Cash
Consideration and Stock Consideration described above, each holder of U.S. Home
Common Stock may elect to receive as the Merger Consideration, either (i) $36 in
cash, but no Lennar Common Stock ("Cash Election") or (ii) a number of shares of
Lennar Common Stock which is twice the number of shares the holder of U.S. Home
Common Stock would otherwise receive (as described above), but no cash ("Stock
Election"). However, if Stock Elections would cause the total number of shares
of Lennar Common Stock which are to be issued to holders of U.S. Home Common
Stock, to be more than the Maximum Shares, (i) the number of shares of Lennar
Common Stock which a holder of U.S. Home Common Stock who made a Stock Election
will receive, for each share of U.S. Home Common Stock as to which the Stock
Election is made, will be reduced on a pro rata basis with all other such
holders of U.S. Home Common Stock, to the number such that the total number of
shares of Lennar Common Stock to be issued to holders of U.S. Home Common Stock
will be the Maximum Shares (assuming no holders of U.S. Home Common Stock
exercise dissenters' rights or receive cash in lieu of fractional shares), and
(ii) cash will be
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(1)The Merger Agreement further provides that, if the Market Value of a share of
Lennar Common Stock is more than $23.96, the number of shares of Lennar Common
Stock will be the number of shares of Lennar Common Stock which has a Market
Value of $23.00.
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U.S. Home Corporation 3 March 29, 2000
distributed to the holder of U.S. Home Common Stock for the remainder of the
Merger Consideration. In addition, if Cash Elections would cause more than 55%
of the total value of the Merger Consideration for all the outstanding shares
of U.S. Home Common Stock to be cash (including cash paid to holders of U.S.
Home Common Stock who exercise dissenters' rights based on the assumption set
forth below), (i) the cash which a holder of U.S. Home Common Stock who makes a
Cash Election will receive will be reduced on a pro rata basis with all other
such holders to the amount such that 55% of the total value of the Merger
Consideration will be cash (including cash paid to holders of U.S. Home Common
Stock who exercise dissenters' rights based on the assumption set forth below),
but not below $18 per share of U.S. Home Common Stock, and (ii) the holder of
U.S. Home Common Stock will receive for each $0.01 of the reduction of cash a
fraction of a share of Lennar Common Stock equal to the number of shares
constituting the Stock Consideration divided by 1800. For these purposes, all
holders of U.S. Home Common Stock who give U.S. Home a timely proper notice of
intention to exercise dissenters' rights are treated as receiving the Merger
Consideration consisting of cash equal to $36 per share as to which the notices
relate.
Fractional shares of Lennar Common Stock will not be issued to the holders
of U.S. Home Common Stock. Instead, Lennar will pay each holder of U.S. Home
Common Stock who would otherwise be entitled to a fractional share of Lennar
Common Stock an amount of cash equal to the product of (i) such fraction, and
(ii) the Market Value of a share of Lennar Common Stock. Holders of U.S. Home
Common Stock who have complied with Section 262 of the DGCL (i.e., holders of
U.S. Home Common Stock who have exercised dissenters' rights) and who, as of the
Effective Time, have not withdrawn or lost their right to appraisal, will not
have their U.S. Home Common Stock converted into or represent the right to
receive the Merger Consideration. Instead, if the Merger takes place, Surviving
Corporation will pay such holders of U.S. Home Common Stock the fair value of
their shares of U.S. Home Common Stock, determined as provided in Section 262 of
the DGCL.
At the Effective Time, each outstanding option or warrant issued by U.S.
Home will become the right to receive a sum in cash equal to (i) the amount, if
any, by which the per share exercise price of the option or warrant is less than
$36.00, times (ii) the number of shares of U.S. Home Common Stock issuable upon
exercise of the option or warrant in full (irrespective of vesting provisions).
Thereafter, the options and warrants will be canceled.
Also at the Effective Time, each issued and outstanding share of
Acquisition Stock will remain outstanding and will become one share of common
stock of Surviving Corporation.
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U.S. Home Corporation 4 March 29, 2000
In rendering our opinion we have relied, with your consent and consistent
with Section 5.1(i) of the Merger Agreement, upon the representations of U.S.
Home, Lennar and Acquisition that are contained in the Merger Agreement, as well
as on the representations contained in certifications of officers of U.S. Home
and officers of Lennar and Acquisition, respectively, dated the date hereof,
that are relevant to this opinion (the "Officers' Tax Certificates"). We have
assumed that all such representations are true and complete in all material
respects, and that any statement made in any of the documents referred to herein
as being "to the best of the knowledge" of any person or party, or similarly
qualified, is correct without such qualification. We have not attempted to
independently verify such representations. We have assumed the genuineness of
all signatures and the capacity of the persons so signing, the authenticity of
all documents submitted to us as originals, the conformity to the original
documents of all copies submitted to us as certified or photostatic copies and
the authenticity of the originals of such latter documents.
We have also assumed for purposes of this opinion that U.S. Home will
terminate the Merger Agreement if (i) the Market Value of a share of Lennar
Common Stock is $11.55 or less, and Lennar does not increase the Stock
Consideration as described above, or (ii) the number of shares of U.S. Home
Common Stock as to which the holders give timely and proper notice of intention
to exercise dissenters' rights exceeds four percent (4%) of the outstanding
shares of U.S. Home Common Stock, and in the case of either (i) or (ii) above
the cash payable to all holders of U.S. Home Common Stock as a result of the
Merger would be greater than sixty percent (60%) of the total Merger
Consideration (including the Cash Consideration, cash paid to holders of U.S.
Home Common Stock who exercise dissenters' rights, cash paid with respect to
fractional shares of Lennar Common Stock received in the Merger, and cash equal
to the value of shares of U.S. Home Common Stock owned by Lennar immediately
prior to the Merger).
Based upon and subject to the foregoing, and assuming full compliance by
the parties with the terms and conditions of the documents described herein
(including, without limitation, that the Merger will be consummated in
accordance with the terms and conditions set forth in the Merger Agreement), we
are of the opinion that (i) the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code, and (ii) Lennar, Acquisition and U.S.
Home will each be a party to the reorganization within the meaning of Section
368(b) of the Code.
We express no opinion concerning any income tax matters relating to the
Merger except as expressly set forth above. Moreover, we note that our opinion
is based on current U.S. income tax laws and Treasury Regulations and on current
authoritative interpretations. Such laws, Treasury Regulations and
interpretations are subject to change at any time. Any such changes could affect
the continuing validity of the opinion contained herein. Moreover, because we
have assumed, in rendering our opinion, that all representations in the Merger
Agreement and the Officers' Tax Certificates are true and complete in all
material respects, the continuing validity of our opinion depends on the
continuing validity of such representations.
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U.S. Home Corporation 5 March 29, 2000
We consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement on Form S-4 initially filed by Lennar on March 21, 2000,
as amended, and to the reference to this firm under the caption "Legal Matters"
therein. In giving this consent, we do not concede that we are experts within
the meaning of the Securities Act of 1933, as amended, or the rules and
regulations thereunder, or that this consent is required by Section 7 of the
Securities Act of 1933.
Very truly yours,
/s/ Kaye, Scholer, Fierman, Hays & Handler, LLP
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this amendment no. 1 to registration statement of our report dated
January 31, 2000 (except with respect to the matters discussed in Note 13 as to
which the date is February 16, 2000) included in U.S. Home Corporation's Annual
Report on Form 10-K for the year ended December 31, 1999, and to all references
to our firm included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
March 29, 2000
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Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendent No. 1 to
Registration Statement of Lennar Corporation on Form S-4 of our reports dated
January 11, 2000, except for Note 15, as to which the date is February 16, 2000,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Lennar Corporation for the year ended November 30, 1999 and to the reference to
us under the heading ""Experts'' in the Joint Proxy Statement/Prospectus, which
is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Miami, Florida
March 29, 2000
<PAGE> 1
Exhibit 99.1
CONSENT OF DEUTSCHE BANK SECURITIES INC.
We hereby consent to the use of our name and to the description of our opinion
letter, dated February 16, 2000, to the Board of Directors of Lennar Corporation
("Lennar") under the captions "Background of the Transaction", "Recommendations
of the Boards of Directors and Reasons for the Transaction", "The Terms of
Lennar's Acquisition of U.S. Home--Representations and Warranties" and "Opinion
of Lennar's Financial Advisor" in, and to the inclusion of such opinion letter
as Annex II to, the Joint Proxy Statement/Prospectus of Lennar and U.S. Home
Corporation, which Joint Proxy Statement/Prospectus is part of the Registration
Statement on Form S-4 and Post-Effective Amendment No. 1 to the Registration
Statement on Form S-4 (Registration No. 333-32860) of Lennar. By giving such
consent, we do not thereby admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "expert" as used in,
or that we come within the category of persons whose consent is required under,
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
DEUTSCHE BANK SECURITIES INC.
By: /s/ Glenn Crafford
---------------------------
Managing Director
New York, New York
March 24, 2000
<PAGE> 1
EXHIBIT 99.2
CONSENT OF WARBURG DILLON READ LLC
We hereby consent to the use of Annex III containing our opinion letter
dated February 16, 2000, to the Board of Directors of U.S. Home Corporation in
the Joint Proxy Statement/Prospectus constituting a part of the Registration
Statement on Form S-4 relating to the merger of U.S. Home Corporation into a
wholly-owned subsidiary of Lennar Corporation, and to the references to our firm
in such Joint Proxy Statement/Prospectus. In giving this consent, we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
WARBURG DILLON READ LLC
New York, New York
March 23, 2000
<PAGE> 1
PROXY
LENNAR CORPORATION
PROXY FOR SPECIAL MEETING APRIL 28, 2000
The undersigned hereby appoints Leonard Miller and Stuart A. Miller, and
each of them, with or without the other, proxies with full power of
substitution, to vote all shares of stock that the undersigned is entitled to
vote at the Special Meeting of Stockholders of Lennar Corporation, to be held at
the Doral Park Golf and Country Club, 5001 N.W. 104th Avenue, Miami, Florida, on
April 28, 2000 at 10:00 a.m., local time, and at all adjournments thereof as
follows:
(1) APPROVAL OF THE ISSUANCE OF COMMON STOCK OF LENNAR CORPORATION TO HOLDERS
OF COMMON STOCK OF U.S. HOME CORPORATION IN EXCHANGE FOR THEIR U.S. HOME
COMMON STOCK PURSUANT TO THE MERGER OF U.S. HOME CORPORATION WITH AND INTO
LEN ACQUISITION CORPORATION CONTEMPLATED BY THE PLAN AND AGREEMENT OF
MERGER, DATED AS OF FEBRUARY 16, 2000, AS AMENDED, BETWEEN LENNAR
CORPORATION, LEN ACQUISITION CORPORATION AND U.S. HOME CORPORATION.
|_| FOR |_| AGAINST |_| ABSTAIN
(2) IN THEIR DISCRETION, UPON ANY OTHER BUSINESS WHICH MAY PROPERLY COME
BEFORE THE MEETING.
This proxy will be voted as you specify above. If no specification is
made, the proxy will be voted FOR proposal 1 above. Receipt of the Notice of
Special Meeting and the Joint Proxy Statement/Prospectus is hereby acknowledged.
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