PROSPECTUS Filed Pursuant to Rule 424(b)(3)
File No. 333-58793
2,509,662 SHARES
MONTEREY HOMES CORPORATION
COMMON STOCK
This Prospectus relates to the offer and sale by William W. Cleverly,
Steven J. Hilton and John R. Landon (the "Selling Stockholders") of an aggregate
of 2,509,662 shares of Common Stock, $0.01 par value per share (the "Common
Stock"), of Monterey Homes Corporation, a Maryland corporation (the "Company").
The Company will not receive any portion of the proceeds from the sale of the
Common Stock offered hereby. The Selling Stockholders may elect to sell all, a
portion, or none of the shares of Common Stock registered hereby. The Common
Stock being registered under the Registration Statement of which this Prospectus
is a part may be offered for sale from time to time by or for the account of
such Selling Stockholders in the open market, on the New York Stock Exchange in
privately negotiated transactions, in an underwritten offering, or a combination
of such methods, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Common
Stock is intended to be sold through one or more broker-dealers or directly to
purchasers. Such broker-dealers may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders and/or
purchasers of the Common Stock for whom such broker-dealers may act as agent, or
to whom they may sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary concessions). The Selling
Stockholders and any broker-dealers who act in connection with the sale of the
Common Stock hereunder may be deemed to be "underwriters" within the meaning of
the Securities Act, and any commissions received by them and proceeds of any
resale of the Common Stock may be deemed to be underwriting discounts and
commissions under the Securities Act. See "Selling Stockholders" and "Plan of
Distribution." All expenses of registration incurred in connection with this
Offering are being borne by the Company, but the Selling Stockholders will pay
any brokerage and other expenses of sale incurred by them. See "Plan of
Distribution."
The Company's Common Stock is traded on the New York Stock Exchange
under the symbol "MTH." On July 24, 1998, the closing sale price for the Common
Stock, as reported by NYSE, was $17.3125 per share.
SEE "RISK FACTORS" ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
EACH SELLING STOCKHOLDER AND ANY BROKER EXECUTING SELLING ORDERS ON BEHALF OF
THE SELLING STOCKHOLDERS MAY BE DEEMED TO BE AN "UNDERWRITER" WITHIN THE MEANING
OF THE SECURITIES ACT. COMMISSIONS RECEIVED BY ANY SUCH BROKER MAY BE DEEMED TO
BE UNDERWRITING COMMISSIONS UNDER THE SECURITIES ACT.
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 DATE OF THIS PROSPECTUS IS JULY 27, 1998
<PAGE>
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, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements, and other information filed by the Company with the Commission
may be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
its regional offices located at 7 World Trade Center, 13th Floor, New York, New
York 10048, and Northwestern Atrium 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, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a World Wide Web site on
the Internet (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding registrants, such as the Company,
that file electronically with the Commission. In addition, the Company's Common
Stock is traded on the New York Stock Exchange. Reports, proxy statements, and
other information filed by the Company are also available for inspection at the
offices of the New York Stock Exchange at 20 Broad Street, 17th Floor, New York,
New York 10005.
This Prospectus constitutes a part of a registration statement on Form
S-3 (the "Registration Statement") that the Company has filed with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information contained in the Registration Statement and the
exhibits thereto and reference is hereby made to the Registration Statement and
related exhibits for further information with respect to the Company and the
Common Stock offered hereby. Statements contained in this Prospectus as to the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission are not necessarily complete and, in each
instance, reference is made to the copy of such document as so filed. Each such
statement is qualified in its entirety by such reference.
No person is authorized to give any information or make any
representation other than those contained or incorporated by reference in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus 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.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed by the Company with the
Commission and are hereby incorporated by reference in this Prospectus: (i) the
Annual Report of the Company on Form 10-K for the fiscal year ended December 31,
1997, (ii) the Quarterly Report of the Company on Form 10-Q for the quarterly
period ended March 31, 1998, (iii) the Current Report of the Company on Form 8-K
filed on July 15, 1998, and (iv) the description of Monterey Homes' capital
stock contained in the Form 8-A of Emerald Mortgage Investments Corporation (a
predecessor of Monterey Homes) filed on July 7, 1988. All other documents and
reports filed by the Company with the Commission pursuant to Sections 13, 14, or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
in this Prospectus and to be made a part hereof from their respective dates of
filing. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that 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 cause to be furnished, without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any and all documents
incorporated herein by reference (not including the exhibits to such documents,
unless such exhibits are specifically incorporated by reference in the document
which this Prospectus incorporates). Requests should be directed to Chief
Financial Officer, Monterey Homes Corporation, 6613 North Scottsdale Road, Suite
200, Phoenix, Arizona 85250; telephone: (602) 998-8700.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the factors discussed below in
evaluating the Company and its business before purchasing any of the shares of
Common Stock offered hereby. This Prospectus contains forward-looking statements
which involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus. See "Disclosure Regarding
Forward-Looking Statements."
Homebuilding Industry Factors. The homebuilding industry is cyclical
and is significantly affected by changes in national and local economic and
other conditions, such as employment levels, availability of financing, interest
rates, consumer confidence and housing demand. Although the Company believes
that certain of its customers (particularly purchasers of luxury homes) are
somewhat less price sensitive than generally is the case for other homebuilders,
such uncertainties could adversely affect the Company's performance. In
addition, homebuilders are subject to various risks, many of which are outside
the control of the homebuilders, including delays in construction schedules,
cost overruns, changes in government regulations, increases in real estate taxes
and other local government fees, and availability and cost of land, materials,
and labor. Although the principal raw materials used in the homebuilding
industry generally are available from a variety of sources, such materials are
subject to periodic price fluctuations. There can be no assurance that the
occurrence of any of the foregoing will not have a material adverse effect on
the Company.
Customer demand for new housing also impacts the homebuilding industry.
Real estate analysts predict that in 1998 new home sales in the Phoenix
metropolitan area may slow and that sales in the Tucson metropolitan area may
remain relatively flat. Any such slowing in new home sales would have a material
adverse effect on the Company's business and operating results. In general, home
sales in the Texas market are expected to show moderate growth or remain
relatively flat.
The homebuilding industry is subject to the potential for significant
variability and fluctuations in real estate values, as evidenced by the changes
in real estate values in recent years in Arizona, Texas and Northern California.
Although the Company believes that its projects are currently reflected on its
balance sheet at appropriate values, no assurance can be given that write-downs
of some or all of the Company's projects will not occur if market conditions
deteriorate, or that such write-downs will not be material in amount.
Fluctuations in Operating Results. Monterey historically has
experienced, and in the future, the Company expects to continue to experience,
variability in home sales and net earnings on a quarterly basis. Factors
expected to contribute to this variability include, among others, (i) the timing
of home closings and land sales, (ii) the Company's ability to continue to
acquire additional land or options to acquire additional land on acceptable
terms, (iii) the condition of the real estate market and the general economy in
Arizona, Texas and Northern California, and in other areas into which the
Company may expand its operations, (iv) the cyclical nature of the homebuilding
industry and changes in prevailing interest rates and the availability of
mortgage financing, (v) costs or shortages of materials and labor, and (vi)
delays in construction schedules due to strikes, adverse weather conditions,
acts of God, the availability of subcontractors or governmental restrictions. As
a result of such variability, the Company's historical performance may not be a
meaningful indicator of future results.
Interest Rates and Mortgage Financing. The Company believes that
certain of its move-up and luxury home customers have been somewhat less
sensitive to interest rate fluctuation than many home buyers. However, many
purchasers of the Company's homes finance their acquisition through third-party
lenders providing mortgage financing. In general, housing demand is adversely
affected by increases in interest rates and housing costs, and the
unavailability of mortgage financing. If mortgage interest rates increase and
the ability of prospective buyers to finance home purchases is consequently
adversely affected, the Company's home sales, gross margins and net income may
be adversely impacted and such adverse impact may be material. In any event, the
Company's homebuilding activities are dependent upon the availability and costs
of mortgage financing for buyers of homes owned by potential customers so those
customers ("move-up buyers") can sell their homes and purchase a home from the
Company. Any limitations or restrictions on the availability of such financing
could adversely affect the Company's home sales. Furthermore, changes in federal
income tax laws may affect demand for new homes. From time to time, proposals
have been publicly discussed to limit mortgage interest deductions and to
eliminate or limit tax-free rollover treatment provided under current law where
the proceeds of the sale of a principal residence are reinvested in a new
principal residence. Enactment of such proposals may have an adverse effect on
the homebuilding industry in general, and on demand for the Company's products
in particular. No prediction can be made whether any such proposals will be
enacted and, if
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enacted, the particular form such laws would take.
Competition. The single-family residential housing industry is highly
competitive and fragmented. Homebuilders compete for desirable properties,
financing, raw materials, and skilled labor. The Company competes for
residential home sales with other developers and individual resales of existing
homes. Competitors include large homebuilding companies, some of which have
greater financial resources than the Company, and smaller homebuilders, who may
have lower costs than the Company. Competition is expected to continue and
become more intense, and there may be new entrants in the markets in which the
Company currently operates and in markets it may enter in the future.
Lack of Geographic Diversification. The Company's operations are
presently localized in the Phoenix and Tucson, Arizona and Dallas/Ft. Worth,
Austin and Houston, Texas metropolitan areas and in Northern California. In
addition, the Company currently operates in two primary market segments in
Arizona: the semi-custom, luxury market and move-up buyer market; and in two
primary market segments in Texas: the move-up buyer market and the entry-level
home market. Failure to be more geographically or economically diversified by
product line could have a material adverse impact on the Company if the
homebuilding market in Arizona, Texas or Northern California should decline,
because there may not be a balancing opportunity in a healthier market in other
geographic regions.
Additional Financing; Limitations. The homebuilding industry is capital
intensive and requires significant up-front expenditures to acquire land and
begin development. Accordingly, the Company incurs substantial indebtedness to
finance its homebuilding activities. At March 31, 1998, the Company's notes
payable totaled approximately $30.3 million. The Company may be required to seek
additional capital in the form of equity or debt financing from a variety of
potential sources, including bank financing and securities offerings. In
addition, lenders are increasingly requiring developers to invest significant
amounts of equity in a project both in connection with origination of new loans
as well as the extension of existing loans. If the Company is not successful in
obtaining sufficient capital to fund its planned capital or other expenditures,
new projects planned or begun may be delayed or abandoned. Any such delay or
abandonment could result in a reduction in home sales and may adversely affect
the Company's operating results. There can be no assurance that additional debt
or equity financing will be available in the future or on terms acceptable to
the Company.
In addition, the amount and types of indebtedness that the Company can
incur is limited by the terms and conditions of its current indebtedness. The
Company must comply with numerous operating and financial maintenance covenants
and there can be no assurance that the Company will be able to maintain
compliance with such financial and other covenants. Failure to comply with such
covenants would result in a default and resulting cross defaults under the
Company's other indebtedness, and could result in acceleration of all such
indebtedness. Any such acceleration would have a material adverse affect on the
Company.
Government Regulations; Environmental Conditions. The Company is
subject to local, state, and federal statutes and rules regulating certain
developmental matters, as well as building and site design. In addition, the
Company is subject to various fees and charges of governmental authorities
designed to defray the cost of providing certain governmental services and
improvements. The Company may be subject to additional costs and delays or may
be precluded entirely from building projects because of "no growth" or "slow
growth" initiatives, building permit ordinances, building moratoriums, or
similar government regulations that could be imposed in the future due to
health, safety, welfare, or environmental concerns. The Company must also obtain
licenses, permits, and approvals from government agencies to engage in certain
of its activities, the granting or receipt of which are beyond the Company's
control.
The Company and its competitors are also subject to a variety of local,
state, and federal statutes, ordinances, rules and regulations concerning the
protection of health and the environment. Environmental laws or permit
restrictions may result in project delays, may cause substantial compliance and
other costs, and may prohibit or severely restrict development in certain
environmentally sensitive regions or areas. Environmental regulations can also
have an adverse impact on the availability and price of certain raw materials
such as lumber.
Recent Expansion and Future Expansion. In 1997, the Company made a
significant expansion into the Texas market and recently completed an
acquisition pursuant to which it will begin operations in the Northern
California market. The Company may continue to consider growth in other areas of
the country. The magnitude, timing and nature of any future acquisitions will
depend on a number of factors, including suitable acquisition candidates, the
negotiation of acceptable terms, the Company's financial capabilities, and
general economic and business conditions. Acquisitions by the Company may result
in the incurrence of additional debt and/or amortization of expenses related to
goodwill and intangible assets that could adversely affect the Company's
profitability. Acquisitions could also result in potentially
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dilutive issuances of the Company's equity securities. In addition, acquisitions
involve numerous risks, including difficulties in the assimilation of operations
of the acquired company, the diversion of management's attention from other
business concerns, risks of entering markets in which the Company has had no or
only limited direct experience and the potential loss of key employees of the
acquired company. There can be no assurance that the Company will be able to
expand into new markets on a profitable basis or that it can successfully manage
its expansion into Texas or any additional markets.
Dependence on Key Personnel. The Company's success is largely dependent
on the continuing services of certain key persons, including William W.
Cleverly, Steven J. Hilton and John R. Landon, and the ability of the Company to
attract new personnel required to continue the development of the Company. The
Company has entered into employment agreements with each of Messrs. Cleverly,
Hilton and Landon. A loss by the Company of the services of Messrs. Cleverly,
Hilton or Landon, or certain other key personnel, could have a material adverse
affect on the Company.
Dependence on Subcontractors. The Company conducts its business only as
a general contractor in connection with the design, development and construction
of its communities. Virtually all architectural and construction work is
performed by subcontractors of the Company. As a consequence, the Company is
dependent upon the continued availability and satisfactory performance by
unaffiliated third-party subcontractors in designing and building its homes.
There is no assurance that there will be sufficient availability and
satisfactory performance by unaffiliated third-party subcontractors in designing
and building its homes, and such a lack could have a material adverse affect on
the Company.
NOL Carryforward. The ability of the Company to use its net operating
loss carryforward (the "NOL Carryforward") to offset future taxable income would
be substantially limited under Section 382 of the Code if an "ownership change",
within the meaning of Section 382 of the Code, has occurred or occurs with
respect to the Company before expiration of the NOL Carryforward. The Company
believes that (i) there was not an "ownership change" of the Company prior to
the effective date of the Merger (defined below), (ii) the Merger did not cause
an "ownership change", and (iii) the Legacy Combination (defined below) did not
cause an "ownership change".
Pursuant to Section 384 of the Code, the Company may not be permitted
to use the NOL Carryforward to offset taxable income resulting from sales of
assets owned by the Monterey Entities (defined below) at the time of the Merger
(or to offset taxable income resulting from sales of certain assets acquired in
the Legacy Combination) to the extent that the fair market value of such assets
at the time of the Merger (or at the time of the Legacy Combination) exceeded
their tax basis as of the relevant date.
There is no assurance that the Company will have sufficient earnings in
the future to fully utilize the NOL Carryforward.
Disclosure Regarding Forward-Looking Statements. Certain statements
contained in this Prospectus, including all documents incorporated herein by
reference, may be forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995. These forward-looking statements may
include projections of revenue and net income and issues that may affect revenue
or net income; projections of capital expenditures; plans for future operations;
financing needs or plans; plans relating to the Company's products and services;
and assumptions relating to the foregoing. In particular, there can be no
assurance that the Company will be able to maintain listing of its Common Stock
and on the New York Stock Exchange. Forward-looking statements are inherently
subject to risks and uncertainties, some of which cannot be predicted or
quantified. Future events and actual results could differ materially from those
set forth in, contemplated by, or underlying the forward-looking statements.
Statements in this Prospectus, including those set forth above, describe
factors, among others, that could contribute to or cause such differences.
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USE OF PROCEEDS
The Selling Stockholders will receive all of the proceeds and the
Company will not receive any of the proceeds from the sale of the Common Stock
offered hereby.
SELLING STOCKHOLDERS
The Company was originally formed under the name Homeplex Mortgage
Investments Corporation to operate as a REIT, investing in mortgage-related
assets and selected real estate loans. On December 31, 1996, Homeplex Mortgage
Investments Corporation merged with Monterey Homes Arizona II, Inc. and Monterey
Homes Construction II, Inc. (collectively, the "Monterey Entities") (the
"Merger"). As a result of the Merger, the Company's status as a REIT was
terminated and its prior operations essentially discontinued, the Company's name
was changed to Monterey Homes Corporation, and its NYSE ticker symbol was
changed to MTH. As part of the Merger consideration, William W. Cleverly and
Steven J. Hilton (the "Monterey Stockholders") received 1,288,726 shares of
Company Common Stock (the "Exchange Shares"), of which 212,398 shares have been
registered pursuant to the Securities Act and reserved for issuance pursuant to
the exercise of the Company's outstanding warrants. Currently, Mr. Cleverly and
Mr. Hilton each beneficially own 538,164 reserved but not yet registered
Exchange Shares.
In addition to the Exchange Shares, the Company reserved for the
Monterey Stockholders 266,666 shares of common stock, issuable subject to the
achievement of certain stock price thresholds (the "Contingent Stock"), of which
43,946 shares have been reserved but not yet registered, pending the exercise of
the Company's outstanding warrants. As of September 5, 1997, all price
thresholds had been achieved, and on January 1, 1998, 44,942 shares of the
Contingent Stock were issued to the Monterey Stockholders. On January 1, 1999 or
as soon thereafter as practicable 88,888 shares of Contingent Stock will be
issued to the Monterey Stockholders and on January 1, 2000 or as soon thereafter
as practicable, 88,890 shares of Contingent Stock will be issued to the Monterey
Stockholders, but in each case only if the Monterey Stockholders remain employed
with the Company at such times.
In connection with the Merger, the Company entered into separate
employment agreements and stock option agreements (the "Stock Option
Agreements") with the Monterey Stockholders. The Stock Option Agreements provide
for the grant to each Monterey Stockholder of options to purchase an aggregate
of 166,667 shares of Common Stock per Monterey Stockholder at an exercise price
of $5.25 per share (the "Employment Options"). The Employment Options vest
annually over a three year period which began December 31, 1997.
On December 31, 1996, the Company entered into registration rights
agreements with each of the Monterey Stockholders with respect to the Exchange
Shares, the Contingent Stock and the Employment Options (the "Registration
Rights Agreements"), pursuant to which, subject to certain conditions and
limitations, the Monterey Stockholders may, at any time after December 31, 1997,
require the Company to register such shares under the Securities Act for resale
by the Monterey Stockholders. This Prospectus is a part of the Registration
Statement filed by the Company in order to satisfy this requirement.
On July 1, 1997, the Company combined with Legacy Homes, Ltd., Legacy
Enterprises, Inc. and Texas Home Mortgage Corporation (collectively "Legacy"), a
Texas-based homebuilder with related mortgage brokerage operations (the "Legacy
Combination"). In connection with the Legacy Combination, the Company issued
666,667 shares of Common Stock (the "Landon Shares") to John and Eleanor Landon
and/or entities controlled by John and Eleanor Landon (the "Landons"). In
addition, the Company entered into an employment agreement and related stock
option agreement with John Landon (the "Landon Option Agreement"). The Landon
Option Agreement grants John Landon the option to purchase 166,667 shares of
Common Stock at an exercise price of $5.25 per share (the "Option Shares"). The
Landon Options are exercisable annually over a three year period beginning July
1, 1998. In connection with the Legacy Combination, the Company entered into a
registration rights agreement with the Landons pursuant to which the Landons,
subject to certain conditions and limitations, may at any time after December
31, 1997, require the Company to register the Landon Shares and the Option
Shares under the Securities Act for resale by the Landons. This Prospectus is a
part of the Registration Statement filed by the Company in order to satisfy this
requirement.
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The following table provides certain information with respect to the
Common Stock owned or under option by the Selling Stockholders or which the
Selling Stockholders have the right to own as of July 24, 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
No. of Shares of Percentage of No. of Shares of Percentage of
Common Stock Common Stock No. of Shares Common Stock Common Stock
Owned Prior to Owned Prior to of Common Owned After Owned After
Selling Stockholder the Offering the Offering(1) Stock Offered the Offering(2) the Offering(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William W. 930,073 17.3% 838,164 91,909 1.7%
Cleverly
- ---------------------------------------------------------------------------------------------------------------------------
Steven J. Hilton 926,740 17.3% 838,164 88,576 1.7%
- ---------------------------------------------------------------------------------------------------------------------------
John Landon and
Eleanor Landon 833,334 15.5% 833,334 0 0.0%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes all shares of Common Stock beneficially owned by the Selling
Stockholders as a percentage of the 5,370,238 shares of Common Stock
outstanding at July 24, 1998. The figures above also include the
Employment Options and the Option Shares.
(2) Assumes that Selling Stockholders dispose of all the shares of Common
Stock covered by this Prospectus and do not acquire any additional shares
of Common Stock.
PLAN OF DISTRIBUTION
This Prospectus relates to the sale of 2,509,662 shares of Common Stock by the
Selling Stockholders. The Selling Stockholders may from time to time effect
sales of Common Stock in ordinary broker's transactions on the New York Stock
Exchange, at the price prevailing at the time of such sales, at prices relating
to such prevailing market prices, or at negotiated prices. In connection with
distributions of the Common Stock or otherwise, the Selling Stockholders may
enter into hedging transactions with broker-dealers. In connection with such
transactions, banks or broker-dealers may engage in short sales of the Common
Stock in the course of hedging the positions they assume with the Selling
Stockholders. The Selling Stockholders may also sell Common Stock short and
redeliver the Common Stock to close out such positions. The Selling Stockholders
may also enter into option or other transactions with banks or broker-dealers
which require the delivery to the bank or broker-dealer of the Common Stock
registered hereunder, which the bank or broker-dealer may resell or otherwise
transfer pursuant to this Prospectus. The Selling Stockholders may also lend or
pledge the Common Stock to a bank or broker-dealer and the bank or broker-dealer
may sell the Common Stock so loaned, or upon a default, the bank or
broker-dealer may effect sales of the pledged Common Stock pursuant to this
Prospectus. It is anticipated that any broker-dealers participating in such
sales of securities will receive the usual and customary selling commissions.
The Selling Stockholders and any dealers or agents participating in the
distribution of the shares may be deemed to be "underwriters" as defined in the
Securities Act and any profit on the sale of the share by them and any
discounts, commissions or concessions received by any such dealers or agents
might be deemed to be underwriting discounts and commissions under the
Securities Act. The Selling Stockholders will be subject to the applicable
provisions of the Exchange Act and rules and regulations thereunder, including,
without limitation, Regulation M, which provision may limit the timing of
purchases and sales of any of the shares of Common Stock by the Selling
Stockholders.
It is not possible at the present time to determine the price to the public in
any sale of the shares by Selling Stockholders. Accordingly, the public offering
price and the amount of any applicable underwriting discounts and commissions
will be determined at the time of such sale by Selling Stockholders. The
aggregate proceeds to the Selling Stockholders from the sale of the shares will
be the purchase price of the shares sold less all applicable commissions and
underwriters' discounts, if any. The Company will pay all of the expenses
incident to the registration of the Common Stock offered hereby, other than
commissions and selling expenses with respect to the Common Stock being sold by
the Selling Stockholders.
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LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Venable, Baetjer & Howard LLP, Baltimore, Maryland.
EXPERTS
The consolidated financial statements of Monterey Homes Corporation and
Subsidiaries as of December 31, 1997 and 1996, and for the years then ended have
been incorporated by reference herein and in the Prospectus in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The consolidated financial statements of Monterey Homes Corporation and
Subsidiaries for the year ended December 31, 1995, have been incorporated by
reference herein and in the Prospectus in reliance upon the report of Ernst &
Young, LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
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================================================================================
No dealer, sales representative, or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company, the Selling Security Holders, or any
other person. This Prospectus does not constitute an offer of any securities
other than those to which it relates or an offer to sell, or a solicitation of
an offer to buy, to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder and thereunder shall, under any circumstances, create any
implication that the information contained herein is correct as of anytime
subsequent to the date hereof.
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TABLE OF CONTENTS
Page
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Available Information....................... 2
Information Incorporated by Reference...... 2
Risk Factors................................ 3
Use of Proceeds............................. 6
Selling Stockholders........................ 6
Plan of Distribution........................ 7
Legal Opinions.............................. 8
Experts..................................... 8
2,509,662 Shares of Common Stock
MONTEREY HOMES
CORPORATION
---------------
PROSPECTUS
---------------
July 27, 1998
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