EXHIBIT 1.9
KB HOME
(A DELAWARE CORPORATION)
$50,000,000
7 3/4% SENIOR SUBORDINATED NOTES DUE 2010
UNDERWRITING AGREEMENT
February 5, 2003
UBS Warburg LLC
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Ladies and Gentlemen:
KB Home, a Delaware corporation (the "Company"), confirms its agreement
with UBS Warburg LLC (the "Underwriter"), with respect to the sale by the
Company and the purchase by the Underwriter of $50,000,000 aggregate principal
amount of the Company's 7 3/4% Senior Subordinated Notes due 2010 (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
instruments 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 Securities will constitute part of the same series of debt
securities under the Indenture as the $250,000,000 aggregate principal amount of
the Company's 7-3/4% Senior Subordinated Notes due 2010 issued on January 27,
2003 (the "Initial Notes").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-71630) 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 January 28, 2002 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 January 28, 2002 (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 Underwriter 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 Underwriter
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 Underwriter 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 Underwriter proposes to make a public
offering of the Securities as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to the 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 and 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 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 Underwriter
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
Underwriter for such use) and at the Closing
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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 the Underwriter
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 in the Base Prospectus under the caption "Ratios of Earnings to
Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock
Dividends" and 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 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
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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 Company's 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 Partnership. Each Significant Subsidiary has been duly
organized and is validly existing as a corporation or 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 (except for general
partnership interests) 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 Regulation S-X (as in effect
on January 1, 1996), but substituting "8%" 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,
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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 Underwriter 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, and the Indenture has been duly qualified under the 1939
Act; 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 aggregate amount of theretofore unsold
securities registered pursuant to the Registration Statement.
(viii) The Company is not in violation of its charter or by-laws
and none of the Company's Significant Subsidiaries is in violation of its
charter or by-laws or other organizational documents, and neither the Company
nor any of its Significant Subsidiaries is in default in the performance or
observance of (A) any obligation, agreement, covenant or condition contained in:
(1) the Company's 2000 Revolving 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 promissory notes or other agreements or instruments entered into
in connection therewith (the "Revolving Facility"),
(2) 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
promissory notes or other
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agreements or instruments entered into in connection therewith (the
"Term Facility" and, together with the Revolving Facility, the
"Revolving Loan Agreement"),
(3) the Initial Notes, the Company's 9-5/8% Senior
Subordinated Notes due 2006, 9-1/2% Senior Subordinated Notes due 2011
or 8-5/8% Senior Subordinated Notes due 2008 (collectively, the
"Senior Subordinated Notes") or the Indenture dated as of November 19,
1996 between the Company and Suntrust Bank (as successor to Suntrust
Bank, Atlanta) pursuant to which the Initial Notes and the Senior
Subordinated Notes were issued (the "Senior Subordinated Indenture,"
which term, as used herein, includes the respective instruments
establishing the form and terms of the Initial Notes and the Senior
Subordinated Notes),
(4) 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 Senior
Notes were issued (the "Senior Indenture," which term, as used herein,
includes the instrument establishing the form and terms of the Senior
Notes), or
(5) the $200 million Master Loan and Security Agreement
dated as of May 13, 2002 and the $400 million Master Loan and Security
Agreement dated as of May 13, 2002 entered into by a subsidiary of the
Company and the other parties thereto, including all amendments and
supplements thereto, if any, and any promissory notes and other
instruments or agreements entered into in connection therewith (the
"Mortgage Banking Agreements"),
(the Revolving Loan Agreement, the Initial Notes, the Senior Subordinated Notes,
the Senior Subordinated Indenture, the Senior Notes, the Senior Indenture and
the Mortgage Banking Agreements 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
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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 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 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,
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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 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.
(xv) The Securities and the Initial Notes will constitute and form
a single series of Securities (as such term is defined in the Indenture) under
the Indenture.
(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 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.
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(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.
(xxii) All resolutions adopted by the board of directors of the
Company authorizing or approving the issuance and sale of the Securities and any
matters related thereto have been adopted, and the issuance and sale of the
Securities and any related transactions have been approved, by at least
two-thirds of the "Continuing Directors" (as defined in Article Eighth of the
Company's charter).
(b) Any certificate signed by any officer of the Company and delivered
to the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
SECTION 2. Sale and Delivery to the Underwriter; 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 the Underwriter, and the Underwriter agrees to purchase from the
Company, at 98.444% of the principal amount thereof plus accrued and unpaid
interest on the Securities from January 27, 2003, the aggregate principal amount
of Securities set forth in Schedule A opposite the name of the Underwriter.
(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 Underwriter and the
Company, at 7:00 a.m., California time, on February 7, 2003, or such other time
not later than ten business days after such date as shall be agreed upon by the
Underwriter 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 Underwriter of certificates
for the Securities to be purchased by it. Certificates for the Securities shall
be in such denominations and registered in such names as the Underwriter may
request in writing at least one full business day before Closing Time. The
certificates for the Securities will be made available for examination and
packaging by the Underwriter 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 the
Underwriter as follows:
(a) The Company will notify the Underwriter 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
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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, the Prospectus or the documents incorporated or deemed
to be incorporated by reference in the Registration Statement or the Prospectus,
(iv) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or the documents
incorporated or deemed to be incorporated by reference in the Registration
Statement or 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.
(b) The Company will give the Underwriter 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 Underwriter in connection with the
offering of the Securities which differs from the Prospectus first provided to
the Underwriter 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 Underwriter 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 Underwriter or counsel for
the Underwriter shall reasonably object.
(c) The Company has delivered to the Underwriter 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 Underwriter as many conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) as the Underwriter may reasonably request.
(d) The Company will furnish to the 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 the 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 Underwriter, 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 Underwriter and counsel for the Underwriter) 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
Underwriter a reasonable number of copies of such amendment or supplement.
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(f) The Company will endeavor, in cooperation with the Underwriter, 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
Underwriter 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
Underwriter 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.
(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 Underwriter 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 UBS Warburg 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 Underwriter 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 Underwriter from and against any and all loss,
liability, claim, damage and expense whatsoever
11
(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 the 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 Underwriter, (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 Underwriter in connection therewith and in
connection with the preparation of the Blue Sky Survey, (vi) the printing and
delivery to the Underwriter of copies of the Registration Statement as
originally filed and of each amendment thereto, of any preliminary prospectuses
and any preliminary prospectus supplements, and of the Prospectus and any
amendments or supplements thereto, (vii) the printing and delivery to the
Underwriter 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 Underwriter in accordance with
the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse the
Underwriter for all of its out-of-pocket expenses, including the reasonable fees
and disbursements of counsel for the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The obligations of
the Underwriter 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 Underwriter of
such timely filing or transmittal.
(b) At Closing Time the Underwriter 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 Underwriter, 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.
12
(ii) The Indenture (which term, as used in such
opinion, shall include the Officers' 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.
(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 Initial Notes, the Senior Subordinated Notes, the
Senior Subordinated Indenture, the Senior Notes or the Senior
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.
13
(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 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., Vice President, Corporate Legal Affairs of the
Company, in form and substance satisfactory to counsel for the
Underwriter, 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 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 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
14
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 equity interests in each such
Significant Domestic Subsidiary which is a Partnership have
been duly authorized (if applicable) and validly issued, are
fully paid and (except for general partnership interests)
non-assessable and are owned by the Company (except to the
extent that a minority interest in such Partnership is
reflected 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 or
deemed to be 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," "Item 1.
Business--Risk Factors--We are subject to substantial
legal and regulatory requirements regarding the development of
land, the homebuilding process and protection of the
15
environment, which can cause us to suffer delays and incur
costs associated with compliance and prohibit or restrict
homebuilding activity in some regions or areas," and "Item 3.
Legal Proceedings" in the Company's Annual Report on Form 10-K
for the fiscal year ended November 30, 2001, under "Risk
Factors--We are subject to substantial legal and regulatory
requirements regarding the development of land, the
homebuilding process and protection of the environment, which
can cause us to suffer delays and incur costs associated with
compliance, and which can prohibit or restrict homebuilding
activity in some regions or areas" in the Prospectus
Supplement 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 incorporated
by reference therein or to be filed or incorporated by
reference as exhibits thereto other than those described or
referred to or filed or incorporated by reference as exhibits
thereto, the descriptions thereof and 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
Underwriter 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
16
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.
(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 Underwriter, so long as
each such opinion shall be dated as of the Closing Time and in form and
substance satisfactory to the Underwriter, and shall expressly permit
the Underwriter 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 Underwriter, with respect to
the matters set forth in (i) through (iii) and (v) through (ix) of
subsection (b)(1) of this Section.
17
(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 Underwriter 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 Underwriter for such use) or at Closing
Time, included or includes an untrue statement of a material fact or
omitted or omits to state a 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 or 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 Underwriter
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 set forth in this Agreement 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) since the date of this
Agreement, none of the ratings assigned by any nationally recognized statistical
rating organization to any debt securities of the Company or any subsidiary of
the Company has been lowered and no such rating agency has publicly announced
that it has placed any debt securities of the Company or 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 "Registration Statement"
means the Registration Statement as in effect on the date of this Agreement and
"Prospectus" means the Prospectus in the form first used to confirm sales of the
Securities.
(d) At the Closing Time, the Underwriter shall have received from Ernst &
Young LLP a letter dated such date, in form and substance satisfactory to the
Underwriter, to the effect that they reaffirm the statements made in the letter
dated January 27, 2003 furnished by
18
them to the Underwriter in connection with the purchase of the Initial Notes,
except that the specified date referred to shall be a date not more than three
business days prior to Closing Time.
(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 Underwriter a letter from each such rating
agency or other evidence satisfactory to the Underwriter, 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 Underwriter shall have been
furnished with such documents and opinions as it may require for the purpose of
enabling it to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in 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 Underwriter and counsel for
the Underwriter.
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 Underwriter 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 the Underwriter
and each person, if any, who controls the 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
19
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 UBS Warburg 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 the Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or any preliminary prospectus, 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
the 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 or deemed to be incorporated by
reference therein) was not sent or given by or on behalf of the 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) The Underwriter 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 the Underwriter 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
20
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 Underwriter shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and the Underwriter, as incurred, in
such proportions that the Underwriter is 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 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 99.000%
of the principal amount thereof and the underwriting discount shall be deemed to
be equal to 0.556% of the principal amount thereof. For purposes of this
Section, each person, if any, who controls the Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
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.
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 the Underwriter or any controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a) The Underwriter 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 or 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, 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 or any change or development involving a prospective
change in national or international political, financial or
21
economic conditions, in each case the effect of which is such as to make it, in
the judgment of the Underwriter, 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 or materially limited by the
Commission or a national securities exchange, or if trading generally on either
the American Stock Exchange or the New York Stock Exchange or the Nasdaq
National Market has been suspended or materially limited, 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 the Nasdaq National Market
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 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
"Registration Statement" means the Registration Statement as in effect on the
date of this Agreement and "Prospectus" means the Prospectus in the form first
used to confirm sales of the Securities.
(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. 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
Underwriter shall be directed to it at UBS Warburg LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; notices to the
Company shall be directed to it at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., Vice President, Corporate
Legal Affairs.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter 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 Underwriter
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 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 Underwriter 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 the Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 12. 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
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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 Underwriter and the Company in accordance with its terms.
Very truly yours,
KB HOME
By:
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
CONFIRMED AND ACCEPTED
as of the date first above written:
UBS WARBURG LLC
By:
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