-----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, OiE/ZZ8zmWNH8ngNMmxpFRiRfJCI73gAiBObkZmDutI2uGncrwbz+UlueOItQDq5 w1KWAaWuDU51fDWeO5S0rA== 0000950147-97-000617.txt : 19970912 0000950147-97-000617.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950147-97-000617 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970908 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEL WEBB 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: SEC FILE NUMBER: 001-04785 FILM NUMBER: 97676712 BUSINESS ADDRESS: STREET 1: 2231 EAST CAMELBACK ROAD 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, 1996 to June 30, 1997. [ ] 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 9 3/4% Senior Subordinated Debentures due 2003 New York Stock Exchange 9% Senior Subordinated Debentures due 2006 New York Stock Exchange 9 3/4% Senior Subordinated Debentures due 2008 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, 1997 was 17,577,461 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 $327,400,000. Documents Incorporated by Reference Portions of Registrant's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on November 6, 1997 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, 1997 TABLE OF CONTENTS PART I Item 1. PAGE and Item 2. Business and Properties The Company......................................................... 1 Master-Planned Communities.......................................... 1 Future Communities.................................................. 2 Conventional Homebuilding........................................... 3 Product Design...................................................... 4 Construction........................................................ 4 Sales Activities.................................................... 4 Competition......................................................... 5 Certain Factors Affecting the Company's Operations.................. 5 Forward Looking Information; Certain Cautionary Statements.......... 7 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 residential communities ranging from smaller-scale, non-amenitized communities within its conventional homebuilding operations to large-scale, master-planned communities with extensive amenities. The Company currently conducts its operations in the states of Arizona, Nevada, California, Texas and South Carolina. The Company's primary activities involve the development of large-scale, master-planned communities with extensive amenities for active adults age 55 and over. The Company is one of the nation's leading developers of such age-qualified active adult communities. It has extensive experience in the active adult community business, having built and sold more than 56,000 homes at ten Sun City communities over the past 37 years. 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 usually the exclusive developer of homes. The Company was incorporated in 1946 in Arizona and reincorporated in 1994 in 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 the "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, employees and shareholders are approximations. MASTER-PLANNED COMMUNITIES At June 30, 1997 the Company had nine large-scale, master-planned communities at which home closings were taking place. The Company also had one master-planned community, Sun City Tucson, at which home closings were completed in the fiscal year ended June 30, 1997. These communities are generally characterized by extensive and distinguishing amenities which promote an active lifestyle involving numerous clubs, classes and recreational, fitness and social activities. These amenities have included, among others, golf courses, exercise and fitness centers, swimming pools, social halls, arts and crafts studios, tennis courts, walking trails and restaurants. The following table shows certain information concerning the nine communities at which the Company was delivering homes at June 30, 1997. The table includes information with respect to land owned by the Company and which it has options to acquire.
Sun Cities Sun Cities Sun City Sun City Sun City Sun City Phoenix Las Vegas Palm Desert Roseville Hilton Head Georgetown Terravita ------- --------- ----------- --------- ----------- ---------- --------- First home closing............. 1978 1989 1992 1995 1995 1996 1994 Total acres.................... 10,859 3,064 865 1,200 5,600 5,625 823 Homes at completion............ 26,150 10,146 2,409 3,109 8,500 10,500 1,380 Home closings through June 30, 1997................ 16,291 7,195 1,384 1,674 676 851 1,260 Future homes to be closed...... 9,859 2,951 1,025 1,435 7,824 9,649 120 Future homes to be offered..... 9,167 2,418 899 1,155 7,665 9,447 - Base price range of homes at June 30, 1997 (in thousands). $90 - 250 $100 - 290 $120 - 300 $120 - 290 $100 - 270 $110 - 240 $170 - 400
1 The Sun Cities Phoenix include Sun City West and Sun City Grand. These communities are located 25 miles northwest of downtown Phoenix, Arizona. The build-out of Sun City West is being coordinated with the development of Sun City Grand, where home closings began in February 1997. 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. Sun City MacDonald Ranch is located in Henderson, Nevada, near Las Vegas. Sun City Palm Desert is located in the Coachella Valley 20 miles east of Palm Springs, California, and 130 miles east of downtown Los Angeles. Information in the above table is for phase one of that community. The Company also owns 700 adjacent acres 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 Roseville is located 20 miles northeast of downtown Sacramento, California. Sun City Hilton Head is located inland 13 miles from Hilton Head Island, South Carolina. This community encompasses 5,600 acres, 2,569 of which are owned by the Company and the balance of which it has options to purchase. Sun City Georgetown is located 30 miles north of downtown Austin, Texas. This community encompasses 5,625 acres, 4,883 of which are owned by the Company and the balance of which it has options to purchase. Terravita is a master-planned residential country-club community located in Scottsdale, Arizona, that is not age- qualified. All remaining homes at Terravita are subject to home sale contracts, with a backlog of 120 homes remaining to be closed as of June 30, 1997. FUTURE COMMUNITIES The Company believes that the demographic attributes of its active adult market segment of people age 55 and over present significant opportunities for 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 (such as the Prescott, Arizona area) and in other areas (such as the Williamsburg, Virginia area), including full four-season areas (i.e., areas which experience cold winters) where it does not have experience in developing communities. The Company's potential future communities are subject to extensive federal, state and local regulations regarding development and the environment, the broad discretion that governmental agencies have in administering those regulations, "no growth" or "slow growth" political views and concerns of environmental groups, all of which can prevent, delay, make uneconomic or significantly increase the cost of such communities. In connection with the development of the Company's potential future communities, 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 community and, if successful, could result in approvals or permits being voided. 2 In making significant land acquisitions, the Company generally endeavors to acquire options on the land to mitigate risks and reduce holding costs 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. At June 30, 1997 the Company had three lower-amenitized future communities in various stages of development. These communities range in size from 360 to 1,000 planned units on 175 to 300 acres (some of which the Company owns and some of which the Company has options to acquire). Two of these communities are age-qualified and one is not. These smaller-scale communities are generally planned to include fitness centers, clubhouses, swimming pools, tennis courts and walking trails, but not golf courses. Sales activity is expected to begin at all three of these communities in the fiscal year ending June 30, 1998. Set forth below is selected information concerning several large-scale communities which the Company is planning to develop. None of these potential communities is currently anticipated to have home closings in the fiscal year ending June 30, 1998. Chicago Area ------------ The Company is planning a 5,000-unit active adult community on 1,800 acres which it has options to purchase in the Chicago area town of Huntley, Illinois. The major amenities at this large-scale active adult community will be comparable to those at the Company's existing large-scale communities and will be designed for summer and winter health, fitness and social activities. Las Vegas Area -------------- The Company is planning a 4,700-acre master-planned community in the southern Las Vegas valley. This community is planned to consist of three components: a 3,400-acre large-scale active adult community to be the successor community to Sun City Summerlin; a 950-acre gate-guarded, amenity-rich country club community that will not be age-qualified; and a 350-acre conventional residential development planned to contain multiple communities and homes offered in a wide range of prices. The Company is currently working with the United States Bureau of Land Management ("BLM") to obtain the land for this community in trades for environmentally-sensitive lands obtained or to be obtained by the Company for purposes of the trades. The first phase of this land (920 acres) was acquired from the BLM in July 1997. Sun City Lincoln Hills ---------------------- Sun City Lincoln Hills is planned as the successor large-scale active adult community to Sun City Roseville, which is nearby. Sun City Lincoln Hills is planned for 4,800 homes on 2,361 acres, 400 of which are owned by the Company and the balance of which the Company has options to purchase. Sun City Lincoln Hills is planned to have amenities comparable to those at the Company's existing large-scale communities. Villages at Desert Hills ------------------------ Since 1992 the Company has owned 5,600 acres of land north of Phoenix as the site for a possible master-planned community currently known as the Villages at Desert Hills. This community is currently planned for 14,500 homes. The Villages at Desert Hills is planned to include conventional and master-planned communities. CONVENTIONAL HOMEBUILDING The Company began its conventional homebuilding operations in the Phoenix area in 1991 and expanded these operations to Tucson in 1994, Las Vegas and southern California in 1995 and north-central Arizona in 1996. At June 30, 1997 the Company had a backlog of home sales orders at 25 communities -- 14 in the Phoenix area, 4 in the Tucson area, 4 in the Las Vegas area, 2 in southern California and 1 in north-central Arizona. The Company has no current plans to continue its conventional homebuilding operations in southern California after completion of its existing communities. 3 In order to capitalize on its market knowledge and organizational structure, the Company's conventional homebuilding activities are primarily conducted in metropolitan or market areas in which the Company is developing an active adult community. The Company's conventional homebuilding operations offer homes in a broad range of prices ($70,000 to $420,000 at June 30, 1997). For the year ended June 30, 1997, conventional homebuilding operations generated 20.8 percent of the Company's homebuilding revenues. The Company currently expects that active adult community development will continue to be its primary business activity. 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 communities the Company is usually 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 is maintained for immediate sale to customers. SALES ACTIVITIES At each of its large-scale 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. 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 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 from a few days 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. 4 The Company offers mortgage financing for the purchasers of homes at its communities. The Company sells the mortgages it generates to third parties. 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, some 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 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 56,000 homes over 37 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-qualified, 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. In each of the areas in which the Company has conventional 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. 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 are built out over time. 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 large-scale community involves 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 such communities to achieve positive cash flow. 5 The Company will incur additional risks, to the extent it develops a different size or style of community or develops communities in climates or geographic areas in which it does not have experience. These risks include 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 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 will be challenges attracting potential customers from areas and to a market in which the Company has not had significant experience. GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS. The Company's business is subject to extensive federal, state and local regulations regarding development and the environment, the broad discretion that governmental agencies have in administering those regulations and "no growth" or "slow growth" political views and concerns of environmental groups, all of which can prevent, delay, make uneconomic or significantly increase the cost of its developments. In connection with the development of the Company's new and existing communities and other real estate projects, 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. GEOGRAPHIC CONCENTRATION. The Company's primary business operations are particularly concentrated in the Phoenix and Las Vegas metropolitan areas. Its entire operations are comprised of 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. 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 conditions in the southern California real estate market and the southern California economy generally. CYCLICAL NATURE OF REAL ESTATE OPERATIONS AND OTHER CONDITIONS GENERALLY. The Company's communities are subject to 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 real estate operations, general national economic conditions and changing demographic conditions. 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 and home closings among the Company's communities and conventional homebuilding operations and by sales of commercial land and facilities at the Company's communities. The Company's real estate operations also 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. 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. 6 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. The Company's principal credit facility restricts and the indentures for its publicly-held debt contain provisions that may restrict indebtedness of the Company. The availability of debt financing is also dependent on governmental policies and other factors outside the control of the Company. No assurance can be given as to the availability or cost of any future financing. 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. NATURAL RISKS. Some of the Company's communities are subject to natural risks including earthquakes, floods, tornados, hurricanes and significant rainfall. Such natural risks could have a material adverse impact on the development of and results of operations for the community affected. 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. FORWARD LOOKING INFORMATION; CERTAIN CAUTIONARY STATEMENTS Certain statements contained in this Annual Report that are not historical results 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. Further, certain forward looking statements are based upon assumptions of future events, which may not prove to be accurate. 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, 1997.
Years Years as an Employed Executive by the Name Age Position Officer Company - ---------------------- --------- ----------------------------------------- ---------------- ------------ P. J. Dion 52 Chairman of the Board and 15 15 Chief Executive Officer J. F. Contadino 55 Executive Vice President 5 6 L. C. Hanneman, Jr. 50 Executive Vice President 8 25 J. H. Gleason 55 Senior Vice President, Project Planning 7 9 and Development A. L. Mariucci 40 Senior Vice President and 11 13 General Manager - Terravita and Villages at Desert Hills F. D. Pankratz 47 Senior Vice President and 9 10 General Manager - Sun City Summerlin and Sun City MacDonald Ranch C. T. Roach 50 Senior Vice President and 8 18 General Manager - Sun City West and Sun City Grand J. A. Spencer 48 Senior Vice President and 12 18 Chief Financial Officer L. W. Beckner 50 Vice President, Information Services 1 1 R. C. Jones 52 Vice President and General Counsel 5 5 D. V. Mickus 51 Vice President, Treasurer and Secretary 11 14 J. M. Murray 43 Vice President and General Manager - 1 8 Sun City Roseville D. E. Rau 40 Vice President and Controller 11 12 D. G. Schreiner 44 Vice President, Marketing 4 6 M. L. Schuttenberg 54 Vice President, Human Resources 4 11 R. L. Vandermeer 46 Vice President and General Manager - Less than 8 Sun City Hilton Head one year R. R. Wagoner 56 Vice President, Land Development 3 5 - ---------------------- --------- ----------------------------------------- ---------------- ------------
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 non-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 November 1991 to January 1994. 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 and General Manager of the Villages at Desert Hills since July 1996. 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. 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. 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. Mr. Vandermeer has served as Vice President since November 1996, when he began serving as General Manager of Sun City Hilton Head. Prior to that time he served as General Manager of Sun City Georgetown from October 1994 to November 1996 and in a sales management capacity at Sun City West from January 1991 to October 1994. 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, 1997 the Company had 2,500 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, 1997.
Sales Price - --------------------------------------------------------------------------------------------------------- Fiscal Year 1997 Fiscal Year 1996 - --------------------------------------------------------------------------------------------------------- Quarter Ended High Low High Low - --------------------------------------------------------------------------------------------------------- September 30 19 3/4 16 1/4 25 17 3/4 December 31 17 3/4 15 1/4 21 1/2 17 3/8 March 31 17 7/8 15 1/4 20 3/4 16 1/4 June 30 17 14 3/4 20 16 3/8 - ---------------------------------------------------------------------------------------------------------
As of July 31, 1997 the number of shareholders of record of common stock of the Company was 3,100. 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, 1997 $15.2 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. During fiscal 1997 the Company acquired 137,258 shares of its common stock at a total cost of $2.1 million. 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, 1997. 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, - ---------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------- Statement of operations information: Revenues: Home sales - communities $ 906,523 $ 794,671 $ 620,012 $ 405,462 $ 324,817 Home sales - conventional homebuilding 237,566 217,158 144,469 79,992 44,456 Land and facility sales and other 42,173 38,904 38,638 24,607 21,313 - --------------------------------------------------------------------------------------------------------- Total revenues $ 1,186,262 $ 1,050,733 $ 803,119 $ 510,061 $ 390,586 ========================================================================================================= Earnings (loss): Continuing operations (1) $ 39,686 $ (7,751) $ 28,491 $ 17,021 $ 16,863 Total (2) $ 38,401 $ (7,751) $ 28,491 $ 17,021 $ 24,511 ========================================================================================================= Net earnings (loss) per share: Continuing operations (1) $ 2.22 $ (.44) $ 1.87 $ 1.13 $ 1.05 Total (2) 2.15 (.44) 1.87 1.13 1.53 ========================================================================================================= 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) Total earnings for fiscal 1997 include a $1.3 million extraordinary loss from the early extinguishment of debt. 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. 12 Item 6. Selected Consolidated Financial Data (Continued) (Not covered by report of independent auditors)
Dollars In Thousands Year Ended June 30, - --------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 - --------------------------------------------------------------------------------------------------------- Balance sheet information at year-end: Total assets $ 1,086,662 $ 1,024,795 $ 925,050 $ 758,424 $ 555,586 Notes payable and senior debt 222,881 320,063 284,585 189,657 133,175 Subordinated debt 340,187 194,614 206,673 206,019 108,688 ----------- ----------- ---------- ---------- ---------- Total notes payable, senior and subordinated debt 563,068 514,677 491,258 395,676 241,863 Shareholders' equity $ 299,830 $ 264,776 $ 229,342 $ 201,324 $ 199,446 Total notes payable, senior and subordinated debt divided by total notes payable, senior and subordinated debt and shareholders' equity 65.3% 66.0% 68.2% 66.3% 54.8% =========================================================================================================
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, 1997.
Year Ended Change Change June 30, 1997 vs 1996 1996 vs 1995 - ------------------------------------------------------------- ------------------- -------------------- 1997 1996 1995 Amount Percent Amount Percent - ------------------------------------------------------------- ------------------- -------------------- OPERATING DATA: Number of net new orders(1): Sun Cities Phoenix(2) 1,271 963 946 308 32.0% 17 1.8% Sun City Tucson 58 160 310 (102) (63.8%) (150) (48.4%) Sun Cities Las Vegas(3) 1,091 1,241 770 (150) (12.1%) 471 61.2% Sun City Palm Desert 262 216 267 46 21.3% (51) (19.1%) Sun City Roseville 553 537 515 16 3.0% 22 4.3% Sun City Hilton Head(4) 337 349 149 (12) (3.4%) 200 134.2% Sun City Georgetown(4) 440 491 122 (51) (10.4%) 369 302.5% Terravita 226 431 392 (205) (47.6%) 39 9.9% Coventry Homes 1,359 1,462 1,063 (103) (7.0%) 399 37.5% - ------------------------------------------------------------- ------------------- -------------------- Total 5,597 5,850 4,534 (253) (4.3%) 1,316 29.0% ============================================================= =================== ==================== Number of home closings: Sun Cities Phoenix(2) 1,132 912 1,104 220 24.1% (192) (17.4%) Sun City Tucson 103 264 444 (161) (61.0%) (180) (40.5%) Sun Cities Las Vegas(3) 1,200 1,001 847 199 19.9% 154 18.2% Sun City Palm Desert 248 251 282 (3) (1.2%) (31) (11.0%) Sun City Roseville(4) 650 731 293 (81) (11.1%) 438 149.5% Sun City Hilton Head(4) 371 305 N/A 66 21.6% 305 N/A Sun City Georgetown(4) 616 235 N/A 381 162.1% 235 N/A Terravita 410 425 425 (15) (3.5%) - - Coventry Homes 1,476 1,407 921 69 4.9% 486 52.8% - ------------------------------------------------------------- ------------------- -------------------- Total 6,206 5,531 4,316 675 12.2% 1,215 28.2% ============================================================= =================== ==================== BACKLOG DATA: Homes under contract at June 30: Sun Cities Phoenix(2) 692 553 502 139 25.1% 51 10.2% Sun City Tucson N/A 45 149 (45) (100.0%) (104) (69.8%) Sun Cities Las Vegas(3) 533 642 402 (109) (17.0%) 240 59.7% Sun City Palm Desert 126 112 147 14 12.5% (35) (23.8%) Sun City Roseville(4) 280 377 571 (97) (25.7%) (194) (34.0%) Sun City Hilton Head(4) 159 193 149 (34) (17.6%) 44 29.5% Sun City Georgetown(4) 202 378 122 (176) (46.6%) 256 209.8% Terravita 120 304 298 (184) (60.5%) 6 2.0% Coventry Homes 478 595 540 (117) (19.7%) 55 10.2% - ------------------------------------------------------------- ------------------- -------------------- Total(5) 2,590 3,199 2,880 (609) (19.0%) 319 11.1% ============================================================= =================== ==================== Aggregate contract sales amount (dollars in millions) $514 $617 $565 ($103) (16.7%) $52 9.2% Average contract sales amount per home (dollars in thousands) $198 $193 $196 $5 2.6% $(3) (1.5%) ============================================================= =================== ====================
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, 1997 vs 1996 1996 vs 1995 - ---------------------------------------------------------------------- -------------------- -------------------- 1997 1996 1995 Amount Percent Amount Percent - ---------------------------------------------------------------------- -------------------- -------------------- AVERAGE REVENUE PER HOME CLOSING: Sun Cities Phoenix(2) $ 158,900 $ 160,300 $ 151,100 $ (1,400) (0.9%) $ 9,200 6.1% Sun City Tucson 167,000 170,600 164,400 (3,600) (2.1%) 6,200 3.8% Sun Cities Las Vegas(3) 182,900 171,000 180,700 11,900 7.0% (9,700) (5.4%) Sun City Palm Desert 221,100 224,100 214,400 (3,000) (1.3%) 9,700 4.5% Sun City Roseville(4) 215,800 217,800 201,100 (2,000) (0.9%) 16,700 8.3% Sun City Hilton Head(4) 168,100 159,200 N/A 8,900 5.6% N/A N/A Sun City Georgetown(4) 183,100 181,500 N/A 1,600 0.9% N/A N/A Terravita 292,100 295,600 253,700 (3,500) (1.2%) 41,900 16.5% Coventry Homes 161,000 154,300 156,900 6,700 4.3% (2,600) (1.7%) Weighted average $ 184,400 $ 182,900 $ 177,100 $ 1,500 0.8% $ 5,800 3.3% ====================================================================== ==================== ==================== OPERATING STATISTICS: Costs and expenses as a percentage of revenues: Home construction, land and other 77.0% 76.9% 76.6% 0.1% 0.1% 0.3% 0.4% Interest 4.2% 4.0% 3.9% 0.2% 5.0% 0.1% 2.6% Selling, general and administrative 13.6% 14.0% 14.1% (0.4%) (2.9%) (0.1%) (0.7%) Ratio of home closings to homes under contract in backlog at beginning of year 194.0% 192.0% 162.1% 2.0% 1.0% 29.9% 18.4% ====================================================================== ==================== ====================
(1) Net of cancellations. The Company recognizes revenue at close of escrow. (2) Includes Sun City West and Sun City Grand. The Company began taking new home sales orders at Sun City Grand in October 1996. Home closings began at Sun City Grand in February 1997. (3) 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. (4) The Company began taking new home sales orders at Sun City Hilton Head in November 1994 and at Sun City Georgetown in June 1995. Home closings began at Sun City Roseville in February 1995, at Sun City Hilton Head in August 1995 and at Sun City Georgetown in February 1996. (5) A majority of the backlog at June 30, 1997 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, 1997, 1996 and 1995, cancellations of home sales orders as a percentage of new home sales orders written during the year were 17.1 percent, 17.2 percent and 18.3 percent, respectively. 15 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) RESULTS OF OPERATIONS - --------------------- REVENUES. Revenues increased to $1.19 billion for the fiscal year ended June 30, 1997 from $1.05 billion for the fiscal year ended June 30, 1996. Increased home closings at Sun City Georgetown and Sun City Hilton Head (two communities at which the Company had home closings for only part of fiscal 1996) accounted for $69.2 million and $10.5 million, respectively, of the increase. Increased home closings at the Sun Cities Las Vegas (where the Company had home closings at Sun City MacDonald Ranch for only part of fiscal 1996), the Sun Cities Phoenix (where home closings did not begin at Sun City Grand until February 1997) and Coventry Homes (due mainly to the expansion of operations in the Las Vegas area) accounted for $34.0 million, $35.3 million and $10.6 million, respectively, of the increase in revenues. Decreased home closings at Sun City Roseville (reflecting the decrease in net new orders experienced at that community in the first quarter of fiscal 1997) and Sun City Tucson (reflecting the completion of that community) resulted in decreased revenues of $17.6 million and $27.5 million, respectively. An increase in the average revenue per home closing resulted in a $23.0 million increase in revenues. This increase in average revenue per home closing was primarily due to changes in mix of product and home closings among the Company's communities and conventional homebuilding operations and to increases in lot premiums and optional upgrades in homes at certain communities. 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 fiscal 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 the Sun Cities Phoenix (due to a lower backlog at the beginning of the year at Sun City West), 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 from fiscal 1995 to fiscal 1996. 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 CONSTRUCTION, LAND AND OTHER COSTS. The increase in home construction, land and other costs to $913.9 million for fiscal 1997 compared to $808.0 million for fiscal 1996 was due to the increase in home closings. As a percentage of revenues, these costs were 77.0 percent for fiscal 1997 and 76.9 percent for fiscal 1996. 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 and home closings among the Company's communities and conventional homebuilding operations. 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, optional upgrades, 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 4.2 percent for fiscal 1997 compared to 4.0 percent for fiscal 1996. The increase was primarily due to the fiscal 1996 adoption of 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 resulted in the allocation of more capitalized interest to communities with greater home closings than Sun City Palm Desert, resulting in an increase in amortization of capitalized interest as a percentage of revenues. See "Loss From Impairment of Southern California Real Estate Inventories". 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. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of revenues, selling, general and administrative expenses decreased to 13.6 percent for fiscal 1997 as compared to 14.0 percent for fiscal 1996. This decrease resulted from the spreading of relatively fixed corporate overhead over greater revenues. 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 occurred during fiscal 1995). The balance of the increase was due to a variety of general and administrative expenses. LOSS FROM IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES. In connection with its adoption of SFAS No. 121 in fiscal 1996, 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. 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 was developing an active adult community near Sun City Palm Desert which was expected to 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. 17 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) INCOME TAXES. The increase in income taxes to a $22.3 million expense in fiscal 1997 compared to a $4.2 million benefit for fiscal 1996 was due to the change in earnings (loss) before income taxes and extraordinary item. The effective tax rate also increased to 36 percent from 35 percent. The change in income taxes 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 effective tax rate in both fiscal 1996 and fiscal 1995 was 35 percent. EXTRAORDINARY ITEM. In connection with the early redemption of all of the Company's $100 million of outstanding 107/8% Senior Notes at par on March 31, 1997, an extraordinary loss of $1.3 million was recognized in fiscal 1997. This amount represented the unamortized discount and debt issue costs for the Senior Notes, net of a $0.7 million tax benefit. NET EARNINGS (LOSS). The Company had net earnings of $38.4 million in fiscal 1997 compared to a net loss of $7.8 million in fiscal 1996, primarily due to the non-cash loss with respect to southern California real estate inventories incurred by the Company in fiscal 1996. Excluding this non-cash loss in fiscal 1996, net earnings increased by $3.9 million (11.3 percent), while home closings increased by 675 units (12.2 percent) and revenues increased by $135.5 million (12.9 percent). The overall less-than-proportionate increase in net earnings was attributable to the extraordinary loss recognized by the Company in fiscal 1997. NET NEW ORDER ACTIVITY AND BACKLOG. Net new orders in fiscal 1997 were 4.3 percent lower than in fiscal 1996. A significant increase was realized at the Sun Cities Phoenix as a result of new order activity at Sun City Grand, which began taking new orders in October 1996. Net new orders at Sun City Tucson and Terravita declined 63.8 percent and 47.6 percent, respectively, from fiscal 1996, reflecting the completion or approaching completion of those communities. Net new orders at the Sun Cities Las Vegas declined 12.1 percent from a particularly strong fiscal 1996. Coventry Homes also experienced a 7.0 percent decrease in net new orders as a result of having fewer communities open in fiscal 1997 than in fiscal 1996. The number of homes under contract at June 30, 1997 was 19.0 percent lower than at June 30, 1996. This backlog decrease was due primarily to decreases at: Sun City Roseville (as a result of a decline in net new orders in the first quarter of fiscal 1997 and a high level of home closings in fiscal 1997); Sun City Georgetown and Coventry Homes (as their net new orders did not keep pace with home closings in fiscal 1997); and Sun City Tucson and Terravita (attributable to the completion or approaching completion of those communities). Net new orders increased 29.0 percent in fiscal 1996 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. 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) LIQUIDITY AND FINANCIAL CONDITION OF THE COMPANY - ------------------------------------------------ At June 30, 1997 the Company had $24.7 million of cash and short-term investments, $174.0 million outstanding under its $350 million senior unsecured revolving credit facility and $12.0 million outstanding under its $20 million of short-term lines of credit. In January 1997 the Company completed a public offering of $150 million in principal amount of 9 3/4% Senior Subordinated Debentures due 2008. The $145 million of net proceeds from the offering were used to repay a portion of the amounts outstanding under the Company's $350 million senior unsecured revolving credit facility. The Company subsequently reborrowed under that facility to redeem all of its $100 million of outstanding 10 7/8% Senior Notes at par on March 31, 1997. The balance of the reborrowings have been or will be used to fund land acquisitions and develop new projects or 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 operating communities and conventional homebuilding activities, will provide the Company with adequate capital resources to fund the Company's currently anticipated operating requirements for the next 12 months. However, these operating requirements reflect some limitations on the timing and extent of new projects and activities that the Company may otherwise desire to undertake. 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. During fiscal 1997 the Company generated $305.5 million of net cash from community sales activities, used $169.0 million of cash for land and lot and amenity development at operating communities, paid $81.8 million for costs related to communities in the pre-operating stage, generated $18.7 million of net cash from conventional homebuilding operations and used $95.9 million of cash for other operating activities. The resulting $22.5 million of net cash used for operating activities (which was primarily attributable to expenditures for communities not yet generating home sales revenues and for corporate activities including payment of interest and income taxes) was funded mainly through proceeds from the public offering of $150 million in excess of the $100 million redemption of the Company's Senior Notes. 19 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) At June 30, 1997, under the most restrictive of the covenants in the Company's debt agreements, $15.2 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. During fiscal 1997, the Company acquired 137,258 shares of its common stock at a total cost of $2.1 million. 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. ACCOUNTING STANDARDS NOT YET ADOPTED BY THE COMPANY - --------------------------------------------------- The Financial Accounting Standards Board ("FASB") has issued several new pronouncements that are not yet adopted by the Company. In February 1997 the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation, and disclosure requirements for earnings per share for entities with publicly-held common stock. SFAS No. 128 will be effective for the Company for the quarter ending December 31, 1997; earlier application is not permitted. This new accounting standard will require presentation of basic earnings per share (which for the Company is currently anticipated to result in slightly higher earnings per share than would otherwise be reported) and diluted earnings per share (which for the Company is currently anticipated to result in essentially the same earnings per share as the Company would otherwise report as primary earnings per share). In February 1997 the FASB issued SFAS No. 129, "Disclosure of Information about Capital Structure", to consolidate existing disclosure requirements. This new standard contains no change in disclosure requirements for the Company. It will be effective for the Company for the quarter ending December 31, 1997. In June 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income", to establish standards for reporting and display of comprehensive income (all changes in equity during a period except those resulting from investments by and distributions to owners) and its components in financial statements. This new standard, which will be effective for the Company for the fiscal year ending June 30, 1999, is not currently anticipated to have a significant impact on the Company's consolidated financial statements based on the current financial structure and operations of the Company. In June 1997 the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", to establish standards for reporting information about operating segments in annual financial statements, selected information about operating segments in interim financial reports and disclosures about products and services, geographic areas and major customers. This new standard, which will be effective for the Company for the fiscal year ending June 30, 1999, will require the Company to report financial information on the basis that is used internally for evaluating segment performance and deciding how to allocate resources to segments, which is currently anticipated to result in more detailed information in the notes to the Company's consolidated financial statements than is currently required and provided. 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, 1997 the Company did not file any reports on Form 8-K. 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 5th day of September, 1997. 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 September 5, 1997 - ------------------------------------ (Principal Executive Officer) (Philip J. Dion) /s/ John A. Spencer Senior Vice President and September 5, 1997 - ------------------------------------ Chief Financial Officer (John A. Spencer) (Principal Financial Officer) /s/ David E. Rau Vice President and Controller September 5, 1997 - ------------------------------------ (Principal Accounting Officer) (David E. Rau) /s/ D. Kent Anderson Director September 5, 1997 - ------------------------------------ (D. Kent Anderson) /s/ Hugh F. Culverhouse, Jr. Director September 5, 1997 - ------------------------------------ (Hugh F. Culverhouse, Jr.) /s/ Kenny C. Guinn Director September 5, 1997 - ------------------------------------ (Kenny C. Guinn) /s/ Michael O. Maffie Director September 5, 1997 - ------------------------------------ (Michael O. Maffie) /s/ J. Russell Nelson Director September 5, 1997 - ------------------------------------ (J. Russell Nelson) /s/ Peter A. Nelson Director September 5, 1997 - ------------------------------------ (Peter A. Nelson) /s/ Michael E. Rossi Director September 5, 1997 - ------------------------------------ (Michael E. Rossi) /s/ Glenn W. Schaeffer Director September 5, 1997 - ------------------------------------ (Glenn W. Schaeffer) /s/ C. Anthony Wainwright Director September 5, 1997 - ------------------------------------ (C. Anthony Wainwright) /s/ Sam Yellen Director September 5, 1997 - ------------------------------------ (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, 1997 and 1996........................... 27 Statements of Operations for each of the years in the three-year period ended June 30, 1997.......................................... 28 Statements of Shareholders' Equity for each of the years in the three-year period ended June 30, 1997............................... 29 Statements of Cash Flows for each of the years in the three-year period ended June 30, 1997.......................................... 30 Notes to Consolidated Financial Statements............................ 32 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, 1997............................ 46 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 consolidated 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 consolidated financial statements. The consolidated 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, 1997 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, 1997, 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, 1997 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, 1997 and 1996, and the results of their operations and their cash flows for each of the years in the three-year period ended June 30, 1997 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 13 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 15, 1997 26 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1997 and 1996
In Thousands - ------------------------------------------------------------------------------------------------------------ 1997 1996 - ------------------------------------------------------------------------------------------------------------ Assets - ------------------------------------------------------------------------------------------------------------ Real estate inventories (Notes 2, 6 and 12) $ 939,684 $ 899,815 Cash and short-term investments 24,715 18,340 Receivables (Note 3) 28,892 25,162 Property and equipment, net (Note 4) 20,937 27,599 Deferred income taxes (Note 7) 6,526 12,612 Other assets (Note 5) 65,908 41,267 - ------------------------------------------------------------------------------------------------------------ $ 1,086,662 $ 1,024,795 ============================================================================================================ Liabilities and Shareholders' Equity - ------------------------------------------------------------------------------------------------------------ Notes payable, senior and subordinated debt (Note 6) $ 563,068 $ 514,677 Contractor and trade accounts payable 70,827 82,918 Accrued liabilities and other payables 79,959 68,920 Home sale deposits 69,476 88,304 Income taxes payable (Note 7) 3,502 5,200 - ------------------------------------------------------------------------------------------------------------ Total liabilities 786,832 760,019 - ------------------------------------------------------------------------------------------------------------ Shareholders' equity: Common stock, $.001 par value. Authorized 30,000,000 shares; issued 17,691,118 shares and 17,541,772 shares at June 30, 1997 and 1996, respectively (Notes 8 and 9) 18 18 Additional paid-in capital (Note 8) 160,308 158,262 Retained earnings (Note 6) 145,922 111,033 - ------------------------------------------------------------------------------------------------------------ 306,248 269,313 Less cost of common stock in treasury, 124,509 shares and 3,751 shares at June 30, 1997 and 1996, respectively (Note 8) (1,914) (70) Less deferred compensation (Note 9) (4,504) (4,467) - ------------------------------------------------------------------------------------------------------------ Total shareholders' equity 299,830 264,776 - ------------------------------------------------------------------------------------------------------------ $ 1,086,662 $ 1,024,795 ============================================================================================================
See accompanying notes to consolidated financial statements. 27 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years ended June 30, 1997, 1996 and 1995
In Thousands Except Per Share Data - -------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------- Revenues (Note 11) $ 1,186,262 $ 1,050,733 $ 803,119 - -------------------------------------------------------------------------------------------------------------------- Costs and expenses (Note 11): Home construction, land and other 913,872 807,988 614,847 Interest (Note 12) 49,457 42,354 31,205 Selling, general and administrative 160,924 147,315 113,235 Loss from impairment of southern California real estate inventories (Notes 12 and 13) - 65,000 - - -------------------------------------------------------------------------------------------------------------------- 1,124,253 1,062,657 759,287 - -------------------------------------------------------------------------------------------------------------------- Earnings (loss) before income taxes and extraordinary item 62,009 (11,924) 43,832 Income taxes (Note 7) (22,323) 4,173 (15,341) - -------------------------------------------------------------------------------------------------------------------- Earnings (loss) before extraordinary item 39,686 (7,751) 28,491 Extraordinary item: Loss from extinguishment of debt (net of tax) (Note 6) 1,285 - - - -------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 38,401 $ (7,751) $ 28,491 ==================================================================================================================== Weighted average shares outstanding 17,862 17,425 15,209 ==================================================================================================================== Earnings (loss) per share: Earnings (loss) before extraordinary item $ 2.22 $ (0.44) $ 1.87 Extraordinary item (0.07) - - - -------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 2.15 $ (0.44) $ 1.87 ====================================================================================================================
See accompanying notes to consolidated financial statements. 28 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years ended June 30, 1997, 1996 and 1995
In Thousands - ------------------------------------------------------------------------------------------------------------------------------------ Additional Total Common Paid-In Retained Treasury Deferred Shareholders' Stock Capital Earnings Stock Compensation Equity - ------------------------------------------------------------------------------------------------------------------------------------ Balances at July 1, 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 $.001 par value common stock (Note 8) (112,726) 112,726 -- -- -- -- Cash dividends ($ .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 $3.0 million (Note 8) 2 34,211 -- 11,058 -- 45,271 Treasury stock acquired, 1,551 shares -- -- -- (31) -- (31) Cash dividends ($ .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 Shares issued and retired for stock option and restricted stock plans (186,717 shares of common stock issued, 16,500 shares net decrease in treasury stock and 37,371 shares of common stock retired), net of amortization -- 2,046 -- 261 (37) 2,270 Treasury stock acquired, 137,258 shares -- -- -- (2,105) -- (2,105) Cash dividends ($.20 per share) -- -- (3,512) -- -- (3,512) Net earnings -- -- 38,401 -- -- 38,401 - ------------------------------------------------------------------------------------------------------------------------------------ Balances at June 30, 1997 $ 18 $ 160,308 $ 145,922 $ (1,914) $ (4,504) $ 299,830 ====================================================================================================================================
See accompanying notes to consolidated financial statements. 29 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended June 30, 1997, 1996 and 1995 (In Thousands)
1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Cash received from customers related to community home sales $ 876,379 $ 792,835 $ 588,526 Cash received from commercial land and facility sales 8,328 7,880 1,599 Cash paid for costs related to community home construction (579,188) (509,315) (377,735) - ------------------------------------------------------------------------------------------------------------------ Net cash provided by community sales activities 305,519 291,400 212,390 Cash paid for land acquisitions at operating communities (11,885) (8,351) (8,046) Cash paid for lot development at operating communities (100,588) (96,863) (62,612) Cash paid for amenity development at operating communities (56,503) (63,853) (29,683) - ------------------------------------------------------------------------------------------------------------------ Net cash provided by operating communities 136,543 122,333 112,049 Cash paid for costs related to communities in the pre-operating stage (81,755) (92,668) (98,183) Cash received from customers related to conventional homebuilding 248,488 222,513 146,210 Cash paid for land, development, construction and other costs related to conventional homebuilding (229,830) (213,959) (152,696) Cash received from residential land development project 7,110 8,834 10,309 Cash paid for corporate activities (42,327) (34,280) (29,402) Interest paid (45,854) (47,444) (44,104) Cash paid for income taxes (14,879) (10,501) (1,796) - ------------------------------------------------------------------------------------------------------------------ Net cash used for operating activities (22,504) (45,172) (57,613) - ------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Purchases of property and equipment (4,284) (6,715) (13,256) Investments in life insurance policies (3,222) (3,554) (1,594) - ------------------------------------------------------------------------------------------------------------------ Net cash used for investing activities (7,506) (10,269) (14,850) - ------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Borrowings 547,871 305,122 766,968 Repayments of debt (506,990) (292,260) (679,985) Proceeds from sale of common stock - 45,271 - Purchases of treasury stock (2,105) (31) (8) Proceeds from exercise of common stock options 1,121 148 882 Dividends paid (3,512) (3,369) (2,968) - ------------------------------------------------------------------------------------------------------------------ Net cash provided by financing activities 36,385 54,881 84,889 - ------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in cash and short-term investments 6,375 (560) 12,426 Cash and short-term investments at beginning of year 18,340 18,900 6,474 - ------------------------------------------------------------------------------------------------------------------ Cash and short-term investments at end of year $ 24,715 $ 18,340 $ 18,900 ==================================================================================================================
See accompanying notes to consolidated financial statements. 30 DEL WEBB CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years ended June 30, 1997, 1996 and 1995 (In Thousands)
1997 1996 1995 - ------------------------------------------------------------------------------------------------------------------- Reconciliation of net earnings (loss) to net cash used for operating activities: Net earnings (loss) $ 38,401 $ (7,751) $ 28,491 Allocation of non-cash common costs in costs and expenses, excluding interest 268,806 247,734 188,081 Amortization of capitalized interest in costs and expenses 49,457 42,354 31,205 Deferred compensation amortization 1,748 1,804 1,598 Depreciation and other amortization 6,425 8,740 5,243 Deferred income taxes on earnings (loss) before extraordinary item 6,086 (17,810) 16,801 Non-cash loss from impairment of southern California real estate inventories - 65,000 - Extraordinary loss from extinguishment of debt (net of tax) 1,285 - - Net increase in home construction costs (4,218) (35,445) (42,566) Land acquisitions (61,499) (37,176) (39,332) Lot development (155,348) (190,959) (154,864) Amenity development (89,063) (103,086) (78,785) Pre-acquisition costs (19,869) (8,732) (2,770) Net change in other assets and liabilities (64,715) (9,845) (10,715) - ------------------------------------------------------------------------------------------------------------------ Net cash used for operating activities $ (22,504) $ (45,172) $ (57,613) ==================================================================================================================
See accompanying notes to consolidated financial statements. 31 DEL WEBB CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1997, 1996 and 1995 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of Del Webb Corporation and its subsidiaries (the "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 develops residential communities ranging from smaller-scale, non-amenitized communities within its conventional homebuilding operations to large-scale, master-planned communities with extensive amenities. The Company currently conducts its operations in the states of Arizona, Nevada, California, Texas and South Carolina. The Company's communities are generally 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 usually the exclusive builder of homes. The Company's conventional homebuilding operations encompass the construction and sale of homes in various locations, primarily in Arizona and Nevada. 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), governmental regulation and environmental considerations, the geographic concentration of the Company's operations, the cyclical nature of real estate operations and other conditions generally, competition, fluctuations in labor and material costs, the availability and cost of financing and certain natural risks that exist in certain 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, development period interest and other costs, 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 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. 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 in fiscal 1996, 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 13). 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 using the asset and liability method. 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. 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 282,000 and 382,000 included in the computation of earnings per share for fiscal 1997 and 1995, 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, 1997 the Company had no derivative financial instruments. The fair value estimates of financial instruments presented in Note 6 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. 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, 1997. 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. 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 6 do not reflect the value of the Company as a whole. Stock-Based Compensation ------------------------ In accordance with the provisions of Accounting Principals Board Opinion No. 25, Accounting for Stock Issued to Employees, the Company measures stock-based compensation expense as the excess of the market price at the grant date over the amount the employee must pay for the stock. The Company's policy is to generally grant stock options at fair market value at the date of grant, so no compensation expense is recognized. As permitted, the Company has elected to adopt the disclosure provisions only of SFAS No. 123, "Accounting for Stock-Based Compensation" (see Note 9). 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, ----------------------------------------------------------------------------------------------- 1997 1996 ----------------------------------------------------------------------------------------------- Home construction costs $ 182,018 $ 177,800 Unamortized improvement and amenity costs 489,142 439,679 Unamortized capitalized interest 46,121 43,661 Land held for housing 174,930 168,530 Land and facilities held for future development or sale 47,473 70,145 ----------------------------------------------------------------------------------------------- $ 939,684 $ 899,815 ===============================================================================================
34 (2) REAL ESTATE INVENTORIES (Continued) At June 30, 1997, the Company had 403 completed homes and 516 homes under construction that were not subject to a sales contract. These homes represented $30.9 million and $17.7 million, respectively, of home construction costs at June 30, 1997. At June 30, 1996 the Company had 252 completed homes and 480 homes under construction (representing $20.1 million and $15.0 million, respectively, of home construction costs) that were not subject to a sales contract. Included in land and facilities held for future development or sale at June 30, 1997 were 313 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. (3) RECEIVABLES Receivables are summarized as follows:
In Thousands at June 30, ------------------------------------------------------------------------------------------------ 1997 1996 ------------------------------------------------------------------------------------------------ Escrow funds from home and land sales $ 8,254 $ 7,479 Mortgage loans held for sale 8,629 9,073 Notes from sales of land and facilities 8,424 4,547 Other 3,585 4,063 ------------------------------------------------------------------------------------------------ $ 28,892 $ 25,162 ================================================================================================
(4) PROPERTY AND EQUIPMENT, NET Property and equipment, stated at cost, and related accumulated depreciation are summarized as follows:
In Thousands at June 30, ------------------------------------------------------------------------------------------------ 1997 1996 ------------------------------------------------------------------------------------------------ Buildings and improvements $ 6,803 $ 9,120 Equipment 40,240 39,133 Land and improvements - 2,839 ------------------------------------------------------------------------------------------------ 47,043 51,092 Less accumulated depreciation 26,106 23,493 ------------------------------------------------------------------------------------------------ $ 20,937 $ 27,599 ================================================================================================
35 (5) OTHER ASSETS Other assets are summarized as follows:
In Thousands at June 30, ------------------------------------------------------------------------------------------------ 1997 1996 ------------------------------------------------------------------------------------------------ Pre-acquisition costs $ 30,876 $ 10,141 Cash surrender value of life insurance policies 20,083 15,500 Prepaid expenses 5,903 5,760 Utility deposits 4,971 5,965 Other 4,075 3,901 ------------------------------------------------------------------------------------------------ $ 65,908 $ 41,267 ================================================================================================
(6) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT Notes payable, senior and subordinated debt consists of the following:
In Thousands at June 30, ------------------------------------------------------------------------------------------------ 1997 1996 ------------------------------------------------------------------------------------------------ 10 7/8% Senior Notes, net $ - $ 97,475 9 3/4% Senior Subordinated Debentures due 2003, net 97,670 97,259 9% Senior Subordinated Debentures due 2006, net 97,628 97,355 9 3/4% Senior Subordinated Debentures due 2008, net 144,889 - Notes payable to banks under a revolving credit facility and short-term lines of credit 185,990 193,000 Real estate and other notes, variable interest rates from prime to prime plus 1% and fixed rates from 7.38% to 10.21%, maturities to 2004 36,891 29,588 ------------------------------------------------------------------------------------------------ $ 563,068 $ 514,677 ================================================================================================
In April 1992 the Company completed a public offering of $100 million of Senior Notes and on March 31,1997, redeemed at par all $100 million of these outstanding Senior Notes. In connection with this early redemption, the Company recognized an extraordinary loss of $1.3 million, which represented the unamortized discount and debt issue costs for the Senior Notes, net of a $0.7 million tax benefit. 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, 102.4375 and 100 percent, respectively, of the principal amount of the Debentures redeemed, plus accrued and unpaid interest to the redemption date. 36 (6) NOTES PAYABLE, SENIOR AND SUBORDINATED DEBT (Continued) 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 January 1997 the Company completed a public offering of $150 million of Senior Subordinated Debentures, which are shown net of unamortized deferred financing costs and discount. These Debentures are due on January 15, 2008 and have a stated interest rate of 9 3/4 percent per year. Interest is payable semi-annually on January 15 and July 15. The annual effective interest rate of the Debentures, after giving effect to the amortization of deferred financing costs and discount, is 10.1 percent. The Debentures may be redeemed by the Company on or after January 15, 2002, 2003, 2004 and 2005 at 104.875, 103.250, 101.625 and 100 percent, respectively, of the principal amount of the Debentures redeemed, plus accrued and unpaid interest to the redemption date. In March 1994 the Company established a $125 million senior unsecured revolving credit facility. The facility was increased 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 1.70 percent. The effective interest rate on borrowings outstanding under the senior unsecured revolving credit facility at June 30, 1997 was 7.9 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, 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, 1997 the Company had $174.0 million outstanding under its $350 million senior unsecured revolving credit facility and $12.0 million outstanding under its $20 million of short-term lines of credit. At June 30, 1997, under the most restrictive of the covenants in the Company's debt agreements, $15.2 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, 1997 of the Company's 9 3/4% Senior Subordinated Debentures due 2003, 9% Senior Subordinated Debentures due 2006 and 9 3/4% Senior Subordinated Debentures due 2008 were $98.8 million, $102.9 million and $154.5 million, respectively. The estimated fair values at June 30, 1996 of the Company's Senior Notes, 9 3/4% Senior Subordinated Debentures due 2003 and 9% Senior Subordinated Debentures due 2006 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: 1998 $ 29,761 1999 $ 77,957 2000 $ 70,595 2001 $ 35,871 2002 $ 1,909 37 (7) INCOME TAXES Components of Income Taxes -------------------------- The components of income taxes on earnings before the extraordinary item are:
In Thousands Year Ended June 30, ------------------------------------------------------------------------------------------------ 1997 1996 1995 ------------------------------------------------------------------------------------------------ Current: Federal $ 14,029 $ 11,333 $ (3,336) State 2,208 2,304 1,876 ------------------------------------------------------------------------------------------------ 16,237 13,637 (1,460) ------------------------------------------------------------------------------------------------ Deferred: Federal 6,854 (15,084) 15,953 State (768) (2,726) 848 ------------------------------------------------------------------------------------------------ 6,086 (17,810) 16,801 ------------------------------------------------------------------------------------------------ $ 22,323 $ (4,173) $ 15,341 ================================================================================================
In the year ended June 30, 1997, the Company also recognized a $0.7 million income tax benefit related to the extraordinary loss from extinguishment of debt. Components of Deferred Income Taxes ----------------------------------- The components of deferred income taxes are as follows:
In Thousands Year Ended June 30, ------------------------------------------------------------------------------------------------ 1997 1996 1995 ------------------------------------------------------------------------------------------------ Change in net operating loss carryforwards $ (451) $ (201) $ 15,164 Change in loss provisions for discontinued operations 2,982 1,854 3,556 Change in basis differences of real estate 2,802 (18,214) 9,721 Deferred compensation (1,422) (1,087) (237) Amortization of short period loss - 486 76 Accelerated depreciation 2,094 4,245 (6,037) Change in tax credit carryforwards 3,051 - - Change in deferred tax asset valuation allowance (473) - (2,744) Other (2,497) (4,893) (2,698) ------------------------------------------------------------------------------------------------ $ 6,086 $ (17,810) $ 16,801 ================================================================================================
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 13). The 1997 and 1995 reductions in the deferred tax asset valuation allowance 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 (7) INCOME TAXES (Continued) Deferred Tax Assets and Liabilities Deferred tax assets and liabilities have been recognized in the consolidated balance sheets due to temporary differences and carryforwards as follows:
In Thousands at June 30, ------------------------------------------------------------------------------------------------ 1997 1996 ------------------------------------------------------------------------------------------------ Deferred tax assets: Net operating loss carryforwards $ 652 $ 201 Tax credit carryforwards - 3,051 Liabilities of discontinued operations, principally due to loss provisions 4,597 7,579 Property and equipment, principally due to differences in depreciation 5,130 7,224 State income taxes 2,586 2,886 Deferred compensation 6,796 5,374 Accruals 11,630 8,903 Other 1,141 766 ------------------------------------------------------------------------------------------------ 32,532 35,984 Valuation allowance 3,389 3,862 ------------------------------------------------------------------------------------------------ 29,143 32,122 ------------------------------------------------------------------------------------------------ Deferred tax liabilities: Real estate, principally due to basis differences 21,087 18,285 Other 1,530 1,225 ------------------------------------------------------------------------------------------------ 22,617 19,510 ------------------------------------------------------------------------------------------------ Net deferred income taxes $ 6,526 $ 12,612 ================================================================================================
Reconciliation of Effective Income Taxes ---------------------------------------- Income taxes differ from the amounts computed using the federal statutory income tax rate as a result of the following:
In Thousands Year Ended June 30, ------------------------------------------------------------------------------------------------ 1997 1996 1995 ------------------------------------------------------------------------------------------------ Expected taxes at current federal statutory income tax rate $ 21,703 $ (4,173) $ 15,341 State income taxes, net of federal benefit 2,856 (274) 1,771 Federal and state tax credits (2,210) (2,580) - Adjustments due to the settlement of audits and resolution of issues 252 2,407 718 Change in deferred tax asset valuation allowance (473) - (2,744) Other 195 447 255 ------------------------------------------------------------------------------------------------ Income taxes $ 22,323 $ (4,173) $ 15,341 ================================================================================================
39 (7) INCOME TAXES (Continued) Carryforward ------------ At June 30, 1997 the Company had a state net operating loss carryforward of $13.0 million that expires in fiscal 2010. (8) 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 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. (9) 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 (9) COMMON STOCK RESERVED (Continued) Effective in fiscal 1997 the Company adopted the disclosure requirements of SFAS No. 123, "Accounting for Stock-Based Compensation." As permitted under SFAS No. 123, the Company will continue to measure stock-based compensation expense as the excess of the market price at the grant date over the amount the employee must pay for the stock. SFAS No. 123 requires disclosure of pro forma net earnings and pro forma net earnings per share as if the fair value based method had been applied in measuring compensation expense for awards granted in fiscal 1997 and 1996. Management believes that the fiscal 1997 and 1996 pro forma amounts may not be representative of the effects of stock-based awards on future pro forma net earnings and pro forma net earnings per share because those pro forma amounts exclude the pro forma compensation expense related to unvested stock options granted before fiscal 1996. Reported and pro forma net earnings (loss), in thousands, and net earnings (loss) per share amounts for the years ended June 30, 1997 and 1996 are set forth below:
1997 1996 ------------------------------------------------------------------------------------------------ Reported: Net earnings (loss) $ 38,401 $ (7,751) Net earnings (loss) per share 2.15 (0.44) Pro forma: Net earnings (loss) 37,777 (8,056) Net earnings (loss) per share 2.11 (0.46) ------------------------------------------------------------------------------------------------
The fair values of the options granted were estimated on the date of their grant using the Black-Scholes option pricing model based on the following weighted average assumptions:
1997 1996 ------------------------------------------------------------------------------------------------ Risk free interest rate 6.26% 5.84% Expected life (in years) 7.4 7.4 Expected volatility 27% 32% Expected dividend yield 1.17% 1.16% ------------------------------------------------------------------------------------------------
41 (9) COMMON STOCK RESERVED (Continued) Stock option activity for the years ended June 30, 1997, 1996 and 1995 is summarized as follows:
1997 1996 1995 ------------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Options Price Options Price Options Price ---------------------------------------------------------------------------------------------------------- Options outstanding, beginning of year 1,801,288 $ 14.82 1,438,470 $ 13.19 1,248,019 $ 12.49 Granted 339,665 16.39 388,201 20.83 325,720 15.99 Exercised (94,017) 11.93 (12,883) 11.52 (72,785) 12.12 Canceled (65,323) 17.89 (12,500) 17.68 (62,484) 14.88 ---------------------------------------------------------------------------------------------------------- Options outstanding, end of year 1,981,613 $ 15.12 1,801,288 $ 14.82 1,438,470 $ 13.19 ========================================================================================================== Options exercisable at end of year 1,287,530 $ 13.49 1,145,236 $ 12.70 925,528 $ 12.03 ========================================================================================================== Weighted average fair value of options granted during the year $ 6.46 $ 8.73 ===============================================================================
Stock options outstanding at June 30, 1997 were as follows:
Options Outstanding Options Exercisable ---------------------------------------------------------------------------------------------------------- Weighted Average Weighted Weighted Range of Exercise Remaining Average Exercise Average Exercise Price Options Contractual Life Price Options Price ---------------------------------------------------------------------------------------------------------- $5.63 - $9.89 193,948 3.6 years $ 8.47 193,948 $ 8.47 $10.13 - $14.75 694,253 3.9 12.73 694,253 12.73 $15.71 - $19.38 739,352 7.9 16.38 323,858 16.43 $20.56 - $20.88 354,060 8.4 20.86 75,471 20.85 ------------------ ----------------- 1,981,613 6.1 years $ 15.12 1,287,530 $ 13.49 ==========================================================================================================
Shares granted, net of cancellations, under the Company's restricted stock plans during the years ended June 30, 1997, 1996 and 1995 aggregated 109,200 shares, 163,380 shares and 148,901 shares, respectively. The Company recognized compensation expense of $1.7 million, $1.8 million and $1.6 million related to shares granted under the restricted stock plans for the years ended June 30, 1997, 1996 and 1995, respectively. (10) 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 $2.6 million, $2.0 million and $1.5 million for the years ended June 30, 1997, 1996 and 1995, respectively. 42 (11) REVENUES AND COSTS AND EXPENSES The components of revenues and costs and expenses:
In Thousands Year Ended June 30, - --------------------------------------------------------------------------------------------------------- 1997 1996 1995 - --------------------------------------------------------------------------------------------------------- Revenues: Homebuilding: Communities $ 906,523 $ 794,671 $ 620,012 Conventional 237,566 217,158 144,469 - --------------------------------------------------------------------------------------------------------- Total homebuilding 1,144,089 1,011,829 764,481 Land and facility sales 31,289 29,525 31,892 Other 10,884 9,379 6,746 - --------------------------------------------------------------------------------------------------------- $ 1,186,262 $ 1,050,733 $ 803,119 ========================================================================================================= Costs and expenses: Home construction and land: Communities $ 682,873 $ 597,014 $ 459,258 Conventional 202,054 184,532 121,915 - --------------------------------------------------------------------------------------------------------- Total homebuilding 884,927 781,546 581,173 Cost of land and facility sales 26,051 23,227 28,847 Other cost of sales 2,894 3,215 4,827 - --------------------------------------------------------------------------------------------------------- Total home construction, land and other 913,872 807,988 614,847 Interest 49,457 42,354 31,205 Selling, general and administrative 160,924 147,315 113,235 Loss from impairment of southern California real estate inventories - 65,000 - - --------------------------------------------------------------------------------------------------------- $ 1,124,253 $ 1,062,657 $ 759,287 =========================================================================================================
(12) INTEREST The following table shows the components of interest:
In Thousands Year Ended June 30, - --------------------------------------------------------------------------------------------------------- 1997 1996 1995 - --------------------------------------------------------------------------------------------------------- Interest incurred and capitalized $ 51,917 $ 52,022 $ 46,641 ========================================================================================================= Amortization of capitalized interest in costs and expenses $ 49,457 $ 42,354 $ 31,205 ========================================================================================================= Unamortized capitalized interest included in real estate inventories at year end $ 46,121 $ 43,661 $ 55,793 ========================================================================================================= Interest income $ 1,510 $ 1,017 $ 581 =========================================================================================================
Unamortized capitalized interest included in real estate inventories at June 30, 1996 was 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 13). Interest income is included in other revenues. 43 (13) IMPAIRMENT OF SOUTHERN CALIFORNIA REAL ESTATE INVENTORIES In connection with its adoption of SFAS No. 121 in fiscal 1996, 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 was developing an active adult community near Sun City Palm Desert, which was expected to 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. (14) 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 and standby letters of credit aggregating $94.4 million at June 30, 1997. The Company leases from third parties, under operating leases, office space, models, 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 $7.5 million, $6.9 million and $4.8 million for the years ended June 30, 1997, 1996 and 1995, respectively. Minimum lease payments (in thousands) to be made by the Company under non-cancelable lease agreements are as follows: 1998 $ 5,451 1999 3,640 2000 2,678 2001 2,342 2002 1,962 Later years 6,193 ----------- $ 22,266 =========== 44 (15) QUARTERLY FINANCIAL INFORMATION (Unaudited) Quarterly financial information for the years ended June 30, 1997 and 1996 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, 1997 1997 1996 1996 ------------------------------------------------------------------------------------------------ Revenues $ 347,968 $ 280,317 $ 293,682 $ 264,295 Earnings before extraordinary item 13,319 9,576 10,799 5,992 Net earnings 13,319 8,291 10,799 5,992 Earnings per share before extraordinary item .75 .54 .60 .33 Net earnings per share .75 .46 .60 .33 ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ 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 ------------------------------------------------------------------------------------------------
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 13). 45 DEL WEBB CORPORATION AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS ----------- Years ended June 30, 1997, 1996 and 1995
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 - -------------------------------------------------------------------------------------------------------------------- 1997 - ---- Reserve for residential land development project $ 7,126 $ 365 $ - $ - $ 7,491 Deferred tax asset valuation allowance 3,862 - - 473 3,389 Reserves for disposal costs of discontinued operations 12,209 - - 1,827 10,382 - -------------------------------------------------------------------------------------------------------------------- $ 23,197 $ 365 $ - $ 2,300 $ 21,262 ==================================================================================================================== 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 ====================================================================================================================
46 DEL WEBB CORPORATION Report on Form 10-K For The Year Ended June 30, 1997 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, incorporated by reference to Exhibit 3.1 to Registrant's Report on Form 10-K for the year ended June 30, 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. Notes have been redeemed. 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. 4.4 Indenture dated as of January 21, 1997, between Registrant, State Street Bank and Trust Company, as Trustee, defining the rights of the holders of the 9 3/4% Senior Subordinated Debentures due 2008 incorporated by reference to Registrant's Report on Form 8-K dated January 21, 1997. 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, incorporated by reference to Exhibit 10.2 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 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, incorporated by reference to Exhibit 10.6 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 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 on November 8, 1994, incorporated by reference to Exhibit 10.8 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 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 on November 18, 1994, incorporated by reference to Exhibit 10.9 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 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; as amended by the Second Amendment to the Executive Long-Term Incentive Plan dated June 20, 1996. 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; as amended by the First Amendment to the 1993 Executive Long-Term Incentive Plan dated June 20, 1996. 2 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 June 27, 1995; as amended by the Second Amendment to the Amended and Restated Revolving Loan Agreement effective July 22, 1996, incorporated by reference to Exhibit 10.15 to Registrant's Report on Form 10-K for the year ended June 30, 1996; as amended by the Third Amendment to the Amended and Restated Revolving Loan Agreement effective March 31, 1997; as amended by the Fourth Amendment to the Amended and Restated Revolving Loan Agreement effective April 29, 1997. 10.16 Current list of participants to the 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, incorporated by reference to Exhibit 10.18 to Registrant's Report on Form 10-K for the year ended June 30, 1993. 3 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, incorporated by reference to Exhibit 10.19 to Registrant's Report on Form 10-K for the year ended June 30, 1993. 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, incorporated by reference to Exhibit 10.23 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 10.24 Sample Directors and Officers Indemnification Agreement between Registrant and its directors and officers with list of such directors and officers. 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 Report on Form 10-K for the year ended June 30, 1995; as amended by the First Amendment to the 1995 Executive Long-Term Incentive Plan dated June 20, 1996. 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 1998 (July 1, 1997 - June 30, 1998). 10.29 Amended and Restated Certificate and Agreement of Limited Partnership of New Mexico Asset Limited Partnership effective June 18, 1996, incorporated by reference to Exhibit 10.29 to Registrant's Report on Form 10-K for the year ended June 30, 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, incorporated by reference to Exhibit 10.30 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 4 10.31 1996/97 Executive Management Incentive Plan Award Agreement between the Registrant and Philip J. Dion dated August 21, 1996. 10.32 Key Executive Life Plan Plus dated August 23, 1995, incorporated by reference to Exhibit 10.32 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 10.33 Key Executive Life Plan 1995 dated October 5, 1995, incorporated by reference to Exhibit 10.33 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 10.34 Group Term Carve-Out Plan dated November 18, 1994, incorporated by reference to Exhibit 10.34 to Registrant's Report on Form 10-K for the year ended June 30, 1996. 10.35 Employment Agreement dated April 11, 1997 between the Registrant and Joseph F. Contadino. 10.36 Employment Agreement dated April 11, 1997 between the Registrant and John H. Gleason. 10.37 Employment Agreement dated April 11, 1997 between the Registrant and LeRoy C. Hanneman. 10.38 Employment Agreement dated April 11, 1997 between the Registrant and Anne L. Mariucci. 10.39 Supplemental Executive Retirement Plan No. 1 Participation Agreement as of April 11, 1997 between the Registrant and Joseph F. Contadino. 10.40 Supplemental Executive Retirement Plan No. 1 Participation Agreement as of April 11, 1997 between the Registrant and John H. Gleason. 10.41 Supplemental Executive Retirement Plan No. 1 Participation Agreement as of April 11, 1997 between the Registrant and LeRoy C. Hanneman. 10.42 Supplemental Executive Retirement Plan No. 1 Participation Agreement as of April 11, 1997 between the Registrant and Anne L. Mariucci. 21.0 Subsidiaries of the Registrant. 23.0 Consent of Experts. 27 Financial Data Schedule. 5 EX-10.1 2 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% 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% Larry Beckner 11-1-95 18 1.5 35% Rich Vandermeer 11-4-96 18 1.5 35%
EX-10.10 3 EXECUTIVE LONG-TERM INCENTIVE PLAN Exhibit 10.10 As Amended June 30, 1993 As Amended June 20, 1996 DEL WEBB CORPORATION EXECUTIVE LONG-TERM INCENTIVE PLAN ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION 1.1 Establishment of the Plan. Del Webb Corporation, an Arizona corporation (hereinafter referred to as the "Company"), hereby established an incentive compensation plan to be known as the "Dell Webb Corporation Executive Long-Term Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Performance Units, and other Share-based Awards. Upon approval by the Board of Directors of the Company, subject to ratification by an affirmative vote of a majority of Shares of the Common Stock present and untitled to vote at the November 20, 1991 annual shareholders meeting at which a quorum is present, the Plan shall become effective as of November 20, 1991 (the "Effective Date"), and shall remain in effect as provided in Section 1.3 herein. 1.2 Purpose of the Plan. Is to promote the success, and enhance the value of the Company by linking the personal interests of Participants to those of Company shareholders, and by providing Participants with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants upon whose judgement, interest, and special effort the successful conduct of its operation largely is dependent. 1.3 Duration of the Plan. Subject to approval by the Board of Directors of the Company and ratification by the shareholders of the Company, the Plan shall commence on the Effective Date, as described in Section 1.1 herein, and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 14 herein, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award be granted under the Plan on or after November 19, 2001. ARTICLE 2. DEFINITIONS AND CONSTRUCTION 2.1 Definitions. Whenever used in a Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized: (a) "Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Performance Units, or other Share-based Awards. (b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. (c) "Board" or "Board or Directors" means the Board of Directors of Del Webb Corporation. (d) "Cause" means: (i) will and gross misconduct on the part of a Participant that is materially and demonstrably detrimental to the Company or (ii) the commission by a Participant of one or more acts which constitute an indictable crime under United States Federal, state, or local law. "Cause" under either (i) or (ii) shall be determined in good faith by a written resolution duly opted by the affirmative vote of not less than two-thirds (2/3rds) of all the Directors at a meeting duly called and held for that C-1 purpose after reasonable notice to the Participant and opportunity for the Participant and his or her legal counsel to be heard. (e) "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 1(a) of form 8-K pursuant to Section 13 or 15(d) of the Exchange Act, whether or not so reportable. A Change in Control shall be deemed to have occurred if: (i) Any Person, excluding affiliates of the Company as of the Effective Date, is or becomes the Beneficial Owner, Directly or indirectly, of securities of the company representing twenty percent (20%) 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' provided, however, that this provision shall not apply to any such acquisition of the Company's securities if there is no change in the majority of the Board (as hereinafter defined) following such acquisition. For purposes of the Plan, a "change in the majority" of the Board shall occur at the point in time at which a majority of the Directors constituting the board are persons other than those serving on the Board on the Effective Date (Incumbents"), those serving on the Board pursuant to nomination or appointment thereto by a majority of Incumbents (Successors"), and those serving on the Board pursuant to nomination or appointment thereto by a majority of a Board composed of Incumbents and/or Successors" or (ii) Within two (2) years after a tender offer or exchange offer for the voting stock of the Company (other than by the Company and other than offers successfully opposed by the Company), or as a result of a merger, consolidation, sale of assets or contested election, of any combination of the foregoing, there is a change in the majority of the Board (for purposes hereof, the term "Board" as used in this sentence shall include the Board of Directors of the entry which succeeds to the business and operations of the Company); provided, however, that the foregoing events shall not be deemed to be a Change in Control if the transaction, transactions, or elections causing such change shall have been approved by the affirmative vote of at least a majority of the members of the Board in offices as of the Effective Date, or of a Board composed of Incumbents and/or Successors. (f) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (g) "Committee" means the committee, as specified in Article 3, appointed by the Board to administer the Plan with respect to grants of Awards. (h) "Company" means Del Webb Corporation, an Arizona corporation (including any and all Subsidiaries), or any successor thereto as provided in Article 17 herein. (i) "Director" means any individual who is a member of the Board of Directors of the Company. (j) "Disability" means a permanent and total disability, within the meaning of Code Section 22(e)(3), as determined by the Committee in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice. (k) "Employee" means any full-time, nonunion employee of the Company. Directors who are not otherwise employed by the Company shall not be considered Employees under this Plan. (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto. (m) "Fair Market Value" means the average of the highest and lowest quoted selling prices for Shares on the relevant date, or (if there were no sales on such date) the weighted average of the means between the highest and lowest quoted selling prices on the nearest day before and the nearest day after the relevant date, as prescribed by Treasury Regulation 20.2031- 2(b)(2), as reported in the Wall Street Journal or a similar publication selected by the Committee. (n) "Incentive Stock Option" or "ISO" means an option to purchase Shares, granted under Article 6 herein, which is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422A of the Code. C-2 (o) "Insider" shall mean an Employee who is, at the time in Award is made under this Plan, an insider pursuant to Section 16 of the Exchange Act. (p) "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares, granted under Article 6 herein, which is not intended to be an Incentive Stock Option. (q) "Option" means an Incentive Stock Option or a Nonqualified Stock Option. (r) "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee. (s) "Parent" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (t) "Participant" means an Employee of the Company who has outstanding an Award granted under the Plan. (u) "Performance Unit" means an Award granted to an Employee pursuant to Article 8 herein. (v) "Period of Restriction" means the period during which the transfer to Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture as provided in Article 7 herein. (w) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (x) "Restricted Stock" means an Award granted to a Participant pursuant to Article 7 herein. (y) "Retirement" means a voluntary termination of employment by a Participant who has less than ten (10) years of service with the Company at or after age sixty-five (65), or voluntary termination at or after age fifty-five (55) for Participants who have at least ten (10) years of service with the Company as of the date of employment termination. (z) "Shares" means the shares of common stock of Del Webb Corporation. (aa) "Subsidiary" means any corporation in which the Company owns directly, or indirectly through subsidiaries, at least fifty percent (50%) of the total combined voting power of all classes of stock, or any other entity (including, but now limited to, partnerships and joint ventures) in which the Company owns at least fifty percent (50%) of the combined equity thereof. 2.2 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural. 2.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining part of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. ARTICLE 3. ADMINISTRATION 3.1 The Committee. The Plan shall be administered by the Human Resources Committee of the Board, or by any other Committee appointed by the Board consisting of not less than two (2) Directors who are not Employees. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. Except as permitted under Section 16b-3(c)(i)(A), (B), (C), and (D), no member of the Committee shall have received a grant of any Award under the Plan or any similar Plan of the Company or any of its Subsidiaries while serving on the Committee, or shall have so received such a grant at any time within one (1) year prior to his or her service on the Committee, or, if different, for the time period just necessary to C-3 fulfill the then current Rule 16b-3 requirements under the Exchange Act, the Board of Directors may appoint a new Committee so as to comply with Rule 16b-3. 3.2 Authority of the Committee. The Committee shall have full power except as limited by law or by the Articles of Incorporation or Bylaws of the Company, and subject to the provisions herein, to determine the size and types of Awards; to determine the terms and conditions of such Awards in a manner consistent with the Plan; to cancel and reissue any Awards granted hereunder; to construe and interpret the Plan and any agreement of instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 14 herein) to amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authorities as identified hereunder. 3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board of Directors shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries. ARTICLE 4. SHARES SUBJECT TO THE PLAN 4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 herein, the total number of Shares available for grant under the Plan may not exceed seven hundred fifty thousand (750,000). These seven hundred fifty thousand (750,000) Shares may be either authorized by unissued or reacquired Shares. 4.2 Lapsed Awards. If any Award granted under this Plan is concealed, terminates, expires, or lapses, for any reason, any Shares subject to such Award again shall be available for the grant of an Award under the Plan. 4.3 Adjustments in Authorized Shares. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other change in the corporate structure of the Company affecting the Shares, such adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number and class of and/or price of Shares subject to outstanding Options and Restricted Stock granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; and provided that the number of Shares subject to any Aware shall always be a whole number. ARTICLE 5. ELIGIBILITY AND PARTICIPATION 5.1 Eligibility. Persons eligible to participate in this Plan include all officers and key Employees of the Company, as determined by the Committee, including Employees who are members of the Board, but excluding Directors who are not Employees. 5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees, those to whom Awards shall be granted an Award under this Plan. In addition, nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. C-4 ARTICLE 6. STOCK OPTIONS 6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees at any time and from time to time as shall be determined by the Committee. The Committee shall have discretion in determining the number of Shares subject to Options granted to each Participant. The Committee may grant ISOs, NQSOs, or a combination thereof. Nothing in this Article 6 shall be deemed to prevent the grant of NQSOs in excess of the maximum established by Section 422A of the Code. 6.2 Option Agreement. Each Option grant shall be evidenced by an Option Agreement that shall specify the Option Price the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Option Agreement also shall specify whether the Option is intended to be an ISO within the meaning of Section 422A of the Code, or a NQSO whose grant is intended to fall under the Code provisions of Section 422A 6.3 Option Price. The Option Price for each grant of an Option shall be determined by the Committee; provided that in the case of an ISO, the Option Price shall not be less than one hundred percent (100%) of the Full Market Value of such Share on the date the Option is granted; and, provided further, that in the case of a NQSO, the Option Price shall not be less than eighty-five percent (85%) of the Fair Market Value of each Share on the date the Option is granted. 6.4 Expiration of Options. Each Option shall expire at such times as the Committee shall determine at the time of grant provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 6.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. However, in no event may any Option granted under this Plan become exercisable prior to six (6) months following the date of its grant. 6.6 Payment. Options shall be exercised by the Delivery of a written notice of exercise to the Secretary of the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied, by full payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) by tendering previously acquired Shares having Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (c) by a combination of (a) and (b). The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be considered with the Plan's purpose and applicable law. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s). 6.7 Restrictions on Share Transferability. The Committee shall impose such restrictions on any Shares acquired pursuant to the exercise of an Option under the Plan, as it may deem advisable, including, without limitations, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. C-5 6.8 Termination of Employment Due to Death, Disability, or Retirement. (a) Termination by Death. In the even the employment of the Participant is terminated by reason of death any outstanding Options granted to that Participant which are vested as of the date of death shall remain exercisable at any time prior to their expiration date, or for one (1) year after the date that employment was terminated, whichever period is shorter, by such person or persons as shall have been named as the Participant's beneficiary, or by such persons that have acquired the Participant's rights under the Option by will or by the laws of descent and distribution. The person of any outstanding Option which is deemed vested under this Plan as of the date of employment termination shall be determined according to the following guidelines: (i) The portion of the Option which is exercisable as of the date of employment termination shall remain exercisable; (ii) The percentage vesting of the portion of the Option which otherwise would have vested at the end of the year in which employment termination occurs, will equal a fraction, the numerator of which is the number of full weeks of employment during the year in which employment termination occurs, and the denominator of which is fifty-two (52); and (iii) The portion of the Option which is scheduled to vest in a year which begins after the end of the year in which employment termination occurs, shall be forfeited by the Participant and returned to the Company (and shall once again be available for grant under the Plan). Any Options which are not vested as of the date of employment termination shall expire immediately, and may not be exercised following such time. (b) Termination by Disability. In the event the employment of a Participant is terminated by reason of Disability, any outstanding Options granted to that Participant which are vested as of the date the Committee determines the definition of Disability to have been satisfied, shall remain exercisable at any time prior to their expiration date, or for one (1) year after the date that the Committee determines the definition of Disability to have been satisfied, whichever period is shorter. The portion of any outstanding Option which is deemed vested as of the effective date of Disability is determined to have been satisfied by the Committee shall be determined pursuant to the guidelines set forth in Subparagraphs (a)(i) through (a)(iii) of this section 6.8. Any Options which are not vested as of the date that the Committee determines the definition of Disability to have been satisfied, shall expire immediately, and may not be exercised following such date. (c) Termination by Retirement. In the event the employment of a Participant is terminated by reason of Retirement, any outstanding Options granted to that Participant which vested as of the effective date of retirement, shall remain exercisable at any time prior to their expiration date, or for three (3) years after the effective date of Retirement, whichever period is shorter. The portion of any outstanding Option which is deemed vested as of the effective date of Retirement shall be determined pursuant to the guidelines set forth in Subparagraphs (a)(i) through (a)(iii) of this Section 6.8. Any Options which are not vested as of the effective date of Retirement shall expire immediately, and may not be exercised following such date. (d) Exercise Limitations on ISOs. In the case of ISOs, the tax treatment prescribed under Section 422A of the Internal Revenue Code of 1986, as amended, may not be available if the Options are not exercised within the Section 422A prescribed time periods after each of the various types of employment termination. Notwithstanding the exercise periods described in Subparagraph (a), (b), and (c) above, the Committee shall have the authority, in its sole discretion, to accelerate the vesting of Options which are outstanding as of the date of employment termination for one of the reasons described in this Section 6.8. C-6 6.9 Termination of Employment for Other Reasons. If the employment of a Participant shall terminate for any reason (other than the reasons set forth in Section 6.8 or for Cause), all Options held by the Participant which are not vested as of the effective date of employment termination immediately shall be forfeited to the Company (and shall once again become available for grant under the Plan). However, the Committee in its sole discretion, shall have the right to immediately vest all or any portion of such Option, subject to such terms as the Committee, in its sole discretion, deems appropriate. Options which are vested as of the effective date of employment termination may be exercised by the Participant within the period beginning on the effective date of employment termination, and ending three (3) months after such date. If the employment of a Participant shall terminate for Cause, all outstanding Options held by the Participant immediately shall be forfeited to the Company and no additional exercise period shall be allowed, regardless of the vested status of the Options. 6.10 Nontransferability of Options. No Option granted under the Plan may be sold transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. ARTICLE 7. RESTRICTED STOCK 7.1 Grant of Restricted Stock Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to eligible Employees in such amounts as the Committee shall determine. 7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced by a Restricted Stock Agreement that shall specify the Period of Restriction, or Periods, the number of Restricted Stock Shares granted, and such other provisions as the Committee shall determine. 7.3 Transferability. Except as provided in this Article 7, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Agreement. However, in no event may any Restricted Stock granted under the Plan become vested in a Participant prior to six (6) months following the date of its grant. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant. 7.4 Other Restrictions. The Committee shall impose such other restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), and/or restrictions under applicable Federal or state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. 7.5 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 7.4 herein, each certificate representing Shares of Restricted Stock granted pursuant to the Plan shall bear the following legend: "The sale or other transfer of the Shares of Stock represented by this certificate, whether voluntary, involuntary, or by operations of law, is subject to certain restrictions on transfer as set forth in the Del Webb Corporation Executive Long-Term Incentive Plan and in a Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Del Webb Corporation." C-7 7.6 Removal of Restrictions. Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become, freely transferable by the Participant after the last day of the Period of Restriction. Once the Shares are released from the restrictions, the Participant shall be entitled to have the legend required by Section 7.5 removed from his or her Share certificate. 7.7 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. 7.8 Dividends and Other Distributions. During the Period of Restriction, participants holding Shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those Shares while they are so held. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 7.9 Termination of Employment. If the employment of a Participant shall terminate for any reason, all nonvested Shares of Restricted Stock held by the Participant upon the effective date of employment termination immediately shall be forfeited and returned to the Company (and shall once again become available for grant under the Plan). The number of Shares of Restricted Stock which are deemed vested as of the effective date of employment termination shall be determined pursuant to the guidelines set forth with respect to the vesting of Options, as specified in Sections 6.8 and 6.9 herein. With the exception of a termination of employment for Cause, the Committee, in its sole discretion, shall have the right to provide for lapsing of the restrictions on Restricted Stock following employment termination, upon such terms and provisions as it deems proper, provided that, no such lapsing of restrictions shall occur after the expiration date of the Restricted Stock. ARTICLE 8. PERFORMANCE UNITS 8.1 Grant of Performance Units. Subject to the terms of the Plan, Performance Units may be granted to eligible Employees at any time and from time to time, as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Performance Units granted to each Participant. 8.2. Value of Performance Units. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units that will be paid out to the Participants. The time period during which the performance goals must be met shall be called a "Performance Period." Performance Periods shall, in all cases, exceed six (6) months in length. 8.3 Earning of Performance Units. After the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive payout on the number of Performance Units, earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved. 8.4. Form and Timing of Payment of Performance Units. Payment of earned Performance Units shall be made in a single lump sum, within forty-five (45) calendar days following the close of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units in the form of cash or in Options (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable Performance Period. Prior to the beginning of each Performance Period. Participants may elect to defer the receipt of Performance Unit payout upon such terms as the Committee deems appropriate. C-8 8.5 Termination of Employment due to Death, Disability, Retirement, or Involuntary Termination (without Cause). In the event the employment of a Participant is terminated by reason of death, Disability, Retirement, or involuntary termination without Cause during a Performance Period, the Participant shall receive a prorated payout of the Performance Units. The prorated payout shall be determined by the Committee, in its sole discretion, based upon the guidelines set forth with respect to the vesting of Options, as specified in Sections 6.8 and 6.9 herein and further adjusted based on the achievement of the preestablished performance goals. Payment of earned Performance Units shall be made at the same time payments are made to Participants who did not terminate employment during the applicable Performance Period. 8.6 Termination of Employment for Other Reasons. In the event that a Participant terminates employment with the Company for any reason other than those reasons set fort in Section 8.5, all Performance Units shall be forfeited by the Participant to the company, and shall once again be available for grant under the Plan. 8.7 Nontransferability. Performance Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated other than by will or by the laws of descent and distribution. Further a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative. ARTICLE 9. OTHER SHARE-BASED AWARDS The Committee may grant other Share-based Awards under this Plan, including without limitation, those Awards pursuant to which Shares are or may in the future be acquired. Awards denominated in Share units, securities convertible into Shares and dividend equivalents. The Committee, in its sole discretion, shall determine the terms and conditions of such other Share- based Awards. Shares issued in connection with such other Share-based Awards shall be issued for such minimum consideration as shall be required by applicable law and such addition consideration, if any, as may be determined by the Committee. The Committee also may grant other Awards under this Plan which are not tied to the value of Shares, and shall determine the terms and conditions of such other Awards. The Committee may grant Awards under this Article 9 in tandem or combination with other Awards or each other, in exchange of other Awards, or in tandem or combination with, or as alternatives to grants or rights under any other employee plan of the Company, including any plan of any acquired entity. The Committee shall have the authority to determine the Participants for such Awards and all other terms and conditions of such other Awards. No amendment of this Plan is required for the creation of another type of Award. ARTICLE 10. BENEFICIARY DESIGNATION Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Human Resource Department of the Company during the Participant's lifetime. In the absence of any such designation, benefits, remaining unpaid at the Participant's death shall be paid to the Participant's estate. ARTICLE 11. DEFERRALS The Committee may permit a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option, the lapse or waiver of restrictions with respect to Restricted Stock, the satisfaction of any requirements of goals with respect to Performance Units, or the earning of other Share-based Awards. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. C-9 ARTICLE 12. RIGHTS OF EMPLOYEES 12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination of employment. 12.2 Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected to be selected to receive a future Award. ARTICLE 13. CHANGE IN CONTROL Upon the occurrence of a Change in Control, unless otherwise specifically prohibited by the terms of Section 18 herein: (a) Any and all Options and other Share-based Awards granted hereunder shall become immediately exercisable; (b) any restriction periods and restrictions imposed on Restricted Shares shall lapse, and within ten (10) business days after the occurrence of a Change in Control, the stock certificates representing Shares of Restricted Stock, without any restrictions or legend thereon, shall be delivered to the applicable Participants; (c) The target value attainable under all Performance Units and other Share-based Awards shall be deemed to have been fully earned for the entire Performance Period as of the effective date of the Change in Control, except that all Performance Units and other Share-based Awards which shall have been outstanding less than six (6) months on the effective date of the Change in Control shall not be deemed to have earned the target value; and (d) Subject to Article 14 herein, the Committee shall have the authority to make any modifications to the Awards as determined by the Committee to be appropriate before the effective date of the Change in Control. ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION 14.1 Amendment, Modification, and Termination. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend, or modify the Plan. However, without the approval of the stockholders of the Company (as may be required by the Code, by the insider trading rules of Section 16 of the Exchange Act, by any national, securities exchange or system on which the Shares are then listed or reported, or by a regulatory body having jurisdiction with respect hereto) no such termination, amendment, or modification may: (a) Increase the total amount of Shares which may be issued under this Plan, except as provided in Section 4.3 herein; or (b) Change the class of Employees eligible to participate in the Plan; or (c) Materially increase the cost of the Plan or materially increase the benefits to Participants; or (d) Extend the maximum period after the date of grant during which Options or other Share-based Awards may be exercised. 14.2 Awards Previously Granted. No termination, amendment, or modification of the Plan shall in any manner adversely affect any Award previously granted under the Plan, without the written consent of the Participant holding such Award. C-10 ARTICLE 15. WITHHOLDING 15.1 Tax Withholding. The Company shall have the power and the right to deduce to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of this Plan. 15.2 Share Withholding. With respect to withholding required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the maximum marginal total tax which could be imposed on the transaction. All elections shall be irrevocable, made in writing, signed by the Participant, and either: (a) Delivered to the Committee at least six (6) months prior to the date specified by the Participant on which the taxable transaction (i.e., the exercise of the Option, the lapse of restrictions on Restricted Stock, etc.) is to occur; or (b) Be made pursuant to an exercise of an Option or the vesting of an Award which occurs during a "window period." For this purpose, "window period" means the period beginning on the third (3rd) business day following the date of public release of the Company's quarterly sales and earnings information, and ending on the twelfth (12th) business day following such date. ARTICLE 16. INDEMNIFICATION Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party of in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgement in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. ARTICLE 17. SUCCESSORS. All obligations of the company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. ARTICLE 18. REQUIREMENTS OF LAW 18.1 Requirements of Law. The granting of Awards and issues of Shares under the Plan shall be subject to all applicable laws rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. C-11 Notwithstanding any other provision set forth in the Plan, if required by the then current Rule 16b-3 of the Exchange Act, any "derivative security" or "equity security" offered pursuant o the Plan to any Insider may not be sold or transferred for at least six (6) months after the date of grant of such Award, except in the case of the death, disability, or termination of employment of the Participant. The terms of "equity security" and "derivative security" or termination of employment of the Participant. The terms of "equity security" and derivative security shall have the meanings ascribed to them in the then current Rule 16b-3 of the Exchange Act. 18.2 Governing Law. To the extent not preempted by Federal law, the Plan and the agreements hereunder, shall be construed in accordance with governed by the laws of the State of Arizona. C-12 FIRST AMENDMENT TO THE DEL WEBB CORPORATION EXECUTIVE LONG-TERM INCENTIVE PLAN 1. THIS FIRST 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 15.2 of the Plan is hereby amended and restated as follows: 15.2 Share Withholding. With respect to withholding - required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event, Participants shall satisfy all Federal, state and local tax withholding requirements by having the Company withhold Shares (to the extent that Shares are issued pursuant to the Award) 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. 3. This First Amendment shall be effective June 30, 1993. SECOND AMENDMENT TO THE DEL WEBB CORPORATION EXECUTIVE LONG-TERM INCENTIVE PLAN 1. THIS FIRST AMENDMENT shall only amend that Sections specified herein and the remaining provisions of the Plan not so amended are hereby ratified and affirmed. 2. Section 6.10 of the Plan is hereby amended as follows: 6.10 Nontransferability of Options. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a Participant who has been granted an Option under the Plan to assign or otherwise transfer all or a portion of the rights under the Option to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 3. Section 7.3 of the Plan is hereby amended as follows: 7.3 Transferability. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a participant who has been granted Shares of Restricted Stock under the Plan to assign or otherwise transfer all or a portion of the rights under the Shares of Restricted Stock to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 4. Section 8.7 of the Plan is hereby amended as follows: 8.7 Nontransferability. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a Participant who has been granted Performance Units under the Plan to assign or otherwise transfer all or a portion of the rights under the Performance Units to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 5. This second amendment is pursuant to a Board of Directors resolution dated June 20, 1996, and is effective as of that date. DELL WEBB CORPORATION By: /s/ Robertson C. Jones ----------------------------- Robertson C. Jones Vice President EX-10.11 4 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN Exhibit 10.11 As Amended June 20, 1996 DEL WEBB CORPORATION 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION 1.1 Establishment of the Plan. Del Webb Corporation, an Arizona corporation (hereinafter referred to as the "Company"), hereby establishes an incentive compensation plan to be known as the "Del Webb Corporation 1993 Executive Long-Term Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this document. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, and Performance units. Upon approval by the Board of Directors of the Company and subject to shareholder ratification, the Plan shall become effective as of October 26, 1993 (the "Effective Date"), and shall remain in effect as provided in Section 1.3 herein. 1.2 Purpose of the Plan. The purpose of the Plan is to promote the success, and enhance the value, of the Company by linking the personal interests of participants to those of Company shareholders, and by providing Participants with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants upon whose judgment, interest, and special effort the successful conduct of its operation largely is dependent. 1.3 Duration of the Plan. Subject to approval by the Board of Directors of the Company and ratification by the shareholders of the Company, the Plan shall commence on the Effective Date, as described in Section 1.1. herein, and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 13 herein, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award be granted under the Plan on or after October 25, 2003. ARTICLE 2. DEFINITIONS AND CONSTRUCTION 2.1 Definitions. Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized: (a) "Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, or Performance Units. (b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. (c) "Board" or "Board or Directors" means the Board of Directors of Del Webb Corporation. (d) "Cause " means: ( i) willful and gross misconduct on the part of a Participant that is materially and demonstrably detrimental to the Company; or (ii) the commission by a Participant of one or more acts which constitute an indictable crime under United States Federal, state, or local law. "Cause" under either ( i ) or (ii) shall be determined in good faith by a written resolution duly adopted by the affirmative vote of not less than two-thirds (2/3rds) of all the Directors at a meeting, duly called and held for that purpose after reasonable notice to the Participant and opportunity for the Participant and his or her legal counsel to be heard. (e) "Change in Control" of the Company shall mean a change in control of a nature that would be required to be reported in response to Item 1 (a) of Form 8-K pursuant to Section 13 or 15(d) of the Exchange Act, whether or not so reportable. A Change in Control shall be deemed to have occurred if: (i) Any Person, excluding affiliates of the Company as of the Effective Date, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) 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; provided, however, that this provision shall not apply to any such acquisition of the Company's securities if there is no change in the majority of the Board (as hereinafter defined) following, such acquisition. For purposes of this Plan, a "change in the majority" of the Board shall occur at the point in time at which a majority of the Directors constituting the Board are persons other than those serving on the Board on the Effective Date ("Incumbents"), those serving on the Board pursuant to nomination or appointment thereto by a majority of Incumbents ("Successors"), and those serving on the Board pursuant to nomination or appointment thereto by a majority of a Board composed of Incumbents and/or Successors; or (ii) Within two (2) years after a tender offer or exchange offer for the voting stock of the Company (other than by the Company and other than offers successfully opposed by the Company), or as a result of a merger, consolidation, sale of assets, or contested election, or any combination of the foregoing, there is a change in the majority of the Board (for purposes hereof, the term "Board" as used in this sentence shall include the Board of Directors of the entity which succeeds to the business and operations of the Company); provided, however, that the foregoing events shall not be deemed to be a Change in Control if the 2 transaction, transactions, or elections causing such change shall have been approved by the affirmative vote of at least a majority of the members of the Board in office as of the Effective Date, or of a Board composed of Incumbents and/or Successors. (f) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (g) "Committee" means the committee, as specified in Article 3, appointed by the Board to administer the Plan with respect to grants of Awards. (h) "Company" means Del Webb Corporation, an Arizona corporation (including any and all Subsidiaries), or any successor thereto as provided in Article 16 herein. (i) "Director" means any individual who is a member of the Board of Directors of the Company. (j) "Disability" means a permanent and total disability, within the meaning of Code Section 22(e)(3), as determined by the Committee in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice. (k) "Employee" means any full-time, nonunion employee of the Company. Directors who are not otherwise employed by the Company shall not be considered Employees under this Plan. (1) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto. (m) "Fair Market Value" means the average of the highest and lowest quoted selling prices for Shares on the relevant date, or (if there were no sales on such date) the weighted average of the means between the highest and lowest quoted selling prices on the nearest day before and the nearest day after the relevant date, as prescribed by Treasury Regulation Section 20.2031-2(b)(2), as reported in the Wall Street Journal or a similar publication selected by the Committee. (n) "Incentive Stock Option" or "ISO" means an option to purchase Shares, granted under Article 6 herein, which is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code. (o) "Insider" shall mean an Employee who is, at the time an Award is made under this Plan, an insider pursuant to Section 16 of the Exchange Act. 3 (p) "Nonqualified Stock Option" or 'NQSO" means an option to purchase Shares, granted under Article 6 herein, which is not intended to be an Incentive Stock Option. (q) "Option" means an Incentive Stock Option or a Nonqualified Stock Option. (r) "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee. (s) "Parent" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (t) "Participant" means an Employee of the Company who has an outstanding Award granted under the Plan. (u) "Performance Unit" means an Award granted to an Employee pursuant to Article 8 herein. (v) "Period of Restriction" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 herein. (w) "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including, a "group" as defined in Section 13(d). (x) "Restricted Stock" means an Award granted to a Participant pursuant to Article 7 herein. (y) "Retirement" means a voluntary termination of employment by a Participant who has less than ten (10) years of service with the Company at or after age sixty-five (65), or voluntary termination at or after age fifty-five (55) for Participants who have at least ten (10) years of service with the Company as of the date of employment termination. (z) "Shares" means the shares of common stock of Del Webb Corporation. (aa) "Subsidiary" means any corporation in which the Company owns directly, or indirectly through subsidiaries, at least fifty percent (50%) of the total combined voting power of all classes of stock, or any other entity (including, but not limited to, partnerships and joint ventures) in which the Company owns at least fifty percent (50%) of the combined equity thereof. 4 2.2 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 2.3 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included. ARTICLE 3. ADMINISTRATION 3.1 The Committee. The Plan shall be administered by the Human Resources Committee of the Board, or by any other Committee appointed by the Board consisting of not less than two (2) Directors who are not Employees. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. Except as permitted under Section 16b-3(c)(2)(I)(A), (B), (C), and (D), no member of the Committee shall have received a grant of an Award under the Plan or any similar Plan of the Company or any of its Subsidiaries while serving on the Committee, or shall have so received such a grant at any time within one (1) year prior to his or her service on the Committee, or, if different, for the time period just necessary to fulfill the then current Rule 16b-3 requirements under the Exchange Act. However, if for any reason the Committee does not qualify to administer the Plan, as contemplated by Rule 16b-3 of the Exchange Act, the Board of Directors may appoint a new Committee so as to comply with Rule 16b-3. 3.2 Authority of the Committee. The Committee shall have full power except as limited by law or by the Articles of Incorporation or Bylaws of the Company, and subject to the provisions herein, to determine the size and types of Awards; to determine the terms and conditions of such Awards in a manner consistent with the Plan; to cancel and reissue any Awards granted hereunder in the event the Award lapses for any reason (provided that the Committee shall not have the authority to reprice previously issued and currently outstanding Awards without shareholder approval); to construe and interpret the Plan and any agreement or in instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 13 herein) to amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authorities as identified hereunder. 3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board of Directors shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries. 5 ARTICLE 4. SHARES SUBJECT TO THE PLAN 4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 herein, the total number of Shares available for grant under the Plan may not exceed One Million Two Hundred Thousand (1,200,000). These One Million Two Hundred Thousand (1,200,000) Shares may be either authorized but unissued or reacquired Shares. 4.2 Lapsed Awards. If any Award granted under this Plan is canceled, terminates, expires, or lapses for any reason, any Shares subject to such Award again shall be available for the grant of an Award under the Plan. 4.3 Adjustments in Authorized Shares. In the event of any merger, reorganization consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other change in the corporate structure of the Company affecting the Shares, such adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number and class of and/or price of Shares subject to outstanding Options and Restricted Stock granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; and provided that the number of Shares subject to any Award shall always be a whole number. ARTICLE 5. ELIGIBILITY AND PARTICIPATION 5.1 Eligibility. Persons eligible to participate in this Plan include all officers and key Employees of the Company, as determined by the Committee, including Employees who are members of the Board, but excluding Directors who are not Employees. 5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from all eligible Employees, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No Employee shall have any right to be granted an Award under this Plan. In addition, nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. ARTICLE 6. STOCK OPTIONS 6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees at any time and from time to time as shall be determined by the Committee. The Committee shall have discretion in determining the number of Shares subject to Options granted to each Participant. The Committee may grant ISOs, NQSOs, or a combination thereof. Nothing in this Article 6 shall be deemed to prevent the grant of NQSOs in excess of the maximum established by Section 422 of the Code. 6.2 Option Agreement. Each Option grant shall be evidenced by an Option Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which 6 the Option pertains, and such other provisions as the Committee shall determine. The Option Agreement also shall Specify whether the Option is intended to be an ISO within the meaning of Section 422 of the Code, or a NQSO whose grant is intended not to fall under the provisions of Section 422 of the Code. 6.3 Option Price. The Option Price for each grant of an Option shall not be less than one hundred percent (100%) of the Fair Market Value of such Share on the date the Option is granted. 6.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 6.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. However, in no event may any Option granted under this Plan become exercisable prior to six (6) months following the date of its grant. 6.6 Payment. Options shall be exercised by the delivery of a written notice of exercise to the Secretary of the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by fall payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) by tendering previously acquired Shares having a Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or ( c) a combination of (a) and (b). The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s). 6.7 Restrictions on Share Transferability. The Committee shall impose such restrictions on any Shares acquired pursuant to the exercise of an Option under the Plan, as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares. 7 are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. 6.8 Termination of Employment Due to Death, Disability, or Retirement. (a) Termination by Death. In the event the employment of a Participant is terminated by reason of death, any outstanding Options granted to that Participant which are vested as of the date of death shall remain exercisable at any time prior to their expiration date, or for one (1) year after the date that employment was terminated, whichever period is shorter, by such person or persons as shall have been named as the Participant's beneficiary, or by such persons that have acquired the Participant's rights under the Option by will or by the laws of descent and distribution. The portion of any outstanding Option which is deemed vested under this Plan as of the date of employment termination shall be determined according to the following guidelines: (i) The portion of the Option which is exercisable as of the date of employment termination shall remain exercisable; (ii) The percentage vesting of the portion of the Option which otherwise would have vested at the end of the year in which employment termination occurs, will equal a fraction, the numerator of which is the number of full weeks of employment during the year in which employment termination occurs, and the denominator of which is fifty-two (52); and (iii) The portion of the Option which is scheduled to vest in a year which begins after the end of the year in which employment termination occurs, shall be forfeited by the Participant and returned to the Company (and shall once again be available for grant under the Plan). Any Options which are not vested as of the date of employment termination shall expire immediately, and may not be exercised following such time. (b) Termination by Disability. In the event the employment of a Participant is terminated by reason of Disability, any outstanding Options granted to that Participant which are vested as of the date the Committee determines the definition of Disability to have been satisfied, shall remain exercisable at any time prior to their expiration date, or for one (1) year after the date that the Committee determines the definition of Disability to have been satisfied, whichever period is shorter. The portion of any outstanding Option which is deemed vested as of the date the definition of Disability is determined to have been satisfied by the Committee shall be 8 determined pursuant to the guidelines set forth in Subparagraphs (a)(i) through (a)(iii) of this Section 6.8. Any Options that are not vested as of the date that the Committee determines the definition of Disability to have been satisfied, shall expire immediately, and may not be exercised following such date. (c) Termination by Retirement. In the event the employment of a Participant is terminated by reason of Retirement, any outstanding Options granted to that Participant which are vested as of the effective date of Retirement, shall remain exercisable at any time prior to their expiration date, or for three (3) years after the effective date of Retirement, whichever period is shorter. The portion of any outstanding Option which is deemed vested as of the effective date of Retirement shall be determined pursuant to the guidelines set forth in Subparagraphs a(i) through a(iii) of this Section 6.8. Any Options which are not vested as of the effective date of Retirement shall expire immediately, and may not be exercised following such date. (d) Exercised Limitations on ISOs. In the case of ISOs, the tax treatment prescribed under Section 422 of the Internal Revenue Code of 1986, as amended, may not be available if the Options are not exercised within the Section 422 prescribed time periods after each of the various types of employment termination. Notwithstanding the exercise periods described in Subparagraphs (a), (b), and (c) above, the Committee shall have the authority, in its sole discretion, to accelerate the vesting of Options which are outstanding as of the date of employment termination for one of the reasons described in this Section 6.8. 6.9 Termination of Employment for Other Reasons. If the employment of a Participant shall terminate for any reason (other than the reasons set forth in Section 6.8 or for Cause), all Options held by the Participant which are not vested as of the effective date of employment termination immediately shall be forfeited to the Company (and shall once again become available for grant under the Plan). However, the Committee, in its sole discretion, shall have the right immediately vest all or any portion of such Options, subject to such terms as the Committee, in its sole discretion, deems appropriate. Options which are vested as of the effective date of employment termination may be exercised by the Participant within the period beginning on the effective date of employment termination, and ending three (3) months after such date. 9 If the employment of a Participant shall terminate for Cause, all outstanding Options held by the Participant immediately shall be forfeited to the Company and no additional exercise period shall be allowed, regardless of the vested status of the Options. 6.10 Nontransferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. ARTICLE 7. RESTRICTED STOCK 7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to eligible Employees in such amounts as the Committee shall determine; provided that the total number of Shares of Restricted Stock granted under this Plan shall not exceed 450,000 Shares of Restricted Stock. 7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced by a Restricted Stock Agreement that shall specify the Period of Restriction, or Periods, the number of Restricted Stock Shares granted, and such other provisions as the Committee shall determine. 7.3 Transferability. Except as provided in this Article 7, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Agreement. However, in no event may any Restricted Stock granted under the Plan become vested in a Participant prior to six (6) months following the date of its grant. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant. 7.4 Other Restrictions. The Committee shall impose such other restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), and/or restrictions under applicable Federal or state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. 7.5 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 7.4 herein, each certificate representing Shares of Restricted Stock granted pursuant to the Plan shall bear the following legend: "The sale or other transfer of the Shares of Stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to 10 certain restrictions on transfer as set forth in the Del Webb Corporation 1993 Executive Long-Term Incentive Plan, and in a Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Del Webb Corporation." 7.6 Removal of Restrictions. Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction. Once the Shares are released from the restrictions, the Participant shall be entitled to have the legend required by Section 7.5 removed from his or her Share certificate. 7.7 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. 7.8 Dividend and Other Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those Shares while they are so held. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 7.9 Termination of Employment. If the employment of a Participant shall terminate for any reason, all nonvested Shares of Restricted Stock held by the Participant upon the effective date of employment termination immediately shall be forfeited and returned to the Company (and shall once again become available for grant under the Plan). The number of Shares of Restricted Stock which are deemed vested as of the effective date of employment termination shall be determined pursuant to the guidelines set forth with respect to the vesting of Options, as specified in Sections 6.8 and 6.9 herein. With the exception of a termination of employment for Cause, the Committee, in its sole discretion, shall have the right to provide for lapsing of the restrictions on Restricted Stock following employment termination, upon such terms and provisions as it deems proper; provided that, no such lapsing of restrictions shall occur after the expiration date of the Restricted Stock. ARTICLE 8. PERFORMANCE UNITS 8.1 Grant of Performance Units. Subject to the terms of the Plan, Performance Units may be granted to eligible Employees at any time and from time to time, as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Performance Units granted to each Participant. 8.2 Value of Performance Units. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the 11 number and/or value of Performance Units that will be paid out to the Participants. The time Period during which the performance goals must be met shall be called a "Performance Period." Performance Periods shall, in all cases, exceed six (6) months in length. 8.3 Earning of Performance Units. After the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive payout on the number of Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved. 8.4 Form and Timing of Payment of Performance Units. Payment of earned Performance Units shall be made in a single lump sum, within forty-five (45) calendar days following the close of the applicable Performance Period. The Committee, in its sole discretion, may pay earned Performance Units in the form of cash or in Options (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable Performance Period. Prior to the beginning of each Performance Period, Participants may elect to defer the receipt of Performance Unit payout upon such terms as the Committee deems appropriate. 8.5 Termination of Employment Due to Death, Disability, Retirement, or Involuntary Termination (without Cause). In the event the employment of a Participant is terminated by reason of Death, Disability, Retirement, or involuntary termination without Cause during a Performance Period, the Participant shall receive a prorated payout of the Performance units. The prorated payout shall be determined by the Committee, in its sole discretion, based upon the guidelines set forth with respect to the vesting of Options, as specified in Sections 6.8 and 6.9 herein, and further adjusted based on the achievement of the preestablished performance goals. Payment of earned Performance Units shall be made at the same time payments are made to Participants who did not terminate employment during the applicable Performance Period. 8.6 Termination of Employment for Other Reasons. In the event that a Participant terminates employment with the Company for any reason other than those reasons set forth in Section 8.5, all Performance Units shall be forfeited by the Participant to the Company, and shall once again be available for grant under the Plan. 8.7 Nontransferability. Performance Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative. 12 ARTICLE 9. BENEFICIARY DESIGNATION Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Human Resource Department of the company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. ARTICLE 10. DEFERRALS The Committee may permit a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option, the lapse or waiver of restrictions with respect to Restricted Stock, or the satisfaction of any requirements or goals with respect to Performance Units. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. ARTICLE 11. RIGHTS OF EMPLOYEES 11.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the company. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination of employment. 11.2 Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. ARTICLE 12. CHANGE IN CONTROL Upon the occurrence of a Change in Control, unless otherwise specifically prohibited by the terms of Article 17 herein: (a) Any and all Options granted hereunder shall become immediately exercisable; (b) Any restriction periods and restrictions imposed on Restricted Shares shall lapse, and within ten (10) business days after the occurrence of a Change in Control, the 13 stock certificates representing Shares of Restricted Stock, without any restrictions or legend thereon, shall be delivered to the applicable Participants; (c) The target value attainable under all Performance Units shall be deemed to have been fully earned for the entire Performance Period as of the effective date of the Change in Control, except that all Performance Units which shall have been outstanding less than six (6) months on the effective date of the Change in Control shall not be deemed to have earned the target value; and (d) Subject to Article 13 herein, the Committee shall have the authority to make any modifications to the Awards as determined by the Committee to be appropriate before the effective date of the Change in Control. ARTICLE 13. AMENDMENT, MODIFICATION, AND TERMINATION 13.1 Amendment, Modification, and Termination.. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend, or modify the Plan. However, without the approval of the stockholders of the Company (as may be required by the Code, by the insider trading rules of Section 16 of the Exchange Act, by any national securities exchange or system on which the Shares are then listed or reported, or by a regulatory body having jurisdiction with respect hereto) no such termination, amendment, or modification may: (a) Increase the total amount of Shares which may be issued under this Plan, except as provided in Section 4.3 herein; or (b) Change the class of Employees eligible to participate in the Plan; or (c) Materially increase the cost of the Plan or materially increase the benefits to Participants; or (d) Extend the maximum period after the date of grant during which Options may be exercised. 13.2 Awards Previously Granted. No termination, amendment, or modification of the Plan shall in any manner adversely affect any Award previously granted under the Plan, without the written consent of the Participant holding such Award. ARTICLE 14. WITHHOLDING 14.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes (including the Participant's FICA obligation required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of this Plan. 14 14.2 Share Withholding. With respect to withholding required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event, Participants shall satisfy all federal, state and local tax withholding requirements by having, the Company withhold Shares (to the extent that Shares are issued pursuant to the Award) having, a Fair Market Value on the date the tax is to be determined equal to the maximum market total tax which would be imposed on the transaction. ARTICLE 15. INDEMNIFICATION Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. ARTICLE 16. SUCCESSORS All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. ARTICLE 17. REQUIREMENTS OF LAW 17.1 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision set forth in the Plan, if required by the then current Rule 16b-3 of the Exchange Act, any "derivative security or equity security" offered pursuant to the Plan to any Insider may not be sold or transferred for at least six (6) months after the date of grant of such Award, except in the case of the death, disability, or termination of employment of the Participant. The terms "equity security" and "derivative security" shall have the meanings ascribed to them in the then current Rule 16b-3 of the Exchange Act. 15 17.2 Governing Law. To the extent not preempted by Federal law, the Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Arizona. 16 FIRST AMENDMENT TO THE DEL WEBB CORPORATION 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN 1. THIS FIRST AMENDMENT shall only amend those Sections specified herein and the remaining provisions of the plan not so amended are hereby ratified and affirmed. 2. Section 6.10 of the Plan is hereby amended as follows: 6.10 Nontransferability of Options. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a Participant who has been granted an Option under the Plan to assign or otherwise transfer all or a portion of the rights under the Option to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human resources Committee deems to be appropriate. 3. Section 7.3 of the Plan is hereby amended as follows: 7.3 Transferability. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a participant who has been granted Shares of Restricted Stock under the Plan to assign or otherwise transfer all or a portion of the rights under the Shares of Restricted Stock to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 4. Section 8.7 of the Plan is hereby amended as follows: 8.7 Nontransferability. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a participant who has been granted Performance Units under the Plan to assign or otherwise transfer all or a portion of the rights under the Performance Units to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 5. This first amendment is pursuant to a Board of Directors resolution dated June 20, 1996, and is effective as of that date. DEL WEBB CORPORATION By: /s/ Robertson C. Jones ---------------------------------- Robertson C. Jones Vice President EX-10.15 5 THIRD AND FOURTH AMENDMENTS TO LOAN AGREEMENT THIRD AMENDMENT TO AMENDED AND ------------------------------ RESTATED REVOLVING LOAN AGREEMENT --------------------------------- This Third Amendment to Amended and Restated Revolving Loan Agreement ("Third Amendment") is entered into as of March 31, 1997 by and among DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose name is set forth on the signature pages of this Third 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 Third 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 Third 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, and that certain Second Amendment to Amended and Restated Revolving Loan Agreement, dated as of July 22, 1996 (the "Loan Agreement"), pursuant to which the Banks agreed to make revolving loans to Borrower in the original aggregate principal amount of up to $350,000,000 (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 certain 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 modifications and amendments, as more fully set forth below. 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. Amendment to Loan Agreement. Section 6.11 of the Loan Agreement is hereby amended such that the reference to "$200,000,000" therein shall instead read "$185,000,000." 2. Borrower's Representations and Warranties. Borrower hereby represents and warrants that except as previously disclosed to the Banks in writing, all of the representations -1- and warranties contained in the Loan Documents are true and correct on and as of the date of this Third Amendment as though made on that date and after giving effect to this Third Amendment no Event of Default shall be continuing. 3. Effective Date. This Third Amendment shall become effective upon its due execution, on or before May 15, 1997, by (a) Borrower, (b) the Agent, (c) Banks constituting the Majority Banks and (d) all indicated signatories to the Guarantors' Consent appended hereto. If this Third Amendment is not so duly executed by all such signatories on or before May 15, 1997, then any signatories hereon on such date shall be of no further force or effect. If so duly and timely executed, this Third Amendment shall thereupon be effective as of March 31, 1997. 4. 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 Third Amendment. 5. Loan Documents in Full Force and Effect. Except as modified hereby, the Loan Documents remain in full force and effect. 6. Governing Law. This Third Amendment shall be governed by, and construed in accordance with, the Laws of the State of California. 7. Severability. If any provision of this Third Amendment is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. Counterparts. This Third 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. 9. Prior Agreements. This Third 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 Third Amendment. -2- IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed as of the date first above written. "Borrower" BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, DEL WEBB CORPORATION as a Bank By: ________________________________ By: ________________________________ John A. Spencer Carol E. Settles Senior Vice President Vice President "Agent" BANKBOSTON, N.A. (formerly known as The First National Bank of Boston) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: ________________________________ Nicholas Whiting Vice President By: ________________________________ Derik J. Hart Vice President GUARANTY FEDERAL BANK, F.S.B. "Co-Agent" By: ________________________________ Richard V. Thompson BANK ONE, ARIZONA, NA, as Co-Agent Vice President By: ________________________________ Jennifer Pescatore Assistant Vice President "Banks" BANK ONE, ARIZONA, NA, as a Bank By: ________________________________ Jennifer Pescatore Assistant Vice President -3- CREDIT LYONNAIS LOS ANGELES FIRST UNION NATIONAL BANK OF BRANCH NORTH CAROLINA By: ________________________________ By: ________________________________ Dianne M. Scott R. Steven Hall Vice President and Manager Vice President NATIONSBANK, N.A., formerly known as FLEET NATIONAL BANK NationsBank, N.A. (Carolinas) By: ________________________________ By: ________________________________ Michael A. Cope Robert L. Whittemore Vice President Senior Vice President BANK OF HAWAII By: ________________________________ Joseph T. Donalson Vice President -4- GUARANTORS' CONSENT ------------------- The undersigned do each hereby (a) consent to that certain Third Amendment to Amended and Restated Revolving Loan Agreement, dated as of March 31, 1997, 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, 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. Dated: March 31, 1997 Asset One Corp., an Arizona corporation Del Webb Commercial Properties Corporation, an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Coventry of California, Inc., an Arizona corporation Del Webb Communities, Inc., an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Del Webb California Corp., an Arizona corporation Del Webb Conservation Holding Corp., an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Guarantors' Consent Page 1 of 5 Del Webb Home Construction, Inc., Del Webb's Coventry Homes an Arizona corporation Construction Co., an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Del Webb Homes, Inc., an Arizona Del Webb's Coventry Homes, Inc., corporation an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Del Webb Communities of Nevada, Inc. Del Webb's Coventry Homes of Nevada, (formerly known as Del Webb Kingswood Inc., an Arizona corporation (formerly Parke, Inc.), an Arizona corporation known as Del Webb of Nevada, Inc.) By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer The Villages at Desert Hills, Inc. Del Webb's Coventry Homes Construction (formerly known as Del Webb Lakeview of Tucson Co., an Arizona corporation Corporation), an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Guarantors' Consent Page 2 of 5 Del Webb's Coventry Homes of Tucson, Del E. Webb Glen Harbor Development Inc., an Arizona corporation Corporation, an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Del E. Webb Cactus Development Corp., DW Aviation Co., an Arizona an Arizona corporation corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Fairmount Mortgage, Inc., an Arizona Del E. Webb Development Co., L.P., corporation a Delaware limited partnership By: Del Webb Communities, Inc., By: _______________________________ general partner Richard W. Day Treasurer By:________________________ Donald V. Mickus Glen Harbor Joint Venture, an Arizona Treasurer general partnership By: Del E. Webb Glen Harbor Del E. Webb Foothills Corporation, Development Corporation, an Arizona corporation general partner By: _______________________________ By: ______________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Guarantors' Consent Page 3 of 5 Terravita Commercial Corp., an Arizona Del Webb Limited Holding Co., corporation an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Terravita Corp., an Arizona corporation Del Webb Southwest Co., an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Terravita Home Construction Co., an Arizona corporation New Mexico Asset Corporation, an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Trovas Company, an Arizona corporation Del Webb Texas Limited Partnership, an Arizona limited partnership By: _______________________________ Donald V. Mickus By: Del Webb Southwest Co., Treasurer an Arizona corporation Trovas Construction Co., an Arizona By: ______________________ corporation Donald V. Mickus Treasurer By: _______________________________ Donald V. Mickus Treasurer Guarantors' Consent 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 Treasurer Guarantors' Consent Page 5 of 5 FOURTH AMENDMENT TO AMENDED AND ------------------------------- RESTATED REVOLVING LOAN AGREEMENT --------------------------------- This Fourth Amendment to Amended and Restated Revolving Loan Agreement ("Fourth Amendment") is entered into as of April 29, 1997 by and among DEL WEBB CORPORATION, a Delaware corporation ("Borrower"), each bank whose name is set forth on the signature pages of this Third 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 Fourth 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 Fourth 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, that certain Second Amendment to Amended and Restated Revolving Loan Agreement, dated as of July 22, 1996, and that certain Third Amendment to Amended and Restated Revolving Loan Agreement, dated as of March 31, 1997 (the "Loan Agreement"), pursuant to which the Banks agreed to make revolving loans to Borrower in the original aggregate principal amount of up to $350,000,000 (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 certain 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 modifications and amendments, as more fully set forth below. 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. Amendment to Loan Agreement. Section 3.1(c) of the Loan Agreement is hereby amended such that the reference to "1.95%" therein shall instead read "1.70%." 2. Borrower's Representations and Warranties. Borrower hereby represents and warrants that except as previously disclosed to the Banks in writing, all of the representations -1- and warranties contained in the Loan Documents are true and correct on and as of the date of this Fourth Amendment as though made on that date and after giving effect to this Fourth Amendment no Event of Default shall be continuing. 3. Effective Date. This Fourth Amendment shall become effective upon its due execution, on or before May 15, 1997, by (a) Borrower, (b) the Agent, (c) all of the Banks and (d) all indicated signatories to the Guarantors' Consent appended hereto. If this Fourth Amendment is not so duly executed by all such signatories on or before May 15, 1997, then any signatories hereon on such date shall be of no further force or effect. If so duly and timely executed, this Fourth Amendment shall thereupon be effective as of May 1, 1997. 4. 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 Fourth Amendment. 5. Loan Documents in Full Force and Effect. Except as modified hereby, the Loan Documents remain in full force and effect. 6. Governing Law. This Fourth Amendment shall be governed by, and construed in accordance with, the Laws of the State of California. 7. Severability. If any provision of this Fourth Amendment is held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. Counterparts. This Fourth 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. 9. Prior Agreements. This Fourth 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 Fourth Amendment. -2- IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be duly executed as of the date first above written. "Borrower" BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, DEL WEBB CORPORATION as a Bank By: ________________________________ By: ________________________________ John A. Spencer Carol E. Settles Senior Vice President Vice President "Agent" BANKBOSTON, N.A. (formerly known as The First National Bank of Boston) BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: ________________________________ Nicholas Whiting Vice President By: ________________________________ Derik J. Hart Vice President GUARANTY FEDERAL BANK, F.S.B. "Co-Agent" By: ________________________________ Richard V. Thompson BANK ONE, ARIZONA, NA, as Co-Agent Vice President By: ________________________________ Jennifer Pescatore Assistant Vice President "Banks" BANK ONE, ARIZONA, NA, as a Bank By: ________________________________ Jennifer Pescatore Assistant Vice President -3- CREDIT LYONNAIS LOS ANGELES FIRST UNION NATIONAL BANK OF BRANCH NORTH CAROLINA By: ________________________________ By: ________________________________ Dianne M. Scott R. Steven Hall Vice President and Manager Vice President NATIONSBANK, N.A., formerly known as FLEET NATIONAL BANK NationsBank, N.A. (Carolinas) By: ________________________________ By: ________________________________ Michael A. Cope Robert L. Whittemore Vice President Senior Vice President BANK OF HAWAII By: ________________________________ Joseph T. Donalson Vice President -4- GUARANTORS' CONSENT ------------------- The undersigned do each hereby (a) consent to that certain Fourth Amendment to Amended and Restated Revolving Loan Agreement, dated as of April 29, 1997, 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, 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. Dated: April 29, 1997 Asset One Corp., an Arizona corporation Del Webb Commercial Properties Corporation, an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Coventry of California, Inc., an Arizona corporation Del Webb Communities, Inc., an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Del Webb California Corp., an Arizona corporation Del Webb Conservation Holding Corp., an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Guarantors' Consent Page 1 of 5 Del Webb Home Construction, Inc., Del Webb's Coventry Homes an Arizona corporation Construction Co., an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Del Webb Homes, Inc., an Arizona Del Webb's Coventry Homes, Inc., corporation an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Del Webb Communities of Nevada, Inc. Del Webb's Coventry Homes of Nevada, (formerly known as Del Webb Kingswood Inc., an Arizona corporation (formerly Parke, Inc.), an Arizona corporation known as Del Webb of Nevada, Inc.) By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer The Villages at Desert Hills, Inc. Del Webb's Coventry Homes Construction (formerly known as Del Webb Lakeview of Tucson Co., an Arizona corporation Corporation), an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Guarantors' Consent Page 2 of 5 Del Webb's Coventry Homes of Tucson, Del E. Webb Glen Harbor Development Inc., an Arizona corporation Corporation, an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Del E. Webb Cactus Development Corp., DW Aviation Co., an Arizona an Arizona corporation corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Fairmount Mortgage, Inc., an Arizona Del E. Webb Development Co., L.P., corporation a Delaware limited partnership By: Del Webb Communities, Inc., By: _______________________________ general partner Richard W. Day Treasurer By:________________________ Donald V. Mickus Glen Harbor Joint Venture, an Arizona Treasurer general partnership By: Del E. Webb Glen Harbor Del E. Webb Foothills Corporation, Development Corporation, an Arizona corporation general partner By: _______________________________ By: ______________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Guarantors' Consent Page 3 of 5 Terravita Commercial Corp., an Arizona Del Webb Limited Holding Co., corporation an Arizona corporation By: _______________________________ By: _______________________________ Donald V. Mickus Donald V. Mickus Treasurer Treasurer Terravita Corp., an Arizona corporation Del Webb Southwest Co., an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Terravita Home Construction Co., an Arizona corporation New Mexico Asset Corporation, an Arizona corporation By: _______________________________ Donald V. Mickus By: _______________________________ Treasurer Donald V. Mickus Treasurer Trovas Company, an Arizona corporation Del Webb Texas Limited Partnership, an Arizona limited partnership By: _______________________________ Donald V. Mickus By: Del Webb Southwest Co., Treasurer an Arizona corporation Trovas Construction Co., an Arizona By: ______________________ corporation Donald V. Mickus Treasurer By: _______________________________ Donald V. Mickus Treasurer Guarantors' Consent 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 Treasurer Guarantors' Consent Page 5 of 5 EX-10.16 6 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2 Exhibit 10.16 DEL WEBB CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 2 LIST OF PARTICIPANTS Larry W. Beckner Joseph F. Contadino John H. Gleason LeRoy C. Hanneman, Jr. Robertson C. Jones Anne L. Mariucci Donald V. Mickus John M. Murray Frank D. Pankratz David E. Rau Charles T. Roach David G. Schreiner M. Lynn Schuttenberg John A. Spencer Richard L. Vandermeer Robert R. Wagoner EX-10.24 7 INDEMNIFICATION AGREEMENT DIRECTORS and OFFICERS INDEMNIFICATION AGREEMENT This Indemnification Agreement (the "Agreement") is entered into as of the ___ day of ____________, 199___, between Del Webb Corporation, a Delaware corporation (the "Company"), and _____________, a(n) __________________ of the Company (the "Indemnitee"). RECITALS WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available; WHEREAS, Indemnitee is a director or officer of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; WHEREAS, the Amended and Restated Certificate of Incorporation ("Certificate of Incorporation") of the Company requires the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted by law and the Indemnitee has been serving and continues to serve as a director or officer of the Company in part in reliance on such Certificate of Incorporation; WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the Certificate of Incorporation, and in part to provide Indemnitee with specific contractual assurance that the protection promised by the Certificate of Incorporation will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; and THEREFORE, in consideration of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, and for other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows: Indemnification Agreement Page - 2 1. Certain Definitions: -------------------- (a) Action: any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other. (b) 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) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company represent ing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities (as defined below), or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) 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 (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the 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 the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all the Company's assets. (c) Derivative Action: an Action by or in the right of the Company. Indemnification Agreement Page - 3 (d) Expenses: include reasonable attorneys' fees, court costs, deposition costs, court reporter fees, travel and all other costs, expenses and obligations actually paid to another or incurred in connection with investigating the facts underlying the Action, preparing to defend and defending the Action, preparation for and participating in the Action as a witness, or any of the foregoing expenses incurred on appeal, or any other reasonable expenses incurred by Indemnitee in participating in any Indemnifiable Action or Indemnifiable Derivative Action. (e) Indemnifiable Action or Indemnifiable Derivative Action: any Action or Derivative Action arising out of or relating, directly or indirectly, to the fact that Indemnitee is or was a Director, Indemnitee, employee, agent or fiduciary of the Company, or a subsidiary of the Company, or is or was serving at the request of the Company as a Director, Indemnitee, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity. (f) Potential Change in Control: shall be deemed to have occurred if (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute a Change in Control; (iii) any person other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company who is or becomes the beneficial owner, directly or indirectly, of securities of the 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 (iv) the Board of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (g) Voting Securities: any securities of the Company which vote generally in the election of directors. 2. No Pending Actions. Indemnitee represents to Company that to Indemnitee's actual knowledge, (i) there is no Indemnifiable Action Indemnification Agreement Page - 4 or Indemnifiable Derivative Action involving Indemnitee as of the date of this Agreement and (ii) no facts exist that may form the basis for such Action involving Indemnitee. 3. Indemnification For Actions Other Than Derivative Actions. In the event Indemnitee was, is, or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in, an Indemnifiable Action other than an Indemnifiable Derivative Action, the Company shall, subject to the provisions of this Agreement, indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses, judgments, fines, penalties, and amounts paid in settlement of such Action. 4. Indemnification For Derivative Actions. (a) Basic Indemnification. In the event Indemnitee was, is, or becomes a party to or a witness or other participant in, or is threatened to be made a party to or witness or other participant in an Indemnifiable Derivative Action, the Company shall, subject to the provisions of this Agreement, indemnify Indemnitee to the fullest extent permitted by law against any and all Expenses, but not judgments, fines, or, except as set forth below, amounts paid in settlement of such Derivative Action. (b) Adjudication of Liability in Derivative Actions. Notwithstanding Paragraph 4(a), no indemnification shall be made in respect of any claim, issue, or matter as to which Indemnitee shall have been adjudged (by final judicial determination from which there is no further right to appeal) to be liable to the Company unless and only to the extent that the court in which such Derivative Action was brought shall determine upon application by Indemnitee that despite the adjudication of liability and in view of all circumstances of the case, such person is fairly and reasonably entitled to indemnification which such court shall deem proper. (c) Settlement of Derivative Actions. Notwithstanding Paragraph 4(a), the court in which such Derivative Action was brought may determine upon application of Indemnitee that, in view of all circumstances of the case, indemnity for amounts paid in settlement is proper and may order indemnity for the amounts so paid in settlement and for the Expenses actually and reasonably paid in connection with such application, to the extent the court deems proper. 5. Limits on Indemnification. Except as stated in Paragraph 6, there shall be no indemnification pursuant to this Indemnification Agreement: Indemnification Agreement Page - 5 (a) to the extent that payment for the same claims or amounts are actually made to the Indemnitee under a valid and collectible insurance policy; provided, however, that if it should subsequently be determined that the Indemnitee is not legally entitled to retain any such payment, the restriction on indemnification pursuant to this subparagraph (a) shall no longer apply; (b) to the extent that the Indemnitee is indemnified or receives a recovery for the same claims or amounts otherwise than pursuant to this Indemnification Agreement; provided, however, that if it should subsequently be determined that the Indemnitee is not legally entitled to retain any such recovery, the restriction on indemnification pursuant to this subparagraph (b) shall no longer apply; (c) on account of any violation of Section l6(b) of the Securities Exchange Act of l934, as amended, and rules promulgated thereunder; (d) on account of any violation of Section l0(b) of the Securities Exchange Act of l934, as amended (the "Exchange Act"), and any rules promulgated thereunder, or similar state law, to the extent that such violation is based on (i) the purchase or sale of a security by Indemnitee or a person affiliated with Indemnitee while Indemnitee is in possession of material nonpublic information about the Company, or (b) the communication of material nonpublic information about the Company in connection with any transaction on or through the facilities of a national securities exchange or from or through a broker or dealer, other than as part of a securities offering by the Company; (e) with respect to any transaction from which the Indemnitee derived an improper personal benefit to which he or she is not legally entitled; (f) for the return of any remuneration paid to the Indemnitee that is held by any court in a final judgment to have been illegal or improper; (g) to the extent that the Indemnitee acted or failed to act (i) not in good faith, or (ii) not in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, or (iii) with respect to any criminal Action, with reasonable cause to believe his or her conduct was unlawful; or (h) if a final nonappealable decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful. 6. Partial and Mandatory Indemnity. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company of some or a portion of the Indemnification Agreement Page - 6 Expenses, judgments, fines, penalties and amounts paid in settlement of an Action but not for the total amount, the Company shall indemnify Indemnitee for the portion to which Indemnitee is entitled. To the extent that Indemnitee has been successful on the merits or otherwise (including dismissal with or without prejudice) in defense of any Indemnifiable Action or Indemnifiable Derivative Action, or in defense of any claim, issue or matter therein, he or she shall be indemnified against Expenses actually and reasonably incurred by him in connection therewith, except as stated in Paragraph 5(a) or 5(b). 7. Notification of Indemnifiable Action or Indemnifiable Derivative Action. Indemnitee shall promptly notify the Company of any Indemnifiable Action or Indemnifiable Derivative Action promptly after receipt by Indemnitee of notice of the commencement of such Indemnifiable Action or Derivative Action. With respect thereto: (a) The Company will be entitled to participate therein at its own expense. (b) Except as otherwise provided below, the Company jointly with any other indemnifying party may assume the defense thereof, with counsel reasonably satisfactory to Indemnitee to be chosen or approved by the Company. After notice from the Company to Indemnitee of its election to so assume the defense thereof, the Company will not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or participation in any Action or Derivative Action (including travel expenses) or as otherwise provided below. Indemnitee shall have the right to employ independent counsel in such Action or Derivative Action; however, the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless: (i) the employment of independent counsel by Indemnitee has been authorized by the Company; (ii) counsel employed by the Company to represent the Indemnitee shall have reasonably concluded that there may be a conflict of interest in the conduct of the defense of such action that prevents such counsel from representing Indemnitee; or (iii) the Company shall not in fact have employed counsel to assume the defense of such Action or Derivative Action on behalf of Indemnitee. The fees and expenses of independent counsel of Indemnitee in subparagraphs 7(b)(i), (ii) and (iii) shall be borne by the Company. Indemnification Agreement Page - 7 (c) If the Company has assumed the defense of the Indemnitee pursuant to subparagraph (b) above, the Company shall not be liable to indemnify Indemnitee under this Agreement for any amount paid in settlement of any Action or Derivative Action effected without its written consent, the Company shall not settle any Action or Derivative Action in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent, and neither the Company nor Indemnitee will unreasonably withhold their consent to any proposed settlement. 8. Establishment of Trust. In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a trust for the benefit of Indemnitee and from time to time upon written request of Indemnitee shall fund such trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for and defending any Indemnifiable Action or Indemnifiable Derivative Action, and any and all judgments, fines, penalties and settlement amounts of any and all Indemnifiable Actions or Indemnifiable Derivative Action from time to time actually paid or claimed, reasonably anticipated or proposed to be paid; provided, however, that in no event shall more than $250,000 be required to be deposited in any trust created hereunder in excess of amounts deposited in respect of reasonably anticipated Expenses. The terms of the trust shall provide that upon a Change in Control (i) the trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the trustee shall advance, within ten (10) business days of a written request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Section 9(b) of this Agreement), (iii) the trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in such trust shall revert to the Company upon a final determination by the Indemnitee or a court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. Trustee shall be chosen by the Board of Directors. Nothing in this Section 8 shall relieve the Company of any of its obligations under this Agreement. 9. Advance of Expenses; Failure to Pay Claim. (a) Written Request. If so requested by Indemnitee in writing, the Company shall (subject to the Expense Advance Rules hereinafter described) advance to Indemnitee (an "Expense Advance") any and all Expenses incurred in connection with the Indemnification Agreement Page - 8 investigation and preparation of the Indemnitee's participation in any Indemnifiable Action or Indemnifiable Derivative Action, whether as a witness or a party, pursuant to this Agreement. The Company shall comply with the Indemnitee's written request for an Expense Advance within ten (10) business days of receipt of such written request together with the reimbursement commitment referred to in subparagraph (b) below. In the event the Company does not honor Indemnitee's request for an Expense Advance, Indemnitee may bring an action in any court of competent jurisdiction to enforce the right to an Expense Advance, and the Company shall have the burden of proof in such action to demonstrate that the Expense Advance is not payable. (b) Reimbursement by Indemnitee. The obligation of the Company to make an Expense Advance shall be subject to the condition that, if it is ultimately determined (by final judicial determination from which there is no further right to appeal) that there are matters to which Indemnitee is not entitled to indemnity under this Agreement, the Company shall be entitled to be reimbursed by Indemnitee for all such amounts. Prior to obtaining the initial Expense Advance, Indemnitee must confirm such reimbursement obligation by delivery to Company of a signed undertaking in the form of Exhibit A or in such other form as Company may reasonably accept. (c) Expense Advance Rules. Expenses in all cases must be reasonable and comply with existing or future billing procedures of the Company so that the Company can reasonably monitor and audit such Expenses. With respect to attorneys' fees, the Company will give reasonable consideration to requests for specific counsel and to requests for the grouping of individuals for joint defense purposes. Any attorney representing more than one individual may be requested to render separate statements to each individual or otherwise allocate billings by individual. (d) Failure to Pay Claim. If loss has been incurred and a claim for indemnification under this Agreement is not paid by the Company within ten (10) business days after a written claim has been received by the Company, Indemnitee may at any time thereafter bring suit against the Company to recover any unpaid amount of the claim. 10. Burden of Proof. In connection with any determination as to whether Indemnitee is entitled to be indemnified hereunder the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. 11. No Presumption. For purposes of this Agreement, the termination of any action, suit or proceeding by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or Indemnification Agreement Page - 9 have any particular belief or that a court has determined that indemnification is not payable under this Indemnification Agreement or permitted by applicable law. 12. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Certificate of Incorporation, or the Delaware General Corporation Law or otherwise. To the extent that a change in the Delaware General Corporation Law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Company's Certificate of Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 13. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing Directors' and Officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company Director, Officer or Indemnitee. In the event Indemnitee incurs any Expenses in tendering the defense of the Action to the insurance company providing the Directors and Officers insurance, such Expenses shall be considered indemnifiable Expenses. 14. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern. 15. No Right To Continued Employment. Nothing contained in this Indemnification Agreement is intended to, or shall, create any right to continued employment by the Company. 16. Amendments and Waiver. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto; provided, however, that if any provision of this Agreement is challenged as being unlawful, the parties agree that the court in which such challenge is litigated may modify such provision so that it is enforceable to the maximum extent permitted by law and may enforce the Agreement as so modified. No waiver of any of the provisions of this Agreement shall Indemnification Agreement Page - 10 be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 17. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 18. Binding Effect. Etc. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, heirs, and assigns. l9. Termination by Company. This Agreement shall continue in full force and effect, regardless of whether Indemnitee continues to serve as an officer or director of the Company or any other enterprise at the Company's request, unless terminated pursuant to this Paragraph. By giving written notice to Indemnitee at his or her address according to Company records, the Company, prior to a Potential Change of Control or Change of Control, may terminate its obligations under this Indemnification Agreement as to any act or omission of Indemnitee after such written notice is given. Notice is deemed given when actually received or two days after being sent by registered or certified mail, whichever is earlier. 20. Severability. The provisions of this Agreement shall be severable and, in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law, including the provisions that have been modified by a court pursuant to Paragraph 16 hereof. 21. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. 22. Prior Agreements. This Agreement supersedes all prior Indemnification Agreements between the Company and Indemnitee. DEL WEBB CORPORATION Indemnification Agreement Page - 11 By: ------------------------------------- Its: ------------------------------------ ---------------------------------------- Indemnitee ---------------------------------------- ---------------------------------------- EXHIBIT A --------- __________ ___, l995 DEL WEBB CORPORATION Attention: General Counsel 6001 North 24th Street Phoenix, Arizona 85016 Re: Indemnification Agreement Dated , l995 (the "Agreement") --------------------------------------------------------------------------- Gentlemen: I am the beneficiary of the above Agreement and am a defendant, witness, or other participant in the following legal action: ______________________________________________________________________. A copy of the Complaint in this action is attached for your information. Pursuant to Paragraph 9 of the Agreement, I hereby request that Del Webb Corporation advance my Expenses as such term is used in the Agreement, subject to the Expense Advance Rules, as such Rules are applied in the Agreement. I hereby confirm that I will reimburse Del Webb Corporation for all the amounts advanced to me that are ultimately determined (by final judicial determination from which there is no further right to appeal) to be associated with matters to which I am not entitled to indemnity under the Agreement. If any additional information is needed, my address and telephone number are listed below: Address: ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ Telephone Number: ----------------------------------------------------------- Very truly yours, DIRECTORS AND OFFICERS INDEMNIFICATION AGREEMENTS LIST OF RECIPIENTS Directors: - ---------- Philip J. Dion Hugh F. Culverhouse J. Russell Nelson Peter A. Nelson C. Anthony Wainwright Sam Yellen D. Kent Anderson Michael E. Rossi Kenny C. Guinn Michael O. Maffie Glenn W. Schaeffer Officers - -------- Philip J. Dion Larry W. Beckner Joseph F. Contadino John H Gleason LeRoy C. Hanneman, Jr. Robertson C. Jones Anne L. Mariucci Donald V. Mickus John M. Murray Frank D. Pankratz David E. Rau Charles T. Roach David G. Schreiner M. Lynn Schuttenberg John A. Spencer Richard L. Vandermeer Robert R. Wagoner EX-10.25 8 1995 EXECUTIVE LONG-TERM INCENTIVE PLAN Exhibit 10.25 As Amended June 20, 1996 DEL WEBB CORPORATION 1995 EXECUTIVE LONG-TERM INCENTIVE PLAN ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION 1.1 Establishment of the Plan. Del Webb Corporation, a Delaware corporation (hereinafter referred to as the "Company"), hereby establishes an incentive compensation plan to be known as the "Del Webb Corporation 1995 Executive Long-term Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in this document The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Performance Units, and Performance Based Awards. Upon approval by the board of Directors of the Company and subject to shareholder ratification, the Plan shall become effective as of November 8, 1995 (the "Effective Date"), and shall remain in effect as provided in Section 1.3 herein. 1.2 Purpose of the Plan. The purpose of the Plan is to promote the success, and enhance the value, of the Company by linking the personal interests of participants to those of Company shareholders, and by providing Participants with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants upon whose judgement, interest, and special effort the successful conduct of its operation largely is dependent. 1.3 Duration of the Plan. Subject to approval by the board of Directors of the Company and ratification by the shareholders of the Company, the Plan shall commence on the Effective Date, as described in Section 1.1 herein, and shall remain in effect, subject to the right of the Board of Directors to terminate the Plan at any time pursuant to Article 14 herein, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions. However, in no event may an Award be granted under the Plan on or after November 7, 2005. ARTICLE 2. DEFINITIONS AND CONSTRUCTION 2.1 Definitions. Whenever used in the Plan, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized: (a) "Award" means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted Stock, Performance Units, or Performance-Based Awards. (b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act. (c) "Board" or "Board or Directors" means the Board of Directors of Del Webb Corporation. (d) "Cause " means: (i) willful and gross misconduct on the part of a Participant that is materially and demonstrably detrimental to the Company; or (ii) the commission by a Participant of one or more acts which constitute an indictable crime under United States Federal, state, or local law. "Cause" under either (i) or (ii) shall be determined in good faith by a written resolution duly adopted by the affirmative vote of not less than two-thirds (2/3rds) of all the Directors at a meeting, duly called and held for that purpose after reasonable notice to the Participant and opportunity for the Participant and his or her legal counsel to be heard. (e) "Change in Control" of the Company shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a coproration owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities (defined as any securities of the Company which vote generally in the election of directors), or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) 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 therof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the 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 the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all the Company's assets. (f) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (g) "Committee" means the committee, as specified in Article 3, appointed by the Board to administer the Plan with respect to grants of Awards. 2 (h) "Company" means Del Webb Corporation, a Delaware Corporation (including any and all Subsidiaries), or any successor thereto as provided in Article 16 herein. (i) "Covered Employee" means an Employee who is a "covered employee" within the meaning of Section 162(m) of the Code. (j) "Director" means any individual who is a member of the Board of Directors of the Company. (k) "Disability" means a permanent and total disability, within the meaning of Code Section 22(e)(3), as determined by the Committee in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice. (l) "Employee" means any full-time, nonunion employee of the Company. Directors who are not otherwise employed by the Company shall not be considered Employees under this Plan. (m) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto. (n) "Fair Market Value" means the average of the highest and lowest quoted selling prices for Shares on the relevant date, or (if there were no sales on such date) the weighted average of the means between the highest and lowest quoted selling prices on the nearest day before and the nearest day after the relevant date, as prescribed by Treasury Regulation Section 20.2031-2(b)(2), as reported in the Wall Street Journal or a similar publication selected by the Committee. (o) "Incentive Stock Option" or "ISO" means an option to purchase Shares, granted under Article 6 herein, which is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code. (p) "Insider" shall mean an Employee who is, at the time an Award is made under this Plan, an insider pursuantt to Section 16 of the Exchance Act. (q) "Nonqualified Stock Option" or 'NQSO" means an option to purchase Shares, granted under Article 6 herein, which is not intended to be an Incentive Stock Option. (r) "Option" means an Incentive Stock Option or a Nonqualified Stock Option. (s) "Option Price" means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee. 3 (t) "Parent" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (u) "Participant" means an Employee of the Company who has an outstanding Award granted under the Plan. (v) "Performance-Based Awards" means the Restricted Stock Awards and Performance Unit Awards granted to selected Covered Employees pursuant to Articles 7 and 8, but which are subject to the terms and conditions set forth in Article 9. All Performance-Based Awards are intended to qualify as "performance-based compensation" under Section 162(m) of the Code. (w) "Performance Criteria" means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period. The Performance Criteria that will be used to establish Performance Goals are limited to the following: pre- or after-tax net earnings, revenue growth, operating income, operating cash flow, return on net assets, return on shareholders' equity, return on assets, return on capital, Share price growth, shareholder returns, gross or net profit margin, earnings per share, price per Share, and market share, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. The Committee shall, within the time prescribed by Section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period for such Participant. (x) "Performance Goals" means, for a Performance Period, the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria. Depending on the Performance Crieteria used to establish such Goal, the Goal may be expressed in terms of overall Company performance or the performance of an operating unit or community. The Committee, in its discretion, may, within the time prescribed by Section 162(m) of the Code, adjust or modify the calculation of Performance goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants, (I) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development; and (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions. (y) "Performance Period" means the one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant's right to, and the payment of, a Performance-Based Award. 4 (z) "Performance Unit" means an Award granted to an Employee pursuant to Article 8 herein. (aa) "Period of Restriction" means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, at its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 herein. (bb) "Restricted Stock" means an Award granted to a Participant pursuant to Article 7 herein. (cc) "Retirement" means a voluntary termination of employment by a Participant who has less than ten (10) years of service with the Company at or after age sixty-five (65), or voluntary termination at or after age fifty-five (55) for Participants who have at least ten (10) years of service with the Company as of the date of employment termination. (dd) "Shares" means the shares of common stock of Del Webb Corporation. (ee) "Subsidiary" means any corporation in which the Company owns directly, or indirectlythrough subsidiaries, at least fifty percent (50%) of the total combined voting power of all classes of stock, or any other entity (including, but not limited to, partnerships and joint ventures) in which the Company owns at least fifty percent (50%) of the combined equity thereof. 2.2 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural. 2.3 Severability. In the event that a court of competent jurisdiction determines that any portion of this Plan is in violation of any satute, common law, or public policy, then only the portions of this Plan that violate such statute, common law, or public policy shall be stricken. All portions of this Plan that do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Plan shall modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties under this Plan. ARTICLE 3. ADMINISTRATION 3.1 The Committee. The Plan shall be administered by the Human Resources Committee of the Board, or by any other Committee appointed by the Board consisting of not less than two (2) Directors who are not Employees. The members of the Comittee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. 5 Except as permitted under Section 16b-3(c)(2)(i)(A), (B), (C), and (D), no member of the Committee shall have received a grant of an Award under the Plan or any similar Plan of the Company or any of its Subsidiaries while serving on the Committee, or shall have so received such a grant at any time within one (1) year prior to his or her service on the Committee, or, if different, for the time period just necessary to fulfill the then current Rule 16b-3 requirements under the Exchange Act. However, if for any reason the Committee does not qualify to administer the Plan, as contemplated by Rule 16b-3 of the Exchange Act, the Board of Directors may appoint a new Committee so as to comply with Rule 16b-3. 3.2 Authority of the Committee. The Committee shall have full power except as limited by law or by the Articles of Incorporation or Bylaws of the Company, and subject to the provisions herein, to determine the size and types of Awards; to determine the terms and conditions of such Awards in a manner consistent with the Plan; to cancel and reissue any Awards granted hereunder in the event the Award lapses for any reason (provided that the Committee shall not have the authority to reprice previously issued and currently outstanding Awards without shareholder approval); to construe and interpret the Plan and any agreement or in instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan's administration; and (subject to the provisions of Article 13 herein) to amend the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion of the Committee as provided in the Plan. Further, the Committee shall make all other determinations which may be necessary or advisable for the administration of the Plan. As permitted by law, the Committee may delegate its authorities as identified hereunder. 3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders or resolutions of the Board of Directors shall be final, conclusive, and binding on all persons, including the Company, its stockholders, Employees, Participants, and their estates and beneficiaries. ARTICLE 4. SHARES SUBJECT TO THE PLAN 4.1 Number of Shares. Subject to adjustment as provided in Section 4.3 herein, the total number of Shares available for grant under the Plan may not exceed one million two hundred thousand (1,200,000). These one million two hundred thousand (1,200,000) Shares may be either authorized but unissued or reacquired Shares. 4.2 Lapsed Awards. If any Award granted under this Plan is canceled, terminates, expires, or lapses for any reason, any Shares subject to such Award again shall be available for the grant of an Award under the Plan. 4.3 Adjustments in Authorized Shares. In the event of any merger, reorganization consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination, or other changre in the corporate structure of the Company affecting the Shares, such adjustment shall be made in the number and class of Shares which may be delivered under the Plan, and in the number 6 and class of and/or price of Shares subject to outstanding Options and Restricted Stock granted under the Plan, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; and provided that the number of Shares subject to any Award shall always be a whole number. 4.4 Limiation on Number of Shares Subject to Award. Notwithstanding any provision in the Plan to the contrary, the maximum number of shares of Stock that may be subject to one or more Awards granted to any one Participant over the term of the Plan shall be 400,000. ARTICLE 5. ELIGIBILITY AND PARTICIPATION 5.1 Eligibility. Persons eligible to participate in this Plan include all officers and key Employees of the Company, as determined by the Comiittee, including Employees who are members of the Board, but excluding Directors who are not Employees. 5.2 Actual Participation. Subject to the provisions of the Plan, the Comittee may, from time to time, select from all eligible Employees, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No Employee shall have any right to be granted an Award under this Plan. In addition, nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company. ARTICLE 6. STOCK OPTIONS 6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to Employees at any time and from time to time as shall be determined by the Committee. The Committee shall have discretion in determining the number of Shares subject to Options granted to each Participant. The Committee may grant ISOs, NQSOs, or a combination thereof. Nothing in this Article 6 shall be deemed to prevent the grant of NQSOs in excess of the maximum established by Section 422(d) of the Code. 6.2 Option Agreement. Each Option grant shall be evidenced by an Option Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, and such other provisions as the Committee shall determine. The Option Agreement also shall Specify whether the Option is intended to be an ISO within the meaning of Section 422 of the Code, or a NQSO whose grant is intended not to fall under the provisions of Section 422 of the Code. 6.3 Option Price. The Option Price for each grant of an Option shall not be less than one hundred percent (100%) of the Fair Market Value of such Share on the date the Option is granted. 7 6.4 Duration of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however, that no Option shall be exercisable later than the tenth (10th) anniversary date of its grant. 6.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. However, in no event may any Option granted under this Plan become exercisable prior to six (6) months following the date of its grant. 6.6 Payment. Options shall be exercised by the delivery of a written notice of exercise to the Secretary of the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by fall payment for the Shares. The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent, or (b) by tendering previously acquired Shares having a Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (c) by a combination of (a) and (b). The Committee also may allow cashless exercise as permitted under Federal Reserve Board's Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant's name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s). 6.7 Restritions on Share Transferability. The Committee shall impose such restrictions on any Shares acquired pursuant to the exercise of an Option under the Plan, as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. 6.8 Termination of Employment Due to Death, Disability, or Retirement. (a) Termination by Death. In the event the employment of a Participnt is terminated by reason of death, any outstanding Options granted to that Participant which are vested as of the date of death shall remain exercisable at any time prior to their expriation date, or for one (1) year after the date that employment was terminated, whichever period is shorter, by such person or persons as shall have been named as the Participant's beneficiary, 8 or by such persons that have acquired the Participant's rights under the Option by will or by the laws of descent and distribution. The portion of any outstanding Option which is deemed vested under this Plan as of the date of employment termination shall be determined according to the following guidelines: (i) The portion of the Option which is exercisable as of the date of employment termination shall remain exercisable; (ii) The percentage vesting of the portion of the Option which otherwise would have vested at the end of the calendar year in which employment termination occurs, will equal a fraction, the numerator of which is the number of full weeks of employment during the calendar year in which employment termination occurs, and the denominator of which is fifty-two (52); and (iii) The portion of the Option which is scheduled to vest in a year which begins after the end of the calendar year in which employment termination occurs, and the portion of the Option that does not vest in the year in which employment termination occurs, shall be forfeited by the Participant and returned to the Company (and shall once again be available for grant under the Plan). Any Options which are not vested as of the date of employment termination shall expire immediately, and may not be exercised following such time. (b) Termination by Disability. In the event the employment of a Participant is terminated by reason of Disability, any outstanding Options granted to that Participnt which are vested as of the date the Committee determines the definition of Disability to have been satisfied, shall remain exercisable at any time prior to their expiration date, or for one (1) year after the date that the Committee determines the definition of Disability to have been satisfied, whichever period is shorter. The portion of any outstanding Option which is deemed vested as of the date the definition of Disability is determined to have been satisfied by the Committee shall be deermined pursuant to the guidelines set forth In Subparagraphs (a)(i) through (a)(iii) of this Section 6.8. Any Options that are not vested as of the date that the Committee determines the definition of Disability to have been satisfied, shall expire immediately, and may not be exercised following such date. (c) Termination by Retirement. In the event the employment of a Participant is terminated by reason of Retirement, any outstanding Options granted to that Participant which are vested as of the effective date of Retirement, shall remain exercisable at any time 9 prior to their expiration date, or for three (3) years after the effective date of Retirement, whichever period is shorter. The portion of any outstanding Option which is deemed vested as of the effective date of Retirement shall be determined pursuant to the guidelines set forth in Subparagraphs a(i) through a(iii) of this Section 6.8. Any Options whicha re not vested as of the effective date of Retirement shall expire immediately, and may not be exercised following such date. (d) Exercise Limitations on ISOs. In the case of ISOs, the tax treatment prescribed under Section 422 of the Code may not be available if the Options are not exercised within the Section 422 prescribed time periods after each of the various types of employment termination. Notwithstanding the exercise periods described in Subparagraphs (a), (b), and ( c) above, the Committee shall have the authority, in its sole discreition, to accelerate the vesting of Options which are outstanding as of the date of employment termination for one of the reasons described in this Section 6.8. 6.9 Termination of Employment for Other Reasons. If the employment of a Participant shall termiante for any reason (other than the reasons set forth in Section 6.8 or for Cause), all Options held by the Participant which are not vested as of the effective date of employment termination immediately shall be forfeited to the Company (and shall once again become available for grant under the Plan). However, the Committee, in its sole discretion, shall have the right to immediately vest all or any portion of such Options, subject to such terms as the Committee, in its sole discretion, deems appropriate. Options which are vested as of the effective date of employment termination may be exercised by the Participant within the period beginning on the effective date of employment termination, and ending three (3) months after such date. If the employment of a Participant shall terminate for Cause, all outstanding Options held by the Participant immediately shall be forfeited to the Company and no additional exercise period shall be allowed, regardless of the vested status of the Options. 6.10 Nontransferability of Options. Each Incentive Stock Option granted under the Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution; each other Option granted under the Plan may be transferable subject to the terms and conditions as may be established by the Committee in accordance with the regulations promulgated under the Exchange Act, or any other applicable law or regulation. Further, all Options granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. 10 ARTICLE 7. RESTRICTED STOCK 7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to eligible Employees in such amounts as the Committee shall determine; provided that the total number of Shares of Restricted Stock granted under this Plan shall not exceed One Hundred Thousand (100,000) Shares of Restricted Stock. 7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced by a Restricted Stock Agreement that shall specify the Period of Restriction, or Periods, the number of Restricted Stock Shares granted, and such other provisions as the Committee shall determine. 7.3 Transferability. Except as provided in this Article 7, the Shares of Restricted Stock granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Restricted Stock Agreement, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Restricted Stock Agreement. However, in no event may any Restricted Stock granted under the Plan become vested in a Participant prior to six (6) months following the date of its grant. All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant. 7.4 Other Restrictions. The Committee shall impose such other restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), and/or restrictions under applicable Federal or state securities laws; and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. 7.5 Certificate Legend. In addition to any legends placed on certificates pursuant to Section 7.4 herein, each certificate representing Shares of Restricted Stock granted pursuant to the Plan shall bear the following legend: "The sale or other transfer of the Shares of Stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Del Webb Corporation 1995 Executive Long-Term Incentive Plan, and in a Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Del Webb Corporation." 7.6 Removal of Restrictions. Except as otherwise provided in this Article 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction. Once the Shares are 11 released from the restrictions, the Participant shall be entitled to have the legend required by Section 7.5 removed from his or her Share certificate. 7.7 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares. 7.8 Dividends and Other Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those Shares while they are so held. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 7.9 Termination of Employment. If the employment of a Participant shall terminate for any reason, except as determined by the Committee at the time of such termination for any reason other than for Cause, all nonvested Shares of Restricted Stock held by the Participant upon the effective date of employment termination immediately shall be forfeited and returned to the Company (and shall once again become available for grant under the Plan). The number of Shares of Restricted Stock which are deemed vested as of the effective date of employment termination shall be determined pursuant to the guidelines set forth with respect to the vesting of Options, as specified in Sections 6.8 and 6.9 herein. ARTICLE 8. PERFORMANCE UNITS 8.1 Grant of Performance Units. Subject to the terms of the Plan, Performance Units may be granted to eligible Employees at any time and from time to time, as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Performance Units granted to each Participant. 8.2 Value of Performance Units. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the number and/or value of Performance Units that will be paid out to the Participants. The time Period during which the performance goals must be met shall be called a "Performance Period." Performance Periods shall, in all cases, exceed six (6) months in length. 8.3 Earning of Performance Units. After the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive payout on the number of Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved. 8.4 Form and Timing of Payment of Performance Units. Payment of earned Performance Units shall be made in a single lump sum, within forty-five (45) calendar days following the close of the applicable Performance Period. The Committee, in its sole discretion, 12 may pay earned Performance Units in the form of cash or in Options (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable Performance Period. Prior to the beginning of each time period during which the goals must be met, Participants may elect to defer the receipt of Performance Unit payout upon such terms as the Committee deems appropriate. 8.5 Termination of Employment Due to Death, Disability, Retirement, or Involuntary Termination (without Cause). In the event the employment of a Participant is terminated by reason of Death, Disability, Retirement, or involuntary termination without Cause during a Performance Period, the Participant shall receive a prorated payout of the Performance units. The prorated payout shall be determined by the Committee, in its sole discretion, based upon the guidelines set forth with respect to the vesting of Options, as specified in Sections 6.8 and 6.9 herein, and further adjusted based on the achievement of the preestablished performance goals. Payment of earned Performance Units shall be made at the same time payments are made to Participants who did not terminate employment during the applicable Performance Period. 8.6 Termination of Employment for Other Reasons. In the event that a Participant terminates employment with the Company for any reason other than those reasons set forth in Section 8.5, all Performance Units shall be forfeited by the Participant to the Company, and shall once again be available for grant under the Plan. 8.7 Nontransferability. Performance Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further a Participant's rights under the Plan shall be exercisable during the Participant's lifetime only by the Participant or the Participant's legal representative. ARTICLE 9. PERFORMANCE-BASED AWARDS 9.1 Purpose. The purpose of this Article 9 is to provide the Committee the ability to qualify the Restricted Stock Awards under Article 7 and the Performance Unit Awards under Article 8 as "performance-based compensation" under Section 162(m) of the Code. If the Committee, in its discretion, decides to grant a Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control over any contrary provision contained in Articles 7 or 8. 9.2 Applicability. This Article 9 shall apply only to those Covered Employees selected by the Committee to receive Performance-Based Awards. The Committee may, in its discretion, grant Restricted Stock Awards or Performance Unit Awards to Covered Employees that do not satisfy the requirements of this Article 9. The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the 13 period. Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant in any subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period or in any other period. 9.3 Discretion of Committee with Respect to Performance Awards. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type of Performance-Based Awards to be issued, the kind and/or level of the Performance goal, and whether the Performance Goal is to apply to the Company, a Subsidiary or any division or business unit thereof. 9.4 Payment of Performance Awards. Unless otherwise provided in the relevant Award Agreement, a Participant must be employed by the Company or a Subsidiary on the lsat day of the Performance Period to be eligible for a Performance Award for such Performance Period. Furthermore, a Participant shall be eligible to receive payment under a Performance-Based Award for a Performance Period only if the Performance Goals for such period are achieved. In determining the actual size of an individual Performance-Based Award, the Committee may reduce or eliminate the amount of the Performance-Based Award earned for the Performance Period, if in its sole and absolute discretion, such reduction or elimination is apropriate. 9.5 Maximum Award Payable. Notwithstanding any provision contained in the Plan to the contrary, the maximum Performance-Based Award payable to any one Participant under the Plan for a Performance Period is Seventy-Five Thousand (75,000) Shares, or in the event the Performance- Based Award is paid in cash, such maximum Performance-Based Award shall be determined by multiplying Seventy-Five Thousand (75,000) by the Fair Market Value of one Share as of the date of grant of the Performance-Based Award. ARTICLE 10. BENEFICIARY DESIGNATION Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Company, and will be effective only when filed by the Participant in writing with the Human Resource Department of the company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate. ARTICLE 11. DEFERRALS The Committee may permit a Participant to defer such Participant's receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option, the lapse or waiver of restrictions with respect to Restricted Stock, or the 14 satisfaction of any requirements or goals with respect to Performance Units. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals. ARTICLE 12. RIGHTS OF EMPLOYEES 12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the company. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination of employment. 12.2. Participation. No Employee shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. ARTICLE 13. CHANGE IN CONTROL Upon the occurrence of a Change in Control, unless otherwise specifically prohibited by the terms of Article 17 herein: (a) Any and all Options granted hereunder shall become immediately exercisable; (b) Any restriction periods and restrictions imposed on Restricted Shares shall lapse, and within ten (10) business days after the occurrence of a Change in Control, the stock certificates representing Shares of Restricted Stock, without any restrictions or legend thereon, shall be delivered to the applicable Participants; (c) The target value attainable under all Performance Units shall be deemed to have been fully earned for the entire Performance Period as of the effective date of the Change in Control, except that all Performance Units which shall have been outstanding less than six (6) months on the effective date of the Change in Control shall not be deemed to have earned the target value; and (d) Subject to Article 13 herein, the Committee shall have the authority to make any modifications to the Awards as determined by the Committee to be appropriate before the effective date of the Change in Control. ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION 14.1 Amendment, Modification, and Termination.. With the approval of the Board, at any time and from time to time, the Committee may terminate, amend, or modify the Plan. However, 15 without the approval of the stockholders of the Company (as may be required by the Code, by the insider trading rules of Section 16 of the Exchange Act, by any national securities exchange or system on which the Shares are then listed or reported, or by a regulatory body having jurisdiction with respect hereto) no such termination, amendment, or modification may: (a) Increase the total amount of Shares which may be issued under this Plan, except as provided in Section 4.3 herein; or (b) Change the class of Employees eligible to participate in the Plan; or (c) Materially increase the cost of the Plan or materially increase the benefits to Participants; or (d) Extend the maximum period after the date of grant during which Options may be exercised. 14.2 Awards Previously Granted. No termination, amendment, or modification of the Plan shall in any manner adversely affect any Award previously granted under the Plan, without the written consent of the Participant holding such Award. ARTICLE 15. WITHHOLDING 15.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local taxes (including the Participant's FICA obligation required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of this Plan. 15.2 Share Withholding. With respect to withholding required upon the exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event, Participants shall satisfy all federal, state and local tax withholding requirements by having, the Company withhold Shares (to the extent that Shares are issued pursuant to the Award) having, a Fair Market Value on the date the tax is to be determined equal to the maximum market total tax which would be imposed on the transaction. ARTICLE 16. SUCCESSORS All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. ARTICLE 17. REQUIREMENTS OF LAW 16 17.1 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision set forth in the Plan, if required by the then current Rule 16b-3 of the Exchange Act, any "derivative security or equity security" offered pursuant to the Plan to any Insider may not be sold or transferred for at least six (6) months after the date of grant of such Award, except in the case of the death, disability, or termination of employment of the Participant. The terms "equity security" and "derivative security" shall have the meanings ascribed to them in the then current Rule 16b-3 of the Exchange Act. 17.2 Governing Law. The Plan, and all agreements hereunder, shall be governed by the laws of the State of Delaware. 17 FIRST AMENDMENT TO THE DEL WEBB CORPORATION 1995 EXECUTIVE LONG-TERM INCENTIVE PLAN 1. THIS FIRST AMENDMENT shall only amend those Sections specified herein and the remaining provisions of the Plan not so amended are hereby ratified and affirmed. 2. Section 6.10 of the Plan is hereby amended as follows: 6.10 Nontransferability of Options. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a Participant who has been granted an Option under the Plan to assign or otherwise transfer all or a portion of the rights under the Option to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 3. Section 7.3 of the Plan is hereby amended as follows: 7.3 Transferability. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a participant who has been granted Shares of Restricted Stock under the Plan to assign or otherwise transfer all or a portion of the rights under the Shares of Restricted Stock to a family member or members, or to a trust a similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 4. Section 8.7 of the Plan is hereby amended as follows: 8.7 Nontransferabililty. The Human Resources Committee of the Board of Directors, in its discretion, on a case-by-case basis, may allow a participant who has been granted Performance Units under the Plan to assign or otherwise transfer all or a portion of the rights under the Performance Units to a family member or members, or to a trust or similar entity (including a family limited partnership) benefitting such family member or members, subject to such restrictions, limitations, or conditions as the Human Resources Committee deems to be appropriate. 5. This first amendment is pursuant to a Board of Directors resolution dated June 20, 1996, and is effective as of that date. DEL WEBB CORPORATION By: /s/ Robertson C. Jones -------------------------- Robertson C. Jones Vice President EX-10.28 9 MANAGEMENT INCENTIVE PLAN FISCAL 1998 DEL WEBB CORPORATION MANAGEMENT INCENTIVE PLAN Fiscal 1998 (July 1, 1997 - June 30, 1998) 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. Total incentives payable under the MIP will not exceed 12 1/2% of pre-tax, pre-incentive earnings of the Company for the 1998 fiscal year. 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. 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 1997/1998 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 75% 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 and cash flow objectives relating to the participant's area of responsibility for participants in operating entities and Corporate, and on project milestone achievements for communities in start-up prior to initiation of sales and closings. o Depending upon the business unit 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 Project milestone objectives are the most significant non-financial goals which the individual participant is expected to accomplish during the Plan year in conjunction with the project start-up schedule.
Corporate Start-up After Tax Operating Cash Project Milestone 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 Bellasera Cloverdale Fairmount II. Target Bonus below 35% A. Headquarters 85% 0 15% 0% B. Operating Sun City Communities 20% 60% 20% 0% Coventry Coventry Tucson/Las Vegas Bellasera Cloverdale Fairmount Coventry Verde Valley C. Anthem 20% 0 80% Villages
(1) Operating earnings are the pre-tax, pre-interest, pre-cash discounts earnings achieved at the operation where the individual is assigned. 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. Project Milestone Performance Objectives - ---------------------------------------- Non-financial performance objectives will be established at the beginning of the fiscal year for each participant whose primary responsibility is in a start-up community. These objectives, which will be submitted to the CEO for final approval, will reflect the project milestones which must be successfully met in order for the community to open for sales on time and on budget. Objectives must be specific, 4 realistic, quantifiable and time-limited before they will be approved and will be mutually agreed to by the participant and management. In the event circumstances or directions change, affecting any participant's pre-established project milestone objectives, the executive vice president overseeing the start-up project 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 overall Corporate operating earnings is paramount in the bonus computation formula; project milestone 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-10.31 10 1996/97 EXECUTIVE MANAGEMENT INCENTIVE PLAN Exhibit 10.31 Del Webb Corporation - -------------------------------------------------------------------------------- August 21, 1996 REVISED ======= Mr. Philip J. Dion Chairman of the Board and Chief Executive Officer Del Webb Corporation RE: 1996/97 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, 1997 ("Performance Period") the Committee will evaluate performance under one or more of three 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 1996/97 Performance Award will be made are set forth in Exhibit A. If the Performance Goal or 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 21, 1996 Page 2 2. Target Bonus: Solely for purposes of limitation under SERP, your bonus target is deemed to be 120% of base salary. 3. 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. 4. 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. 5. 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. 6. 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: ____________________, 1996 ___________________________________ Your signature EX-10.35 11 EMPLOYMENT AGREEMENT WITH J.F. CONTADINO DEL WEBB CORPORATION JOSEPH F. CONTADINO EMPLOYMENT AGREEMENT TABLE OF CONTENTS Page 1. DEFINITIONS .......................................................... -1- 2. TERM OF AGREEMENT; DUTIES ............................................ -1- (a) Initial Term; Renewal; Employment Period Defined ................ -1- (b) Duties .......................................................... -1- (c) Employee Commitments ............................................ -2- (d) Other Programs .................................................. -2- 3. COMPENSATION ......................................................... -2- (a) Base Salary ..................................................... -2- (b) Incentive and Benefit Plan ...................................... -2- (c) Supplemental Executive Retirement Plan .......................... -3- 4. CONFIDENTIALITY ...................................................... -3- 5. TERMINATION DUE TO DEATH OR DISABILITY ............................... -4- (a) Death ........................................................... -4- (b) Permanent Disability ............................................ -4- (c) Salary Continuation ............................................. -5- (d) Lapse of Provisions ............................................. -5- 6. TERMINATION BY COMPANY ............................................... -5- (a) Termination for cause ........................................... -5- (b) "Cause" Defined ................................................. -5- (c) Termination Without Cause ....................................... -5- 7. TERMINATION BY EMPLOYEE .............................................. -6- (a) General ......................................................... -6- (b) Good Reason Defined ............................................. -6- (c) Company May Cure Good Reason .................................... -7- (d) Effect of Good Reason Termination ............................... -7- (e) Effect of Termination without Good Reason ....................... -8- 8. SEVERANCE BENEFITS ................................................... -8- (a) Eligibility ..................................................... -8- (b) Severance Benefits .............................................. -8- (c) Severance Period ................................................ -10- (d) COBRA ........................................................... -10- -i- 9. CHANGE IN CONTROL OF COMPANY ......................................... -11- (a) General ......................................................... -11- (b) Eligibility to Receive a Severance Benefit ...................... -11- (c) Permanent Disability ............................................ -11- (d) Change in Control Defined ....................................... -12- (e) Good Reason Defined ............................................. -13- (f) Notice of Termination by Employee ............................... -14- (g) Effect of Termination; Special Severance Benefits ............... -14- (h) Other Agreements ................................................ -16- (i) Legal Expenses .................................................. -16- 10. CEILING ON CHANGE IN CONTROL BENEFITS ................................ -16- (a) General ......................................................... -16- (b) Base Period Income .............................................. -16- (c) Total Payments .................................................. -17- (d) Procedural Matters .............................................. -17- 11. COMPETITION .......................................................... -18- (a) Restrictive Covenant ............................................ -18- (b) Duration of Covenant ............................................ -19- (c) Remedies; Reasonableness ........................................ -19- (d) Survival of Provision ........................................... -19- (e) Competing Business .............................................. -20- (f) Change in Control ............................................... -20- 12. DISPUTE RESOLUTION ................................................... -20- (a) Mediation ....................................................... -20- (b) Arbitration ..................................................... -21- (c) Damages ......................................................... -21- (d) Selection of Mediator or Arbitrators ............................ -22- (e) Expenses ........................................................ -22- 13. BENEFIT AND BINDING EFFECT ........................................... -22- 14. NON-DISPARAGEMENT .................................................... -23- 15. OTHER AGREEMENTS OF EMPLOYEE ......................................... -23- 16. NOTICES .............................................................. -23- 17. ENTIRE AGREEMENT ..................................................... -24- 18. GOVERNING LAW ........................................................ -24- -ii- EMPLOYMENT AGREEMENT -------------------- This Employment Agreement (the "Agreement") is entered into as of the 11th day of April, 1997 between DEL WEBB CORPORATION, a Delaware corporation (the "Company"), and JOSEPH F. CONTADINO (the "Employee"). 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) Initial Term; Renewal; Employment Period Defined ------------------------------------------------ Employee shall be employed by Company for the duties set forth below for the period beginning on April 11, 1997 and ending on June 30, 1998 (the "Initial Term"), unless sooner terminated in accordance with the provisions of this Agreement. This Agreement shall be automatically renewed at the end of the Initial Term for additional one-year periods commencing on each July 1 and ending on the next following June 30 ( a "Renewal Term"), unless either party serves notice of desire to terminate or modify this Agreement on the other. Such notice must be given at least 30 days before the end of the Initial Term or the applicable Renewal Term. The period of time commencing as of the first day of the Initial Term and ending on the effective date of the termination of employment of Employee under this or any successor agreement shall be referred to as the "Employment Period". (b) Duties ------ Employee shall be employed as an Executive President of Company. As Executive Vice President, Employee shall perform all of the duties and responsibilities described in the Job Description on file as of the date hereof with Company, including, but not limited to the responsibility to direct, control and plan all operational activities for the Del Webb non-age restricted businesses including, but not limited to, Coventry, Terravita, Fairmount Mortgage, and Trovas. Employee is responsible for reviewing and analyzing land purchase opportunities for new development. As a member of the Management Committee, employee participates in development and review of short and long range plans for non-age restricted business and actively participates in evaluation and resolution of major issues and opportunities affecting the overall Company. -1- Employee 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") or Company's Chief Executive Officer. Any additional duties delegated to Employee shall be reasonably consistent with Employee's position. 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. (c) Employee Commitments -------------------- Employee agrees that 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 and the Chief Executive Officer of Company. Employee also agrees that 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. (d) Other Programs -------------- As a general rule, this Agreement is intended to supplement and enhance the rights and benefits available to Employee as a senior executive officer of the Company. Accordingly, unless this Agreement or any other agreement or plan of Company specifically indicates otherwise, none of the rights and benefits provided to Employee pursuant to this Agreement are intended to replace the rights and benefits made available generally to other senior executive officers of the Company. 3. COMPENSATION ------------ Employee shall receive the following compensation for services: (a) Base Salary ----------- Employee shall receive "Base Salary" at the rate of $300,000 per year. Base Salary shall be payable as nearly as possible in equal bi-weekly installments (or in such other installments as the Company shall determine). The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executive officers. (b) Incentive and Benefit Plans --------------------------- Employee shall participate in any incentive compensation plans maintained by the Company for "Senior Executive Officers", as such term is defined below. For the 1996-1997 -2- fiscal year, Employee's "Target Bonus", as that term is customarily used in conjunction with the Company's Annual Management Incentive Plan (the "MIP"), shall be 75% of Employee's Base Salary, with the actual amount of the bonus payment to be determined in accordance with all of the terms and provisions of the MIP, as it may be amended from time to time. The Employee's Target Bonus, and all other terms and conditions of Employee's participation in the MIP (including other bonus levels and performance goals) may be changed from time to time by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. Employee also shall have the right to participate in any and all 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 Senior Executive Officers, all in accordance with the terms and conditions of the plans. Company will provide Employee with an automobile and an active membership in a country club of Employee's choice in accordance with the policies and practices applicable to Senior Executive Officers. The automobile and country club policies for Senior Executive Officers may be modified from time to time. For purposes of this Agreement, the term "Senior Executive Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice President or Vice President. (c) Supplemental Executive Retirement Plan -------------------------------------- Employee is a participant in the Company's Supplemental Executive Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be entered into between Employee and Company pursuant to which Employee shall receive enhanced treatment for purposes of the SERP. 4. CONFIDENTIALITY --------------- Employee 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 Information". The term "Confidential Information" includes, but is 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 Employee's employment hereunder. The term "Confidential Information" does not include any material that Company has already disclosed to the public and is in the public domain. This covenant and agreement of Employee shall survive this Agreement and continue to be binding upon Employee 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. -3- Employee acknowledges that, in the event of his breach of the confidentiality provisions of this Section 4, money damages will not sufficiently compensate Company or the applicable Subsidiary for its injury. Employee accordingly agrees that in addition to such money damages, Employee may be restrained and enjoined from continuing breach of the provisions of this Section 4 without any bond or other security. Employee also acknowledges that any breach of this Section 4 would result in irreparable damage to Company or the applicable Subsidiary. 5. TERMINATION DUE TO DEATH OR DISABILITY -------------------------------------- (a) Death ----- This Agreement shall terminate upon Employee's death. Employee's estate shall be entitled to receive the Base Salary due through the date of his death. In addition, Employee's Base Salary (as determined pursuant to Section 3) as in effect at the time of his death will be continued for a period of 12 calendar months following the date of his death. The continued salary payments will be made to Employee's spouse, if Employee is married and living with Employee's spouse on the date of death. If Employee is not married and living with Employee's spouse on the date of death, the continued salary payments will be paid to Employee's estate. Payments under this paragraph may be made to a designated beneficiary, in lieu of Employee's estate, where Employee has made a written request to Company designating a beneficiary, and the Company, in its discretion, has approved the requested designation made by Employee. The death benefit provided pursuant to this Section 5 is intended to be in addition to any other death benefit provided pursuant to any other plan or program sponsored by the Company except the Executive Spouse Benefit authorized by the Human Resources Committee of the Board for officers of the Company as reflected in a letter to Employee dated October 20, 1992, which is replaced by this Agreement. (b) Permanent Disability -------------------- At Company's option, this Agreement also shall terminate in the event of Employee's "Permanent Disability" upon notice in writing to Employee to that effect. For purposes of this Agreement, "Permanent Disability" shall mean that because of physical or mental illness or disability, with or without accommodation, Employee shall have been continuously unable to perform his duties hereunder for a consecutive period of 180 days. If this Agreement is terminated due to Employee's Permanent Disability, Employee shall receive the Severance Benefits provided by Section 8. -4- (c) Salary Continuation ------------------- If the Employee is absent from work and unable to perform his duties due to a physicial or mental illness or disability, Employee shall continue to receive Base Salary until such time as this Agreement is terminated. Company may not terminate this Agreement without Cause pursuant to Section 6(c) during the period of absence. Rather, Company may only terminate this Agreement because of Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section 6(a). The period of time during which Employee's Base salary is continued pursuant to this Section 5(c) shall be charged against Employee's available sick leave and then against Employee's available vacation. (d) Lapse of Provisions ------------------- This Section 5 shall cease to apply following the termination of Employee's employment pursuant to Sections 6, 7, or 9. 6. TERMINATION BY COMPANY ---------------------- (a) Termination for Cause --------------------- Company may terminate this Agreement for "Cause" upon written notice to Employee. If Company terminates this Agreement for "Cause", Employee shall be entitled to receive his Base Salary through the effective date of his termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. (b) "Cause" Defined --------------- Termination of this Agreement for "Cause" shall mean (i) breach of any material provision of this Agreement by Employee which is not cured within a reasonable time after receipt by Employee of written notice of such breach from Company, or (ii) conviction, by a court of competent jurisdiction, of Employee of any felony or any other crime involving gross depravity or dishonesty. (c) Termination Without Cause ------------------------- Termination of this Agreement by Company for reasons other than (i) death, (ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial Term or any Renewal Term shall be referred to as a termination "without Cause". If this Agreement is terminated without Cause, Employee 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 -5- (the "Termination Date") following the day on which the notice is given (the "Notice Date"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day notice period. During such administrative leave, Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. If this Agreement is terminated without Cause, Employee shall be entitled to receive the Severance Benefits provided by Section 8. 7. TERMINATION BY EMPLOYEE ----------------------- (a) General ------- Employee may terminate this Agreement at any time, with or without "Good Reason". If Employee terminates this Agreement without "Good Reason", Employee shall provide Company with 60 days advance written notice. If Employee terminates this Agreement with Good Reason, Employee shall provide Company with 30 days advance written notice, which notice shall clearly identify the action or omission that Employee claims gives rise to Good Reason for termination of this Agreement. In order to terminate this Agreement for Good Reason, the notice of termination must be given to Company by Employee within 30 days of Employee's receipt of notice, whether written or oral, or actual knowledge of the action or omission that gave rise to Employee's Good Reason for termination. The termination of this Agreement shall be effective on the last day of the required notice period (the "Termination Date"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day or 60-day notice period. During such administrative leave, the Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. (b) Good Reason Defined ------------------- For purposes of this Agreement, "Good Reason" shall mean and include any of the following: (1) Without Employee's express written consent, the assignment to him of any duties that are not reasonably consistent 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 -6- him other than for Good Reason, or by Company upon the expiration of the Initial Term or any applicable Renewal Term. (2) A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time, other than a reduction of no more than 15% which applies to all Senior Executive Officers of Company. (3) The taking of any action by Company which would adversely affect Employee'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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, unless a comparable replacement program is offered to Employee or unless such action applies to all Senior Executive Officers. (4) 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. (5) Breach of any material provisions of this Agreement by Company. For purposes of this Section 7, the "Relevant Date" is the date of execution of this Agreement. For purposes of Section 9, the "Relevant Date" is the date specified in Section 9(e). (c) Company May Cure Good Reason ---------------------------- Within the 30 day notice period called for in Section 7(a), Company may rescind or otherwise cure any action or omission relied upon by Employee as constituting Good Reason for termination. If Company rescinds or otherwise cures such action or omission within this period, Employee's notice of termination will be automatically withdrawn and this Agreement will continue. (d) Effect of Good Reason Termination --------------------------------- If Employee terminates this Agreement for Good Reason, Employee shall be entitled to receive the Severance Benefits provided by Section 8 to the same extent as if this Agreement had been terminated by Company without Cause. -7- (e) Effect of Termination without Good Reason ----------------------------------------- If Employee terminates this Agreement without Good Reason, Employee shall be entitled to receive his Base Salary through the effective date of his termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. 8. SEVERANCE BENEFITS ------------------ (a) Eligibility ----------- Employee shall be eligible and entitled to receive the Severance Benefits provided by paragraph (b) if Employee's employment is terminated due to Permanent Disability pursuant to Section 5(b), if this Agreement is terminated by Company without Cause pursuant to Section 6(c), or if this Agreement is terminated by Employee for Good Reason pursuant to Section 7. In addition, Employee shall be eligible and entitled to receive the Severance Benefits provided by paragraph (b) if the Company notifies Employee of its desire to terminate this Agreement pursuant to Section 2(a) and at the time such notice is given the Company does not have "Cause" to terminate Employee's employment pursuant to Section 6. Similarly, if Company notifies Employee of its desire to modify this Agreement and such modification provides Employee with "Good Reason" to terminate this Agreement pursuant to Section 7 and Employee rejects such modification, Employee shall be entitled to receive the Severance Benefits called for by paragraph (b). (b) Severance Benefits ------------------ The "Severance Benefits" to which an eligible Employee shall be entitled pursuant to this section are limited to the following payments, benefits and reimbursements, which will continue throughout the "Severance Period" referred to in Section 8(c): (1) Company will continue to pay Employee his Base Salary as set forth in Section 3 (or as it may be adjusted from time to time), in equal bi-weekly installments. (2) Company also shall make a single "Incentive Compensation Payment" to Employee. The "Incentive Compensation Payment" shall equal the amount that would have been payable to Employee pursuant to all of the terms and provisions of the Company's MIP, as it may be amended or replaced from time to time, had Employee's employment continued until the end of the fiscal year of the Company in which Employee's Termination Date occurs. (This payment shall be in addition to any payment for a prior fiscal year -8- which has not yet been paid.) For purposes of calculating the amount that would have been due to Employee pursuant to the MIP (i) any provision of the MIP requiring continued employment will be disregarded; (ii) the Company shall assume that Employee's Base Salary would continue throughout the end of such fiscal year at the same rate in effect on the Termination Date; (iii) the actual performance of the Company shall be utilized; (iv) the Company shall assume that any subjective performance criteria or requirements were satisfied; and (v) all other factors impacting the calculation of the amounts due will be determined by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. The Incentive Compensation Payment will be paid at the same time as similar payments are paid to active employees. The Employee shall not be entitled to receive any compensation or grants pursuant to the Company's Long Term Incentive Plan, or any successor plan or program, following the Termination Date. (3) Company also intends that life, disability, accident and group health benefits and coverages (each an "Insurance Benefit" and collectively the "Insurance Benefits") substantially similar to those which Employee was receiving immediately prior to the Notice Date be made available to Employee following the Notice Date, but Company does not intend to duplicate Insurance Benefits provided by a successor employer. If and to the extent that and so long as such Insurance Benefits (or an Insurance Benefit) is not provided by a successor employer, Company will arrange to provide such Insurance Benefit or Insurance Benefits to Employee at a cost to Employee of not more than the cost to Employee of similar coverage immediately prior to the Notice Date. If an Insurance Benefit is not provided by a successor employer and Company, after a good faith effort, is unable to provide continued coverage to Employee with respect to one or more of such Insurance Benefits because of restrictions imposed by any insurance carrier that provides such Insurance Benefit or Benefits, in lieu of the unavailable Insurance Benefit or Benefits Company may pay Employee a monthly amount equal to 150% of the Company's share of the cost of providing such unavailable Insurance Benefit or Benefits to comparable executives in comparable circumstances. Such cost shall be determined conclusively by Company. Employee shall provide Company with such information concerning the Insurance Benefits provided to Employee by a successor employer as Company shall reasonably request and Company may decline to provide any Insurance Benefits to Employee unless and until Employee provides such information. Whether a particular Insurance Benefit provided by a successor employer is "substantially -9- similar" to a benefit provided to Employee prior to the Notice Date shall be determined by Company in the exercise of its discretion. (4) Company will continue to provide Employee with an automobile and an active membership in a country club in accordance with Section 3(b) and the policies and practices applicable to Senior Executive Officers, as such policies may be modified from time to time. (5) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable but which would become exercisable within 12 months from the Termination Date if Employee's employment were continued, shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (6) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which are subject to restrictions on the Notice Date shall, as of the Notice Date, automatically become free of all restrictions if and to the extent that such restrictions would have lapsed within 12 months of the Termination Date if Employee's employment were continued. (c) Severance Period ---------------- The Severance Benefits will continue throughout the "Severance Period". Generally, the Severance Period will be the 12 month period beginning on the Termination Date. If the Severance Benefits are due because this Agreement was not renewed by the Company, the Severance Period will be the 12 month period beginning on Employee's last day of active work. (d) COBRA ----- Employee has the right to continued health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA continuation period shall commence on Employee's Termination Date, but Company may be obligated to pay a portion of the cost of continued health care coverage during the Severance Period pursuant to Section 8(b)(3). -10- 9. CHANGE IN CONTROL OF COMPANY ---------------------------- (a) General ------- The Board recognizes that the continuing possibility of a "Change in Control" of Company is unsettling to Employee and other senior executives of Company. Therefore, the arrangements set forth below are being made to help assure a continuing dedication by Employee 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 Employee, 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 Employee's continued employment with Company, Company agrees that if a Change in Control of Company occurs during the Initial Term or any Renewal Term Employee shall be entitled to the special severance benefits provided in subparagraph (g) of this Section 9 if prior to the expiration of 24 months after the Change in Control of Company Employee terminates his employment with Company for Good Reason or Company terminates Employee's employment without Cause. If Employee triggers the application of this Section by terminating employment for Good Reason, he must do so within 120 days following Employee's actual knowledge or receipt of notice, whether written or oral, of the occurrence of the last event that constitutes Good Reason. (c) Permanent Disability -------------------- Any attempted termination of Employee's employment by Company for reasons of Permanent Disability pursuant to Section 5(b) following a Change in Control shall be treated as a termination by Company without Cause unless Employee is approved for and receives long term disability payments under Company's long term disability plan. In addition, following a Change in Control this Agreement may not be terminated pursuant to Section 5(b) due to Employee's Permanent Disability unless the incapacity giving rise to the Permanent Disability occurs prior to the occurrence of an event that might cause amounts to be payable to Employee pursuant to this Section 9. Once payments begin pursuant to this Section 9, this Agreement may not be terminated by Company pursuant to Section 5(b) due to Permanent Disability and any payments due pursuant to this Section 9 shall not cease or diminish on account of Employee's Permanent Disability. -11- (d) 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. -12- A "Potential Change in Control" shall be deemed to have occurred in any or all of the following instances: (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. (e) Good Reason Defined ------------------- For purposes of this Section, "Good Reason" shall have the meaning assigned to it in Section 8, with the following modifications: (1) The "Relevant Date" shall be the day prior to the Change in Control. (2) Paragraph (2) of Section 7(b) shall read as follows: A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time. (3) Paragraph (3) of Section 7(b) shall read as follows: -13- 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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, (or plans providing Employee with substantially similar benefits), the taking of any action by Company which would adversely affect Employee'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, or the failure of the Company to provide Employee with the number of paid vacation days to which Employee is then entitled on the basis of his years of service with the Company in accordance with the Company's normal vacation policy as in effect on the Relevant Date; (4) Two additional elements of Good Reason shall be added as follows: (6) Employee is assigned to, or Company's office at which Employee is principally employed on the Relevant Date is relocated to, a location which would require a round-trip commute to work from Employee's principal residence on the Relevant Date of more than 100 miles per day. (7) Failure of Company to obtain an agreement satisfactory to Employee from any successor to the business, or substantially all the assets, of Company to assume this Agreement or issue a substantially similar agreement. (f) Notice of Termination by Employee --------------------------------- Any termination by Employee under this Section 9 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. (g) Effect of Termination; Special Severance Benefits ------------------------------------------------- If Employee is entitled to receive a special severance benefit pursuant to Section 9(b) hereof, Company will provide Employee with the following special severance benefits in addition to the Severance Benefits to which Employee is entitled pursuant to Section 8: -14- (1) Within five days following Employee's termination, a lump sum severance payment will be made to Employee. The lump sum severance payment shall be in an amount equal to: (i) 2.5 times Employee's yearly Base Salary as set forth in Section 3 or as it may be increased from time to time; plus (ii) the greatest of (a) 2.5 times the average annual incentive compensation paid to Employee pursuant to the MIP (or any predecessor or successor plan) during the five fiscal years preceding the fiscal year in which the Change in Control occurs, or (b) an amount equal to 100% of the incentive compensation paid to Employee pursuant to the MIP (or any predecessor or successor plan) during the 12 month period prior to the Termination Date, or (c) an amount equal to 35% of Employee's Base Salary as set forth in Section 3 or as it may be increased from time to time; minus (iii) the total amounts due to Employee, if any, pursuant to Sections 8(b)(1) and (2). (2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2) will be accelerated and paid to Employee in one lump sum within five days following Employee's termination without any discount for early payment. For purposes of calculating the amounts due to Employee pursuant to Section 8(b)(2) the Company shall assume that the Company's performance and all other relevant factors for all future fiscal years will be the same as for the fiscal year prior to the fiscal year in which the Change in Control occurs. (3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be provided for 30 months following Employee's Termination Date rather than for the period specified in Section 8(c). In lieu of all fringe benefits other than those referred to in Sections 8(b)(3) and (4), Employee shall receive a lump sum payment equal to 20% of Employee's Base Salary as set forth in Section 3 as it may be increased from time to time. (4) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable and which do not become exercisable pursuant to Section 8(b)(5), shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (5) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which on the Notice Date are subject to restrictions which do not lapse pursuant to Section 8(b)(6) shall, as of that date, automatically become free of all restrictions. -15- Company shall amend, if necessary, any option or restricted stock agreements entered into between Company and Employee to be consistent with paragraphs (4) and (5). (h) Other Agreements ---------------- On execution of this Agreement, the letter agreement between Employee and Company concerning change in control benefits dated October 20, 1992, shall be null and void and of no further force or effect. Nothing in this Agreement is intended to modify any change of control provisions or protections provided to Employee by the SERP. (i) Legal Expenses -------------- If Employee, at any time, takes any legal action against Company for breach of this Section 9 or Section 10, Company shall reimburse Employee for all costs and expenses incurred by Employee to pursue such legal action, regardless of the outcome, unless the arbitrators appointed pursuant to Section 12(d) find Employee's action to have been frivolous and without merit. Although the dispute resolution provisions of Section 12 shall apply to any legal action involving a breach of this Section 9 and Section 10, the provisions of this Section 9(i) shall supersede conflicting provisions of Section 12(e). 10. CEILING ON CHANGE IN CONTROL BENEFITS ------------------------------------- (a) General ------- The Internal Revenue Code (the "Code") places significant tax burdens on Employee and Company if the total payments made to Employee due to a Change in Control exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company, by signing this Agreement Employee agrees that the present value of his "Total Payments" (as defined below) under this Agreement or any other agreement or arrangement with Company will not exceed an amount equal to two and ninety-nine hundredths (2.99) times his "Base Period Income" (as defined below). This is the maximum amount which Employee may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which Company may pay without loss of deduction under Section 280G of the Code. (b) Base Period Income ------------------ "Base Period Income" is an amount equal to Employee's "annualized includible compensation" for the "base period" as defined in Sections 280G (d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Employee's "annualized includible compensation" is the average of his annual taxable income from Company for the "base period", which is the five calendar years prior to the year in which Change in Control occurs. All of the rules set forth -16- in the applicable regulations apply for purposes of determining Employee's Base Period Income, his "annualized includible compensation", and his "base period". (c) Total Payments -------------- The "Total Payments" include the amount payable pursuant to Section 9(g) and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for Employee's benefit, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. (d) Procedural Matters ------------------ If Company believes that these rules will result in a reduction of the payments to which Employee is entitled under this Agreement, it will so notify Employee within 60 days following the Termination Date. Employee and Company will then, at Company's expense, retain legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants to provide an opinion or opinions concerning whether the Total Payments exceed the limit discussed above. Company will select the legal counsel, certified public accountants and executive compensation consultants. If Employee does not accept one or more of the parties selected by Company, Employee may provide Company with the names of legal counsel, certified public accountants and/or executive compensation consultants acceptable to Employee. If Company does not accept the party or parties selected by Employee, the legal counsel, certified public accounts and /or executive compensation consultants selected by Employee and Company, respectively, will select the legal counsel, certified public accountants and/or executive compensation consultants to provide the opinions required. At a minimum, the opinions required by this Section must set forth (1) the amount of Employee's Base Period Income, (2) the present value of the Total Payments and (3) the amount and present value of any excess parachute payments If the opinions state that there would be an excess parachute payment, Employee's payments under this Agreement will be reduced to the extent necessary to eliminate the excess. Employee will be allowed to choose the payment that should be reduced or eliminated, but the payment Employee chooses to reduce or eliminate must be a payment determined by such counsel to be includible in Total Payments. Employee will make his decision in writing and deliver it to Company within 30 days of receipt of such opinions. If Employee fails to so notify Company, Company will decide which payments to reduce or eliminate. If the legal counsel or certified public accountants selected to provide the opinions referred to above so requests in connection with the opinion required by this Section, a firm of recognized. -17- executive compensation consultants, selected by Employee and Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel or certified public accountants may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered before or after the Change in Control. If Company believes that Employee's Total Payments will exceed the limitations of this Section, Company shall provide Employee with a detailed explanation of the basis for its conclusion. Company then shall make payments to Employee, at the times stated above, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid after the opinions called for above have been received. If the Internal Revenue Service concludes in a final determination that the amounts paid to Employee exceed the limitations of this Section, as a general rule, the excess will be treated as a loan to Employee by Company, and shall be repayable on the 90th day following demand by Company, together with interest at the "applicable federal rate" provided in Section 1274(d) of the Code. In the event that the provisions of Section 280G and 4999 of the Code are repealed without succession, this Section shall be of no further force or effect. 11. COMPETITION ----------- (a) Restrictive Covenant -------------------- In consideration of Company's agreements contained herein and the payments to be made by it to Employee pursuant hereto, Employee 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 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which any of the businesses of Company are being conducted on the date of termination of this Agreement or within 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which the Company's strategic plan or any replacement plan (the "Strategic Plan"), as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement, discuss the possibility of Company conducting business within two years following the date of termination of this Agreement; or -18- (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 who was employed by Company or any Subsidiary immediately prior to such hiring or solicitation or during the prior one-year period. (b) Duration of Covenant -------------------- Generally, this restrictive covenant shall apply during the Initial Term and any Renewal Term and for the one-year period following the date of termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or any arbitrator). If the Competing Business in which Employee engages or intends to engage is a business involving the development or management of an age-restricted community, however, the limitations of Section 11(a)(1) shall apply during the Initial Term, any Renewal Term and for the two-year period following the date of the termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). This Restrictive Covenant shall not apply should the Agreement terminate on or after the date on which Employee attains age 65. (c) Remedies: Reasonableness ------------------------ Employee acknowledges and agrees that a breach of Employee 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 restraining and enjoining Employee 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 Employee. Employee 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) Employee 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 11, nor a release of Employee from his obligations thereunder. -19- (e) Competing Business ------------------ For purposes of this Agreement, Employee 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 of any business contemplated by Company's Strategic Plan as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement. Indirect participation in the operation or ownership of any such entity shall include any investment by Employee 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 which is listed and regularly traded on any national securities exchange or which is regularly traded over-the-counter). Employee shall not be deemed to be engaged in a "Competing Business" if, in any capacity enumerated above, he engages or participates, directly or indirectly, in the operation, ownership, or management of any proprietorship, partnership, corporation, or other business entity where Employee or the business entity in which he may be involved, either directly or indirectly, and together with any related individuals or entities, builds fewer than 25 homes per calendar year (with the number of homes to be determined by the number of permits pulled for such homes.) At the written request of Employee from time to time, Company shall furnish Employee with a written description of the business or businesses in which Company is then actively engaged. (f) Change in Control ----------------- The provisions of this Section shall lapse and be of no further force or effect if Employee's employment is terminated by Company without Cause, or by Employee for Good Reason, following a Change in Control, or if Company gives notice that it is involved in voluntary liquidation proceedings pursuant to Chapter 7 of the United States Bankruptcy Code (11 U.S.C. SS. 701 et seq.) or that the trustee has been ordered by the United States Bankruptcy Court, pursuant to a final and non-appealable order, to cease Company's operations pursuant to 11 U.S.C. SS. 1174 of the United States Bankruptcy Code. 12. DISPUTE RESOLUTION ------------------ (a) Mediation --------- Any and all disputes arising under, pertaining to or touching upon this Agreement or the statutory rights or obligations of either party hereto, shall, if not settled by negotiation, be subject to non-binding mediation. Excepted from this Section 12 is the right of Company or Employee to seek preliminary judicial relief with respect to a dispute should such action be necessary to avoid immediate, irreparable harm or damage pending the proceedings providing for in this Section -20- 12. Mediation shall be before an independent mediator selected by the parties pursuant to Section 12(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 16. 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 12(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 SECTION 12 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION 12(a). 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 1-16. If no such policy has been adopted, the arbitration shall be governed by the then current National Rules for the Resolution of Employment Disputes of the American Arbitration Association or its successor. Notwithstanding any provisions in such rules to the contrary, the 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 the applicable statute. 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 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. -21- 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 Employee was for Good Reason, Employee shall only be entitled to the Severance Benefits provided by Section 8 (or the special Change in Control severance benefits provided by Section 9 in the event of a Change in Control), 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 Employee all amounts to which he would be entitled under Section 8 if a Change in Control has not occurred or Section 9 if a Change in Control has occurred, calculated in either case on the assumption that Employee'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. Employee shall have the first strike. The parties also shall select the arbitrators from a panel list made available by the Association. Company and Employee each shall select one arbitrator from such panel list within ten days of receipt of such list. After Company and Employee 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 cost and expenses of any mediator shall be borne by Company. The costs and expenses of any arbitration shall be borne by the losing party, unless the arbitrator allocates such costs and expenses in a different manner in the arbitration award. 13. 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 Employee, his heirs, executors, administrators, and legal representatives, provided that the obligations of Employee may not be delegated. -22- 14. NON-DISPARAGEMENT ----------------- Employee 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, Company (including its officers, directors, employees, and agents) will not disparage Employee and will refrain from any action which would reasonably be expected to result in embarrassment to Employee or to materially and adversely affect his opportunities for employment. The preceding two sentences shall not apply to statements or allegations made in any pleading filed in connection with any legal proceeding or to disclosures required by applicable law, regulation, or order of court or governmental agency. 15. OTHER AGREEMENTS OF EMPLOYEE ---------------------------- Employee 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 Employee and any third party. 16. 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 Employee, to: Joseph F. Contadino 6649 E. Cholla Paradise Valley, AZ 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. -23- 17. 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 Employee and Company with respect to the relationship of Employee with Company. 18. GOVERNING LAW ------------- This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona. 19. CAPTIONS -------- The captions included herein are for convenience and shall not constitute a part of this Agreement. 20. 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 Employee and Company. 21. MITIGATION ---------- In the event that Employee's employment is terminated and payments become due to Employee pursuant to this Agreement, Employee shall have no duty to mitigate damages or to become reemployed by another employer. 22. TERMINATION OF EMPLOYMENT ------------------------- Termination of this Agreement by either party also shall result in the termination of Employee's employment relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment relationship continue after the termination of this Agreement. -24- 23 NO CONSTRUCTION AGAINST COMPANY ------------------------------- This Agreement is the result of negotiation between Company and Employee 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 Employee, regardless of which party drafted the provision at issue. DEL WEBB CORPORATION By: /s/ Robertson C. Jones ----------------------------------- Its: V.P. & Gen'l Counsel ---------------------------------- COMPANY /s/ Joseph F. Contadino ---------------------------------- JOSEPH F. CONTADINO EMPLOYEE -25- EX-10.36 12 EMPLOYMENT AGREEMENT WITH J. H. GLEASON Exhibit 10.36 DEL WEBB CORPORATION JOHN H. GLEASON EMPLOYMENT AGREEMENT TABLE OF CONTENTS Page 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1- 2. TERM OF AGREEMENT; DUTIES . . . . . . . . . . . . . . . . . . . . . -1- (a) Initial Term; Renewal; Employment Period Defined . . . . . -1- (b) Duties . . . . . . . . . . . . . . . . . . . . . . . . . . -1- (c) Employee Commitments . . . . . . . . . . . . . . . . . . . -2- (d) Other Programs . . . . . . . . . . . . . . . . . . . . . . -2- 3. COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . -2- (a) Base Salary . . . . . . . . . . . . . . . . . . . . . . . -2- (b) Incentive and Benefit Plans . . . . . . . . . . . . . . . -3- (c) Supplemental Executive Retirement Plan . . . . . . . . . . -3- 4. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . -3- 5. TERMINATION DUE TO DEATH OR DISABILITY . . . . . . . . . . . . . . -4- (a) Death . . . . . . . . . . . . . . . . . . . . . . . . . . -4- (b) Permanent Disability . . . . . . . . . . . . . . . . . . -4- (c) Salary Continuation . . . . . . . . . . . . . . . . . . . -5- (d) Lapse of Provisions . . . . . . . . . . . . . . . . . . . -5- 6. TERMINATION BY COMPANY . . . . . . . . . . . . . . . . . . . . . . -5- (a) Termination for Cause . . . . . . . . . . . . . . . . . . -5- (b) "Cause" Defined . . . . . . . . . . . . . . . . . . . . . -5- (c) Termination Without Cause . . . . . . . . . . . . . . . . -5- 7. TERMINATION BY EMPLOYEE . . . . . . . . . . . . . . . . . . . . . -6- (a) General . . . . . . . . . . . . . . . . . . . . . . . . . -6- (b) Good Reason Defined . . . . . . . . . . . . . . . . . . . -6- (c) Company May Cure Good Reason . . . . . . . . . . . . . .. -7- (d) Effect of Good Reason Termination . . . . . . . . . . . . -7- (e) Effect of Termination without Good Reason . . . . . . . . -8- 8. SEVERANCE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . -8- (a) Eligibility . . . . . . . . . . . . . . . . . . . . . . . -8- (b) Severance Benefits . . . . . . . . . . .. . . . . . . . . -8- (c) Severance Period . . . . . . . . . . . . . . . . . . . . -10- (d) COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . -10- -i- Page 9. CHANGE IN CONTROL OF COMPANY . . . . . . . . . . . . . . . . . . . -11- (a) General . . . . . . . . . . . . . . . . . . . . . . . . . -11- (b) Eligibility to Receive a Severance Benefit. . . . . . . . -11- (c) Permanent Disability. . . . . . . . . . . . . . . . . . . -11- (d) Change in Control Defined . . . . . . . . . . . . . . . . -12- (e) Good Reason Defined . . . . . . . . . . . . . . . . . . . -13- (f) Notice of Termination by Employee . . . . . . . . . . . . -14- (g) Effect of Termination; Special Severance Benefits . . . . -15- (h) Other Agreements. . . . . . . . . . . . . . . . . . . . . -16- (i) Legal Expenses. . . . . . . . . . . . . . . . . . . . . . -16- 10. CEILING ON CHANGE IN CONTROL BENEFITS. . . . . . . . . . . . . . . -16- (a) General . . . . . . . . . . . . . . . . . . . . . . . . . -16- (b) Base Period Income. . . . . . . . . . . . . . . . . . . . -17- (c) Total Payments. . . . . . . . . . . . . . . . . . . . . . -17- (d) Procedural Matters. . . . . . . . . . . . . . . . . . . . -17- 11. COMPETITION . . . . . . . . . . . . . . . . . . . . . . .. . . . . -18- (a) Restrictive Covenant. . . . . . . . . . . . . . . . . . . -18- (b) Duration of Covenant. . . . . . . . . . . . . . . . . . . -19- (c) Remedies; Reasonableness. . . . . . . . . . . . . . . . . -19- (d) Survival of Provision . . . . . . . . . . . . . . . . . . -20- (e) Competing Business. . . . . . . . . . . . . . . . . . . . -20- (f) Change in Control . . . . . . . . . . . . . . . . . . . . -20- 12. DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . -21- (a) Mediation . . . . . . . . . . . . . . . . . . . . . . . . -21- (b) Arbitration. . . . . . .. . . . . . . . . . . . . . . . . -21- (c) Damages . . . . . . . . . . . . . . . . . . . . . . . . . -22- (e) Selection of Mediator or Arbitrators. . . . . . . . . . . -22- (f) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . -23- 13. BENEFIT AND BINDING EFFECT . . . . . . . . . . . . . . . . . . . . -23- 14. NON-DISPARAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . -23- 15. OTHER AGREEMENTS OF EMPLOYEE . . . . . . . . . . . . . . . . . . . -23- 16. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23- 17. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . -24- ii Page 18. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . -24- 19. CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24- 20. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . -24- 21. MITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25- 22. TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . -25- 23. NO CONSTRUCTION AGAINST COMPANY. . . . . . . . . . . . . . . . . . -25- iii EMPLOYMENT AGREEMENT -------------------- This Employment Agreement (the "Agreement") is entered into as of the 11th day of April, 1997 between DEL WEBB CORPORATION, a Delaware corporation (the "Company"), and JOHN H. GLEASON (the "Employee"). 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) Initial Term; Renewal; Employment Period Defined ------------------------------------------------ Employee shall be employed by Company for the duties set forth below for the period beginning on April 11, 1997 and ending on June 30, 1998 (the "Initial Term"), unless sooner terminated in accordance with the provisions of this Agreement. This Agreement shall be automatically renewed at the end of the Initial Term for additional one-year periods commencing on each July 1 and ending on the next following June 30 ( a "Renewal Term"), unless either party serves notice of desire to terminate or modify this Agreement on the other. Such notice must be given at least 30 days before the end of the Initial Term or the applicable Renewal Term. The period of time commencing as of the first day of the Initial Term and ending on the effective date of the termination of employment of Employee under this or any successor agreement shall be referred to as the "Employment Period". (b) Duties ------ Employee shall be employed as the Senior Vice President of Community Planning and Development of Company. As Senior Vice President of Community Planning and Development, Employee shall be responsible for all of the duties and responsibilities described in the Job Description on file as of the date hereof with Company, including, but not limited to, identification, planning and execution of new and expansion communities. He shall assist with site acquisition negotiations and purchase, supervise and direct the Vice President of Land Development in identifying engineering and development costs and issues, and direct the entitlement process for new sites. Employee shall also direct the product design and discontinued properties departments of the Corporation. Employee also shall perform such additional duties related to the business and affairs of Company and its Subsidiaries as may be delegated to him 1 from time to time by the Board of Directors of Company (the "Board") or Company's Chief Executive Officer. Any additional duties delegated to Employee shall be reasonably consistent with Employee's position. 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. (c) Employee Commitments -------------------- Employee agrees that 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 and the Chief Executive Officer of Company. Employee also agrees that 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. (d) Other Programs -------------- As a general rule, this Agreement is intended to supplement and enhance the rights and benefits available to Employee as a senior executive officer of the Company. Accordingly, unless this Agreement or any other agreement or plan of Company specifically indicates otherwise, none of the rights and benefits provided to Employee pursuant to this Agreement are intended to replace the rights and benefits made available generally to other senior executive officers of the Company. 3. COMPENSATION ------------ Employee shall receive the following compensation for services: (a) Base Salary ----------- Employee shall receive "Base Salary" at the rate of $190,000 per year. Base Salary shall be payable as nearly as possible in equal bi-weekly installments (or in such other installments as the Company shall determine). The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executive officers. (b) Incentive and Benefit Plans --------------------------- Employee shall participate in any incentive compensation plans maintained by the Company for "Senior Executive Officers", as such term is defined below. For the 1996-1997 fiscal year, Employee's "Target Bonus", as that term is customarily used in conjunction with the 2 Company's Annual Management Incentive Plan (the "MIP"), shall be 60% of Employee's Base Salary, with the actual amount of the bonus payment to be determined in accordance with all of the terms and provisions of the MIP, as it may be amended from time to time. The Employee's Target Bonus, and all other terms and conditions of Employee's participation in the MIP (including other bonus levels and performance goals) may be changed from time to time by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. Employee also shall have the right to participate in any and all 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 Senior Executive Officers, all in accordance with the terms and conditions of the plans. Company will provide Employee with an automobile and an active membership in a country club of Employee's choice in accordance with the policies and practices applicable to Senior Executive Officers. The automobile and country club policies for Senior Executive Officers may be modified from time to time. For purposes of this Agreement, the term "Senior Executive Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice President or Vice President. (c) Supplemental Executive Retirement Plan -------------------------------------- Employee is a participant in the Company's Supplemental Executive Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be entered into between Employee and Company pursuant to which Employee shall receive enhanced treatment for purposes of the SERP. 4. CONFIDENTIALITY --------------- Employee 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 Information". The term "Confidential Information" includes, but is 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 Employee's employment hereunder. The term "Confidential Information" does not include any material that Company has already disclosed to the public and is in the public domain. This covenant and agreement of Employee shall survive this Agreement and continue to be binding upon Employee 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. Employee acknowledges that, in the event of his breach of the confidentiality provisions of this Section 4, money damages will not sufficiently compensate Company or the applicable 3 Subsidiary for its injury. Employee accordingly agrees that in addition to such money damages, Employee may be restrained and enjoined from continuing breach of the provisions of this Section 4 without any bond or other security. Employee also acknowledges that any breach of this Section 4 would result in irreparable damage to Company or the applicable Subsidiary. 5. TERMINATION DUE TO DEATH OR DISABILITY -------------------------------------- (a) Death ----- This Agreement shall terminate upon Employee's death. Employee's estate shall be entitled to receive the Base Salary due through the date of his death. In addition, Employee's Base Salary (as determined pursuant to Section 3) as in effect at the time of his death will be continued for a period of 12 calendar months following the date of his death. The continued salary payments will be made to Employee's spouse, if Employee is married and living with Employee's spouse on the date of death. If Employee is not married and living with Employee's spouse on the date of death, the continued salary payments will be made to Employee's estate. Payments under this paragraph may be made to a designated beneficiary, in lieu of Employee's estate, where Employee has made a written request to Company designating a beneficiary, and the Company, in its discretion, has approved the requested designation made by Employee. The death benefit provided pursuant to this Section 5 is intended to be in addition to any other death benefit provided pursuant to any other plan or program sponsored by the Company except the Executive Spouse Benefit authorized by the Human Resources Committee of the Board for officers of the Company, which is replaced by this Agreement. (b) Permanent Disability -------------------- At Company's option, this Agreement also shall terminate in the event of Employee's "Permanent Disability" upon notice in writing to Employee to that effect. For purposes of this Agreement, "Permanent Disability" shall mean that because of physical or mental illness or disability, with or without accommodation, Employee shall have been continuously unable to perform his duties hereunder for a consecutive period of 180 days. If this Agreement is terminated due to Employee's Permanent Disability, Employee shall receive the Severance benefits provided by Section 8. (c) Salary Continuation ------------------- If Employee is absent from work and unable to perform his duties due to a physical or mental illness or disability, Employee shall continue to receive Base Salary until such time as this Agreement is terminated. Company may not terminate this Agreement without Cause pursuant to Section 6(c) during the period of absence. Rather, Company may only terminate this 4 Agreement because of Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section 6(a). The period of time during which Employee's Base Salary is continued pursuant to this Section 5(c) shall be charged against Employee's available sick leave and then against Employee's available vacation. (d) Lapse of Provisions ------------------- This Section 5 shall cease to apply following the termination of Employee's employment pursuant to Sections 6, 7, or 9. 6. TERMINATION BY COMPANY ---------------------- (a) Termination for Cause --------------------- Company may terminate this Agreement for "Cause" upon written notice to Employee. If Company terminates this Agreement for "Cause", Employee shall be entitled to receive his Base Salary through the effective date of his termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. (b) "Cause" Defined --------------- Termination of this Agreement for "Cause" shall mean (i) breach of any material provision of this Agreement by Employee which is not cured within a reasonable time after receipt by Employee of written notice of such breach from Company, or (ii) conviction, by a court of competent jurisdiction, of Employee of any felony or any other crime involving gross depravity or dishonesty. (c) Termination Without Cause ------------------------- Termination of this Agreement by Company for reasons other than (i) death, (ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial Term or any Renewal Term shall be referred to as a termination "without Cause". If this Agreement is terminated without Cause, Employee 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"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day notice period. During such administrative leave, Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. If this Agreement is terminated without Cause, Employee shall be entitled to receive the Severance benefits provided by Section 8. 5 7. TERMINATION BY EMPLOYEE ----------------------- (a) General ------- Employee may terminate this Agreement at any time, with or without "Good Reason". If Employee terminates this Agreement without "Good Reason", Employee shall provide Company with 60 days advance written notice. If Employee terminates this Agreement with Good Reason, Employee shall provide Company with 30 days advance written notice, which notice shall clearly identify the action or omission that Employee claims gives rise to Good Reason for his termination of this Agreement. In order to terminate this Agreement for Good Reason, the notice of termination must be given to Company by Employee within 30 days of Employee's receipt of notice, whether written or oral, or actual knowledge of the action or omission that gave rise to Employee's Good Reason for termination. The termination of this Agreement shall be effective on the last day of the required notice period (the "Termination Date"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day or 60-day notice period. During such administrative leave, the Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. (b) Good Reason Defined ------------------- For purposes of this Agreement, "Good Reason" shall mean and include any of the following: (1) Without Employee's express written consent, the assignment to him of any duties that are not reasonably consistent 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 Initial Term or any applicable Renewal Term. (2) A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time, other than a reduction of no more than 15% which applies to all Senior Executive Officers of Company. 6 (3) The taking of any action by Company which would adversely affect Employee'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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, unless a comparable replacement program is offered to Employee or unless such action applies to all Senior Executive Officers. (4) 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. (5) Breach of any material provisions of this Agreement by Company. For purposes of this Section 7, the "Relevant Date" is the date of execution of this Agreement. For purposes of Section 9, the "Relevant Date" is the date specified in Section 9(e). (c) Company May Cure Good Reason ---------------------------- Within the 30 day notice period called for by Section 7(a), Company may rescind or otherwise cure any action or omission relied upon by Employee as constituting Good Reason for termination. If Company rescinds or otherwise cures such action or omission within this period, Employee's notice of termination will be automatically withdrawn and this Agreement will continue. (d) Effect of Good Reason Termination --------------------------------- If Employee terminates this Agreement for Good Reason, Employee shall be entitled to receive the Severance benefits provided by Section 8 to the same extent as if this Agreement had been terminated by Company without Cause. (e) Effect of Termination Without Good Reason ----------------------------------------- If Employee terminates this Agreement without Good Reason, Employee shall be entitled to receive his Base Salary through the effective date of his termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. 7 8. SEVERANCE BENEFITS ------------------ (a) Eligibility ----------- Employee shall be eligible and entitled to receive the Severance benefits provided by paragraph (b) if Employee's employment is terminated due to Permanent Disability pursuant to Section 5(b), if this Agreement is terminated by Company without Cause pursuant to Section 6(c), or if this Agreement is terminated by Employee for Good Reason pursuant to Section 7. In addition, Employee shall be eligible and entitled to receive the Severance benefits provided by paragraph (b) if the Company notifies Employee of its desire to terminate this Agreement pursuant to Section 2(a) and at the time such notice is given the Company does not have "Cause" to terminate Employee's employment pursuant to Section 6. Similarly, if Company notifies Employee of its desire to modify this Agreement and such modification provides Employee with "Good Reason" to terminate this Agreement pursuant to Section 7 and Employee rejects such modification, Employee shall be entitled to receive the Severance benefits called for by paragraph (b). (b) Severance Benefits ------------------ The "Severance Benefits" to which an eligible Employee shall be entitled pursuant to this section are limited to the following payments, benefits and reimbursements, which will continue throughout the "Severance Period" referred to in Section 8(c): (1) Company will continue to pay Employee his Base Salary as set forth in Section 3 (or as it may be adjusted from time to time), in equal bi-weekly installments. (2) Company also shall make a single "Incentive Compensation Payment" to Employee. The "Incentive Compensation Payment" shall equal the amount that would have been payable to Employee pursuant to all of the terms and provisions of the Company's MIP, as it may be amended or replaced from time to time, had Employee's employment continued until the end of the fiscal year of the Company in which Employee's Termination Date occurs. (This payment shall be in addition to any payment for a prior fiscal year which has not yet been paid.) For purposes of calculating the amount that would have been due to Employee pursuant to the MIP (i) any provision of the MIP requiring continued employment will be disregarded; (ii) the Company shall assume that Employee's Base Salary would continue throughout the end of such fiscal year at the same rate in effect on the Termination Date; (ii) the actual performance of the Company shall be utilized; (iv) the Company shall assume that any subjective performance 8 criteria or requirements were satisfied; and (v) all other factors impacting the calculation of the amounts due will be determined by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. The Incentive Compensation Payment will be paid at the same time as similar payments are paid to active employees. The Employee shall not be entitled to receive any compensation or grants pursuant to the Company's Long Term Incentive Plan, or any successor plan or program, following the Termination Date. (3) Company also intends that life, disability, accident and group health benefits and coverages (each an "Insurance Benefit" and collectively the "Insurance Benefits") substantially similar to those which Employee was receiving immediately prior to the Notice Date be made available to Employee following the Notice Date, but Company does not intend to duplicate Insurance Benefits provided by a successor employer. If and to the extent that and so long as such Insurance Benefits (or an Insurance Benefit) is not provided by a successor employer, Company will arrange to provide such Insurance Benefit or Insurance Benefits to Employee at a cost to Employee of not more than the cost to Employee of similar coverage immediately prior to the Notice Date. If an Insurance Benefit is not provided by a successor employer and Company, after a good faith effort, is unable to provide continued coverage to Employee with respect to one or more of such Insurance Benefits because of restrictions imposed by any insurance carrier that provides such Insurance Benefit or Benefits, in lieu of the unavailable Insurance Benefit or Benefits, Company may pay Employee a monthly amount equal to 150% of the Company's share of the cost of providing such unavailable Insurance Benefit or Benefits to comparable executives in comparable circumstances. Such cost shall be determined conclusively by Company. Employee shall provide Company with such information concerning the Insurance Benefits provided to Employee by a successor employer as Company shall reasonably request and Company may decline to provide any Insurance Benefits to Employee unless and until Employee provides such information. Whether a particular Insurance Benefit provided by a successor employer is "substantially similar" to a benefit provided to Employee prior to the Notice Date shall be determined by Company in the exercise of its discretion. (4) Company will continue to provide Employee with an automobile and an active membership in a country club in accordance with Section 3(b) and the policies and practices applicable to Senior Executive Officers, as such policies may be modified from time to time. 9 (5) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable but which would become exercisable within 12 months from the Termination Date if Employee's employment were continued, shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (6) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which are subject to restrictions on the Notice Date shall, as of the Notice Date, automatically become free of all restrictions if and to the extent that such restrictions would have lapsed within 12 months of the Termination Date if Employee's employment were continued. (c) Severance Period ---------------- The Severance Benefits will continue throughout the "Severance Period". Generally, the Severance Period will be the 12 month period beginning on the Termination Date. If the Severance Benefits are due because this Agreement was not renewed by the Company, the Severance Period will be the 12 month period beginning on Employee's last day of active work. (d) COBRA ----- Employee has the right to continued health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA continuation period shall commence on Employee's Termination Date, but Company may be obligated to pay a portion of the cost of continued health care coverage during the Severance Period pursuant to Section 8(b)(3). 9. CHANGE IN CONTROL OF COMPANY ---------------------------- (a) General ------- The Board recognizes that the continuing possibility of a "Change in Control" of Company is unsettling to Employee and other senior executives of Company. Therefore, the arrangements set forth below are being made to help assure a continuing dedication by Employee 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 Employee, without being influenced by the uncertainties of his own situation, to assess and advise the Board whether such proposals would 10 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 Employee's continued employment with Company, Company agrees that if a Change in Control of Company occurs during the Initial Term or any Renewal Term Employee shall be entitled to the special severance benefits provided in subparagraph (g) of this Section 9 if prior to the expiration of 24 months after the Change in Control of Company Employee terminates his employment with Company for Good Reason or Company terminates Employee's employment without Cause. If Employee triggers the application of this Section by terminating employment for Good Reason, he must do so within 120 days following Employee's actual knowledge or receipt or notice, whether written or oral, of the occurrence of the last event that constitutes Good Reason. (c) Permanent Disability -------------------- Any attempted termination of Employee's employment by Company for reasons of Permanent Disability pursuant to Section 5(b) following a Change in Control shall be treated as a termination by Company without Cause unless Employee is approved for and receives long term disability payments under Company's long term disability plan. In addition, following a Change in Control this Agreement may not be terminated pursuant to Section 5(b) due to Employee's Permanent Disability unless the incapacity giving rise to the Permanent Disability occurs prior to the occurrence of an event that might cause amounts to be payable to Employee pursuant to this Section 9. Once payments begin pursuant to this Section 9, this Agreement may not be terminated by Company pursuant to Section 5(b) due to Permanent Disability and any payments due pursuant to this Section 9 shall not cease or diminish on account of Employee's Permanent Disability. (d) 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 11 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: (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; 12 (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. (e) Good Reason Defined ------------------- For purposes of this Section, "Good Reason" shall have the meaning assigned to it in Section 7, with the following modifications: (1) The "Relevant Date" shall be the day prior to the Change in Control. (2) Paragraph (2) of Section 7(b) shall read as follows: A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time. (3) Paragraph (3) of Section 7(b) shall read as follows: 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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, (or plans providing Employee with substantially similar benefits), the taking of any action by Company which would adversely affect Employee's participation in or materially reduce his benefits under any of such plans or deprive him of any material fringe benefit enjoyed by him 13 as of the Relevant Date or any later date, or the failure of the Company to provide Employee with the number of paid vacation days to which Employee is then entitled on the basis of his years of service with the Company in accordance with the Company's normal vacation policy as in effect on the Relevant Date; (4) Two additional elements of Good Reason shall be added as follows: (6) Employee is assigned to, or Company's office at which Employee is principally employed on the Relevant Date is relocated to, a location which would require a round-trip commute to work from Employee's principal residence on the Relevant Date of more than 100 miles per day. (7) Failure of Company to obtain an agreement satisfactory to Employee from any successor to the business, or substantially all the assets, of Company to assume this Agreement or issue a substantially similar agreement. (f) Notice of Termination By Employee --------------------------------- Any termination by Employee under this Section 9 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. (g) Effect of Termination; Special Severance Benefits ------------------------------------------------- If Employee is entitled to receive a special severance benefit pursuant to Section 9(b) hereof, Company will provide Employee with the following special severance benefits in addition to the Severance Benefits to which Employee is entitled pursuant to Section 8: (1) Within five days following Employee's termination, a lump sum severance payment will be made to Employee. The lump sum severance payment shall be in an amount equal to: (i) 2.5 times Employee's yearly Base Salary as set forth in Section 3 or as it may be increased from time to time; plus (ii) the greatest of (a) 2.5 times the average annual incentive compensation paid to Employee pursuant to the MIP (or any predecessor or successor plan) during the five fiscal years preceding the fiscal year in which the Change in Control occurs, or (b) an amount equal to 100% of the incentive compensation paid to Employee pursuant to the MIP (or any predecessor 14 or successor plan) during the 12 month period prior to the Termination Date, or (c) an amount equal to 35% of Employee's Base Salary as set forth in Section 3 or as it may be increased from time to time; minus (iii) the total amounts due to Employee, if any, pursuant to Sections 8(b)(1) and (2). (2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2) will be accelerated and paid to Employee in one lump sum within five days following Employee's termination without any discount for early payment. For purposes of calculating the amounts due to Employee pursuant to Section 8(b)(2) the Company shall assume that the Company's performance and all other relevant factors for all future fiscal years will be the same as for the fiscal year prior to the fiscal year in which the Change in Control occurs. (3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be provided for 30 months following Employee's Termination Date rather than for the period specified in Section 8(c). In lieu of all fringe benefits other than those referred to in Sections 8(b)(3) and (4), Employee shall receive a lump sum payment equal to 20% of Employee's Base Salary as set forth in Section 3 as it may be increased from time to time. (4) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable and which do not become exercisable pursuant to Section 8(b)(5), shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (5) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which on the Notice Date are subject to restrictions which do not lapse pursuant to Section 8(b)(6) shall, as of that date, automatically become free of all restrictions. Company shall amend, if necessary, any option or restricted stock agreements entered into between Company and Employee to be consistent with paragraphs (4) and (5). (h) Other Agreements ---------------- On execution of this Agreement, the letter agreement between Employee and Company concerning change in control benefits dated February 1, 1990, shall be null and void and of no 15 further force or effect. Nothing in this Agreement is intended to modify any change of control provisions or protections provided to Employee by the SERP. (i) Legal Expenses -------------- If Employee, at any time, takes any legal action against Company for breach of this Section 9 or Section 10, Company shall reimburse Employee for all costs and expenses incurred by Employee to pursue such legal action, regardless of the outcome, unless the arbitrators appointed pursuant to Section 12(d) find Employee's action to have been frivolous and without merit. Although the dispute resolution provisions of Section 12 shall apply to any legal action involving a breach of this Section 9 and Section 10, the provisions of this Section 9(i) shall supersede conflicting provisions of Section 12(e). 10. CEILING ON CHANGE IN CONTROL BENEFITS ------------------------------------- (a) General ------- The Internal Revenue Code (the "Code") places significant tax burdens on Employee and Company if the total payments made to Employee due to a Change in Control exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company, by signing this Agreement Employee agrees that the present value of his "Total Payments" (as defined below) under this Agreement or any other agreement or arrangement with Company will not exceed an amount equal to two and ninety-nine hundredths (2.99) times his "Base Period Income" (as defined below). This is the maximum amount which Employee may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which Company may pay without loss of deduction under Section 280G of the Code. (b) Base Period Income ------------------ "Base Period Income" is an amount equal to Employee's "annualized includible compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Employee's "annualized includible compensation" is the average of his annual taxable income from Company for the "base period", which is the five calendar years prior to the year in which the Change in Control occurs. All of the rules set forth in the applicable regulations apply for purposes of determining Employee's Base Period Income, his "annualized includible compensation, and his "base period". (c) Total Payments -------------- The "Total Payments" include the amount payable pursuant to Section 9(g) and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the 16 regulations adopted thereunder) to or for Employee's benefit, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. (d) Procedural Matters ------------------ If Company believes that these rules will result in a reduction of the payments to which Employee is entitled under this Agreement, it will so notify Employee within 60 days following the Termination Date. Employee and Company will then, at Company's expense, retain legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants to provide an opinion or opinions concerning whether the Total Payments exceed the limit discussed above. Company will select the legal counsel, certified public accountants and executive compensation consultants. If Employee does not accept one or more of the parties selected by Company, Employee may provide Company with the names of legal counsel, certified public accountants and/or executive compensation consultants acceptable to Employee. If Company does not accept the party or parties selected by Employee, the legal counsel, certified public accountants and/or executive compensation consultants selected by Employee and Company, respectively, will select the legal counsel, certified public accountants and/or executive compensation consultants to provide the opinions required. At a minimum, the opinions required by this Section must set forth (1) the amount of Employee's Base Period Income, (2) the present value of the Total Payments and (3) the amount and present value of any excess parachute payments. If the opinions state that there would be an excess parachute payment, Employee's payments under this Agreement will be reduced to the extent necessary to eliminate the excess. Employee will be allowed to choose the payment that should be reduced or eliminated, but the payment Employee chooses to reduce or eliminate must be a payment determined by such counsel to be includible in Total Payments. Employee will make his decision in writing and deliver it to Company within 30 days of receipt of such opinions. If Employees fails to so notify Company, Company will decide which payments to reduce or eliminate. If the legal counsel or certified public accountants selected to provide the opinions referred to above so requests in connection with the opinion required by this Section, a firm of recognized executive compensation consultants, selected by Employee and Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel or certified public accountants may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered before or after the Change in Control. If Company believes that Employee's Total Payments will exceed the limitations of this Section, Company shall provide Employee with a detailed explanation of the basis for its 17 conclusion. Company then shall make payments to Employee, at the times stated above, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid after the opinions called for above have been received. If the Internal Revenue Service concludes in a final determination that the amounts paid to Employee exceed the limitations of this Section, as a general rule, the excess will be treated as a loan to Employee by Company, and shall be repayable on the 90th day following demand by Company, together with interest at the "applicable federal rate" provided in Section 1274(d) of the Code. In the event that the provisions of Section 280G and 4999 of the Code are repealed without succession, this Section shall be of no further force or effect. 11. COMPETITION ----------- (a) Restrictive Covenant -------------------- In consideration of Company's agreements contained herein and the payments to be made by it to Employee pursuant hereto, Employee 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 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which any of the businesses of Company are being conducted on the date of termination of this Agreement or within 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which the Company's strategic plan or any replacement plan (the "Strategic Plan"), as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement, discusses the possibility of Company 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 who was employed by Company or any Subsidiary immediately prior to such hiring or solicitation or during the prior one-year period. 18 (b) Duration of Covenant -------------------- Generally, this restrictive covenant shall apply during the Initial Term and any Renewal Term and for the one-year period following the date of termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). If the Competing Business in which Employee engages or intends to engage is a business involving the development or management of an age-restricted community, however, the limitations of Section 11(a)(l) shall apply during the Initial Term, any Renewal Term and for the two-year period following the date of the termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). This Restrictive Covenant shall not apply should the Agreement terminate on or after the date on which Employee attains age 65. (c) Remedies; Reasonableness ------------------------ Employee acknowledges and agrees that a breach by Employee 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 restraining and enjoining Employee 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 Employee. Employee 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) Employee 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 11, nor a release of Employee from his obligations thereunder. (e) Competing Business ------------------ For purposes of this Agreement, Employee 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 19 contemplated by Company's Strategic Plan as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement. Indirect participation in the operation or ownership of any such entity shall include any investment by Employee 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 which is listed and regularly traded on any national securities exchange or which is regularly traded over-the-counter). Employee shall not be deemed to be engaged in a "Competing Business" if, in any capacity enumerated above, he engages or participates, directly or indirectly, in the operation, ownership, or management of any proprietorship, partnership, corporation, or other business entity where Employee or the business entity in which he may be involved, either directly or indirectly, and together with any related individuals or entities, builds fewer than 25 homes per calendar year (with the number of homes to be determined by the number of permits pulled for such homes). At the written request of Employee from time to time, Company shall furnish Employee with a written description of the business or businesses in which Company is then actively engaged. (f) Change in Control ----------------- The provisions of this Section shall lapse and be of no further force or effect if Employee's employment is terminated by Company without Cause, or by Employee for Good Reason, following a Change in Control, or if Company gives notice that it is involved in voluntary liquidation proceedings pursuant to Chapter 7 of the United States Bankruptcy Code (11 U.S.C. SS 701 et seq.) or that the trustee has been ordered by the United States Bankruptcy Court, pursuant to a final and non-appealable order, to cease Company's operations pursuant to 11 U.S.C. SS 1174 of the United States Bankruptcy Code. 12. DISPUTE RESOLUTION ------------------ (a) Mediation --------- Any and all disputes arising under, pertaining to or touching upon this Agreement or the statutory rights or obligations of either party hereto, shall, if not settled by negotiation, be subject to nonbinding mediation. Excepted from this Section 12 is the right of Company or Employee to seek preliminary judicial relief with respect to a dispute should such action be necessary to avoid immediate, irreparable harm or damage pending the proceedings provided for in this Section 12. Mediation shall be before an independent mediator selected by the parties pursuant to Section 12(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 16. 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. 20 (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 12(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 SECTION 12 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION 12(a). 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 1-16. If no such policy has been adopted, the arbitration shall be governed by the then current National Rules for the Resolution of Employment Disputes of the American Arbitration Association or its successor. Notwithstanding any provisions in such rules to the contrary, the 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 the applicable statute. 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 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 Employee was for Good Reason, Employee shall only be entitled to the Severance Benefits provided by Section 8 (or the special Change in Control severance benefits provided by Section 9 in the event of a Change in Control), and, in either case, payment of her 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 Employee all amounts to which he would be entitled under Section 8 if a Change in Control has not occurred or Section 9 if a 21 Change in Control has occurred, calculated in either case on the assumption that Employee'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. Employee shall have the first strike. The parties also shall select the arbitrators from a panel list made available by the Association. Company and Employee each shall select one arbitrator from such panel list within ten days of receipt of such list. After Company and Employee 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 mediator shall be borne by Company. The costs and expenses of any arbitration shall be borne by the losing party, unless the arbitrator allocates such costs and expenses in a different manner in the arbitration award. 13. 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 Employee, his heirs, executors, administrators, and legal representatives, provided that the obligations of Employee may not be delegated. 14. NON-DISPARAGEMENT ----------------- Employee 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, Company (including its officers, directors, employees, and agents) will not disparage Employee and will refrain from any action which would reasonably be expected to result in embarrassment to Employee or to materially and adversely affect his opportunities for employment. The preceding two sentences shall not apply to statements or allegations made in any pleading filed 22 in connection with any legal proceeding or to disclosures required by applicable law, regulation, or order of court or governmental agency. 15. OTHER AGREEMENTS OF EMPLOYEE ---------------------------- Employee 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 Employee and any third party. 16. 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 Employee, to: John H. Gleason 7228 N. Red Ledge Dr. Paradise Valley, AZ 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. 17. 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 Employee and Company with respect to the relationship of Employee with Company. 18. GOVERNING LAW ------------- This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona. 19. CAPTIONS -------- 23 The captions included herein are for convenience and shall not constitute a part of this Agreement. 20. 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 Employee and Company. 21. MITIGATION ---------- In the event that Employee's employment is terminated and payments become due to Employee pursuant to this Agreement, Employee shall have no duty to mitigate damages or to become re-employed by another employer. 22. TERMINATION OF EMPLOYMENT ------------------------- The termination of this Agreement by either party also shall result in the termination of Employee's employment relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment relationship continue after the termination of this Agreement. 23. NO CONSTRUCTION AGAINST COMPANY ------------------------------- This Agreement is the result of negotiation between Company and Employee 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 Employee, regardless of which party drafted the provision at issue. DEL WEBB CORPORATION By: /s/ Robertson C. Jones ---------------------------------- Its: V.P. & General Council -------------------------------- COMPANY 24 /s/ John H. Gleason ------------------------------------ JOHN H. GLEASON EMPLOYEE EX-10.37 13 EMPLOYMENT AGREEMENT WITH L. HANNEMAN Exhibit 10.37 DEL WEBB CORPORATION LEROY C. HANNEMAN EMPLOYMENT AGREEMENT TABLE OF CONTENTS Page 1. DEFINITIONS............................................................ 1 2. TERM OF AGREEMENT; DUTIES.............................................. 1 (a) Initial Term; Renewal; Employment Period Defined.............. 1 (b) Duties........................................................ 1 (c) Employee Commitments.......................................... 2 (d) Other Programs................................................ 2 3. COMPENSATION........................................................... 2 (a) Base Salary................................................... 2 (b) Incentive and Benefit Plans................................... 2 (c) Supplemental Executive Retirement Plan........................ 3 4. CONFIDENTIALITY........................................................ 3 5. TERMINATION DUE TO DEATH OR DISABILITY................................. 4 (a) Death......................................................... 4 (b) Permanent Disability.......................................... 4 (c) Salary Continuation........................................... 4 (d) Lapse of Provisions........................................... 5 6. TERMINATION BY COMPANY................................................. 5 (a) Termination for Cause......................................... 5 (b) "Cause" Defined............................................... 5 (c) Termination Without Cause..................................... 5 7. TERMINATION BY EMPLOYEE................................................ 6 (a) General....................................................... 6 (b) Good Reason Defined........................................... 6 (c) Company May Cure Good Reason.................................. 7 (d) Effect of Good Reason Termination............................. 7 (e) Effect of Termination without Good Reason..................... 7 8. SEVERANCE BENEFITS..................................................... 8 (a) Eligibility................................................... 8 (b) Severance Benefits............................................ 8 (c) Severance Period.............................................. 10 (d) COBRA......................................................... 10 - i - Page 9. CHANGE IN CONTROL OF COMPANY........................................... 10 (a) General....................................................... 10 (b) Eligibility to Receive a Severance Benefit.................... 11 (c) Permanent Disability.......................................... 11 (d) Change in Control Defined..................................... 11 (e) Good Reason Defined........................................... 13 (f) Notice of Termination by Employee............................. 14 (g) Effect of Termination; Special Severance Benefits............. 14 (h) Other Agreements.............................................. 15 (i) Legal Expenses................................................ 16 10. CEILING ON CHANGE IN CONTROL BENEFITS.................................. 16 (a) General....................................................... 16 (b) Base Period Income............................................ 16 (c) Total Payments................................................ 16 (d) Procedural Matters............................................ 17 11. COMPETITION............................................................ 18 (a) Restrictive Covenant.......................................... 18 (b) Duration of Covenant ......................................... 19 (c) Remedies; Reasonablenes ...................................... 19 (d) Survival of Provision ........................................ 19 (e) Competing Business ........................................... 19 (f) Change in Control ............................................ 20 12. DISPUTE RESOLUTION .................................................... 20 (a) Mediation .................................................... 20 (b) Arbitration .................................................. 20 (c) Damages ...................................................... 21 (d) Selection of Mediator or Arbitrators ......................... 21 (e) Expenses ..................................................... 22 13. BENEFIT AND BINDING EFFECT ............................................ 22 14. NON-DISPARAGEMENT ..................................................... 22 15. OTHER AGREEMENTS OF EMPLOYEE .......................................... 22 16. NOTICES ............................................................... 22 17. ENTIRE AGREEMENT ...................................................... 23 - ii - Page 18. GOVERNING LAW ......................................................... 23 19. CAPTIONS .............................................................. 23 20. SEVERABILITY .......................................................... 23 21. MITIGATION ............................................................ 24 22. TERMINATION OF EMPLOYMENT ............................................. 24 23. NO CONSTRUCTION AGAINST COMPANY ....................................... 24 -iii- EMPLOYMENT AGREEMENT -------------------- This Employment Agreement (the "Agreement") is entered into as of the 11th day of April, 1997 between DEL WEBB CORPORATION, a Delaware corporation (the "Company"), and LEROY C. HANNEMAN (the "Employee"). 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) Initial Term; Renewal; Employment Period Defined ------------------------------------------------ Employee shall be employed by Company for the duties set forth below for the period beginning on April 11, 1997 and ending on June 30, 1998 (the "Initial Term"), unless sooner terminated in accordance with the provisions of this Agreement. This Agreement shall be automatically renewed at the end of the Initial Term for additional one-year periods commencing on each July 1 and ending on the next following June 30 ( a "Renewal Term"), unless either party serves notice of desire to terminate or modify this Agreement on the other. Such notice must be given at least 30 days before the end of the Initial Term or the applicable Renewal Term. The period of time commencing as of the first day of the Initial Term and ending on the effective date of the termination of employment of Employee under this or any successor agreement shall be referred to as the "Employment Period". (b) Duties ------ Employee shall be employed as an Executive Vice President of Company. As Executive Vice President, Employee shall perform all of the duties and responsibilities described in the Job Description on file as of the date hereof with Company. Such duties and responsibilities include, but are not limited to, Employee's duty to plan, organize, direct and control operational activities for all Sun City communities. He shall direct activities of Sun City communities in all functional areas including land planning, land use entitlements, product design and control, construction, sales, marketing, customer service, human resources and accounting. Employee shall further participate in major Company decisions affecting profitability, cash flow, and establishment of - 1 - short term and long range objectives, plans and policies. Employee 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") or Company's Chief Executive Officer. Any additional duties delegated to Employee shall be reasonably consistent with Employee's position. 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. (c) Employee Commitments -------------------- Employee agrees that 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 and the Chief Executive Officer of Company. Employee also agrees that 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. (d) Other Programs -------------- As a general rule, this Agreement is intended to supplement and enhance the rights and benefits available to Employee as a senior executive officer of the Company. Accordingly, unless this Agreement or any other agreement or plan of Company specifically indicates otherwise, none of the rights and benefits provided to Employee pursuant to this Agreement are intended to replace the rights and benefits made available generally to other senior executive officers of the Company. 3. COMPENSATION ------------ Employee shall receive the following compensation for services: (a) Base Salary ----------- Employee shall receive "Base Salary" at the rate of $300,000 per year. Base Salary shall be payable as nearly as possible in equal bi-weekly installments (or in such other installments as the Company shall determine). The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executive officers. (b) Incentive and Benefit Plans --------------------------- - 2 - Employee shall participate in any incentive compensation plans maintained by the Company for "Senior Executive Officers", as such term is defined below. For the 1996-1997 fiscal year, Employee's "Target Bonus", as that term is customarily used in conjunction with the Company's Annual Management Incentive Plan (the "MIP"), shall be 75% of Employee's Base Salary, with the actual amount of the bonus payment to be determined in accordance with all of the terms and provisions of the MIP, as it may be amended from time to time. The Employee's Target Bonus, and all other terms and conditions of Employee's participation in the MIP (including other bonus levels and performance goals) may be changed from time to time by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. Employee also shall have the right to participate in any and all 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 Senior Executive Officers, all in accordance with the terms and conditions of the plans. Company will provide Employee with an automobile and an active membership in a country club of Employee's choice in accordance with the policies and practices applicable to Senior Executive Officers. The automobile and country club policies for Senior Executive Officers may be modified from time to time. For purposes of this Agreement, the term "Senior Executive Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice President or Vice President. (c) Supplemental Executive Retirement Plan -------------------------------------- Employee is a participant in the Company's Supplemental Executive Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be entered into between Employee and Company pursuant to which Employee shall receive enhanced treatment for purposes of the SERP. 4. CONFIDENTIALITY --------------- Employee 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 Information". The term "Confidential Information" includes, but is 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 Employee's employment hereunder. The term "Confidential Information" does not include any material that Company has already disclosed to the public and is in the public domain. This covenant and agreement of Employee shall survive this Agreement and continue to be binding upon Employee after the - 3 - expiration or termination of this Agreement, whether by passage of time or otherwise so long as such information and data shall remain confidential. Employee acknowledges that, in the event of his breach of the confidentiality provisions of this Section 4, money damages will not sufficiently compensate Company or the applicable Subsidiary for its injury. Employee accordingly agrees that in addition to such money damages, Employee may be restrained and enjoined from continuing breach of the provisions of this Section 4 without any bond or other security. Employee also acknowledges that any breach of this Section 4 would result in irreparable damage to Company or the applicable Subsidiary. 5. TERMINATION DUE TO DEATH OR DISABILITY -------------------------------------- (a) Death ----- This Agreement shall terminate upon Employee's death. Employee's estate shall be entitled to receive the Base Salary due through the date of his death. In addition, Employee's Base Salary (as determined pursuant to Section 3) as in effect at the time of his death will be continued for a period of 12 calendar months following the date of his death. The continued salary payments will be made to Employee's spouse, if Employee is married and living with Employee's spouse on the date of death. If Employee is not married and living with Employee's spouse on the date of death, the continued salary payments will be made to Employee's estate. Payments under this paragraph may be made to a designated beneficiary, in lieu of Employee's estate, where Employee has made a written request to Company designating a beneficiary, and the Company, in its discretion, has approved the requested designation made by Employee. The death benefit provided pursuant to this Section 5 is intended to be in addition to any other death benefit provided pursuant to any other plan or program sponsored by the Company except the Executive Spouse Benefit authorized by the Human Resources Committee of the Board for Senior Executive Officers of the Company, which is replaced by this Agreement. (b) Permanent Disability -------------------- At Company's option, this Agreement also shall terminate in the event of Employee's "Permanent Disability" upon notice in writing to Employee to that effect. For purposes of this Agreement, "Permanent Disability" shall mean that because of physical or mental illness or disability, with or without accommodation, Employee shall have been continuously unable to perform his duties hereunder for a consecutive period of 180 days. If this Agreement is terminated due to Employee's Permanent Disability, Employee shall receive the Severance Benefits provided by Section 8. - 4 - (c) Salary Continuation ------------------- If Employee is absent from work and unable to perform his duties due to a physical or mental illness or disability, Employee shall continue to receive Base Salary until such time as this Agreement is terminated. Company may not terminate this Agreement without Cause pursuant to Section 6(c) during the period of absence. Rather, Company may only terminate this Agreement because of Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section 6(a). The period of time during which Employee's Base Salary is continued pursuant to this Section 5(c) shall be charged against Employee's available sick leave and then against Employee's available vacation. (d) Lapse of Provisions ------------------- This Section 5 shall cease to apply following the termination of Employee's employment pursuant to Sections 6, 7, or 9. 6. TERMINATION BY COMPANY ---------------------- (a) Termination for Cause --------------------- Company may terminate this Agreement for "Cause" upon written notice to Employee. If Company terminates this Agreement for "Cause", Employee shall be entitled receive his Base Salary through the effective date of his termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of termination. (b) "Cause" Defined --------------- Termination of this Agreement for "Cause" shall mean (i) breach of any material provision of this Agreement by Employee which is not cured within a reasonable time after receipt by Employee of written notice of such breach from Company, or (ii) conviction, by a court of competent jurisdiction, of Employee of any felony or any other crime involving gross depravity or dishonesty. (c) Termination Without Cause ------------------------- Termination of this Agreement by Company for reasons other than (i) death, (ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial Term or any Renewal Term shall be referred to as a termination "without Cause". If this Agreement is terminated without Cause, Employee is entitled to receive 30 days advance written notice. This Agreement shall continue - 5 - 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"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day notice period. During such administrative leave, Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. If this Agreement is terminated without Cause, Employee shall be entitled to receive the Severance Benefits provided by Section 8. 7. TERMINATION BY EMPLOYEE ----------------------- (a) General ------- Employee may terminate this Agreement at any time, with or without "Good Reason". If Employee terminates this Agreement without "Good Reason", Employee shall provide Company with 60 days advance written notice. If Employee terminates this Agreement with Good Reason, Employee shall provide Company with 30 days advance written notice, which notice shall clearly identify the action or omission that Employee claims gives rise to Good Reason for termination of this Agreement. In order to terminate this Agreement for Good Reason, the notice of termination must be given to Company by Employee within 30 days of Employee's receipt of notice, whether written or oral, or actual knowledge of the action or omission that gave rise to Employee's Good Reason for termination. The termination of this Agreement shall be effective on the last day of the required notice period (the "Termination Date"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day or 60-day notice period. During such administrative leave, the Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. (b) Good Reason Defined ------------------- For purposes of this Agreement, "Good Reason" shall mean and include any of the following: (1) Without Employee's express written consent, the assignment to him of any duties that are not reasonably consistent 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 - 6 - him other than for Good Reason, or by Company upon the expiration of the Initial Term or any applicable Renewal Term. (2) A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time, other than a reduction of no more than 15% which applies to all Senior Executive Officers of Company. (3) The taking of any action by Company which would adversely affect Employee'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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, unless a comparable replacement program is offered to Employee or unless such action applies to all Senior Executive Officers. (4) 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. (5) Breach of any material provisions of this Agreement by Company. For purposes of this Section 7, the "Relevant Date" is the date of execution of this Agreement. For purposes of Section 9, the "Relevant Date" is the date specified in Section 9(e). (c) Company May Cure Good Reason ---------------------------- Within the 30 day notice period called for by Section 7(a), Company may rescind or otherwise cure any action or omission relied upon by Employee as constituting Good Reason for termination. If Company rescinds or otherwise cures such action or omission within this period, Employee's notice of termination will be automatically withdrawn and this Agreement will continue. (d) Effect of Good Reason Termination --------------------------------- If Employee terminates this Agreement for Good Reason, Employee shall be entitled to receive the Severance Benefits provided by Section 8 to the same extent as if this Agreement had been terminated by Company without Cause. (e) Effect of Termination without Good Reason ----------------------------------------- - 7 - If Employee terminates this Agreement without Good Reason, Employee shall be entitled to receive his Base Salary through the effective date of his termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. 8. SEVERANCE BENEFITS ------------------ (a) Eligibility ----------- Employee shall be eligible and entitled to receive the Severance Benefits provided by paragraph (b) if Employee's employment is terminated due to Permanent Disability pursuant to Section 5(b), if this Agreement is terminated by Company without Cause pursuant to Section 6(c), or if this Agreement is terminated by Employee for Good Reason pursuant to Section 7. In addition, Employee shall be eligible and entitled to receive the Severance Benefits provided by paragraph (b) if the Company notifies Employee of its desire to terminate this Agreement pursuant to Section 2(a) and at the time such notice is given the Company does not have "Cause" to terminate Employee's employment pursuant to Section 6. Similarly, if Company notifies Employee of its desire to modify this Agreement and such modification provides Employee with "Good Reason" to terminate this Agreement pursuant to Section 7 and Employee rejects such modification, Employee shall be entitled to receive the Severance Benefits called for by paragraph (b). (b) Severance Benefits ------------------ The "Severance Benefits" to which an eligible Employee shall be entitled pursuant to this section are limited to the following payments, benefits and reimbursements, which will continue throughout the "Severance Period" referred to in Section 8(c): (1) Company will continue to pay Employee his Base Salary as set forth in Section 3 (or as it may be adjusted from time to time), in equal bi-weekly installments. (2) Company also shall make a single "Incentive Compensation Payment" to Employee. The "Incentive Compensation Payment" shall equal the amount that would have been payable to Employee pursuant to all of the terms and provisions of the Company's MIP, as it may be amended or replaced from time to time, had Employee's employment continued until the end of the fiscal year of the Company in which Employee's Termination Date occurs. (This payment shall be in addition to any payment for a prior fiscal year which has not yet been paid.) For purposes of calculating the amount that would have been due to Employee pursuant to the MIP (i) any provision of - 8 - the MIP requiring continued employment will be disregarded; (ii) the Company shall assume that Employee's Base Salary would continue throughout the end of such fiscal year at the same rate in effect on the Termination Date; (iii) the actual performance of the Company shall be utilized; (iv) the Company shall assume that any subjective performance criteria or requirements were satisfied; and (v) all other factors impacting the calculation of the amounts due will be determined by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. The Incentive Compensation Payment will be paid at the same time as similar payments are paid to active employees. The Employee shall not be entitled to receive any compensation or grants pursuant to the Company's Long Term Incentive Plan, or any successor plan or program, following the Termination Date. (3) Company also intends that life, disability, accident and group health benefits and coverages (each an "Insurance Benefit" and collectively the "Insurance Benefits") substantially similar to those which Employee was receiving immediately prior to the Notice Date be made available to Employee following the Notice Date, but Company does not intend to duplicate Insurance Benefits provided by a successor employer. If and to the extent that and so long as such Insurance Benefits (or an Insurance Benefit) is not provided by a successor employer, Company will arrange to provide such Insurance Benefit or Insurance Benefits to Employee at a cost to Employee of not more than the cost to Employee of similar coverage immediately prior to the Notice Date. If an Insurance Benefit is not provided by a successor employer and Company, after a good faith effort, is unable to provide continued coverage to Employee with respect to one or more of such Insurance Benefits because of restrictions imposed by any insurance carrier that provides such Insurance Benefit or Benefits, in lieu of the unavailable Insurance Benefit or Benefits Company may pay Employee a monthly amount equal to 150% of the Company's share of the cost of providing such unavailable Insurance Benefit or Benefits to comparable executives in comparable circumstances. Such cost shall be determined conclusively by Company. Employee shall provide Company with such information concerning the Insurance Benefits provided to Employee by a successor employer as Company shall reasonably request and Company may decline to provide any Insurance Benefits to Employee unless and until Employee provides such information. Whether a particular Insurance Benefit provided by a successor employer is "substantially similar" to a benefit provided to Employee prior to the Notice Date shall be determined by Company in the exercise of its discretion. - 9 - (4) Company will continue to provide Employee with an automobile and an active membership in a country club in accordance with Section 3(b) and the policies and practices applicable to Senior Executive Officers, as such policies may be modified from time to time. (5) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable but which would become exercisable within 12 months from the Termination Date if Employee's employment were continued, shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (6) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which are subject to restrictions on the Notice Date shall, as of the Notice Date, automatically become free of all restrictions if and to the extent that such restrictions would have lapsed within 12 months of the Termination Date if Employee's employment were continued. (c) Severance Period ---------------- The Severance Benefits will continue throughout the "Severance Period". Generally, the Severance Period will be the 12 month period beginning on the Termination Date. If the Severance Benefits are due because this Agreement was not renewed by the Company, the Severance Period will be the 12 month period beginning on Employee's last day of active work. (d) COBRA ----- Employee has the right to continued health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA continuation period shall commence on Employee's Termination Date, but Company may be obligated to pay a portion of the cost of continued health care coverage during the Severance Period pursuant to Section 8(b)(3). 9. CHANGE IN CONTROL OF COMPANY ---------------------------- (a) General ------- The Board recognizes that the continuing possibility of a "Change in Control" of Company is unsettling to Employee and other senior executives of Company. Therefore, the arrangements - 10 - set forth below are being made to help assure a continuing dedication by Employee 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 Employee, 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 Employee's continued employment with Company, Company agrees that if a Change in Control of Company occurs during the Initial Term or any Renewal Term Employee shall be entitled to the special severance benefits provided in subparagraph (g) of this Section 9 if prior to the expiration of 24 months after the Change in Control of Company Employee terminates his employment with Company for Good Reason or Company terminates Employee's employment without Cause. If Employee triggers the application of this Section by terminating employment for Good Reason, he must do so within 120 days following Employee's actual knowledge or receipt of notice, whether written or oral, of the occurrence of the last event that constitutes Good Reason. (c) Permanent Disability -------------------- Any attempted termination of Employee's employment by Company for reasons of Permanent Disability pursuant to Section 5(b) following a Change in Control shall be treated as a termination by Company without Cause unless Employee is approved for and receives long term disability payments under Company's long term disability plan. In addition, following a Change in Control this Agreement may not be terminated pursuant to Section 5(b) due to Employee's Permanent Disability unless the incapacity giving rise to the Permanent Disability occurs prior to the occurrence of an event that might cause amounts to be payable to Employee pursuant to this Section 9. Once payments begin pursuant to this Section 9, this Agreement may not be terminated by Company pursuant to Section 5(b) due to Permanent Disability and any payments due pursuant to this Section 9 shall not cease or diminish on account of Employee's Permanent Disability. (d) 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". - 11 - 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: (1) Company enters into an agreement, the consummation of which would result in the occurrence of an Actual Change in Control; - 12 - (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. (e) Good Reason Defined ------------------- For purposes of this Section, "Good Reason" shall have the meaning assigned to it in Section 7, with the following modifications: (1) The "Relevant Date" shall be the day prior to the Change in Control. (2) Paragraph (2) of Section 7(b) shall read as follows: A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time. (3) Paragraph (3) of Section 7(b) shall read as follows: 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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, (or plans providing Employee with substantially - 13 - similar benefits), the taking of any action by Company which would adversely affect Employee'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, or the failure of the Company to provide Employee with the number of paid vacation days to which Employee is then entitled on the basis of his years of service with the Company in accordance with the Company's normal vacation policy as in effect on the Relevant Date; (4) Two additional elements of Good Reason shall be added as follows: (6) Employee is assigned to, or Company's office at which Employee is principally employed on the Relevant Date is relocated to, a location which would require a round-trip commute to work from Employee's principal residence on the Relevant Date of more than 100 miles per day. (7) Failure of Company to obtain an agreement satisfactory to Employee from any successor to the business, or substantially all the assets, of Company to assume this Agreement or issue a substantially similar agreement. (f) Notice of Termination by Employee --------------------------------- Any termination by Employee under this Section 9 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. (g) Effect of Termination; Special Severance Benefits ------------------------------------------------- If Employee is entitled to receive a special severance benefit pursuant to Section 9(b) hereof, Company will provide Employee with the following special severance benefits in addition to the Severance Benefits to which Employee is entitled pursuant to Section 8: (1) Within five days following Employee's termination, a lump sum severance payment will be made to Employee. The lump sum severance payment shall be in an amount equal to: (i) 2.5 times Employee's yearly Base Salary as set forth in Section 3 or as it may be increased from time to time; plus (ii) the greatest of (a) 2.5 times the average annual incentive compensation - 14 - paid to Employee pursuant to the MIP (or any predecessor or successor plan) during the five fiscal years preceding the fiscal year in which the Change in Control occurs, or (b) an amount equal to 100% of the incentive compensation paid to Employee pursuant to the MIP (or any predecessor or successor plan) during the 12 month period prior to the Termination Date, or (c) an amount equal to 35% of Employee's Base Salary as set forth in Section 3 or as it may be increased from time to time; minus (iii) the total amounts due to Employee, if any, pursuant to Sections 8(b)(1) and (2). (2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2) will be accelerated and paid to Employee in one lump sum within five days following Employee's termination without any discount for early payment. For purposes of calculating the amounts due to Employee pursuant to Section 8(b)(2) the Company shall assume that the Company's performance and all other relevant factors for all future fiscal years will be the same as for the fiscal year prior to the fiscal year in which the Change in Control occurs. (3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be provided for 30 months following Employee's Termination Date rather than for the period specified in Section 8(c). In lieu of all fringe benefits other than those referred to in Sections 8(b)(3) and (4), Employee shall receive a lump sum payment equal to 20% of Employee's Base Salary as set forth in Section 3 as it may be increased from time to time. (4) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable and which do not become exercisable pursuant to Section 8(b)(5), shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (5) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which on the Notice Date are subject to restrictions which do not lapse pursuant to Section 8(b)(6) shall, as of that date, automatically become free of all restrictions. Company shall amend, if necessary, any option or restricted stock agreements entered into between Company and Employee to be consistent with paragraphs (4) and (5). (h) Other Agreements ---------------- - 15 - On execution of this Agreement, the letter agreement between Employee and Company concerning change in control benefits dated May 17, 1989, shall be null and void and of no further force or effect. Nothing in this Agreement is intended to modify any change of control provisions or protections provided to Employee by the SERP. (i) Legal Expenses -------------- If Employee, at any time, takes any legal action against Company for breach of this Section 9 or Section 10, Company shall reimburse Employee for all costs and expenses incurred by Employee to pursue such legal action, regardless of the outcome, unless the arbitrators appointed pursuant to Section 12(d) find Employee's action to have been frivolous and without merit. Although the dispute resolution provisions of Section 12 shall apply to any legal action involving a breach of this Section 9 and Section 10, the provisions of this Section 9(i) shall supersede conflicting provisions of Section 12(e). 10. CEILING ON CHANGE IN CONTROL BENEFITS ------------------------------------- (a) General ------- The Internal Revenue Code (the "Code") places significant tax burdens on Employee and Company if the total payments made to Employee due to a Change in Control exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company, by signing this Agreement Employee agrees that the present value of his "Total Payments" (as defined below) under this Agreement or any other agreement or arrangement with Company will not exceed an amount equal to two and ninety-nine hundredths (2.99) times his "Base Period Income" (as defined below). This is the maximum amount which Employee may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which Company may pay without loss of deduction under Section 280G of the Code. (b) Base Period Income ------------------ "Base Period Income" is an amount equal to Employee's "annualized includible compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Employee's "annualized includible compensation" is the average of his annual taxable income from Company for the "base period", which is the five calendar years prior to the year in which the Change in Control occurs. All of the rules set forth in the applicable regulations apply for purposes of determining Employee's Base Period Income, his "annualized includible compensation", and his "base period". - 16 - (c) Total Payments -------------- The "Total Payments" include the amount payable pursuant to Section 9(g) and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for Employee's benefit, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. (d) Procedural Matters ------------------ If Company believes that these rules will result in a reduction of the payments to which Employee is entitled under this Agreement, it will so notify Employee within 60 days following the Termination Date. Employee and Company will then, at Company's expense, retain legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants to provide an opinion or opinions concerning whether the Total Payments exceed the limit discussed above. Company will select the legal counsel, certified public accountants and executive compensation consultants. If Employee does not accept one or more of the parties selected by Company, Employee may provide Company with the names of legal counsel, certified public accountants and/or executive compensation consultants acceptable to Employee. If Company does not accept the party or parties selected by Employee, the legal counsel, certified public accountants and/or executive compensation consultants selected by Employee and Company, respectively, will select the legal counsel, certified public accountants and/or executive compensation consultants to provide the opinions required. At a minimum, the opinions required by this Section must set forth (1) the amount of Employee's Base Period Income, (2) the present value of the Total Payments and (3) the amount and present value of any excess parachute payments. If the opinions state that there would be an excess parachute payment, Employee's payments under this Agreement will be reduced to the extent necessary to eliminate the excess. Employee will be allowed to choose the payment that should be reduced or eliminated, but the payment Employee chooses to reduce or eliminate must be a payment determined by such counsel to be includible in Total Payments. Employee will make his decision in writing and deliver it to Company within 30 days of receipt of such opinions. If Employees fails to so notify Company, Company will decide which payments to reduce or eliminate. If the legal counsel or certified public accountants selected to provide the opinions referred to above so requests in connection with the opinion required by this Section, a firm of recognized executive compensation consultants, selected by Employee and Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel or certified - 17 - public accountants may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered before or after the Change in Control. If Company believes that Employee's Total Payments will exceed the limitations of this Section, Company shall provide Employee with a detailed explanation of the basis for its conclusion. Company then shall make payments to Employee, at the times stated above, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid after the opinions called for above have been received. If the Internal Revenue Service concludes in a final determination that the amounts paid to Employee exceed the limitations of this Section, as a general rule, the excess will be treated as a loan to Employee by Company, and shall be repayable on the 90th day following demand by Company, together with interest at the "applicable federal rate" provided in Section 1274(d) of the Code. In the event that the provisions of Section 280G and 4999 of the Code are repealed without succession, this Section shall be of no further force or effect. 11. COMPETITION ----------- (a) Restrictive Covenant -------------------- In consideration of Company's agreements contained herein and the payments to be made by it to Employee pursuant hereto, Employee 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 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which any of the businesses of Company are being conducted on the date of termination of this Agreement or within 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which the Company's strategic plan or any replacement plan (the "Strategic Plan"), as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement, discusses the possibility of Company conducting business within two years following the date of termination of this Agreement; or - 18 - (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 who was employed by Company or any Subsidiary immediately prior to such hiring or solicitation or during the prior one-year period. (b) Duration of Covenant -------------------- Generally, this restrictive covenant shall apply during the Initial Term and any Renewal Term and for the one-year period following the date of termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). If the Competing Business in which Employee engages or intends to engage is a business involving the development or management of an age-restricted community, however, the limitations of Section 11(a)(1) shall apply during the Initial Term, any Renewal Term and for the two-year period following the date of the termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). This Restrictive Covenant shall not apply should the Agreement terminate on or after the date on which Employee attains age 65. (c) Remedies; Reasonableness ------------------------ Employee acknowledges and agrees that a breach by Employee 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 restraining and enjoining Employee 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 Employee. Employee 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) Employee 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 11, nor a release of Employee from his obligations thereunder. - 19 - (e) Competing Business ------------------ For purposes of this Agreement, Employee 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 Strategic Plan as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement. Indirect participation in the operation or ownership of any such entity shall include any investment by Employee 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 which is listed and regularly traded on any national securities exchange or which is regularly traded over-the-counter). Employee shall not be deemed to be engaged in a "Competing Business" if, in any capacity enumerated above, he engages or participates, directly or indirectly, in the operation, ownership, or management of any proprietorship, partnership, corporation, or other business entity where Employee or the business entity in which he may be involved, either directly or indirectly, and together with any related individuals or entities, builds fewer than 25 homes per calendar year (with the number of homes to be determined by the number of permits pulled for such homes). At the written request of Employee from time to time, Company shall furnish Employee with a written description of the business or businesses in which Company is then actively engaged. (f) Change in Control ----------------- The provisions of this Section shall lapse and be of no further force or effect if Employee's employment is terminated by Company without Cause, or by Employee for Good Reason, following a Change in Control, or if Company gives notice that it is involved in voluntary liquidation proceedings pursuant to Chapter 7 of the United States Bankruptcy Code (11 U.S.C. ss.701 et seq.) or that the trustee has been ordered by the United States Bankruptcy Court, pursuant to a final and non-appealable order, to cease Company's operations pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code. 12. DISPUTE RESOLUTION ------------------ (a) Mediation --------- Any and all disputes arising under, pertaining to or touching upon this Agreement or the statutory rights or obligations of either party hereto, shall, if not settled by negotiation, be subject to non-binding mediation. Excepted from this Section 12 is the right of Company or Employee to seek preliminary judicial relief with respect to a dispute should such action be - 20 - necessary to avoid immediate, irreparable harm or damage pending the proceedings provided for in this Section 12. Mediation shall be before an independent mediator selected by the parties pursuant to Section 12(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 16. 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 12(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 SECTION 12 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION 12(a). 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 National Rules for the Resolution of Employment Disputes of the American Arbitration Association or its successor. Notwithstanding any provisions in such rules to the contrary, the 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 the applicable statute. 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. - 21 - 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 Employee was for Good Reason, Employee shall only be entitled to the Severance Benefits provided by Section 8 (or the special Change in Control severance benefits provided by Section 9 in the event of a Change in Control), 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 Employee all amounts to which he would be entitled under Section 8 if a Change in Control has not occurred or Section 9 if a Change in Control has occurred, calculated in either case on the assumption that Employee'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. Employee shall have the first strike. The parties also shall select the arbitrators from a panel list made available by the Association. Company and Employee each shall select one arbitrator from such panel list within ten days of receipt of such list. After Company and Employee 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 mediator shall be borne by Company. The costs and expenses of any arbitration shall be borne by the losing party, unless the arbitrator allocates such costs and expenses in a different manner in the arbitration award. 13. 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 Employee, his heirs, executors, administrators, and legal representatives, provided that the obligations of Employee may not be delegated. - 22 - 14. NON-DISPARAGEMENT ----------------- Employee 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, Company (including its officers, directors, employees, and agents) will not disparage Employee and will refrain from any action which would reasonably be expected to result in embarrassment to Employee or to materially and adversely affect his opportunities for employment. The preceding two sentences shall not apply to statements or allegations made in any pleading filed in connection with any legal proceeding or to disclosures required by applicable law, regulation, or order of court or governmental agency. 15. OTHER AGREEMENTS OF EMPLOYEE ---------------------------- Employee 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 Employee and any third party. 16. 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 Employee, to: LeRoy C. Hanneman 9643 E. Laurel Lane Scottsdale, AZ 85260 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. - 23 - 17. 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 Employee and Company with respect to the relationship of Employee with Company. 18. GOVERNING LAW ------------- This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona. 19. CAPTIONS -------- The captions included herein are for convenience and shall not constitute a part of this Agreement. 20. 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 Employee and Company. 21. MITIGATION ---------- In the event that Employee's employment is terminated and payments become due to Employee pursuant to this Agreement, Employee shall have no duty to mitigate damages or to become re-employed by another employer. 22. TERMINATION OF EMPLOYMENT ------------------------- The termination of this Agreement by either party also shall result in the termination of Employee's employment relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment relationship continue after the termination of this Agreement. - 24 - 23. NO CONSTRUCTION AGAINST COMPANY ------------------------------- This Agreement is the result of negotiation between Company and Employee 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 Employee, regardless of which party drafted the provision at issue. DEL WEBB CORPORATION By: /s/ Robertson C. Jones --------------------------------------- Its: V.P. & Gen'l Counsel -------------------------------------- COMPANY /s/ LEROY C. HANNEMAN ------------------------------------------ LEROY C. HANNEMAN EMPLOYEE - 25 - EX-10.38 14 EMPLOYMENT AGREEMENT WITH A.L. MARIUCCI Exhibit 10.38 DEL WEBB CORPORATION ANNE L. MARIUCCI EMPLOYMENT AGREEMENT TABLE OF CONTENTS Page 1. DEFINITIONS......................................................... 1 2. TERM OF AGREEMENT; DUTIES........................................... 1 (a) Initial Term; Renewal; Employment Period Defined........... 1 (b) Duties..................................................... 1 (c) Employee Commitments....................................... 2 (d) Other Programs............................................. 2 3. COMPENSATION........................................................ 2 (a) Base Salary................................................ 2 (b) Incentive and Benefit Plans................................ 2 (c) Supplemental Executive Retirement Plan..................... 3 4. CONFIDENTIALITY..................................................... 3 5. TERMINATION DUE TO DEATH OR DISABILITY.............................. 4 (a) Death...................................................... 4 (b) Permanent Disability....................................... 4 (c) Salary Continuation........................................ 4 (d) Lapse of Provisions........................................ 5 6. TERMINATION BY COMPANY.............................................. 5 (a) Termination for Cause...................................... 5 (b) "Cause" Defined............................................ 5 (c) Termination Without Cause.................................. 5 7. TERMINATION BY EMPLOYEE............................................. 6 (a) General.................................................... 6 (b) Good Reason Defined........................................ 6 (c) Company May Cure Good Reason............................... 7 (d) Effect of Good Reason Termination.......................... 7 (e) Effect of Termination without Good Reason.................. 7 8. SEVERANCE BENEFITS.................................................. 8 (a) Eligibility................................................ 8 (b) Severance Benefits......................................... 8 (c) Severance Period........................................... 10 (d) COBRA...................................................... 10 - i - Page 9. CHANGE IN CONTROL OF COMPANY........................................ 10 (a) General.................................................... 10 (b) Eligibility to Receive a Severance Benefit................. 11 (c) Permanent Disability....................................... 11 (d) Change in Control Defined.................................. 11 (e) Good Reason Defined........................................ 13 (f) Notice of Termination by Employee.......................... 14 (g) Effect of Termination; Special Severance Benefits.......... 14 (h) Other Agreements........................................... 15 (i) Legal Expenses............................................. 16 10. CEILING ON CHANGE IN CONTROL BENEFITS............................... 16 (a) General.................................................... 16 (b) Base Period Income......................................... 16 (c) Total Payments............................................. 16 (d) Procedural Matters......................................... 17 11. COMPETITION......................................................... 18 (a) Restrictive Covenant....................................... 18 (b) Duration of Covenant....................................... 19 (c) Remedies; Reasonableness................................... 19 (d) Survival of Provision...................................... 19 (e) Competing Business......................................... 19 (f) Change in Control.......................................... 20 12. DISPUTE RESOLUTION.................................................. 20 (a) Mediation.................................................. 20 (b) Arbitration................................................ 21 (c) Damages.................................................... 21 (d) Selection of Mediator or Arbitrators....................... 22 (e) Expenses................................................... 22 13. BENEFIT AND BINDING EFFECT.......................................... 22 14. NON-DISPARAGEMENT................................................... 22 15. OTHER AGREEMENTS OF EMPLOYEE........................................ 23 16. NOTICES............................................................. 23 - ii - Page 17. ENTIRE AGREEMENT.................................................... 23 18. GOVERNING LAW....................................................... 23 19. CAPTIONS............................................................ 24 20. SEVERABILITY........................................................ 24 21. MITIGATION.......................................................... 24 22. TERMINATION OF EMPLOYMENT........................................... 24 23. NO CONSTRUCTION AGAINST COMPANY..................................... 24 - iii - EMPLOYMENT AGREEMENT -------------------- This Employment Agreement (the "Agreement") is entered into as of the 11th day of April, 1997 between DEL WEBB CORPORATION, a Delaware corporation (the "Company"), and ANNE L. MARIUCCI (the "Employee"). 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) Initial Term; Renewal; Employment Period Defined ------------------------------------------------ Employee shall be employed by Company for the duties set forth below for the period beginning on April 11, 1997 and ending on June 30, 1998 (the "Initial Term"), unless sooner terminated in accordance with the provisions of this Agreement. This Agreement shall be automatically renewed at the end of the Initial Term for additional one-year periods commencing on each July 1 and ending on the next following June 30 ( a "Renewal Term"), unless either party serves notice of desire to terminate or modify this Agreement on the other. Such notice must be given at least 30 days before the end of the Initial Term or the applicable Renewal Term. The period of time commencing as of the first day of the Initial Term and ending on the effective date of the termination of employment of Employee under this or any successor agreement shall be referred to as the "Employment Period". (b) Duties ------ Employee shall be employed as a Senior Vice President of Company. As Senior Vice President, Employee shall oversee the master planned communities within the conventional building arm of the Company. Her responsibilities encompass, but are not limited to, the duties and responsibilities described in the Job Description on file as of the date hereof with Company, including strategic planning, scheduling, ongoing economic evaluation, and management of the current Terravita community, subsequent Terravita operations and The Villages. Employee also shall perform such additional duties related to the business and affairs of Company and its Subsidiaries as may be delegated to her from time to time by the Board of Directors of Company (the "Board") or Company's Chief Executive Officer. Any additional duties delegated to Employee shall be reasonably consistent with Employee's position. For purposes of this - 1 - 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. (c) Employee Commitments -------------------- Employee agrees that she will faithfully, industriously, and to the best of her ability, experience, and talents, perform all of the duties that may be required of and from her and fulfill all of her responsibilities hereunder pursuant to the express and explicit terms hereof, to the reasonable satisfaction of the Board and the Chief Executive Officer of Company. Employee also agrees that she will devote substantially all of her 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. (d) Other Programs -------------- As a general rule, this Agreement is intended to supplement and enhance the rights and benefits available to Employee as a senior executive officer of the Company. Accordingly, unless this Agreement or any other agreement or plan of Company specifically indicates otherwise, none of the rights and benefits provided to Employee pursuant to this Agreement are intended to replace the rights and benefits made available generally to other senior executive officers of the Company. 3. COMPENSATION ------------ Employee shall receive the following compensation for services: (a) Base Salary ----------- Employee shall receive "Base Salary" at the rate of $190,000 per year. Base Salary shall be payable as nearly as possible in equal bi-weekly installments (or in such other installments as the Company shall determine). The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executive officers. (b) Incentive and Benefit Plans --------------------------- Employee shall participate in any incentive compensation plans maintained by the Company for "Senior Executive Officers", as such term is defined below. For the 1996-1997 fiscal year, Employee's "Target Bonus", as that term is customarily used in conjunction with the Company's Annual Management Incentive Plan (the "MIP"), shall be 60% of Employee's Base Salary, with the actual amount of the bonus payment to be determined in accordance with all of the terms and provisions of the MIP, as it may be amended from time to time. The Employee's - 2 - Target Bonus, and all other terms and conditions of Employee's participation in the MIP (including other bonus levels and performance goals) may be changed from time to time by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. Employee also shall have the right to participate in any and all 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 Senior Executive Officers, all in accordance with the terms and conditions of the plans. Company will provide Employee with an automobile and an active membership in a country club of Employee's choice in accordance with the policies and practices applicable to Senior Executive Officers. The automobile and country club policies for Senior Executive Officers may be modified from time to time. For purposes of this Agreement, the term "Senior Executive Officer" includes any Del Webb Corporation Executive Vice President, Senior Vice President or Vice President. (c) Supplemental Executive Retirement Plan -------------------------------------- Employee is a participant in the Company's Supplemental Executive Retirement Plan No. 2 (the "SERP"). A new SERP Participation Agreement shall be entered into between Employee and Company pursuant to which Employee shall receive enhanced treatment for purposes of the SERP. 4. CONFIDENTIALITY --------------- Employee 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 Information". The term "Confidential Information" includes, but is 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 her 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 Employee's employment hereunder. The term "Confidential Information" does not include any material that Company has already disclosed to the public and is in the public domain. This covenant and agreement of Employee shall survive this Agreement and continue to be binding upon Employee 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. Employee acknowledges that, in the event of her breach of the confidentiality provisions of this Section 4, money damages will not sufficiently compensate Company or the applicable Subsidiary for its injury. Employee accordingly agrees that in addition to such money damages, Employee may be restrained and enjoined from continuing breach of the provisions of this - 3 - Section 4 without any bond or other security. Employee also acknowledges that any breach of this Section 4 would result in irreparable damage to Company or the applicable Subsidiary. 5. TERMINATION DUE TO DEATH OR DISABILITY -------------------------------------- (a) Death ----- This Agreement shall terminate upon Employee's death. Employee's estate shall be entitled to receive the Base Salary due through the date of her death. In addition, Employee's Base Salary (as determined pursuant to Section 3) as in effect at the time of her death will be continued for a period of 12 calendar months following the date of her death. The continued salary payments will be made to Employee's spouse, if Employee is married and living with Employee's spouse on the date of death. If Employee is not married and living with Employee's spouse on the date of death, the continued salary payments will be made to Employee's estate. Payments under this paragraph may be made to a designated beneficiary, in lieu of Employee's estate, where Employee has made a written request to Company designating a beneficiary, and the Company, in its discretion, has approved the requested designation made by Employee. The death benefit provided pursuant to this Section 5 replaces and supersedes any Executive Spouse Benefit provided generally to executives of Company. (b) Permanent Disability -------------------- At Company's option, this Agreement also shall terminate in the event of Employee's "Permanent Disability" upon notice in writing to Employee to that effect. For purposes of this Agreement, "Permanent Disability" shall mean that because of physical or mental illness or disability, with or without accommodation, Employee shall have been continuously unable to perform her duties hereunder for a consecutive period of 180 days. If this Agreement is terminated due to Employee's Permanent Disability, Employee shall receive the Severance Benefits provided by Section 8. (c) Salary Continuation ------------------- If Employee is absent from work and unable to perform her duties due to physical or mental illness or disability, Employee shall continue to receive Base Salary until such time as this Agreement is terminated. Company may not terminate her Agreement without Cause pursuant to Section 6(c) during the period of absence. Rather, Company may only terminate this Agreement because of Permanent Disability pursuant to Section 5(b) or for Cause pursuant to Section 6(a). The period of time during which Employee's Base Salary is continued pursuant to this Section 5(c) shall be charged against Employee's available sick leave and then against Employee's available vacation. - 4 - (d) Lapse of Provisions ------------------- This Section 5 shall cease to apply following the termination of Employee's employment pursuant to Sections 6, 7, or 9. 6. TERMINATION BY COMPANY ---------------------- (a) Termination for Cause --------------------- Company may terminate this Agreement for "Cause" upon written notice to Employee. If Company terminates this Agreement for "Cause", Employee shall be entitled to receive her Base Salary through the effective date of her termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. (b) "Cause" Defined --------------- Termination of this Agreement for "Cause" shall mean (i) breach of any material provision of this Agreement by Employee which is not cured within a reasonable time after receipt by Employee of written notice of such breach from Company, or (ii) conviction, by a court of competent jurisdiction, of Employee of any felony or any other crime involving gross depravity or dishonesty. (c) Termination Without Cause ------------------------- Termination of this Agreement by Company for reasons other than (i) death, (ii) Permanent Disability, (iii) Cause, or (iv) upon expiration of the Initial Term or any Renewal Term shall be referred to as a termination "without Cause". If this Agreement is terminated without Cause, Employee 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"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day notice period. During such administrative leave, Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. If this Agreement is terminated without Cause, Employee shall be entitled to receive the Severance Benefits provided by Section 8. - 5 - 7. TERMINATION BY EMPLOYEE ----------------------- (a) General ------- Employee may terminate this Agreement at any time, with or without "Good Reason". If Employee terminates this Agreement without "Good Reason", Employee shall provide Company with 60 days advance written notice. If Employee terminates this Agreement with Good Reason, Employee shall provide Company with 30 days advance written notice, which notice shall clearly identify the action or omission that Employee claims gives rise to Good Reason for termination of this Agreement. In order to terminate this Agreement for Good Reason, the notice of termination must be given to Company by Employee within 30 days of Employee's receipt of notice, whether written or oral, or actual knowledge of the action or omission that gave rise to Employee's Good Reason for termination. The termination of this Agreement shall be effective on the last day of the required notice period (the "Termination Date"). In the exercise of its discretion, the Company may place Employee on a paid administrative leave during all or any part of the 30-day or 60-day notice period. During such administrative leave, the Company may bar Employee from access to any Company facility or may allow such access on such terms as Company deems appropriate. (b) Good Reason Defined ------------------- For purposes of this Agreement, "Good Reason" shall mean and include any of the following: (1) Without Employee's express written consent, the assignment to her of any duties that are not reasonably consistent with her positions, duties, responsibilities, and status with Company as in effect on the "Relevant Date", or demotion, or a change in her titles or offices as in effect on the Relevant Date (except as specifically contemplated by this Agreement), or any removal of her from or any failure to re-appoint or re-elect her to any of such positions, except in connection with the termination of this Agreement for Cause, Permanent Disability, as a result of her death, by her other than for Good Reason, or by Company upon the expiration of the Initial Term or any applicable Renewal Term. (2) A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time, other than a reduction of no more than 15% which applies to all Senior Executive Officers of Company. - 6 - (3) The taking of any action by Company which would adversely affect Employee's participation in or materially reduce her benefits under any thrift, incentive, or compensation plan, or any pension, life insurance, health and accident or disability plan in which Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, unless a comparable replacement program is offered to Employee or unless such action applies to all Senior Executive Officers. (4) 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. (5) Breach of any material provisions of this Agreement by Company. For purposes of this Section 7, the "Relevant Date" is the date of execution of this Agreement. For purposes of Section 9 , the "Relevant Date" is the date specified in Section 9(e). (c) Company May Cure Good Reason ---------------------------- Within the 30 day notice period called for by Section 7(a), Company may rescind or otherwise cure any action or omission relied upon by Employee as constituting Good Reason for termination. If Company rescinds or otherwise cures such action or omission within this period, Employee's notice of termination will be automatically withdrawn and this Agreement will continue. (d) Effect of Good Reason Termination --------------------------------- If Employee terminates this Agreement for Good Reason, Employee shall be entitled to receive the Severance Benefits provided by Section 8 to the same extent as if this Agreement had been terminated by Company without Cause. (e) Effect of Termination without Good Reason ----------------------------------------- If Employee terminates this Agreement without Good Reason, Employee shall be entitled to receive her Base Salary through the effective date of her termination. Employee's entitlement to receive any other amount shall be determined in accordance with the provisions of any incentive or benefit plans in which Employee participates on the effective date of the termination. - 7 - 8. SEVERANCE BENEFITS ------------------ (a) Eligibility ----------- Employee shall be eligible and entitled to receive the Severance Benefits provided by paragraph (b) if Employee's employment is terminated due to Permanent Disability pursuant to Section 5(b), if this Agreement is terminated by Company without Cause pursuant to Section 6(c), or if this Agreement is terminated by Employee for Good Reason pursuant to Section 7. In addition, Employee shall be eligible and entitled to receive the Severance Benefits provided by paragraph (b) if the Company notifies Employee of its desire to terminate this Agreement pursuant to Section 2(a) and at the time such notice is given the Company does not have "Cause" to terminate Employee's employment pursuant to Section 6. Similarly, if Company notifies Employee of its desire to modify this Agreement and such modification provides Employee with "Good Reason" to terminate this Agreement pursuant to Section 7 and Employee rejects such modification, Employee shall be entitled to receive the Severance Benefits called for by paragraph (b). (b) Severance Benefits ------------------ The "Severance Benefits" to which an eligible Employee shall be entitled pursuant to this section are limited to the following payments, benefits and reimbursements, which will continue throughout the "Severance Period" referred to in Section 8(c): (1) Company will continue to pay Employee her Base Salary as set forth in Section 3 (or as it may be adjusted from time to time), in equal bi-weekly installments. (2) Company also shall make a single "Incentive Compensation Payment" to Employee. The "Incentive Compensation Payment" shall equal the amount that would have been payable to Employee pursuant to all of the terms and provisions of the Company's MIP, as it may be amended or replaced from time to time, had Employee's employment continued until the end of the fiscal year of the Company in which Employee's Termination Date occurs. (This payment shall be in addition to any payment for a prior fiscal year which has not yet been paid.) For purposes of calculating the amount that would have been due to Employee pursuant to the MIP (i) any provision of the MIP requiring continued employment will be disregarded; (ii) the Company shall assume that Employee's Base Salary would continue throughout the end of such fiscal year at the same rate in effect on the Termination Date; (iii) the actual performance of the Company shall be utilized; (iv) the Company shall assume that any subjective performance - 8 - criteria or requirements were satisfied; and (v) all other factors impacting the calculation of the amounts due will be determined by the Company's Board of Directors or a Committee thereof in the exercise of its discretion. The Incentive Compensation Payment will be paid at the same time as similar payments are paid to active employees. The Employee shall not be entitled to receive any compensation or grants pursuant to the Company's Long Term Incentive Plan, or any successor plan or program, following the Termination Date. (3) Company also intends that life, disability, accident and group health benefits and coverages (each an "Insurance Benefit" and collectively the "Insurance Benefits") substantially similar to those which Employee was receiving immediately prior to the Notice Date be made available to Employee following the Notice Date, but Company does not intend to duplicate Insurance Benefits provided by a successor employer. If and to the extent that and so long as such Insurance Benefits (or an Insurance Benefit) is not provided by a successor employer, Company will arrange to provide such Insurance Benefit or Insurance Benefits to Employee at a cost to Employee of not more than the cost to Employee of similar coverage immediately prior to the Notice Date. If an Insurance Benefit is not provided by a successor employer and Company, after a good faith effort, is unable to provide continued coverage to Employee with respect to one or more of such Insurance Benefits because of restrictions imposed by any insurance carrier that provides such Insurance Benefit or Benefits, in lieu of the unavailable Insurance Benefit or Benefits Company may pay Employee a monthly amount equal to 150% of the Company's share of the cost of providing such unavailable Insurance Benefit or Benefits to comparable executives in comparable circumstances. Such cost shall be determined conclusively by Company. Employee shall provide Company with such information concerning the Insurance Benefits provided to Employee by a successor employer as Company shall reasonably request and Company may decline to provide any Insurance Benefits to Employee unless and until Employee provides such information. Whether a particular Insurance Benefit provided by a successor employer is "substantially similar" to a benefit provided to Employee prior to the Notice Date shall be determined by Company in the exercise of its discretion. (4) Company will continue to provide Employee with an automobile and an active membership in a country club in accordance with Section 3(b) and the policies and practices applicable to Senior Executive Officers, as such policies may be modified from time to time. - 9 - (5) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable but which would become exercisable within 12 months from the Termination Date if Employee's employment were continued, shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (6) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which are subject to restrictions on the Notice Date shall, as of the Notice Date, automatically become free of all restrictions if and to the extent that such restrictions would have lapsed within 12 months of the Termination Date if Employee's employment were continued. (c) Severance Period ---------------- The Severance Benefits will continue throughout the "Severance Period". Generally, the Severance Period will be the 12 month period beginning on the Termination Date. If the Severance Benefits are due because this Agreement was not renewed by the Company, the Severance Period will be the 12 month period beginning on Employee's last day of active work. (d) COBRA ----- Employee has the right to continued health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"). The COBRA continuation period shall commence on Employee's Termination Date, but Company may be obligated to pay a portion of the cost of continued health care coverage during the Severance Period pursuant to Section 8(b)(3). 9. CHANGE IN CONTROL OF COMPANY ---------------------------- (a) General ------- The Board recognizes that the continuing possibility of a "Change in Control" of Company is unsettling to Employee and other senior executives of Company. Therefore, the arrangements set forth below are being made to help assure a continuing dedication by Employee to her 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 Employee, without being influenced by the uncertainties of her own situation, to assess and advise the Board whether such proposals would - 10 - 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 Employee's continued employment with Company, Company agrees that if a Change in Control of Company occurs during the Initial Term or any Renewal Term Employee shall be entitled to the special severance benefits provided in subparagraph (g) of this Section 9 if prior to the expiration of 24 months after the Change in Control of Company Employee terminates her employment with Company for Good Reason or Company terminates Employee's employment without Cause. If Employee triggers the application of this Section by terminating employment for Good Reason, she must do so within 120 days following Employee's actual knowledge or receipt of notice, whether written or oral, of the occurrence of the last event that constitutes Good Reason. (c) Permanent Disability -------------------- Any attempted termination of Employee's employment by Company for reasons of Permanent Disability pursuant to Section 5(b) following a Change in Control shall be treated as a termination by Company without Cause unless Employee is approved for and receives long term disability payments under Company's long term disability plan. In addition, following a Change in Control this Agreement may not be terminated pursuant to Section 5(b) due to Employee's Permanent Disability unless the incapacity giving rise to the Permanent Disability occurs prior to the occurrence of an event that might cause amounts to be payable to Employee pursuant to this Section 9. Once payments begin pursuant to this Section 9, this Agreement may not be terminated by Company pursuant to Section 5(b) due to Permanent Disability and any payments due pursuant to this Section 9 shall not cease or diminish on account of Employee's Permanent Disability. (d) 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 - 11 - 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: (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; - 12 - (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. (e) Good Reason Defined ------------------- For purposes of this Section, "Good Reason" shall have the meaning assigned to it in Section 7, with the following modifications: (1) The "Relevant Date" shall be the day prior to the Change in Control. (2) Paragraph (2) of Section 7(b) shall read as follows: A reduction by Company in Employee's Base Salary as in effect on the date hereof or as the same may be increased from time to time. (3) Paragraph (3) of Section 7(b) shall read as follows: 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 Employee is participating on the Relevant Date, whether such plan is qualified for favorable tax treatment or otherwise, (or plans providing Employee with substantially similar benefits), the taking of any action by Company which would adversely affect Employee's participation in or materially reduce her benefits under any of such plans or deprive her of any material fringe benefit enjoyed by her as - 13 - of the Relevant Date or any later date, or the failure of the Company to provide Employee with the number of paid vacation days to which Employee is then entitled on the basis of her years of service with the Company in accordance with the Company's normal vacation policy as in effect on the Relevant Date; (4) Two additional elements of Good Reason shall be added as follows: (6) Employee is assigned to, or Company's office at which Employee is principally employed on the Relevant Date is relocated to, a location which would require a round-trip commute to work from Employee's principal residence on the Relevant Date of more than 100 miles per day. (7) Failure of Company to obtain an agreement satisfactory to Employee from any successor to the business, or substantially all the assets, of Company to assume this Agreement or issue a substantially similar agreement. (f) Notice of Termination by Employee --------------------------------- Any termination by Employee under this Section 9 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. (g) Effect of Termination; Special Severance Benefits ------------------------------------------------- If Employee is entitled to receive a special severance benefit pursuant to Section 9(b) hereof, Company will provide Employee with the following special severance benefits in addition to the Severance Benefits to which Employee is entitled pursuant to Section 8: (1) Within five days following Employee's termination, a lump sum severance payment will be made to Employee. The lump sum severance payment shall be in an amount equal to: (i) 2.5 times Employee's yearly Base Salary as set forth in Section 3 or as it may be increased from time to time; plus (ii) the greatest of (a) 2.5 times the average annual incentive compensation paid to Employee pursuant to the MIP (or any predecessor or successor plan) during the five fiscal years preceding the fiscal year in which the Change in Control occurs, or (b) an amount equal to 100% of the incentive compensation paid to Employee pursuant to the MIP (or any predecessor - 14 - or successor plan) during the 12 month period prior to the Termination Date, or (c) an amount equal to 35% of Employee's Base Salary as set forth in Section 3 or as it may be increased from time to time; minus (iii) the total amounts due to Employee, if any, pursuant to Sections 8(b)(1) and (2). (2) The amounts due to Employee pursuant to Sections 8(b)(1) and (2) will be accelerated and paid to Employee in one lump sum within five days following Employee's termination without any discount for early payment. For purposes of calculating the amounts due to Employee pursuant to Section 8(b)(2) the Company shall assume that the Company's performance and all other relevant factors for all future fiscal years will be the same as for the fiscal year prior to the fiscal year in which the Change in Control occurs. (3) The benefits provided by Sections 8(b)(3) and 8(b)(4) shall be provided for 30 months following Employee's Termination Date rather than for the period specified in Section 8(c). In lieu of all fringe benefits other than those referred to in Sections 8(b)(3) and (4), Employee shall receive a lump sum payment equal to 20% of Employee's Base Salary as set forth in Section 3 as it may be increased from time to time. (4) Any stock options to purchase Common Stock of Company or stock appreciation rights relating to Common Stock of Company held by Employee on the Notice Date, which are not at the Notice Date currently exercisable and which do not become exercisable pursuant to Section 8(b)(5), shall on the Notice Date automatically become exercisable and shall remain exercisable for 90 days thereafter. (5) All shares of Common Stock of Company held by Employee under any Restricted Stock Plan which on the Notice Date are subject to restrictions which do not lapse pursuant to Section 8(b)(6) shall, as of that date, automatically become free of all restrictions. Company shall amend, if necessary, any option or restricted stock agreements entered into between Company and Employee to be consistent with paragraphs (4) and (5). (h) Other Agreements ---------------- On execution of this Agreement, the letter agreement between Employee and Company concerning change in control benefits dated May 20, 1988 (which was subsequently amended on January 12, 1989), shall be null and void and of no further force or effect. Nothing in this - 15 - Agreement is intended to modify any change of control provisions or protections provided to Employee by the SERP. (i) Legal Expenses -------------- If Employee, at any time, takes any legal action against Company for breach of this Section 9 or Section 10, Company shall reimburse Employee for all costs and expenses incurred by Employee to pursue such legal action, regardless of the outcome, unless the arbitrators appointed pursuant to Section 12(d) find Employee's action to have been frivolous and without merit. Although the dispute resolution provisions of Section 12 shall apply to any legal action involving a breach of this Section 9 and Section 10, the provisions of this Section 9(i) shall supersede conflicting provisions of Section 12(e). 10. CEILING ON CHANGE IN CONTROL BENEFITS ------------------------------------- (a) General ------- The Internal Revenue Code (the "Code") places significant tax burdens on Employee and Company if the total payments made to Employee due to a Change in Control exceed prescribed limits. In order to avoid this excise tax and the related adverse tax consequences for Company, by signing this Agreement Employee agrees that the present value of her "Total Payments" (as defined below) under this Agreement or any other agreement or arrangement with Company will not exceed an amount equal to two and ninety-nine hundredths (2.99) times her "Base Period Income" (as defined below). This is the maximum amount which Employee may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which Company may pay without loss of deduction under Section 280G of the Code. (b) Base Period Income ------------------ "Base Period Income" is an amount equal to Employee's "annualized includible compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Employee's "annualized includible compensation" is the average of her annual taxable income from Company for the "base period", which is the five calendar years prior to the year in which the Change in Control occurs. All of the rules set forth in the applicable regulations apply for purposes of determining Employee's Base Period Income, her "annualized includible compensation", and her "base period". (c) Total Payments -------------- The "Total Payments" include the amount payable pursuant to Section 9(g) and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the - 16 - regulations adopted thereunder) to or for Employee's benefit, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. (d) Procedural Matters ------------------ If Company believes that these rules will result in a reduction of the payments to which Employee is entitled under this Agreement, it will so notify Employee within 60 days following the Termination Date. Employee and Company will then, at Company's expense, retain legal counsel, certified public accountants, and/or a firm of recognized executive compensation consultants to provide an opinion or opinions concerning whether the Total Payments exceed the limit discussed above. Company will select the legal counsel, certified public accountants and executive compensation consultants. If Employee does not accept one or more of the parties selected by Company, Employee may provide Company with the names of legal counsel, certified public accountants and/or executive compensation consultants acceptable to Employee. If Company does not accept the party or parties selected by Employee, the legal counsel, certified public accountants and/or executive compensation consultants selected by Employee and Company, respectively, will select the legal counsel, certified public accountants and/or executive compensation consultants to provide the opinions required. At a minimum, the opinions required by this Section must set forth (1) the amount of Employee's Base Period Income, (2) the present value of the Total Payments and (3) the amount and present value of any excess parachute payments. If the opinions state that there would be an excess parachute payment, Employee's payments under this Agreement will be reduced to the extent necessary to eliminate the excess. Employee will be allowed to choose the payment that should be reduced or eliminated, but the payment Employee chooses to reduce or eliminate must be a payment determined by such counsel to be includible in Total Payments. Employee will make her decision in writing and deliver it to Company within 30 days of receipt of such opinions. If Employees fails to so notify Company, Company will decide which payments to reduce or eliminate. If the legal counsel or certified public accountants selected to provide the opinions referred to above so requests in connection with the opinion required by this Section, a firm of recognized executive compensation consultants, selected by Employee and Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel or certified public accountants may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered before or after the Change in Control. If Company believes that Employee's Total Payments will exceed the limitations of this Section, Company shall provide Employee with a detailed explanation of the basis for its - 17 - conclusion. Company then shall make payments to Employee, at the times stated above, in the maximum amount that it believes may be paid without exceeding such limitations. The balance, if any, will then be paid after the opinions called for above have been received. If the Internal Revenue Service concludes in a final determination that the amounts paid to Employee exceed the limitations of this Section, as a general rule, the excess will be treated as a loan to Employee by Company, and shall be repayable on the 90th day following demand by Company, together with interest at the "applicable federal rate" provided in Section 1274(d) of the Code. In the event that the provisions of Section 280G and 4999 of the Code are repealed without succession, this Section shall be of no further force or effect. 11. COMPETITION ----------- (a) Restrictive Covenant -------------------- In consideration of Company's agreements contained herein and the payments to be made by it to Employee pursuant hereto, Employee agrees that, during the duration of this restrictive covenant she will not: (1) Without the prior written consent of the Board of Directors of Company, engage in a Competing Business within 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which any of the businesses of Company are being conducted on the date of termination of this Agreement or within 100 miles of the outer boundaries of any Standard Metropolitan Statistical Area (or such lesser geographical area as may be set by a court of competent jurisdiction or an arbitrator) in which the Company's strategic plan or any replacement plan (the "Strategic Plan"), as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement, discusses the possibility of Company conducting business within two years following the date of termination of this Agreement; or (2) Directly or indirectly, for herself, or on behalf of, or in conjunction with, any other person or entity, seek to hire and/or hire any individual who was employed by Company or any Subsidiary immediately prior to such hiring or solicitation or during the prior one-year period. - 18 - (b) Duration of Covenant -------------------- Generally, this restrictive covenant shall apply during the Initial Term and any Renewal Term and for the one-year period following the date of termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). If the Competing Business in which Employee engages or intends to engage is a business involving the development or management of an age-restricted community, however, the limitations of Section 11(a)(1) shall apply during the Initial Term, any Renewal Term and for the two-year period following the date of the termination of this Agreement and any renewals thereof (or such lesser period as may be set by a court of competent jurisdiction or an arbitrator). This Restrictive Covenant shall not apply should the Agreement terminate on or after the date on which Employee attains age 65. (c) Remedies; Reasonableness ------------------------ Employee acknowledges and agrees that a breach by Employee 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 restraining and enjoining Employee 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 Employee. Employee 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 her; (ii) the general public will not be harmed as a result of enforcement of this restrictive covenant; and (iii) Employee 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 11, nor a release of Employee from her obligations thereunder. (e) Competing Business ------------------ For purposes of this Agreement, Employee 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, she 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 - 19 - contemplated by Company's Strategic Plan as in effect on the earlier of the date of the competitive activity by Employee or the date of termination of this Agreement. Indirect participation in the operation or ownership of any such entity shall include any investment by Employee 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 which is listed and regularly traded on any national securities exchange or which is regularly traded over-the-counter). Employee shall not be deemed to be engaged in a "Competing Business" if, in any capacity enumerated above, she engages or participates, directly or indirectly, in the operation, ownership, or management of any proprietorship, partnership, corporation, or other business entity where Employee or the business entity in which she may be involved, either directly or indirectly, and together with any related individuals or entities, builds fewer than 25 homes per calendar year (with the number of homes to be determined by the number of permits pulled for such homes). At the written request of Employee from time to time, Company shall furnish Employee with a written description of the business or businesses in which Company is then actively engaged. (f) Change in Control ----------------- The provisions of this Section shall lapse and be of no further force or effect if Employee's employment is terminated by Company without Cause, or by Employee for Good Reason following a Change in Control, or if Company gives notice that it is involved in voluntary liquidation proceedings pursuant to Chapter 7 of the United States Bankruptcy Code (11 U.S.C. ss.701 et seq.) or that the trustee has been ordered by the United States Bankruptcy Court, pursuant to a final and non-appealable order, to cease Company's operations pursuant to 11 U.S.C. ss.1174 of the United States Bankruptcy Code. 12. DISPUTE RESOLUTION ------------------ (a) Mediation --------- Any and all disputes arising under, pertaining to or touching upon this Agreement or the statutory rights or obligations of either party hereto, shall, if not settled by negotiation, be subject to non-binding mediation. Excepted from this Section 12 is the right of Company or Employee to seek preliminary judicial relief with respect to a dispute should such action be necessary to avoid immediate, irreparable harm or damage pending the proceedings provided for in this Section 12. Mediation shall be before an independent mediator selected by the parties pursuant to Section 12(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 16. 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. - 20 - (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 12(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 SECTION 12 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL, EXCEPT AS PROVIDED IN SECTION 12(a). 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 National Rules for the Resolution of Employment Disputes of the American Arbitration Association or its successor. Notwithstanding any provisions in such rules to the contrary, the 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 the applicable statute. 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 Employee was for Good Reason, Employee shall only be entitled to the Severance Benefits provided by Section 8 (or the special Change in Control severance benefits provided by Section 9 in the event of a Change in Control), and, in either case, payment of her 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 Employee all amounts to which she would be entitled under Section 8 if a Change in Control has not occurred or Section 9 if a - 21 - Change in Control has occurred, calculated in either case on the assumption that Employee'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. Employee shall have the first strike. The parties also shall select the arbitrators from a panel list made available by the Association. Company and Employee each shall select one arbitrator from such panel list within ten days of receipt of such list. After Company and Employee 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 mediator shall be borne by Company. The costs and expenses of any arbitration shall be borne by the losing party, unless the arbitrator allocates such costs and expenses in a different manner in the arbitration award. 13. 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 Employee, her heirs, executors, administrators, and legal representatives, provided that the obligations of Employee may not be delegated. 14. NON-DISPARAGEMENT ----------------- Employee 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, Company (including its officers, directors, employees, and agents) will not disparage Employee and will refrain from any action which would reasonably be expected to result in embarrassment to Employee or to materially and adversely affect her opportunities for employment. The preceding two sentences shall not apply to statements or allegations made in any pleading filed - 22 - in connection with any legal proceeding or to disclosures required by applicable law, regulation, or order of court or governmental agency. 15. OTHER AGREEMENTS OF EMPLOYEE ---------------------------- Employee 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 Employee and any third party. 16. 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 Employee, to: Anne L. Mariucci 9042 N. 46th St. Phoenix, AZ 85028 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. 17. 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 Employee and Company with respect to the relationship of Employee with Company. 18. GOVERNING LAW ------------- This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona. - 23 - 19. CAPTIONS -------- The captions included herein are for convenience and shall not constitute a part of this Agreement. 20. 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 Employee and Company. 21. MITIGATION ---------- In the event that Employee's employment is terminated and payments become due to Employee pursuant to this Agreement, Employee shall have no duty to mitigate damages or to become re-employed by another employer. 22. TERMINATION OF EMPLOYMENT ------------------------- The termination of this Agreement by either party also shall result in the termination of Employee's employment relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment relationship continue after the termination of this Agreement. 23. NO CONSTRUCTION AGAINST COMPANY ------------------------------- This Agreement is the result of negotiation between Company and Employee and both have had the opportunity to have this Agreement reviewed by their legal counsel and other advisors. - 24 - Accordingly, this Agreement shall not be construed for or against Company or Employee, regardless of which party drafted the provision at issue. DEL WEBB CORPORATION By: /s/ Robertson C. Jones. --------------------------------------- Its: V.P. & General Counsel --------------------------------------- COMPANY /s/ ANNE L. MARIUCCI --------------------------------------- ANNE L. MARIUCCI EMPLOYEE - 25 - EX-10.39 15 SUPPLEMENTAL EXECUTIVE RETIREMENT NO. 1 DEL WEBB CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 PARTICIPATION AGREEMENT (Amended and Restated Effective as of ________ __, 1997) This amended and restated Participation Agreement is entered into as of this ___th day of ___________, 1997, between Del Webb Corporation, a Delaware corporation ("Employer"), and Joseph F. Contadino ("Participant"). R E C I T A L S - - - - - - - - A. Employer and Participant previously entered into a Participation Agreement dated as of November 9, 1992, providing for participation by Participant, beginning on November 1, 1992, in the Del Webb Corporation Supplemental Executive Retirement Plan No. 2 (the "Plan"). B. The Plan was originally adopted as of January 1, 1989 and was 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 November 9, 1992, and which was effective as of November 1, 1992. 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, which was added by the First Amendment, the provisions of the Plan as they apply to Participant are modified and supplemented as follows: (a) Short Service Penalty. If Participant's employment is continued until Participant has attained the age of sixty-two (62), Participant will be credited with two (2) additional Years of Service for purposes of the short service penalty provisions of paragraph 4.2(c) of the Plan. (b) Early Retirement. If Participant's employment is continued until Participant has attained age sixty-two (62), the reduction called for by paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall imply that retirement is expected at any particular (c) 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 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 Agreement includes two definitions of Good Reason, the standard definition that applies prior to a Change in Control and a modified 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:_____________________________________ Title:Vice President, Human Resources PARTICIPANT: ---------------------------------------- JOSEPH F. CONTADINO -2- EX-10.40 16 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 Exhibit 10.40 DEL WEBB CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 PARTICIPATION AGREEMENT (Amended and Restated Effective as of ________ __, 1997) This amended and restated Participation Agreement is entered into as of this ___th day of ___________, 1997, between Del Webb Corporation, a Delaware corporation ("Employer"), and John H. Gleason ("Participant"). R E C I T A L S - - - - - - - - A. Employer and Participant previously entered into a Participation Agreement dated as of March 15, 1990 providing for participation by Participant, beginning on January 1, 1990, in the Del Webb Corporation Supplemental Executive Retirement Plan No. 2 (the "Plan"). B. The Plan was originally adopted as of January 1, 1989 and was 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 March 15, 1990, and which was effective as of January 1, 1990. 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, which was added by the First Amendment, the provisions of the Plan as they apply to Participant are modified and supplemented as follows: (a) Short Service Penalty. If Participant's employment is continued until Participant has attained the age of sixty-two (62), Participant will be credited with four and one-quarter (4.25) additional Years of Service for purposes of the short service penalty provisions of paragraph 4.2(c) of the Plan. (b) Early Retirement. If Participant's employment is continued until Participant has attained age sixty-two (62), the reduction called for by paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall imply that retirement is expected at any particular age. (c) 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 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 Agreement includes two definitions of Good Reason, the standard definition that applies prior to a Change in Control and a modified 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:_____________________________________ Title:Vice President, Human Resources PARTICIPANT: ---------------------------------------- JOHN H. GLEASON -2- EX-10.41 17 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 Exhibit 10.41 DEL WEBB CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 PARTICIPATION AGREEMENT (Amended and Restated Effective as of ________ __, 1997) This amended and restated Participation Agreement is entered into as of this ___th day of ___________, 1997, between Del Webb Corporation, a Delaware corporation ("Employer"), and LeRoy C. Hanneman ("Participant"). R E C I T A L S - - - - - - - - A. Employer and Participant previously entered into a Participation Agreement dated as of May 2, 1989 providing for participation by Participant, beginning on January 1, 1989, in the Del Webb Corporation Supplemental Executive Retirement Plan No. 2 (the "Plan"). B. The Plan was originally adopted as of January 1, 1989 and was 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 May 2, 1989, and which was effective as of January 1, 1989. 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, which was added by the First Amendment, the provisions of the Plan as they apply to Participant are modified and supplemented as follows: (a) Early Retirement. If Participant's employment is continued until Participant has attained age sixty-two (62), the reduction called for by paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall imply that retirement is expected at any particular age. (b) 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 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 Agreement includes two definitions of Good Reason, the standard definition that applies prior to a Change in Control and a modified 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:_____________________________________ Title:Vice President, Human Resources PARTICIPANT: ---------------------------------------- LEROY C. HANNEMAN -2- EX-10.42 18 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 Exhibit 10.42 DEL WEBB CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN NO. 1 PARTICIPATION AGREEMENT (Amended and Restated Effective as of ________ __, 1997) This amended and restated Participation Agreement is entered into as of this ___th day of ___________, 1997, between Del Webb Corporation, a Delaware corporation ("Employer"), and Anne L. Mariucci ("Participant"). R E C I T A L S - - - - - - - - A. Employer and Participant previously entered into a Participation Agreement dated as of April 6, 1989 providing for participation by Participant, beginning on January 1, 1989, in the Del Webb Corporation Supplemental Executive Retirement Plan No. 2 (the "Plan"). B. The Plan was originally adopted as of January 1, 1989 and was 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 April 6, 1989, and which was effective as of January 1, 1989. 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, which was added by the First Amendment, the provisions of the Plan as they apply to Participant are modified and supplemented as follows: (a) Early Retirement. If Participant's employment is continued until Participant has attained age sixty-two (62), the reduction called for by paragraph 4.3(d) shall not apply. Nothing in this Agreement or the Plan shall imply that retirement is expected at any particular age. (b) 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 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 Agreement includes two definitions of Good Reason, the standard definition that applies prior to a Change in Control and a modified 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:_____________________________________ Title:Vice President, Human Resources PARTICIPANT: ---------------------------------------- ANNE L. MARIUCCI -2- EX-21 19 SUBSIDIARIES OF THE REGISTRANT SUBSIDIARIES OF THE REGISTRANT* Exhibit 21 as of June 30, 1997
Asset One Corp. Marina Operations Corp. Asset Four Corp. New Mexico Asset Corporation Asset Five Corp. New Mexico Asset Limited Partnership Bellasera Corp. Sun City Sales Corporation, a Michigan corporation Bellasera Home Construction Co. Sun City Title Agency Co. Coventry of California, Inc. Sun State Insulation Co., Inc. Del Webb Architectural Services, Inc. Terravita Commercial Corp. Del Webb California Corp. Terravita Corp. Del Webb Commercial Properties Corporation Terravita Home Construction Co. Del Webb Communities, Inc. Terravita Marketplace L.L.C. Del Webb Communities of Nevada, Inc. The Villages at Desert Hills, Inc. Del Webb Community Management Co. Trovas Company Del Webb Conservation Holding Corp. Trovas Construction Co. Del Webb Construction Services Co. Del Webb Home Construction, Inc. Del Webb Homes, Inc. Del Webb Limited Holding Co. Del Webb Midatlantic Corp. Del Webb Property Corp. Del Webb Southwest Co. Del Webb Texas Limited Partnership Del Webb Texas Title Agency Co. Del Webb's Contracting Services, Inc. Del Webb's Contracting Services of Tucson, Inc. Del Webb's Coventry Homes Construction Co. Del Webb's Coventry Homes, Inc. 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 Sunflower of Tucson, Inc. Del Webb's Stetson Hills, Inc. Del Webb's Sun City Realty, Inc. Del E. Webb Cactus Development Corp. Del E. Webb Development Co., L.P., a Delaware limited partnership Del E. Webb Finance Company, a Nevada corporation 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.
* All subsidiaries are Arizona corporations except the following: Del E. Webb Development Co., L.P., a Delaware limited partnership Del E. Webb Finance Company, a Nevada corporation New Mexico Asset Limited Partnership, an Arizona limited partnership Sun City Sales Corporation, a Michigan corporation EX-23 20 CONSENT OF EXPERTS Exhibit 23.0 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 15, 1997, relating to the consolidated balance sheets of Del Webb Corporation and subsidiaries as of June 30, 1997 and 1996 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, 1997 which appears in the June 30, 1997 annual report on Form 10-K of Del Webb Corporation. Our report refers to a change in the method of accounting for impairment of long-lived assets. KPMG PEAT MARWICK LLP Phoenix, Arizona September 5, 1997 EX-27 21 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 U.S. DOLLARS 12-MOS JUN-30-1997 JUL-01-1996 JUN-30-1997 1 24,715 0 28,892 0 939,684 0 47,043 26,106 1,086,662 0 563,068 0 0 18 299,812 1,086,662 0 1,186,262 0 963,329 160,924 0 0 62,009 22,323 39,686 0 (1,285) 0 38,401 2.15 0
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