Exhibit 1.5
January 17, 2001
Mr. Ken Hull
100 Hester Hollow
Georgetown, TX 78628
Dear Mr. Hull:
The Board of Directors of Del Webb Corporation (the "Company") and the Human
Resources Committee (the "Committee") of the Board have determined that it is in
the best interest of the Company and its shareholders for the Company to agree,
as provided herein, to pay you termination compensation in the event you should
leave the employ of the Company or a Subsidiary under the circumstances
described below. Reference in this letter to your employment by or with the
Company 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 Company is unsettling to you and other senior executives of
the Company. Therefore, these arrangements are being made to help assure a
continuing dedication by you to your duties to the Company notwithstanding the
occurrence or potential occurrence of a change in control. In particular, the
Board and the Committee believe it important, should the Company 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 Company and its Subsidiaries that the Company 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 Company, the Company agrees with you as follows:
1. LIMITED RIGHT TO RECEIVE SEVERANCE BENEFITS. In the event that within
twelve (12) months after a "Change in Control" (as defined herein) of the
Company your employment with the Company is terminated, you shall be
entitled to the severance benefits provided in Section 3 hereof unless such
termination is (i) because of your death, "Permanent Disability" (as
defined herein) or retirement, (ii) by the Company for "Cause" (as defined
herein) or (iii) by you, other than for "Good Reason" (as defined herein).
January 17, 2001
Page 2
2. CERTAIN DEFINITIONS. For purposes of this Agreement:
(a) CHANGE IN CONTROL. A "Change in Control" of the Company shall be
deemed to have occurred in any or all of the following instances:
(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 Company or
a Company 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 the Exchange 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
(ii) 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
(iii) The stockholders of Company approve a merger or consolidation of
Company with any other Company, 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
(iv) 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 series of
transactions) all or substantially all Company's assets.
(b) POTENTIAL CHANGE IN CONTROL. A "Potential Change in Control" shall be
deemed to have occurred in any or all of the following instances:
(i) Company enters into an agreement, the consummation of which
would result in the occurrence of an Actual Change in Control;
January 17, 2001
Page 3
(ii) Any person (including 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 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
(iv) 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 Sections 2(a) and 2(b) above, the term "Voting Securities" shall
mean and include any securities of the Company which vote generally for the
election of directors.
(c) RETIREMENT. Termination by the Company or you of your employment based
on "Retirement" shall mean (i) voluntary retirement by you from active
full-time employment with any person or Company on and after the
attainment of sixty-five (65) years, (ii) voluntary separation because
of retirement from active employment in accordance with the Company'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 Company for you with your written
consent.
(d) PERMANENT DISABILITY. If, as a result of your incapacity because of
physical or mental illness, you shall have been absent from your
duties with the Company or a Subsidiary on a full-time basis for (6)
months or more and you apply for and are approved for long-term
disability payments under the Company's long-term disability plan, the
Company may terminate this Agreement for "Permanent Disability."
Notwithstanding the foregoing, this Agreement may not be terminated
pursuant to this Section 2(d) 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(d) and
such payment shall not cease or diminish on account of your Permanent
Disability.
January 17, 2001
Page 4
(e) CAUSE. The Company shall have "Cause" to terminate your employment
upon (i) the breach by you of any employment contract between you and
the Company, or (ii) your conviction of a felony or crime involving
moral turpitude (meaning a crime that necessarily includes the
commission of any act of gross depravity, dishonesty or bad morals).
(f) 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 the
last of any of the events specified in (i) - (v) 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 not reasonably consistent with your
positions, duties, responsibilities and status with the Company
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 Company in your base salary as in effect on
the date hereof or as the same may be increased from time to
time;
(iii) (A) the failure by the Company 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 Company
(or plans providing you with substantially similar benefits),
(B) the taking of any action by the Company 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 (C) the failure by the Company 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 Company in accordance
with the Company's normal vacation policy in effect on the date
hereof;
(iv) you are assigned to, or the Company's office at which you are
principally employed immediately prior to the date of the Change
in Control of the Company is relocated to, a location which
would require a round-trip commute to work from your residence
of more than one hundred (100) miles per day:
(v) the failure of the Company to obtain an agreement satisfactory
to you from any successor to the business, or substantially all
the assets, of the Company to assume this Agreement or issue a
substantially similar agreement;
January 17, 2001
Page 5
(g) Termination of your employment by you for "Good Reason," with receipt
of the benefits provided in Section 3, shall also include:
(i) your termination by the Company, purportedly for Cause, if it is
thereafter determined that cause did not exist under this
Agreement with respect to your termination.
(ii) the taking of any action by the Company at the request of or on
behalf of any person, after the occurrence of a Potential Change
in Control, but prior to the earlier of (i) a date 180 days
following the trigger date of a Potential Change in Control or
(ii) an actual Change in Control, terminating this Agreement or
terminating your employment with the Company, other than for
Cause: PROVIDED THAT, for purposes of this subparagraph only,
cause shall include willful and gross misconduct on your part
that is materially and demonstratively detrimental to the
Company.
(h) NOTICE OF TERMINATION. Any termination by the Company or you shall be
communicated by written notice to the other party ("Notice of
Termination"). With respect to any termination by the Company 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.
(i) SUBSIDIARY. "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.
3. EFFECT OF TERMINATION. If you are entitled to receive severance benefits
pursuant to this agreement, such severance benefits shall be as follows:
(a) within five (5) days following your termination, 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 biweekly installments
without interest) equal to the sum of (i) 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 (ii) 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 your current target bonus under the
management incentive program then in effect;
(b) any stock options to purchase common stock of the Company 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;
January 17, 2001
Page 6
(c) all shares of common stock of the Company held by you under the
Company's long-term incentive 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 other than those provided separately in Section 5.
4. EXCISE AND INCOME TAX GROSS-UP. The Internal Revenue Code of 1986 (the
"Code") imposes significant tax burdens on you and Company if the total
amounts received by your pursuant to this agreement exceed prescribed
limits. These tax burdens include a requirement that you pay 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, you are
required to pay such excise tax, then upon written notice from you to
Company, Company shall pay you an amount equal to the total excise tax
imposed on you (including the excise tax reimbursements due pursuant to the
next sentence). If Company is obligated to pay you pursuant to the
preceding sentence, Company also shall pay you an amount equal to the
"total presumed federal and state taxes" that could be imposed on you with
respect to the excise tax reimbursements due to you pursuant to the
preceding sentence and the federal and state tax reimbursements due to you
pursuant to this sentence. For purposes of the preceding sentence, the
"total presumed federal and state taxes" that could be imposed on you 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 you reside on the date that
the payment under this Section 4 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. You will be responsible
for paying the actual taxes. The amounts payable to you pursuant to this or
any other agreement or arrangement with Company will 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 you
or Company may elect to challenge any excise taxes imposed by the Internal
Revenue Service and you and Company agree to cooperate with each other in
prosecuting such challenges. If you elect to litigate or otherwise
challenge the imposition of such excise tax, however, Company will join you
in such litigation or challenge only if Company's General Counsel
determines in good faith that your position has substantial merit and that
the issues should be litigated from the standpoint of Company's best
interest.
5. 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 Company or any 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 because
of your termination shall be paid to you by the Company in cash in the
event any payment is made to you pursuant to Section 3. In the event that
on the date your employment with the Company is terminated (and provided
you are entitled to benefits) you are provided an automobile allowance or
are entitled to the use of an automobile under the Company's executive
January 17, 2001
Page 7
automobile policy, you shall have allowance or 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 twelve (12) month period after
any termination entitling you to benefits under Section 3 hereof, the
Company 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").
6. CONTINUATION OF EMPLOYMENT. This Agreement shall not be construed to confer
upon you any right to continue in the employ of the Company or a
Subsidiary, and shall not limit any right of the Company or Subsidiary to
in its sole discretion terminate your employment.
7. ENTIRE AGREEMENT. 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 Company and any applicable benefit
plan of the Company or any of its Subsidiaries in effect at the time
(including but not limited to the plans referred to in Section 5), would
constitute the entire obligation of the Company to you and performance
thereof would constitute full settlement of any claim that you might
otherwise assert against the Company on account of such termination.
8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
the benefit of you, your estate and the Company and any successor of the
Company, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged to you.
9. 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 Company.
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.
10. TERMINATION OF THIS AGREEMENT. This Agreement may be unilaterally
terminated by the Company upon twelve (12) months prior written notice to
you; PROVIDED THAT (subject to the provisions of Section 2(f) relating to a
Potential Change in Control) after the occurrence of a Potential Change in
Control the foregoing provision shall not apply.
January 17, 2001
Page 8
11. MEDIATION AND ARBITRATION.
(a) MEDIATION. Any and all disputes arising under, pertaining to or
touching upon this Agreement or the statutory rights or obligations of
either you or the Company hereto, shall, if not settled by
negotiation, be subject to non-binding mediation. Excepted from this
Section 11 is the right of Company or you 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 11. Mediation shall be before an
independent mediator selected by you or the Company pursuant to
Section 11(d). Any demand for mediation shall be made in writing. 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, you shall then proceed to binding arbitration before a
panel of three independent arbitrators selected pursuant to Section
11(d). The mediator shall not serve as an arbitrator. ALL DISPUTES
INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY
ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT
COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS
OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC
POLICY, SHALL BE RESOLVED PURSUANT TO THIS PARAGRAPH (b) AND THERE
SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The
arbitration hearing shall occur at a time and place convenient to you
and Company 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 current
arbitration rules of the American Arbitration Association or its
successor (the "Association"). 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 42 U.S.C.ss. 1981 (a) and the Civil Rights Act of
1991. In cases of employment tort, the arbitrators may award punitive
damages if proved by clear and convincing evidence. Issues of
procedure, arbitrability, or confirmation of award shall be governed
January 17, 2001
Page 9
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 your termination was for Good Reason, you
shall only be entitled to the severance benefits provided by Section 3
and payment of your 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
you all amounts to which you would be entitled under Section 3,
calculated on the assumption that your employment had been terminated
without Cause.
(d) SELECTION OF MEDIATOR OR ARBITRATORS. You and Company shall elect the
mediator from a panel list made available by the Association. If you
or Company 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 for the Association. You shall have the first strike. You and
Company shall also select the arbitrators from a panel list made
available by the Association. Company and you each shall select one
arbitrator from such panel list within ten days of receipt of such
list. After Company and you 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. Should you or Company, at any time, initiate arbitration for
breach of this Agreement, Company shall reimburse you for all amounts
spent by you to pursue such arbitration, unless the arbitrator finds
your action to have been frivolous and without merit.
12. 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.
13. 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 Company the enclosed copy of this letter, whereupon
this letter shall constitute a binding agreement between you and the
Company in accordance with its terms.
January 17, 2001
Page 10
14. GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
Sincerely yours,
Lynn Schuttenberg
Enclosure
AGREED:
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Ken Hull
Date: ___________________
January 17, 2001
Page 11
ELECTION FOR RECEIPT OF INSTALLMENT PAYMENTS
Pursuant to the terms of the Change in Control Agreement dated
_________________, 2000 between Del Webb Company and the undersigned, I elect to
have the payments due me under Section 3(a) of this letter agreement paid to me
in equal biweekly installments over a period of twelve (12) months.
----------------------------------------
Ken Hull
Date: ________________________
State of Arizona )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this ___ day of __________,
___, by ____________.
My Commission Expires _________________________. _____________________________.
Notary