-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EuD1eK1QD3+hUYQIqHv1hPgUfid2WUW9zSkB4RqNH5NSCGTJdqcCyXNNeNhbCfd5 PCrZF4MG5xx2bCYvx7c1BQ== 0000950147-96-000410.txt : 19960911 0000950147-96-000410.hdr.sgml : 19960911 ACCESSION NUMBER: 0000950147-96-000410 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 23 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960910 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBB DEL CORP CENTRAL INDEX KEY: 0000105189 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 860077724 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-04785 FILM NUMBER: 96627959 BUSINESS ADDRESS: STREET 1: 6001 NORTH 24TH STREET CITY: PHOENIX STATE: AZ ZIP: 85016 BUSINESS PHONE: 6028088000 MAIL ADDRESS: STREET 1: 6001 NORTH 24 STREET CITY: PHOENIX STATE: AZ ZIP: 85016 FORMER COMPANY: FORMER CONFORMED NAME: WEBB DEL E CORP DATE OF NAME CHANGE: 19880728 10-K405 1 ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the fiscal year July 1, 1995 to June 30, 1996. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from N/A to N/A . ----- ----- Commission File Number: 1-4785 DEL WEBB CORPORATION (Exact name of registrant as specified in its charter) Delaware 86-0077724 (State of Incorporation) (IRS Employer Identification Number) 6001 North 24th Street, Phoenix, Arizona 85016 (Address of principal executive offices) (Zip Code) (602) 808-8000 (Registrant's phone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- New York Stock Exchange Common Stock (par value $.001 per share) Pacific Stock Exchange 10 7/8% Senior Notes due 2000 New York Stock Exchange 9 3/4% Senior Subordinated Debentures due 2003 New York Stock Exchange 9% Senior Subordinated Debentures due 2006 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Registrant's Common Stock outstanding at July 31, 1996 was 17,537,903 shares. At that date, the aggregate market value of Registrant's Common shares held by non-affiliates, based upon the closing price of the Common Stock on the New York Stock Exchange on that date, was approximately $306,900,000. Documents Incorporated by Reference Portions of Registrant's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on November 14, 1996 are incorporated herein as set forth in Part III of this Annual Report. DEL WEBB CORPORATION FORM 10-K ANNUAL REPORT For the Fiscal Year Ended June 30, 1996 TABLE OF CONTENTS PART I Item 1. PAGE and Item 2. Business and Properties The Company..................................................... 1 Master-Planned Communities...................................... 1 Potential Future Communities.................................... 3 Conventional Homebuilding....................................... 4 Product Design.................................................. 4 Construction.................................................... 4 Sales Activities................................................ 4 Other Real Estate Activity.......................................5 Competition..................................................... 5 Certain Factors Affecting the Company's Operations.............. 6 Executive Officers of the Company............................... 8 Employees.......................................................10 Item 3. Legal Proceedings...............................................10 Item 4. Submission of Matters to a Vote of Security Holders.............10 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters...................................11 Item 6. Selected Consolidated Financial Data............................12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain Consolidated Financial and Operating Data...........14 Results of Operations.......................................16 Liquidity and Financial Condition of the Company............19 Impact of Inflation.........................................20 TABLE OF CONTENTS (continued) PART II (Continued) PAGE Item 8. Financial Statements and Supplementary Data.....................20 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........................20 PART III Item 10. Directors and Executive Officers of the Registrant..............21 Item 11. Executive Compensation..........................................21 Item 12. Security Ownership of Certain Beneficial Owners and Management................................................21 Item 13. Certain Relationships and Related Transactions..................21 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...........................................22 PART I Items 1. and 2. Business and Properties THE COMPANY Del Webb Corporation develops large-scale, master-planned residential communities, primarily for active adults age 55 and over, and has significant conventional subdivision homebuilding operations. The Company is one of the nation's leading developers of age-restricted active adult communities. It has extensive experience in the active adult community business, having built and sold more than 52,000 homes at its nine Sun City communities over the past 36 years. The Company is also delivering homes at Terravita, a gate-guarded, amenity-rich, master-planned residential community in north Scottsdale, Arizona, that is not age-restricted. The Company designs, develops and markets these communities, controlling all phases of the master plan development process from land selection through the construction and sale of homes. Within its communities, the Company is the exclusive developer of homes. The Company conducts its conventional subdivision homebuilding operations under the name "Coventry Homes" in the Phoenix, Tucson and Las Vegas areas, southern California and north-central Arizona. The Company was incorporated in 1946 under the laws of the State of Arizona and reincorporated in 1994 under the laws of the State of Delaware. The Company's principal executive offices are located at 6001 North 24th Street, Phoenix, Arizona 85016 and its telephone number is (602) 808-8000. The Company conducts substantially all of its activities through subsidiaries and, as used in this Annual Report, the term "Company" includes Del Webb Corporation and its subsidiaries unless the context indicates otherwise. Statements in this Annual Report as to acreage, mileage, number of future homes, square feet and number of residents, employees and shareholders are approximations. MASTER-PLANNED COMMUNITIES At June 30, 1996 the Company had nine master-planned communities at which home closings were taking place. The Company also had one master-planned community in an earlier stage of development. Communities Delivering Homes The following table shows certain information concerning the nine communities at which the Company was delivering homes at June 30, 1996. Two of these communities, Sun City Summerlin (formerly known as Sun City Las Vegas) and Sun City MacDonald Ranch, are reported on a combined basis since they are both located in the Las Vegas metropolitan area. The table includes information with respect to land owned by the Company and which it has options to acquire. Information for Sun City Palm Desert (formerly known as Sun City Palm Springs) is presented for phase one of that community. The Company also owns 700 acres of land for a second phase of development at Sun City Palm Desert. If developed, this second phase is currently planned for 2,300 homes. Development of future phases at any of the Company's communities will depend on the state of the economy and prospects for the communities at the time the current phases near completion.
- ---------------------------------------------------------------------------------------------------------------------- Sun City Sun City Sun Cities Sun City Sun City Sun City Sun City West Tucson Las Vegas Palm Desert Roseville Hilton Head Georgetown Terravita ---- ------ --------- ----------- --------- ----------- ---------- --------- First home closing........... 1978 1987 1989 1992 1995 1995 1996 1994 Total acres.................. 7,000 1,000 3,064 906 1,200 5,600 5,300 823 Homes at completion.......... 16,328 2,460 10,140 2,435 3,072 8,000 9,650 1,380 Home closings through June 30, 1996.............. 15,159 2,356 5,995 1,136 1,024 305 235 850 Future homes to be closed.... 1,169 104 4,145 1,299 2,048 7,695 9,415 530 Future homes to be sold...... 616 59 3,503 1,187 1,671 7,502 9,037 226 Base price range of homes at June 30, 1996 (in thousands) $90-240 $110-230 $90-280 $100-300 $120-280 $90-260 $100-240 $170-390 - ----------------------------------------------------------------------------------------------------------------------
1 Sun City West ------------- Sun City West is a self-contained active adult community located 25 miles northwest of downtown Phoenix, Arizona. The focal point of Sun City West is its central activities area, including a very large recreation center, a large indoor theater, a library, a bowling alley, tennis courts, lawn bowling greens and a Company-owned 18- hole championship golf course. Sun City West also has eight other 18-hole golf courses (seven of which are owned by the residents' community association and one of which is owned by a private club owned by residents) and three smaller recreation centers. In addition, Sun City West has over 200 civic and social organizations and clubs. Sun City West had a population of 29,000 at June 30, 1996. The build-out of this community is being coordinated with the development of Sun City Grand, a nearby community being developed by the Company. Sun City Tucson --------------- Sun City Tucson is located 20 miles north of downtown Tucson, Arizona. It is developed around an 18-hole championship golf course. This active adult community's primary recreation center includes a social hall, arts and crafts rooms, a large kitchen and a sports and exercise facility. Its outdoor recreational facilities include tennis courts, a swimming pool, shuffleboard courts, bocci ball courts and a miniature golf course. Sun City Tucson also has two smaller recreation facilities (including swimming pools, tennis courts and activity rooms). Sun City Tucson has numerous civic and social organizations and clubs and had a population of 4,500 at June 30, 1996. This community is anticipated to be built out in the 1997 fiscal year. Sun Cities Las Vegas -------------------- The Sun Cities Las Vegas include Sun City Summerlin and Sun City MacDonald Ranch. Sun City Summerlin is located eight miles northwest of downtown Las Vegas, Nevada. It has two 18-hole championship golf courses and a third, executive course. Other amenities in this active adult community include extensive recreational facilities at two large and two smaller recreation centers. Together, these facilities include meeting halls, arts and crafts rooms and tennis, shuffleboard, bocci ball and horseshoe courts, as well as sports and exercise complexes that include indoor and outdoor swimming pools, saunas, weight training and exercise rooms and a racquetball court. Sun City Summerlin has approximately 65 civic and social organizations and clubs and had a population of 11,000 at June 30, 1996. Sun City MacDonald Ranch is located in Henderson, Nevada, near Las Vegas. It is an active adult community with fewer amenities (an executive golf course and a smaller recreational facility with an outdoor pool, tennis courts, a fitness and exercise center, arts and crafts studios and a social hall) and higher density than the Company's other active adult communities. Home closings at Sun City MacDonald Ranch began in January 1996. Sun City MacDonald Ranch had a population of 500 at June 30, 1996. Sun City Palm Desert -------------------- Sun City Palm Desert is located in the Coachella Valley 20 miles east of Palm Springs and 130 miles east of downtown Los Angeles. It is a gate-guarded active adult community that has an 18-hole championship golf course and a large recreation center with indoor and outdoor swimming pools and therapy spas, tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts studios, a ballroom and a full service restaurant and lounge. Sun City Palm Desert had a population of 2,000 at June 30, 1996. Sun City Roseville ------------------ Sun City Roseville is located 20 miles northeast of downtown Sacramento, California. This active adult community is planned to include 27 holes of championship golf and has extensive parks and a large recreation center with indoor and outdoor swimming pools and therapy spas, tennis courts, bocci ball courts, a fitness and exercise center, arts and crafts studios, a ballroom and a full-service restaurant and lounge. Sun City Roseville had a population of 2,000 at June 30, 1996. 2 Sun City Hilton Head -------------------- Sun City Hilton Head is located inland 13 miles from Hilton Head Island, South Carolina. This community encompasses 5,600 acres, 2,300 of which are already owned by the Company and the balance of which the Company has options to purchase. Sun City Hilton Head is a gate-guarded active adult community that has an 18-hole championship golf course, a clubhouse and restaurant and a large recreation center with indoor and outdoor swimming pools, tennis courts, a croquet course, a putting course, bocci ball courts, a fitness and exercise center, arts and crafts studios and a social hall. Future amenities are currently planned to include additional golf courses, a nature trail system and a river club . Home closings at Sun City Hilton Head began in August 1995. Sun City Hilton Head had a population of 500 at June 30, 1996. Sun City Georgetown ------------------- Sun City Georgetown is an active adult community located 30 miles north of downtown Austin, Texas. This community encompasses 5,300 acres, 3,500 of which are already owned by the Company and the balance of which the Company has options to purchase. Sun City Georgetown's amenities are planned to include several golf courses, a clubhouse and restaurant, a trail system and large recreation center with indoor and outdoor swimming pools, a fitness and exercise center, arts and crafts studios and a social hall. Sun City Georgetown began home closings in February 1996 and had a population of 400 at June 30, 1996. Terravita --------- Terravita is a gate-guarded, amenity-rich, master-planned residential community located in north Scottsdale, Arizona, that is not age-restricted. It has an 18-hole championship golf course, a large clubhouse, restaurant and fitness center, a swimming pool, tennis courts and other recreational amenities. Terravita had a population of 1,500 at June 30, 1996. Community in an Earlier Stage of Development The Company had one community, Sun City Grand, in an earlier stage of development at June 30, 1996. Sun City Grand is located on 3,775 acres near Sun City West. It is currently planned as a gate-guarded community to include 9,550 homes and four championship golf courses, each with a spacious golf club and restaurant facility. The major amenities will be centralized and are planned to include a large recreation center with indoor and outdoor swimming pools, a fitness and exercise center, a large social hall, numerous arts and crafts studios, lighted tennis courts, bocci ball courts and entertainment cabanas. Future phases are also planned to include a theater and bowling alley. Development of Sun City Grand began in the Spring of 1995 and is being coordinated with the build-out of Sun City West. The Company currently anticipates that home sales and closings will begin at Sun City Grand in fiscal 1997. POTENTIAL FUTURE COMMUNITIES The Company believes that the demographic attributes of its active adult target market segment of people age 55 and over present significant opportunities for carefully selected future active adult communities. The Company's plan is to capitalize on those opportunities and its experience, expertise and reputation by developing active adult communities in strategically selected locations. The current business strategy of the Company includes conducting extensive market research on prospective areas, including consumer surveys and supply and demand analyses, in connection with its evaluation of sites for future active adult communities. To the extent the Company has had a successful community in an area, the Company generally strives to maintain a market presence in that area through development of a successor community as build-out of the former community approaches. At any given time, the Company may have a number of land acquisitions for potential communities under study and in various stages of investigation or negotiation. The Company is currently investigating the acquisition of land for communities to be located both in areas of the country where the Company has active adult communities and in other areas, including full four-season areas (i.e., areas which experience cold winters), where it does not have experience in developing communities. In making significant land acquisitions, the Company generally endeavors to acquire options on the land to mitigate the risk of holding the land during the detailed feasibility and entitlement process. However, under certain circumstances, the Company may acquire such property at an earlier stage in the development process. 3 In 1992 the Company purchased 5,600 acres of land north of Phoenix (currently known as the Villages at Desert Hills) as the site for a possible master-planned community. In fiscal 1995 the Company received a general plan amendment and development master plan approval (the initial governmental planning approvals required) for 16,500 homes on this property. In fiscal 1996 the primary zoning approvals were received; however, development of this property remains subject to uncertainties and the planning and permitting process is still in an early stage. At June 30, 1996 the Company's investment in the Villages at Desert Hills was $17.9 million. CONVENTIONAL HOMEBUILDING The Company began its conventional subdivision homebuilding operations in the Phoenix area in 1991 and expanded these operations to Tucson in fiscal 1994, Las Vegas and southern California in fiscal 1995 and north-central Arizona in fiscal 1996. At June 30, 1996 the Company had a backlog of home sales orders at 28 subdivisions -- 15 in the Phoenix area, 4 in the Tucson area, 4 in the Las Vegas area, 4 in southern California and 1 in north-central Arizona. The Company has no current plans to continue its conventional subdivision homebuilding operations in southern California after completion of its existing subdivisions. In order to capitalize on its market knowledge and organizational structure, the Company's conventional homebuilding activities are primarily conducted in those metropolitan or market areas in which the Company is developing an active adult community. Through June 30, 1996 the Company's conventional homebuilding operations have generally targeted first-time and move-up buyers, although some luxury homes are also being sold. The base price of homes offered for sale at June 30, 1996 ranged from $70,000 to $420,000. The Company currently expects that community development will continue to be its primary business activity. For the year ended June 30, 1996, conventional homebuilding operations generated 21.5 percent of the Company's homebuilding revenues. PRODUCT DESIGN The Company designs homes to suit its market and endeavors to conform to the popular home design characteristics in the particular geographic market involved. Home designs are periodically reviewed and refined or changed to reflect changing home buyer tastes in each market. Homes at the Company's communities generally range in size from 1,000 square feet to 3,700 square feet. The Company offers a program of interior and exterior upgrades, including different styles of cabinetry and floor coverings and, at its communities, a program for architectural changes to allow home buyers to further modify their homes. CONSTRUCTION The Company generally functions as its own general contractor. At all stages of production, the Company's management personnel and on-site superintendents coordinate the activities of contractors, consultants and suppliers and subject their work to quality and cost controls. Consulting firms assist in project planning and independent contractors are employed to perform almost all of the site development and construction work. Within its active adult communities and, generally, its conventional subdivisions, the Company is the exclusive developer of homes and does not sell vacant lots to others for residential construction purposes. The time required for construction of the Company's homes depends on the weather, time of year, local labor situations, availability of materials and supplies and other factors. The Company strives to coordinate the construction of homes with home sales orders to control the costs and risks associated with completed but unsold inventory. An inventory of unsold homes under construction is maintained for immediate sale to customers. SALES ACTIVITIES At each of its communities the Company establishes a large and well-appointed sales pavilion and an extensive complex of furnished model homes. These models include a wide variety of single family homes, each of which is generally available in several exterior styles. The Company's homes are sold by its commissioned sales personnel, who are available to provide prospective home buyers with floor plans, price information, option selections and tours of models and lots. All communities have co-brokerage programs with independent real estate brokers. Homes are sold through sales contracts, some of which allow customers to purchase homes for delivery up to one year or more in the future. The sales contracts generally require an initial deposit and an additional deposit prior to commencement of construction. The Company provides to all home buyers standardized warranties subject to specified limitations. 4 While more than one factor may contribute to a given home sale, the Company's experience indicates that a substantial portion of the home sales at its communities are attributable to follow-ups on referrals from residents of its communities and, at certain active adult communities, to the Company's "Vacation Getaway" program. This program enables prospective purchasers to visit an active adult community and stay (for a modest charge) in vacation homes for up to one week to experience the Sun City lifestyle prior to deciding whether to purchase a home. The Company's information is that most home buyers at its active adult communities generally visit the community in which they purchase on more than one occasion before buying. This may affect the success or initial success of the sales effort at those communities at which a higher proportion of the potential customers do not live within a several-hour driving distance from the community. The Company also markets its communities through billboards, television and radio commercials, local and national print advertising, direct mailings and telemarketing. The Company offers mortgage financing for the purchasers of homes at its communities and conventional subdivisions. The Company sells the mortgages it generates to third parties. OTHER REAL ESTATE ACTIVITY The Company is completing the development of The Foothills, a 4,140-acre master-planned residential land development project located in Phoenix in which individual land parcels and lots are being sold to other builder/developers for conventional housing and related commercial development. At June 30, 1996, 294 acres of residential and commercial land remained to be sold at The Foothills. At June 30, 1996 the Company's investment in The Foothills was $17.7 million. COMPETITION All of the Company's real estate operations are subject to substantial competition. The Company competes with numerous national, regional and local homebuilders and developers, a few of which have greater financial resources than the Company. The Company believes that it maintains a leading position within the active adult community market in each of the metropolitan areas in which it has a community that is currently generating revenues. The Company believes the major competitive factors in active adult community home purchases include location, lifestyle, price, value, recreational facilities and other amenities and builder/developer reputation. The Company believes its reputation, established by building and selling more than 52,000 homes over 36 years and providing an attractive lifestyle for adults age 55 and over, enhances the Company's active adult community marketing position. For the Company's active adult communities, there are varying degrees of direct and increasing competition from businesses engaged exclusively or primarily in the sale of homes to buyers age 55 and older and from non-age-restricted, master-planned communities in these areas. The Company competes with new home sales and resales at these other communities, as well as with resales of homes in its own communities. The Company believes there may be significant additional future competition in active adult community development, including competition from national homebuilders and conventional community developers. Also, a national homebuilder is developing an active adult community in Indio, California, near Sun City Palm Desert, which will cause additional competitive pressures at that community. In each of the areas in which the Company has conventional subdivision homebuilding operations, the Company is subject to a high degree of competition from new home developers, home resales, rental housing and condominium development. The Company believes that the major competitive factors in this part of its business include location, home quality, price, design and mortgage financing terms. 5 CERTAIN FACTORS AFFECTING THE COMPANY'S OPERATIONS Set forth below is a brief description of certain matters that may affect the Company. FUTURE AND NEWER COMMUNITIES. The Company's communities will be built out over time. Therefore, the medium- and long-term future of the Company will be dependent on the Company's ability to develop and market future communities successfully. Acquiring land and committing the financial and managerial resources to develop a community on that land involve significant risks. Before these communities generate any revenues, they require material expenditures for, among other things, acquiring land, obtaining development approvals and constructing project infrastructure (such as roads and utilities), recreation centers, model homes and sales facilities. It generally takes several years for communities to achieve cumulative positive cash flow. The Company will incur additional risks to the extent it develops communities in climates or other geographic areas in which it does not have experience or develops a different size or style of community, including acquiring the necessary construction materials and labor in sufficient amounts and on acceptable terms and adapting the Company's construction methods to different geographies and climates. Among other things, the Company believes that a significant portion of the home sales at its active adult communities is attributable to referrals from, or sales to, residents of those communities. The extent of such referrals or sales at new communities, including communities developed in other areas of the country, may be less than the Company has enjoyed at the active adult communities where it currently sells homes, and there may be challenges attracting potential customers from areas and to a market in which the Company has not had significant experience. COMPETITION; REAL ESTATE, ECONOMIC AND OTHER CONDITIONS GENERALLY. The Company's communities and its other real estate operations are subject to substantial existing and potential competition (including increased competition from a number of national homebuilders that are entering or expanding their presence in active adult community development), real estate market conditions (both where its communities and conventional homebuilding operations are located and in areas where its potential customers reside), the cyclical nature of the real estate business, general national economic conditions and changing demographic conditions. A significant number of purchasers at the Company's active adult communities in Arizona, Nevada and southern California are from southern California. Those communities may be affected by the continuing adverse conditions in the southern California real estate market and the southern California economy generally. FINANCING AND LEVERAGE. Real estate development is dependent on the availability and cost of financing. In periods of significant growth, the Company will require significant additional capital resources, whether from issuances of equity or by incurring additional indebtedness. No assurance can be given as to the availability or cost of any future financing. The Company's principal credit facility and the indentures for its publicly-held debt restrict the indebtedness the Company may incur. The availability of debt financing is also dependent on governmental policies and other factors outside the control of the Company. If the Company cannot obtain sufficient capital to fund its development and expansion expenditures, its projects may be significantly delayed, resulting in cost increases and adverse effects on the Company's results of operations. The Company's degree of leverage from time to time will affect its interest incurred and may limit funds available for operations, which could limit its ability to withstand adverse changes or capitalize on business opportunities. If the Company is at any time unable to service its debt, refinancing or obtaining additional financing may be required and may not be available. INTEREST RATES. The Company's real estate operations depend upon the availability and cost of mortgage financing. An increase in interest rates, which may result from governmental policies and other factors outside the control of the Company, may adversely affect the buying decisions of potential home buyers and their ability to sell their existing homes. 6 CONSTRUCTION LABOR AND MATERIALS COSTS. The Company has from time to time experienced shortages of materials or qualified tradespeople or volatile increases in the cost of certain materials (particularly increases in the price of lumber and framing, which are significant components of home construction costs), resulting in longer than normal construction periods and increased costs not reflected in the prices of homes for which home sale contracts had been entered into up to one year in advance of scheduled closing. Generally, the Company's home sale contracts do not contain, or contain limited, provisions for price increases if the Company's costs of construction increase. The Company relies heavily on local contractors, who may be inadequately capitalized or understaffed. The inability or failure of one or more local contractors to perform may result in construction delays, increased costs and loss of some home sale contracts. GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS. The Company's business is subject to extensive federal, state and local regulatory requirements, the broad discretion that governmental agencies have in administering those requirements and "no growth" or "slow growth" political policies, all of which can prevent, delay, make uneconomic or significantly increase the cost of its developments. In addition, environmental concerns and related governmental requirements have affected and will continue to affect all of the Company's community development operations. In connection with the development of the Company's communities and other real estate projects, particularly those located in California, numerous governmental approvals and permits are required throughout the development process, and no assurance can be given as to the receipt (or timing of receipt) of these approvals or permits. In addition, third parties can file lawsuits challenging approvals or permits received, which could cause substantial uncertainties and material delays for the project and, if successful, could result in approvals or permits being voided. PERIOD-TO-PERIOD FLUCTUATIONS. The Company's communities are long-term projects. Sales activity at the Company's communities varies from period to period, and the ultimate success of any community cannot necessarily be judged by results in any particular period or periods. A community may generate significantly higher sales levels at inception (whether because of local pent-up demand in the area or other reasons) than it does during later periods over the life of the community. Revenues and earnings of the Company will also be affected by period-to-period fluctuations in the mix of product, subdivisions and home closings among the Company's communities and conventional homebuilding operations and by sales of commercial land at the Company's communities. GEOGRAPHIC CONCENTRATION. The Company's primary business operations are concentrated in a limited number of communities in five states. The Company's geographic concentration and limited number of projects may create increased vulnerability to regional economic downturns or other adverse project-specific matters. NATURAL RISKS. Sun City Roseville and Sun City Hilton Head are subject to significant seasonal rainfall that can cause delays in construction and development or that can increase costs. Earthquake faults, including the San Andreas fault, run through the Coachella Valley, which includes Sun City Palm Desert and the communities of Palm Springs, Indio, Palm Desert, La Quinta, Rancho Mirage and Indian Wells. A portion of Sun City Palm Desert is also located in a flood plain. The Coachella Valley Water District has approved the Company's conceptual flood control plan for Sun City Palm Desert and has approved the Company's specific flood control plan for the first phase of this project. Sun City Hilton Head is located in an area which may be subject to hurricanes. A major earthquake, flood or hurricane could have a material adverse impact on the development of and results of operations for the community affected. FORWARD LOOKING INFORMATION; CERTAIN CAUTIONARY STATEMENTS. Certain statements contained in this Annual Report are forward looking statements. These forward looking statements involve risks and uncertainties including but not limited to those referred to above. Actual results may differ materially from those projected or implied in the forward looking statements. Further, certain forward looking statements are based upon assumptions of future events, which may not prove to be accurate. Additional information on factors which could affect the Company's financial results may be included in subsequent reports filed by the Company with the Securities and Exchange Commission. 7 EXECUTIVE OFFICERS OF THE COMPANY Set forth below are the names and ages of all executive officers of the Company and the offices held with the Company at July 31, 1996.
Years Years as an Employed Executive by the Name Age Position Officer Company - ------------------------------------------------------------------------------------------------------------------------ P. J. Dion 51 Chairman of the Board and 14 14 Chief Executive Officer J. F. Contadino 54 Executive Vice President 4 5 L. C. Hanneman, Jr. 49 Executive Vice President 7 24 J. H. Gleason 54 Senior Vice President, Project Planning 6 8 and Development A. L. Mariucci 39 Senior Vice President and General 10 12 Manager - Terravita F. D. Pankratz 46 Senior Vice President and 8 9 General Manager - Sun City Summerlin and Sun City MacDonald Ranch C. T. Roach 49 Senior Vice President and 7 17 General Manager - Sun City West and Sun City Grand J. A. Spencer 47 Senior Vice President and Chief 11 17 Financial Officer J. D. Wilkins 51 Senior Vice President and 7 7 General Manager - Sun City Hilton Head L. W. Beckner 49 Vice President, Information Services Less than Less than one year one year R. C. Jones 51 Vice President and General Counsel 4 4 D. V. Mickus 50 Vice President, Treasurer and Secretary 10 13 J. M. Murray 42 Vice President and General Manager, Less than 7 Sun City Roseville one year D. E. Rau 39 Vice President and Controller 10 11 D. G. Schreiner 43 Vice President, Marketing 3 5 M. L. Schuttenberg 53 Vice President, Human Resources 3 10 R. R. Wagoner 55 Vice President, Land Development 2 4 - ------------------------------------------------------------------------------------------------------------------------
Mr. Dion has served as Chairman of the Board and Chief Executive Officer since November 1987. Mr. Contadino has served as Executive Vice President, overseeing conventional homebuilding and community development operations, since May 1996. Prior to that time he served as Senior Vice President from January 1994 to May 1996 and as Vice President from November 1991 to January 1994. He became President of Coventry Homes in January 1991. 8 EXECUTIVE OFFICERS OF THE COMPANY (Continued) Mr. Hanneman has served as Executive Vice President, overseeing active adult community operations, since May 1996. Prior to that time he served as Senior Vice President from January 1994 to May 1996 and as Vice President from January 1989 to January 1994. From August 1987 to May 1996 he served as General Manager of Sun City Summerlin and, subsequently, Sun City MacDonald Ranch. Mr. Gleason has served as Senior Vice President, Project Planning and Development, since January 1994. Prior to that time he served as Vice President, Project Planning and Development, from June 1993 to January 1994. He became a Vice President in January 1990. Ms. Mariucci has served as Senior Vice President since May 1996. Prior to that time she served as a Vice President from June 1986 (when she began serving as Vice President, Corporate Planning and Development) to May 1996. She has served as General Manager of Terravita since December 1992. Mr. Pankratz has served as General Manager of Sun City Summerlin and Sun City MacDonald Ranch since May 1996. Prior to that time he served as General Manager of Sun City Palm Desert from February 1990 to May 1996. Since September 1988 he has served as Senior Vice President. Mr. Roach has served as Senior Vice President since January 1994. Prior to that time he served as Vice President from January 1989 to January 1994. Since August 1987 he has served as General Manager of Sun City West and, subsequently, Sun City Grand. Mr. Spencer has served as Chief Financial Officer since April 1993. Since February 1991 he has served as Senior Vice President. Mr. Wilkins has served as Senior Vice President and General Manager of Sun City Hilton Head since January 1994. Prior to that time he served as Vice President and General Manager of Sun City Tucson from July 1989 to January 1994. Mr. Beckner has served as Vice President, Information Services, since November 1995. Prior to that time he was employed by AlliedSignal Corporation in Tempe, Arizona, where he held the position of Director, Strategic Alliances. Mr. Jones has served as Vice President and General Counsel since January 1992. From March 1990 to November 1991 he was a partner with the law firm of Gaston & Snow. Mr. Mickus has served as Vice President and Treasurer since November 1985 and as Secretary commencing in June 1991. Mr. Murray has served as Vice President since September 1995. Since December 1992 he has served as General Manager of Sun City Roseville. Prior to that time he served in a financial management capacity for a subsidiary of the Company from July 1989 to December 1992. Mr. Rau has served as Vice President and Controller since February 1991. Mr. Schreiner has served as Vice President, Marketing, since December 1992. Prior to that time he served as Senior Vice President, Marketing and Operations, of Coventry Homes from October 1992 to December 1992 and Vice President, Marketing and Operations, of Coventry Homes from January 1991 to October 1992. Ms. Schuttenberg has served as Vice President, Human Resources, since April 1993. Prior to that time she served as Director of Human Resources from March 1992 to April 1993 and as Director of Taxes from April 1989 to March 1992. Mr. Wagoner has served as Vice President, Land Development, since January 1994. Prior to that time he served as Director of Land Development from January 1992 to January 1994. Prior to 1992 Mr. Wagoner was a principal and stockholder for 32 years at Collar, Williams and White Engineering in Phoenix, where he held various positions including President. 9 EMPLOYEES At June 30, 1996 the Company had 2,300 employees. The Company currently has no unionized employees. The Company believes that its employee relations are generally satisfactory. Item 3. Legal Proceedings The Company is a party to various legal proceedings arising in the ordinary course of business. While it is not feasible to predict the ultimate disposition of these matters, it is the opinion of management that their outcome will not have a material adverse effect on the financial condition of the Company. Item 4. Submission of Matters to a Vote of Security Holders None. 10 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters The Company's common stock is listed on the New York Stock Exchange and Pacific Stock Exchange under the trading symbol (WBB). The following table sets forth the high and low sales prices of the Company's common stock on the New York Stock Exchange for the two fiscal years ended June 30, 1996.
Sales Price - ---------------------------------------------------------------------------------------------------------- Fiscal Year 1996 Fiscal Year 1995 - ---------------------------------------------------------------------------------------------------------- Quarter Ended High Low High Low - ---------------------------------------------------------------------------------------------------------- September 30 25 17 3/4 17 3/8 13 5/8 December 31 21 1/2 17 3/8 17 5/8 14 1/4 March 31 20 3/4 16 1/4 20 17 June 30 20 16 3/8 23 5/8 16 5/8 - ----------------------------------------------------------------------------------------------------------
As of July 31, 1996 the number of shareholders of record of common stock of the Company was 3,200. The Company has paid regular quarterly dividends of $.05 per share for each quarter in the last five fiscal years. The amount and timing of any future dividends is subject to the discretion of the Board of Directors. Among the factors which the Board of Directors may consider in determining the amount and timing of dividends are the earnings, cash needs and capital resources of the Company. In addition, the Company is party to a loan agreement and various indentures that contain covenants restricting the Company's ability to pay dividends and acquire its common stock. Under the most restrictive of these covenants, at June 30, 1996 $9.0 million of the Company's retained earnings were available for payment of cash dividends and for the acquisition by the Company of its common stock. In August 1995 the Company publicly sold 2,474,900 shares of its common stock at a price to the public of $19.50 per share. 11 Item 6. Selected Consolidated Financial Data (Not covered by report of independent auditors) The following tables set forth selected consolidated financial data of the Company as of and for each of the five fiscal years ended June 30, 1996. They should be read in conjunction with the Consolidated Financial Statements and Notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Dollars In Thousands Except Per Share Data Year Ended June 30, - ----------------------------------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------- Statement of operations information: Revenues: Home sales - communities $ 794,671 $ 620,012 $ 405,462 $ 324,817 $ 226,014 Home sales - conventional homebuilding 217,158 144,469 79,992 44,456 27,097 Land sales and other 38,904 38,638 24,607 21,313 7,761 - ----------------------------------------------------------------------------------------------------------------- Total revenues $ 1,050,733 $ 803,119 $ 510,061 $ 390,586 $ 260,872 ================================================================================================================= Earnings (loss): Continuing operations (1), (2) $ (7,751) $ 28,491 $ 17,021 $ 16,863 $ 14,068 Total (3) $ (7,751) $ 28,491 $ 17,021 $ 24,511 $ 17,107 ================================================================================================================= Net earnings (loss) per share: Continuing operations (1) $ (.44) $ 1.87 $ 1.13 $ 1.05 $ 1.09 Total (.44) 1.87 1.13 1.53 1.33 ================================================================================================================= Cash dividends per share $ .20 $ .20 $ .20 $ .20 $ .20 =================================================================================================================
(1) In fiscal 1996, in connection with the adoption of Statement of Financial Accounting Standards ("SFAS") No. 121, the Company incurred a non-cash loss from impairment of southern California real estate inventories in the amount of $65.0 million pre-tax ($42.3 million after tax) related to the valuation of its Sun City Palm Desert active adult community. Exclusive of the non-cash loss, the Company's net earnings for fiscal 1996 were $34.5 million, or $1.96 per share. (2) Earnings (loss) from continuing operations for fiscal 1996, 1995, 1994 and 1993 reflect a higher income tax rate (a rate more closely approximating the statutory rate) than for fiscal 1992 as a result of the Company's adoption of SFAS No. 109 effective July 1, 1992. (3) Total earnings for fiscal 1993 include a $12.8 million loss from discontinued operations (primarily additional loss provisions related to the Company's discontinued land development projects), a $0.5 million extraordinary gain from the extinguishment of debt on a discounted basis and a $20.0 million increase in net earnings as a result of a cumulative effect of an accounting change from the adoption of SFAS No. 109. Total earnings for fiscal 1992 include a $3.0 million extraordinary gain from the extinguishment of debt on a discounted basis. 12 Item 6. Selected Consolidated Financial Data (Continued) (Not covered by report of independent auditors)
Dollars In Thousands Year Ended June 30, - ----------------------------------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------- Balance sheet information at year-end: Total assets $ 1,024,795 $ 925,050 $ 758,424 $ 555,586 $ 442,051 Notes payable and senior debt 320,063 284,585 189,657 133,175 159,637 Subordinated debt 194,614 206,673 206,019 108,688 12,622 ----------- ----------- ---------- ----------- ----------- Total notes payable, senior and subordinated debt 514,677 491,258 395,676 241,863 172,259 Shareholders' equity $ 264,776 $ 229,342 $ 201,324 $ 199,446 $ 178,615 Total notes payable, senior and subordinated debt divided by total notes payable, senior and subordinated debt and shareholders' equity 66.0% 68.2% 66.3% 54.8% 49.1% =================================================================================================================
13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion of results of operations and financial condition should be read in conjunction with the Selected Consolidated Financial Data and the Consolidated Financial Statements and Notes thereto. CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA - ------------------------------------------------------ Set forth below is certain consolidated financial and operating data of the Company as of and for each of the three fiscal years ended June 30, 1996.
Year Ended Change Change June 30, 1996 vs 1995 1995 vs 1994 - ------------------------------------------------------------------- -------------------- -------------------- 1996 1995 1994 Amount Percent Amount Percent - ------------------------------------------------------------------- -------------------- -------------------- OPERATING DATA: Number of net new orders(1): Sun City West 963 946 1,156 17 1.8% (210) (18.2%) Sun City Tucson 160 310 357 (150) (48.4%) (47) (13.2%) Sun Cities Las Vegas(2) 1,241 770 863 471 61.2% (93) (10.8%) Sun City Palm Desert 216 267 315 (51) (19.1%) (48) (15.2%) Sun City Roseville(3) 537 515 349 22 4.3% 166 47.6% Sun City Hilton Head(3) 349 149 N/A 200 134.2% 149 N/A Sun City Georgetown(3) 491 122 N/A 369 302.5% 122 N/A Terravita(3) 431 392 331 39 9.9% 61 18.4% Coventry Homes 1,462 1,063 774 399 37.5% 289 37.3% - ------------------------------------------------------------------- -------------------- -------------------- Total 5,850 4,534 4,145 1,316 29.0% 389 9.4% =================================================================== ==================== ==================== Number of home closings: Sun City West 912 1,104 1,161 (192) (17.4%) (57) (4.9%) Sun City Tucson 264 444 342 (180) (40.5%) 102 29.8% Sun Cities Las Vegas(2) 1,001 847 815 154 18.2% 32 3.9% Sun City Palm Desert 251 282 278 (31) (11.0%) 4 1.4% Sun City Roseville(3) 731 293 N/A 438 149.5% 293 N/A Sun City Hilton Head(3) 305 N/A N/A 305 N/A N/A N/A Sun City Georgetown(3) 235 N/A N/A 235 N/A N/A N/A Terravita(3) 425 425 N/A - - 425 N/A Coventry Homes 1,407 921 587 486 52.8% 334 56.9% - ------------------------------------------------------------------- -------------------- -------------------- Total 5,531 4,316 3,183 1,215 28.2% 1,133 35.6% =================================================================== ==================== ==================== BACKLOG DATA: Homes under contract at June 30: Sun City West 553 502 660 51 10.2% (158) (23.9%) Sun City Tucson 45 149 283 (104) (69.8%) (134) (47.3%) Sun Cities Las Vegas(2) 642 402 479 240 59.7% (77) (16.1%) Sun City Palm Desert 112 147 162 (35) (23.8%) (15) (9.3%) Sun City Roseville(3) 377 571 349 (194) (34.0%) 222 63.6% Sun City Hilton Head(3) 193 149 N/A 44 29.5% 149 N/A Sun City Georgetown(3) 378 122 N/A 256 209.8% 122 N/A Terravita(3) 304 298 331 6 2.0% (33) (10.0%) Coventry Homes 595 540 398 55 10.2% 142 35.7% - ------------------------------------------------------------------- -------------------- -------------------- Total(4) 3,199 2,880 2,662 319 11.1% 218 8.2% =================================================================== ==================== ==================== Aggregate contract sales amount (dollars in millions) $617 $565 $471 $52 9.2% $94 20.0% Average contract sales amount per home (dollars in thousands) $193 $196 $177 $(3) (1.5%) $19 10.7% =================================================================== ==================== ====================
14 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) CERTAIN CONSOLIDATED FINANCIAL AND OPERATING DATA (Continued) - -------------------------------------------------------------------
Year Ended Change Change June 30, 1996 vs 1995 1995 vs 1994 - ---------------------------------------------------------------------- -------------------- -------------------- 1996 1995 1994 Amount Percent Amount Percent - ---------------------------------------------------------------------- -------------------- -------------------- AVERAGE REVENUE PER HOME CLOSING: Sun City West $ 160,300 $ 151,100 $ 143,500 $ 9,200 6.1% $ 7,600 5.3% Sun City Tucson 170,600 164,400 159,700 6,200 3.8% 4,700 2.9% Sun Cities Las Vegas(2) 171,000 180,700 160,800 (9,700) (5.4%) 19,900 12.4% Sun City Palm Desert 224,100 214,400 191,400 9,700 4.5% 23,000 12.0% Sun City Roseville(3) 217,800 201,100 N/A 16,700 8.3% N/A N/A Sun City Hilton Head(3) 159,200 N/A N/A N/A N/A N/A N/A Sun City Georgetown(3) 181,500 N/A N/A N/A N/A N/A N/A Terravita(3) 295,600 253,700 N/A 41,900 16.5% N/A N/A Coventry Homes 154,300 156,900 136,300 (2,600) (1.7%) 20,600 15.1% Weighted average $ 182,900 $ 177,100 $ 152,500 $ 5,800 3.3% $ 24,600 16.1% ====================================================================== ==================== ==================== OPERATING STATISTICS: Costs and expenses as a percentage of revenues: Home construction, land and other 76.9% 76.6% 75.7% 0.3% 0.4% 0.9% 1.2% Interest 4.0% 3.9% 3.5% 0.1% 2.6% 0.4% 11.4% Selling, general and administrative 14.0% 14.1% 15.6% (0.1%) (0.7%) (1.5%) (9.6%) Ratio of home closings to homes under contract in backlog at beginning of year 192.0% 162.1% 187.2% 29.9% 18.4% (25.1%) (13.4%) ====================================================================== ==================== ====================
(1)Net of cancellations. The Company recognizes revenue at close of escrow. (2)Includes Sun City Summerlin and Sun City MacDonald Ranch. The Company began taking new home sales orders at Sun City MacDonald Ranch in September 1995. Home closings began at Sun City MacDonald Ranch in January 1996. (3)The Company began taking new home sales orders at Sun City Roseville in May 1994, at Sun City Hilton Head in November 1994, at Sun City Georgetown in June 1995 and at Terravita in November 1993. Home closings began at Sun City Roseville in February 1995, at Sun City Hilton Head in August 1995, at Sun City Georgetown in February 1996 and at Terravita in July 1994. (4)A majority of the backlog at June 30, 1996 is currently anticipated to result in revenues in the next 12 months. However, a majority of the backlog is contingent upon the availability of financing for the customer, sale of the customer's existing residence or other factors. Also, as a practical matter, the Company's ability to obtain damages for breach of contract by a potential home buyer is limited to retaining all or a portion of the deposit received. In the years ended June 30, 1996, 1995 and 1994, cancellations of home sales orders as a percentage of new home sales orders written during the year were 17.2 percent, 18.3 percent and 15.6 percent, respectively. 15 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) RESULTS OF OPERATIONS - --------------------- REVENUES. Home closings at Sun City Hilton Head and Sun City Georgetown accounted for $48.6 million and $42.7 million, respectively, of the increase in revenues to $1.05 billion for the fiscal year ended June 30, 1996 from $803.1 million for the fiscal year ended June 30, 1995. The Company had not yet begun delivering homes at these communities in fiscal 1995. Increased home closings at the Sun Cities Las Vegas (where home closings began at Sun City MacDonald Ranch in January 1996) and Sun City Roseville (where the Company had home closings for only a part of fiscal 1995) accounted for $27.8 million and $88.1 million, respectively, of the increase in revenues. Decreased home closings at Sun City West (due to a lower backlog at the beginning of the year), Sun City Tucson (reflecting the approaching build-out of that community) and Sun City Palm Desert (see "Loss from Impairment of Southern California Real Estate Inventories") collectively resulted in a $65.2 million decrease in revenues. Increased home closings at Coventry Homes (which benefitted from increases in Phoenix, Tucson, Las Vegas and southern California operations) resulted in increased revenues of $76.3 million. An increase in the average revenue per home closing (excluding the new communities of Sun City Hilton Head and Sun City Georgetown) resulted in a $29.1 million increase in revenues. This increase was primarily due to sales price increases previously implemented by the Company, increases in lot premiums at certain communities and changes in product mix. Home closings at Terravita and Sun City Roseville accounted for $107.8 million and $58.9 million, respectively, of the increase in revenues to $803.1 million for fiscal 1995 compared to $510.1 million for the fiscal year ended June 30, 1994. The Company had not yet begun delivering homes at these communities in fiscal 1994. Increased home closings (due to a higher beginning backlog) at Sun City West, Sun City Tucson, Sun City Summerlin and Sun City Palm Desert collectively accounted for $14.0 million of the increase in revenues. Increased home closings at Coventry Homes accounted for $45.5 million of the increase in revenues. Coventry Homes' increased home closings were due both to an increase in Phoenix-area operations and to the expansion of operations in the Tucson and Las Vegas areas and southern California. Increases in the average revenue per home closing at Sun City West, Sun City Tucson, Sun City Summerlin, Sun City Palm Desert and Coventry Homes collectively accounted for $52.8 million of the increase in revenues from fiscal 1994 to fiscal 1995. These increases in average revenues per home closing were partially due to sales price increases implemented by the Company and partially due to changes in product mix. Land sales and other revenues were $14.0 million higher in fiscal 1995 than in fiscal 1994. Land sales are a normal part of the Company's master-planned community developments but occur irregularly, complicating period-to-period comparisons. HOME CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land and other costs to $808.0 million for fiscal 1996 compared to $614.8 million for fiscal 1995 was primarily due to the increase in home closings. As a percentage of revenues, these costs were 76.9 percent for fiscal 1996 compared to 76.6 percent for fiscal 1995, with the increase primarily attributable to changes in mix of product, subdivisions and home closings among the Company's communities and conventional homebuilding operations. The increase in home construction, land and other costs to $614.8 million in fiscal 1995 compared to $386.2 million in fiscal 1994 was primarily due to the increase in home closings. As a percentage of revenues, home construction, land and other costs increased to 76.6 percent for fiscal 1995 compared to 75.7 percent for fiscal 1994. This increase was the result of a variety of factors, including changes in the mix of contributions by various communities and Coventry Homes and decreased base housing margins at Sun City Tucson. Pricing strategies employed by the Company to facilitate the completion of Sun City Tucson resulted in the decrease in base housing margins at that community. On a period-to-period basis, home construction, land and other costs as a percentage of revenues will vary due to, among other things, changes in product mix, differences between individual communities, lot premiums, upgrades and extras, price increases and changes in construction costs. 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) INTEREST. As a percentage of revenues, amortization of capitalized interest was 4.0 percent for fiscal 1996 compared to 3.9 percent for fiscal 1995. This increase was primarily due to higher levels of indebtedness and increases in land held for longer-term development, with respect to which land the Company does not allocate capitalized interest. As a result of the non-cash loss from impairment of southern California real estate inventories recognized by the Company in fiscal 1996 (see "Loss from Impairment of Southern California Real Estate Inventories"), management currently anticipates that in the future greater capitalized interest will be allocated to communities with more expected home closings than Sun City Palm Desert. If all other factors were constant, this would result in an increase in amortization of capitalized interest as a percentage of revenues in future periods. Increased borrowings and higher interest rates resulted in an increase in the amortization of capitalized interest to 3.9 percent of revenues for fiscal 1995 compared to 3.5 percent of revenues for fiscal 1994. Because the Company capitalizes interest and amortizes capitalized interest as home closings occur over the lives of its projects and the Company has several communities at which closings just began in fiscal 1996, a significant portion of the reduction in interest costs resulting from the use of proceeds of the August 1995 public offering of 2,474,900 shares of common stock to repay indebtedness was not reflected in reported earnings for the Company's fiscal year ended June 30, 1996 and some portion will not be reflected in the 1997 fiscal year. See "Liquidity and Financial Condition of the Company." SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Of the increase in total selling, general and administrative expenses to $147.3 million for fiscal 1996 from $113.2 million for fiscal 1995, $12.7 million was attributable to higher sales and marketing expenses, $6.5 million was due to increased commissions on the increased revenues and $7.7 million resulted from the recognition of expenses at Sun City Roseville, Sun City Hilton Head, Sun City MacDonald Ranch and Sun City Georgetown in fiscal 1996 (which were capitalized prior to the commencement of home closings, which for each of these communities included part or all of fiscal 1995). The balance of the increase was due to a variety of general and administrative expenses. Of the increase in selling, general and administrative expenses to $113.2 million in fiscal 1995 as compared to $79.7 million in fiscal 1994, $9.2 million was attributable to higher sales and marketing expenses and $7.9 million was attributable to increased commissions on the higher revenues. The balance of the increase was attributable to a variety of general and administrative expenses. Since a significant portion of selling, general and administrative expenses is fixed, the increase in revenues for fiscal 1995 resulted in a decrease in these expenses as a percentage of revenues as compared to fiscal 1994. LOSS FROM IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES. In fiscal 1996 the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. (For a brief description of SFAS No. 121, see Note 1 to the Consolidated Financial Statements.) In connection with its adoption of SFAS No. 121, the Company incurred a non-cash loss from impairment of southern California real estate inventories in the amount of $65.0 million pre-tax ($42.3 million after tax) related to the valuation of its Sun City Palm Desert active adult community. Exclusive of the non-cash loss, the Company's net earnings for fiscal 1996 were $34.5 million, or $1.96 per share. 17 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) In the first six months of fiscal 1996, net new orders at Sun City Palm Desert were substantially below both the comparable period of the prior fiscal year and the Company's expectations. Although the Company was encouraged by net new orders significantly greater in the first 45 days of the third quarter of fiscal 1996 than in the comparable period in the prior fiscal year, a lower than anticipated level of net new orders was expected in the remainder of fiscal 1996 and net new orders for all of fiscal 1996 were anticipated to be lower than in prior fiscal years. Additionally, a national home builder is developing an active adult community near Sun City Palm Desert which will cause additional competitive pressures at that community. Based on these and other factors, the Company reduced its estimate with respect to net new orders and closings in the fiscal years ending June 30,1997 and beyond to below the levels achieved in the three fiscal years ended June 30, 1995. This resulted in expected future net cash flows (undiscounted and without interest charges) at Sun City Palm Desert being less than the book value of the asset. As required by SFAS No. 121, the Company therefore recorded in fiscal 1996 a non-cash loss from impairment of southern California real estate inventories to reflect Sun City Palm Desert at its estimated fair value. Fair value was estimated based upon an evaluation of comparable market prices and discounted expected future cash flows. The Company owns additional land for a second phase of development at Sun City Palm Desert. Development of subsequent phases of large-scale real estate projects is always assessed in light of conditions existing when construction of the phase is to begin, and any decision on the development of the second phase at this community will depend on the state of the economy and prospects for the community at the time the current phase is nearing completion. INCOME TAXES. The change in income tax expense to a $4.2 million benefit for fiscal 1996 as compared to a $15.3 million expense for fiscal 1995 was due to the change in earnings (loss) before income taxes. The increase in income tax expense to $15.3 million in fiscal 1995 as compared to $9.2 million in fiscal 1994 was due to the increase in earnings before income taxes. The effective tax rate in all three years was 35 percent. NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders increased 29.0 percent in fiscal 1996 as compared to fiscal 1995. This increase was largely attributable to new sales orders at Sun City Georgetown (at which the Company began taking new sales orders in June 1995) and substantial increases for Coventry Homes (due to increases in Phoenix, Tucson, Las Vegas and southern California operations) and Sun City Hilton Head (at which new orders were negatively impacted in fiscal 1995 by adverse weather conditions). Net new orders at Sun City Tucson decreased 48.4 percent in fiscal 1996 compared to fiscal 1995, reflecting the approaching build-out of that community. Net new orders at the Sun Cities Las Vegas increased 61.2 percent, primarily as a result of the commencement of new order activity at Sun City MacDonald Ranch in September 1995. At Sun City Palm Desert, net new orders decreased 19.1 percent in fiscal 1996 compared to fiscal 1995. Management continues to be concerned by adverse conditions in the southern California economy and real estate market. Future net new order activity at Sun City Palm Desert will be affected by various factors, including the condition of the southern California economy and real estate market and competition. See "Loss from Impairment of Southern California Real Estate Inventories." The number of homes under contract at June 30, 1996 was 11.1 percent higher than at June 30, 1995. This increase was primarily attributable to new sales orders at Sun City Georgetown and Sun City MacDonald Ranch, partially offset by the decreased net new order activity at Sun City Tucson and a reduction in the number of homes under contract at Sun City Roseville as a result of home closings at that community. 18 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Net new orders increased 9.4 percent in fiscal 1995 compared to fiscal 1994. This increase was attributable to new sales orders at Sun City Roseville, Sun City Hilton Head, Sun City Georgetown and the expansion of Coventry Homes' conventional subdivision homebuilding operations. The Company did not have a full year of sales activity at Sun City Roseville in fiscal 1994 and began home sales activity at Sun City Hilton Head and Sun City Georgetown in fiscal 1995. At the more mature communities of Sun City West, Sun City Summerlin, Sun City Tucson and Sun City Palm Desert, net new orders decreased by 14.8 percent, due primarily to exceptionally high new order activity at Sun City West and Sun City Summerlin in the prior year, the winding down of new order activity at Sun City Tucson as build-out of that community approaches and the effect on Sun City Palm Desert of continued adverse conditions in the southern California economy. The number of homes in backlog at June 30, 1995 was 8.2 percent higher than at June 30, 1994. This increase was primarily attributable to the inclusion of homes under contract at Sun City Hilton Head and Sun City Georgetown and increases in backlog at Sun City Roseville and Coventry Homes, partially offset by declines in homes under contract at the Company's more mature communities. LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY - ------------------------------------------------ At June 30, 1996 the Company had $18.3 million of cash and short-term investments, $190.0 million outstanding under its $300 million senior unsecured revolving credit facility and $3.0 million outstanding under its $15 million of short-term lines of credit. In August 1995 the Company publicly sold 2,474,900 shares of its common stock. The net proceeds of $45.3 million were used to repay a portion of the indebtedness then outstanding under the Company's then $300 million senior unsecured revolving credit facility. The Company has reborrowed and will continue to reborrow under the senior unsecured revolving credit agreement from time to time as necessary to fund development of existing and new projects and for other general corporate purposes. Management believes that the Company's current borrowing capacity, when combined with existing cash and short-term investments and currently anticipated cash flows from the Company's operations will provide the Company with adequate capital resources to fund the Company's currently anticipated operating requirements for the next 12 months. Given the Company's current capital resources, operating requirements reflect limitations on some of the projects and activities that the Company might otherwise desire to undertake. In July 1996 the senior unsecured revolving credit facility was amended to increase the amount of the facility to $350 million. This amendment will provide greater flexibility in the nature and timing of future development expenditures. The Company's senior unsecured revolving credit facility and the indentures for the Company's publicly-held debt contain restrictions which could, depending on the circumstances, affect the Company's ability to borrow in the future. If the Company at any time is not successful in obtaining sufficient capital to fund its then planned development and expansion expenditures, some or all of its projects may be significantly delayed. Any such delay could result in cost increases and may adversely affect the Company's results of operations. The cash flow for each of the Company's communities can differ substantially from reported earnings, depending on the status of the development cycle. The initial years of development or expansion require significant cash outlays for, among other things, land acquisition, obtaining master plan and other approvals, construction of amenities (including golf courses and recreation centers), model homes, sales and administration facilities, major roads, utilities, general landscaping and interest. Since these initial costs are generally capitalized, this can result in income reported for financial statement purposes during the initial years significantly exceeding cash flow. However, after the initial years of development or expansion, when these expenditures are made, cash flow can significantly exceed earnings reported for financial statement purposes, as costs and expenses include amortization charges for substantial amounts of previously expended costs. 19 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) During fiscal 1996 the Company generated $291.4 million of net cash from community sales activities, used $169.1 million of cash for land and lot and amenity development at operating communities, paid $92.7 million for costs related to communities in the pre-operating stage, generated $8.6 million of net cash from conventional homebuilding operations and used $83.4 million of cash for other operating activities. The resulting $45.2 million of net cash used for operating activities (which was primarily attributable to expenditures for communities not yet generating home sales revenues) was funded mainly through borrowings under the Company's senior unsecured revolving credit facility and proceeds from the sale of common stock. At June 30, 1996, under the most restrictive of the covenants in the Company's debt agreements, $9.0 million of the Company's retained earnings was available for payment of cash dividends and for the acquisition by the Company of its common stock. IMPACT OF INFLATION - ------------------- Operations of the Company can be impacted by inflation. Home and land sales prices can increase, but inflation can also cause increases in interest costs and the costs of land, raw materials and contract labor. Unless such increased costs are recovered through higher sales prices, operating margins will decrease. High mortgage interest rates may also make it more difficult for the Company's potential customers to sell their existing homes in order to move to one of the Company's communities or to finance the purchases of their new homes. Item 8. Financial Statements and Supplementary Data The response to this item is submitted as a separate section of this report below. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 20 PART III Item 10. Directors and Executive Officers of the Registrant For information with respect to the Executive Officers of the Registrant, see "Item 1 -- Executive Officers of the Company" at the end of Part I of this report. Information with respect to the Directors of the Registrant is incorporated herein by reference to the Registrant's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the most recent fiscal year covered by this Form 10-K. Item 11. Executive Compensation Information in response to this Item is incorporated herein by reference to the Registrant's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the most recent fiscal year covered by this Form 10-K. Item 12. Security Ownership of Certain Beneficial Owners and Management Information in response to this Item is incorporated herein by reference to the Registrant's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the most recent fiscal year covered by this Form 10-K. Item 13. Certain Relationships and Related Transactions Information in response to this Item is incorporated herein by reference to the Registrant's definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the end of the most recent fiscal year covered by this Form 10-K. 21 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. and 2. The response to this portion of Item 14 is submitted as a separate section of this report beginning on page 24. 3. Exhibits The Exhibit Index attached to this Report is hereby incorporated by reference. (b) In the quarter ended June 30, 1996 the Company filed a report on Form 8-K dated April 24, 1996 stating that, in connection with its adoption of SFAS No. 121, the Company incurred a non-cash loss from impairment of southern California real estate inventories in the amount of $65.0 million pre-tax ($42.3 million after tax) related to the valuation of its Sun City Palm Desert active adult community. 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, who is duly authorized to do so, in Phoenix, Arizona on the 22nd day of August, 1996. DEL WEBB CORPORATION (Registrant) By: /s/ Philip J. Dion ------------------------------------ Philip J. Dion Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature Title Date - ------------------------------------------------------------------------------------------------------------------- /s/ Philip J. Dion Chairman and Chief Executive Officer August 22, 1996 - ------------------------------------ (Principal Executive Officer) (Philip J. Dion) /s/ John A. Spencer Senior Vice President and Chief August 22, 1996 - ------------------------------------ Financial Officer (John A. Spencer) (Principal Financial Officer) /s/ David E. Rau Vice President and Controller August 22, 1996 - ------------------------------------ (Principal Accounting Officer) (David E. Rau) /s/ D. Kent Anderson Director August 22, 1996 - ------------------------------------ (D. Kent Anderson) /s/ Robert Bennett Director August 22, 1996 - ------------------------------------ (Robert Bennett) /s/ Hugh F. Culverhouse, Jr. Director August 29, 1996 - ------------------------------------ (Hugh F. Culverhouse, Jr.) /s/ Kenny C. Guinn Director August 22, 1996 - ------------------------------------ (Kenny C. Guinn) /s/ J. Russell Nelson Director August 22, 1996 - ------------------------------------ (J. Russell Nelson) /s/ Peter A. Nelson Director August 22, 1996 - ------------------------------------ (Peter A. Nelson) /s/ Michael E. Rossi Director August 22, 1996 - ------------------------------------ (Michael E. Rossi) /s/ C. Anthony Wainwright Director August 30, 1996 - ------------------------------------ (C. Anthony Wainwright) /s/ Sam Yellen Director August 22, 1996 - ------------------------------------ (Sam Yellen)
23 DEL WEBB CORPORATION FORM 10-K Item 8, Item 14(a) (1) and (2) Index of Consolidated Financial Statements and Schedule The following financial statements required to be included in Item 8 and other disclosures by the Registrant are listed below:
PAGE Management's Report........................................................................................... 25 Independent Auditors' Report.................................................................................. 26 Consolidated Financial Statements: Balance Sheets as of June 30, 1996 and 1995....................................................... 27 Statements of Operations for each of the years in the three-year period ended June 30, 1996...................................................................... 28 Statements of Shareholders' Equity for each of the years in the three-year period ended June 30, 1996........................................................... 29 Statements of Cash Flows for each of the years in the three-year period ended June 30, 1996...................................................................... 30 Notes to Consolidated Financial Statements........................................................ 32
Separate financial statements of the Company's subsidiaries that are guarantors of the Company's 10 7/8% Senior Notes due 2000 are not included because those subsidiaries are jointly and severally liable as guarantors of the Notes and the aggregate assets, liabilities, earnings and equity of those subsidiaries are substantially equivalent to the assets, liabilities, earnings and equity of the Company and its subsidiaries on a consolidated basis. The following financial statement schedule of the Registrant and its subsidiaries is included in Item 14(a) (2):
PAGE Consolidated Financial Statement Schedule: II Valuation and Qualifying Accounts for each of the years in the three-year period ended June 30, 1996............................................................. 45
Schedules other than the one listed above are omitted because the conditions requiring their filing do not exist or because the required information is given in the financial statements, including the notes thereto. 24 MANAGEMENT'S REPORT Financial Statements Del Webb Corporation is responsible for the preparation, integrity and fair presentation of its published financial statements. The financial statements that follow have been prepared in accordance with generally accepted accounting principles and, as such, include amounts based on judgements and estimates made by management. The Company also prepared the other information included in the annual report and is responsible for its accuracy and consistency with the financial statements. The financial statements have been audited by the independent accounting firm, KPMG Peat Marwick LLP, which was given access to all financial records and related data, including minutes of all meetings of shareholders, the board of directors and committees of the board. The Company believes that all representations made to the independent auditors during their audit were valid and appropriate. KPMG Peat Marwick LLP's audit report is presented on the following page. Internal Control System The Company maintains a system of internal control over financial reporting and over safeguarding of assets against unauthorized acquisition, use or disposition which is designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation of reliable published financial statements and such asset safeguarding. The system includes a documented organizational structure and division of responsibility, established policies and procedures (including a code of conduct) which are communicated throughout the Company, and the selection, training and development of employees. Internal auditors monitor the operation of the internal control system and report findings and recommendations to management and the board of directors, and corrective actions are taken to correct deficiencies if and as they are identified. The board, operating through its audit committee which is composed of directors who are not officers or employees of the Company, provides oversight to the financial reporting and asset safeguarding process. Even an effective internal control system, no matter how well designed, has inherent limitations -- including the possibility of the circumvention or overriding of controls -- and therefore can provide only reasonable assurance with respect to financial statement preparation and asset safeguarding. Further, because of changes in conditions, internal control system effectiveness may vary over time. The Company assessed its internal control system as of June 30, 1996 in relation to criteria for effective internal control over financial reporting described in "Internal Control -- Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, the Company believes that, as of June 30, 1996, its system of internal control over financial reporting and over safeguarding of assets against unauthorized acquisition, use or disposition met those criteria. /s/ Philip J. Dion - ------------------------------------ Philip J. Dion Chairman and Chief Executive Officer /s/ John A. Spencer - ------------------------------------ John A. Spencer Senior Vice President and Chief Financial Officer June 30, 1996 25 Independent Auditors' Report ---------------------------- The Board of Directors and Shareholders Del Webb Corporation: We have audited the consolidated financial statements of Del Webb Corporation and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Del Webb Corporation and subsidiaries as of June 30, 1996 and 1995, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 1996 in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. As discussed in Notes 1 and 12 to the consolidated financial statements, in fiscal 1996 the Company changed its method of accounting for impairment of long-lived assets in accordance with the adoption of Statement of Financial Accounting Standards No. 121. KPMG Peat Marwick LLP Phoenix, Arizona August 16, 1996 26 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1996 and 1995
In Thousands - ------------------------------------------------------------------------------------------------------------- 1996 1995 - ------------------------------------------------------------------------------------------------------------- Assets - ------------------------------------------------------------------------------------------------------------- Real estate inventories (Notes 2, 5 and 11) $ 899,815 $ 828,752 Cash and short-term investments 18,340 18,900 Receivables (Note 3) 25,162 21,995 Property and equipment, net (Note 4) 27,599 29,326 Deferred income taxes (Note 6) 12,612 - Other assets 41,267 26,077 - ------------------------------------------------------------------------------------------------------------- $ 1,024,795 $ 925,050 ============================================================================================================= Liabilities and Shareholders' Equity - ------------------------------------------------------------------------------------------------------------- Notes payable, senior and subordinated debt (Note 5) $ 514,677 $ 491,258 Contractor and trade accounts payable 82,918 76,421 Accrued liabilities and other payables 68,920 52,046 Home sale deposits 88,304 66,887 Income taxes payable (Note 6) 5,200 3,899 Deferred income taxes (Note 6) - 5,197 - ------------------------------------------------------------------------------------------------------------- Total liabilities 760,019 695,708 - ------------------------------------------------------------------------------------------------------------- Shareholders' equity: Common stock, $.001 par value. Authorized 30,000,000 shares; issued 17,541,772 shares and 15,798,649 shares at June 30, 1996 and 1995, respectively (Notes 7 and 8) 18 16 Additional paid-in capital (Note 7) 158,262 121,059 Retained earnings (Note 5) 111,033 122,153 - ------------------------------------------------------------------------------------------------------------- 269,313 243,228 Less cost of common stock in treasury, 3,751 shares and 877,728 shares at June 30, 1996 and 1995, respectively (Note 7) (70) (11,058) Less deferred compensation (Note 8) (4,467) (2,828) - ------------------------------------------------------------------------------------------------------------- Total shareholders' equity 264,776 229,342 - ------------------------------------------------------------------------------------------------------------- $ 1,024,795 $ 925,050 =============================================================================================================
See accompanying notes to consolidated financial statements. 27 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years ended June 30, 1996, 1995 and 1994
In Thousands Except Per Share Data - -------------------------------------------------------------------------------------------------------------------- 1996 1995 1994 - -------------------------------------------------------------------------------------------------------------------- Revenues (Note 10) $ 1,050,733 $ 803,119 $ 510,061 - -------------------------------------------------------------------------------------------------------------------- Costs and expenses (Note 10): Home construction, land and other 807,988 614,847 386,199 Interest (Note 11) 42,354 31,205 18,003 Selling, general and administrative 147,315 113,235 79,673 Loss from impairment of southern California real estate inventories (Notes 11 and 12) 65,000 - - - -------------------------------------------------------------------------------------------------------------------- 1,062,657 759,287 483,875 - -------------------------------------------------------------------------------------------------------------------- Earnings (loss) before income taxes (11,924) 43,832 26,186 Income taxes (Note 6) 4,173 (15,341) (9,165) - -------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ (7,751) $ 28,491 $ 17,021 ==================================================================================================================== Weighted average shares outstanding 17,425 15,209 15,036 ==================================================================================================================== Net earnings (loss) per share $ (0.44) $ 1.87 $ 1.13 ====================================================================================================================
See accompanying notes to consolidated financial statements. 28 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years ended June 30, 1996, 1995 and 1994
In Thousands - ------------------------------------------------------------------------------------------------------------------------------- Additional Total Common Paid-In Retained Treasury Deferred Shareholders' Stock Capital Earnings Stock Compensation Equity - ------------------------------------------------------------------------------------------------------------------------------- Balances at July 1, 1993 $ 113,289 $ 8,019 $ 82,591 $ (2,596) $ (1,857) $ 199,446 Shares issued and retired for stock option and restricted stock plans (123,167 shares of treasury stock issued and 23,453 shares of common stock retired), net of amortization (345) 314 - 1,322 (126) 1,165 Treasury stock acquired, 1,046,751 shares - - - (13,326) - (13,326) Cash dividends ($ .20 per share) - - (2,982) - - (2,982) Net earnings - - 17,021 - - 17,021 - ------------------------------------------------------------------------------------------------------------------------------- Balances at June 30, 1994 112,944 8,333 96,630 (14,600) (1,983) 201,324 Shares issued and retired for stock option, restricted stock and retirement savings plans (254,781 shares of treasury stock issued and 30,291 shares of common stock retired), net of amortization (202) - - 3,550 (845) 2,503 Treasury stock acquired, 444 shares - - - (8) - (8) Change from common stock without par value to $.001 par value common stock (Note 7) (112,726) 112,726 - - - - Cash dividends ($ .20 per share) - - (2,968) - - (2,968) Net earnings - - 28,491 - - 28,491 - ------------------------------------------------------------------------------------------------------------------------------- Balances at June 30, 1995 16 121,059 122,153 (11,058) (2,828) 229,342 Shares issued and retired for stock option and restricted stock plans (178,463 shares of common stock issued, 2,200 shares net increase in treasury stock and 32,512 shares of common stock retired), net of amortization 2,992 - (39) (1,639) 1,314 Proceeds from sale of 1,597,172 shares of common stock and 877,728 shares of treasury stock, less offering costs of $3.0 million (Note 7) 2 34,211 - 11,058 - 45,271 Treasury stock acquired, 1,551 shares - - - (31) - (31) Cash dividends ($ .20 per share) - - (3,369) - - (3,369) Net loss - - (7,751) - - (7,751) - ------------------------------------------------------------------------------------------------------------------------------- Balances at June 30, 1996 $ 18 $ 158,262 $ 111,033 $ (70) $ (4,467) $ 264,776 ===============================================================================================================================
See accompanying notes to consolidated financial statements. 29 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended June 30, 1996, 1995 and 1994 (In Thousands)
1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Cash received from customers related to community home sales $ 792,835 $ 588,526 $ 415,090 Cash received from commercial land sales 7,880 1,599 3,730 Cash paid for costs related to community home construction (509,315) (377,735) (275,079) - ------------------------------------------------------------------------------------------------------------------ Net cash provided by community sales activities 291,400 212,390 143,741 Cash paid for land acquisitions at operating communities (8,351) (8,046) (5,212) Cash paid for lot development at operating communities (96,863) (62,612) (46,921) Cash paid for amenity development at operating communities (63,853) (29,683) (34,292) - ------------------------------------------------------------------------------------------------------------------ Net cash provided by operating communities 122,333 112,049 57,316 Cash paid for costs related to communities in the pre-operating stage (92,668) (98,183) (101,469) Cash received from customers related to conventional homebuilding 222,513 146,210 79,282 Cash paid for land, development, construction and other costs related to conventional homebuilding (213,959) (152,696) (102,726) Cash received from residential land development project 8,834 10,309 3,143 Cash paid for corporate activities (34,280) (29,402) (24,432) Interest paid (47,444) (44,104) (27,258) Cash received (paid) for income taxes (10,501) (1,796) 759 - ------------------------------------------------------------------------------------------------------------------ Net cash used for operating activities (45,172) (57,613) (115,385) - ------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Purchases of property and equipment (6,715) (13,256) (13,380) Investments in life insurance policies (3,554) (1,594) (2,511) - ------------------------------------------------------------------------------------------------------------------ Net cash used for investing activities (10,269) (14,850) (15,891) - ------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Borrowings 305,122 766,968 315,922 Repayments of debt (292,260) (679,985) (195,706) Proceeds from sale of common stock 45,271 - - Purchases of treasury stock (31) (8) (13,326) Proceeds from exercise of common stock options 148 882 164 Dividends paid (3,369) (2,968) (2,982) - ------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 54,881 84,889 104,072 - ------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and short-term investments (560) 12,426 (27,204) Cash and short-term investments at beginning of year 18,900 6,474 33,678 - ------------------------------------------------------------------------------------------------------------------ Cash and short-term investments at end of year $ 18,340 $ 18,900 $ 6,474 ==================================================================================================================
See accompanying notes to consolidated financial statements. 30 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years ended June 30, 1996, 1995 and 1994 (In Thousands)
1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------ Reconciliation of net earnings (loss) to net cash used for operating activities: Net earnings (loss) $ (7,751) $ 28,491 $ 17,021 Allocation of non-cash common costs to costs and expenses, excluding interest 247,734 188,081 110,478 Amortization of capitalized interest in costs and expenses 42,354 31,205 18,003 Deferred compensation amortization 1,804 1,598 1,330 Depreciation and other amortization 8,740 5,243 3,698 Deferred income taxes (17,810) 16,801 9,061 Non-cash loss from impairment of southern California real estate inventories 65,000 - - Net increase in home construction costs (35,445) (42,566) (34,192) Land acquisitions (37,176) (39,332) (81,788) Lot development (190,959) (154,864) (89,983) Amenity development (103,086) (78,785) (62,621) Pre-acquisition costs (8,732) (2,770) (5,228) Net change in other assets and liabilities (9,845) (10,715) (1,164) - ------------------------------------------------------------------------------------------------------------------ Net cash used for operating activities $ (45,172) $ (57,613) $ (115,385) ==================================================================================================================
See accompanying notes to consolidated financial statements. 31 DEL WEBB CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996, 1995 and 1994 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of Del Webb Corporation and its Subsidiaries ("Company"). All significant intercompany transactions and accounts have been eliminated in consolidation. Certain financial statement items from prior years have been reclassified to be consistent with the current year financial statement presentation. Operations ---------- The Company's operations include its communities, conventional homebuilding operations and residential land development project. The Company's communities are large-scale, master-planned residential communities at which the Company controls all phases of the master plan development process from land selection through the construction and sale of homes. Within its communities, the Company is the exclusive builder of homes. The Company's conventional homebuilding operations encompass the construction and sale of homes in subdivisions. The Company's residential land development project is being completed and includes the sale of individual land parcels and lots to other builders and developers for conventional housing and related commercial development. The Company's operations are subject to a number of risks and uncertainties, including, but not limited to, risks associated with the development of future and newer communities (including development in new geographic areas), competition, the real estate markets and general economic conditions of the areas in which the Company competes, the availability and cost of financing, fluctuations in interest rates, fluctuations in labor and raw material costs, governmental regulation, environmental considerations, period-to-period fluctuations during the long-term operations of the Company's communities, the geographic concentration of the Company's operations and certain natural risks that exist in some of the Company's market areas. Real Estate Inventories ----------------------- Real estate inventories include undeveloped land, partially improved land, amenities and homes on finished lots, in various stages of completion. These assets include direct construction costs for homes and common costs. Common costs include land, general and subdivision land development costs, model and vacation home costs in excess of normal direct construction costs, costs of community sales centers, costs of assets (such as golf courses and recreation centers) contributed to certain of the community associations, costs of subsidizing the community associations, other costs (such as property taxes and pre-operating costs) and development period interest, all of which are capitalized. The capitalized costs and estimated future common costs are allocated, on a community by community basis, to residential and commercial lots based upon the estimated relative sales value that each lot has to the estimated aggregate sales value of all lots in the community. Home construction, land and other costs and expenses includes the direct construction costs of the home and an allocation of common costs. Sales commissions, advertising and other marketing expenses are included in selling, general and administrative expenses. The Company recognizes revenue at close of escrow. The Company values its real estate inventories in accordance with Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which was issued by the Financial Accounting Standards Board in March 1995 and which the Company adopted in fiscal 1996. In accordance with SFAS No. 121, prior period financial statements have not been restated to reflect the change in accounting principle. 32 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) SFAS No. 121 requires that long-lived assets, such as real estate inventories, be reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. If the sum of the expected future net cash flows (undiscounted and without interest charges) from an asset to be held and used is less than the book value of the asset, an impairment loss must be recognized in the amount of the difference between the book value and fair value, as opposed to the difference between book value and net realizable value under the previous accounting standard. For long-term assets like active adult communities, the determination of whether there is an impairment loss is dependent primarily on the Company's estimate of annual home closings over the life of the community, which involves numerous assumptions and judgements as to future events over a period of many years. In connection with its adoption of SFAS No. 121, the Company incurred a non-cash loss from impairment of southern California real estate inventories in the amount of $65.0 million pre-tax ($42.3 million after tax) related to the valuation of its Sun City Palm Desert active adult community (see Note 12). Cash and Short-Term Investments ------------------------------- The Company's policy is to invest its cash in high-grade, income-producing short-term investments. Accordingly, uninvested cash balances are generally kept at minimum levels. Short-term investments are valued at the lower of cost or market and principally include overnight repurchase agreements, certificates of deposit and commercial paper with an original maturity of less than 90 days. Depreciation ------------ Depreciation is computed using principally the straight-line method for financial statement purposes and accelerated methods for tax purposes, over the estimated useful lives of the assets. Income Taxes ------------ The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated statement of operations as an adjustment to the effective income tax rate in the period that includes the enactment date. Earnings (Loss) Per Share ------------------------- Earnings (loss) per share is determined by dividing net earnings (loss) by the weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares of 382,000 and 219,000 included in the computation of earnings per share for fiscal 1995 and 1994, respectively, represent the effect of stock options. Consolidated Statements of Cash Flows ------------------------------------- In the Consolidated Statements of Cash Flows, the Company defines operating communities as communities generating revenues from home closings. Communities in the pre-operating stage are those not yet generating revenues from home closings. Warranty Costs -------------- Estimated future warranty costs are charged to home construction, land and other costs and expenses when the revenues from home closings are recognized. 33 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial Instruments --------------------- In the normal course of business, the Company may invest in various financial assets and incurs various financial liabilities. The Company does not trade in derivative financial instruments, although it occasionally enters into agreements involving derivative financial instruments for purposes other than trading. At June 30, 1996 the Company had no derivative financial instruments. The fair value estimates of financial instruments presented in Note 5 have been determined by the Company using available market information and valuation methodologies deemed appropriate by the Company. Considerable judgement is required in interpreting market data to develop the estimates of fair value. Accordingly, these fair value estimates are not necessarily indicative of the amounts the Company might pay or receive in actual market transactions. Potential taxes and other transaction costs have not been considered in estimating fair value. As substantially all of the Company's assets (including real estate inventories, property and equipment and deferred income taxes) are not financial instruments, the disclosures in Note 5 do not reflect the value of the Company as a whole. The fair values of the Company's publicly held debt are estimated based on the quoted bid prices for these debt instruments on June 30, 1996. The carrying amounts of the Company's remaining debt approximate the estimated fair values because they are at interest rates comparable to rates currently available to the Company for debt with similar terms and remaining maturities. For all other financial instruments, the carrying amounts approximate the fair values because of the short maturity of these instruments and in some cases because they bear interest at market rates. Use of Estimates ---------------- The preparation of the Company's consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, particularly those previously discussed for real estate inventories, that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. (2) REAL ESTATE INVENTORIES The components of real estate inventories are as follows:
In Thousands at June 30, --------------------------------------------------------------------------------------------------------- 1996 1995 --------------------------------------------------------------------------------------------------------- Home construction costs $ 177,800 $ 142,355 Unamortized improvement and amenity costs 439,679 356,457 Unamortized capitalized interest 43,661 55,793 Land held for housing 168,530 220,297 Land held for future development or sale 70,145 53,850 --------------------------------------------------------------------------------------------------------- $ 899,815 $ 828,752 =========================================================================================================
34 (2) REAL ESTATE INVENTORIES (Continued) At June 30, 1996, the Company had 252 completed homes and 480 homes under construction that were not subject to a sales contract. These homes represented $20.1 million and $15.0 million, respectively, of home construction costs at June 30, 1996. At June 30, 1995 the Company had 366 completed homes and 388 homes under construction (representing $26.3 million and $10.3 million, respectively, of home construction costs) that were not subject to a sales contract. Included in land held for future development or sale at June 30, 1996 were 385 acres of residential land, commercial land and worship sites that are currently being marketed for sale at the Company's communities and conventional homebuilding operations. Also included in land held for future development or sale at June 30, 1996 were 294 acres of residential land and commercial land at the Company's residential land development project. (3) RECEIVABLES Receivables are summarized as follows:
In Thousands at June 30, ---------------------------------------------------------------------------------------------------------- 1996 1995 ---------------------------------------------------------------------------------------------------------- Escrow funds from home sales $ 7,479 $ 7,089 Note from sale of commercial building 2,603 2,665 Mortgages held for sale 9,073 3,617 Notes from sales of land 1,944 1,708 Other 4,063 6,916 ---------------------------------------------------------------------------------------------------------- $ 25,162 $ 21,995 ==========================================================================================================
(4) PROPERTY AND EQUIPMENT, NET Property and equipment, stated at cost, and related accumulated depreciation are summarized as follows:
In Thousands at June 30, ---------------------------------------------------------------------------------------------------------- 1996 1995 ---------------------------------------------------------------------------------------------------------- Buildings and improvements $ 9,120 $ 9,422 Equipment 39,133 35,267 Land and improvements 2,839 2,839 ---------------------------------------------------------------------------------------------------------- 51,092 47,528 Less accumulated depreciation 23,493 18,202 ---------------------------------------------------------------------------------------------------------- $ 27,599 $ 29,326 ==========================================================================================================
35 (5) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT Notes payable, senior and subordinated debt consists of the following:
In Thousands at June 30, ---------------------------------------------------------------------------------------------------------- 1996 1995 ---------------------------------------------------------------------------------------------------------- 10 7/8% Senior Notes, net $ 97,475 $ 96,787 9 3/4% Senior Subordinated Debentures, net 97,259 96,847 9% Senior Subordinated Debentures, net 97,355 97,081 Subordinated Swiss Franc Bonds, net - 12,745 Notes payable to banks under a revolving credit facility and short- term lines of credit 193,000 160,200 Real estate and other notes, variable interest rates from prime to prime plus 1% and fixed rates from 9.0% to 10.2%, interest payable quarterly, maturities to 2004 29,588 27,598 ---------------------------------------------------------------------------------------------------------- $ 514,677 $ 491,258 ==========================================================================================================
In April 1992 the Company completed a public offering of $100 million of Senior Notes, which are shown net of unamortized deferred financing costs and discount. The Notes are due on March 31, 2000 and have a stated interest rate of 10 7/8 percent per year. Interest is payable semi-annually on March 31 and September 30. The annual effective interest rate of the Notes, after giving effect to the amortization of deferred financing costs and discount, is 11.6 percent. The Notes may be redeemed by the Company after March 31, 1997 at 100 percent of the principal amount of the Notes redeemed, plus accrued and unpaid interest to the redemption date. In March 1993 the Company completed a public offering of $100 million of Senior Subordinated Debentures, which are shown net of unamortized deferred financing costs and discount. These Debentures are due on March 1, 2003 and have a stated interest rate of 9 3/4 percent per year. Interest is payable semi-annually on March 1 and September 1. The annual effective interest rate of the Debentures, after giving effect to the amortization of deferred financing costs and discount, is 10.2 percent. The Debentures may be redeemed by the Company on or after March 1, 1998, 1999 and 2000 at 104.875 percent, 102.4375 percent and 100 percent, respectively, of the principal amount of the Debentures redeemed, plus accrued and unpaid interest to the redemption date. In February 1994 the Company completed a public offering of $100 million of Senior Subordinated Debentures, which are shown net of unamortized deferred financing costs. These Debentures are due on February 15, 2006 and have a stated interest rate of 9 percent per year. Interest is payable semi-annually on February 15 and August 15. The annual effective interest rate of the Debentures, after giving effect to the amortization of deferred financing costs, is 9.3 percent. The Debentures may be redeemed by the Company on or after February 15, 1999, 2000, 2001, 2002 and 2003 at 104.500, 103.375, 102.250, 101.125 and 100 percent, respectively, of the principal amount of the Debentures redeemed, plus accrued and unpaid interest to the redemption date. In February 1986 the Company issued 50 million Subordinated Swiss Franc Bonds ($24 million) outside of the United States and simultaneously entered into a currency exchange agreement. In February 1996 the then remaining Bonds matured and were paid. The related currency exchange agreement was fully performed and expired in February 1996. The Company also had an interest rate swap agreement which called for an interest rate conversion from a variable rate to a fixed rate on a notional amount of $20 million. This agreement expired in February 1996. As a result of this agreement, the Company incurred net interest of $0.6 million, $1.0 million and $1.4 million for the fiscal years ended June 30, 1996, 1995, and 1994, respectively. 36 (5) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT (Continued) In March 1994 the Company established a $125 million senior unsecured revolving credit facility. The facility was amended to increase the amount of the facility to $175 million in November 1994, $300 million in June 1995 and $350 million in July 1996. If the revolving credit facility is not subsequently amended, its capacity will begin declining in June 1998 through its maturity in December 2000. Borrowings under this facility bear interest at the prime rate or, if the Company selects, at the Eurodollar rate plus 1.95 percent. The effective interest rate on borrowings outstanding under the senior unsecured revolving credit facility at June 30, 1996 is 7.5 percent. The senior unsecured revolving credit facility and the indentures for the Company's publicly-held debt contain covenants which, taken together and among other things, limit investments in unentitled land and unsold homes under construction, conventional homebuilding assets, dividends, stock repurchases, incurrence of indebtedness and certain acquisitions and which could, depending on the circumstances, affect the Company's ability to borrow in the future. At June 30, 1996 the Company had $190.0 million outstanding under its $300 million senior unsecured revolving credit facility and $3.0 million outstanding under its $15 million of short-term lines of credit. At June 30, 1996, under the most restrictive of the covenants in the Company's debt agreements, $9.0 million of the Company's retained earnings was available for payment of cash dividends and for the acquisition by the Company of its common stock. The estimated fair values at June 30, 1996 of the Company's Senior Notes, 9 3/4% Senior Subordinated Debentures and 9% Senior Subordinated Debentures were $101.5 million, $100.0 million and $92.5 million, respectively. The principal payment requirements (in thousands) on debt for the next five years ended June 30 are as follows: 1997 $ 23,219 1998 $ 2,870 1999 $ 76,825 2000 $ 174,351 2001 $ 38,962 (6) INCOME TAXES Components of Income Taxes -------------------------- The components of income taxes are:
In Thousands Year Ended June 30, ---------------------------------------------------------------------------------------------------------- 1996 1995 1994 ---------------------------------------------------------------------------------------------------------- Current: Federal $ 11,333 $ (3,336) $ 49 State 2,304 1,876 55 ---------------------------------------------------------------------------------------------------------- 13,637 (1,460) 104 ---------------------------------------------------------------------------------------------------------- Deferred: Federal (15,084) 15,953 7,364 State (2,726) 848 1,697 ---------------------------------------------------------------------------------------------------------- (17,810) 16,801 9,061 ---------------------------------------------------------------------------------------------------------- Income tax expense (benefit) $ (4,173) $ 15,341 $ 9,165 ==========================================================================================================
37 (6) INCOME TAXES (Continued) Components of Deferred Income Taxes ----------------------------------- The components of deferred income taxes are as follows:
In Thousands Year Ended June 30, ---------------------------------------------------------------------------------------------------------- 1996 1995 1994 ---------------------------------------------------------------------------------------------------------- Change in net operating loss carryforwards $ (201) $ 15,164 $ (2,197) Change in loss provisions for discontinued operations 1,854 3,556 (2,260) Change in basis differences of real estate (18,214) 9,721 18,076 Deferred compensation (1,087) (237) (1,356) Amortization of short period loss 486 76 262 Accelerated depreciation 4,245 (6,037) (2,973) Change in deferred tax asset valuation allowance - (2,744) (1,115) Other (4,893) (2,698) 624 ---------------------------------------------------------------------------------------------------------- Deferred income tax expense (benefit) $ (17,810) $ 16,801 $ 9,061 ==========================================================================================================
The deferred income tax benefit for fiscal 1996, and the related deferred tax asset at June 30, 1996, resulted from the non-cash loss from impairment of southern California real estate inventories recognized by the Company in fiscal 1996 (see Note 12). Included in deferred income taxes for fiscal 1995 and 1994 are reductions in the deferred tax asset valuation allowance of $2.7 million and $1.1 million, respectively. These reductions resulted from additional years of operating earnings generated by the Company, which increased the portion of the gross deferred tax asset that the Company believed would more likely than not be realized. 38 (6) INCOME TAXES (Continued) Deferred Tax Assets and Liabilities ----------------------------------- Deferred tax assets and liabilities have been recognized in the consolidated balance sheets due to temporary difference and carryforwards as follows:
In Thousands at June 30, --------------------------------------------------------------------------------------------------------- 1996 1995 --------------------------------------------------------------------------------------------------------- Deferred tax assets: Net operating loss carryforwards $ 201 $ - Tax credit carryforwards 3,051 4,649 Liabilities of discontinued operations, principally due to loss provisions 7,579 9,433 Property and equipment, principally due to differences in depreciation 7,224 11,469 State income taxes 2,886 2,948 Amortization of short period loss - 486 Deferred compensation 5,374 4,287 Other loss provisions 8,903 4,519 Other 766 966 --------------------------------------------------------------------------------------------------------- 35,984 38,757 Valuation allowance 3,862 3,862 --------------------------------------------------------------------------------------------------------- 32,122 34,895 --------------------------------------------------------------------------------------------------------- Deferred tax liabilities: Real estate, principally due to basis differences 18,285 36,499 Other 1,225 3,593 --------------------------------------------------------------------------------------------------------- 19,510 40,092 --------------------------------------------------------------------------------------------------------- Net deferred income taxes $ 12,612 $ (5,197) =========================================================================================================
Reconciliation of Effective Income Tax Expense (Benefit) -------------------------------------------------------- Income tax expense (benefit) differs from the amounts computed using the federal statutory income tax rate as a result of the following:
In Thousands Year Ended June 30, ---------------------------------------------------------------------------------------------------------- 1996 1995 1994 ---------------------------------------------------------------------------------------------------------- Expected tax at current federal statutory income tax rate $ (4,173) $ 15,341 $ 9,165 State income taxes, net of federal benefit (274) 1,771 1,139 Tax credits (2,580) - - Adjustments due to the settlement of audits and resolution of issues 2,407 718 - Change in deferred tax asset valuation allowance - (2,744) (1,115) Other 447 255 (24) ---------------------------------------------------------------------------------------------------------- Total income tax expense (benefit) $ (4,173) $ 15,341 $ 9,165 ==========================================================================================================
39 (6) INCOME TAXES (Continued) Carryforwards ------------- For federal income tax purposes, at June 30, 1996 the Company had tax credit carryforwards and a state net operating loss carryforward of $3.1 million and $4.0 million, respectively, that expire beginning in fiscal 2000 and fiscal 2010, respectively. (7) EQUITY TRANSACTIONS In August 1995 the Company publicly sold 2,474,900 shares of its common stock. The net proceeds of $45.3 million were used to repay a portion of the indebtedness then outstanding under the Company's $300 million senior unsecured revolving credit facility. In November 1994 the Company changed its state of incorporation from Arizona to Delaware. In connection with this reincorporation, the common stock changed from common stock without par value to common stock with a par value of $.001 per share, which resulted in a consolidated balance sheet reclassification within shareholders' equity from common stock to additional paid-in capital. There was no impact on total shareholders' equity as a result of the reincorporation. (8) COMMON STOCK RESERVED The Company has five stock option plans: the 1981 Stock Option Plan (under which no grants can be made subsequent to December 31, 1991), the 1986 Stock Option and Stock Appreciation Rights (SAR) Plan (under which no grants can be made subsequent to December 31, 1995) and the 1991, 1993 and 1995 Executive Long-Term Incentive Plans (1991 ELTIP, 1993 ELTIP and 1995 ELTIP, which cover both options and restricted stock grants). Options under each of these plans are granted to key employees to purchase shares of the Company's common stock at a price not less than the current market price at the date of the grant. The options are exercisable over a ten-year period from the date of the grant. Shares authorized for grant under the 1991 ELTIP total 750,000. Shares authorized for grant under the 1993 ELTIP total 1,200,000, of which no more than 450,000 may be used for restricted stock grants. Shares authorized for grant under the 1995 ELTIP total 1,200,000, of which no more than 100,000 may be used for restricted stock grants. The Company has the 1991 Directors' Stock Plan and the 1995 Director Stock Plan, under which options may be granted to the Directors of the Company to purchase shares of the Company's common stock at a price not less than the current market price at the date of grant. Under these plans the Directors may elect to defer some or all of their annual retainers and receive restricted stock or stock options at prices that, when combined with the amounts of deferred retainers, equal the current market price at the date of the grant. Shares authorized under these plans total 75,000 per plan. 40 (8) COMMON STOCK RESERVED (Continued) Activity in the stock option plans for the years ended June 30, 1996, 1995 and 1994 is summarized as follows:
Year Ended June 30, ---------------------------------------------------------------------------------------------------------- 1996 Price Range 1996 1995 1994 ---------------------------------------------------------------------------------------------------------- Options outstanding, beginning of year $5.63 - $17.69 1,438,470 1,248,019 1,002,218 Granted $14.53 - $20.88 388,201 325,720 276,548 Exercised $8.00 - $16.88 (12,883) (72,785) (14,933) Canceled $16.06 - $20.88 (12,500) (62,484) (15,814) ---------------------------------------------------------------------------------------------------------- Options outstanding, end of year $5.63 - $20.88 1,801,288 1,438,470 1,248,019 ========================================================================================================== Number of options exercisable at end of year 1,145,236 924,828 800,129 Number of options at end of year available for future option or restricted stock grants 1,491,646 755,727 1,175,364 ----------------------------------------------------------------------------------------------------------
Shares granted, net of cancellations, under the Company's restricted stock plans during the years ended June 30, 1996, 1995 and 1994 aggregated 163,380 shares, 148,901 shares and 108,234 shares, respectively. The Company recognized compensation expense of $1.8 million, $1.6 million and $1.3 million related to shares granted under the restricted stock plans for the years ended June 30, 1996, 1995 and 1994, respectively. (9) DEFINED CONTRIBUTION PLAN The Company sponsors a defined contribution retirement savings plan that covers substantially all employees of the Company after completion of six months of service. Company contributions to this plan, which include amounts based on a percentage of employee contributions as well as discretionary contributions, were $2.0 million, $1.5 million and $1.2 million for the years ended June 30, 1996, 1995 and 1994, respectively. 41 (10) REVENUES AND COSTS AND EXPENSES The components of revenues and costs and expenses:
In Thousands Year Ended June 30, --------------------------------------------------------------------------------------------------------- 1996 1995 1994 --------------------------------------------------------------------------------------------------------- Revenues: Homebuilding: Communities $ 794,671 $ 620,012 $ 405,462 Conventional 217,158 144,469 79,992 --------------------------------------------------------------------------------------------------------- Total homebuilding 1,011,829 764,481 485,454 Land sales 29,525 31,892 17,951 Other 9,379 6,746 6,656 --------------------------------------------------------------------------------------------------------- $ 1,050,733 $ 803,119 $ 510,061 ========================================================================================================= Costs and expenses: Home construction and land: Communities $ 597,014 $ 459,258 $ 301,570 Conventional 184,532 121,915 67,292 --------------------------------------------------------------------------------------------------------- Total homebuilding 781,546 581,173 368,862 Interest 42,354 31,205 18,003 Cost of land sales 23,227 28,847 14,197 Other cost of sales 3,215 4,827 3,140 Selling, general and administrative 147,315 113,235 79,673 Loss from impairment of southern California real estate inventories 65,000 - - --------------------------------------------------------------------------------------------------------- $ 1,062,657 $ 759,287 $ 483,875 =========================================================================================================
(11) INTEREST The following table shows the components of interest:
In Thousands Year Ended June 30, --------------------------------------------------------------------------------------------------------- 1996 1995 1994 --------------------------------------------------------------------------------------------------------- Interest incurred $ 52,022 $ 46,641 $ 33,677 Less capitalized interest 52,022 46,641 33,677 --------------------------------------------------------------------------------------------------------- Interest expense $ - $ - $ - ========================================================================================================= Amortization of capitalized interest in costs and expenses $ 42,354 $ 31,205 $ 18,003 ========================================================================================================= Unamortized capitalized interest included in real estate inventories at year end $ 43,661 $ 55,793 $ 40,357 ========================================================================================================= Interest income $ 1,017 $ 581 $ 1,056 =========================================================================================================
Unamortized capitalized interest included in real estate inventories at June 30, 1996 has been reduced by $21.8 million, the portion of the non-cash loss from impairment of southern California real estate inventories allocated to unamortized capitalized interest (see Note 12). 42 (12) IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES In March 1995 the Financial Accounting Standards Board issued SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The Company adopted this new standard in fiscal 1996. In connection with its adoption of SFAS No. 121, the Company incurred a non-cash loss from impairment of southern California real estate inventories in the amount of $65.0 million ($42.3 million after tax) related to the valuation of its Sun City Palm Desert active adult community (see Note 1). In the first six months of fiscal 1996, net new orders at Sun City Palm Desert were substantially below both the comparable period of the prior fiscal year and the Company's expectations. Although the Company was encouraged by net new orders significantly greater in the first 45 days of the third quarter of fiscal 1996 than in the comparable period in the prior fiscal year, a lower than anticipated level of net new orders was expected in the remainder of fiscal 1996 and net new orders for all of fiscal 1996 were anticipated to be lower than in prior fiscal years. Additionally, a national home builder is developing an active adult community near Sun City Palm Desert, which will cause additional competitive pressures at that community. Based on these and other factors, the Company reduced its estimate with respect to net new orders and closings in the fiscal years ending June 30, 1997 and beyond to below the levels achieved in the three fiscal years ended June 30, 1995. This resulted in expected future net cash flows (undiscounted and without interest charges) at Sun City Palm Desert being less than the book value of the asset. As required by SFAS No. 121, the Company therefore recorded in fiscal 1996 a non-cash loss from impairment of southern California real estate inventories to reflect Sun City Palm Desert at its estimated fair value. Fair value was estimated based upon an evaluation of comparable market prices and discounted expected future cash flows. (13) CONTINGENT LIABILITIES AND COMMITMENTS The Company is a party to various legal proceedings arising in the ordinary course of business. While it is not feasible to predict the ultimate disposition of these matters, it is the opinion of management that their outcome will not have a material adverse effect on the financial condition of the Company. The Company has issued surety bonds, guarantees and standby letters of credit aggregating $139.4 million at June 30, 1996. The Company leases from third parties, under operating leases, office space, apartment units which it rents to prospective customers at its active adult communities, automobiles and certain other equipment. The leases are generally renewable at the Company's option for additional periods. Total rent expense incurred by the Company was $6.9 million, $4.8 million and $3.7 million for the years ended June 30, 1996, 1995 and 1994, respectively. Minimum lease payments (in thousands) to be made by the Company under non-cancelable lease agreements are as follows: 1997 $ 5,153 1998 3,702 1999 1,624 2000 1,555 2001 1,644 Later years 5,115 ---------------- $ 18,782 =============== 43 (14) QUARTERLY FINANCIAL INFORMATION (Unaudited) Quarterly financial information for the years ended June 30, 1996 and 1995 is presented below. The sum of the individual quarterly data may not equal the annual data due to rounding and fluctuations in weighted average shares outstanding on a quarter-to-quarter basis.
In Thousands Except Per Share Data Three Months Ended ---------------------------------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, 1996 1996 1995 1995 ---------------------------------------------------------------------------------------------------------- Revenues $ 348,942 $ 256,014 $ 239,459 $ 206,318 Net earnings (loss) 11,945 (35,385) 9,155 6,534 Net earnings (loss) per share .67 (2.02) .51 .39 ---------------------------------------------------------------------------------------------------------- June 30, March 31, December 31, September 30, 1995 1995 1994 1994 ---------------------------------------------------------------------------------------------------------- Revenues $ 268,796 $ 195,383 $ 176,058 $ 162,882 Net earnings 9,580 6,995 6,609 5,307 Net earnings per share .62 .46 .44 .35 ----------------------------------------------------------------------------------------------------------
The net loss in the quarter ended March 31, 1996 resulted from the non-cash loss from impairment of southern California real estate inventories related to the valuation of the Company's Sun City Palm Desert active adult community (see Note 12). 44 DEL WEBB CORPORATION AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS ----------- Years ended June 30, 1996, 1995 and 1994
In Thousands - -------------------------------------------------------------------------------------------------------------------- Additions Additions Balance at Charged to Charged to Beginning of Costs and Other Balance at Classification Year Expenses Accounts Deductions End of Year - -------------------------------------------------------------------------------------------------------------------- 1996 - ---- Reserve for residential land development project $ 8,264 $ - $ - $ 1,138 $ 7,126 Deferred tax asset valuation allowance 3,862 - - - 3,862 Reserves for disposal costs of discontinued operations 27,855 - - 15,646 12,209 - -------------------------------------------------------------------------------------------------------------------- $ 39,981 $ - $ - $ 16,784 $ 23,197 ==================================================================================================================== 1995 - ---- Reserve for residential land development project $ 6,738 $ 1,526 $ - $ - $ 8,264 Deferred tax asset valuation allowance 6,606 - - 2,744 3,862 Reserves for disposal costs of discontinued operations 29,155 - - 1,300 27,855 - -------------------------------------------------------------------------------------------------------------------- $ 42,499 $ 1,526 $ - $ 4,044 $ 39,981 ==================================================================================================================== 1994 - ---- Reserve for residential land development project $ 7,710 $ - $ - $ 972 $ 6,738 Deferred tax asset valuation allowance 7,721 - - 1,115 6,606 Reserves for disposal costs of discontinued operations 32,314 - - 3,159 29,155 - -------------------------------------------------------------------------------------------------------------------- $ 47,745 $ - $ - $ 5,246 $ 42,499 ====================================================================================================================
45 DEL WEBB CORPORATION Report on Form 10-K For The Year Ended June 30, 1996 10-K EXHIBIT INDEX ------------------ NON-FINANCIAL STATEMENT EXHIBITS -------------------------------- Exhibit Number ------ 3.0 Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 99.0 to Registrant's Report on Form 10-Q for the quarter ended September 30, 1994. 3.1 The Bylaws of the Registrant effective November 1, 1994; as amended on February 13, 1996. 4.1 Indenture dated as of April 15, 1992 between Registrant and United States Trust Company of New York, as Trustee, defining the rights of holders of the 10 7/8% Senior Notes due 2000, incorporated by reference to Registration Statement No. 33-45703. 4.2 Indenture dated as of March 8, 1993 between Registrant and Fidelity Trust Company, New York, as Trustee, defining the rights of the holders of the 9 3/4% Senior Subordinated Debentures due 2003, incorporated by reference to Registration Statement No. 33-56898. 4.3 Indenture dated as of February 4, 1994, between Registrant and The Bank of New York, as Trustee, defining the rights of the holders of the 9% Senior Subordinated Debentures due 2006 incorporated by reference to Registration Statement No. 33-68732. 10.1 Sample Change of Control Agreement between Registrant and certain of its officers with schedule setting forth the differences. 10.2 Employment and Consulting Agreement dated July 10, 1996, between the Registrant and Philip J. Dion. 10.6 Office Lease Agreement between Western Plaza Investors, L.P. and Registrant dated April 20, 1994 incorporated by reference to Registrant's Report on Form 10-K for the year ended June 30, 1994; as amended by the First Amendment to Lease dated February 29, 1996. 10-K Exhibit Index Page - 2 10.7 Del Webb Corporation Deferred Compensation Plan effective June 1, 1993, incorporated by reference to Exhibit 10.7 to Registrant's Report on Form 10-K for the year ended June 30, 1993. 10.8 Key Executive Life Insurance Plan II dated April 1, 1992, incorporated by reference to Exhibit 10.8 to Registrant's Report on Form 10-K for the year ended June 30, 1992; as amended November 8, 1994. 10.9 Key Executive Life Insurance Plan dated May 15, 1991, incorporated by reference to Exhibit 10.10 to Registrant's Report on Form 10-K for the year ended June 30, 1991; as amended November 18, 1994. 10.10 Del Webb Corporation Executive Long-Term Incentive Plan adopted November 20, 1991, incorporated by reference to Registrant's Report on Form 10-K for the year ended June 30, 1992; and First Amendment to the Executive Long-Term Incentive Plan dated June 30, 1993, incorporated by reference to Exhibit 10.10 to Registrant's Report on Form 10-K for the year ended June 30, 1993. 10.11 Del Webb Corporation 1993 Executive Long Term Incentive Plan dated March 17, 1994, incorporated by reference to Exhibit 10.11 to Registrant's Report on Form 10-K for the year ended June 30, 1994. 10.12 Del Webb Corporation Management Incentive Plan Fiscal 1996 (July 1, 1995 - June 30, 1996). 10.13 Del Webb Corporation Supplemental Executive Retirement Plan No. 1, as amended and restated April 20, 1993, incorporated by reference to Exhibit 10.12 to Registrant's Report on Form 10-K for the year ended June 30, 1993; as amended by First Amendment to the Del Webb Corporation Supplemental Executive Retirement Plan No. 1 effective July 1, 1995, incorporated by reference to Exhibit 10.13 to Registrant's Report on Form 10-K for the year ended June 30, 1995. 10.14 Del Webb Corporation Director Stock Plan dated November 20, 1991, incorporated by reference to Exhibit 10.13 to Registrant's Report on Form 10-K for the year ended June 30, 1993. 10.15 Amended and Restated Revolving Loan Agreement by and among Del Webb Corporation and Bank of America National Trust and Savings Association as Agent, and Bank One Arizona, NA, as Co-Agent, dated 10-K Exhibit Index Page - 3 June 27, 1995; as amended by the Second Amendment to the Amended and Restated Revolving Loan Agreement effective July 22, 1996. 10.16 Del Webb Corporation Supplemental Executive Retirement Plan No. 2, as amended and restated April 20, 1993, incorporated by reference to Exhibit 10.16 to Registrant's Report on Form 10-K for the year ended June 30, 1993; as amended by First Amendment to the Del Webb Corporation Supplemental Executive Retirement Plan No. 2 effective July 1, 1995, incorporated by reference to Exhibit 10.16 to Registrant's Report on Form 10-K for the year ended June 30, 1995. 10.17 Senior Officer Medical and Dental Reimbursement Plan, as amended and restated November 16, 1992, incorporated by reference to Exhibit 10.17 to Registrant's Report on Form 10-K for the year ended June 30, 1993. 10.18 1981 Stock Option Plan, as amended October 29, 1981; as amended January 29, 1987, as amended by the Third Amendment to the Del Webb Corporation 1981 Stock Option Plan dated June 30, 1993. 10.19 1986 Stock Option and SAR Plan of the Del Webb Corporation, as amended January 27, 1987; as amended by the Second Amendment to the 1986 Stock Option and SAR Plan dated June 30, 1993. 10.22 Del Webb Corporation Retirement Savings Plan Amended and Restated effective January 1, 1995, incorporated by reference to Exhibit 10.22 to Registrant's Report on Form 10-K for the year ended June 30, 1995; as amended by the First Amendment to the Retirement Savings Plan for the Employees of Del Webb Corporation effective as of January 1, 1996. 10.23 Del E. Webb Corporation Umbrella Trust dated June 11, 1987, as amended by Amendment Number One to the Del Webb Corporation Umbrella Trust dated February 8, 1989, and Amendment Number Two to Del Webb Corporation Umbrella Trust dated March 14, 1990. 10.24 Sample Directors and Officers Indemnification Agreement between Registrant and its directors and officers dated February 1, 1995 incorporated by reference to the Registrant's Report on Form 10-Q for the quarter ended March 31, 1995. 10.25 Del Webb Corporation 1995 Executive Long-Term Incentive Plan adopted July 13, 1995, incorporated by reference to Exhibit 10.25 to Registrant's 10-K Exhibit Index Page - 4 Report on Form 10-K for the year ended June 30, 1995. 10.26 Del Webb Corporation 1995 Director Stock Plan adopted July 13, 1995, incorporated by reference to Exhibit 10.26 to Registrant's Report on Form 10-K for the year ended June 20, 1995. 10.27 Del Webb Corporation 1995 Executive Management Incentive Plan adopted July 13, 1995, incorporated by reference to Exhibit 10.27 to Registrant's Report on Form 10-K for the year ended June 30, 1995. 10.28 Del Webb Corporation Management Incentive Plan Fiscal 1997 (July 1, 1996 - June 30, 1997). 10.29 Amended and Restated Certificate and Agreement of Limited Partnership of New Mexico Asset Limited Partnership effective June 18, 1996. 10.30 Supplemental Executive Retirement Plan No. 1 Participation Agreement between the Registrant and Philip J. Dion Amended and Restated effective July 25, 1996. 10.31 1995/96 Executive Management Incentive Plan Award Agreement between the Registrant and Philip J. Dion dated August 8, 1995. 10.33 Key Executive Life Plan 1995 dated October 5, 1995. 10.34 Group Term Carve-Out Plan dated November 18, 1994. 10.32 Key Executive Life Plan Plus dated August 23, 1995. 21.0 List of Active Subsidiaries and Associated Companies of Registrant. 23.0 Consent of Experts. 27 Financial Data Schedule. EX-3.1 2 BY-LAWS OF DEL WEBB CORPORATION Exhibit 3.1 BY-LAWS OF DEL WEBB CORPORATION (the "Corporation") (Effective November 1, 1994) ARTICLE 1 OFFICES ------- Section 1.1 Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 1.2 Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors or the officers may from time to time determine. ARTICLE 2 MEETINGS OF STOCKHOLDERS ------------------------ Section 2.1 Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2.2 Annual Meetings. The Annual Meetings of Stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote members of the Board of Directors in the class whose term shall expire at such Annual Meeting, and transact such other business as may properly be brought before the meeting. Written notice of the Annual Meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 2.3 Special Meetings. Unless otherwise prescribed by law or by the Certificate of Incorporation, Special Meetings of Stockholders, for any purpose or purposes, may be called by either the Chairman or the President and shall be called by either such officer at the request in writing of a majority of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. Written notice of a Special Meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 2.4 Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given not less than ten nor more than sixty days before the date of the adjourned meeting to each stockholder entitled to vote at the meeting. Section 2.5 Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-Laws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in such officer's discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 2.6 List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stock holder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. Section 2.7 Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by 2 Section 2.6 or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. Any good faith decision in regard to such matters by the officer of the Corporation who has charge of the stock ledger of the Corporation, which may be the Secretary, any Assistant Secretary or any other appropriate officer of the Corporation, shall be final. Section 2.8 Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders (a) by or at the direction of the Board of Directors (or any duly authorized commit tee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.8 and on the record date for the determination of stockholders entitled to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.8. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company (a) in the case of an Annual Meeting, not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a 3 representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relat ing to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. Notwithstanding compliance with the foregoing provisions, the Board of Directors shall not be obligated to include information as to any stockholder nominee for director in any proxy statement or other communication sent to stockholders. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2.8. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. Section 2.9 Business at Annual Meetings. No business may be transacted at an Annual Meeting of Stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.9 and on the record date for the determination of stockholders entitled to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 2.9. In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the Annual Meeting (i) a brief 4 description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting. No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.9, provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.9 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. ARTICLE 3 DIRECTORS --------- Section 3.1 Election of Directors. Directors shall be elected by a plurality of the votes cast at Annual Meetings of Stockholders. Any director may resign at any time upon notice to the Corporation. Directors need not be stockholders. Section 3.2 Duties and Powers. The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders. Section 3.3 Meetings. The Board of Directors of the Corporation may hold meetings both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman or the President or by a majority of the directors then in office. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight hours before the date of the meeting, by telephone, facsimile or telegram on twenty-four hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. 5 Section 3.4 Quorum. Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these By-Laws, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 3.5 Actions of Board. Unless otherwise provided by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 3.6 Meetings by Means of Conference Telephone. Unless otherwise provided by the Certificate of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.6 shall constitute presence in person at such meeting. Section 3.7 Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unani mously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. A majority of the members of a committee, including any alternate members, shall constitute a quorum of such committee. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corpora tion. Each committee shall keep regular minutes and report to the Board of Directors when required. Section 3.8 Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like 6 compensation for attending committee meetings. In addition, the Board of Directors may adopt one or more director compensation plans using securities of the Corporation. Section 3.9 Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because such director's vote is counted for such purpose if (i) the material facts as to such director's relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the dis interested directors be less than a quorum; or (ii) the material facts as to such director's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE 4 OFFICERS -------- Section 4.1 General. The officers of the Corporation shall be chosen by the Board of Directors and may include a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors (who must be a director) and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation. The officers of the Corporation may sign and execute documents on behalf of the Corporation, whether requiring a seal or otherwise, when authorized by these By-Laws, the Board of Directors, the Chairman or President. Section 4.2 Election. The Board of Directors at its first meeting held after each Annual Meeting of Stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. 7 Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors or by a committee thereof. Section 4.3 Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman, President or any Vice President and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. Section 4.4 Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Direc tors. The Chairman shall be the Chief Executive Officer of the Corporation, and except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as from time to time may be assigned to the Chairman by these By-Laws or by the Board of Directors. All officers of the Corporation shall be under the supervision of the Chairman, if there be one, and shall perform all such duties as shall be assigned by the Chairman. Section 4.5 President. The President, if there shall be one, shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the President shall preside at all meetings of the stockholders and the Board of Directors. If there be no Chairman of the Board of Directors, the President shall be the Chief Executive Officer of the Corporation. The President shall also perform such other duties and may exercise such other powers as from time to time may be assigned to the President by these ByLaws, by the Board of Directors or by the Chairman. Section 4.6 Vice Presidents. At the request of the President or in the President's absence or in the event of the President's inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the President, and 8 when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice Presi dent shall perform such other duties and have such other powers as the Board of Directors, Chairman and/or the President from time to time may prescribe. Section 4.7 Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when requested or appropriate. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, Chairman or President. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation, if there is one, and the Secretary or any Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by such officer's signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. Section 4.8 Treasurer. The Treasurer shall supervise the maintenance of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors or Chairman. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, Chairman or President for such disbursements, and shall render to the Chairman, President and the Board of Directors, at its regular meetings, or when the Board of Directors or Chairman so requires, an account of all transactions as Treasurer and of the financial condition of the Corporation. The Treasurer shall perform such other duties and have such powers as the Board of Directors, Chairman and/or President from time to time may prescribe. If required by the Board of Directors or Chairman, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors or Chairman for the faithful performance of the duties of such office and for the restoration to the Corporation, in case of the Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Treasurer's possession or under such officer's control belonging to the Corporation. Section 4.9 Assistant Secretaries. Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chairman, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of such officer's disability or 9 refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. Section 4.10 Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chairman, the President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of such officer's disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors or Chairman, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors or Chairman for the faithful performance of the duties of such officer's office and for the restoration to the Corporation, in case of the Assistant Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in such officer's possession or under such officer's control belonging to the Corporation. Section 4.11 Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, Chairman, or President. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE 5 STOCK ----- Section 5.1 Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chairman of the Board of Directors, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such holder in the Corporation. Section 5.2 Signatures. Where a certificate is countersigned by (i) a transfer agent other than the Corporation or its employee, or (ii) a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Section 5.3 Lost Certificates. The Secretary may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the 10 certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Secretary may, in such officer's discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owner's legal representative, to advertise the same in such manner as the Secretary shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 5.4 Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person's attorney lawfully consti tuted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued. Section 5.5 Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 5.6 Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law. ARTICLE 6 STOCK REPURCHASES ----------------- Section 6.1 In addition to any affirmative vote of stockholders required by any provision of law or the Certificate of Incorporation of this Corporation or by these By-Laws, the Corporation shall not, directly or indirectly, purchase or agree to purchase any equity security of a class of securities which is registered pursuant to Section 12 of the Exchange Act issued by the Corporation from any Person or two or more Persons who act as a partnership, limited partnership, syndicate, or other group pursuant to any agreement, arrangement, relationship, understanding, or otherwise, whether or not in writing, for the purpose of acquiring, owning, 11 or voting shares of the Corporation, who is the Beneficial Owner of more than five percent of the aggregate voting power of the Corporation for more than the Average Market Price of the shares, unless (i) the purchase or agreement to purchase is approved at a meeting of the stockholders by the affirmative vote of the holders of a majority of the aggregate voting power of all shares entitled to vote, except that no Interested Shares shall be entitled to vote on the question of such approval or (ii) the Corporation makes an offer of at least equal value per share to all holders of shares of the same class or series and to all holders of any class or series into which the securities may be converted. For purposes of this By-Law, the following definitions apply: 6.1.1. "Average Market Price" shall mean the average closing sale price during the thirty trading days immediately preceding the purchase of the share in question, or if the Person or Persons have commenced a tender offer or have announced an intention to seek control of the Corporation, during the thirty trading days preceding the earlier of the commencement of the tender offer or the making of the announcement, of a share on the composite tape for New York stock ex change listed shares or, if the shares are not quoted on the composite tape or not listed on the New York stock exchange, on the principal United States securities exchange registered under the Exchange Act on which the shares are listed or, if the shares are not listed on any such exchange, on the national association of securities dealers, inc. automated quotations national market system or, if the shares are not quoted on the national association of securities dealers, inc. automated quotations national market system, the average closing bid quotation, during the thirty trading days preceding the purchase of the shares in question of a share on the national association of securities dealers, inc. automated quotations system or any system then in use, or if the Person or Persons have commenced a tender offer or have announced an intention to seek control of the Corporation, during the thirty trading days preceding the earlier of the commencement of the tender offer or the making of the announcement, except that if no quotation is available, the average market price is the fair market value on the date of purchase of the shares in question of a share as determined in good faith by the Board of Directors of the Corporation. 6.1.2. "Beneficial Owner" shall have the meaning ascribed to it in Rule 13d-3 and Rule 13d-5 of the General Rules and Regulations under the Exchange Act, as in effect on June 30, 1994. 6.1.3. "Interested Shares" shall mean all outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors that are beneficially owned by any Person or Persons that is the direct or indirect Beneficial Owner of more than five percent of the aggregate voting power of the Corporation. 6.1.4. "Person" shall mean any individual, partnership, firm, corporation, association, trust, unincorporated organization, or other entity,as well as any syndicate or group 12 deemed to be a Person pursuant to Section 13(d)(3) of the Exchange Act, as in effect on June 30, 1994, other than the Corporation or any subsidiary of the Corporation. ARTICLE 7 NOTICES ------- Section 7.1 Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person's address as it appears on the records of the Corporation, with postage thereon prepaid or such notice may be given personally, by facsimile, overnight delivery, telegram, telex, or cable at such address. Such notice shall be deemed to be given at the earlier of receipt of such notice or at the time when the same shall be deposited in the United States mail or otherwise transmitted. Section 7.2 Waivers of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE 8 GENERAL PROVISIONS ------------------ Section 8.1 Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property, or in shares of the capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves for any proper purpose, and the Board of Directors may modify or abolish any such reserve. Section 8.2 Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 8.3 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 8.4 Corporate Seal. The Corporation may have a corporate seal, which shall have inscribed thereon the words "Corporate Seal". The seal may be used by causing it 13 or a facsimile thereof to be impressed or affixed or reproduced or otherwise. However, nothing in these By-Laws or in the Certificate of Incorporation of the Corporation shall be construed to require a corporate seal to be affixed to any document. ARTICLE 9 AMENDMENTS ---------- Section 9.1 These By-Laws may be altered, amended or repealed, in whole or in part, or new By-Laws may be adopted by the stockholders or by the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of stockholders or Board of Directors as the case may be. All such amendments must be approved by either the holders of a majority of the outstanding capital stock entitled to vote thereon or by a majority of the entire Board of Directors then in office. Section 9.2 Entire Board of Directors. As used in this Article and in these By-Laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. I hereby certify that the above and foregoing Bylaws are a true and correct copy of the Bylaws of Del Webb Corporation, adopted effective November 1, 1994. /s/ Donald V. Mickus --------------------------- Donald V. Mickus, Secretary 14 SECRETARY'S CERTIFICATE ----------------------- I, Robertson C. Jones, do hereby certify that I am the duly elected, qualified and acting Assistant Secretary of Del Webb Corporation, an Delaware corporation, and as such Assistant Secretary have access to all the original records and books of said Corporation and that the following is a true and correct copy of a resolution adopted by the Executive Committee of the Board of Directors by unanimous written consent effective February 13, 1996, and that such resolution has not been modified or rescinded and remains in full force and effect: WHEREAS, the Company is currently an "issuing public corporation" within the meaning of Section 10-2701(11) of the Arizona Revised Statutes; and WHEREAS, Section 10-2721(A)(5) of the Arizona Revised Statutes allows an issuing public corporation to elect not to be subject to Title 10, Chapter 23, Article 2 of the Arizona Revised Statutes, relating to "Control Share Acquisitions," if such election is contained in the corporation's bylaws and is made within forty-five days of the effective date of Section 10-2721 of the Arizona Revised Statutes; NOW, THEREFORE, BE IT RESOLVED, Article 8, Section 8.5 of the Company's Bylaws is hereby added as follows: SECTION 8. ELECTION NOT TO BE SUBJECT TO ARIZONA CONTROL SHARE ACQUISITION STATUTE. The Corporation elects not to be subject to Title 10, Chapter 23, Article 2 of the Arizona Revised Statutes, relating to "Control Share Acquisitions. IN WITNESS WHEREOF, I have hereunto set my hand as the Assistant Secretary of the Corporation on the 20th day of February, 1996. /s/ Robertson C. Jones --------------------------------------- Robertson C. Jones, Assistant Secretary EX-10.1 3 SAMPLE CHANGE OF CONTROL AGREEMENT Exhibit 10.1 Sample Change of Control Agreement Date Name Address Dear _____: The Board of Directors of Del Webb Corporation (the "Corporation") and the Human Resources Committee (the "Committee") of the Board have determined that it is in the best interest of the Corporation and its shareholders for the Corporation to agree, as provided herein, to pay you termination compensation in the event you should leave the employ of the Corporation or a Subsidiary under the circumstances described below. Reference in this letter to your employment by or with the Corporation shall be deemed to include employment by or with a Subsidiary. The Board and Committee recognize that the continuing possibility of a change in the control of the Corporation is unsettling to you and other senior executives of the Corporation. Therefore, these arrangements are being made to help assure a continuing dedication by you to your duties to the Corporation notwithstanding the occurrence or potential occurrence of a change in control. In particular, the Board and the Committee believe it important, should the Corporation receive proposals from third parties with respect to its future, to enable you, without being influenced by the uncertainties of your own situation, to assess and to take such other action regarding such proposals as the Board might determine to be appropriate. The Board and the Committee also wish to demonstrate to executives of the Corporation and its Subsidiaries that the Corporation is concerned with the welfare of its executives and intends to see that loyal executives are provided with the benefits stated herein. In view of the foregoing and in further consideration of your continued employment with the Corporation, the Corporation agrees with you as follows: 1. Limited Right to Receive Severance Benefits. In the event that within twenty-four (24) months after a change of control of the Corporation (as defined herein) your employment with the Corporation is terminated, you shall be entitled to the severance benefits provided in Section 3 hereof unless: Name - 2 - Date (a) at that time your employment is terminated by the Corporation, you have a written employment contract with the Corporation extending at least _______ months from the date written Notice of Termination is given you and the Corporation acknowledges its breach of that agreement and offers you, in cash, an amount equal to all future payments called for thereunder, plus all other damages suffered by you as a result of such termination; or (b) such termination is (i) because of your death or retirement, (ii) by the Corporation for cause or your permanent disability, or (iii) by you, other than for good reason in accordance with Section 2(e) hereof. 2. Certain Definitions. For purposes of this Agreement: ------------------- (a) Change in Control. "Change in control of the Corporation" shall mean a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended ("Exchange Act"); provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing twenty-five percent (25%) or more of the combined voting power of the Corporation's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors, or (ii) within two (2) years of a tender offer or exchange offer for the voting stock of the Corporation (other than by the Corporation) or as a result of a merger, consolidation, sale of assets or contested election or any combination of the foregoing, the persons who were directors of the Corporation immediately prior thereto shall cease to constitute a majority of the Board of Directors of the Corporation or of its successor by merger, consolidation or sale of assets. (b) Retirement. Termination by the Corporation or you of your employment based on "Retirement" shall mean (i) voluntary retirement by you from active full-time employment with any person or corporation on and after the attainment of sixty-five (65) years, (ii) voluntary separation because of retirement from active employment in accordance with the Corporation's retirement policy in effect as of the date of Change in Control (including early retirement at your option) generally applicable to its salaried employees, or (iii) in accordance with any written retirement policy established by the Corporation for you with your written consent. Name - 3 - Date (c) Permanent Disability. If, as a result of your incapacity due to physical or mental illness, you shall have been absent from your duties with the Corporation or a Subsidiary on a full-time basis for six (6) months or more and you apply for and are approved for long-term disability payments under the Corporation's long-term disability plan, the Corporation may terminate this Agreement for "Permanent Disability". Notwithstanding the foregoing, this Agreement may not be terminated pursuant to this Section 2(c) unless the incapacity giving rise to such Permanent Disability occurs prior to the occurrence of an event which might cause amounts to be payable to you under this Agreement. Once payments have begun pursuant to any provision of this Agreement, this Agreement may not be terminated pursuant to this Section 2(c) and such payment shall not cease or diminish on account of your Permanent Disability. (d) Cause. The Corporation shall have "Cause" to terminate your employment upon (i) the breach by you of any employment contract between you and the Corporation, or (ii) the adjudication that you are bankrupt, or (iii) your conviction of a felony or crime involving moral turpitude (meaning a crime that necessarily includes the commission of an act of gross depravity, dishonesty or bad morals). (e) Good Reason. You may terminate your employment for Good Reason, and receive the benefits provided in Section 3 hereof, only if you do so within one hundred twenty (120) days following the occurrence of any of the events specified in (i)-(iv) below. Termination of your employment by you for "Good Reason" shall mean: (i) without your express written consent, the assignment to you of any duties that are inconsistent with your positions, duties, responsibilities and status with the Corporation immediately prior to a Change in Control, or a demotion, or a change in your titles or offices as in effect immediately prior to a Change in Control, or any removal of you from or any failure to re-elect you to any of such positions, except in connection with the termination of your employment for Cause, Permanent Disability or as a result of your death or by other than for Good Reason; (ii) a reduction by the Corporation in your base salary as in effect on the date hereof or as the same may be increased from time to time; Name - 4 - Date (iii) the failure by the Corporation to continue in effect any thrift, incentive or compensation plan, or any pension, life insurance, health and accident or disability plan in which you are participating at the time of a Change in Control of the Corporation (or plans providing you with substantially similar benefits), the taking of any action by the Corporation which would adversely affect your participation in or materially reduce your benefits under any of such plans or deprive you of any material fringe benefit enjoyed by you at the time of the change in control, or the failure by the Corporation to provide you with the number of paid vacation days to which you are then entitled on the basis of years of service with the Corporation in accordance with the Corporation's normal vacation policy in effect on the date hereof; (iv) you are assigned to, or the Corporation's office at which you are principally employed immediately prior to the date of the Change in Control of the Corporation are relocated to, a location which would require a round-trip commute to work from your present residence of more than one hundred twenty (120) miles per day: (v) the failure of the Corporation to obtain an agreement satisfactory to you from any successor to the business, or substantially all the assets, of the Corporation to assume this Agreement or issue a substantially similar agreement; (vi) your termination by the Corporation, purportedly for Cause, if it is thereafter determined that cause did not exist under this Agreement with respect to your termination. (f) Notice of Termination. Any termination by the Corporation or you shall be communicated by written notice to the other party ("Notice of Termination"). With respect to any termination by the Corporation for Cause, Retirement or Disability, or any termination by you for Good Reason, the Notice of Termination shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. (g) Subsidiary. "Subsidiary" shall mean any corporation, partnership, joint venture or other entity in which the Corporation has a twenty percent (20%) or greater equity interest. 3. Effect of Termination. If you are entitled to receive severance benefits pursuant to Section 1 hereof, such severance benefits shall be as follows: Name - 5 - Date (a) you will be entitled to a cash payment in lump sum (or, if you make an irrevocable election prior to a Change in Control, payable in equal semi- monthly installments without interest) equal to ___________ times the highest annual base salary in effect at any time during the twelve (12) months prior to the date the Notice of Termination is given ("Termination Salary"), plus an amount equal to the greater of the value of all bonuses paid to you during the twelve (12) month period prior to the giving of such Notice of Termination, or ________________ of the Termination Salary; (b) any stock options to purchase common stock of the Corporation or stock appreciation rights held by you on the date the Notice of Termination is given, which are not at that date currently exercisable, shall on that date automatically become exercisable; and be exercisable for three (3) months after termination of employment; (c) all shares of common stock of the Corporation held by you under the Corporation's Restricted Stock Plans which are still subject to restrictions on the date the Notice of Termination is given shall, as of that date, automatically become free of all restrictions; (d) a payment of twenty percent (20%) of your Termination Salary in lieu of fringe benefits. The Corporation shall be obligated to amend, if necessary, its Restricted Stock Plans and its plans pursuant to which you have been or may be granted stock options or stock appreciation rights, or grant instruments, to be consistent with Section 3(b) and 3(c) of this Agreement. Should you, at any time, take legal action, including arbitration, against the Corporation for breach of this Agreement, the Corporation shall reimburse you for all amounts spent by you to pursue such legal action, regardless of the outcome, unless a court of competent jurisdiction finds your action to have been frivolous and without merit. 4. Effect on Other Benefits. Except to the extent specified in Section 3 hereof, this Agreement shall not affect your participation in, distributions from and vested rights under any pension, profit sharing or other employee benefit plan of the Corporation or any of its Subsidiaries, which will be governed by the terms of those respective plans. Any forfeitures you experience under any pension, profit sharing or stock bonus plans due to your termination shall be paid to you by the Corporation in cash in the event any payment is made to you pursuant to Section 3. In the event that Name - 6 - Date on the date your employment with the Corporation is terminated (and provided you are entitled to severance benefits pursuant to Section 3 hereof) you are provided or are entitled to the use of an automobile under the Corporation's executive automobile policy, you shall have the use of such automobile for one (1) year after the date of such termination of employment, on terms no less favorable than those contained in such policy prior to such termination of employment. In addition, for a twelve (12) month period after any termination entitling you to benefits under Section 3 hereof, the Corporation shall arrange to provide you with life, disability, accident and group health benefits and coverages substantially similar to those which you were receiving immediately prior to the Notice of Termination. The cost to you of such coverage shall be not more than the cost to you of similar coverage immediately prior to the Notice of Termination. Your right to continued life, disability, accident and health benefits shall be in addition to and not in lieu of your rights under the Consolidated Omnibus Reconciliation Act of 1986 ("COBRA"). 5. Continuation of Employment. This Agreement shall not be construed to confer upon you any right to continue in the employ of the Corporation or the Operating Company, and shall not limit any right of the Corporation or the Operating Company to terminate your employment at any time in its sole discretion. 6. Entire Agreement. This Agreement supersedes all other agreements and understandings between us with respect to benefits due to you in connection with a Change in Control. In the event of the termination of your employment under circumstances entitling you to the termination payments hereunder, the arrangements provided for by this Agreement, together with any written employment contract between you and the Corporation and any applicable benefit plan of the Corporation or any of its subsidiaries in effect at the time (as modified by this Agreement), would constitute the entire obligation of the Corporation to you and performance thereof would constitute full settlement of any claim that you might otherwise assert against the Corporation on account of such termination. 7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of you, your estate and the Corporation and any successor of the Corporation, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by you. 8. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed by you and such officer as may be specifically designated by the Board of Directors of the Corporation. Name - 7 - Date No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Arizona. 9. Termination of this Agreement. Prior to a Change in Control of the Corporation, this Agreement may be unilaterally terminated by the Corporation upon twelve (12) months prior written notice to you. 10. Arbitration and Litigation. In the event that following a Change in Control of the Corporation, the Corporation terminates you by reason of your Permanent Disability or for Cause and you dispute the accuracy of such assertion of Permanent Disability or Cause, or in the event you terminate your employment for Good Reason, and the Corporation disputes the accuracy of such assertion of Good Reason, the accuracy of such assertion shall be submitted to arbitration in accordance with the then current commercial arbitration rules of the American Arbitration Association ("Association") or its successor, provided you or the Corporation file a written demand for arbitration at a regional office of the Association within thirty (30) calendar days following the date of termination. The Corporation shall continue to pay all benefits due to you under this Agreement during arbitration until a final, binding determination has been entered relieving the Corporation of its duty to provide benefits hereunder. In the event the Corporation shall elect to insure all or part of its liability for providing health and long-term disability benefits under this paragraph, you shall submit to such reasonable physical examination as the Company may request. Arbitration shall be the sole remedy hereunder and the decision of the arbitrator shall be final and binding. 11. Severability. If any one (1) or more of the provisions or parts of a provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity or enforceability shall not affect any other provision or part of a provision of this Agreement, but this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provisions or part thereof shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted by law. Any such reformation shall be read as narrowly as possible to give the maximum effect to our mutual intentions. Name - 8 - Date 12. Mitigation. In the event that your employment is terminated and payments become due pursuant to this Agreement, you shall have no duty to mitigate damages or to become re-employed by another employer. If you are in agreement with the foregoing, please so indicate by signing and returning to the Corporation the enclosed copy of this letter, whereupon this letter shall constitute a binding agreement between you and the Corporation in accordance with its terms. Very truly yours, PJD/sd Enclosure AGREED: _________________________________ Name Date: __________________________ ELECTION FOR RECEIPT OF INSTALLMENT PAYMENTS -------------------------------------------- Pursuant to the terms of the Change in Control Agreement dated ________, 19__ between Del Webb Corporation and the undersigned, I elect to have the payments due me under Section 3(a) of this letter agreement paid to me in equal semi-monthly installments over a period of eighteen (18) months. ________________________________ Name Date: _________________________ State of Arizona ) ) ss. County of Maricopa ) The foregoing instrument was acknowledged before me this _______ day of ____________________, 19___, by [Name]. My Commission Expires ________________. ___________________________________ Notary Exhibit 10.1 Sample Change of Control Agreements for certain officers. Schedule of differences: 1. Limited Right to Receive Severance Benefits. In the event that within twenty-four (24) months after a change of control of the Corporation (as defined herein) your employment with the Corporation in terminated, you shall be entitled to the severance benefits provided in Section 3 hereof unless: (a) at that time your employment is terminated by the Corporation,you have a written employment contract with the Corporation extending at least ________ months (see differences attached hereto as #1) from the date written Notice of Termination is given you and the Corporation acknowledges it s breach of that agreement and offers you, in cash, an amount equal to all future payments called for thereunder, plus all other damages suffered by you as a result of such termination; 3. Effect of Termination. If you are entitled to receive severance benefits pursuant to Section 1 hereof, such severance benefits shall be as follows: (a) you will be entitled to a cash payment in lump sum (or, if you make an irrevocable election prior to a Change in Control, payable in equal semi- monthly installments without interest) equal to __________ times (see differences attached hereto as #2) the highest annual base salary in effect at any time during the twelve (12) months prior to the date the Notice of Termination is given ("Termination Salary"), plus an amount equal to the greater of the value of all bonuses paid to you during the twelve (12) month period prior to the giving of such Notice of Termination, or __________ percent (see differences attached hereto as #3)of the Termination Salary; Contract OR PLUS Date of Extension Base Salary Bonus Name Agreement in Months (1) in Years (2) Computation (3) - ---- --------- ------------- ------------ --------------- John Spencer 5-20-88 24 2 35% Don Mickus 5-20-88 24 2 35% Frank Pankratz 5-20-88 18 1.5 40% LeRoy Hanneman 5-17-89 18 1.5 35% Anne Mariucci 5-20-88 18 1.5 35% Dave Rau 5-20-88 18 1.5 35% Chuck Roach 5-17-89 18 1.5 35% Dennis Wilkins 7-01-89 18 1.5 35% Jack Gleason 2-01-90 18 1.5 35% Joe Contadino 10-20-92 18 1.5 35% Rob Jones 11-16-92 18 1.5 35% Dave Schreiner 12-21-92 18 1.5 35% Lynn Schuttenberg 4-29-93 18 1.5 35% Bob Wagoner 1-26-94 18 1.5 35% John Murray 9-25-95 18 1.5 35% EX-10.2 4 EMPLOYMENT AND CONSULTING AGREEMENT Exhibit 10.2 EMPLOYMENT AND CONSULTING AGREEMENT ----------------------------------- This Employment and Consulting Agreement (the "Agreement") is entered into as of the 10th day of July, 1996 between DEL WEBB CORPORATION, a Delaware corporation (the "Company"), and PHILIP J. DION ("Dion"). 1. DEFINITIONS ----------- Throughout this Agreement, certain defined terms will be identified by the capitalization of the first letter of the defined word or the first letter of each substantive word in a defined phrase. Whenever used, these terms will be given the indicated meaning. 2. TERM OF AGREEMENT; DUTIES ------------------------- (a) Employment Period ----------------- The "Employment Period" shall begin on July 10, 1996 and end on November 30, 1999. During the Employment Period, Dion shall perform the duties of Chairman of the Board and Chief Executive Officer of Company. As Chief Executive Officer, Dion shall supervise and direct the entire operation of Company and, to the extent practicable, its "Subsidiaries". During the Employment Period, Dion also shall perform such additional duties related to the business and affairs of Company and its Subsidiaries as may be delegated to him from time to time by the Board of Directors of Company (the "Board"). Any additional duties delegated to Dion by the Board shall be consistent with Dion's position as Chief Executive Officer and Chairman of the Board and shall be of the type customarily assigned to the Chief Executive Officer and Chairman of the Board of a comparable corporation. For purposes of this Agreement, the term "Subsidiary" shall mean any corporation, partnership, joint venture, or other entity in which Company directly or indirectly has a 20% or greater equity interest. (b) Consulting Period ----------------- Dion's status as an "employee" of Company shall end on November 30, 1999, the last day of the Employment Period, unless this Agreement is terminated previously pursuant to the provisions hereof. If this Agreement has not been previously terminated, Dion shall become a part-time consultant to Company on December 1, 1999 and shall continue to serve as a part-time consultant to Company until November 30, 2001. The period beginning on December 1, 1999 and ending on November 30, 2001 shall be referred to as the "Consulting Period". During the Consulting Period, Dion shall serve as Chairman of the Board of Company if he is elected to the Board of Directors by the stockholders and is appointed as Chairman by the directors, in each case pursuant to Company's Bylaws. In such case, Dion shall perform the duties assigned to the Chairman of the Board by Company's Bylaws. If he is serving as a member of the Board of Directors during the Consulting Period Mr. Dion shall receive, in addition to the Consulting Fee set forth in Section 5, the same fees for attendance and committee assignments as other non-employee Board members; provided, that during the Consulting Period he shall not receive any additional fee for acting as Chairman of the Board. Regardless of whether Dion is serving as Chairman of the Board during the Consulting Period, Dion shall perform such additional or other duties as may be assigned to him by the Board as long as such duties are of the type customarily assigned to a retired Chief Executive Officer acting as a part-time consultant to a comparable corporation. Dion shall not be required to perform more than 600 hours of consulting services in either of the 12-month periods (December 1, 1999 to November 30, 2000 and December 1, 2000 to November 30, 2001) included in the Consulting Period. The Consulting Period shall not commence and Dion shall not be a consultant if this Agreement is terminated prior to December 1, 1999 pursuant to the provisions hereof. The Consulting Period may be extended for an additional one-year period on such terms and conditions as the parties may agree to. (c) Board Nomination ---------------- Company will recommend to the Nominating Committee that Dion be submitted to the stockholders as a Board candidate following the expiration of his term on the Board that begins in calendar year 1996. Dion's nomination will be left to the discretion of the Nominating Committee, which shall act in a manner that it deems to be in the best interests of Company's stockholders. As provided in Section 11(b)(1), if Dion is not nominated and elected to the Board, or is elected to the Board but not the Chairmanship, he shall have Good Reason to terminate this Agreement. (d) General ------- Dion agrees that at all times during both the Employment Period and the Consulting Period he will faithfully, industriously, and to the best of his ability, experience, and talents, perform all of the duties that may be required of and from him and fulfill all of his responsibilities hereunder pursuant to the express and explicit terms hereof, to the reasonable satisfaction of the Board. Dion also agrees that during the Employment Period, he will devote substantially all of his undivided time, attention, knowledge, and skills, during customary business hours, to the business and interests of Company, subject to such reasonable vacations and sick leave as are provided under the general policies of Company as they may exist from time to time and consistent with past practice. During the Employment Period, Dion also shall maintain his residence at a location within the city or in or near a suburban community of the city in which the executive offices of Company are located. 3. DEATH BENEFIT ------------- In addition to any other benefits to which Dion may become entitled pursuant to any plan or program sponsored by Company, if this Agreement is terminated during the Employment Period by reason of the death of Dion, Dion's widow or, if she shall not survive him, his estate shall be paid at -2- the rate of Dion's "Base Salary" (as determined pursuant to Section 4) as in effect at the time of his death for a period of 12 calendar months following the date of his death. 4. COMPENSATION FOR EMPLOYMENT PERIOD ---------------------------------- Dion shall receive the following compensation for services during the Employment Period. (a) Base Salary ----------- Dion shall receive "Base Salary" during the Employment Period at the rate of $500,000 per year. Base Salary shall be payable as nearly as possible in equal bi-weekly installments. The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executive officers, but it may not be reduced below the Base Salary provided above. (b) Incentive and Benefit Plans --------------------------- During the Employment Period, Dion shall participate in any incentive compensation plans, pension or profit sharing plans, stock purchase plans, executive retirement plans, any annuity or group benefit plans and any medical plans and other benefit plans that are now or in the future may be maintained by Company for its executive officers, all in accordance with the terms and conditions of the plans. Dion shall not be entitled to participate in these plans during the Consulting Period except to the extent that Dion's participation is continued pursuant to other provisions of this Agreement (e.g., Section 6) because of the circumstances pursuant to which his employment is terminated. During the Employment Period (but not the Consulting Period), Company will provide Dion with an automobile and an active membership in a country club of Dion's choice in accordance with the policies and practices applicable to the Chief Executive Officer. The automobile and country club policies for executive officers may be modified from time to time, but no reduction in the level of benefits provided or expenses reimbursed will apply to Dion in the absence of his consent. At the conclusion of the Employment Period, Dion shall retain the country club membership in his name and shall be responsible for dues and other expenses associated therewith. 5. CONSULTING FEE -------------- Dion shall receive a "Consulting Fee" of $200,000 per year during the Consulting Period. The Consulting Fee shall be payable as nearly as possible in equal bi-weekly installments or in such other installments as Company and Dion may agree. Except as provided elsewhere in this Agreement, the Consulting Fee is the only compensation to which Dion will be entitled for services rendered during the Consulting Period. The Consulting Fee will represent a payment for services rendered by an independent contractor and will not be subject to withholding or employment taxes. -3- 6. RETIREE MEDICAL COVERAGE ------------------------ If Dion's employment is continued until the expiration of the Employment Period, or if Dion's employment is terminated prior to the expiration of the Employment Period by Company without Cause pursuant to Sections 10 or 12 or by Dion for Good Reason pursuant to Sections 11 or 12, Dion also shall be entitled to continued coverage under any and all health plans sponsored by Company for the benefit of its executive level employees (the "Executive Health Plans"), with such coverage to continue until the later of the death of Dion or his spouse. The coverage afforded to Dion and his spouse under the Executive Health Plans and the premiums they will be required to pay shall be the same as the coverage afforded to and the premiums charged to any active executive level employee, provided that the benefits may be reduced by any benefits payable pursuant to Part A or Part B of Medicare or any replacement national or state health care program (all of which programs are collectively referred to as "Medicare"). After Dion becomes eligible for Medicare coverage, in lieu of the continued coverage of Dion under the Executive Health Plans, Company may, at its expense, purchase a Medicare supplement for Dion, with such Medicare supplement to provide the best coverage available under any Medicare supplement generally available in the location in which Dion resides; provided, however, that Company may elect to provide a Medicare supplement other than the best available supplement as long as such supplement provides Dion (when combined with the coverage afforded to Dion by Medicare) with coverage reasonably comparable to the coverage offered to executive level employees under the Executive Health Plans. If Dion becomes eligible to receive Medicare coverage prior to the date on which Dion's spouse becomes eligible to receive Medicare coverage, Dion's spouse shall continue to receive coverage under Company's Executive Health Plans until she, too, is eligible for Medicare coverage, at which point Company may purchase a Medicare supplement for Dion's spouse on the same terms set forth above for Dion. Notwithstanding anything in this Section to the contrary, Company will exert its best efforts to assure that any coverage afforded to Dion and his spouse pursuant to this Section under the Executive Health Plans or any Medicare supplement allows Dion and his spouse to choose their own physicians and other medical care providers. If Company, after a good faith effort, is unable to provide continued coverage to Dion and/or his spouse under the Executive Health Plans because of restrictions imposed by any insurance carrier that provides coverage for any claims incurred under the Executive Health Plans, in lieu of the continued coverage of Dion and/or his spouse, Company may pay Dion or his spouse a monthly amount equal to 150% of the cost of providing coverage under the Executive Health Plans to executive level employees with covered families the size of Dion's. Such cost shall be determined conclusively by Company. Such payments shall continue unless or until the Company provides Dion and his spouse with a Medicare supplement in accordance with the preceding provisions of this Section. -4- Company intends to provide Dion and his spouse with medical coverage that is the same as or comparable to the coverage offered to its senior level executives until such time as they become eligible for Medicare. Following eligibility for Medicare, Company intends to provide Dion and his spouse with a high quality Medicare supplement. If due to changes in medical programs available to Company or in Medicare the preceding provisions of this Section do not accomplish this objective, Company and Dion (or his spouse if Dion predeceases her) will enter into good faith negotiations to reach an alternative agreement that will carry out this intention. 7. CONFIDENTIALITY --------------- Dion covenants and agrees to hold in strictest confidence, and not disclose to any person, firm or corporation, without the express written consent of Company, any and all of Company's or any Subsidiary's confidential data, including but not limited to information and documents concerning Company's or any Subsidiary's business, customers, and suppliers, market methods, files, trade secrets, or other "know-how" or techniques or information not of a published nature which shall come into his possession, knowledge, or custody concerning the business of Company or any Subsidiary, except as such disclosure may be required by law or in connection with Dion's employment hereunder. This covenant and agreement of Dion shall survive this Agreement and continue to be binding upon Dion after the expiration or termination of this Agreement, whether by passage of time or otherwise so long as such information and data shall remain confidential. Dion acknowledges that, in the event of his breach of the confidentiality provisions of this Section 7, money damages will not sufficiently compensate Company or the applicable Subsidiary for its injury. Dion accordingly agrees that in addition to such money damages, Dion may be restrained and enjoined from continuing breach of the provisions of this Section 7 without any bond or other security being required by any court. Dion also acknowledges that any breach of this Section 7 would result in irreparable damage to Company or the applicable Subsidiary. 8. TERMINATION DUE TO DEATH OR DISABILITY -------------------------------------- (a) Death ----- This Agreement shall terminate upon Dion's death. Dion's estate shall be entitled to receive the Base Salary, or Consulting Fee, due through the date of his death, but no Base Salary, Consulting Fee, or other payment or benefit will be payable in the future except as expressly provided elsewhere in this Agreement. (b) Permanent Disability -------------------- At Company's option, this Agreement also shall terminate in the event of Dion's "Permanent Disability" upon notice in writing to Dion to that effect. For purposes of this Agreement, "Permanent Disability" shall mean that because of physical or mental illness or disability, with or without -5- accommodation, Dion shall have been continuously unable to perform his duties hereunder for a consecutive period of 180 days. If this Agreement is terminated during the Employment Period due to Dion's Permanent Disability, Dion shall receive all of the payments and benefits called for by Section 10, other than the benefits called for by Section 10(b)(8) and (9) relating to stock options, stock appreciation rights and restricted stock. If this Agreement is terminated during the Consulting Period due to Dion's Permanent Disability, Dion shall be entitled to receive the Consulting Fee throughout the balance of the Consulting Period and Dion shall not be entitled to receive any other amounts or benefits except to the extent expressly provided in other provisions of this Agreement (e.g., Section 6). (c) Lapse of Provisions ------------------- This Section 8 shall cease to apply following the termination of Dion's employment pursuant to Sections 10, 11, or 12. 9. TERMINATION FOR CAUSE --------------------- (a) General ------- Company may terminate this Agreement for "Cause" upon written notice to Dion. If Company terminates this Agreement for "Cause", Dion's Base Salary or Consulting Fee, whichever is applicable at the time, shall immediately cease and Dion shall be entitled to no other payments or benefits pursuant to this Agreement, except for any vested rights pursuant to any benefit plans in which Dion participates. (b) "Cause" Defined --------------- Termination of this Agreement for "Cause" shall mean (i) breach of any material provision of this Agreement by Dion which is not cured within a reasonable time after receipt by Dion of written notice of such breach from Company, or (ii) conviction of Dion of any felony, or any other crime involving moral turpitude (meaning a crime that necessarily includes the commission of an act of gross depravity, dishonesty, or bad morals). 10. TERMINATION WITHOUT CAUSE ------------------------- (a) General ------- Termination of this Agreement by Company for reasons other than (i) death, (ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Employment Period and the Consulting Period shall be referred to as a termination "without Cause". If this Agreement is terminated without Cause, -6- Dion is entitled to receive 30 days advance written notice. This Agreement shall continue during such notice period. The termination of this Agreement shall be effective on the 30th day (the "Termination Date") following the day on which the notice is given (the "Notice Date"). (b) Payments and Benefits --------------------- If Company terminates this Agreement without Cause pursuant to this Section: (1) If the Termination Date occurs during the Employment Period, Company will pay Dion his Base Salary as set forth in Section 4 (or as it may be increased from time to time), plus 16-2/3% of the Base Salary in lieu of employee benefits referred to in Section 4(b), in equal bi-weekly installments. With each such payment, Company also shall make an "Incentive Compensation Payment" to Dion. The "Incentive Compensation Payment" shall equal the average annual "Incentive Compensation" paid to Dion by Company during the five fiscal years preceding the fiscal year in which the Termination Date occurs divided by 26. For purposes of this Section, "Incentive Compensation" refers to the amounts payable to Dion pursuant to any management incentive compensation or bonus program sponsored by Company during the fiscal years included in the five-year averaging period. The payments called for by the preceding provisions of this Section shall continue throughout the Employment Period. Company then shall pay Dion the Consulting Fee in equal bi-weekly payments throughout the Consulting Period. (2) If the Termination Date occurs during the Consulting Period, Company shall continue to pay the Consulting Fee for the balance of the Consulting Period. (3) If the Notice Date occurs during the Employment Period (but not the Consulting Period), Company will pay any reasonable expenses incurred by Dion in finding new employment and any reasonable costs of moving Dion and his family and possessions to a new location, with such expenses not to exceed $50,000 in the aggregate. Alternatively, Dion may elect to receive a lump sum payment of $50,000 in lieu of reimbursement for such expenses. (4) Company will pay Dion's automobile expenses for the remainder of the Employment Period in accordance with the provisions of Section 4(b). (5) Company will pay the dues of the club referred to in Section 4(b) for the remainder of the Employment Period in accordance with the provisions of Section 4(b). -7- (6) Company will pay any expenses incurred in connection with any conventions, seminars, or travel scheduled prior to the Notice Date, regardless of whether the Notice Date occurs during the Employment Period or the Consulting Period. (7) If the termination occurs during the Employment Period, Dion will continue to accrue benefits under Company's Supplemental Executive Retirement Plan No. 1 (the "SERP") until the end of the Employment Period to the same extent and on the same basis as if Dion's actual employment were continued to the end of the Employment Period. At the end of the Employment Period, Dion will be entitled to begin to draw benefits pursuant to the provisions of the SERP and his SERP Participation Agreement. (8) If the Notice Date occurs during the Employment Period, any stock options or stock appreciation rights to purchase or relating to Common Stock of Company held by Dion on the Notice Date which are not at the Notice Date currently exercisable shall on the Notice Date automatically become exercisable and be exercisable for 90 days thereafter. (9) If the Notice Date occurs during the Employment Period, all shares of Common Stock of Company held by Dion under any Company Restricted Stock Plans which are still subject to restrictions on the Notice Date shall as of that date automatically become free of all restrictions. (c) Office Space and Services ------------------------- If Company terminates this Agreement without Cause pursuant to this Section 10, from the Notice Date until the "Benefit Termination Date" Company will provide Dion with suitable office space (substantially equivalent to that occupied by Dion on the Notice Date) and private secretarial services away from Company's offices in an office complex of Dion's choice in Phoenix, Arizona. The "Benefit Termination Date" shall be the date following the Termination Date which is the later of (i) the expiration of both the Employment and Consulting Periods as provided in Section 2 hereof, or (ii) the first anniversary of the Termination Date. (d) Non-Disparagement ----------------- Provided that Company duly performs all of its obligations arising by virtue of a termination of Dion pursuant to this Section, Dion will not publicly disparage Company or its officers, directors, employees, or agents and will refrain from any action which would reasonably be expected to cause material adverse public relations or embarrassment to Company or to any of such persons. Similarly, provided that Dion duly performs all of his obligations to Company, Company (including its officers, directors, employees, and agents) will not disparage Dion and will refrain from any action which -8- would reasonably be expected to result in embarrassment to Dion or to materially and adversely affect his opportunities for employment. The preceding two sentences shall not apply to disclosures required by applicable law, regulation, or order of court or governmental agency. (e) Other Plans ----------- Except to the extent specified in this Section 10, this Agreement shall not affect Dion's participation in, distributions from and vested rights under any pension, profit sharing, or other employee benefit plan of Company or any of its Subsidiaries, which will be governed by the terms of those respective plans. (f) Minimum Benefit Period; COBRA ----------------------------- At a minimum, if Dion's employment is terminated without Cause pursuant to this Section 10 during the Employment Period, until the later of (i) the expiration of the Employment Period or (ii) for one year after the Termination Date, Company shall arrange to provide Dion with life, disability, accident, and group health benefits and coverages substantially similar to those which Dion was receiving immediately prior to the Notice Date. The cost to Dion of such coverage shall not be more than the cost to Dion of similar coverage immediately prior to the Notice Date. The benefits provided by this Section 10(f) shall not be due for any period for which Dion is entitled to receive a payment of 16-2/3% of his Base Salary for the Employment Period pursuant to Section 10(b)(1). In addition, the parties do not intend to duplicate any benefits. As a result, the provisions of this Section shall not apply with respect to a particular benefit if and so long as the benefit is continued, or if a payment in lieu of the benefit is due, pursuant to any other provision of this Agreement. Dion's right to continued life, disability, accident, and health benefits shall be in addition to and not in lieu of Dion's rights under the Consolidated Omnibus Reconciliation Act of 1986 ("COBRA"). 11. TERMINATION BY DION ------------------- (a) General ------- Dion may terminate this Agreement at any time, with or without "Good Reason". If Dion terminates this Agreement without "Good Reason", Dion shall provide Company with 90 days advance written notice. If Dion terminates this Agreement with Good Reason, Dion shall provide Company with 30 days advance written notice. (b) Good Reason Defined ------------------- For purposes of this Agreement, "Good Reason" shall mean and include each of the following: -9- (1) Without Dion's express written consent, the assignment to him of any duties that are inconsistent with his positions, duties, responsibilities, and status with Company as in effect on the "Relevant Date", or demotion, or a change in his titles or offices as in effect on the Relevant Date (except as specifically contemplated by this Agreement), or any removal of him from or any failure to re-appoint or re-elect him to any of such positions, except in connection with the termination of this Agreement for Cause, Permanent Disability, as a result of his death, by him other than for Good Reason, or by Company upon the expiration of the Employment and Consulting Periods. (2) A reduction by Company in Dion's Base Salary or Consulting Fee as in effect on the date hereof or as the same may be increased from time to time. (3) During the Employment Period, the taking of any action by Company which would adversely affect Dion's participation in or materially reduce his benefits under any thrift, incentive, or compensation plan, or any pension, life insurance, health and accident or disability plan in which Dion is participating on the Relevant Date, unless a comparable replacement program is offered to Dion. (4) Assignment of Dion to, or the relocation of Company's office at which Dion is principally employed as of the Relevant Date to, a location which would require a round-trip commute to work from Dion's present residence of more than 120 miles per day. (5) Failure of Company to obtain an agreement satisfactory to Dion from any successor to the business, or substantially all the assets, of Company to assume this Agreement or issue a substantially similar agreement. (6) The termination of this Agreement by Company without Cause or any attempted termination by Company purportedly for Cause if it is thereafter determined that Cause did not exist under this Agreement with respect to the termination. (7) Breach of any material provisions of this Agreement by Company which is not cured within 30 days after receipt by Company of written notice of such breach from Dion. For purposes of this Section 11, the "Relevant Date" is the date of execution of this Agreement. For purposes of Section 12, the "Relevant Date" is the date specified in Section 12(d). -10- (c) Effect of Good Reason Termination --------------------------------- If Dion terminates this Agreement for Good Reason, Dion shall be entitled to receive all of the payments and benefits provided by Section 10 to the same extent as if this Agreement had been terminated by Company without Cause. (d) Effect of Termination without Good Reason ----------------------------------------- If Dion terminates this Agreement without Good Reason, Dion shall be entitled to receive his Base Salary or Consulting Fee (as the case may be) through the effective date of his termination. Dion's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Dion participates on the effective date of the termination. 12. CHANGE IN CONTROL OF COMPANY ---------------------------- (a) General ------- The Board recognizes that the continuing possibility of a "Change in Control" of Company is unsettling to Dion and other senior executives of Company. Therefore, the arrangements set forth below are being made to help assure a continuing dedication by Dion to his duties to Company, notwithstanding the occurrence or potential occurrence of a "Change in Control." In particular, the Board believes it important, should Company receive proposals from third parties with respect to its future, to enable Dion, without being influenced by the uncertainties of his own situation, to assess and advise the Board whether such proposals would be in the best interests of Company and its stockholders and to take such other action regarding such proposals as the Board might determine to be appropriate. The Board also wishes to demonstrate to executives of Company that Company is concerned with the welfare of its executives and intends to see that loyal executives are treated fairly. (b) Eligibility to Receive a Severance Benefit ------------------------------------------ In view of the foregoing and in further consideration of Dion's continued employment with Company, Company agrees that if a Change in Control of Company occurs during the Employment Period (but not the Consulting Period) Dion shall be entitled to the severance benefits provided in subparagraph (f) of this Section 12 if prior to the expiration of 24 months after the Change in Control of Company Dion terminates his employment with Company for Good Reason or Company terminates Dion's employment without Cause. If Dion triggers the application of this Section by terminating employment for Good Reason, he must do so within 120 days following the occurrence of the last event that constitutes Good Reason. The full severance benefits provided by this Section shall be payable regardless of the period remaining until the end of the Employment Period. -11- (c) Change in Control Defined ------------------------- For purposes of this Agreement, a "Change in Control" shall include both an "Actual Change in Control" and a "Potential Change in Control". An "Actual Change in Control" shall be deemed to have occurred in any or all of the following instances: (1) Any "person" as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, other than a trustee or other fiduciary holding securities under an employee benefit plan of Company or a corporation owned directly or indirectly by the stockholders of Company in substantially the same proportions as their ownership of stock of Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of Company representing 20% or more of the total voting power represented by Company's then outstanding Voting Securities (as defined below); or (2) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Company and any new director whose election by the Board of Directors or nomination for election by Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (3) The stockholders of Company approve a merger or consolidation of Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of Company or such surviving entity outstanding immediately after such merger or consolidation; or (4) The stockholders of Company approve a plan of complete liquidation of Company or an agreement for the sale or disposition by Company of (in one transaction or a series of transactions) all or substantially all Company's assets. A "Potential Change in Control" shall be deemed to have occurred in any or all of the following instances: -12- (1) Company enters into an agreement, the consummation of which would result in the occurrence of an Actual Change in Control; (2) Any person (including Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (3) Any person other than a trustee or other fiduciary holding securities under an employee benefit plan of Company or a corporation owned, directly or indirectly, by the stockholders of Company in substantially the same proportions as their ownership of stock of Company who is or becomes the beneficial owner, directly or indirectly, of securities of Company representing 10% or more of the combined voting power of the Company's then outstanding Voting Securities, increases such person's beneficial ownership of such securities by five percentage points (5%) or more over the percentage so owned by such person; or (4) The Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. For purposes of this Section, the term "Voting Securities" shall mean and include any securities of the Company which vote generally for the election of directors. (d) Good Reason Defined ------------------- For purposes of this Section, "Good Reason" shall have the meaning assigned to it in Section 11, except that for purposes of this Section the "Relevant Date" shall be the day prior to the Change in Control and paragraph (3) of Section 11(b) shall read as follows: (3) The failure by Company to continue in effect any thrift, incentive, or compensation plan, or any pension, life insurance, health and accident or disability plan in which Dion is participating on the Relevant Date (or plans providing Dion with substantially similar benefits), the taking of any action by Company which would adversely affect Dion's participation in or materially reduce his benefits under any of such plans or deprive him of any material fringe benefit enjoyed by him as of the Relevant Date or any later date (except for acceleration of stock options or restricted stock as contemplated by this Agreement). -13- (e) Notice of Termination by Dion ----------------------------- Any termination by Dion under this Section 12 shall be communicated by written notice to Company which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for such termination. (f) Effect of Termination --------------------- If Dion is entitled to receive a severance benefit pursuant to Section 12(b) hereof, Company will provide Dion with the following severance benefits in addition to the benefits to which Dion is entitled pursuant to Section 10 or 11: (1) Within five days following Dion's termination, a lump sum severance payment equal to the difference between (i) the sum of three years of Dion's yearly Base Salary as set forth in Section 4 or as it may be increased from time to time, three years of fringe benefits calculated at 16-2/3% of such Base Salary and three year's of Incentive Compensation Payments calculated in accordance with Section 10(b)(1); and (ii) the total amounts due to Dion, if any, pursuant to Section 10(b)(1). (2) The amounts due to Dion pursuant to Section 10(b)(1) will be accelerated and paid to Dion in one lump sum within five days following Dion's termination without any discount for early payment. (3) The office space and secretarial services to which Dion is entitled pursuant to Section 10(c) shall be provided until the earlier of (i) the second anniversary of Dion's Notice Date or (ii) when Dion secures suitable other employment. (g) Excise and Income Tax Gross-Up ------------------------------ The Internal Revenue Code of 1986 (the "Code") imposes significant tax burdens on Dion and Company if the total amounts received by Dion due to a change in control exceed prescribed limits. These tax burdens include a requirement that Dion pay a 20% excise tax on certain amounts received in excess of the prescribed limits and a loss of deduction for Company. If, as a result of these Code provisions, Dion is required to pay such excise tax, then upon written notice from Dion to Company, Company shall pay Dion an amount equal to the total excise tax imposed on Dion (including the excise taxes on any excise tax reimbursements due pursuant to this sentence and the excise taxes on any federal and state tax reimbursements due pursuant to the next sentence). If Company is obligated to pay Dion pursuant to the preceding sentence, Company also shall pay Dion an amount equal to the "total presumed federal and state taxes" that could be imposed on Dion with respect to the excise tax reimbursements due to Dion pursuant to the preceding sentence and the federal and state tax reimbursements due to Dion pursuant to this sentence. For purposes of the preceding sentence, the -14- "total presumed federal and state taxes" that could be imposed on Dion shall be conclusively calculated using a combined tax rate equal to the sum of the maximum marginal federal and state income tax rates and the hospital insurance (or "HI") portion of FICA. Based on rates in effect as of the date of execution of this Agreement, the "total presumed federal and state taxes" rate is 46.65% (39.6% federal income tax rate plus 5.6% state income tax rate plus 1.45% HI tax rate). No adjustments will be made in this combined rate for the deduction of state taxes on the federal return, the loss of itemized deductions or exemptions, or for any other purpose. Dion shall be responsible for paying the actual taxes. The amounts payable to Dion pursuant to this or any other agreement or arrangement with Company shall not be limited in any way by the amount that may be paid pursuant to the Code without the imposition of an excise tax or the loss of Company deductions. Either Dion or Company may elect to challenge any excise taxes imposed by the Internal Revenue Service and Dion and Company agree to cooperate with each other in prosecuting such challenges. If Dion elects to litigate or otherwise challenge the imposition of such excise tax, however, Company will join Dion in such litigation or challenge only if Company's General Counsel determines in good faith that Dion's position has substantial merit and that the issues should be litigated from the standpoint of Company's best interest. 13. COMPETITION ----------- (a) Restrictive Covenant -------------------- In consideration of Company's agreements contained herein and the payments to be made by it to Dion pursuant hereto, Dion agrees that, during the duration of this restrictive covenant he will not: (1) Without the prior written consent of the Board of Directors of Company, engage in a Competing Business within the geographical limits of any state (or such lesser geographical area as may be set by a court of competent jurisdiction) in which any of the businesses of Company are being conducted on the date of termination of this Agreement or within the geographical limits of any state (or such lesser geographical area as may be set by a court of competent jurisdiction) in which the Company's business plan, as in effect on the earlier of the date of the competitive activity by Dion or the date of termination of this Agreement, contemplates conducting business within two years following the date of termination of this Agreement; or (2) Directly or indirectly, for himself, or on behalf of, or in conjunction with, any other person or entity, seek to hire and/or hire any individual employed by Company or any Subsidiary immediately prior to such hiring or solicitation or during the prior one-year period. -15- (b) Duration of Covenant. -------------------- Generally, this restrictive covenant shall apply during the Employment Period and the Consulting Period and for the one-year period following the date of termination of this Agreement and any renewals thereof. If the Competing Business in which Dion engages or intends to engage is a business involving the development or management of an age-restricted community, however, the limitations of Section 13(a)(1) shall apply during the Employment Period and the Consulting Period and for the two-year period following the date of the termination of this Agreement and any renewals thereof. (c) Remedies; Reasonableness. ------------------------ Dion acknowledges and agrees that a breach by Dion of the provisions of this Section will constitute such damage as will be irreparable and the exact amount of which will be impossible to ascertain and, for that reason, agrees that Company will be entitled to an injunction to be issued by any court of competent jurisdiction restraining and enjoining Dion from violating the provisions of this Section. The right to an injunction shall be in addition to and not in lieu of any other remedy available to Company for such breach or threatened breach, including the recovery of damages from Dion. Dion expressly acknowledges and agrees that (i) this Restrictive Covenant is reasonable as to time and geographical area and does not place any unreasonable burden upon him; (ii) the general public will not be harmed as a result of enforcement of this restrictive covenant; and (iii) Dion understands and hereby agrees to each and every term and condition of this Restrictive Covenant. (d) Survival of Provision. --------------------- Termination of this Agreement, whether by passage of time or any other cause, shall not constitute a waiver of Company's rights under this Section 13, nor a release of Dion from his obligations thereunder. (e) Competing Business ------------------ For purposes of this Agreement, Dion shall be deemed to be engaged in a "Competing Business" if, in any capacity, including but not limited to proprietor, partner, officer, director, or employee, he engages or participates, directly or indirectly, in the operation, ownership, or management of any proprietorship, partnership, corporation, or other business entity which competes, in whole or in part, with the then actual business of Company or any business contemplated by Company's business plan as in effect on the earlier of the date of the competitive activity by Dion or the date of termination of this Agreement. Indirect participation in the operation or ownership of any such entity shall include any investment by Dion in any such entity, by way of loan, guaranty, or stock ownership (other than ownership of 1% or less of any class of equity or other securities of a company -16- which is listed and regularly traded on any national securities exchange or which is regularly traded over-the-counter). At the written request of Dion from time to time, Company shall furnish Dion with a written description of the business or businesses in which Company is then actively engaged. (f) Change of Control. ----------------- The provisions of this Section shall lapse and be of no further force or effect if Dion's employment is terminated by Company without Cause, or by Dion for Good Reason, following a Change in Control. 14. DISPUTE RESOLUTION ------------------ (a) Mediation --------- Any and all disputes arising under, pertaining to or touching upon this Agreement (excepting the Confidentiality provisions of Section 7 and the Restrictive Covenant and Competing Business provisions of Section 13), or the statutory rights or obligations of either party hereto, shall, if not settled by negotiation, be subject to non-binding mediation before an independent mediator selected by the parties pursuant to Section 14(d). Any demand for mediation shall be made in writing and served upon the other party to the dispute, by certified mail, return receipt requested, at the address specified in Section 18. The demand shall set forth with reasonable specificity the basis of the dispute and the relief sought. The mediation hearing will occur at a time and place convenient to the parties in Maricopa County, Arizona, within 30 days of the date of selection or appointment of the mediator. (b) Arbitration ----------- In the event that the dispute is not settled through mediation, the parties shall then proceed to binding arbitration before a panel of three independent arbitrators selected pursuant to Section 14(d). The mediator shall not serve as an arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS PARAGRAPH (b) AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The arbitration hearing shall occur at a time and place convenient to the parties in Maricopa County, Arizona, within 30 days of selection or appointment of the last of the three arbitrators. If Company has adopted a policy that is applicable to arbitrations with executives, the arbitration shall be conducted in accordance with said policy to the extent that the policy is consistent with this Agreement and the Federal Arbitration Act, 9 U.S.C. ss.ss. 1-16. If no such policy has been adopted, the arbitration shall be governed by the then current arbitration rules of the American Arbitration Association or its successor (the "Association"). Notwithstanding any provisions in such rules to the contrary, the -17- arbitrators shall issue findings of fact and conclusions of law, and an award, within 15 days of the date of the hearing unless the parties otherwise agree. (c) Damages ------- In case of breach of contract or policy, damages shall be limited to contract damages. In cases of intentional discrimination claims prohibited by statute, the arbitrators may direct payment consistent with 42 U.S.C. ss. 1981(a) and the Civil Rights Act of 1991. In cases of employment tort, the arbitrators may award punitive damages if proved by clear and convincing evidence. Issues of procedure, arbitrability, or confirmation of award shall be governed by the Federal Arbitration Act, 9 U.S.C. ss.ss. 1-16, except that Court review of the arbitrators' award shall be that of an appellate court reviewing a decision of a trial judge sitting without a jury. The arbitrators may not award reinstatement. Instead, if the arbitrators find that the termination by Company was not for Permanent Disability or not for Cause or that the termination by Dion was for Good Reason, Dion shall only be entitled to the benefits of Section 10 or 12 (in the case of termination by Company) and Sections 11 or 12 (in the case of termination by Dion) and, in either case, payment of his reasonable legal expenses in such arbitration. Until a final, binding determination has been entered relieving Company of its duty to provide payments hereunder, Company shall pay Dion all amounts to which he would be entitled under Section 10, calculated on the assumption that Dion's employment had been terminated without Cause. (d) Selection of Mediator or Arbitrators ------------------------------------ The parties shall select the mediator from a panel list made available by the Association. If the parties are unable to agree to a mediator within ten days of receipt of a demand for mediation, the mediator will be chosen by alternatively striking from a list of five mediators obtained by Company from the Association. Executive shall have the first strike. The parties also shall select the arbitrators from a panel list made available by the Association. Company and Dion each shall select one arbitrator from such panel list within ten days of receipt of such list. After Company and Dion have each selected an arbitrator, the two arbitrators so selected shall select the third arbitrator from such list within the next ten days. (e) Expenses -------- The costs and expenses of any arbitration shall be borne by Company. Should Dion or Company, at any time, initiate mediation or arbitration for breach of this Agreement, Company shall reimburse Dion for all amounts spent by Dion to pursue such mediation or arbitration, regardless of the outcome, unless the mediator or arbitrator finds Dion's action to have been frivolous and without merit. -18- 15. OFFICE AND CLERICAL SUPPORT. --------------------------- Company shall provide Dion with an appropriate office and part-time secretarial and other support during the Consulting Period. Company shall continue to provide such office and part-time secretarial and other support after the expiration of the Consulting Period until the earlier of the Annual Meeting that occurs in 2005 or the last day of Dion's service as a member of Company's Board of Directors. This Section shall survive the termination of this Agreement, but only if the termination occurs due to the expiration of the Consulting Period on November 30, 2001 (or November 30, 2002 if the Consulting Period is extended pursuant to Section 2(b)). 16. BENEFIT AND BINDING EFFECT -------------------------- This Agreement shall inure to the benefit of and be binding upon Company, its successors and assigns, including but not limited to any corporation, person, or other entity which may acquire all or substantially all of the assets and business of Company or any corporation with or into which Company may be consolidated or merged, and Dion, his heirs, executors, administrators, and legal representatives, provided that the obligations of Dion may not be delegated. 17. OTHER AGREEMENTS OF DION ------------------------ Dion represents that the execution and performance of this Agreement will not result in a breach of any of the terms and conditions of any employment or other agreement between Dion and any third party. 18. NOTICES ------- All notices hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid: If to Company, to: Del Webb Corporation 6001 North 24th Street Phoenix, Arizona 85016 Attention: General Counsel If to Dion, to: Philip J. Dion 6110 East Caballo Lane Paradise Valley, Arizona 85253 Either party may change the address to which notices are to be sent to it by giving 10 days' written notice of such change of address to the other party in the manner above provided for giving notice. Notices will be considered delivered on personal delivery or on the date of deposit in the United States mail in the manner provided for giving notice by mail. -19- 19. ENTIRE AGREEMENT ---------------- The entire understanding and agreement between the parties has been incorporated into this Agreement, and this Agreement supersedes all other agreements and understandings between Dion and Company with respect to the relationship of Dion with Company. 20. GOVERNING LAW ------------- This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona. 21. CAPTIONS -------- The captions included herein are for convenience and shall not constitute a part of this Agreement. 22. SEVERABILITY ------------ If any one or more of the provisions or parts of a provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision or part of a provision of this Agreement, but this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provisions or part thereof shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted by law. Any such reformation shall be read as narrowly as possible to give the maximum effect to the mutual intentions of Dion and Company. 23. MITIGATION ---------- In the event that Dion's employment is terminated and payments become due to Dion pursuant to this Agreement, Dion shall have no duty to mitigate damages or to become re-employed by another employer. 24. TERMINATION OF EMPLOYMENT ------------------------- The termination of this Agreement by either party also shall result in the termination of Dion's employment and consulting relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment or consulting relationship continue after the termination of this Agreement. -20- 25. NO CONSTRUCTION AGAINST COMPANY ------------------------------- This Agreement is the result of negotiation between Company and Dion and both have had the opportunity to have this Agreement reviewed by their legal counsel and other advisors. Accordingly, this Agreement shall not be construed for or against Company or Dion, regardless of which party drafted the provision at issue. DEL WEBB CORPORATION By: /s/ Mary Lynn Schuttenberg --------------------------------------- Its: V.P. Human Resources -------------------------------------- 7/10/96 COMPANY /s/ Philip J. Dion ------------------------------------- PHILIP J. DION DION 7/10/96 -21- EX-10.6 5 FIRST AMENDMENT TO LEASE Exhibit 10.6 FIRST AMENDMENT TO LEASE THIS AMENDMENT (hereinafter referred to as this "Amendment") made the 29th day of February, 1996, between WESTERN PLAZA INVESTORS, L.P., a Delaware limited partnership (hereinafter referred to as "Landlord") whose address is 3030 LBJ Freeway, Suite 1500, Dallas, Texas 75234, and DEL WEBB CORPORATION, an Arizona corporation (hereinafter referred to as "Tenant") whose address is 6001 North 24th Street, Phoenix, Arizona 85016; W I T N E S S E T H: WHEREAS, Landlord and Tenant entered into a lease dated April 20, 1994 (hereinafter referred to as the "Lease"), whereby Lessee is presently in possession of premises containing 85,000 net rentable square feet of space (hereinafter referred to as the "Premises") in the building known as The Del Webb Building (hereinafter referred to as the "Building"); and WHEREAS, the parties hereto desire to clarify and amend certain responsibilities under the Lease and resolve certain disagreements that have arisen in interpreting provisions of the Lease; and WHEREAS, the parties hereto desire to modify and amend the Lease only in the respects and on the conditions hereinafter stated. NOW, THEREFORE, Lessor and Lessee agree as follows: 1. For purposes of this Amendment, capitalized terms shall have the meanings ascribed to them in the Lease unless otherwise defined herein. 2. Landlord and Tenant hereby confirm that the Commencement Date of the Term of the Lease is December 1, 1994 and that the expiration date is November 30, 2004. 3. Section 4.1(d) of the Lease shall be amended effective as of November 1, 1995 to read as follows: "Cleaning. Tenant shall assume responsibility, and be reimbursed by Landlord as hereinafter provided, for providing cleaning services to the Leased Premises, which at a minimum shall be comparable to the standard of cleaning provided at other first-class office buildings in the Camelback corridor. For this purpose, Tenant shall engage a cleaning contractor or service acceptable to Tenant in its sole discretion. Tenant shall be directly and exclusively responsible for monitoring the performance of said contractor. In consideration of Tenant relieving Landlord of responsibility for providing cleaning services to the Leased Premises, Landlord shall pay to Tenant the sum of Fifty-five Thousand ($55,000) Dollars per year (the "Janitorial Allowance") in monthly installments in arrears of Four Thousand, Five Hundred and Eighty-three and 33/100's Dollars ($4,583.33) Dollars each on the tenth (10th) day of each month commencing on February 10, 1996. Tenant shall render Landlord a monthly bill for the installment of the Janitorial Allowance due each month. The annualized amounts paid by Landlord to Tenant on account of the Janitorial Allowance will be included in Operating Costs for the Base Year and each subsequent year during the Term. Except for payment by landlord of the Janitorial Allowance, Landlord shall have no responsibility or obligation with respect to rendering cleaning services to the Leased Premises. Tenant shall be solely responsible for the cost of such cleaning services to the Leased Premises, and Tenant shall indemnify, defend and hold Landlord harmless with respect to any and all claims or causes of action resulting from Tenant assuming the obligation of providing cleaning services to the Leased Premises, except to the extent proximately caused by the negligence or wilful misconduct of Landlord or its agents, servants, contractors or employees acting within the scope of their authority or employment." 4. Tenant shall also assume, subject to reimbursement from Landlord as hereinafter provided, responsibility for providing landscaping services for the Land on which the Leased Premises are located, which at a minimum shall be comparable to the standard of landscaping services provided at other first-class office buildings in the Camelback corridor. Such landscaping services shall include, but not be limited to, regular maintenance and replacement of all grass, plants, trees, shrubs, other vegetation and landscape materials now on the Land; and such regular maintenance shall include, but not be limited to, watering, mowing, trimming and prevention of soil erosion, all to be performed as frequently as necessary to maintain the appearance of the Project as a first class office building in the Camelback corridor. For this purpose, Tenant shall engage a landscaping contractor or service reasonably acceptable to Landlord, and Landlord shall grant to Tenant and its landscaping contractor or service a nonexclusive right of ingress, egress and access over, under, across and upon the Land. Tenant shall be directly and exclusively responsible for monitoring the performance of said contractor. In consideration of Tenant relieving Landlord of responsibility for providing landscaping services to the Land, Landlord shall pay to Tenant the sum of Thirty-five Thousand, Five Hundred ($35,500) Dollars per year (the "Landscaping Allowance") in monthly installments in arrears of Two Thousand, Nine Hundred and Fifty-eight and 33/100's Dollars ($2,958.33) Dollars each on the tenth (10th) day of each month commencing on February 10, 1996. In addition, to the extent that aggregate annual landscaping costs actually incurred by Tenant exceed Thirty-five Thousand, Five Hundred ($35,500) Dollars per year and Landlord is able, using due diligence, to recover a portion of such excess landscaping costs directly attributable to landscaping services performed by Tenant from other tenants of the Project through the pass-through of Operating Costs to such tenants, Landlord shall pay the amounts so recovered over to Tenant. Tenant shall render Landlord a monthly bill for the installment of the Landscaping Allowance due each month. The annualized amounts paid by Landlord to Tenant on account of the Landscaping Allowance will be included in Operating Costs for the Base Year and each subsequent year during the Term. Landlord and Tenant acknowledge and agree that the Landscaping Allowance is intended to encompass the costs of maintenance and replacement of grass (including annual replanting of winter lawns), small plants and shrubs as well as the cost of mowing, trimming, watering and prevention of soil erosion. If, in order to maintain the appearance of the Project as a first class office building in the Camelback corridor, it becomes necessary, for reasons other than negligence or wilful misconduct of Tenant or its agents, contractors or employees, to replace any large shrubs, trees or large patches of winter lawn during any year subsequent to the Base Year, then Tenant shall replace such items at Tenant's expense, but the costs thereof shall be reported to and treated by Landlord as additional landscaping expenses included in Operating Costs for such year, and Landlord shall promptly reimburse Tenant for the portion of such costs so incurred by Tenant which exceeds Tenant's Project Share thereof (whether or not Landlord is able to recover such excess from other tenants of the Project through the pass-through of Operating Costs to such tenants). Tenant shall indemnify, defend and hold Landlord harmless with respect to any claims or causes of action resulting from Tenant's assuming the obligation of providing said landscape services, except to the extent proximately caused by the negligence or wilful misconduct of Landlord or its agents, servants, contractors or employees acting within the scope of their authority or employment. In the event Tenant does not perform landscape services consistent with maintaining the Project as a first class office building in the Camelback corridor, Landlord may takeover responsibility for furnishing said services, include any costs of providing said services as part of Operating Costs, and bill Tenant for a portion of such costs to the extent they exceed Thirty-five Thousand, Five Hundred ($35,500) Dollars per year equal to Tenant's Project Share. 2 5. Tenant hereby agrees that it shall be solely responsible for the maintenance and repair of the landscaping irrigation system at the Project. In consideration therefor, Landlord hereby grants to Tenant an allowance in the amount of One Thousand ($1,000) Dollars per calendar year (the "Irrigation Allowance") toward the cost of irrigation system maintenance and repairs. As Tenant incurs out of pocket costs and expenses in connection with maintenance and repairs of said irrigation system, Tenant may submit to Landlord copies of paid invoices reflecting the amounts incurred by Tenant, and Landlord shall reimburse Tenant for such costs and expenses within thirty (30) days after receipt of Tenant's request for payment, the amount of such reimbursement in any calendar year not to exceed, however, the Irrigation Allowance. All such reimbursements by Landlord shall be Operating Costs pursuant to Section 3.2(C) of the Lease. 6. (a) Landlord hereby agrees that as part of its Common Area maintenance requirement it shall perform the following services at the Leased Premises as provided in paragraph 6(b) through 6(e) below, all of which shall be Operating Costs pursuant to Section 3.2(c)of the Lease. (b) Landlord shall wash the exterior of all windows (including the roof windows) three (3) times per year pursuant to a schedule to be provided to Tenant. In addition, Landlord shall wash the exterior of the roof windows and all other windows a fourth (4th) time during the year on a date requested by Tenant upon not less than fifteen (15) business days written notice. (c) Landlord shall power wash the entrances to the Building and exterior balconies three (3) times per year pursuant to a schedule to be provided to Tenant. In addition, Landlord shall power wash those areas a fourth (4th) time during the year on a date requested by Tenant upon not less than fifteen (15) business days written notice. (d) Landlord shall power wash the granite exterior walls of the Building one (1) time per year on one (1) of the same occasions that it power washes the entrances to the Building and exterior balconies. (e) Landlord shall power wash the garage floor three (3) times per year pursuant to a schedule to be provided to Tenant. (f) Landlord shall paint all exterior metal and stucco surfaces of the Project as necessary to maintain and preserve the appearance of the Project as a first class office building in the Camelback corridor. (g) To the extent that the frequency of services to be provided pursuant to paragraph 6(b) and 6(d) exceeds the frequency of such service, if any, provided in the Base Year, the imputed amount it would have cost to provide those services more frequently in the Base Year shall be added to Operating Costs for the Base Year. 7. Section 4.1(e) of the Lease shall be amended by adding the following language at the end thereof: "Landlord shall also inspect the Common Area at the beginning of each Building Day for general cleanliness and cause any debris to be removed from said Common Areas and the costs therefor shall be included as an Operating Cost." 8. Landlord and Tenant hereby agree that the maintenance and repair of elevators in the Building serving the Tenant, to include the elevators which provides access to the garage, shall be the responsibility of Tenant who shall bear the entire cost thereof. Tenant shall maintain the elevators in accordance with all applicable state, federal and local rules and regulations. For this purpose, Tenant may enter into a maintenance and service agreement with U.S. ELEVATOR, MONTGOMERY 3 ELEVATOR or OTIS ELEVATOR, and Landlord shall grant to Tenant and its elevator service contractor a nonexclusive right of ingress, egress and access to the Project. The provisions of ARTICLE II, Section 6 of Exhibit C-I to the Lease pertaining to the filing of liens are herein incorporated and shall be applicable with respect to any maintenance or service performed on the elevators. 9. Section 4.3 of the Lease shall be amended by adding the following at the end thereof: "Except as specifically set forth herein, Landlord shall have no obligation to make any repairs, including but not limited to any equipment to service or redistribute Utility Service to the Leased Premises. However, in the event Tenant encounters a problem with any Utility Service which has been redistributed to the Leased Premises, Landlord shall use its best efforts to determine the source of the problem. In the event the source of such problem is outside the point of redistribution to the Leased Premises, Landlord shall repair or cause the problem with the Utility Service to be repaired (except to the extent the source of the problem is located within interior (as distinguished from exterior) space currently leased to another tenant that has not agreed to make such repairs or permit Landlord access to its space for the purpose of making such repairs, in which situation Landlord shall only be obliged to use best efforts to repair or cause the problem to be repaired). (Landlord represents to Tenant, however, that none of the equipment or lines required to distribute Utility service to the Lease Premises is located within any interior space currently leased to another tenant.) In the event the source of the problem is at or beyond the point of redistribution to Tenant, whether or not it is within the Leased Premises, Tenant shall be responsible for such repairs. For this purpose, Landlord hereby grants Tenant and its contractors a nonexclusive right of ingress, egress and access to the Project (but not to any interior space leased to another tenant that has not agreed to make such repairs or permit Landlord access to its space for the purpose of making such repairs), and agrees to make its personnel available in accordance with provisions of paragraph 12 of the First Amendment of this Lease so that Tenant may coordinate its repairs with the proper operation of the Plant." 10. (a) Tenant has provided Landlord with a punchlist of alleged deficiencies which exist or existed in connection with the landscaping of the Land attached hereto as Annex I. Landlord has denied the existence of such deficiencies or its responsibility with respect to same. In order to resolve said dispute, and without acknowledging the existence of any deficiencies, Landlord hereby agrees to pay the sum of Three Thousand ($3,000) Dollars upon the signing of this Amendment in full satisfaction of all claims of Tenant in connection with landscaping of the Project. In exchange therefor, Tenant agrees to release Landlord from all claims which Tenant may now have against Landlord and any future claims with respect to Project landscaping (other than for payment of the Landscaping and Irrigation Allowances or other obligations provided for in paragraphs 4 and 5 of this Amendment). Furthermore, Tenant agrees to cure all deficiencies noted on Annex I at its sole cost and expense. (b) In addition to those items described in paragraph 10(a) above, Tenant has forwarded to Landlord certain letters identified on Annex II alleging that other defects exist or existed at the Leased Premises which Tenant alleges were Landlord's obligation. Landlord has denied the existence of such defects and/or its responsibility with respect to the same. In order to resolve said dispute, and without acknowledging the existence of any defects, Landlord hereby agrees to pay the sum of Fifteen Thousand ($15,000.00) Dollars upon the signing of this Amendment in full satisfaction of all claims of Tenant related to defects which exist or existed at the Leased Premises. In exchange therefor, Tenant hereby releases Landlord from any and all claims which Tenant may now have against Landlord and any and all claims Tenant may have in the future, whether or not raised in the letters identified on Annex II, relating to or resulting from any defects which 4 exist or existed at the Leased Premises. Furthermore, Tenant agrees that any defect discovered after the signing of this Amendment shall be repaired or remedied at the sole cost and expense of Tenant. However, Landlord shall continue to be liable for Capital Repairs specifically assumed by Landlord pursuant to Section 4.3 of the Lease subject to the provisions set forth therein with respect to repayment therefor. 11. Tenant shall assume sole responsibility for the maintenance and repair of all interior landscaping, including the pools and extensions on the east side of the exterior of the Building, in a manner comparable to that of other first class office buildings in the Camelback corridor. For this purpose, Landlord shall grant Tenant and its contractors a nonexclusive right of ingress, egress and access over, under, across and upon the Land, and Landlord shall pay to Tenant an allowance equal to Twelve Thousand ($12,000) Dollars per year (the "Pool Allowance") in equal monthly installments of One Thousand ($1,000) Dollars per month payable in arrears on the tenth (10th) day of each month commencing February 10, 1996. Tenant shall render Landlord a monthly bill for the installment of the Pool Allowance due each month. The annualized amounts paid by Landlord to Tenant on account of the Pool Allowance will be included in Operating Costs for the Base Year and each subsequent year during the Term. Landlord and Tenant acknowledge that the pools have had a chronic leakage problem which has required repeated minor repairs; and that the recurrence of leaks will not constitute a breach by Tenant of its obligation to maintain and repair the pools so long as Tenant promptly repairs, controls, mitigates, and/or manages the leaks as and when they reoccur. 12. Landlord hereby agrees to make its on-site personnel available to Tenant for making minor repairs and changing light bulbs and ballasts to the extent said work is within said personnel's expertise. In the event Tenant utilizes such services it shall pay to Landlord as additional Rent within ten (10) days of receipt of a bill, Landlord's cost plus ten (10%) percent for such bulbs, ballasts and other materials plus the current hourly rate charged by Landlord to tenants for use of its personnel computed at the hourly cost inclusive of benefits of operating said employee. Any payments so made allocable for the current hourly rate of employees whose salary is part of Project Operating Costs shall be a credit against Project Operating Costs in computing Tenant's Project Share of such Project Operating Costs. 13. Wherever the Lease shall require the consent of Landlord, the following provisions shall apply. (a) Tenant shall request such written consent of the Landlord in the manner prescribed by Section 6.15 of the Lease. (b) Landlord shall have twenty-five (25) days from receipt of such notice to respond to such request. (c) In the event Landlord fails to respond within such twenty-five (25) day period, Tenant shall send a second copy of such notice to Landlord in the manner prescribed by Section 6.15 of the Lease. (d)In the event Landlord fails to respond to such second notice within seven (7) days of receipt, Landlord shall be deemed to have given its consent. 14. Section 6.11(b)(i) and (ii) of the Lease shall be amended to read as follows: "(b) By Tenant. The Tenant, at its cost, shall provide and keep in force during the Term of the Lease the following insurance: (i) A commercial general liability policy in standard form (containing the so-called "occurrence clause") against claims for personal 5 injury and property damage occurring on, in or about the Leased Premises in the combined single limit amount of Three Million ($3,000,000) Dollars, and include an endorsement naming Landlord as an additional insured with respect to its vicarious liability for Tenant's operation, maintenance, use and control of the Leased Premises and Common Areas including but not limited to the assigned and unassigned Parking Areas. The commercial general liability policy shall be primary insurance coverage for Landlord with respect to any other insurance Landlord may have available for such vicarious liability and, at Tenant's option, may provide for a deductible amount or for a retention amount under a self-insurance program not exceeding Five Hundred Thousand ($500,000) Dollars per occurrence provided Tenant's net worth is and continues to be at least equal to One Hundred Million ($100,000,000) Dollars. (ii) The policy of insurance shall be from a company rated in the A.M. Best Key Rating Guide with a policyholder's service rating of A- and a financial rating of X. The company shall be licensed by the State of Arizona and a true copy of the policy (or a certificate thereof) shall be delivered to the Landlord, together with evidence of the payment of the 20 premiums therefor, not less than fifteen (15) days prior to the Commencement Date of the Term. At least fifteen (15) days prior to the expiration or termination date of any policy, the Tenant shall deliver to Landlord a certificate issued by the insurer confirming that the policy has been renewed." 15. No credit, allowance or payment of any kind pursuant to the terms of this Amendment shall reduce Base Rental, Base Rental adjustments or additional Rent for purposes of computing the management fees under Section 3.2(c)(iii) of the Lease, and any payments made by Tenant, inclusive of any Landlord contribution, for services described in paragraphs 3 and 4 of this First Amendment shall be considered for purposes of calculating management fees payable to Landlord. Any installment of the Janitorial, Landscaping, Irrigation and/or Pool Allowances provided for in this Amendment which is not paid by Landlord within three (3) days after written notice from Tenant to Landlord and any Designated Parties specified in Section 7.7 of the Lease shall accrue interest and be subject to collection by Tenant as provided and subject to the limitations set forth in - the last two sentences of Section 7.7 of the Lease. 16. Landlord agrees that Tenant shall have the right to construct and maintain, at Tenant's sole cost and expense, a covering over a portion of the existing parking area on the eastern side of the Project at the location set forth on Exhibit X attached hereto and made a part hereof; provided, however, that (i) that Tenant complies with all applicable governmental ordinances and regulations and receives all necessary governmental and ARIZONA BILTMORE ESTATES VILLAGE ASSOCIATION ("ABEVA") approvals required for the construction and maintenance of the covering; (ii) that the plans and specifications of the covering, as well as the contractors to perform said work, are approved in advance and in writing by the Landlord; and (iii) at the option of the Landlord exercised by at least ninety (90) days prior written notice to Tenant, at the end of the Term Tenant shall, at its sole cost and expense, remove the covering and promptly repair all damage to the parking area caused by such removal, said repairs to be performed in a good and workmanlike manner, in conformity with law, and in conformity with all applicable provisions of this Lease, such that the area involved be restored to the condition existing prior to the construction of the covering, reasonable wear and tear excepted. Tenant agrees that Tenant shall be responsible for paying for: (i) the costs of all electricity consumed within the covered parking area (now existing or to be constructed) and (ii) the costs of installing and maintaining the check meters measuring the consumption of electricity, including any necessary electrical wiring. 6 Tenant agrees that, until the submeters are in place, Tenant shall pay for Tenant's electrical consumption with the parking area as determined by an independent electrical engineering consultant selected by the Landlord, but at Tenant's cost, who shall make a survey of the electric power demand of the electric lighting fixtures and the electric equipment of Tenant used in the covered parking area inclusive of an allocation of the costs of operating the plant to determine the average monthly electric consumption thereof. After Landlord's consultant has submitted its report, Tenant shall pay to Landlord, within ten (10) days after demand therefor by Landlord, the amount determined by said consultant as owing from the date that construction of the covering for the parking area commenced, and the then expired months, to include the then current month and thereafter, on the first day of every month, in advance, the amount set forth as the monthly consumption in said report until the electric check meters are in the rate schedule (including surcharges or demand adjustments), of the public utility servicing the area in which the Project is located, or the imposition of any tax with respect to such service or increase in any such tax following the commencement of the construction of the parking area covering, the payments due hereunder shall be adjusted equitably to reflect the increase or decrease in rate or imposition or increase in the aforesaid tax. All computations shall be made on the basis of Tenant's surveyed usage as if a meter exclusively measuring such usage to the covered parking area was in place. Tenant covenants that it shall notify Landlord immediately upon the introduction of any equipment or lighting different from that in the covered parking area as of Landlord's electrical survey or in addition to the aforesaid equipment or lighting in the covered parking area as of said survey. The introduction of any new or different equipment or lighting shall be cause for, at Landlord's election, a resurveying of the covered parking area at Tenant's expense. Landlord reserves the right to inspect the covered parking area to insure compliance with this provision. Once the meters are in place, Tenant shall pay to Landlord the amount of electricity consumed as determined by said meter calculated at the rate structure then existing of the utility company supplying electrical energy to the Project, but adjusted to include an allocable share of the costs of operating the plant. The aforesaid amounts payable to Landlord with respect to electrical consumption shall be treated as Additional Rent due under the Lease. 17. In accordance with Section 5.5 of the Lease and subject to compliance with applicable ABEVA and governmental restrictions and requirements, Tenant shall be permitted to install and maintain, at its sole cost and expense, (a) a flagpole to fly one or more flags and (b) one or more exterior signs to identify the Building and Tenant's occupancy thereof, all in accordance with plans and specifications listed on Annex III previously submitted to Landlord for approval, which approval is hereby granted. 18. Except as modified by this Amendment, the Lease and all the covenants, agreements, terms, provisions and conditions thereof shall remain in full force and effect and are hereby ratified and affirmed. The covenants, agreements, terms, provisions and conditions contained in this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and except as otherwise provided in the Lease as modified by this Amendment, their respective assigns. In the event of any conflict between the terms contained in this Amendment and the Lease, the terms herein contained shall supersede and control the obligations and liabilities of the parties. 19. This Amendment shall not be binding upon Landlord's mortgage holder until approved or consented to by such mortgagee. Promptly after the execution and delivery of this Amendment, Landlord shall seek and use reasonable efforts to obtain approval of and/or consent to this Amendment from its mortgage holder. In the event such approval and/or consent is denied or not obtained within a period of sixty (60) days after the date of this Amendment, then this Amendment will be subject to cancellation by either party by written notice to the other party given within ninety (90) days after the date of this Amendment. 7 Annex I ------- Landscape Punchlist Items ------------------------- 1. Arizona Biltmore Streetscape - Add greater variety and quantity of shrubs and ground cover per original plan) 2. Building Entry - Add 1/4" sized rock ground cover to planters, both sides - Add annuals - Add Oleanders and Indian Hawthorn Ballerinas at wall location (per plan) - Add Indian Hawthorn Ballerinas to planter at northwest (per plan) 3. Building Southeast Corner - Install additional ground cover between walk and planter 4. Building South Side - Add 1/4" sized rock ground cover - Provide drain inlet and pipe installation to resolve drainage issue 5. Building Southwest Corner - Remove conduit and wire from planting bed - Add natal plums at wing wall and by Building (per plan) 6. Building Northeast Corner - Rework entire landscape to eliminate erosion where rain falls 7. Generally - Replace all substandard size 1 gallon and 5 gallon plants Annex II -------- List of Letters describing alleged Building Defects --------------------------------------------------- Annex III --------- List of Plans and Specifications for Flagpole and Signs ------------------------------------------------------- 9 EX-10.8 6 KEY EXECUTIVE LIFE PLAN II Exhibit 10.8 Key Executive Life Plan II Number of Participants: 55 Total Initial Death Benefit: $12,875,000 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ THIS AGREEMENT, is made as of the day of _______________, 19__, by and between Del Webb Corporation, and its successors and assigns, of Phoenix, Arizona, hereinafter called the Corporation, and __________________________ WHEREAS, ___________________________, hereinafter called the Employee, has rendered service to the Corporation, and, WHEREAS, the Corporation wishes to provide a death benefit for the Employee and/or the Employee's designee through a Key Executive Life Plan II, and, WHEREAS, the Employee agrees to participate in such plan to the extent hereinafter provided, NOW THEREFORE, it is mutually agreed that: Insurance Policies 1. In furtherance of the purpose of this Agreement, life insurance is to be purchased on the life of _____________________________ hereinafter called the Insured, from Security Life of Denver Insurance Company under Policy Number ___________ hereinafter called the Policy. Security 2. As security for the Corporation's interest in the Cash Value of the Policy, the Employee shall execute, on a form acceptable to the insurance company, a collateral assignment to the Corporation of certain specified rights in the Policy, as set forth in Article 5. Except as provided in Article 5, ownership of the Policy's rights, including but not limited to the right to name the beneficiary, shall rest with the Employee. Premiums 3. All premiums due on the Policy shall be paid by the Corporation. However, the Employee shall reimburse the Corporation each year in an amount that is equal to the value, as determined for federal tax purposes, of the "economic benefit" derived by the Employee from the Policy's life insurance protection. The Employee will receive Compensation in addition to annual salary each year in an amount equal to this reimbursement. 1 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ Termination 4. This Agreement shall immediately terminate for any of the following reasons: termination of the Employee's employment for any reason; submission of written notice to terminate by either party to this Agreement to the other party; the death of the Insured; or any action by the Corporation which would impair, reduce, or defeat the Employee's interest in the Policy. Such action by the Corporation might include but is not limited to surrender or lapse of the Policy for nonpayment of premiums. If this Agreement terminates, the Employee shall have the right, exercisable within 90 days, to obtain a release of the Corporation's interest in the Policy by paying to the Corporation its interest in the Policy as determined in Article 6(2). Upon receipt of such amount, the Corporation shall either transfer the Policy to the Employee or transfer such interest to the party designated by the Employee. The Corporation agrees to execute all documents necessary to transfer the Policy to the Employee or his/her assigns. If the Employee does not timely exercise this right, the Corporation may exercise its rights under Article 5. Corporation's Rights 5. Under the terms of the collateral assignment of the Policy, the Corporation shall have the following rights: the right to receive, upon termination of this Agreement, an amount equal to the Corporation's interest in the Policy's Cash Value, as determined in accordance with Articles 6(1) and 6(2); the right to release the collateral assignment; the right to surrender or partially surrender the Policy upon the giving of 14 days advance written notice of the Corporation's exercise of its right to surrender the Policy; and the right to make and receive loans against the Policy to the extent of its interest as defined in Article 6(4). Any rights to Policy values or proceeds in excess of the Corporation's interest shall be owned by and payable to, or as designated by, the Employee. 2 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ Any designation or change of beneficiary or change in election of settlement options or exercise of policy rights shall be made subject to this Agreement and the Corporation's rights hereunder. Policy rights shall be exercisable by the sole signature of a duly authorized representative of the Corporation. The Corporation agrees to refrain from making loans or partial surrenders against the Policy in an amount greater than its interest under the Policy as defined in Article 6(4). The parties agree that Security Life of Denver Insurance Company is authorized to recognize the Corporation's right to borrow without the insurance company being responsible for the calculation of amounts permitted to be borrowed and without investigation of the validity or amount of the request by the Corporation to borrow. The sole signature of a duly authorized representative of the Corporation shall be sufficient for the exercise of the Corporation's right to borrow and shall be a full discharge and release to Security Life of Denver Insurance Company. The Employee shall not have the right to make a loan against the Policy or otherwise have access to cash values unless and until such time as the Employee's employment is terminated or the Corporation's interest in the Policy terminates in accordance with this Agreement. Corporation's Interest 6. For purposes of Articles 4 and 5, the amount receivable by the Corporation upon (1) death of the Insured, (2) termination of this Agreement for reason other than death of the Insured, (3) surrender or partial surrender of the Policy, or (4) exercise of the loan right by the Corporation shall be as follows: 3 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ (1)Upon termination of this Agreement resulting from death of the Insured, the Corporation's share of the Policy's death proceed shall be an amount equal to its Aggregate Premiums paid, as defined in Article 6(5), plus any death proceeds paid under the Policy that exceed the amount payable to the Insured's named beneficiary based on the current schedule of Death Benefits as set forth on Appendix A attached to this Agreement. (2)Upon termination of this Agreement for reasons other than the death of the Insured, the Corporation's share of the Policy's Cash Value shall be an amount equal to its Aggregate Premiums paid. The excess, if any, of the Policy's Cash Value shall be paid to the Employee. (3)Upon the Corporation's surrender or partial surrender of the Policy in accordance with Article 5, the Corporation's share of the Policy's Cash Value shall be an amount equal to its Aggregate Premiums paid. The excess, if any, of the Policy's Cash Value shall be paid to the Employee. (4)If the Corporation obtains any loans against the Policy, the amount of the loans together with the interest thereon shall at no time exceed the Aggregate Premiums paid. (5)"Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. "Cash Value" shall mean the guaranteed cash value of the Policy, plus the cash value of any dividend additions as of the date to which premiums have been paid and any dividend credits outstanding, and reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy. 4 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ Application for Additional 7. Should the parties to this Agreement Agreements or Riders deem it desirable, application may be made for a supplemental agreement or rider providing for the waiver of Policy premiums in the event of the Insured's total disability. Any additional premium attributable to such agreement or rider shall be paid by the Corporation. Waived premiums shall not be treated as paid by the Corporation. Named Fiduciary 8. For purposes of the Employee Retirement Income Security Act of 1974, the Corporation is the "named fiduciary" of the Key Executive Life Plan for which this Agreement is hereby designated the written plan instrument. Claims and Review 9. At the Insured's death, the Corporation Procedure and the beneficiary designated to receive proceeds shall execute such forms and furnish such other documents or information as are required to receive payment under the Policy. The Corporation shall also furnish to Security Life of Denver Insurance Company an affidavit specifying the amount of death proceeds payable to the Corporation as defined in Article 6(1). With respect to claims against the Corporation arising under this Agreement, the following procedure shall be used: The claimant shall file a claim for benefits by notifying the Corporation in writing. If the claim is wholly or partially denied, the Corporation shall provide a written notice within 90 days specifying the reason for the denial, the provisions of this Agreement on which the denial is based and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. 5 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ If a claim is denied and a review is desired, the claimant shall notify the Corporation in writing within 60 days after receipt of written notice of a denial of claim. In requesting a review, the claimant may review plan documents and submit any written issues and comments he/she feels are appropriate. The Corporation shall then review the claim and provide a written decision within 60 days of receipt of a request for a review. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. The Corporation's liability under this Agreement shall not exceed the amount of proceeds it has received from the insurance company. Payment of Proceeds 10. In lieu of the lump sum payable at Insured's death, the Employee may, in accordance with the procedures of the insurance company, elect any of the optional modes of payment for the death proceeds as enumerated in the Policy and known as "settlement options" with respect to the portion of the Policy's death proceeds that become payable to the beneficiary. If no such election is in effect at the Insured's death, the beneficiary shall have the right to elect such settlement options. The Corporation shall have a similar right to elect a settlement option for the proceeds attributable to its interest in the Policy. Amendment/Assignment 11. This Agreement may be altered, amended, or modified, including the addition of any extra Policy provisions, by a written agreement signed by the parties to this Agreement. In addition, either party may assign his/her rights, interests and obligations under this Agreement, provided however, that any assignment shall be made subject to the terms of this Agreement. 6 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP II) Split-Dollar Life Insurance Agreement ================================================================================ Interpretation 12. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine and vice-versa. Headings and subheadings are for convenience purposes only and have no effect on the construction of the Agreement. The internal laws of the State of Arizona shall govern this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year First hereinabove written. ----------------------------- (Assignor) ----------------------------- (Corporation) - --------------------------- ----------------------------- (Witness) (By) 7 Del Webb Corporation Key Executive Life Plan II Split-Dollar Collateral Assignment - Equity Method ================================================================================ - ----------------------------- ------------------------------ Policy Number Insured Both copies of this Assignment should be forwarded to the Home Office. One copy will be retained by the Company (hereafter called the Insurer) which is Security Life of Denver Insurance Company. The undersigned owner/applicant of the policy to be issued pursuant to application Part I number _____________ and dated ___________________ for insurance on the life of the insured named above authorizes the Insurer to insert the policy number in this Assignment after said policy is issued. ----------------------------------------------- Owner/Applicant ASSIGNOR________________________________________________________________________ ASSIGNEE: Del Webb Corporation 2231 East Camelback Road, Suite 400 Phoenix, Arizona 85016 FOR VALUE RECEIVED, the undersigned owner (hereafter called the assignor) assigns, transfers and sets over to the assignee, its successors or assigns, certain rights in the policy numbered above, including any and all supplemental extra benefit riders or agreements issued under said policy, subject to all the terms and conditions of the policy and this Assignment and to all superior liens, if any, which the Insurer or any prior assignee may have against this policy. The assignor by this instrument and the assignee by acceptance of this Assignment jointly and severally agree to the conditions and provisions herein set forth. This Assignment is made and the policy is to be held as collateral security for any and all liabilities of the assignor to the assignee, either now existing or that may hereafter arise between the assignor or any successors or assigns and the assignee in conjunction with a Split-Dollar arrangement with regard to this policy. 1.(a) It is expressly agreed that the assignee shall have the following rights: (1) the right to make and receive loans against the policy to the extent of aggregate premiums paid by the assignee; (2) the right to release this Assignment to the assignor or his/her assigns; (3) the right, upon 14 days advance written notice to the Insured, to surrender or partially surrender the policy and to receive the cash values and any dividend credits outstanding (but not in excess of Aggregate Premiums (as defined below) paid by the assignee); and (4) the right to receive from the death proceeds, and to elect an income settlement option with respect thereto, an amount equal to the aggregate premiums paid by the assignee until the date of the insured's death plus any death proceeds paid by the Insurer pursuant to the application numbered above, that exceed the amount payable to the Insured's named beneficiary based on the schedule of Death Benefits attached (see Appendix A). 1 Del Webb Corporation Key Executive Life Plan II Split-Dollar Collateral Assignment - Equity Method ================================================================================ (b) Assignor shall not have the right to make a loan against the policy or otherwise have access to cash values unless and until such time as the Assignor's employment is terminated or the Assignor's interest in the Policy terminates. Except as modified by paragraph 1(a), all other rights in the policy, including but not limited to the right to designate and change the beneficiary and the right to receive any cash values and dividend credits outstanding in excess of aggregate premiums paid by the assignee, are reserved to the assignor and excluded from this Assignment. (c) Notwithstanding any other provision of this Assignment or the Split-Dollar Life Insurance Agreement entered into between assignor and assignee, for all purposes, the assignee shall furnish to the insurer an affidavit specifying the amount(s) to be paid, or the rights to be exercised, by each party. Both the assignor and the assignee acknowledge that, between themselves, they are bound by the limitations of the Assignment. The Insurer will recognize the signature of the assignee and the insurer is authorized to recognize the assignee's claims to rights granted by this Assignment without investigating the reason for any action taken by the assignee, or the validity or the amount of any liabilities or the existence of any default therein. Payment by the Insurer of the sums set forth in the affidavit shall be a full discharge and release therefor to the Insurer. This assignment does not impede or change the Insurer's right under the "Policy Loan" provision to charge interest on any policy loan. If interest is not paid under the terms of the policy, the Insurer has the right to add such interest to the unpaid loan from whatever cash value remains regardless of who owns that cash value under the terms of the Assignment. 2. Aggregate premiums paid by the assignee shall include premiums for any extra benefit riders or agreements issued under this policy. "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. 3. Any death proceeds in excess of the amount payable to the assignee shall be paid by the Insurer to the beneficiary named under the policy. 4. All provisions of this Assignment are binding upon the executors, administrators, successors or assigns of the assignor. 5. All options and designations in effect as of the date of this Assignment shall remain in effect unless specifically changed by this Assignment or by action taken thereafter consistent with the Assignment. 6. The Insurer shall not be responsible for the sufficiency or validity of this Assignment and Il not a party to any split-dollar agreement (or any other similar agreement) between the assignee and the assignor. Signed at____________________________________ on________________________________ (City and State) (Date) SIGN ORIGINAL AND DUPLICATE - ------------------------------ --------------------------------- Witness Signature Signature of Owner of Policy 2 EX-10.9 7 KEY EXECUTIVE LIFE PLAN I Exhibit 10.9 Key Executive Life Plan I Number of Participants: 55 Total Initial Death Benefit: $12,875,OOO Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ THIS AGREEMENT, is made as of the _____ day of _______________, l9__, by and between Del Webb Corporation, and its successors and assigns, of Phoenix, Arizona, hereinafter called the Corporation, and ___________________________ WHEREAS, _________________________, hereinafter called the Employee, has rendered service to the Corporation, and, WHEREAS, the Corporation wishes to provide a death benefit for the Employee and/or the Employee's designee through a Key Executive Life Plan, and, WHEREAS, the Employee agrees to participate in such plan to the extent hereinafter provided, NOW THEREFORE, it is mutually agreed that: Insurance Policies 1. In furtherance of the purpose of this Agreement, life insurance is to be purchased on the life of _____________________________ hereinafter called the Insured, from Security Life of Denver Insurance Company under Policy Number __________ hereinafter called the Policy. Security 2. As security for the Corporation's interest in the Cash Value of the Policy, the Employee shall execute, on a form acceptable to the insurance company, a collateral assignment to the Corporation of certain specified rights in the Policy, as set forth in Article 5. Except as provided in Article 5, ownership of the Policy's rights, including but not limited to the right to name the beneficiary, shall rest with the Employee. Premiums 3. All premiums due on the Policy shall be paid by the Corporation. However, the Employee shall reimburse the Corporation each year in an amount that is equal to the value, as determined for federal tax purposes, of the 'economic benefit" derived by the Employee from the Policy's life insurance protection. The Employee will receive Compensation in addition to annual salary each year in an amount equal to this reimbursement. 1 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ Termination 4. This Agreement shall immediately terminate for any of the following reasons: termination of the Employee's employment for any reason; submission of written notice to terminate by either party to this Agreement to the other party; the death of the Insured; or any action by the Corporation which would impair, reduce, or defeat the Employee's interest in the Policy. Such action by the Corporation might include but is not limited to surrender or lapse of the Policy for nonpayment of premiums. If this Agreement terminates, the Employee shall have the right, exercisable within 90 days, to obtain a release of the Corporation's interest in the Policy by paying to the Corporation its interest in the Policy as determined in Article 6(2). Upon receipt of such amount, the Corporation shall either transfer the Policy to the Employee or transfer such interest to the party designated by the Employee. The Corporation agrees to execute all documents necessary to transfer the Policy to the Employee or his/her assigns. If the Employee does not timely exercise this right, the Corporation may exercise its rights under Article 5. Corporation's Rights 5. Under the terms of the collateral assignment of the Policy, the Corporation shall have the following rights: the right to receive, upon termination of this Agreement, an amount equal to the Corporation's interest in the Policy's Cash Value, as determined in accordance with Articles 6(1) and 6(2); the right to release the collateral assignment; the right to surrender or partially surrender the Policy upon the giving of 14 days advance written notice of the Corporation's exercise of its right to surrender the Policy; and the right to make and receive loans against the Policy to the extent of its interest as defined in Article 6(4). Any rights to Policy values or proceeds in excess of the Corporation's interest shall be owned by and payable to, or as designated by, the Employee. 2 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ Any designation or change of beneficiary or change in election of settlement options or exercise of policy rights shall be made subject to this Agreement and the Corporation's rights hereunder. Policy rights shall be exercisable by the sole signature of a duly authorized representative of the Corporation. The Corporation agrees to refrain from making loans or partial surrenders against the Policy in an amount greater than its interest under the Policy as defined in Article 6(4). The parties agree that Security Life of Denver Insurance Company is authorized to recognize the Corporation's right to borrow without the insurance company being responsible for the calculation of amounts permitted to be borrowed and without investigation of the validity or amount of the request by the Corporation to borrow. The sole signature of a duly authorized representative of the Corporation shall be sufficient for the exercise of the Corporation's right to borrow and shall be a full discharge and release to Security Life of Denver Insurance Company. The Employee shall not have the right to make a loan against the Policy or otherwise have access to cash values unless and until such time as the Employee's employment is terminated or the Corporation's interest in the Policy terminates in accordance with this Agreement. Corporation's Interest 6. For purposes of Articles 4 and 5, the amount receivable by the Corporation upon (1) death of the Insured, (2) termination of this Agreement for reason other than death of the Insured, (3) surrender or partial surrender of the Policy, or (4) exercise of the loan right by the Corporation shall be as follows: 3 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ (1)Upon termination of this Agreement resulting from death of the Insured, the Corporation's. share of the Policy's death proceed shall be an amount equal to its Aggregate Premiums paid, as defined in Article 6(5), plus any death proceeds paid under the Policy that exceed the amount payable to the Insured's named beneficiary based on the current schedule of Death Benefits as set forth on Appendix A attached to this Agreement. (2)Upon termination of this Agreement for reasons other than the death of the Insured, the Corporation's share of the Policy's Cash Value shall be an amount equal to its Aggregate Premiums paid. The excess, if any, of the Policy's Cash Value shall be paid to the Employee. (3)Upon the Corporation's surrender or partial surrender of the Policy in accordance with Article 5, the Corporation's share of the Policy's Cash Value shall be an amount equal to its Aggregate Premiums paid. The excess, if any, of the Policy's Cash Value shall be paid to the Employee. (4)If the Corporation obtains any loans against the Policy, the amount of the loans together with the interest thereon shall at no time exceed the Aggregate Premiums paid. (5) "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. "Cash Value" shall mean the guaranteed cash value of the Policy, plus the cash value of any dividend additions as of the date to which premiums have been paid and any dividend credits outstanding, and reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy. 4 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ Application for Additional 7. Should the parties to this Agreement deem Agreements or Riders it desirable, application may be made for a supplemental agreement or rider providing for the waiver of Policy premiums in the event of the Insured's total disability. Any additional premium attributable to such agreement or rider shall be paid by the Corporation. Waived premiums shall not be treated as paid by the Corporation. Named Fiduciary 8. For purposes of the Employee Retirement Income Security Act of 1974, the Corporation is the "named fiduciary" of the Key Executive Life Plan for which this Agreement is hereby designated the written plan instrument. Claims and Review 9. At the Insured's death, the Corporation Procedure and the beneficiary designated to receive proceeds shall execute such forms and furnish such other documents or information as are required to receive payment under the Policy. The Corporation shall also furnish to Security Life of Denver Insurance Company an affidavit specifying the amount of death proceeds payable to the Corporation as defined in Article 6(1). With respect to claims against the Corporation arising under this Agreement, the following procedure shall be used: The claimant shall file a claim for benefits by notifying the Corporation in writing. If the claim is wholly or partially denied, the Corporation shall provide a written notice within 90 days specifying the reason for the denial, the provisions of this Agreement on which the denial is based and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. 5 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ If a claim is denied and a review is desired, the claimant shall notify the Corporation in writing within 60 days after receipt of written notice of a denial of claim. In requesting a review, the claimant may review plan documents and submit any written issues and comments he/she feels are appropriate. The Corporation shall then review the claim and provide a written decision within 60 days of receipt of a request for a review. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. The Corporation's liability under this Agreement shall not exceed the amount of proceeds it has received from the insurance company. Payment of Proceeds 10. In lieu of the lump sum payable at Insured's death, the Employee may, in accordance with the procedures of the insurance company, elect any of the optional modes of payment for the death proceeds as enumerated in the Policy and known as "settlement options" with respect to the portion of the Policy's death proceeds that become payable to the beneficiary. If no such election is in effect at the Insured's death, the beneficiary shall have the right to elect such settlement options. The Corporation shall have a similar right to elect a settlement option for the proceeds attributable to its interest in the Policy. Amendment/Assignment 11. This Agreement may be altered, amended, or modified, including the addition of any extra Policy provisions, by a written agreement signed by the parties to this Agreement. In addition, either party may assign his/her rights, interests and obligations under this Agreement, provided however, that any assignment shall be made subject to the terms of this Agreement. 6 Del Webb Corporation Amended and Restated - Key Executive Life Plan (KELP) Split-Dollar Life Insurance Agreement ================================================================================ Interpretation 12. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine and vice-versa. Headings and subheadings are for convenience purposes only and have no effect on the construction of the Agreement. The internal laws of the State of Arizona shall govern this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first hereinabove written. ----------------------------------- (Assignor) ---------------------------------- (Corporation) - --------------------------- ---------------------------------- (Witness) (By) 7 Del Webb Corporation Key Executive Life Plan Split-Dollar Collateral Assignment - Equity Method ================================================================================ - --------------------------- ---------------------------------- Policy Number Insured Both copies of this Assignment should be forwarded to the Home Office. One copy will be retained by the Company (hereafter called the Insurer) which is Security Life of Denver Insurance Company. The undersigned owner/applicant of the policy to be issued pursuant to application Part I number _____________ and dated ___________________ for insurance on the life of the insured named above authorizes the Insurer to insert the policy number in this Assignment after said policy is issued. ------------------------------------ Owner/Applicant ASSIGNOR________________________________________________________________________ ASSIGNEE: Del Webb Corporation 2231 East Camelback Road, Suite 400 Phoenix, Arizona 85016 FOR VALUE RECEIVED, the undersigned owner (hereafter called the assignor) assigns, transfers and sets over to the assignee, its successors or assigns, certain rights in the policy numbered above, including any and all supplemental extra benefit riders or agreements issued under said policy, subject to all the terms and conditions of the policy and this Assignment and to all superior liens, if any, which the Insurer or any prior assignee may have against this policy. The assignor by this instrument and the assignee by acceptance of this Assignment jointly and severally agree to the conditions and provisions herein set forth. This Assignment is made and the policy is to he held as collateral security for any and all liabilities of the assignor to the assignee, either now existing or that may hereafter arise between the assignor or any successors or assigns and the assignee in conjunction with a Split-Dollar arrangement with regard to this policy. 1. (a) It is expressly agreed that the assignee shall have the following rights: (1) the right to make and receive loans against the policy to the extent of aggregate premiums paid by the assignee; (2) the right to release this Assignment to the assignor or his/her assigns; (3) the right, upon 14 days advance written notice to the Insured, to surrender or partially surrender the policy and to receive the cash values and any dividend credits outstanding (but not in excess of Aggregate Premiums (as defined below) paid by the assignee); and (4) the right to receive from the death proceeds, and to elect an income settlement option with respect thereto, an amount equal to the aggregate premiums paid by the assignee until the date of the insured's death plus any death proceeds paid by the Insurer pursuant to the application numbered above, that exceed the amount payable to the Insured's named beneficiary based on the schedule of Death Benefits attached (see Appendix A). 1 Del Webb Corporation Key Executive Life Plan Split-Dollar Collateral Assignment - Equity Method ================================================================================ (b) Assignor shall not have the right to make a loan against the policy or otherwise have access to cash values unless and until such time as the Assignor's employment is terminated or the Assignor's interest in the Policy terminates. Except as modified by paragraph 1(a), all other rights in the policy, including but not limited to the right to designate and change the beneficiary and the right to receive any cash values and dividend credits outstanding in excess of aggregate premiums paid by the assignee, are reserved to the assignor and excluded from this Assignment. (c) Notwithstanding any other provision of this Assignment or the Split-Dollar Life Insurance Agreement entered into between assignor and assignee, for all purposes, the assignee shall furnish to the insurer an affidavit specifying the amount(s) to be paid, or the rights to be exercised, by each party. Both the assignor and the assignee acknowledge that, between themselves, they are bound by the limitations of the Assignment. The Insurer will recognize the signature of the assignee and the insurer is authorized to recognize the assignee's claims to rights granted by this Assignment without investigating the reason for any action taken by the assignee, or the validity or the amount of any liabilities or the existence of any default therein. Payment by the Insurer of the sums set forth in the affidavit shall be a full discharge and release therefor to the Insurer. This assignment does not impede or change the Insurer's right under the "Policy Loan" provision to charge interest on any policy loan. If interest is not paid under the terms of the policy, the Insurer has the right to add such interest to the unpaid loan from whatever cash value remains regardless of who owns that cash value under the terms of the Assignment. 2. Aggregate premiums paid by the assignee shall include premiums for any extra benefit riders or agreements issued under this policy. "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. 3. Any death proceeds in excess of the amount payable to the assignee shall be paid by the Insurer to the beneficiary named under the policy. 4. All provisions of this Assignment are binding upon the executors, administrators, successors or assigns of the assignor. 5. All options and designations in effect as of the date of this Assignment shall remain in effect unless specifically changed by this Assignment or by action taken thereafter consistent with the Assignment. 6. The Insurer shall not be responsible for the sufficiency or validity of this Assignment and is not a party to any split-dollar agreement (or any other similar agreement) between the assignee and the assignor. Signed at__________________________________ on______________________________ (City and State) (Date) SIGN ORIGINAL AND DUPLICATE - --------------------------- ---------------------------- Witness Signature Signature of Owner of Policy 2 EX-10.12 8 MANAGEMENT INCENTIVE PLAN Exhibit 10.12 DEL WEBB CORPORATION MANAGEMENT INCENTIVE PLAN Fiscal 1996 (July 1, 1995 - June 30, 1996) Plan Objectives - --------------- o To motivate key management personnel to achieve or exceed Corporate financial goals and to contribute to the short and longer term interest of shareholders. o To provide a competitive bonus program necessary to attract, retain and motivate high quality management. Administration - -------------- 1. Bonuses may be paid in cash or in stock, less applicable deductions and subject to prior deferral agreements as soon as practicable after the end of the Fiscal Year. 2. In order to receive a bonus, the participant must be on the active payroll at the time the bonus is paid unless approval for a pro rata bonus is granted by the Chairman/Chief Executive Officer (CEO). 3. At the discretion of the CEO and upon approval of the Human Resources Committee, financial objectives may be adjusted upward or downward as a result of significant windfalls or disasters beyond the control of management. In addition, the Human Resources Committee can revise financial objectives during the year if significant events occur that were not included in the profit plan. 4. Bonuses are recommended by the participant's immediate superior, reviewed by the CEO and the Human Resources Department, and presented to the Human Resources Committee of the Board for final approval. 5. All terms and conditions of the Plan and its very existence are at the sole discretion of the Human Resources Committee of the Board of Directors. 1 Eligibility - ----------- Key Management personnel: o whose duties and responsibilities can materially affect the growth, development and profitability of the Corporation and, o who are nominated by a Company officer and are approved by the CEO, and o who are assigned to an eligible position on or before July 1st unless otherwise approved by the CEO. Bonus Opportunity Levels - ------------------------ Each participant will have a Target Bonus which will be the amount earned for meeting the Plan objectives. The Target Bonus will be expressed as a percentage of actual base salary earned throughout the 1995/96 fiscal year and will be established by the CEO and the Human Resources Department based on competitive compensation data and internal equity. Target Bonuses - -------------- Target bonus levels will range from 10% to 60% of salary based on the participant's salary grade and organizational level and recommendation of the CEO. No bonuses will be payable until the minimum acceptable threshold earnings target is achieved unless specifically approved by the Human Resources Committee of the Board of Directors. A bonus of 100% of the target bonus will be payable for achieving 100% of Plan objectives. A maximum bonus of 200% of Target Bonus will be payable for attaining the maximum expected performance. Bonus Objectives - ---------------- Bonus objectives will be comprised of the financial objectives relating the participants' area of responsibility and/or non-financial performance objectives as specified in the annual performance appraisal. o Depending upon the community or the division of the company involved, financial objectives for a participant may be based on Corporate net after-tax earnings, budgeted Group or Project operating earnings before interest and cash discounts and/or community/project cash flow. The minimum acceptable threshold, target and maximum expected earnings levels will be determined by the CEO based on the degree of difficulty and the level of acceptability of the budget. 2 Non-Financial performance objectives are the most significant non-financial goals which the individual participant is expected to accomplish during the Plan year.
Corporate Project Project Non-Financial After Tax Operating Cash Performance Earnings Earnings(1) Flow Objectives -------- ----------- ------- ---------- I. Target Bonus 35% and above (Corporate officers, Coventry Division Managers Associate GMS & Fairmount Operations VP) A. Headquarters 100% 0 0 0 B. Operating Sun City Communities 25% 60% 15% 0 Coventry/Coventry Tucson So. CA Conventional Terravita II. Target Bonus below 35% A. Headquarters 80% 0 0 20% B. Operating Sun City Communities 20% 50% 15% 15% Coventry Coventry Tucson/Las Vegas Terravita So. CA Conventional C. Foothills(2) 30% 0 50% 20% D. Coventry Verde Valley 20% 20% 60%
(1) Before interest and cash discounts (2) 35% of Foothills cash flow total is related to generation of budgeted cash flow. 15% of Foothills cash flow total is related to monitoring and communication of cash flow. Non-financial performance objectives will be included in the annual performance appraisal conducted near the beginning of the fiscal year and will be submitted to the CEO for final approval. Objectives must be specific, realistic, quantifiable and time-limited before they will be approved. The objectives will be designed to improve short- and long-term performance and will be mutually agreed to by the participant and management. 3 In the event circumstances or directions change, affecting any participant's pre-established performance objectives, the manager is responsible for revising them or establishing new objectives during the year. Financial Objectives - -------------------- A minimum bonus will be paid upon a community/project achieving the threshold community/project earnings forecast. For results between a threshold and maximum expected earnings, the bonus percent will increase incrementally to a maximum of 200% of target bonus based upon community/project earnings and the achievement of the other formula targets. (See attached for net after-tax earnings and operating income schedules.) Non-Financial Performance Objectives - ------------------------------------ The achievement of performance objectives is measured by the participant's immediate superior based upon documented evaluation of results. Accomplishments will be evaluated using the following scale: Threshold Target Maximum --------- ------ ------- Overall Rating Poor Good Excellent Superior Percent of Target 0 50 - 75 75 - 125 125 - 200 Evaluation of results should take into account the difficulty the objective, the timeliness of accomplishment, the effectiveness of results and the overall impact on the individual's organizational unit. Achievement of community/project financial earnings is paramount in the bonus computation formula; non-financial performance objectives are reviewed and evaluated only if minimum earnings objectives have been met or if specifically approved by the Human Resources Committee. Rating Definitions - ------------------ Maximum A "superior" rating is achieved if the participant ------- accomplishes highly challenging objectives resulting in significant contribution to the Company or business unit. This rating incorporates superior reaction to crisis and superior exploitation of unanticipated opportunities. Target An "excellent" rating is achieved if the participant ------ accomplishes all objectives in a timely and effective manner and overall performance for the year is considered standard or, if the participant accomplished most of a number of significant and highly challenging objectives and overall performance is considered above standard. Threshold A "good" rating is achieved if the participant --------- accomplished most of the objectives in an acceptable manner or all of a group of objectives that were minimally challenging. Overall performance of the year is considered standard. 4 EX-10.15 9 SECOND AMENDMENT TO AMENDED LOAN AGREEMENT Exhibit 10.15 SECOND AMENDMENT TO AMENDED AND ------------------------------- RESTATED REVOLVING LOAN AGREEMENT --------------------------------- This Second Amendment to Amended and Restated Revolving Loan Agreement ("Second Amendment") is entered into as of July 22, 1996 by and among DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose name is set forth on the signature pages of this Second Amendment (collectively, the "Banks" and individually a "Bank"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association (the "Agent") and BANK ONE, ARIZONA, NA, a national banking association (the "Co-Agent"). This Second Amendment is one of the Loan Documents referred to in the Loan Agreement defined below. All terms and agreements set forth in the Loan Agreement which are generally applicable to the Loan Documents shall apply to this Second Amendment. Capitalized terms not otherwise defined herein shall have the meanings given them in the Loan Agreement. RECITALS -------- A. Borrower, the Banks, the Agent and the Co-Agent have previously made and entered into that certain Amended and Restated Revolving Loan Agreement, dated as of June 27, 1995, as amended by that certain First Amendment to Amended and Restated Revolving Loan Agreement, dated as of December 15, 1995 (the "Loan Agreement"), pursuant to which the Banks agreed to make revolving loans to Borrower in the original aggregate principal amount of up to $300,000,000 (the "Loan"). The Loan is evidenced by the Loan Agreement and the various Line A Notes and Line B Notes executed by Borrower in favor of the Banks. B. Borrower has requested that an additional $50,000,000 be made available as part of the Line A Commitment, that the maturity date of the Loan be extended and that certain other modifications and amendments be made to the Loan Agreement and, subject to the terms and conditions contained herein, the Banks and the Agent have agreed to such increase and such modifications and amendments, as more fully set forth below. C. Concurrently with this Second Amendment, FLEET NATIONAL BANK has executed a Commitment Assignment and Acceptance to become a Bank under the Loan Agreement concurrently with the effectiveness of this Second Amendment. Borrower and the Agent hereby approve Fleet National Bank becoming a Bank. NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Borrower, the Banks and the Agent hereby agree as follows: 1. Amendments to Loan Agreement. 1.1 Section 1.1 Section 1.1 of the Loan Agreement is amended as follows: (a) The definition of "Commitment Reduction Date" is restated in its entirety to read as follows: "'Commitment Reduction Date' means June 30, 1998." -1- (b) The last sentence of the definition of "Current Operating Projects" is restated to read as follows: "Also, Current Operating Projects shall include a replacement for one of the foregoing projects if such project is located within the same general metropolitan area as the replaced project and if construction of such project is commenced at a time that the replaced project has less than a three year expected sell-out term based upon its current absorption rate." (c) The definition of "Line A Commitment" is restated in its entirety to read as follows: "'Line A Commitment' means, subject to Sections 2.4 and 2.5, $272,000,000. The respective Pro Rata Shares of the Banks with respect to the Line A Commitment are set forth in Schedule 1.2." (d) The definition of "Maturity Date" is restated in its entirety to read as follows: "'Maturity Date' means December 31, 2000." 1.2 Section 6.13. The table in Section 6.13 of the Loan Agreement is amended as follows: "Period Ratio ------- ----- April 1, 1996 through March 31, 1997 2.55:1.00 April 1, 1997 through March 31, 1998 2:35:1.00 April 1, 1998 and thereafter 2.15:1.00" 1.3 Section 6.14. The table in Section 6.14 of the Loan Agreement is amended as follows: "Period Ratio ------- ----- April 1, 1996 through March 31, 1997 1.80:1.00 April 1, 1997 through March 31, 1998 1.70:1.00 April 1, 1998 through March 31, 1999 1.50:1.00 April 1, 1999 and thereafter 1.30:1.00" -2- 1.4 Schedule 1.1. Schedule 1.2 ("Bank Group Commitments") to the Loan Agreement is amended and restated in its entirety in the schedule attached to this Second Amendment as Annex I. 1.5 Schedule 4.4. Schedule 4.4 ("Subsidiaries") to the Loan Agreement is amended and restated in its entirety in the schedule attached to this Second Amendment as Annex IV. 2. Underwriting Fees. On the effective date of this Second Amendment, Borrower agrees to pay Underwriting Fees as follows: (a) Borrower agrees to pay to the Agent for the respective accounts of the Banks, pro-rata, according to their pro-rata share of the additional $50,000,000 portion of the Line A Commitment, as shown on Annex III hereto, a fee of $62,500; and (b) Borrower agrees to pay a $10,000 fee to each Bank, except Fleet National Bank, payable to the Agent for the account of each such Bank. These Underwriting Fees are fully earned upon such effective date and are nonrefundable. 3. Adjusting Purchase Payments. The Agent shall notify the Banks on the first Banking Day that the conditions specified in Sections 5(a)-5(f) hereof have been satisfied (the "Notice"). On the following Banking Day, certain of the Banks shall purchase, and certain of the Banks shall sell, to one another, the percentage interests in the Commitments as reflected in Annex II hereto, in order to reallocate the then outstanding Advances under the Notes among the Banks to correspond to the revised Pro Rata Shares of the Banks specified in Annex I hereto. The applicable purchase price payments are specified on Annex II hereto and referred to herein as the "Adjusting Purchase Payments." The Adjusting Purchasing Payments shall be made to the Agent by the applicable purchasing Banks by Federal Reserve wire transfer initiated by the payor no later than 9:00 a.m. California time on the Banking Day following the Notice. Upon receipt of all such payments, the Agent shall promptly send appropriate portions thereof to the selling Banks by Federal Reserve wire transfer. The new Pro Rata Shares shall become effective after the close of business on the day of transfer of such funds. 4. Borrower's Representations and Warranties. Borrower hereby represents and warrants that except as previously disclosed to the Banks in writing, all of the representations and warranties contained in the Loan Documents are true and correct on and as of the date of this Second Amendment as though made on that date and after giving effect to this Second Amendment no Event of Default shall be continuing. 5. Conditions Precedent. The effectiveness of this Second Amendment is conditioned upon the satisfaction by Borrower of each of the following conditions on or before July 31, 1996: (a) Borrower shall have delivered or caused to be delivered to the Agent executed original counterparts of this Second Amendment and Exhibit "A" hereto, sufficient in number for distribution to the Agent, the Banks and Borrower; (b) Borrower shall have delivered to the Agent executed original replacement Line A Notes and Line B Notes, for each Bank, in the forms of Exhibit "B" and Exhibit "C" hereto. Such replacement notes -3- shall reflect the increase in the Line A Commitment herein as well as the alteration of the Pro Rata Share of each Bank reflected on Annex I hereto; (c) Borrower shall have paid the Underwriting Fees required in Section 2 hereof; (d) The Agent shall have received from Borrower such documentation as may be required to establish the authority of Borrower to execute, deliver and perform any of the Loan Documents to which it is a Party, including, without limitation, this Second Amendment and the replacement Line A Notes and Line B Notes. Such documentation shall include certified corporate resolutions, incumbency certificates, and such other certificates or documents as the Agent shall reasonably require; (e) The Agent shall have received a written legal opinion of counsel(s) to Borrower and each Guarantor, in form and substance satisfactory to the Agent, regarding the execution, delivery, performance and enforceability of this Second Amendment, the Guarantors' Consent hereto and the replacement Line A Notes and Line B Notes; (f) The Agent shall have received a written certification from a Responsible Official of Borrower that Borrower and its Subsidiaries are in compliance with all the terms and provisions of the Loan Documents and after giving effect to this Second Amendment no Default or Event of Default shall be continuing; and the satisfaction by the Banks of the following condition: (g) The applicable Banks shall have made the Adjusting Purchase Payments as specified in Section 3 hereof. 6. Return of Canceled Notes to Borrower. Upon the effectiveness of this Second Amendment in accordance herewith, including the delivery by Borrower of all documents required under Section 6 hereof, the Banks shall return the Line A Notes and Line B Notes that have been replaced pursuant to Section 5(b) hereof to Borrower, in each case marked "Canceled." 7. Amendment to Other Loan Documents. Each of the Loan Documents is hereby amended such that all references to the Loan Agreement contained therein shall be deemed to be made with respect to the Loan Agreement as amended hereby. Each of the Loan Documents are hereby further amended such that any reference contained therein to any document amended hereby shall be deemed to be made with respect to such document as amended hereby. Each reference to Loan Documents generally shall be deemed to include this Second Amendment. 8. Loan Documents in Full Force and Effect. Except as modified hereby, the Loan Documents remain in full force and effect. 9. Effective Dates. Unless otherwise specified herein, and subject to the satisfaction of all conditions specified in Section 5, each amendment and modification identified herein shall be deemed effective as of the date of this Second Amendment, provided that the changes to the Pro Rata Shares of the Banks identified on Annex I hereto shall be deemed effective on the date of the Adjusting Purchase Payments described in Section 3 of this Second Amendment. -4- 10. Governing Law. This Second Amendment shall be governed by, and construed in accordance with, the Laws of the State of California. 11. Severability. If any provision of this Second Amendment is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 12. Counterparts. This Second Amendment may be executed in counterparts and any party may execute any counterpart, each of which shall be deemed to be an original and all of which, taken together, shall be deemed to be one and the same document. The execution hereof by any parties shall not become effective until this Second Amendment, and Exhibit "A" hereto, is executed and delivered by all parties hereto and thereto. 13. Prior Agreements. This Second Amendment contains the entire agreement between Borrower, the Banks and the Agent with respect to the subject matter hereof, and all prior negotiations, understandings, and agreements with respect thereto are superseded by this Second Amendment. -5- IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed as of the date first above written. "Borrower" DEL WEBB CORPORATION By:________________________________ John A. Spencer Senior Vice President "Agent" BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By:________________________________ Derik J. Hart Vice President "Co-Agent" BANK ONE, ARIZONA, NA, as Co-Agent By:________________________________ James A. Warner Vice President "Banks" BANK ONE, ARIZONA, NA, as a Bank By:________________________________ James A. Warner Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By:________________________________ Carol E. Settles Vice President THE FIRST NATIONAL BANK OF BOSTON By:________________________________ Kevin C. Hake Vice President GUARANTY FEDERAL BANK, F.S.B. By:________________________________ Richard V. Thompson Vice President CREDIT LYONNAIS CAYMAN ISLAND BRANCH By:________________________________ Thierry F. Vincent Authorized Signatory -6- CREDIT LYONNAIS LOS ANGELES BRANCH By:________________________________ Thierry F. Vincent Vice President and Manager NATIONSBANK, N.A., formerly known as NationsBank, N.A. (Carolinas) By:________________________________ Robert L. Whittemore Senior Vice President BANK OF HAWAII By:________________________________ Joseph T. Donalson Vice President FIRST UNION NATIONAL BANK OF NORTH CAROLINA By:________________________________ R. Steven Hall Vice President FLEET NATIONAL BANK By:________________________________ Michael A. Cope Vice President -7- EXHIBIT "A" ----------- GUARANTORS' CONSENTS -------------------- The undersigned do each hereby (a) consent to that certain Second Amendment to Amended and Restated Revolving Loan Agreement, dated as of July 22, 1996, by and among Del Webb Corporation ("Borrower"), the Banks named therein, Bank of America National Trust and Savings Association, as Agent, and Bank One, Arizona, NA, as Co-Agent, including the increase of $50,000,000 in the Line A Commitment contained therein and (b) reaffirm (i) their respective obligations under that certain Subsidiary Guaranty, dated as of June 27, 1995, and (ii) that the Subsidiary Guaranty remains in full force and effect and that, without limitation, any indebtedness of Borrower represented by the $50,000,000 increase in the Line A Commitment constitutes "Guarantied Obligations" thereunder. Dated: July 22, 1996 Asset One Corp., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Coventry of California, Inc., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Del Webb California Corp., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb Commercial Properties Corporation, an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb Communities, Inc., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb Conservation Holding Corp., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer EXHIBIT "A" Page 1 of 5 Del Webb Home Construction, Inc., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb Homes, Inc., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Del Webb Communities of Nevada, Inc. (formerly known as Del Webb Kingswood Parke, Inc.), an Arizona corporation By:________________________________ Donald V. Mickus its treasurer The Villages at Desert Hills, Inc. (formerly known as Del Webb Lakeview Corporation), an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb's Coventry Homes Construction Co., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb's Coventry Homes, Inc., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del Webb's Coventry Homes of Nevada, Inc., an Arizona corporation (formerly known as Del Webb of Nevada, Inc.) By:________________________________ Donald V. Mickus Treasurer Del Webb's Coventry Homes Construction of Tucson Co., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer EXHIBIT "A" Page 2 of 5 Del Webb's Coventry Homes of Tucson, Inc., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del E. Webb Cactus Development Corp., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del E. Webb Development Co., L.P., a Delaware limited partnership By: Del Webb Communities, Inc., general partner By:_______________________________ Donald V. Mickus Treasurer Del E. Webb Foothills Corporation, an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Del E. Webb Glen Harbor Development Corporation, an Arizona corporation By:________________________________ Donald V. Mickus Treasurer DW Aviation Co., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Fairmount Mortgage, Inc., an Arizona corporation By:________________________________ Richard W. Day Treasurer Glen Harbor Joint Venture, an Arizona general partnership By: Del E. Webb Glen Harbor Development Corporation, general partner By: _________________________ Donald V. Mickus Treasurer EXHIBIT "A" Page 3 of 5 Terravita Commercial Corp., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Terravita Corp., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Terravita Home Construction Co., an Arizona corporation By:________________________________ Donald V. Mickus Treasurer Trovas Company, an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Trovas Construction Co., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Del Webb Limited Holding Co., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Del Webb Southwest Co., an Arizona corporation By:________________________________ Donald V. Mickus its treasurer New Mexico Asset Corporation, an Arizona corporation By:________________________________ Donald V. Mickus its treasurer Del Webb Texas Limited Partnership, an Arizona limited partnership By: Del Webb Southwest Co., an Arizona corporation By:____________________________ Donald V. Mickus its treasurer EXHIBIT "A" Page 4 of 5 New Mexico Asset Limited Partnership (formerly known as New Mexico Investment Co. Limited Partnership), an Arizona limited partnership By: Del Webb Corporation, a Delaware corporation By:____________________________ Donald V. Mickus its treasurer EXHIBIT "A" Page 5 of 5 EXHIBIT "B" ----------- LINE A NOTE ----------- $________________ July 22, 1996 Los Angeles, California FOR VALUE RECEIVED, the undersigned promises to pay to the order of __________________________________________________ (the "Bank"), the principal amount of _____________________________________________ ($_____________) or such lesser aggregate amount of Advances as may be made by the Bank with respect to the Line A Commitment under the Loan Agreement referred to below, together with interest on the principal amount of each Advance made hereunder and remaining unpaid from time to time from the date of each such Advance until the date of payment in full, payable as hereinafter set forth. Reference is made to the Amended and Restated Revolving Loan Agreement, dated as of June 27, 1995, as amended by the First Amendment thereto, dated December 15, 1995, and by the Second Amendment thereto, dated July 22, 1996, by and among the undersigned, as Borrower, the Banks which are parties thereto, Bank One, Arizona, N.A., as Co-Agent, and Bank of America National Trust and Savings Association, as Agent for the Banks (as amended, the "Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined herein are used herein with the meanings given those terms in the Loan Agreement. This is one of the Line A Notes referred to in the Loan Agreement, and any holder hereof is entitled to all of the rights, remedies, benefits and privileges provided for in the Loan Agreement as originally executed or as it may from time to time be supplemented, modified or amended. The Loan Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events upon the terms and conditions therein specified. The principal indebtedness evidenced by this Line A Note shall be payable as provided in the Loan Agreement and in any event on the Maturity Date. Interest shall be payable on the outstanding daily unpaid principal amount of Advances from the date of each such Advance until payment in full and shall accrue and be payable at the rates and on the dates set forth in the Loan Agreement both before and after default and before and after maturity and judgment, with interest on overdue principal and interest to bear interest at the rate set forth in Section 3.7 of the Loan Agreement, to the fullest extent permitted by applicable Law. Each payment hereunder shall be made to the Agent at the Agent's Office for the account of the Bank in immediately available funds not later than 11:00 a.m. (San Francisco time) on the day of payment (which must be a Banking Day). All payments received after 11:00 a.m. (San Francisco time) on any particular Banking Day shall be deemed received on the next succeeding Banking Day. All payments shall be made in lawful money of the United States of America. EXHIBIT "B" Page 1 of 2 The Bank shall use its best efforts to keep a record of Advances made by it and payments received by it with respect to this Line A Note, and such record shall be presumptive evidence of the amounts owing under this Line A Note. The undersigned hereby promises to pay all costs and expenses of any rightful holder hereof incurred in collecting the undersigned's obligations hereunder or in enforcing or attempting to enforce any of such holder's rights hereunder, including reasonable attorneys' fees and disbursements, whether or not an action is filed in connection therewith. The undersigned hereby waives presentment, demand for payment, dishonor, notice of dishonor, protest, notice of protest and any other notice or formality, to the fullest extent permitted by applicable Laws. This Line A Note shall be delivered to and accepted by the Bank in the State of California, and shall be governed by, and construed and enforced in accordance with, the local Laws thereof. [ . . . This Line A Note replaces, amends and restates that certain Line A Note, dated as of June 27, 1995, in the principal amount of $____________, heretofore delivered by the undersigned to the Bank pursuant to the Loan Agreement . . . .] DEL WEBB CORPORATION, a Delaware corporation By: ________________________________________ ________________________________________ Printed Name and Title EXHIBIT "B" Page 2 of 2 EXHIBIT "C" ----------- LINE B NOTE ----------- $_____________ July 22, 1996 Los Angeles, California FOR VALUE RECEIVED, the undersigned promises to pay to the order of ______________________________________________ (the "Bank"), the principal amount of ________________________________________ DOLLARS ($____________) or such lesser aggregate amount of Advances as may be made by the Bank with respect to the Line B Commitment under the Loan Agreement referred to below, together with interest on the principal amount of each Advance made hereunder and remaining unpaid from time to time from the date of each such Advance until the date of payment in full, payable as hereinafter set forth. Reference is made to the Amended and Restated Revolving Loan Agreement, dated as of June 27, 1995, as amended by the First Amendment thereto, dated December 15, 1995, and the Second Amendment thereto, dated July 22, 1996, by and among the undersigned, as Borrower, the Banks which are parties thereto, Bank One, Arizona, N.A., as Co-Agent, and Bank of America National Trust and Savings Association, as Agent for the Banks (as amended, the "Loan Agreement"). Terms defined in the Loan Agreement and not otherwise defined herein are used herein with the meanings given those terms in the Loan Agreement. This is one of the Line B Notes referred to in the Loan Agreement, and any holder hereof is entitled to all of the rights, remedies, benefits and privileges provided for in the Loan Agreement as originally executed or as it may from time to time be supplemented, modified or amended. The Loan Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events upon the terms and conditions therein specified. The principal indebtedness evidenced by this Line B Note shall be payable as provided in the Loan Agreement and in any event on the Maturity Date. Interest shall be payable on the outstanding daily unpaid principal amount of Advances from the date of each such Advance until payment in full and shall accrue and be payable at the rates and on the dates set forth in the Loan Agreement both before and after default and before and after maturity and judgment, with interest on overdue principal and interest to bear interest at the rate set forth in Section 3.7 of the Loan Agreement, to the fullest extent permitted by applicable Law. Each payment hereunder shall be made to the Agent at the Agent's Office for the account of the Bank in immediately available funds not later than 11:00 a.m. (San Francisco time) on the day of payment (which must be a Banking Day). All payments received after 11:00 a.m. (San Francisco time) on any particular Banking Day shall be deemed received on the next succeeding Banking Day. All payments shall be made in lawful money of the United States of America. EXHIBIT "C" Page 1 of 2 The Bank shall use its best efforts to keep a record of Advances made by it and payments received by it with respect to this Line B Note, and such record shall be presumptive evidence of the amounts owing under this Line B Note. The undersigned hereby promises to pay all costs and expenses of any rightful holder hereof incurred in collecting the undersigned's obligations hereunder or in enforcing or attempting to enforce any of such holder's rights hereunder, including reasonable attorneys' fees and disbursements, whether or not an action is filed in connection therewith. The undersigned hereby waives presentment, demand for payment, dishonor, notice of dishonor, protest, notice of protest and any other notice or formality, to the fullest extent permitted by applicable Laws. This Line B Note shall be delivered to and accepted by the Bank in the State of California, and shall be governed by, and construed and enforced in accordance with, the local Laws thereof. [ . . . This Line B Note replaces, amends and restates that certain Line B Note, dated as of June 27, 1995 in the principal amount of $_______________ , heretofore delivered by the undersigned to the Bank pursuant to the Loan Agreement . . . . ] DEL WEBB CORPORATION, a Delaware corporation By: ________________________________________ ________________________________________ Printed Name and Title EXHIBIT "C" Page 2 of 2 ANNEX I ------- DEL WEBB CORPORATION BANK GROUP COMMITMENTS
Line "A" Line "B" Total Syndicate Bank Pro Rata Share $272,000,000 $78,000,000 $350,000,000 - -------------- -------------- ------------ ----------- ------------ Bank of America NT & SA 24.28571429% $ 66,057,143 $ 18,942,857 $ 85,000,000 Bank One, Arizona, NA 18.57142857% 50,514,286 14,485,714 65,000,000 NationsBank, N.A. 12.85714286% 34,971,429 10,028,571 45,000,000 Guaranty Federal, F.S.B. 11.42857143% 31,085,714 8,914,286 40,000,000 The First National Bank of Boston 10.00000000% 27,200,000 7,800,000 35,000,000 First Union National Bank of North Carolina 7.14285714% 19,428,571 5,571,429 25,000,000 Bank of Hawaii 5.71428571% 15,542,857 4,457,143 20,000,000 Fleet National Bank 5.71428571% 15,542,857 4,457,143 20,000,000 Credit Lyonnais 4.28571429% 11,657,143 3,342,857 15,000,000 TOTAL: 100.00000000% $272,000,000 $ 78,000,000 $350,000,000
ANNEX I Page 1 of 1 ANNEX II -------- ADJUSTING PURCHASE PAYMENTS Aggregate Principal Balance of existing Promissory Notes immediately prior to effective date of Second Amendment - $195,000,000 ("Carryover Principal Balance").
Banks Making Former Share New Share of Adjusting of Carryover Former Carryover New Adjusting Purchase Adjusting Purchase Purchase Payments Principal Balance Pro Rata Share Principal Balance Pro Rata Share Payment to Pay Payment to Receive - ----------------- ----------------- -------------- ----------------- -------------- ------------------ ------------------ Bank of Hawaii $ 9,750,000 5.000000% $ 11,142,857 5.71428571% $ 1,392,857 First Union National 9,750,000 5.000000% 13,928,571 7.14285714% 4,178,571 Bank of North Carolina Fleet National Bank -0- -0- 11,142,857 5.71428571% 11,142,857 Banks Receiving Adjusting Purchase Payments - ------------------------------------------- Bank of America 55,250,000 28.333333% 47,357,143 24.28571429% $ 7,892,857 Bank One, 42,250,000 21.666667% 36,214,286 18.57142857% 6,035,714 Arizona, NA NationsBank, N.A. 26,000,000 13.333333% 25,071,429 12.85714286% 928,571 Guaranty Federal, 22,750,000 11.666667% 22,285,714 11.42857143% 464,286 F.S.B. The First National 19,500,000 10.000000% 19,500,000 10.00000000% -0- Bank of Boston Credit Lyonnais 9,750,000 5.000000% 8,357,143 4.28571429% 1,392,857 TOTAL: $195,000,000 100.000000% $195,000,000 100.00000000% $16,714,285 $16,714,285
ANNEX II Page 1 of 1 ANNEX III SHARES OF INCREASE IN COMMITMENT
Portion of Pro-Rata Share of Syndicate Bank Increase in Commitment Increase in Commitment - -------------- ---------------------- ---------------------- Bank of America NT & SA -0- -0- Bank One, Arizona, NA -0- -0- NationsBank, N.A. $ 5,000,000 10% Guaranty Federal, F.S.B. 5,000,000 10% The First National Bank of Boston 5,000,000 10% First Union National Bank of North Carolina 10,000,000 20% Bank of Hawaii 5,000,000 10% Fleet National Bank 20,000,000 40% Credit Lyonnais -0- -0- TOTAL: $50,000,000 100%
ANNEX III Page 1 of 1 Annex IV Schedule 4.4 SUBSIDIARIES AND ASSOCIATED COMPANIES OF DEL WEBB CORPORATION
Name Shares Issued Shares Owned By: Asset One Corp.* 100 Del Webb Corporation Asset Four Corp. 100 Del Webb Corporation Asset Five Corp. 100 Del Webb Corporation Coventry of California, Inc.* 1,000 Del Webb Corporation Del Webb Architectural Services, Inc. 1,000 Del Webb Corporation Del Webb California Corp.* 250 Del Webb Corporation Del Webb Commercial Properties Corporation* 1,000 Del Webb Corporation Del Webb Communities, Inc.* 751,852 Del Webb Corporation Del Webb Communities of Nevada, Inc.* 1,000 Del Webb Corporation Del Webb Community Management Co. 250 Del Webb Corporation Del Webb Conservation Holding Corp.* 1,000 Del Webb Communities, Inc. Del Webb Construction Services Co 100 Del Webb Corporation Del Webb Home Construction, Inc.* 100 Del Webb Communities, Inc. Del Webb Homes, Inc.* 1,000 Del Webb Corporation Del Webb Limited Holding Co.* 1,000 Del Webb Communities, Inc. Del Webb Midatlantic Corp. 100 Del Webb Corporation Del Webb Property Corp. 100 Del Webb Corporation Del Webb Southwest Co.* 1,000 Del Webb Construction Services Co. Del Webb Texas Limited Partnership* -0- Del Webb Texas Title Agency Co. 1,000 Del Webb Southwest Co. Del Webb's Contracting Services, Inc. 100 Del Webb Communities, Inc. Del Webb's Contracting Services of Tucson, Inc. 100 Del Webb Communities, Inc. Del Webb's Coventry Homes Construction Co.* 1,000 Del Webb's Coventry Homes, Inc. Del Webb's Coventry Homes, Inc.* 1,000 Del Webb Corporation Del Webb's Coventry Homes of Nevada, Inc.* 1,000 Del Webb's Coventry Homes, Inc. Del Webb's Coventry Homes Construction of Tucson Co.* 1,000 Del Webb's Coventry Homes of Tucson, Inc. Del Webb's Coventry Homes of Tucson, Inc.* 1,000 Del Webb's Coventry Homes, Inc. Del Webb's Stetson Hills, Inc. 1,000 Del Webb's Coventry Homes, Inc. Del Webb's Sun City Realty, Inc. 1,000 Del Webb Corporation Del E. Webb Cactus Development Corp.* 1,000 Del Webb Commercial Properties Corporation
Del E. Webb Development Co., L.P.* -0- Del E. Webb Finance Company 100 Del Webb Corporation Del E. Webb Financial Corporation 1,000 Del Webb Corporation Del E. Webb Foothills Corporation* 1,000 Del Webb Commercial Properties Corporation Del E. Webb Glen Harbor Development Corporation* 1,000 Del Webb Commercial Properties Corporation DW Aviation, Co.* 1,000 Del Webb Corporation Fairmount Mortgage, Inc.* 400,000 Del Webb Corporation Glen Harbor Joint Venture* -0- Marina Operations Corp. 100 Del Webb Corporation New Mexico Asset Corporation* 100 Del Webb Corporation New Mexico Asset Limited Partnership* -0- Risco Insurance Company, Ltd. 499,990 Del Webb Corporation Sun City Sales Corporation 1,000 Del Webb Communities, Inc. Sun City Title Agency Co. 100,000 Del Webb Communities, Inc. Sun State Insulation Co., Inc. 1,000 Del Webb Communities, Inc. Terravita Commercial Corp.* 1,000 Del Webb Corporation Terravita Corp.* 1,000 Del Webb Corporation Terravita Home Construction Co.* 1,000 Del Webb Corporation Terravita Marketplace L.L.C. -0- The Villages At Desert Hills, Inc.* 100 Del Webb Corporation Trovas Company* 1,000 Del Webb's Coventry Homes, Inc. Trovas Construction Co.* 1,000 Del Webb's Coventry Homes, Inc.
o Those subsidiaries designated with an asterisk constitute Guarantor Subsidiaries as defined in the Loan Agreement. o All of these entities are corporations except: o Del E. Webb Development Co., L.P. - a Delaware limited partnership, which is owned by Del Webb Communities, Inc. (99.9%) and Del Webb Construction Services Co. (.1%). Del Webb Communities, Inc. is the general partner. o Glen Harbor Joint Venture - an Arizona partnership owned by Del E. Webb Glen Harbor Development Corporation (50%), and Del E. Webb Cactus Development Corp. (50%). o Del Webb Texas Limited Partnership - an Arizona limited partnership, which is owned by Del Webb Southwest Co. (1%) and Del Webb Limited Holding Co. (99%). Del Webb Southwest Co. is the general partner. o New Mexico Asset Limited Partnership - an Arizona limited partnership, which is owned by Del Webb Corporation (1%), and New Mexico Asset Corporation (99%). Del Webb Corporation is the general partner. o Terravita Marketplace L.L.C. - an Arizona limited liability company which is owned by Pederson Group, Inc. (1%), Terravita Commercial Corp. (59%), Terravita Corp. (1%), and J&R Holdings II, L.L.C. (39%). Pederson Group, Inc. is the general partner. o All corporations are Arizona corporations except: o Del Webb Corporation, a Delaware corporation. o The company also owns shares of stock in a number of publicly held companies for purposes of obtaining such companies' public reports. These holdings are immaterial. EX-10.18 10 1981 STOCK OPTION PLAN Exhibit 10.18 As Amended October 29, 1981 January 27, 1987 June 30, 1993 DEL E. WEBB CORPORATION June 20, 1996 ----------------------- 1981 STOCK OPTION PLAN ---------------------- 1. Purpose of Plan. The purpose of this Plan is to enable Del E. Webb Corporation and certain of its subsidiaries to continue to compete successfully in attracting and retaining key employees with outstanding abilities by making it possible for them to purchase shares of the Company's Common Stock on terms which will give them a more direct and continuing interest in the future success of the Company's business. It is intended that options granted hereunder may be either incentive stock options under Section 422A of the Internal Revenue Code or non-qualified options. 2. Definitions. "Company" means Del E. Webb Corporation, an Arizona corporation. "Code" means the Internal Revenue Code of 1954, as amended and any successor provision. "Committee" means a committee established by the Board consisting of three or more members of the Board, none of whom is eligible to receive options under the Plan. The Executive Compensation and Management Development Committee may be this committee if it meets these qualifications. "Incentive Stock Option" means an option designed to meet the requirements of Section 422A(b) of the Code. "Subsidiary", unless specified otherwise, means a corporation of which at least a majority of the outstanding securities having ordinary voting power to elect all or a majority of the directors of such corporation is at the time owned or controlled directly or indirectly by the Company or a Subsidiary. "Employees" means employees, (including employees who are directors and/or officers) regularly employed on a salary basis by the Company or by a Subsidiary. "Shares" means shares of Common Stock of the Company. "Board" means the Board of Directors of the Company. "Optionee" means a person to whom an option has been granted under this Plan which has not expired or been fully exercised, surrendered, or forfeited. "Plan" means the Del E. Webb Corporation 1981 Stock Option Plan. 3. Administration. The Plan shall be administered by the Committee which shall adopt by resolution Such Rules and Regulations as may be required in order to carry out the purpose of the Plan, as well as the form of option agreement and other forms required in connection with the Plan. All questions of interpretation, administration and application of the Plan shall be determined by a majority of the Committee and the determination of such majority shall be final and binding upon all persons in interest, including the Company and its shareholders and all Optionees. 4. Number of Shares. The grants of options to purchase Common Stock of the Company shall not exceed in the aggregate 600,000 shares of the Common Stock of the Company; provided, however, that in the event that options granted under the Plan shall terminate or expire without being exercised, in whole or in part, the shares subject to such unexercised options may again be subjected to an option under this Plan. Provided further, the number of shares' shall be adjusted to reflect changes or other adjustments in the number of outstanding shares as hereinafter provided in Section 5. The shares of stock to be so made subject to an option under this Plan shall be shares of Common Stock of the Company either held in the Company's treasury or authorized and unissued Common Stock of the Company, or some of each. The Company shall be under no obligation to reserve or to retain in its treasury any particular number of shares at any time, and no particular shares, whether unissued or held as treasury shares, shall be identified as those optioned under this Plan. 5. Change in Capitalization. In the event that the shares of Common Stock of the Company, as presently constituted, shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether by merger, consolidation, reorganization, recapitalization, combination of shares or otherwise) then there shall be substituted for each share of Common Stock of the Company heretofore appropriated for use in the Plan the number and kind of shares of stock or other securities into which each such share shall be exchanged. In the event that there should be any change in the number or kind of outstanding shares of the Common Stock of the Company, or of any stock or other securities into which it shall have been changed, or for which it shall have been exchanged by stock dividend or stock split, or the stock of a wholly-owned subsidiary corporation shall have been distributed to the stockholders of the Company, and this action equitably requires an adjustment in the number or kind of shares then subject to an option or Options or an adjustment in the number or kind of shares which may become subject to an option under this Plan and an adjustment in the option prices therefor, such adjustment or adjustments shall be made in accordance with the determination by the Committee, and notice thereof shall be given by the Company to each Optionee and such adjustment shall be effective and binding for all purposes of this Plan. 6. Granting of Options. The Committee, is authorized to grant options to selected employees pursuant to this Plan during the calendar year 1981 and in any calendar year thereafter to May 31, 1991 but not thereafter. The number of shares optioned in each year, the employees to whom options are granted, and the number of Shares optioned to each employee selected shall be wholly within the discretion of the Committee, subject to the limitations prescribed in Section 4 and provided that the aggregate fair market value of the stock for which any employee may be granted incentive stock options in any calendar year under the Plan and all other incentive stock option plans maintained by the Company and its parent and subsidiary corporations shall not exceed the sum of One Hundred Thousand Dollars ($100,000) plus any unused limit carryover applicable to such year under Section 422A(c)(4) of the Code. 7. Terms of Stock Options. The terms of stock options granted under this Plan shall be as follows: (a) The Option price shall be fixed by the Committee but shall in no event be less than 100 percent of the fair market value of the shares subject to the option on the date the option is granted, except in the case of an incentive stock option granted to an employee who at the time the option is granted owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation the option price shall be at least 110 percent of the fair market value of the stock subject to the option. (b) Options shall not be transferable otherwise than by will or by the laws of descent and distribution. No option shall be subject, in whole or in part, to attachment, execution or levy of any kind. (c) Each option shall expire and all rights thereunder shall end at the expiration of such period (which shall not be more than ten years) after the date on which it was granted as shall be fixed by the Committee, subject in all cases to earlier expiration as provided in paragraphs (d) and (e) of this Section 7 in the event of termination of employment or death, and provided further that in the case of an incentive stock option granted to an employee who at the time the option is granted owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporations such option by its terms will not be exercisable after the expiration of five years from the date the option is granted. (d) During the lifetime of an Optionee, his option shall be exercisable only by him and only while employed by the Company or a Subsidiary, or within (i) one year after termination of employment in the case of any employee who is disabled (within the meaning of Section 105(d)(4) of the Code) or (ii) three months after he otherwise ceases to be so employed (but in any event not later than the end of the period fixed by the Committee in accordance with the provisions of paragraph of this Section 7), if and to the extent the option was exercisable by him on the last day of such employment. (e) If an Optionee dies within a period during which his option could have been exercised by him, his option may be exercised at any time during the period in which Optionee could have exercised the option had Optionee survived (or such other or shorter period as may be provided by the Committee in accordance with applicable regulations issued with respect to the Code). (f) Subject to the foregoing terms and to such additional or different terms regarding the exercise of the options as the Committee may fix at time of grant, options may be exercised in whole at one time or in part from time to time. (g) No incentive stock option granted under the Plan shall be exercisable while there is outstanding (within the meaning of Section 422A(c)(7) of the Code) any incentive stock option which was granted before the granting of such option, to such Optionee to purchase stock in the Company or in any corporation which (at the time of the granting of such option) was a parent or subsidiary Corporation of the Company or a predecessor corporation of any such corporations. Under Section 422A(c)(7) of the Code an incentive stock option is treated as outstanding until such option is exercised in full or expires by reason of lapse of time. 8. Reorganization of the Company. In the event that the Company is succeeded by another corporation in a re organization, merger, consolidation, acquisition of property or stock, separation or liquidation, the successor corporation shall assume the outstanding options granted under this Plan or shall substitute new options for them 9. Delivery of Shares. No shares shall be delivered upon the exercise of an option until the option price has been paid in full in cash or, at the discretion of the Committee, in whole or in part in the Company's Common Stock owned by the Optionee valued at fair market value on the date of exercise. If required by the Committee no shares will be delivered upon the exercise of an option until the Optionee has given the Company (a) a satisfactory written statement that he is purchasing the shares for investment and not with a view to the sale or distribution of any such shares, (b) a written agreement not to sell any shares received upon the exercise of the option or any other shares of the Company that he may then own or thereafter acquire except either (i) through a broker on the New York Stock Exchange or another national securities exchange or (ii) with the prior written agreement of the Company and an agreement satisfactory to the Committee providing for either payment by Optionee to the Company or permitting deduction by the Company from any amounts owing to Optionee of an amount equal to any Federal, state or local taxes of any kind required by law to be withheld with respect to the shares subject to the option. The granting of any option and the obligation of the Company to sell and deliver stock under any option shall be subject to the approval of any governmental authority which may be required in connection either with the grant of the option or with the authorization, issuance or sale of such stock. 10. Continuation of Employment. Neither this Plan nor any option granted hereunder shall confer upon any employee any right to Continue in the employment of the Company or any Subsidiary or limit in any respect the right of the Company or any Subsidiary to terminate his employment at any time. 11. Amendments. The Board may from time to time alter, amend, suspend or discontinue the Plan and make rules for its administration; provided, however, that subject to the provisions of Section 5, unless the stockholders of the Company shall have first approved thereof, (i) the total number of shares authorized under the Plan shall not be increased, (ii) the minimum option price specified in Section 7, or the exercise price (or formula for its computation) as to previously granted options, shall not be changed, except that stockholder approval shall not be required if the minimum option price is increased, (iii) no option shall be exercisable more than ten (10) years after the date it is granted, (iv) no change shall be made in the class of employees to whom options may be granted or awards made, and (v) the expiration date of this Plan shall not be extended. The expiration date shall be May 31, 1991, or such earlier date as the Board, In its discretion, may determine. Any option outstanding under the Plan at the date of termination shall remain in effect until it shall have been exercised or it shall have expired as herein otherwise provided. 12. Effective Date. The Plan shall become effective June 1, 1981, provided, however, that no option may be exercised unless this Plan is approved by the stockholders at the next annual meeting of the stockholders or at a special meeting held for that purpose within twelve months after the effective date. No termination or amendment may adversely affect the rights of an Optionee without his consent. EXHIBIT B 1981 Stock Option Plan 1. Paragraph 6 shall be amended as follows: The Committee is authorized to grant options to selected Employees pursuant to this Plan during the calendar year 1986 and any calendar year thereafter to December 31, 1991, but not thereafter. The number of shares optioned in each year, the Employees to whom options are granted, and the number of Shares optioned to each Employee selected shall be wholly within the discretion of the Committee, subject to the limitations described in Section 4 and provided that the aggregate fair market value of option stock (determined at the time of the Incentive Stock Option grant) for which Incentive Stock Options are exercisable for the first time under the terms of the Plan and all other Incentive Stock Option plans maintained by the Company and its parent and Subsidiary corporations, by any employee during any calendar year after December 31, 1986, cannot exceed $100,000. 2. Paragraph 7(g) shall be amended by inserting the language "prior to January 1, 1987" into the first sentence thereof as follows: 7(g) No Incentive Stock Option granted under the Plan prior to January 1, 1987 shall be exercisable while there is outstanding (within the meaning of Section 422A(c)(7) of the Code) any Incentive Stock Option which was granted before the granting of such option . . . THIRD AMENDMENT TO THE DEL WEBB CORPORATION 1981 STOCK OPTION PLAN 1. This Third Amendment shall only amend that Section specified herein and the remaining provisions of the Plan not so amended are hereby ratified and affirmed. 2. Section 9 of the Plan is hereby amended and restated as follows: No shares shall be delivered upon the exercise of an option until the price, if any, that is due upon exercise has been paid in full in cash, or, at the discretion of the Committee, in whole or in part in the Company's common stock owned by the Optionee valued at fair market value on the date of exercise. if required by the Committee, no Shares will be delivered upon the exercise of an option until the Optionee has given the Company (a) a satisfactory written statement that he is purchasing the Shares for investment and not with a view to the sale or distribution of any such Shares, or (b) a written agreement not to sell any Shares received upon the exercise of the option or any other Shares that he may then own or thereafter acquire except either (i) through a broker on the New York Stock Exchange or another national securities exchange or (ii) with the prior written agreement of the Company. With respect to withholding required upon the exercise of an option or upon any other taxable event, Optionees shall satisfy all Federal, state and local taxes required by law to be withheld by having the Company withhold Shares (to the extent that Shares are issued) having a fair market value on the date the tax is to be determined equal to the maximum marginal total tax which would be imposed on the transaction. The granting of any option and the obligation of the Company to sell and deliver stock under any option shall be subject to the approval of any governmental authority which may be required in connection either with the grant of the option or with the authorization, issuance or sale of such stock. 3. This Third Amendment shall be effective June 30, 1993. EX-10.19 11 1986 STOCK OPTION AND SAR PLAN Exhibit 10.19 As Amended January 27, 1987 June 30, 1993 June 20, 1996 STOCK OPTION AND SAR PLAN OF THE -------------------------------- DEL E. WEBB CORPORATION ----------------------- 1. Purpose of Plan --------------- The purpose of this Plan is to enable Del E. Webb Corporation and certain of its Subsidiaries to continue to compete successfully in attracting and retaining key employees with outstanding abilities by making it possible for them to obtain Shares of the Company's common stock on terms which will give them a more direct and continuing interest in the future success of the Company's business. It is intended that options granted hereunder may be either Incentive Stock Options under section 422A of the Internal Revenue Code or nonqualified options and that SARs may be granted and exercised together with either of these two types of options or independently from any such option, subject to the terms and conditions specified hereinafter. 2. Definition ---------- When used in the Plan, the following terms shall have the meaning specified below. (a) "Board" means the Board of Directors of the Company. (b) "Code" means the Internal Revenue Code of 1954, as amended and any successor provision. (c) "Committee" means a committee established by the Board consisting of three or more members of the Board, none of whom is eligible to receive options under the Plan and each of whom is a "disinterested" person (within the meaning of Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934). The Human Resources Committee may be this committee if it meets these qualifications. -1- (d) "Company" means Del E. Webb Corporation, an Arizona corpo ration. (e) "Employees" means employees, (including employees who are directors and/or officers) regularly employed on a salary basis by the Company or by a Subsidiary. (f) "Incentive Stock Option" means an option designed to meet the requirements of Section 422A(b) of the Code. (g) "Optionee" means a person to whom an option or an SAR has been granted under this Plan which has not expired or been fully exercised, surrendered, or forfeited. (h) "Plan" means the Del E. Webb Corporation 1986 Stock Option and SAR Plan. (i) "SARs" means stock appreciation rights granted under the Plan. (j) "Shares" means shares of common stock of the Company, or such other substituted shares as may replace them pursuant to section 5 hereof. (k) "Subsidiary" means a subsidiary corporation of the Company (within the meaning of section 425(f) of the Code). 3. Administration -------------- The Plan shall be administered by the Committee which shall adopt by resolution such rules and regulations as may be required in order to carry out the purpose of the Plan, as well as the form of option and SAR agreements and any other forms required in connection with the Plan. All questions of interpretation, administration and application of the Plan shall be determined by a majority of the Committee and the determination of such majority -2- shall be final and binding upon all persons in interest, including the Company and its shareholders and all Optionees. 4. Number of Shares ---------------- The grants of options or SARs to obtain common stock of the Company shall not permit the acquisition of a number of Shares which in the aggregate exceeds 600,000 Shares; provided, however, that in the event that options or SARs granted under the Plan shall terminate or expire without being exercised, in whole or in part, the Shares subject to such unexercised options may again be subjected to an option or SAR under this Plan. Provided further, the number of Shares shall be adjusted to reflect changes or other adjustments in the number of outstanding Shares as hereinafter provided in section 5. The Shares to be so made subject to an option or SAR under this Plan shall be shares of common stock of the Company either held in the Company's treasury or authorized and unissued common stock of the Company, or some of each. The Company shall be under no obligation to reserve or to retain in its treasury any particular number of Shares at any time, and no particular Shares, whether unissued or held as treasury Shares, shall be identified as those subject to an option or SAR under this Plan. 5. Change in Capitalization ------------------------ In the event that the common stock of the Company, as presently constituted, shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation (whether by merger, consolidation, reorganization, recapitalization, combination of shares or otherwise), then there shall be substituted for each Share heretofore appropriated for use in the Plan the number and kind of shares of stock or other securities into which each such Share shall be exchanged. In the event that there should be any change in the number or kind of outstanding Shares of the common stock of the Company, or of any stock or other securities into which it shall -3- have been changed, or for which it shall have been exchanged by stock dividend or stock split, or the stock of a wholly-owned Subsidiary corporation shall have been distributed to the stockholders of the Company, and this action equitably requires an adjustment in the number or kind of Shares then subject to options or SARs or an adjustment in the number or kind of Shares which may become subject to an option or SAR under this Plan and an adjustment in the option or SAR exercise prices therefor, such adjustment or adjustments shall be made in accordance with the determination by the Committee, and notice thereof shall be given by the Company to each Optionee and such adjustment shall be effective and binding for all purposes of this Plan. 6. Granting of Options ------------------- The Committee is authorized to grant options to selected Employees pursuant to this Plan during the calendar year 1986 and in any calendar year thereafter to December 31, 1995 but not thereafter. The number of Shares optioned in each year, the Employees to whom options are granted, and the number of Shares optioned to each Employee selected, shall be wholly within the discretion of the Committee, subject to the limitations prescribed in section 4 and provided that the aggregate fair market value of the stock for which any Employee may be granted Incentive Stock Options in any calendar year under the Plan and all other Incentive Stock Option plans maintained by the Company and its parent and Subsidiary corporations shall not exceed the sum of $100,000 plus any unused limit carryover applicable to such year under section 422A(c) (4) of the Code. 7. Terms of Stock Options ---------------------- Stock options granted under this Plan shall be evidenced by a written agreement indicating whether the option being granted is an Incentive Stock Option, a nonqualified option, or a combination of these two types and also whether or not the option is initially -4- coupled with an SAR. Nonqualified options shall not be granted in tandem with an Incentive Stock Option under terms providing that the exercise of one affects the right to exercise the other. Each stock option agreement shall specify the number of Shares subject to the option, the option exercise price per Share, and the times at which the option may be exercised. In addition, each such agreement shall ensure that the option complies with the following conditions and shall explicitly include terms indicating compliance with the rules in paragraphs (b), (c), and (g) below. (a) The option exercise price shall be fixed by the Committee but shall in no event be less than 100 percent of the fair market value of the Shares subject to the option on the date the option is granted, except in the case of an Incentive Stock Option granted to an Employee who at the time the option is granted owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or of its parent or Subsidiary corporations, the option price shall be at least 110 percent of the fair market value of the stock subject to the option. (b) Options shall not be transferable otherwise than by will or by the laws of descent and distribution. No option shall be subject, in whole or in part, to attachment, execution or levy of any kind. (c) Each option shall expire and all rights thereunder shall end at the expiration of such period (which shall not be more than ten years after the date on which it was granted) as shall be fixed by the Committee, provided that in the case of an Incentive Stock Option granted to an Employee who at the time the option is granted owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or its parent or Subsidiary corporations such option by its terms will not be exercisable after the expiration of five years from the date the option is granted. -5- (d) During the lifetime of an Optionee, his option shall be exercisable only by him and only while employed by the Company or a Subsidiary, or within (i) one year after termination of employment in the case of any Employee who is disabled (within the meaning of section 105(d)(4) of the Code) or (ii) three months after he otherwise ceases to be so employed (but in any event not later than the end of the period fixed by the Committee in accordance with the provisions of paragraph (c) of this section 7), if and to the extent the option was exercisable by him on the last day of such employment. (e) If an Optionee dies within a period during which his option could have been exercised by him, his option may be exercised at any time during the period in which Optionee could have exercised the option had Optionee survived (or such other or shorter period as may be provided by the Committee in accordance with applicable regulations issued with respect to the Code). (f) Subject to the foregoing terms and to such additional or different terms regarding the exercise of the options as the Committee may fix at time of grant, options may be exercised in whole at one time or in part from time to time. (g) No Incentive Stock Option granted under the Plan shall be exercisable while there is outstanding (within the meaning of Section 422A(c)(7) of the Code) any Incentive Stock Option which was granted before the granting of such option, to such Optionee to purchase stock in the Company or in any corporation which (at the time of the granting of such option) was a parent or Subsidiary corporation of the Company or a prede cessor corporation of any such corporations. Under section 422A(c)(7) of the Code, an Incentive Stock Option is treated as outstanding until such option is exercised in full or expires by reason of lapse of time. These rules shall not apply to any nonqualified options granted under the Plan. -6- 8. Granting of SARs ---------------- The Committee may from time to time grant SARs in conjunction with all or any part of any option granted under the Plan either (i) at the time of the initial option grant (not including any subsequent modification that may be treated as a new grant of an Incentive Stock Option for purposes of Code section 425(h)) or (ii) with respect to nonqualified options, at any time thereafter while the nonqualified option is outstanding. At any time and for any period during which options could have been granted and allowed to be exercised under this Plan, stand-alone SARs may also be granted and allowed to be exercised other than in conjunction with an option granted under the Plan. 9. Terms of SARs ------------- SARs granted under the Plan shall comply with the following conditions and also with the terms of the agreement governing the SARs or an option in conjunction with which the SARs may be granted. (a) Upon the exercise of an SAR, the Optionee shall be entitled to receive payment equal to the excess of the aggregate fair market value of the Shares with respect to which the SAR is then being exercised (determined as of the date of such exercise) over (i) the aggregate option exercise price of such Shares, or (ii) in the case of a stand-alone SAR, the fair market value of such Shares on the date of the SAR grant. Payment may be made in Shares, valued at their fair market value on the date of exercise, or in cash or partly in Shares and partly in cash, as set forth in the governing agreement. (b) SARs shall be exercisable only during such periods as may be permissible without causing the Optionee to incur liability under Section 16(b) of the Securities Exchange Act of 1934. In addition, SARs that are tied to a related option shall be exercisable (i) only at such time or times and only to the -7- extent that the option to which they relate shall be exercisable; (ii) only when the fair market value of the Shares subject to the related option exceeds the exercise price of that option; and (iii) only upon surrender of the related option or any part thereof with respect to the Shares for which the SARs are then being exercised. (c) All SARs granted under the Plan shall by their terms not be transferable otherwise than by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionee, only by the Optionee or, in the event he becomes legally incompetent, his legal representative. (d) Upon exercise of an SAR, a corresponding number of Shares subject to the SAR (or to the related option, if there is such an option) shall be canceled. Such canceled Shares shall be charged against the Shares reserved for the Plan to the extent of the SAR exercise (or, in the case of a related option, as if the option had been exercised to such extent) and shall not be available for future option or SAR grants under the Plan. 10. Reorganization of the Company ----------------------------- In the event that the Company is succeeded by another corporation in a reorganization, merger, consolidation, acquisition of property or stock, separation or liquidation, the successor corporation shall assume the outstanding options granted under this Plan or shall substitute new options for them. 11. Delivery of Shares ------------------ No Shares shall be delivered upon the exercise of an option or SAR until the price, if any, that is due upon exercise has been paid in full in cash, or, at the discretion of the Committee, in whole or in part in the Company's common stock owned by the Optionee valued at fair market value on the date of exercise. If required by the -8- Committee, no Shares will be delivered upon the exercise of an option or SAR until the Optionee has given the Company (a) a satisfactory written statement that he is purchasing the Shares for investment and not with a view to the sale or distribution of any such Shares, (b) a written agreement not to sell any Shares received upon the exercise of the option or SAR or any other Shares that he may then own or thereafter acquire except either (i) through a broker on the New York Stock Exchange or another national securities exchange or (ii) with the prior written agreement of the Company, and (c) an agreement satisfactory to the Committee providing for either payment by the Optionee to the Company or permitting deduction by the Company from any amounts owing to Optionee of an amount equal to any Federal, state or local taxes of any kind required by law to be withheld with respect to the Shares being acquired by the Optionee. The granting of any option or SAR and the obligation of the Company to sell and deliver stock under any option or SAP shall be subject to the approval of any governmental authority which may be required in connection either with the grant of the option or SAR or with the authorization, issuance or sale of such stock. 12. Continuation of Employment -------------------------- Neither this Plan nor any option or SAR granted hereunder shall confer upon any Employee any right to continue in the employ of the Company or any Subsidiary or limit in any respect the right of the Company or any Subsidiary to terminate his employment at any time. 13. Amendments ---------- The Board may from time to time alter, amend, suspend or discontinue the Plan and make rules for its administration; provided, however, that subject to the provisions of Section 5, unless the stockholders of the Company shall have first approved thereof, (i) the total number of Shares authorized under the Plan shall not be increased, (ii) the minimum exercise price specified in section 7, -9- the SAR settlement formula specified in section 9, and the exercise price (or formula for its computation) as to previously granted options or SARs, shall not be changed, except that stockholder approval shall not be required if the minimum option price is increased, (iii) no option shall be exercisable more than ten years after the date it is granted, (iv) no change shall be made in the class of Employees to whom options may be granted or awards made, and (v) the expiration date of this Plan shall not be extended. The expiration date shall be December 31, 1995, or such earlier date as the Board, in its discretion, may determine. Any option outstanding under the Plan at the date of termination shall remain in effect until it shall have been exercised or it shall have expired as herein otherwise provided. 14. Effective Date -------------- The Plan is effective January 1, 1986; provided that this Plan is approved by the stockholders at the next annual meeting of the stockholders or at a special meeting held for that purpose within twelve months after the effective date of the Plan. No termination or amendment of the Plan may adversely affect the rights of an Optionee as to any previously granted option or SAP without his consent. -10- EXHIBIT A 1986 Stock Option and SAR Plan 1. Paragraph 6 shall be amended as follows: The Committee is authorized to grant options to selected Employees pursuant to this Plan during the calendar year 1986 and any calendar year thereafter to December 31, 1995, but not thereafter. The number of shares optioned in each year, the Employees to whom options are granted, and the number of Shares optioned to each Employee selected shall be wholly within the discretion of the Committee, subject to the limitations described in Section 4 and provided that the aggregate fair market value of option stock (determined at the time of the Incentive Stock Option grant) for which Incentive Stock Options are exercisable for the first time under the terms of the Plan and all other Incentive Stock Option plans maintained by the Company and its parent and Subsidiary corporations, by any employee during any calendar year after December 31, 1986, cannot exceed $100,000. 2. Paragraph 7(g) shall be amended by inserting the language "prior to January 1, 1987" into the first sentence thereof as follows: 7(g) No Incentive Stock Option granted under the Plan prior to January 1, 1987 shall be exercisable while there is outstanding (within the meaning of Section 422A(c)(7) of the Code) any Incentive Stock Option which was granted before the granting of such option . . AMENDMENTS TO DEL E. WEBB CORPORATION 1981 STOCK OPTION PLAN AND 1986 STOCK OPTION AND SAR PLAN RESOLVED, that in accordance with the respective provisions of each Plan, the Board of Directors proposes to exercise its retained authority to amend each Plan by adding a provision to each Plan to the following effect: "Cancellation of Options. With the written consent of consent of an Optionee, the Company may at any time cancel all or any part of any unexercised Stock Option [or SAR] previously granted hereunder, whereupon any Shares subject to such canceled Stock Option or SAR may again be subjected to a Stock Option or SAR granted under this Plan." SECOND AMENDMENT TO THE 1986 STOCK OPTION AND SAR PLAN OF THE DEL WEBB CORPORATION 1. This Second Amendment shall only amend that Section specified herein and the remaining provisions of the Plan not so amended are hereby ratified and affirmed. 2. Section 11 of the Plan is hereby amended and restated as follows: No Shares shall be delivered upon the exercise of an option or SAR until the price, if any, that is due upon exercise has been paid in full in cash, or, at the discretion of the Committee, in whole or in part in the Company's common stock owned by the Optionee valued at fair market value on the date of exercise. If required by the Committee, no Shares will be delivered upon the exercise of an option or SAR until the Optionee has given the Company (a) a satisfactory written statement that he is purchasing the Shares for investment and not with a view to the sale or distribution of any such Shares, or (b) a written agreement not to sell any Shares received upon the exercise of the option or SAR or any other Shares that he may then own or thereafter acquire except either (i) through a broker on the New York Stock Exchange or another national securities exchange or (ii) with the prior written agreement of the Company. With respect to withholding required upon the exercise of an option or upon any other taxable event, Optionees shall satisfy all Federal, state and local taxes required by law to be withheld by having the Company withhold Shares (to the extent that Shares are issued) having a fair market value on the date the tax is to be determined equal to the maximum marginal total tax which would be imposed on the transaction. The granting of any option or SAR and the obligation of the Company to sell and delivery stock under any option or SAR shall be subject to the approval of any governmental authority which may be required in connection either with the grant of the option or SAR or with the authorization, issuance or sale of such stock. 3. This Second Amendment shall be effective June 30, 1993. -2- EX-10.22 12 FIRST AMENDMENT TO THE RETIREMENT SAVINGS PLAN Exhibit 10.22 FIRST AMENDMENT TO THE RETIREMENT SAVINGS PLAN FOR THE EMPLOYEES OF DEL WEBB CORPORATION Effective January 1, 1976, Del E. Webb Corporation established the "Retirement Savings Plan for the Employees of Del E. Webb Corporation", now known as the "Retirement Savings Plan For the Employees of Del Webb Corporation" (the "Plan"). Del E. Webb Corporation later changed its name to Del Webb Corporation and recently merged into a Delaware corporation that bears the same name and assumed its role as sponsor of the Plan and is referred to in this document as the "Company". The Company most recently amended and restated the Plan in its entirety effective January 1, 1995. By this First Amendment the Company intends to incorporate certain technical changes requested by the Internal Revenue Service in connection with the Company's Application For Determination with respect to the Plan filed on September 8, 1995. 1. The provisions of this First Amendment shall be effective as of January 1, 1996. This First Amendment shall amend only the provisions of the Plan as set forth herein, and those provisions not expressly amended hereby shall be considered in full force and effect. 2. Section 2.1(z) of the Plan is hereby amended and restated in its entirety to provide as follows: (z) "On Call Employee" shall mean an Employee who is a member of an administrative or clerical pool who does not have a regular work schedule and who works on an as needed basis. An Employee who is temporarily absent from work due to a seasonal adjustment or layoff is not an On Call Employee. For the purposes of this Plan only, an "ask me employee" shall also be considered to be an "On Call Employee". An "ask me employee" is a resident of a Del Webb community who is intermittently available to answer questions of prospective residents. For example, "ask me employees" occasionally man lemonade stands at model home sites and field questions of prospective residents. 3. Section 2. 1(hh) of the Plan is hereby amended and restated in its entirety to provide as follows: (hh) "Temporary Employee" shall mean any Employee who, at the time he commences employment, 1) has a known end date, or (2) is hired to perform a specific short-term task. Examples of Temporary Employees include summer interns and golf course seeders. Any determination as to whether an Employee is a Temporary Employee shall be made in a uniform and nondiscriminatory manner by the Company or the Affiliate that employs the Employee. Any determination so made shall be final and binding on all parties. 4. Section 9.3 of the Plan is hereby amended by adding a new subparagraph (C) to the end thereof as follows: (c) Notwithstanding anything herein to the contrary, the maximum amount that may be returned to the Company pursuant to subparagraphs (a) and (b) above is limited to the portion of such contribution attributable to the mistake of fact or the portion of such contribution deemed non-deductible (the "excess contribution"). Earnings attributable to the excess contribution will not be returned to the Company, but losses attributable thereto will reduce the amount returned. IN WITNESS WHEREOF, the Company has caused this First Amendment to be signed by its duly authorized representative as of this 10th day of June, 1996. DEL WEBB CORPORATION By: /s/ Lynn Schuttenberg, Vice President ------------------------------------- Its: Chairman, Benefits Advisory Committee EX-10.23 13 AMENDMENT NO. 2 TO THE UMBRELLA TRUST AMENDMENT No. 2 Exhibit 10.23 TO THE DEL WEBB CORPORATION UMBRELLA TRUST THIS AMENDMENT to the Del Webb corporation Umbrella Trust is entered into by and between Del Webb Corporation and The Valley National Bank of Arizona, N.A., is effective as of January 1, 1990, and has been executed as of this 14 day of March, 1990. WHEREAS, Del Webb Corporation (the "COMPANY") has established the Del Webb Corporation Umbrella Trust (the "Trust") effective June 11, 1987 with The Valley National Bank of Arizona, N.A. as Trustee (the "Trustee"), and WHEREAS, the Company intends to include the Supplemental Executive Retirement Plan II within the Trust; and WHEREAS, the Trust inadvertently fails to provide a means to add additional plans to the Trust; and WHEREAS, pursuant to Section 7.02 of the Trust, the right to amend the Trust is reserved to the Company and the Trustee, with the Written Consent of Participants; and WHEREAS, the Company and Trustee, with the Written Consent of Participants, have approved the amendment to the Trust; NOW, THEREFORE, the Trust is amended as follows: Section 1.05 shall be added as follows: 1.05 Plans Covered. -------------- 1.05-1 The following Plans are subject to the Trust: a) Supplemental Executive Retirement Plan I; b) Supplemental Executive Retirement Plan II. 1.05-2 Prior to the occurrence of a Triggering Event as described in Section 2.01-2 or a Change in Control as described in Section 1.04-2, the Company, in its sole discretion, shall designate such benefit plans as it may determine from time to time to be subject to the Trust. AMENDMENT NO. 2 TO THE DEL WEBB CORPORATION UMBRELLA TRUST (Continued) Except as herein before amended, all of the remaining terms and provisions of the Trust shall remain in full force and effect. DEL WEBB CORPORATION By: /s/ David E. Rau -------------------------------- Its: Vice President - Taxes -------------------------------- THE VALLEY NATIONAL BANK OF ARIZONA, N.A.. By: /s/ Verna M. Hegeman -------------------------------- Its: Assistant Vice President -------------------------------- DEL WEBB CORPORATION UMBRELLA TRUST WRITTEN CONSENT OF PARTICIPANTS Consent to Amendment No. 2 to the Del Webb Corporation Umbrella Trust pursuant to Section 7.02 is hereby given: Date_________________________ /s/ Philip J. Dion ----------------------------------- Philip J. Dion Date_________________________ /s/ Ernest E. East ----------------------------------- Ernest E. East Date_________________________ /s/ John A. Spencer ----------------------------------- John A. Spencer AMENDMENT NO. 1 TO THE DEL WEBB CORPORATION UMBRELLA TRUST (TM) THIS AMENDMENT to the Del Webb Corporation Umbrella Trust (TM) is entered into by and between Del Webb Corporation and The Valley National Bank of Arizona, N.A., is effective as of January 1, 1989, and has been executed as of this 8th day of February, 1989 WHEREAS, Del Webb Corporation (the "Company") has established the Del Webb Corporation Umbrella Trust (TM) (the "Trust") effective June 11, 1987 with the Valley National Bank of Arizona, N.A. as Trustee (the "Trustee"); and WHEREAS, the Trust document was submitted to the Internal Revenue Service ("IRS") for a letter ruling; and WHEREAS, the IRS requested certain revisions to the document prior to issuing a favorable letter ruling; and WHEREAS, the Company has received a favorable letter ruling conditioned on making the amendment to the Trust set forth below; and WHEREAS, pursuant to Section 7.02 of the Trust, the right to amend the Trust is reserved to the Company and the Trustee, with the Written Consent of Participants; and WHEREAS, the Company and Trustee, with the Written Consent of Participants, have approved the amendment of the Trust as follows: FIRST: Article I, Section 1.02 paragraph 3 of the Trust shall be amended by adding a new first sentence to read as follows: 1.02-3 This trust is intended to be unfunded for purposes of ERISA. SECOND: Article II, Section 2.01 paragraph 2 of the Trust shall be amended by replacing "shall" with "may" to read as follows: (1) AMENDMENT NO. 1 TO THE DEL WEBB CORPORATION UMBRELLA TRUST (TM) (Continued) 2.01-2 The Company may, upon the occurrence of any of the events described in 2.01-3 ("triggering event"), contribute to the trust the sum of the following: THIRD: Article V, Section 5.01 paragraph 2 of the Trust shall be restated in its entirety to read as follows: 5.01-2 The Chief Executive Officer and the Board of Directors of the Company shall promptly give notice to the Trustee upon becoming Insolvent. If the Trustee receives such notice or receives from any other person claiming to be a creditor of the Company a written allegation that the Company is Insolvent, the Trustee shall independently determine whether such insolvency exists. The expenses of such determination shall be allowed as administrative expenses of the trust. FOURTH: Article V, Section 5.01 paragraph 3 of the Trust shall be restated in its entirety to read as follows: 5.01-3 Upon receipt of the notice of allegation described in 5.01-2, the Trustee shall discontinue making payments from the trust fund to participants under the Plans, and the Trustee shall commence Insolvency Administration under 5.02. EXCEPT AS HEREIN BEFORE AMENDED, all of the remaining terms and provisions of the Trust shall remain in full force and effect. DEL WEBB CORPORATION By:/s/ David E. Rau -------------------------------------- Its Vice President THE VALLEY NATIONAL BANK OF ARIZONA, N.A. By: /s/ Verna M. Hegeman -------------------------------------- Its Assistant Vice President (2) WRITTEN CONSENT OF PARTICIPANTS Consent to amend the Del Webb Corporation Umbrella Trust (TM) pursuant to Section 7.02 is hereby given: Date: 2/9/89 /s/Philip J. Dion ------------------------------ ------------------------------- Philip J. Dion Date: February 9, 1989 /s/Ernest E. East ------------------------------ ------------------------------- Ernest E. East Date: 2/9/89 /s/John A. Spencer ------------------------------ ------------------------------- John A. Spencer Date: 2/9/89 /s/Paul H. Tatz ------------------------------ ------------------------------- Paul H. Tatz DEL E. WEBB CORPORATION UMBRELLA TRUST JUNE, 1987 Del E. Webb Corporation 3800 N. Central Avenue Phoenix, Arizona 85038 Company The Valley National Bank of Arizona, N.A. Trust Division 241 North Central Avenue Phoenix, Arizona 85001 Trustee TABLE OF CONTENTS Preamble PAGE ---- ARTICLE I Effective Date; Duration 2 1.01 Effective Date 2 1.02 Duration 2 1.03 Revocability 4 1.04 Change in Control 4 ARTICLE II Trust Fund 6 2.01 Contributions 6 2.02 Investments 9 2.03 Recapture of Excess Assets 11 2.04 Subtrusts 11 2.05 Substitution of Other Property 12 ARTICLE III Administration 12 3.01 Committee 12 3.02 Payment of Benefits 13 3.03 Disputed Claims 13 3.04 Records 15 3.05 Accountings 15 3.06 Expenses and Fees 16 ARTICLE IV Liability 16 4.01 Indemnity 16 4.02 Bonding 17 TABLE OF CONTENTS (Continued) PAGE ---- ARTICLE V Insolvency 17 5.01 Determination of Insolvency 17 5.02 Insolvency Administration 18 5.03 Termination of Insolvency Administration 19 5.04 Creditors' Claims During Solvency 19 ARTICLE VI Successor Trustees 20 6.01 Resignation and Removal 20 6.02 Appointment of Successor 20 6.03 Accountings; Continuity 21 ARTICLE VII General Provisions 22 7.01 Interests Not Assignable 22 7.02 Amendment 22 7.03 Applicable Law 23 7.04 Agreement Binding on All Parties 23 7.05 Notices and Directions 23 7.06 No Implied Duties 24 EXHIBIT A INDEX OF TERMS TERM PROVISION PAGE - --------------------------------- --------- ---- Act 1.04-2(a) 5 Board 1.04-2(b) 6 Change in Control 1.04-2 5 Committees Preamble 1 Company Heading 1 ERISA Funding 1.02-4 4 Excess Assets 2.03-2 11 Insolvency Administration 5.02 18 Insolvent 5.01-1 17 Plans Preamble 1 Solvency 5.04-2 20 Subtrusts 2.04 11 Trustee Heading 1 DEL K. WEBB CORPORATION UMBRELLA TRUST JUNE, 1987 Del E. Webb Corporation 3800 N. Central Avenue Phoenix, Arizona 85038 Company The Valley National Bank of Arizona, N.A. Trust Division 241 North Central Avenue Phoenix, Arizona 85001 Trustee The Company has adopted the following plans (the Plans) for the benefit of eligible executive employees and directors of the Company and its affiliates: Del K. Webb Corporation Executive Deferred Compensation Plan Del E. Webb Corporation Supplemental Executive Retirement Plan The Plans are administered by the Company's Benefits Advisory Committee and Human Resources Committee, respectively (the Committees), appointed by the Company. The purpose of this trust is to give Plan participants greater security by placing assets in trust for them for use only to pay benefits or, if the Company becomes insolvent, to pay creditors. The trust is intended to be a grantor trust, the income of which is taxable to the Company. No contribution to or income of the trust is to be taxable to Plan participants until benefits are distributed to them. The parties therefore establish this trust on the following terms: ARTICLE I Effective Date: Duration ------------------------ 1.01 Effective Date -------------- This trust shall be effective June 11, 1987. The trust year shall coincide with the Company's fiscal year, which is the calendar year. 1.02 Duration -------- 1.02-1 This trust shall continue in effect until all the assets of the trust fund are exhausted through distribution of benefits to participants, payment to general creditors in the event of insolvency, payment of fees and expenses of the Trustee and return of remaining funding of a Subtrust pursuant to 1.02-2. 1.02-2 Except as provided in 1.03, the trust shall be irrevocable with respect to amounts contributed to it for a Plan until all benefit rights covered by the Subtrust for that Plan are satisfied. The Trustee shall then return to the Company any assets remaining in the Subtrust for that Plan. 1.02-3 If the existence of this trust is held to be ERISA Funding by a federal court and appeals from that holding are no longer timely or have been exhausted, this trust shall terminate. Upon such termination, the assets of each Subtrust remaining after payment of the Trustee's fees and expenses shall be distributed as follows: (a) If none of the events described in 2.01-3 have occurred, such assets shall be returned to the Company. The Company shall then either (i) transfer such assets to a new trust which is not deemed to be ERISA Funding, but which is similar in all other respects to this Trust; or (ii) if it is not possible to establish the trust in (i) above, then the assets returned to the Company shall be retained by the Company. (b) If any of the events described in 2.01-3 have occurred, and more than twenty-four (24) months has elapsed without a Change in Control, as defined in 1.04-2, occurring, then (a) above shall apply. (c) If any of the events described in 2.01-3 have occurred and either twenty-four (24) months or less has elapsed or there has been a Change in Control, as defined in 1.04- 2, then such assets shall be allocated in proportion to the accrued benefit rights of the participants and distributed to them in lump sums. Any assets remaining shall be returned to the Company. 1.02-4 This trust is ERISA Funding if it prevents any of the Plans from meeting the "unfunded" criterion of the exceptions to various requirements of Title I of the Employee Retirement Income Security Act of 1974 for plans that are unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. 1.03 Revocability ------------ 1.03-1 This trust shall become irrevocable upon the issuance by the Internal Revenue Service of a private letter ruling establishing that its existence and ownership of assets do not cause the benefit rights of participants under the Plans to be taxable currently. If such a ruling is denied or if the Internal Revenue Service declines to issue such a ruling the Company may revoke the trust and take possession of all assets held by the Trustee for the trust. 1.03-2 Notwithstanding the provisions of 1.03-1, if any of the events described in 2.01-3(a), (b) or (c) has occurred, the Company may declare the trust to be irrevocable. 1.04 Change in Control ----------------- 1.04-1 On a Change in Control described in 1.04-2 the trust assets shall be held for participants who had benefit rights under the Plans before the Change in Control occurred. If the Company makes contributions for benefits owed to new participants under a Plan, such contributions and any insurance contracts or other assets purchased with them shall be held in a new Subtrust separate from the existing Subtrust for previous participants. The existing Subtrust shall cover all the benefits provided by the Plan for a previous participant, including benefits accrued after the Change in Control. 1.04-2 "Change in Control" means a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Act"); provided that, without limitation, such a change in control shall be deemed to have occurred if: (a) Any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Act) is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of Directors; or (b) Within two years of a tender offer or exchange offer for the voting stock of the Company (other than by the Company) or as a result of a merger, consolidation, sale of assets or contested election or any combination of the foregoing, the persons who were Directors of the Company immediately prior thereto shall cease to constitute a majority of the Board of the Company (the "Board") or of its successor by merger, consolidation or sale or assets. With respect to employees of any subsidiary corporation "Change in Control" shall be deemed to have occurred upon disposition of more than 50% of the outstanding capital stock of that subsidiary by Del E. Webb Corporation, but shall not include, however, a "spinoff" distribution by Del E. Webb Corporation to its shareholders, pro rata, of any or all of its shares of the capital stock of the subsidiary. ARTICLE II Trust Fund ---------- 2.01 Contributions ------------- 2.01-1 The Company shall contribute to the trust such amounts as the Committees shall reasonably decide are necessary to purchase the insurance contracts and to pay premiums and loan interest payments, all as described in 2.02-1. The time of payment of contributions shall be decided by the Committees, except as provided in 2.01-2. 2.01-2 The Company shall, upon the occurrence of any of the events described in 2.01-3 ("triggering event"), contribute to the trust the sum of the following: (a) The present value of the remaining premiums and the interest on any policy loans on insurance contracts held in the trust. (b) The amount by which the present value of all benefits payable under the Plans exceeds the value of all trust assets. Each participant's benefit for purposes of calculating present value shall be the highest benefit the participant would have under the Plan within the 24 months following the triggering event, assuming that no changes are made in the participant's level of income deferral, that employment continues for 24 months at the same rate of compensation, and that the participant receives any benefit enhancement provided by the Plan upon a Change in Control. The insurance contracts shall be valued at cash surrender value. (c) A reasonable estimate provided by the Trustee of its fees due over the remaining duration of the trust. 2.01-3 The events referred to in 2.01-2 shall include the following: (a) The delivery to the Company by any person, as defined in Section 13(d)(3) of the Act, of a statement containing the information required by Schedule 13-D under the Act, or any amendment to any such statement, that shows that such person has acquired, directly or indirectly, the beneficial ownership or (i) more than 20 percent or any class of equity security of tne Company entitled to vote as a class in the election or removal from office or directors, or (ii) more than 20 percent of the voting power of any group of classes or equity securities of the Company entitled to vote as a single class in the election of removal from office directors. (b) The Company becomes aware that preliminary or definitive copies of a proxy statement and information statement or other information have been filed with the Securities and Exchange Commission pursuant to Rule 4a-6, Rule 14c-5, or rule 14f-1 under the Act relating to a proposed change in control of the Company. (c) The delivery to the Company pursuant to Rule 14d-3 under the Act of a Tender Offer Statement relating to equity securities of the Company. (d) The termination of either of the Plans by the Company or any amendment to either of the Plans which would reduce the benefits currently provided for under such Plan. (e) Failure by the Company to contribute, within 60 days of receipt of a written notice from the Trustee, the full amount of any insufficiency in trust assets that is required to pay any benefit that is payable upon a direction from the Committee pursuant to 3.02-2 or upon resolution of a disputed claim pursuant to 3.03-2. 2.01-4 The calculations required under 2.01-2 shall be based on the actuarial assumptions set forth in the attached Exhibit A, which, prior to a Change in Control, may be revised by the Committee from time to time. For purposes of 2.01-2(a), the discount rate shall be the same as the rate applied to determine the present value of the Benefit Liability. 2.01-5 The Trustee shall accept the contributions made by the Company and shall hold them as a trust fund for the payment of benefits under the Plans. The Trustee shall not be responsible for determining the required amount of contributions or for collecting any contribution not voluntarily paid. Contributions may be in cash or in kind, subject to approval and acceptance by the Trustee. 2.02 Investments ----------- 2.02-1 The trust fund shall be invested primarily in insurance contracts. Such contracts may be purchased by the Company and transferred to the Trustee as in-kind contributions or may be purchased by the Trustee with the proceeds of cash contributions. The purchase and holding of such contracts shall be an investment directed by the Company, pursuant to 2.02-2. The Company's contributions to the trust shall include sufficient cash to make projected premium payments on such contracts and payments of any interest due on loans secured by the cash value of such contracts. 2.02-2 The Trustee shall invest the trust fund in accordance with written directions by the Committee. The Trustee shall act only as an administrative agent in carrying out the directed investment transactions and shall not be responsible for the investment decision. If a directed transaction violates the duty to diversify, to maintain liquidity or to meet any other investment standard under this trust or applicable law, the entire responsibility shall rest upon the Company. 2.02-3 If the Trustee does not receive instructions from the Committee for the investment of part or all of the trust fund, the Trustee shall invest it in securities or other property in accordance with applicable law. Permissible investments shall include, but not be limited to, the following: (a) Preferred or common stocks, notes, debentures, bonds or other securities. (b) Mutual funds, money market funds, com mercial paper, savings and loan accounts, certificates of deposit and savings accounts, including deposits bearing a reasonable rate of interest in the savings department of the Trustee. (c) Real estate or mortgages. (d) Common or collective investment funds maintained by the Trustee. 2.03 Recapture Of Excess Assets -------------------------- 2.03-1 In the event any Subtrust shall hold Excess Assets, the Committee, at its option, may direct the Trustee to return part or all of such Excess Assets to the Company. 2.03-2 "Excess Assets" are assets of any Subtrust exceeding one hundred seventy-five percent (175%) of the present value of the benefits due participants in such Subtrust. 2.03-3 The calculation required by 2.03-2 shall be based on the actuarial assumptions set forth in Exhibit A, and shall be made by The Company. 2.04 Subtrusts --------- 2.04-1 The Trustee shall establish a Subtrust for each Plan to which it shall credit contributions for that Plan. The account shall reflect an undivided interest in assets of the trust fund and shall not require any segregation of particular assets, except that an insurance contract covering benefits of a particular Plan shall be held in the subtrust for that Plan. 2.04-2 The Trustee shall allocate investment earnings and losses of the trust fund among the Subtrusts in proportion to their balances, except that changes in the value of an insurance contract shall be allocated to the Subtrust for which it is held. Payments to general creditors during insolvency administration under 5.02 shall be charged against the Subtrusts in proportion to their balances, except the payment of benefits to a Plan participant as a general creditor shall be charged against the Subtrust for that Plan. 2.05 Substitution of Other Property ------------------------------ 2.05-1 The Company shall have the power to reacquire part or all of the trust fund at any time, by substituting for it other property of equivalent value. Such power is exercisable in a nonfiduciary capacity. 2.05-2 The value of any insurance contracts reac quired under 2.05-1 shall be the present value of future projected cash flow of benefits payable under the contract. The projection shall include death benefits based on reasonable mortality assumptions. The value of all other assets in the trust fund shall be fair market value. Values shall be determined by the Trustee. ARTICLE III Administration -------------- 3.01 Committee --------- 3.01-1 The Committees are the plan administrators for the Plans and have full responsibility to interpret the Plans and determine the rights of participants and beneficiaries. 3.01-2 The Trustee shall be given the names and specimen signatures of the Chairman, Secretary and members of each Committee. The Trustee shall accept and rely upon the names and signatures until notified of change. Instructions to the Trustee shall be signed for the Committee by the Chairman or such other person as the Committee may designate. 3.02 Payment of Benefits ------------------- 3.02-1 The Trustee shall pay benefits to participants and beneficiaries on behalf of the Company in satisfaction of its obligations under the Plans. Benefit payments from a Subtrust shall be made in full until the assets of the Subtrust are exhausted. Payments due on the date the Subtrust is exhausted shall be made pro rata in proportion to the accrued benefit rights of the participants and beneficiaries to the extent of the remaining assets in such Subtrust. The Company's obligation shall not be limited to the trust fund and a participant shall have a claim against the Company for any payment not made by the Trustee. 3.02-2 The Trustee shall make payments in accordance with written direction from the Committee, except as provided in 3.03. The Trustee shall make any required income tax withholding and shall pay amounts withheld to taxing authorities on the Company's behalf or determine that such amounts have been paid by the Company. 3.02-3 A participant's entitlement to benefits under the Plans shall be determined by the Committee. Any claim for such benefits shall be considered and reviewed under the claims procedures set out in the Plans. 3.03 Disputed Claims --------------- 3.03-1 A participant with an account in this trust whose claim has been denied by the Committee or who has received no response to the claim within 30 days after submission, may submit the claim to the Trustee. The Trustee shall give notice of the claim to the Committee, If the Trustee receives no notice of response from the Committee within 30 days after the date the Committee is given the notice of claim, the Trustee shall pay the participant the amount claimed. If a notice of response is received within such 30 days, the Trustee shall consider the claim, including the Committee's response. If the merits of the claim depend on compensation, service or other data in the possession of the Company and it is not provided, the Trustee may rely upon information provided by the participant. 3.03-2 The Trustee shall give notice to the participant and the Committee of its decision on the claim. Either the participant or the Committee may challenge the Trustee's decision by filing suit in a court of competent jurisdiction. If no such suit is filed within 30 days after notice of the Trustee's decision, the decision shall become final and binding on all parties. If the decision is to grant the claim, the Trustee shall make payment to the participant. 3.03-3 The Trustee may decline to decide a claim and may file suit to have the matter resolved by a court of competent jurisdiction. All of the Trustee's expenses in the court proceeding, including attorneys fees, shall be allowed as administrative expenses of the trust. 3.03-4 If the Committee opposes a claim presented under 3.03-1 and the Trustee ultimately pays the claim from the trust assets, the Company shall reimburse the Participant's expenses in pursuing the claim, Including attorneys fees at the trial and appellate level. 3.04 Records ------- The Trustee shall keep complete records on the trust fund open to inspection by the Company and the Committee at all reasonable times. In addition to accounts required below, the Trustee shall furnish to the Company and Committee any information requested about the trust fund. 3.05 Accountings ----------- 3.05-1. The Trustee shall furnish each Committee with a complete statement of accounts annually within 60 days after the end of the trust year showing assets and liabilities and income and expense for the year of each Subtrust. The form and content of the account shall be sufficient for the Company to include in computing its taxable income and credits the income, deductions and credits against tax that are attributable to the trust fund. 3.05-2 A Committee may object to an accounting within 60 days after it is furnished and require that it be settled by audit by a qualified, independent certified public accountant. The auditor shall be chosen by the Trustee from a list of at least five such accountants furnished by the Committee at the time the audit is requested. Either the Committee or the Trustee may require that the account be settled by a court of competent jurisdiction, in lieu of or in conjunction with the audit. All expenses of any audit or court proceedings, including reasonable attorneys' fees, shall be allowed as administrative expenses of the trust. 3.05-3 If the Committee does not object to an accounting within the time provided, the account shall be settled for the period covered by it. 3.05-4 When an account is settled, it shall be final and binding on all parties, including all participants and persons claiming through them. 3.06 Expenses and Fees ----------------- 3.06-1 The Trustee shall be reimbursed for all expenses and shall be paid a reasonable fee fixed by it from time to time. No increase in the fee shall be effective before 60 days after the Trustee gives notice to the Company of the increase. The Trustee shall notify the Committee periodically of expenses and fees. 3.06-2 The fees and expenses shall be paid from the trust fund. The Company shall reimburse the trust fund for any fees and expenses paid out of it, unless, immediately after the payment of any such fees and expenses, the Trust shall have Excess Assets, as determined under 2.03-2. ARTICLE IV Liability --------- 4.01 Indemnity --------- The Company shall indemnify and defend the Trustee from any claim, loss, liability or expense arising from any action or inaction in administration of this trust based on direction or information from the Committee, absent willful misconduct or bad faith. 4.02 Bonding ------- The Trustee need not give any bond or other security for performance of its duties under this trust. ARTICLE V Insolvency ---------- 5.01 Determination of Insolvency --------------------------- 5.01-1 The Company is Insolvent for purposes of this trust if: (a) The Company is persistently unable to pay its debts as they come due; or (b) The Company is the subject of a pending proceeding as a debtor under the Bankruptcy Code. 5.01-2 The Chief Executive Officer or the Board of Directors of the Company shall promptly give notice to the Trustee upon becoming Insolvent. If the Trustee receives such notice or receives from any other person claiming to be a creditor of the Company a written allegation that the Company is Insolvent, the Trustee shall request the Company's then independent certified public accountants to determine whether such insolvency exists. The expenses of such determination shall be allowed as administrative expenses of the trust. 5.01-3 The Trustee shall continue making payments from the trust fund to participants under the Plans while the existence of insolvency is being determined. Such payments shall cease and the Trustee shall commence Insolvency Administration under 5.02 upon the earlier of: (a) A determination by the Company's then independent certified public accountants that the company is Insolvent; or (b) 30 days after the notice or allegation of insolvency is received under 5.01-2, unless the Company's then independent certified public accountants have determined that the Company is not Insolvent since receipt of such notice or allegation. 5.01-4 The Trustee shall have no obligation to investigate the financial condition of the Company prior to receiving a notice or allegation of insolvency under 5.01-2. 5.02 Insolvency Administration ------------------------- 5.02-1 During Insolvency Administration, the Trustee shall hold the trust fund for the benefit of the general creditors of the Company and make payments only in accordance with 5.02-2. The Trustee shall continue the investment of the trust fund in accordance with 2.02. 5.02-2 The Trustee shall make payments out of the trust fund in one or more of the following ways: (a) To general creditors in accordance with instructions from a court, or a person appointed by a court, having jurisdiction over the Company's condition of insolvency; (b) To Plan participants and beneficiaries in accordance with such instructions; or (c) In payment of its own fees or expenses. 5.02-3 The Trustee shall be a secured creditor with a priority claim to the trust fund with respect to its own fees and expenses. 5.03 Termination of Insolvency Administration ---------------------------------------- 5.03-1 Insolvency Administration shall terminate when the Company's then independent certified public accountants determine that the Company: (a) Is not Insolvent, in response to a notice or allegation of insolvency under 5.01- 2; or (b) Has ceased to be Insolvent. 5.03-2 Upon termination of Insolvency Administration under 5.03-1 the trust fund shall continue to be held for the benefit of the participants in the Plans. Benefit payments due during the period of Insolvency Administration shall be made as soon as practicable, together with interest from the due dates at the following rates: (a) For the Deferred Compensation Plan, the rate credited on the participant's account under the Plan. (b) For the Supplemental Executive Retirement Plan, a rate equal to the interest rate fixed by the Pension Benefit Guaranty Corporation for valuing immediate annuities in the preceding month. 5.04 Creditors Claims During Solvency -------------------------------- 5.04.1 During periods of Solvency, the Trustee shall hold the trust fund exclusively to pay benefits and fees 5.04-2 A period of Solvency is any period not covered by 5.02. ARTICLE VI Successor Trustees ------------------ 6.01 Resignation and Removal ----------------------- 6.01-1 The Trustee may resign at any time by notice to the Committee, which shall be effective in 60 days unless the Committee and the Trustee agree otherwise. 6.01-2 The Trustee may be removed by the Committee on 60 days' notice or shorter notice accepted by the Trustee. 6.01-3 When resignation or removal is effective, the Trustee shall begin transfer of assets to the successor Trustee immediately. The transfer shall be completed within 60 days, unless the Committee extends the time limit. 6.01-4 If the Trustee resigns or is removed, the Committee shall appoint a successor by the effective date of resignation or removal under 6.01-1 or 6.01-2. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the trust. 6.02 Appointment of Successor ------------------------ 6.02-1 The Committee may appoint any national bank or trust company that is unrelated to the Company and that has total assets in excess of $500,000,000 as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee including ownership rights in the trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Committee or the successor Trustee to evidence the transfer. 6.02-2 The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing trust assets, subject to Article II. The successor Trustee shall not be responsible for and the Company shall indemnify and defend the successor Trustee from any claim or liability because of any action or inaction of any prior Trustee or any other past event, any existing condition or any existing assets. 6.03 Accounts; Continuity -------------------- 6.03-1 A Trustee who resigns or is removed shall submit a final accounting to the Committee as soon as practicable. The accounting shall be received and settled as provided in 3.04 for regular accounts. 6.03-2 No resignation or removal of the Trustee or change in identity of the Trustee for any reason shall cause a termination of the Plan or this trust. ARTICLE VII General Provisions ------------------ 7.01 Interests Not Assignable ------------------------ 7.01-1 The interest of a participant in the trust fund may not be assigned, seized by legal process, transferred or subjected to the claims of the participant's creditors in any way. 7.01-2 The Company may not create a security interest in the trust fund in favor of any of its creditors. The Trustee shall not make payments from the trust fund of any amounts to creditors of the Company who are not Plan participants, except as provided in 5.02. 7.01-3 The participants shall have no interest in the assets of the trust fund beyond the right to receive payment of Plan benefits and reimbursement of expenses from such assets subject to the instructions for insolvency administration referred to in 5.02-2. During Insolvency Administration the participants' rights to trust assets shall not be superior to those of any other general creditor of the Company. 7.02 Amendment --------- The Company and the Trustee may amend this trust at any time by a written instrument executed by both parties and consented to in writing by a majority of all the participants in the Plans to whom benefit payments are owed at the time the amendment is adopted. 7.03 Applicable Law -------------- This trust shall be construed according to the Laws of Arizona except as preempted by federal law. 7.04 Agreement Binding on All Parties -------------------------------- This agreement shall be binding upon the heirs, personal representatives, successors and assigns of any and all present and future parties. 7.05 Notices and Directions ---------------------- Any notice or direction under this trust shall be in writing and shall be effective when actually delivered or, if mailed, when deposited postpaid as first-class mail. Mail to a party shall be directed to the address stated in this trust or to such other address as either party may specify by notice to the other party. Notices to the Committee shall be sent to the address of the Company. Notices to participants who have submitted claims under 3.02-2 shall be mailed to the address shown in the claim submission. 7.06 No Implied Duties ----------------- The duties of the Trustee shall be those stated in this trust, and no other duties shall be implied. Company: DEL WEBB CORPORATION By /s/ Alan B. O'Connor ------------------------------- Its Vice President, Human Resources Executed: June 11, 1987 --------------- Trustee: THE VALLEY NATIONAL BANK OF ARIZONA, N.A. By /s/ Verna M. Hegeman ------------------------------- Its Assistant Vice President Executed: July 22, 1987 -------------- EXHIBIT A Assumptions and Methodology for Calculation Required Under 2.01-2 and 2.03 1. The liability will be calculated using two different assumptions as to when the employee terminates employment and receives a change of control benefit: a) As of the trigger date, b) 24 months after the trigger date assuming future compensation continues at current levels The Benefit Liability will be the greater of the liabilities calculated in accordance with a) and b) above. 2. Calculations will be based upon the most valuable optional form of payment available to the participant. 3. The Benefit Liability is equal to the present value of benefits discounted to the trigger date at 12% per annum. 4. No mortality is assumed prior to the commencement of benefits. Future mortality is assumed to occur in accordance with the 1983 Group Annuity Table Male rates after the commencement of benefits. 5. Where left undefined by 1. through 4. above, calculations will be performed in accordance with generally accepted actuarial principles. 6. For the purpose of projecting deferral account balances, Moody's bond rate is assumed to remain at the last published rate prior to the Trigger Date. EX-10.28 14 MANAGEMENT INCENTIVE PLAN Exhibit 10.28 DEL WEBB CORPORATION MANAGEMENT INCENTIVE PLAN Fiscal 1997 (July 1, 1996 - June 30, 1997) Plan Objectives - --------------- o To motivate key management personnel to achieve or exceed Corporate financial goals and to contribute to the short and longer term interest of shareholders. o To provide a competitive bonus program necessary to attract, retain and motivate high quality management. Administration - -------------- 1. Bonuses may be paid in cash or in stock, less applicable tax deductions and subject to prior deferral agreements as soon as practicable after the end of the Fiscal Year. 2. In order to receive a bonus, the participant must be on the active payroll at the time the bonus is paid unless approval for a pro rata bonus is granted by the Chairman/Chief Executive Officer (CEO). 3. At the discretion of the CEO and upon approval of the Human Resources Committee, financial objectives may be adjusted upward or downward as a result of significant windfalls or disasters beyond the control of management. In addition, the Human Resources Committee can revise financial objectives during the year if significant events occur that were not included in the budget. 4. Bonuses are computed under the plan criteria for corporate earnings, community earnings and cash flow approved by the Human Resources Committee of the Board. The portion of the bonus computation related to project milestones and personal goals is recommended by the participant's immediate superior. Bonus calculations are reviewed by the CEO and the Human Resources Department, and presented to the Human Resources Committee of the Board for final approval. 5. All terms and conditions of the Plan and its very existence are at the sole discretion of the Human Resources Committee of the Board of Directors. 1 Eligibility - ----------- Key Management personnel: o whose duties and responsibilities can materially affect the growth, development and profitability of the Company and, o who are nominated by a subsidiary or Company officer and are approved by the CEO, and o who are assigned to an eligible position on or before July 1st unless otherwise approved by the CEO. Bonus Opportunity Levels - ------------------------ Each participant will have a Target Bonus which will be the amount earned for meeting the Plan objectives. The Target Bonus will be expressed as a percentage of actual base salary earned throughout the 1995/96 fiscal year and will be established by the CEO and the Human Resources Department based on competitive compensation data and internal equity. Target Bonuses - -------------- Target bonus levels will range from 10% to 60% of salary based on the participant's salary grade and organizational level and recommendation of the CEO. No bonuses will be payable until the minimum acceptable threshold earnings target is achieved unless specifically approved by the Human Resources Committee of the Board of Directors. A bonus of 100% of the target bonus will be payable for achieving 100% of Plan objectives. A maximum bonus of 200% of Target Bonus will be payable for attaining the maximum expected performance. Bonus Objectives - ---------------- Bonus objectives will be comprised of the financial objectives relating to the participant's area of responsibility and/or non-financial performance objectives as specified in the annual performance appraisal. o Depending upon the operation of the company involved, financial objectives for a participant may be based on Corporate net after-tax earnings, budgeted Group or Project operating earnings before interest and cash discounts and/or operations cash flow. The minimum acceptable threshold, target and maximum expected earnings levels will be determined by the CEO based on the degree of difficulty and the level of acceptability of the budget. 2 o Non-Financial performance objectives are the most significant non-financial goals which the individual participant is expected to accomplish during the Plan year.
Corporate Non-Financial After Tax Operating Cash Performance Earnings Earnings(1) Flow Objectives -------- ----------- ---- ---------- I. Target Bonus 35% and above (Corporate officers, Coventry Division Managers Associate GMS & Fairmount Operations VP) A. Headquarters 85% 0 15% 0 B. Operating Sun City Communities 20% 60% 20% 0 Coventry/Coventry Tucson Coventry Las Vegas Terravita II. Target Bonus below 35% A. Headquarters 75% 0 15% 10% B. Operating Sun City Communities 20% 50% 20% 10% Coventry Coventry Tucson/Las Vegas Terravita So. CA Conventional Fairmount Coventry Verde Valley C. Foothills(2) 30% 0 60% 10%
(1) Operating earnings are the pre-tax, pre-interest, pre-cash discounts earnings achieved at the operation where the individual is assigned. (2) 40% of Foothills cash flow total is related to generation of budgeted cash flow. 20% of Foothills cash flow total is related to monitoring and communication of cash flow. 3 Financial Objectives - -------------------- A minimum bonus will be paid upon the corporation or operation achieving the threshold earnings forecast as shown on the income schedules included as part of this Management Incentive Plan. For results between a threshold and maximum expected earnings, the bonus percent will increase incrementally to a maximum of 200% of target bonus based upon operating earnings and the achievement of the other formula targets. (See attached for net after-tax earnings and operating income schedules.) Cash Flow Component - ------------------- Cash flow will, of necessity, vary from budget and previous indicated actuals based upon sales and housing deposits collected, closings, land development and housing needs within each operation, and decisions made on the timing of phases and amenities of some projects. The ultimate recommendation of cash flow component awards will be made by the chief executive officer with input from the corporate chief financial officer and corporate controller. The recommendation will be based upon how well cash flow is being managed and reported acknowledging the business decisions by Webb's executive management team affecting cash throughout the year. The cash flow element of the Plan works independently of all other Plan components, including the earnings component. Operating Communities The award of the portion of the incentive formula related to cash flow will be based upon three criteria for operating communities and divisions: quality of cash flow (accuracy and timing of cash flow reporting); quantity of cash flow (percentage of budgeted cash flow achieved); and overall management of department/community general and administrative (G&A) expense budget. For operating communities, five percent of the overall incentive formula will be earned based upon meeting department and/or community G&A budget with ability to earn greater than 100% for operating under budget. The chief financial officer and corporate controller will assign a percentage of achievement to each operation for both quantity of cash flow generated based on agreed upon budget cash flow targets, and quality and timeliness of cash flow reporting. The percentages assigned to quality and quantity of cash flow will be multiplied to arrive at an overall percentage of success. This percentage will reflect the achievement of cash flow component other than G&A. Headquarters The cash flow component for Headquarters plan participants will be awarded based upon achievement of corporate and department G&A budgets for which the participant has responsibility. The ability to earn greater than 100% can be achieved for operating under budget. Non-Financial Performance Objectives - ------------------------------------ Non-financial performance objectives will be included in the annual performance appraisal conducted near the beginning of the fiscal year and will be submitted to the CEO for final approval. Objectives must be specific, realistic, quantifiable and time-limited before they will be approved. The objectives will be 4 designed to improve short- and long-term performance and will be mutually agreed to by the participant and management. In the event circumstances or directions change, affecting any participant's pre-established performance objectives, the manager is responsible for revising them or establishing new objectives during the year. The achievement of performance objectives is measured by the participant's immediate superior based upon documented evaluation of results. Accomplishments will be evaluated using the following scale: Threshold Target Maximum --------- ------ ------- Overall Rating Poor Good Excellent Superior Percent of Target 0 - 49 50 - 75 76 - 125 126 - 200 Evaluation of results should take into account the difficulty the objective, the timeliness of accomplishment, the effectiveness of results and the overall impact on the individual's organizational unit. Achievement of operating earnings is paramount in the bonus computation formula; non-financial performance objectives are reviewed and evaluated only if minimum earnings objectives have been met or if specifically approved by the Human Resources Committee. Rating Definitions - ------------------ Maximum A "superior" rating is achieved if the participant ------- accomplishes highly challenging objectives resulting in significant contribution to the Company or business unit. This rating incorporates superior reaction to crisis and superior exploitation of unanticipated opportunities. Target An "excellent" rating is achieved if the participant ------ accomplishes all objectives in a timely and effective manner and overall performance for the year is considered standard or, if the participant accomplished most of a number of significant and highly challenging objectives and overall performance is considered above standard. Threshold A "good" rating is achieved if the participant --------- accomplished most of the objectives in an acceptable manner or all of a group of objectives that were minimally challenging. Overall performance of the year is considered standard. 5 EX-10.29 15 AMENDED/RESTATED AGREEMENT OF LIMITED PARTNERSHIP 2-13098 FILED ARIZONA SECRETARY OF STATE JUNE 18, 1996 AMENDED AND RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP OF NEW MEXICO ASSET LIMITED PARTNERSHIP THIS AMENDED AND RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") is entered into and shall be effective as of this 23rd day of May, 1996, by and among Del Webb Corporation, a Delaware corporation, as the General Partner, and New Mexico Asset Corporation, an Arizona corporation, as the Limited Partner. WHEREAS, the General Partner and Limited Partner entered into a Certificate and Agreement of Limited Partnership effective as of July 1, 1995 (the "Original Agreement"); and WHEREAS, the General Partner and Limited Partner desire to amend and restate the Certificate and Agreement of Limited Partnership by this Amended and Restated Certificate and Agreement of Limited Partnership effective as of May 23, 1996 (the "Agreement") as provided herein. NOW, THEREFORE, for the consideration of their mutual covenants hereinafter set forth, the parties to this Agreement hereby amend and restate the Original Agreement, in its entirety, as follows: ARTICLE I --------- General Definitions ------------------- The following terms, which are used generally throughout this Agreement, shall have the following meanings: "Act" means the Arizona Revised Uniform Limited Partnership Act set forth in Chapter 3 of Title 29 of the Arizona Revised Statutes, as amended from time to time. "Agreement" or "Partnership Agreement" means this Certificate and Agreement of Limited Partnership of New Mexico Asset Limited Partnership, as amended from time to time. Words such as "herein," "hereinafter," "hereof," "hereto," and "hereunder," refer to this Agreement as a whole, unless the context otherwise requires. "Capital Contribution" means the amount of money and the initial Net Asset Value of any property (other than money) contributed to the capital of the Partnership by a Partner. "Initial Capital Contributions" means the initial contributions to the capital of this Partnership made pursuant to Section 3.1 of this Agreement. "Additional Capital Contributions" shall mean the contributions made pursuant to Section 3.2 of this Agreement. "Code" means the Internal Revenue Code of 1986, as amended from time to time. References in this Agreement to specific sections of the Code shall include the corresponding sections of succeeding law following any amendment of the Code. "Interest in the Partnership" or "Partnership Interest" means the right under the terms of the Agreement to share in the Partnership's Profits and Losses and to receive distributions of the Partnership's assets. "Limited Partner" means any Person who has been admitted as a Limited Partner pursuant to the terms of this Agreement for so long as such Person is the owner of a Partnership Interest. "Limited Partners" means all such Persons. "Net Available Cash Flow" means, for any period, the Partnership's gross cash receipts derived from any source whatsoever (including, without limitation, from borrowings, sale of property, or the release of funds previously set aside as a reserve) less the portion thereof used to pay or establish reasonable reserves for all Partnership expenses, debt payments (other than payments of Partner loans), asset acquisitions, capital improvements, expansions, repairs, replacements, contingencies, and any other proper cash expenditure of the Partnership as reasonably determined by the General Partner. "Net Available Cash Flow" shall not be reduced by depreciation, amortization, cost recovery deductions or similar allowances. "Partners" means the General Partner and Limited Partner, when no distinction is required by the context in which the term is used herein. "Partner" means any one of the Partners. "Partnership" means the limited partnership formed pursuant to this Agreement. "Percentage Interest" means the percentage interest of each Partner in the profits and losses of the Partnership as set forth on Exhibit A of this Agreement. "Person" means any individual, partnership, corporation, limited liability company, trust, or other legal entity. "Profits" or "Losses" means, for each Fiscal Year or other period, the taxable income or taxable loss of the Partnership as determined under Code Section 703(a) (including in such taxable income or taxable loss all items of income, gain, loss or deduction 2 required to be stated separately pursuant to Section 703(a)(1) of the Code) with the following adjustments: (a) Any income of the Partnership that is exempt from federal income tax shall be added to such taxable income or loss; and (b) Any expenditures of the Partnership that are described in Code Section 705(a)(2)(B), or treated as such pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and that are not otherwise taken into account in the computation of taxable income or loss of the Partnership, shall be deducted in the determination of Profits or Losses. "Regulations" means the regulations promulgated and amended from time to time by the Department of the Treasury pursuant to the Code. References in this Agreement to specific sections of the Regulations shall include the corresponding sections of the Regulations following any amendments or changes of the Regulations from time to time. "Substituted Limited Partner" means a Person that is admitted to the Partnership as a Limited Partner pursuant to Section 8.3 hereof. ARTICLE II ---------- Formation, Purpose, and Term ---------------------------- 2.1 Formation. The undersigned Partners hereby form the Partnership as a limited partnership in accordance with the provisions of this Agreement and of the Act. 2.2 Name. The name of the Partnership shall be New Mexico Asset Limited Partnership, or such other name as the General Partner shall designate from time to time by written notice to all Partners. 2.3 Office. The principal office of the Partnership (and the office required to be maintained for keeping Partnership records under Arizona law) shall be located at 6001 North 24th Street, Phoenix, Arizona 85016, or such other place in the State of Arizona as the General Partner may designate from time to time, with written notice to the other Partners. 2.4 Agent for Service of Process. The name and address of the Partnership's initial agent for service of process is Philip H. Darrow, 6001 North 24th Street, Phoenix, Arizona 85016. 2.5 Character of Business. The character of the Partnership's business shall be to acquire oil and gas interests. 3 The Partnership may also engage in and do any act concerning any or all lawful businesses for which limited partnerships may be organized under Arizona Law. The Partnership shall have all of the powers permitted by law. 2.6 Term. The term of the Partnership, which will commence upon the filing of the Certificate of Limited Partnership, shall continue (subject to Article IX hereof) for a period of fifty (50) years after the date of such filing. 2.7 Independent Activities. Unless otherwise provided, the General Partner and each Limited Partner may, notwithstanding this Agreement, engage in whatever activities they choose, whether the same are competitive with the Partnership or otherwise, without having or incurring any obligation to offer any interest in such activities to the Partnership or to any Partner. ARTICLE III ----------- Capital Contributions --------------------- 3.1 Initial Capital Contributions. On or before the acquisition by the Partnership of the oil and gas interest, the General Partner shall notify each Partner of the amount of its Initial Capital Contribution and the date on which such Initial Capital Contribution is required. The Partners' respective share of such Initial Capital Contribution shall be in proportion to their relative Percentage Interests on the date of such notice. On or before the due date specified in such notice, each Partner shall contribute to the capital of the Partnership its share of the Initial Capital Contribution. The Partnership may not assign the Partners' obligation to make an Initial Capital Contribution to any creditor or other third party. 3.2 Additional Capital Contributions. If the General Partner determines at any time that the Partnership requires additional cash contributions to capital in order to pay when due the obligations and expenses of the Partnership or otherwise to accomplish the Partnership's purposes, the General Partner shall give written notice to each Partner of the amount(s) and date(s) on which such additional contributions are required. The Partners' respective shares of each additional contribution required in such notice shall be in proportion to their relative Percentage Interests on the date of such notice. On or before each due date specified in such notice, each Partner shall contribute to the capital of the Partnership its share of the total amount to be contributed on that date. The Partnership may not assign the Partners' obligation to make Additional Capital Contributions to any creditor or other third party. 3.3 Failure to Contribute. If a Partner (the "Defaulting Partner") fails to make an Additional Capital Contributions within 4 ten (10) days after the same becomes due, such failure shall constitute a breach of this Agreement. ARTICLE IV ---------- Distributions Prior to Liquidation ---------------------------------- 4.1 Distributions of Net Available Cash Flow. Prior to the dissolution of the Partnership and the commencement of the liquidation and winding up of its assets and affairs, the Net Available Cash Flow (if any) shall be distributed at such time(s) as the General Partner may determine in accordance with the following priorities: (a) First, to the repayment of any accrued interest on any and all Partner loans; (b) Second, to the repayment of the outstanding principal on any and all Partner loans; and (c) Third, to the Partners in proportion to their Percentage Interests. 4.2 Distributions In Liquidation. All Net Available Cash Flow arising after the dissolution of the Partnership and commencement of liquidation shall be applied and distributed in accordance with Section 9.2 hereof. ARTICLE V --------- Allocation of Profits and Losses -------------------------------- 5.1 Profits and Losses. The Profits and Losses shall be allocated among the Partners in proportion to their Percentage Interests as of the close of the taxable year or other appropriate period for which Profits and Losses are being allocated. 5.2 Tax Allocations. For income tax purposes, all items of income, gain, loss, deduction and credit of the Partnership for any tax period shall be allocated among the Partners in accordance with the allocations of Profit and Loss prescribed in this Article V. ARTICLE VI ---------- Management ---------- 6.1 General Authority. Subject to Section 6.2 hereof, the General Partner shall have full and exclusive responsibility and authority to control the management of the Partnership's business and assets, with all rights and powers necessary, incidental or convenient to such management, including (without limitation) all of the rights and powers that may be possessed by general partners 5 under the Act and the specific power and authority on behalf of the Partnership to: (a) Acquire by purchase, lease or otherwise any real or personal property that may be necessary, appropriate or incidental to the accomplishment of the purposes of the Partnership; (b) Operate, manage, maintain, finance, refinance, improve, construct, raze, own, grant options with respect to, sell, exchange, convey, assign, mortgage, lease or otherwise dispose of and deal with any real property and any personal property as may be necessary, convenient or incidental to the accomplishment of the purposes of the Partnership; (c) Grant options, easements, licenses, servitudes and rights of way with respect to the real and personal assets and properties of the Partnership and enter into agreements respecting their use; (d) Execute and deliver any agreements, contracts, certificates, deeds, bills of sale, pledges, assignments, leases, subleases, stock powers and other instruments and documents with respect to the real and personal assets and properties of the Partnership and in connection with the management and operation of the business and affairs of the Partnership; (e) Borrow money, execute loan agreements and other contracts, issue evidences of indebtedness and issue guarantees or grant security for the debts of others, as may be necessary, desirable or convenient in order to accomplish the purposes of the Partnership, and secure the same by deed of trust, mortgage, security interest, pledge or other lien on any property; (f) Execute, in furtherance of any or all of the purposes of the Partnership, any deed, lease, easement, mortgage, deed of trust, mortgage note, guaranty, security agreement, assignment as security, promissory note, bill of sale, contract or other instrument purporting to convey or encumber any or all of the Partnership's property; (g) Prepay in whole or in part, refinance, recast, increase, modify or extend any liabilities affecting the Partnership and, in connection therewith, execute any extensions or renewals of encumbrances on any or all of the Partnership's property; (h) Invest, care for and distribute funds to the Partners by way of cash, income, return of capital or otherwise, all in accordance with the provisions of this 6 Agreement, and perform all matters in furtherance of the objectives of the Partnership or this Agreement; (i) Contract for the employment and services of employees and/or independent contractors and delegate to such persons the management or supervision of any of the assets or operations of the Partnership; (j) Prosecute, defend, settle or compromise, at the Partnership's expense, any suits, actions or claims at law or in equity to which the Partnership is a party or by which it is affected, as may be necessary or proper to enforce or protect the Partnership's interests, and to satisfy out of Partnership funds any judgment, decree or decision of any court, board, agency or authority having jurisdiction or any settlement of any suit, action or claim prior to judgment or final decision thereon; (k) Pay the expenses of the Partnership from the funds of the Partnership, provided that all of the Partnership expenses shall be billed directly to and paid by the Partnership to the extent reasonably practicable; (l) Vote at any election or meeting of any corporation in which the Partnership holds an interest in person, or by proxy, and to appoint agents to do so in their or its place; (m) Invest the funds of the Partnership and establish bank, money market and other accounts for the deposit of Partnership funds and permit withdrawals therefrom upon such signatures as the General Partner shall designate; provided, however, that the Partnership's funds shall not be commingled with the funds of any other Person or entity; (n) Compromise, without the consent of any of the Limited Partners, the obligation to return money or other property paid or distributed in violation of the Act; (o) Establish and maintain reserves for proper Partnership purposes in such amounts as may be reasonably appropriate from time to time to accomplish the purposes of the Partnership; (p) Engage in any kind of activity and perform and carry out contracts of any kind (including contracts of insurance covering risks to Partnership property and general partner liability) necessary or incidental to, or in connection with, the accomplishment of the purposes of the Partnership and the performance of the General Partner's duties under this Agreement; and 7 (q) Make any and all elections for federal, state and local tax purposes, including, without limitation, any election, if permitted by applicable law, to: (i) adjust the basis of Partnership property pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state or local law, in connection with the transfers or liquidations of Partnership interests; (ii) extend the statute of limitations for assessment of tax deficiencies against Partners with respect to adjustments to the Partnership's federal, state or local tax returns; and (iii) represent the Partnership and Partners before taxing authorities or courts of competent jurisdiction in tax matters affecting the Partnership and the Partners in their capacity as Partners and to execute any agreements or other documents relating to or affecting such tax matters, including agreements or other documents that bind the Partners with respect to such tax matters. The General Partner is specially authorized to act as the "Tax Matters Partner" under Code Section 6231(a)(7) and in any similar capacity under state or local law. 6.2 Matters Requiring Unanimous Consent. The General Partner shall not have the right or authority to do any of the following without the written approval of all of the Limited Partners: (a) admit any Person to the Partnership as a General Partner, except as expressly permitted under the terms of this Agreement; (b) cause the Partnership to sell or transfer all or substantially all of its assets; or (c) amend this Agreement in any respect; provided, however, that the General Partner may amend this Agreement without the consent of any Limited Partners: (i) to add to the representations, duties or obligations of the General Partner or surrender any right or power granted to the General Partner herein, for the benefit of the Limited Partners; and (ii) to cure any ambiguity, to correct or supplement any provision hereof that may be inconsistent with any other provisions hereof, or to make any other provision with respect to matters or questions arising under this Agreement not inconsistent with the intent of this Agreement. 6.3 Liability and Indemnification of the General Partner. The General Partner shall not be liable, responsible, or accountable in damages or otherwise to the Partnership or to any of the Limited Partners for any act or omission performed or omitted in good faith pursuant to the authority granted to it by this Agreement in a manner reasonably believed to be within the scope of the authority granted to it by this Agreement; provided, however, that the General Partner shall not be relieved of liability in respect of any claim, issue or matter as to which the General 8 Partner shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of its fiduciary duty to the Partnership or to the Limited Partners. The Partnership shall indemnify the General Partner and its affiliates against any loss, damage or judgment incurred by it, and against expenses (including attorneys' fees as and when incurred) actually and reasonably incurred by it in connection with the defense or settlement of any threatened, pending or completed action or suit, arising out of any act performed or omitted to be performed by the General Partner and its affiliates. The satisfaction of any indemnification shall be from and limited to Partnership assets, and no Limited Partner shall have any personal liability on account thereof. ARTICLE VII ----------- Books and Records ----------------- 7.1 Books and Records. The General Partner shall keep at its office the books and records required to be kept by Section 29- 305 of the Act as hereinafter amended. Any Partner or its designated representative shall have the right, at any reasonable time, to have access to and may inspect and copy (at such Partner's expense) the contents of such books or records at the Partnership's office. At the discretion of the General Partner, the financial records of the Partnership may be reviewed or audited as of the end of any fiscal year by an independent firm of accountants, at the expense of the Partnership. 7.2 Tax Information. The General Partner shall instruct the Partnership's accountants, at the expense of the Partnership, to prepare and deliver all necessary tax returns and information to each Partner, including a copy of the Partnership's federal income tax return, within a reasonable period following the end of each fiscal year. ARTICLE VIII ------------ Transfer of Partnership Interests --------------------------------- 8.1 In General. Except as otherwise set forth in this Article VIII, a Limited Partner and a Person who may succeed to the Partnership Interest of a Limited Partner shall not sell, assign, transfer, pledge or hypothecate all or any portion of its Partnership Interest without either the consent of the General Partner or compliance with Section 8.2 hereof. The General Partner shall not sell, assign, transfer, pledge or hypothecate all or any portion of their respective Partnership Interests to any Person without the consent of all of the Limited Partners. Any sale, assignment, transfer, pledge or hypothecation that does not comply with the provisions of this Article VIII shall be void and shall not cause or constitute a dissolution of the Partnership. 9 8.2 Exception. A Limited Partner may sell, assign or transfer its Interest in the Partnership without the consent of the General Partner if each of the following conditions have been satisfied: (a) The Limited Partner shall have first offered in writing to sell its entire Partnership Interest (or portion thereof proposed to be transferred) to the General Partner for the same cash purchase price and upon the same terms and conditions as set forth in a bona fide purchase offer executed by the proposed transferee, and the General Partner shall have failed to accept such written offer within sixty (60) days after receipt of a copy of such purchase offer; and (b) such Limited Partner and its transferee execute, acknowledge and deliver to the General Partner such instruments of transfer and assignment with respect to such transaction as are in form and substance satisfactory to the General Partner. If a sale, transfer or assignment of an Interest in the Partnership complies with the provisions of this Section 8.2 but the Person acquiring such interest is not admitted as a Substituted Limited Partner pursuant to Section 8.3 hereof, such Person shall be entitled to receive distributions and allocations with respect to such interest as set forth in this Agreement, but shall have no right to any information or accounting of the affairs of the Partnership, shall not be entitled to inspect the books or records of the Partnership, and shall not be entitled to any of the rights of the General Partner or a Limited Partner under the Act or this Agreement. 8.3 Substituted Limited Partner. Except in the case of a transfer by a Limited Partner to an entity all of the equity or beneficial interests of which are held exclusively by the Limited Partner, no Person taking or acquiring, by whatever means, any Interest in the Partnership of any Limited Partner shall be admitted as a Substituted Limited Partner without the consent of all of the other Partners and unless such Person: (a) Elects to become a Substituted Limited Partner by evidencing written notice of such election to the Partnership; and (b) Executes, acknowledges and delivers to the Partnership such other instruments as the General Partner may deem necessary or advisable to effect the admission of such Person as a Substituted Limited Partner, including, without limitation, the written acceptance and adoption of such person of the provisions of this Agreement. 10 The General Partner shall amend Exhibit A attached hereto from time to time to reflect the admission of Substituted Limited Partners. ARTICLE IX ---------- Dissolution and Winding Up -------------------------- 9.1 Dissolution. No Partner shall take any action to dissolve (or any action that would cause the dissolution of) the Partnership prior to the expiration of the term of the Partnership, except as expressly permitted by the provisions of this Section 9.1. The Partnership shall dissolve upon the first to occur of any of the following events: (a) The unanimous written agreement of all Partners at any time; (b) The expiration of the term of the Partnership specified in this Agreement as amended; (c) The acquisition by one Person of all of the outstanding Interests in the Partnership; (d) The entry of a dissolution decree with respect to the Partnership by a court of competent jurisdiction pursuant to Section 29-345 of the Act; or (e) An event of withdrawal as described in Section 29-323 with respect to a General Partner, unless at the time there is at least one other General Partner, or a new General Partner is elected pursuant to Section 10.3, and the business of the Partnership is continued by the written consent of such remaining or new General Partners and the written consent of a Majority in Interest of the Limited Partners, given within ninety (90) days of such event. 9.2 Winding Up. Upon a dissolution of the Partnership, the General Partner shall take full account of the Partnership's liabilities and assets, and the Partnership shall be liquidated as promptly as is consistent with obtaining the fair value thereof. The proceeds of liquidation, to the extent sufficient therefor, shall be applied and distributed in the following order: (a) To the payment and discharge of all the Partnership's debts and liabilities (other than those to the General Partner), including the establishment of any necessary reserves; (b) To the payment of any debts and liabilities owed to the General Partner; and 11 (c) To the Partners in accordance with their respective Percentage Interests. ARTICLE X --------- Events Affecting the General Partner ------------------------------------ 10.1 Cessation. The General Partner shall cease to be the General Partner upon the transfer of its entire Interest in the Partnership or upon its withdrawal in accordance with Section 10.2 hereof, or the occurrence of any of the events set forth in Section 29-323 of the Act. Upon the occurrence of any such event, such Person or its transferee or other successor shall have the right to receive distributions and allocations with respect to its Partnership Interest, shall be treated as the transferee of such interest, and shall have the right to become a General Partner only with the consent of all other Partners. 10.2 Withdrawal of a General Partner. Upon thirty (30) days notice to the Partners, the General Partner may withdraw as General Partner at any time, provided that the General Partner delivers to the Partnership an opinion of competent counsel to the effect that such withdrawal will not adversely affect the classification of the Partnership as a partnership for federal income tax purposes. 10.3 Election of a New General Partner. In the event any Person ceases to be a General Partner pursuant to Section 10.1, and as a consequence thereof the Partnership has no General Partner, any Limited Partner may nominate one or more Persons for election as the General Partner to continue the Partnership and its business. No Person so nominated shall become the General Partner unless elected by an affirmative vote of all of the Limited Partners. ARTICLE XI ---------- Miscellaneous ------------- 11.1 Notices. Any notice or demand required or permitted to be given by any provision of this Agreement shall be in writing and shall be delivered personally to the Person to whom the same is directed (or to an officer, general partner, member, manager or trustee of such Person that is a corporation, partnership, limited liability company or trust) or sent by registered or certified mail, addressed as follows: if to the Partnership, to the Partnership at the address of its principal office; if to the General Partner, to the address set forth in Exhibit A attached hereto, or to such other address as the General Partner may from time to time specify by notice to the Partners; and if to a Limited Partner, to such Limited Partner at the address set forth in Exhibit A attached hereto, or to such other address as such Limited Partner may from time to time specify by notice to the Partnership. 12 Any such notice shall be deemed to be delivered, given and received for all purposes as of the date so delivered, if delivered personally, or as of the date on which the same was deposited in a regularly maintained receptacle for the deposit of United States mail, if sent by registered or certified mail, postage and charges prepaid. 11.2 Binding Effect. Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement shall be binding upon and inure to the benefit of the Partners and their respective heirs, legatees, legal representatives, successors, transferees and assigns. 11.3 Construction. Every covenant, term and provision of this Agreement shall be construed according to its fair meaning and not strictly for or against any Partner. 11.4 Headings. Section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define or limit the scope or application of this Agreement or any provision hereof. 11.5 Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement. 11.6 Incorporation by Reference. Every exhibit and other appendix attached to this Agreement and referred to herein is hereby incorporated in this Agreement by reference. 11.7 Additional Documents. Each Partner, upon the request of the General Partner, agrees to perform all further acts and execute, acknowledge and deliver any documents that may be reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement. 11.8 Variation of Pronouns. All pronouns and any variations thereof shall be deemed to refer to masculine, feminine or neuter, singular or plural, as the identity of the Person or Persons may require. 11.9 Arizona Law. The laws of the State of Arizona, without giving effect to its principles of conflicts of laws, shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the Partners. 11.10 Waiver of Action for Partition. Each of the Partners irrevocably waives any right that he may have to maintain any action for partition with respect to any of the Partnership's assets and properties. 13 11.11 Counterpart Execution. This Agreement may be executed in any number of counterparts with the same effect as if all of the Partners had signed the same document. All counterparts shall be construed together and shall constitute one agreement. 11.12 Sole and Absolute Discretion. Except as otherwise provided in this Agreement, all actions that the General Partner may take and all determinations that the General Partner may make pursuant to this Agreement may be taken and made at the sole and absolute discretion of the General Partner. IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day first above set forth. GENERAL PARTNER: ---------------- DEL WEBB CORPORATION, a Delaware corporation By: /s/ Robertson C. Jones -------------------------------- Robertson C. Jones Its: Vice President LIMITED PARTNER: ---------------- NEW MEXICO ASSET CORPORATION, an Arizona corporation By: /s/ David E. Rau -------------------------------- David E. Rau Its: Vice President 14 STATE OF ARIZONA ) :ss. COUNTY OF MARICOPA ) The foregoing instrument was acknowledged before me this 23rd day of May, 1996, by Robertson C. Jones, the Vice President of Del Webb Corporation, a Delaware corporation, on behalf of the corporation. My Commission Expires: /s/ Susan L. Davis ----------------------------------------- [SEAL] NOTARY PUBLIC May 1, 1998 Residing at Maricopa County, Arizona - ---------------------- ------------------------------ STATE OF ARIZONA ) :ss. COUNTY OF MARICOPA ) The foregoing instrument was acknowledged before me this 23rd day of May, 1996, by David E. Rau, the Vice President of New Mexico Asset Corporation, an Arizona corporation, on behalf of the corporation. My Commission Expires: /s/ Susan L. Davis ----------------------------------------- [SEAL] NOTARY PUBLIC May 1, 1998 Residing at Maricopa County, Arizona - ---------------------- ------------------------------ 15 EXHIBIT A SCHEDULE OF PARTNERS -------------------- GENERAL PARTNER: Percentage First Capital Name Address Interest Contribution - ---- ------- -------- ------------ Del Webb 6001 North 24th Street 1% $ .01 Corporation Phoenix, Arizona 85016 LIMITED PARTNER: Percentage First Capital Name Address Interest Contribution - ---- ------- -------- ------------ New Mexico Asset 6001 North 24th Street 99% $ .99 Corporation Phoenix, Arizona 85016 -------- ------------- 100% $ 1.00 EX-10.30 16 PARTICIPATION AGREEMENT Exhibit 10.30 DEL WEBB CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO.1 PARTICIPATION AGREEMENT (Amended and Restated Effective as of July 25, 1996) This amended and restated Participation Agreement is entered into of this 25th day of July, 1996, between Del Webb Corporation, a Delaware corporation ("Employer"), and Philip J. Dion ("Participant"). RECITALS -------- A. Employer and Participant previously entered into a Participation Agreement dated as of December 5, 1986 providing for participation by Participant, beginning on January 1, 1986, in the Del E. Webb Corporation Supplemental Executive Retirement Plan (the "Plan"). B. The Plan was restated as of January 1, 1989 and redesignated the Supplemental Executive Retirement Plan No.1 and was further amended and then further amended and restated as of April 20, 1993. The Plan also has been amended on two separate occasions since its 1993 restatement. C. Employer and Participant desire to amend and restate the Participation Agreement and to modify and supplement the Plan as it relates to Participant, all as set forth herein. NOW, THEREFORE, the parties hereby agree as follows: 1. GENERAL ------- This Agreement restates and reaffirms Participant's original Participation Agreement, which was entered into on December 5, 1986, and which was effective as of January 1, 1986. Participant's participation in the Plan is hereby reaffirmed. 2. THE PLAN -------- This Participation Agreement is subject to all of the terms and provisions of the Plan, except to the extent that the Plan is modified and supplemented below as it applies to Participant. The Plan is expressly incorporated by reference into this Participation Agreement. By signing this Participation Agreement, Participant acknowledges receipt of a copy of the Plan and confirms his understanding and acceptance of all of the terms, conditions and provisions of the Plan. 3. MODIFICATIONS ------------- Pursuant to paragraph 8.3 of the Plan, the provisions of the Plan as they apply to Participant are modified and supplemented as follows: (a) Years of Service. For each "Year of Service," as defined in paragraph 2.3(b) of the Plan, or portion thereof, on or after January 1, 1989, Participant shall be credited with 1.5 times such Year of Service, or portion thereof, for all purposes under the Plan. (b) Normal Retirement Date. Participant's "Normal Retirement Date," as defined in paragraph 4.1(b) of the Plan, shall be age 55. (C) Normal Form of Benefit Payments.Notwithstanding paragraph 4.5(a) of the Plan, any benefits payable to Participant pursuant to paragraph 4.2 of the Plan (the Normal Retirement Benefit provision) will be payable in one lump sum within thirty (30) days following Participant's termination of active employment. Except as otherwise provided in paragraph 3(f), below, the provisions of paragraph 4.5(a) of the Plan, as it may be amended from time to time, will apply to the payment of benefits to Participant if his active employment terminates prior to his Normal Retirement Date. For purposes of this Participation Agreement, service as an independent contractor consultant or board member will not be considered to be "active employment." (d) Actuarial Equivalence. For purposes of determining actuarial equivalence pursuant to paragraph 4.5(b) of the Plan, the following actuarial factors and assumptions shall be utilized: Interest Rate: The average Pension Benefit Guaranty Corporation ("PBGC") immediate annuity interest rate for the 36 months prior to the month in which the payments begin Mortality Table: The PBGC immediate annuity mortality table as in effect for the month in which the payments begin (e) Accelerated Distribution. The ten percent (10%) penalty provided by paragraph 4.5(d) of the Plan shall not apply to any distribution made to Participant pursuant to paragraph 4.2 of the Plan (the Normal Retirement Benefit provision) and paragraph 3(c), above. Except as otherwise provided in paragraph 3(f), below, the provisions of paragraph 4.5(d) of the Plan, including the ten percent (10%) penalty, shall apply to any distribution to Participant if his active employment (as such term is used and defined in paragraph 3(c), above) terminates prior to his Normal Retirement Date. (f) Termination Without Cause or for Good Reason. If prior to this Normal Retirement Date Participant's employment is terminated by Employer without Cause or by -2- Participant for Good Reason, (i) Participant shall continue to accrue benefits under the Plan until his Normal Retirement Date to the same extent and on the same basis as if Participant's employment were actually continued until his Normal Retirement Date; (ii) Participant's employment will then be considered to terminate on his Normal Retirement Date; (iii) Participant will be entitled to begin to receive payments following his Normal Retirement Date pursuant to paragraph 4.2 of the Plan; and (iv) for purposes of paragraphs 3(c) and (e), above, Participant will be deemed to be in the active employment of Employer until his Normal Retirement Date. (g) Definitions For purposes of the Plan and this Participation Agreement, the terms "Cause", "Change in Control" and "Good Reason" shall have the meanings ascribed to those terms in the Employment and Consulting Agreement entered into between Employer and Participant, dated as of the date hereof, as it may be amended from time to time, rather than the definitions included in paragraph 4.6 of the Plan. The Employment and Consulting Agreement includes two definitions of Good Reason, the standard definition that applies prior to a Change in Control and a special definition that applies after a Change in Control. The standard definition will apply for purposes of the Plan and this Participation Agreement unless and until a Change in Control occurs, after which the special post-Change in Control definition will apply. EMPLOYER: DEL WEBB CORPORATION By: /s/ Lynn Schuttenberg ---------------------- Title: Vice President, Human Resources PARTICIPANT: /s/ Philip J. Dion ------------------ Philip J. Dion -3- EX-10.31 17 LETTER RE: MANAGEMENT INCENTIVE PLAN AGREEMENT Exhibit 10.31 August 8, 1995 Mr. Philip J. Dion Chairman of the Board and Chief Executive Officer Del Webb Corporation RE: 1995/96 Executive Management Incentive Plan Award Agreement Dear Phil: Del Webb Corporation (the "Company") has adopted the Del Webb Corporation 1995 Executive Management Incentive Plan (the "Plan"). Under the Plan, the Human Resources Committee (the "Committee") of the Company's Board of Directors is authorized to make awards of performance-based compensation to you. The Committee has decided to make an award to you pursuant to which you may become entitled to receive performance-based compensation. The payment of the performance-based compensation is subject to the terms and provisions of the Plan and this letter, which is the "Award Agreement". 1. Performance Compensation: The maximum amount of your Performance Compensation will depend on the level at which the Performance Goal is satisfied. For fiscal year ended June 30, 1996 ("Performance Period") the Committee will evaluate performance under one or more of the following specific performance elements: 3.75% of after tax net earnings; revenue growth relative to the revenue growth of the proxy comparator peer group; and/or unit closings growth relative to the unit closings growth of the proxy comparator peer group. The Performance Compensation and Performance Goals under which the 1995/96 Performance Award will be made are set forth in Exhibit A. If the Performance Goals are satisfied during the Performance Period, you will be entitled to receive the Performance Compensation provided by this paragraph, subject to the discretionary adjustment provisions of paragraph 2. If the Performance Goal evaluation is not satisfied at the minimum level, you will not be entitled to receive any performance-based compensation. Your Performance Compensation, if any, will be paid to you as soon as administratively feasible following the date the Committee certifies that the Performance Goals for the Performance Period have been satisfied. Mr. Philip J. Dion August 8, 1995 Page 2 2. Discretionary Adjustments: We have set the Performance Compensation that could be payable to you upon attainment of the Performance Goals at an intentionally high level. We have followed this approach because under the terms of the Plan the Committee has the discretion to reduce or eliminate (but not increase) the amount of your Performance Compensation on the basis of subjective factors the Committee determines to be appropriate. The Committee reserves this right. 3. Status of Plan: This Award Agreement is made pursuant to the provisions of the Plan. The Plan is incorporated herein and a copy is attached as Exhibit B. In the event of any conflict between the provisions of the Plan and this Award Agreement, the provisions of the Plan control. 4. Deferral of Payments: You may elect to defer all or a portion of the Performance Compensation payable to you pursuant to the terms and provisions of the Del Webb Corporation Deferred Compensation Plan. Any such election must be made on or before December 15, 1995. 5. Amendments: This Award Agreement may be amended only by a written agreement executed by the Company and you. Any changes required in order to qualify the Performance Compensation as performance-based compensation for the purposes of Section 162(m) of the Internal Revenue Code of 1986, however, may be unilaterally adopted by the Company without your consent. Please execute the acknowledgment in the enclosed extra copy of this letter and return it in the enclosed self-addressed, stamped envelope. DEL WEBB CORPORATION By: _______________________________ Chairman, Human Resources Committee ACKNOWLEDGMENT -------------- I acknowledge receipt of a copy of the Del Webb Corporation 1995 Executive Management Incentive Plan. I also acknowledge that no amounts will be payable to me pursuant to the Plan or this Award Agreement if the Performance Goals referred to above are not attained within the Performance Period. I also acknowledge that the Committee has the right to reduce the Performance Compensation in the exercise of its discretion. I accept the terms and provisions of this Award Agreement and the Plan. DATED: ____________________, 1995 ___________________________________ Your signature PERFORMANCE BASED INCENTIVE PLAN - EXHIBIT A FY 96 DEL WEBB CORPORATION PERFORMANCE GOALS
(1) 3.75% AFTER-TAX EARNINGS ------------------------- Performance (2) DEL WEBB Compensation HOUSING MAXIMUM $$$ (Thousands) REVENUE -------------- --- ------------- GROWTH Performance Compensation (Thousands) ----------- -------------- 48,055 $1,800 +5.00% $1,750 43,755 $1,640 +4.00% $1,600 39,455 $1,480 +3.00% $1,450 35,155 $1,320 +2.00% $1,300 Budget 30,855 $1,160 +1.00% $1,150 26,855 $1,010 Peer Group Avg. Inc. ---- $1,000 22,855 $860 -1.00% $850 18,855 $710 -2.00% $700 14,855 $560 -3.00% $550 10,855 $410 -4.00% $400 6,855 $260 -5.00% $250 (3) DEL WEBB ----------- MAXIMUM UNIT Performance CLOSINGS Compensation GROWTH (Thousands) ----------- ------------- +5.00% $1,750 +4.00% $1,600 +3.00% $1,450 +2.00% $1,300 +1.00% $1,150 Peer Group Avg. Inc. ---- $1,000 -1.00% $850 -2.00% $700 -3.00% $550 -4.00% $400 -5.00% $250
NOTES: (1) After-tax earnings for FY 96 have been budgeted at $30.9M. Under this criterion, the performance compensation is computed at 3.75% of achieved results. This chart depicts various performance compensation maximums under several possible scenarios. (2) This performance compensation criterion will be based upon the actual average housing revenue growth experienced by the homebuilder peer group as defined below. The maximum performance compensation will then vary by 1% increments from the peer group average, calculated from the most recent trailing four quarters of SEC filed information, within the stated maximum performance compensation range of $1.75M to $0.25M. For FY 95, the Company's housing revenues totaled $764.5M. (3) This performance compensation criterion will be based upon the actual average unit closings growth experienced by the homebuilder peer group as defined below. The maximum performance compensation will then vary by 1% increments from the peer group average, calculated from the most recent trailing four quarters of SEC filed information, within the stated maximum performance compensation range of $1.75M to $0.25M. For FY 95, the Company's unit closings totaled 4,316. - -------------------------------------------------------------------------------- Homebuilder Peer Group: Centex Corporation, Continental Homes Holding Corp., Hovnanian Enterprises, Inc., Kaufman & Broad Home Corporation, Lennar Corporation, Pulte Corporation, The Ryland Group, Inc., Standard Pacific Corp., and Toll Brothers, Inc. - -------------------------------------------------------------------------------- EX-10.32 18 KEY EXECUTIVE LIFE PLAN PLUS Exhibit 10.32 Key Executive Life Plan Plus Number of Participants: 60 Total Initial Death Benefit: $23,500,000 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ THIS AGREEMENT, is made as of the _____ day of______________ l9__, by and between Del Webb Corporation, and its successors and assigns, of Phoenix, Arizona, hereinafter called the Corporation, and_________________ WHEREAS, ________________________ hereinafter called the Employee, has rendered service to the Corporation, and, WHEREAS, the Corporation wishes to provide a death benefit for the Employee and/or the Employee's designee through the Key Executive Life Plan PLUS, and, WHEREAS, the Employee agrees to participate in such plan to the extent hereinafter provided, NOW THEREFORE, it is mutually agreed that: Insurance Policies 1. In furtherance of the purpose of this Agreement, life insurance is to be purchased on the life of__________________________ hereinafter called the Insured, from Sun Life Assurance Company of Canada under Policy Number__________ hereinafter called the Policy. Security 2. As security for the Corporation's interest in the Cash Surrender Value of the Policy, the Employee shall execute, on a form acceptable to the insurance company, a collateral assignment to the Corporation of certain specified rights in the Policy, as set forth in Article 5. Except as provided in Article 5, ownership of the Policy's rights, including but not limited to the right to name the beneficiary, shall rest with the Employee Premiums 3. All premiums due on the Policy shall be paid by the Corporation. However, the Employee shall reimburse the Corporation each year in an amount that is equal to the value, as determined for federal tax purposes, of the "economic benefit" derived by the Employee from the Policy's life insurance protection. The Employee will receive Compensation in addition to annual salary each year in an amount equal to this reimbursement This additional compensation and reimbursement may be in the form of book entries rather than the actual exchange of cash or checks. 1 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ Termination 4. This Agreement shall immediately terminate for any of the following reasons: termination of the Employee's employment for any reason; submission of written notice to terminate by either party to this Agreement to the other party; the death of the Insured and the payment of any death benefits pursuant hereto; or any action by the Corporation which would impair, reduce, or defeat the Employee's interest in the Policy. Such action by the Corporation might include but is not limited to surrender or lapse of the Policy for nonpayment of premiums. If this Agreement terminates at least five years after the date of this Agreement)the Employee shall have the right, exercisable within 90 days, to obtain a release of the Corporation's interest in the Policy by paying to the Corporation its interest in the Policy as determined in Article 6(2). Upon receipt of such amount, the Corporation shall either transfer the Policy to the Employee or transfer such interest to the party designated by the Employee. The Corporation agrees to execute all documents necessary to transfer the Policy to the Employee or his/her assigns. If the Employee does not timely exercise this right, the Corporation may exercise its rights under Article 5. Corporation's Rights 5. Under the terms of the collateral assignment of the Policy, the Corporation shall have the following rights: the right to receive, upon termination of this Agreement, an amount equal to the Corporation's interest in the Policy's Cash Surrender Value, as determined in accordance with Articles 6(1) and 6(2); the right to release the collateral assignment; the right to surrender or partially surrender the Policy upon the giving of 14 days advance written notice of the Corporation's exercise of its right to surrender the Policy; and the right to make and receive loans against the Policy to the extent of its interest as defined in Article 6(4). Any rights to Policy values or death benefits in excess of the Corporation's interest shall be owned by and payable to, or as designated by, the Employee. Any designation or change of beneficiary or change in election of settlement options or exercise of policy rights shall be made subject to this Agreement and the Corporation's rights hereunder. 2 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ Policy rights shall be exercisable by the sole signature of a duly authorized representative of the Corporation. The Corporation agrees to refrain from making loans or partial surrenders against the Policy in an amount greater than its interest under the Policy as defined in Article 6(4) The parties agree that Sun Life Assurance Company of Canada is authorized to recognize the Corporation's right to borrow without the insurance company being responsible for the calculation of amounts permitted to be borrowed and without investigation of the validity or amount of the request by the Corporation to borrow. The sole signature of a duly authorized representative of the Corporation shall be sufficient for the exercise of the Corporation's right to borrow and shall be a full discharge and release to Sun Life Assurance Company of Canada. The Employee shall not have the right to make a loan against the Policy or otherwise have access to cash surrender values unless and until such time as the Employee's employment is terminated or the Corporation's interest in the Policy terminates in accordance with this Agreement. Corporation's Interest 6. For purposes of Articles 4 and 5, the amount receivable by the Corporation upon (1) death of the Insured, (2) termination of this Agreement for reason other than death of the Insured, (3) surrender or partial surrender of the Policy, or (4) exercise of the loan right by the Corporation shall be as follows: (1) Upon termination of this Agreement resulting from death of the Insured, the Corporation's share of the Policy's death benefit shall be an amount equal to its Aggregate Premiums paid' as defined in Article 6(5), plus that portion of the remaining death benefits payable from the Policy, if any, that exceeds the applicable amount set forth on Appendix A determined for the Executive's plan year at the time of death, which Appendix is attached hereto and incorporated herein by this reference. (2) Upon termination of this Agreement for reasons other than the death of the Insured, if such termination occurs within the five-year period following the date of this Agreement, the Corporation's share of the Policy shall be the Cash Surrender Value. For terminations occurring after the five-year period, the Corporation's share of the Policy's Cash Surrender Value shall be an amount equal to its Aggregate Premiums paid; the excess, if any, of the Policy's Cash 3 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ Surrender Value shall accrue to the Employee. After the five-year period, the Employee shall have the options as stated in Article 4, paragraph 2. (3) Upon the Corporation's surrender or partial surrender of the Policy in accordance with Article 5, if such surrender or partial surrender occurs within the five-year period following the date of this Agreement, the Corporation's share of the Policy shall be the Cash Surrender Value For surrenders or partial surrenders occurring after the five-year period, the Corporation's share of the Policy's Cash Surrender Value shall be an amount equal to its Aggregate Premiums paid; the excess, if any, of the Policy's Cash Surrender Value shall be paid to the Employee. (4) If the Corporation obtains any loans against the Policy, the amount of the loans together with the interest thereon shall at no time exceed the Aggregate Premiums paid. (5) "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. (6) "Cash Surrender Value" shall mean an amount that equals, at any specified time, the cash surrender value provided under the Policy at that time. Notwithstanding any of the above, during the five-year period immediately following the date of this Agreement, the Corporation shall have the right, upon the termination of this Agreement, or upon the surrender or partial surrender of the policy for reason other than death of the insured, to cause to be transferred all interests in the policy from the Employee, and to receive such from the Employee or former Employee, within a 60 day period following such termination, surrender or partial surrender of the policy. The Employee hereby agrees to comply with such request from the Corporation to initiate the transfer. 4 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ Application for Additional 7. Should the parties to this Agreement deem Agreements or Riders it desirable, application may be made for a supplemental agreement or rider providing for the waiver of Policy premiums in the event of the Insured's total disability, if such agreement or rider is now or subsequently made available by the Insurer. Any additional premium attributable to such agreement or rider shall be paid by the Corporation. Waived premiums shall not be treated as paid by the Corporation. Named Fiduciary 8. For purposes of the Employee Retirement Income Security Act of 1974, the Corporation is the "named fiduciary" of the Key Executive Life Plan PLUS for which this Agreement is hereby designated the written plan instrument. Claims and Review 9. At the Insured's death, the Corporation Procedure arid the beneficiary designated to receive death benefits shall execute such forms and furnish such other documents or information as are required to receive payment under the Policy. The Corporation shall also furnish to Sun Life Assurance Company of Canada an affidavit specifying the amount of death benefits payable to the Corporation as defined in Article 6(1). With respect to claims against the Corporation arising under this Agreement, the following procedure shall be used: The claimant shall file a claim for benefits by notifying the Corporation in writing. If the claim is wholly or partially denied, the Corporation shall provide a written notice within 90 days specifying the reason for the denial, the provisions of this Agreement on which the denial is based and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the claimant shall notify the Corporation in writing within 60 days after receipt of written notice of a denial of claim In requesting a review, the claimant may review plan documents and submit any written issues and comments he/she feels are appropriate. The Corporation shall then review the claim and provide a written decision within 60 days of receipt of a request for a review. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. 5 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ In no event shall the Corporation's liability under this Agreement exceed the amount of the death benefit as provided in Appendix A. Payment of Death 10. In lieu of the lump sum payable at Benefits Insured's death, the Employee may, in accordance with the procedures of the insurance company, elect any of the optional modes of payment for the death benefits as enumerated in the Policy and known as "settlement options" with respect to the portion of the Policy's death benefits that become payable to the beneficiary. If no such election is in effect at the Insured's death, the beneficiary shall have the right to elect such settlement options. The Corporation shall have a similar right to elect a settlement option for the benefits attributable to its interest in the Policy. Amendment Assignment 11. This Agreement may be altered, amended, or modified, including the addition of any extra Policy provisions, by a written agreement signed by the parties to this Agreement In addition, either party may assign his/her rights, interests and obligations under this Agreement, provided however, that any assignment shall be made subject to the terms of this Agreement Binding Agreement 12. This Agreement shall be binding upon the heirs, administrators, executors, successors and assigns of each party to this Agreement. Validity 13. In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining Parts of this Agreement, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been inserted in this Agreement. No Contract of 14. The terms and conditions of this Employment Agreement shall not be deemed to constitute a contract of employment between the Corporation and the Executive. Such employment is hereby acknowledged to be an "at will" employment relationship that can be terminated at any time for any reason, with or without cause, unless expressly provided in a separate written employment agreement. Nothing in this Agreement shall be deemed to give the Executive the right to be retained in the service of the Corporation or to interfere with the right of the Corporation to discipline or discharge the Executive at any time. 6 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Life Insurance Agreement ================================================================================ Interpretation 15. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine and vice-versa. Headings and subheadings are for convenience purposes only and have no effect on the construction of the Agreement. The internal laws of the State of Arizona shall govern this Agreement Entire Agreement 16. This Agreement constitutes the entire agreement between the parties hereto with regard to the subject matter of this Agreement and supersedes all previous negotiations, agreements and commitments in respect thereto. No oral explanation or oral information by either of the parties to this Agreement shall alter the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first written above. ------------------------------------ (Employee) ------------------------------------ (Corporation) - --------------------------- ------------------------------------ (Witness) (By) Its: -------------------------------- 7 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Collateral Assignment - Equity Method ================================================================================ - ------------------------------ -------------------------------- Policy Number Insured The original of this Assignment should be forwarded to the Home Office, to be retained by the Company (hereafter called the Insurer) which is Sun Life Assurance Company of Canada. The undersigned owner/applicant of the policy to be issued pursuant to application number___________ and dated for insurance on the life of the insured named above authorizes the Issuer to insert the policy number in this Assignment after said policy is issued. ------------------------------- Owner/Applicant ASSIGNOR________________________________________________________________________ ASSIGNEE: Del Webb Corporation 6001 N. 24th Street Phoenix, AZ 85016 FOR VALUE RECEIVED, the undersigned owner (hereafter called the assignor) assigns, t and sets over [0 the assignee, its successors or assigns, certain rights in the policy numbered above, including any and all supplemental extra benefit riders or agreements issued under said policy, subject to all the terms and conditions of the policy and this Assignment and to all superior liens, if any, which the Insurer or ally prior assignee may have against this policy The assignor by this t and the assignee by acceptance of this Assignment jointly and severally agree 10 the conditions and provisions herein set forth. This Assignment is made and the policy is to be held as collateral security for any and all liabilities of the assignor to the assignee. either now existing or that may hereafter arise between the assignor or any successors or assigns and the assignee in conjunction with a Split-Dollar arrangement with regard to this policy 1.(a) It is expressly agreed that the assignee shall have the following rights: (1) the right to make and receive loans against the policy to the extent of aggregate premiums paid by the assignee; (2) the right to release this Assignment to the assignor or his/her assigns; (3) the right, upon 14 days advance written notice to the t to surrender or partially surrender the policy and to receive, if such surrender or partial surrender occurs within the five-year period immediately following the date of this Agreement, the cash surrender value of the policy numbered above. if such surrender or partial surrender occurs after the five-year period, the right shall be limited to the cash surrender values (but not in excess of Aggregate Premiums, as defined below, paid by the assignee); (4) the right to receive from the death proceeds, arid to elect an income settlement option with respect thereto, an amount equal to the aggregate premiums paid by the assignee until the date Of the insured's death plus any death proceeds paid by the Insurer pursuant to the application numbered above, that exceed the amount payable to the Insured's named beneficiary based on the schedule of Death Benefits attached (see Appendix A). 1 Del Webb Corporation Key Executive Life Plan PLUS (KELP PLUS) Split-Dollar Collateral Assignment - Equity Method ================================================================================ (b) Assignor shall not have the right to make a loan against the policy or otherwise have access to cash values unless and until such time as the Assignor's employment is terminated or the Assignor's interest in the Policy terminates as modified by paragraph 1(a), all other rights in the policy, including but not limited to the right to designate and change the beneficiary and the right to receive any cash values in excess of aggregate premiums paid by the assignee, are reserved to the assignor and excluded from this Assignment. (c) Notwithstanding any other provision of this Assignment or the Split-Dollar Life Insurance Agreement entered into between assignor and assignee, for all purposes, the assignee shall furnish to the insurer an affidavit specifying the amount(s) to be paid, or the rights to be exercised, by each party. Both the assignor and the assignee acknowledge that, between themselves, they are bound by the limitations of the Assignment. The insurer will recognize the signature of the assignee and the insurer is authorized to recognize the assignee's claims to rights granted by this Assignment without investigating the reason for any action taken by the assignee, or the validity or the amount of any liabilities or the existence of any default therein. Payment by the Insurer of the sums set forth in the affidavit shall be a full discharge and release therefor to the Insurer. This assignment does not impede or change the insuurer's right under the "Policy Loan" provision to charge interest on any policy loan if interest is not paid under the terms of the policy, the Insurer has the right to add such interest to the unpaid loan from whatever cash value remains regardless of who owns that cash value under the terms of the Assignment. 2. Aggregate premiums paid by the assignee shall include premiums for any extra benefit riders or agreements issued under this policy. "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid inerest incurred by the Corporation on the Policy. 3. Any death proceeds in excess of the amount payable to the assignee shall be paid by the Insurer to the bendiciary named under the policy. 4. All provisions of this Assignment are binding upon the executors, administrators, successors or assigns of the assignor. 5 All options and designations in effect as of the date of this Assignment shall remain in effect unless specifically changed by this Assignment or by action taken thereafter consistent with the Assignment. 6 The insurer shall not be responsible for the sufficiency or validity of this Assignment and is not a party to any split-dollar agreement (or any other similar agreernent) between the assignee and the assignor. Signed at _____________________________ on ___________________________________ (City and State) (Date) - ------------------------------- --------------------------------- Witness Signature Signature of Owner of Policy 2 EX-10.33 19 KEY EXECUTIVE LIFE PLAN 95 Exhibit 10.33 Key Executive Life Plan 95 Number of Participants: 28 Total Initial Death Benefit: $8,500,000 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Life Insurance Agreement ================================================================================ THIS AGREEMENT, is made as of the _____ day of _______________, 19 by and between Del Webb Corporation, and its successors and assigns, of Phoenix, Arizona, hereinafter called the Corporation, and ___________________________ WHEREAS, ____________________________, hereinafter called the Employee, has rendered service to the Corporation, and, WHEREAS, the Corporation wishes to provide a death benefit for the Employee and/or the Employee's designee through the Key Executive Life Plan 1995, and, WHEREAS, the Employee agrees to participate in such plan to the extent hereinafter provided, NOW THEREFORE, it is mutually agreed that: Insurance Policies 1. In furtherance of the purpose of this Agreement, life insurance is to be purchased on the life of ___________________________ hereinafter called the Insured, from Security Life of Denver Insurance Company under Policy Number __________, hereinafter called the Policy. Security 2. As security for the Corporation's interest in the Cash Value of the Policy, the Employee shall execute, on a form acceptable to the insurance company, a collateral assignment to the Corporation of certain specified rights in the Policy, as set forth in Article 5. Except as provided in Article 5, ownership of the Policy's rights, including but not limited to the right to name the beneficiary, shall rest with the Employee. Premiums 3. All premiums due on the Policy shall be paid by the Corporation. However, the Employee shall reimburse the Corporation each year in an amount that is equal to the value, as determined for federal tax purposes, of the "economic benefit" derived by the Employee from the Policy's life insurance protection. The Employee will receive Compensation in addition to annual salary each year in an amount equal to this reimbursement. 1 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Life Insurance Agreement ================================================================================ Termination 4. This Agreement shall immediately terminate for any of the following reasons: termination of the Employee's employment for any reason; submission of written notice to terminate by either party to this Agreement to the other party; the death of the Insured; or any action by the Corporation which would impair, reduce, or defeat the Employee's interest in the Policy. Such action by the Corporation might include but is not limited to surrender or lapse of the Policy for nonpayment of premiums. If this Agreement terminates, the Employee shall have the right, exercisable within 90 days, to obtain a release of the Corporation's interest in the Policy by paying to the Corporation its interest in the Policy as determined in Article 6(2). Upon receipt of such amount, the Corporation shall either transfer the Policy to the Employee or transfer such interest to the party designated by the Employee. The Corporation agrees to execute all documents necessary to transfer the Policy to the Employee or his/her assigns. If the Employee does not timely exercise this right, the Corporation may exercise its rights under Article 5. Corporation's Rights 5. Under the terms of the collateral assignment of the Policy, the Corporation shall have the following rights: the right to receive, upon termination of this Agreement, an amount equal to the Corporation's interest in the Policy's Cash Value, as determined in accordance with Articles 6(1) and 6(2); the right to release the collateral assignment; the right to surrender or partially surrender the Policy upon the giving of 14 days advance written notice of the Corporation's exercise of its right to surrender the Policy; and the right to make and receive loans against the Policy to the extent of its interest as defined in Article 6(4). Any rights to Policy values or proceeds in excess of the Corporation's interest shall be owned by and payable to, or as designated by, the Employee. Any designation or change of beneficiary or change in election of settlement options or exercise of policy rights shall be made subject to this Agreement and the Corporation's rights hereunder. 2 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Life Insurance Agreement ================================================================================ Policy rights shall be exercisable by the sole signature of a duly authorized representative of the Corporation. The Corporation agrees to refrain from making loans or partial surrenders against the Policy in an amount greater than its interest under the Policy as defined in Article 6(4). The parties agree that Security Life of Denver Insurance Company is authorized to recognize the Corporation's right to borrow without the insurance company being responsible for the calculation of amounts permitted to be borrowed and without investigation of the validity or amount of the request by the Corporation to borrow. The sole signature of a duly authorized representative of the Corporation shall be sufficient for the exercise of the Corporation's right to borrow and shall be a full discharge and release to Security Life of Denver Insurance Company. The Employee shall not have the right to make a loan against the Policy or otherwise have access to cash values unless and until such time as the Employee's employment is terminated or the Corporation's interest in the Policy terminates in accordance with this Agreement. Corporation's Interest 6. For purposes of Articles 4 and 5, the amount receivable by the Corporation upon (1) death of the Insured, (2) termination of this Agreement for reason other than death of the Insured, (3) surrender or partial surrender of the Policy, or (4) exercise of the loan right by the Corporation shall be as follows: 1. Upon termination of this Agreement resulting from death of the Insured, the Corporation's share of the Policy's death proceed shall be an amount equal to its Aggregate Premiums paid, as defined in Article 6(5), plus any death proceeds paid under the Policy that exceed the amount payable to the Insured's named beneficiary based on the current schedule of Death Benefits as set forth on Appendix A attached to this Agreement. 2. Upon termination of this Agreement for reasons other than the death of the Insured, the Corporation's share of the Policy's Cash Value shall be an amount equal to its Aggregate Premiums paid. The excess, if any, of the Policy's Cash Value shall be paid to the Employee. 3 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Life Insurance Agreement ================================================================================ 3. Upon the Corporation's surrender or partial surrender of the Policy in accordance with Article 5, the Corporation's share of the Policy's Cash Value shall be an amount equal to its Aggregate Premiums paid. The excess, if any, of the Policy's Cash Value shall be paid to the Employee. 4.If the Corporation obtains any loans against the Policy, the amount of the loans together with the interest thereon shall at no time exceed the Aggregate Premiums paid. 5. "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. "Cash Value" shall mean the guaranteed cash value of the Policy, plus the cash value of any dividend additions as of the date to which premiums have been paid and any dividend credits outstanding, and reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy. Application for Additional 7. Should the parties to this Agreement deem Agreements or Riders it desirable, application may be made for a supplemental agreement or rider providing for the waiver of Policy premiums in the event of the Insured's total disability. Any additional premium attributable to such agreement or rider shall be paid by the Corporation. Waived premiums shall not be treated as paid by the Corporation. Named Fiduciary 8. For purposes of the Employee Retirement Income Security Act of 1974, the Corporation is the "named fiduciary" of the Key Executive Life Plan 1995 for which this Agreement is hereby designated the written plan instrument. Claims and Review 9. At the Insured's death, the Corporation Procedure and the beneficiary designated to receive proceeds shall execute such forms and furnish such other documents or information as are required to receive payment under the Policy. The Corporation shall also furnish to Security Life of Denver Insurance Company an affidavit specifying 4 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Life Insurance Agreement ================================================================================ the amount of death proceeds payable to the Corporation as defined in Article 6(1). With respect to claims against the Corporation arising under this Agreement, the following procedure shall be used: The claimant shall file a claim for benefits by notifying the Corporation in writing. If the claim is wholly or partially denied, the Corporation shall provide a written notice within 90 days specifying the reason for the denial, the provisions of this Agreement on which the denial is based and additional material or information necessary to receive benefits, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied and a review is desired, the claimant shall notify the Corporation in writing within 60 days after receipt of written notice of a denial of claim. In requesting a review, the claimant may review plan documents and submit any written issues and comments he/she feels are appropriate. The Corporation shall then review the claim and provide a written decision within 60 days of receipt of a request for a review. This decision shall state the specific reasons for the decision and shall include references to specific provisions on which the decision is based. The Corporation's liability under this Agreement shall not exceed the amount of proceeds it has received from the insurance company. Payment of Proceeds 10. In lieu of the lump sum payable at Insured's death, the Employee may, in accordance with the procedures of the insurance company, elect any of the optional modes of payment for the death proceeds as enumerated in the Policy and known as "settlement options" with respect to the portion of the Policy's death proceeds that become payable to the beneficiary. If no such election is in effect at the Insured's death, the beneficiary shall have the right to elect such settlement options. The Corporation shall have a similar right to elect a settlement option for the proceeds attributable to its interest in the Policy. 5 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Life Insurance Agreement ================================================================================ Amendment/Assignment 11. This Agreement may be altered, amended, or modified, including the addition of any extra Policy provisions, by a written agreement signed by the parties to this Agreement. In addition, either party may assign his/her rights, interests and obligations under this Agreement, provided however, that any assignment shall be made subject to the terms of this Agreement. Interpretation 12. Where appropriate in this Agreement, words used in the singular shall include the plural and words used in the masculine shall include the feminine and vice-versa. Headings and subheadings are for convenience purposes only and have no effect on the construction of the Agreement. The internal laws of the State of Arizona shall govern this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first here in above written. --------------------------------- (Assignor) --------------------------------- (Corporation) - ------------------------------ --------------------------------- (Witness) (By) 6 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Collateral Assignment - Equity Method ================================================================================ - -------------------------- --------------------------------- Policy Number Insured The original of this Assignment should be forwarded to the Home Office, to be retained by the Company (hereafter called the Insurer) which is Security Life of Denver Insurance Company. The undersigned owner/applicant of the policy to be issued pursuant to application Part I number ______________ and dated ____________________ for insurance on the life of the insured named above authorizes the Insurer to insert the policy number in this Assignment after said policy is issued. ------------------------------------ Owner/Applicant ASSIGNOR________________________________________________________________________ ASSIGNEE: Del Webb Corporation 2231 East Camelback Road, Suite 400 Phoenix, Arizona 85016 FOR VALUE RECEIVED, the undersigned owner (hereafter called the assignor) assigns, transfers and sets over to the assignee, its successors or assigns, certain rights in the policy numbered above, including any and all supplemental extra benefit riders or agreements issued under said policy, subject to all the terms and conditions of the policy and this Assignment and to all superior liens, if any, which the Insurer or any prior assignee may have against this policy. The assignor by this instrument and the assignee by acceptance of this Assignment jointly and severally agree to the conditions and provisions herein set forth. This Assignment is made and the policy is to be held as collateral security for any and all liabilities of the assignor to the assignee, either now existing or that may hereafter arise between the assignor or any successors or assigns and the assignee in conjunction with a Split-Dollar arrangement with regard to this policy. 1.(a) It is expressly agreed that the assignee shall have the following rights: (1) the right to make and receive loans against the policy to the extent of aggregate premiums paid by the assignee; (2) the right to release this Assignment to the assignor or his/her assigns; (3) the right, upon 14 days advance written notice to the Insured, to surrender or partially surrender the policy and to receive the cash values and any dividend credits outstanding (but not in excess of Aggregate Premiums (as defined below) paid by the assignee); and (4) the right to receive from the death proceeds, and to elect an income settlement option with respect thereto, an amount equal to the aggregate premiums paid by the assignee until the date of the insured's death plus any death proceeds paid by the Insurer pursuant to the application numbered above, that exceed the amount payable to the Insured's named beneficiary based on the schedule of Death Benefits attached (see Appendix A). 1 Del Webb Corporation Key Executive Life Plan 1995 (KELP '95) Split-Dollar Collateral Assignment - Equity Method ================================================================================ (b) Assignor shall not have the right to make a loan against the policy or otherwise have access to cash values unless and until such time as the Assignor's employment is terminated or the Assignor's interest in the Policy terminates. Except as modified by paragraph 1(a), all other rights in the policy, including but not limited to the right to designate and change the beneficiary and the right to receive any cash values and dividend credits outstanding in excess of aggregate premiums paid by the assignee, are reserved to the assignor and excluded from this Assignment. (c) Notwithstanding any other provision of this Assignment or the Split-Dollar Life Insurance Agreement entered into between assignor and assignee, for all purposes, the assignee shall furnish to the insurer an affidavit specifying the amount(s) to be paid, or the rights to be exercised, by each party. Both the assignor and the assignee acknowledge that, between themselves, they are bound by the limitations of the Assignment. The Insurer will recognize the signature of the assignee and the insurer is authorized to recognize the assignee's claims to rights granted by this Assignment without investigating the reason for any action taken by the assignee, or the validity or the amount of any liabilities or the existence of any default therein. Payment by the Insurer of the sums set forth in the affidavit shall be a full discharge and release therefor to the Insurer. This assignment does not impede or change the Insurer's right under the "Policy Loan" provision to charge interest on any policy loan. If interest is not paid under the terms of the policy, the Insurer has the right to add such interest to the unpaid loan from whatever cash value remains regardless of who owns that cash value under the terms of the Assignment. 2. Aggregate premiums paid by the assignee shall include premiums for any extra benefit riders or agreements issued under this policy. "Aggregate Premiums" shall mean all premiums paid by the Corporation, including premiums paid for any extra benefit riders or agreements issued under the Policy and shall be reduced by any indebtedness and any accrued unpaid interest incurred by the Corporation on the Policy and the amount of any Policy dividends used to reduce or offset such premiums. 3. Any death proceeds in excess of the amount payable to the assignee shall be paid by the Insurer to the beneficiary named under the policy. 4. All provisions of this Assignment are binding upon the executors, administrators, successors or assigns of the assignor. 5. All options and designations in effect as of the date of this Assignment shall remain in effect unless specifically changed by this Assignment or by action taken thereafter consistent with the Assignment. 6. The Insurer shall not be responsible for the sufficiency or validity of this Assignment and is not a party to any split-dollar agreement (or any other similar agreement) between the assignee and the assignor. Signed______________________________________ at_____________________________ (City and State) (Date) SIGN ORIGINAL AND DUPLICATE - --------------------------------- ------------------------------- Witness Signature Signature of Owner of Policy 2 EX-10.34 20 GROUP TERM CARVE-OUT PLAN Exhibit 10.34 Group Term Carve-Out Plan Number of Participants: 163 Total Current Death Benefit: $14,624,000 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ THIS AGREEMENT is made as of the _____ day of _______________, 199_ , by and between Del Webb Corporation, and its successors or assigns, of Phoenix, Arizona, hereinafter called the "Corporation", and __________________________ hereinafter called the "Employee". RECITALS: A. The Corporation is a corporation duly organized and validly existing under the laws of the state of its incorporation. B. The Employee is an employee of the Corporation. C. In consideration of the performance of services by the Employee for the Corporation, the Corporation wishes to benefit the Employee by entering into a split-dollar life insurance arrangement in accordance with the terms and conditions of this Agreement. D. The split-dollar arrangement provided for in this Agreement, which the parties intend to satisfy the requirements of Rev. Rul. 64-328, 1964-2 C.B. 11, relates to a life insurance policy number ___________ (the "Policy") to be issued by Security Life of Denver Insurance Company (the "Insurer") on the life of the Employee to be owned by the Corporation subject to an endorsement in favor of the Employee. NOW, THEREFORE, the parties mutually agree as follows: 1. Acquisition of Policy The parties. shall cooperate in applying for and obtaining the Policy. (The Policy shall be issued to the Corporation as owner with an endorsement granting to the Employee the rights described in Article 4 below.) 1 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ 2. Payment of Premiums All premiums due on the Policy shall be paid by the Corporation. However, the Employee shall reimburse the Corporation in an amount such that the reimbursement for each year is equal to the value of the "economic benefit" of the life insurance protection in accordance with the principles set forth in Rev. Rul. 64-328, 1964-2 C.B. 11 and Rev. Rul. 66-110, 1966-1 C.B. 12. The Employee will receive compensation in addition to annual salary each year in an amount equal to this reimbursement. 3. Corporation's Interest in Policy A. The Corporation's Interest. In consideration of the Corporation's premium payments under the split-dollar arrangement, the Corporation's interest in the Policy shall at all times equal the amount determined in accordance with the following provisions. The Corporation shall be entitled to recover the Corporation's interest in the Policy in accordance with the terms and conditions of this Agreement. B. Termination of Agreement. Upon termination of this Agreement, the Corporation's interest in the Policy shall be an amount equal to the Cash Surrender Value (as hereinafter defined) of the Policy at such time. C. Death of Insured. Upon the death of the Insured, the Employee's designated beneficiary's interest in the Policy shall be an amount equal to the lesser of one times the Employee's Basic Earnings or the policy death proceeds. The Corporation shall receive the balance of the policy death benefits, if any. D. Definitions. For purposes of this Agreement: (i) The Cash Surrender Value of the Policy at any time equals, at such time, the cash value set forth in the Policy's table of values; plus the cash value of any paid-up additions; plus any dividend accumulations and unpaid dividends; less any policy loans to the Corporation and accrued interest thereon at such time. 2 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ (ii) Basic Earnings shall be determined based on the definitions set forth in the Del Webb Corporation Group Term Life Insurance Plan. 4. Rights in the Policy A. Employee's Rights. The Employee shall be entitled to designate a beneficiary under the Policy and elect a settlement option for death proceeds to be paid to the designated beneficiary, and to change such designations or elections at any time and from time to time, with respect to that portion of the death proceeds as determined under Article 3 above. The Policy shall contain an endorsement (the "Endorsement"), in a form acceptable to the parties and the Insurer, granting the Employee such rights. The Employee shall be entitled to such other rights, if any, as are expressly granted to the Employee or the Employee's designated beneficiary in this Agreement or the Endorsement. B. Corporation's Rights. Except for those rights granted to the Employee in this Agreement or the Endorsement, the Corporation shall have all of the rights of the owner under the Policy and the Corporation shall be entitled to exercise all of such rights, options and privileges without the consent of the Employee; provided, however, the Corporation agrees not to exercise the right to surrender the Policy except following a Termination Event and in compliance with the provisions of Article 6 below. C. Conflict. As between the parties hereto, in the event of any conflict between the terms of the Endorsement and this Agreement, the terms of this Agreement shall prevail. The Insurer shall be bound, however, only by the terms of the Policy and any endorsement thereto. 5. Death of the Employee. In the event of the Employee's death while this Agreement is in force: A. Corporation's Recovery. The Corporation shall be entitled to recover out of the proceeds of the Policy an amount equal to the Corporation's Interest in the Policy as determined under Article 3 above. 3 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ B. Beneficiary's Recovery. The Employee's beneficiary shall receive a death benefit equal to one times the Employee's Basic Earnings or the policy death proceeds if less. C. Collection of Death Proceeds. Promptly following the Employee's death, the parties shall cooperate in the filing of a death claim in accordance with the Insurer's claims procedures and shall request distribution to the Corporation of the Corporation's Interest in the Policy and the balance of the death proceeds, if any, shall be paid by the Insurer to the beneficiary designated by the Employee under the Policy. 6. Termination of Agreement A. Termination Events. Subject to fulfillment of the obligations arising upon termination hereinafter set forth, this Agreement shall terminate on the first to occur of the following events (each referred to herein as a "Termination Event"): (i) Delivery of written notice of termination of this Agreement by the Corporation to the Employee. (ii) Delivery of written notice of termination of this Agreement by the Employee to the Corporation. (iii) Termination of the Employee's employment with the Corporation for any reason, by either the Corporation or the Employee, with or without cause, except as indicated in 6.C.ii below. B. Disposition of Policy Following a Termination Event. Following a Termination Event prior to or upon reaching Normal Retirement, the Employee shall have the option, for fifteen (15) business days after such Termination Event, to pay to the Corporation in cash an amount equal to the Corporation's Interest in the Policy as determined under Article 3 above. Upon receipt of such payment, the Corporation shall transfer all of its right, title, and interest in and to the Policy to the Employee. 4 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ If the Employee fails to exercise this option, the Corporation shall be entitled to surrender the Policy or to remove the Endorsement from the Policy and thereafter to deal with the Policy as the Corporation sees fit. The Employee agrees to cooperate in the removal of the Endorsement including signing any documents requested by the Insurer in connection therewith. The Employee hereby authorizes the Corporation to act on the Employee's behalf to sign all documents and to take any other action required by the Insurer to remove the Endorsement following a Termination Event. The Insurer shall be entitled to rely on the Corporation's authority upon submission by the Corporation of a photocopy of this signed Agreement. The Corporation shall cooperate in effecting any full or partial policy surrender, policy loan, or surrender of paid-up additions requested by the Employee related to the Employee's exercise of any option provided hereunder; provided, however, that the Corporation's Interest in the Policy is paid to the Corporation in connection with such a transaction. 7. Application of Policy Dividends Any Annual dividend attributable to the Policy shall be applied to the purchase of paid-up additions from the Insurer. 8. Provision Regarding the Insurer The parties acknowledge and agree as follows: A. Bound Only by Policy. The Insurer shall be bound only by the provisions of the Policy and any endorsement thereto. B. Discharge. Any payment made or actions taken by the Insurer in accordance with the provisions of the Policy and any endorsement thereto shall fully discharge the Insurer from all claims, suits and demands of all persons whatsoever. C. Insurer Not a Party. The Insurer shall not be deemed a party to, or to have notice of, this Agreement or the provisions hereof and shall have no obligation to see to the performance of the obligations of the parties hereunder. 5 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ 9. Special Provisions In compliance with the requirements of the Employee Retirement Income Security Act of 1974, as amended, the parties hereby confirm: A. Named Fiduciary. The Corporation is the named fiduciary of the split-dollar life insurance plan of which this Agreement is the written instrument. B. Funding. The funding policy of the split-dollar life insurance plan is that the Corporation will pay that portion of the premiums under the Policy required under Article 2 above. C. ERISA Claims Procedures. The following claims procedure shall be utilized: (i) The claimant shall file a claim for benefits by notifying the Corporation in writing. If the claim is wholly or partially denied, the Corporation shall provide a written notice within ninety (90) days specifying the reason for the denial, the provisions of this Agreement on which the denial is based, and additional material or information, if any, necessary for the claimant to receive benefits. Such written notice shall also indicate the steps to be taken by the claimant if a review of the denial is desired. (ii) If a claim is denied and a review is desired, the claimant shall notify the Corporation in writing within sixty (60) days after receipt of written notice of a denial of a claim. In requesting a review, the claimant may review any documents and submit any written issues and comments the claimant feels are appropriate. The Corporation shall then review the claim and provide a written decision within sixty (60) days of receipt of a request for a review. This decision shall state the specific reasons for the decision and shall include references to specific provisions of this Agreement, if any, upon which the decision is based. (iii) In no event shall the Corporation's liability under this Agreement exceed the amount of proceeds from the Policy. 6 Del Webb Corporation Group Term Carve-Out Plan Split-Dollar Life Insurance Agreement - Endorsement Method ================================================================================ 10. Disability Waiver of Premiums. The parties may, by mutual agreement, add an agreement or rider to the Policy providing for the waiver of premiums in the event of the insured's disability. Any additional premium attributable to such agreement or rider shall be payable by the Corporation in the proportion that each contributes to the base policy premiums under Article 2 for such period. 11. Amendment. This Agreement may be altered, amended or modified, including the addition of any extra policy provisions, but only by a written instrument signed by all of the parties. 12. Assignment. A party may assign such party's interests and obligations under this Agreement at any time subject to the terms and conditions of this Agreement. 13. Governing Law. This Agreement shall be governed by the internal laws of the State of Arizona. 14. Entire Agreement. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof. Any and all prior agreements or understandings with respect to such matters are hereby superseded. IN WITNESS WHEREOF, the parties have signed and sealed this Agreement as of the day and year first above written. WITNESS: - ------------------------------- ------------------------------------ Witness Signature Employee ATTEST: Del Webb Corporation _______________________________ By: ________________________________ Witness Signature Signature of Representative of Del Webb Corporation 7 Del Webb Corporation Group Term Carve-Out Plan Designation of Beneficiary and Ownership Rights Form - Endorsement ================================================================================ Application or Policy No.:______________________________________________________ Insurer: Security Life of Denver Insurance Company Insured: ______________________________________________________ Primary Owner: Del Webb Corporation Secondary Owner: ______________________________________________________ I. BENEFICIARIES (1) The Secondary Owner shall designate a beneficiary for all or a portion of the death proceeds that is equal to one times the insured's basic earnings (Based on definitions set forth in the primary owner's group term life insurance plan) or, if less, the entire death proceeds. (2) The beneficiary of any remaining proceeds (the "Remaining Proceeds") shall be the Primary Owner. II. OWNERSHIP (3) The owner of the policy shall be the Primary Owner, who shall have all ownership rights in the policy except those rights specifically granted to the Secondary Owner in paragraph (4). (4) The Secondary Owner shall own and have the right to designate the beneficiary for that portion of the death proceeds set forth in paragraph (1) that is to be paid to that beneficiary, and to exercise all settlement options with respect to those death proceeds. 1 Del Webb Corporation Group Term Carve-Out Plan Designation of Beneficiary and Ownership Rights Form - Endorsement ================================================================================ III. AGREEMENT The undersigned hereby agree that the Insurer may rely on the Primary Owner's signature alone as to any actions on the policy, including but not limited to the amount due to be paid to the beneficiaries upon death of the insured. Upon payment of any proceeds based on such signature, the Insurer shall be fully discharged under the policy and the respective recipients shall indemnify the Insurer to that effect. If the Insurer is made, or elects to become a party to any litigation concerning the proper apportionment of the death proceeds, the Insurer's litigation expenses, including attorney fees, shall be deducted from the death proceeds. IV. SECONDARY OWNER'S AGREEMENT AND DESIGNATION OF BENEFICIARY. The Secondary Owner hereby agrees to the foregoing and, subject to the rights of the Primary Owner as stated above, designates below the primary and contingent beneficiaries of the death proceeds described in paragraph (1). A primary or contingent beneficiary must survive the Insured to have or pass any rights to the death proceeds. If no primary beneficiary survives the Insured, the death proceeds will be paid to the surviving contingent beneficiary. If no beneficiary survives the Insured, the death proceeds will be paid to the Secondary Owner's Estate. If there are two or more primary or contingent beneficiaries, death proceeds will be distributed in equal shares to those surviving the Insured. The beneficiary designation appearing on this form may be revoked, and new designations may be made. V. DIRECTIONS AND DESIGNATIONS: Check either box 1 below and complete the primary and contingent beneficiary designations or check box 2 below and complete the name of the spouse. 1. [ ] PRIMARY BENEFICIARY(IES), of the Secondary Owner, are: Full Name(s) Relationship to Insured Date of Birth - --------------------------- ---------------------------------- --------------- - --------------------------- ---------------------------------- --------------- - --------------------------- ---------------------------------- --------------- 2 Del Webb Corporation Group Term Carve-Out Plan Designation of Beneficiary and Ownership Rights Form - Endorsement ================================================================================ If no primary beneficiary survives the Insured, CONTINGENT BENEFICIARY(IES) are: Full Name(s) Relationship to Insured Date of Birth - --------------------------- ----------------------------------- --------------- - --------------------------- ----------------------------------- --------------- - --------------------------- ----------------------------------- --------------- 2. [ ] SPOUSE PRIMARY BENEFICIARY - CHILDREN OF THE MARRIAGE CONTINGENT BENEFICIARY: ____________________________ spouse of the Insured. Then to the children of the marriage. The term "children of the marriage" shall include only children born of the marriage of the Insured and the spouse named and those legally adopted by them. It shall not include children of a different marriage Signed this ____________ day of ___________________________ 19 _________ - -------------------------------- -------------------------------- WITNESS PRIMARY OWNER (Authorized Corporate Officer with Title) - -------------------------------- SECONDARY OWNER 3 EX-21.0 21 LIST OF SUBSIDIARIES Exhibit 21.0 ACTIVE SUBSIDIARIES AND ASSOCIATED ENTITIES OF DEL WEBB CORPORATION as of August 1, 1996 Asset One Corp. Sun City Georgetown Community Association, Asset Four Corp. Inc. (Non-Profit) Asset Five Corp. Sun City Hilton Head Community Coventry of California, Inc. Association, Inc. (Non-Profit) Del Webb Architectural Services, Inc. Sun City MacDonald Ranch Community Del Webb California Corp. Association, Inc. (Non-Profit) Del Webb Commercial Properties Corporation Sun City Palm Springs Charities, Inc. (Non-Profit) Del Webb Communities, Inc. Sun City Palm Desert Community Association Del Webb Communities of Nevada, Inc. (Non-Profit) Del Webb Community Management Co. Sun City Roseville Community Association, Inc. Del Webb Conservation Holding Corp. (Non-Profit) Del Webb Construction Services Co. Sun City Sales Corporation Del Webb Home Construction, Inc. Sun City Summerlin Charities, Inc. (Non-Profit) Del Webb Homes, Inc. Sun City Summerlin Community Association, Inc. Del Webb Limited Holding Co. (Non-Profit) Del Webb Midatlantic Corp. Sun City Title Agency Co. Del Webb Property Corp. Sun State Insulation Co., Inc. Del Webb Southwest Co. Del Webb Texas Limited Partnership Terravita Commercial Corp. Del Webb Texas Title Agency Co. Terravita Community Association (Non-Profit) Terravita Corp. Del Webb's Contracting Services, Inc. Terravita Home Construction Co. Del Webb's Contracting Services of Terravita Marketplace L.L.C. Tucson, Inc. The Villages at Desert Hills, Inc. Del Webb's Coventry Homes Construction Co. Trovas Company Del Webb's Coventry Homes, Inc. Trovas Construction Co. Del Webb's Coventry Homes of Nevada, Inc. Del Webb's Coventry Homes Construction of Tucson Co. Del Webb's Coventry Homes of Tucson, Inc. Del Webb's Stetson Hills, Inc. (Soon to be known as Del Webb Communities of Nevada, Inc.) Del Webb's Sun City Realty, Inc. Del E. Webb Cactus Development Corp. Del E. Webb Development Co., L.P. Del E. Webb Finance Company Del E. Webb Financial Corporation Del E. Webb Foothills Corporation Del E. Webb Glen Harbor Development Corporation Del E. Webb Land Conservancy (Non-Profit) DW Aviation Co. Fairmount Mortgage, Inc. The Foothills Community Association (Non-Profit) Marina Operations Corp. New Mexico Asset Corporation New Mexico Asset Limited Partnership
i EX-23.0 22 CONSENT OF EXPERTS CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors Del Webb Corporation: We consent to incorporation by reference in the Registration Statements (Nos. 33-12023, 2-78336, 33-32309, 33-10228, 33-46720, 33-46704, 33-6564, 33-52725, 33-65161 and 33-65163 on Forms S-8 and No. 33-60089 on Form S-3) of Del Webb Corporation of our report dated August 16, 1996, relating to the consolidated balance sheets of Del Webb Corporation and subsidiaries as of June 30, 1996 and 1995 and the related consolidated statements of operations, shareholders' equity and cash flows and related schedule for each of the years in the three-year period ended June 30, 1996 which appears in the June 30, 1996 annual report on Form 10-K of Del Webb Corporation. Our report refers to a change in the method of accounting for long-lived assets. KPMG Peat Marwick LLP Phoenix, Arizona September 10, 1996 EX-27 23 ARTICLE 5 FDS FOR 10-K
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 12-MOS JUN-30-1996 JUL-01-1995 JUN-30-1996 1 18,340 0 25,162 0 899,815 0 51,092 23,493 1,024,795 0 514,677 0 0 18 264,758 1,024,795 1,045,852 1,050,733 850,187 850,342 212,315 0 0 (11,924) (4,173) (7,751) 0 0 0 (7,751) (0.44) 0
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