<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1999.
REGISTRATION NO. 333-88569
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRESLEY MERGER SUB, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 1531 33-0864902
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
19 CORPORATE PLAZA
NEWPORT BEACH, CA 92660
(949) 640-6400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
WADE H. CABLE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
19 CORPORATE PLAZA
NEWPORT BEACH, CA 92660
(949) 640-6400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
------------------------
COPY TO:
<TABLE>
<S> <C>
NANCY M. HARLAN, ESQ. KEITH PAUL BISHOP, ESQ.
THE PRESLEY COMPANIES IRELL & MANELLA LLP
19 CORPORATE PLAZA 840 NEWPORT CENTER DRIVE, SUITE 400
NEWPORT BEACH, CA 92660 NEWPORT BEACH, CA 92660
(949) 640-6400 (949) 760-0991
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the Merger described herein.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------------ .
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------ .
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Merger Sub Bylaws will provide that Merger Sub shall indemnify and
advance expenses to any person to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "Delaware Corporate Law"),
whenever they are defendants or threatened to be made defendants in any legal or
administrative proceeding by reason of the fact that such person is or was a
director or officer of Merger Sub or is or was serving at the request of Merger
Sub as a director, officer, employee or agent of another entity. Section 145 of
the Delaware Corporate Law provides that a corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had not
reasonable cause to believe was unlawful. A similar standard of care is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with
defense or settlement of such an action and then, where the person is adjudged
to be liable to the corporation, only if and to the extent that the Court of
Chancery of the State of Delaware or the court in which such action was brought
determines that such person is fairly and reasonably entitled to such indemnity
and then only for such expenses as the court shall deem proper.
Presley and Merger Sub have entered into Indemnity Agreements with their
directors and officers contractually obligating Presley and Merger Sub to
provide indemnification rights substantially similar to those described above.
Merger Sub is empowered by Section 102(b)(7) of the Delaware Corporate Law
to include a provision in its Certificate of Incorporation that limits a
director's liability to Merger Sub or its stockholders for monetary damages for
breaches of his or her fiduciary duty as a director. The Merger Sub Certificate
of Incorporation will state that directors shall not be liable for monetary
damages for breaches of their fiduciary duty to the fullest extent permitted by
the Delaware Corporate Law.
Presley maintains (and after the Merger, Merger Sub plans to maintain)
directors' and officers' insurance for certain expenses and losses for which
indemnification is permitted by the Delaware Corporate Law and Presley Bylaws,
including liabilities under the securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceedings) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate
II-1
<PAGE> 3
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<C> <S>
2.1** Certificate of Ownership and Merger (included as Appendix A
to the Proxy Statement/Prospectus)
3.1** Certificate of Incorporation of the Registrant to be in
effect immediately prior to the Merger (included as Appendix
B to the Proxy Statement/Prospectus)
3.2** Bylaws of the Registrant to be in effect immediately prior
to the Merger (included as Appendix C to the Proxy
Statement/Prospectus)
4.1** Specimen of Presley Merger Sub, Inc. Common Stock
Certificate
5.1** Opinion of Irell & Manella LLP, counsel to the Registrant in
connection with the Merger
8.1 Opinion of Irell & Manella LLP, tax counsel to the
Registrant in connection with the Merger
10.1** Form of Indemnity Agreement
10.2** Purchase Agreement and Escrow Instructions among The Presley
Companies, Presley Homes, William Lyon Homes, Inc., William
Lyon and William H. Lyon
23.1** Consent of Irell & Manella LLP (included in Exhibit 5.1 and
8.1)
23.2** Consent of Morris, Nichols, Arsht & Tunnell (included in
Exhibit 99.3)
23.3** Consent of Warburg Dillon Read, LLC
23.4** Consent of Houlihan Lokey Howard & Zukin Financial Advisors,
Inc.
23.5** Consent of Ernst & Young LLP
23.6** Consent of CB Richard Ellis, Inc.
24.1** Power of Attorney appointing Wade H. Cable and David M.
Siegel to sign and file amendments hereto (included on
Signature Page)
99.1** Opinion of Warburg Dillon Read, LLC, financial advisor to
The Presley Companies in connection with the Merger
(included as Appendix D to the Proxy Statement/ Prospectus)
99.2** Opinion of Houlihan Lokey Howard & Zukin Financial Advisors,
Inc., financial advisor to The Presley Companies in
connection with the Acquisition (included as Appendix E to
the Proxy Statement/Prospectus)
99.3** Opinion of Morris, Nichols, Arsht & Tunnell, special
Delaware counsel to The Presley Companies in connection with
the Merger
99.4** Form of proxy to be distributed to the stockholders of The
Presley Companies
</TABLE>
- ---------------
** Previously filed.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form
II-2
<PAGE> 4
with respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the applicable
form; and
(2) Every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933 each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof), which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-3
<PAGE> 5
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT, PRESLEY MERGER SUB, INC., A DELAWARE CORPORATION, HAS DULY CAUSED
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEWPORT BEACH, STATE
OF CALIFORNIA, ON OCTOBER 7, 1999.
PRESLEY MERGER SUB, INC.
a Delaware corporation
By /s/ WILLIAM LYON*
------------------------------------
William Lyon
Chairman of the Board
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON OCTOBER 7, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ WILLIAM LYON* Director, Chairman of the Board
- ---------------------------------------------------
William Lyon
/s/ WADE H. CABLE* Director, President, Chief Executive
- --------------------------------------------------- Officer (principal executive officer)
Wade H. Cable
/s/ DAVID M. SIEGEL Senior Vice President, Chief
- --------------------------------------------------- Financial Officer and Treasurer
David M. Siegel (principal accounting officer)
/s/ JAMES E. DALTON* Director
- ---------------------------------------------------
James E. Dalton
/s/ STEVEN S. SAMPLE* Director
- ---------------------------------------------------
Steven S. Sample
/s/ MARSHALL E. STEARNS* Director
- ---------------------------------------------------
Marshall E. Stearns
/s/ RAY A. WATT* Director
- ---------------------------------------------------
Ray A. Watt
/s/ GREGORY P. FLYNN* Director
- ---------------------------------------------------
Gregory P. Flynn
/s/ KAREN S. SANDLER* Director
- ---------------------------------------------------
Karen S. Sandler
</TABLE>
*By: /s/ DAVID M. SIEGEL
- ----------------------------------------
David M. Siegel
(Attorney-in-fact)
II-4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
2.1** Certificate of Ownership and Merger (included as Appendix A
to the Proxy Statement/Prospectus)..........................
3.1** Certificate of Incorporation of the Registrant to be in
effect immediately prior to the Merger (included as Appendix
B to the Proxy Statement/Prospectus)........................
3.2** Bylaws of the Registrant to be in effect immediately prior
to the Merger (included as Appendix C to the Proxy
Statement/Prospectus).......................................
4.1** Specimen of Presley Merger Sub, Inc. Common Stock
Certificate.................................................
5.1** Opinion of Irell & Manella LLP, counsel to the Registrant in
connection with the Merger..................................
8.1 Opinion of Irell & Manella LLP, tax counsel to the
Registrant in connection with the Merger....................
10.1** Form of Indemnity Agreement.................................
10.2** Form of Purchase Agreement and Escrow Instructions among The
Presley Companies, Presley Homes, William Lyon Homes, Inc.,
William Lyon and William H. Lyon............................
23.1** Consent of Irell & Manella LLP (included in Exhibit 5.1 and
8.1)........................................................
23.2** Consent of Morris, Nichols, Arsht & Tunnell (included in
Exhibit 99.3)...............................................
23.3** Consent of Warburg Dillon Read, LLC.........................
23.4** Consent of Houlihan Lokey Howard & Zukin Financial Advisors,
Inc. .......................................................
23.5** Consent of Ernst & Young LLP................................
23.6** Consent of CB Richard Ellis, Inc. ..........................
24.1** Power of Attorney appointing Wade H. Cable and David M.
Siegel to sign and file amendments hereto (included on
Signature Page).............................................
99.1** Opinion of Warburg Dillon Read, LLC, financial advisor to
The Presley Companies in connection with the Merger
(included as Appendix D to the Proxy
Statement/Prospectus).......................................
99.2** Opinion of Houlihan Lokey Howard & Zukin Financial Advisors,
Inc., financial advisor to The Presley Companies in
connection with the Acquisition (included as Appendix E to
the Proxy Statement/ Prospectus)............................
99.3** Opinion of Morris, Nichols, Arsht & Tunnell, special
Delaware counsel to The Presley Companies in connection with
the Merger..................................................
99.4** Form of proxy to be distributed to the stockholders of The
Presley Companies...........................................
</TABLE>
- ---------------
** Previously filed.
<PAGE> 1
EXHIBIT 8.1
Opinion of Irell & Manella LLP
October 7, 1999
The Presley Companies
19 Corporate Plaza
Newport Beach, California 92660
Ladies and Gentlemen:
We have acted as counsel for The Presley Companies, a Delaware
corporation ("COMPANY"), in connection with the proposed merger of Company with
and into Presley Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Company ("SUBSIDIARY") (Company and Subsidiary are collectively
referred to herein as the "PARTIES"). You have requested our opinion concerning
certain United States federal income tax consequences of the merger (the
"MERGER") of Company with and into Subsidiary.
In connection with this opinion, we have reviewed such documents as we
have found necessary or appropriate, including, without limitation, the
Registration Statement on Form S-4 filed on October 7, 1999 with the Securities
and Exchange Commission, and related documents pertaining to the Merger. In
expressing our opinion, we are relying upon, and the opinion stated in this
letter is expressly based upon, the information and representations contained in
the documents provided to us by the Parties and the information and
representations provided in our discussions with representatives of the Parties.
Certain of the representations of the Parties are set forth in the Officer's
Certificate for Company and Subsidiary (the "OFFICER'S CERTIFICATE"), which is
appended hereto as Exhibit A. We assume (without any independent investigation),
and have relied on the assumptions, that the Officer's Certificate has been
executed by appropriate officers of Company and Subsidiary, and that such
Officer's Certificate is now true and correct and will be true and correct at
the time of the Merger. We assume that the documents and information provided to
us present an accurate and complete description of all of the facts relevant to
the Merger. Finally, we assume that the Merger will be reported by each of
Company and Subsidiary on their respective federal income tax returns in a
manner consistent with the opinion set forth below.
Based upon the foregoing, and assuming that the transactions
contemplated by the documents referred to above are consummated in accordance
with their terms, we are of the opinion that, subject to all the qualifications,
limitations, and assumptions set forth herein, the Merger will constitute a
"reorganization" for federal income tax purposes within the meaning of Section
<PAGE> 2
The Presley Companies
October 7, 1999
Page 2
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE") and that
accordingly:
(i) The holders of Company common stock will recognize no gain or loss
upon the receipt of Subsidiary common stock in exchange for their Company common
stock, excluding the impact of cash received in exchange for fractional
interests from the agent designated by Company;
(ii) The holders of Company common stock will have an initial tax basis
in Subsidiary common stock received that is the same as their adjusted tax basis
in Company common stock exchanged therefor;
(iii) The holders of Company common stock will have a holding period
for Subsidiary common stock received that includes their holding period for
their Company common stock exchanged therefore; and
(iv) To the extent that they receive cash in exchange for fractional
interests, the holders of Company common stock will recognize gain or loss equal
to the difference between their basis in such fractional interest and the amount
of cash received with respect to such fractional interests. Such gain or loss
will be treated as capital gain or loss, with gain resulting from fractional
interests held for more than one year taxed as a maximum rate of 20% and gain
resulting from fractional interests held for one year or less taxed at a maximum
rate of 39.6%;
(v) Company and Subsidiary will not recognize any taxable gain or loss
as a result of the Merger; and
(vi) Neither the Merger nor the adoption of the transfer restrictions
with respect to Subsidiary common stock, by themselves, will impair the ability
of Subsidiary, Company and other members of their affiliated group which file a
consolidated federal income tax return, to utilize Company's federal tax net
operating loss carryforwards, federal investment tax credit carryforwards and
other material federal tax benefits.
We express no opinion as to any compensation income that might be realized by
any stockholders and option holders of Company, whether vested or unvested, as a
consequence of the Merger.
In expressing this opinion, we mean that, if the IRS were to assert a
position contrary to the conclusions described herein, the conclusions described
herein, if properly presented to a court, should prevail. The IRS may take
positions contrary to the conclusions expressed herein, including contrary
positions as to the applicable facts, and there is a risk that such positions
might ultimately be sustained by the courts. Our opinion is not binding on the
IRS or the courts. It merely represents our best judgment and thus should not be
construed as a guarantee of ultimate results.
<PAGE> 3
The Presley Companies
October 7, 1999
Page 3
The opinion set forth herein is based on our interpretation of the
applicable provisions of the Code, the Income Tax Regulations promulgated
thereunder (the "REGULATIONS"), and administrative and judicial interpretations
of the Code and the Regulations, all as currently in effect. Any or all of these
could change, and any such change could require a conclusion or conclusions
different from the opinion expressed herein. We do not undertake to advise you
as to any future changes in the Code, the Regulations, or administrative or
judicial interpretations of either that may affect our opinion unless we are
specifically retained to do so.
This opinion does not address all aspects of federal income taxation
that may be relevant to a particular stockholder or to certain types of
stockholders that are subject to special treatment under the federal income tax
laws such as banks, insurance companies, tax-exempt organizations, dealers in
securities, stockholders who received Company common stock as compensation or
upon the exercise of options received as compensation, stockholders who hold
Company common stock as part of a hedge, straddle or conversion transaction, or
foreign taxpayers, or any aspect of state, local or foreign tax laws.
Furthermore, this opinion relates only to the stockholders who hold Company
common stock and Subsidiary common stock as a capital asset.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 and the reference to us under the caption
"Federal Income Tax Consequences" in the Prospectus/Proxy Statement included in
the Registration Statement. In giving such consent, we do not thereby admit that
we are in the category of person whose consent is required under Section 7 of
the Securities Act.
This opinion is being delivered to you in our capacity as counsel for
Company. This opinion is solely for the benefit of Company, Subsidiary, and the
stockholders of Company and may not be used or relied upon by any other person.
Very truly yours,
/s/ Irell & Manella LLP
IRELL & MANELLA LLP
<PAGE> 4
OFFICER'S CERTIFICATE
---------------------
THE PRESLEY COMPANIES
19 CORPORATE PLAZA
NEWPORT BEACH, CALIFORNIA 92660
October 7, 1999
Irell & Manella LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Re: Merger of The Presley Companies
with and into Presley Merger Sub, Inc.
--------------------------------------
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 filed with
the Securities and Exchange Commission on October 7, 1999 (the "REGISTRATION
STATEMENT"), you will render an opinion concerning certain United States federal
income tax consequences of the Merger. The Registration Statement describes the
proposed merger (the "MERGER") of The Presley Companies, a Delaware corporation
("COMPANY"), with and into Presley Merger Sub, Inc., a Delaware corporation and
a wholly-owned subsidiary of Company ("SUBSIDIARY"),
In connection with such opinion, and recognizing that you will rely on
this letter in rendering said opinion, the undersigned, a duly authorized
officer of each of Company and Subsidiary, acting as such, hereby certifies, to
the best knowledge and belief of the management of each of Company and
Subsidiary, that the facts relating to the Merger as described in the
Registration Statement are true, correct and complete in all material respects
and that the statements and representations stated herein are true, correct and
complete in all material respects at the date hereof and will continue to be
true, correct and complete in all material respects as of time of the Merger.
Representations.
1. The fair market value of the Subsidiary stock and other
consideration received by each Company stockholder will be approximately equal
to the fair market value of the Company stock surrendered in the exchange.
2. To the best knowledge and belief of management of the Company,
neither Company nor any person related to Company within the meaning of Income
Tax
<PAGE> 5
Regulations section 1.368-1(e)(3) has purchased, redeemed or otherwise acquired,
or made any extraordinary distributions (as defined in Temporary Income Tax
Regulations section 1.368-1T(e)(1)(ii)) with respect to any Company stock prior
to and in connection with the Merger, or otherwise as part of a plan of which
the Merger is a part. To the best knowledge and belief of management of the
Company, neither Subsidiary nor any "related person" of Subsidiary within the
meaning of Income Tax Regulations section 1.368-1(e)(3) has any plan or
intention to purchase, redeem or otherwise reacquire any Subsidiary stock issued
in the Merger or has purchased any Company stock prior to and in connection with
the Merger with consideration other than Subsidiary stock.
3. Immediately following consummation of the Merger, the stockholders
of Company will own all of the outstanding Subsidiary stock and will own such
stock solely by reason of their ownership of Company stock immediately prior to
the Merger.
4. Subsidiary has no plan or intention to issue additional shares of
its stock following the Merger.
5. Immediately following consummation of the Merger, Subsidiary will
possess the same assets and liabilities, except for assets used to pay
dissenters to the Merger, if any, and assets used to pay expenses incurred in
connection with the Merger, as those possessed by Company immediately prior to
the Merger. Assets used to pay expenses, assets used to pay dissenters to the
Merger, if any, and all redemptions and distributions (except for regular,
normal dividends) made by Company immediately preceding the Merger will, in the
aggregate, constitute less than one percent (1%) of the net assets of Company.
Dissenting stockholders, if any, will own less than one percent (1%) of the
Company stock.
6. At the time of the Merger, Company will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in Company, other than employee options
which will be assumed by Subsidiary in connection with the Merger.
7. Subsidiary has made no plan or intention to sell or otherwise
dispose of any of the assets of Company acquired in the Merger, except for
dispositions made in the ordinary course of business.
8. The liabilities of Company assumed by Subsidiary plus the
liabilities, if any, to which the transferred assets are subject were incurred
by Company in the ordinary course of its business and are associated with the
assets transferred.
9. Following the Merger, Subsidiary will continue the historic business
of Company or use a significant portion of Company's historic business assets in
a business.
10. The stockholders of Company will pay their respective expenses, if
any, incurred in connection with the Merger.
11. Company is not under the jurisdiction of a court in a title 11 or
similar case within the meaning of section 368(a)(3)(A) of the Internal Revenue
Code.
2
<PAGE> 6
12. None of the compensation received by any stockholder-employee of
Company pursuant to any employment, consulting or similar arrangement is or will
be separate consideration for, or allocable to, any of his shares of Company
stock. None of the shares of Subsidiary stock received by any
stockholder-employee of Company pursuant to the Merger are or will be separate
consideration for, or allocable to, any such employment, consulting or similar
arrangement. The compensation paid to any stockholder-employee of Company
pursuant to any such employment, consulting or similar arrangement is or will be
for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
13. Neither Company nor Subsidiary will make any payment of cash in
lieu of fractional shares of Subsidiary stock in connection with the Merger.
Reliance by You in Rendering Opinions; Limitations on Your Opinions.
1. The undersigned recognizes that (i) your opinion will be based on
the representations set forth herein, and on the statements contained in the
Registration Statement and the documents related thereto, and (ii) your opinion
will be subject to certain limitations and qualifications including that they
may not be relied upon if any such representations are not accurate in all
material respects.
2. The undersigned recognizes that your opinion will not address any
tax consequences of the Merger or any action taken in connection therewith,
except as expressly set forth in such opinion.
3. Company undertakes to inform you immediately should any of the
foregoing statements or representations become untrue, incorrect or incomplete
in any respect on or prior to the time of the Merger.
3
<PAGE> 7
This letter is being furnished to you solely for your benefit and for
use in rendering your opinions and is not to be used, circulated, quoted or
otherwise referred to for any other purpose (other than inclusion in your
opinions) without the express written consent of Company and Subsidiary.
Very truly yours,
The Presley Companies
Delaware corporation
By: /s/ David Siegel
-----------------------------------
Name: David Siegel
Title: Chief Financial Officer
Presley Merger Sub, Inc.
Delaware corporation
By: /s/ David Siegel
-----------------------------------
Name: David Siegel
Title: Chief Financial Officer
