EXHIBIT 1.4
KB HOME
(A DELAWARE CORPORATION)
$200,000,000
8-5/8% SENIOR SUBORDINATED NOTES DUE 2008
UNDERWRITING AGREEMENT
November 30, 2001
Banc of America Securities LLC
Comerica Securities, Inc.
Banc One Capital Markets, Inc.
SunTrust Capital Markets, Inc.
As Representatives of the several Underwriters
c/o Banc of America Securities LLC
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Ladies and Gentlemen:
KB Home, a Delaware corporation (the "Company"), confirms its agreement
with Banc of America Securities LLC and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Banc of America Securities LLC, Comerica Securities, Inc.,
Banc One Capital Markets, Inc. and SunTrust Capital Markets, Inc. are acting as
representatives (in such capacity, the "Representatives"), with respect to the
sale by the Company and the purchase by the Underwriters, acting severally and
not jointly, of $200,000,000 aggregate principal amount of the Company's 8-5/8%
Senior Subordinated Notes due 2008 (the "Securities"). The Securities are to be
issued pursuant to an indenture dated as of November 19, 1996 (the "Indenture",
which term as used herein includes the instrument establishing the form and
terms of the Securities) between the Company and SunTrust Bank (as successor to
SunTrust Bank, Atlanta), as trustee (the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-41549) for the
registration under
the Securities Act of 1933 (the "1933 Act") of, among other securities, debt
securities, which registration statement was declared effective by the
Commission on December 16, 1997 and copies of which have heretofore been
delivered to you. Such registration statement, as amended at the date of this
Agreement and including all documents incorporated or deemed to be incorporated
by reference therein, is hereinafter referred to as the "Registration
Statement". The Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "1939 Act"). The Company proposes to file with the
Commission pursuant to Rule 424(b) of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") the Prospectus
Supplement (as defined in Section 3(i) hereof) and the related prospectus dated
November 30, 2001 (the "Base Prospectus"), and has previously advised you of all
further information (financial and other) with respect to the Company set forth
therein. The Base Prospectus together with the Prospectus Supplement, in the
respective forms first provided to the Underwriters for use in confirming sales
of the Securities, including all documents incorporated or deemed to be
incorporated by reference therein through the date hereof, are hereinafter
referred to as, collectively, the "Prospectus", except that if any revised
prospectus or prospectus supplement shall be provided to the Underwriters by the
Company for use in connection with the offering and sale of the Securities which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b) of the 1933 Act Regulations), the term "Prospectus" shall refer to such
revised prospectus or prospectus supplement, as the case may be, from and after
the time it is first provided to the Underwriters for such use. Unless the
context otherwise requires, all references in this Agreement to documents,
financial statements and schedules and other information which is "contained",
"included", "stated", "described in" or "referred to" in the Registration
Statement or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such documents, financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934 (the "1934
Act") after the date of this Agreement which is or is deemed to be incorporated
by reference in the Registration Statement or the Prospectus, as the case may
be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the
date hereof (such date being hereinafter referred to as the "Representation
Date") as follows:
(i) The Company meets the requirements for use of Form S-3
under the 1933 Act and the 1933 Act Regulations. The Registration Statement, at
the time it became effective, as of the Representation Date, and the Base
Prospectus, as of its date and as of the Representation Date, complied and
comply in all material respects with the requirements of the 1933 Act, the 1933
Act Regulations (including Rule 415(a) of the 1933 Act Regulations), the 1939
Act and the rules and regulations of the Commission under the 1939 Act (the
"1939 Act
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Regulations"), and did not and as of the Representation Date do not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
The Prospectus, at the Representation Date (unless the term "Prospectus" refers
to a prospectus which has been provided to the Underwriters by the Company for
use in connection with the offering of the Securities which differs from the
Prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations, in which case at the time it is first provided to the Underwriters
for such use) and at the Closing Time referred to in Section 2 hereof, does not
and will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the representations and warranties in this subsection (i) shall not apply
to statements in or omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through the Representatives expressly for
use in the Registration Statement or the Prospectus or the information contained
in any Statement of Eligibility of a trustee under the 1939 Act filed or
incorporated by reference as an exhibit to the Registration Statement (a "Form
T-1").
(ii) Ernst & Young LLP, whose reports are incorporated by
reference into the Registration Statement, are independent public accountants
with respect to the Company and its subsidiaries as required by the 1933 Act and
the 1933 Act Regulations.
(iii) The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries as at the
dates indicated and the results of operations of the Company and its
consolidated subsidiaries for the periods specified; except as otherwise stated
in the Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis; the supporting schedules included or incorporated
by reference in the Registration Statement present fairly the information
required to be stated therein; the Company's ratios of earnings to fixed charges
and of earnings to combined fixed charges and preferred stock dividends
(including the amounts the ratios would have been were interest on the
outstanding collateralized mortgage obligations of the Company's wholly owned
limited purpose financing subsidiaries included in such ratios' calculation)
included in the Prospectus Supplement under the caption "Selected Consolidated
Financial Data" and in Exhibit 12 to the Registration Statement have been
calculated in compliance with Item 503(d) of Regulation S-K of the Commission;
and the pro forma financial statements, if any, and related notes thereto
included in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries (which term, as used in this
Agreement, includes without limitation consolidated joint ventures in which the
Company or any of its other subsidiaries is a participant, any consolidated
limited and general partnerships in which the Company or any
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of its other subsidiaries owns partnership interests and any consolidated
limited liability companies in which the Company or any of its other
subsidiaries owns membership interests (such joint ventures, limited and general
partnerships and limited liability companies being hereinafter called,
collectively, the "Partnerships")) considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) except for regular
quarterly dividends in customary amounts per share on the common stock, par
value $1.00 per share (the "Common Stock"), there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock. As used in this subsection (iv), the term "Registration
Statement" means the Registration Statement as in effect on the date of this
Agreement and the term "Prospectus" means the Prospectus in the form first used
to confirm sales of the Securities.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus; and the
Company is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(vi) Each Significant Subsidiary (as defined below) is either
a corporation or a limited partnership. Each Significant Subsidiary has been
duly organized and is validly existing as a corporation or limited partnership,
as the case may be, in good standing under the laws of the jurisdiction of its
organization, has power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; all of the issued and
outstanding capital stock of each Significant Subsidiary which is a corporation
has been duly authorized and validly issued, is fully paid and non-assessable
and is owned (except for directors qualifying shares and a nominal number of
shares held by affiliated parties) by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; and all of the outstanding equity interests in
each Significant Subsidiary which is a Partnership have been duly authorized (if
applicable) and validly issued, are fully paid and non-assessable and are owned
by the Company (except to the extent that a minority interest in the Partnership
is reflected in the Company's consolidated financial statements included or
incorporated by reference in the Prospectus), directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. For purposes of this Agreement, "Significant Subsidiary" means
any subsidiary of the Company (including, without limitation, any Partnership)
that is a "significant subsidiary" as defined in Rule 1-02 of
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Regulation S-X (as in effect on January 1, 1996), but substituting "5%" for
"10%" wherever "10%" appears in such definition.
(vii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements, employee
benefit plans referred to or incorporated by reference in the Prospectus); the
shares of issued and outstanding Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable; the Common Stock, the
Company's authorized but unissued special common stock, par value $1.00 per
share (the "Special Common Stock"), and the Company's authorized and unissued
preferred stock, par value $1.00 per share (the "Preferred Stock"), conform to
the respective statements relating thereto included in the Prospectus; the
Securities have been duly authorized for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued by the Company, authenticated by the
Trustee and delivered pursuant to the provisions of the Indenture and this
Agreement against payment of the consideration set forth herein, the Securities
will have been duly executed and delivered by the Company and will constitute
valid and binding obligations of the Company enforceable in accordance with
their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles, and
will be entitled to the benefits of the Indenture; the Indenture has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles; the Securities
and the Indenture conform in all material respects to the descriptions thereof
contained in the Prospectus; and, after giving effect to the sale of Securities
and the sale of any other securities registered pursuant to the Registration
Statement to be issued prior to the delivery of the Securities, the aggregate
amount of Securities which will have been issued and sold by the Company will
not exceed the amount of theretofore unsold securities registered pursuant to
the Registration Statement.
(viii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or in default in the performance or
observance of (A) any obligation, agreement, covenant or condition contained in
the Company's 2000 Revolving Credit Facility dated as of October 3, 2000, among
the Company, the banks party thereto, Bank of America, N.A. as Administrative
Agent, Credit Lyonnais Los Angeles Branch, as Syndication Agent, Bank One, NA,
as Documentation Agent, and Banc of America Securities LLC, as Lead Arranger and
Sole Book Manager, including all amendments and supplements thereto, if any, and
any agreements entered into in connection therewith (the "Revolving Facility"),
and the 2000 Term Loan Agreement dated as of October 3, 2000, among the Company,
the banks party thereto, Bank of America, N.A., as Administrative Agent, Credit
Lyonnais Los Angeles Branch, as Syndication Agent, Bank One, NA, as
Documentation Agent, and Banc of America Securities LLC, as Lead Arranger and
Sole Book Manager, including all amendments and supplements thereto, if any, and
any agreements entered into in connection therewith (the "Term Facility" and,
together with the Revolving Facility, the "Revolving Loan Agreement"), or the
Company's 9-3/8% Senior Subordinated Notes due 2003 (the "9-3/8% Senior
Subordinated Notes") or the Indenture dated as of May 1, 1993 between the
Company and The First National Bank of Boston pursuant to which the 9-3/8%
Senior Subordinated Notes were issued (the "9-3/8% Senior Subordinated
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Indenture"), the Company's 9-5/8% Senior Subordinated Notes due 2006 (the
"9-5/8% Senior Subordinated Notes") or the Indenture or the instrument
establishing the form and terms of the 9-5/8% Senior Subordinated Notes, the
Company's 9-1/2% Senior Subordinated Notes due 2011 (the "9-1/2% Senior
Subordinated Notes" and together with the 9-3/8% Senior Subordinated Notes and
the 9-5/8% Senior Subordinated Notes, the "Senior Subordinated Notes") or the
instrument establishing the form and terms of the 9-1/2% Senior Subordinated
Notes (the Indenture and the instruments establishing the form and terms of the
9-5/8% Senior Subordinated Notes and the 9-1/2% Senior Subordinated Notes are
referred to in this Agreement as, collectively, the "Senior Subordinated
Indenture"), the Company's 7-3/4% Senior Notes due October 15, 2004 (the "7-3/4%
Senior Notes" or the "Senior Notes") or the Indenture dated as of October 14,
1997 between the Company and SunTrust Bank (as successor to SunTrust Bank,
Atlanta), pursuant to which the 7-3/4% Senior Notes were issued, including the
instrument establishing the form and terms of the 7-3/4% Senior Notes (the
"7-3/4% Senior Notes Indenture") (the Revolving Loan Agreement, the 9-3/8%
Senior Subordinated Notes, the 9-3/8% Senior Subordinated Indenture, the 9-5/8%
Senior Subordinated Notes, the 9-1/2% Senior Subordinated Notes, the Senior
Subordinated Indenture, the 7-3/4% Senior Notes and the 7-3/4% Senior Notes
Indenture are hereinafter called, collectively, the "Subject Instruments" and,
individually, a "Subject Instrument") or (B) any obligation, agreement, covenant
or condition contained in any other contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any of the
Significant Subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any of the
Significant Subsidiaries is subject, which default or violation would have a
material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and the execution, delivery and
performance of this Agreement, the Indenture and the Securities and the
consummation of the transactions contemplated herein and therein and compliance
by the Company with its obligations hereunder and thereunder, have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of the Significant Subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
the Company or any of the Significant Subsidiaries is a party or by which it or
any of them may be bound (including, without limitation, the Subject
Instruments), or to which any of the property or assets of the Company or any of
the Significant Subsidiaries is subject, except (other than in the case of the
Subject Instruments) for a conflict, breach, default, lien, charge or
encumbrance which would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise, nor will such
action result in any violation of the provisions of the charter, by-laws or
other corresponding organizational documents of the Company or any of the
Significant Subsidiaries or any applicable law, administrative regulation or
administrative or court order or decree.
(ix) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which is not so disclosed and
(net of reserves and insurance) the Company believes might result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business
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affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, or which might materially and adversely affect the properties or
assets thereof or which might materially and adversely affect the consummation
of this Agreement; all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in or incorporated by
reference in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate and net of reserves
and insurance, not material to the Company and its subsidiaries considered as
one enterprise; and there are no contracts or documents of the Company or any of
its subsidiaries which are required to be filed as exhibits to, or incorporated
by reference in, the Registration Statement by the 1933 Act or by the 1933 Act
Regulations which have not been so filed or incorporated by reference.
(x) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the issuance
and sale of the Securities hereunder or the consummation by the Company of any
of the other transactions contemplated hereby, except such as may be required
and have been obtained under the 1933 Act, the 1933 Act Regulations and the 1939
Act and such as may be required under state securities laws.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto became effective, at the
Representation Date and at Closing Time did not, do not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(xiii) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder (collectively, the
"Cuba Act") or is exempt therefrom.
(xiv) The Securities and the Indenture conform in all material
respects to the respective statements relating thereto contained in the
Prospectus.
(xv) The Securities are subordinate in right of payment to the
Senior Notes and rank and will rank pari passu in right of payment with the
Senior Subordinated Notes.
(xvi) There are no holders of securities of the Company with
currently exercisable registration rights to have any securities registered as
part of the Registration Statement or included in the offering contemplated by
this Agreement.
(xvii) The Company and each of the Significant Subsidiaries
have good and marketable title to all of their respective properties, in each
case free and clear of all liens, encumbrances and defects, except (i) customary
liens and encumbrances arising in the ordinary
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course of the Company's construction and development business and the financing
thereof, (ii) as stated or incorporated by reference in the Prospectus or (iii)
such as do not materially affect the value of such properties in the aggregate
to the Company and its subsidiaries considered as one enterprise and do not
materially interfere with the use made and proposed to be made of such
properties.
(xviii) The Company and its Significant Subsidiaries possess
such certificates, authorities and permits issued by the appropriate state,
federal and foreign regulatory agencies or bodies necessary to conduct all
material aspects of the business now operated by them, and neither the Company
nor any of its Significant Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such certificate, authority or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
(xix) No default or event of default with respect to any
Indebtedness (as such term is defined the Prospectus Supplement) of the Company
or any of its Significant Subsidiaries entitling, or which, with notice or lapse
of time or both, would entitle, the holders thereof to accelerate the maturity
thereof exists or will exist as a result of the execution and delivery of this
Agreement or the Indenture, the issuance and sale of the Securities or the
consummation of the transactions contemplated hereby or thereby.
(xx) The Company and each of the Significant Subsidiaries have
filed all tax returns required to be filed, which returns, as amended, are
complete and correct in all material respects, and neither the Company nor any
Significant Subsidiary is in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect to said returns
which would materially and adversely affect the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(xxi) The Company and its Significant Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with management's
general or specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(b) Any certificate signed by any officer of the Company and delivered
to the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
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SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at 99.206% of the principal amount thereof,
the aggregate principal amount of Securities set forth in Schedule A opposite
the name of such Underwriter, plus any additional aggregate principal amount of
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof.
(b) Payment of the purchase price for the Securities shall be made at
the offices of the Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
or at such other place as shall be agreed upon by the Representatives and the
Company, at 7:00 a.m., California time, on December 14, 2001, or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery of
the Securities being herein called "Closing Time"). Payment shall be made to the
Company by wire transfer of immediately available funds to a bank account
designated by the Company, against delivery to the Representatives for the
respective accounts of the several Underwriters of certificates for the
Securities to be purchased by them. Certificates for the Securities shall be in
such denominations and registered in such names as the Representatives may
request in writing at least one full business day before Closing Time. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Securities which it has agreed to purchase. Banc of America
Securities LLC, individually and not as a representative of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for any
Securities to be purchased by any Underwriter whose payment therefor has not
been received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder. The certificates for the Securities
will be made available for examination and packaging by the Representatives not
later than 10:00 a.m. (New York City time) on the last business day prior to
Closing Time in New York, New York.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will notify the Representatives immediately, and
confirm the notice in writing, (i) of the effectiveness of any post-effective
amendment to the Registration Statement, (ii) of the mailing or the delivery to
the Commission for filing of the Prospectus or any amendment to the Registration
Statement or amendment or supplement to the Prospectus or any document to be
filed pursuant to the 1934 Act during any period when the Prospectus is required
to be delivered under the 1933 Act, (iii) of the receipt of any comments or
inquiries from the Commission relating to the Registration Statement or
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information and (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
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(b) The Company will give the Representatives notice of its intention
to file or prepare any post-effective amendment to the Registration Statement or
any amendment or supplement to the Prospectus (including any revised prospectus
which the Company proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the Prospectus first provided to
the Underwriters for use in confirming sales of the Securities, whether or not
such revised prospectus is required to be filed pursuant to Rule 424(b) of the
1933 Act Regulations), will furnish the Representatives with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Representatives or counsel
for the Underwriters shall reasonably object.
(c) The Company has delivered to the Representatives one copy of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
will also deliver to the Representatives as many conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) as the Representatives may reasonably request.
(d) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act or the 1934 Act or the respective applicable rules
and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Company
will forthwith amend or supplement the Prospectus (in form and substance
satisfactory to the Representatives and counsel for the Underwriters) so that,
as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances existing at
the time it is delivered to a purchaser, not misleading, and the Company will
furnish to the Underwriters a reasonable number of copies of such amendment or
supplement.
(f) The Company will endeavor, in cooperation with the Underwriters, to
qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Representatives may designate; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which it is
not so qualified. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for so
long as may be required by applicable law. The Company will promptly advise the
Representatives of the receipt by the Company of any notification with respect
to the suspension of qualification of the Securities for sale in any state or
jurisdiction or the initiating or threatening of any proceeding for such
purpose.
10
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby (or 120 days in the case of the close of the Company's fiscal
year), an earnings statement (in form complying with the provisions of Rule 158
of the 1933 Act Regulations) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the date of
this Agreement.
(h) The Company will use the net proceeds received by it from the sale
of the Securities in the manner to be specified in the Prospectus Supplement
under "Use of Proceeds".
(i) Immediately following the execution of this Agreement, the Company
will prepare a prospectus supplement, dated the date hereof (the "Prospectus
Supplement"), containing the terms of the Securities, the plan of distribution
thereof and such other information as may be required by the 1933 Act or the
1933 Act Regulations or as the Representatives and the Company deem appropriate,
and will file or transmit for filing with the Commission in accordance with such
Rule 424(b) of the 1933 Act Regulations copies of the Prospectus (including such
Prospectus Supplement).
(j) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Sections 13, 14 or 15 of
the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) During a period from and including the date of this Agreement
through and including the day which is 30 days after the date of this Agreement,
the Company will not, without the prior written consent of Banc of America
Securities LLC, directly or indirectly, issue, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any debt securities or any
securities convertible into or exchangeable or exercisable for any debt
securities (except for the Securities sold to the Underwriters pursuant to this
Agreement); provided that the foregoing shall not prevent the Company from
making borrowings under the Revolving Loan Agreement or under bank credit lines.
(l) In accordance with the Cuba Act, if applicable, and without
limitation to the provisions of Sections 6 and 7 hereof, the Company agrees to
indemnify and hold harmless the Underwriters from and against any and all loss,
liability, claim, damage and expense whatsoever (including fees and
disbursements of counsel), as incurred, arising out of any violation by the
Company of the Cuba Act, if applicable.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing and filing of each Registration Statement as originally filed
and of each amendment thereto, (ii) the printing or reproduction of this
Agreement and the Indenture, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel and accountants, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the
11
Underwriters of copies of the Registration Statement as originally filed and of
each amendment thereto, of the preliminary prospectuses and any preliminary
prospectus supplements, and of the Prospectus and any amendments or supplements
thereto, (vii) the printing and delivery to the Underwriters of copies of the
Blue Sky Survey, (viii) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities, (ix) any fees payable in connection with the rating of the
Securities, and (x) any fees and expenses of a depositary in connection with
holding the Securities in book-entry form.
If this Agreement is terminated by the Representatives in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse
the Underwriters for all of its out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company herein contained, to the performance by the
Company of its obligations hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission. The Prospectus (including
the Prospectus Supplement referred to in Section 3(i) hereof) shall have been
filed or transmitted for filing with the Commission pursuant to Rule 424(b) of
the 1933 Act Regulations within the prescribed time period, and prior to Closing
Time the Company shall have provided evidence satisfactory to the
Representatives of such timely filing or transmittal.
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time, of
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The Indenture (which term, as used in such
opinion, shall include the Officer's Certificate establishing
the form and terms of the Securities) has been duly
authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general
equitable principles.
12
(iii) The Securities are in the form established
pursuant to the Indenture, have been duly authorized for
issuance and sale by the Company and, when duly executed by
the Company and authenticated by the Trustee in the manner
provided for in the Indenture and delivered pursuant to the
provisions of the Indenture and this Agreement against payment
of the purchase price therefor specified herein, will
constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of
creditors' rights generally or by general equitable
principles, and will be entitled to the benefits of the
Indenture.
(iv) The issuance and delivery of the Securities, the
execution and delivery of this Agreement and the Indenture,
and the consummation of the transactions contemplated herein
and therein, will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or any of its Significant Subsidiaries pursuant
to, the 9-3/8% Senior Subordinated Notes, the 9-3/8% Senior
Subordinated Indenture, the 9-5/8% Senior Subordinated Notes,
the 9-1/2% Senior Subordinated Notes, the Senior Subordinated
Indenture, the 7-3/4% Senior Notes or the 7-3/4% Senior Notes
Indenture.
(v) The Indenture has been qualified under the 1939
Act.
(vi) This Agreement has been duly authorized,
executed and delivered by the Company.
(vii) The Securities and the Indenture conform in all
material respects to the descriptions thereof contained in the
Prospectus.
(viii) The Registration Statement is effective under
the 1933 Act and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the
Commission.
(ix) At the time the Registration Statement became
effective, the Registration Statement (other than the
financial statements and supporting schedules included or
incorporated by reference therein or omitted therefrom and any
Form T-1, as to which no opinion need be rendered) complied as
to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations.
In rendering such opinion, such counsel shall state that,
insofar as such opinion concerns the Indenture, the Securities or this
Agreement (all of which are
13
governed by the laws of the State of New York), such counsel has
assumed without investigation that the law of the State of New York is
the same as the law of the State of California.
(2) The favorable opinion, dated as of Closing Time, of
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Director, Corporate Legal Affairs of the
Company, in form and substance satisfactory to counsel for the
Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
(ii) To the best of such counsel's knowledge and
information, the Company is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required,
except where the failure to so qualify would not have a
material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries (as such term is
defined in this Agreement) considered as one enterprise.
(iii) Each of the Company's Significant Domestic
Subsidiaries (as defined below) has been duly organized and is
validly existing as a corporation or limited partnership, as
the case may be, in good standing under the laws of the
jurisdiction of its incorporation or formation, as the case
may be, has power and authority as a corporation or limited
partnership, as the case may be to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and, to the best of such counsel's knowledge and
information, is duly qualified to transact business and is in
good standing in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure
to so qualify would not have a material adverse effect on the
Company and its subsidiaries considered as one enterprise or
on their consolidated financial condition or earnings; to the
best of such counsel's knowledge and information, all of the
issued and outstanding capital stock of each such Significant
Domestic Subsidiary which is a corporation has been duly
authorized and validly issued, is fully paid and
non-assessable and is owned (except for directors qualifying
shares and a nominal number of shares held by affiliated
parties) by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; and to the best of such
counsel's knowledge and information, all of the issued and
outstanding partnership interests in each such Significant
Domestic Subsidiary which is a limited partnership have been
duly authorized (if applicable) and validly issued, are fully
paid and non-assessable and are owned by the Company (except
to the extent that a minority interest in such limited
partnership is reflected
14
in the Company's consolidated financial statements included or
incorporated or deemed to be incorporated by reference in the
Prospectus), directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. As used in this Agreement, the term
"Significant Domestic Subsidiaries" means all Significant
Subsidiaries other than any Significant Subsidiaries organized
and existing under the laws of any jurisdiction other than the
United States of America, any State thereof or the District of
Columbia.
(iv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under
"Capitalization" (except for subsequent issuances, if any,
pursuant to the exercise of options issued under employee
benefit plans referred to in the Prospectus or in the
documents incorporated or deemed to be incorporated by
reference therein); and the shares of issued and outstanding
Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable.
(v) To the best of such counsel's knowledge and
information, there are no statutes or regulations required to
be described in the Registration Statement or the Prospectus
or in the documents incorporated or deemed to be incorporated
by reference therein which are not described as required and
there are no legal or governmental proceedings pending or
threatened which are required to be disclosed in the
Registration Statement or in the documents incorporated by
reference therein, other than those disclosed therein, and all
pending legal or governmental proceedings to which the Company
or any subsidiary is a party or to which any of their property
is subject which are not described in the Registration
Statement or in the documents incorporated or deemed to be
incorporated by reference therein, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate and net of reserves and insurance, not material to
the Company and its subsidiaries considered as one enterprise.
(vi) The information under "Item 1.
Business--Regulation and Environmental Matters" and "Item 3.
Legal Proceedings" in the Company's Annual Report on Form 10-K
for the fiscal year ended November 30, 2000 and in Item 15 in
Part II of the Registration Statement, to the extent that such
information constitutes matters of law, summaries of legal
matters, summaries of securities, instruments, agreements or
other documents or legal conclusions, has been reviewed by
such counsel and is correct in all material respects.
(vii) To the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required
to be described or referred to in the Registration Statement
or in the documents incorporated or deemed to be
15
incorporated by reference therein or to be filed or
incorporated by reference as exhibits thereto other than those
described or referred to or filed as exhibits thereto, the
descriptions thereof or references thereto are correct, and,
to the best of such counsel's knowledge, no default exists in
the due performance or observance of any obligation,
agreement, covenant or condition contained in (A) any Subject
Instrument or (B) any other contract, indenture, mortgage,
loan agreement, note, lease or other instrument so described,
referred to or filed or incorporated by reference, which
default (other than in the case of the Subject Instruments)
could have a material adverse effect on the Company and its
subsidiaries considered as one enterprise or on their
consolidated financial condition or earnings.
(viii) No authorization, approval, consent or order
of any court or governmental authority or agency is required
in connection with the sale of the Securities to the
Underwriters or for the performance by the Company of its
obligations under the Indenture or the Securities, except such
as may be required under the 1933 Act, the 1933 Act
Regulations, the 1939 Act, the 1939 Act Regulations or state
securities laws.
(ix) The issuance and delivery of the Securities, the
execution and delivery of this Agreement and the Indenture
(which term, as used in such opinion, shall include the
Officer's Certificate establishing the form and terms of the
Securities), the consummation of the transactions contemplated
herein and therein, and the performance by the Company of its
obligations under the Indenture and the Securities, will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any
of its Significant Subsidiaries pursuant to, (A) any Subject
Instrument or (B) to the best of such counsel's knowledge and
information, any other contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company or any of its Significant Subsidiaries is a party or
by which it or any of them may be bound, or to which any of
the property or assets of the Company or any of its
Significant Subsidiaries is subject, nor will such action
result in any violation of the provisions of the charter or
by-laws of the Company, or any applicable law, administrative
regulation or administrative or court decree.
(x) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the
financial statements and supporting schedules included or
incorporated by reference therein, as to which no opinion need
be rendered), at the time they were filed with the Commission,
complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations.
16
(xi) To the best of such counsel's knowledge and
information, no default with respect to any Indebtedness (as
such term is defined in the Prospectus Supplement) of the
Company or any of its subsidiaries entitling, or which, with
notice or lapse of time or both, would entitle, the holders
thereof to accelerate the maturity thereof exists or will
exist as a result of the execution and delivery of this
Agreement or the Indenture, the issuance and sale of the
Securities or the consummation of the transactions
contemplated hereby or thereby.
In rendering such opinion, such counsel shall state that,
insofar as such opinion concerns the Indenture, the Securities or this
Agreement (all of which are governed by the laws of the State of New
York), such counsel has assumed without investigation that the law of
the State of New York is the same as the law of the State of
California. In addition, in rendering such opinion, such counsel may,
as to other matters governed by the law of any jurisdiction other than
the law of the State of California, the General Corporation Law of the
State of Delaware and the federal law of the United States of America,
either (a) assume without any investigation that the law of the State
of California is the same as the law governing such other matters for
all purposes relevant to such opinion or (b) rely on an opinion or
opinions of local counsel satisfactory to the Representatives, so long
as each such opinion shall be dated as of the Closing Time and in form
and substance satisfactory to the Representatives, and shall expressly
permit the Underwriters to rely thereon as if such opinion were
addressed to the Underwriter.
(3) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Underwriters, with respect to
the matters set forth in (i) through (iii) and (v) through (ix) of
subsection (b)(1) of this Section.
(4) In giving their opinions required by subsections (b)(1),
(b)(2) and (b)(3), respectively, of this Section, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP shall
each additionally state that nothing has come to their attention that
would lead them to believe that the Registration Statement (except for
financial statements and schedules and other financial and statistical
data included or incorporated by reference therein or omitted therefrom
and any Form T-1, as to which counsel need make no statement), at the
time it became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and other
financial and statistical data included or incorporated by reference
therein or omitted therefrom, as to which counsel need make no
statement), at the Representation Date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters by
the Company for use in connection with the offering of the Securities
which differs from the Prospectus filed with at the Commission pursuant
to Rule 424(b) of the 1933 Act Regulations, in which case at the time
it is first provided to the Underwriters for such use) or at Closing
Time, included or includes an untrue statement of a material fact or
omitted or omits to state a
17
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) At Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1 are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the best of
such officer's knowledge and information, no proceedings for that purpose have
been initiated or threatened by the Commission and (v) the rating assigned by
any nationally recognized statistical rating organization to any debt securities
of the Company or any trust preferred securities, capital securities or similar
securities of any subsidiary of the Company has not been lowered and no such
rating agency has publicly announced that it has placed any debt securities of
the Company or any trust preferred securities, capital securities or similar
securities of any subsidiary of the Company on what is commonly termed a "watch
list" for a possible downgrading. As used in this Section 5(c), the term
"Prospectus" means the Prospectus in the form first used to confirm sales of the
Securities.
(d) At the Closing Time, the Representatives shall have received from
Ernst & Young LLP a letter dated such date, in form and substance satisfactory
to the Underwriters, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and financial information included and
incorporated by reference in the Registration Statement and the Prospectus
(including, without limitation, any pro forma financial statements).
(e) At Closing Time, the Securities shall have a rating of at least Ba3
from ▇▇▇▇▇'▇ Investor's Service Inc. and BB- from Standard & Poor's, and the
Company shall have delivered to the Representatives a letter from each such
rating agency or other evidence satisfactory to the Underwriters, confirming
that the Securities have such ratings.
(f) Prior to the Closing Time, if required by the 1933 Act, the 1933
Act Regulations, the 1939 Act or the 1939 Act Regulations, the Trustee shall
have filed with the Commission an application for the purpose for determining
the eligibility of the Trustee under the 1939 Act in accordance with the rules
and regulations prescribed by the Commission under Section 305(b)(2) of the 1939
Act and the Commission shall not have issued an order refusing to permit such
application to become effective or taken any similar action.
(g) At Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in
18
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives by notice to the Company at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 4, 6, 7 and 8 shall remain in effect.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, any
preliminary prospectus supplement or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the written consent
of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by Banc of America Securities LLC), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that (A) the foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission (1) made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus,
19
preliminary prospectus supplement or the Prospectus (or any amendment or
supplement thereto) or (2) in the Form T-1; and (B) the foregoing indemnity
agreement with respect to any preliminary prospectus or preliminary prospectus
supplement shall not inure to the benefit of the Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Securities, or any person controlling such Underwriter, if a copy of the
Prospectus (as it may then be amended or supplemented if the Company shall have
furnished any amendments or supplements thereto, but excluding documents
incorporated by reference therein) was not sent or given by or on behalf of such
Underwriter to such person, if such is required by law, at or prior to the
written confirmation of the sale of such Securities to such person and if the
Prospectus (as so amended or supplemented, if applicable) would have cured the
defect giving rise to such loss, claim, damage, liability or expense, except
that this clause (B) shall not be applicable if such defect shall have been
corrected in a document which is incorporated or deemed to be incorporated by
reference in the Prospectus.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or any preliminary prospectus, preliminary prospectus
supplement or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use in
such Registration Statement (or any amendment thereto) or such preliminary
prospectus, such preliminary prospectus supplement or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give written notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. In the case of indemnity pursuant to Section 6(a) or
6(b) above, the indemnifying parties shall in no event be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 6(a) or (b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and one or more of the Underwriters,
as incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount (calculated
as described below) with respect to the Securities bears to the public offering
price (calculated as described below) of the Securities and the Company is
responsible for the balance; provided, however, that no person guilty of
fraudulent
20
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of the preceding sentence, the public offering
price of the Securities shall be deemed to be equal to 99.6767% of the principal
amount thereof and the underwriting discount shall be deemed to be equal to
0.4707% of the principal amount thereof. For purposes of this Section, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the aggregate
principal amount of Securities set forth opposite their respective names in
Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or any controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statement, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which is such as to make it, in the judgment of
the Representatives, impracticable to market the Securities or to enforce
contracts for the sale of the Securities, or (iii) if trading in the securities
of the Company has been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by either of said Exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
federal, New York or California authorities, (iv) if the rating assigned by any
nationally recognized statistical rating organization to any debt securities of
the Company or any trust preferred securities, capital securities or similar
securities of any subsidiary of the Company shall have been lowered or if any
such rating agency shall have publicly announced that it has placed any debt
securities of the Company or any trust preferred securities, capital securities
or similar securities of any subsidiary of the Company on what is commonly
termed a "watch list" for a possible downgrading. As used in this Section 9(a),
the term "Prospectus" means the Prospectus in the form first used to confirm
sales of the Securities.
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(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof. Notwithstanding any such termination, the
provisions of Sections 4, 6, 7 and 8 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Securities which
it or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters or any other underwriters to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of the Defaulted Securities does
not exceed 10% of the aggregate principal amount of Securities to be purchased
at Closing Time, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of the Defaulted Securities
exceeds 10% of the aggregate principal amount of Securities to be purchased at
Closing Time, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representatives or the Company shall have the
right to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at Banc of America Securities LLC, ▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇; notices to the Company shall be directed to it at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.,
Director, Corporate Legal Affairs.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this
22
Agreement or any provision contained herein. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the Underwriters and the Company and their respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Unless otherwise set forth
herein, specified times of day refer to New York City time.
[SIGNATURE PAGE FOLLOWS]
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
KB HOME
By:
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and Controller
CONFIRMED AND ACCEPTED
as of the date first above written:
BANC OF AMERICA SECURITIES LLC
COMERICA SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.
SUNTRUST CAPITAL MARKETS, INC.
By: BANC OF AMERICA SECURITIES LLC
By:
------------------------------------------
Name:
Title:
On behalf of each of the Underwriters
SCHEDULE A
Aggregate
Principal
Amount
Name of Underwriter of Securities
Banc of America Securities LLC............................................................ $ 160,000,000
Comerica Securities, Inc.................................................................. 20,000,000
Banc One Capital Markets, Inc............................................................. 10,000,000
SunTrust Capital Markets, Inc............................................................. 10,000,000
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Total............................................................................ $200,000,000