DEL WEBB CORPORATION
JOHN A. SPENCER
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the 1st
day of January, 2000 between DEL WEBB CORPORATION, a Delaware corporation (the
"Company"), and John A. Spencer (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 as of January 1, 2000 and ending on December 31, 2000 (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 January 1 and
ending on the next following December 31 ( 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 Executive Vice President. As Executive Vice
President, Employee shall act as Chief Financial Officer and senior financial
and administrative officer, responsible for direction of financial, legal, human
resources, information systems, internal audit, marketing research, and
Fairmount Mortgage operations. Employee's responsibilities shall include, but
are not limited to, the duties and responsibilities described in the Job
Description on file with Company; recognizing, however, that the Job Description
may from time to time not reflect the responsibilities of the Employee, because
the Job Description is updated only periodically. Employee also shall perform
such additional duties related to the business and affairs of Company and its
Subsidiaries as may be delegated to Employee 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.
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(c) EMPLOYEE COMMITMENTS
Employee agrees that Employee will faithfully, industriously, and to the
best of Employee's ability, experience, and talents, perform all of the duties
that may be required of and from Employee and fulfill all of Employee's
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 Employee will devote substantially all of
Employee's 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 $255,000 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 2000 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 65% 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
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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 Employee's 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 Employee's 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.
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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 Employee's
death. In addition, Employee's Base Salary (as determined pursuant to Section 3)
as in effect at the time of Employee's death will be continued for a period of
12 calendar months following the date of Employee's 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
Employee's 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 Employee's 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 Employee's 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.
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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 Employee's Base Salary through the effective date of
Employee's 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.
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
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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
Employee of any duties that are not reasonably consistent with
Employee's positions, duties, responsibilities, and status with
Company as in effect on the "Relevant Date", or demotion, or a
change in Employee's titles or offices as in effect on the
Relevant Date (except as specifically contemplated by this
Agreement), or any removal of Employee from or any failure to
re-appoint or re-elect Employee to any of such positions, except
in connection with the termination of this Agreement for Cause,
Permanent Disability, as a result of Employee's death, by
Employee 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 Employee's
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.
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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 Employee's Base Salary through the effective date of
Employee's 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).
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(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):
Company will continue to pay Employee Employee's 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 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.
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
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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.
(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.
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(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 Employee's 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 Employee's 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 Employee's employment with Company for Good Reason
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or Company terminates Employee's employment without Cause. If Employee triggers
the application of this Section by terminating employment for Good Reason,
Employee 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 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
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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:
Company enters into an agreement, the consummation of which would
result in the occurrence of an Actual Change in Control;
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.
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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 Employee's
benefits under any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee 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 Employee's 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.
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(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:
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
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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 as of March 16, 1999 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).
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10. EXCISE AND INCOME TAX GROSS-UP
The Internal Revenue Code of 1986 (the "Code") imposes significant tax
burdens on Employee and Company if the total amounts received by Employee due to
a Change in Control exceed prescribed limits. These tax burdens include a
requirement that Employee pay a 20% excise tax on certain amounts received in
excess of the prescribed limits and a loss of deduction for Company. If, as a
result of these Code provisions, Employee is required to pay such excise tax,
then upon written notice from Employee to Company, Company shall pay Employee an
amount equal to the total excise tax imposed on Employee (including the excise
tax on reimbursements due pursuant to this sentence and the excise taxes on any
federal and state tax reimbursements due pursuant to the next sentence). If
Company is obligated to pay Employee pursuant to the preceding sentence, Company
also shall pay Employee an amount equal to the "total presumed federal and state
taxes" that could be imposed on Employee with respect to the excise tax
reimbursements due to Employee pursuant to the preceding sentence and the
federal and state tax reimbursements due to Employee pursuant to this sentence.
For purposes of the preceding sentence, the "total presumed federal and states
taxes" that could be imposed on Employee shall be conclusively calculated using
a combined tax rate equal to the sum of (a) the highest individual income tax
rate in effect under (i) Federal tax law and (ii) the tax laws of the state in
which Employee resides on the date that the payment under this Section 10 is
computed and (b) the hospital insurance portion of FICA. No adjustments will be
made in this combined rate for the deduction of state taxes on the federal
return, the loss of itemized deductions or exemptions, or for any other purpose.
Employee shall be responsible for paying the actual taxes. The amounts payable
to Employee pursuant to this or any other agreement or arrangement with Company
shall not be limited in any way by the amount that may be paid pursuant to the
Code without the imposition of an excise tax or the loss of Company deductions.
Either Employee or Company may elect to challenge any excise taxes imposed by
the Internal Revenue Service and Employee and Company agree to cooperate with
each other in prosecuting such challenges. If Employee elects to litigate or
otherwise challenge the imposition of such excise tax, however, Company will
join Employee in such litigation or challenge only if Company's General Counsel
determines in good faith that Employee's position has substantial merit and that
the issues should be litigated from the standpoint of Company's best interest.
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 Employee 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
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(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 Employee, 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 Employee; (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 Employee's obligations thereunder.
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(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, Employee 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, Employee 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 Employee 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.
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(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 Employee's 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 Employee 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.
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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, Employee's 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 Employee's 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.
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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 A. Spencer
10426 N. 44th 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.
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. Accordingly, this Agreement shall not be construed
for or against Company or Employee, regardless of which party drafted the
provision at issue.
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DEL WEBB CORPORATION
By: /s/ Robertson C. Jones
-------------------------------------
Its:
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COMPANY
/s/ John A. Spencer
----------------------------------------
John A. Spencer EMPLOYEE
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