<PAGE> 1
Filed pursuant to Rule
424(b)(3) Reg No. 33-60089
SUBJECT TO COMPLETION, DATED JANUARY 13, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 21, 1995)
$125,000,000
[DEL WEBB LOGO]
% SENIOR SUBORDINATED DEBENTURES DUE 2008
------------------------
The % Senior Subordinated Debentures due 2008 (the "Debentures") of Del
Webb Corporation (the "Company") are unsecured senior subordinated obligations
of the Company. Interest on the Debentures is payable on and
of each year commencing , 1997. The Debentures are
not redeemable prior to 2002. Thereafter, the Debentures are redeemable at any
time at the option of the Company, in whole or in part, at the redemption prices
set forth herein. The Company is required to offer to repurchase all outstanding
Debentures at 101 percent of their principal amount plus accrued interest
promptly after the occurrence of a Change of Control (as defined).
The Debentures are unsecured obligations of the Company and are subordinated
in right of payment to all existing and future Senior Debt (as defined) of the
Company. The Debentures will be pari passu with the Company's $100 million of
9 3/4% Senior Subordinated Debentures due 2003 and $100 million of 9% Senior
Subordinated Debentures due 2006 and the covenants applicable to the Debentures
are substantially similar to those applicable to the 9 3/4% Senior Subordinated
Debentures and 9% Senior Subordinated Debentures. The Indenture pursuant to
which the Debentures will be issued will restrict the ability of the Company and
certain of its subsidiaries to incur additional indebtedness. After giving
effect to the offering of the Debentures and the anticipated repayment of debt
with the net proceeds thereof, as of September 30, 1996 the Company would have
had no Senior Debt outstanding other than $100 million of its 10 7/8% Senior
Notes due 2000, $107.6 million outstanding under the Company's senior unsecured
revolving credit facility and short-term lines of credit and $2.7 million of
other Senior Debt, but would have had the capacity to borrow $257.4 million of
Senior Debt under its senior unsecured revolving credit facility and short-term
lines of credit. In addition, the Company conducts all of its operations through
subsidiaries, and the Debentures will be effectively subordinated to all
existing and future obligations of the Company's subsidiaries. At September 30,
1996 the subsidiaries of the Company had $29.5 million of indebtedness. See
"Description of the Debentures." The Debentures have been approved for listing
on the New York Stock Exchange.
SEE "RISK FACTORS" AT PAGE S-8 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE DEBENTURES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS
PRICE TO AND PROCEEDS TO
PUBLIC* COMMISSIONS+ COMPANY*++
<S> <C> <C> <C>
Per Debenture...................... % % %
Total.............................. $ $ $
</TABLE>
- ---------------
* Plus accrued interest, if any, from , 1997.
+ The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
++ Before deducting expenses, estimated at $150,000, which will be paid by the
Company.
------------------------
The Debentures are being offered by the Underwriters, as set forth under
"Underwriting" herein. It is expected that the delivery of the Debentures will
be made at the office of Dillon, Read & Co. Inc., New York, New York, on or
about , 1997, against payment therefor in New York funds. The
Underwriters are:
DILLON, READ & CO. INC. GOLDMAN, SACHS & CO.
The date of this Prospectus Supplement is January , 1997
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES AND
THE OTHER PUBLICLY TRADED DEBT SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER THE COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary should be read in conjunction with and is qualified
in its entirety by the information and financial statements (including the notes
thereto) appearing elsewhere or incorporated by reference in this Prospectus
Supplement or the accompanying Prospectus. As used in this Prospectus
Supplement, the "Company" means Del Webb Corporation and its subsidiaries unless
the context requires otherwise.
Certain statements contained in this Prospectus Supplement, the
accompanying Prospectus and documents incorporated by reference therein that are
not historical results are forward-looking statements. These forward-looking
statements involve risks and uncertainties including, but not limited to, those
set forth under "Risk Factors." Actual results may differ materially from those
projected or implied in the forward-looking statements. Further, certain
forward-looking statements are based upon assumptions of future events, which
may not prove to be accurate.
THE COMPANY
Del Webb Corporation develops large-scale, master-planned residential
communities primarily for active adults age 55 and over and has significant
conventional subdivision homebuilding operations.
The Company is one of the nation's leading developers of age-restricted
active adult communities. It has extensive experience in the active adult
community business, having built and sold more than 54,000 homes at its Sun City
communities over the past 36 years. The Company is also delivering homes at
Terravita, a gate-guarded, amenity-rich, master-planned residential community in
north Scottsdale, Arizona, that is not age-restricted. The Company designs,
develops and markets these communities, controlling all phases of the master
plan development process from land selection through the construction and sale
of homes. Within its communities, the Company is the exclusive developer of
homes.
The Company conducts its conventional subdivision homebuilding operations
under the name "Coventry Homes" in the Phoenix, Tucson and Las Vegas areas,
southern California and north-central Arizona.
THE OFFERING
Securities Offered........... $125 million aggregate principal amount of %
Senior Subordinated Debentures due ,
2008.
Maturity Date................ , 2008.
Interest Payment Dates....... and , commencing
, 1997.
Interest Rate................ % per year.
Redemption................... The Debentures will be redeemable, in whole or in
part, at any time on or after , 2002,
at the option of the Company, at the redemption
prices set forth herein, plus accrued and unpaid
interest to the redemption date.
Ranking...................... The Debentures will be general unsecured
obligations of the Company and will be
subordinated in right of payment to all existing
and future Senior Debt of the Company (including
the Company's $100 million of 10 7/8% Senior
Notes due 2000 (the "10 7/8% Senior Notes") and
amounts outstanding from time
to time under the Company's $350 million senior
unsecured revolving credit facility and
short-term lines of credit). The Debentures will
also be effectively subordinated to all existing
and future obligations of the Company's
subsidiaries, through which the Company conducts
all of its operations. The Debentures will be
pari passu with the Company's $100 million of
9 3/4% Senior Subordinated Debentures due 2003
(the "9 3/4% Debentures") and $100 million of 9%
Senior Subordinated Debentures due 2006 (the "9%
Debentures"). The Indenture pursuant to which the
Debentures will be issued (the "Indenture") will
provide that the Company may not incur any
S-3
<PAGE> 4
Indebtedness (as defined) that is subordinated in
right of payment to any Senior Debt of the
Company and senior in right of payment to the
Debentures. See "Description of the
Debentures--Subordination."
Offers to Purchase........... In the event of a Change of Control, the Company
will be required, subject to certain conditions
and limitations, to offer to purchase all
Debentures then outstanding at a purchase price
equal to 101 percent of the aggregate principal
amount of the Debentures, plus accrued and unpaid
interest to the date of purchase.
The Company also may be required, subject to
certain conditions and limitations, to offer to
purchase 10 percent of the principal amount of
the Debentures initially issued, at 100 percent
of the aggregate principal amount thereof, plus
accrued and unpaid interest, if its Consolidated
Tangible Net Worth (as defined) decreases to less
than $125 million. As of September 30, 1996 the
Consolidated Tangible Net Worth of the Company
was $270.5 million.
For more complete information regarding these
mandatory offers to purchase the Debentures, see
"Description of the Debentures--Certain
Covenants--Change of Control" and "--Maintenance
of Consolidated Tangible Net Worth."
Certain Covenants............ The Indenture will contain certain covenants
which, among other things, limit the incurrence
of additional Indebtedness, the payment of
dividends, the making of certain other
distributions and the ability to enter into
certain transactions with affiliates or merge,
consolidate or transfer substantially all of the
Company's assets. The covenants applicable to the
Debentures are substantially similar to those
applicable to the 9 3/4% Debentures and the 9%
Debentures. See "Description of the
Debentures--Certain Covenants."
Use of Proceeds.............. The Company anticipates using the net proceeds to
repay a portion of the indebtedness outstanding
under the Company's $350 million senior unsecured
revolving credit facility. The Company currently
intends to reborrow under that facility to fund
land acquisitions, development of new projects or
the purchase or redemption of its $100 million of
outstanding 10 7/8% Senior Notes (which are
redeemable, at par, commencing March 31, 1997) or
for other general corporate purposes. See "Use of
Proceeds."
S-4
<PAGE> 5
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED JUNE 30, SEPTEMBER 30,
------------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1995 1996
-------- -------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Total revenues................ $260,872 $390,586 $510,061 $803,119 $1,050,733 $206,318 $264,295
Earnings (loss) from
continuing operations(1).... 14,068 16,863 17,021 28,491 (7,751) 6,534 5,992
Net earnings (loss) (1)....... 17,107 24,511 17,021 28,491 (7,751) 6,534 5,992
Earnings (loss) per share from
continuing operations....... 1.09 1.05 1.13 1.87 (.44) .39 .33
Net earnings (loss) per
share....................... $ 1.33 $ 1.53 $ 1.13 $ 1.87 $ (.44) $ .39 $ .33
Ratio of earnings to fixed
charges(2).................. 1.59x 1.63x 1.30x 1.59x (2) 1.24x 1.70x
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
JUNE 30, AS
1996 ACTUAL ADJUSTED(3)
---------- ---------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.................................................. $1,024,795 $1,046,207 $1,049,795
Notes payable, senior and subordinated debt:
Senior debt and real estate notes(4)........................ 222,588 258,480 137,068
Senior Notes, 10 7/8%, due 2000............................. 97,475 97,647 97,647
Senior Subordinated Debentures, 9 3/4%, due 2003............ 97,259 97,362 97,362
Senior Subordinated Debentures, 9%, due 2006................ 97,355 97,423 97,423
Senior Subordinated Debentures, %, due 2008............. -- -- 125,000
---------- ---------- --------
Total................................................ $ 514,677 $ 550,912 $ 554,500
Total shareholders' equity.................................... $ 264,776 $ 270,462 $ 270,462
</TABLE>
- ---------------
(See footnotes commencing on page S-6.)
S-5
<PAGE> 6
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------ -----------------
1994 1995 1996 1995 1996
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net new orders(5)..................................... 4,145 4,534 5,850 1,164 1,131
Home closings......................................... 3,183 4,316 5,531 1,083 1,382
Homes under contract at period end (backlog)(6)....... 2,662 2,880 3,199 2,961 2,948
Dollar amount of backlog (in millions)(6)............. $ 471 $ 565 $ 617 $ 571 $ 575
Average revenue per home closing (in thousands)....... $ 153 $ 177 $ 183 $ 180 $ 178
Home construction, land and other costs as a
percentage of revenues.............................. 75.7% 76.6% 76.9% 77.2% 77.6%
Interest as a percentage of revenues.................. 3.5 3.9 4.0 3.7 4.4
Selling, general and administrative expenses as a
percentage of revenues.............................. 15.6 14.1 14.0 14.2 14.4
EBIT(7)............................................... $ 43,133 $ 74,456 $ 94,413 $17,425 $20,575
EBITDA(8)............................................. 157,309 267,780 350,887 68,273 87,934
Total property and equipment and development
expenditures........................................ 287,192 331,573 382,113 87,455 103,275
Interest incurred(9).................................. 33,677 46,641 52,022 14,197 12,066
EBITDA/interest incurred.............................. 4.67x 5.74x 6.74x 4.81x 7.29x
</TABLE>
- ---------------
(1) In fiscal 1996, in connection with the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 121, the Company incurred a non-cash loss
from impairment of southern California real estate inventories in the
amount of $65.0 million pre-tax ($42.3 million after tax) related to the
valuation of its Sun City Palm Desert active adult community. Exclusive of
the non-cash loss, the Company's net earnings for fiscal 1996 were $34.5
million, or $1.96 per share.
Earnings (loss) from continuing operations for fiscal 1993, 1994, 1995 and
1996 reflect a higher income tax rate (a rate more closely approximating
the statutory rate) than for fiscal 1992 as a result of the Company's
adoption of SFAS No. 109 effective July 1, 1992.
Total earnings for fiscal 1992 include a $3.0 million extraordinary gain
from the extinguishment of debt on a discounted basis. Total earnings for
fiscal 1993 include a $12.8 million loss from discontinued operations
(primarily additional loss provisions related to the Company's discontinued
land development projects), a $0.5 million extraordinary gain from the
extinguishment of debt on a discounted basis and a $20.0 million increase
in net earnings as a result of a cumulative effect of an accounting change
from the adoption of SFAS No. 109.
(2) The ratio of earnings to fixed charges is calculated by dividing earnings
by fixed charges. For this purpose, "earnings" means earnings from
continuing operations before income taxes plus (a) fixed charges and
interest amortization (including the proportionate share thereof of
unconsolidated affiliates and discontinued operations) minus (b)
capitalized interest. "Fixed charges" means total interest whether
capitalized or expensed (including the proportionate share thereof of
unconsolidated affiliates and discontinued operations and the portion of
rent expense representative of interest costs), plus debt-related fees and
amortization of deferred financing costs. Earnings were inadequate to cover
fixed charges for the fiscal year ended June 30, 1996 by $21.6 million.
(3) As adjusted for the sale of the Debentures and the anticipated use of the
estimated net proceeds therefrom. The net proceeds are anticipated to be
used to repay a portion of the indebtedness outstanding under the Company's
$350 million senior unsecured revolving credit facility. See "Use of
Proceeds."
(4) At September 30, 1996, $29.5 million of this senior debt and real estate
notes was subsidiary debt.
(5) Net new orders are reduced by cancellations. The Company recognizes
revenues at close of escrow.
(6) A majority of the backlog at September 30, 1996 is currently anticipated to
result in revenues in the 12 months ended September 30, 1997. However, a
majority of the backlog is contingent upon the availability of
S-6
<PAGE> 7
financing for the customer, sale of the customer's existing residence or
other factors. Also, as a practical matter, the Company's ability to obtain
damages for breach of contract by a potential home buyer is limited to
retaining all or a portion of the deposit received. In the years ended June
30, 1994, 1995 and 1996 and the three months ended September 30, 1995 and
1996, cancellations of home sales orders as a percentage of new home sales
orders written during the period were 15.6%, 18.3%, 17.2%, 19.1% and 20.8%,
respectively.
(7) "EBIT" means earnings from continuing operations before (i) interest, (ii)
income taxes and (iii) non-cash loss from impairment of southern California
real estate inventories. For this purpose, "interest" means interest
expense plus interest amortization less interest income.
(8) "EBITDA" means earnings from continuing operations before (i) interest,
(ii) income taxes, (iii) non-cash loss from impairment of southern
California real estate inventories, (iv) allocation of non-cash common
costs (excluding interest amortization) and (v) depreciation and other
amortization. See Note (7) above for the definition of "interest" as used
here.
(9) "Interest incurred" means total interest, whether capitalized or expensed,
on debt for continuing and discontinued operations, plus debt-related fees
and amortization of deferred financing costs.
RECENT DEVELOPMENTS
Net new orders for the Company's second quarter ended December 31, 1996
increased 5.8% to 1,310 net new orders, compared with 1,238 net new orders for
the comparable quarter in the prior year. The increase in net new orders for the
second quarter was due primarily to the 40.9% increase in net new orders at the
Sun Cities Phoenix, which was a result of new order activity associated with the
opening of Sun City Grand in October 1996.
Home closings for the second quarter totaled 1,513, a 25.4% increase from
1,207 closings for the comparable quarter in the prior year. Consistent with the
Company's experience in the quarter ended September 30, 1996, there was an
increase in closings at newer communities in the second quarter which, as is
common with newer communities, is expected to result in a decrease in the
average revenue and gross margin per home closing. As a result, the increase in
home closings in the second quarter is not expected to result in an increase in
earnings over the comparable period in the prior year.
For the six months ended December 31, 1996, net new orders increased to
2,441, up 1.6% from 2,402 net new orders for the comparable period in the prior
year. Home closings increased 26.4% for the six month period, to 2,895 closings
from 2,290 closings for the comparable period in the prior year. Backlog at
December 31, 1996 totaled 2,745 homes under contract, a decrease of 8.3% from a
backlog of 2,992 homes under contract at December 31, 1995.
S-7
<PAGE> 8
RISK FACTORS
Set forth below is a brief discussion of certain matters that should be
considered by prospective investors.
FUTURE AND NEWER COMMUNITIES
The Company's communities will be built out over time. Therefore, the
medium- and long-term future of the Company will be dependent on the Company's
ability to develop and market future communities successfully. Acquiring land
and committing the financial and managerial resources to develop a community on
that land involve significant risks. Before these communities generate any
revenues, they require material expenditures for, among other things, acquiring
land, obtaining development approvals and constructing project infrastructure
(such as roads and utilities), recreation centers, model homes and sales
facilities. It generally takes several years for communities to achieve
cumulative positive cash flow.
The Company will incur additional risks to the extent it develops
communities in climates or other geographic areas in which it does not have
experience or develops a different size or style of community, including
acquiring the necessary construction materials and labor in sufficient amounts
and on acceptable terms and adapting the Company's construction methods to
different geographies and climates. Among other things, the Company believes
that a significant portion of the home sales at its active adult communities is
attributable to referrals from, or sales to, residents of those communities. The
extent of such referrals or sales at new communities, including communities
developed in other areas of the country, may be less than the Company has
enjoyed at the active adult communities where it currently sells homes, and
there may be challenges attracting potential customers from areas and to a
market in which the Company has not had significant experience.
COMPETITION; REAL ESTATE, ECONOMIC AND OTHER CONDITIONS GENERALLY
The Company's communities and its other real estate operations are subject
to substantial existing and potential competition (including increased
competition from a number of national homebuilders that are entering or
expanding their presence in active adult community development), real estate
market conditions (both where its communities and conventional homebuilding
operations are located and in areas where its potential customers reside), the
cyclical nature of the real estate business, general national economic
conditions and changing demographic conditions.
A significant number of the home purchasers at the Company's active adult
communities in Arizona, Nevada and southern California are from southern
California. Those communities may be affected by the continuing adverse
conditions in the southern California real estate market and the southern
California economy generally.
FINANCING AND LEVERAGE
Real estate development is dependent on the availability and cost of
financing. In periods of significant growth, the Company will require
significant additional capital resources, whether from issuances of equity or by
incurring additional indebtedness. No assurance can be given as to the
availability or cost of any future financing. The Company's principal credit
facility and the indentures for its publicly-held debt restrict the indebtedness
the Company may incur. The availability of debt financing is also dependent on
governmental policies and other factors outside the control of the Company. If
the Company cannot obtain sufficient capital to fund its development and
expansion expenditures, its projects may be significantly delayed, resulting in
cost increases and adverse effects on the Company's results of operations.
The Company's degree of leverage from time to time will affect its interest
incurred and may limit funds available for operations, which could limit its
ability to withstand adverse changes or capitalize on
S-8
<PAGE> 9
business opportunities. If the Company is at any time unable to service its
debt, refinancing or obtaining additional financing may be required and may not
be available.
INTEREST RATES
The Company's real estate operations depend upon the availability and cost
of mortgage financing. An increase in interest rates, which may result from
governmental policies and other factors outside the control of the Company, may
adversely affect the buying decisions of potential home buyers and their ability
to sell their existing homes.
CONSTRUCTION LABOR AND MATERIAL COSTS
The Company has from time to time experienced shortages of materials or
qualified tradespeople or volatile increases in the cost of certain materials
(particularly increases in the price of lumber and framing, which are
significant components of home construction costs), resulting in longer than
normal construction periods and increased costs not reflected in the prices of
homes for which home sale contracts had been entered into up to one year in
advance of scheduled closing. Generally, the Company's home sale contracts do
not contain, or contain limited, provisions for price increases if the Company's
costs of construction increase. The Company relies heavily on local contractors,
who may be inadequately capitalized or understaffed. The inability or failure of
one or more local contractors to perform may result in construction delays,
increased costs and loss of some home sale contracts.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONSIDERATIONS
The Company's business is subject to extensive federal, state and local
regulatory requirements, the broad discretion that governmental agencies have in
administering those requirements and "no growth" or "slow growth" political
policies, all of which can prevent, delay, make uneconomic or significantly
increase the cost of its developments. In addition, environmental concerns and
related governmental requirements have affected and will continue to affect all
the Company's community development operations.
In connection with the development of the Company's communities and other
real estate projects, particularly those located in California, numerous
governmental approvals and permits are required throughout the development
process and no assurance can be given as to the receipt (or timing of receipt)
of these approvals or permits. In addition, third parties can file lawsuits
challenging approvals or permits received, which could cause substantial
uncertainties and material delays for the project and, if successful, could
result in approvals or permits being voided.
PERIOD-TO-PERIOD FLUCTUATIONS
The Company's communities are long-term projects. Sales activity at the
Company's communities varies from period to period, and the ultimate success of
any community cannot necessarily be judged by results in any particular period
or periods. A community may generate significantly higher sales levels at
inception (whether because of local pent-up demand in the area or other reasons)
than it does during later periods over the life of the community. Revenues and
earnings of the Company will also be affected by period-to-period fluctuations
in the mix of product, subdivisions and home closings among the Company's
communities and conventional homebuilding operations and by sales of commercial
land and amenities at the Company's communities.
GEOGRAPHIC CONCENTRATION
The Company's primary business operations are concentrated in a limited
number of communities in five states. The Company's geographic concentration and
limited number of projects may create increased vulnerability to regional
economic downturns or other adverse project-specific matters.
S-9
<PAGE> 10
NATURAL RISKS
Earthquake faults, including the San Andreas fault, run through the
Coachella Valley, which includes Sun City Palm Desert and the communities of
Palm Springs, Indio, Palm Desert, La Quinta, Rancho Mirage and Indian Wells. A
portion of Sun City Palm Desert is also located in a flood plain. The Coachella
Valley Water District has approved the Company's conceptual flood control plan
for Sun City Palm Desert and has approved the Company's specific flood control
plan for the first phase of this project. Sun City Hilton Head is located in an
area which may be subject to hurricanes. Sun City Roseville and Sun City Hilton
Head are subject to significant seasonal rainfall that can cause delays in
construction and development or that can increase costs. A major earthquake,
flood, hurricane or significant rainfall could have a material adverse impact on
the development of and results of operations for the community affected.
SUBORDINATION OF THE DEBENTURES
The Debentures will be subordinate and junior in right of payment to all
Senior Debt of the Company. At September 30, 1996, on a pro forma basis after
giving effect to the sale of the Debentures and the anticipated use of the
estimated net proceeds therefrom, the Senior Debt of the Company, which does not
include any subsidiary indebtedness, would have been $210.3 million (including
$2.7 million of letters of credit and guarantees). Since the Company conducts
all of its operations through subsidiaries, the Debentures will be effectively
subordinated to all existing and future obligations of the Company's
subsidiaries, even though subsidiary obligations do not constitute Senior Debt.
At September 30, 1996 the Company's subsidiaries had $29.5 million of
indebtedness.
Because of the subordination of the Debentures, in the event of any payment
or distribution of assets of the Company in any dissolution, insolvency,
bankruptcy or other similar proceeding, holders of Senior Debt must be paid in
full before the holders of Debentures may be paid and amounts otherwise payable
to the holders of Debentures will be paid to the holders of Senior Debt until
the Senior Debt is paid in full. By reason of this subordination, in the event
of the dissolution, insolvency or bankruptcy of the Company, holders of the
Debentures may recover less, ratably, than holders of Senior Debt and other
creditors of the Company, or may recover nothing. In addition, the Company is
required to stop making payments of principal and interest on the Debentures if
there is a continuing default with respect to certain Senior Debt that would
permit the holders of such Senior Debt to accelerate payment of that debt and
the Trustee receives notice of the default from a holder of such Senior Debt
entitled to give that notice.
MARKET FOR THE DEBENTURES
Although the Debentures have been approved for listing on the New York
Stock Exchange, the Debentures are a new issue of securities, have no
established trading market and may not be widely distributed. Accordingly, no
assurance can be given as to the liquidity of, or trading market for, the
Debentures. No assurance can be given that the Debentures will not trade below
their face amount.
S-10
<PAGE> 11
USE OF PROCEEDS
The net proceeds from the sale of the Debentures offered hereby, which are
estimated at approximately $121 million, are anticipated to be used to repay a
portion of the indebtedness outstanding under the Company's $350 million senior
unsecured revolving credit facility. At December 31, 1996, $207 million of
borrowings, bearing a weighted average interest rate of 7.6 percent per year,
were outstanding under the senior unsecured revolving credit facility. See
"Capitalization." These borrowings were incurred to fund development of existing
and new projects and for other general corporate purposes, or to refinance
indebtedness incurred for those purposes. The Company currently intends to
reborrow under that facility to fund land acquisitions, development of new
projects or the purchase or redemption of its $100 million of outstanding
10 7/8% Senior Notes, which are redeemable at par on or after March 31, 1997, or
for other general corporate purposes.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at September 30, 1996 and as adjusted to give effect to the sale of the
Debentures and the anticipated use of the estimated net proceeds therefrom. This
table should be read in conjunction with the Company's Consolidated Financial
Statements and the Notes thereto, included in its Annual Report on Form 10-K for
the year ended June 30, 1996 and its Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, which are incorporated by reference in the
accompanying Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------
AS
ACTUAL ADJUSTED(1)
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Debt(2):
Senior debt and real estate notes(3)............................... $258,480 $ 137,068
Senior Notes, 10 7/8%, due 2000.................................... 97,647 97,647
Senior Subordinated Debentures, 9 3/4%, due 2003................... 97,362 97,362
Senior Subordinated Debentures, 9%, due 2006....................... 97,423 97,423
Senior Subordinated Debentures, %, due 2008................... -- 125,000
-------- -----------
Total debt...................................................... $550,912 $ 554,500
Shareholders' equity:
Common stock and additional paid-in capital........................ 158,396 $ 158,396
Retained earnings.................................................. 116,148 116,148
Treasury stock and deferred compensation........................... (4,082) (4,082)
-------- -----------
Total shareholders' equity...................................... $270,462 $ 270,462
-------- -----------
Total capitalization............................................ $821,374 $ 824,962
======== ===========
</TABLE>
- ---------------
(1) The net proceeds from the issuance of the Debentures are anticipated to be
used to repay a portion of the indebtedness outstanding under the Company's
$350 million senior unsecured revolving credit facility. See "Use of
Proceeds."
(2) See Note 5 to the Company's Consolidated Financial Statements included in
its Annual Report on Form 10-K for the year ended June 30, 1996 and Note 3
to the Company's Consolidated Financial Statements included in its Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996, which are
incorporated by reference in the accompanying Prospectus, for information
regarding outstanding indebtedness.
(3) Of this senior debt and real estate notes, $29.5 million constitutes
subsidiary debt.
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<PAGE> 12
DESCRIPTION OF THE DEBENTURES
THIS DESCRIPTION OF THE TERMS OF THE DEBENTURES SUPPLEMENTS AND, TO THE
EXTENT INCONSISTENT THEREWITH, MODIFIES THE DESCRIPTION OF THE GENERAL TERMS AND
PROVISIONS OF THE DEBT SECURITIES SET FORTH IN THE ACCOMPANYING PROSPECTUS, TO
WHICH REFERENCE IS HEREBY MADE. The following description of certain terms of
the Debentures does not purport to be complete and is qualified in its entirety
by reference to the Indenture pursuant to which the Debentures will be issued, a
copy of the proposed form of which will be filed as an exhibit to a Current
Report on Form 8-K, and to those terms made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
Terms (whether or not capitalized) used but not defined herein have the meanings
given to them in the Indenture.
AS USED BELOW IN THIS "DESCRIPTION OF THE DEBENTURES" SECTION, THE
"COMPANY" MEANS DEL WEBB CORPORATION, BUT NOT ANY OF ITS SUBSIDIARIES, UNLESS
THE CONTEXT REQUIRES OTHERWISE.
GENERAL
The Debentures will be general unsecured senior subordinated obligations of
the Company and will be issued under an Indenture between the Company and State
Street Bank and Trust Company, as Trustee, Co-Paying Agent and Co-Registrar (the
"Trustee"), and State Street Bank and Trust Company, N.A., an affiliate of the
Trustee, as Co-Paying Agent and Co-Registrar. The Debentures will be limited to
an aggregate principal amount of $125 million and will mature on ,
2008. The Debentures will bear interest at the rate shown on the cover page of
this Prospectus Supplement, payable on and of each year,
commencing on , 1997, to holders of record (the "Holders") at the
close of business on or , as the case may be,
immediately preceding the respective interest payment date. The Debentures will
be issued in denominations of $1,000 and integral multiples thereof.
The Debentures will rank pari passu with the 9 3/4% Debentures and the 9%
Debentures and the covenants applicable to the Debentures are substantially
similar to those applicable to the 9 3/4% Debentures and the 9% Debentures.
The Debentures will be subordinated and junior in right of payment, to the
extent and in the manner set forth below, to all Senior Debt. The Company is a
holding company, which currently conducts its operations through subsidiaries.
This effectively subordinates the Debentures to all indebtedness (including
trade payables) of the Company's subsidiaries. Therefore, the Company's rights
and the rights of its creditors, including holders of Debentures, to participate
in the assets of any subsidiary upon the subsidiary's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors, except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary. However, in that case the claims of
the Company would still be effectively junior to any indebtedness of the
subsidiaries to the extent the creditors are entitled to the benefit of security
interests in the assets of the subsidiary as well as to any indebtedness of the
subsidiary senior to that held by the Company. In addition, because the Company
is a holding company, it is dependent on dividends or other distributions from
its subsidiaries to make payments on its indebtedness, including the Debentures.
Such dividends or other distributions to the Company may be subject to state
law, which can restrict the ability of a corporation to pay dividends or make
other distributions to its shareholders and which protect the rights of
creditors of a corporation in the event of improperly made dividends or
distributions, as well as to present or future contractual or regulatory
restrictions that could materially restrict the subsidiaries' ability to make
such payments to the Company. The Indenture will not prohibit the Company's
ability to enter into contracts in the future that limit the ability of the
Company's subsidiaries to make dividends, loans or advances to it. Payments to
the Company from its subsidiaries also are contingent upon the earnings of such
subsidiaries and are subject to various business considerations, such as the
working capital needs of the subsidiaries. See "Risk Factors--Subordination of
the Debentures."
Initially, State Street Bank and Trust Company, N.A., and the Trustee will
act as the Co-Registrars and Co-Paying Agents under the Indenture. The Company
or any of its subsidiaries may subsequently act as the Registrar and/or the
Paying Agent, except in certain circumstances described in the Indenture, and
the Company may change any Registrar and/or any Paying Agent without prior
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<PAGE> 13
notice to the Holders. Principal, premium and interest on the Debentures will be
payable, and the Debentures may be presented for registration of transfer or
exchange, at the offices of State Street Bank and Trust Company, N.A. in New
York, New York or of the Trustee in Boston, Massachusetts. Payments may be paid
by checks mailed to the registered addresses of the holders of record. The
Holders must surrender their Debentures to the Paying Agent to collect principal
payments. The Company may require appropriate endorsements, transfer documents
and payment of a sum sufficient to cover any transfer tax or other governmental
charge payable in connection with certain transfers or exchanges of the
Debentures.
OPTIONAL REDEMPTION OF THE DEBENTURES
The Debentures may not be redeemed by the Company prior to ,
2002. Thereafter, the Debentures may be redeemed at the option of the Company,
in whole or in part, at the following redemption prices (expressed as a
percentage of principal amount) if redeemed during the 12-month period beginning
on of the indicated year:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------------------- ----------
<S> <C>
2002............................................................. %
2003............................................................. %
2004............................................................. %
2005 and thereafter.............................................. 100.000%
</TABLE>
plus, in each case, accrued and unpaid interest thereon to the redemption date.
If less than all of the Debentures are to be redeemed at any time,
selection of the Debentures to be redeemed will be made by the Trustee from
among the outstanding Debentures on a pro rata basis, by lot or by another means
that is in compliance with the requirements of the principal national securities
exchange, if any, on which the Debentures are then listed. Notice of redemption
will be mailed at least 30 days but not more than 60 days before the redemption
date to each Holder whose Debentures are to be redeemed at the registered
address of such Holder. On and after the redemption date, interest shall cease
to accrue on the Debentures or portions thereof called for redemption.
The Debentures will not have the benefit of any sinking fund.
MANDATORY OFFERS TO PURCHASE THE DEBENTURES
The Indenture will require the Company to make an offer to purchase all of
the outstanding Debentures upon a Change of Control and a portion of the
outstanding Debentures if the Company fails to maintain its Consolidated
Tangible Net Worth above $125 million for certain periods. See "Certain
Covenants--Change of Control" and "--Maintenance of Consolidated Tangible Net
Worth." The Company's ability to purchase the Debentures in the event of a
Change of Control or failure to maintain its Consolidated Tangible Net Worth may
be adversely affected by, among other things, the presence of a change of
control covenant in the indenture for the 10 7/8% Senior Notes and a restriction
therein on the acquisition by the Company of subordinated indebtedness (which
includes the Debentures) prior to April 1, 2000, similar-effect covenants and
restrictions in the Company's $350 million senior unsecured revolving credit
agreement, change of control covenants in the indentures for the 9 3/4%
Debentures (which are due in 2003) and the 9% Debentures (which are due in 2006)
and covenants and restrictions in the Company's credit facilities in existence
from time to time in the future. See Note 5 to the Company's Consolidated
Financial Statements, included in the Company's Annual Report on Form 10-K for
the year ended June 30, 1996, which is incorporated in the Prospectus by
reference. There can be no assurance that sufficient funds will be available in
the event of a Change of Control or failure to maintain its Consolidated
Tangible Net Worth to permit the Company to make any repurchases then required.
S-13
<PAGE> 14
SUBORDINATION
The Debentures will be subordinate and junior in right of payment, to the
extent and in the manner to be set forth below, to all "Senior Debt" of the
Company. The Indenture will define "Senior Debt" as all present or future "Debt"
(defined below) created, incurred, assumed or, to the extent described below,
guaranteed (to the extent of the guarantee) by the Company (and all renewals,
extensions or refundings thereof), unless the instrument under which such Debt
is created, incurred, assumed or guaranteed provides that such Debt is not
senior or superior in right of payment to the Debentures; provided, however,
that Senior Debt shall not include (a) any Debt of the Company to any of its
subsidiaries, (b) any Debt of the Company or guarantees of Debt by the Company
which by its terms or the terms of the instrument creating or evidencing it
expressly provides that such Debt or guarantee is expressly subordinated in
right of payment to any other Debt of the Company, (c) the 9 3/4% Debentures,
(d) the 9% Debentures or (e) guarantees by the Company of Debt (i) outstanding
at the date of the Indenture or (ii) which may be outstanding in the future,
except that Senior Debt shall include any present and future guarantees that
provide by their terms that they constitute Senior Debt and the Repayment
Guaranty (Limited) dated as of June 30, 1992 from the Company to Bank One,
Arizona, NA (formerly The Valley National Bank of Arizona) with respect to
certain indebtedness of The Villages at Desert Hills, Inc. (formerly Del Webb
Lakeview Corporation). The Debentures will not be senior or superior in right of
payment to the 9 3/4% Debentures or the 9% Debentures and will rank pari passu
in right of payment to the 9 3/4% Debentures and the 9% Debentures. "Debt" will
be defined in the Indenture to mean any indebtedness of a Person, contingent or
otherwise, (x) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such person or only to a portion
thereof), (y) evidenced by bonds, notes, debentures or similar instruments
(except any of the foregoing that constitutes a trade payable) or (z) evidenced
by letters of credit.
At September 30, 1996 the Senior Debt of the Company was $231.7 million. At
that date, on a pro forma basis after giving effect to the offering of the
Debentures and the anticipated repayment of debt with the net proceeds thereof,
the Company would have had no Senior Debt outstanding other than $100 million of
its 10 7/8% Senior Notes, $107.6 million outstanding under the Company's senior
unsecured revolving credit facility and short-term lines of credit and $2.7
million of other Senior Debt. Senior Debt does not include any indebtedness of
the Company's subsidiaries.
By reason of this subordination, in the event of a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Company or its
property, upon any distribution of assets, holders of Senior Debt will be
entitled to be paid principal and interest in full before principal or interest
payments may be made on the Debentures and the Holders of Debentures will be
required to pay over their share of such distribution to the holders of Senior
Debt until such Senior Debt is paid in full, except that Holders of Debentures
may receive securities that are subordinated at least to the same extent as the
Debentures are to Senior Debt. By reason of this subordination, in the event of
dissolution, insolvency or bankruptcy of the Company, Holders of the Debentures
may recover less, ratably, than holders of Senior Debt and other creditors of
the Company, or may recover nothing.
The Company may not pay principal of, or interest on, the Debentures and
may not acquire any Debentures for cash or property (other than securities that
are subordinated to at least the same extent as the Debentures are subordinated
to Senior Debt) if (i) a default in the payment of any principal or other
obligations with respect to Designated Senior Debt occurs and is continuing
beyond any applicable grace period or (ii) a default, other than a payment
default, on Designated Senior Debt occurs and is continuing that permits holders
of the Designated Senior Debt to accelerate its maturity and the Trustee
receives a notice of the default from a person permitted to give such notice
under the Indenture requesting that payment of principal or interest with
respect to the Debentures be prohibited. Notwithstanding the foregoing, the
Company may resume payments in respect of the Debentures upon the earlier of (a)
the date upon which the default is cured or waived or (b) in the case of a
default referred to in (ii) above, 179 days pass after notice is received (a
"Payment Blockage Period"), provided that the terms of the Indenture otherwise
permit the payment, distribution or acquisition of the Debentures at the time in
question. Only one Payment Blockage Period may be
S-14
<PAGE> 15
commenced within any consecutive 365-day period with respect to the Debentures.
"Designated Senior Debt" will be defined in the Indenture to mean (i) Senior
Debt of the Company permitted to be incurred under the Indenture under any
institutional credit agreement and (ii) any other Senior Debt permitted to be
incurred under the Indenture the principal amount of which is $25 million or
more.
CERTAIN COVENANTS
AFFIRMATIVE COVENANTS. In addition to the covenants described below, the
Indenture will require the Company, subject to certain limitations described
therein, to, among other things, do the following: (a) deliver to the Trustee
copies of all reports filed with the Commission; (b) deliver to the Trustee
quarterly officers' certificates with respect to the Company's compliance with
its obligations under the Indenture; (c) maintain its corporate existence,
subject to the provisions described below relating to mergers and acquisitions;
and (d) pay its taxes when due except where such taxes are being contested in
good faith.
LIMITATIONS ON ADDITIONAL INDEBTEDNESS. The Indenture will provide that,
after the date of the Indenture, the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume, guarantee, extend the maturity of or otherwise become liable with
respect to (collectively, "incur") any Indebtedness (other than Indebtedness
between the Company and any of its Wholly Owned Restricted Subsidiaries or among
its Wholly Owned Restricted Subsidiaries) or issue any Disqualified Stock
unless, after giving effect thereto, the Company's Consolidated Fixed Charge
Coverage Ratio on the date thereof would be at least 3.0 to 1.0.
Notwithstanding the foregoing, the Company or any Restricted Subsidiary may
incur the following Indebtedness (plus interest and premium, if any, thereon)
without regard to the foregoing limitation (although any Indebtedness so
incurred will be included in the determination of the Consolidated Fixed Charge
Coverage Ratio thereafter): (i) Indebtedness under credit agreements in an
aggregate principal amount at any one time of not more than $150 million; (ii)
Indebtedness evidenced by the Debentures; (iii) Indebtedness under Guarantees of
Indebtedness incurred in the ordinary course of business of suppliers or
customers, which Guarantees are also in the ordinary course of business of the
Company or its subsidiaries; (iv) Non-Recourse Indebtedness incurred for the
acquisition and/or improvement of real property and secured by Liens on such
real property and/or improvements; (v) Refinancing Indebtedness; (vi) Excluded
Debt; and (vii) Indebtedness not otherwise permitted to be incurred pursuant to
clauses (i) through (vi) above which, together with any other then outstanding
Indebtedness incurred pursuant to this clause (vii) (and refinancings thereof),
has an aggregate principal amount at the time of incurrence of not in excess of
20 percent of Consolidated Tangible Net Worth of the Company (as of the last
fiscal quarter for which financial results have then been reported). The
Indenture will not restrict any Unrestricted Subsidiary from incurring
Indebtedness, nor will Indebtedness of any Unrestricted Subsidiary be included
in the Consolidated Fixed Charge Coverage Ratio, as long as the Unrestricted
Subsidiary incurring such Indebtedness remains an Unrestricted Subsidiary. As of
the date hereof, all of the Company's operating subsidiaries would be Restricted
Subsidiaries under the Indenture.
LIMITATIONS ON RESTRICTED PAYMENTS. The Indenture will provide that the
Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly make any Restricted Payment after the date of the
Indenture, except as provided below in this Limitations on Restricted Payments
covenant, if at the time of such Restricted Payment:
(i) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof;
(ii) the amount of such Restricted Payment, when added to the
aggregate amount of all Restricted Payments made after February 11, 1994
other than pursuant to clause (a) below, exceeds the sum of: (1) 50 percent
of the Company's Consolidated Net Earnings (excluding Consolidated Net
Earnings attributable to dividends or distributions from Unrestricted
Subsidiaries) accrued during the period (taken as one accounting period)
since December 31,
S-15
<PAGE> 16
1993 (or, if such aggregate Consolidated Net Earnings shall be a deficit,
minus 100 percent of such aggregate deficit), plus (2) the sum of (x) 100
percent of the book value of property and assets (other than cash),
determined at the time such property or assets were contributed as an
Investment to an Unrestricted Subsidiary, received by the Company or its
Wholly Owned Restricted Subsidiaries from any of their Unrestricted
Subsidiaries, up to the amount of the Company's and its Restricted
Subsidiaries' aggregate net Investment in Unrestricted Subsidiaries,
provided that such property so received is substantially similar to the
property contributed to the Unrestricted Subsidiaries, (y) 100 percent of
the cash distributions or cash dividends received by the Company or its
Wholly Owned Restricted Subsidiaries from any Unrestricted Subsidiaries, to
the extent the amount of such cash and such book value of property and
assets referred to in clause (x) above do not exceed the amount of the
Company's and its Restricted Subsidiaries' aggregate net Investment in
Unrestricted Subsidiaries and (z) 50 percent of any other cash
distributions or cash dividends received by the Company and its Wholly
Owned Restricted Subsidiaries from Unrestricted Subsidiaries, plus (3) the
aggregate net proceeds, including the fair market value of property other
than cash (such fair market value to be determined by a majority of the
disinterested members of the full Board of Directors of the Company, whose
good faith determination shall be conclusive and evidenced by a resolution
certified by an officer's certificate and filed with the Trustee), received
by the Company from the issuance of Capital Stock of the Company (other
than to a subsidiary of the Company) that is not Disqualified Stock since
December 31, 1993, plus (4) 100 percent of the principal amount of any
Indebtedness of the Company or a Wholly Owned Restricted Subsidiary that is
converted into or exchanged for Capital Stock of the Company that is not
Disqualified Stock since December 31, 1993, plus (5) 100 percent of the
Released Asset Value since February 11, 1994, plus (6) 100 percent of the
reductions since February 11, 1994 in Guarantees of the Company which are
Investments in Unrestricted Subsidiaries to the extent such Guarantees were
classified as Restricted Payments; or
(iii) the Company would be unable to incur an additional $1 of
Indebtedness under the Consolidated Fixed Charge Coverage Ratio in the
Limitations on Additional Indebtedness covenant.
Notwithstanding the foregoing, the Indenture will not prevent:
(a) Restricted Payments since February 11, 1994 up to, but not
exceeding, $50 million not otherwise permitted above, provided that any
Restricted Payments made pursuant to this clause (a) shall be evidenced by
filing with the Trustee of an officer's certificate certifying that such
Restricted Payment has been made under this exception and, provided
further, that no Restricted Payment (other than a Restricted Payment
pursuant to clause (iii)(a) of the Restricted Payment definition) shall be
made pursuant to this clause (a) if at the time of such Restricted Payment
a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof;
(b) the purchase since February 11, 1994 at a price of not more than
$.05 per right of any rights issued or issuable pursuant to any future
rights plan of the Company, provided that such purchases shall not exceed
$1 million in the aggregate;
(c) the payment of any dividend within 60 days after the date of
declaration thereof if the payment thereof would have complied with the
limitations of the Indenture on the date of declaration; or
(d) the retirement of shares of the Company's Capital Stock in
exchange for or out of the proceeds of a substantially concurrent sale
(other than a sale to a subsidiary of the Company) of other shares of its
Capital Stock (other than Disqualified Stock).
LIMITATIONS ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction
(other
S-16
<PAGE> 17
than encumbrances or restrictions imposed by law, by judicial or regulatory
action or by provisions in leases or other agreements that restrict the
assignability thereof) on the ability of any Restricted Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock which is owned by
the Company or any of its other Restricted Subsidiaries, or pay interest on or
principal of any Indebtedness owed to the Company or any of its other Restricted
Subsidiaries, (ii) make loans or advances to the Company or any of its other
Restricted Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its other Restricted Subsidiaries, except in each case for
encumbrances or restrictions existing under or by reason of (a) applicable
statute, law, rule, regulation or governmental order, (b) covenants or
restrictions contained in Indebtedness existing as of the date of the Indenture,
(c) any restrictions under any note, indenture, agreement or other document
evidencing any Acquired Indebtedness that was permitted to be incurred pursuant
to the Indenture, provided that such restrictions and encumbrances only apply to
assets that were subject to such restrictions and encumbrances prior to the
acquisition of such assets by the Company or its subsidiaries or assets acquired
with the proceeds of such assets, (d) restrictions or encumbrances replacing
those permitted by clause (b) or (c) which are not, in the judgment of the Board
of Directors, determined in good faith, more restrictive, (e) any restrictions
or encumbrances arising in connection with the replacement, renewal or extension
of any credit agreement, credit facility or similar arrangement existing as of
the date of the Indenture, provided that any such restrictions and encumbrances
are not, in the judgment of the Board of Directors, determined in good faith,
more restrictive than those in the credit agreement, credit facility or similar
arrangement being replaced, extended or renewed, as the case may be, (f) any
restrictions or encumbrances arising in connection with the refunding or
refinancing of any Indebtedness existing as of the date of the Indenture,
provided that any restrictions and encumbrances of the type described in this
clause that arise in connection with such refunding or refinancing are not, in
the judgment of the Board of Directors, determined in good faith, more
restrictive than those under the agreement creating or evidencing the
Indebtedness being refunded or refinanced, (g) any agreement restricting the
sale or other disposition of property securing Indebtedness permitted by the
Indenture if such agreement does not expressly restrict the ability of a
subsidiary of the Company to pay dividends or make loans or advances and (h)
reasonable and customary borrowing base covenants set forth in credit agreements
pursuant to which Indebtedness otherwise permitted by the Indenture is
outstanding (including but not limited to borrowing base covenants substantially
similar to those contained in the Revolving Loan Agreement between Del Webb
Communities, Inc. and First Interstate Bank of Nevada, as agent for the lenders,
as in effect on February 11, 1994), which covenants restrict or limit the
distribution of revenues or sale proceeds from real estate or a real estate
project based upon the amount of Indebtedness outstanding on such real estate or
real estate project and the value of some or all of the remaining real estate or
the project's remaining assets.
LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. The Indenture will provide
that the Company and each of its Restricted Subsidiaries will not, after the
date of the Indenture, make any loan, advance, Guarantee or capital contribution
to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, (i) any Affiliate of the Company or
any of its subsidiaries or (ii) any Person (or any Affiliate of such Person)
holding ten percent or more of the Common Equity of the Company or any of its
subsidiaries (each an "Affiliate Transaction"), except on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary, as the case may
be, than those that could have been obtained in a comparable transaction on an
arm's-length basis from a Person that is not an Affiliate.
The Indenture will also provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, enter into an Affiliate
Transaction involving or having a value of more than $10 million unless (i) such
Affiliate Transaction has been approved by a majority of the disinterested
members of a Committee of the Board of Directors of the Company or (ii) the
Company has delivered an officer's certificate to the Trustee stating that (a)
the signatory officer was not a party to or otherwise interested in such
Affiliate Transaction and (b) the terms of such Affiliate Transaction are not
less
S-17
<PAGE> 18
favorable to the Company or the relevant Restricted Subsidiary, as the case may
be, than those that could have been obtained in a comparable transaction on an
arm's-length basis from a Person that is not an Affiliate. Delivery of a
certificate as required by the Indenture and described above will, absent
manifest fraud, constitute conclusive evidence that the terms of the Affiliate
Transaction in question are not less favorable to the Company or the relevant
Restricted Subsidiary, as the case may be, than those that could have been
obtained in a comparable transaction on an arm's-length basis from a Person that
is not an Affiliate.
Notwithstanding the foregoing, the term "Affiliate Transaction" shall not
include any contract, agreement or understanding with or for the benefit of, or
plan for the benefit of, any or all employees of the Company or its subsidiaries
(in their capacity as such) that has been approved by the Company's Board of
Directors, a disinterested committee thereof or the Chief Executive Officer of
the Company (or his or her designee) or stock issuances to directors pursuant to
plans approved by shareholders.
CHANGE OF CONTROL. Following any Change of Control, the Company shall offer
(a "Change of Control Offer") to purchase all outstanding Debentures at a
purchase price equal to 101 percent of the aggregate principal amount of the
Debentures, plus accrued and unpaid interest to the date of purchase.
Within 30 days after any Change of Control, the Company, or the Trustee at
the Company's request, will mail or cause to be mailed to all Holders on the
date of the Change of Control a notice of the occurrence of such Change of
Control and of the Holders' rights arising as a result thereof. Such notice will
contain all instructions and materials necessary to enable Holders to tender
their Debentures to the Company. Any Change of Control Offer will be conducted
in compliance with applicable regulations under the federal securities laws,
including Exchange Act Rule 14e-l.
The Company's ability to purchase Debentures pursuant to a Change of
Control Offer may be restricted by covenants in the indenture for the Company's
10 7/8% Senior Notes (which restrict the acquisition by the Company of its
subordinated indebtedness, which includes the Debentures, prior to April 1,
2000), the indentures for the 9 3/4% Debentures and 9% Debentures, the Company's
$350 million senior unsecured revolving credit agreement and other credit
agreements the Company may have in the future. Also, there can be no assurance
that sufficient funds will be available at the time of any Change of Control
Offer to make any required repurchases. However, the Company's failure to comply
with the Change of Control covenant will be an Event of Default under the
Indenture if such failure continues for a specified period and the required
notice is given by the Trustee or the Holders of not less than 25 percent in
principal amount of the then outstanding Debentures.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that will afford Holders of the Debentures
protection in the event of a highly leveraged transaction, takeover,
reorganization, restructuring, recapitalization, merger or similar transaction
involving the Company that may adversely affect Holders.
LIMITATIONS ON MERGERS AND CONSOLIDATIONS. The Indenture will provide that
the Company will not consolidate or merge with or into, or sell, lease, convey
or otherwise dispose of all or substantially all of its assets (including by way
of liquidation or dissolution) to any Person, unless: (i) the Person formed by
or surviving such consolidation or merger (if other than the Company), or to
which such sale, lease, conveyance or other disposition shall be made
(collectively, the "Successor"), is a corporation or other legal entity
organized and existing under the laws of the United States or any State thereof
or the District of Columbia and the Successor assumes by supplemental indenture
in a form reasonably satisfactory to the Trustee all of the obligations of the
Company under the Debentures and the Indenture; (ii) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction and
the use of any net proceeds therefrom, on a pro forma basis, the Consolidated
Tangible Net Worth of the Company or the Successor, as the case may be, would be
at least equal to the Consolidated Tangible Net Worth of the Company immediately
prior to such transaction; and (iv) the Consolidated Fixed Charge Coverage Ratio
of the Company or the Successor, as the case may be, immediately after giving
effect to such
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transaction, would be such that the Company or the Successor, as the case may
be, would be entitled to incur at least $1 of additional Indebtedness under the
Consolidated Fixed Charge Coverage Ratio test in the Limitations on Additional
Indebtedness covenant. For this purpose, a sale, lease, conveyance or other
disposition by the Company and/or its subsidiaries of all or substantially all
of the assets of the Company and its subsidiaries, taken as a whole, shall be
deemed a sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company. The meaning of the term "all or substantially
all of the assets" has not been definitely established, is likely to be
interpreted by reference to applicable state law if and at the time the issue
arises and will be dependent on the facts and circumstances existing at that
time. Accordingly, there may be uncertainty as to whether a Holder of Debentures
can determine whether a Change of Control has occurred and exercise any remedies
such Holder may have upon a Change of Control.
MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH. The Indenture will provide
that if the Company's Consolidated Tangible Net Worth at the end of each of any
two consecutive fiscal quarters (the last day of the second such fiscal quarter
being referred to as a "Deficiency Date") is less than $125 million (the
"Minimum Consolidated Tangible Net Worth"), then the Company shall, no later
than 60 days after a Deficiency Date (or 120 days if a Deficiency Date is also
the end of the Company's fiscal year), offer to purchase (a "Net Worth Offer")
ten percent of the principal amount of Debentures originally issued under the
Indenture (or such lesser amount as may be outstanding at the time the Net Worth
Offer is made) (the "Offer Amount") at a purchase price equal to 100 percent of
the aggregate principal amount thereof, plus accrued and unpaid interest to the
purchase date; provided, however, that no such Net Worth Offer shall be required
if, after the Deficiency Date but prior to the timely delivery of the officer's
certificate required by the Indenture, capital is contributed or otherwise paid
to the Company or its subsidiaries sufficient to increase the Company's
Consolidated Tangible Net Worth to $125 million or more. The Net Worth Offer
shall remain open for a period of 20 business days following its commencement
and no longer, unless a longer period is required by law (the "Offer Period").
Promptly after the termination of the Offer Period, the Company shall purchase
and mail or deliver payment for the Offer Amount of Debentures tendered or, if
less than the Offer Amount has been tendered, all Debentures tendered in
response to the Net Worth Offer. In no event shall the Company's failure to meet
the Minimum Consolidated Tangible Net Worth at the end of any fiscal quarter be
counted towards the making of more than one Net Worth Offer. The principal
amount of Debentures to be purchased pursuant to a Net Worth Offer may be
reduced by the principal amount of Debentures acquired by the Company through
purchase or redemption (other than pursuant to a Change of Control Offer)
subsequent to the Deficiency Date and surrendered to the Trustee for
cancellation. Any Net Worth Offer shall be conducted in compliance with
applicable regulations under the federal securities law, including Exchange Act
Rule 14e-l.
The Company's ability to purchase Debentures in the event it is required to
make a Net Worth Offer may be adversely affected by, among other things,
covenants in the indenture for the Company's Senior Notes due 2000 (which
restricts the acquisition by the Company of its subordinated indebtedness, which
includes the Debentures, prior to March 31, 2000), the indentures for the 9 3/4%
Debentures and 9% Debentures, the Company's $350 million senior unsecured
revolving credit agreement and other credit agreements the Company may have in
the future. There can be no assurance that sufficient funds will be available at
the time of any Net Worth Offer to make required repurchases. The Company's
failure to comply with the Maintenance of Consolidated Tangible Net Worth
covenant will be an Event of Default under the Indenture if such failure
continues for a specified period and the required notice is given by the Trustee
or the Holders of not less than 25 percent in principal amount of the then
outstanding Debentures.
LIMITATION ON RANKING OF FUTURE INDEBTEDNESS. The Company will not,
directly or indirectly, incur, create, assume, guarantee or otherwise become
liable for any indebtedness which is subordinated in right of payment to any
Senior Debt of the Company and senior in right of payment to the Debentures.
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<PAGE> 20
EVENTS OF DEFAULT
An "Event of Default" will be defined in the Indenture as (i) failure by
the Company to pay interest on any of the Debentures when it becomes due and
payable, whether or not prohibited by the subordination provisions of the
Indenture, and the continuance of any such failure for 30 days; (ii) failure by
the Company to pay the principal on the Debentures when due, either at maturity,
upon redemption at the option of the Company, by declaration of acceleration or
otherwise, whether or not prohibited by the subordination provisions of the
Indenture; (iii) failure by the Company to comply with any agreement or covenant
in the Indenture or the Debentures and continuance of such failure for 60 days
(or for ten days in the case of the covenant described under "Certain
Covenants -- Change of Control") after notice of such failure has been given to
the Company by the Trustee or by the Holders of at least 25 percent of the
aggregate principal amount of the Debentures then outstanding (except that with
respect to certain covenants, such defaults shall be Events of Default with such
notice but without such passage of time); (iv) an event of default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which is
Guaranteed by the Company or any of its Restricted Subsidiaries, to the extent
of the Guarantee) other than Non-Recourse Indebtedness if (a) either (1) such
event of default results from the failure to pay any such Indebtedness when due
(whether at maturity or otherwise) or (2) as a result of such event of default
the maturity of such Indebtedness has been accelerated prior to its expressed
maturity and (b) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to pay
principal when due or the maturity of which has been so accelerated, equals or
exceeds $10 million or more in the aggregate, without such Indebtedness having
been discharged or such acceleration rescinded within 30 days after notice to
the Company from the Trustee or the Holders of 25 percent in principal amount of
the Debentures then outstanding; (v) a final judgment or judgments, except to
the extent the judgment or judgments are in respect of Non-Recourse
Indebtedness, that exceed $10 million in the aggregate, for the payment of
money, having been entered by a court or courts of competent jurisdiction, and
remaining undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, against (a) the Company, (b) any of its Material
Subsidiaries which is at the time a Restricted Subsidiary or (c) any subsidiary
which is at the time a Restricted Subsidiary and which is (1) a member of a
Material Subsidiary Group and (2) material to or holds material assets of (in
each case as determined in good faith by the Board of Directors) the specific
real estate project in respect of which it is a member of the Material
Subsidiary Group; and (vi) certain events of bankruptcy, insolvency or
reorganization involving (a) the Company, (b) any of its Material Subsidiaries
which is at the time a Restricted Subsidiary or (c) any subsidiary which is at
the time a Restricted Subsidiary and which is (1) a member of a Material
Subsidiary Group and (2) material to or holds material assets of (in each case
as determined in good faith by the Board of Directors) the specific real estate
project in respect of which it is a member of the Material Subsidiary Group.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization involving the Company) shall have
occurred and be continuing, the Trustee by written notice to the Company, or the
Holders of at least 25 percent in aggregate principal amount of the Debentures
then outstanding by written notice to the Company and the Trustee, may declare
all amounts owing under the Debentures to be due and payable. Upon such
declaration of acceleration, the aggregate principal amount of, and all accrued
and unpaid interest on, the outstanding Debentures shall immediately become due
and payable. If an Event of Default results from bankruptcy, insolvency or
reorganization involving the Company, all outstanding Debentures shall become
due and payable without any further action or notice. The Holders of a majority
in aggregate principal amount of the Debentures then outstanding may waive or
annul an existing Default or Event of Default (other than any Default or Event
of Default in payment of principal or interest on the Debentures), and its
consequences, under the Indenture.
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<PAGE> 21
The Holders may not institute any action to enforce the provisions of the
Indenture or the Debentures (except actions for payment of overdue principal or
interest) unless (a) such Holders previously have given the Trustee written
notice of the default and continuance thereof, (b) the Holders of not less than
25 percent in principal amount of the Debentures then outstanding have requested
the Trustee to institute such action and offered the Trustee reasonable
indemnity, (c) the Trustee has not instituted such action within 60 days of the
request and (d) the Trustee has not received direction inconsistent with such
written request from the Holders of a majority in principal amount of the
Debentures then outstanding.
Subject to certain limitations, Holders of a majority in principal amount
of the Debentures then outstanding may direct the Trustee in its exercise of any
trust or power, provided that such direction does not conflict with the terms of
the Indenture and such Holders have offered to the Trustee security and
indemnity satisfactory to the Trustee. The Trustee may withhold from the Holders
notice of any continuing Default or Event of Default (except any Default or
Event of Default in payment of principal or interest on the Debentures) if the
Trustee determines that withholding such notice is in the Holders' interest.
The Company is required to deliver to the Trustee quarterly a statement
regarding compliance with the Indenture, and upon any Officer of the Company
becoming aware of any Default or Event of Default, a statement specifying such
Default or Event of Default.
The Indenture will provide that no director, officer, employee or
shareholder of the Company, as such, will have any liability for any obligations
of the Company under the Debentures or the Indenture. The Indenture and the
Debentures will each provide that each holder of the Debentures, by accepting
the Debentures, waives and releases all such liability.
DEFEASANCE AND DISCHARGE
The Company can discharge or defease its obligations under the Indenture as
set forth below.
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to Holders of Debentures that have not already been delivered to the
Trustee for cancellation and that have either become due and payable or are by
their terms due and payable within one year (or scheduled for redemption within
one year) by irrevocably depositing with the Trustee cash or United States
Government Obligations, or a combination thereof, as trust funds in an amount
certified to be sufficient to pay at maturity (or upon redemption) the principal
of and interest on such Debentures.
The Company may also discharge any and all of its obligations to Holders of
the Debentures at any time ("defeasance"), but may not thereby avoid its duty to
register the transfer or exchange of the Debentures, to replace any temporary,
mutilated, destroyed, lost or stolen Debentures or to maintain an office or
agency in respect of such Debentures and certain other obligations.
Alternatively, the Company may be released with respect to the Debentures from
the obligations imposed by specified portions of Article 4 and by Article 5 of
the Indenture (which contain, among other things, the covenant described above
limiting consolidations, mergers, asset sales and leases) and omit to comply
with such Articles or portions thereof without creating an Event of Default
("covenant defeasance"). Defeasance or covenant defeasance may be effected only
if, among other things: (a) the Company irrevocably deposits with the Trustee
cash or United States Government Obligations, or a combination thereof, as trust
funds in an amount certified to be sufficient to pay at maturity the principal
of and interest on all outstanding Debentures; (b) no Event of Default under the
Indenture has occurred and is then continuing; (c) the defeasance or covenant
defeasance will not result in an event of default under any agreement to which
the Company is a party or by which it is bound; and (d) the Company delivers to
the Trustee an opinion of counsel to the effect that the Holders of Debentures
will not recognize income, gain or loss for federal income tax purposes as a
result of such defeasance or covenant defeasance and, in effect, that such
defeasance or covenant defeasance will not otherwise alter such Holders' federal
income tax treatment of principal and interest payments on the Debentures.
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MODIFICATION OF THE INDENTURE
The Indenture will provide that the Company and the Trustee may enter into
supplemental indentures without the consent of the Holders of Debentures to,
among other things: (a) cure any ambiguity or correct any inconsistency in the
Indenture; (b) make any change that does not adversely affect the legal rights
of Holders of Debentures; (c) modify, eliminate or add to the provisions of the
Indenture to the extent necessary to qualify the Indenture under applicable
federal statutes; (d) provide for uncertificated Debentures in addition to
certificated Debentures; or (e) surrender any right or power conferred by the
Indenture upon the Company.
The Indenture also will contain provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
principal amount of Debentures outstanding, to add any provision to, change in
any manner or eliminate any of the provisions of the Indenture or modify in any
manner the rights of the Holders of the Debentures so affected; provided,
however, that the Company and the Trustee may not, without the consent of the
Holder of each outstanding Debenture affected thereby, do, among other things,
any of the following: (a) reduce the amount of Debentures whose Holders must
consent to an amendment, supplement or waiver with respect to the Indenture; (b)
reduce the rate of or change the time for payment of interest on any Debentures;
(c) reduce the principal of or change the fixed maturity of any Debenture or
alter the redemption provisions with respect thereto; (d) waive a default in the
payment of the principal of, or interest on, any Debenture; (e) make any
Debenture payable in money other than that stated in the Debenture; and (f) make
any change in the provisions of the Indenture relating to waiver of past
defaults, the rights of Holders of Debentures to receive payments of principal
of or interest on the Debentures or the foregoing amendment provisions.
The Indenture may not be amended to alter the subordination of any
outstanding Debentures without the consent of each holder of Senior Debt then
outstanding that would be adversely affected in any material respect thereby.
TRANSFER AND EXCHANGE
A Holder will be able to transfer or exchange Debentures only in accordance
with the provisions of the Indenture. The Registrar and the Company may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to (i) transfer or exchange any Debenture
selected for redemption or (ii) transfer or exchange any Debenture for a period
of 15 days before a selection of Debentures to be redeemed. The registered
Holder of a Debenture may be treated as the owner of such Debenture for all
purposes.
CONCERNING THE TRUSTEE
The Indenture will contain certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest, it must
eliminate such conflict or resign.
The Holders of a majority in principal amount of the then outstanding
Debentures will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default occurs and is not cured, the Trustee will be required, in the exercise
of its power, to use the degree of care of a prudent person in similar
circumstances in the conduct of his, her or its own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder, unless such
Holder shall have offered to the Trustee security and indemnity satisfactory to
the Trustee.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture.
"Acquired Indebtedness" means (i) with respect to any Person that becomes a
subsidiary of the Company after the date hereof, indebtedness of such Person and
its subsidiaries existing at the time such Person becomes a subsidiary of the
Company that was not incurred in connection with, or in contemplation of, such
Person becoming a subsidiary of the Company and (ii) with respect to the Company
or any of its subsidiaries, any Indebtedness assumed by the Company or any of
its subsidiaries in connection with the acquisition of an asset from another
Person that was not incurred by such other Person in connection with, or in
contemplation of, such acquisition.
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
the referent Person. For purposes of this definition, control of a Person shall
mean the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, the term "Affiliate" shall not
include, with respect to the Company or any Wholly Owned Subsidiary of the
Company, any Wholly Owned Subsidiary of the Company.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation, operation
of law or otherwise) of any assets of the Company or its Restricted Subsidiaries
in any transaction, or series of related transactions, outside of the Company's
then ordinary course of business, where the proceeds from any such sale, lease,
conveyance or other disposition, whether in a transaction or series of related
transactions, exceeds $1,000,000.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable), participations or
other equivalents of or interests in (however designated) the equity (which
includes, but is not limited to, common stock, preferred stock and partnership
and joint venture interests) of such Person (excluding any debt securities that
are convertible into, or exchangeable for, such equity).
"Capitalized Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) in one or a series
of transactions, provided that a transaction where the holders of all classes of
Common Equity of the Company immediately prior to such transaction own, directly
or indirectly, 50 percent or more of all classes of Common Equity of such Person
or group immediately after such transactions shall not be a change of control;
(ii) the acquisition by the Company and/or any of its subsidiaries of 50 percent
or more of the aggregate voting power of all classes of Common Equity of the
Company in one transaction or a series of related transactions; (iii) the
liquidation or dissolution of the Company, provided that a liquidation or
dissolution of the Company which is part of a transaction or series of related
transactions that does not constitute a change of control under the "provided"
clause of clause (i) above shall not constitute a change of control under this
clause (iii); or (iv) any transaction or series of transactions (as a result of
a tender offer, merger, consolidation or otherwise) that results in, or that is
in connection with, (a) any Person, including a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) that includes such Person, acquiring
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50 percent or more of the aggregate voting power of
all classes of Common Equity of the Company or any Person that possesses
"beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50 percent or more of the aggregate voting power of
all classes of Common Equity of the Company, or (b) less than 50 percent
(measured
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<PAGE> 24
by the aggregate voting power of all classes) of the Company's Common Equity
being registered under Section 12(b) or 12(g) of the Exchange Act.
"Common Equity" of any Person means all Capital Stock of such Person that
is generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Consolidated Cash Flow Available for Fixed Charges" of the Company means
for any period the amounts for such period of (i) Consolidated Net Earnings,
plus (ii) Consolidated Income Tax Expense, plus (iii) amortization of
capitalized interest included in cost of sales, plus (iv) allocation of noncash
costs to cost of sales, excluding interest, plus (v) to the extent not otherwise
included, other noncash charges to earnings, net, reduced by (vi) noncash
earnings included in Consolidated Net Earnings; all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, with
respect to any determination date, the ratio of (i) Consolidated Cash Flow
Available for Fixed Charges of the Company for the prior four full fiscal
quarters for which financial results have been reported immediately preceding
the determination date to (ii) the aggregate Consolidated Interest Expense of
the Company reasonably anticipated in good faith by the Company to become due
during the fiscal quarter in which the determination date occurs and the three
fiscal quarters immediately subsequent to such fiscal quarter; provided,
however, that in any calculation of the Company's Consolidated Fixed Charge
Coverage Ratio, the interest on any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the determination date had been the applicable rate for the entire
period.
"Consolidated Income Tax Expense" of the Company for any period means the
provision for taxes based on earnings and profits of the Company and its
Restricted Subsidiaries (but only to the extent such income or profits were
included in computing the Consolidated Net Earnings of the Company for such
period), determined on a consolidated basis consistent with the Company's past
practices under SFAS 96.
"Consolidated Interest Expense" of the Company for any period means the
aggregate amount of interest which, in conformity with GAAP, would be set
opposite the caption "interest expense" or any like caption on the consolidated
statement of earnings of the Company and its Restricted Subsidiaries (including,
but not limited to, imputed interest included on Capitalized Lease Obligations,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, the net costs associated
with hedging obligations, amortization of other financing fees and expenses, the
interest portion of any deferred payment obligation, amortization of discount or
premium, if any, and all other noncash interest expense other than interest
amortized to cost of sales) and includes, without duplication (including
duplication of the foregoing items), all capitalized interest and all interest
incurred in connection with Investments in Discontinued Operations for such
period and interest actually paid by the Company or a Restricted Subsidiary
under any Guarantee of Indebtedness (including a Guarantee of principal,
interest or any combination thereof) of any other Person, all determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Earnings" of the Company for any period means the net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP (except that income
taxes shall be determined on a basis consistent with the Company's past
practices under SFAS 96); provided that there shall be excluded from such net
income (to the extent otherwise included therein), without duplication: (i) the
net income (or loss) of any Person (other than a Restricted Subsidiary of the
Company) in which any Person other than the Company has an ownership interest,
except to the extent that any such income has actually been received by the
Company or any of its Wholly Owned Restricted Subsidiaries in the form of
dividends or similar distributions during such period; (ii) except to the extent
includible in the consolidated net
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<PAGE> 25
income of the Company pursuant to the foregoing clause (i), the net income (or
loss) of any Person that accrued prior to the date that (a) such Person becomes
a Restricted Subsidiary of the Company or is merged into or consolidated with
the Company or any of its Restricted Subsidiaries or (b) the assets of such
Person are acquired by the Company or any of its Restricted Subsidiaries; (iii)
the net earnings of any Restricted Subsidiary of the Company (other than a
Wholly Owned Restricted Subsidiary) to the extent that (but only so long as) the
declaration or payment of dividends or similar distributions by such Restricted
Subsidiary of those earnings is not permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to the Restricted Subsidiary during such
period (and when and to the extent such dividend or other distribution is
permitted, such income not previously recognized shall then be recognized, in
the period when such dividend or other distribution was permitted and to the
extent of such permission); (iv) any gain (but not loss), together with any
related provisions for taxes on any such gain, realized during such period by
the Company or any of its Restricted Subsidiaries upon (a) the acquisition of
any securities, or the extinguishment of any Indebtedness, of the Company or any
of its Restricted Subsidiaries or (b) any Asset Sale by the Company or any of
its Restricted Subsidiaries; (v) any extraordinary gain (but not extraordinary
loss), together with any related provision for taxes on any such extraordinary
gain, realized by the Company or any of its Restricted Subsidiaries during such
period; and (vi) in the case of a successor to the Company by consolidation,
merger or transfer of its assets, any earnings of the successor prior to such
merger, consolidation or transfer of assets; provided, further, that there shall
be included in such Consolidated Net Earnings (to the extent not otherwise
included therein) the net earnings of any Unrestricted Subsidiary of the Company
to the extent such net earnings are received by the Company or a Wholly Owned
Restricted Subsidiary in the form of cash dividends or other cash distributions
from such Unrestricted Subsidiary; provided, further, that, in calculating
Consolidated Net Earnings, the Company shall be entitled to take into
consideration the tax benefits associated with any loss, but only when and to
the extent such tax benefits are recognized by the Company; provided, further,
that solely for purposes of calculating the Consolidated Fixed Charge Coverage
Ratio in the Limitations on Additional Indebtedness Covenant included in the
Indenture, Consolidated Net Earnings shall exclude (x) any non-cash losses on
valuation reserves relating to Discontinued Operations, Foothills, the
5,661-acre tract of land referred to under "Business and Properties--Other Real
Estate Activities--Other" in the Annual Report of the Company on Form 10-K for
the year ended June 30, 1993 or the 77-acre tract of land in Fort Collins,
Colorado, except to the extent the Company has made Investments in the
particular Discontinued Operation, Foothills or such other tracts of land in
question since February 11, 1994, and (y) any noncash losses, whether or not
extraordinary, incurred in connection with the issuance of Capital Stock (other
than Disqualified Stock) in exchange for Indebtedness of the Company or its
Wholly Owned Restricted Subsidiaries since February 11, 1994.
"Consolidated Tangible Net Worth" of the Company as of any date means the
stockholders' equity (including any preferred stock that is classified as equity
under GAAP, other than Disqualified Stock) of the Company and its Restricted
Subsidiaries on a consolidated basis at such date, as determined in accordance
with GAAP, less (i) all write-ups subsequent to December 31, 1992 in the book
value of any asset owned by the Company or any of its Restricted Subsidiaries
and (ii) Intangible Assets reflected on the consolidated balance sheet of the
Company and its Restricted Subsidiaries as of such date.
"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Discontinued Operations" means with respect to the Company those
operations of the Company and its subsidiaries which were classified as
"discontinued operations" in the consolidated financial statements of the
Company and its subsidiaries as of December 31, 1992.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final maturity date of the Debentures.
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<PAGE> 26
"Excess Asset Lien" means a Lien on assets or property securing
Non-Recourse Indebtedness incurred pursuant to clause (iv) of the Limitation on
Additional Indebtedness covenant to the extent the aggregate undepreciated and
unamortized cost basis of such assets or property exceeds the outstanding
principal amount of such Non-Recourse Indebtedness. The amount of a Restricted
Payment based upon the grant of an Excess Asset Lien is the amount by which the
undepreciated and unamortized cost basis of such assets or property at the date
of grant of the Lien exceeds the outstanding principal amount of such
Non-Recourse Indebtedness.
"Excluded Debt" means any Indebtedness of the Company which is (i)
subordinated (subject to the rights of holders of Senior Debt) in right of
payment to the Debentures (upon liquidation or otherwise) at least to the extent
that the Debentures are subordinated to Senior Debt and (ii) matures after, and
is not redeemable mandatorily or at the option of the holder thereof prior to,
the final maturity date of the Debentures.
"Foothills" means Del E. Webb Foothills Corporation, the successor to an
Arizona general partnership organized on January 31, 1986 for the purpose of
acquiring and developing certain real property in Phoenix, Arizona (and its
successors).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, in each case as in effect on February
11, 1994.
"Guarantee" with respect to any obligation means: (i) any direct or
indirect guarantee; (ii) any direct or indirect agreement or arrangement,
contingent or otherwise, to purchase, repurchase or otherwise acquire any part
or all of such obligation; or (iii) any other direct or indirect agreement or
arrangement the practical effect of which is to assure the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation.
"Indebtedness" of any Person at any date means, without duplication, (i)
all indebtedness of such Person for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof), (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit incurred
by such Person in the ordinary course of business; (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
except trade payables and accrued expenses incurred in the ordinary course of
business, (v) all Capitalized Lease Obligations of such Person, (vi) all
Indebtedness of others secured by a Lien (other than assessment district and
similar Liens arising in connection with municipal financings) on any asset of
such Person, whether or not such Indebtedness is assumed by such Person, and
(vii) all Indebtedness of others Guaranteed by such Person to the extent of such
Guarantee. The amount of Indebtedness of any Person at any date shall be (a) the
outstanding balance at such date of all unconditional obligations described
above, (b) the maximum liability of such Person for any contingent obligations
under clause (iii) above and (c) in the case of clause (vi), the lesser of (A)
the fair market value of any asset subject to a Lien securing the Indebtedness
of others on the date that the Lien attaches and (B) the amount of the
Indebtedness secured. To the extent such Person Guarantees the obligation of
another Person to pay interest on indebtedness owed by such other Person, then a
designated percentage of the interest Guaranteed or the principal amount of the
underlying Indebtedness, as the case may be, shall be deemed indebtedness of the
referent Person. For purposes of this definition, the amount of such deemed
Indebtedness of the referent Person shall be equal to the lesser of: (a) the
aggregate principal amount of the underlying Indebtedness relating to such
interest Guarantee or (b) the aggregate amount of interest due and payable over
the term of such Indebtedness (or the term of the Debentures, if shorter)
determined based upon the rate of interest in effect as of the date of such
determination, together with the maximum prepayment premium or penalty which
could become due or payable with respect to such Indebtedness if such
Indebtedness was prepaid prior to the maturity of the Debentures.
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<PAGE> 27
Notwithstanding the foregoing, Indebtedness shall not include (v) Indebtedness
which has been defeased or discharged, (w) Indebtedness in respect of interest
rate swap or similar agreements intended to protect against fluctuations in
interest rates, or foreign currency hedge, exchange or similar agreements
intended to protect against fluctuations in currency exchange rates, (x)
Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument drawn against insufficient funds in the
ordinary course of business, provided that such Indebtedness is extinguished
within five Business Days of its incurrence, (y) letters of credit provided in
the ordinary course of business securing performance (and not financial)
obligations and (z) performance, completion, surety and similar bonds and
similar purpose undertakings provided in the ordinary course of business.
"Intangible Assets" of the Company means all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, write-ups of assets over their carrying value at
December 31, 1992 or the date of acquisition, if acquired subsequent thereto,
and all other items which would be treated as intangibles on the consolidated
balance sheet of the Company and its Restricted Subsidiaries prepared in
accordance with GAAP.
"Investments" of any Person means (i) all investments (assets net of
liabilities) by such Person in any other Person in the form of loans, advances
or capital contributions, (ii) all Guarantees of Indebtedness or other
obligations of any other Person by such Person, (iii) all purchases (or other
acquisitions for consideration) by such Person of indebtedness, Capital Stock or
other securities of any other Person and (iv) all other items that would be
classified as investments (including, without limitation, purchases of assets
outside the ordinary course of business) on a balance sheet of such Person
prepared in accordance with GAAP.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
pledge, lien, charge, security interest, adverse claim affecting title or
resulting in a charge against such asset, or encumbrance of any kind in respect
of such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell).
"Material Subsidiary" means (i) any subsidiary of the Company that holds,
directly or indirectly, a material amount of the assets of Sun City West, Sun
City Las Vegas, Sun City Palm Desert or Sun City Tucson or (ii) any other
subsidiary of the Company which accounted for (a) 5 percent or more of the
revenues of the Company on a consolidated basis for the four full fiscal
quarters for which financial results have been reported immediately prior to the
Default or Event of Default and (b) 5 percent or more of the total assets of the
Company on a consolidated basis as of the four full fiscal quarters for which
financial results have been reported immediately prior to the Default or Event
of Default. Subsidiaries of the Company that hold assets of a specific real
estate project will be a "Material Subsidiary Group" if such subsidiaries, when
considered as one subsidiary, would be a Material Subsidiary under clause (ii)
of the preceding sentence.
"Non-Recourse Indebtedness" means Indebtedness secured by a Lien on
property to the extent the liability for such Indebtedness (and any interest
thereon) is limited to the security of the borrower's rights in such property
and its income and rents, without liability on the part of the Company or any of
its subsidiaries for any deficiency, including liability by reason of any
agreement by the Company or any of its subsidiaries to provide additional
capital or maintain the financial condition of or otherwise support the credit
of the Person incurring such indebtedness; provided, however, that with respect
to the Company and its Restricted Subsidiaries, Non-Recourse Indebtedness shall
also include Indebtedness of Coventry of California, Inc., Del Webb's Coventry
Homes, Inc., Del Webb's Coventry Homes Construction Co., Del Webb's Coventry
Homes of Tucson, Inc., Del Webb's Coventry Homes Construction of Tucson Co., Del
Webb's Coventry Homes of Nevada, Inc., Del Webb Homes, Inc., Trovas Company and
Trovas Construction Co. (collectively "Coventry"), but only to the extent that,
and so long as, (a) such Indebtedness shall have no recourse whatsoever
(including but not limited to, no recourse with respect to the collection of
principal or interest on such Indebtedness) to the Company or any Restricted
Subsidiary of the Company (other than Coventry) or any assets of the Company or
S-27
<PAGE> 28
any Restricted Subsidiary of the Company (other than Coventry), (b) neither the
Company nor any of its Restricted Subsidiaries (other than Coventry) shall have
provided to any holder of Indebtedness of Coventry any covenant or agreement to
maintain a minimum net worth at Coventry or otherwise directly or indirectly
provided any other similar form of credit or capital support to Coventry, (c)
the proceeds of such Indebtedness are used exclusively by Coventry in connection
with its business and (d) the aggregate of all direct and indirect Investments
by the Company and its Restricted Subsidiaries in Coventry shall not exceed $15
million. Indebtedness which is otherwise Non-Recourse Indebtedness will not lose
its character as Non-Recourse Indebtedness because there is recourse to the
borrower, any guarantor or any other Person for (1) environmental warranties or
indemnities, (2) indemnities for fraud, misrepresentation or non-payment of
rents or profits from secured assets to be paid to the lender or (3) any other
matters which are at the relevant time customary in instruments evidencing or
securing non-recourse Indebtedness.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Refinancing Indebtedness" means renewals, extensions, refinancings or
refundings of Indebtedness outstanding on the date of, or permitted to be
incurred by, the Indenture (including Refinancing Indebtedness, but excluding
any Indebtedness incurred pursuant to clauses (i), (vi) and (vii) of the
"Limitations on Additional Indebtedness" covenant), provided that, (A) in the
case of any refinancing or refunding of Indebtedness equal in right of payment
to the Debentures, such Refinancing Indebtedness is made equal in right of
payment or subordinate to the Debentures and, in the case of any refinancing or
refunding of Indebtedness subordinated to the Debentures, such Refinancing
Indebtedness is made subordinate to the Debentures to substantially the same
extent as such refinanced or refunded Indebtedness is subordinated to the
Debentures, (B) in either such case, such Refinancing Indebtedness does not
require the payment of all or a portion of the principal thereof (whether
pursuant to purchase, redemption, defeasance, retirement, sinking fund payment,
payment at stated maturity or otherwise, but excluding any retirement required
by virtue of acceleration of such Indebtedness upon an event of default
thereunder) prior to the final scheduled maturity of the Indebtedness being
refinanced or refunded, (C) the portion, if any, of such Refinancing
Indebtedness that is scheduled to mature on or prior to the maturity date of the
Debentures has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the Weighted Average
Life to Maturity of the portion of the Indebtedness being refunded, refinanced
or extended that is scheduled to mature on or prior to the maturity date of the
Debentures, (D) such Refinancing Indebtedness will be Refinancing Indebtedness
to the extent it is in an aggregate principal amount that is equal to or less
than the aggregate principal amount then outstanding under the Indebtedness
being refinanced or refunded and (E) if such Indebtedness being renewed,
extended, refinanced or refunded is Non-Recourse Indebtedness incurred pursuant
to clause (iv) of the Limitations on Additional Indebtedness covenant, only to
the extent such Refinancing Indebtedness is Non-Recourse Indebtedness and is
secured with only the assets as the Indebtedness being renewed, extended,
refinanced or refunded. For purposes of this definition, the final scheduled
maturity of the Company's 10 7/8% Senior Notes due 2000 shall be deemed to be
March 31, 1997.
"Released Asset Value" means the undepreciated and unamortized cost basis
of assets or property, or portion thereof, of the Company or a Restricted
Subsidiary which is released from an Excess Asset Lien (to the extent of the
release). The amount of the Released Asset Value is equal to the undepreciated
and unamortized cost basis of such assets or property (or relevant portion
thereof), at the time of the granting of the Excess Asset Lien, so released (to
the extent of the release).
"Repurchasable" does not include redeemable.
"Restricted Payment" means with respect to any Person, (i) the declaration
of any dividend or the making of any other payment or distribution of cash,
securities or other property or assets in respect of such Person's Capital Stock
(except that a dividend payable solely in Capital Stock (other than
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<PAGE> 29
Disqualified Stock) of such Person shall not constitute a Restricted Payment),
(ii) any payment on account of the purchase, redemption, retirement or other
acquisition for value of such Person's Capital Stock or any other payment or
distribution made in respect thereof, either directly or indirectly, (iii) any
Investment in (a) an Unrestricted Subsidiary necessary to fund operating
expenses or (b) any other Investment in an Unrestricted Subsidiary, (iv) any
principal payment, redemption, repurchase, defeasance or other acquisition or
retirement of (a) Excluded Debt or (b) Indebtedness of the Company or its
subsidiaries which is subordinated in right of payment to the Debentures prior
to the scheduled principal payment or scheduled maturity of such Indebtedness or
(v) the grant of an Excess Asset Lien; provided, however, that with respect to
the Company and its subsidiaries, Restricted Payments shall not include (a) any
payment described in clause (i) or (ii) above made to the Company or any of its
Wholly Owned Restricted Subsidiaries by any of the Company's subsidiaries, (b)
any underwritten call of Indebtedness of the Company which is convertible into
Capital Stock (other than Disqualified Stock) but only to the extent the Company
is not required to make any redemption or principal payments in respect of
Indebtedness subject to such underwritten call (other than redemption and
principal payments which are covered by the net proceeds received by the Company
from a concurrent sale of Capital Stock (other than Disqualified Stock) to the
underwriters or standby purchasers participating in such underwritten call) or
(c) the exchange by the Company of Capital Stock (other than Disqualified Stock)
for Indebtedness of the Company or a Restricted Subsidiary in an exchange offer,
but only to the extent the exchange is solely for such Capital Stock.
"Restricted Subsidiaries" means each of the subsidiaries of the Company
which is not, as of the determination date, an Unrestricted Subsidiary of the
Company.
"Subsidiary" of any Person means (i) any corporation of which at least a
majority of the aggregate voting power of all classes of the Common Equity is
owned by such Person directly or through one or more other subsidiaries of such
Person and (ii) any entity other than a corporation in which such Person,
directly or indirectly, owns at least a majority of the Common Equity of such
entity.
"Sun City Las Vegas" means the Company's age-restricted active adult
community development located in Las Vegas, Nevada, as its geographic boundaries
existed at February 11, 1994.
"Sun City Palm Desert" means the Company's age-restricted active adult
community development located in the Coachella Valley in Southern California
(formerly known as Sun City Palm Springs), as its geographic boundaries existed
at February 11, 1994.
"Sun City Tucson" means the Company's age-restricted active adult community
development located in Pima County, Arizona, as its geographic boundaries
existed at February 11, 1994.
"Sun City West" means the Company's age-restricted active adult community
development located in Maricopa County, Arizona, as its geographic boundaries
existed at February 11, 1994.
"United States Government Obligations" means obligations for which the full
faith and credit of the United States of America is pledged and which are not
callable at the issuer's option.
"Unrestricted Subsidiaries" means each of the subsidiaries of the Company
so designated by a resolution adopted by the Company's Board of Directors and
whose creditors have no direct or indirect recourse (including, but not limited
to, recourse with respect to the payment of principal or interest on
Indebtedness of such subsidiary) to the Company or a Restricted Subsidiary
(except to the extent the Investment made by the Company in the Unrestricted
Subsidiary is (a) permitted under the Limitations on Restricted Payments
covenant and (b) is a Guarantee); provided, however, that the Board of Directors
of the Company will be prohibited from designating any subsidiary which holds,
directly or indirectly, any of the assets of Sun City West, Sun City Tucson, Sun
City Las Vegas or Sun City Palm Desert as an Unrestricted Subsidiary. The Board
of Directors of the Company may designate an Unrestricted Subsidiary to be a
Restricted Subsidiary, provided that (i) any such redesignation shall be deemed
to be an incurrence by the Company and its Restricted Subsidiaries of the
Indebtedness (if any) of such redesignated subsidiary for purposes of the
Limitations on Additional Indebtedness covenant in the Indenture as of the date
of such redesignation and (ii) immediately after giving effect
S-29
<PAGE> 30
to such redesignation and the incurrence of any such additional Indebtedness,
the Company and its Restricted Subsidiaries could incur $1 of additional
Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio in the
Limitations on Additional Indebtedness covenant in the Indenture. Subject to the
foregoing, the Board of Directors of the Company also may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary, provided that (i) all
previous Investments by the Company and its such Restricted Subsidiaries shall
be deemed to be Restricted Payments at the time of such designation and shall
reduce the amount available for Restricted Payments under the Limitations on
Restricted Payments covenant in the Indenture and (ii) immediately after giving
effect to such designation and reduction of amounts available for Restricted
Payments under the Limitations on Restricted Payments covenant in the Indenture,
the Company and its Restricted Subsidiaries could incur $1 of additional
Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio in the
Limitations on Additional Indebtedness covenant in the Indenture. Any such
designation or redesignation by the Board of Directors shall be evidenced to the
Trustee by the filing with the Trustee of a certified copy of the Resolution of
the Company's Board of Directors giving effect to such designation or
redesignation and an officer's certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth the
underlying calculations of such certificate.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or portion thereof (if applicable), at any date, the number of years obtained by
dividing (i) the then outstanding principal amount of such Indebtedness or
portion thereof (if applicable) into (ii) the sum of the products obtained by
multiplying (a) the amount of each remaining installment, sinking fund, serial
maturity or other required payment of principal, including payment at final
maturity, in respect thereof, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment.
"Wholly Owned Restricted Subsidiary" of the Company means a Restricted
Subsidiary of the Company of which 100 percent of the Common Equity (except for
directors' qualifying shares or certain minority interests owned by other
Persons solely due to local law requirements that there be more than one
stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by the Company or through one or more other Wholly
Owned Restricted Subsidiaries of the Company.
"Wholly Owned Subsidiary" of any Person means (i) a subsidiary of which 100
percent of the Common Equity (except for directors' qualifying shares or certain
minority interests owned by other Persons solely due to local law requirements
that there be more than one stockholder, but which interest is not in excess of
what is required for such purpose) is owned directly by such Person or through
one or more other Wholly Owned Subsidiaries of such Person or (ii) any entity
other than a corporation in which such Person, directly or indirectly, owns all
of the Common Equity.
S-30
<PAGE> 31
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amounts of the Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
---------------------------------------------------------------------- ------------
<S> <C>
Dillon, Read & Co. Inc. .............................................. $
Goldman, Sachs & Co. .................................................
---------
Total....................................................... $125,000,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Debentures, if any are
taken.
The Debentures are being initially offered severally by the Underwriters
for sale at the price set forth on the cover page hereof, or at such price less
a concession not in excess of % of the principal amount of the Debentures
to certain dealers. The Underwriters may allow, and such dealers may reallow, a
concession of not in excess of % of the principal amount of the Debentures
on sales to certain other dealers. The offering of the Debentures is made for
delivery when, as and if accepted by the Underwriters and subject to prior sale
and to withdrawal, cancellation or modification of the offer without notice. The
Underwriters reserve the right to reject any order for the purchase of
Debentures. After the public offering, the offering price and concession may be
changed by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
CERTAIN LEGAL MATTERS
Gibson, Dunn & Crutcher LLP has rendered an opinion (filed as an exhibit to
the Registration Statement) with respect to the validity of the Debentures
covered by the Registration Statement. The partner of Gibson, Dunn & Crutcher
LLP who has primary responsibility for the work of that firm in connection with
that Registration Statement beneficially owns $225,000 in principal amount of
the 10 7/8% Senior Notes of the Company. Certain legal matters with respect to
the Debentures will be passed upon for the Underwriters by Latham & Watkins. See
"Certain Legal Matters" in the accompanying Prospectus.
S-31
<PAGE> 32
PROSPECTUS
$200,000,000
[DEL WEBB LOGO]
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK AND STOCK PURCHASE WARRANTS
------------------------
Del Webb Corporation (the "Company") may offer and issue from time to time
its: debt securities (the "Debt Securities") in one or more series, consisting
of debentures, notes or other evidences of indebtedness and having such prices
and terms as are determined at the time of sale; preferred stock, which may be
issued in one or more series (the "Preferred Stock"); common stock (the "Common
Stock"); and Stock Purchase Warrants to purchase Preferred Stock or Common Stock
(the "Warrants" and, together with the Debt Securities, Preferred Stock and
Common Stock, the "Securities"). The Securities may be issued as Units (the
"Units") and in any combination, the Debt Securities may or may not be
convertible into Preferred Stock or Common Stock and the Preferred Stock may or
may not be convertible into Common Stock or exchangeable for Debt Securities.
The accompanying Prospectus Supplement sets forth: the ranking of the Debt
Securities covered thereby as senior, senior subordinated or subordinated
(including junior subordinated) and the specific designation, aggregate
principal amount, purchase price, maturity, interest rate (or manner of
calculation thereof), time of payment of interest (if any), right to defer
interest (if any), convertibility (if any) and, if applicable, Securities into
which convertible and conversion price and any other specific terms of the Debt
Securities; the rights, privileges and preferences of the Preferred Stock
covered thereby, including whether and on what terms such Preferred Stock may be
convertible into Common Stock or exchangeable for Debt Securities, and whether
the Company has elected to offer any Preferred Stock in the form of depositary
shares; the Preferred Stock or Common Stock for which any Warrants covered
thereby will be exercisable and the exercise price; whether the Securities
covered thereby will be issued in Units and, if so, the Securities which are
part thereof; whether the Securities covered thereby are listed on a securities
exchange; and the name of and compensation to each dealer, underwriter or agent
(if any) involved in the sale of the Securities covered thereby.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
------------------------
Prior to issuance there will have been no market for the Debt Securities,
Preferred Stock or Warrants, and there can be no assurance that a secondary
market for the Debt Securities, Preferred Stock or Warrants will develop. This
Prospectus may not be used to consummate sales of Securities unless accompanied
by a Prospectus Supplement. The Securities may be offered through one or more
different plans of distribution, including offerings through underwriters. See
"Plan of Distribution."
------------------------
The date of this Prospectus is July 21, 1995
<PAGE> 33
IN CONNECTION WITH THE OFFERINGS OF THE DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK OR WARRANTS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT SECURITIES, PREFERRED
STOCK, COMMON STOCK OR WARRANTS, OR ANY OF THEM, AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Debt Securities,
Preferred Stock, Common Stock and Warrants. This Prospectus, which constitutes
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the Rules and Regulations of the Commission. For further
information with respect to the Company, reference is made to the Registration
Statement.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, as well as such reports, proxy
statements and other information filed by the Company, may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at the Commission's Regional Offices located at Northwestern Atrium Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade
Center, 13th Floor, New York, New York 10048. In addition, such reports, proxy
statements and other information concerning the Company may also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005 and the Pacific Stock Exchange, 115 Sansome Street, Suite 1104, San
Francisco, California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for its fiscal year ended June 30,
1994 and its Quarterly Reports on Form 10-Q for the Quarters ended September 30,
1994, December 31, 1994 and March 31, 1995, which have been filed with the
Commission, are incorporated in this Prospectus by reference. Pages 15-21 of the
Company's proxy statement for the annual meeting of its shareholders held on
November 2, 1994, which is incorporated by reference in, and Exhibit 99.0 (the
Company's Amended and Restated Certificate of Incorporation) to, the Company's
Quarterly Report on Form 10-Q for the Quarter ended December 31, 1994, are both
also specifically incorporated herein by reference. They contain a description
of and provisions with respect to the Common Stock and Preferred Stock of the
Company. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering made hereby are incorporated by
reference in this Prospectus and made a part hereof from the date such documents
are filed.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
in the Prospectus Supplement or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of each document incorporated herein by reference (not including the
exhibits to those documents, unless the exhibits are specifically incorporated
by reference therein or herein). Requests for such copies should be directed to:
Del Webb Corporation, 6001 North 24th Street, Phoenix, Arizona 85016, Attention:
Secretary. Telephone requests may be directed to (602) 808-8000.
2
<PAGE> 34
THE COMPANY
Del Webb Corporation is one of the nation's leading developers of
age-restricted (age 55 and over) active adult communities, having built and sold
approximately 50,000 homes at its active adult Sun City communities over the
past 35 years. The Company currently offers homes for sale at eight communities,
each of which, except Terravita, is an active adult community: Sun City West
(near Phoenix), Sun City Tucson and Terravita (in Scottsdale) in Arizona; Sun
City Las Vegas in Nevada; Sun City Palm Springs and Sun City Roseville (near
Sacramento) in California; Sun City Hilton Head in South Carolina; and Sun City
Georgetown (near Austin), in Texas. The Company is in various stages of
developing two other Sun City active adult communities: Sun City McDonald Ranch
(near Las Vegas) in Nevada, and Sun City Grand, near Sun City West, in Arizona.
The Company designs, develops and markets these large-scale, master-planned
residential communities, controlling all phases of the master plan development
process from land selection through construction and selling homes. Within its
active adult communities, the Company is the exclusive developer of homes.
The Company also conducts conventional subdivision homebuilding operations
in the Phoenix, Tucson and Las Vegas areas and southern California. The Company
is also in the preliminary development process for a potential master-planned
development near Phoenix, Arizona, located on approximately 5,600 acres.
However, development of this project remains subject to a number of
uncertainties and the planning, entitlement and permitting processing is still
in a relatively early stage.
The Company was incorporated in 1946 under Arizona law and reincorporated
in Delaware in 1994. The Company's principal executive offices are located at
6001 North 24th Street, Phoenix, Arizona 85016 and its telephone number is (602)
808-8000. The Company conducts substantially all of its activities through
subsidiaries and, as used in this Prospectus and the accompanying Prospectus
Supplement, the term the "Company" includes Del Webb Corporation and its
subsidiaries, unless the context indicates otherwise.
USE OF PROCEEDS
Unless otherwise set forth in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities will be used to reduce outstanding
balances under the Company's senior unsecured revolving credit facility, to fund
land acquisitions and development of new projects and for general corporate
purposes. Amounts so repaid under the revolving credit facility may be
reborrowed in the future.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges of the Company for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED JUNE 30, ENDED MARCH 31,
------------------------------------ ---------------
1990 1991 1992 1993 1994 1994 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges
(unaudited)............................. 1.81x 1.38x 1.59x 1.63x 1.30x 1.19x 1.44x
</TABLE>
The ratio of earnings to fixed charges is calculated by dividing earnings
by fixed charges. For this purpose "earnings" means earnings (loss) from
continuing operations before income taxes plus (a) fixed charges and interest
amortized to cost of sales (including the proportionate share thereof of
unconsolidated affiliates and discontinued operations) minus (b) capitalized
interest (including the proportionate share thereof of unconsolidated affiliates
and discontinued operations). "Fixed charges" means total interest, whether
capitalized or expensed (including the proportionate share thereof of
unconsolidated affiliates and discontinued operations and the portion of rent
expense representative of interest costs), plus (i) debt-related fees and (ii)
amortization of deferred financing costs.
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<PAGE> 35
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute senior, senior subordinated or
subordinated (including, if applicable, junior subordinated) debt of the Company
and will be issued under a Senior Debt Securities Indenture (the "Senior Debt
Indenture"), a Senior Subordinated Debt Securities Indenture (the "Senior
Subordinated Debt Indenture") or a Subordinated Debt Securities Indenture (the
"Subordinated Debt Indenture"), in each case between the Company and a Trustee
(the "Trustee"). The Senior Debt Indenture, Senior Subordinated Debt Indenture
and the Subordinated Debt Indenture are sometimes referred to below individually
as an "Indenture" and collectively as the "Indentures." Unless otherwise stated
in the Prospectus Supplement, the Trustee under the first Indenture under which
Debt Securities will be issued will be The First National Bank of Boston. Unless
otherwise stated in the applicable Prospectus Supplement, The First National
Bank of Boston may also be the Trustee under more than one of the other
Indentures. (See "Concerning the Trustee.") The Debt Securities offered by this
Prospectus and the accompanying Prospectus Supplement are referred to below as
the "Offered Debt Securities." If and to the extent set forth in the
accompanying Prospectus Supplement, the Offered Debt Securities will be
convertible into Preferred or Common Stock of the Company or issued as part of
Units of Offered Debt Securities and other Securities. If the Offered Debt
Securities are to be issued as part of Units of Debt Securities and other
Securities or may be issued in exchange for Preferred Stock, the Prospectus
Supplement will describe any applicable material federal income tax
consequences.
The following summaries of certain provisions of the Indentures and the
Debt Securities do not purport to be complete. Except to the extent set forth in
the Prospectus Supplement with respect to a particular issue of Debt Securities,
the Indentures are substantially identical, except for the provisions relating
to subordination, including the fact that senior subordinated Debt Securities
will rank senior to the subordinated Debt Securities.
GENERAL
The Indenture for the Offered Debt Securities will not limit the amount of
additional indebtedness the Company or any of its subsidiaries may incur, except
as may be provided in the accompanying Prospectus Supplement. The Debt
Securities will be unsecured senior, senior subordinated or subordinated
obligations of the Company, as set forth in the accompanying Prospectus
Supplement.
The Company is a holding company, which currently conducts its operations
through subsidiaries. In addition to the subordination described under
"Subordination of Senior Subordinated and Subordinated Debt Securities" below
and as may be described in the accompanying Prospectus Supplement, this
effectively subordinates the Debt Securities to all indebtedness (including
trade payables) of the Company's subsidiaries. Therefore, the Company's rights
and the rights of its creditors, including holders of Debt Securities, to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors (including third persons who have the benefit of guarantees given by
the subsidiary), except to the extent that the Company may itself be a creditor
with recognized claims against the subsidiary. However, in that case the claims
of the Company would still be effectively junior to any indebtedness of the
subsidiary to the extent the holders of that indebtedness are entitled to the
benefit of security interests in the assets of the subsidiary, as well as to any
indebtedness of that subsidiary which is senior to any debt or other claims held
by the Company. In addition, the Company's $100 million of Senior Notes due 2000
and amounts which may from time to time be outstanding under the Company's $300
million principal debt facility are guaranteed by subsidiaries of the Company
that hold substantially all of its consolidated assets. The Debt Securities,
including any senior Debt Securities, will not be so guaranteed. As a result,
the holders of that other debt may have a claim against the assets of the
Company's subsidiaries before those assets are available to make payments due on
the Debt Securities.
Also, because the Company is a holding company, it is dependent on
dividends or other distributions from its subsidiaries to make payments on its
indebtedness, including the Debt Securities.
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<PAGE> 36
Such dividends or other distributions to the Company may be subject to state
law, which can restrict the ability of a corporation to pay dividends or make
other distributions to its shareholders and which protect the rights of
creditors of a corporation, including third persons who have the benefit of
guarantees given by the corporation, in the event of improperly made dividends
or distributions, as well as to present or future contractual or regulatory
restrictions that could materially restrict the ability of the subsidiaries to
make such payments to the Company. The accompanying Prospectus Supplement
discloses, to the extent material to the Company, any contractual restrictions
on the ability of the subsidiaries of the Company to make dividends, loans or
advances to the Company that exist at the date of that Prospectus Supplement.
Except as may be described in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities will not restrict the Company's
ability to enter into contracts in the future that limit the ability of the
Company's subsidiaries to make dividends, loans or advances to it. Payments to
the Company from its subsidiaries also are contingent upon the earnings of such
subsidiaries and are subject to various business considerations, such as the
working capital needs of the subsidiaries.
Reference is made to the accompanying Prospectus Supplement for the
following terms of and information relating to the Offered Debt Securities (to
the extent such terms are applicable to such Debt Securities): (a) the specific
designation, aggregate principal amount, purchase price and denomination; (b)
the date of maturity; (c) the interest rate or rates (or the method by which
such rate will be determined), if any; (d) the date from which interest will
accrue and dates on which any such interest will be payable; (e) the rights of
the Company to defer interest, if any; (f) the place or places where the
principal of, premium, if any, and interest, if any, on the Offered Debt
Securities will be payable; (g) whether the Offered Debt Securities are senior,
senior subordinated or subordinated (including junior subordinated) Debt
Securities; (h) any redemption, repayment or sinking fund provisions; (i) any
obligation of the Company to offer to purchase the Offered Debt Securities in
the event of a Change of Control (as defined) of the Company; (j) whether the
Offered Debt Securities are convertible into Preferred Stock or Common Stock
and, if so, the terms of the security into which they are convertible (see
"Description of Capital Stock"), the conversion price, other terms related to
conversion and any anti-dilution protections; (k) whether the Offered Debt
Securities will be sold as part of Units consisting of Offered Debt Securities
and other Securities; (1) any applicable material federal income tax
consequences; and (m) any other material specific terms of the Offered Debt
Securities, including any material additional events of default or covenants
provided for with respect to the Offered Debt Securities and any material terms
that may be required by or advisable under applicable laws or regulations.
Debt Securities may bear interest at a fixed rate or a floating rate. Debt
Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate or as part of Units consisting of
Debt Securities and other Securities may be sold or deemed to be sold at a
discount below their stated principal amount. With respect to any Debt
Securities as to which the Company has the right to defer interest, the holders
of such Debt Securities may be allocated interest income for federal and state
income tax purposes without receiving equivalent, or any, interest payments. The
material federal income tax considerations applicable to any such discounted
Debt Securities or to certain Debt Securities issued at par that are treated as
having been issued at a discount for federal income tax purposes will be
described in the Prospectus Supplement.
GLOBAL DEBT SECURITIES
If any Debt Securities are represented by one or more Global Securities,
the applicable Prospectus Supplement will describe the terms of the depositary
arrangement with respect to such Global Securities.
SUBORDINATION OF SENIOR SUBORDINATED AND SUBORDINATED DEBT SECURITIES
The senior subordinated and subordinated Debt Securities will be
subordinate and junior in right of payment, to the extent and in the manner to
be set forth in the Indenture, to all "Senior Debt" of the Company. Except to
the extent set forth in the accompanying Prospectus Supplement, the Indenture
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<PAGE> 37
for the Offered Debt Securities that are senior subordinated or subordinated
Debt Securities will define "Senior Debt" as all present or future
"Indebtedness" (defined below) created, incurred, assumed or, to the extent
described below, guaranteed by the Company (and all renewals, extensions or
refundings thereof), unless the instrument under which such Indebtedness is
created, incurred, assumed or guaranteed provides that such Indebtedness is not
senior or superior in right of payment to the Offered Debt Securities in
question; provided, however, that Senior Debt shall not include (a) any
Indebtedness of the Company to any of its subsidiaries, (b) any trade payables
of the Company or (c) except to the extent set forth or referred to in the
accompanying Prospectus Supplement, guarantees by the Company of Indebtedness
outstanding at the date hereof or that may be outstanding in the future.
Each Senior Subordinated Debt Indenture will provide that the Company will
not issue any Indebtedness that is subordinated in right of payment to any
Senior Debt of the Company and is senior in right of payment to the Debt
Securities covered by the Senior Subordinated Debt Indenture. No Subordinated
Debt Indenture will contain a similar provision. Except as may otherwise be
provided in the accompanying Prospectus Supplement, "Indebtedness" will be
defined in the Indenture for the Offered Debt Securities to mean any
indebtedness of a person, contingent or otherwise, in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
person or only to a portion thereof), evidenced by bonds, notes, debentures or
similar instruments or letters of credit or representing the balance deferred
and unpaid of the purchase price of any property or interest therein (except any
such balance that constitutes a trade payable), all capitalized lease
obligations and all direct or indirect obligations that arise as a result of
claims under or drawings pursuant to surety, performance, completion or
maintenance bonds.
By reason of such subordination, in the event of dissolution, insolvency,
bankruptcy or other similar proceedings, upon any distribution of assets: (a)
holders of Senior Debt will be entitled to be paid in full before payments may
be made on senior subordinated and subordinated Debt Securities and the holders
of senior subordinated and subordinated Debt Securities will be required to pay
over their share of such distributions to the holders of Senior Debt until such
Senior Debt is paid in full (except to the extent, if at all, that holders of
senior subordinated and subordinated Debt Securities may receive securities that
are subordinated to the same extent the senior subordinated and subordinated
Debt Securities are subordinated to Senior Debt); (b) in addition, holders of
senior subordinated debt will be entitled to be paid in full before payments may
be made on subordinated Debt Securities and holders of subordinated Debt
Securities will be required to pay over their share of such distributions to the
holders of senior subordinated debt until such senior subordinated debt is paid
in full (except to the extent, if at all, that holders of subordinated Debt
Securities may receive securities that are subordinated to the same extent the
subordinated Debt Securities are subordinated to senior subordinated debt); and
(c) creditors of the Company who are not holders of senior subordinated or
subordinated Debt Securities may recover less, ratably, than holders of Senior
Debt and may recover more, ratably, than the holders of the senior subordinated
or subordinated Debt Securities, and creditors of the Company who are not
holders of subordinated Debt Securities may recover less, ratably, than holders
of Senior Debt and may recover more, ratably, than holders of subordinated Debt
Securities. Accordingly, such subordination may result in a reduction or
elimination of payments to the holders of all senior subordinated and
subordinated Debt Securities or all subordinated Debt Securities.
Except as may otherwise be described in the accompanying Prospectus
Supplement, no payment of principal or interest with respect to any of the
Offered Debt Securities that are senior subordinated or subordinated Debt
Securities may be made, nor may the Company acquire any Offered Debt Securities
that are senior subordinated or subordinated Debt Securities, in each case
except as set forth in the Indenture for such Offered Debt Securities, if any
default with respect to Senior Debt that permits the acceleration of the
maturity of any Senior Debt occurs and is continuing and such default is either
the subject of judicial proceedings or the Company receives notice (a "Default
Notice") of the default from a holder of Senior Debt entitled to give such a
notice. By reason of these provisions, in the event of a default on any Senior
Debt of the Company that is presently existing or may be incurred in the future,
payments of principal of and interest and premium, if any, on the Offered Debt
Securities that are senior subordinated or subordinated Debt Securities may not
be permitted until such Senior Debt is
6
<PAGE> 38
paid in full. However, except as may otherwise be described in the accompanying
Prospectus Supplement, the Company may resume payments in respect of the Offered
Debt Securities that are senior subordinated or subordinated Debt Securities and
may acquire such senior subordinated or subordinated Debt Securities if (a) 179
days pass after the Default Notice is given, if the default with respect to such
Senior Debt is not then the subject of judicial proceedings, or (b) the default
with respect to such Senior Debt is cured or waived and, in each case described
in the foregoing clauses (a) and (b), the terms of the Indenture otherwise
permit the payment or acquisition of such Offered Debt Securities at the time in
question. The Indenture for the Company's $100 million of 10 7/8% Senior Notes
and the Company's $300 million senior unsecured revolving credit agreement
restrict the acquisition by the Company of its subordinated indebtedness,
including any senior subordinated or subordinated Debt Securities prior to April
1, 2000 (for the Indenture for the Senior Notes) and the term of the principal
credit facility as it may be extended from time to time, respectively, and the
Indentures for the Company's $100 million of 9 3/4% Senior Subordinated
Debentures and $100 million of 9% Senior Subordinated Debentures restrict the
acquisition, prior to March 1, 2003 and February 15, 2006, respectively, of
subordinated Debt Securities issued pursuant to the Subordinated Debt Indenture.
The Prospectus Supplement for the Offered Debt Securities or the information
incorporated herein by reference sets forth the approximate amount of Senior
Debt and Senior Subordinated Debt outstanding as of the end of the most recent
fiscal quarter of the Company.
CERTAIN COVENANTS OF THE COMPANY
AFFIRMATIVE COVENANTS. In addition to such other covenants, if any, as may
be described in the accompanying Prospectus Supplement and except as may
otherwise be set forth therein, the Indenture for the Offered Debt Securities
will require the Company, subject to certain limitations described therein, to,
among other things, do the following: (a) deliver to the Trustee copies of all
reports filed with the Commission; (b) deliver to the Trustee annual officers'
certificates with respect to the Company's compliance with its obligations under
that Indenture; (c) maintain its corporate existence subject to the provisions
described below relating to mergers and consolidations; and (d) pay its taxes
when due except where such taxes are being contested in good faith. Except as
may be set forth in the accompanying Prospectus Supplement, the Indentures will
not restrict the business or operations of the Company or its subsidiaries,
limit their indebtedness or prohibit any liens, charges or other encumbrances on
any properties or other assets they may have from time to time.
DIVIDENDS AND OTHER PAYMENTS. Except as may otherwise be provided in the
accompanying Prospectus Supplement and except as may otherwise be set forth in
the Indenture for the Offered Debt Securities, that Indenture will generally
prohibit the Company from making a "Restricted Payment" (defined below) if, at
the time of the Restricted Payment, (a) an Event of Default (as defined) has
occurred under the Indenture and is continuing or would occur as a consequence
of the Restricted Payment or (b) if, upon giving effect to the Restricted
Payment, the aggregate amount expended for all Restricted Payments exceeds the
sum of (i) a specified percentage of the aggregate consolidated net earnings of
the Company accrued during certain fiscal quarters, (ii) the aggregate net
proceeds received by the Company from the issuance or sale of capital stock of
the Company, (iii) the amount expended by the Company for the purchase,
redemption or other acquisition or retirement for value of any preferred stock
of the Company plus (iv) the amount set forth in the accompanying Prospectus
Supplement. Except as may be otherwise provided in the accompanying Prospectus
Supplement, a "Restricted Payment" will be defined as any of the following: (1)
declaring or paying any dividend on, or making any distribution to the holders
of, any shares of the Company's capital stock, other than dividends or
distributions payable in "Equity Interests" (defined as equity securities or
securities with a right to acquire equity securities (other than convertible
debt securities) of the Company) or (2) purchasing, redeeming or otherwise
acquiring or retiring for value any Equity Interests.
CHANGE OF CONTROL. Except as may otherwise be set forth in the accompanying
Prospectus Supplement, the Indenture for the Offered Debt Securities will
provide that, if a Change of Control occurs, the Company will be obligated to
offer to purchase all outstanding Offered Debt Securities at a purchase price
equal to 100 percent of the aggregate principal amount of the Debt Securities,
plus
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<PAGE> 39
accrued and unpaid interest to the date of purchase. Any offer to purchase
Offered Debt Securities upon a Change of Control will be conducted in compliance
with applicable regulations under the federal securities laws, including
Exchange Act Rule 14e-l. Any limitations on the Company's financial ability to
purchase Offered Debt Securities upon a Change of Control will be described in
the accompanying Prospectus Supplement. Except as may be otherwise provided in
the accompanying Prospectus Supplement, a "Change of Control" will be defined in
the Indenture for the Offered Debt Securities as any of the following: (a) all
or substantially all of the Company's assets are sold as an entirety to any
person or it engages in any merger, consolidation, sale of capital stock, sale
of beneficial ownership interests or any other transactions as a result of which
its shareholders immediately prior to such transactions own, directly or
indirectly, in the aggregate less than 50 percent of the total voting power
entitled to vote in the election of (i) its directors, if it is the surviving
entity, or (ii) the directors, managers or trustees of (1) the surviving entity
or (2) the purchaser of all or substantially all of its assets; or (b) any
person acquires more than 50 percent of the total voting power entitled to vote
for directors of the Company. Except as may otherwise be set forth in the
accompanying Prospectus Supplement, the Company's failure to comply with the
Change of Control covenant as to the Offered Debt Securities \will be an Event
of Default under the Indenture for the Offered Debt Securities, as specified in
the accompanying Prospectus Supplement. See "Events of Default" below. The
meaning of the term "all or substantially all of the assets" has not been
definitely established and is likely to be interpreted by reference to
applicable state law if and at the time the issue arises and will be dependent
on the facts and circumstances existing at the time. Accordingly, there may be
uncertainty as to whether a holder of Offered Debt Securities can determine
whether a Change of Control has occurred and exercise any remedies such holder
may have upon a Change of Control. Except as described above with respect to a
Change of Control or as described in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities will not afford holders of the Debt
Securities protection in the event of a highly leveraged transaction, takeover,
reorganization, restructuring, recapitalization, merger or similar transaction
involving the Company that may adversely affect holders of the Debt Securities.
MERGER, CONSOLIDATION, SALE, LEASE OR CONVEYANCE. Except as may otherwise
be provided in the accompanying Prospectus Supplement, the Indenture for the
Offered Debt Securities will provide that the Company will not merge or
consolidate with or into any other person and will not sell, lease or convey all
or substantially all of its assets to any person, unless it is the continuing
corporation, or the successor corporation or person that acquires all or
substantially all of its assets is a corporation organized and existing under
the laws of the United States or a State thereof or the District of Columbia and
expressly assumes all of the Company's obligations under the Offered Debt
Securities and the Indenture for the Offered Debt Securities and, immediately
after such merger, consolidation, sale, lease or conveyance, such person or such
successor corporation is not in default in the performance of the covenants and
conditions in the Indenture for the Offered Debt Securities. With respect to
possible uncertainties concerning the meaning of the term "all or substantially
all of the assets", the possible lack of protection in a highly leveraged merger
or other transaction and related possible effects on holders of the Debt
Securities, see "Change of Control" above.
REDEMPTION
If and to the extent set forth in the accompanying Prospectus Supplement,
the Company will have the right to redeem the Offered Debt Securities, in whole
or from time to time in part, after the date and at the redemption prices set
forth in the accompanying Prospectus Supplement.
EVENTS OF DEFAULT
Except as may be described in the accompanying Prospectus Supplement, an
"Event of Default" will be defined under the Indenture for the Offered Debt
Securities as being: (a) default for 30 days in payment of any interest on the
Offered Debt Securities; (b) default in payment of any principal of the Offered
Debt Securities, either at maturity (or upon any redemption), by declaration or
otherwise; (c) default for 60 days after written notice in the performance of
any other agreements or covenants in, or provisions of, the Offered Debt
Securities or the Indenture for the Offered Debt Securities; (d) an
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<PAGE> 40
event of default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company and certain of its subsidiaries (or the payment of
which is guaranteed by the Company), other than non-recourse Indebtedness, if
(i) either (1) such event of default results from the failure to pay any such
Indebtedness at maturity or (2) as a result of such event of default, the
maturity of such Indebtedness has been accelerated prior to its expressed
maturity and such default has not been cured or such acceleration rescinded and
(ii) the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal at
maturity or the maturity of which has been so accelerated and the acceleration
of which has not been rescinded, equals or exceeds the amount specified in the
accompanying Prospectus Supplement; (e) failure for 60 days to discharge final
judgments against the Company and certain of its subsidiaries for the payment of
money aggregating the amount specified in the accompanying Prospectus Supplement
or more; and (f) certain events of bankruptcy, insolvency or reorganization.
The Indenture for the Offered Debt Securities will provide that if an Event
of Default (other than an Event of Default due to certain events of bankruptcy,
insolvency or reorganization) has occurred and is continuing, either the Trustee
or the holders of not less than 25 percent in principal amount of the Offered
Debt Securities outstanding under the Indenture for the Offered Debt Securities,
or such other amount as may be specified in the Prospectus Supplement, may then
declare the principal of all Offered Debt Securities under that Indenture and
interest accrued thereon to be due and payable immediately.
Except to the extent otherwise stated in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will contain a
provision entitling the Trustee, subject to the duty of the Trustee during a
default to act with the required standard of care, to be indemnified by the
holders of Offered Debt Securities before proceeding to exercise any right or
power under that Indenture at the request of such holders. Subject to such
provisions in the Indenture for the Offered Debt Securities for the
indemnification of the Trustee and certain other limitations, the holders of a
majority in principal amount of the Offered Debt Securities then outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.
Except to the extent otherwise stated in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that no
holder of Offered Debt Securities may institute any action against the Company
under the Indenture (except actions for payment of overdue principal or
interest) unless (a) such holder previously has given the Trustee written notice
of the default and continuance thereof, (b) the holders of not less than 25
percent in principal amount of the Offered Debt Securities then outstanding have
requested the Trustee to institute such action and offered the Trustee
reasonable indemnity, (c) the Trustee has not instituted such action within 60
days of the request and (d) the Trustee has not received direction inconsistent
with such written request from the holders of a majority in principal amount of
the Offered Debt Securities then outstanding under the Indenture.
The Indentures and the Debt Securities will provide that no director,
officer, employee or shareholder of the Company, as such, will have any
liability for any obligations of the Company under the Debt Securities or the
Indentures. The Indentures and the Debt Securities will also each provide that
each holder of the Debt Securities, by accepting the Debt Securities, waives and
releases all such liability.
DEFEASANCE AND DISCHARGE
Except as may otherwise be provided in the accompanying Prospectus
Supplement, the Company can discharge or defease its obligations under the
Indenture for the Offered Debt Securities as set forth below.
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of the Offered Debt Securities that have not already been
delivered to the Trustee for cancellation and that have either become due and
payable or are by their terms due and payable within one year (or
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<PAGE> 41
scheduled for redemption within one year) by irrevocably depositing with the
Trustee cash or United States Government Obligations (as defined in the
Indenture for the Offered Debt Securities), or a combination thereof, as trust
funds in an amount certified to be sufficient to pay at maturity (or upon
redemption) the principal of and interest on such Offered Debt Securities.
The Company may also discharge any and all of its obligations to holders of
the Offered Debt Securities at any time ("defeasance"), but may not thereby
avoid its duty to register the transfer or exchange of the Offered Debt
Securities, to replace any temporary, mutilated, destroyed, lost or stolen
Offered Debt Securities or to maintain an office or agency in respect of such
Offered Debt Securities and certain other obligations. Alternatively, the
Company may be released with respect to the Offered Debt Securities from the
obligations imposed by specific portions of the Indenture for the Offered Debt
Securities (including the covenant described above limiting consolidations,
mergers, asset sales and leases) and omit to comply with such provisions without
creating an Event of Default ("covenant defeasance"). Defeasance or covenant
defeasance may be effected only if, among other things: (a) the Company
irrevocably deposits with the Trustee cash or United States Government
Obligations, or a combination thereof, as trust funds in an amount certified to
be sufficient to pay at maturity the principal of and interest on all
outstanding Offered Debt Securities; (b) no Event of Default under the Indenture
for the Offered Debt Securities has occurred and is then continuing; (c) the
defeasance or covenant defeasance will not result in an event of default under
any agreement to which the Company is a party or by which it is bound; and (d)
the Company delivers to the Trustee an opinion of counsel to the effect that the
holders of Debt Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance or covenant defeasance and
that such defeasance or covenant defeasance will not otherwise alter such
holders' federal income tax treatment of principal and interest payments on the
Offered Debt Securities.
MODIFICATIONS TO THE INDENTURES
Except as may otherwise be set forth in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that the
Company and the Trustee may enter into supplemental indentures without the
consent of the holders of Offered Debt Securities to, among other things: (a)
add covenants, conditions and restrictions for the protection of the holders of
Offered Debt Securities or to surrender any right of the Company; (b) cure any
ambiguity or correct any inconsistency in the Indenture for the Offered Debt
Securities; (c) make any change that does not adversely affect the legal rights
of holders of Offered Debt Securities; (d) modify, eliminate or add to the
provisions of the Indenture for the Offered Debt Securities to the extent
necessary to qualify that Indenture under applicable federal statutes; or (e)
make any other changes in the Indenture before Offered Debt Securities are
issued thereunder, provided that such changes are not prohibited by the Trust
Indenture Act of 1939, as amended.
Except as may otherwise be set forth in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities also will contain
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of Offered Debt
Securities outstanding, to add any provision to, change in any manner or
eliminate any of the provisions of the Indenture for the Offered Debt Securities
or modify in any manner the rights of the holders of the Offered Debt Securities
so affected; provided that the Company and the Trustee may not, without the
consent of the holder of each outstanding Offered Debt Security affected
thereby, do, among other things, any of the following: (a) reduce the amount of
Offered Debt Securities whose holders must consent to an amendment, supplement
or waiver with respect to the Indenture; (b) reduce the rate of or change the
time for payment of interest on any Offered Debt Security; (c) reduce the
principal of or change the fixed maturity of any Offered Debt Security; or (d)
waive a default in the payment of the principal of, or interest on, any Offered
Debt Security.
The Indentures for senior subordinated or subordinated Offered Debt
Securities may not be amended to alter the subordination of any outstanding
senior subordinated or subordinated Debt Securities without the consent of each
holder of Senior Debt and, as to subordinated Debt Securities, also senior
subordinated debt then outstanding that would be adversely affected thereby.
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CONCERNING THE TRUSTEE
An affiliate of The First National Bank of Boston is a lender to the
Company under the Company's principal credit facility, and it or any other
Trustee, or their respective affiliates, may from time to time have lender or
other business arrangements with the Company. The Indenture will contain certain
limitations on the rights of the Trustee, should it or its affiliates then be
creditors of the Company, to obtain payment of claims in certain cases or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee and its affiliates will be permitted to engage in other
transactions; however, if they acquire any conflicting interest, the conflict
must be eliminated or the Trustee must resign.
The Holders of a majority in principal amount of the then outstanding Debt
Securities issued under any Indenture will have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee under that Indenture, subject to certain exceptions.
Unless otherwise stated in the applicable Prospectus Supplement, the Indentures
will provide that in case an Event of Default occurs and is not cured, the
Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent person in similar circumstances in the conduct of his, her or
its affairs. Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under any Indenture at the request of
any Holder, unless such Holder has offered the Trustee security and indemnity
satisfactory to the Trustee.
GOVERNING LAW
Unless otherwise specified in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities and the Offered Debt Securities will
be governed by New York law.
DESCRIPTION OF WARRANTS
GENERAL
The Warrants will be issued in fully registered form under a Warrant
Agreement between the Company and the Warrant Agent named in the accompanying
Prospectus Supplement (the "Warrant Agent"). The statements in this Prospectus
relating to the Warrants and the Warrant Agreement are summaries and do not
purport to be complete.
Each Warrant will entitle the registered owner (the "Warrantholder") to
purchase one share of Preferred or Common Stock, as set forth in the
accompanying Prospectus Supplement, subject to the call provisions referred to
below, from the time the Warrants are separately transferable until the date set
forth in the accompanying Prospectus Supplement. The initial per share exercise
price of the Warrants and the date on which the Warrants become separately
transferable will be set forth in the applicable Prospectus Supplement.
The Warrants can be exercised by surrendering to the Warrant Agent a
Warrant certificate signed by the Warrantholder or his, her or its duly
authorized agent indicating the Warrantholder's election to exercise all or a
portion of the Warrants evidenced by the certificate. Surrendered Warrant
certificates must be accompanied by payment of the aggregate exercise price of
the Warrants to be exercised (the "Warrant Price"), which payment may be made in
the form of cash or a cashier's check equal to the exercise price or, if and to
the extent set forth in the accompanying Prospectus Supplement, the surrender of
Debt Securities in denominations at least equal to the aggregate Warrant Prices
or, if applicable, any combination of cash and such denominations of Debt
Securities. If the principal amount of Debt Securities surrendered is in excess
of the aggregate Warrant Price so paid, only a portion of such surrendered
principal amount shall be accepted against payment of the Warrant Price and new
Debt Securities shall be issued in the principal amount not so applied against
the aggregate Warrant Price, provided that the amount of such excess is $1,000
or an integral multiple thereof.
Certificates evidencing duly exercised Warrants shall be delivered by the
Warrant Agent to the transfer agent for the Preferred or Common Stock, as
applicable. Upon receipt thereof, the transfer agent will be obligated to
deliver or cause to be delivered, to or upon the written order of the exercising
Warrantholders, certificates representing the number of shares of Preferred or
Common Stock so
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purchased. If fewer than all of the Warrants evidenced by any certificate are
exercised, the Warrant Agent will be obligated to deliver to the exercising
Warrantholder a new Warrant certificate representing the unexercised Warrants.
To the extent set forth in the accompanying Prospectus Supplement, the
Warrant Price and the number of shares of Preferred or Common Stock purchasable
upon the exercise of each Warrant are subject to adjustment in certain events,
including: (i) the issuance of a stock dividend to holders of Preferred Stock or
Common Stock (whichever the Warrants are exercisable for) or a combination,
subdivision or reclassification of the Preferred Stock or the Common Stock
(whichever the Warrants are exercisable for); (ii) the issuance of rights,
warrants or options or securities convertible into, or exchangeable for, the
Preferred Stock or the Common Stock (whichever the Warrants are exercisable for)
that are distributed to all holders of the Company's outstanding Preferred or
Common Stock (whichever the Warrants are exercisable for) entitling them to
subscribe for or purchase Preferred or Common Stock; and (iii) any distribution
by the Company to the holders of its Preferred or Common Stock (whichever the
Warrants are exercisable for) of evidences of indebtedness of the Company or of
assets (excluding, if and to the extent set forth in the accompanying Prospectus
Supplement, certain cash dividends or distributions). To the extent set forth in
the accompanying Prospectus Supplement, no adjustment in the number of shares
purchasable upon exercise of the Warrants or in the Warrant Price will be
required until cumulative adjustments require an adjustment of at least one
percent thereof. In addition, unless the accompanying Prospectus Supplement
states to the contrary, the Company may, at its option, reduce the Warrant Price
at any time. No fractional shares will be issued upon exercise of Warrants, but
the Company will pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, unless the accompanying Prospectus
Supplement states to the contrary, in case of any consolidation, merger or sale
or conveyance of the property of the Company and its subsidiaries as a whole,
including a consolidation or merger in which the Company is the continuing
corporation and in which all or a majority of the Preferred and Common Stock
outstanding immediately prior to the consolidation or merger is converted into
consideration other than capital stock (or the right to receive such
consideration), the holder of each outstanding Warrant shall have the right to
exercise the Warrant for the kind and amount of shares of stock and other
securities and property (including cash) receivable by a holder of the number of
shares of Preferred and Common Stock for which such Warrant was exercisable
immediately prior thereto.
Adjustments to the Warrant Price (and, possibly, adjustment to the number
of shares of Preferred or Common Stock purchasable upon the exercise of each
Warrant), or the failure to make such adjustments, may in certain circumstances
result in distributions that could be taxable as dividends under the Internal
Revenue Code of 1986, as amended, to holders of the Warrants or to holders of
shares of Preferred or Common Stock issued upon exercise thereof. The Company
will reserve the right (but will not be obligated) to make such adjustments to
the Warrant Price or in the number of shares of Preferred or Common Stock
purchasable upon the exercise of each Warrant, in addition to those required in
the foregoing provisions, as it shall determine to be advisable in order that
certain stock related distributions which may be made by the Company to its
stockholders after the date of the applicable Prospectus Supplement are not
taxable to them.
If all or any portion of the Warrants are callable at the option of the
Company, the call provisions, including the call price and the date through
which the Warrants may be exercised, will be set forth in the accompanying
Prospectus Supplement. If upon expiration the unexercised Warrants will convert
into Preferred or Common Stock, the manner and rate of such conversion will be
set forth in the accompanying Prospectus Supplement.
Holders of Warrants are not entitled, by virtue of being holders, to
receive dividends or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, to vote at any such meeting or to exercise any rights
whatsoever as stockholders of the Company. The Warrant Agreement and the
Warrants will provide that no director, officer, employee or shareholder of the
Company, as such, will have any liability under
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the Warrants or the Warrant Agreement. The Warrant Agreement and the Warrants
will also each provide that each holder of the Warrants, by accepting the
Warrants, waives and releases all such liability.
Unless otherwise specified in the accompanying Prospectus Supplement, the
Warrant Agreement and the Warrants will be governed by New York law.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, $.001 par value, and 10,000,000 shares of Preferred Stock,
$.001 par value, of which 14,920,921 shares of Common Stock (exclusive of
treasury shares) were issued and outstanding on June 30, 1995. No shares of
Preferred Stock were outstanding at that date.
COMMON STOCK
Subject to the rights of holders of any outstanding Preferred Stock, the
holders of outstanding shares of Common Stock are entitled to share ratably in
dividends declared out of assets legally available therefor at such time and in
such amounts as the Board of Directors may from time to time lawfully determine.
At the date of this Prospectus the payment of dividends on the Common Stock is
limited by provisions of the indentures (the "Public Debt Indentures") for the
Company's $100 million of 10 7/8% Senior Notes due April 1, 2000, its $100
million of 9 3/4% Senior Subordinated Debentures due March 1, 2003 and its $100
million of 9% Senior Subordinated Debentures due February 15, 2006 and the
provisions of the Company's principal credit facility.
Each holder of Common Stock is entitled to one vote for each share held by
him, her or it. Holders of Common Stock are not entitled to cumulate votes for
the election of directors. The Common Stock is not entitled to conversion or
preemptive rights and is not subject to redemption or assessment. Subject to the
rights of holders of any outstanding Preferred Stock, upon liquidation,
dissolution or winding up of the Company, any assets legally available for
distribution to shareholders as such are to be distributed ratably among the
holders of the Common Stock at that time outstanding. The Common Stock presently
outstanding is, and the Common Stock issued upon conversion of the Debt
Securities, exercise of the Warrants (upon payment in full of the Warrant
exercise price) or conversion of any convertible Preferred Stock offered hereby,
as the case may be, will be, fully paid and nonassessable. See "Incorporation of
Certain Documents by Reference" and "Available Information."
PREFERRED STOCK
The authorized shares of Preferred Stock are issuable, without further
shareholder approval, in one or more series as determined by the Board of
Directors, with such rights, privileges and preference as are fixed by the Board
of Directors, including dividend, liquidation and other rights preferred over
the Common Stock, subject to the restrictions in the Public Debt Indentures and
the credit facility referred to above. The Preferred Stock issuable upon
exercise of any Warrants exercisable for Preferred Stock (upon payment in full
of the Warrant exercise price) or conversion of any Debt Securities convertible
into Preferred Stock will be fully paid and nonassessable. The Preferred Stock
may be convertible and, if so convertible, may be converted into one or both of
Common Stock and Debt Securities. The Preferred Stock may also be exchangeable,
at the option of the Company, for Debt Securities (see "Description of Debt
Securities"). If Preferred Stock or Warrants exercisable for Preferred Stock are
being offered or if the Preferred Stock is exchangeable for Debt Securities, the
accompanying Prospectus Supplement will describe the rights, privileges,
preferences and restrictions of such Preferred Stock (including, without
limitation, the designation, the number of authorized shares of the series in
question, the dividend rate (or method of calculation), any voting rights,
conversion rights, anti-dilution protections, exchangeability provisions and
terms of the Debt Securities that are exchangeable for the Preferred Stock, any
redemption provisions, liquidation preferences and any sinking fund provisions).
If fractional interests in shares of Preferred Stock may be issued, there will
be a depositary for the shares of Preferred Stock involved and the applicable
Prospectus Supplement will
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<PAGE> 45
describe the terms of the depositary arrangement and related matters. See
"Incorporation of Certain Documents by Reference" and "Available Information."
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Securities will be named in the applicable Prospectus Supplement. The
Company may sell Securities directly to investors on its own behalf in those
jurisdictions where it is authorized to do so.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Company
also may, from time to time, authorize dealers, acting as Company agents, to
offer and sell the Securities upon such terms and conditions as may be set forth
in the Prospectus Supplement. In connection with the sale of the Securities,
underwriters may receive compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell the Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for which they may act as
agents.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts or
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities.
The Debt Securities, the Preferred Stock and the Warrants will be new
issues of securities with no established trading market. Any underwriters or
agents to or through which Securities are sold by the Company for public
offering and sale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and any of them may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or trading market for any Debt Securities, Preferred Stock or Warrants.
CERTAIN LEGAL MATTERS
Gibson, Dunn & Crutcher has rendered an opinion (filed as an exhibit to the
Registration Statement) with respect to the validity of the Debt Securities,
Preferred Stock, Common Stock and Warrants covered by this Prospectus. The
partner of Gibson, Dunn & Crutcher who has primary responsibility for the work
of that firm in connection with this Registration Statement beneficially owns
$225,000 in principal amount of the 10 7/8% Senior Notes due 2000 of the
Company. Certain legal matters in connection with offerings made by this
Prospectus may be passed on for any underwriters by counsel named in the
Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedules of Del Webb Corporation
and subsidiaries as of June 30, 1994 and 1993, and for each of the years in the
three-year period ended June 30, 1994, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the June 30, 1993
consolidated financial statements refers to a change in the method of accounting
for income taxes.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY DEBENTURES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE TO THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Supplement Summary......... S-3
Risk Factors.......................... S-8
Use of Proceeds....................... S-11
Capitalization........................ S-11
Description of the Debentures......... S-12
Underwriting.......................... S-31
Certain Legal Matters................. S-31
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Consolidated Ratio of Earnings to
Fixed Charges....................... 3
Description of Debt Securities........ 4
Description of Warrants............... 11
Description of Capital Stock.......... 13
Plan of Distribution.................. 14
Certain Legal Matters................. 14
Experts............................... 14
</TABLE>
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[DEL WEBB LOGO]
$125,000,000
% SENIOR SUBORDINATED
DEBENTURES DUE 2008
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PROSPECTUS SUPPLEMENT
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DILLON, READ & CO. INC.
GOLDMAN, SACHS & CO.
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