<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 1997
REGISTRATION NO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CONTINENTAL HOMES HOLDING CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 86-0554624
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
7001 N. SCOTTSDALE ROAD
SUITE 2050
SCOTTSDALE, ARIZONA 85253
(602) 483-0006
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DONALD R. LOBACK
CHIEF EXECUTIVE OFFICER
7001 N. SCOTTSDALE ROAD
SUITE 2050
SCOTTSDALE, ARIZONA 85253
(602) 483-0006
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
JOHN P. MITCHELL, ESQ. VINCENT J. PISANO, ESQ.
CAHILL GORDON & REINDEL SKADDEN, ARPS, SLATE,
80 PINE STREET MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10005 919 THIRD AVENUE
(212) 701-3000 NEW YORK, NEW YORK 10022
(212) 735-3000
---------------
<TABLE>
<CAPTION>
STATE OF
NAME OF ADDITIONAL INCORPORATION I.R.S. EMPLOYER
REGISTRANTS OR ORGANIZATION IDENTIFICATION NO.
- ------------------ --------------- ------------------
<S> <C> <C>
Acheter, Inc. Texas 74-2528175
CH Mortgage
Company Colorado 84-0834739
CHI Construction
Company Arizona 86-0533370
CHI Finance
Corp. Arizona 86-0527430
Continental
Homes, Inc. Delaware 86-0515339
Continental
Homes of
Florida, Inc. Florida 59-1237314
Continental
Homes of Texas,
Inc. Texas 74-2695183
KDB Homes, Inc. Delaware 86-0565376
L&W Investments
Inc. California 86-0596757
Milburn
Investments,
Inc. Texas 74-2209385
</TABLE>
<TABLE>
<CAPTION>
STATE OF
INCORPORATION I.R.S. EMPLOYER
NAME OF ADDITIONAL REGISTRANTS OR ORGANIZATION IDENTIFICATION NO.
- ------------------------------ --------------- ------------------
<S> <C> <C>
Miltex Financial IV General Partnership Texas 74-2209385
Miltex Management, Inc. Texas 74-2648358
Miltex Mortgage of Texas Limited Partnership Texas 74-2209385
Rancho Carillo, Inc. Delaware 84-0724231
R.O.S. Corporation Texas 74-2665796
Settlement Corporation Texas 74-2209385
Travis County Title Company Texas 74-2111971
</TABLE>
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
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. [_]
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. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 JANUARY 27, 1997
PRELIMINARY PROSPECTUS
$20,000,000
CONTINENTAL HOMES HOLDING CORP.
10% SENIOR NOTES DUE 2006
--------
The 10% Senior Notes due 2006 (the "Senior Notes") offered hereby (the
"Offering") are being offered by Continental Homes Holding Corp. (the
"Company"). The Senior Notes offered hereby are part of a class of securities
limited to $150,000,000 aggregate principal amount, of which $130,000,000
aggregate principal amount were issued in a public offering in April 1996 and
$20,000,000 aggregate principal amount are being offered hereby. Interest on
the Senior Notes is payable semi-annually on April 15 and October 15 of each
year, commencing April 15, 1997. The Senior Notes offered hereby bear interest
from October 15, 1996. The Senior Notes mature on April 15, 2006.
The Senior Notes are redeemable at the option of the Company, in whole or in
part, at any time on or after April 15, 2001 at the redemption prices set forth
herein, plus accrued and unpaid interest, if any, to the date of redemption. In
addition, at any time on or prior to April 15, 1999, the Company may redeem up
to 33% of the aggregate principal amount of the Senior Notes originally issued
with the net proceeds of one or more public offerings of its common stock at a
redemption price equal to 110% of the aggregate principal amount of each Senior
Note so redeemed, plus accrued and unpaid interest, if any, to the date of
redemption; provided, however, that immediately after giving effect to any such
redemption, not less than $86,667,000 principal amount of the Senior Notes
remains outstanding.
In the event of a Change of Control (as defined), the Company is required to
offer to repurchase all of the Senior Notes at a price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any,
to the date of repurchase. In addition, the Company will be obligated to make
an offer to repurchase Senior Notes for cash at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of repurchase with the net cash proceeds of certain asset sales and if the
Company's Net Worth (as defined) falls below a specified level for two
consecutive fiscal quarters.
The Senior Notes are general unsecured obligations of the Company, ranking
senior in right of payment to all existing and future subordinated indebtedness
of the Company and pari passu in right of payment with all existing and future
senior indebtedness of the Company; however, the Senior Notes are effectively
subordinated to all secured indebtedness of the Company to the extent of the
value of the assets securing such indebtedness. As of November 30, 1996, after
giving effect to the Offering and the application of the proceeds therefrom,
the Company would have had no secured indebtedness outstanding. The Senior
Notes are guaranteed (the "Guarantees"), on a joint and several basis, by all
of the Restricted Subsidiaries (as defined) of the Company existing on the
closing date of this Offering (collectively, the "Guarantors"). The Guarantees
are general unsecured obligations of the Guarantors, ranking senior in right of
payment to all existing and future subordinated indebtedness of the Guarantors
and pari passu in right of payment with all existing and future senior
indebtedness of the Guarantors; however, the Guarantees are effectively
subordinated to all secured indebtedness of the Guarantors to the extent of the
value of the assets securing such indebtedness. As of November 30, 1996, after
giving effect to the Offering and the application of the proceeds therefrom,
the Guarantors would have had approximately $12,169,000 of secured indebtedness
outstanding.
The Senior Notes are listed on the New York Stock Exchange.
--------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE
SENIOR NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------
The Underwriter has agreed to purchase the Senior Notes offered hereby from
the Company at % of their principal amount plus accrued interest from
October 15, 1996 ($ aggregate proceeds to the Company, before
deducting expenses payable by the Company in respect of the Offering estimated
at $55,000, subject to the terms and conditions set forth in the Underwriting
Agreement.
The Underwriter proposes to offer the Senior Notes offered hereby from time
to time for sale in one or more negotiated transactions, or otherwise, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. For further information with
respect to the plan of distribution and any discounts, commissions or profits
on resale that may be deemed underwriting discounts or commissions, see "The
Underwriter" herein.
--------
The Senior Notes offered hereby are being offered, subject to prior sale,
when, as and if delivered to and accepted by the Underwriter and subject to
certain conditions. It is expected that delivery of the Senior Notes will be
made at the offices of Smith Barney Inc., 333 West 34th Street, New York, New
York 10001, on or about , .
--------
SMITH BARNEY INC.
,
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR IN THE OVER THE
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
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 and information
statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be
inspected and copied at the Public Reference Section maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices maintained by the Commission: New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048 and Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy
statements and other information concerning the Company (symbol "CON") can be
inspected and copied at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. Additionally such information may be
obtained on the Commission's web site at http://www.sec.gov.
The Company has filed with the Commission a registration statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Senior Notes offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to
the Company and the Senior Notes offered hereby.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the Commission
pursuant to the Exchange Act, are hereby incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
August 31, 1996; and
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 1996;
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this Offering shall be deemed to be incorporated by reference in this
Prospectus and shall be part hereof from the date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein 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 such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered, upon
the written or oral request of any such person, a copy of any document
described above (other than exhibits). Requests for such copies should be
directed to Continental Homes Holding Corp., 7001 N. Scottsdale Road, Suite
2050, Scottsdale, Arizona 85253, Attention: Secretary, telephone number (602)
483-0006.
2
<PAGE>
THE COMPANY
Continental Homes Holding Corp. (the "Company") designs, constructs and
sells high quality single-family homes targeted primarily to entry-level and
first-time move-up homebuyers. As of November 30, 1996, the Company was
offering homes for sale in 74 communities in seven markets. The Company is
geographically diversified, currently operating in Phoenix, Arizona; Austin,
San Antonio and Dallas, Texas; Denver, Colorado; South Florida; and Southern
California.
The Company is a leading homebuilder in the Phoenix and Austin markets. The
Phoenix metropolitan area is the Company's primary market and accounted for
approximately 46% of the Company's revenues from homebuilding operations for
the fiscal year ended May 31, 1996. In calendar 1996, the Company continued to
be the leading non-retirement homebuilder in Phoenix for the twelfth
consecutive year. The Phoenix market ranked second nationally for single-
family housing starts in calendar 1996. The Austin market contributed
approximately 25% of the Company's revenues from homebuilding operations for
the fiscal year ended May 31, 1996. The Company retained its number one
ranking in Austin in calendar year 1996 by delivering more single-family homes
than any other homebuilder. The Company also has expanding operations in
Denver, San Antonio, Dallas, South Florida and Southern California. The
Company complements its homebuilding activities by providing mortgage banking
to its homebuyers and to third parties.
The Company markets its homes by emphasizing quality housing at affordable
prices. The Company's operating strategy is to (i) design efficient floorplans
to minimize construction costs, (ii) negotiate favorable pricing and terms
from certain of its subcontractors which perform a high volume of work for the
Company, (iii) closely monitor construction costs using the Company's custom-
designed management information systems and (iv) maintain a supply of land to
meet anticipated homebuilding requirements for approximately two to three
years.
The Company believes that it will continue to capitalize on the operating
strategy that it has successfully implemented in the different geographical
markets in which it operates. The Company entered the Austin, San Antonio,
South Florida and Dallas markets in July 1993, January 1994, November 1994 and
June 1996, respectively, through acquisitions of existing homebuilders. The
Company will continue to review opportunities to enter new housing markets
that have demonstrated periods of strong population and employment growth. The
Company may enter such markets through either acquisitions or start-up
operations.
The Company was incorporated in Delaware in June 1986. The Company's
executive offices are located at 7001 N. Scottsdale Road, Suite 2050,
Scottsdale, Arizona 85253; its telephone number is (602) 483-0006.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED MAY 31, NOVEMBER 30,
----------------------------- --------------
1992 1993 1994 1995 1996 1995 1996
---- ---- ---- ---- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges, including mortgage
banking operations(1).......... 1.44x 1.91x 2.36x 1.99x 2.83x 2.47x 3.21x
Ratio of earnings to fixed
charges, excluding mortgage
banking operations(1)(2)....... 1.51x 2.01x 2.62x 2.11x 2.97x 2.65x 3.25x
</TABLE>
- --------
(1) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income from operations before income taxes plus fixed
charges (net of capitalized interest). Fixed charges include interest
expense plus capitalized interest and a portion of operating lease rental
expense deemed to be representative of interest.
(2) The Company believes that the ratio of earnings to fixed charges excluding
interest expense attributable to the Company's mortgage banking operations
may be helpful to investors in understanding the Company's ability to
cover fixed charges for its homebuilding operations.
4
<PAGE>
RISK FACTORS
Prospective purchasers of the Senior Notes should consider carefully the
factors set forth below as well as the other information set forth or
incorporated by reference in this Prospectus prior to investing in the Senior
Notes.
THE HOUSING INDUSTRY
Homebuilders, including the Company, are subject to various risks, such as
economic recession, competitive overbuilding, changes in governmental
regulation, increases in real estate taxes, energy costs or costs of materials
and labor, the availability of suitable land, and the availability of
construction funds or mortgage loans at rates acceptable to builders and
homebuyers. In addition, increases in interest rates or a reduction in the
deductibility of mortgage interest for federal tax purposes may have an
adverse effect upon the Company's sales and could affect the availability of
home financing to present and potential customers of the Company.
LEVERAGE; POTENTIAL ADVERSE EFFECT OF INDEBTEDNESS ON FUTURE OPERATIONS
As of November 30, 1996, after giving effect to the Offering and the
application of the proceeds therefrom, the outstanding consolidated
indebtedness of the Company would have been $269,994,000 (excluding mortgage
banking related indebtedness) and the Company would have had stockholders'
equity of $143,589,000. In addition, subject to the restrictions in the
Indenture, the Company may incur additional indebtedness in the future, some
of which may be secured. The Company's ability to make required debt service
payments in the future will be dependent upon the Company's operating results,
which are subject to financial, economic and other factors affecting the
Company that are beyond its control. No assurance can be given that the
Company will be able to make required debt service payments.
The degree to which the Company is leveraged could have an adverse impact on
the Company, including (i) increased vulnerability to adverse general economic
and market conditions, (ii) impaired ability to expand and to respond to
increased competition, (iii) impaired ability to obtain additional financing
for future working capital, capital expenditures, general corporate or other
purposes and (iv) requiring that a significant portion of cash provided by
operating activities be used for the payment of debt obligations, thereby
reducing funds available for operations and future business opportunities.
COMPETITION
The single-family residential housing industry is highly competitive and the
Company competes in each of its markets with numerous other national, regional
and local homebuilders, some of which have greater resources than the Company.
The Company's homes compete on the basis of quality, price, design, mortgage
financing terms and location. See "Business--Operating Strategy." The Company
also competes with developers of rental housing units and, to a lesser extent,
condominiums.
GROWTH THROUGH ACQUISITIONS
During the past three years, the Company has expanded its operations into
new housing markets primarily by means of acquisitions of existing
homebuilders. The Company entered the Austin, San Antonio, South Florida and
Dallas markets in July 1993, January 1994, November 1994 and June 1996,
respectively, through acquisitions of existing homebuilders. The Company will
continue to review opportunities to enter new housing markets that have
demonstrated periods of strong population and employment growth. However,
there can be no assurance that the Company will be able to locate or acquire
other suitable acquisition candidates on acceptable terms, or that it will be
successful in managing the operations of the entities acquired and effectively
and profitably integrating such operations into the Company. Additionally,
there can be no assurance that any future acquisitions will not have a
material adverse effect on the Company's operating results, particularly
during the period immediately following such acquisitions.
5
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company's business is managed by a small number of executive officers.
The loss of the services of one or more of these executive officers could have
a material adverse effect on the business and operations of the Company.
FRAUDULENT CONVEYANCE
The Company is a holding company which derives all of its operating income
from its subsidiaries. The Company must rely on dividends and other
distributions from its subsidiaries to generate the funds necessary to meet
its obligations, including the payment of principal and interest on the Senior
Notes. The ability of the Company's subsidiaries to pay such dividends or make
such distributions will be subject to, among other things, applicable state
laws and, under certain circumstances, restrictions contained in agreements or
debt instruments that the Company or its subsidiaries may enter into after the
date of the Indenture. All of the subsidiaries of the Company have jointly and
severally guaranteed the Senior Notes.
The Guarantees may be subject to review under federal or state fraudulent
conveyance law. To the extent that a court were to find that (x) a Guarantee
was incurred by a Guarantor with intent to hinder, delay, or defraud any
present or future creditor, or the Guarantor contemplated insolvency with a
design to prefer one or more creditors to the exclusion in whole or in part of
others, or (y) such Guarantor did not receive fair consideration or reasonable
equivalent value for issuing its Guarantee and such Guarantor (i) was
insolvent, (ii) was rendered insolvent by reason of the issuance of such
Guarantee, (iii) was engaged or about to engage in a business or transaction
for which the remaining assets of such Guarantor constituted unreasonably
small capital to carry on its business, or (iv) intended to incur, or believed
that it would incur, debts beyond its ability to pay such debts as they
matured, a court could avoid or subordinate such Guarantee in favor of the
Guarantor's creditors. Among other things, a legal challenge of a Guarantee on
fraudulent conveyance grounds may focus on the benefits, if any, realized by
each Guarantor as a result of the issuance by the Company of the Senior Notes.
The measure of insolvency for purposes of the foregoing will vary depending on
the law of the jurisdiction being applied. Generally, however, an entity would
be considered insolvent if the sum of its debts (including contingent or
unliquidated debts) is greater than all its property at a fair valuation or if
the present fair saleable value of its assets is less than the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured. Pursuant to the terms of the Guarantees, the
liability of each Guarantor is limited to the maximum amount of indebtedness
permitted, at the time of the grant of such Guarantee, to be incurred in
compliance with fraudulent conveyance or similar laws.
To the extent any Guarantee was avoided or subordinated as a fraudulent
conveyance, limited as described above, or held unenforceable for any other
reason, holders of the Senior Notes would, to such extent, cease to have a
claim in respect of such Guarantee and, to such extent, would be creditors
solely of the Company and any Guarantor whose Guarantee was not avoided,
subordinated, limited, or held unenforceable. In such event, the claims of the
holders of the Senior Notes against the issuer of an avoided, subordinated,
limited or unenforceable Guarantee would be subject to the prior payment of
all liabilities of such Guarantor. There can be no assurance that, after
providing for all prior claims, there would be sufficient assets to satisfy
the claims of the holders of the Senior Notes.
REPURCHASE OF SENIOR NOTES UPON A CHANGE OF CONTROL
In the event of a Change of Control, the Company will be required to offer
to repurchase all of the outstanding Senior Notes at a purchase price equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, to the repurchase date. There can be no assurance that the
Company will have sufficient funds available or will be permitted by its other
indebtedness agreements to repurchase the Senior Notes upon the occurrence of
a Change of Control. The Change of Control purchase feature of the Senior
Notes may in certain circumstances make more difficult or discourage a
takeover of the Company and, thus, the removal of incumbent management. The
Change of Control purchase feature, however, is not the result of
6
<PAGE>
management's knowledge of any specific effort to obtain control of the Company
by means of a merger, tender offer, solicitation or otherwise, or part of a
plan by management to adopt a series of anti-takeover provisions. See
"Description of the Senior Notes--Certain Covenants--Change of Control."
LIQUIDITY OF THE PUBLIC MARKET
The Senior Notes offered hereby are part of a class of securities listed on
the New York Stock Exchange. No assurance can be given as to the liquidity of
the trading market, if any, for the Senior Notes.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Senior Notes offered
hereby are estimated to be $ . The Company intends to use the net proceeds
to reduce temporarily outstanding amounts under the Company's revolving line
of credit (bearing interest at either LIBOR plus 1 3/4% or prime plus 1/8% at
November 30, 1996) which were incurred for working capital purposes. The
Company continually evaluates acquisition opportunities; however, the Company
currently has no agreements or understandings with respect to the acquisition
of any homebuilding operations.
7
<PAGE>
DESCRIPTION OF THE SENIOR NOTES
The Senior Notes offered hereby are to be issued under an Indenture, dated
as of April 15, 1996 (the "Indenture"), among the Company, the Guarantors and
First Union National Bank, as Trustee (the "Trustee"), a copy of which is an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summaries of certain provisions of the Indenture do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular defined terms of the
Indenture are referred to, such defined terms are incorporated herein by
reference. For purposes of this section and the Indenture, references to the
"Company" include only the Company and not its subsidiaries.
GENERAL
The Senior Notes are part of a class of securities limited to $150,000,000
aggregate principal amount, of which $130,000,000 aggregate principal amount
were issued in a public offering in April 1996 and $20,000,000 aggregate
principal amount are being offered hereby. The Senior Notes mature on April
15, 2006. The Senior Notes bear interest from the date of original issuance,
or from the most recent date to which interest has been paid or provided for,
at the rate stated on the cover page hereof, payable in arrears on April 15
and October 15 of each year, with the next payment date being April 15, 1997,
to the persons in whose names the Senior Notes are registered at the close of
business on the first day of the month in which the interest payment date
occurs. Interest will be computed on the basis of a 360-day year of twelve 30-
day months. The Senior Notes offered hereby will be identical in all respects
to, and are part of a class of securities with, the Senior Notes offered in
April 1996. The Senior Notes offered hereby will bear interest from October
15, 1996.
The Senior Notes are general unsecured obligations of the Company, ranking
senior in right of payment to all existing and future subordinated
indebtedness of the Company and pari passu in right of payment with all
existing and future senior indebtedness of the Company; however, the Senior
Notes are effectively subordinated to all secured indebtedness of the Company
to the extent of the value of the assets securing such indebtedness. As of
November 30, 1996, after giving effect to the Offering and the application of
the proceeds therefrom, the Company would have had no secured indebtedness
outstanding.
Principal and premium, if any, and interest on the Senior Notes are to be
payable, and the Senior Notes are exchangeable and transfers thereof are
registrable, at the offices of the Company or its agent maintained for such
purposes in The City of New York; provided that payment of interest may, at
the option of the Company, be made by check mailed to a holder at his
registered address.
The Senior Notes offered hereby will be issued only in fully registered form
without coupons, in denominations of $1,000 and any integral multiple thereof.
The Senior Notes are exchangeable and transfers thereof will be registered
without charge therefor, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
THE GUARANTEES
Each of the Guarantors (so long as they remain Subsidiaries of the Company)
has unconditionally guaranteed on a joint and several basis all of the
Company's obligations under the Senior Notes, including its obligations to pay
principal, premium, if any, and interest with respect to the Senior Notes. The
Guarantees are general unsecured obligations of the Guarantors, ranking senior
in right of payment to all existing and future subordinated indebtedness of
the Guarantors and pari passu in right of payment with all existing and future
senior indebtedness of the Guarantors; however, the Guarantees are effectively
subordinated to all secured indebtedness of the Guarantors to the extent of
the value of the assets securing such indebtedness. As of November 30, 1996,
after giving effect to the Offering and the application of the proceeds
therefrom, the Guarantors would have had approximately $12,169,000 of secured
indebtedness outstanding. Except as provided in "Certain Covenants" below, the
Company is not restricted from selling or otherwise disposing of any of the
Guarantors.
The Indenture provides that each Restricted Subsidiary (other than, in the
Company's discretion, any Restricted Subsidiary the assets of which have a
book value of not more than $1,000,000) will be a Guarantor.
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<PAGE>
The Indenture provides that if all or substantially all of the assets of any
Guarantor or all of the capital stock of any Guarantor is sold (including by
issuance or otherwise) by the Company or any of its Subsidiaries in a
transaction constituting an Asset Sale, and if the Net Proceeds from such
Asset Sale are used in accordance with the covenant, "Limitation on Asset
Sales," then such Guarantor (in the event of a sale or other disposition of
all of the capital stock of such Guarantor) or the corporation acquiring such
assets (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) shall be released and discharged of its
Guarantee obligations.
OPTIONAL REDEMPTION
The Senior Notes are redeemable at the option of the Company, in whole or in
part (in any integral multiple of $1,000), at any time on or after April 15,
2001, on not less than 30 days nor more than 60 days notice mailed to the
registered holders thereof at their last registered addresses, at the
following redemption prices (expressed as percentages of the principal amount
thereof), plus accrued and unpaid interest, if any, to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.............................. 105.0%
2002.............................. 102.5%
2003 and thereafter............... 100.0%
</TABLE>
In addition, if the Company consummates one or more public offerings of its
Common Stock subsequent to the date of this Prospectus and on or prior to
April 15, 1999, the Company may, at its option, redeem up to 33% of the
original principal amount of the Senior Notes with the net proceeds of such
offerings at 110% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date; provided, however, that immediately
after giving effect to any such redemption not less than $86,667,000 principal
amount of the Senior Notes remains outstanding.
If less than all of the Senior Notes are to be redeemed, the Trustee will
select the particular Senior Notes (or the portions thereof) to be redeemed
either by lot, pro rata or by such other method as the Trustee shall deem fair
and appropriate, but in any such event, in such manner as complies with
applicable legal and stock exchange requirements. On or after the redemption
date, interest will cease to accrue on the Senior Notes or portions thereof
called for redemption.
CERTAIN COVENANTS
Change of Control.
In the event of a Change of Control (as defined below), each holder of
Senior Notes shall have the right upon receipt of a Change of Control Notice
(as defined below), at such holder's option, to require the Company to
repurchase all of such holder's Senior Notes, or a portion thereof which is
$1,000 or any integral multiple thereof, on the date (the "Change of Control
Repurchase Date") that is 45 days after the date of the Change of Control
Notice at a price equal to 101% of the principal amount thereof, plus accrued
interest to the Change of Control Repurchase Date.
Within 30 days after the occurrence of a Change of Control, the Company or,
at the request of the Company, the Trustee, shall deliver to all holders of
record of the Senior Notes a notice (the "Change of Control Notice") of the
occurrence of such Change of Control and of the repurchase right arising as a
result thereof. The Company shall deliver a copy of the Change of Control
Notice to the Trustee. To exercise the repurchase right, on or before the 30th
day after the date of the Change of Control Notice, holders of Senior Notes
must deliver written notice to the Company (or an agent designated by the
Company for such purposes) of the holder's exercise of such right, together
with the Senior Notes with respect to which the right is being exercised, duly
endorsed for transfer. Such written notice shall be irrevocable.
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<PAGE>
The right to require the repurchase of Senior Notes shall not continue after
a discharge of the Company from its obligations under the Senior Notes and the
Indenture with respect to the Senior Notes in accordance with Article 8 of the
Indenture.
If the Change of Control Repurchase Date is between a regular record date
for the payment of interest and the next succeeding interest payment date, any
Senior Note to be repurchased must be accompanied by funds equal to the
interest payable on such succeeding interest payment date on the principal
amount to be repurchased (unless such Senior Note shall have been called for
redemption, in which case no such payment shall be required), and the interest
on the principal amount of the Senior Note being repurchased will be paid on
such next succeeding interest payment date to the registered holder of such
Senior Note on the immediately preceding record date. A Senior Note
repurchased on an interest payment date need not be accompanied by any
payment, and the interest on the principal amount of the Senior Note being
repurchased will be paid on such interest payment date to the registered
holder of such Senior Note on the immediately preceding record date.
As used herein, a "Change of Control" of the Company means the occurrence of
any of the following events: (a) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Management Group (as defined below), is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable
immediately, after the passage of time, upon the happening of an event or
otherwise), directly or indirectly, of more than 50% of the total Voting Stock
(as defined below) of the Company; provided, however, that the members of the
Management Group do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of the Company; (b) the Company consolidates with, or merges with or
into, another Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person, or
any Person consolidates with, or merges with or into, the Company, in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where immediately after such transaction no
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), excluding the Management Group, is the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable
immediately, after the passage of time, upon the happening of an event or
otherwise), directly or indirectly, of more than 50% of the total Voting Stock
of the surviving or transferee corporation; provided, however, that the
members of the Management Group do not have the right or ability by voting
power, contract or otherwise, to elect or designate for election a majority of
the Board of Directors of the Company; (c) at any time during any consecutive
two-year period, individuals who at the beginning of such period constituted
the Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office; or (d) the Company is liquidated or
dissolved or adopts a plan of liquidation. The "Management Group" shall
consist of the executive officers of the Company as of the date of the
Indenture, members of their immediate families, certain trusts for their
benefit, and legal representatives of, or heirs, beneficiaries or legatees
receiving Common Stock (or securities convertible or exchangeable for Common
Stock) under, any such person's estate. "Voting Stock" shall mean, with
respect to any Person, Capital Stock of any class or kind normally entitled to
vote in the election of the board of directors or other governing body of such
Person.
If any repurchase pursuant to the foregoing provisions constitutes a tender
offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule 14e-1 and any other tender offer rules under the Exchange
Act which then may be applicable. The Company could, in the future, enter into
certain significant transactions that would not constitute a Change of Control
with respect to the Change of Control
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<PAGE>
purchase feature of the Senior Notes. The Change of Control purchase feature
of the Senior Notes may in certain circumstances make more difficult or
discourage a takeover of the Company and, thus, the removal of incumbent
management. The Change of Control purchase feature, however, is not the result
of management's knowledge of any specific effort to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of anti-takeover provisions.
The meaning of the phrase "all or substantially all" as used in the
Indenture in the definition of "Change of Control" with respect to a sale of
assets varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under relevant law and is
subject to judicial interpretation. Accordingly, in certain circumstances,
there may be a degree of uncertainty in ascertaining whether a particular
transaction would involve a disposition of "all or substantially all" of the
assets of the Company, and therefore it may be unclear whether a Change of
Control has occurred and whether the Senior Notes are subject to a Change of
Control Offer.
Maintenance of Net Worth.
In the event that the Company's Net Worth at the end of each of any two
consecutive fiscal quarters (the last day of such second fiscal quarter being
referred to as the "Trigger Date") is less than $20,000,000 (the "Minimum Net
Worth"), then the Company shall make an offer to all holders (a "Net Worth
Offer") to acquire on a pro rata basis on the date (the "Net Worth Repurchase
Date") that is 45 days following the date of the Net Worth Notice (as defined
below), Senior Notes in an aggregate principal amount equal to 10% of the
initial outstanding principal amount of the Senior Notes (or if less than 10%
of the aggregate principal amount of the Senior Notes issued are then
outstanding, all the Senior Notes outstanding at the time) (the "Net Worth
Offer Amount") at a purchase price of 100% of the principal amount thereof,
plus accrued interest to the Net Worth Repurchase Date (the "Net Worth
Price"). The Company may credit against the Net Worth Offer Amount the
principal amount of Senior Notes acquired by the Company prior to the Trigger
Date through purchase, optional redemption or exchange. The Company, however,
may not credit a specific Note in more than one Net Worth Offer. In no event
shall the failure to meet the Minimum Net Worth at the end of any fiscal
quarter be counted toward the making of more than one Net Worth Offer. The
Company shall notify the Trustee promptly after the occurrence of any of the
events specified in this provision and shall notify the Trustee in writing if
its Net Worth is equal to or less than the Minimum Net Worth for any fiscal
quarter.
Within 30 days after the Trigger Date, the Company, or, at the request of
the Company, the Trustee, shall give notice of the Net Worth Offer to each
holder (the "Net Worth Notice"). To accept a Net Worth Offer a holder shall
deliver to the Company (or to a Paying Agent designated by the Company for
such purpose), on or before the 30th day after the date of the Net Worth
Notice, a written notice of the holder's acceptance of such offer, together
with the Senior Notes with respect to which the offer is being accepted, duly
endorsed for transfer to the Company. Such written notice may be withdrawn
upon further written notice delivered to the Trustee on or prior to the third
day preceding the Net Worth Repurchase Date.
If the Net Worth Repurchase Date is between a regular record date for the
payment of interest and the next succeeding interest payment date, any Senior
Note to be repurchased must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount to be
repurchased (unless such Senior Note shall have been called for redemption, in
which case no such payment shall be required), and the interest on the
principal amount of the Senior Note being repurchased will be paid on such
next succeeding interest payment date to the registered holder of such Senior
Note on the immediately preceding record date. A Senior Note repurchased on an
interest payment date need not be accompanied by any payment, and the interest
on the principal amount of the Senior Note being repurchased will be paid on
such interest payment date to the registered holder of such Senior Note on the
immediately preceding record date.
If any repurchase pursuant to the foregoing provisions constitutes a tender
offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule 14e-1 and any other tender offer rules under the Exchange
Act which then may be applicable.
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<PAGE>
Limitation on Debt.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume, guarantee or otherwise
become liable for ("Incur"), any Debt, except Permitted Debt. "Permitted Debt"
means (a) Debt evidenced by the Senior Notes and the Guarantees, (b) Debt
Incurred by the Company or any Guarantor under or in respect of a Bank
Facility (including any guarantees related thereto) for working capital or
general corporate purposes or evidenced by letters of credit; provided that
the aggregate amount of all such Debt outstanding at any time pursuant to this
clause (b) may not exceed $110,000,000, (c) Debt Incurred under a Warehouse
Facility; provided that the amount of such Debt (including funding drafts
issued thereunder) outstanding at any time pursuant to this clause (c)
guaranteed by the Company or a Restricted Subsidiary may not exceed
$30,000,000 and the amount of such Debt (excluding funding drafts issued
thereunder) may not exceed 98% of the value of the Mortgages pledged to secure
Debt thereunder, (d) Debt of the Company to any Guarantor or of any Restricted
Subsidiary of the Company to the Company or to any Guarantor, (e) Existing
Debt (without duplication of Debt indicated under clauses (a)-(d) above) of
the Company and its Restricted Subsidiaries other than Debt to be repaid from
the proceeds of the sale of the Senior Notes, (f) Non-Recourse Debt, (g) Debt
in respect of performance, completion, guarantee, surety and similar bonds or
banker's acceptances provided by the Company or any of its Restricted
Subsidiaries in the ordinary course of business, (h) additional Debt of the
Company or any Guarantor in an amount not to exceed $5,000,000 at any time
outstanding, (i) Debt referred to in the definition of Interest Rate
Protection Agreements, and (j) Refinancing Debt.
Notwithstanding the foregoing, and subject to the immediately succeeding
paragraph, the Company and the Guarantors may Incur Debt if, at the time such
Debt is so Incurred and after giving effect thereto and the application of the
proceeds therefrom, the Company's Coverage Ratio shall not be less than 2.0 to
1.0.
The Company shall not, and the Company will not cause or permit any
Guarantor to, directly or indirectly, Incur any Debt that purports to be by
its terms (or by the terms of any agreement governing such Debt) subordinated
to any other Debt of the Company or of such Guarantor, as the case may be,
unless such Debt is also by its terms (or by the terms of any agreement
governing such Debt) made expressly subordinated to the Senior Notes or the
Guarantee of such Guarantor, as the case may be, to the same extent and in the
same manner as such Debt is subordinated to such other Debt.
Limitation on Restricted Payments.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, make any Restricted Payment, if, after giving
effect thereto (a) an Event of Default, or an event that through the passage
of time or the giving of notice, or both, would become an Event of Default,
shall have occurred and be continuing, or (b) the Company would be unable to
incur $1.00 of additional Debt under the second paragraph set forth under the
caption "Limitation on Debt," or (c) the aggregate amount of all Restricted
Payments made by the Company and its Restricted Subsidiaries (the amount
expended or distributed for such purposes, if other than cash, to be
determined in good faith by the board of directors of the Company) from and
after the date of the Indenture shall exceed the sum of (i) the aggregate of
50% of the Consolidated Net Income of the Company accrued for the period
(taken as one accounting period) commencing with April 15, 1996 to and
including the first full month ended immediately prior to the date of such
calculation (or, in the event Consolidated Net Income is a deficit, then minus
100% of such deficit), (ii) the aggregate net proceeds (the amount of such
proceeds, if other than cash, to be determined in good faith by the board of
directors of the Company) received by the Company from the issuance or sale
(other than to a Subsidiary of the Company) of its Capital Stock (other than
Redeemable Stock), including the principal amount of any convertible or
exchangeable notes or other convertible or exchangeable securities that are
converted or exchanged into Capital Stock, from and after the date of the
Indenture, and options, warrants and rights to purchase its Capital Stock
(other than Redeemable Stock), (iii) in the case of the disposition or
repayment of any Investment constituting a Restricted Payment made after the
date of the Indenture (excluding any Investment described in clause (4) of the
following paragraph, but including upon the redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary), an amount equal to the lesser of the
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<PAGE>
return of capital with respect to such Investment and the cost of such
Investment, in either case, reduced (but not below zero) by the excess, if
any, of the cost of the disposition of such Investment over the gain, if any,
realized by the Company or such Restricted Subsidiary in respect of such
disposition of such Investment and (iv) $5,000,000.
The foregoing paragraph will not prevent: (1) the payment of any dividend
within 60 days after the date of its declaration if such dividend could have
been made on the date of its declaration in compliance with the foregoing
provisions; (2) so long as no Default or Event of Default shall have occurred
and be continuing, the redemption, repurchase or other acquisition or
retirement of any shares of any class of Capital Stock of the Company or any
Subsidiary of the Company in exchange for, or out of the net cash proceeds of,
a substantially concurrent (x) capital contribution to the Company from any
Person (other than a Subsidiary of the Company) or (y) issue and sale of other
shares of Capital Stock (other than Redeemable Stock) of the Company to any
Person (other than to a Subsidiary of the Company); provided, however, that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase or other acquisition or retirement shall be excluded
from clause (ii) of the preceding paragraph; (3) so long as no Default or
Event of Default shall have occurred and be continuing, any redemption,
repurchase or other acquisition or retirement of subordinated Debt by exchange
for, or out of the net cash proceeds of, a substantially concurrent (x)
capital contribution to the Company from any Person (other than a Subsidiary
of the Company) or (y) issue and sale of (A) Capital Stock (other than
Redeemable Stock) of the Company to any Person (other than to a Subsidiary of
the Company); provided, however, that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase or other acquisition or
retirement shall be excluded from clause (ii) of the preceding paragraph; or
(B) Debt of the Company issued to any Person (other than a Subsidiary of the
Company), so long as such Debt (x) has no stated maturity earlier than April
15, 2006, (y) has a Weighted Average Life to Maturity equal to or greater than
the remaining Weighted Average Life to Maturity of the Senior Notes and (z) is
subordinated to the Senior Notes in the same manner and at least to the same
extent as the subordinated Debt so purchased, exchanged, redeemed, acquired or
retired; (4) Investments constituting Restricted Payments made as a result of
the receipt of non-cash consideration from any Asset Sale made pursuant to and
in compliance with the covenant described under "Limitation on Asset Sales";
(5) so long as no Default or Event of Default has occurred and is continuing,
the repurchase or redemption of shares of Capital Stock from any officer,
director or employee of the Company or its Restricted Subsidiaries whose
employment has been terminated or who has died or become disabled in an
aggregate amount not to exceed $250,000 per annum; and (6) so long as no
Default or Event of Default shall have occurred and be continuing, the making
of Restricted Payments in an aggregate amount not to exceed $5,000,000,
provided that amounts paid pursuant to clauses (5) and (6) (but not clauses
(1), (2), (3) or (4)) shall reduce amounts available for future Restricted
Payments.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, assume or otherwise cause or suffer to
exist or to become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or
make any other distributions on its Capital Stock to the Company or any of its
Restricted Subsidiaries; (b) make payments in respect of any Debt owed to the
Company or any of its Restricted Subsidiaries; or (c) make loans or advances
to the Company or any of the Company's Restricted Subsidiaries; provided,
however, that the following restrictions shall not be prohibited pursuant to
this provision: (i) those contained in the Indenture, a Bank Facility, a
Warehouse Facility, any Non-Recourse Debt Incurred by the Carlsbad Subsidiary
(to the extent that restrictions in such Non-Recourse Debt apply only to the
Carlsbad Subsidiary or any Subsidiary thereof) and Refinancing Debt (to the
extent restrictions contained in such Refinancing Debt are not more
restrictive than those contained in the Debt being refinanced); (ii)
consensual encumbrances or restrictions binding upon any person at the time
such Person becomes a Subsidiary of the Company; provided that such
encumbrances or restrictions are not created, incurred or assumed in
contemplation of such Person becoming a Subsidiary of the Company and do not
extend to any other property of the Company or another of its Subsidiaries;
(iii) restrictions contained in security agreements permitted by the Indenture
securing Debt permitted by the Indenture to the extent such restrictions
restrict the
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<PAGE>
transfer of assets subject to such security agreements; (iv) any encumbrance
or restriction consisting of customary non-assignment provisions in leases to
the extent such provisions restrict the transfer of the leases; (v) any
encumbrance or restriction pursuant to an agreement in effect on the date of
the Indenture; or (vi) any restrictions with respect to a Subsidiary of the
Company imposed pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all the capital stock or assets of
such Subsidiary.
Limitation on Liens.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or permit to exist any Lien
upon or with respect to any of the assets of the Company or any such
Subsidiary, whether now owned or hereafter acquired, or on any income or
profits therefrom, other than Liens which constitute Permitted Liens at the
date such Liens are created, unless contemporaneously therewith or prior
thereto all payments due under the Indenture and the Senior Notes are secured
on an equal and ratable basis with the obligation or liability so secured
until such time as such obligation or liability is no longer secured by a
Lien. The Indenture will also provide that no Liens will be permitted to be
created or suffered to exist on any Debt from the Company in favor of any
Restricted Subsidiary and that such Debt will not be permitted to be sold,
disposed of or otherwise transferred.
Transactions with Affiliates.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, enter into any transactions with Affiliates of the
Company unless (i) such transactions are between or among the Company and its
Restricted Subsidiaries, (ii) such transactions are in the ordinary course of
business and consistent with past practice or (iii) the terms of such
transactions are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be, and are at least as favorable as the terms
which could be obtained by the Company or such Restricted Subsidiary, as the
case may be, in a comparable transaction made on an arm's-length basis between
unaffiliated parties. In the event of any transaction or series of
transactions occurring subsequent to the date of the Indenture with an
Affiliate of the Company which involves in excess of $2,500,000 and is not
permitted under clause (i) of the preceding sentence, all of the disinterested
members of the Board of Directors shall by resolution determine that such
transaction or series of transactions meets the criteria set forth in clause
(iii) of the preceding sentence. In the event of any transaction or series of
transactions occurring subsequent to the date of the Indenture with an
Affiliate of the Company which involves in excess of $10,000,000 and is not
permitted under clause (i) above, the Company will be required to deliver to
the Trustee an opinion of an Independent Financial Advisor to the effect that
the transaction is fair to the Company or the relevant Restricted Subsidiary,
as the case may be, from a financial point of view. Notwithstanding the
foregoing, such provisions do not prohibit and will not apply to (1) any
Restricted Payment which is permitted by the "Limitation on Restricted
Payments" covenant or (2) the payment of compensation to directors of the
Company who are not employees of the Company and wages and other compensation
to officers of the Company or any of its Subsidiaries.
Limitation on Asset Sales.
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly consummate an Asset Sale, unless (i) the Company or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (as determined
in good faith by the board of directors of the Company or the Restricted
Subsidiary, as the case may be) of the assets disposed of, and (ii) the
consideration for such Asset Sale consists of at least 85% cash; provided that
(x) the amount of liabilities assumed by the transferee, (y) any notes or
other obligations received by the Company or such Restricted Subsidiary and
immediately converted into cash or (z) with respect to the sale or other
disposition of all of the Capital Stock of any Restricted Subsidiary, the
amount of liabilities that remain the obligation of such Restricted Subsidiary
subsequent to such sale or other disposition, shall be deemed to be "cash".
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<PAGE>
Within 12 months from the date that any Asset Sale is consummated, the Net
Proceeds thereof will be reinvested in Additional Assets or applied to the
redemption or repurchase of Debt of the Company which ranks pari passu with
the Senior Notes or Debt of a Restricted Subsidiary of the Company which is
not subordinated to other debt of such Restricted Subsidiary (which, in each
case, will be a permanent reduction of such Debt). To the extent that the Net
Proceeds of an Asset Sale are not so applied, the Company or such Restricted
Subsidiary, as the case may be, will, within 30 days from the expiration of
such 12-month period, use the remaining Net Proceeds (less any amounts used to
pay reasonable fees and expenses connected with a Net Proceeds Offer) to make
an offer to repurchase the Senior Notes at a price equal to 100% of the
principal amount thereof, plus accrued interest to the Net Proceeds Repurchase
Date ("a Net Proceeds Offer").
Notwithstanding the foregoing, the Net Proceeds of an Asset Sale are not
required to be applied in accordance with the preceding paragraph, unless and
until the aggregate Net Proceeds for all such Asset Sales in a 12-month period
exceeds $10,000,000.
To accept a Net Proceeds Offer a holder shall deliver to the Company (or to
a Paying Agent designated by the Company for such purpose) on or before the
30th day after the date of the Net Proceeds Offer, a written notice of the
holder's acceptance of the Net Proceeds Offer, together with the Senior Notes
with respect to which the offer is being accepted, duly endorsed for transfer
to the Company. Such written notice may be withdrawn upon further written
notice to the Trustee on or prior to the third day preceding the Net Proceeds
Repurchase Date.
If the Net Proceeds Repurchase Date is between a regular record date for the
payment of interest and the next succeeding interest payment date, any Note to
be repurchased must be accompanied by funds equal to the interest payable on
such succeeding interest payment date on the principal amount to be
repurchased (unless such Senior Note shall have been called for redemption, in
which case no such payment shall be required), and the interest on the
principal amount of the Senior Note being repurchased will be paid on such
next succeeding interest payment date to the registered holder of such Senior
Note on the immediately preceding record date. A Senior Note repurchased on an
interest payment date need not be accompanied by any payment, and the interest
on the principal amount of the Senior Note being repurchased will be paid on
such interest payment date to the registered holder of such Senior Note on the
immediately preceding record date.
If any repurchase pursuant to the foregoing provisions constitutes a tender
offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule 14e-1 and any other tender offer rules under the Exchange
Act which then may be applicable.
Any amount of Net Proceeds remaining after a Net Proceeds Offer shall be
returned by the Trustee to the Company and may be used by the Company for any
purpose not inconsistent with the Indenture.
CERTAIN DEFINITIONS
In addition to the terms defined above, the Indenture contains, among other
things, the following definitions:
"Additional Assets" means assets used or usable by the Company or any of its
Restricted Subsidiaries in the operation of the existing lines of business of
the Company and its Restricted Subsidiaries.
"Affiliate" of any Person means (i) any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person and (ii) any other Person that beneficially owns at least 10% of
the voting common stock of such Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation or sale
and leaseback transaction, and whether by operation of law or otherwise) of
any of that Person's assets (including, without limitation, the sale or other
disposition of Capital
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Stock of any Subsidiary of such Person, whether by such Person or such
Subsidiary) outside the ordinary course of business, whether owned on the date
of the Indenture or subsequently acquired in one transaction or a series of
related transactions, in which such Person and/or its Subsidiaries receive
cash and/or other consideration (including, without limitation, the
unconditional assumption of Indebtedness of such Person and/or its
Subsidiaries) of $5,000,000 or more as to each such transaction or series of
related transactions; provided, however, that (i) a transaction or series of
related transactions that results in a Change of Control shall not constitute
an Asset Sale, (ii) sales, leases, conveyances or other dispositions of real
estate related to the homebuilding business of the Company or its Subsidiaries
will not constitute Asset Sales, and (iii) transactions between the Company
and any Guarantor, or among such Guarantors will not constitute Asset Sales.
"Bank Facility" means, collectively, one or more commitments from one or
more banks or other lending institutions to lend funds, together with any and
all agreements, documents and instruments from time to time delivered in
connection therewith as such commitments or any such agreements, documents or
instruments may be in effect or amended, amended and restated, renewed,
extended, restructured, supplemented or otherwise modified from time to time
and any credit agreement, loan agreement, note purchase agreement, indenture
or other agreement, document or instrument refinancing, refunding or otherwise
replacing such Bank Facility, whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Bank
Facility" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any Bank Facility and
all refundings, refinancings and replacements of any Bank Facility, including
any agreement (i) extending the maturity of any Debt incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder; provided that such borrowers and issuers include one or more of
the Company and its Subsidiaries and their respective successors and assigns,
(iii) increasing the amount of Debt Incurred thereunder or available to be
borrowed thereunder; provided that on the date thereof such Debt would not be
prohibited by clause (b) of the definition of Permitted Debt set forth under
the "Limitation on Debt" covenant, or (iv) otherwise altering the terms and
conditions thereof in a manner not prohibited by the terms of the Indenture.
"Carlsbad Property" means the 417 acres owned by the Carlsbad Subsidiary in
Carlsbad, California, located in San Diego County.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Consolidated Interest Expense" of the Company means, for any period, the
aggregate amount of interest which, in accordance with generally accepted
accounting principles, would be included on an income statement for the
Company and its Restricted Subsidiaries on a consolidated basis, whether
expensed directly, or included as a component of cost of goods sold, or
allocated to joint ventures or otherwise (including, but not limited to,
imputed interest included on capitalized lease obligations, all commissions,
discounts and other fees and charges owed with respect to letters of credit
and bankers' acceptance financing, the net costs associated with hedging
obligations, amortization of other financing fees and expenses, the interest
portion of any deferred payment obligation, amortization of discount or
premium, if any, and all other non-cash interest expense), excluding interest
expense related to mortgage banking operations, plus the product of (x) the
sum of (i) cash dividends paid on any Preferred Stock of the Company plus (ii)
cash dividends, the principal amount of any debt securities issued as a
dividend, the liquidation value of any Preferred Stock issued as a dividend
and the fair market value (as determined by the Company's board of directors
in good faith) of any other non-cash dividends, in each case, paid on any
Preferred Stock of any Restricted Subsidiary of Company (other than a Wholly-
Owned Restricted Subsidiary), times (y) a fraction, the numerator of which is
one and the denominator of which is one minus the then current effective
aggregate federal, state and local tax rate of the Company, expressed as a
decimal.
"Consolidated Interest Incurred" of the Company means, for any period, (a)
the aggregate amount of interest which, in accordance with generally accepted
accounting principles, would be included on an income statement for the
Company and its Restricted Subsidiaries on a consolidated basis, whether
expensed directly, or included as a component of cost of goods sold, or
allocated to joint ventures or otherwise (including, but not limited to,
imputed interest included on capitalized lease obligations, all commissions,
discounts and other fees
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and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premium, if any, and all other
non-cash interest expense), excluding interest expense related to the
Company's mortgage banking operations, plus or minus, without duplication, (b)
the difference between capitalized interest for such period and the interest
component of cost of goods sold for such period, plus (c) the product of (x)
the sum of (i) cash dividends paid on any Preferred Stock of the Company plus
(ii) cash dividends, the principal amount of any debt securities issued as a
dividend, the liquidation value of any Preferred Stock issued as a dividend
and the fair market value (as determined by the Company's Board of Directors
in good faith) of any other non-cash dividends, in each case, paid on any
Preferred Stock of any Subsidiary of the Company (other than a Wholly-Owned
Restricted Subsidiary), times (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current effective aggregate
federal, state and local tax rate of the Company, expressed as a decimal.
"Consolidated Net Income" of the Company, for any period, means the net
income (loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis, in accordance with generally accepted
accounting principles; provided that, without duplication, (i) the net income
of any Person, other than a Restricted Subsidiary which is consolidated with
the Company, in which any Person other than the Company and its Restricted
Subsidiaries has an interest shall be included only to the extent of the
amount of cash dividends or distributions actually paid to the Company or a
Restricted Subsidiary during such period, (ii) the net income of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded, (iii) the net income of any
Subsidiary of the Company shall be excluded to the extent such Subsidiary is
prohibited, directly or indirectly, from distributing such net income or any
portion thereof to the Company or a Restricted Subsidiary, (iv) all
extraordinary gains and losses (after taxes) that would be included on an
income statement for such period shall be excluded and (v) all gains and
losses (after taxes) attributable to Asset Sales shall be excluded; provided,
that there shall be included in such net income, without duplication, the net
income of any Unrestricted Subsidiary to the extent such net income is
actually received by the Company or any of its Restricted Subsidiaries in cash
during such period.
"Consolidated Non-cash Charges" of the Company means, for any period, the
aggregate depreciation, amortization and other non-cash charges (other than
reserves or expenses established in anticipation of future cash requirements
such as reserves for taxes and uncollectible accounts) of the Company and its
Restricted Subsidiaries on a consolidated basis for such period, as determined
in accordance with generally accepted accounting principles; provided that
Consolidated Non-cash Charges shall exclude (i) any charges that are not
included for the purpose of determining Consolidated Net Income, (ii) any
charges that are included for the purpose of determining Consolidated Interest
Expense or Consolidated Tax Expense and (iii) any charges representing
capitalized selling, general and administrative expenses that are expensed
during such period as cost of goods sold.
"Consolidated Tangible Assets" of the Company as of any date means the total
amount of assets of the Company and its Restricted Subsidiaries (less
applicable reserves and less the assets securing the payment of Non-Recourse
Debt of the Company and its Restricted Subsidiaries) on a consolidated basis
at the end of the fiscal quarter immediately preceding such date, as
determined in accordance with generally accepted accounting principles, less:
(i) unamortized debt and debt issuance expense, deferred charges, goodwill,
patents, trademarks, copyrights, and all other items which would be treated as
intangibles on the consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries, in the case of each of clauses (i) and (ii) above, as reflected
on the consolidated balance sheet of the Company and its Restricted
Subsidiaries.
"Consolidated Tangible Net Worth" of the Company means the Company's Net
Worth less unamortized debt and debt issuance expense, deferred charges,
goodwill, patents, trademarks, copyrights, and all other items which would be
treated as intangibles on the consolidated balance sheet of the Company and
its Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles.
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"Consolidated Tax Expense" of the Company means, for any period, the
aggregate of the tax expense of the Company and its Restricted Subsidiaries
for such period, determined on a consolidated basis, in accordance with
generally accepted accounting principles.
"Coverage Ratio" of the Company means the ratio of the Company's EBITDA to
its Consolidated Interest Incurred for the four fiscal quarters ending
immediately prior to the date of determination. Notwithstanding clause (ii) of
the definition of Consolidated Net Income, if the Debt which is being Incurred
is Incurred in connecting with an acquisition by the Company or a Restricted
Subsidiary, the Coverage Ratio shall be determined after giving effect to both
the Consolidated Interest Incurred related to the Incurrence of such Debt and
the EBITDA (x) of the Person becoming a Restricted Subsidiary of the Company
or (y) in the case of an acquisition of assets that constitute substantially
all of an operating unit or business, relating to the assets being acquired by
the Company or a Restricted Subsidiary of the Company.
"Debt" means, as to any Person, without duplication, (a) any indebtedness of
such Person for borrowed money, (b) all indebtedness of such Person evidenced
by bonds, debentures, notes, letters of credit, drafts or similar instruments,
(c) all indebtedness of such Person to pay the deferred purchase price of
property or services, but not including accounts payable and accrued expenses
arising in the ordinary course of business, (d) all capitalized lease
obligations of such Person, (e) all Debt of others secured by a Lien on any
asset of such Person, whether or not such Debt is assumed by such Person or
guaranteed by such Person, (f) Redeemable Stock of such Person and Preferred
Stock of any Subsidiary of such Person, (g) all obligations of such Person
with respect to Interest Rate Protection Agreements and (h) all Debt of others
guaranteed by such Person. The amount of Debt of any Person at any date
pursuant to clauses (a)-(d) and (f) above shall be as would appear as a
liability upon a balance sheet of such Person prepared on a consolidated basis
in accordance with generally accepted accounting principles. Notwithstanding
the foregoing, "Debt" of the Company shall not include the amount reflected on
a consolidated balance sheet of the Company with respect to options to acquire
real property which was purchased by the Company and sold to a third party
within 360 days of such purchase for consideration at least equal to the
amount paid by the Company for such property less an amount equal to the value
of such option.
"EBITDA" for the Company, for any period, means, without duplication, the
Consolidated Net Income of the Company plus, to the extent deducted in
calculating Consolidated Net Income, the sum of (a) Consolidated Tax Expense,
(b) Consolidated Interest Expense and (c) Consolidated Non-cash Charges.
"Existing Debt" means all of the Debt of the Company and its Restricted
Subsidiaries that was outstanding on April 15, 1996.
"guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt of such
other Person (whether by agreement to keepwell or to maintain financial
condition or otherwise), provided that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified
to perform the task for which it is to be engaged.
"Interest Rate Protection Agreement" means any arrangement with any other
Person whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a floating
or a fixed rate of interest on a stated notional amount in exchange for
periodic payments made by such Person calculated by applying a fixed or a
floating rate of interest on the same notional amount and shall include,
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<PAGE>
without limitation, interest rate swaps, caps, floors, collars and similar
agreements; provided that any arrangement which is entered into by the Company
or any of its Restricted Subsidiaries in connection with Debt Incurred by the
Company or any of its Restricted Subsidiaries shall constitute Permitted Debt.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Debt issued by, any other Person. "Investments" shall exclude
extensions of trade credit by the Company and its Subsidiaries in the ordinary
course of business in accordance with normal trade practices of the Company or
such Subsidiary, as the case may be.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
assignment (including any assignment of rights to receive payments of money
other than in connection with mortgage banking operations in the ordinary
course of business), charge, security interest or encumbrance of any kind
(including any conditional sale or other title retention agreement or any
lease in the nature thereof) in respect of such asset, any agreement to grant
to any Person any such Lien and any sale and leaseback of any asset.
"Material Subsidiary" means any Restricted Subsidiary of the Company which
accounted for 10 percent or more of the Consolidated Tangible Assets or EBITDA
of the Company for the fiscal year ending immediately prior to any Default or
Event of Default.
"Mortgage" means a first priority mortgage or first priority deed of trust
on improved real property.
"Net Proceeds" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely convertible into U.S. dollars) received by the Company or
any of its Restricted Subsidiaries from such Asset Sale (including cash
received as consideration for the assumption or incurrence of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such
Asset Sale to the Company or any of its Restricted Subsidiaries, whether or
not offset by net operating loss and tax credit carry-forwards, (b) payment of
all brokerage commissions and the underwriting fees and, without limitation,
all other fees and expenses related to such Asset Sale, and (c) deduction of
appropriate amounts to be provided by the Company or any of its Restricted
Subsidiaries as a reserve, in accordance with generally accepted accounting
principles, against any liabilities associated with the assets sold or
otherwise disposed of in such Asset Sale (including, without limitation,
pension and other post-employment benefit liabilities and liabilities related
to environmental matters) or against any indemnification obligations
associated with the sale or other disposition of the assets sold or otherwise
disposed of in such Asset Sale, and (ii) all noncash consideration received by
the Company or any of its Restricted Subsidiaries from such Asset Sale upon
the liquidation or conversion of such consideration into cash.
"Net Worth" of the Company means, at any date, the aggregate of capital,
surplus and retained earnings of the Company and its Restricted Subsidiaries
as would be shown on a consolidated balance sheet of the Company prepared in
accordance with generally accepted accounting principles, adjusted to exclude
(to the extent included) investments by the Company and its Subsidiaries in
joint ventures and the amount of equity attributable to Affiliates other than
Restricted Subsidiaries of such Person.
"Non-Recourse Debt" with respect to any Person means Debt of such Person for
which the sole legal recourse for collection of principal and interest on such
Debt is against the specific property identified in the instruments evidencing
or securing such Debt and such property was acquired with the proceeds of such
Debt or such Debt was Incurred (i) within 90 days after the acquisition of
such property or (ii) in respect of the Carlsbad Property.
"Permitted Investments" of any Person means Investments of such Person in
(i) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof, in
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each case maturing within 180 days of the date of acquisition thereof, (ii)
certificates of deposit maturing within 180 days of the date of acquisition
thereof issued by a bank, trust company or savings and loan association which
is organized under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $250 million
and a Keefe Bank Watch Rating of C or better, (iii) certificates of deposit
maturing within 180 days of the date of acquisition thereof issued by a bank,
trust company or savings and loan association organized under the laws of the
United States or any state thereof other than banks, trust companies or
savings and loan associations satisfying the criteria in (ii) above; provided
that the aggregate amount of all certificates of deposit issued to the Company
at any one time by such bank, trust company or savings and loan association
will not exceed $100,000, (iv) commercial paper given the highest rating by
two established national credit rating agencies and maturing not more than 180
days from the date of the acquisition thereof, (v) repurchase agreements or
money-market accounts which are fully secured by direct obligations of the
United States or any agency thereof and (vi) in the case of the Company and
its Subsidiaries, (1) any receivables or loans taken by the Company or a
Subsidiary in connection with the sale of any asset otherwise permitted by the
Indenture, (2) Investments in any Guarantor, (3) Investments in the Senior
Notes or Debt pari passu with the Senior Notes, (4) Investments in evidences
of Debt, securities or other property received from another Person by the
Company or any of its Restricted Subsidiaries in connection with any
bankruptcy proceeding or by reason of a composition or readjustment of debt or
a reorganization of such Person or as a result of foreclosure, perfection or
enforcement of any Lien in exchange for evidences of Debt, securities or other
property of such Person held by the Company or any of its Restricted
Subsidiaries, or for other liabilities or obligations of such other Person to
the Company or any of its Restricted Subsidiaries that were created, in
accordance with the terms of the Indenture, (5) Investments in Interest Rate
Protection Agreements which constitute Permitted Debt and (6) Investments in
an aggregate amount outstanding not greater than $30,000,000.
"Permitted Liens" with respect to the Company and its Restricted
Subsidiaries means (i) Liens on assets of the Company or any Restricted
Subsidiary of the Company securing Debt which may be incurred pursuant to the
"Limitation on Debt" covenant, provided that the aggregate amount of Debt
secured by Liens (excluding Non-Recourse Debt of the Company and Restricted
Subsidiaries and Debt outstanding under the Warehouse Facility) may not exceed
40 percent of the Company's Consolidated Tangible Assets; (ii) Liens securing
a Warehouse Facility; provided that such Liens shall not extend to any assets
other than the mortgages, promissory notes and other collateral that secures
mortgage loans made by the Company or any of its Restricted Subsidiaries;
(iii) Liens securing Non-Recourse Debt of the Company or any Restricted
Subsidiary of the Company, provided that such Liens apply only to the property
financed out of the net proceeds of such Non-Recourse Debt within 90 days of
the incurrence of such Non-Recourse Debt (except that such 90 day limitation
shall not apply with respect to the Carlsbad Property); (iv) Liens securing
Debt of a Person existing at the time that such Person is merged into or
consolidated with the Company or a Restricted Subsidiary; provided that such
Liens were not created in contemplation of such merger or consolidation and do
not extend to any assets or property of the Company or any Restricted
Subsidiary, other than the surviving Person and its Subsidiaries; (v) Liens on
assets or property acquired by the Company or a Restricted Subsidiary;
provided that such Liens were not created in contemplation of such acquisition
and do not extend to any other assets or property (other than proceeds of such
acquired assets or property); (vi) Liens in respect of Interest Rate
Protection Agreements which constitute Permitted Debt; (vii) Liens for taxes,
assessments or governmental charges or claims that either (a) are not yet
delinquent or (b) are being contested in good faith by appropriate proceedings
and as to which appropriate reserves have been established or other provisions
have been made in accordance with generally accepted accounting principles;
(viii) statutory Liens of landlords and carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other Liens imposed by law and
arising in the ordinary course of business; (ix) Liens (other than any Lien
imposed by the Employee Retirement Income Security Act of 1974, as amended)
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security; (x) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
progress payments, government contracts and other obligations of like nature
(exclusive of obligations for the payment of borrowed money), in each case,
incurred in the ordinary course of business; (xi) attachment or judgment Liens
not giving rise to a Default or Event of Default; (xii) easements, rights-of-
way, restrictions and other similar charges or
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encumbrances not materially interfering with the ordinary conduct of the
business of the Company or any of its Subsidiaries; (xii) leases or subleases
granted to others not materially interfering with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries; (xiv) Liens
securing Refinancing Debt; provided that such Liens only extend to the assets
securing the Debt being refinanced, such refinanced Debt was previously
secured and such Liens do not extend to any other assets of the Company or the
assets of any of the Company's other Subsidiaries; (xv) Liens securing
Purchase Money Obligations (including capitalized lease obligations); (xvi)
Liens existing on the date of the Indenture; (xvii) any contract to sell an
asset provided such sale is otherwise permitted under the Indenture and
(xviii) Liens on property or assets of any Restricted Subsidiary securing Debt
of such Restricted Subsidiary owing to the Company or one or more Restricted
Subsidiaries of the Company.
"Person" means any individual, corporation, partnership, association, trust
or other entity or organization, including a government or political
subdivision or agency or instrumentality thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding or issued after
the date of the Indenture, and including, without limitation, all classes and
series of preferred or preference stock.
"Purchase Money Obligations" means Debt of any Person secured by Liens (i)
on property purchased, acquired, or constructed by such Person or its
Subsidiaries after the date of the Indenture and used in the ordinary course
of business by such Person and (ii) securing the payment of all or any part of
the purchase price or construction cost of such assets and limited to the
property so acquired and improvements thereof; provided that such Debt is
incurred no later than 90 days after the acquisition of such property or
completion of such construction or improvements.
"Redeemable Stock" means, with respect to any Person, any class or series of
Capital Stock of such Person that is redeemable at the option of the holder
(except pursuant to a change in control provision that does not (i) cause such
Capital Stock to become redeemable in circumstances which would not constitute
a Change of Control and (ii) require the Company to pay the redemption price
therefor prior to the Change of Control Repurchase Date) or is subject to
mandatory redemption or otherwise matures prior to the final stated maturity
of the Senior Notes.
"Refinancing Debt" means Debt that refunds, refinances or extends any Senior
Notes, Existing Debt (other than Existing Debt to be repaid with the net
proceeds of the offering of the Senior Notes) or other Debt incurred by the
Company or its Restricted Subsidiaries pursuant to the terms of the Indenture,
but only to the extent that (i) the Refinancing Debt is subordinated to the
Senior Notes to the same extent as the Debt being refunded, refinanced or
extended, if at all, (ii) the Refinancing Debt is scheduled to mature either
(a) no earlier than the Debt being refunded, refinanced or extended, or (b)
after the maturity date of the Senior Notes, (iii) the portion, if any, of the
Refinancing Debt that is scheduled to mature on or prior to the maturity date
of the Senior Notes has a Weighted Average Life to Maturity at the time such
Refinancing Debt is Incurred that is equal to or greater than the Weighted
Average Life to Maturity of the portion of the Debt being refunded, refinanced
or extended that is scheduled to mature on or prior to the maturity date of
the Senior Notes, and (iv) the gross proceeds of such Refinancing Debt is an
amount that is equal to or less than the aggregate principal amount then
outstanding under the Debt being refunded, refinanced or extended (plus the
premiums or other payments paid in connection therewith (which shall not
exceed the stated amount of any premium or other payment required to be paid
in connection with such a renewal, extension, substitution, refunding,
refinancing, redemption, repurchase or replacement pursuant to the terms of
the Debt being renewed, extended, substituted, refunded, refinanced, amended,
modified, supplemented, redeemed, repurchased or replaced) and the expenses
incurred in connection therewith).
"Restricted Payments" means with respect to the Company or any Restricted
Subsidiary (i) the declaration or payment of any dividend or other
distribution on any shares of such Person's Capital Stock ((x) except
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dividends or distributions in additional shares of Capital Stock of the
Company other than Redeemable Stock or (y) the declaration or payment of any
dividend or other distribution by a Restricted Subsidiary to the Company or
another Restricted Subsidiary), (ii) any payment on account of the purchase,
redemption or other acquisition of (a) any shares of such Person's Capital
Stock or (b) any option, warrant or other right to acquire shares of such
Person's Capital Stock, except, in each case, Capital Stock held by the
Company or a Restricted Subsidiary, (iii) any Investment (other than a
Permitted Investment) in any Person, or (iv) any principal payment,
redemption, repurchase, defeasance or other acquisition or retirement, prior
to scheduled principal payment or scheduled maturity, of Debt of the Company
or its Subsidiaries which is subordinated in right of payment to the Senior
Notes (other than Debt held by the Company or a Restricted Subsidiary).
"Restricted Subsidiary" means any Subsidiary which is not an Unrestricted
Subsidiary.
"Subsidiary" means, with respect to any Person, (i) any corporation or
entity of which a majority of the capital stock having ordinary voting power
to elect a majority of the board of directors or other Persons performing
similar functions is at the time directly or indirectly owned by such Person
or one or more of the other Subsidiaries of that Person or (ii) any
partnership or joint venture at least a majority of the voting power of which
is at the time directly or indirectly owned by such Person or one or more of
the other Subsidiaries of that Person, or a combination thereof or a successor
thereto.
"Unrestricted Subsidiary" means each of the Subsidiaries of the Company
(other than a Guarantor) so designated by a resolution adopted by the Board of
Directors of the Company as provided below; provided that (a) neither the
Company nor any of its other Subsidiaries (other than Unrestricted
Subsidiaries) (1) provides any direct or indirect credit support for any Debt
of such Subsidiary (including any undertaking, agreement or instrument
evidencing such Debt) or (2) is directly or indirectly liable for any Debt of
such Subsidiary, and (b) the creditors with respect to Debt for borrowed money
of such Subsidiary have agreed in writing that they have no recourse, direct
or indirect, to the Company or any other Subsidiary of the Company (other than
Unrestricted Subsidiaries), including, without limitation, recourse with
respect to the payment of principal or interest on any Debt of such
Subsidiary. The Board of Directors of the Company may designate an
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) any
such redesignation will be deemed to be an Incurrence by the Company and its
Restricted Subsidiaries of the Debt (if any) of such redesignated Subsidiary
for purposes of the "Limitation on Debt" covenant set forth in the Indenture
as of the date of such redesignation, (ii) any Debt of such Unrestricted
Subsidiary could then be Incurred in accordance with the "Limitation on Debt"
covenant set forth in the Indenture on the date of such redesignation and
(iii) the Liens of such Unrestricted Subsidiary could then be incurred in
accordance with the "Limitation on Liens" covenant set forth in the Indenture
as of the date of such redesignation. Subject to the foregoing, the Board of
Directors of the Company also may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary; provided that (i) all previous Investments by the
Company and its Restricted Subsidiaries in such Restricted Subsidiary (net of
any returns previously paid on such Investments) will be deemed to be
Restricted Payments at the time of such designation and will reduce the amount
available for Restricted Payments under the "Limitations on Restricted
Payments" covenant set forth in the Indenture, (ii) the Company and its
Restricted Subsidiaries could incur $1.00 of additional Indebtedness under the
Coverage Ratio test contained in the "Limitations on Debt" covenant set forth
in the Indenture and (iii) no Default or Event of Default shall have occurred
or be continuing. Any such designation or redesignation by the Board of
Directors of the Company will be evidenced to the Trustee by the filing with
the Trustee of a certified copy of the resolution of the Board of Directors of
the Company giving effect to such designation or redesignation and an
Officers' Certificate certifying that such designation or redesignation
complied with the foregoing conditions and setting forth the underlying
calculations.
"Warehouse Facility" means a Bank Facility to finance the making of mortgage
loans originated by the Company or any of its Subsidiaries.
"Weighted Average Life to Maturity" means, when applied to any Debt or
portion thereof, if applicable, at any date, the number of years obtained by
dividing (i) the then outstanding principal amount of such Debt or portion
thereof, if applicable, into (ii) the sum of the products obtained by
multiplying (a) the amount of each
22
<PAGE>
then remaining installment, sinking fund, serial maturity or other required
payment of principal, including payment at final maturity, in respect thereof,
by (b) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the
Company of which 100% of the outstanding Capital Stock is owned by one or more
Wholly Owned Restricted Subsidiaries of the Company or by the Company and one
or more Wholly Owned Restricted Subsidiaries of the Company. For purposes of
this definition, any directors' qualifying shares shall be disregarded in
determining the ownership of a Subsidiary.
EVENTS OF DEFAULT
The following shall constitute Events of Default with respect to the Senior
Notes: (i) failure to pay the principal of any Note when such principal
becomes due and payable at maturity, upon acceleration or otherwise, (ii)
failure to pay interest when due, and such failure continues for a 30-day
period; (iii) a default in the observance or performance of any other covenant
or agreement of the Company or the Guarantors in the Note, the Guarantee or
the Indenture that continues for the period and after the notice specified
below; (iv) an event of default shall have occurred under one or more
evidences of Debt of the Company or any of its Restricted Subsidiaries (other
than Non-Recourse Debt) with an outstanding aggregate principal amount of
$5,000,000 or more, whether such Debt now exists or is created hereafter,
which event of default (1) consists of the failure by the Company or any
Restricted Subsidiary to make any payment in respect of such Debt at its final
maturity or (2) results in the acceleration of such Debt which acceleration
shall be in effect; (v) any final judgment or judgments for payment of money
in excess of $5,000,000 in the aggregate shall be rendered against the Company
or any of its Restricted Subsidiaries and shall remain unstayed, unsatisfied
or undischarged for the period and after the notice specified below; (vi)
certain events of bankruptcy, insolvency or reorganization of the Company or
Material Subsidiaries and (vii) any Guarantee of a Material Subsidiary ceases
to be in full force and effect (other than in accordance with the terms of
such Guarantee and the Indenture) or is declared null and void and
unenforceable or found to be invalid or any Guarantor denies its liability
under its Guarantee (other than by reason of release of a Guarantor from its
Guarantee in accordance with the terms of the Indenture and the Guarantee).
The Company is required to deliver to the Trustee within 120 days after the
end of each fiscal year of the Company, an officer's certificate stating
whether or not the signatories know of any default by the Company under the
Indenture and the Senior Notes and, if any default exists, describing such
default.
A default under clause (iii) or (v) above is not an Event of Default until
the Trustee or the holders of at least 25% in principal amount of the Senior
Notes then outstanding notify the Company of the default and the Company does
not cure the default within 60 days. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice of Default."
If the holders of 25% in principal amount of Senior Notes then outstanding
request the Trustee to give such notice on their behalf, the Trustee shall do
so.
In case an Event of Default (other than an Event of Default resulting from
certain events of bankruptcy, insolvency or reorganization of the Company)
shall have occurred and be continuing, the Trustee, by notice to the Company,
or the holders of 25% of the principal amount of the Senior Notes then
outstanding, by notice to the Company and the Trustee, may declare the
principal of the Senior Notes, plus accrued interest, to be immediately due
and payable. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization of the Company shall occur, such
amounts shall be due and payable without any declaration or any act on the
part of the Trustee or the holders of the Senior Notes. Any declaration of
acceleration may be rescinded and past defaults may be waived by the holders
of a majority of the principal amount of the Senior Notes then outstanding
upon conditions provided in the Indenture. Except to enforce the right to
receive payment of principal or interest when due, no holder of a Note may
institute any proceeding with respect to the Indenture or for any remedy
thereunder unless such holder has previously given to the Trustee written
notice of a continuing Event of Default and unless the holders of 25% of the
principal amount of the Senior Notes then outstanding have requested the
Trustee to institute proceedings in respect of such Event of Default and have
offered the Trustee reasonable indemnity against loss, liability and expense
to be thereby incurred, the Trustee has failed so to act for 60 days after
receipt of the same and during such 60-day period the holders of a majority
23
<PAGE>
of the principal amount of the Senior Notes then outstanding have not given
the Trustee a direction inconsistent with the request. Subject to certain
restrictions, the holders of a majority in principal amount of the Senior
Notes then outstanding will have the right to 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. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture,
that is unduly prejudicial to the rights of any holder of a Note or that would
involve the Trustee in personal liability and the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction.
MERGERS AND CONSOLIDATIONS
Neither the Company nor any Guarantor will consolidate or merge with or
into, or sell, lease, convey or otherwise dispose of all or substantially all
of its assets (including, without limitation, by way of liquidation or
dissolution), or assign any of its obligations under the Senior Notes, the
Guarantees or the Indenture (as an entirety or substantially as an entirety in
one transaction or series of related transactions), to any Person or permit
any of its Restricted Subsidiaries to do any of the foregoing (in each case
other than with the Company or another Wholly Owned Restricted Subsidiary)
unless: (i) the Person formed by or surviving such consolidation or merger (if
other than the Company or such Guarantor, as the case may be), or to which
such sale, lease, conveyance or other disposition or assignment will be made
(collectively, the "Successor"), is a corporation or other legal entity
organized and existing under the laws of the United States or any state
thereof or the District of Columbia, and the Successor assumes by supplemental
indenture in a form reasonably satisfactory to the Trustee all of the
obligations of the Company or such Guarantor, as the case may be, under the
Senior Notes or such Guarantor's Guarantee, as the case may be, and the
Indenture, (ii) immediately after giving effect to such transaction, no
Default or Event of Default has occurred and is continuing, (iii) immediately
after giving effect to such transaction and the use of any net proceeds
therefrom, on a pro forma basis, the Consolidated Tangible Net Worth of the
Company or the Successor (in the case of a transaction involving the Company),
as the case may be, would be at least equal to the Consolidated Tangible Net
Worth of the Company immediately prior to such transaction and (iv) in the
case of a transaction involving the Company, immediately after giving effect
to such transaction and the use of any net proceeds therefrom, on a pro forma
basis, the Coverage Ratio of the Company or the Successor (in the case of a
transaction involving the Company), as the case may be, would be such that the
Company or the Successor (in the case of a transaction involving the Company),
as the case may be, would be entitled to Incur at least $1.00 of additional
Debt under such Coverage Ratio test in the "Limitation on Debt" covenant set
forth in the Indenture. The foregoing provisions shall not apply to a
transaction involving the consolidation or merger of a Guarantor with or into
another person, or the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Guarantor, that results in such
Guarantor being released from its Guarantee as provided under "The Guarantees"
above.
DEFEASANCE
Under the terms of the Indenture and the Senior Notes, the Company, at its
option, (a) will be Discharged from any and all obligations in respect of the
Senior Notes (except in each case for certain obligations to register the
transfer or exchange of Senior Notes, replace stolen, lost or mutilated Senior
Notes, maintain paying agencies and hold moneys for payment in trust) or (b)
need not comply with the covenants of the Indenture nor be subject to the
operation of the cross acceleration provisions described under "Events of
Default," in each case, if the Company irrevocably deposits with the Trustee,
in trust, money or U.S. Government Obligations (as defined in the Indenture)
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of and interest on the Senior Notes on the dates such payments
are due in accordance with the terms of the Senior Notes.
To exercise either option above, the Company is required to deliver to the
Trustee an opinion of counsel that the holders of the Senior Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred.
24
<PAGE>
In the event the Company exercises its options under clause (b) of the
second preceding paragraph and the Senior Notes are declared due and payable
because of the occurrence of any Event of Default (other than the cross
acceleration provisions described under "Events of Default" which will be
inapplicable), the amount of money and U.S. Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Senior Notes at
the time of their stated maturity but may not be sufficient to pay amounts due
on the Senior Notes at the time of the acceleration resulting from such Event
of Default. However, the Company shall remain liable for such payments.
REPORTS
As long as any of the Senior Notes are outstanding, the Company will deliver
to the Trustee and mail to each Holder within 15 days after the filing of the
same with the Commission copies of the quarterly and annual reports and of the
information, documents and other reports with respect to the Company and the
Guarantors, if any, which the Company and the Guarantors may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
The Indenture will provide that, notwithstanding that neither the Company nor
any of the Guarantors may be required to remain subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will
continue to file with the Commission and provide the Trustee and Holders with
such annual and quarterly reports and such information, documents and other
reports with respect to the Company and the Guarantors as are required under
Sections 13 and 15(d) of the Exchange Act. If filing of documents by the
Company with the Commission as aforementioned in this paragraph is not
permitted under the Exchange Act, the Company shall promptly upon written
notice supply copies of such documents to any prospective holder. The Company
and each Guarantor will also comply with the other provisions of Section
314(a) of the Trust Indenture Act.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Senior Notes may be
amended or supplemented with the consent (which may include consents obtained
in connection with a tender offer or exchange offer for Senior Notes) of the
Holders of at least a majority in principal amount of Senior Notes then
outstanding, and any existing Default or Event of Default (other than any
continuing Default or Event of Default in the payment of interest on or the
principal of the Senior Notes) under, or compliance with any provision of, the
Indenture may be waived with the consent (which may include consents obtained
in connection with a tender offer or exchange offer for Senior Notes) of the
Holders of a majority in principal amount of the Senior Notes then
outstanding. Without the consent of any Holder, the Company, the Guarantors
and the Trustee may amend the Indenture or the Senior Notes or waive any
provision of the Indenture to cure any ambiguity, defect or inconsistency, to
comply with the "Mergers and Consolidations" section set forth in the
Indenture, to provide for uncertificated Senior Notes in addition to
certificated Senior Notes, to make any change that does not adversely affect
the legal rights under the Indenture of any Holder, to comply with the
qualification of the Indenture under the Trust Indenture Act, or to reflect a
Guarantor ceasing to be liable on the Guarantees because it is no longer a
Subsidiary of the Company.
Without the consent of each Holder affected, the Company may not (i) reduce
the amount of Senior Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment
of interest, including default interest, on any Note, (iii) reduce the
principal of or change the fixed maturity of any Note or alter the provisions
with respect to redemption under the "Optional Redemption" section set forth
in the Indenture, (iv) make any Senior Notes payable in money other than that
stated in the Note, (v) make any change in certain other provisions set forth
in the Indenture, (vi) adversely modify the ranking or priority of the Senior
Notes or any Guarantee, (vii) release any Guarantor from any of its
obligations under its Guarantee or the Indenture otherwise than in accordance
with the terms of the Indenture, or (viii) waive a continuing Default or Event
of Default in the payment of principal of or interest on the Senior Notes.
25
<PAGE>
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS OR EMPLOYEES
The Indenture provides that no recourse for the payment of the principal of,
premium, if any, or interest on any of the Senior Notes, or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon
any obligation, covenant or agreement of the Company or any Guarantor in the
Indenture or in any of the Senior Notes or because of the creation of any Debt
represented thereby, shall be had against any shareholder, officer, director,
employee or controlling person of the Company, any Guarantor or any successor
Person thereof. Each Holder, by accepting such Senior Notes, will waive and
release all such liability.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest (as
defined in the Indenture), it must eliminate such conflict or resign.
The Holders of a majority in principal amount of the then outstanding Senior
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
occurs and is not cured, the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent person in similar circumstances
in the conduct of his own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to the Trustee.
GOVERNING LAW
The Indenture, the Senior Notes and the Guarantees will be governed by the
internal laws of the State of New York.
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated the date hereof, Smith Barney Inc. (the "Underwriter"), has agreed to
purchase, and the Company has agreed to sell to such Underwriter, all of the
Senior Notes offered hereby.
The Underwriter is obligated to take and pay for all of the Senior Notes
offered hereby if any such Senior Notes are taken.
The distribution of the Senior Notes offered hereby the Underwriter will be
effected from time to time in negotiated transactions or otherwise at varying
prices to be determined at the time of each sale. In connection with the sale
of any Senior Notes offered hereby, the Underwriter may be deemed to have
received compensation from the Company equal to the difference between the
amount received by the Underwriter upon the sale of such Senior Notes and the
price at which the Underwriter purchased such Senior Notes from the Company,
less any accrued interest included in such amounts. In addition, the
Underwriter may sell the Senior Notes offered hereby to or through certain
dealers, and dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Underwriter and/or any
purchasers of such Senior Notes for whom it may act as agent (which
compensation may be in excess of customary commissions). The Underwriter may
also receive compensation from the purchasers of such Senior Notes for whom it
may act as agent.
The Company and the Guarantors have agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act.
26
<PAGE>
When issued, the Senior Notes offered hereby will be a part of a class of
securities with an aggregate principal amount of $150,000,000. The Senior
Notes are listed on the New York Stock Exchange. No assurance can be given,
however, as to the liquidity of the trading market, if any, for the Senior
Notes.
Smith Barney Inc. has from time to time performed investment banking and
other financial advisory services for the Company in the ordinary course of
business and has received customary compensation. Smith Barney Inc. was one of
the underwriters of the Company's public offering of the $130,000,000
aggregate principal amount of Senior Notes consummated in April 1996.
LEGAL MATTERS
Certain legal matters relating to the issuance and sale of the Senior Notes
offered hereby are being passed upon for the Company by Cahill Gordon &
Reindel (a partnership including a professional corporation), New York, New
York, and for the Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York.
EXPERTS
The audited financial statements incorporated by reference in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.
27
<PAGE>
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- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED
HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER
THAN THOSE TO WHICH IT RELATES NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Documents by Reference.................................... 2
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Risk Factors............................................................... 5
Use of Proceeds............................................................ 7
Description of the Senior Notes............................................ 8
Underwriting............................................................... 26
Legal Matters.............................................................. 27
Experts.................................................................... 27
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$20,000,000
CONTINENTAL HOMES HOLDING CORP.
10% SENIOR NOTES
DUE 2006
-------
PROSPECTUS
-------
SMITH BARNEY INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses (other than the SEC registration and NASD filing
fees) are estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........... $ 6,896.67*
NASD filing fee............................................... --
Blue Sky fees and expenses.................................... --
Printing and engraving........................................ 5,000.00
Accountants' fees and expenses................................ 10,000.00
Legal fees and expenses....................................... 30,000.00
Trustee fees and expenses..................................... 5,000.00
Miscellaneous................................................. 5,000.00
----------
Total....................................................... $55,000.00
==========
</TABLE>
--------
* Represents the portion of the amount of the filing fee paid in
connection with the registration of $150,000,000 aggregate principal
amount of Senior Notes that is being carried forward pursuant to Rule
429(b) of Regulation C of the Securities Act.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation, as amended, provides that the
Company shall, to the full extent permitted by Sections 102 and 145 of the
General Corporation Law of the State of Delaware, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto and
eliminates the personal liability of its directors to the full extent
permitted by Section 102(b)(7) of the General Corporation Law of the State of
Delaware, as amended from time to time.
Section 145 of the General Corporation Law of the State of Delaware permits
a corporation to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred by them in connection with any action, suit
or proceeding brought by third parties, if such directors or officers acted in
good faith and in a manner they 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 their conduct was unlawful.
In a derivative action, i.e., one by or in the right of the corporation,
indemnification may be made only for expenses actually and reasonably incurred
by directors and officers in connection with the defense or settlement of an
action or suit, and only with respect to a matter as to which they shall have
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable
for negligence or misconduct in the performance of his respective duties to
the corporation, although the court in which the action or suit was brought
may determine upon application that the defendant officers or directors are
reasonably entitled to indemnity for such expenses despite such adjudication
of liability.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation 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 the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision shall
eliminate or limit the liability of a director for any act or omission
occurring prior to the date when such provision becomes effective.
Section 7 of the Underwriting Agreement filed as Exhibit 1 provides that the
Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including liabilities under the Securities Act of 1933.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
NUMBER EXHIBIT
------ -------
<C> <S>
1* --Form of Underwriting Agreement.
2.1 --Stock Purchase Agreement between William O. Milburn and the Company
dated July 28, 1993. Incorporated by reference to the Company's
report on Form 8-K dated July 29, 1993.
2.2(a) --Stock Purchase Agreement between Seller and the Company dated
November 3, 1994. Incorporated by reference to Exhibit 2.1 to the
Company's report on Form 8-K dated November 18, 1994.
2.2(b) --Amendment to Stock Purchase Agreement between Seller and the Company
dated November 18, 1994. Incorporated by reference to Exhibit 2.2(b)
to the Company's report on Form 10-K for the year ended May 31, 1995.
2.2(c) --Second Amendment to Stock Purchase Agreement between Seller and the
Company dated November 18, 1994. Incorporated by reference to Exhibit
2.2(c) to the Company's report on Form 10-K for the year ended May
31, 1995.
2.2(d) --Third Amendment to Stock Purchase Agreement between Seller and the
Company dated July 12, 1995. Incorporated by reference to Exhibit
2.2(d) to the Company's report on Form 10-K for the year ended May
31, 1995.
2.3 --Agreement dated as of September 18, 1995 between Robert J. and
Kathleen R. Wade and the Company. Incorporated by reference to
Exhibit 2.1 to the Company's report on Form 10-Q for the quarter
ended August 31, 1995.
4.1 --Indenture dated as of April 15, 1996 between the Company, the
guarantors and First Union National Bank, as Trustee. Incorporated by
reference to Exhibit 4.1 to the Company's report on Form 10-Q for the
quarter ended August 31, 1996.
4.2 --Form of Note (Included in Exhibit 4.1).
4.3 --Indenture dated as of November 1, 1995 between the Company and
Manufacturers and Traders Trust Company, as Trustee. Incorporated by
reference to Exhibit 4.1 to the Company's report on Form 10-Q for the
quarter ended November 30, 1995.
4.4 --Indenture dated as of August 1, 1992 between the Company and
Fidelity Bank, National Association, as Trustee. Incorporated by
reference to Exhibit 4.1 to the Company's report on Form 10-Q for the
quarter ended August 31, 1992.
4.5 --First Supplemental Indenture dated as of March 22, 1994 to the
Indenture dated as of August 1, 1992, between the Company and First
Fidelity Bank, National Association (formerly Fidelity Bank, National
Association), as Trustee. Incorporated by reference to Exhibit 4.1 to
the Company's report on Form 10-Q for the quarter ended February 28,
1994.
5* --Opinion of Cahill Gordon & Reindel.
12* --Statement of Computation of Ratio of Earnings to Fixed Charges.
23.1* --Consent of Arthur Andersen LLP
23.2* --Consent of Cahill Gordon & Reindel (included in Exhibit 5).
24* --Powers of Attorney (included on signature pages).
25* --Statement of Eligibility on Form T-1 of Trustee.
</TABLE>
- --------
* Filed herewith.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes:
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 that is
incorporated by reference in this Registration Statement 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:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Continental Homes Holding Corp.
/s/ Donald R. Loback
By_________________________________
DONALD R. LOBACK
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback Chairman, Chief January 27,
- ------------------------------------- Executive Officer 1997
(DONALD R. LOBACK) and Director
/s/ Julie E. Collins Financial Vice- January 27,
- ------------------------------------- President, 1997
(JULIE E. COLLINS) Treasurer and
Secretary
(Principal
Financial Officer
and Principal
Accounting Officer)
/s/ W. Thomas Hickcox President, Chief January 27,
- ------------------------------------- Operating Officer 1997
(W. THOMAS HICKCOX) and Director
/s/ Bradley S. Anderson Director January 27,
- ------------------------------------- 1997
(BRADLEY S. ANDERSON)
/s/ Jo Ann Rudd Director January 27,
- ------------------------------------- 1997
(JO ANN RUDD)
/s/ William Steinberg Director January 27,
- ------------------------------------- 1997
(WILLIAM STEINBERG)
/s/ Peter O'Conner Director January 27,
- ------------------------------------- 1997
(PETER O'CONNER)
II-4
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Acheter, Inc.
/s/ Donald R. Loback
By_________________________________
DONALD R. LOBACK
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins, or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign this Registration Statement and
to sign any and all amendments to this Registration Statement, including post-
effective amendments, and registration statements filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Treasurer(Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ Timothy C. Westfall Secretary and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
/s/ Terry E. Mitchell Vice President and January 27,
- ------------------------------------- Director 1997
(TERRY E. MITCHELL)
II-5
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
CH Mortgage Company
/s/ Randall C. Present
By_________________________________
RANDALL C. PRESENT
CHAIRMAN AND PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins, or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign this Registration Statement and
to sign any and all amendments to this Registration Statement, including post-
effective amendments, and registration statements filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Randall C. Present Chairman and January 27,
- ------------------------------------- President 1997
(RANDALL C. PRESENT)
/s/ Christina M. Monkewicz Treasurer (Principal January 27,
- ------------------------------------- Financial Officer 1997
(CHRISTINA M. MONKEWICZ) and Principal
Accounting Officer)
/s/ W. Thomas Hickcox Director January 27,
- ------------------------------------- 1997
(W. THOMAS HICKCOX)
/s/ Robert B. Ryan Director January 27,
- ------------------------------------- 1997
(ROBERT B. RYAN)
II-6
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
CHI Construction Company
/s/ W. Thomas Hickcox
By_________________________________
W. THOMAS HICKCOX
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ W. Thomas Hickcox President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
/s/ Julie E. Collins Vice President, January 27,
- ------------------------------------- Treasurer and 1997
(JULIE E. COLLINS) Secretary
(Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Donald R. Loback Vice President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Timothy C. Westfall Vice President and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
II-7
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
CHI Finance Corp.
/s/ Donald R. Loback
By_________________________________
DONALD R. LOBACK
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins, or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign this Registration Statement and
to sign any and all amendments to this Registration Statement, including post-
effective amendments, and registration statements filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Financial Vice January 27,
- ------------------------------------- President, 1997
(JULIE E. COLLINS) (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ W. Thomas Hickcox Secretary, Treasurer January 27,
- ------------------------------------- and Director 1997
(W. THOMAS HICKCOX)
/s/ Robert B. Ryan Director January 27,
- ------------------------------------- 1997
(ROBERT B. RYAN)
II-8
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Continental Homes, Inc.
/s/ Donald R. Loback
By_________________________________
DONALD R. LOBACK
CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins, or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign this Registration Statement and
to sign any and all amendments to this Registration Statement, including post-
effective amendments, and registration statements filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback Chief Executive January 27,
- ------------------------------------- Officer and 1997
(DONALD R. LOBACK) Director
/s/ Julie E. Collins Financial Vice January 27,
- ------------------------------------- President, 1997
(JULIE E. COLLINS) Treasurer and
Secretary
(Principal
Financial Officer
and Principal
Accounting Officer)
/s/ W. Thomas Hickcox President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
/s/ Timothy C. Westfall Vice President and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
II-9
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Continental Homes of Florida, Inc.
/s/ John P. Moroney
By_________________________________
JOHN P. MORONEY
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ John P. Moroney President January 27,
- ------------------------------------- 1997
(JOHN P. MORONEY)
/s/ Christina M. Monkewicz Treasurer (Principal January 27,
- ------------------------------------- Financial Officer 1997
(CHRISTINA M. MONKEWICZ) and Principal
Accounting Officer)
/s/ Julie E. Collins Director January 27,
- ------------------------------------- 1997
(JULIE E. COLLINS)
/s/ Donald R. Loback Vice President January 27,
- ------------------------------------- andDirector 1997
(DONALD R. LOBACK)
/s/ W. Thomas Hickcox Director January 27,
- ------------------------------------- 1997
(W. THOMAS HICKCOX)
/s/ Timothy C. Westfall Director January 27,
- ------------------------------------- 1997
(TIMOTHY C. WESTFALL)
II-10
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Continental Homes of Texas, Inc.
/s/ David Matlock
By_________________________________
DAVID MATLOCK PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback Chairman January 27,
- ------------------------------------- 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Vice President and January 27,
- ------------------------------------- Treasurer 1997
(JULIE E. COLLINS) (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
/s/ Timothy C. Westfall Secretary January 27,
- ------------------------------------- andDirector 1997
(TIMOTHY C. WESTFALL
II-11
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
KDB Homes, Inc.
/s/ Curtis H. Nelson
By_________________________________
CURTIS H. NELSON
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Curtis H. Nelson President January 27,
- ------------------------------------- 1997
(CURTIS H. NELSON)
/s/ Julie E. Collins Treasurer and January 27,
- ------------------------------------- Secretary 1997
(JULIE E. COLLINS) (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Donald R. Loback Vice President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Timothy C. Westfall Vice President and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
II-12
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
L & W Investments, Inc.
/s/ Christopher J. Chambers
By_________________________________
CHRISTOPHER J. CHAMBERS
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Christopher J. Chambers President January 27,
- ------------------------------------- 1997
(CHRISTOPHER J. CHAMBERS)
/s/ Julie E. Collins Treasurer (Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ Donald R. Loback Vice President and January 27,
- ------------------------------------- Director 1997
((DONALD R. LOBACK)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
/s/ Timothy C. Westfall Vice President and January 27,
- ------------------------------------- Director 1997
TIMOTHY C. WESTFALL
II-13
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Milburn Investments, Inc.
/s/ Bruce F. Dickson
By_________________________________
BRUCE F. DICKSON
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback Director January 27,
- ------------------------------------- 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Treasurer (Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
/s/ Timothy C. Westfall Vice President and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
II-14
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Miltex Financial IV General
Partnership
/s/ Donald R. Loback
By_________________________________
DONALD R. LOBACK
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Treasurer(Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ Timothy C. Westfall Secretary and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
II-15
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Miltex Management, Inc.
/s/ Randall C. Present
By_________________________________
RANDALL C. PRESENT
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Randall C. Present President January 27,
- ------------------------------------- 1997
(RANDALL C. PRESENT)
/s/ Richard Marek Treasurer and January 27,
- ------------------------------------- Assistant Secretary 1997
(RICHARD MAREK) (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Donald R. Loback Vice President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Timothy C. Westfall Secretary and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
II-16
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Miltex Mortgage of Texas Limited
Partnership
/s/ Donald R. Loback
By: _________________________________
DONALD R. LOBACK PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins, or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign this Registration Statement and
to sign any and all amendments to this Registration Statement, including post-
effective amendments, and registration statements filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Donald R. Loback President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Treasurer (Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ Timothy C. Westfall Secretary and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
II-17
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Rancho Carillo, Inc.
/s/ Christopher J. Chambers
By: _________________________________
CHRISTOPHER J. CHAMBERS
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins, or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign this Registration Statement and
to sign any and all amendments to this Registration Statement, including post-
effective amendments, and registration statements filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Christopher J. Chambers President January 27,
- ------------------------------------- 1997
(CHRISTOPHER J. CHAMBERS)
/s/ Julie E. Collins Treasurer and January 27,
- ------------------------------------- Secretary 1997
(JULIE E. COLLINS) (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Donald R. Loback Vice President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Timothy C. Westfall Director January 27,
- ------------------------------------- 1997
(TIMOTHY C. WESTFALL)
/s/ W. Thomas Hickcox Vice President and January 27,
- ------------------------------------- Director 1997
(W. THOMAS HICKCOX)
II-18
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
R.O.S. Corporation
/s/ Donald R. Loback
By: _________________________________
DONALD R. LOBACK
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Donald R. Loback President January 27,
- ------------------------------------- 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Treasurer (Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ Timothy C. Westfall Secretary and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
/s/ Terry E. Mitchell Vice President and January 27,
- ------------------------------------- Director 1997
(TERRY E. MITCHELL)
II-19
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Settlement Corporation
/s/ Donald R. Loback
By_________________________________
DONALD R. LOBACK
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Donald R. Loback President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ Julie E. Collins Treasurer(Principal January 27,
- ------------------------------------- Financial Officer 1997
(JULIE E. COLLINS) and Principal
Accounting Officer)
/s/ Timothy C. Westfall Secretary and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
/s/ Terry E. Mitchell Vice President and January 27,
- ------------------------------------- Director 1997
(TERRY E. MITCHELL)
II-20
<PAGE>
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 THE CITY OF NEW YORK AND STATE OF NEW YORK ON JANUARY 27, 1997.
Travis County Title Company
/s/ Jackie Manuel
By_________________________________
JACKIE MANUEL
PRESIDENT
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Donald R. Loback and Julie E. Collins,
or either of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Registration
Statement and to sign any and all amendments to this Registration Statement,
including post-effective amendments, and registration statements filed
pursuant to Rule 462 under the Securities Act of 1933, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Jackie Manuel President January 27,
- ------------------------------------- 1997
(JACKIE MANUEL)
/s/ Burl McClendon Treasurer and January 27,
- ------------------------------------- Assistant Secretary 1997
(BURL MCCLENDON) (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ Donald R. Loback Vice President and January 27,
- ------------------------------------- Director 1997
(DONALD R. LOBACK)
/s/ W. Thomas Hickcox Director January 27,
- ------------------------------------- 1997
(W. THOMAS HICKCOX)
/s/ Timothy C. Westfall Vice President and January 27,
- ------------------------------------- Director 1997
(TIMOTHY C. WESTFALL)
II-21
<PAGE>
EXHIBIT 1.2
$20,000,000
CONTINENTAL HOMES HOLDING CORP.
10% Senior Notes due 2006
UNDERWRITING AGREEMENT
----------------------
January __, 1997
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Continental Homes Holding Corp., a Delaware corporation (the
"Company"), proposes, upon the terms and conditions set forth herein, to issue
and sell $20,000,000 aggregate principal amount of its 10% Senior Notes due
2006 (the "Notes") to you (the "Underwriter"). The Notes will be guaranteed
(the "Guarantees"), on a joint and several basis, by all of the Company's
subsidiaries which are signatories hereto (the "Guarantors"). The Notes and
the Guarantees are collectively referred to herein as the "Securities." The
Securities will be issued pursuant to the provisions of an Indenture dated as
of April 15, 1996 (the "Indenture"), among the Company, the Guarantors and
First Union National Bank, as Trustee (the "Trustee").
The Company and the Guarantors wish to confirm as follows their
agreement with you, in connection with the purchase of the Securities by the
Underwriter.
1. Registration Statement and Prospectus. The Company and
-------------------------------------
the Guarantors have prepared and filed with the
<PAGE>
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-3 under the Act (the "registration statement")
relating to the Securities. The term "Registration Statement" as used in this
Agreement means the registration statement (including all financial schedules
and exhibits), as supplemented or amended prior to the execution of this
Agreement. If it is contemplated, at the time this Agreement is executed, that
a post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Securities may commence, the
term "Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. Any registration
statement filed by the Company and the Guarantors pursuant to Rule 462(b) under
the Act is referred to as the "Rule 462(b) Registration Statement," and after
such filing the term Registration Statement shall include the Rule 462(b)
Registration Statement. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus subject to completion in the form included in
the registration statement at the time of
2
<PAGE>
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As
used herein, the term "Incorporated Documents" means the documents which at the
time are incorporated by reference in the registration statement, the
Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby
-------------------------------
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Underwriter and, upon the basis of the representations, warranties
and agreements of the Company and the Guarantors herein contained and subject
to all the terms and conditions set forth herein, the Underwriter agrees to
purchase from the Company, at a purchase price of _____% of the principal
amount thereof, $20,000,000 aggregate principal amount of Securities.
3
<PAGE>
3. Terms of Public Offering. The Company has been advised
------------------------
by you that you propose to make a public offering of the Securities as soon
after the Registration Statement and this Agreement have become effective as in
your judgment is advisable and to offer the Securities upon the terms set forth
in the Prospectus.
4. Delivery of the Securities and Payment Therefor.
-----------------------------------------------
Delivery to the Underwriter of and payment for the Securities shall be made at
the office of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at
10:00 A.M., New York City time, on January __, 1997 (the "Closing Date"). The
place of closing for the Securities and the Closing Date may be varied by
agreement between you and the Company.
The Securities will be delivered to you for your account against
payment of the purchase price therefor by wire transfer of immediately
available funds to the Company and registered in such names and in such
denominations as you shall request prior to 9:30 A.M., New York City time, on
the second business day preceding the Closing Date. The Securities to be
delivered to you shall be made available to you in New York City for inspection
and packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date.
5. Agreements of the Company and the Guarantors. The
--------------------------------------------
Company and each of the Guarantors, jointly and severally, agree with the
Underwriter as follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto or any Rule 462(b)
4
<PAGE>
Registration Statement to be declared effective before the offering of the
Securities may commence, the Company and the Guarantors will endeavor to cause
any such registration statement or such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested by
you, will confirm such advice in writing, when any such registration statement
or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
paragraph (e) below, of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or results of operations, or
of the happening of any event, which, in each case, makes any statement of a
material fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any additions
to or changes in the Registration Statement or the Prospectus (as then amended
or supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the
5
<PAGE>
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) three
signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the registration statement, (ii) such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may request, (iii) such number of copies
of the Indenture and of the Incorporated Documents, without exhibits, as you
may request, and (iv) three copies of the exhibits to the Incorporated
Documents.
(d) The Company and the Guarantors will not file any amendment to
the Registration Statement or make any amendment or supplement to the
Prospectus or, prior to the earlier of (i) the end of the period of time
referred to in the first sentence in subsection (e) below and (ii) the first
anniversary of the Closing Date, file any document which, upon filing becomes
an Incorporated Document, of which you shall not previously have been advised
or to which, after you shall have received a copy of the document proposed to
be filed, you shall reasonably object.
(e) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as a prospectus is
required by the Act to be delivered in connection with sales by the Underwriter
or any dealer, the Company will expeditiously deliver to the
6
<PAGE>
Underwriter and each dealer, without charge, as many copies of the Prospectus
(and of any amendment or supplement thereto) as you may request. The Company
and each of the Guarantors consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Securities are offered by the Underwriter and by all dealers to whom Securities
may be sold, both in connection with the offering and sale of the Securities
and for such period of time thereafter as the Prospectus is required by the Act
to be delivered in connection with sales by the Underwriter or any dealer. If
during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriter is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus (or to file under the Exchange Act any
document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
expeditiously furnish to the Underwriter and dealers a reasonable number of
copies thereof. In the event that the Company and you, as Underwriter, agree
that the Prospectus should be amended or supplemented before the Closing Date,
the Company, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed amendment or
supplement.
7
<PAGE>
(f) The Company and the Guarantors will cooperate with you and
with counsel for the Underwriter in connection with the registration or
qualification of the Securities for offering and sale by the Underwriter and by
dealers under the securities or Blue Sky laws of such jurisdictions as you may
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company or any Guarantor be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, or to
taxation in any jurisdiction where it is not now so subject.
(g) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(h) So long as any of the Securities are outstanding, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as you may request.
(i) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof
8
<PAGE>
(otherwise than pursuant to notice given by you terminating this Agreement
pursuant to Section 10 or Section 11 hereof) or if this Agreement shall be
terminated by you because of any failure or refusal on the part of the Company
or the Guarantors to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse you for all out-of-pocket
expenses (including reasonable fees and expenses of your counsel) incurred by
you in connection herewith.
(j) The Company will apply the net proceeds from the sale of the
Securities substantially in accordance with the description set forth in the
Prospectus.
6. Representations and Warranties of the Company and the
------------------------------------------------------
Guarantors. The Company and each of the Guarantors, jointly and severally,
- ----------
represent and warrant to the Underwriter that:
(a) The Company and the Guarantors have reasonable grounds
to believe that they meet all of the requirements for filing on Form S-3 under
the Act. The registration statement in the form in which it became effective
and also in such form as it may be when any post-effective amendment thereto
shall become effective, any Rule 462(b) Registration Statement in the form in
which it becomes effective, and the Prospectus (and any supplement or amendment
thereto) when filed with the Commission under Rule 424(b) under the Act,
complied or will comply in all material respects with the provisions of the Act
and will not at any such times 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,
9
<PAGE>
except that this representation and warranty does not apply to statements in or
omissions from the registration statement or the prospectus made in reliance
upon and in conformity with (i) information relating to the Underwriter
furnished to the Company in writing by or on behalf of the Underwriter
expressly for use therein, or (ii) the Trustee's Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended (the
"1939 Act").
(b) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, any
further Incorporated Documents so filed during the period a prospectus is
required by the Act to be delivered in connection with sales by the Underwriter
or any dealer will, when they are filed, comply in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder;
no such document when it was filed (or, if an amendment with respect to any
such document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and no such further document, when it is filed during the period a
prospectus is required by the Act to be delivered in connection with sales by
the Underwriter or any dealer, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
10
<PAGE>
(c) The financial statements of the Company and its
subsidiaries set forth in the Registration Statement and Prospectus (and any
amendment and supplement thereto) fairly present in all material respects the
financial condition of the Company and its subsidiaries as of the dates
indicated and the results of operations and changes in financial position for
the periods therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein).
(d) The Company and each of its subsidiaries has been duly
incorporated and is an existing corporation in good standing under the laws of
its jurisdiction of incorporation, has all requisite power and authority
(corporate and other) to conduct its business as described in the Registration
Statement and Prospectus and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in which the conduct
of its business requires such qualification, except where the failure to be so
qualified, considering all such cases in the aggregate, would not have a
material adverse effect on the business, properties, financial position or
results of operations of the Company and its subsidiaries taken as a whole; and
all of the outstanding shares of capital stock of each such subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable and
(except as otherwise stated in the Registration Statement) are owned
beneficially by the Company subject to no security interest, other encumbrance
or adverse claim. Except for the Company's [6-7/8% Convertible Subordinated
Notes due November 2002] and options to purchase common stock granted pursuant
to the Company's stock option plans, there are no outstanding rights,
11
<PAGE>
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interest in the Company or any
of its subsidiaries.
(e) All of the outstanding shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), and all other equity
securities of the Company have been duly authorized and are validly issued,
fully paid and non-assessable. The stockholders of the Company have no
preemptive rights with respect to the Common Stock. No person has any rights
to the registration of securities by reason of the Company's filing the
Registration Statement with the Commission or otherwise.
(f) Except as contemplated in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, or entered into
any transactions, not in the ordinary course of business, that are material to
the Company and its subsidiaries taken as a whole, and there has not been any
material change, on a consolidated basis, in the capital stock, current
liabilities or long-term obligations of the Company and its subsidiaries taken
as a whole, or any material adverse change, in the condition (financial or
other), business, net worth, results of operations or properties of the Company
and its subsidiaries taken as a whole.
(g) Except as set forth in the Prospectus, neither the
Company nor any of its subsidiaries is in violation, and, to the best knowledge
of the Company, no
12
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director, officer, or employee of the Company or any of its subsidiaries is in
violation, of any law, ordinance, administrative or governmental rule or
regulation or court decree (including, without limitation, any relating to
environmental regulation) applicable to it or them, and there is not pending
or, to the knowledge of the Company, threatened any action, suit, or proceeding
(including, without limitation, any relating to environmental regulation) to
which the Company or any of its subsidiaries is a party, or, to the best
knowledge of the Company, to which any director, officer or employee of the
Company is a party, before or by any court or governmental agency or body, that
in either case might result in any material adverse change in the condition
(financial or other), business, net worth or results of operations of the
Company and its subsidiaries taken as a whole, or might materially and
adversely affect the properties or assets thereof.
(h) There are no contracts or documents of the Company or
any of its subsidiaries that are required to be filed as exhibits to the
Registration Statement or to the Incorporated Documents by the Act or the
Exchange Act and the rules and regulations thereunder that have not been so
filed.
(i) Each of this Agreement and the Indenture has been duly
authorized, executed and delivered by the Company and each Guarantor and each
is a legal, valid and binding agreement of the Company and each Guarantor
enforceable in accordance with its terms, except to the extent that (a)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of equity
(regardless of
13
<PAGE>
whether enforcement is considered in a proceeding at law or in equity); and (b)
with respect to this Agreement, as rights to indemnity and contribution
hereunder may be limited by federal or state laws relating to securities or the
policies underlying such laws.
(j) The Indenture has been duly qualified under the 1939
Act, complies with the applicable provisions of the 1939 Act and conforms in
all material respects to the description thereof in the Registration Statement
and the Prospectus.
(k) The Securities will conform in all material respects to
the description thereof in the Registration Statement and the Prospectus. The
Securities have been duly authorized by the Company and each of the Guarantors,
as applicable, and, when executed and authenticated in accordance with the
Indenture and delivered to you against payment therefor in accordance with the
terms hereof and the Indenture, will have been validly issued and delivered and
will constitute valid and binding obligations of the Company and the Guarantors
enforceable against the Company and the Guarantors in accordance with their
terms, except as such enforcement may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
(l) The performance of this Agreement and the Indenture and
the consummation of the transactions herein and therein contemplated, will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default
14
<PAGE>
under, any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them is bound or to which any
of the property of the Company or any of its subsidiaries is subject, the
charter or bylaws of the Company or any of its subsidiaries, or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties, which breach, violation or default, with respect to any
such agreement or instrument, would have a material adverse effect on the
condition (financial or other), business, net worth, results of operations or
properties of the Company and its subsidiaries taken as a whole; no consent,
approval, authorization or order of, or filing with, any court or governmental
agency or body is required for the consummation of the transactions
contemplated by this Agreement or the Indenture in connection with the issuance
or sale of the Securities, except such as may be required under the Act or
state securities or Blue Sky laws; and the Company and each of the Guarantors
has full corporate power and authority to authorize, issue and sell the
Securities as contemplated by this Agreement and the Indenture.
(m) Neither the Company nor any Guarantor has taken nor
will take, directly or indirectly, any action designed to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(n) The Company and each of its subsidiaries has all
material governmental licenses, certificates, permits, authorizations,
approvals, franchises or other rights necessary to engage in the business
currently conducted by it
15
<PAGE>
as described in the Prospectus, except such as may be necessary for the
development of and construction on specific properties or as do not materially
adversely affect the condition (financial or other), business, net worth,
results of operations or properties of the Company and its subsidiaries taken
as a whole, and the Company has no reason to believe that any governmental body
or agency is considering limiting, suspending or revoking any such license,
certificate, permit, authorization, approval, franchise or right.
(o) Neither the Company nor any of its subsidiaries is in
breach or violation of any of the terms and provisions of, or in default under,
any agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them is bound or to which any of the property
of the Company or any of its subsidiaries is subject, which breach, violation
or default would have a material adverse effect on the condition (financial or
other), business, net worth, results of operations or properties of the Company
and its subsidiaries taken as a whole.
(p) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(q) The Company has complied with all provisions of Florida
Statutes, (SECTION)517.075, relating to issuers doing business in Cuba.
7. Indemnification and Contribution. (a) The Company and
--------------------------------
each of the Guarantors, jointly and severally,
16
<PAGE>
agree to indemnify and hold harmless the Underwriter and each person, if any,
who controls the Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information relating to the Underwriter furnished in writing to the Company
by or on behalf of the Underwriter expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a)
with respect to any Prepricing Prospectus shall not inure to the benefit of the
Underwriter (or to the benefit of any person controlling the Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Securities by the Underwriter to any person if a copy of the
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Prepricing Prospectus was corrected in the Prospectus,
provided that the Company has delivered the Prospectus to the Underwriter in
requisite quantity on a timely basis to permit
17
<PAGE>
such delivery or sending. The foregoing indemnity agreement shall be in
addition to any liability which the Company or the Guarantors may otherwise
have.
(b) If any action, suit or proceeding shall be brought against
the Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Company and the Guarantors, the Underwriter
or such controlling person shall promptly notify the Company and the Guarantors
and the Company and the Guarantors shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. The
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Underwriter or such controlling person unless (i) the Company
has agreed in writing to pay such fees and expenses, (ii) the Company and the
Guarantors have failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both the Underwriter or such controlling person and the
Company or the Guarantors and the Underwriter or such controlling person shall
have been advised by its counsel that representation of such indemnified party
and the Company or the Guarantors by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company and the
Guarantors shall not have the right to assume the defense of such action, suit
or proceeding on behalf of the Underwriter or such controlling person). It is
understood, however, that the Company or the Guarantors shall,
18
<PAGE>
in connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Underwriter
and controlling persons not having actual or potential differing interests with
you or among themselves, which firm shall be designated in writing by Smith
Barney Inc., and that all such fees and expenses shall be reimbursed as they
are incurred. The Company and the Guarantors shall not be liable for any
settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Company and the Guarantors agree to indemnify and hold harmless the
Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) The Underwriter agrees to indemnify and hold harmless the
Company, the Guarantors, their directors, their officers who sign the
Registration Statement, and any person who controls the Company or the
Guarantors within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company
and the Guarantors to the Underwriter, but only with respect to information
relating to the Underwriter furnished in writing by or on behalf of the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the
19
<PAGE>
Company, the Guarantors, any of their directors, any such officer, or any such
controlling person, based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against the Underwriter pursuant to this
paragraph (c), the Underwriter shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company shall have assumed
the defense thereof the Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the Underwriter's expense), and
the Company, the Guarantors, their directors, any such officer, and any such
controlling person, shall have the rights and duties given to the Underwriter
by paragraph (b) above. The foregoing indemnity agreement shall be in addition
to any liability which the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors on the one hand and the Underwriter on the other
hand from the offering of the Securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the
20
<PAGE>
Company and the Guarantors on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Guarantors on the one hand and the Underwriter on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriter, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Guarantors on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantors on the one hand or by
the Underwriter on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company, the Guarantors and the Underwriter agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any
21
<PAGE>
claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price of the
Securities underwritten by it and distributed to the public exceeds the amount
of any damages which the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7, the
agreements of the Company and the Guarantors set forth in this Agreement and
the representations and warranties of the Company and the Guarantors set forth
in this Agreement shall remain operative and in full force and
22
<PAGE>
effect, regardless of (i) any investigation made by or on behalf of the
Underwriter or any person controlling the Underwriter, the Company, the
Guarantors, their directors or officers or any person controlling the Company,
(ii) acceptance of any Securities and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Underwriter or any person
controlling the Underwriter, or to the Company, the Guarantors, their directors
or officers, or any person controlling the Company or the Guarantors, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. Conditions of Underwriter's Obligation. The obligation
--------------------------------------
of the Underwriter to purchase the Securities hereunder is subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the registration statement or a post-effective amendment
thereto or the Rule 462(b) Registration Statement to be declared effective
before the offering of the Securities may commence, the registration statement
or such post-effective amendment and such Rule 462(b) Registration Statement
shall have become effective not later than 5:30 P.M., New York City time, on
the date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 424 and 430A under
the Act shall have been timely made; no stop order suspending the effectiveness
of the registration statement or the Rule 462(b) Registration Statement, if
any, shall have been issued and no proceeding for that purpose shall have been
instituted or, to the knowledge of the Company or the Underwriter, threatened
by the Commission, and any request of the Commission for additional information
(to be
23
<PAGE>
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of the staff of the Commission.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company and
its subsidiaries, taken as a whole, not contemplated by the Prospectus, which
in your opinion, as Underwriter, would materially adversely affect the market
for the Securities, or (ii) any event or development relating to or involving
the Company or any officer or director of the Company or involving any of its
subsidiaries which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriter and its
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such event
or development would, in your opinion, as Underwriter, materially adversely
affect the market for the Securities.
(c) You shall have received on the Closing Date, an opinion of
Cahill Gordon & Reindel, counsel for the Company, dated the Closing Date and
addressed to you, as Underwriter, to the effect that:
(i) Each of the Company and each of its subsidiaries
incorporated in the State of Delaware (each a "Delaware Guarantor") has been
duly incorporated and is an
24
<PAGE>
existing corporation in good standing under the laws of its jurisdiction of
incorporation; has all requisite corporate power and authority to conduct its
business as described in the Registration Statement and Prospectus and is duly
qualified to do business in each jurisdiction in which such counsel has been
advised it owns or leases real property or in which the conduct of its business
requires such qualification, except where the failure to be so qualified,
considering all such cases in the aggregate, would not have a material adverse
effect on the business, net worth, properties, financial position or results of
operations of the Company and its subsidiaries taken as a whole; all of the
outstanding shares of capital stock of each such Delaware Guarantor have been
duly authorized and validly issued, are fully paid and non-assessable and, to
the knowledge of such counsel (except as otherwise stated in the Registration
Statement), are owned beneficially by the Company subject to no security
interest, other encumbrance or adverse claim; and to the knowledge of such
counsel, except for the Company's [6-7/8% Convertible Subordinated Notes due
November 2002] and options to purchase common stock granted pursuant to the
Company's stock option plans, there are no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any of its
subsidiaries;
(ii) All of the outstanding shares of Common Stock have been
duly authorized and are validly issued, fully paid and non-assessable;
(iii) Based solely on telephonic advice from the Commission,
the Registration Statement and any Rule 462(b) Registration Statement have
become effective under the Act;
25
<PAGE>
any required filing of the Prospectus pursuant to Rule 424(b) has been made in
accordance with Rule 424(b); and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement have been issued and no proceeding for that purpose has
been instituted or threatened by the Commission;
(iv) The Registration Statement when it became effective,
any Rule 462(b) Registration Statement when it became effective and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, appeared to comply as to
form in all material respects with the requirements of the Act; and the
Incorporated Documents, when they were filed with the Commission under the
Exchange Act, appeared to comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder (it
being understood that such counsel need express no opinion as to the financial
statements or other financial and statistical data included in any of the
documents mentioned in this clause and as to the Statement of Eligibility on
Form T-1);
(v) There is no statute or contract or other document known
to such counsel of a character required to be described in the Registration
Statement, the Prospectus or the Incorporated Documents or to be filed as an
exhibit to the Registration Statement or the Incorporated Documents, which is
not described or filed as required;
(vi) The Company and each Delaware Guarantor have corporate
authority to enter into this Agreement and the Indenture and to issue the
Securities. Each of this Agreement
26
<PAGE>
and the Indenture has been duly authorized, executed and delivered by the
Company and each Delaware Guarantor. Assuming due authorization, execution and
delivery by the parties thereto other than the Company and any Delaware
Guarantor, each of this Agreement and the Indenture is the legal, valid and
binding obligation of the Company and each Guarantor, enforceable against it in
accordance with its terms, except that (a) the enforceability thereof may be
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' and debtors' rights and remedies generally, (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought and (c) rights to indemnification and
contribution under this Agreement may be limited by Federal and state
securities laws or the policies underlying such laws;
(vii) The Indenture has been duly qualified under the 1939
Act and conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus;
(viii) The Securities conform in all material respects to
the description thereof in the Prospectus. The Securities have been duly
authorized by the Company and each Delaware Guarantor and, when executed and
authenticated in accordance with the terms of the Indenture and delivered to
the Underwriter against payment therefor in accordance with the terms of this
Agreement and the Indenture, will have been validly issued and delivered by the
Company and each Delaware Guarantor, and assuming due authorization, execution
and
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<PAGE>
delivery by the Guarantors other than the Delaware Guarantors, will constitute
valid and binding obligations of the Company and each Guarantor enforceable
against the Company and each Guarantor in accordance with their terms, subject
to (a) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' and debtors' rights and remedies generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought;
(ix) The execution and delivery of this Agreement, the
Indenture and the Securities, the performance of this Agreement, the Indenture
and the Securities and the consummation of the transactions herein and therein
contemplated, will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute or any material
agreement or instrument known to such counsel to which the Company or any
Delaware Guarantor is a party or by which it is bound or to which any of the
property of the Company or any Delaware Guarantor is subject, the Company's
charter or by-laws, the charter or by-laws of any Delaware Guarantor or any
order, rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any Delaware Guarantor
or any of their properties; and no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is required for
the consummation of the transactions contemplated by this Agreement or the
Indenture in connection with the issuance or sale of the Securities by the
Company and the Delaware Guarantors, except such as have been obtained under
the Act and such as may be required under state securi-
28
<PAGE>
ties laws (as to which such counsel need express no opinion) in connection with
the purchase and distribution of the Securities by the Underwriter;
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company and the Guarantors, representatives of the independent public
accountants for the Company, your representatives and representatives of your
counsel at which the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, on the basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers and other representatives of the Company),
no facts have come to such counsel's attention that lead them to believe that
the Registration Statement or any Rule 462(b) Registration Statement, at the
time they 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, that the Prospectus, as of its date
and as of the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel is not requested to and need
not express any comment with respect to the financial statements and schedules
and other financial and statistical data included or incorporated by reference
in the Registration Statement or Prospectus and the Statement of Eligibility on
Form T-1).
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<PAGE>
(d) You shall have received on the Closing Date, an opinion of
Timothy C. Westfall, Esq., general counsel to the Company, dated the Closing
Date and addressed to you, as Underwriter, to the effect that:
(i) Each of the Company's subsidiaries incorporated in the
State of Arizona (each an "Arizona Guarantor") has been duly incorporated and
is an existing corporation in good standing under the laws of the State of
Arizona; has all requisite corporate power and authority to conduct its
business as described in the Registration Statement and Prospectus and is duly
qualified to do business in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such qualification,
except where the failure to be so qualified, considering all such cases in the
aggregate, would not have a material adverse effect on the business, net worth,
properties, financial position or results of operations of the Company and its
subsidiaries taken as a whole; all of the outstanding shares of capital stock
of each Arizona Guarantor have been duly authorized and validly issued, are
fully paid and non-assessable and, to the knowledge of such counsel, (except as
otherwise stated in the Registration Statement) are owned beneficially by the
Company subject to no security interest, other encumbrance or adverse claim,
and there are no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital stock
or other equity interest in the Arizona Guarantors;
(ii) There are no legal or governmental proceedings pending
or threatened to which the Company or any Arizona Guarantor is a party or to
which any of its property or assets is subject, including ordinary routine
litigation
30
<PAGE>
incidental to its business, which are, considered in the aggregate, likely to
result in any material adverse effect on the business, properties, net worth,
financial position or results of operations of the Company and its subsidiaries
taken as a whole;
(iii) Each Arizona Guarantor has corporate authority to
enter into this Agreement and the Indenture and to issue its Guarantee. Each
of this Agreement and the Indenture has been duly authorized, executed and
delivered by each Arizona Guarantor;
(iv) The Guarantees of the Arizona Guarantors have been duly
authorized by the Arizona Guarantors and, when the Securities are executed and
authenticated in accordance with the terms of the Indenture and delivered to
the Underwriter against payment therefor in accordance with the terms of this
Agreement and the Indenture, will have been validly issued and delivered;
(v) The execution and delivery of this Agreement, the
Indenture and the Guarantees by the Arizona Guarantors and the performance of
this Agreement, the Indenture and the Guarantees and the consummation of the
transactions herein and therein contemplated by the Arizona Guarantors, will
not result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute or any material agreement or instrument
known to such counsel to which any Arizona Guarantor is a party or by which it
is bound or to which any of the property of any Arizona Guarantor is subject,
any Arizona Guarantor's charter or by-laws, or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
31
<PAGE>
jurisdiction over any Arizona Guarantor or any of its properties; and no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the consummation by the Arizona
Guarantors of the transactions contemplated by this Agreement or the Indenture
in connection with the issuance or sale of the Securities, except such as have
been obtained under the Act and such as may be required under state securities
laws (as to which such counsel need express no opinion) in connection with the
purchase and distribution of the Securities by the Underwriter.
(e) You shall have received on the Closing Date, an opinion of
Christopher J. Chambers, Esq., general counsel to L&W Investments, dated the
Closing Date and addressed to you, as Underwriter, to the effect that:
(i) L&W Investments, Inc., a California corporation and a
wholly-owned subsidiary of the Company ("L&W"), is a corporation duly organized
and validly existing under the laws of the State of California and has the
power and authority to engage in its business as currently conducted;
(ii) L&W has corporate authority to enter into this
Agreement and the Indenture and to issue its Guarantee. Each of this Agreement
and the Indenture has been duly authorized, executed and delivered by L&W;
(iii) L&W's Guarantee has been duly authorized by L&W and,
when the Securities are executed and authenticated in accordance with the terms
of the Indenture and delivered to the Underwriter against payment therefor in
accordance with
32
<PAGE>
the terms of this Agreement and the Indenture, will have been validly issued
and delivered;
(iv) The execution and delivery of this Agreement, the
Indenture and its Guarantee by L&W and the performance of this Agreement, the
Indenture and its Guarantee and the consummation of the transactions herein and
therein contemplated by L&W, will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any statute or any
material agreement or instrument known to such counsel to which L&W is a party
or by which it is bound or to which any of the property of L&W is subject,
L&W's charter or by-laws, or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over
L&W or any of its properties; and no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is required for
the consummation by L&W of the transactions contemplated by this Agreement or
the Indenture in connection with the issuance or sale of the Securities, except
such as have been obtained under the Act and such as may be required under
state securities laws (as to which such counsel need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriter.
(f) You shall have received on the Closing Date, an opinion of
Terry E. Mitchell, Esq., general counsel to Milburn Investments, Inc., dated
the Closing Date and addressed to you, as Underwriter, to the effect that:
(i) Milburn Investments, Inc., Continental Homes of Texas,
Inc., Miltex Management, Inc., Travis County Title Company, Acheter, Inc.,
R.O.S. Corporation and
33
<PAGE>
Settlement Corporation, each a Texas corporation and a wholly-owned subsidiary
of the Company, Miltex Financial IV General Partnership and Miltex Mortgage of
Texas Limited Partnership, each a Texas partnership, (each a "Texas Guarantor")
are corporations or partnerships, as applicable, duly organized and validly
existing under the laws of the State of Texas and have the power and authority
to engage in their businesses as currently conducted; all of the outstanding
shares of capital stock of each Texas Guarantor which is a Texas corporation
have been duly authorized and validly issued, are fully paid and non-assessable
and, to the knowledge of such counsel, (except as otherwise stated in the
Registration Statement) are owned beneficially by the Company subject to no
security interest, other encumbrance or adverse claim, and there are no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Texas Guarantors;
(ii) There are no legal or governmental proceedings pending
or threatened to which any Texas Guarantor is a party or to which any of its
property or assets is subject, including ordinary routine litigation incidental
to its business, which are, considered in the aggregate, likely to result in
any material adverse effect on the business, properties, net worth, financial
position or results of operations of the Company and its subsidiaries taken as
a whole;
(iii) Each Texas Guarantor has authority (corporate or
other) to enter into this Agreement and the Indenture and to issue its
Guarantee. Each of this Agreement and the Indenture has been duly authorized,
executed and delivered by each Texas Guarantor;
34
<PAGE>
(iv) The Guarantees of the Texas Guarantors have been duly
authorized and, when the Securities are executed and authenticated in
accordance with the terms of the Indenture and delivered to the Underwriter
against payment therefor in accordance with the terms of this Agreement and the
Indenture, will have been validly issued and delivered ;
(v) The execution and delivery of this Agreement, the
Indenture and the Guarantees by the Texas Guarantors and the performance of
this Agreement, the Indenture and the Guarantees and the consummation of the
transactions herein and therein contemplated by the Texas Guarantors, will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute or any material agreement or instrument
known to such counsel to which any Texas Guarantor is a party or by which it is
bound or to which any of the property of any Texas Guarantor is subject, any
Texas Guarantor's charter, by-laws, partnership agreement or other constituent
document, or any order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over any Texas Guarantor or
any of its properties; and no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
consummation by the Texas Guarantors of the transactions contemplated by this
Agreement or the Indenture in connection with the issuance or sale of the
Securities, except such as have been obtained under the Act and such as may be
required under state securities laws (as to which such counsel need express no
opinion) in connection with the purchase and distribution of the Securities by
the Underwriter.
(g) You shall have received on the Closing Date, an
35
<PAGE>
opinion of Davis & Ceriani, P.C., counsel to CH Mortgage Company, dated the
Closing Date and addressed to you, as Underwriter, to the effect that:
(i) CH Mortgage Company, a Colorado corporation and a
wholly-owned subsidiary of the Company ("CH Mortgage"), is a corporation duly
organized and validly existing under the laws of the State of Colorado and has
the power and authority to engage in its business as currently conducted;
(ii) CH Mortgage has corporate authority to enter into this
Agreement and the Indenture and to issue its Guarantee. Each of this Agreement
and the Indenture has been duly authorized, executed and delivered by CH
Mortgage;
(iii) CH Mortgage's Guarantee has been duly authorized by CH
Mortgage and, when the Securities are executed and authenticated in accordance
with the terms of the Indenture and delivered to the Underwriter against
payment therefor in accordance with the terms of this Agreement and the
Indenture, will have been validly issued and delivered;
(iv) The execution and delivery of this Agreement, the
Indenture and its Guarantee by CH Mortgage and, the performance of this
Agreement, the Indenture and its Guarantee and the consummation of the
transactions herein and therein contemplated by CH Mortgage and will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute or any material agreement or instrument known to
such counsel to which CH Mortgage is a party or by which it is bound or to
which any of the property of CH Mortgage is subject, CH Mortgage's charter
36
<PAGE>
or by-laws, or any order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over CH Mortgage or any of
its properties; and no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the consummation
by CH Mortgage of the transactions contemplated by this Agreement or the
Indenture in connection with the issuance or sale of the Securities, except
such as have been obtained under the Act and such as may be required under
state securities laws (as to which such counsel need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriter.
(h) You shall have received on the Closing Date, an opinion of
Salomon, Kanner, Damian & Rodriguez, P.A., counsel to Continental Homes of
Florida, Inc., dated the Closing Date and addressed to you, as Underwriter, to
the effect that:
(i) Continental Homes of Florida, Inc., a Florida
corporation and a wholly-owned subsidiary of the Company ("CH Florida"), is a
corporation duly organized and validly existing under the laws of the State of
Florida and has the power and authority to engage in its business as currently
conducted;
(ii) CH Florida has corporate authority to enter into this
Agreement and the Indenture and to issue its Guarantee. Each of this Agreement
and the Indenture has been duly authorized, executed and delivered by CH
Florida;
(iii) CH Florida's Guarantee has been duly authorized by CH
Florida and, when the Securities are executed and authenticated in accordance
with the terms of the
37
<PAGE>
Indenture and delivered to the Underwriter against payment therefor in
accordance with the terms of this Agreement and the Indenture, will have been
validly issued and delivered;
(iv) The execution and delivery of this Agreement, the
Indenture and its Guarantee, by CH Florida and the performance of this
Agreement, the Indenture and its Guarantee and the consummation of the
transactions herein and therein contemplated by CH Florida, will not result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute or any material agreement or instrument known to
such counsel to which CH Florida is a party or by which it is bound or to which
any of the property of CH Florida is subject, CH Florida's charter or by-laws,
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over CH Florida or any of its
properties; and no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the consummation
by CH Florida of the transactions contemplated by this Agreement or the
Indenture in connection with the issuance or sale of the Securities, except
such as have been obtained under the Act and such as may be required under
state securities laws (as to which such counsel need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriter.
(i) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriter, dated the
Closing Date and addressed to you, as Underwriter, with respect to the matters
referred to in clauses (iii), (iv), (vi) through (viii) and in the last
paragraph of the foregoing paragraph (c) and such other
38
<PAGE>
related matters as you may request.
(j) You shall have received letters addressed to you, as
Underwriter, and dated the date hereof and the Closing Date from Arthur
Andersen LLP, independent certified public accountants, substantially in the
forms heretofore approved by you.
(k) (i) No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement, if any, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission at or
prior to the Closing Date; (ii) there shall not have been any change in the
capital stock of the Company nor any material increase in the short-term or
long-term debt of the Company or its subsidiaries (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); (iii)
there shall not have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole; (iv) the Company and its subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company and its
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or
39
<PAGE>
any amendment or supplement thereto); and (v) all the representations and
warranties of the Company and the Guarantors contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received
certificates, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company and the chief financial officer
and another authorized officer of each of the Guarantors (or such other
officers as are acceptable to you), to the effect set forth in this Section
8(k) and in Section 8(l) hereof.
(l) The Company and the Guarantors shall not have failed at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(m) There shall not have been any announcement by any "nationally
recognized statistical rating organization", as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
debt securities of the Company, or (ii) it is reviewing its rating assigned to
any debt securities of the Company with a view to possible downgrading, or with
negative implications, or direction not determined.
(n) The Company and the Guarantors shall have furnished or caused
to be furnished to you such further certificates and documents as you shall
have reasonably requested.
(o) The Securities have been authorized for listing
40
<PAGE>
on the New York Stock Exchange, Inc., subject to notice of issuance.
All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are satisfactory in
form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company or
the Guarantors and delivered to you, as Underwriter, or to counsel for the
Underwriter, shall be deemed a representation and warranty by the Company or
the Guarantors to the Underwriter as to the statements made therein.
9. Expenses. The Company agrees to pay the following costs
--------
and expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing (or reproduction),
and filing with the Commission of the registration statement (including
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectus, each amendment or supplement to any of them, this Agreement, the
Indenture and the Statement of Eligibility of the Trustee; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, each Prepricing Prospectus, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as may be
reasonably requested for use in connection with the offering and sale of the
Securities; (iii) the preparation, printing (or reproduction), execution and
delivery of the Indenture and the preparation, printing, authentication,
issuance and delivery of the
41
<PAGE>
Securities, including any stamp taxes in connection with the original issuance
of the Securities; (iv) the printing (or reproduction) and delivery of the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Securities; (v) the listing of the Securities on the New York Stock
Exchange, Inc. and the registration of the Securities under the Exchange Act;
(vi) the registration or qualification of the Securities for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Underwriter relating to the preparation, printing (or
reproduction), and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc.; (viii) the fees and expenses of the Trustee; (ix)
the fees and expenses associated with obtaining ratings for the Securities from
nationally recognized statistical rating organizations; (x) the transportation
and other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Securities; and
(xi) the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto
42
<PAGE>
or any Rule 462(b) Registration Statement to be declared effective before the
offering of the Securities may commence, when notification of the effectiveness
of any such registration statement or such post-effective amendment has been
released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying you, or by
you, as Underwriter, by notifying the Company.
Any notice under this Section 10 may be made by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be
------------------------
subject to termination in your absolute discretion, without liability on the
part of the Underwriter to the Company or the Guarantors by notice to the
Company, if prior to the Closing Date, (i) trading in the Common Stock of the
Company shall be suspended or subject to any restriction or limitation not in
effect on the date of this Agreement; (ii) trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, (iii) a general
moratorium on commercial banking activities in New York or Arizona shall have
been declared by either federal or state authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in your judgment, impracticable or inadvisable to
commence or continue the offering of the Securities on the terms set forth on
the cover page of the Prospectus or to enforce contracts for the resale
43
<PAGE>
of the Securities by the Underwriter. Notice of such termination may be given
to the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
12. Information Furnished by the Underwriter. The statements
----------------------------------------
set forth in the last paragraph on the cover page, the stabilization legend on
the inside cover page, and the statements in the first and third paragraphs
under the caption "Underwriting" in the Prospectus, constitute the only
information furnished by or on behalf of the Underwriter through you as such
information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections
-------------
5, 10 and 11 hereof, notice given pursuant to any provision of this Agreement
shall be in writing and shall be delivered (i) if to the Company or the
Guarantors, at the office of the Company at 7001 N. Scottsdale Road, Suite
2050, Scottsdale, Arizona 85253, Attention: Donald R. Loback, Chief Executive
Officer, with a copy to: Cahill Gordon & Reindel, 80 Pine Street, New York,
New York 10005, Attention: John P. Mitchell, Esq.; or (ii) if to you, as
Underwriter, Smith Barney Inc., 388 Greenwich Street, New York, New York 10013,
Attention: Manager, Investment Banking Division, with a copy to Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022,
Attention: Vincent Pisano.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Company, the Guarantors, their respective directors and
officers, and the other controlling persons referred to in Section 7 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by
44
<PAGE>
virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from the Underwriter of any of the Securities in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
----------------------------
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
45
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Underwriter.
Very truly yours,
CONTINENTAL HOMES HOLDING CORP.
By ........................
Name:
Title:
ACHETER, INC.
By ........................
Name:
Title:
CH MORTGAGE COMPANY
By ........................
Name:
Title:
CHI CONSTRUCTION COMPANY
By ........................
Name:
Title:
CHI FINANCE CORP.
By ........................
Name:
Title:
46
<PAGE>
CONTINENTAL HOMES, INC.
By ........................
Name:
Title:
CONTINENTAL HOMES OF
FLORIDA, INC.
By ........................
Name:
Title:
CONTINENTAL HOMES OF TEXAS, INC.
By ........................
Name:
Title:
KDB HOMES, INC.
By ........................
Name:
Title:
L&W INVESTMENTS INC.
By ........................
Name:
Title:
MILBURN INVESTMENTS, INC.
By ........................
Name:
Title:
MILTEX FINANCIAL IV GENERAL
PARTNERSHIP
By ........................
Name:
Title:
47
<PAGE>
MILTEX MANAGEMENT, INC.
By ........................
Name:
Title:
MILTEX MORTGAGE OF TEXAS
LIMITED PARTNERSHIP
By ........................
Name:
Title:
RANCHO CARILLO, INC.
By ........................
Name:
Title:
R.O.S. CORPORATION
By ........................
Name:
Title:
SETTLEMENT CORPORATION
By ........................
Name:
Title:
TRAVIS COUNTY TITLE COMPANY
By ........................
Name:
Title:
48
<PAGE>
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
By SMITH BARNEY INC.
By ..........................
Managing Director
49
<PAGE>
EXHIBIT 5
[LETTERHEAD OF CAHILL GORDON & REINDEL]
January 27, 1997
Continental Homes Holding Corp.
7001 N. Scottsdale Road
Suite 2050
Scottsdale, Arizona 85253
Ladies and Gentlemen:
We have examined a copy of the Registration Statement on
Form S-3 (No. [ ]) filed by Continental Homes Holding Corp.
(the "Company") and its subsidiaries (collectively, the "Subsid-
iaries") with the Securities and Exchange Commission on January 27,
1997 relating to the registration pursuant to the provisions of
the Securities Act of 1933, as amended (the "Act"), of
(i) $20,000,000 principal amount of Senior Notes due 2006 of the
Company (the "Notes") and (ii) the guarantees (collectively, the
"Guarantees") issued by the Subsidiaries in connection with the
Notes. The Notes and the Guarantees are to be issued under an
Indenture (the "Indenture") among the Company, the Subsidiaries
and First Union National Bank, as trustee (the "Trustee"). In
rendering this opinion, we have reviewed such documents and made
such investigation as we deemed appropriate.
<PAGE>
-2-
We are of the opinion that (subject to compliance with
the pertinent provisions of the Act and, with respect to the
Indenture, the Notes and the Guarantees, the Trust Indenture Act
of 1939, as amended, and to compliance with such securities or
"blue sky" laws of any jurisdiction as may be applicable):
1. When the Indenture has been duly authorized, exe-
cuted and delivered by the proper officers of the Company, the
Subsidiaries and the Trustee, and when the Notes have been duly
executed, authenticated, registered, issued and delivered in
accordance with the terms of the Indenture, the Notes will consti-
tute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
similar laws affecting creditors' rights and remedies generally
and subject to general principles of equity.
2. When the Indenture has been duly authorized, exe-
cuted and delivered by the proper officers of the Company, the
Subsidiaries and the Trustee, and when the Guarantees have been
duly executed, issued and delivered in accordance with the terms
of the Indenture, the Guarantees will constitute valid and binding
obligations of the Subsidiaries, enforceable against the Subsid-
iaries in accordance with their terms and entitled to the benefits
of the Indenture, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and similar laws
affecting creditors' rights and remedies generally and subject to
general principles of equity.
We hereby consent to the use of our firm's name under
the caption "Legal Matters" and to the filing of this opinion with
the Securities and Exchange Commission as an exhibit to the afore-
said Registration Statement.
Very truly yours,
/s/ Cahill Gordon & Reindel
<PAGE>
EXHIBIT 12
Continential Homes Holding Corp.
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months ended
Years ended May 31, November 30,
----------------------------------------------------------------------------
1992 1993 1994 1995 1996 1995 1996
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Charges
Rent expense..................... $ 178 $ 165 $ 305 $ 363 $ 480 $ 240 $ 240
Interest (expensed or capital-
ized)--homebuilding............ 8,662 11,896 13,378 19,528 22,422 10,762 12,208
Interest (expensed or capital-
ized)--joint ventures(1)....... 885 144 0 0 0 0 --
Interest--mortgage banking....... 1,557 1,343 2,707 2,360 1,785 1,368 260
----------------------------------------------------------------------------
Total fixed charges.......... $11,282 $13,548 $16,390 $22,251 $24,687 $12,370 $12,708
============================================================================
Earnings:
Income before taxes and extraor-
dinary credits.................. $ 2,155 $12,083 $23,137 $25,465 $45,382 $18,692 $28,548
Fixed charges..................... 11,282 13,548 16,390 22,251 24,687 12,370 12,708
Interest capitalized(1)(2)........ 2,783 202 (920) (3,421) (207) (507) (508)
Total earnings before fixed ----------------------------------------------------------------------------
charges....................... $16,220 $25,833 $38,607 $44,295 $69,862 $30,555 $40,748
============================================================================
Ratio of earnings to fixed charges.. 1.44x 1.91x 2.36x 1.99x 2.83x 2.47x 3.21x
</TABLE>
- -----------------
(1) Reflects the Company's proportionate share of the joint venture.
(2) Since interest capitalized is charged to interese expense when the related
assets are sold, this amount represents the change in capitalized interest
from the previous period end.
<PAGE>
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) __
FIRST UNION NATIONAL BANK
(Name of Trustee)
22-1147033
(I.R.S. Employer Identification No.)
101 NORTHSIDE PLAZA, ELKTON, MARYLAND
(Address of Principal Executive Offices)
21921
(Zip Code)
CONTINENTAL HOMES HOLDING CORP.
(Exact name of registrants as specified in their charters)
DELAWARE
(State of Incorporation)
86-0554624
(I.R.S. Employer Identification No.)
7001 N. SCOTTSDALE ROAD
SUITE 2000, SCOTTSDALE, AZ
(602-483-0006)
(Address of Principal Executive Offices)
$20,000,000 10% SENIOR NOTES DUE 2006
(Title of Indenture Securities)
<PAGE>
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH
IT IS SUBJECT:
Comptroller of the Currency
United States Department of the Treasury
Washington, D.C. 20219
Federal Reserve Bank (3rd District)
Philadelphia, Pennsylvania 19106
Federal Deposit Insurance Corporation
Washington, D.C. 20429
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF
THE TRUSTEE:
Not applicable - see answer to item 13.
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION:
Not applicable - see answer to item 13.
2
<PAGE>
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS.
IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE
IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE
OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING
ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION.
Not applicable - see answer to item 13.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE
TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND
EXECUTIVE OFFICER OF THE OBLIGOR:
Not applicable - see answer to item 13.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS.
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE
TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH
DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER:
Not applicable - see answer to item 13.
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED
BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE
TRUSTEE:
Not applicable - see answer to item 13.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH
THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY
OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE:
Not applicable - see answer to item 13.
3
<PAGE>
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF
THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING STOCK OF THE OBLIGOR OR
(2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE
FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON:
Not applicable - see answer to item 13.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING
50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE
TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON
ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE:
Not applicable - see answer to item 13.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE
TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
Not applicable - see answer to item 13.
13. DEFAULTS BY THE OBLIGOR.
(A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
None.
(B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.
None.
4
<PAGE>
14. AFFILIATIONS WITH THE UNDERWRITERS.
IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
Not applicable - see answer to item 13.
15. FOREIGN TRUSTEE.
IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE TRUSTEE IS AUTHORIZED TO
ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT.
Not applicable - trustee is a national banking association organized under
the laws of the United States.
16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
___ 1. Copy of Articles of Association of the trustee as now in effect.**
___ 2. Copy of the Certificate of the Comptroller of the Currency dated
January 11, 1994, evidencing the authority of the trustee to
transact business.*
___ 3. Copy of the authorization of the trustee to exercise fiduciary
powers.*
___ 4. Copy of existing by-laws of the trustee.**
___ 5. Copy of each indenture referred to in Item 4, if the obligor is in
default, not applicable.
X 6. Consent of the trustee required by Section 321(b) of the Act.
---
X 7. Copy of report of condition of the trustee at the close of
---
business on December 31, 1995, published pursuant to the
requirements of its supervising authority.
___ 8. Copy of any order pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to
be qualified under the Act, not applicable.
5
<PAGE>
___ 9. Consent to service of process required of foreign trustees
pursuant to Rule 10a-4 under the Act, not applicable.
_____________________
*Previously filed with the Securities and Exchange Commission on
February 11, 1994 as an Exhibit to Form T-1 in connection with Registration
Statement No. 22-73340 and ** previously filed with the Securities Exchange
Commission on March 6, 1996 with Registration Statement Number 333-1102 and
incorporated herein by reference.
NOTE
The trustee disclaims responsibility for the accuracy or completeness of
information contained in this Statement of Eligibility and Qualification not
known to the trustee and not obtainable by it through reasonable investigation
and as to which information it has obtained from the obligor and has had to rely
or will obtain from the principal underwriters and will have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Union National Bank, a national banking association organized and
existing under the laws of the United States of America, has duly caused this
Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Elkton and State of Maryland, on
the 24th day of January, 1997.
FIRST UNION NATIONAL BANK
By: s/John H. Clapham
John H. Clapham
Vice President
6
<PAGE>
EXHIBIT 1
---------
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, and in connection with the proposed issue of Continental Homes
Holding Corp.. we hereby consent that reports of examinations by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
FIRST UNION NATIONAL BANK
By: s/John H. Clapham
John H. Clapham
Vice President
Elkton, Maryland
January 24, 1997
<PAGE>
REPORT OF CONDITION
EXHIBIT 7
Consolidating domestic and foreign subsidiaries of the First Union National Bank
of Elkton in the state of Maryland, at the close of business on September 30,
1996 published in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161. Charter Number 33869 Comptroller of
the Currency Northeastern District.
STATEMENT OF RESOURCES AND LIABILITIES
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin.......... 1,744,126
Interest-bearing balances................................... 32,119
Securities.................................................... /////////
Hold-to-maturity securities................................. 471,801
Available-for-sale securities............................... 2,420,442
Federal funds sold and securities purchased under agreements //////////
to resell in domestic offices of the bank and of it //////////
Edge and Agreement subsidiaries, and in IBFs: //////////
Federal funds sold.......................................... 1,543,706
Securities purchased under agreements to resell............. 324,410
Loans and lease financing receivables:
Loan and leases, net of unearned income......19,124,413
LESS: Allowance for loan and lease losses.......28,4428
LESS: Allocated transfer risk reserve.................0
Loans and leases, net of unearned income, allowance, and
reserve.......................................................18,843,971
Assets held in trading accounts............................... 0
Premises and fixed assets (including capitalized leases)...... 398,122
Other real estate owned....................................... 45,179
Investment in unconsolidated subsidiaries and associated //////////
companies..................................................... 25,832
Customer's liability to this bank on acceptances outstanding.. 54,463
Intangible assets............................................. 405,536
Other assets.................................................. 736,026
Total assets..................................................27,045,733
LIABILITIES
Deposits:
In domestic offices......................................21,878,186
Noninterest-bearing......................4,706,658
Interest-bearing........................17,171,528
In foreign offices, Edge and Agreement subsidiaries,
and IBFs............................................... 228,345
Noninterest-bearing....................... 702
Interest-bearing...........................227,713
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and IBFs
Federal fund purchased................................... 92,227
Securities sold under agreements to repurchase........... 1,010,374
Demand notes issued to the U.S. Treasury...................... 99,359
Trading liabilities........................................... 0
Other borrowed money:......................................... /////////
With original maturity of one year or less.............. 53,992
With original maturity of more than one year............ 10,453
Mortgage indebtedness and obligations under capitalized leases 6,268
Bank's liability on acceptances executed and outstanding...... 54,756
Subordinated notes and debentures............................. 175,000
Other liabilities............................................. 688,684
Total liabilities.............................................24,297,644
Limited-life preferred stock and related surplus.............. 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus................. 160,540
Common Stock.................................................. 452,156
Surplus....................................................... 1,300,080
Undivided profits and capital reserves........................ 861,789
Net unrealized holding gains (losses) on available-for-sale /////////
securities................................................. (26,476)
Cumulative foreign currency translation adjustments........... 0
Total equity capital.......................................... 2,748,089
Total liabilities, limited-life preferred stock and equity.... /////////
capital....................................................27,045,733
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated June 19, 1996
incorporated by reference in Continental Homes Holding Corp.'s Form 10-K for
the year ended May 31, 1996 and to all references to our firm included in this
registration statement.
Phoenix, Arizona,
January 21, 1997.
