<PAGE> 1
As filed with the Securities and Exchange Commission on December 5, 1997
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KAUFMAN AND BROAD HOME CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3666267
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10990 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(310) 231-4000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
KIMBERLY N. KING, ESQ.
CORPORATE SECRETARY AND ASSOCIATE COUNSEL
KAUFMAN AND BROAD HOME CORPORATION
10990 WILSHIRE BOULEVARD
LOS ANGELES, CA 90024
(310) 231-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
R. GREGORY MORGAN, ESQ.
MUNGER, TOLLES & OLSON LLP
355 SOUTH GRAND AVENUE
LOS ANGELES, CA 90071
Approximate date of commencement of proposed sale to the public: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS DETERMINED BY
MARKET CONDITIONS.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT PRICE (2)(3)(4) FEE
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<S> <C> <C> <C> <C>
Debt Securities(5) -- (6) -- --
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Preferred Stock, $1.00 par value(7) -- (6) -- --
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Common Stock, $1,00 par value, -- (6) -- --
including Preferred Stock Purchase
Rights(8)
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Warrants -- (6) -- --
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Total $500,000,000 (6) $500,000,000 $147,500.00(9)
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</TABLE>
(1) Subject to Footnote (3), there are being registered hereunder (i) an
indeterminate amount of Debt Securities, Preferred Stock, Common Stock and
Warrants issuable in primary offerings, (ii) an indeterminate amount of
Common Stock issuable upon conversion of Debt Securities and Preferred Stock
registered hereunder, and (iii) an indeterminate amount of Debt Securities,
Preferred Stock and Common Stock issuable upon exercise of Warrants
registered hereunder.
(2) In U.S. dollars or the equivalent thereof in one or more foreign currencies
or composite currencies. The proposed maximum offering price per unit will
be determined from time to time by the Registrant in connection with the
issuance of the securities registered hereunder.
(3) Estimated solely for the purpose of calculating the registration fee. In no
event will the aggregate maximum offering price of all securities issued
under this Registration Statement exceed $500,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies or, if any
Debt Securities are issued with original issue discount, such greater amount
as shall result in proceeds of $500,000,000 to the Registrant.
(4) With respect to Debt Securities, excluding accrued interest and accrued
amortization of discount, if any, to the date of delivery.
(5) Debt Securities may be issued in primary offerings and/or upon exercise of
Warrants registered hereby.
(6) Omitted pursuant to General Instruction II(D) of Form S-3 under the
Securities Act.
(7) Shares of Preferred Stock may be issued in primary offerings, upon
conversion of Debt Securities registered hereby, and/or upon exercise of
Warrants registered hereby.
(8) Shares of Common Stock may be issued in primary offering, upon conversion of
Debt Securities and/or Preferred Stock registered hereby, and/or upon
exercise of Warrants registered hereby. The aggregate amount of Common Stock
registered hereby is limited to that which is permissible under Rule
415(a)(4) under the Securities Act of 1933, as amended (the "Securities
Act"). The Preferred Stock Purchase Rights are not presently exercisable and
do not trade separately from the Common Stock.
(9) Determined pursuant to Rule 457(o) of the Securities Act.
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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.
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<PAGE> 3
[side legend on prospectus cover] INFORMATION CONTAINED HEREIN IS SUBJECT TO
COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 5, 1997
PROSPECTUS
KAUFMAN AND BROAD HOME CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK,
AND
WARRANTS
Kaufman and Broad Home Corporation, a Delaware corporation (the "Company"),
may offer and issue from time to time (1) its debt securities ("Debt
Securities"), consisting of debentures, notes or other evidences of indebtedness
representing unsecured obligations of the Company, which may be either senior
Debt Securities, senior subordinated Debt Securities or subordinated Debt
Securities, (2) shares of its Preferred Stock, par value $1.00 per share
("Preferred Stock"), (3) shares of its Common Stock, par value $1.00 per share
("Common Stock"), or (4) warrants to purchase Debt Securities, Preferred Stock,
Common Stock or other securities of the Company or another issuer ("Warrants").
The Debt Securities, Preferred Stock, Common Stock and Warrants are herein
collectively referred to as the "Securities". The Securities may be offered in
one or more separate classes or series, in amounts, at prices and on terms to be
determined by market conditions at the time of sale and to be set forth in a
supplement or supplements to this Prospectus (a "Prospectus Supplement"). Any
Securities may be offered with other Securities or separately. Debt Securities
or Preferred Stock may be convertible into shares of Common Stock. The aggregate
offering price of the Securities will not exceed $500,000,000.
Certain terms of any Debt Securities in respect of which this Prospectus is
being delivered will be set forth in the accompanying Prospectus Supplement
including, without limitation, the specific designation (including whether such
Debt Securities are senior, senior subordinated or subordinated and whether such
Debt Securities are convertible or exchangeable for other securities of the
Company or another issuer), aggregate principal amount, purchase price,
currency, denomination, maturity, interest rate (which may be fixed or variable)
and time of payment of interest (if any), terms (if any) for the subordination,
redemption or conversion thereof, listing (if any) on a securities exchange and
any other specific terms of the Debt Securities. Certain terms of any Preferred
Stock in respect of which this Prospectus is being delivered will be set forth
in the accompanying Prospectus Supplement including, without limitation, the
designation, number of shares, purchase price, and provisions for dividends,
liquidation preference, voting, redemption and conversion or exchange (into
other securities of the Company or another issuer), and any listing on a
securities exchange. The purchase price of any Common Stock in respect of which
this Prospectus is being delivered will be set forth in the accompanying
Prospectus Supplement. Certain terms of any Warrants in respect of which this
Prospectus is being delivered will be set forth in the accompanying Prospectus
Supplement, including the specific designation, number, duration, purchase price
and terms thereof, any listing of the Warrants or the underlying securities on a
securities exchange and any other terms in connection with the offering, sale
and exercise of the Warrants, as well as the terms on which and the securities
for which such Warrants may be exercised. The Prospectus Supplement will also
contain information, where applicable, about certain United States federal
income tax considerations relating to the Securities covered by the Prospectus
Supplement.
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol "KBH."
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 ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Securities may be sold on a negotiated or competitive bid basis to or
through underwriters or dealers designated from time to time or to other
purchasers directly or through agents designated from time to time. Certain
terms of the offering and sale of the Securities, including, where applicable,
the names of the underwriters, dealers or agents, if any, the principal amount
or number of shares or Warrants to be purchased, the purchase price of the
Securities and the proceeds to the Company from such sale, and any applicable
commissions, discounts and other items constituting compensation of such
underwriters, dealers or agents, will also be set forth in the accompanying
Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS _____________, 1997
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CERTAIN PERSONS PARTICIPATING IN AN OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING" IN THE PROSPECTUS SUPPLEMENT
FOR SUCH OFFERING.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus or any Prospectus Supplement, and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Company or by any underwriter, agent or dealer. This
Prospectus and any Prospectus Supplement shall not constitute an offer to sell
or a solicitation of an offer to buy any of the Securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus and
any Prospectus Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that the information therein is correct as
of any time subsequent to the date thereof.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information .......................................... 3
Incorporation of Certain Information by Reference .............. 3
The Company .................................................... 4
Use of Proceeds ................................................ 4
Consolidated Ratios of Earnings to Fixed Charges
and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends ...................................... 4
Description of the Debt Securities ............................. 5
Description of Capital Stock ................................... 13
Description of Warrants ........................................ 17
Plan of Distribution ........................................... 19
Experts ........................................................ 19
Legal Matters .................................................. 20
</TABLE>
2
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AVAILABLE INFORMATION
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 and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its Regional Offices located at Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661-2511 and
at Seven World Trade Center, 13th Floor, New York, New York 10048, and copies of
such material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov. The Company's Common Stock is
listed on the New York Stock Exchange. In addition, reports, proxy statements
and other information concerning the Company can be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
This Prospectus constitutes a part of Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the information
set forth in such Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the Securities. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and in
each instance reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed with the Commission, are
hereby incorporated by reference:
1. Annual Report on Form 10-K of the Company for the year ended November
30, 1996; and
2. Quarterly Reports on Form 10-Q of the Company for the quarters ended
February 28, 1997, May 31, 1997 and August 31, 1997; and
3. Current Reports on Form 8-K of the Company dated October 8, 1997
and October 14, 1997.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the termination of the offering of the Securities offered hereby, shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents. Any statement contained 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 (or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any statements so modified or superseded shall be
deemed to constitute a part of this Prospectus, except as so modified or
superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this Prospectus
(other than certain exhibits to such documents). Telephone requests for such
documents may be made by dialing 1-888-KBH-NYSE (1-888-524-6973). Mail requests
for such documents should be directed to Kaufman and Broad Home Corporation,
10990 Wilshire Boulevard, Los Angeles, California 90024, Attention: Investor
Relations.
3
<PAGE> 6
THE COMPANY
The Company is a builder of single-family homes with domestic operations in
seven western states, and international operations in France and Mexico.
Domestically, the Company is the largest home builder west of the Mississippi
River, delivering more single-family homes than any other builder in the region.
Founded in 1957, the Company builds innovatively designed homes which cater
primarily to first-time home buyers, generally in medium-sized developments
close to major metropolitan areas. Internationally, the Company is among the
largest builders in greater metropolitan Paris, France, based on the number of
homes delivered. In France, the Company also builds commercial projects and
high-density residential properties, such as condominium and apartment
complexes. The Company provides mortgage banking services to domestic home
buyers through its wholly owned subsidiary, Kaufman and Broad Mortgage Company.
The Company is a Delaware corporation and maintains its principal executive
offices at 10990 Wilshire Boulevard, Los Angeles, California 90024. Its
telephone number is (310) 231-4000. As used herein, the term "Company" refers to
Kaufman and Broad Home Corporation and its subsidiaries, unless the context
indicates otherwise.
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement,
proceeds from the sale of the Securities will be used by the Company for general
corporate purposes, which may include, among other things, the development of
new residential properties and commercial projects, the repayment of existing
indebtedness, as well as possible land and corporate acquisitions.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends of
the Company for each of the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED AUGUST 31, YEAR ENDED NOVEMBER 30,
----------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
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<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (1)......1.96x --(2)(3) --(2)(3) 1.35x 2.09x 2.07x 1.88x
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends(1) ...1.96x --(2)(3) --(2)(3) 1.12x 1.64x 1.80x 1.88x
</TABLE>
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(1) For purposes of calculating the ratio of earnings to fixed charges and the
ratio of earnings to combined fixed charges and preferred stock dividends,
earnings are computed by adding fixed charges (except capitalized interest
and the effect of preferred stock dividends) and amortization of previously
capitalized interest to pretax earnings (excluding undistributed earnings
of unconsolidated joint ventures). Fixed charges consist of interest
expense plus capitalized interest and the portion of rental expense
considered to be interest and, for the ratio of earnings to combined fixed
charges and preferred stock dividends prior to April 1, 1996, include the
effect of preferred stock dividends on the Company's Series B Mandatory
Conversion Premium Dividend Preferred Stock. On April 1, 1996, all shares
of the Company's only outstanding series of preferred stock, the Series B
Mandatory Conversion Premium Dividend Preferred Stock, were mandatorily
converted to shares of Common Stock and no future preferred stock dividends
will be paid or are payable with respect to such preferred stock.
In computing the ratio of earnings to fixed charges and the ratio of
earnings to combined fixed charges and preferred stock dividends, interest
expense excludes interest incurred by the Company's wholly owned limited
purpose financing subsidiaries with respect to their outstanding
collateralized mortgage obligations. If interest on such collateralized
mortgage obligations were included, (i) earnings for the nine months ended
August 31, 1996 and the year ended November 30, 1996 would have been
inadequate to cover fixed charges by $132.8 million and $97.8 million,
respectively, while the ratio of earnings to fixed charges for the nine
months ended August 31, 1997 and the years ended November 30, 1995, 1994,
1993 and 1992 would have been 1.87x, 1.31x, 1.88x, 1.77x and 1.55x,
respectively, and (ii) earnings for the nine months ended August 31, 1996
and the year ended November 30, 1996 would have been inadequate to cover
combined fixed charges and preferred stock dividends by $140.5 million and
$105.5 million, respectively, while the ratio of earnings to combined fixed
charges and preferred stock dividends for the nine months ended August 31,
1997 and the years ended November 30, 1995, 1994, 1993 and 1992 would have
been 1.87x, 1.11x, 1.54x, 1.60x, and 1.54x, respectively.
4
<PAGE> 7
(2) The amount of earnings used in the calculation of the ratio of earnings to
fixed charges and the ratio of earnings to combined fixed charges and
preferred stock dividends for the nine months ended August 31, 1996 and the
year ended November 30, 1996 includes the $170.8 million pretax non-cash
charge for impairment of long-lived assets recorded by the Company in the
second quarter of 1996. If the non-cash charge for impairment of long-lived
assets were excluded, the ratio of earnings to fixed charges and the ratio
of earnings to combined fixed charges and preferred stock dividends for the
nine months ended August 31, 1996 would have been 1.65x and 1.46x,
respectively, and for the year ended November 30, 1996 would have been
1.96x and 1.78x, respectively.
(3) Earnings for the nine months ended August 31, 1996 and the year ended
November 30, 1996 are inadequate to cover fixed charges by $132.8 million
and $97.8 million, respectively. Earnings for the nine months ended August
31, 1996 and the year ended November 30, 1996 are inadequate to cover
combined fixed charges and preferred stock dividends by $140.5 million and
$105.5 million, respectively.
DESCRIPTION OF THE DEBT SECURITIES
The following sets forth certain general terms and provisions of the
indentures under which the Debt Securities are to be issued. If so issued, the
particular terms of the Debt Securities will be set forth in a Prospectus
Supplement relating to such Debt Securities which will accompany this
Prospectus.
The Debt Securities will constitute either senior, senior subordinated or
subordinated debt of the Company and will be issued, in the case of Debt
Securities that will be senior debt, under a Senior Indenture (the "Senior Debt
Indenture"), in the case of Debt Securities that will be senior subordinated
debt, under a Senior Subordinated Indenture (the "Senior Subordinated Debt
Indenture"), and, in the case of Debt Securities that will be subordinated debt,
under a Subordinated Indenture (the "Subordinated Debt Indenture"), each such
indenture to be executed by the Company and one or more trustees (each a
"Trustee"). The Senior Debt Indenture, the Senior Subordinated Debt Indenture
and the Subordinated Debt Indenture are sometimes hereinafter referred to
individually as an "Indenture" and collectively as the "Indentures." The
Indentures will be in the form that has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part, subject to such
amendments or supplements as are adopted from time to time. The following
summaries of certain provisions of the Indentures and the Debt Securities do not
purport to be complete and such summaries are subject to the detailed provisions
of the applicable Indenture to which reference is hereby made for a full
description of such provisions, including the definition of certain terms used
herein, and for other information regarding the Debt Securities. Numerical
references in parentheses below are to sections in the applicable Indenture.
Wherever particular sections or defined terms of the applicable Indenture are
referred to, such sections or defined terms are incorporated herein by reference
as part of the statement made, and the statement is qualified in its entirety by
such reference. The Indentures are substantially identical, except for the
provisions relating to subordination. See "Senior Subordinated Debt" and
"Subordinated Debt." The Debt Securities offered by this Prospectus and the
accompanying Prospectus Supplement are referred to herein as the "Offered Debt
Securities."
GENERAL
None of the Indentures limits the amounts of additional indebtedness the
Company or any of its subsidiaries may incur, except as may be provided in the
Prospectus Supplement. The Debt Securities will be unsecured senior, senior
subordinated or subordinated obligations of the Company. The Company is a
holding company, which currently conducts its operations through consolidated
and unconsolidated subsidiaries. All of the operating assets of the Company are
owned by its subsidiaries, effectively subordinating 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, except to the extent that the Company may itself
be a creditor with recognized claims against the subsidiary, in which case the
claims of the Company would still be effectively subordinate to any third party
security interests in the assets of such subsidiary and would be subordinate to
any indebtedness of such subsidiary senior to that held by the Company. In
addition, dividends, loans and advances from certain subsidiaries to the Company
may be subject to certain contractual, statutory or regulatory restrictions, are
contingent upon the earnings of such subsidiaries and are subject to various
business considerations.
5
<PAGE> 8
The Indentures provide that Debt Securities may be issued from time to time
in one or more series and may be denominated and payable in U.S. dollars or
foreign currencies or units based on or relating to foreign currencies,
including European Currency Units ("ECUs"). Special United States federal income
tax considerations applicable to any Debt Securities so denominated will be
described in the relevant Prospectus Supplement.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Offered Debt Securities (to the extent such
terms are applicable to such Offered Debt Securities): (i) classification as
senior, senior subordinated or subordinated Debt Securities, the specific
designation, aggregate principal amount, purchase price and denomination; (ii)
currency or units based on or relating to currencies in which such Offered Debt
Securities are denominated and/or in which principal (and premium, if any)
and/or any interest will or may be payable; (iii) any date of maturity; (iv)
interest rate or rates (or the method by which such rate will be determined), if
any; (v) the date from which interest will accrue and dates on which any such
interest will be payable; (vi) the place or places where the principal of,
premium, if any, and interest, if any, on the Offered Debt Securities will be
payable; (vii) any redemption, repayment or sinking fund provisions; (viii) the
terms, if any, on which such Debt Securities may be converted into or exchanged
for stock or other securities of the Company or other entities, any specific
terms relating to the adjustment thereof and the period during which such Debt
Securities may be so converted or exchanged; (ix) whether the Offered Debt
Securities will be issuable in registered form or bearer form ("Bearer
Securities") or both, and if Bearer Securities are issuable, any restrictions
applicable to the exchange of one form for another and to the offer, sale and
delivery of Bearer Securities; (x) any applicable United States federal income
tax consequences, including whether and under what circumstances the Company
will pay additional amounts on Offered Debt Securities held by a person who is
not a U.S. person (as defined in the Prospectus Supplement) in respect of any
tax, assessment or governmental charge withheld or deducted and, if so, whether
the Company will have the option to redeem such Offered Debt Securities rather
than pay such additional amounts; and (xi) any other specific terms of the
Offered Debt Securities, including any additional events of default or covenants
provided for with respect to such Offered Debt Securities, and any terms that
may be required by or advisable under applicable laws or regulations.
Debt Securities may be presented for exchange and registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Indenture and the Prospectus
Supplement. Such services will be provided without charge, other than any tax or
other governmental charge payable in connection therewith, but subject to the
limitations provided in the applicable Indenture. Debt Securities in bearer form
and the coupons, if any, appertaining thereto will be transferable upon
delivery.
Debt Securities will bear interest at a fixed rate (a "Fixed Rate
Security") or a floating rate (a "Floating Rate Security"). Debt Securities
bearing no interest or interest at a rate that at the time of issuance is below
the prevailing market rate will be sold at a discount below their stated
principal amount. Special United States 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 United
States federal income tax purposes will be described in the relevant Prospectus
Supplement.
Debt Securities may be issued, from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on any
interest payment date, to be determined by reference to one or more currency
exchange rates, commodity prices, equity indices or other factors. Holders of
such Debt Securities may receive a principal amount on any principal payment
date, or a payment of interest on any interest payment date, that is greater
than or less than the amount of principal or interest otherwise payable on such
dates, depending upon the value on such dates of the applicable currency,
commodity, equity index or other factors. Information as to the methods for
determining the amount of principal or interest payable on any date, the
currencies, commodities, equity indices or other factors to which the amount
payable on such date is linked and certain additional tax considerations will be
set forth in the applicable Prospectus Supplement.
6
<PAGE> 9
GLOBAL SECURITIES
Registered Global Security. The registered Debt Securities of a series may
be issued in the form of one or more fully registered global securities (each, a
"Registered Global Security") that will be deposited with a depositary (a
"Depositary"), or with a nominee for a Depositary, identified in the Prospectus
Supplement relating to such series and registered in the name of the Depositary
or a nominee thereof. In such case, one or more Registered Global Securities
will be issued in a denomination or aggregate denominations equal to the portion
of the aggregate principal amount of outstanding registered Debt Securities of
the series to be represented by such Registered Global Security or Securities.
Unless and until it is exchanged in whole for Debt Securities in definitive
registered form, a Registered Global Security may not be transferred except as a
whole by the Depositary for such Registered Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
The Company anticipates that the following provisions will apply to all
arrangements with a Depositary for the Registered Global Securities. The
information concerning such depositary arrangements has been obtained from
sources the Company believes to be reliable, but the Company takes no
responsibility for the accuracy thereof.
Beneficial ownership of interests in a Registered Global Security will be
limited to persons that have accounts with the Depositary for such Registered
Global Security ("participants") or persons that may hold interests through
participants. Upon the issuance of a Registered Global Security, the Depositary
for such Registered Global Security will credit, on its book-entry registration
and transfer system, the participants' accounts with the respective principal
amounts of the Debt Securities represented by such Registered Global Security
beneficially owned by such participants. The participants' accounts to be
credited shall be designated by any dealers, underwriters or agents
participating in the distribution of such Debt Securities. Ownership of
beneficial interests in such Registered Global Security will be shown on, and
the transfer of such ownership interests will be effected only through, records
maintained by the Depositary for such Registered Global Security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to own,
transfer or pledge beneficial interests in Registered Global Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
nominee, as the case may be, will be considered the sole owner or holder of the
Debt Securities represented by such Registered Global Security for all purposes
under the applicable Indenture. Except as set forth below, owners of beneficial
interests in a Registered Global Security will not be entitled to have the Debt
Securities represented by such Registered Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such Debt
Securities in definitive form and will not be considered the owners or holders
thereof under the applicable Indenture. Accordingly, each person owning a
beneficial interest in a Registered Global Security must rely on the procedures
of the Depositary for such Registered Global Security and, if such person is not
a participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a holder under the applicable
Indenture. Under existing industry practices, if the Company requests any action
of beneficial owners or if an owner of a beneficial interest in a Registered
Global Security desires to give or take any action that a holder is entitled to
give or take under the applicable Indenture, the Depositary for such Registered
Global Security would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants would authorize
beneficial owners owning through such participants to give or take such action
or would otherwise act upon the instructions of beneficial owners holding
through them.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
the Company, the Trustee or any other agent of the Company or agent of the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial owners of interests
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in such Registered Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities
represented by a Registered Global Security, upon receipt of any payment of
principal premium or interest in respect of such Registered Global Security,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in such Registered Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interest in such
Registered Global Security held through such participants will be governed by
standing customer instructions and customary practices, as is now the case with
the securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary or
ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act is
not appointed by the Company within 90 days, the Company will issue such Debt
Securities in definitive form in exchange for such Registered Global Security.
In addition, the Company may at any time and in its sole discretion determine
not to have any of the Debt Securities of a series represented by one or more
Registered Global Securities and, in such event, will issue Debt Securities of
such series in definitive form in exchange for all of the Registered Global
Security or Securities representing such Debt Securities. Any Debt Securities
issued in definitive form in exchange for a Registered Global Security will be
registered in such name or names as the Depositary shall instruct the relevant
Trustee. It is expected that such instructions will be based upon directions
received by the Depositary from participants with respect to ownership of
beneficial interests in such Registered Global Security.
Bearer Global Security. The Debt Securities of a series may also be issued
in the form of one or more bearer global Securities (a "Bearer Global Security")
that will be deposited with a common depositary for Morgan Guaranty Trust
Company of New York, as operator of the Euroclear system, and Cedel Bank,
societe anonyme, or with a nominee for such depositary identified in the
Prospectus Supplement relating to such series. The specific terms and
procedures, including the specific terms of the depositary arrangement, with
respect to any portion of a series of Debt Securities to be represented by a
Bearer Global Security will be described in the Prospectus Supplement relating
to such series.
SENIOR DEBT
The Debt Securities and, in the case of Bearer Securities, any coupons
appertaining thereto (the "Coupons") that will constitute part of the senior
debt of the Company, if issued, will be issued under the Senior Debt Indenture
and will rank pari passu with all other unsecured and unsubordinated debt of the
Company.
SENIOR SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the senior
subordinated debt of the Company, if issued, will be issued under the Senior
Subordinated Debt Indenture and will be subordinate and junior in right of
payment, to the extent and in the manner set forth in the Senior Subordinated
Debt Indenture, to all "Senior Indebtedness" of the Company. The Senior
Subordinated Debt Indenture defines "Senior Indebtedness" as the principal of
(and, premium, if any) and unpaid interest (including post-petition interest) or
accrued original issue discount on and other amounts due on or in connection
with any Debt (as defined below) incurred, assumed or guaranteed by the Company,
whether outstanding on the date of the Indenture or thereafter incurred, assumed
or guaranteed, and all renewals, extensions and refundings of any such Debt;
provided, however, that the following will not constitute Senior Indebtedness:
(i) any Debt of the Company as to which, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
expressly provided that such Debt is subordinate in right of payment to all
other Debt of the Company not expressly subordinated to such Debt; (ii) any Debt
of the Company which by its terms refers explicitly to the senior subordinated
Debt Securities and states that such Debt shall not be senior in right of
payment thereto; (iii) any
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Debt of the Company in respect of the senior subordinated Debt Securities; (iv)
any Debt of the Company to any subsidiary of the Company; (v) any Debt of the
Company to any joint venture or partnership, which joint venture or partnership
is required, under generally accepted accounting principles, to be consolidated
in the Company's consolidated financial statements; and (vi) the subordinated
Debt Securities and any other Debt of the Company which by its terms ranks pari
passu with or subordinate to the subordinated Debt Securities. (Senior
Subordinated Debt Indenture; Section 13.1) The Company will not issue any Debt
which is subordinated in right of payment to any other Debt of the Company and
which is not expressly made pari passu with, or subordinate and junior in right
of payment to, the senior subordinated Debt Securities. (Senior Subordinated
Debt Indenture Section; 3.7) Debt is defined in the Senior Subordinated Debt
Indenture to mean, with respect to any person at any date, without duplication,
(A) all obligations of such person for borrowed money, (B) all obligations of
such person evidenced by bonds, debentures, notes or other similar instruments,
(C) all Debt of others secured by a lien on any asset of such person, whether or
not such Debt is assumed by such person, (D) all Debt of others for the payment
of which such person is responsible or liable as obligor or guarantor, (E) all
obligations of such person in respect of letters of credit or other similar
instruments (or reimbursement obligations with respect thereto), (F) all
obligations of such person to pay the deferred purchase price of property or
services, except Trade Payables, and (G) all obligations of such person as
lessee under Capital Leases. (Senior Subordinated Debt Indenture; Section 1.1)
By reason of such subordination, in the event of dissolution, insolvency,
bankruptcy or other similar proceedings, upon any distribution of assets, (i)
holders of Senior Indebtedness will be entitled to be paid in full before
payments may be made on the senior subordinated Debt Securities and the holders
of senior subordinated Debt Securities will be required to pay over their share
of such distribution to the holders of Senior Indebtedness until such Senior
Indebtedness is paid in full and (ii) creditors of the Company who are neither
holders of senior subordinated Debt Securities nor holders of Senior
Indebtedness may recover less, ratably, than holders of Senior Indebtedness and
may recover more, ratably, than the holders of the senior subordinated Debt
Securities. (Senior Subordinated Debt Indenture; Section 13.2)
In the event the senior subordinated Debt Securities are declared or become
due and payable prior to their maturity by reason of the occurrence of an Event
of Default, then the Company is obligated to promptly notify holders of Senior
Indebtedness of such acceleration. The Company may not pay the senior
subordinated Debt Securities until 135 days have passed after such acceleration
occurs and may thereafter pay the senior subordinated Debt Securities only if
the terms of the Indenture otherwise permit payment at that time. (Senior
Subordinated Debt Indenture; Section 13.3)
No payment of principal, interest, or any other amount owing with respect
to any of the senior subordinated Debt Securities may be made, nor may the
Company acquire any senior subordinated Debt Securities except as set forth in
the Indenture, if any default with respect to Senior Indebtedness occurs and is
continuing that permits the acceleration of the maturity thereof and, unless
such default relates to a failure by the Company to make any payment in respect
of such Senior Indebtedness when due or within any applicable grace period (a
"Payment Default"), such default is either the subject of judicial proceedings
or the Company receives notice of the default. Notwithstanding the foregoing,
the Company may resume payments in respect of the senior subordinated Debt
Securities and may acquire senior subordinated Debt Securities if: (i)(a) 135
days pass after, in the case of such a Payment Default, the later of the date
such payment was due and the expiration of any applicable grace period for such
payment or, in the case of any other such default, the date that the related
judicial proceedings commence or that notice of the default is given to the
Company, as the case may be, and (b) the Senior Indebtedness in respect of which
such default exists has not been declared due and payable in its entirety within
such 135 day period or, if declared due and payable, such declaration has been
rescinded, waived or annulled; or (ii) the default with respect to the Senior
Indebtedness is cured or waived and, in each case described in the foregoing
clauses (i) and (ii), the terms of the Indenture otherwise permit the payment or
acquisition of the senior subordinated Debt Securities at that time. (Senior
Subordinated Debt Indenture; Section 13.4) If this Prospectus is being delivered
in connection with a series of senior subordinated Debt Securities, the
accompanying Prospectus Supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior Indebtedness
outstanding as of the end of the most recent fiscal quarter.
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SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the
subordinated debt of the Company will be issued under the Subordinated Debt
Indenture and will be subordinate and junior in right of payment, to the extent
and in the manner set forth in the Subordinated Debt Indenture, to all "Senior
Indebtedness" of the Company. The Subordinated Debt Indenture defines "Senior
Indebtedness" as the principal of (and premium, if any) and unpaid interest
(including post-petition interest) or accrued original issue discount on and
other amounts due on or in connection with any Debt (as defined below) incurred,
assumed or guaranteed by the Company, whether outstanding on the date of the
Indenture or thereafter incurred, assumed or guaranteed, and all renewals,
extensions and refundings of any such Debt; provided, however, that the
following will not constitute Senior Indebtedness: (i) any Debt of the Company
as to which, in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is expressly provided that such Debt is
subordinate in right of payment to all other Debt not expressly subordinated to
such Debt; (ii) any Debt of the Company which by its terms refers explicitly to
the subordinated Debt Securities and states that such Debt shall not be senior
in right of payment thereto; (iii) any Debt in respect of the subordinated Debt
Securities; (iv) any Debt of the Company to any Subsidiary of the Company; and
(v) any Debt to any joint venture or partnership, which joint venture or
partnership is required, under generally accepted accounting principles, to be
consolidated in the Company's consolidated financial statements. (Subordinated
Debt Indenture; Section; 13.1) The definition of Debt in the Subordinated Debt
Indenture is the same as in the Senior Subordinated Debt Indenture and is
described above under "Senior Subordinated Debt." (Subordinated Debt Indenture;
Section 1.1) There is no provision in the Subordinated Debt Indenture preventing
the Company from issuing any Debt which is subordinated in right of payment to
any other debt of the Company and which is not expressly made pari passu with,
or subordinate and junior in right of payment to, the subordinated Debt
Securities.
By reason of such subordination, upon any distribution of assets, in the
event of dissolution, insolvency, bankruptcy or other similar proceedings, (i)
holders of Senior Indebtedness will be entitled to be paid in full before
payments may be made on the subordinated Debt Securities and the holders of
subordinated Debt Securities will be required to pay over their share of such
distribution to the holders of Senior Indebtedness until such Senior
Indebtedness is paid in full and (ii) creditors of the Company who are neither
holders of subordinated Debt Securities nor holders of Senior Indebtedness may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the holders of the subordinated Debt Securities. (Subordinated
Debt Indenture; Section 13.2)
In the event the subordinated Debt Securities are declared or become due
and payable prior to their maturity by reason of the occurrence of an Event of
Default, then the Company is obligated to promptly notify holders of Senior
Indebtedness of such acceleration. The Company may not pay the subordinated Debt
Securities until 135 days have passed after such acceleration occurs and may
thereafter pay the subordinated Debt Securities only if the terms of the
Indenture otherwise permit payment at that time. (Subordinated Debt Indenture;
Section 13.3)
The conditions and limitations on payments by the Company with respect to
any of the subordinated Debt Securities in the event of any default with respect
to any Senior Indebtedness are the same as are provided for under the Senior
Subordinated Debt Indenture and are described above under "Senior Subordinated
Debt." (Subordinated Debt Indenture; Section 13.4) If this Prospectus is being
delivered in connection with a series of subordinated Debt Securities, the
accompanying Prospectus Supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior Indebtedness
outstanding as of the end of the most recent fiscal quarter.
CERTAIN COVENANTS OF THE COMPANY
Merger, Consolidation, Sale, Lease or Conveyance. Each Indenture provides
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 its assets to any
person, unless the Company shall be the continuing corporation, or the successor
corporation or person that acquires all or substantially all the assets of the
Company shall be a corporation organized and
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<PAGE> 13
existing under the laws of the United States or a State thereof or the District
of Columbia and shall expressly assume all obligations of the Company under such
Indenture and the Debt Securities issued thereunder, and immediately after such
merger, consolidation, sale, lease or conveyance, the Company, such person or
such successor corporation shall not be in default in the performance of the
covenants and conditions of such Indenture to be performed or observed by the
Company. (Indentures; Section 9.1)
EVENTS OF DEFAULT
An Event of Default is defined under each Indenture with respect to Debt
Securities of any series issued under such Indenture as being: (i) default for
30 days in payment of any interest on any Debt Securities of such series; (ii)
default in payment of any principal of the Debt Securities of such series,
either at maturity (or upon any redemption), by declaration of acceleration or
otherwise; (iii) default in payment of any sinking fund installment due under
the terms of the Debt Securities of such series; (iv) default in the
performance, or breach, of any other covenant or warranty of the Company in
respect of the Debt Securities of such series for 60 days after written notice
to the Company by the Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the outstanding Securities of
all series affected thereby; (v) certain events of bankruptcy, insolvency or
reorganization; or (vi) any other Event of Default provided in any relevant
Supplemental Indenture or resolution of the Board of Directors under which such
series of Debt Securities is issued or in the form of Debt Security for such
series. (Indentures; Section 5.1)
Each Indenture provides that (i) if an Event of Default due to the default
in payment of principal of, premium, if any, or interest on, or sinking fund
installment in respect of any series of Debt Securities issued under such
Indenture or due to the default in the performance or breach of any other
covenant or warranty of the Company applicable to the Debt Securities of such
series but not applicable to all outstanding Debt Securities issued under such
Indenture shall have occurred and be continuing, either the Trustee, or the
holders of not less than 25% in principal amount of the Debt Securities of such
series (voting as a separate class) issued under such Indenture and then
outstanding may then declare the principal of all Debt Securities of such series
and interest accrued thereon to be due and payable immediately; and (ii) if an
Event of Default due to a cross-default or cross-acceleration or a default in
the performance or breach of any other of the covenants or agreements in such
Indenture applicable to all outstanding Debt Securities issued thereunder and
then outstanding or due to certain events of bankruptcy, insolvency and
reorganization of the Company shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all Debt
Securities issued under such Indenture and then outstanding (treated as one
class) may declare the principal of all such Debt Securities and interest
accrued thereon to be due and payable immediately. Upon certain conditions such
declarations may be annulled and past defaults may be waived (except a
continuing default in payment of principal of (or premium, if any) or interest
on such Debt Securities) by the holders of a majority in principal amount of the
Debt Securities of all such affected series then outstanding, voting as a
separate class or as a single class, as applicable. (Indentures; Sections 5.1
and 5.10)
Each Indenture contains 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 Debt Securities issued under such Indenture
before proceeding to exercise any right or power under such Indenture at the
request of such holders. (Indentures; Section 6.2) Subject to such provisions in
each Indenture for the indemnification of the Trustee and certain other
limitations, the holders of a majority in principal amount of the Debt
Securities of each series affected (with each series voting as a separate class)
issued under such Indenture and 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. (Indentures; Section
5.9)
Each Indenture provides that no holder of Debt Securities of any series
issued under such Indenture may institute any action against the Company under
such Indenture (except actions for payment of overdue principal or interest)
unless such holder previously shall have given to the Trustee written notice of
default and continuance thereof and unless the holders of not less than 25% in
principal amount of the Debt Securities of such series issued under such
Indenture and then outstanding shall have requested the Trustee to institute
such action and shall have offered the Trustee reasonable indemnity, the Trustee
shall not have instituted such action
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within 60 days of such request and the Trustee shall not have received direction
inconsistent with such written request by the holders of a majority in principal
amount of the Debt Securities of each affected series (with each series voting
as a separate class) issued under such Indenture and then outstanding.
(Indentures; Sections 5.6 and 5.9)
Each Indenture contains a covenant that the Company will file annually with
the Trustee a certificate as to the Company's compliance with the covenants and
conditions under such Indenture. (Indentures; Section 3.5)
DEFEASANCE AND DISCHARGE
The Company can discharge or defease its obligations under each Indenture
as set forth below. (Indentures; Section 10)
The Company may discharge certain obligations to holders of any series of
Debt Securities issued under an Indenture (excluding its obligation to pay the
principal of, premium, if any, and interest on the Debt Securities of such
series) 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, in the case of Debt Securities payable only
in U.S. dollars, U.S. Government Obligations (as defined in such Indenture), or
a combination thereof, as trust funds in an amount certified to be sufficient to
pay at maturity (or upon redemption or repayment at the option of the holder)
the principal of, premium, if any, and interest on such Debt Securities.
The Company may also discharge any and all of its obligations to holders of
any series of Debt Securities issued under an Indenture at any time (including
its obligation to pay the principal of, premium, if any, and interest on the
Debt Securities of such series) ("defeasance"), but may not thereby avoid its
duty to register the transfer or exchange of such series of Debt Securities, to
replace any temporary, mutilated, destroyed, lost or stolen series of Debt
Securities or to maintain an office or agency in respect of such series of Debt
Securities and certain other obligations. The Company may instead be released
with respect to any outstanding series of Debt Securities issued under the
relevant Indenture from the obligations imposed by the covenants specified in
the accompanying Prospectus Supplement (other than its obligation to pay the
principal of, premium, if any, and interest on the Debt Securities of such
series), and omit to comply with such Covenants without creating an Event of
Default ("covenant defeasance"). Defeasance or covenant defeasance may be
effected only if, among other things: (i) the Company irrevocably deposits with
the Trustee cash or, in the case of Debt Securities payable only in U.S.
dollars, U.S. Government Obligations, or a combination thereof, as trust funds
in an amount certified to be sufficient to pay at maturity (or upon redemption
or repayment at the option of the holders) the principal of and interest on all
outstanding Debt Securities of such series issued under such Indenture; (ii) the
Company delivers to the Trustee an opinion of counsel to the effect that the
holders of such series of Debt Securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and that defeasance or covenant defeasance
will not otherwise alter such holders' United States federal income tax
treatment of principal, premium, if any, and interest payments on such series of
Debt Securities; and (iii) (a) in the case of the Senior Subordinated and
Subordinated Debt Indentures, no event or condition shall exist that, pursuant
to certain provisions described under "Senior Subordinated Debt" and
"Subordinated Debt" above, would prevent the Company from making payments of
principal of (and premium, if any) and interest on the relevant Debt Securities
at the date of the irrevocable deposit referred to above or at any time during
the period ending on the 91st day after such deposit date and (b) the Company
delivers to the Trustee an opinion of counsel to the effect that (1) in the case
of the Senior Subordinated and Subordinated Debt Indentures, the trust funds
will not be subject to any rights of holders of Senior Indebtedness (as defined
in the applicable Indenture) and (2) in the case of all Debt Securities, after
the 91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, except that if a court were to rule under
any such law in any case or proceeding that the trust funds remained property of
the Company, then the Trustee and the holders of the relevant Debt Securities
would be entitled to certain rights as secured creditors in such trust funds.
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MODIFICATION OF THE INDENTURES
Each Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (i) secure any Debt Securities; (ii) evidence the assumption by a successor
corporation of the obligations of the Company; (iii) add covenants for the
protection of the holders of Debt Securities; (iv) cure any ambiguity or correct
any inconsistency in such Indenture; (v) establish the forms or terms of Debt
Securities of any series; (vi) evidence the acceptance of appointment by a
successor trustee; or (vii) add to, change or eliminate any provisions of the
relevant Indenture, provided that any such addition, change or elimination shall
not apply to any Debt Security of any series created prior to the execution of
such supplemental indenture and entitled to the benefit of such provision or
modify the rights of the holder of any such Debt Security with respect to such
provision. (Indentures; Section 8.1)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
principal amount of Debt Securities of all series issued under such Indenture
then outstanding and affected (voting as one class), to add any provisions to,
or change in any manner or eliminate any of the provisions of, such Indenture or
modify in any manner the rights of the holders of the Debt Securities of each
series so affected; provided that the Company and the Trustee may not, without
the consent of the holder of each outstanding Debt Security affected thereby,
(i) extend the stated maturity of the principal of any Debt Security, or reduce
the principal amount thereof or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption or repayments
thereof or make the principal thereof (including any amount in respect of
original issue discount), or interest thereon payable in any coin or currency
other than that provided in the Debt Securities or reduce the amount of any
original issue discount security payable upon acceleration or provable in
bankruptcy or modify the percentage of holders required to waive any default or
rescind and annul any declaration of acceleration or impair the right to
institute suit for the enforcement of any payment on any Debt Security when due
or if the Debt Securities provide therefor, any right of repayment of the holder
thereof, or (ii) reduce the aforesaid percentage of Debt Securities of any
series issued under such Indenture, the consent of the holders of which is
required for any such modification. (Indentures; Section 8.2)
The Senior Subordinated and Subordinated Debt Indentures may not be amended
to alter the subordination of any outstanding Debt Securities issued under such
Indenture without the consent of each holder of Senior Indebtedness (as defined
therein) then outstanding that would be adversely affected thereby. (Indentures;
Section 8.6)
APPLICABLE LAW
The Indentures will provide that the Debt Securities and the Indentures
will be governed by and construed in accordance with the laws of the State of
New York. (Indentures; Section 11.8)
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue (i) 100,000,000 shares of Common Stock,
of which 38,989,834 shares were outstanding as of December 1, 1997, (ii)
25,000,000 shares of Special Common Stock, none of which is outstanding and
(iii) 10,000,000 shares of preferred stock, par value $1.00 per share
("Preferred Stock"), none of which is outstanding. At December 1, 1997, there
were 1,882 holders of record of the Common Stock. The following summaries of
certain provisions of the Company's Certificate of Incorporation and Shareholder
Rights Plan do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, the Company's Certificate of Incorporation
and Shareholder Rights Plan, copies of which have been incorporated by reference
as exhibits to the Registration Statement of which this Prospectus is a part.
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COMMON STOCK AND SPECIAL COMMON STOCK
The holders of Common Stock and Special Common Stock generally have
identical rights except that holders of Common Stock are entitled to one vote
per share while holders of Special Common Stock are entitled to one-tenth of a
vote per share on all matters to be voted on by stockholders. Holders of shares
of Common Stock and Special Common Stock are not entitled to cumulate their
votes in the election of directors. Generally all matters to be voted on by
stockholders must be approved by a majority of the combined voting power of the
outstanding shares of Common Stock and Special Common Stock, voting together as
a single class, subject to any voting rights of holders of outstanding Preferred
Stock, if any, and amendments to the Company's Certificate of Incorporation must
be approved by a majority of the combined voting power of all shares of Common
Stock and Special Common Stock, voting together as a single class. However,
amendments to the Company's Certificate of Incorporation (i) that adversely
affect the rights of the Common Stock or Special Common Stock also must be
approved by a majority of the shares of such class voting as a separate class,
(ii) that modify the classified board provisions contained in the Certificate of
Incorporation must be approved by an 80% supermajority of the combined voting
power of all shares of outstanding capital stock (including Common Stock and any
outstanding Special Common Stock and voting Preferred Stock) and (iii) that
modify the "fair price" provisions contained in the Company's Certificate of
Incorporation must likewise be approved by an 80% supermajority of the combined
voting power of all shares of outstanding voting stock excluding voting stock
held by a Related Person (see "Additional Provisions of the Company's
Certificate of Incorporation") and its Affiliates and Associates (as defined in
the Certificate of Incorporation).
Preemptive Rights; Redemption; Nonassessable. The holders of Common Stock
and Special Common Stock have no preemptive or other subscription or conversion
rights and there are no redemption provisions with respect to such shares. All
the outstanding shares of Common Stock are fully paid and nonassessable and the
shares of Special Common Stock if issued will be fully paid and nonassessable.
Dividends. Subject to the prior dividend rights of holders of outstanding
Preferred Stock, if any, the holders of Common Stock and Special Common Stock
are entitled to receive such dividends and distributions, if any, as may be
declared from time to time by the Board of Directors in its discretion from
funds legally available therefor, and shall share equally in all such dividends
and distributions on a per share basis. In the case of dividends or other
distributions payable in capital stock other than Preferred Stock (including
stock splits), only shares of Common Stock shall be distributed with respect to
Common Stock and only shares of Special Common Stock shall be paid or
distributed with respect to Special Common Stock, in each case in an amount per
share equal to the amount per share distributed with respect to the Common Stock
or the Special Common Stock, as the case may be. In the case of any combination
or reclassification of Common Stock or Special Common Stock, the shares of each
such class shall be combined or reclassified in such manner so as to retain the
proportionate interest of each such class after giving effect to such
combination or reclassification.
Distributions on Liquidation. The holders of Common Stock and Special
Common Stock are entitled to share pro rata in any distribution upon the
liquidation, dissolution or winding up of the Company, after giving effect to
any liquidation preference of any Preferred Stock.
Reorganization, Consolidation or Merger. In the event of a reorganization,
consolidation or merger of the Company, each holder of a share of Common Stock
shall be entitled to receive the same kind and amount of property receivable by
a holder of a share of Special Common Stock and each holder of a share of
Special Common Stock shall be entitled to receive the same kind and amount of
property receivable by a holder of Common Stock.
PREFERRED STOCK
The Company is authorized to issue Preferred Stock in one or more series
with such designations, rights, preferences and limitations as the Board of
Directors may determine, including the consideration to be received therefor,
the number of shares comprising each series, dividend rates, redemption
provisions, liquidation preferences, mandatory retirement provisions, conversion
rights and voting rights, all without any
14
<PAGE> 17
stockholder approval. The future issuance of Preferred Stock with voting rights
could make an acquisition of control of the Company more difficult and could
adversely affect the rights of holders of Common Stock. Preferred stockholders
typically would be entitled to satisfaction in full of specified dividend and
liquidation rights before any payment of dividends or distribution of assets on
liquidation is made to holders of the Common Stock. If voting rights are granted
to the holders of Preferred Stock, the voting power of the Common Stock will be
diluted and under some circumstances control of the Company would shift from the
holders of the Common Stock to the holders of Preferred Stock. Certain
fundamental matters requiring stockholder approval (such as mergers, sale of
assets, and certain amendments to the Certificate of Incorporation) may require
approval by the separate vote of the holders of the Common Stock and the
Preferred Stock.
SHAREHOLDER RIGHTS PLAN
On January 11, 1989, the Board of Directors declared a dividend of one
Preferred Stock share purchase right (a "Right") for each share of Common Stock
outstanding on March 7, 1989. Each Right entitles the registered holder, subject
to the occurrence of certain events, to purchase from the Company one
one-hundredth of a share (a "Unit") of Series A Participating Cumulative
Preferred Stock of the Company (the "Rights Preferred Stock"), at a purchase
price of $30.00 per Unit subject to adjustment. The terms of the Rights are set
forth in a rights agreement (the "Shareholder Rights Plan") between the Company
and ChaseMellon Shareholder Services, L.L.C. (assignee of the Bank of America
National Trust and Savings Association, successor-by-merger to Security Pacific
National Bank), as Rights Agent.
Until the Rights Distribution Date (as defined below) or the earlier
redemption, expiration or termination of the Rights, (i) the Rights are
evidenced by the Common Stock certificates and are transferred with, and only
with such certificates which contain a notation incorporating the Shareholder
Rights Plan by reference and (ii) the surrender for transfer of any certificates
for Common Stock constitutes a transfer of the Rights associated with the Common
Stock represented by such certificate. The Rights will separate from the Common
Stock and will be distributed on the date (the "Rights Distribution Date") which
occurs upon the earlier of (a) ten days following the date (the "Stock
Acquisition Date") of a public announcement that a person has become an
Acquiring Person (as defined below) or (b) ten business days following the
commencement of a tender offer or exchange offer that would result in a person
becoming an Acquiring Person. Under the Shareholder Rights Plan, an "Acquiring
Person" means any person who or which, together with all Affiliates and
Associates (as defined in the Shareholder Rights Plan) of such person,
beneficially owns 20% or more of the aggregate voting power of the outstanding
Common Stock, but does not include (x) the Company or any of its subsidiaries or
any of their respective employee benefit plans or (y) a specifically designated
individual formerly affiliated with the Company or certain of his Affiliates or
Associates.
The Rights are not exercisable until the Rights Distribution Date and will
expire at the close of business on March 7, 1999, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Rights Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Rights Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights. Except (i) in connection
with the exercise of employee stock options or under any employee benefit plan
or arrangement, (ii) in connection with the exercise, conversion or exchange of
securities issued by the Company after the date of the Shareholder Rights Plan
and (iii) as otherwise determined by the Board of Directors, only Common Stock
issued prior to the Rights Distribution Date will be issued with Rights.
Notwithstanding the foregoing, no such Rights shall be issued (i) if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the person to whom such Rights would be issued, (ii) if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof and (iii) after the earlier of the redemption and expiration of the
Rights.
If at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction or (ii) 50% or
more of the Company's assets or earning power is sold, each
15
<PAGE> 18
holder of a Right shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two times the
current purchase price of the Right.
If (i) any person becomes an Acquiring Person or (ii) the Company is the
surviving corporation in a merger with an Acquiring Person and the Common Stock
is not changed or exchanged, proper provision will be made so that each holder
of a Right originally issued to a holder of Common Stock, other than Rights that
are, or (under certain circumstances specified in the Shareholder Rights Plan)
were, beneficially owned by an Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise that number of shares of
Common Stock (the "Exercise Number") having a market value equal to two times
the exercise price of the Right. The events described in this and the
immediately preceding paragraph are referred to as the "Triggering Events."
The purchase price payable for a Unit and the number of Units issuable upon
exercise of the Rights is subject to adjustment from time to time in certain
cases. In addition, the number of Rights associated with each share of Common
Stock is subject to adjustment from time to time in the event of a stock
dividend on, or a subdivision or combination of, Common Stock.
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least one percent of the
purchase price. No fractional shares of Common Stock will be issued and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Stock on the last trading date prior to the date on which such fractional
shares would have been otherwise issuable. The Board of Directors may redeem the
Rights in whole, but not in part, at the redemption price of $.01 per Right at
any time prior to the expiration of a ten day period following the Stock
Acquisition Date. The foregoing redemption period can be extended by a majority
of Continuing Directors (as defined in the Shareholder Rights Plan) at any time
prior to the date on which the Rights would otherwise become nonredeemable.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate, no further Rights will be issued and the only
right of the holders of Rights will be to receive the redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Prior to the Rights Distribution Date, the Company may, subject to certain
exceptions, amend any provision of the Shareholder Rights Plan without the
approval of any holders of Common Stock.
ADDITIONAL PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION
The Company's Certificate of Incorporation contains "fair price" provisions
which are intended to protect the Company's stockholders from certain possible
pricing abuses in connection with, among other things, unsolicited attempts to
gain control of the Company. These provisions require the affirmative vote of
the holders of 80% of the outstanding shares of voting stock of the Company held
by persons other than a Related Person in order to permit certain mergers and
other major corporate transactions involving the Company and a Related Person,
unless the merger or other transaction is approved by at least two-thirds of the
Continuing Directors (as defined in the Certificate of Incorporation) or certain
"fair price" criteria are met. A "Related Person" is defined as any individual,
corporation, partnership or entity that, together with its Affiliates and
Associates (as defined in the Certificate of Incorporation), beneficially owns
in the aggregate 20% or more of the Company's outstanding voting stock, except
for (i) any person or entity whose acquisition of such voting stock was approved
in advance by at least two-thirds of the Continuing Directors, (ii) any
fiduciary in respect of any employee benefit plan of the Company or its
subsidiaries or (iii) a specifically designated corporation formerly affiliated
with the Company or any of its Affiliates or Associates. The "fair price"
provisions are deemed to have been satisfied if, in general, the cash or other
consideration received per share by holders of each class or series of the
Company's outstanding voting stock in the merger or other transaction is not
less than the highest price paid at any time by the Related Person in acquiring
stock of such class or series, as determined by two-thirds of the Continuing
Directors. The term "Continuing Director" means a director of the Company
16
<PAGE> 19
who was a member of the Board of Directors prior to the time that a Related
Person involved in a merger or other major corporate transaction became a
Related Person.
The Company has also adopted certain defensive measures that include
classifying the Board of Directors into three classes of directors, requiring a
supermajority vote of the Company's stockholders to effect certain amendments to
its Certificate of Incorporation and bylaws, restricting stockholders' ability
to call special meetings of stockholders, implementing the Shareholder Rights
Plan and amending the Certificate of Incorporation to provide that Section 203
of the Delaware General Corporation Law shall apply to the Company. In addition,
the Certificate of Incorporation prohibits stockholder action by written
consent.
The foregoing defensive measures, together with the provisions of the
Shareholder Rights Plan and the Certificate of Incorporation, in certain
circumstances could require a potential acquiror of the Company to pay a higher
price than might otherwise be the case or to obtain the approval of a larger
percentage of the stockholders than might otherwise be the case, and may have
the effect of discouraging a proxy contest or making more difficult a merger
involving the Company, or a tender offer, open-market purchase program or other
purchase of the Company's shares, in circumstances that would give stockholders
the opportunity to realize a premium over the then-prevailing market prices for
their shares.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
As a Delaware corporation, the Company is subject to the provisions of
Section 203 of the General Corporation Law of the State of Delaware. Section 203
generally provides that if a person or group acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder")
without prior board approval, such interested stockholder may not, for a period
of three years, engage in a wide range of business combination transactions with
the corporation. However, this restriction does not apply to a person who
becomes an interested stockholder in a transaction resulting in the interested
stockholder owning at least 85% of the corporation's voting stock (excluding
from the outstanding shares, shares held by officers, directors or pursuant to
employee stock plans without confidential tender offer decisions), or to a
business combination approved by the board of directors and authorized by the
affirmative vote of a least 66 2/3% of the outstanding voting stock not owned by
the interested stockholder. In addition, Section 203 does not apply to certain
business combinations proposed subsequent to the public announcement of
specified business combination transactions which are not opposed by the board
of directors.
TRANSFER AGENT
The transfer agent and registrar for the Company's Common Stock is
ChaseMellon Shareholder Services, L.L.C.
DESCRIPTION OF WARRANTS
The Company may issue warrants to purchase Debt Securities (the "Debt
Warrants"), Preferred Stock (the "Preferred Stock Warrants"), Common Stock (the
"Common Stock Warrants") or other securities issued by the Company or another
issuer (the "Other Warrants", collectively with the Common Stock Warrants, the
Debt Warrants and the Preferred Stock Warrants, the "Warrants"). Warrants may be
issued independently or together with any Securities and may be attached to or
separate from such Securities. The Warrants are to be issued under warrant
agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as warrant agent (the "Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to the Warrants being
offered pursuant thereto.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt
17
<PAGE> 20
Warrants and the debt warrant certificates representing such Debt Warrants,
including the following: (i) the title of such Debt Warrants; (ii) the aggregate
number of such Debt Warrants; (iii) the price or prices at which such Debt
Warrants will be issued; (iv) the designation, aggregate principal amount and
terms of the Debt Securities purchasable upon exercise of such Debt Warrants,
and the procedures and conditions relating to the exercise of such Debt
Warrants; (v) the date, if any, on and after which such Debt Warrants and the
related Debt Securities will be separately transferable; (vi) the principal
amount of Debt Securities purchasable upon exercise of each Debt Warrant, and
the price at which such principal amount of Debt Securities may be purchased
upon such exercise; (vii) the date on which the right to exercise such Debt
Warrants shall commence, and the date on which such right shall expire; (viii)
the maximum or minimum number of such Debt Warrants which may be exercised at
any time; (ix) a discussion of material federal income tax considerations, if
any; and (x) any other terms of such Debt Warrants and terms, procedures and
limitations relating to the exercise of such Debt Warrants.
Debt Warrant certificates will be exchangeable for new Debt Warrant
certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the Prospectus Supplement. Prior to the exercise of their Debt Warrants, holders
of Debt Warrants will not have any of the rights of holders of the securities
purchasable upon such exercise and will not be entitled to payments of principal
of (or premium, if any) or interest, if any, on the securities purchasable upon
such exercise.
PREFERRED STOCK WARRANTS, COMMON STOCK WARRANTS, AND OTHER WARRANTS
The applicable Prospectus Supplement will describe the following terms of
Preferred Stock Warrants, Common Stock Warrants, and Other Warrants in respect
of which this Prospectus is being delivered: (i) the title of such Warrants;
(ii) the securities for which such Warrants are exercisable; (iii) the price or
prices at which such Warrants will be issued; (iv) if applicable, the number of
such Warrants issued with each share of Preferred Stock, Common Stock or other
securities of the Company or another issuer; (v) any provisions for adjustment
of the number or amount of shares of Preferred Stock, Common Stock or other
securities of the Company or another issuer receivable upon exercise of such
Warrants or the exercise price of such Warrants; (vi) if applicable, the date on
and after which such Warrants and the related Preferred Stock, Common Stock or
other securities of the Company or another issuer will be separately
transferable; (vii) if applicable, a discussion of material federal income tax
considerations; (viii) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants; (ix) the date on which the right to exercise such Warrants shall
commence, and the date on which such right shall expire; and (x) the maximum or
minimum number of such Warrants which may be exercised at any time.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder of Warrants to purchase for cash such
principal amount of Debt Securities, shares of Preferred Stock or Common Stock,
or amounts of other securities at such exercise price as shall in each case be
set forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Warrants offered thereby. Warrants may be exercised at any time
up to the close of business on the expiration date set forth in the Prospectus
Supplement relating to the Warrants offered thereby. After the close of business
on the expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Warrants offered thereby. Upon receipt of payment and the
warrant certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Debt
Securities, shares of Preferred Stock or Common Stock or other securities
purchasable upon such exercise. If less than all of the Warrants represented by
such warrant certificate are exercised, a new warrant certificate will be issued
for the remaining Warrants.
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<PAGE> 21
PLAN OF DISTRIBUTION
The Securities may be sold (i) through agents, (ii) through underwriters,
(iii) through dealers or (iv) directly to purchasers (through a specific bidding
or auction process or otherwise). The distribution of Securities may be effected
from time to time in one or more transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices.
Offers to purchase the Securities may be solicited by agents designated by
the Company from time to time. Any such agent involved in the offer or sale of
the Securities will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Any such agent may be deemed to
be an underwriter, as that term is defined in the Securities Act, of the
Securities so offered and sold.
If an underwriter or underwriters are utilized in the sale of Securities,
the Company will execute an underwriting agreement with such underwriter or
underwriters at the time an agreement for such sale is reached, and the names of
the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transactions, including compensation of the
underwriters and dealers, if any, will be set forth in the Prospectus
Supplement, which will be used by the underwriters to make resales of the
Securities.
If a dealer is utilized in the sale of the Securities, the Company will
sell such Securities to the dealer, as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such dealer
at the time of resale. The name of the dealer and the terms of the transactions
will be set forth in the Prospectus Supplement relating thereto.
Offers to purchase the Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional investors
or others. The terms of any such sales, including the terms of any bidding or
auction process, if utilized, will be described in the Prospectus Supplement
relating thereto.
Agents, underwriters and dealers may be entitled under agreements which may
be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and any
such agents, underwriters or dealers, or their affiliates may be customers of,
engage in transactions with or perform services for the Company in the ordinary
course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Debt Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Such Contracts will be subject to only those conditions set forth in
the Prospectus Supplement. A commission indicated in the Prospectus Supplement
will be paid to underwriters and agents soliciting purchases of Debt Securities
pursuant to Contracts accepted by the Company.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-K) for the year ended November 30, 1996 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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<PAGE> 22
Any financial statements and schedules hereafter incorporated by reference
in the registration statement of which this prospectus is a part that have been
audited and are the subject of a report by independent auditors will be
incorporated herein by reference in reliance upon such reports given on their
authority as experts in accounting and auditing to the extent covered by
consents filed with the Commission.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for the
Company by Munger, Tolles & Olson LLP, Los Angeles, California.
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<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee .....................$147,500.00
Legal fees and expenses .............. 20,000.00
Accounting fees and expenses ......... 11,000.00
Blue sky fees and expenses ........... 10,000.00
Printing and engraving expenses ...... 20,000.00
Miscellaneous ........................ 2,500.00
-----------
Total ................................$211,000.00
===========
</TABLE>
All amounts are estimated except for the registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended, 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 he 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 attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he 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 no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or such other court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnification for such expenses which the Court of
Chancery or such other court shall deem proper.
Article 6(d) of the Company's Certificate of Incorporation provides that
each person who was or is made a party to (or is threatened to be made a party
to) or is otherwise involved in any action, suit or proceeding by reason of the
fact that such person is or was a director, officer, employee or agent of the
Company shall be indemnified and held harmless by the Company to the full extent
permitted by the General Corporation Law of Delaware against all expenses,
liability and loss (including without limitation attorney's fees, judgments,
fines and amounts paid in settlement) reasonably incurred by such person in
connection therewith. The rights conferred by Article 6(d) are contractual
rights and include the right to be paid by the Company the expenses incurred in
defending such action, suit or proceeding in advance of the final disposition
thereof.
Article 6(c) of the Company's Certificate of Incorporation provides that
the Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of
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<PAGE> 24
their fiduciary duty as directors except (i) for any breach of the duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of Delaware, which
makes directors liable for unlawful dividends or unlawful stock repurchases or
redemptions or (iv) for transactions from which directors derive an improper
personal benefit.
The Company has purchased directors' and officers' liability insurance
policies which insure against certain liabilities incurred by directors and
officers of the Company.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement relating to Debt Securities.
1.2 Form of Underwriting Agreement relating to Common Stock, Preferred
Stock and/or Warrants.
4.1 Form of Senior Debt Indenture filed as an exhibit to the Company's
Registration Statement No. 333-14977 on Form S-3, is incorporated
herein by reference.
4.2 Form of Senior Subordinated Debt Indenture filed as an exhibit to the
Company's Registration Statement No. 333-14977 on Form S-3, is
incorporated herein by reference.
4.3 Form of Subordinated Debt Indenture filed as an exhibit to the
Company's Registration Statement No. 333-14977 on Form S-3, is
incorporated herein by reference.
4.4 Form of certificate for Common Stock filed as an exhibit to the
Company's Registration Statement No. 333-14977 on Form S-3, is
incorporated herein by reference.
4.5* Form of Certificate of Designation of Preferred Stock.
4.6* Form of certificate for Preferred Stock.
4.7 Rights Agreement between the Company and ChaseMellon Shareholder
Services, L.L.C. (assignee of Bank of America National Trust and
Savings Association, successor-by-merger to Security Pacific National
Bank), as Rights Agent, dated February 21, 1989, filed as an exhibit
to the Company's 1989 Annual Report on Form 10-K, is incorporated by
reference herein.
4.8* Form of Warrant Agreement.
5.1 Opinion of Munger, Tolles & Olson LLP as to the legality of
Securities to be issued.
12 Statement re: Computation of Consolidated Ratio of Earnings to Fixed
Charges of the Company and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Munger, Tolles & Olson LLP (included in Exhibit 5.1).
24 Powers of Attorney (included on page II-5).
</TABLE>
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<PAGE> 25
<TABLE>
<S> <C>
25* Statement of Eligibility and Qualification of the Trustee under the
Trust Indenture Act (to be filed in accordance with Section 305(b)(2)
of the Trust Indenture Act of 1939).
</TABLE>
- ----------------
* To be incorporated by reference in the event of an offering of the specified
Securities.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, 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 this 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 end 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 this registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this 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 herein, 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.
The undersigned registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions set forth or described in Item 15 of this
Registration Statement, or otherwise, the registrant has been advised that in
the opinion of the
II-3
<PAGE> 26
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 registrants of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person,
in connection with the securities registered hereby, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate 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.
The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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 to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-4
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Los Angeles, California, on the 4th day of December, 1997.
KAUFMAN AND BROAD HOME CORPORATION
By: /s/ MICHAEL F. HENN
------------------------------
Michael F. Henn
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael F. Henn, Barton P. Pachino and
Kimberly N. King, and each of them, his or her true and lawful attorney-in-fact
and agent, with full power of substitution, for him or her and in his or her
name, and in any and all capacities, to sign all amendments (including
post-effective amendments) to the Registration Statement to which this power of
attorney is attached and all subsequently filed registration statements,
including any amendments thereto, for the same offering that are to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file all such amendments, registration statements and all exhibits to them and
other documents to be filed in connection with them, with the Securities and
Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ BRUCE KARATZ Chairman and Chief December 4, 1997
- -------------------------------- Executive Officer
Bruce Karatz
/s/ MICHAEL F. HENN Senior Vice President and Chief December 4, 1997
- -------------------------------- Financial Officer
Michael F. Henn
/s/ RONALD W. BURKLE Director December 4, 1997
- --------------------------------
Ronald W. Burkle
/s/ JANE EVANS Director December 4, 1997
- -------------------------------
Jane Evans
/s/ RAY R. IRANI Director December 4, 1997
- -------------------------------
Dr. Ray R. Irani
/s/ ANTOINE JEANCOURT-GALIGNANI Director December 4, 1997
- -------------------------------
Antoine Jeancourt-Galignani
Director December 4, 1997
/s/ JAMES A. JOHNSON
- -------------------------------
James A. Johnson
</TABLE>
II-5
<PAGE> 28
<TABLE>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ GUY NAFILYAN Director December 4, 1997
- ------------------------
Guy Nafilyan
/s/ LUIS G. NOGALES Director December 4, 1997
- ------------------------
Luis G. Nogales
/s/ Director December 4, 1997
- ------------------------
Charles R. Rinehart
/s/ SANFORD C. SIGOLOFF Director December 4, 1997
- ------------------------
Sanford C. Sigoloff
</TABLE>
<PAGE> 1
EXHIBIT 1.1
KAUFMAN AND BROAD HOME CORPORATION
(a Delaware corporation)
Debt Securities
UNDERWRITING AGREEMENT
_______, 199_
Ladies and Gentlemen:
Kaufman and Broad Home Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell from time to time certain of its debt
securities ("Debt Securities"), consisting of debentures, notes or other
evidences of indebtedness representing unsecured obligations of the Company,
which may be either senior Debt Securities, senior subordinated Debt Securities
or subordinated Debt Securities. The Debt Securities will be issued, in the case
of Debt Securities that will be senior debt, under a senior indenture (the
"Senior Debt Indenture"), in the case of Debt Securities that will be senior
subordinated debt, under a senior subordinated indenture (the "Senior
Subordinated Debt Indenture"), and, in the case of Debt Securities that will be
subordinated debt, under a subordinated indenture (the "Subordinated Debt
Indenture"), each such indenture to be executed by the Company and one or more
trustees (each a "Trustee"). The Senior Debt Indenture, the Senior Subordinated
Debt Indenture and the Subordinated Debt Indenture are sometimes hereinafter
referred to individually as an "Indenture" and collectively as the "Indentures."
The Debt Securities are registered under the registration statement referred to
below. The Securities will be issued in one or more series, which series may
vary as to interest rates, maturities, redemption provisions, selling prices and
other terms, with all such terms for any particular series of the Debt
Securities being determined at the time of sale.
Particular series of the Debt Securities will be sold pursuant to a
Terms Agreement referred to in Section 2 in the form of Annex A attached hereto,
for resale in accordance with the terms of offering determined at the time of
sale. The Debt Securities involved in any such offering are hereinafter referred
to as the "Securities". The firm or firms which agree to purchase the Securities
are hereinafter referred to as the "Underwriters" of such Securities, and the
representative or representatives of the Underwriters, if any, specified in the
Terms Agreement
1
<PAGE> 2
referred to in Section 2 are hereinafter referred to as the "Representative(s)";
provided, however, that if the Terms Agreement does not specify any
representative of the Underwriters, the term "Representative(s)", as used in
this Agreement shall mean the Underwriters.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as
follows:
(i) A registration statement (No. 333-_____), including a
prospectus, relating to the Debt Securities has been filed with the
Securities and Exchange Commission (the "Commission") and has become
effective. Such registration statement, as amended at the time of any
Terms Agreement referred to in Section 2, is hereinafter referred to
as the "Registration Statement", and the prospectus included in such
Registration Statement, as supplemented as contemplated by Section 2
to reflect the terms of the Securities and the terms of offering
thereof, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") of the rules and
regulations of the Commission under the Securities Act of 1933, as
amended (the "1933 Act") (the "1933 Act Regulations"), including all
material incorporated by reference therein, is hereinafter referred to
as the "Prospectus". At the time the Registration Statement became
effective, the Registration Statement complied in all material
respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the Trust Indenture Act of 1939, as amended (the "1939
Act") and the rules and regulations of the Commission under the 1939
Act (the "1939 Act Regulations"), and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and on the date of each Terms Agreement referred to in
Section 2, the Registration Statement and the Prospectus will comply
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations, and neither of such documents will include an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading; provided, however, that
the representations and warranties in this subsection (i) shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representative(s) expressly for use in the Registration Statement or
the Prospectus or the information contained in any Statement of
Eligibility of the Trustee under the 1939 Act filed as an exhibit to
the Registration Statement or in accordance with Section 305(b)(2) of
the 1939 Act (the "Form T-1").
(ii) Ernst & Young LLP, whose report is incorporated by
reference into the Registration Statement, are independent public
accountants with respect to the Company and with respect to the
Company's subsidiaries, in each case as required by the 1933 Act and
the 1933 Act Regulations.
2
<PAGE> 3
(iii) The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of operations
of the Company and its consolidated subsidiaries for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis; the supporting schedules included or
incorporated by reference in the Registration Statement present fairly
the information required to be stated therein; and the Company's
ratios of earnings to fixed charges and earnings to combined fixed
charges and preferred stock dividends (including the amounts the
ratios would have been were interest on the outstanding collateralized
mortgage obligations of the Company's wholly owned limited purpose
financing subsidiaries included in such ratios' calculation) included
in the Prospectus under the caption "Consolidated Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends" in Exhibit 12 to the Registration Statement
have been calculated in compliance with Item 503(d) of Regulation S-K
of the Commission.
(iv) Since the date of the latest audited financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries (which term, as used in
this Agreement, includes without limitation consolidated joint
ventures and partnerships (collectively, the "Joint Ventures") in
which the Company is a participant) considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) except for regular quarterly
dividends in customary amounts per share on the Common Stock of the
Company, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(vi) Each Significant Subsidiary (as defined below) has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
3
<PAGE> 4
organization, has power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise; all of the issued
and outstanding capital stock of each Significant Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable
and is owned (except for directors qualifying shares and a nominal
number of shares held by affiliated parties) by the Company, directly
or through one of its other subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and all of the outstanding equity interests in each
Significant Subsidiary which is a Joint Venture have been duly
authorized (if applicable) and validly issued, are fully paid and
non-assessable and are owned by the Company (except to the extent that
a minority interest in the Joint Ventures is reflected in the
Company's consolidated financial statements included or incorporated
by reference in the Prospectus), directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. For purposes of this Agreement,
"Significant Subsidiaries" means the subsidiaries and Joint Ventures
identified on Annex B hereto which subsidiaries and Joint Ventures (A)
on the basis of the Company's most recent audited financial statements
included or incorporated by reference in the Registration Statement,
represent 90% or more of the total assets of the Company and its
Subsidiaries and (B) include all "significant subsidiaries" of the
Company, as such term is defined in Rule 405 of the 1933 Act
Regulations.
(vii) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus (except for
subsequent issuances, if any, pursuant to reservations, agreements,
employee benefit plans or the exercise of convertible securities
referred to or incorporated by reference in the Prospectus); the
shares of issued and outstanding Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable;
and the Common Stock conforms to the statements relating thereto
referred to or incorporated by reference in the Prospectus; the
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued by the
Company, authenticated by the Trustee and delivered pursuant to the
provisions of the applicable Indenture and this Agreement against
payment of the consideration set forth herein, the Securities will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or
by general equitable principles, and will be entitled to the benefits
of the applicable Indenture; the applicable Indenture has been duly
authorized by the Company and, at the Closing Date (as hereinafter
defined), will have been duly executed and delivered by the Company
and will constitute a valid and binding agreement of the Company
enforceable in accordance with its terms, except as
4
<PAGE> 5
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles; the Securities and the applicable Indenture conform in all
material respects to the descriptions thereof contained in the
Prospectus; and, after giving effect to the sale of Securities and the
sale of any other securities registered pursuant to the Registration
Statement to be issued prior to the delivery of the Securities, the
aggregate amount of Securities which have been issued and sold by the
Company will not exceed the amount of theretofore unsold securities
registered pursuant to the Registration Statement.
(viii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of the Significant Subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any of the Significant Subsidiaries is subject, which
default or violation would have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries considered
as one enterprise; and the execution, delivery and performance of this
Agreement and the Terms Agreement, and the consummation of the
transactions contemplated herein and therein and compliance by the
Company with its obligations hereunder and thereunder, have been duly
authorized by all necessary corporate action and will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Significant
Subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of the Significant Subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any of the Significant Subsidiaries is subject, except for
a conflict, breach, default, lien, charge or encumbrance which would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, nor
will such action result in any violation of the provisions of the
charter, by-laws or other corresponding organizational documents of
the Company or any of the Significant Subsidiaries or any applicable
law, administrative regulation or administrative or court order or
decree.
(ix) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its subsidiaries, which is required to
be disclosed in the Registration Statement (other than as disclosed
therein), or which is not so disclosed and (net of reserves and
insurance) the Company believes might result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
5
<PAGE> 6
subsidiaries considered as one enterprise, or which might materially
and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement;
all pending legal or governmental proceedings to which the Company or
any subsidiary is a party or of which any of their respective property
or assets is the subject which are not described in or incorporated by
reference in the Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate and net of reserves and insurance, not material to the
Company and its subsidiaries considered as one enterprise; and there
are no contracts or documents of the Company or any of its
subsidiaries which are required to be filed as exhibits to, or
incorporated by reference in, the Registration Statement by the 1933
Act or by the 1933 Act Regulations which have not been so filed or
incorporated by reference.
(x) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance and sale of the Securities hereunder or the consummation by
the Company of any of the other transactions contemplated hereby,
except such as may be required and have been obtained under the 1933
Act and the 1933 Act Regulations for the Securities and the
qualification of the applicable Indenture under the 1939 Act and such
as may be required under state securities laws.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1934 Act and the
1934 Act Regulations, and, when read together with the other
information in the Prospectus, at the respective times the
Registration Statement became effective, at the date of the Terms
Agreement and at the Closing Date did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(xiii) There are no holders of securities of the Company
with currently exercisable registration rights who have any securities
registered as part of the Registration Statement or included in the
offering contemplated by this Agreement.
(xiv) The Company and each of the Significant Subsidiaries
have good and marketable title to all of their respective properties,
in each case free and clear of all liens, encumbrances and defects,
except (i) customary liens and encumbrances arising in the ordinary
course of the Company's construction and development business and the
financing thereof, (ii) as stated or incorporated by reference in the
Prospectus or (iii) such as do not materially affect the value of such
properties in the aggregate to the Company
6
<PAGE> 7
and its subsidiaries considered as one enterprise and do not
materially interfere with the use made and proposed to be made of such
properties.
(xv) The Company and its Significant Subsidiaries possess
such certificates, authorities and permits issued by the appropriate
state, federal and foreign regulatory agencies and bodies necessary to
conduct all material aspects of the business now operated by them, and
neither the Company nor any of its Significant Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries considered
as one enterprise.
(xvi) No default or event of default with respect to any
Indebtedness (as such term is defined in the Prospectus) of the Company
or any of its Significant Subsidiaries entitling, or which, with
notice or lapse of time or both, would entitle, the holders thereof to
accelerate the maturity thereof exists or will exist as a result of
the execution and delivery of this Agreement or the applicable
Indenture, the issuance and sale of the Securities or the consummation
of the transactions contemplated hereby or thereby.
(xvii) The Company and each of the Significant Subsidiaries
have filed all tax returns required to be filed, which returns, as
amended, are complete and correct in all material respects, and
neither the Company nor any Significant Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns
or any assessments with respect to said returns which would materially
and adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xviii) The Company and its Significant Subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(b) Any certificate signed by any officer of the Company and
delivered to the Representative(s) or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
SECTION 2. Purchase and Offering of Securities. The obligation of the
Company to issue and
7
<PAGE> 8
sell any Securities and the obligation of the Underwriters to purchase the
Securities will be set forth in a Terms Agreement (the "Terms Agreement") which
shall be in the form of an executed writing (which may be handwritten), and may
be evidenced by an exchange of telegraphic or any other rapid transmission
device designed to produce a written record of communications transmitted at
the time the Company determines to sell the Securities. The Terms Agreement
will incorporate by reference the provisions of this Agreement, except as
otherwise provided therein, and will specify the following: the firm or firms
which will be Underwriters; the names of any Representative(s); the aggregate
principal amount of the Securities; the principal amount of Securities to be
purchased by each Underwriter; the initial public offering price of the
Securities; the purchase price to be paid by the Underwriters and the terms of
the Securities not already specified in the applicable Indenture. The Terms
Agreement will also specify the place of delivery and payment for the
Securities and any details of the terms of the offering that should be
reflected in the prospectus supplement relating to the offering of the
Securities.
The time and date of delivery and payment of the Securities will be
the time and date specified in the Terms Agreement, or such other time
thereafter as the Representative(s) and the Company agree as the time for
payment and delivery of the Securities (such time and date, being herein and in
the Terms Agreement referred to as the "Closing Date"). The obligations of
the Underwriters to purchase the Securities will be several and not joint. It
is understood that the Underwriters propose to offer the Securities for sale as
set forth in the Prospectus. The Securities delivered to the Underwriters on
the Closing Date will be in such denominations and registered in such names as
the Underwriters may request.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter that, in connection with each offering of Securities:
(a) The Company will notify the Representative(s) promptly (i) of
the effectiveness of any post-effective amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing of
the Prospectus or any amendment to the Registration Statement or amendment or
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act during any period when the Prospectus is required to be delivered under the
1933 Act, (iii) of the receipt of any comments or inquiries from the Commission
relating to the Registration Statement or Prospectus, (iv) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose and (vi) of the issuance by any state securities commission or other
regulatory authority of any order suspending the qualification or the exemption
from qualification of the Debt Securities or the Securities under state
securities or Blue Sky laws or the initiation of any proceeding for that
purpose. The Company will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will give the Representative(s) notice of its
intention to file or
8
<PAGE> 9
prepare any amendment to the Registration Statement (including any
post-effective amendment thereto) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the Securities which differs from the
Prospectus on file at the Commission at the time the Registration Statement
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish the
Representative(s) with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file any such amendment or supplement or use any such prospectus to
which the Representative(s) or counsel for the Underwriters shall reasonably
object.
(c) The Company will deliver to the Representative(s) as many
conformed copies of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) as the Representative(s) may reasonably
request.
(d) The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary,
in the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Company
will forthwith amend or supplement the Prospectus (in form and substance
satisfactory to the Representative(s) and counsel for the Underwriters) so
that, as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, and the
Company will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Securities for offering and sale under applicable
securities laws of such states and other jurisdictions of the United States as
the Representative(s) may designate; provided, however, that the Company shall
not be obligated to qualify as a foreign corporation in any jurisdiction in
which it is not so qualified. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports as
may be required by the laws of such jurisdiction to continue such qualification
in effect for so long as may be required by applicable law. The Company will
promptly advise the Representative(s) of the receipt by the Company of any
notification with respect to the suspension of qualification of the Securities
for sale in any state or jurisdiction or the initiating or threatening of any
proceeding for such purpose.
(g) The Company will make generally available to its security
holders as soon as
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<PAGE> 10
practicable, but not later than 50 days after the close of the period covered
thereby (or 120 days in the case of the close of the Company's fiscal year), an
earnings statement (in form complying with the provisions of Rule 158 of the
1933 Act Regulations) covering a twelve month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
(h) The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under "Use of
Proceeds."
(i) Following the execution of the applicable Terms Agreement, the
Company will prepare, and file or transmit for filing copies of the Prospectus
with the Commission in accordance with Rule 424(b).
(j) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Sections 13, 14 or 15 of
the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) If and to the extent so provided in the applicable Terms
Agreement, the Company, for the period therein provided, will not, directly or
indirectly, sell, contract to sell or otherwise dispose of certain of its
securities as specified in such Terms Agreement.
SECTION 4. Payment of Expenses. The Company will pay the following
expenses incident to the performance of its obligations under this Agreement:
(i) the printing and filing of the Registration Statement as originally filed
and of each amendment thereto; (ii) the printing or reproduction of this
Agreement and the Indentures; (iii) the preparation, issuance and delivery of
the certificates for the Securities to the Underwriters; (iv) the fees and
disbursements of the Company's counsel and accountants; (v) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey; (vi) the printing and
delivery to the Underwriters of copies of the Registration Statement as
originally filed and of each amendment thereto, of the preliminary
prospectuses, and of the Prospectus and any amendments or supplements thereto;
(vii) the printing and delivery to the Representative(s) of copies of the Blue
Sky Survey; (viii) any fees payable in connection with the rating of the
Securities; (ix) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the applicable
Indenture and the Securities; and (x) any fees and expenses of a depositary in
connection with holding the Securities in book entry form. The Company will
not be responsible for any other expenses, including (without limitation) the
fees and disbursements of counsel for the Underwriters (except as provided in
Section 4(v) hereof).
If this Agreement is terminated by the Representative(s) in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall
reimburse the Underwriters for all of their
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<PAGE> 11
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Securities on the Closing Date
will be subject to the accuracy of the representations and warranties of the
Company herein contained, to the performance by the Company of its obligations
hereunder, and to the following further conditions:
(a) The Prospectus shall have been filed in accordance with the
1933 Act Regulations and Section 3(i) of this Agreement; and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission.
(b) At the Closing Date the Representative(s) shall have received:
(1) The favorable opinion, dated as of the Closing Date,
of Munger, Tolles & Olson LLP, special counsel for the Company, in
form and substance satisfactory to counsel for the Underwriters, to
the effect (to the extent applicable to the Securities) that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) The applicable Indenture has been duly
authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general
equitable principles.
(iii) The Securities are in the form established
pursuant to the applicable Indenture, have been duly
authorized for issuance and sale by the Company and, when
issued by the Company, authenticated by the Trustee in the
manner provided for in such Indenture and delivered pursuant
to the provisions of such Indenture and this Agreement against
the purchase price therefor specified herein, will constitute
valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as
the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights
generally or by general equitable principles, and will be
entitled to the benefits of the applicable Indenture.
(iv) The applicable Indenture has been qualified
under the 1939 Act.
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(v) The Securities and the applicable Indenture
conform in all material respects to the descriptions thereof
contained in the Prospectus.
(vi) The information in the Prospectus relating
to the description of the capital stock of the Company and
relating to Federal income tax considerations (if any), to the
extent that it constitutes summaries of legal matters or
documents, has been reviewed by such counsel and is correct in
all material respects.
(vii) The Registration Statement is effective under
the 1933 Act and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the
Commission.
(viii) The Registration Statement, at the time it
became effective, and the Registration Statement and the
Prospectus at the date of the applicable Terms Agreement
(other than the financial statements and supporting schedules
included or incorporated by reference therein, as to which no
opinion need be rendered) complied and complies as to form in
all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations.
(ix) The Terms Agreement (including the provisions
of this Agreement) has been duly authorized, executed and
delivered by the Company.
In giving the opinions in paragraphs (ii) and (iii), such counsel shall be
entitled to assume without any investigation that California law is the same as
New York law for all purposes relevant to the determination of the
enforceability of agreements governed by New York law.
(2) The favorable opinion, dated as of the Closing Date,
of the General Counsel or Associate Counsel of the Company, in form
and substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
(ii) To the best of such counsel's knowledge and
information, the Company is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required,
except where the failure to so qualify would not have a
material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as
one enterprise.
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<PAGE> 13
(iii) Each of the Company's Significant Domestic
Subsidiaries (as defined below) has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and, to the best of such counsel's knowledge and
information, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not
have a material adverse effect on the Company and its
subsidiaries considered as one enterprise or on their
consolidated financial condition or earnings; to the best of
such counsel's knowledge and information, all of the issued
and outstanding capital stock of each such Significant
Domestic Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned (except
for directors qualifying shares and a nominal number of shares
held by affiliated parties) by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. As used
in this Agreement, the term "Significant Domestic
Subsidiaries" means the Significant Subsidiaries set forth in
Annex B hereto.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus
(except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans or the
exercise of convertible securities referred to or incorporated
by reference in the Prospectus); and the shares of issued and
outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable.
(v) To the best of such counsel's knowledge and
information, there are no statutes or regulations required to
be described in the Registration Statement or the Prospectus
which are not described as required and there are no legal or
governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other
than those disclosed therein, and all pending legal or
governmental proceedings to which the Company or any
subsidiary is a party or to which any of their property is
subject which are not described in or incorporated by
reference in the Registration Statement, including ordinary
routine litigation incidental to the business, are, considered
in the aggregate and net of reserves and insurance, not
material to the Company and its subsidiaries considered as one
enterprise.
(vi) The information under "Item 1. Business --
Regulation and Environmental Matters" in the most recent
Annual Report on Form 10-K incorporated by reference in the
Registration Statement and in Item 15 in Part II of the
Registration Statement, to the extent that it constitutes
matters of law,
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<PAGE> 14
summaries of legal matters, summaries of securities,
instruments, agreements or other documents or legal
conclusions, has been reviewed by such counsel and is correct
in all material respects.
(vii) To the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required
to be described or referred to in the Registration Statement
or to be filed or incorporated by reference as exhibits
thereto other than those described or referred to or filed as
exhibits thereto, the descriptions thereof or references
thereto are correct, and, to the best of such counsel's
knowledge, no default exists in the due performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument so described,
referred to or filed or incorporated by reference, which
default could have a material adverse effect on the Company
and its subsidiaries considered as one enterprise or on their
consolidated financial condition or earnings.
(viii) No authorization, approval, consent or order
of any court or governmental authority or agency is required
in connection with the sale of the Securities to the
Underwriters, except such as may be required under the 1933
Act, the 1933 Act Regulations, the 1939 Act, the 1939 Act
Regulations or state securities laws.
(ix) The issuance and delivery of the Securities,
the execution and delivery of the Terms Agreement (including
the provisions of this Agreement) and the applicable Indenture
and the consummation of the transactions contemplated herein
and therein, will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or any of its Significant Subsidiaries pursuant
to, to the best of such counsel's knowledge and information,
any contract, indenture, mortgage, loan agreement, note, lease
or other instrument to which the Company or any of its
Significant Subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets
of the Company or any of its Significant Subsidiaries is
subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company, or any
applicable law, administrative regulation or administrative or
court decree.
(x) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the
financial statements and supporting schedules included or
incorporated by reference therein, as to which no opinion need
be rendered), at the time they were filed with the Commission,
complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations.
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<PAGE> 15
(xi) To the best of such counsel's knowledge and
information, no default with respect to any Indebtedness (as
such term is defined in the Prospectus) of the Company or any
of its subsidiaries entitling, or which, with notice or lapse
of time or both, would entitle, the holders thereof to
accelerate the maturity thereof exists or will exist as a
result of the execution and delivery of this Agreement or the
applicable Indenture, the issuance and sale of the Securities
or the consummation of the transactions contemplated hereby or
thereby.
In giving such opinion, as to matters governed by laws other than the law of
the State of California, the General Corporation Law of the State of Delaware
and the federal law of the United States of America, such counsel may, at such
counsel's option, either (A) assume without any investigation that the law of
the State of California (or, if appropriate, the General Corporation Law of the
State of Delaware or the federal law of the United States) is the same as the
law governing such other matters for all purposes relevant to such opinion, or
(B) rely on an opinion or opinions of local counsel satisfactory to the
Representative(s) so long as each such opinion shall be dated as of the Closing
Date and in form and substance reasonably satisfactory to the
Representative(s), and shall expressly permit the Underwriters to rely thereon
as if such opinion were addressed to the Underwriters.
(3) The favorable opinion, dated as of the Closing Date,
of counsel for the Underwriters, with respect to the matters set forth
in (ii) through (v) and (vii) through (ix) (but not with respect to
any documents incorporated by reference) of subsection (b)(1) of this
Section.
(4) In giving their opinions required by subsections
(b)(1), (b)(2) and (b)(3), respectively, of this Section, Munger,
Tolles & Olson LLP, the General Counsel or Associate Counsel of the
Company (as the case may be) and counsel for the Underwriters shall
each additionally state that nothing has come to their attention that
has led them to believe that the Registration Statement (except for
financial statements and schedules and other financial data included
therein and the Form T-1, as to which counsel need make no statement),
at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Registration Statement or the Prospectus
(except for financial statements and other financial data included
therein and the Form T-1, as to which counsel need make no statement),
at the date of the Terms Agreement, or any such amendment or
supplement, as of its date, included an untrue statement of a material
fact or omitted to state a material fact necessary in order to make
the statements therein (in the case of the Prospectus, in the light of
the circumstances under which they were made) not misleading.
(c) At the Closing Date, there shall not have been, since the date
of the Terms Agreement, any material adverse change in the condition, financial
or otherwise, or in the
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<PAGE> 16
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Representative(s) shall have received a
certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of such
Closing Date, to the effect that (i) there has been no such material adverse
change; (ii) the representations and warranties in Section 1 are true and
correct with the same force and effect as though expressly made at and as of
the Closing Date; (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to the Closing Date; (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the best of such officer's
knowledge and information, no proceedings for that purpose have been initiated
or threatened by the Commission; and (v) the rating assigned by any nationally
recognized statistical rating organization to any debt securities of the
Company has not been lowered and no such rating agency has publicly announced
that it has placed any debt securities of the Company on what is commonly
termed a "watch list" for a possible downgrading.
(d) At the Closing Time, the Representative(s) shall have received
from Ernst & Young LLP a letter dated such date, in form and substance
satisfactory to the Representative(s), containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and financial information included and
incorporated by reference in the Registration Statement and the Prospectus.
(e) At the Closing Date, counsel for the Underwriters shall have
been furnished with such documents and opinions as they may require for the
purpose of enabling them to pass upon the issuance and sale of the Securities
as herein contemplated and related proceedings, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Representative(s) and counsel for the Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Representative(s) by notice to the Company at any time at or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 4 hereof.
Notwithstanding any such termination, the provisions of Sections 4, 6, 7 and 8
shall remain in effect.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
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<PAGE> 17
contained in the Registration Statement (or any amendment thereto), or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
including subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the Representative(s)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that (A) the foregoing indemnity agreement shall not apply
to any loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission (1)
made in reliance upon and in conformity with written information furnished to
the Company by any Underwriter through the Representative(s) expressly for use
in the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or Supplement thereto) or (2) in
the Form T-1; and (B) the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of the Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Securities, or any person controlling such Underwriter, if a copy of
the Prospectus (as may then be amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if such is required by law, at
or prior to the written confirmation of the sale of such Securities to such
person and if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage, liability or expense.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged
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<PAGE> 18
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representative(s) expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give written notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more Underwriters, as incurred, in such
proportions that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discount appearing on the cover page of
the Prospectus bears to the initial public offering price appearing thereon and
the Company is responsible for the balance; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section ll(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of Officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
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(a) The Representative(s) may terminate this Agreement and the
applicable Terms Agreement, by notice to the Company, at any time at or prior
to the Closing Date (i) if there has been, since the date of this Agreement and
the applicable Terms Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business; (ii) if
there has occurred any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which is such as to make it, in the judgment
of the Representative(s), impracticable to market the Securities or to enforce
contracts for the sale of the Securities; (iii) if trading in the securities of
the Company has been suspended by the Commission or a national securities
exchange, or if trading generally on the New York Stock Exchange has been
suspended, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by said Exchange or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either federal, New York or California
authorities; or (iv) if the rating assigned by any nationally recognized
statistical rating organization to any debt securities of the Company shall
have been lowered or if any such rating agency shall have publicly announced
that it has placed any debt securities of the Company on what is commonly
termed a "watch list" for a possible downgrading.
(b) If this Agreement and the applicable Terms Agreement are
terminated pursuant to this Section, such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof. Notwithstanding any such termination, the provisions of Sections 4, 6,
7 and 8 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If any one or
more Underwriters shall fail to purchase and pay for any of the Securities
agreed to be purchased by such Underwriter or Underwriters under this Agreement
and the applicable Terms Agreement and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the Representative(s) may make arrangements satisfactory to the
Company for the purchase of such Securities by other persons (including any of
the Underwriters) but if no arrangements are made by the Closing Date the
remaining Underwriters shall be obligated severally to take up and pay for (in
the respective proportions which the amount of Securities set forth opposite
their names in the Terms Agreement bear to the aggregate amount of Securities
set opposite the names of all the remaining Underwriters) the Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event the aggregate amount of Securities which
the defaulting Underwriter or Underwriters agreed but failed to purchase shall
exceed 10 percent of the aggregate amount of Securities set forth in such Terms
Agreement, the Representative(s) may make arrangements satisfactory to the
Company for the purchase of such Securities by other persons (including any of
the Underwriters) but if no arrangements are made by the Closing Date the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities, and if such
non-defaulting Underwriters do not purchase all the Securities, this Agreement
will terminate
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without liability to any non-defaulting Underwriter or the Company. In the
event of a default by any Underwriter as set forth in this Section 10, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representative(s) shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
non-defaulting Underwriter for damages occasioned by its default hereunder.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative(s) at ________________,
attention of ___________________; notices to the Company shall be directed to
it at 10990 Wilshire Boulevard, Los Angeles, California 90024, attention of
Michael F. Henn, Senior Vice President and Chief Financial Officer.
SECTION 12. Parties. This Agreement and the applicable Terms Agreement
shall inure to the benefit of and be binding upon the Underwriters and the
Company and their respective successors. Nothing expressed or mentioned in
this Agreement or such Terms Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or the applicable Terms Agreement or any provision
herein or therein contained. This Agreement and such Terms Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Securities from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in said State. Unless otherwise set
forth herein, specified times of day refer to New York City time.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
KAUFMAN AND BROAD HOME CORPORATION
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
[NAMES OF UNDERWRITERS]
By: [Representative(s)]
By:
-------------------------------
Name:
Title:
For itself and as Representative(s) of the other
Underwriters.
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ANNEX A
KAUFMAN AND BROAD HOME CORPORATION
(a Delaware Corporation)
Debt Securities
TERMS AGREEMENT
_______, 199_
[Names and Addresses of
Representatives]
Dear Sirs:
Kaufman and Broad Home Corporation, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated ________, 199_ (the "Underwriting
Agreement"), between the Company on the one hand and ___________, on the other
hand, to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the securities specified in Schedule II hereto (the
"Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Terms
Agreement, except that, if this Terms Agreement and the Underwriting Agreement
are dated different dates, each representation and warranty with respect to the
Prospectus in Section 1 of the Underwriting Agreement shall be deemed to be a
representation and warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined) and also a representation and
warranty as of the date of this Terms Agreement in relation to the Prospectus
as amended or supplemented relating to the Securities which are the subject of
the Terms Agreement. Each reference to the Representatives herein and in the
provisions of the Underwriting Agreement so incorporated by reference shall be
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined. The Representatives
designated to act on behalf of each of the underwriters of Securities are set
forth in Schedule II hereto.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the
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Underwriters' and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at the time and place and at a purchase price to
the Underwriters set forth in Schedule II hereto, the amount of Securities set
forth opposite the name of such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign
and return to us ________ counterparts hereof, and upon acceptance hereof by
you, on behalf of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination upon request.
Very truly yours,
KAUFMAN AND BROAD HOME CORPORATION
By
-------------------------------
Name:
Title:
Accepted as of the date hereof:
By:
-------------------------------
On behalf of each of the Underwriters
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SCHEDULE I
Amount of Designated
Securities to be
Underwriter Purchased `
--------------------
Total
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SCHEDULE II
Title of Securities:
Aggregate principal amount:
Price to Public:
Purchase Price by Underwriters:
Specified funds for payment of purchase price:
Closing Date:
Closing Location:
Black Out Period:
Names and addresses of Representatives:
Listings(s):
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Address for Notices, etc.:
Other Terms:
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ANNEX B
KAUFMAN AND BROAD HOME CORPORATION
List of Significant Subsidiaries
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EXHIBIT 1.2
KAUFMAN AND BROAD HOME CORPORATION
(a Delaware corporation)
Equity Securities
UNDERWRITING AGREEMENT
_________, 199_
Ladies and Gentlemen:
Kaufman and Broad Home Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell from time to time (i) shares of common
stock of the Company (the "Common Shares"), (ii) shares of a series of
preferred stock of the Company (the "Preferred Shares") which may be
convertible into Common Shares or (iii) warrants to purchase Common Shares or
Preferred Shares (the "Warrants") which may be sold separately or together with
Common Shares. The Common Shares, the Preferred Shares and the Warrants are
hereinafter referred to as the "Securities". The Securities are registered
under the registration statement referred to below.
Particular issuances or series of the Securities will be sold pursuant
to a Terms Agreement referred to in Section 2 in the form of Annex A attached
hereto, for resale in accordance with the terms of offering determined at the
time of sale. Under such Terms Agreement, subject to the terms and conditions
hereof, the Company will agree to issue and sell, and the firm or firms
specified therein (the "Underwriters") will agree to purchase, the amount of
Securities specified therein (the "Firm Securities"). In such Terms Agreement,
the Company also may grant to such Underwriters, subject to the terms and
conditions set forth therein, an option to purchase additional Securities in an
amount not to exceed the amount specified in such Terms Agreement (such
additional Securities are hereinafter referred to as the "Option Securities").
The Firm Securities and the Option Securities are hereinafter collectively
referred to as the "Offered Securities".
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The representative or representatives of the Underwriters, if any,
specified in the Terms Agreement referred to in Section 2 are hereinafter
referred to as the "Representative(s)"; provided, however, that if the Terms
Agreement does not specify any representative of the Underwriters, the term
"Representative(s)", as used in this Agreement shall mean the Underwriters.
Preferred Shares issued pursuant to the Terms Agreement referred to in
Section 2 will be issued in accordance with a Certificate of Designations as
specified in such Terms Agreement (the "Certificate of Designations").
Warrants issued pursuant to the Terms Agreement referred to in Section 2 will
be issued under a Warrant Agreement (the "Warrant Agreement") between a bank or
trust company selected by the Company as specified in such Terms Agreement (the
"Warrant Agent").
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as
follows:
(i) A registration statement (No. 333-_____), including a
prospectus, relating to the Securities has been filed with the
Securities and Exchange Commission (the "Commission") and has become
effective. Such registration statement, as amended at the time of any
Terms Agreement referred to in Section 2, is hereinafter referred to
as the "Registration Statement", and the prospectus included in such
Registration Statement, as supplemented as contemplated by Section 2
to reflect the terms of the Offered Securities and the terms of
offering thereof, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) ("Rule 424(b)") of the rules and
regulations of the Commission under the Securities Act of 1933, as
amended (the "1933 Act") (the "1933 Act Regulations"), including all
material incorporated by reference therein, is hereinafter referred to
as the "Prospectus". At the time the Registration Statement became
effective, the Registration Statement complied in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and on the
date of each Terms Agreement referred to in Section 2, the
Registration Statement and the Prospectus will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations, and neither of such documents will include an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading; provided, however, that
the representations and warranties in this subsection (i) shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representative(s) expressly for use in the Registration Statement or
the Prospectus.
(ii) Ernst & Young LLP, whose report is incorporated by
reference into the Registration Statement, are independent public
accountants with respect to the Company and with respect to the
Company's subsidiaries, in each case as required by the 1933 Act and
the 1933 Act Regulations.
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(iii) The financial statements included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of operations
of the Company and its consolidated subsidiaries for the periods
specified; except as otherwise stated in the Registration Statement,
said financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis; the supporting schedules included or
incorporated by reference in the Registration Statement present fairly
the information required to be stated therein; and the Company's
ratios of earnings to fixed charges and earnings to combined fixed
charges and preferred stock dividends (including the amounts the
ratios would have been were interest on the outstanding collateralized
mortgage obligations of the Company's wholly owned limited purpose
financing subsidiaries included in such ratios' calculation) included
in the Prospectus under the caption "Consolidated Ratios of Earnings
to Fixed Charges and of Earnings to Combined Fixed Charges and
Preferred Stock Dividends" in Exhibit 12 to the Registration Statement
have been calculated in compliance with Item 503(d) of Regulation S-K
of the Commission.
(iv) Since the date of the latest audited financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries (which term, as used in
this Agreement, includes without limitation consolidated joint
ventures and partnerships (collectively, the "Joint Ventures") in
which the Company is a participant) considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) except for regular quarterly
dividends in customary amounts per share on the Common Stock of the
Company, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(vi) Each Significant Subsidiary (as defined below) has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its organization, has
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of
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the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned (except for directors qualifying shares and a nominal number of
shares held by affiliated parties) by the Company, directly or through
one of its other subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; and
all of the outstanding equity interests in each Significant Subsidiary
which is a Joint Venture have been duly authorized (if applicable) and
validly issued, are fully paid and non-assessable and are owned by the
Company (except to the extent that a minority interest in the Joint
Ventures is reflected in the Company's consolidated financial
statements included or incorporated by reference in the Prospectus),
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. For
purposes of this Agreement, "Significant Subsidiaries" means the
subsidiaries and Joint Ventures identified on Annex B hereto which
subsidiaries and Joint Ventures (A) on the basis of the Company's most
recent audited financial statements, represented 90% or more of the
total assets of the Company and its subsidiaries and (B) include all
"significant subsidiaries" of the Company, as such term is defined in
Rule 405 of the 1933 Act Regulations.
(vii) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus (except for
subsequent issuances, if any, pursuant to reservations, agreements,
employee benefit plans or the exercise of convertible securities
referred to or incorporated by reference in the Prospectus); the
shares of issued and outstanding Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable;
and the Common Stock conforms to the statements relating thereto
referred to or incorporated by reference in the Prospectus.
(viii) Neither the Company nor any of its Significant
Subsidiaries is in violation of its charter or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which any of the
property or assets of the Company or any of the Significant
Subsidiaries is subject, which default or violation would have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise; and the execution,
delivery and performance of this Agreement and the Terms Agreement,
and the consummation of the transactions contemplated herein and
therein and compliance by the Company with its obligations hereunder
and thereunder, have been duly authorized by all necessary corporate
action and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of the Significant Subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of the Significant Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of the Significant
Subsidiaries is subject, except for a conflict, breach, default, lien,
charge or encumbrance which would not have a material adverse effect
on the condition, financial or
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otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, nor
will such action result in any violation of the provisions of the
charter, by-laws or other corresponding organizational documents of
the Company or any of the Significant Subsidiaries or any applicable
law, administrative regulation or administrative or court order or
decree.
(ix) There is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any of its Subsidiaries, which is required to
be disclosed in the Registration Statement (other than as disclosed
therein), or which is not so disclosed and (net of reserves and
insurance) the Company believes might result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or which might materially
and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement;
all pending legal or governmental proceedings to which the Company or
any subsidiary is a party or of which any of their respective property
or assets is the subject which are not described in or incorporated by
reference in the Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate and net of reserves and insurance, not material to the
Company and its subsidiaries considered as one enterprise; and there
are no contracts or documents of the Company or any of its
subsidiaries which are required to be filed as exhibits to, or
incorporated by reference in, the Registration Statement by the 1933
Act or by the 1933 Act Regulations which have not been so filed or
incorporated by reference.
(x) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance and sale of the Offered Securities hereunder or the
consummation by the Company of any of the other transactions
contemplated hereby, except such as may be required and have been
obtained under the 1933 Act and the 1933 Act Regulations for the
Offered Securities and such as may be required under state securities
laws.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company.
(xii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1934 Act and the
1934 Act Regulations, and, when read together with the other
information in the Prospectus, at the respective times the
Registration Statement became effective, at the date of the Terms
Agreement and at the Closing Date did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(xiv) There are no holders of securities of the Company
with currently exercisable
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registration rights who have any securities registered as part of the
Registration Statement or included in the offering contemplated by
this Agreement.
(xv) The Company and each of the Significant Subsidiaries
have good and marketable title to all of their respective properties,
in each case free and clear of all liens, encumbrances and defects,
except (i) customary liens and encumbrances arising in the ordinary
course of the Company's construction and development business and the
financing thereof, (ii) as stated or incorporated by reference in the
Prospectus or (iii) such as do not materially affect the value of such
properties in the aggregate to the Company and its subsidiaries
considered as one enterprise and do not materially interfere with the
use made and proposed to be made of such properties.
(xvi) The Company and its Significant Subsidiaries possess
such certificates, authorities and permits issued by the appropriate
state, federal and foreign regulatory agencies and bodies necessary to
conduct all material aspects of the business now operated by them, and
neither the Company nor any of its Significant Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries considered
as one enterprise.
(xvii) No default or event of default with respect to any
Indebtedness (as such term is defined in the Prospectus) of the Company
or any of its Significant Subsidiaries entitling, or which, with
notice or lapse of time or both, would entitle, the holders thereof to
accelerate the maturity thereof exists or will exist as a result of
the execution and delivery of this Agreement, the issuance and sale of
the Offered Securities or the consummation of the transactions
contemplated hereby or thereby.
(xviii) The Company and each of the Significant Subsidiaries
have filed all tax returns required to be filed, which returns, as
amended, are complete and correct in all material respects, and
neither the Company nor any Significant Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns
or any assessments with respect to said returns which would materially
and adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(xix) The Company and its Significant Subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
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(b) Any certificate signed by any officer of the Company and
delivered to the Representative(s) or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
SECTION 2. Purchase and Offering of Offered Securities. The obligation
of the Company to issue and sell any Firm Securities, the obligation of the
Underwriters to purchase the Firm Securities, and, if applicable, the Company's
granting to the Underwriters of an option to purchase any Option Securities,
will be set forth in a Terms Agreement (the "Terms Agreement") which shall be
in the form of an executed writing (which may be handwritten), and may be
evidenced by an exchange of telegraphic or any other rapid transmission device
designed to produce a written record of communications transmitted at the time
the Company determines to sell the Firm Securities. The Terms Agreement will
incorporate by reference the provisions of this Agreement, except as otherwise
provided therein, and will specify the following: the firm or firms which will
be Underwriters; the names of any Representative(s); the aggregate amount of
the Firm Securities, and, if applicable, the Option Securities; the terms of
any option granted by the Company to the Underwriters to purchase Option
Securities; the amount of Firm Securities to be purchased by each Underwriter;
the initial public offering price of the Offered Securities; the purchase price
to be paid by the Underwriters; and, if the Offered Securities are Preferred
Shares or Warrants, the terms thereof. The Terms Agreement will also specify
the place of delivery and payment for the Offered Securities and any details of
the terms of the offering that should be reflected in the prospectus supplement
relating to the offering of the Offered Securities.
The time and date of delivery and payment of the Firm Securities will
be the time and date specified in the Terms Agreement, or such other time
thereafter as the Representative(s) and the Company agree as the time for
payment and delivery of the Firm Securities (such time and date, being herein
and in the Terms Agreement referred to as the "Firm Closing Date"). The time
and date of delivery and payment of the Option Securities, if any, will be the
time and date specified by the Underwriters as provided in the Terms Agreement,
which may be the Firm Closing Date, but shall not be prior to the Firm Closing
Date (such time and date being herein and in the Terms Agreement referred to as
the "Option Closing Date"). As used herein and in the Terms Agreement, the
term "Closing Date" means, with respect to the Firm Securities, the Firm
Closing Date and, with respect to the Option Securities, the Option Closing
Date.
The obligations of the Underwriters to purchase the Offered Securities
will be several and not joint. It is understood that the Underwriters propose
to offer the Offered Securities for sale as set forth in the Prospectus. The
Offered Securities delivered to the Underwriters on the Closing Date will be in
such denominations and registered in such names as the Underwriters may
request.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter that, in connection with each offering of Offered Securities:
(a) The Company will notify the Representative(s) promptly (i) of
the effectiveness of any post-effective amendment to the Registration
Statement, (ii) of the mailing or the delivery to the Commission for filing of
the Prospectus or any amendment to the Registration Statement or amendment or
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act
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during any period when the Prospectus is required to be delivered under the
1933 Act, (iii) of the receipt of any comments or inquiries from the Commission
relating to the Registration Statement or Prospectus, (iv) of any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose and (vi) of the issuance by any state securities commission or other
regulatory authority of any order suspending the qualification or the exemption
from qualification of the Securities or Offered Securities under state
securities or Blue Sky laws or the initiation of any proceeding for that
purpose. The Company will make every reasonable effort to prevent the issuance
of any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will give the Representative(s) notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment thereto) or any amendment or supplement
to the Prospectus (including any revised prospectus which the Company proposes
for use by the Underwriters in connection with the Offered Securities which
differs from the Prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Representative(s) with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Representative(s) or counsel
for the Underwriters shall reasonably object.
(c) The Company will deliver to the Representative(s) as many
conformed copies of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) as the Representative(s) may reasonably
request.
(d) The Company will furnish to each Underwriter, from time to
time during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary,
in the opinion of counsel for the Underwriters, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Company
will forthwith amend or supplement the Prospectus (in form and substance
satisfactory to the Representative(s) and counsel for the Underwriters) so
that, as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, and the
Company will furnish to the Underwriters a reasonable number of copies of such
amendment or supplement.
(f) The Company will endeavor, in cooperation with the
Underwriters, to qualify the Offered Securities for offering and sale under the
applicable securities laws of such states and other
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jurisdictions of the United States as the Representative(s) may designate;
provided, however, that the Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified. In
each jurisdiction in which the Offered Securities have been so qualified, the
Company will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for so long as may
be required by applicable law. The Company will promptly advise the
Representative(s) of the receipt by the Company of any notification with
respect to the suspension of qualification of the Offered Securities for sale
in any state or jurisdiction or the initiating or threatening of any proceeding
for such purpose.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 50 days after the close of
the period covered thereby (or 120 days in the case of the close of the
Company's fiscal year), an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve month
period beginning not later than the first day of the Company's fiscal quarter
next following the "effective date" (as defined in said Rule 158) of the
Registration Statement.
(h) The Company will use the net proceeds received by it from the
sale of the Offered Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) Following the execution of the applicable Terms Agreement, the
Company will prepare, and file or transmit for filing copies of the Prospectus
with the Commission in accordance with Rule 424(b).
(j) The Company, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Sections 13, 14 or 15 of
the 1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) If and to the extent so provided in the applicable Terms
Agreement, the Company, for the period therein provided, will not, directly or
indirectly, sell, contract to sell or otherwise dispose of certain of its
securities as specified in such Terms Agreement.
(l) If and to the extent so provided in the applicable Terms
Agreement, the Company will use its reasonable best efforts to effect the
listing of the Offered Securities on the New York Stock Exchange and to cause
the Offered Securities to be registered under the 1934 Act.
(m) The Company will reserve and keep available at all times, free
of preemptive or other similar rights and liens and adverse claims, sufficient
shares of Common Stock to satisfy any obligations to issue shares of Common
Stock upon conversion of any Preferred Stock or exercise of any Warrants that
may be outstanding from time to time.
SECTION 4. Payment of Expenses. The Company will pay the following expenses
incident to the performance of its obligations under this Agreement: (i) the
printing and filing of the Registration Statement as originally filed and of
each amendment thereto; (ii) the printing or reproduction of this Agreement and
the Terms Agreement; (iii) the preparation, issuance and delivery of the
certificates
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for the Offered Securities to the Underwriters; (iv) the fees and disbursements
of the Company's counsel and accountants; (v) the qualification of the Offered
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and the legal investment survey, if any;
(vi) the printing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment thereto, of
the preliminary prospectuses, and of the Prospectus and any amendments or
supplements thereto; (vii) the printing and delivery to the Representative(s)
of copies of the Blue Sky Survey and the legal investment survey, if any;
(viii) any fees payable in connection with the rating of the Offered
Securities; (ix) any fees payable to the National Association of Securities
Dealers, Inc.; (x) any fees payable to the Commission; and (xi) the fees and
expenses incurred in connection with the listing on the New York Stock Exchange
of the Offered Securities. The Company will not be responsible for any other
expenses, including (without limitation) the fees and disbursements of counsel
for the Underwriters (except as provided in Section 4(v) hereof).
If this Agreement is terminated by the Representative(s) in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Securities on the Firm Closing
Date and the Option Securities on the Option Closing Date will be subject to
the accuracy of the representations and warranties of the Company herein
contained, to the performance by the Company of its obligations hereunder, and
to the following further conditions:
(a) The Prospectus shall have been filed in accordance with the
1933 Act Regulations and Section 3(i) of this Agreement; and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by
the Commission.
(b) At the Closing Date the Representative(s) shall have received:
(1) The favorable opinion, dated as of the Closing Date,
of Munger, Tolles & Olson LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriters, to the effect
(to the extent applicable to the Offered Securities) that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware.
(ii) If the Offered Securities are Common Shares,
the Common Shares have been duly authorized and validly issued
and, when countersigned by the transfer agent therefor, and
sold to the Underwriters against payment therefor pursuant to
this Agreement and the Terms Agreement, will be validly
issued, fully paid and non-assessable; and the issuance of
such Common Shares is not subject to the
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preemptive rights of any stockholder of the Company.
(iii) If the Offered Securities are Preferred
Shares, the Preferred Shares have been duly authorized and
validly issued and, when countersigned by the transfer agent
therefor and sold to the Underwriters against payment therefor
pursuant to this Agreement an the Terms Agreement, will be
validly issued, fully paid and non-assessable; and the
issuance of such Preferred Shares is not subject to the
preemptive rights of any stockholder of the Company.
(iv) If the Offered Securities are Preferred
Shares that are convertible into Common Shares, the Common
Shares have been duly authorized and reserved for issuance by
the Company upon conversion of the Preferred Shares, and when
so issued and countersigned by the transfer agent therefor,
will be validly issued, fully paid and non-assessable; and the
issuance of such Common Shares will not be subject to the
preemptive rights of any stockholder of the Company.
(v) If the Offered Securities are Warrants, the
Warrants have been duly authorized, executed and delivered by
the Company and, when countersigned by the Warrant Agent and
sold to the Underwriters against payment therefor pursuant to
this Agreement and the Terms Agreement, will constitute valid
and legally binding obligations of the Company enforceable in
accordance with their terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general
equitable principles.
(vi) If the Offered Securities are Warrants, the
Warrant Agreement has been duly authorized, executed and
delivered by the Company, and the Warrant Agreement
constitutes a valid and legally binding obligation of the
Company enforceable in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting enforcement of creditors' rights
generally or by general equitable principles.
(vii) If the Offered Securities are Warrants to
purchase Common Shares or Preferred Shares, the Common Shares
or Preferred Shares, as the case may be, have been duly
authorized and reserved for issuance by the Company upon
exercise of such Warrants, and when so issued and
countersigned by the transfer agent therefor, will be validly
issued, fully paid and non-assessable; and the issuance of
such Common Shares or Preferred Shares will not be subject to
the pre-emptive rights of any stockholder of the Company.
(viii) The Offered Securities conform in all
material respects to the description thereof contained in the
Prospectus.
(ix) The forms of certificates for the Offered
Securities conform to the requirements of the Delaware General
Corporation Law.
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(x) The information in the Prospectus relating
to the description of the capital stock of the Company and
relating to Federal income tax considerations, to the extent
that it constitutes summaries of legal matters or documents,
has been reviewed by such counsel and is correct in all
material respects.
(xi) The Registration Statement is effective under
the 1933 Act and, to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the
Commission.
(xii) The Registration Statement, at the time it
became effective, and the Registration Statement and the
Prospectus at the date of the applicable Terms Agreement
(other than the financial statements and supporting schedules
included or incorporated by reference therein, as to which no
opinion need be rendered) complied and complies as to form in
all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations.
(xiii) The Terms Agreement (including the provisions
of this Agreement) has been duly authorized, executed and
delivered by the Company.
In giving the opinions in paragraphs (v), (vi) and (vii), such counsel shall be
entitled to assume without any investigation that California law is the same as
New York law for all purposes relevant to the determination of the
enforceability of agreements governed by New York law.
(2) The favorable opinion, dated as of the Closing Date,
of the General Counsel or Associate Counsel of the Company, in form
and substance satisfactory to counsel for the Underwriters, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
(ii) To the best of such counsel's knowledge and
information, the Company is duly qualified as a foreign
corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required,
except where the failure to so qualify would not have a
material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as
one enterprise.
(iii) Each of the Company's Significant Domestic
Subsidiaries (as defined below) has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus and, to the best of such counsel's knowledge and
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<PAGE> 13
information, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not
have a material adverse effect on the Company and its
subsidiaries considered as one enterprise or on their
consolidated financial condition or earnings; to the best of
such counsel's knowledge and information, all of the issued
and outstanding capital stock of each such Significant
Domestic Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned (except
for directors qualifying shares and a nominal number of shares
held by affiliated parties) by the Company, directly or
through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. As used
in this Agreement, the term "Significant Domestic
Subsidiaries" means the Significant Subsidiaries set forth in
Annex B hereto.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus
(except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans or the
exercise of convertible securities referred to or incorporated
by reference in the Prospectus); and the shares of issued and
outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable.
(v) To the best of such counsel's knowledge and
information, there are no statutes or regulations required to
be described in the Registration Statement or the Prospectus
which are not described as required and there are no legal or
governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other
than those disclosed therein, and all pending legal or
governmental proceedings to which the Company or any
subsidiary is a party or to which any of their property is
subject which are not described in or incorporated by
reference in the Registration Statement, including ordinary
routine litigation incidental to the business, are, considered
in the aggregate and net of reserves and insurance, not
material to the Company and its subsidiaries considered as one
enterprise.
(vi) The information under "Item 1.
Business--Regulation and Environmental Matters" in the
Company's most recent Annual Report on Form 10-K incorporated
by reference in the Registration Statement and in Item 15 in
Part II of the Registration Statement, to the extent that it
constitutes matters of law, summaries of legal matters,
summaries of securities, instruments, agreements or other
documents or legal conclusions, has been reviewed by such
counsel and is correct in all material respects.
(vii) To the best of such counsel's knowledge and
information, there are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed
or incorporated by reference as exhibits thereto other than those
described or referred to or filed as exhibits thereto, the
descriptions thereof or references thereto are correct, and, to the
best of such
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<PAGE> 14
counsel's knowledge, no default exists in the due performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument so described, referred to or filed or
incorporated by reference, which default could have a material adverse
effect on the Company and its subsidiaries considered as one
enterprise or on their consolidated financial condition or earnings.
(viii) No authorization, approval, consent or order of any
court or governmental authority or agency is required in connection
with the sale of the Offered Securities to the Underwriters, except
such as may be required under the 1933 Act, the 1933 Act Regulations,
or state securities laws.
(ix) The issuance and delivery of the Offered Securities,
the execution and delivery of the Terms Agreement (including the
provisions of this Agreement) and the consummation of the transactions
contemplated herein and therein, will not conflict with or constitute
a breach of, or default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Significant Subsidiaries pursuant to, to the
best of such counsel's knowledge and information, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of its Significant Subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its Significant
Subsidiaries is subject, nor will such action result in any violation
of the provisions of the charter or by-laws of the Company, or any
applicable law, administrative regulation or administrative or court
decree.
(x) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the financial
statements and supporting schedules included or incorporated by
reference therein, as to which no opinion need be rendered), at the
time they were filed with the Commission, complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
In giving such opinion, as to matters governed by laws other than the law of
the States of California, the General Corporation Law of the State of Delaware
and the federal law of the United States of America, such counsel may, at such
counsel's option, either (A) assume without any investigation that the law of
the State of California (or, if appropriate, the General Corporation Law of the
State of Delaware and the federal law of the United States of America) is the
same as the law governing such other matters for all purposes relevant to such
opinion, or (B) rely on an opinion or opinions of local counsel satisfactory to
the Representative(s), so long as each such opinion shall be dated as of the
Closing Date and in form and substance reasonably satisfactory to the
Representative(s), and shall expressly permit the Underwriters to rely thereon
as if such opinion were addressed to the Underwriters.
(3) The favorable opinion, dated as of the Closing Date,
of counsel for the Underwriters, with respect to the matters set forth
in (iii) through (viii) and (xi) through (xiii) (but not with respect
to any documents incorporated by reference) of subsection (b)(1) of
this
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<PAGE> 15
Section.
(4) In giving their opinions required by subsections
(b)(1), (b)(2) and (b)(3), respectively, of this Section, Munger,
Tolles & Olson LLP, the General Counsel or Associate Counsel of the
Company (as the case may be) and counsel for the Underwriters shall
each additionally state that nothing has come to their attention that
has led them to believe that the Registration Statement (except for
financial statements and schedules and other financial data included
therein, as to which counsel need make no statement), at the time it
became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Registration Statement or the Prospectus (except for financial
statements and other financial data included therein, as to which
counsel need make no statement), at the date of the Terms Agreement,
or any such amendment or supplement, as of its date, included an
untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they
were made) not misleading.
(b) At the Closing Date, there shall not have been, since the date
of the Terms Agreement, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representative(s) shall
have received a certificate of the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company, dated as
of such Closing Date, to the effect that (i) there has been no such material
adverse change; (ii) the representations and warranties in Section 1 are true
and correct with the same force and effect as though expressly made at and as
of the Closing Date; (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior
to the Closing Date; (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the best of such officer's
knowledge and information, no proceedings for that purpose have been initiated
or threatened by the Commission; and (v) the rating assigned by any nationally
recognized statistical rating organization to any debt securities of the
Company has not been lowered and no such rating agency has publicly announced
that it has placed any debt securities of the Company on what is commonly
termed a "watch list" for a possible downgrading.
(c) At the Closing Time, the Representative(s) shall have received
from Ernst & Young LLP a letter dated such date, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and financial
information included and incorporated by reference in the Registration
Statement and the Prospectus.
(d) If the listing of the Offered Securities on the New York Stock
Exchange is required under Section 3(c) hereof and the applicable Terms
Agreement, the Offered Securities shall, at the Closing Date, have been
approved for listing on the New York Stock Exchange upon notice of issuance.
(e) At the Closing Date, counsel for the Underwriters shall have
been furnished with such
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<PAGE> 16
documents and opinions as they may require for the purpose of enabling them to
pass upon the issuance and sale of the Offered Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Offered Securities as herein
contemplated shall be satisfactory in form and substance to the
Representative(s) and counsel for the Underwriters.
(h) In the event the Underwriters exercise their option to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and correct as of
each Option Closing Date, and the Representative(s) shall have received:
(i) A certificate, dated such Date of Delivery, of the
President or a Vice President of the Company and the chief financial
or chief accounting officer of the Company confirming that the
certificate delivered at the Firm Closing Date pursuant to Section
5(c) hereof remains true as of such Option Closing Date.
(ii) The favorable opinion of Munger, Tolles & Olson LLP,
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, relating to the Option Secutities and otherwise
to the same effect as the opinion required by Sections 5(b)(1) and
5(b)(4) hereof.
(iii) The favorable opinion of the General Counsel or
Associate Counsel of the Company, in form and substance satisfactory
to counsel for the Underwriters, relating to the Option Securities and
otherwise to the same effect as the opinion required by Sections
5(b)(2) and 5(b)(4) hereof.
(iv) The favorable opinion of counsel for the
Underwriters, dated such Option Closing Date, relating to the Option
Securities and otherwise to the same effect as the opinion required by
Sections 5(b)(3) and 5(b)(4) hereof.
(v) A letter from Ernst & Young LLP in form and substance
satisfactory to the Representative(s) and dated such Option Closing
Date, substantially the same in scope and substance as the letter
furnished to the Representative(s) pursuant to Section 5(c) hereof
except that the "specified date" in the letter furnished pursuant to
this Section shall be a date not more than five days prior to such
Option Closing Date.
If any condition specified in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement may be terminated by the
Representative(s) by notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof. Notwithstanding any
such termination, the provisions of Sections 4, 6, 7 and 8 shall remain in
effect.
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SECTION 6. Indemnification
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by the Representative(s)), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that (A) the foregoing indemnity agreement shall not apply
to any loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representative(s) expressly for use in
the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or Supplement thereto); and (B)
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of the Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased Offered
Securities, or any person controlling such Underwriter, if a copy of the
Prospectus (as may then be amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if such is required by law, at or
prior to the written confirmation of the sale of such Offered Securities to
such person and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or expense.
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<PAGE> 18
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representative(s) expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give written notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and one or more Underwriters, as incurred, in such
proportions that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discount appearing on the cover page of
the Prospectus bears to the initial public offering price appearing thereon and
the Company is responsible for the balance; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of Section ll(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as the Company.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement, or
contained in certificates of Officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or controlling person, or
by or on behalf of the Company, and shall survive delivery of the Offered
Securities to the Underwriters.
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<PAGE> 19
SECTION 9. Termination of Agreement.
(a) The Representative(s) may terminate this Agreement and the
applicable Terms Agreement, by notice to the Company, at any time at or prior
to the Closing Date (i) if there has been, since the date of this Agreement and
the applicable Terms Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business; (ii) if
there has occurred any material adverse change in the financial markets in the
United States or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which is such as to make it, in the judgment
of the Representative(s), impracticable to market the Offered Securities or to
enforce contracts for the sale of the Offered Securities; (iii) if trading in
the securities of the Company has been suspended by the Commission or a
national securities exchange, or if trading generally on the New York Stock
Exchange has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by said
Exchange or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either federal, New York or
California authorities; or (iv) if the rating assigned by any nationally
recognized statistical rating organization to any debt securities of the
Company shall have been lowered or if any such rating agency shall have
publicly announced that it has placed any debt securities of the Company on
what is commonly termed a "watch list" for a possible downgrading.
(b) If this Agreement and the applicable Terms Agreement are
terminated pursuant to this Section, such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof. Notwithstanding any such termination, the provisions of Sections 4, 6,
7 and 8 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If any one or more
Underwriters shall fail to purchase and pay for any of the Offered Securities
agreed to be purchased by such Underwriter or Underwriters under this Agreement
and the applicable Terms Agreement and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the Representative(s) may make arrangements satisfactory to the
Company for the purchase of such Offered Securities by other persons (including
any of the Underwriters) but if no arrangements are made by the Closing Date
the remaining Underwriters shall be obligated severally to take up and pay for
(in the respective proportions which the amount of Offered Securities set forth
opposite their names in the Terms Agreement bear to the aggregate amount of
Offered Securities set opposite the names of all the remaining Underwriters)
the Offered Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase; provided, however, that in the event the aggregate
amount of Offered Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10 percent of the aggregate amount
of Offered Securities set forth in such Terms Agreement, the Representative(s)
may make arrangements satisfactory to the Company for the purchase of such
Offered Securities by other persons (including any of the Underwriters) but if
no arrangements are made by the Closing Date the remaining Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Offered Securities, and if
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<PAGE> 20
such non-defaulting Underwriters do not purchase all the Offered Securities,
this Agreement will terminate without liability to any non-defaulting
Underwriter or the Company. In the event of a default by any Underwriter as
set forth in this Section 10, the Closing Date shall be postponed for such
period, not exceeding seven days, as the Representative(s) shall determine in
order that the required changes in the Registration Statement and the
Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any non-defaulting Underwriter for
damages occasioned by its default hereunder.
SECTION 11. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if mailed or transmitted
by any standard form of telecommunication. Notices to the Underwriters shall be
directed to the Representative(s) at ________________, attention of
___________________; notices to the Company shall be directed to it at 10990
Wilshire Boulevard, Los Angeles, California 90024, attention of Michael F.
Henn, Senior Vice President and Chief Financial Officer.
SECTION 12. Parties. This Agreement and the applicable Terms Agreement shall
inure to the benefit of and be binding upon the Underwriters and the Company
and their respective successors. Nothing expressed or mentioned in this
Agreement or such Terms Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters and the Company and
their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or the applicable Terms Agreement or any provision
herein or therein contained. This Agreement and such Terms Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of Offered Securities from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Unless otherwise set forth
herein, specified times of day refer to New York City time.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its
terms.
Very truly yours,
KAUFMAN AND BROAD HOME CORPORATION
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
[NAMES OF UNDERWRITERS]
By: [Representative(s)]
By:
-------------------------------
Name:
Title:
For itself and as Representative(s) of the other
Underwriters.
21
<PAGE> 22
ANNEX A
KAUFMAN AND BROAD HOME CORPORATION
(a Delaware Corporation)
Equity Securities
TERMS AGREEMENT
_______, 199_
[Names and Addresses of
Representatives]
Ladies and Gentlemen:
Kaufman and Broad Home Corporation, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein and in
the Underwriting Agreement, dated ________, 19__ (the "Underwriting
Agreement"), between the Company on the one hand and ___________, on the other
hand, to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the securities specified in Schedule II hereto (the
"Securities"). Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Terms
Agreement, except that, if this Terms Agreement and the Underwriting Agreement
are dated different dates, each representation and warranty with respect to the
Prospectus in Section 1 of the Underwriting Agreement shall be deemed to be a
representation and warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined) and also a representation and
warranty as of the date of this Terms Agreement in relation to the Prospectus
as amended or supplemented relating to the Securities which are the subject of
the Terms Agreement. Each reference to the Representatives herein and in the
provisions of the Underwriting Agreement so incorporated by reference shall be
deemed to refer to you. Unless
22
<PAGE> 23
otherwise defined herein, terms defined in the Underwriting Agreement are used
herein as therein defined. The Representatives designated to act on behalf of
each of the underwriters of Securities are set forth in Schedule II hereto.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters' and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time
and place and at a purchase price to the Underwriters set forth in Schedule II
hereto, the amount of Firm Securities set forth opposite the name of such
Underwriter in Schedule I hereto.
[Subject to the terms and conditions set forth herein and in the Terms
Agreement, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase in the aggregate up to the number of Option
Securities set forth on Schedule II at the same purchase price as shall be
applicable to the Firm Securities. The Option hereby granted will expire _
days after the date hereof and may be exercised, in whole or in part at one
time, only for the purpose of covering over-allotments that may be made in
connection with the offering and distribution of the Firm Securities. Such
option may be exercised upon written notice by you to the Company setting forth
the number of Option Securities as to which the several Underwriters are
exercising the option and the Option Closing Date. If the option is exercised
as to all or any portion of the Option Securities, the Option Securities as to
which the option is exercised shall be purchased by each Underwriter, severally
and not jointly, in the proportion that the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule I bears to the total number
of Firm Securities, subject to such adjustments as you, in your discretion,
shall make to eliminate any sales or purchases of fractional Offered
Securities. No Option Securities shall be sold or delivered unless the Firm
Securities previously have been, or simultaneously are, sold and delivered.
The right to purchase the Option Securities or any portion thereof may be
surrendered and terminated at any time before the exercise thereof upon written
notice by the Representatives to the Company.]
If the foregoing is in accordance with your understanding, please sign
and return to us ________ counterparts hereof, and upon acceptance hereof by
you, on behalf of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
23
<PAGE> 24
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company for examination upon request.
Very truly yours,
KAUFMAN AND BROAD HOME CORPORATION
By
-------------------------------
Name:
Title:
Accepted as of the date hereof:
By:
-------------------------------
On behalf of each of the Underwriters
24
<PAGE> 25
SCHEDULE I
Amount of Designated
Firm Securities
Underwriter to be Purchased
----------- --------------------
----------------
Total............................ ================
25
<PAGE> 26
SCHEDULE II
Title of Securities:
Aggregate amount of Firm Securities:
Aggregate amount of Option Securities:
Price to Public:
$_________
Purchase Price by Underwriters:
$________
Specified funds for payment of purchase price:
If the Securities are Preferred Shares, the terms of such Preferred Shares are
as follows:
Designation:
Date of Certificate of Designations:
Dividend Rate or Amount:
Dividend Payment Dates:
Conversion Rights:
Ranking:
Liquidation Rights:
Redemption Provisions:
Sinking Fund Provisions:
Voting Right Provisions:
26
<PAGE> 27
If the Securities are Warrants, the terms thereof are as follows:
Warrant Agent:
Warrant Agreement:
Warrant Agreement dated as of ________, 19__, between the Company
and the Warrant Agent.
Exercise Price:
Expiration Date:
Terms of Exercise:
Firm Closing Date:
[Time and date], 19 _
Closing Location:
Black Out Period:
Names and addresses of Representatives:
Listings(s):
Address for Notices, etc.:
Other Terms:
27
<PAGE> 28
ANNEX B
KAUFMAN AND BROAD HOME CORPORATION
List of Significant Subsidiaries
(including Significant Foreign Subsidiaries)
28
<PAGE> 1
EXHIBIT 5.1
December 4, 1997
Kaufman and Broad Home Corporation
10990 Wilshire Boulevard
Los Angeles, CA 90024
Re: Registration Statement on Form S-3 (Registration No. 333-______)
Ladies and Gentlemen:
We have acted as counsel for Kaufman and Broad Home Corporation, a Delaware
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (No. 333-_____) (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, for the registration of the sale by the Company from time to time of up
to $500,000,000 maximum aggregate initial offering price of (a) its debt
securities ("Debt Securities"), (b) shares of its Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), (c) shares of its Common Stock, par
value $1.00 per share (the "Common Stock") or (d) warrants to purchase Debt
Securities, Preferred Stock, Common Stock or other securities of the Company or
another issuer (the "Warrants"). The Debt Securities, Preferred Stock, Common
Stock and Warrants are herein collectively referred to as the "Securities".
Debt Securities, Preferred Stock and Warrants may be convertible or exchangeable
for Securities or other securities of the Company or another issuer. The Debt
Securities will be issued under one or more indentures, each in the form filed
as an exhibit to the Registration Statement (each an "Indenture"), between the
Company and one or more trustees (each a "Trustee").
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for purposes of this opinion.
Based upon foregoing, we are of the opinion that:
1. When the Company and a Trustee execute and deliver an
Indenture and the specific terms of a particular Debt Security have been duly
authorized and established in accordance with such Indenture, and such Debt
Security has been duly authorized, executed, authenticated, issued and
delivered in accordance with such Indenture, against payment therefor or upon
exchange in accordance with the applicable underwriting or other agreement,
such Debt Security will constitute the valid and binding obligation of the
Company subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equitable principles.
2. When the issuance of Common Stock has been duly authorized, the
certificates for
<PAGE> 2
such Common Stock have been duly executed by the Company, countersigned by the
transfer agent therefor and duly delivered to the purchasers thereof, against
payment therefor in accordance with the applicable underwriting or other
agreement, such Common Stock (including any Common Stock duly issued (a) upon
the exchange or conversion of any Debt Security or Preferred Stock that is
exchangeable or convertible into Common Stock or (b) upon the exercise of any
Warrant exercisable for Common Stock) will be validly issued, fully paid and
nonassessable.
3. When the issuance of Preferred Stock has been duly authorized,
the Certificate of Designations establishing the terms of such Preferred Stock
has been duly approved and executed by the Company and filed with the Secretary
of State of the State of Delaware, the certificates for such Preferred Stock
have been duly executed by the Company, countersigned by the transfer agent
therefor and delivered to the purchasers thereof, against payment therefor in
accordance with the applicable underwriting or other agreement, such Preferred
Stock (including any Preferred Stock duly issued (a) upon the exchange or
conversion of any Debt Security that is exchangeable or convertible into
Preferred Stock or (b) upon the exercise of any Warrant exercisable for
Preferred Stock) will be validly issued, fully paid and nonassessable.
4. When the Company and a Warrant Agent execute and deliver a
Warrant Agreement and the specific terms of a particular Warrant have been duly
authorized and established in accordance with such Warrant Agreement, and such
Warrant has been duly authorized, executed, countersigned, issued and delivered
in accordance with such Warrant Agreement, against payment therefor in
accordance with the applicable underwriting or other agreement, such Warrant
will constitute the valid and binding obligation of the Company subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equitable principles.
In connection with the opinions expressed above, we have assumed that, at
or prior to the time of delivery of any such Security, (a) the Board of
Directors shall have duly established the terms of such Security and duly
authorized the issuance and sale of such Security, in each case in accordance
with Delaware law, and such authorization shall not have been modified or
rescinded; (b) the Registration Statement shall have been declared effective and
such effectiveness shall not have been terminated or rescinded; (c) the
applicable Indenture, if any, shall have been duly authorized, executed and
delivered by the Company in accordance with applicable law and the applicable
Trustee and shall have been qualified under the Trust Indenture Act of 1939, as
amended; (d) the applicable Certificate of Designations, if any, shall have been
duly approved and executed by the Company in accordance with applicable law and
filed with the Secretary of State of the State of Delaware in accordance with
Delaware law; (e) the applicable Warrant Agreement, if any, shall have been duly
authorized, executed and delivered by the Company in accordance with applicable
law and the applicable Warrant Agent; (f) there will not have occurred any
change in law affecting the validity or enforceability of such Security and (g)
in connection with the issuance and sale of Debt Securities, Preferred Stock or
Warrants convertible into or exchangeable for securities of another issuer, such
other issuer shall have taken any and all necessary and appropriate steps to
enable the Company lawfully to deliver securities, and, if applicable, a
prospectus related thereto, of such other issuer upon such conversion or
exchange. We have also assumed that none of the terms of any Security to be
established subsequent to the date hereof, nor the issuance and delivery of such
Security, nor the compliance by the Company with the terms of such Security will
violate any applicable law or will result in a violation of any provision of any
instrument or agreement then binding upon the Company, or any restriction
imposed by any court or governmental body having jurisdiction over the Company.
<PAGE> 3
We are members of the Bar of the State of California and the foregoing
opinion is limited to the laws of the State of California, the General
Corporation Law of the State of Delaware and the federal laws of the United
States of America. With respect to the Indentures, the Debt Securities, the
Warrant Agreement and the Warrants, which are stated to be governed by the laws
of the State of New York, we have assumed with your consent that such laws are
the same as the laws of the State of California with respect to the legal, valid
and binding nature of the Indenture, the Debt Securities, the Warrant Agreement
and the Warrants.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our name in the Registration
Statement and the related Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933.
Very truly yours,
MUNGER, TOLLES & OLSON LLP
<PAGE> 1
EXHIBIT 12
STATEMENT OF COMPUTATION OF RATIO OF
EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED AUGUST 31, YEARS ENDED NOVEMBER 30,
1997 1996 1996 1995 1994 1993 1992
==================== =====================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Pretax Income (Loss) .......................
$ 47,412 $(126,829) $ (95,744) $ 45,459 $ 73,850 $ 64,321 $ 45,498
-------------------- -----------------------------------------------------
Less undistributed income of
unconsolidated joint ventures . -- 25 -- -- -- -- --
-------------------- -----------------------------------------------------
Pretax income as adjusted .................. $ 47,412 $(126,804) $ (95,744) $ 45,459 $ 73,850 $ 64,321 $ 45,498
Add:
Interest incurred ...................... 44,965 55,727 72,074 73,008 54,425 50,963 44,722
Portion of rent expense considered to
be interest ..................... 4,130 2,741 3,830 3,190 2,971 2,665 2,324
Amortization of previously
capitalized interest ............ 16,485 15,770 24,893 18,508 16,156 17,617 19,094
Deduct:
Interest capitalized ................... (16,655) (21,723) (26,937) (37,128) (27,561) (24,432) (23,419)
-------------------- -----------------------------------------------------
$ 96,337 $ (74,289) $ (21,884) $ 103,037 $ 119,841 $ 111,134 $ 88,219
==================== =====================================================
Fixed Charges
Interest incurred .......................... $ 44,965 $ 55,727 $ 72,074 $ 73,008 $ 54,425 $ 50,963 $ 44,722
Portion of rent expense considered to be
interest ................................ 4,130 2,741 3,830 3,190 2,971 2,665 2,324
-------------------- -----------------------------------------------------
$ 49,095 $ 58,468 $ 75,904 $ 76,198 $ 57,396 $ 53,628 $ 47,046
==================== =====================================================
Ratio of earnings to fixed charges ............. 1.96x (1.27x) (0.29x) 1.35x 2.09x 2.07x 1.88x
==================== =====================================================
</TABLE>
For the purposes of calculating the ratio of earnings to fixed charges,
earnings are computed by adding fixed charges (except capitalized interest and
the effect of preferred dividends) and amortization of previously capitalized
interest to pretax earnings (excluding undistributed earnings of unconsolidated
joint ventures.) Fixed charges consist of interest expense plus capitalized
interest and the portion of rental expense considered to be interest.
In computing the ratio of earnings to fixed charges, interest expense
excludes interest incurred by the Company's wholly owned limited purpose
financing subsidiaries with respect to their outstanding collateralized
mortgage obligations. If interest on such collateralized mortgage
<PAGE> 2
obligations were included, earnings for the nine months ended August 31, 1996
and the year ended November 30, 1996 would have been inadequate to cover fixed
charges by $132.8 million and $97.8 million, respectively, while the ratio of
earnings to fixed charges for the nine months ended August 31, 1997 and the
years ended November 30, 1995, 1994, 1993 and 1992 would have been 1.87x,
1.31x, 1.88x, 1.77x and 1.55x, respectively.
The amount of earnings used in the calculation of the ratio of earnings to
fixed charges for the nine months ended August 31, 1996 and the year ended
November 30, 1996 includes the $170.8 million pretax non-cash charge for
impairment of long-lived assets recorded by the Company in the second quarter
of 1996. If the non-cash charge for impairment of long-lived assets were
excluded, the ratio of earnings to fixed charges for the nine months ended
August 31, 1996 would have been 1.65x and for the year ended November 30, 1996
would have been 1.96x.
Earnings for the nine months ended August 31, 1996 and the year ended
November 30, 1996 are inadequate to cover fixed charges by $132.8 million and
$97.8 million, respectively.
<PAGE> 3
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(In thousands, except ratios)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED AUGUST 31, YEARS ENDED NOVEMBER 30,
==================== ====================================================
1997 1996 1996 1995 1994 1993 1992
-------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Pretax Income (Loss)
$ 47,412 $(126,829) $ (95,744) $ 45,459 $ 73,850 $ 64,321 $ 45,498
Less undistributed income of
unconsolidated joint ventures ..... -- 25 -- -- -- -- --
-------------------- ----------------------------------------------------
Pretax income as adjusted ...................... $ 47,412 $(126,804) $ (95,744) $ 45,459 $ 73,850 $ 64,321 $ 45,498
Add:
Interest incurred .......................... 44,965 55,727 $ 72,074 73,008 54,425 50,963 44,722
Portion of rent expense considered to
be interest ......................... 4,130 2,741 3,830 3,190 2,971 2,665 2,324
Amortization of previously
capitalized interest ............. 16,485 15,770 24,893 18,508 16,156 17,617 19,094
Deduct:
Interest capitalized ....................... (16,655) (21,723) (26,937) (37,128) (27,561) (24,432) (23,419)
-------------------- ----------------------------------------------------
$ 96,337 $ (74,289) $ (21,884) $ 103,037 $ 119,841 $ 111,134 $ 88,219
==================== ====================================================
Fixed Charges
Interest incurred .............................. $ 44,965 $ 55,727 $ 72,074 $ 73,008 $ 54,425 $ 50,963 $ 44,722
Portion of rent expense considered to be
interest .................................... 4,130 2,741 3,830 3,190 2,971 2,665 2,324
Preferred dividends ............................ -- 7,719 7,719 15,438 15,683 7,968 --
-------------------- ------------------------------------------------------
$ 49,095 $ 66,187 $ 83,623 $ 91,636 $ 73,079 $ 61,596 $ 47,046
==================== ======================================================
Ratio of earnings to fixed charges and preferred stock
dividends........................................... 1.96x (1.12x) (0.26x) 1.12x 1.64x 1.80x 1.88x
=================== =======================================================
</TABLE>
For the purpose of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends, earnings are computed by adding fixed
charges (except capitalized interest and the effect of preferred dividends) and
amortization of previously capitalized interest to pretax earnings (excluding
undistributed earnings of unconsolidated joint ventures.) Fixed charges
consist of interest expense plus capitalized interest and the portion of rental
expense considered to be interest and, prior to April 1, 1996, include the
effect of preferred stock dividends on the Company's Series B Mandatory
Conversion
<PAGE> 4
Premium Dividend Preferred Stock. On April 1, 1996, all shares of the
Company's only outstanding series of preferred stock, the Series B Mandatory
Conversion Premium Dividend Preferred Stock, were mandatorily converted to
shares of Common Stock and no future preferred stock dividends will be paid or
are payable with respect to such preferred stock.
In computing the ratio of earnings to combined fixed charges and preferred
stock dividends, interest expense excludes interest incurred by the Company's
wholly owned limited purpose financing subsidiaries with respect to their
outstanding collateralized mortgage obligations. If interest on such
collateralized mortgage obligations were included, earnings for the nine months
ended August 31, 1996 and the year ended November 30, 1996 would have been
inadequate to cover combined fixed charges and preferred stock dividends by
$140.5 million and $105.5 million, respectively, while the ratio of earnings to
combined fixed charges and preferred stock dividends for the nine months ended
August 31, 1997 and the years ended November 30, 1995, 1994, 1993 and 1992 would
have been 1.87x, 1.11x, 1.54x, 1.60x, and 1.54x, respectively.
The amount of earnings used in the calculation of the ratio of earnings to
combined fixed charges and preferred stock dividends for the nine months ended
August 31, 1996 and the year ended November 30, 1996 includes the $170.8 million
pretax non-cash charge for impairment of long-lived assets recorded by the
Company in the second quarter of 1996. If the non-cash charge for impairment
of long-lived assets were excluded, the ratio of earnings to combined fixed
charges and preferred stock dividends for the nine months ended August 31, 1996
would have been 1.46x and for the year ended November 30, 1996 would have been
1.78x.
Earnings for the nine months ended August 31, 1996 and the year ended
November 30, 1996 are inadequate to cover combined fixed charges and preferred
stock dividends by $140.5 million and $105.5 million, respectively.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Kaufman and
Broad Home Corporation to be filed on or about December 5, 1997 and to the
incorporation by reference therein of our report dated January 3, 1997, with
respect to the consolidated financial statements of Kaufman and Broad Home
Corporation included in its Annual Report (Form 10-K) for the year ended
November 30, 1996, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Los Angeles, California
December 4, 1997
