<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
----------------------------------
May 6, 1999 (May 3, 1999)
Date of Report (Date of earliest event reported)
THE PRESLEY COMPANIES
(Exact name of registrant as specified in its charter)
Delaware 0-18001 33-0475923
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
19 Corporate Plaza, Newport Beach, California 92660
---------------------------------------------------
(Address of principal executive offices) (zip code)
(949) 640-6400
--------------
Registrant's telephone number, including area code
<PAGE> 2
Items 1-4. Not Applicable.
Item 5. Other Events.
On May 4, 1999, The Presley Companies issued a press release, a copy of
which is attached hereto as Exhibit 99.1 announcing the signing of a revised
letter of intent, dated as of May 3, 1999, with William Lyon Homes, Inc., a copy
of which is attached hereto as Exhibit 99.2.
Item 6. Not Applicable.
Item 7. Exhibits.
Exhibit 99.1 Press Release dated May 4, 1999.
Exhibit 99.2 Revised Letter of Intent, dated as of May 3, 1999, by and
among William Lyon Homes, Inc. a California corporation, The Presley Companies,
a Delaware corporation and Presley Homes, a California corporation.
Item 8. Not Applicable.
SIGNATURE
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: May 6, 1999
THE PRESLEY COMPANIES,
a Delaware corporation
By: /s/ David M. Siegel
---------------------------------------
Name: David M. Siegel
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
-2-
<PAGE> 3
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
99.1 Press Release Dated May 4, 1999
99.2 Revised Letter of Intent, dated as of May 3, 1999, by and among William
Lyon Homes, Inc. a California corporation, The Presley Companies, a
Delaware corporation and Presley Homes, a California corporation.
</TABLE>
-3-
<PAGE> 1
EXHIBIT 99.1
Contact: Investor Relations Media Relations
W. Douglass Harris Steven D. Stern
The Presley Companies Pondel/Wilkinson Group
(949) 640-6400 (310) 207-9300
THE PRESLEY COMPANIES ENTERS INTO REVISED
LETTER OF INTENT WITH
WILLIAM LYON HOMES, INC.
NEWPORT BEACH, CA - - -May 4, 1999 - - - The Presley Companies (NYSE: PDC)
announced today that after approval by a Special Committee of its Board of
Directors, it has entered into a revised letter of intent with William Lyon
Homes, Inc. ("William Lyon Homes") setting forth their preliminary understanding
with respect to (i) the proposed acquisition by Presley of substantially all of
the assets of William Lyon Homes for a cash purchase price of $48 million and
the assumption of all or substantially all of the liabilities of William Lyon
Homes; and (ii) the proposed purchase by William Lyon Homes of a portion of the
outstanding shares of Common Stock of Presley.
Under the terms of the revised letter of intent, William Lyon Homes will make
offers to the holders of Presley's Series B Common Stock and a tender offer to
the holders of Presley's Series A Common Stock to purchase, for a cash purchase
price of $0.655 per share, an aggregate number of shares of Presley's Common
Stock which when added to the number of shares of Presley already owned by
William Lyon Homes and its affiliates, and after giving effect to a disposition
of up to 8% of the total number of shares of Presley Common Stock currently
outstanding by William Lyon Homes and/or its affiliates, will cause William Lyon
Homes and its affiliates to own an aggregate of approximately 49% of the
outstanding shares of Presley's Common Stock.
<PAGE> 2
The proposed transactions are subject to various conditions, including the
successful negotiation and execution of a definitive agreement; the receipt of
opinions of Presley's advisors with respect to the fairness of the transactions
to Presley and its stockholders as well as the solvency of Presley following the
consummation of the transactions; the receipt of real estate appraisals
satisfactory to Presley and William Lyon Homes with respect to the real estate
assets of William Lyon Homes; the approval of a definitive agreement by the
respective boards of directors of Presley and William Lyon Homes by July 15,
1999; receipt of all required regulatory approvals and third party consents,
including any required lender consents; the possession of sufficient borrowing
capacity or the receipt of financing by Presley in an amount sufficient to
enable Presley to finance the transactions; the holders of Presley's Series B
Common Stock not acquiring or disposing of any beneficial interest in Presley's
Common Stock prior to closing; the purchase by William Lyon Homes of a
sufficient number of shares of Presley Common Stock to cause, when added to the
number of shares already owned and after giving effect to the sale of up to 8%
of Presley's Common Stock, William Lyon Homes to own at least 49% of Presley's
Common Stock (but not more than 49.9%); and the absence of any material adverse
change in the business or financial condition of either Presley or William Lyon
Homes.
The proposed transactions are also conditioned upon each holder of Presley's
Series B Common Stock having consented to the transactions and executed a
written agreement, in form and substance satisfactory to William Lyon Homes and
Presley, to sell shares of Presley's Series B Common Stock to William Lyon Homes
such that each holder will own less than 5% of the aggregate number of shares of
Presley's Common Stock. In the case of Foothill Capital Corporation, which is
the beneficial owner of less than 5% of the outstanding shares of Presley Common
Stock, William Lyon Homes would purchase 710,574 shares of Series B Common
Stock. If the proposed tender offer to the holders of Presley's Series A Common
Stock is undersubscribed, each holder of Series B Common Stock would sell an
additional number of shares pro rata and at the same price. Each of the holders
of Presley Series B Common Stock would also agree that prior to the completion
of the tender offer for the Series A Common Stock, they will not transfer or
tender any Series A Common Stock that they may own or transfer or convert any of
their remaining Series B Common Stock. William Lyon Homes would also agree not
to sell for three years any shares of Presley Common Stock in excess of the
number currently owned unless such sale occurs in a transaction in which all
stockholders of Presley are treated equally. William Lyon Homes has advised
Presley's Special Committee that each holder of Series B Common Stock has
indicated its acceptance of these terms but has not entered into a binding or
enforceable agreement.
The letter of intent contemplates that each of the transactions will be
structured so as to be subject to the successful completion of the others. The
letter of intent also contemplates that the parties will structure the
transactions (including, if necessary, by imposing limitations on certain
transfers of shares) so as to avoid triggering the change of control tax
provisions that would result in the loss of Presley's net operating losses for
tax purposes. The letter of intent also contemplates that Presley's 12 1/2%
Senior Notes due 2001 will remain outstanding without modification.
2
<PAGE> 3
The letter of intent provides that, subject to the fiduciary duties of their
respective boards of directors, Presley and William Lyon Homes will negotiate
exclusively with each other toward a definitive agreement until July 15, 1999.
The letter of intent does not constitute a binding agreement to consummate the
transactions and there can be no assurance that the parties will enter into a
definitive agreement with respect to the transactions or that the conditions to
the transactions will be satisfied.
William Lyon Homes, which is owned by William Lyon and his son, William H. Lyon,
is a California-based homebuilder and real estate developer with projects
currently under development in Northern and Southern California. William Lyon is
the current Chairman of the Board of Presley.
The Presley Companies is one of the oldest and largest homebuilders in the
Southwest with development communities in California, Arizona, New Mexico and
Nevada. Founded in 1956, The Presley Companies has built and sold more than
47,000 homes and currently has 42 sales locations. Presley's corporate
headquarters are located in Newport Beach, California.
3
<PAGE> 1
EXHIBIT 99.2
May 3, 1999
The Presley Companies
19 Corporate Plaza
Newport Beach, California 92660
Attention: General James Dalton
Re: REVISED AGREEMENT IN PRINCIPLE CONCERNING
THE PRESLEY COMPANIES AND
WILLIAM LYON HOMES, INC.
Ladies and Gentlemen:
This letter amends and restates those certain letters dated December 30,
1998 and March 30, 1999 and sets forth our mutual, preliminary understanding
with respect to the proposed acquisition by The Presley Companies, a Delaware
corporation ("Presley-Del."), of substantially all of the assets of William Lyon
Homes, Inc., a California corporation ("WL Homes"), and the proposed purchase by
WL Homes of a portion of the outstanding shares of Common Stock of Presley-Del.
1. The Transaction. On the conditions set forth below and to
be included in a definitive agreement (the "Definitive Agreement"):
(a) Presley Homes, a California corporation and a wholly
owned subsidiary of Presley-Del. ("Presley-Cal.," and together with
Presley-Del., "Presley"), will purchase all or substantially all of the
assets of WL Homes for a cash purchase price of $48 million and the
assumption of all or substantially all of the liabilities of WL Homes
(such purchase and assumption being referred to herein as the
"Acquisition");
(b) WL Homes will make offers to the holders of
Presley-Del. Series B Common Stock (the "Series B Offer") and a tender
offer to the holders of Presley-Del. Series A Common Stock (the "Series
A Offer") to purchase, for a cash purchase price of $0.655 per share, an
aggregate number of shares of Presley-Del. Common Stock which, when
added to the number of shares of Presley-Del. Common Stock already owned
by WL Homes and its affiliates and after giving effect to any
disposition of shares of Presley-Del. Common Stock by WL Homes and its
affiliates as contemplated in Section 2(c) hereof, will cause WL Homes
and its affiliates to own an aggregate of approximately 49% (but in no
event more than 49.9%) of the outstanding shares of Presley-Del. Common
Stock. The Series A Offer and the Series B Offer are collectively
referred to herein as the "Offers."
The Acquisition and the Offers are hereinafter referred to collectively
as the "Transactions."
<PAGE> 2
The Presley Companies-May 3, 1999-Page 2
2. Terms and Conditions. Our preliminary understanding includes
the following additional terms and conditions, which will be addressed in
greater detail in the Definitive Agreement:
(a) The consummation of the Acquisition and the Offers
shall each be conditioned upon the successful completion of the others.
(b) The Offers are premised on (i) Presley-Del. having an
aggregate of 52,195,678 shares of Series A Common Stock and Series B
Common Stock outstanding, (ii) there being no outstanding options to
acquire Presley-Del. Common Stock with an exercise price of less than
$1.00 per share, (iii) there being no other securities outstanding which
are convertible into or exchangeable for shares of Common Stock of
Presley-Del., and (iv) the Series B shareholders not acquiring or
disposing of any beneficial interest in shares of Presley-Del. Common
Stock prior to the closing of the Transactions.
(c) The Transactions will be structured to permit WL Homes
and/or its affiliates, prior to consummation of the Transactions and
consistent with the requirements of applicable securities laws, to sell
shares of Presley-Del. Common Stock which are currently owned by such
persons, up to a maximum of 8% of the total number of shares of
Presley-Del. Common Stock outstanding.
(d) The Transactions shall be conditioned upon there being
purchased in the Offers a number of shares of Presley-Del. Common Stock
that, when added to the number of shares of Presley Del. Common Stock
already owned by WL Homes and its affiliates (after giving effect to any
sale of Presley Del. shares as contemplated in the preceding
subparagraph (c)), causes WL Homes and its affiliates to own at least
49% (but in no event more than 49.9%) of the outstanding Presley-Del.
Common Stock. In the event that the Series A Offer is over-subscribed,
WL Homes will purchase shares of Series A Common Stock from each
tendering stockholder on a pro rata basis. In the event that the Series
A Offer is under-subscribed, WL Homes will purchase additional shares of
Presley-Del. Common Stock from each Series B shareholder on a pro rata
basis.
(e) Concurrent with or prior to the execution and delivery
of the Definitive Agreement, each of the following entities shall have
consented to the Transactions and executed a written agreement to sell
shares of Presley-Del. Series B Common Stock in the Series B Offer such
that, upon closing of the Series B Offer, each of the following entities
shall own less than 5% of the outstanding shares of Presley-Del. Common
Stock:
(i) Foothill Capital Corporation;
(ii) GS Credit Partners, L.P.;
(iii) First Plaza Group Trust; and
(iv) International Nederlande (U.S.) Capital
Corporation.
<PAGE> 3
The Presley Companies-May 3, 1999-Page 3
The agreements for the purchase of the Series B shares shall incorporate
substantially the terms and conditions set forth on Exhibit A attached
hereto, and otherwise shall be in form and substance satisfactory to WL
Homes and to Presley-Del.
(f) The parties contemplate that Presley-Del.'s 12 1/2%
Senior Notes due 2001 (the "Presley Notes") shall remain outstanding
without modification following consummation of the Transactions. The
parties shall use reasonable efforts to structure the Transactions so as
to eliminate the need to obtain any consents to the Transactions from
holders of the Presley Notes.
(g) Presley and WL Homes shall have received all required
regulatory approvals (including, without limitation, expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act) and third party consents (including, without
limitation, lender consents), in each case without the imposition of any
condition which is reasonably unacceptable to Presley or WL Homes. The
parties shall use reasonable efforts to structure the Transactions so as
to eliminate the need to obtain any consents to the Transactions from
the lenders under Presley's existing bank credit facility (the "Presley
Bank Facility").
(h) The respective Boards of Directors of Presley and WL
Homes shall have approved the Definitive Agreement by July 15, 1999 and
caused the Definitive Agreement to have been executed by such date
(unless the term of this letter is extended by mutual agreement of the
parties).
(i) Presley shall have received a fairness opinion or
opinions with respect to the Transactions from Warburg Dillon Read LLC
(or such other investment banking firm or firms of national standing and
reasonably acceptable to Presley and WL Homes), which opinion or
opinions shall include an opinion to the effect that the Acquisition is
fair to Presley from a financial point of view. With respect to the real
property to be acquired from WL Homes by Presley Cal., Presley shall
also have received a determination of value by a real estate appraisal
firm which is of regional standing in the region in which the subject
property is located and is MAI certified, in form and substance
reasonably satisfactory to Presley and WL Homes. In addition, Presley
shall have received a solvency opinion from a firm of national standing
with respect to the solvency of Presley following the consummation of
the Transactions.
(j) The parties shall structure the Transactions
(including, if necessary, the amendment of Presley's certificate of
incorporation and bylaws to restrict transfers of shares) so as to avoid
triggering the change of control tax provisions that would result in the
loss of Presley-Del.'s net operating losses for tax purposes ("NOL's").
Shareholders of Presley-Del. which, after giving effect to the proposed
Transactions, would exceed any applicable percentage ownership
limitations shall have approved and agreed to be bound by such
restrictions, and, to the extent required by applicable law, such
amendments shall have been approved by Presley-Del. shareholders.
(k) Prior to the execution of the Definitive Agreement,
Presley shall have completed to its satisfaction its due diligence
review of the business, financial condition, assets, liabilities,
results of operations and prospects of WL Homes.
<PAGE> 4
The Presley Companies-May 3, 1999-Page 4
(k) The closing of the Offers shall be conditioned upon
the absence of any material adverse change in the business, financial
condition, assets, liabilities, operations or prospects of Presley. The
closing of the Acquisition shall be conditioned upon the absence of any
material adverse change in the business, financial condition, assets,
liabilities, results of operations or prospects of WL Homes.
(l) The Closing of the Acquisition shall be conditioned
upon Presley (i) having borrowing capacity under the terms of the
Presley Bank Facility, and/or (ii) obtaining other bank or third-party
financing on terms reasonably acceptable to Presley, in any case, in an
amount sufficient to enable Presley to finance the Transactions as
contemplated herein.
3. The Definitive Agreement. The Definitive Agreement shall
contain terms, conditions, representations, warranties and covenants customary
and appropriate for transactions of the type contemplated, including those
summarized herein, together with a commitment on behalf of Presley to issue a
favorable recommendation to its shareholders with respect to the Offers, such
obligation being subject to the Presley-Del. Board of Directors' fiduciary
duties under applicable law. The Definitive Agreement may be terminated at any
time by mutual consent of the parties, or, among other circumstances,
unilaterally by either party (provided that such party is not then in breach of
the Definitive Agreement) if (a) the closing of the Transactions has not
occurred by August 31, 1999, or (b) there has been a material adverse change in
the business, financial condition, assets, liabilities, results of operations or
prospects of the other party. Notwithstanding the foregoing, if the closing of
the Transactions has not occurred by August 31, 1999 due to delays in obtaining
governmental or regulatory approvals of the transactions contemplated hereunder,
then the parties agree to extend the term of the Definitive Agreement for up to
an additional 30 calendar days to allow the process of obtaining such approvals
to be completed.
4. Exclusive Negotiations. To induce the parties to expend money
and otherwise devote resources to structure and negotiate the proposed
Transactions, each of the parties agrees that until 11:59 p.m. PDT on July 15,
1999 (the "Exclusivity Period"), it will negotiate exclusively with the other
party hereto with respect to any proposal to acquire (whether by merger, stock
or asset purchase, direct investment, or otherwise) any equity interest in the
other party hereto, any of its subsidiaries, or all or any material portion of
its assets (except with respect to sales of homes in the ordinary course of
business). Any such proposal is hereinafter referred to as an "Acquisition
Proposal."
Each of the parties further agrees that, during the Exclusivity
Period, neither it nor any of its directors, officers, employees,
representatives or agents (including financial advisors and attorneys)
(collectively referred to herein as "Representatives") will (i) solicit,
initiate, encourage or facilitate the submission of, or consider, enter into
discussions concerning or agree to, any Acquisition Proposal other than from the
other party hereto, or (ii) provide any information concerning it or its assets
or business operations to any person or permit any person to visit its premises
in connection with or for the purpose of soliciting or facilitating any
Acquisition Proposal, in each case, other than the other party hereto and its
Representatives. In the event any other potential acquiror or Representative
thereof contacts a party or any of its Representatives with respect to an
Acquisition Proposal, such party shall notify the other party hereto and provide
such party with the details of such contact. Further, the person so contacted
<PAGE> 5
The Presley Companies-May 3, 1999-Page 5
will inform the contacting party that the party is in a period of exclusive
negotiations and terminate such contact without disclosing any details
concerning the negotiations with the other party hereto.
Notwithstanding the foregoing provisions of this Section 4, if
prior to the execution of a Definitive Agreement, the Board of Directors of
Presley-Del. or WL Homes, as the case may be, after receiving advice from
outside legal counsel, determines that a failure to act would be inconsistent
with such Board of Directors' fiduciary duties to stockholders under applicable
law, such party may (a) furnish information with respect to such party to any
person in response to an unsolicited request pursuant to a confidentiality
agreement with terms and conditions similar to those contained in the
confidentiality agreements by and between Presley-Del. and WL Homes, and (b)
participate in discussions and negotiations regarding any potential Acquisition
Proposal. Such party shall promptly notify the other party hereto of any request
received by such party with respect to a potential competing Acquisition
Proposal. If a party receives a competing Acquisition Proposal, such party shall
promptly, and in any event at least three (3) business days prior to entering
into any agreement with respect to such competing Acquisition Proposal, notify
the other party of the receipt of such competing Acquisition Proposal,
specifying the material terms and conditions of the proposal and identifying the
person making such proposal. If a party enters into a definitive agreement with
respect to a competing Acquisition Proposal, such party shall concurrently with
entering into such agreement pay, or cause to be paid, all fees and expenses
incurred by the other party through such date in connection the proposed
Transactions (including, without limitation, all attorneys', accountants',
financial advisors', bankers', appraisers' and similar professional fees and
expenses).
Notwithstanding the Exclusivity Period, the parties agree to use
their best efforts to structure the proposed Transactions, to draft and complete
negotiation of the Definitive Agreement and to close the Transactions as soon as
practicable.
5. Access; Confidentiality. Each party, subject to the need to
preserve attorney-client privilege, will make available such financial, legal,
business and other documents and information concerning its business, assets,
liabilities and operations as the other party may reasonably request. All such
documents and information provided hereunder shall be subject to, and governed
by, the applicable confidentiality agreements existing between WL Homes and
Presley. Presley acknowledges that General William Lyon and Wade Cable,
directors of Presley, have participated in the preparation of WL Homes' proposal
and are sharing information regarding Presley with WL Homes' advisors in
connection with the proposed Transactions.
In furtherance of the foregoing, WL Homes shall, promptly
following the execution and delivery of this letter by each of the parties
hereto, provide Presley and its Representatives with access to copies of all
loan agreements, instruments and other documents governing or relating to any
indebtedness of WL Homes which is proposed to be assumed by Presley in
connection with the Acquisition.
6. Publicity. Presley and WL Homes shall endeavor to
coordinate all publicity relating to the proposed Transactions. No party herein
shall issue any press release, publicity statement or other notice relating to
the proposed Transactions or this letter without the prior consent of the other
parties hereto unless required under applicable securities laws (in which case
<PAGE> 6
The Presley Companies-May 3, 1999-Page 6
each party agrees to give reasonable notice to and consult with the other
parties prior to issuing any such release, statement or other notice).
7. Finder's Fee. Each party represents that it has not engaged or
authorized any broker, finder or similar agent who would be entitled to a
commission or other fee in respect of the proposed Transactions, except for
Presley's engagement of Warburg Dillon Read LLC, whose fees will be paid by
Presley. It is further understood that, in connection with the Transactions,
Presley may, after consultation with WL Homes, engage additional firms with
respect to the fairness opinions, appraisals and solvency issues set forth in
Section 2(h) hereof.
8. Expenses. Subject to Section 4 hereof, (a) Presley shall pay
all fees, costs and expenses incurred in connection with obtaining the fairness
and solvency opinions referenced in Section 2(h) hereof and any appraisals of
Presley assets that may be required in connection with the Transactions, and (b)
WL Homes shall pay all fees, costs and expenses incurred in connection with
obtaining any financing commitments and any appraisals of WL Homes assets that
may be required in connection with the Transactions. Except as provided in
Section 4 hereof and in the foregoing sentence of this Section 8, each party
shall otherwise pay its own expenses incurred in connection with the proposed
Transactions.
9. Not an Offer. This letter is not intended as an offer to
stockholders of Presley. The Offer by WL Homes will be made pursuant to and only
in compliance with applicable federal and state securities laws.
10. Effect of Letter; Enforceability. Except as provided in this
Section, this letter is not intended to be, and does not constitute, a binding
or enforceable agreement, but is merely an outline of intention to facilitate
the negotiation and preparation of a Definitive Agreement and related documents.
This letter merely lists proposed points that may or may not become part of a
Definitive Agreement. It is not based on any existing agreement between the
parties and (except as provided in this Section) is not intended to impose any
obligation whatsoever on any party, including but not limited to any obligation
to bargain in good faith or in any way other than at arms' length. Except as to
Sections 4 through 9 above, and this Section 10, no legal or equitable duties,
responsibilities or rights are created hereby. Each party covenants not to
institute or participate in any proceeding seeking to establish a contrary
position. Neither party may reasonably rely on any promises inconsistent with
this Section.
THIS SECTION SUPERSEDES ANY AND ALL OTHER CONFLICTING OR
AMBIGUOUS LANGUAGE IN THIS LETTER OR ANY CONTEMPORANEOUS OR OTHER COMMUNICATION
PRECEDING THIS LETTER.
11. Term. This letter, unless extended by mutual agreement, shall
terminate (other than Sections 6 through 9, which shall survive) at 11:59 p.m.
PDT on July 15, 1999 or upon the earlier to occur of either of the following:
(a) the execution of the Definitive Agreement; or
(b) ten days following the delivery of written notice by
Presley to WL Homes (together with copies of all supporting
correspondence received from Presley's financial advisors) to the
effect that (i) Presley and its financial advisors have substantially
completed the appraisal and due diligence processes contemplated in
<PAGE> 7
The Presley Companies-May 3, 1999-Page 7
Sections 2(h) and 2(j) hereof, and (ii) one or more of Presley's
financial advisors have confirmed to Presley in writing that they do
not reasonably believe that they will be able to render the fairness or
solvency opinions contemplated in Section 2(h) hereof.
Notwithstanding the foregoing, the parties agree to extend the
term of this letter for up to an additional 30 calendar days in the event that
the signing of a Definitive Agreement is postponed due to delays in obtaining
governmental or regulatory approvals of the transactions contemplated hereunder.
12. Compliance. All matters referred to herein are subject to and
conditioned upon compliance with all applicable laws and the consistency of the
terms hereof with any material rights of any third parties.
If this letter is satisfactory to you as a basis for proceeding toward a
Definitive Agreement, please so signify on the enclosed copy of this letter and
return it to us at the above address.
WILLIAM LYON HOMES, INC.,
A CALIFORNIA CORPORATION
By: /s/ William Lyon
----------------------------------------
William Lyon
Chairman, President & CEO
AGREED, AS OF MAY 3, 1999:
THE PRESLEY COMPANIES,
A DELAWARE CORPORATION
By: /s/ Nancy Harlan
--------------------------------------
Nancy Harlan
Senior Vice President and General Counsel
By: /s/ Linda Foster
--------------------------------------
Linda Foster
Vice President and Corporate Secretary
[Signatures continued on next page.]
<PAGE> 8
The Presley Companies-May 3, 1999-Page 8
PRESLEY HOMES,
A CALIFORNIA CORPORATION
By: /s/ Nancy Harlan
--------------------------------------
Nancy Harlan
Senior Vice President and General Counsel
By: /s/ Linda Foster
--------------------------------------
Linda Foster
Vice President and Corporate Secretary
<PAGE> 9
EXHIBIT A
PROPOSED TERMS AND CONDITIONS
FOR THE
PURCHASE BY WILLIAM LYON HOMES, INC.
OF
SERIES "B" COMMON STOCK OF THE PRESLEY COMPANIES
The following terms relate to the proposed purchase by William Lyon Homes, Inc.
("Lyon") of Series "B" common stock of The Presley Companies ("Presley"):
1. Purchase Price. The purchase price will be $0.655 per share in
cash. This is the same price to be offered to the Series "A"
shareholders in the proposed tender offer.
2. Number of Shares to be Purchased. Lyon will agree to purchase
(a) 710,574 Series "B" shares from Foothill Capital
Corporation, and (b) from each other Series "B" shareholder,
such number of Series "B" shares as is necessary to reduce the
total number of common shares owned by each Series "B"
shareholder (including any Series "A" common shares) below 5%
of the 52,195,678 total common shares of Presley that are
outstanding. The reduction of each Series "B" shareholder's
ownership to below the 5% threshold will enable each Series
"B" shareholder, after completion of the tender offer by Lyon
for the Series "A" shares, to convert its remaining Series "B"
shares into Series "A" shares and trade such Series "A" shares
without being subject to restrictions which are proposed to be
imposed on holders of more than 5% of Presley's common stock
pursuant to Presley's charter documents (as proposed to be
amended).
Based on the number of Presley common shares currently
outstanding and the current share ownership of each Series "B"
shareholder as reflected below, the number and percentage of
Series "B" shares to be purchased by Lyon from each Series "B"
shareholder are specified below:
<TABLE>
<CAPTION>
Series "B" % of Total
Series "B" Total Shares to Be Shares Shares
Shareholders Shares Owned Purchased Purchased Retained
--------------------- ----------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
First Plaza (GM) 6,796,531(1) 4,186,748 61.6% 2,609,783(1)
GS Credit Partners,
L.P. 5,920,362 3,310,579 55.9% 2,609,783
ING 4,547,269 1,937,486 42.6% 2,609,783
Foothill 1,836,109 710,574 38.7% 1,125,535
---------- ---------- ---- ---------
19,100,271 10,145,387 53.1% 8,954,884
========== ========== ==== =========
</TABLE>
(1) Includes 1,697,325 Series "A" shares.
<PAGE> 10
3. Sale of Additional Series "B" Shares. In addition to the
acquisition of the Series "B" shares as described in Section 2
above, Lyon is proposing (a) to dispose of a portion of the
Presley Series "A" shares which are currently held by Lyon and
its affiliates, and (b) to make a tender offer for a portion
of Presley's outstanding Series "A" shares which are not
currently held by Lyon or its affiliates. Lyon's objective,
following consummation of each of the Series "A" and Series
"B" transactions referenced above, is to own an aggregate of
approximately 49% (but in no event more than 49.9%) of
Presley's outstanding common stock. In the event that the
Series "A" shareholders do not tender a sufficient number of
shares in the proposed tender offer to enable Lyon (after
taking into account the Series "B" shares to be acquired as
described in Section 2 above) to achieve the desired ownership
target, the Series "B" shareholders will agree to sell to Lyon
additional Series "B" shares (over and above the 10,145,387
shares to be acquired as described in Section 2 above) to
enable Lyon to reach the desired ownership target. Any such
sales of additional Series "B" shares shall be made at $0.655
per share in cash and, unless otherwise agreed by Lyon and
each of the Series "B" shareholders, shall be made pro rata on
the basis of the number of remaining Series "A" and Series "B"
shares then held by each Series "B" shareholder.
4. Agreements Not to Tender. The Series "B" shareholders will
agree that, prior to completion of the Series "A" tender
offer, (a) they will not transfer or tender any Series "A"
shares which they may own, and (b) they will not transfer
their remaining Series "B" shares or convert their remaining
Series "B" shares into Series "A" shares (except under the
circumstances contemplated in Section 3 above). General Lyon
and Wade Cable (and their respective affiliates) will not
tender their Series "A" shares in the tender offer.
5. Signing Date; Conditions to Closing. Lyon and the Series "B"
shareholders expect to enter into definitive agreements for
the purchase of the Series "B" shares as described above on or
before May 12, 1999. Lyon's purchase of the Series "B" shares
shall be conditioned upon the unanimous agreement of each of
the Series "B" shareholders to the terms and conditions
contained herein. The closing of such purchases shall be
conditioned upon and shall take place concurrently with the
closing of Lyon's proposed tender offer for the Series "A"
shares and the proposed purchase by Presley of substantially
all of Lyon's assets. Such transactions are currently expected
to close on or about August 31, 1999, following the receipt of
shareholder approval of the proposed amendments to Presley's
charter documents at a duly-called special meeting. Such date
may be extended in the event of unforeseen delays in the
S.E.C.'s review and approval of Presley's registration
statement and solicitation materials relating to the special
meeting.
6. Lyon will agree that for the three (3) years following the
consummation of the transaction, Lyon and its affiliates will
not sell any shares of Presley common stock in excess of the
shares which any of them may currently beneficially own
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unless such sale takes place in connection with a transaction
in which all other shareholders of Presley are treated
equally.
The foregoing terms and conditions assume the accuracy of the share ownership
information set forth in Section 2 above and that, prior to the closing of the
proposed transactions referenced above, none of the Series "B" shareholders will
acquire or dispose of any beneficial interest in shares of Presley Series "A" or
Series "B" common stock.
The foregoing is not intended to be, and does not constitute, a binding or
enforceable agreement, but is merely an outline of intention to facilitate the
preparation of definitive agreements with respect to the proposed transactions.
The foregoing is not intended as an offer to purchase securities of Presley. The
offer and sale of any securities of Presley will be made only after satisfaction
of applicable state and federal securities laws.
If the foregoing is acceptable to you as a basis for proceeding toward a
definitive agreement, please so signify by signing in the space provided below
and returning a copy of this term sheet to William Lyon at William Lyon Homes,
Inc., 4490 Von Karman Avenue, Newport Beach, California 92660, facsimile (949)
252-2525, telephone (949) 833-2421.
WILLIAM LYON HOMES, INC.
Date: April 23, 1999 By: /s/ William Lyon
---------------------------------------------
William Lyon
Chairman, President and CEO
FIRST PLAZA GROUP TRUST
Date: April 30, 1999 By: /s/ Charles Froland
---------------------------------------------
Charles Froland
Managing Director, General Motors Investment
Management Corporation
GS CREDIT PARTNERS, L.P.
Date: April 30, 1999 By: /s/ Edward A Mule
---------------------------------------------
Edward A. Mule
[Signatures continued on next page.]
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<PAGE> 12
INTERNATIONAL NEDERLANDE (U.S.)
CAPITAL CORPORATION
Date: April 30, 1999 By: /s/ Gregory P. Flynn
---------------------------------------------
Gregory P. Flynn
FOOTHILL CAPITAL CORPORATION
Date: April 30, 1999 By: /s/ Karen Sandler
----------------------------------------------
Karen Sandler
Senior Vice President
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