<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO RULE 13d-2(a)
(AMENDMENT NO. 9)
------------------------
THE PRESLEY COMPANIES
(NAME OF SUBJECT COMPANY [ISSUER])
------------------------
WILLIAM LYON
AND
WILLIAM H. LYON
(BIDDERS)
------------------------
SERIES A COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
741030-10-0
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
WILLIAM LYON
WILLIAM H. LYON
C/O WILLIAM LYON HOMES, INC.
4490 VON KARMAN
NEWPORT BEACH, CALIFORNIA 92660
(949) 833-3600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPY TO:
DAVID A. KRINSKY, ESQ.
O'MELVENY & MYERS LLP
610 NEWPORT CENTER DRIVE, SUITE 1700
NEWPORT BEACH, CALIFORNIA 92660-6429
(949) 823-7902
CALCULATION OF FILING FEE
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TRANSACTION AMOUNT OF
VALUATION* FILING FEE**
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$6,994,608.76 $1,399.00
============================================================================================
</TABLE>
* Estimated for purpose of calculating the filing fee only. This amount assumes
the purchase of 10,678,792 shares of Series A Common Stock, par value $0.01
per share, of The Presley Companies, a Delaware corporation, at a price of
$0.655 per share in accordance with the terms of the tender offer described
herein.
** The fee, calculated in accordance with Rule 0-11(d) of the Securities
Exchange Act of 1934, is 1/50th of one percent of the aggregate Transaction
Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
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Amount previously paid: Filing party:
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Form or registration no.: Date filed:
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</TABLE>
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<PAGE> 2
SCHEDULE 14D-1
CUSIP NO. 741030-10-0 PAGE 2 OF 7 PAGES
<TABLE>
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1. NAME OF REPORTING PERSON
WILLIAM LYON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
(ENTITIES ONLY)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* PF, AF, OO
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES OF
AMERICA
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,189,589 SHARES
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [X]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 11.7%
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10. TYPE OF REPORTING PERSON* IN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 14D-1
CUSIP NO. 741030-10-0 PAGE 3 OF 7 PAGES
<TABLE>
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1. NAME OF REPORTING PERSON
WILLIAM H. LYON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
(ENTITIES ONLY)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS* PF, AF, OO
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES OF
AMERICA
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 SHARES
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8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [X]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0%
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10. TYPE OF REPORTING PERSON* IN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
INTRODUCTION
This Schedule 14D-1 Tender Offer Statement (this "Statement") relates to
the offer by William Lyon and William H. Lyon (collectively, the "Purchasers")
to purchase up to 10,678,792 shares (subject to adjustment) of outstanding
Series A Common Stock, $0.01 par value per share (the "Series A Shares"), of The
Presley Companies, a Delaware corporation (the "Company"), at a price of $0.655
per share, net to the tendering stockholder in cash, without interest thereon
(the "Offer Price"), upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated October 7, 1999 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). Copies of the Offer to Purchase and the Letter of
Transmittal are annexed to and filed with this Schedule 14D-1 as Exhibits (a)(1)
and (a)(2), respectively.
This Statement also constitutes an amendment to William Lyon's Statement on
Schedule 13D with respect to the beneficial ownership of Series A Shares of the
Company.
The item numbers and responses thereto are in accordance with the
requirements of Schedule 14D-1. Capitalized terms not defined herein have the
meanings assigned thereto in the Offer to Purchase.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is The Presley Companies, a Delaware
corporation. The address of its principal executive offices is 19 Corporate
Plaza, Newport Beach, California 92660.
(b) The information set forth in the "Introduction" and Section 1 ("Terms
of the Offer; Expiration Date; Amendment; Termination") of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Series A
Shares; Dividends") of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This Statement is filed on behalf of William Lyon and William
H. Lyon for purposes of Schedule 14D-1 and Schedule 13D. The information set
forth in the "Introduction" and Section 8 ("Certain Information Concerning the
Purchasers") of the Offer to Purchase is incorporated herein by reference.
(e)-(f) During the last five years, neither of the Purchasers has been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or a finding of any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the "Introduction," Section 8
("Certain Information Concerning the Purchasers"), Section 9 ("Source of
Funds"), Section 10 ("Background of the Offer; The Purchase Agreement") and
Section 11 ("Purpose of the Offer; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Source of Funds") of the
Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS.
(a)-(e) The information set forth in the "Introduction," Section 10
("Background of the Offer; The Purchase Agreement") and Section 11 ("Purpose of
the Offer; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
(f)-(g) The information set forth in Section 13 ("Effect of the Offer on
the Market for the Series A Shares; Stock Exchange Listing; Exchange Act
Registration; Margin Regulations") of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Section 8 ("Certain Information
Concerning the Purchasers") of the Offer to Purchase is incorporated herein by
reference. The Purchasers disclaim beneficial ownership of the
Page 4 of 7 Pages
<PAGE> 5
Series A Shares into which the Series B Shares (as defined in the Offer to
Purchase) which may be purchased by the Purchasers under the Series B Stock
Purchase Agreements (as defined in the Offer to Purchase) are convertible until
such time as the conditions set forth in the Series B Stock Purchase Agreements
have been satisfied and the closing of the transactions contemplated thereunder
have occurred.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "Introduction," Section 9 ("Sources of
Funds"), Section 10 ("Background of the Offer; The Purchase Agreement"), Section
11 ("Purpose of the Offer; Plans for the Company"), and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 ("Fees and Expenses") of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the "Introduction," Section 8 ("Certain
Information Concerning the Purchasers"), Section 9 ("Sources of Funds"), Section
10 ("Background of the Offer; The Purchase Agreement"), Section 11 ("Purpose of
the Offer; Plans for the Company") and Section 16 ("Fees and Expenses") of the
Offer to Purchase is incorporated herein by reference.
(b)-(d) The information set forth under Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(e) To the knowledge of the Purchasers, there are no pending legal
proceedings relating to the tender offer to which this Schedule 14D-1 relates.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, to the extent not otherwise incorporated herein by reference, is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
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(a)(1) Offer to Purchase dated October 7, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Taxpayer Certification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement dated October 7, 1999.
(b) None.
(c)(1) Purchase Agreement and Escrow Instructions, dated as of
October 7, 1999, by and among WLHI, the Purchasers, the
Company and Presley Homes.
(c)(2) Stock Purchase and Sale Agreements, dated as of July 6,
1999, between WLHI and each of the Series B Stockholders.
(c)(3) Nonqualified Stock Option Agreement, dated as of May 20,
1994, between the Company and William Lyon.
(c)(4) Confidentiality Agreement, dated as of November 17, 1998,
between the Company and WLHI.
(d) None.
(e) Not applicable.
(f) Not applicable.
99.1 Joint Filing Agreement of William Lyon and William H. Lyon.
</TABLE>
Page 5 of 7 Pages
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SIGNATURE
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY
THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
/s/ WILLIAM LYON
--------------------------------------
William Lyon
/s/ WILLIAM H. LYON
--------------------------------------
William H. Lyon
Dated: October 7, 1999
Page 6 of 7 Pages
<PAGE> 7
EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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(a)(1) Offer to Purchase dated October 7, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Taxpayer Certification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement dated October 7, 1999.
(b) None.
(c)(1) Purchase Agreement and Escrow Instructions, dated as of
October 7, 1999, by and among WLHI, the Purchasers, the
Company and Presley Homes.
(c)(2) Stock Purchase and Sale Agreements, dated as of July 6,
1999, between WLHI and each of the Series B Stockholders.
(c)(3) Nonqualified Stock Option Agreement, dated as of May 20,
1994, between the Company and William Lyon.
(c)(4) Confidentiality Agreement, dated as of November 17, 1998,
between the Company and WLHI.
(d) None.
(e) Not applicable.
(f) Not applicable.
99.1 Joint Filing Agreement of William Lyon and William H. Lyon.
</TABLE>
Page 7 of 7 Pages
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 10,678,792 OUTSTANDING SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
AT
$0.655 NET PER SHARE
BY
WILLIAM LYON
AND
WILLIAM H. LYON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 5, 1999, UNLESS THE OFFER IS EXTENDED. WILLIAM LYON
AND WILLIAM H. LYON (COLLECTIVELY, THE "PURCHASERS") HAVE AGREED, UNDER CERTAIN
CIRCUMSTANCES AND SUBJECT TO THE TERMS AND CONDITIONS OF THE OFFER, TO EXTEND
THE OFFER FROM TIME TO TIME UNTIL THE CLOSING OF THE ACQUISITION (AS DEFINED
HEREIN).
THE OFFER IS BEING MADE AS PART OF A SERIES OF TRANSACTIONS THAT ARE
EXPECTED TO RESULT IN (I) THE ACQUISITION BY PRESLEY HOMES, A CALIFORNIA
CORPORATION ("PRESLEY HOMES") AND A WHOLLY OWNED SUBSIDIARY OF THE PRESLEY
COMPANIES, A DELAWARE CORPORATION (THE "COMPANY"), OF SUBSTANTIALLY ALL OF THE
REAL ESTATE AND RELATED ASSETS AND LIABILITIES OF WILLIAM LYON HOMES, INC.
("WLHI"), A CALIFORNIA CORPORATION OWNED BY THE PURCHASERS, (II) THE PURCHASE BY
THE PURCHASERS OF OUTSTANDING SHARES OF THE COMPANY'S SERIES A COMMON STOCK
("SERIES A SHARES") PURSUANT TO THE OFFER AND THE PURCHASE BY WLHI (OR ONE OR
MORE OF ITS AFFILIATES) OF OUTSTANDING SHARES OF THE COMPANY'S SERIES B COMMON
STOCK ("SERIES B SHARES") PURSUANT TO THE SERIES B STOCK PURCHASE AGREEMENTS,
EACH AS DESCRIBED HEREIN, SUCH THAT FOLLOWING SUCH PURCHASES, THE PURCHASERS AND
THEIR AFFILIATES OWN UP TO 49.9% OF THE OUTSTANDING COMMON STOCK OF THE COMPANY,
AND (III) THE MERGER OF THE COMPANY WITH AND INTO PRESLEY MERGER SUB, INC., A
NEWLY-FORMED DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF THE COMPANY
(THE "MERGER").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
1,989,180 SERIES A SHARES, SUBJECT TO ADJUSTMENT AS DESCRIBED HEREIN (THE
"MINIMUM CONDITION"), (B) WLHI (OR ONE OR MORE OF ITS AFFILIATES) CONTINUING TO
HAVE, AS OF THE EXPIRATION OF THE OFFER, THE LEGALLY ENFORCEABLE RIGHT TO
PURCHASE SERIES B SHARES PURSUANT TO EACH OF THE SERIES B STOCK PURCHASE
AGREEMENTS, (C) THE CONSUMMATION OF THE ACQUISITION BY PRESLEY HOMES OF
SUBSTANTIALLY ALL OF THE REAL ESTATE AND RELATED ASSETS AND LIABILITIES OF WLHI
PURSUANT TO THE PURCHASE AGREEMENT (AS DEFINED HEREIN), AND (D) APPROVAL OF THE
MERGER BY HOLDERS OF A MAJORITY OF THE OUTSTANDING SERIES A SHARES AND SERIES B
SHARES VOTING TOGETHER AS A SINGLE CLASS.
A SPECIAL COMMITTEE OF INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY DETERMINED THAT THE PURCHASE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS, AND IN FURTHERANCE OF THE TRANSACTIONS
CONTEMPLATED BY THE PURCHASE AGREEMENT, HAS RECOMMENDED THAT HOLDERS OF SERIES A
SHARES (OTHER THAN THE PURCHASERS AND CERTAIN HOLDERS OF SERIES B SHARES) ACCEPT
THE OFFER AND TENDER THEIR SERIES A SHARES PURSUANT TO THE OFFER; PROVIDED,
HOWEVER, THAT SUCH HOLDERS OF SERIES A SHARES SHOULD CONSULT WITH THEIR
FINANCIAL AND TAX ADVISORS PRIOR TO TENDERING THEIR SERIES A SHARES IN THE
OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Series A Shares should either (i) complete and sign the Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) representing
tendered Series A Shares and any other required documents to the Depositary or
tender such Series A Shares pursuant to the procedures for book-entry transfer
set forth in Section 3, or (ii) request such stockholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such stockholder. A stockholder whose Series A Shares are registered in the name
of a broker, dealer, commercial bank trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Series A Shares.
A stockholder who desires to tender Series A Shares and whose certificates
representing such Series A Shares are not immediately available, or who cannot
comply on a timely basis with the procedures for book-entry transfer described
in this Offer to Purchase, may tender such Series A Shares by following the
procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials,
may be directed to the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase. Stockholders may also contact
brokers, dealers, commercial banks and trust companies for assistance concerning
the Offer.
------------------------
October 7, 1999
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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INTRODUCTION..................................................... 1
THE TENDER OFFER................................................. 2
1. Terms of the Offer; Expiration Date; Amendment;
Termination................................................. 2
2. Acceptance for Payment and Proration; Payment............... 4
3. Procedures for Tendering Series A Shares.................... 6
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences..................... 9
6. Price Range of Series A Shares; Dividends................... 9
7. Certain Information Concerning the Company.................. 10
8. Certain Information Concerning the Purchasers............... 13
9. Source of Funds............................................. 15
10. Background of the Offer; The Purchase Agreement............. 16
11. Purpose of the Offer; Plans for the Company................. 25
12. Dividends and Distributions................................. 25
13. Effect of the Offer on the Market for the Series A Shares;
Stock Exchange Listing; Exchange Act Registration; Margin
Regulations................................................. 26
14. Conditions to the Offer..................................... 27
15. Certain Legal Matters....................................... 29
16. Fees and Expenses........................................... 30
17. Miscellaneous............................................... 30
</TABLE>
-i-
<PAGE> 3
TO THE HOLDERS OF SERIES A COMMON STOCK
OF THE PRESLEY COMPANIES:
INTRODUCTION
William Lyon and William H. Lyon (together, the "Purchasers") hereby offer
to purchase up to an aggregate of 10,678,792 shares (subject to adjustment as
described herein) of the outstanding Series A Common Stock, $0.01 par value per
share (the "Series A Shares"), of The Presley Companies, a Delaware corporation
(the "Company"), at a price of $0.655 per Series A Share, net to the tendering
stockholder in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as extended or amended from time to
time, together constitute the "Offer"). Tendering stockholders of the Company
will not be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes with
respect to the purchase of Series A Shares by the Purchasers pursuant to the
Offer. The Purchasers will pay all charges and expenses of ChaseMellon
Consulting Services, LLC, which is acting as Information Agent, and ChaseMellon
Shareholder Services, LLC, which is acting as Depositary in connection with the
Offer. See Section 16.
The Offer is being made pursuant to the Purchase Agreement and Escrow
Instructions dated as of October 7, 1999 (the "Purchase Agreement"), by and
among William Lyon Homes, Inc., a California corporation owned by the Purchasers
("WLHI"), the Purchasers, the Company and Presley Homes, a California
corporation and a wholly owned subsidiary of the Company ("Presley Homes"). The
Purchase Agreement provides for, among other things, the acquisition by Presley
Homes of substantially all of the real estate and related assets of WLHI for the
cash purchase price of forty-eight million dollars ($48,000,000), subject to
adjustment, together with the assumption of substantially all liabilities of
WLHI (the "Acquisition"). The Purchase Agreement also contemplates that (a) the
Company will be merged with and into Presley Merger Sub, Inc. ("New Presley"), a
newly-formed Delaware corporation and a wholly owned subsidiary of the Company
(the "Merger"), and (b) WLHI (or one or more of its affiliates) will consummate
the purchase of up to 15,566,837 shares of the Company's Series B Common Stock,
$0.01 par value per share (the "Series B Shares"), pursuant to separate Stock
Purchase and Sale Agreements (collectively, the "Series B Stock Purchase
Agreements") between WLHI and each of GS Credit Partners, L.P., ING (U.S.)
Capital, LLC, and The Chase Manhattan Bank, as Trustee for First Plaza Group
Trust (collectively, the "Series B Stockholders"). Each Series B Share is
convertible into one Series A Share. (The Series A Shares and the Series B
Shares are collectively referred to herein as the "Common Stock.")
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
1,989,180 SERIES A SHARES, SUBJECT TO ADJUSTMENT AS DESCRIBED HEREIN (THE
"MINIMUM CONDITION"), (II) WLHI (OR ONE OR MORE OF ITS AFFILIATES) CONTINUING TO
HAVE, AS OF THE EXPIRATION OF THE OFFER, THE LEGALLY ENFORCEABLE RIGHT TO
PURCHASE SERIES B SHARES PURSUANT TO EACH OF THE SERIES B STOCK PURCHASE
AGREEMENTS, (III) THE CONSUMMATION OF THE ACQUISITION, AND (IV) APPROVAL OF THE
MERGER BY HOLDERS OF A MAJORITY OF THE OUTSTANDING SERIES A SHARES AND SERIES B
SHARES VOTING TOGETHER AS A SINGLE CLASS.
A SPECIAL COMMITTEE OF INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY DETERMINED THAT THE PURCHASE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS, AND IN FURTHERANCE OF THE TRANSACTIONS
CONTEMPLATED BY THE PURCHASE AGREEMENT, HAS RECOMMENDED THAT HOLDERS OF SERIES A
SHARES (OTHER THAN THE PURCHASERS AND THE SERIES B STOCKHOLDERS) ACCEPT THE
OFFER AND TENDER THEIR SERIES A SHARES PURSUANT TO THE OFFER; PROVIDED, HOWEVER,
THAT SUCH HOLDERS OF SERIES A SHARES SHOULD CONSULT WITH THEIR FINANCIAL AND TAX
ADVISORS PRIOR TO TENDERING THEIR SERIES A SHARES IN THE OFFER.
1
<PAGE> 4
Warburg Dillon Read LLC ("Warburg Dillon Read"), the financial advisor to
the Special Committee of the Board of Directors of the Company, has delivered to
the Special Committee its written opinion dated September 16, 1999, to the
effect that, after giving effect to the Acquisition, the Offer, the Merger and
the transactions contemplated under the Series B Stock Purchase Agreements, the
shares of common stock of New Presley to be issued in the Merger to holders of
Series A Shares and, to the extent that any such holder of Series A Shares
(other than the Purchasers and the Series B Stockholders) tenders Series A
Shares in the Offer, the cash that may be received by each such tendering holder
of Series A Shares (other than the Purchasers and the Series B Stockholders),
subject to the proration provisions of the Offer, is fair to the holders of
Series A Shares (other than the Purchasers and the Series B Stockholders) from a
financial point of view. A copy of such opinion is included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders of the Company concurrently herewith.
Warburg Dillon Read confirmed its opinion as of October 7, 1999. Stockholders
are urged to read the opinion in its entirety for a description of the
assumptions made, factors considered and procedures followed by Warburg Dillon
Read.
The Merger has been proposed in order to implement restrictions on the
transfer of the Company's Common Stock. These stock transfer restrictions will
reduce, but not eliminate, the risk that an ownership change will occur with
respect to the Company that would limit the use by the Company of its
substantial tax net operating loss carryforwards to offset future taxable
income. The Merger and the transfer restrictions are described in detail in
proxy materials of the Company which have been filed with the Securities and
Exchange Commission (the "Commission"). Record holders of Common Stock as of
September 15, 1999 will receive these proxy materials in a separate mailing and
will be entitled to vote on the Merger at a special meeting of stockholders of
the Company. The Company's proxy materials contain important financial and other
information relating to the Merger and the Acquisition, and holders of Series A
Shares should review the proxy materials carefully before making any decision
with respect to the Offer.
William Lyon is presently the Chairman of the Board of Directors of the
Company. Each of the Purchasers and WLHI has agreed, and each of the Series B
Stockholders has conditionally agreed, to vote all shares of Common Stock owned
by them in favor of the Merger at the special meeting of the stockholders. As of
the date of the Offer, the Purchasers own and have the right to vote 5,439,589
of the issued and outstanding shares of Common Stock of the Company. In
addition, the Series B Stockholders have represented to WLHI in the Series B
Stock Purchase Agreements that they own an aggregate of 17,264,162 of the issued
and outstanding shares of Common Stock of the Company.
According to the Company, as of October 6, 1999, there were 34,792,732
Series A Shares and 17,402,946 Series B Shares issued and outstanding,
aggregating to 52,195,678 shares of Common Stock issued and outstanding. On
October 6, 1999, the last full trading day prior to the announcement of the
Purchase Agreement and the Purchasers' intention to commence the Offer, the
closing price per Series A Share on the New York Stock Exchange (the "NYSE") was
$0.8125.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE; AMENDMENT; TERMINATION
Upon the terms and subject to the conditions of the Offer, the Purchasers
will accept for payment and pay for all Series A Shares, up to a maximum
aggregate of 10,678,792 Series A Shares (subject to adjustment as described
below), which are validly tendered prior to the Expiration Date (as hereinafter
defined) and not properly withdrawn in accordance with Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Friday, November
5, 1999 (the "Initial Expiration Date"), unless and until the Purchasers, as
provided below, shall have extended the period of time for which the Offer is
open, in which event the term "Expiration Date" means the latest time and date
at which the Offer as so extended by the
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<PAGE> 5
Purchasers, shall expire. Pursuant to the Purchase Agreement, the Purchasers,
subject to the terms and conditions of the Offer, have agreed to extend the
period of time during which the Offer is open if, on the Initial Expiration
Date, (i) the Minimum Condition shall not have been satisfied or waived by the
Purchasers, or (ii) the Acquisition shall not have been consummated or the
stockholders of the Company shall not have approved the Merger due to delays in
(a) obtaining necessary governmental or regulatory approvals of, or necessary
third party consents to, either of the Acquisition or the Merger, or (b)
obtaining the financing required to satisfy the conditions to the Acquisition,
or (c) obtaining the release of WLHI from certain performance bonds, guarantees
and other obligations as set forth in the Purchase Agreement. Under such
circumstances, the Purchasers have agreed to extend the Expiration Date of the
Offer from time to time and for such number of business days as may be necessary
to allow for such conditions to be satisfied and for the closing of the Offer to
be substantially coterminous with the closing of the Acquisition; provided,
however, that in no event shall the Purchasers be obligated to extend the
expiration of the Offer beyond November 30, 1999 (or thirty calendar days
thereafter in the event that the closing of the Acquisition or the stockholder
vote upon the Merger is delayed due to further delays in the process of
obtaining necessary governmental or regulatory approvals). The Purchasers
expressly reserve the right to decrease or waive the Minimum Condition and
otherwise to amend the terms and conditions of the Offer; provided that, without
the written consent of the Company, no amendment may be made which (1) decreases
the Offer Price, (2) decreases the number of Series A Shares sought, or (3)
amends the terms of the Offer in any manner adverse to the holders of Series A
Shares.
The Purchasers have agreed that if, after receiving the advice of counsel,
the Company determines that the consummation of the Offer and/or the purchases
by WLHI (or one or more of its affiliates) of Series B Shares under the Series B
Stock Purchase Agreements would result in an "ownership change" of the Company
for federal tax purposes or other adverse tax consequence to the Company, the
Purchasers will reduce the number of Series A Shares sought pursuant to the
Offer (but not below the number of Series A Shares required to satisfy the
Minimum Condition) to avoid such "ownership change" or other adverse federal tax
consequence.
If the Purchasers make a material change in the terms of the Offer or the
information concerning the Offer (including a decrease in the number of Series A
Shares sought pursuant to the Offer as required above) or waive a material
condition of the Offer, the Purchasers will disseminate additional tender offer
material and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d)
and 14e-1(b) promulgated by the Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The minimum period during which the Offer
must remain open following material changes in the terms of the Offer or
information concerning the Offer, other than a change in price or a change in
the number of shares sought pursuant to the Offer, will depend upon the facts
and circumstances, including the relative materiality of the terms or
information. With respect to a change in price or a change in the number of
Series A Shares, a minimum of ten business days from the date that notice of
such change in the number of Series A Shares sought is first published or sent
or given to stockholders is generally required to allow for adequate
dissemination to stockholders and investor response. As used in this Offer to
Purchase, "business day" means any day other than Saturday, Sunday or a federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time, as computed in accordance with Rule 14d-1 under the Exchange
Act.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition, the consummation of the Acquisition, approval of the Merger
by holders of a majority of the Series A Shares and Series B Shares voting
together as a class, and the satisfaction of the other conditions set forth in
Section 14. If any such condition is not satisfied prior to the Expiration Date
of the Offer, the Purchasers may, subject to the terms of the Purchase
Agreement, (i) terminate the Offer and return all tendered Series A Shares to
tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights
as set forth in Section 4, retain all such tendered Series A Shares until the
Expiration Date of the Offer as so extended, (iii) other than as described in
Section 14, waive such condition and, subject to any requirement to extend the
period of time during which the Offer is open, purchase all Series A Shares
validly tendered and not withdrawn by the Expiration Date, or (iv) delay
acceptance for payment of (whether or not the Series A Shares have
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<PAGE> 6
theretofore been accepted for payment), or payment for, any Series A Shares
tendered and not withdrawn, subject to applicable law, until satisfaction or
waiver of the conditions to the Offer. Notwithstanding the foregoing, upon
consummation of the Acquisition in accordance with the terms of the Purchase
Agreement, all of the conditions to the Offer shall be deemed to have been
satisfied (other than the condition that there be no action, legislation,
regulation, ruling or judgment instituted or pending which would make illegal or
otherwise prohibit consummation of the Offer, the Merger or the purchase by WLHI
of the Series B Shares as contemplated under the Purchase Agreement and the
Series B Stock Purchase Agreements, or impose a limitation on the ability of the
Purchasers to acquire, hold or vote shares of Common Stock of the Company, or
require divestiture by the Purchasers or their respective affiliates of shares
of Common Stock or divestiture by the Company of any material portion of its
business or assets taken as a whole). In the Purchase Agreement, the Purchasers
have agreed, subject to the conditions in Section 14 and its rights under the
Offer, to accept for payment and pay for Series A Shares tendered pursuant to
the Offer as soon as the Purchasers are legally permitted to do so under
applicable law.
If the Purchasers extend the Offer, or if the Purchasers (whether before or
after their acceptance for payment of Series A Shares) are delayed in their
purchase of or payment for Series A Shares or are unable to pay for Series A
Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchasers' rights under the Offer, the Depositary may retain tendered Series A
Shares on behalf of the Purchasers, and such Series A Shares may not be
withdrawn except to the extent tendering stockholders are entitled to withdrawal
rights as described in Section 4. The ability of the Purchasers to delay the
payment for Series A Shares which the Purchasers have accepted for payment is,
however, limited by Rule 14e-1(c) under the Exchange Act, which requires that a
bidder pay the consideration offered or return the securities deposited by or on
behalf of holders of securities promptly after the termination or withdrawal of
the bidder's offer.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rules 14d-4(c) and
14e-1(d) under the Exchange Act.
The Company has provided to the Purchasers a list containing the names and
addresses of the record holders of Series A Shares and lists of securities
positions of Series A Shares held in stock depositories for the purpose of
disseminating the Offer to stockholders of the Company. This Offer to Purchase
and the related Letter of Transmittal and other relevant materials will be
mailed to record holders of Series A Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholder list or, if applicable,
who are listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Series A Shares.
2. ACCEPTANCE FOR PAYMENT AND PRORATION; PAYMENT
Pursuant to the terms of, and subject to the prior satisfaction or waiver
of the conditions of, the Offer (as it may be extended or amended), the
Purchasers will accept for payment and pay for all Series A Shares validly
tendered prior to the Expiration Date and not properly withdrawn as promptly as
practicable following such Expiration Date. If more than 10,678,792 Series A
Shares have been validly tendered and not withdrawn as of the Expiration Date of
the Offer, the Purchasers will accept for payment and purchase Series A Shares
from tendering stockholders on a pro rata basis, which calculation will be
adjusted downward to avoid acceptance for payment of fractional shares.
Proration for each stockholder tendering Series A Shares will be based on the
ratio of the number of Series A Shares tendered by each stockholder to the total
number of Series A Shares validly tendered and not properly withdrawn. Tendering
stockholders may designate in the Letter of Transmittal the order in which their
Series A Shares are to be purchased if proration is required. If the stockholder
does not designate an order in the Letter of Transmittal, Series A Shares will
be selected for purchase by the Depositary. In the event that proration is
required, the Purchasers will announce the final results of proration as soon as
practicable, but in no event later than five business days following the
Expiration Date. The Purchasers will not pay for any Series A Shares tendered
until after the final proration factor has been determined.
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<PAGE> 7
Subject to applicable rules of the Commission, the Purchasers expressly
reserve the right to delay acceptance for payment of, or payment for, Series A
Shares in order to comply, in whole or in part, with any applicable law. See
Sections 14 and 15. Any such delays will be effected in compliance with Rule
14e-1(c) under the Exchange Act (relating to a bidder's obligation to pay for or
return tendered securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for Series A Shares purchased pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the certificates
evidencing such Series A Shares (the "Share Certificates"), or timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Series A Shares, if such procedure is available, into the Depositary's account
at The Depository Trust Company ("Book-Entry Transfer Facility") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and (iii) any other documents required by the Letter of
Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Series A Shares, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal, and
that Purchaser may enforce such agreement against the participant.
For purposes of the Offer, the Purchasers will be deemed to have accepted
for payment, and thereby purchased, Series A Shares validly tendered and not
withdrawn as, if, and when the Purchasers give oral or written notice to the
Depositary of the Purchasers' acceptance of such Series A Shares for payment.
Upon the terms and subject to the conditions of the Offer, payment for Series A
Shares accepted for payment pursuant to the Offer will be made by deposit of the
aggregate purchase price therefor with the Depositary, which will act as agent
for tendering stockholders for the purpose of receiving payment from the
Purchasers and transmitting payment to such tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SERIES A SHARES BE PAID,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering stockholders, Purchasers' obligation to make such payment will be
satisfied and tendering stockholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Series A Shares pursuant to the Offer.
If any tendered Series A Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Series A Shares than are tendered, Share Certificates
evidencing unpurchased or untendered Series A Shares will be returned, without
expense to the tendering stockholder (or, in the case of Series A Shares
tendered by book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility pursuant to the procedure set forth in Section 3, such Series
A Shares will be credited to an account maintained at such Book-Entry Transfer
Facility), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
If, prior to the Expiration Date, the Purchasers increase the Offer Price
or otherwise increase the consideration offered to stockholders pursuant to the
Offer, such increased consideration will be paid to all holders whose Series A
Shares are purchased in the Offer, whether or not such Series A Shares were
tendered prior to such increase in consideration.
The Purchasers, and each of them individually, reserve the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of their respective affiliates, the right to purchase all or any portion
of the Series A Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchasers of their obligations under the Offer
or prejudice the rights of tendering stockholders to receive payment for Series
A Shares validly tendered and accepted for payment pursuant to the Offer.
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<PAGE> 8
3. PROCEDURES FOR TENDERING SERIES A SHARES
Valid Tender of Series A Shares. In order for Series A Shares to be
validly tendered pursuant to the Offer, either (a) the Letter of Transmittal or
a facsimile thereof, properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Series A Shares, and any other required documents, must be received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date, and either the Share
Certificates evidencing tendered Series A Shares must be received by the
Depositary along with the Letter of Transmittal, or such Series A Shares must be
tendered pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Series A Shares at the Book-Entry Transfer Facility for purposes of the
Offer within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant of the Book-Entry Transfer
Facility's systems may make book-entry delivery of Series A Shares by causing
the Book-Entry Transfer Facility to transfer such Series A Shares into the
Depositary's account at a Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Series A Shares may be effected through book-entry transfer at a
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees, or an Agent's Message, and any other
required documents, must, in any case, be transmitted to and received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date or the guaranteed delivery procedures
described below must be complied with. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a member firm of a registered national securities exchange which
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program, or by a commercial bank or trust company having an office or
correspondent in the United States (each of the foregoing being referred to as
an "Eligible Institution"), unless the Series A Shares tendered thereby are
tendered (i) by a registered stockholder who has not completed either the box
entitled "Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal, or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If a Share Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Share
Certificate is not accepted for payment or is not tendered and is to be returned
to a person other than the registered holder(s), then the Share Certificate must
be endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificate, with the signature(s) on such Share Certificate or stock powers
guaranteed as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Series A Shares
pursuant to the Offer and such stockholder's Share Certificates are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date or the procedure for book-entry
transfer cannot be
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<PAGE> 9
completed on a timely basis, such Series A Shares may nevertheless be tendered
if all the following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchasers herewith, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the Share Certificates for all tendered Series A Shares, in
proper form for transfer, or a Book-Entry Confirmation, together with a
properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) with any required signature guarantee (or, in the
case of a book-entry delivery, an Agent's Message) and any other documents
required by such Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of the Notice of
Guaranteed Delivery. A "trading day" is any day on which the NYSE is open
for business.
Any Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Series A Shares
purchased pursuant to the Offer will, in all cases, be made only after timely
receipt by the Depositary of (i) the Share Certificates evidencing such Series A
Shares, or a Book-Entry Confirmation of the delivery of such Series A Shares,
(ii) a properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) (or, in the case of a book-entry delivery, an Agent's
Message), and (iii) any other documents required by the Letter of Transmittal.
Backup Federal Withholding Tax. To prevent backup federal income tax
withholding with respect to payment of the purchase price of Series A Shares
purchased pursuant to the Offer, each such stockholder must provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") and certify that such stockholder is not subject to backup federal
income tax withholding by completing the Substitute Form W-9 included in the
Letter of Transmittal. Foreign and nonresident alien stockholders must submit a
completed Form W-8 to avoid 31% backup withholding. This form may be obtained
from the Depositary. See Instruction 11 of the Letter of Transmittal.
Appointment as Proxy. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchasers
as such stockholder's attorneys-in-fact and proxies, in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Series A Shares tendered
by such Stockholder and accepted for payment by the Purchasers (and any and all
non-cash dividends, distributions, rights, other Series A Shares, or other
securities issued or issuable in respect of such Series A Shares on or after the
date of this Offer to Purchase). All such proxies shall be irrevocable and
considered coupled with an interest in the tendered Series A Shares. This
appointment will be effective if, when, and only to the extent that, the
Purchasers accept such Series A Shares for payment pursuant to the Offer. Upon
such acceptance for payment, all prior proxies given by such stockholder and not
yet exercised or voted with respect to such Series A Shares and other securities
will, without further action, be revoked, and no subsequent proxies may be
given. The designees of the Purchasers will, with respect to the Series A Shares
and other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual, special, adjourned or postponed
meeting of stockholders, by written consent or otherwise, and in order for
Series A Shares or other securities to be deemed validly tendered, immediately
upon the Purchasers' acceptance for payment of such Series A Shares, the
Purchasers must be able to exercise full voting rights with respect to such
Series A Shares and other securities.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tendered Series A Shares pursuant to any of the procedures described above will
be determined by the Purchasers, in their sole discretion, whose determination
will be final and
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<PAGE> 10
binding on all parties. The Purchasers reserve the absolute right to reject any
or all tenders of any Series A Shares determined by them not to be in proper
form or if the acceptance for payment of, or payment for, such Series A Shares
might, in the opinion of Purchasers' counsel, be unlawful. The Purchasers also
reserve the absolute right, in their sole discretion, to waive any of the
conditions of the Offer or any defect or irregularity in any tender with respect
to Series A Shares of any particular stockholder, whether or not similar defects
or irregularities are waived in the case of other stockholders. The Purchasers'
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding. None of the
Purchasers, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defects or irregularities in tenders
or will incur any liability for failure to give any such notification.
Binding Agreement. A tender of Series A Shares pursuant to any one of the
procedures described above will constitute the tendering stockholder's
acceptance of the terms and conditions of the Offer, as well as the tendering
stockholder's representation and warranty that said stockholder has the full
power and authority to tender and to assign the Series A Shares tendered, as
specified in the Letter of Transmittal. The Purchasers' acceptance for payment
of Series A Shares validly tendered pursuant to the Offer will constitute a
binding agreement between the tendering stockholder and the Purchasers upon the
terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS
Series A Shares tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date and, unless theretofore accepted for payment by the
Purchasers pursuant to the Offer, may also be withdrawn at any time after
December 5, 1999, or at such later time as may apply if the Offer is extended.
If the Purchasers extend the Offer, are delayed in their acceptance of
Series A Shares for payment or are unable to accept Series A Shares for payment
pursuant to the Offer for any reason, then, without prejudice to the Purchasers'
rights under the Offer, the Depositary may, nevertheless, on behalf of the
Purchasers, retain tendered Series A Shares, and such Series A Shares may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as described in this Section 4. Any such delay will be by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Series A Shares to be withdrawn, the number of Series A Shares to be withdrawn
and the name of the registered holder, if different from that of the person who
tendered such Series A Shares. If Share Certificates evidencing Series A Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the release of such Share Certificates, the serial numbers shown
on such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Series A Shares have been tendered for the account of
an Eligible Institution. If Series A Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Series A Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchasers, in their sole
discretion, whose determination will be final and binding. None of Purchasers,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Series A Shares properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn Series
A Shares may be re-tendered at any time prior to the Expiration Date by
following one of the procedures described in Section 3.
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<PAGE> 11
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following general discussion summarizes the anticipated material United
States federal income tax consequences of the Offer to stockholders whose Series
A Shares are purchased pursuant to the Offer. The following discussion does not
address any tax consequences arising from or related to the Merger. Stockholders
should refer to the Company's proxy materials for the special meeting of
stockholders for a discussion of the United States federal income tax
consequences arising from or related to the Merger.
This discussion addresses only stockholders who hold their Series A Shares
as capital assets within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"), and does not address all of the United
States federal income tax consequences that may be relevant to particular
stockholders in light of their individual circumstances or to stockholders who
are subject to special rules, such as:
- financial institutions,
- tax-exempt organizations,
- insurance companies,
- dealers in securities or foreign currencies,
- traders in securities who elect to apply a mark-to-market method of
accounting,
- foreign holders,
- persons who hold Series A Shares as a hedge against currency risk or as
part of a straddle, constructive sale or conversion transaction, or
- holders who acquired their shares upon the exercise of employee stock
options or otherwise as compensation.
The following discussion is not binding on the Internal Revenue Service. It
is based upon the Code, laws, regulations, rulings and decisions in effect as of
the date of this Offer, all of which are subject to change, possibly with
retroactive effect. Tax consequences under state, local and foreign laws are not
addressed.
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR
GENERAL INFORMATIONAL PURPOSES ONLY. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY
DIFFER, STOCKHOLDERS ARE STRONGLY URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER
TAX LAWS IN THEIR PARTICULAR CIRCUMSTANCES.
The receipt of cash for Series A Shares pursuant to the Offer will be a
taxable transaction for federal income tax purposes (and may also be a taxable
transaction under applicable foreign, state, local and other tax laws). In
general, for federal income tax purposes, a stockholder will recognize gain or
loss equal to the difference between his or her adjusted tax basis in the Series
A Shares sold pursuant to the Offer and the amount of cash received therefor.
Gain or loss must be determined separately for each block of Series A Shares
(i.e., Series A Shares acquired at the same cost in a single transaction) sold
pursuant to the Offer. Such gain or loss will be capital gain or loss (provided
such Series A Shares are held as capital assets) and long-term capital gain or
loss if the stockholder has held the Series A Shares for more than one year on
the date of sale. Long term capital gains recognized by individual taxpayers
currently are taxed at a maximum federal income tax rate of 20%.
6. PRICE RANGE OF SERIES A SHARES; DIVIDENDS
The Series A Shares are currently listed and traded on the NYSE and quoted
under the symbol "PDC". The following table sets forth, for the quarters
indicated, the range of high and low sales prices for the Series A
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<PAGE> 12
Shares on the NYSE, as reported in the Company's Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1998 (the "1998 Form 10-K/A") and in
published financial sources:
<TABLE>
<CAPTION>
MARKET PRICE
------------------
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................. $1.2500 $0.8750
Second Quarter............................................ $1.8750 $1.0000
Third Quarter............................................. $1.9375 $0.8125
Fourth Quarter............................................ $1.0625 $0.5625
FISCAL YEAR ENDED DECEMBER 31, 1998:
First Quarter............................................. $1.1250 $0.6250
Second Quarter............................................ $1.1250 $0.6875
Third Quarter............................................. $1.3125 $0.5625
Fourth Quarter............................................ $0.7500 $0.4375
FISCAL YEAR ENDED DECEMBER 31, 1999:
First Quarter............................................. $0.7500 $0.3750
Second Quarter............................................ $1.0000 $0.5000
Third Quarter............................................. $1.1250 $0.6250
Fourth Quarter (through October 6, 1999).................. $0.8750 $0.7500
</TABLE>
On October 6, 1999, the last full trading day prior to the announcement of
the Purchase Agreement and the Purchasers' intention to commence the Offer, the
closing price per Series A Share on the NYSE was $0.8125.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SERIES
A SHARES.
The Company has reported in its 1998 Form 10-K/A that it has not paid any
cash dividends on its Common Stock during the last two fiscal years and that it
expects that for the foreseeable future, it will follow a policy of retaining
earnings in order to help finance its business. In addition, the Company reports
in the 1998 Form 10-K/A that the Company's principal financing agreements
currently prohibit the payment of dividends by the Company.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
General. The Company is a Delaware corporation and its principal executive
offices are located at 19 Corporate Plaza, Newport Beach, California 92660;
telephone: (949) 640-6400. The Company and its subsidiaries are primarily
engaged in designing, constructing and selling single family detached and
attached homes in California, Arizona, New Mexico and Nevada. The Company
designs, constructs and sells a wide range of homes designed to meet the
specific needs of each of its markets, although it primarily emphasizes sales to
the entry-level and move-up home buyer markets. The Company currently markets
its homes through 46 sales locations in both its wholly owned projects and
projects being developed in unconsolidated joint ventures. In the Company's 1998
Form 10-K/A, the Company reports that it had total sales of $368.3 million and
(together with its unconsolidated joint ventures) sold 2,139 homes during the
fiscal year ended December 31, 1998.
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act, and is required to file reports and
other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities, any material interests
of such persons in transactions with the Company and other matters is required
to be disclosed in proxy statements distributed to the Company's stockholders
and filed with the Commission. These reports, proxy statements and other
information are available for inspection at the public reference facilities of
the Commission located at Judiciary Plaza, 450 Fifth Street, N.W.,
10
<PAGE> 13
Washington, D.C. 20549, and are available for inspection and copying at
prescribed rates at the following regional offices of the Commission: Seven
World Trade Center, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such materials may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website on the Internet
(http://www.sec.gov) that contains reports, proxy statements and other
information relating to the Company which have been filed via the Commission's
EDGAR System. Such material should also be available for inspection at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
Except as otherwise noted in this Offer to Purchase, all the information
with respect to the Company and its affiliates set forth in this Offer to
Purchase has been derived from publicly available information and information
provided by the Company. Although the Purchasers do not have any knowledge that
any such information is untrue, none of the Purchasers, the Information Agent or
the Depositary takes any responsibility for, or makes any representation with
respect to, the accuracy or completeness of such information or for any failure
by the Company to disclose events that may have occurred and that may affect the
significance or accuracy of any such information.
A copy of this Offer to Purchase, and certain of the agreements referred to
herein, are attached as exhibits to the Purchasers' Tender Offer Statement on
Schedule 14D-1, dated October 7, 1999 (the "Schedule 14D-1"), which has been
filed with the Commission. The Schedule 14D-1 and the exhibits thereto, along
with such other documents as may be filed by the Purchasers with the Commission,
may be examined and copied in the same manner as set forth above for documents
filed with Commission by the Company.
11
<PAGE> 14
Summary Financial Information for the Company. The following table sets
forth certain summary consolidated financial information and certain operating
information with respect to the Company and its subsidiaries excerpted or
derived from the audited financial statements contained in the Company's 1998
Form 10-K/A, and the unaudited financial information contained in the Company's
Quarterly Reports on Form 10-Q/A and Form 10-Q for the six months ended June 30,
1999 and June 30, 1998, respectively. More comprehensive financial and operating
information is included in such reports and other documents filed by the Company
with the Commission, and the following summary is qualified in its entirety by
reference to such documents (which may be inspected and obtained as described
above), including the financial statements and related notes contained therein.
None of the Purchasers, the Information Agent or the Depositary assumes any
responsibility for the accuracy of the financial information set forth below.
THE PRESLEY COMPANIES
SUMMARY FINANCIAL INFORMATION
(In Thousands, Except Per Common
Share Amounts and Number of Homes)
<TABLE>
<CAPTION>
UNAUDITED
SIX MONTHS ENDED AUDITED FROM 10-K
JUNE 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales............................ $178,012 $147,008 $368,282 $329,942 $318,997 $285,505 $270,168
Operating income (loss).......... 18,685 954 15,580 (84,534) 163 (41,335) 14,318
Income (loss) before
extraordinary item............. 13,084 (2,607) 7,114 (89,894) 152 (39,785) 6,037
Net income (loss)................ 14,873 (2,085) 9,855 (89,894) 152 (37,097) 6,037
Basic and diluted earnings per
common share:
Before extraordinary item...... $ 0.25 $ (0.05) $ 0.14 $ (1.72) $ -- $ (0.76) $ 0.11
After extraordinary item....... 0.28 (0.04) 0.19 (1.72) -- (0.71) 0.11
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate inventories.......... $176,522 $196,555 $174,502 $255,472 $306,381 $315,535 $382,055
Total assets..................... 246,232 258,085 246,404 285,244 331,615 340,933 425,637
Notes payable.................... 181,290 231,810 195,393 254,935 208,524 224,434 272,717
Stockholder's equity (deficit)... 23,188 (7,766) 5,824 (5,681) 84,213 84,061 121,158
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER OPERATING DATA
(INCLUDING UNCONSOLIDATED
JOINT VENTURES):
Number of homes sold............. 1,259 1,161 2,139 1,718 1,804 1,488 1,423
Number of homes closed........... 1,051 734 1,925 1,597 1,838 1,425 1,442
Number of homes in escrow at end
of period...................... 825 830 617 403 282 316 253
Average sales prices of homes
closed......................... $ 208 $ 186 $ 202 $ 192 $ 173 $ 162 $ 182
</TABLE>
Additional Information Relating to the Acquisition and the Merger. The
Acquisition and the Merger are described in detail in proxy materials which have
been prepared by the Company in connection with its special meeting of
stockholders to be held on November 5, 1999 for the purpose of considering and
voting upon the Merger. The Company's proxy materials (including the information
incorporated therein by reference)
12
<PAGE> 15
contain important financial and other information with respect to the Company
and WLHI, including historical and pro forma financial information, financial
forecasts and a financial projection for WLHI and the Company on stand-alone and
combined bases.
The Company's proxy materials, including the information incorporated
therein by reference, have been filed with the Commission (and thus may be
inspected, obtained and copied as described above) and will be mailed to all
record holders of Common Stock as of September 15, 1999. HOLDERS OF SERIES A
SHARES SHOULD REVIEW THE COMPANY'S PROXY MATERIALS CAREFULLY BEFORE MAKING ANY
DECISION WITH RESPECT TO THE OFFER.
8. CERTAIN INFORMATION CONCERNING THE PURCHASERS
Identity and Background
The Purchasers are William Lyon and William H. Lyon. The Purchasers are the
owners of WLHI, a California-based homebuilder and real estate developer, and
their principal business address is 4490 Von Karman, Newport Beach, California
92660. Both Purchasers are citizens of the United States.
Since September 1992, William Lyon has served as the Chairman of the Board,
President and Chief Executive Officer of WLHI. Since 1987, he has also served as
the Chairman of the Board of Directors of the Company. William Lyon is the
father of William H. Lyon.
William H. Lyon has served as an Assistant Project Manager at WLHI since
November of 1997. Prior to such time, he was a full-time student. William H.
Lyon is the son of William Lyon.
Interests in Securities of the Company
William Lyon beneficially owns an aggregate of 6,189,589 Series A Shares
representing approximately 17.4% of the total number of Series A Shares and
approximately 11.7% of the total number of shares of Common Stock of the Company
outstanding as of August 10, 1999 (as reported in the Company's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1999), such percentages
being calculated in accordance with Rule 13d-3 promulgated under the Exchange
Act by the Commission. Of the 6,189,589 Series A Shares beneficially owned by
William Lyon, 750,000 are shares that he has the right to acquire pursuant to
stock options granted by the Company to him in 1994 in respect of his service as
a consultant to the Company. It is contemplated under the Purchase Agreement
that these stock options (which have an exercise price of $2.875 per share) will
be cancelled by the Company and William Lyon upon the closing of the
Acquisition, and thus the Series A Shares issuable upon the exercise of such
options are not taken into account for purposes of determining the number of
shares necessary to satisfy the Minimum Condition under the terms of the
\Purchase Agreement. Except as may otherwise be provided under applicable
community property laws, William Lyon has the sole power to vote or to direct
the vote, and the sole power to dispose or direct the disposition, of all Series
A Shares beneficially owned by him. Pursuant to the Purchase Agreement, William
Lyon has agreed to vote all shares of Common Stock owned by him in favor of the
Merger at the special meeting of stockholders called for such purpose.
William H. Lyon is the beneficiary of a trust which owns 492,450 Series A
Shares. However, William H. Lyon does not have or share, directly or indirectly,
the power to vote or to direct the vote, or the power to dispose or to direct
the disposition, of such Series A Shares, and thus is not considered to have
beneficial ownership of such shares. William H. Lyon does not otherwise
beneficially own any shares of Common Stock of the Company.
For purposes of determining the number of shares necessary to satisfy the
Minimum Condition under the terms of the Purchase Agreement, the Purchasers are
deemed to own 5,932,039 Series A Shares as of the commencement of the Offer,
consisting of 5,439,589 Series A Shares owned directly by William Lyon and
492,450 Series A Shares held in trust for the benefit of William H. Lyon.
13
<PAGE> 16
Series B Stock Purchase Agreements
The following is a summary of certain provisions of the Series B Stock
Purchase Agreements. A copy of each of the Series B Stock Purchase Agreements is
attached as an exhibit to the Schedule 14D-1 and is incorporated herein by
reference. The Series B Stock Purchase Agreements may be examined, and copies
may be obtained, as set forth in Section 7 above. The following summary is
qualified in its entirety by reference to the Series B Stock Purchase
Agreements.
WLHI, which is controlled by William Lyon (and in which William H. Lyon has
a non-controlling, minority interest), has entered into the Series B Stock
Purchase Agreements with each of the Series B Stockholders, which agreements
provide for the purchase from the Series B Stockholders by WLHI or its permitted
assigns of an aggregate minimum of 9,434,813 Series B Shares and an aggregate
maximum of 15,566,837 Series B Shares for a cash price of $0.655 per share. The
Series B Shares are convertible on a share for share basis into Series A Shares.
The exact number of Series B Shares to be purchased under the Series B
Stock Purchase Agreements depends upon the number of Series A Shares tendered
and not withdrawn as of the Expiration Date of the Offer. If the maximum of
10,678,792 Series A Shares are tendered and not withdrawn as of the Expiration
Date of the Offer, then WLHI will have the right to purchase the minimum of
9,434,813 Series B Shares under the Series B Stock Purchase Agreements. If,
however, the number of Series A Shares validly tendered and not withdrawn as of
the Expiration Date, when added to the 5,932,039 Series A Shares which are
deemed for this purpose to be owned by the Purchasers and the minimum of
9,434,813 Series B Shares which may be purchased by WLHI under the Series B
Stock Purchase Agreements, does not aggregate to 26,045,644 shares of Common
Stock (constituting approximately 49.9% of the total shares of Common Stock
which are issued and outstanding), then the Series B Stockholders have agreed to
sell to WLHI, on a pro rata basis, additional Series B Shares at a price of
$0.655 per share, up to a maximum aggregate of 15,566,837 Series B Shares.
The purchase of the Series B Shares under the Series B Stock Purchase
Agreements is subject to numerous conditions as set forth therein, including the
consummation of the Acquisition, the acceptance of and payment for Series A
Shares pursuant to the Offer, the approval of the Merger by holders of a
majority of the Series A Shares and Series B Shares voting together as a class,
and the absence of any person (other than the Purchasers and their affiliates)
owning beneficially five percent (5%) or more of the outstanding Common Stock of
the Company. If and when such conditions are satisfied or waived by WLHI, the
closing of the purchases under the Series B Stock Purchase Agreements is
expected to occur after the Expiration Date of the Offer and prior to the
effective date of the Merger. Each of the Series B Stock Purchase Agreements may
be terminated by either WLHI or the Series B Stockholder party thereto upon
(among other events) the termination of the Purchase Agreement or in the event
the closing under the Series B Stock Purchase Agreement has not occurred on or
before November 15, 1999.
Each of the Series B Stockholders has agreed that, prior to the closing of
the transactions contemplated by the Series B Stock Purchase Agreements, it will
not (i) transfer or dispose of any interest in, tender (pursuant to the Offer or
otherwise), or pledge or otherwise create any encumbrance on any shares of the
Company's Common Stock owned by such Series B Stockholder, (ii) convert any
Series B Shares into Series A Shares, or (iii) acquire any beneficial interest
in any shares of the Company's Common Stock, or any options, warrants or other
rights to acquire shares of the Company's Common Stock. Each of the Series B
Stockholders has also conditionally agreed to vote all shares of Common Stock
owned by it and its respective affiliates in favor of the Merger.
WLHI has agreed that, for a period of three years from the closing date of
the purchase of Series B Shares under the Series B Stock Purchase Agreements,
WLHI and its affiliates will not sell any shares of the Company's Common Stock,
other than the Series A Shares owned by WLHI or its affiliates (including the
Purchasers) prior to the commencement of the Offer, unless such sale takes place
in connection with a transaction in which all other holders of the Company's
Common Stock are afforded an opportunity to participate pro-rata, and on the
same terms and conditions as WLHI and its affiliates. Excluded from this
restriction is WLHI's or any of its affiliates' right to transfer shares of
Common Stock to and among certain
14
<PAGE> 17
affiliated entities, individuals and trusts, provided that such transferees
agree to the foregoing restrictions on transfer.
Sales of Series A Shares by the Purchasers
On August 12, 1999, and in separate transactions, William Lyon and William
H. Lyon sold an aggregate of 2,500,000 Series A Shares and 500,000 Series A
Shares, respectively, for a cash price of $0.65 per share. Such sales were
effected through privately-negotiated sale transactions not involving a broker
or dealer.
Except as set forth in this Offer to Purchase, neither the Purchasers nor,
to the best knowledge of the Purchasers, any associate or
majority-owned-subsidiary of such persons, beneficially owns or has a right to
acquire any equity security of the Company, and neither the Purchasers nor, to
the best knowledge of the Purchasers, any of the other entities or persons
referred to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any equity
security of the Company during the past 60 days. In addition, except as
otherwise set forth in this Offer to Purchase, the Purchasers do not have any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, without limitation, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies.
Other Information
Confidentiality Agreement. WLHI and the Company are parties to a letter
agreement dated November 17, 1998 (the "Confidentiality Agreement") which
requires the Company and its representatives to maintain the confidentiality of
certain information provided to the Company by WLHI for the purpose of
evaluating a possible transaction with WLHI and to use such information solely
for the purpose of evaluating a possible transaction.
Purchase of Lots by WLHI. During the fiscal year ended December 31, 1998,
WLHI made a bulk lot purchase from the Company for $6,996,000 in cash. The
Purchasers believe that the sale was an arm's length transaction representing
fair market value at the time the transaction was negotiated based upon
competitive bids from other homebuilders.
Indemnification Agreement. William Lyon is the Chairman of the Board of
Directors of the Company. Pursuant to an indemnification agreement (the
"Indemnification Agreement"), the Company has agreed to indemnify him to the
fullest extent permitted by the bylaws of the Company and applicable law for all
expenses, damages, liabilities and settlement payments which may be incurred by
him in connection with any actions brought against him as a result of or
relating to any act taken in his capacity as a director or officer of the
Company.
Except as set forth in this Offer to Purchase, the Purchasers have not had,
since January 1, 1996, any business relationships or transactions with the
Company, or any of its executive officers, directors or affiliates that would
require reporting under applicable rules of the Commission.
9. SOURCE OF FUNDS
The Offer is not subject to any financing condition. The total amount of
funds required by the Purchasers to consummate the Offer and to pay related fees
and expenses is estimated to be approximately $7.75 million. Assuming that the
maximum number of Series A Shares are validly tendered pursuant to the Offer and
not withdrawn, the total amount of additional funds required by the Purchasers
to consummate the purchase of the Series B Shares pursuant to the Series B Stock
Purchase Agreements and to pay related fees and expenses is estimated to be
approximately $6.2 million. The Purchasers expect to use a combination of
proceeds received from the Acquisition and personal funds (including
distributions received as shareholders of WLHI prior to the closing date of the
Acquisition) to consummate the Offer and the purchase of the Series B Shares and
to pay the related fees and expenses.
15
<PAGE> 18
10. BACKGROUND OF THE OFFER; THE PURCHASE AGREEMENT
Background of the Offer
The Company announced on or about May 5, 1998 that it had engaged Warburg
Dillon Read to explore various strategic alternatives for the Company.
Subsequent thereto and in connection therewith, a Special Committee comprised of
independent directors of the Company's Board of Directors was formed to evaluate
strategic alternatives.
On or about June 30, 1998, WLHI submitted a non-binding proposal to the
Company (the "June 30 Proposal"), proposing a series of related transactions by
which WLHI would acquire all of the Common Stock of the Company for a cash price
of $0.40 per share. The June 30 Proposal was conditioned on, among other things,
the negotiation and execution of a definitive agreement, completion of due
diligence, certain amendments of the Company's 12 1/2% Senior Notes due 2001
(the "Senior Notes"), and regulatory, stockholder and other approvals. The June
30 Proposal, by its terms, would expire on July 31, 1998, unless accepted prior
to that date.
On or about July 28, 1998, the Special Committee advised WLHI that the
Special Committee had determined to continue exploring additional strategic
alternatives. The Special Committee did, however, invite WLHI at the same time
to make a new or revised proposal to the Special Committee.
During September and October of 1998, WLHI continued to indicate its
interest in pursuing a transaction with the Company. In November of 1998,
William Lyon and WLHI submitted a revised proposal to the Special Committee.
WLHI and the Special Committee, and their respective representatives, continued
to negotiate the revised proposal through the month of December, 1998.
On December 31, 1998, WLHI, the Company and Presley Homes entered into a
letter of intent setting forth their preliminary understanding with respect to
(i) the proposed acquisition by the Company of substantially all of the assets
of WLHI for approximately $48,000,000 together with the assumption of related
liabilities, and (ii) the concurrent purchase by WLHI pursuant to a tender offer
for not less than 40% and not more than 49% of the outstanding shares of the
Company's Common Stock held by stockholders other than WLHI and its affiliates
at a price of $0.62 per share. Following the completion of the proposed
transactions, WLHI, William Lyon and their respective affiliates would own
beneficially between 55% and 65% (depending on the number of shares tendered) of
the outstanding shares of the Company's Common Stock.
Under the terms of the letter of intent, the proposed transactions would be
subject to various conditions, including the successful negotiation and
execution of a definitive agreement, the receipt of opinions of the Company's
advisors with respect to the fairness of the transactions to the Company and its
stockholders as well as the solvency of the Company following consummation of
the transactions, the receipt of real estate appraisals satisfactory to the
Company and WLHI with respect to the real estate assets of WLHI, the approval of
a definitive agreement by the respective boards of directors of the Company and
WLHI by March 31, 1999, receipt of all required regulatory approvals and third
party consents, including any required lender consents, the receipt of
agreements from certain significant stockholders of the Company to tender their
shares pursuant to the tender offer, the receipt of financing by the Company in
an amount sufficient to enable the Company to finance the transactions, and the
absence of any material adverse change in the business or financial condition of
either the Company or WLHI.
In addition, the letter of intent contemplated that each of the
transactions would be structured so as to be subject to the successful
completion of the other and, by imposing share transfer restrictions, to avoid
triggering the change of control tax provisions that would result in the loss of
the Company's net operating losses for tax purposes. The letter of intent also
contemplated that the Company's Senior Notes would remain outstanding without
modification.
The letter of intent provided that, subject to the fiduciary duties of
their respective boards of directors, the Company and WLHI would negotiate
exclusively with each other toward a definitive agreement until March 31, 1999.
The letter of intent did not constitute a binding agreement to consummate the
transactions.
16
<PAGE> 19
On February 18, 1999, WLHI proposed a modification to the December 31, 1998
letter of intent. Under the proposed modification, WLHI would make a tender
offer for not more than 37% of the outstanding shares of Common Stock of the
Company for a purchase price of $0.62 per share. In the event that more than 37%
of the outstanding shares of Common Stock of the Company were tendered, WLHI
would purchase shares from each tendering stockholder on a pro rata basis. The
tender offer was to be conditioned upon there being tendered and not withdrawn,
a number of shares which constituted at least 37% of the outstanding shares of
the Company. The proposed modification also provided that the transactions would
be structured to permit William Lyon and his affiliates, prior to consummation
of the transaction and consistent with applicable securities laws, to sell
shares of the Company's Common Stock owned by them up to a maximum of 4% of the
total number of shares of the Company's Common Stock presently outstanding.
On March 30, 1999, the parties amended the December 31, 1998 letter of
intent to extend its term and the period of exclusive negotiations to April 30,
1999. The parties also agreed that WLHI could participate in discussions and
negotiations with the holders of Series B Shares regarding the purchase by WLHI
of such percentage of the Series B Shares so as to reduce each such Series B
Stockholder's ownership interest in the Company's Common Stock to below 5% of
the Company's outstanding Common Stock following consummation of the proposed
transactions. WLHI was also permitted to seek commitments from the Series B
Stockholders to sell additional shares to WLHI to the extent that the number of
Series A Shares tendered in the tender offer were below the minimum threshold to
be set forth in a definitive agreement.
On May 4, 1999, WLHI, the Company and Presley Homes entered into a revised
letter of intent setting forth their preliminary understanding with respect to
(i) the proposed acquisition by the Company of substantially all of the assets
of WLHI for a cash purchase price of $48,000,000 and the assumption of all or
substantially all of the liabilities of WLHI; and (ii) the proposed purchase by
WLHI of a portion of the outstanding shares of Common Stock of the Company.
Under the terms of the revised letter of intent, WLHI would make offers to the
holders of Series B Shares and a tender offer to the holders of Series A Shares
to purchase, for a cash purchase price of $0.655 per share, an aggregate number
of shares of Common Stock which when added to the number of shares of Common
Stock already owned by WLHI and its affiliates, and after giving effect to a
disposition by William Lyon and his affiliates of up to 8% of the total number
of shares of Common Stock of the Company then outstanding, would cause WLHI and
its affiliates to own an aggregate of approximately 49% of the outstanding
shares of the Company's Common Stock. The proposed transactions were subject to
various conditions, including the successful negotiation and execution of a
definitive agreement; the receipt of opinions of the Company's advisors with
respect to the fairness of the transactions to the Company and its stockholders
as well as the solvency of the Company following the consummation of the
transactions; the receipt of real estate appraisals satisfactory to the Company
and WLHI with respect to the real estate assets of WLHI; the approval of a
definitive agreement by the respective boards of directors of the Company and
WLHI 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 the Company in an
amount sufficient to enable the Company to finance the transactions; the holders
of the Company's Series B Shares not acquiring or disposing of any beneficial
interest in the Company's Common Stock prior to closing; the purchase by WLHI or
its affiliates of a sufficient number of shares of Common Stock to cause, when
added to the number of shares already owned by WLHI and its affiliates and after
giving effect to the sale by WLHI and its affiliates of up to 8% of the
outstanding Common Stock, WLHI and its affiliates to own at least 49% of the
Company'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 the
Company or WLHI.
Effective as of July 15, 1999, the Company and WLHI amended the revised
letter of intent to extend from July 15 to October 15, 1999 the term of the
letter of intent, the period of exclusive negotiations and the date by which the
respective boards of directors of the Company and WLHI must approve a definitive
agreement with respect to the proposed transactions.
17
<PAGE> 20
PURCHASE AGREEMENT
The following is a summary of certain provisions of the Purchase Agreement.
A copy of the Purchase Agreement is attached as an exhibit to the Schedule 14D-1
and is incorporated herein by reference. The Purchase Agreement may be examined,
and copies may be obtained, as set forth in Section 7 above. The following
summary is qualified in its entirety by reference to the Purchase Agreement.
On October 7, 1999, WLHI, the Purchasers, the Company and Presley Homes
entered into the Purchase Agreement. Pursuant to the terms of the Purchase
Agreement, Presley Homes or its permitted assigns will purchase, and WLHI will
sell, substantially all of WLHI's real estate and related assets for a cash
purchase price of $48,000,000, subject to the adjustments described below, and
the assumption by Presley Homes of all or substantially all of the liabilities
of WLHI.
The closing of the purchase and sale of assets pursuant to the Purchase
Agreement is expected to occur immediately prior to the expiration of the Offer
and prior to the completion of the Merger. The completion of the Acquisition is
a condition precedent to the completion of the Offer and the Merger.
Assets to be Acquired by Presley Homes
Subject to the terms and conditions in the Purchase Agreement, WLHI will
sell, and will cause any partnership or limited liability company through which
WLHI owns real property to sell, to Presley Homes or its permitted assigns, all
or substantially all of the assets and properties of WLHI or any such
partnership or limited liability company, including without limitation the
following assets: (i) substantially all real property located in the State of
California that is owned by WLHI or by partnerships and limited liability
companies of which WLHI is a partner or a member, in each case, as identified on
a schedule to the Purchase Agreement, inclusive of any and all buildings,
structures, fixtures and improvements located on such real property and all
associated rights, privileges and easements appurtenant to, or used in
connection with, such real property; (ii) substantially all personal property of
any kind that is owned by WLHI or by any partnerships or limited liability
companies in which WLHI is a partner or member and used in connection with or
related to the real property being sold to Presley Homes; and (iii) all
receivables, escrow proceeds, deposits and other assets arising out of or
related to the real property and the personal property being sold by WLHI or the
selling partnerships and limited liability companies to Presley Homes.
Pursuant to the Purchase Agreement, certain assets are specifically
excluded from the Acquisition and will be retained by WLHI or the partnerships,
or limited liability companies, including but not limited to: (i) any rights and
claims to tax refunds; (ii) the cash consideration to be paid by Presley Homes
to WLHI pursuant to the Purchase Agreement; (iii) company records and all income
tax records and non-transferable licenses and permits; (iv) assets acquired
after the closing date of the Purchase Agreement except for assets that are
acquired with proceeds constituting part of the assets transferred to Presley
Homes; (v) cash reserves in respect of or relating to any of the excluded
liabilities that are not assumed by Presley Homes under the Purchase Agreement;
and (vi) assets scheduled as excluded under the Purchase Agreement.
Adjustments to the Purchase Price
The purchase price for the real property of $48,000,000 was determined
based on the value of the real property and related assets owned directly or
indirectly by WLHI and the selling partnerships and limited liability companies
as of December 31, 1998. The parties intend that these assets, together with all
income, receivables, escrow and other proceeds, purchase deposits, cash and
other assets earned or received by WLHI or the selling partnerships and limited
liability companies from the sale of any of these assets, including any assets
acquired with sales proceeds, in the ordinary course of business since January
1, 1999 and through the closing date of the Acquisition will inure to Presley
Homes. The amounts so inuring to Presley Homes are to be net of any amounts that
have been used to pay or satisfy land acquisition or development costs, capital
expenditures, principal or interest on indebtedness, accounts payable, accrued
liabilities, employee wages and benefits, taxes and other liabilities and
operating expenses existing at December 31, 1998 and incurred in the ordinary
course of business.
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The cash portion of the purchase price will be reduced by certain
distributions and payments made and liabilities accrued by WLHI or the selling
partnerships or limited liability companies in the interim time period between
January 1, 1999 and the closing date of the Acquisition (the "Operating
Period"), except to the extent such payments have been recorded on the books of
the applicable selling party, including: (i) dividends, redemptions or similar
payments or distributions; (ii) the unpaid balance of any loans or other
advances to or for the personal benefit of its shareholders or affiliates or
partners other than WLHI, but excluding loans or other advances in which the
right to receive payment is being transferred to Presley Homes and any advances
or payments made in the form of salary or other compensation for services
rendered in the ordinary course of business; (iii) bonuses and other
compensation to directors, officers and employees for services rendered prior to
December 31, 1998; (iv) warranty expenses related to real estate assets sold and
closed prior to December 31, 1998; (v) payments and related legal fees made in
settlement of legal claims, other than claims relating to the assets being
purchased or the liabilities being assumed; and (vi) significant and unusual
charitable contributions during the period.
The cash portion of the purchase price will be further reduced for: (i) the
value of any real estate assets scheduled as assets excluded from purchase; (ii)
the amount of any costs and operating expenses incurred or accrued by WLHI or
the selling partnership during the period in respect of or relating directly to
any of the excluded assets; (iii) the amount of any non-cash adjustments made on
the books and records of the applicable seller during the period for write-offs
or abandonment of assets to be purchased that were recorded on the books at
December 31, 1998, but only to the extent that amount exceeds $500,000 in the
aggregate; (iv) the amount of any cash reserves to be retained in respect of
liabilities that are not being assumed by Presley Homes; and (v) any amounts
paid or incurred by the applicable selling party (except to the extent that a
corresponding liability was recorded on the books as of December 31, 1998), to
the extent the amounts were paid or incurred in respect of legal, financial and
tax accounting, appraisal, or financial advisory fees and expenses incurred in
connection with the transactions contemplated by the Purchase Agreement which
are in the aggregate greater than $1,250,000.
The cash portion of the purchase price will be increased by the aggregate
amount of the following: (i) any capital contribution or other equity investment
made in WLHI or the selling partnerships or limited liability companies made
during the operating period, if approved by Presley Homes after the date of the
Purchase Agreement; (ii) accounts payable, accrued liabilities or indebtedness
secured by or relating to any of the assets excluded from purchase; (iii)
warranty reserves reflected on the books and records of WLHI or any of the
selling partnerships or limited liability companies as of the closing date
retained by WLHI; and (iv) tax refunds, insurance recoveries, utility deposits
and other assets acquired by WLHI or any of the selling partnerships or limited
liability companies during the period in exchange for or in respect of any
claims or other assets that were not reflected on their books as of December 31,
1998.
Any adjustment to the purchase price will be determined by Ernst & Young
LLP or other independent accounting firm acceptable to Presley Homes and WLHI
based on a review of the books and records of the selling parties. The
independent auditor will perform a preliminary review and notify the parties and
the escrow holder not later than five business days prior to the closing date of
its estimate of any proposed adjustment. Unless either Presley Homes or WLHI
objects, the adjustment will be made to the purchase price at the closing
through escrow. If either objects, the escrow holder is required to withhold the
amount of the proposed adjustment until the amount of the adjustment is finally
determined.
After the closing, the independent auditor will complete a review and
deliver to the parties its final determination of any adjustment to the purchase
price within thirty (30) calendar days of the closing date. If the parties agree
or fail to timely object, the determination will be final and conclusive. If
either party disagrees or makes a timely objection, the parties are required to
make a good faith attempt to resolve any differences. If the parties can't
resolve the matter, it will be directed to Arthur Andersen LLP or another
independent accounting firm acceptable to the parties whose determination shall
be binding.
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Liabilities to be Assumed by Presley Homes
Pursuant to the Purchase Agreement, Presley Homes and its permitted assigns
will assume certain obligations and liabilities of WLHI and the selling
partnerships or limited liability companies related to the assets purchased
pursuant to the Purchase Agreement (other than those obligations and liabilities
excluded from assumption), including but not limited to the following: (i) the
subcontract agreements on the standard form contracts for services, materials or
supplies to be incorporated into the works of improvement on the real property;
(ii) the purchase agreements on the standard form contracts for the sale of
individual lots to homebuyers which sales have not closed escrow on or before
the closing date under the Purchase Agreement; (iii) the subdivision agreements,
development agreements and other entitlement agreements with governmental
entities relating to the real property; (iv) construction or performance bonds,
guaranties and similar commitments entered into in connection with the
development of the real property; (v) the contracts listed on an exhibit to the
Purchase Agreement; (vi) accounts payable and accrued liabilities arising in the
ordinary course of business with respect to the assets; and (vii) compensation,
salary, wages or other benefits for employees who are to continue employment
with Presley Homes, to the extent such benefits are accrued and reflected on the
books and records of WLHI, disclosed on a list delivered to Presley Homes or
incurred by WLHI or the partnerships with respect to the payment period in which
the closing occurs.
Presley Homes will not assume or be responsible for any of the liabilities
or obligations of WLHI and the partnership or limited liability companies which:
(i) result from any alleged or actual defect or breach of warranty claim with
respect to any portion of the real property, including all improvements thereon,
for work done by WLHI or the partnerships or limited liability companies on the
real property prior to the closing date; (ii) result from any claim or other
proceeding made by or against WLHI or the partnerships or limited liability
companies, either before the closing date or after the closing date, with
respect to events that occurred or conditions that existed before the closing
date; (iii) result from taxes, other than property taxes; (iv) relate to or
arise out of the excluded assets that are not being purchased by Presley Homes
and will remain with WLHI or the partnerships or limited liability companies;
(v) arise after the closing date in connection with the Purchase Agreement; (vi)
result from its ownership interest in WLHI or the partnerships or limited
liability companies; (vii) result from indebtedness secured by mortgages or
other security interests on the assets purchased to which WLHI or the
partnerships or limited liability companies is not directly or indirectly liable
or does not provide credit support; (viii) the selling party has the right to be
indemnified or reimbursed by an insurer or other third party with respect to;
and (ix) are scheduled as excluded liabilities in the Purchase Agreement.
As soon as reasonably possible after the execution of the Purchase
Agreement, the parties will open an escrow with First American Title Insurance
Company, the escrow holder. The closing of the purchase and sale of the real
property and related assets will take place through the escrow when all the
conditions to closing have been satisfied, but in no event later than November
30, 1999; provided, however, that if the closing of the transactions has not
occurred by November 30, 1999 due to delays in obtaining governmental or
regulatory approvals of the transactions, then the parties have agreed to extend
the closing date for up to an additional thirty (30) calendar days to obtain
such approvals. The close of escrow shall occur when Presley Homes deposits the
purchase price into escrow and the grant deeds held by WLHI conveying the real
property to Presley Homes are recorded through escrow in the official records of
the counties in which each respective parcel of real property is located.
The Offer
The Purchase Agreement provides for the making of the Offer by the
Purchasers. The Purchasers have agreed to complete the Offer in accordance with
its terms and accept for payment and pay for the Series A Shares tendered
pursuant to the Offer as soon as they are legally permitted to do so under
applicable law. The Offer will be subject to various conditions set forth in the
Purchase Agreement, including the Minimum Condition, as described in Section 14
of this Offer to Purchase. The Purchasers may amend or waive the Minimum
Condition but shall not decrease the Offer Price, or decrease the number of
Series A Shares sought, or amend any other condition of the Offer in any manner
adverse to the holders of Series A Shares without the prior written consent of
the Company.
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In the event that the Company determines that consummation of the Offer or
the purchase of Series B Shares pursuant to the Series B Stock Purchase
Agreements would result in an "ownership change" under applicable federal income
tax laws and regulations or other adverse tax consequences, the Purchasers have
agreed to amend the Offer to decrease the number of Series A Shares being
sought, but not below the number of shares required to satisfy the Minimum
Condition.
If certain conditions to the Offer, including the Minimum Condition,
consummation of the Acquisition and the receipt of the requisite stockholder
approval of the Merger, have not been satisfied or waived by the Purchasers as
of the Expiration Date due to delays in obtaining government or regulatory
approvals or third party consents or obtaining financing or obtaining necessary
releases, then the Purchasers may extend the Expiration Date of the Offer to
allow the conditions to be satisfied, but in no event are the Purchasers
obligated to extend the Offer beyond November 30, 1999 (or thirty calendar days
thereafter in the event the closing of the Acquisition or Merger is delayed due
to further delays in obtaining government or regulatory approvals).
Notwithstanding the foregoing, all conditions to the Offer set forth in the
Purchase Agreement (other than the condition that there be no actions by
governmental entities that would prohibit completion of the Offer) shall be
deemed to have been satisfied upon completion of the Acquisition.
The Company represents that a Special Committee of independent members of
the Company's Board of Directors has determined that the Purchase Agreement and
the transactions contemplated in it, taken together, are fair to and in the best
interests of the Company and the holders of the Series A Common Stock, other
than the Purchasers, provided that each holder is advised to consult with their
financial and tax advisors. The Company has received an opinion from Warburg
Dillon Read, financial advisor to the Special Committee, to the effect that,
after giving effect to the Acquisition, the Offer, the Merger and the
transactions contemplated by the Series B Stock Purchase Agreements, the shares
of common stock of New Presley to be issued in the Merger to holders of Series A
Shares, and to the extent that any such holder of Series A Shares (other than
the Purchasers and the Series B Stockholders) tenders Series A Shares in the
Offer, the cash that may be received by each such tendering holder of Series A
Shares (other than the Purchasers and the Series B Stockholders), subject to the
pro ration provisions of the Offer, is fair to the holders of the Series A
Shares from a financial point of view. The Special Committee has approved the
transactions contemplated in the Purchase Agreement and resolved to recommend
that the holders of Series A Shares (other than the Purchasers and the Series B
Stockholders) accept the Purchasers' tender offer, provided that holders of
Series A Shares should consult with their financial and tax advisors prior to
tendering their Series A Shares and that the recommendation may be withdrawn,
modified or changed if in their opinion, after consultation with counsel, the
failure to take that action would be inconsistent with their fiduciary duties.
In the event that the Offer is oversubscribed, the Purchasers will purchase
Series A Shares from each tendering stockholder on a pro rata basis. In the
event that the Offer is undersubscribed, the Purchasers will purchase additional
shares of Common Stock at $0.655 per share from the Series B Stockholders on a
pro rata basis pursuant to the Series B Stock Purchase Agreements, such that
William Lyon and one or more of his affiliates or associates will own not more
than 49.9% of the issued and outstanding shares of the Company's Common Stock.
William Lyon and one or more of his affiliates or associates will in no event
purchase a number of shares of Common Stock of the Company such that an
"ownership change" would occur with respect to the Company under applicable
federal income tax laws and other regulations.
Representations and Warranties
The Purchase Agreement contains certain representations and warranties of
WLHI including, without limitation, representations as to organization,
authority of WLHI and the individuals relative to the Purchase Agreement and the
Series B Stock Purchase Agreements, identification of WLHI equity interests,
California residency status, condition and marketability of personal property
assets, financial statements, no default, zoning, government notices,
undisclosed defects, unrecorded interests, compliance with law, absence of
certain contracts, litigation, environmental compliance, absence of endangered
species, accounts receivable, employee benefit plans, insurance, no conflicts,
WARN Act, and brokers' fees.
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The Company and Presley Homes make certain representations and warranties
to WLHI in the Purchase Agreement including, without limitation, representations
as to authority with respect to the Purchase Agreement, no conflicts, broker's
fees, litigation, and WARN Act.
Indemnification and Survival of Representations.
The representations and warranties of WLHI made in the Purchase Agreement
will survive for a period of one (1) year after the closing date.
From and after the closing date, WLHI will indemnify and hold the Company
and Presley Homes harmless from any losses resulting from any breach of
representation, any breach of a covenant, and any of the excluded liabilities.
The indemnity liability will be reduced to the extent that the underlying loss
already resulted in an adjustment to the purchase price as provided for in the
Purchase Agreement. WLHI will not be obligated to indemnify the Company or
Presley Homes for losses resulting from any breach of representation or covenant
unless the losses in the aggregate exceed $500,000, and then only to the extent
such losses exceed $500,000. In no event will WLHI be obligated to cover losses
from any breach of representation or covenant (that are not covered by
insurance) in excess of $2,400,000.
From and after the closing date, the Company and Presley Homes will
indemnify and hold WLHI harmless from any losses resulting from any breach of
representation, any breach of a covenant, and any of the assumed liabilities.
The Company and Presley Homes will not be obligated to indemnify WLHI for losses
resulting from any breach of representation or covenant unless the losses in the
aggregate exceed $500,000, and then only to the extent such losses exceed
$500,000. In no event will the Company or Presley Homes be obligated to cover
losses from any breach of representation or covenant in excess of $2,400,000.
The Purchasers and WLHI have agreed to maintain the corporate existence of
WLHI and to maintain in WLHI a tangible net worth of not less than $2.4 million
for a period of one year after closing and for such longer period thereafter as
the representations and warranties may be extended pursuant to the Purchase
Agreement.
Interim Covenants
Prior to the closing date, WLHI agrees to provide Presley Homes with
reasonable access to the assets and the books and records of WLHI, to use best
efforts to maintain and preserve the assets being sold to Presley Homes and to
manage the assets reasonably consistent with past practices in the ordinary
course of business and to cooperate in the obtaining of governmental or third
party consents necessary to complete the transactions.
Prior to the closing date, the Company and Presley Homes agree to cooperate
in the obtaining of any governmental or third party consents necessary to
complete the transactions, maintain and preserve the business operations of
Presley Homes in accordance with past practices and use reasonable efforts to
obtain financing without triggering a default under the senior notes of Presley
Homes.
Conditions to the Acquisition
The obligations of the Company and Presley Homes under the Purchase
Agreement are conditioned upon the satisfaction or waiver of certain conditions,
including: (i) the accuracy of the representations and warranties by WLHI and
the performance of all covenants by WLHI and the Purchasers; (ii) receipt of all
required regulatory approvals and third party consents; (iii) absence of any
material adverse change to the assets or assumed liabilities; (iv) receipt of a
legal opinion from O'Melveny & Myers LLP, counsel for WLHI; (v) absence of any
litigation affecting the assets or the completion of the asset purchase; (vi)
issuance of acceptable policies of title insurance in favor of Presley Homes;
(vii) assignment of all necessary real property documents to Presley Homes;
(viii) receipt by the Company of a solvency opinion from Houlihan Lokey Howard &
Zukin Financial Advisors, Inc., (or such other firm of national standing and
reasonably acceptable to the Company and WLHI); (ix) receipt of adequate
financing; (x) absence of any default under the Senior Notes of the Company;
(xi) determination by the Company of the absence of an "ownership change" under
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applicable federal income tax laws; (xii) conditions to the Offer shall have
been satisfied or waived; (xiii) approval of the stockholders of the Company of
the Merger; (xiv) each of the Series B Stock Purchase Agreements shall be in
full force and effect against the Series B Stockholders in accordance with their
terms; and (xv) cancellation by William Lyon of all his outstanding options to
acquire 750,000 shares of the Series A Shares.
The obligations of WLHI under the Purchase Agreement are conditioned upon
the satisfaction or waiver of certain conditions, including: (i) the accuracy of
the representations and warranties and the performance of all covenants by the
Company and Presley Homes; (ii) the receipt of all required regulatory approvals
and third party consents; (iii) the receipt of legal opinions from Irell &
Manella LLP and Morris, Nichols, Arsht & Tunnell, counsel for the Company and
Presley Homes, and of Nancy M. Harlan, Esq., Senior Vice President and General
Counsel of the Company; (iv) the absence of any litigation affecting the
completion of the Acquisition; (v) the conditions to the Offer shall have been
satisfied or waived; (vi) the approval of the stockholders of the Company of the
Merger; (vii) the release of WLHI from its contracts and obligations assumed by
Presley Homes; (viii) the Series B Stock Purchase Agreements shall continue in
full force and effect and shall be enforceable against the Series B Stockholders
in accordance with their terms, except that this condition shall be satisfied if
any failure is due solely to a breach of the Series B Stock Purchase Agreements
by WLHI; and (ix) the determination by WLHI and its affiliates of the absence of
an "ownership change" under applicable federal income tax laws.
Post Closing Obligations.
After the closing date, Presley Homes agrees to offer continued employment
(on an "at will" basis) to the officers, employees and sales agents of WLHI
identified on an exhibit to the Purchase Agreement on substantially the same
terms and conditions as are in effect at WLHI on the closing date.
WLHI will remain liable and indemnify and defend Presley Homes for any
claims relating to homes which close escrow prior to the closing date for the
Acquisition. Presley Homes will be liable and indemnify and defend WLHI for any
claims relating to homes where no work had commenced prior to the closing date.
To the extent that construction has begun on any improvements prior to the
closing date, or a home has been started but has not yet closed escrow, Presley
Homes and WLHI will each remain liable for any claims for alleged construction
defects for any work done by or for them, respectively, on the real property,
and each shall indemnify the other in accordance with the Purchase Agreement.
After the closing date, Presley Homes agrees to manage and to provide such
other related services as WLHI may reasonably request with respect to certain
real estate development projects which are identified on a schedule to the
Purchase Agreement and are being retained by WLHI. WLHI has agreed to reimburse
Presley Homes for all costs incurred for its management services relating to
such projects.
The Purchasers and WLHI shall, and shall cause the Company and New Presley
to, comply with all applicable federal and state laws and all applicable listing
criteria of the NYSE (or such other securities exchange on which the common
stock of New Presley shall be listed) concerning the corporate governance of the
Company and New Presley, as applicable, following consummation of the Offer,
including obligations in respect of New Presley's stockholders, directors,
officers and otherwise.
After the closing date, WLHI agrees to cooperate, and to cause the
partnerships and the limited liability companies through which it owns real
property to cooperate, in the transfer and delivery of the assets being
purchased by Presley Homes and to maintain adequate levels of insurance coverage
to protect the assets being purchased by Presley Homes.
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Termination
The Purchase Agreement may be terminated under the following circumstances:
(i) by mutual consent of the parties;
(ii) by the Company, Presley Homes or WLHI if any governmental entity
issues an order, decree or ruling which permanently restrains or
otherwise prohibits the purchase of the shares pursuant to the Offer
or the Series B Stock Purchase Agreements;
(iii) by the Company, Presley Homes or WLHI if the closing of the
Acquisition has not occurred (other than through the failure of any
party seeking to terminate to comply fully with its obligations
under the Purchase Agreement) on or before November 30, 1999;
provided that if the closing has not occurred by that date due to
delays in obtaining government approvals, then the parties agree to
extend the closing date for up to an additional thirty (30) days;
(iv) by Presley Homes or the Company if the Purchasers fail to commence
the Offer within the time set forth in the Purchase Agreement,
provided that Presley Homes is not in material breach at that time;
(v) by Presley Homes or the Company in connection with entering into a
definitive agreement with a third party as permitted under the
Purchase Agreement in respect of the Company's Board of Directors'
fiduciary duties to the Company's stockholders (provided that Presley
Homes has complied with all provisions of the Purchase Agreement);
(vi) by Presley Homes or the Company if WLHI shall have breached in any
material respect any of its representations, warranties or
agreements, if the breach cannot be or has not been cured within
thirty (30) days after written notice of the breach;
(vii) by WLHI if, due to an occurrence not involving a breach by it of its
obligations under the Purchase Agreement which makes it impossible
to satisfy any of the conditions to the Offer, the Purchasers shall
have failed to commence the Offer within the time specified in the
Purchase Agreement;
(viii) by WLHI if, prior to the purchase of the Series A Shares by the
Purchasers pursuant to the Offer, the Company's Board of Directors
shall have withdrawn, modified or changed in a manner adverse to the
Purchasers its approval or recommendation of the Offer or shall have
recommended an acquisition proposal or executed an agreement
relating to an acquisition proposal or similar business combination
with a person or entity other than WLHI or its affiliates; or
(ix) by WLHI if Presley Homes or the Company shall have breached any
representation, warranty or covenant in the Purchase Agreement which
cannot be or has not been cured within thirty (30) days after notice.
If the Purchase Agreement is terminated, all further obligations of the
parties shall terminate, provided that the termination will not relieve any
party of any liability that it may have for breach of any representation or
warranty or nonperformance of any covenant or constitute a waiver of any
available remedy for breach or nonperformance.
No Solicitation
Each of WLHI and the Company has agreed that prior to the closing, neither
it nor any of its representatives will solicit or encourage the submission of an
acquisition proposal other than from a party to the Purchase Agreement; or
provide any information concerning it or its assets to any other person or
permit any other person to visit its premises in connection with or for the
purpose of soliciting or facilitating an acquisition proposal.
In the event any other potential acquiror contacts a party to the Purchase
Agreement regarding an acquisition proposal, that party is required to inform
the other parties and to inform the potential acquiror of the period of
exclusive negotiations. If the board of directors of the Company or WLHI, after
receiving advice from counsel, determines that a failure to act would be
inconsistent with such board's fiduciary duties, the party may furnish
information pursuant to confidentiality agreements and participate in
discussions and
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negotiations. If a party enters into a definitive agreement with respect to a
competing proposal, that party is required to concurrently pay all fees and
expenses incurred by the other party through that date in connection with the
Purchase Agreement.
Except as set forth in this Offer to Purchase, there have not been, since
January 1, 1996, any contacts, negotiations or transactions between the
Purchasers, on the one hand, and the Company or its executive officers,
directors or affiliates, on the other hand, concerning a merger, consolidation
or acquisition, tender offer or other acquisition of securities, election of
directors, or a sale or other transfer of a material amount of assets.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY
The Purchasers have commenced the Offer pursuant to the terms of the
Purchase Agreement and for the purpose of acquiring such number of Series A
Shares as will enable the Purchasers and their respective affiliates to own up
to 49.9% of the outstanding Common Stock of the Company. The purchase of Series
A Shares pursuant to the Offer will also allow for the Acquisition and the
Merger to be consummated.
Except as disclosed in this Offer to Purchase, none of the Purchasers or
their respective affiliates has any present plans or proposals that would (a)
result in (i) an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, or sale or transfer of a material amount of assets,
involving the Company or any of its subsidiaries, or (ii) any change in the
present board of directors or management of the Company, or (iii) any material
change in the present capitalization or dividend policy of the Company, or (iv)
any other material change in the Company's corporate structure or business, or
(b) cause a class of the Company's securities to be delisted from the NYSE or
eligible for termination of registration under the Exchange Act.
12. DIVIDENDS AND DISTRIBUTIONS
If, on or after October 7, 1999 and prior to the Expiration Date of the
Offer, the Company should (i) split, combine or otherwise change the Common
Stock or its capitalization, (ii) issue or sell any additional securities of the
Company or otherwise cause an increase in the number of outstanding securities
of the Company (except for Series A Shares issuable upon the exercise of
employee stock options outstanding on October 7, 1999), or (iii) acquire
currently outstanding shares of Common Stock or otherwise cause a reduction in
the number of outstanding shares of Common Stock, then, without prejudice to the
Purchasers' rights under Sections 1 and 14 of this Offer to Purchase, the
Purchasers in their sole discretion, subject to the terms of the Purchase
Agreement, may make such adjustments as they deem appropriate in the Offer Price
and other terms of the Offer.
If, on or after October 7, 1999, the Company should declare or pay any
dividend on the Common Stock or make any distribution (including, without
limitation, cash dividends, the issuance of additional shares of Common Stock
pursuant to a stock dividend or stock split, the issuance of other securities or
the issuance of rights for the purchase of any securities, with respect to
shares of Common Stock, that is payable or distributable to stockholders of
record on a date prior to the transfer to the names of the Purchasers or their
respective nominees or transferees on the Company's stock transfer records of
the Series A Shares purchased pursuant to the Offer, then, without prejudice to
the Purchasers' rights under Sections 1 and 14, any such dividend, distribution
or right to be received by the tendering stockholders will be received and held
by the tendering stockholders for the account of the Purchasers and will be
required to be promptly remitted and transferred by each tendering stockholder
to the Depositary for the account of the Purchasers, accompanied by appropriate
documentation of transfer. Pending such remittance and subject to applicable
law, the Purchasers will be entitled to all rights and privileges as owner of
any such dividend, distribution or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by the Purchasers in their sole discretion.
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13. EFFECT OF THE OFFER ON THE MARKET FOR THE SERIES A SHARES; STOCK EXCHANGE
LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS
Market for the Series A Shares. The purchase of Series A Shares pursuant
to the Offer will reduce the number of Series A Shares that might otherwise
trade publicly and may reduce the number of holders of Series A Shares, which
could adversely affect the liquidity and market value of the remaining Series A
Shares held by the stockholders other than the Purchasers. The Purchasers cannot
predict whether the reduction in the number of Series A Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Series A Shares or whether such
reduction would cause future market prices to be greater or less than the Offer
Price.
The Purchase Agreement contemplates that, assuming holders of a majority of
the Company's outstanding Common Stock approve the Merger, the Merger will take
effect after the closing of the Offer, the Acquisition and the purchase of
Series B Shares pursuant to the Series B Stock Purchase Agreements. The Merger
will implement transfer restrictions on the common stock of New Presley. Such
transfer restrictions would, absent prior approval of the Company's Board of
Directors, prohibit certain sales of common stock of New Presley by or to
persons owning 5% or more of New Presley's common stock or that would result in
any person becoming the holder of 5% or more of New Presley's common stock.
Accordingly, the transfer restrictions will have the effect of further
restricting the liquidity of New Presley's common stock following the Merger.
The Merger and the transfer restrictions are described in detail in the
Company's proxy materials prepared in connection with the special meeting of the
Company's stockholders to be held on November 5, 1999. Such proxy materials have
been filed with the Commission, and copies of these materials may be obtained as
described in Section 7 of this Offer to Purchase. In addition, the proxy
materials will be mailed to holders of record of the Common Stock as of
September 15, 1999. The Merger and the transfer restrictions are also discussed
in the Company's Schedule 14D-9, which is being mailed to stockholders herewith
and which has been filed by the Company with the Commission. Holders of Series A
Shares should review these materials carefully before making a decision to
tender Series A Shares pursuant to the Offer.
Stock Exchange Listing. The Series A Shares are presently listed on the
NYSE under the symbol "PDC." Upon consummation of the Merger, each Series A
Share will be converted into the right to receive 0.2 share of New Presley
common stock, and the Series A Shares will cease to be listed on the NYSE.
The Company states in its proxy materials relating to the Merger that the
NYSE has authorized New Presley's common stock for listing on the NYSE. However,
the Company has also announced that the NYSE has informed the Company that it is
not in compliance with the NYSE's recently amended continued listing criteria,
and that failure by the Company to raise its stock price above $1.00 per share
(over a 30 trading-day period) within six months will result in immediate
suspension of trading and application to the Commission for delisting. The
Company has stated in its filings with the Commission that it has presented a
business plan to the NYSE that demonstrates compliance with all aspects of the
NYSE's continued listing criteria (other than the minimum stock price
requirement) within 12 months of the date of the NYSE's notification. Under
these criteria, the Company (or, after consummation of the Merger, New Presley)
must have:
- a total market capitalization of not less than $50 million and
stockholders' equity of not less than $50 million; and
- an average market capitalization of not less than $15 million over a
consecutive 30 day period.
The NYSE will monitor the Company and New Presley for quarterly compliance
with its plan. If the Company or New Presley fails to achieve the quarterly
milestones included in the plan or, at the completion of the 12 months, is not
in compliance with the NYSE's continued listing criteria, the shares of common
stock of the Company or New Presley will be suspended from trading on the NYSE,
and the NYSE, will apply to the Commission to delist the shares. Delisting of
the Company's or New Presley's shares could adversely impact the liquidity and
market price of such shares.
26
<PAGE> 29
If the NYSE were to delist the Company's or New Presley's shares, it is
possible that such shares would continue to trade on other securities exchanges
or in the over-the-counter market and that price quotations would be reported by
such exchanges or through the Nasdaq Stock Market or other sources. The extent
of the public market for such shares and the availability of such quotations
would depend, however, upon such factors as the number of stockholders and/or
the aggregate market value of the publicly traded shares remaining at such time,
the interest in maintaining a market in the shares on the part of securities
firms, the possible termination of registration under the Exchange Act as
described below, and other factors.
The Purchasers will not be required to accept for payment or pay for any
tendered Series A Shares and may terminate or amend the Offer, as of the
Expiration Date, if it is reasonably determined that upon consummation of the
Offer, the purchases of Series B Shares under the Series B Stock Purchase
Agreements and the Merger, (1) the shares of Common Stock of the Company (or the
shares of Common Stock of New Presley) will cease to be listed on the NYSE or
another national securities exchange, or will not be quoted on an inter-dealer
quotation system of a registered national securities association, or (2) the
shares of Common Stock of the Company (or the shares of Common Stock of New
Presley) outstanding immediately following consummation of such transactions
will be held of record by less than 300 persons.
Exchange Act Registration. The Series A Shares are currently registered
under the Exchange Act, and the shares of New Presley are expected to be
registered under the Exchange Act. Registration of the Series A Shares or the
shares of New Presley under the Exchange Act may be terminated upon application
of the Company or New Presley to the Commission if such shares are neither
listed on a national securities exchange nor held by 300 or more holders of
record. Termination of registration of the Series A Shares or the shares of New
Presley under the Exchange Act would substantially reduce the information
required to be furnished by the Company or New Presley to its stockholders and
to the Commission and would make certain provisions of the Exchange Act no
longer applicable to the Company or New Presley, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of the Company or New Presley and persons holding
"restricted securities" of the Company or New Presley to dispose of such
securities pursuant to Rule 144 or Rule 144A under the Securities Act of 1933,
as amended, may be impaired or eliminated.
Margin Regulations. The Series A Shares are currently "margin securities"
under the regulations of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Series A Shares.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer and the Merger, the
Series A Shares or the shares of New Presley would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
14. CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, the Purchasers shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchasers obligation to pay for or return tendered Shares
promptly after termination of withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Series A Shares, and may amend the Offer or
terminate the Offer and not accept for payment any tendered Shares, if (i) the
Minimum Condition has not been satisfied or waived (pursuant to the Purchase
Agreement) by the Expiration Date, (ii) the Acquisition has not been consummated
in accordance with the terms of the Purchase Agreement, (iii) the stockholders
of the Company have not approved the Merger by the required vote, or (iv) at any
time after October 7, 1999
27
<PAGE> 30
and prior to the Expiration Date, any of the following events shall have
occurred and be continuing as of the Expiration Date:
(a) there shall be any action taken, instituted or pending, or any
statute, rule, regulation, legislation, interpretation, ruling,
condition, judgment, order or injunction enacted, enforced, promulgated,
proposed, amended, issued or deemed applicable to the Offer, the
purchase of the Series B Shares pursuant to the Series B Stock Purchase
Agreements, the Acquisition or the Merger, by any Governmental Entity
(as defined in the Purchase Agreement), that could reasonably be
expected to, directly or indirectly: (1) make illegal or otherwise
prohibit consummation of the Offer, the purchase of the Series B Shares
pursuant to the Series B Stock Purchase Agreements, the Acquisition or
the Merger as contemplated by the Purchase Agreement, (2) impose a
limitation on the ability of the Purchasers effectively to acquire, hold
or exercise full rights of ownership of Common Stock of the Company,
including, without limitation, the right to vote any shares acquired or
owned by the Purchasers on all matters properly presented to the
Company's stockholders, or (3) require divestiture by the Purchasers,
WLHI or their respective affiliates of shares of Common Stock of the
Company or any material portion of the business or assets of the Company
taken as a whole;
(b) (1) the representations of the Company and Presley Homes set
forth in the Purchase Agreement shall not be true and correct in any
material respect as of the date of the Purchase Agreement and as of
consummation of the Offer as though made on and as of such date, (2) the
Company or Presley Homes shall have failed to comply in all material
respects with their respective covenants and agreements set forth in the
Purchase Agreement, (3) there shall have occurred any events or changes
which have had or could reasonably be expected to have a material
adverse effect on the business, assets, prospects, condition (financial
and other) and results of operations of the Company taken as a whole;
(c) (1) it shall have been publicly disclosed, or the Purchasers
and WLHI shall have otherwise learned, that beneficial ownership
(determined for the purposes of this paragraph (c) as set forth in Rule
13d-3 promulgated under the Exchange Act) of 50% or more of the
outstanding shares of Common Stock has been acquired by any person
(including the Company and Presley Homes or any of their subsidiaries or
affiliates) or group (as defined in Section 13(d)(3) under the Exchange
Act), (2) the Board of Directors of the Company or any committee thereof
shall have withdrawn, or shall have modified or amended in a manner
adverse to the Purchasers and WLHI, the approval, adoption or
recommendation, as the case may be, of the Offer or the Merger, or
approved or recommended any, merger, consolidation, other business
combination, sale of material assets, takeover proposal or other
acquisition of shares of Common Stock other than the Offer, the
Acquisition, the Merger and the other transactions contemplated by the
Purchase Agreement, (3) a third party shall have entered into a
definitive agreement or a written agreement in principle with the
Company with respect to a tender offer or exchange offer for any shares
of Common Stock of the Company or a merger, consolidation, other
business combination with the Company or sale of material assets of the
Company or any of its subsidiaries (except as specifically permitted by
the Purchase Agreement), or (4) the Board of Directors of the Company or
any committee thereof shall have resolved to do any of the foregoing and
such resolution shall be made public;
(d) The Company, Presley Homes and WLHI agree to terminate the
Offer, the Acquisition or the Purchase Agreement, or the Purchase
Agreement shall have been otherwise terminated in accordance with its
terms;
(e) there shall have occurred, and continued to exist, (1) any
general suspension of, or limitation on prices for, trading in
securities on the NYSE (excluding any coordinated trading half-
triggered solely as a result of a specified decrease in a market index
and suspensions on limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), or
(2) a banking moratorium in the United States or other limitation on the
extension of credit, or (3) a commencement of a war, armed hostilities
or other national or international
28
<PAGE> 31
calamity involving the United States and having a material adverse
effect on the business, assets, prospects, condition (financial and
other) and results of operations of the Company, taken as a whole, or
materially adversely affecting or delaying the Offer, or (4) in the case
of any condition, circumstance or event referenced in any of the
foregoing clauses (1), (2) and (3) and existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(f) the Series B Stock Purchase Agreements shall no longer be in
full force or effect, or the Series B Stock Purchase Agreements shall no
longer be enforceable against the Series B Stockholders in accordance
with their terms (except for any such failure to be in full force or
effect or enforceable which is due solely to a breach thereof by WLHI);
or
(g) it is reasonably determined that upon consummation of the
Offer, the purchase of Series B Shares under the Series B Stock Purchase
Agreements and the Merger, (1) the shares of Common Stock of the Company
will cease to be listed on the NYSE or another national securities
exchange, or will not be quoted on an inter-dealer quotation system of a
registered national securities association, or (2) the shares of Common
Stock of the Company outstanding immediately following consummation of
such transactions will be held of record by less than 300 persons.
The foregoing conditions are for the sole benefit of the Purchasers and may
be asserted by the Purchasers regardless of the circumstances giving rise to any
such conditions or may be waived by the Purchasers in whole or in part, at any
time and from time to time in their sole discretion, subject to the terms of the
Purchase Agreement. Subject to the terms of the Purchase Agreement, the failure
by Purchasers at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right and each right will be deemed an on-going
right which may be asserted at any time and from time to time. Any reasonable
determination by the Purchasers concerning any events described in the above
conditions will be final and binding on all parties.
Notwithstanding the foregoing, all conditions to the Offer (other than the
condition set forth in paragraph (a) of this Section 14) shall be deemed to have
been satisfied upon consummation of the Acquisition in accordance with the terms
of the Purchase Agreement. In addition, if on the Initial Expiration Date, (i)
the Minimum Condition shall not have been satisfied or waived by the Purchasers,
or (ii) the Acquisition shall not have been consummated or the stockholders of
the Company shall not have approved the Merger due to delays in (a) obtaining
necessary governmental or regulatory approvals of, or necessary third party
consents to, either the Acquisition or the Merger, or (b) obtaining the
financing required to satisfy the conditions to the Acquisition, or (c)
obtaining the release of WLHI from certain performance bonds, guarantees and
other obligations set forth in the Purchase Agreement, the Purchasers have
agreed to extend the Initial Expiration Date of the Offer from time to time and
for such number of business days as may be necessary to allow for such
conditions to be satisfied and for the closing of the Offer to be substantially
coterminous with the closing of the Acquisition; provided, however, that in no
event shall the Purchasers be obligated to extend the Expiration Date of the
Offer beyond November 30, 1999 (or thirty days thereafter in the event that the
closing of the Acquisition or the stockholder vote upon the Merger is delayed
due to further delays in the process of obtaining necessary governmental or
regulatory approvals).
15. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based on a review of
publicly available filings by the Company with the Commission and the review of
certain information furnished by the Company to the Purchasers and their
representatives, the Purchasers are not aware of (i) any governmental license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Series A Shares by the Purchasers pursuant to the Offer, or (ii)
except as set forth below, any approval or other action by any governmental,
administrative or regulatory agency or authority, domestic or foreign, that
would be required for the acquisition or ownership of Series A Shares by the
Purchasers as contemplated herein. Should any such approval or other action be
required, the Purchasers currently contemplate that such approval or action
would be sought. While the Purchasers do not currently intend to delay the
acceptance for payment of Series A Shares tendered pursuant to the Offer pending
the outcome of any such matter, there can be no assurance that any such approval
or
29
<PAGE> 32
action, if needed, would be obtained or would be obtained without substantial
conditions or that adverse consequences might not result to the business of the
Company or the Purchasers or that certain parts of the businesses of the Company
or the Purchasers might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchasers'
obligation under the Offer to accept for payment and pay for Series A Shares is
subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 15. See Section 14.
State Takeover Statutes. A number of states have adopted laws and
regulations which purport, to varying degrees, to apply to attempted
acquisitions of securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme
Court of the United States invalidated on constitutional grounds the Illinois
Business Takeover Statute, which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that
the Indiana Control Share Acquisition Act was constitutional. Such Act, by its
terms, is applicable only to corporations that have a substantial number of
stockholders in Indiana and are incorporated there. Subsequently, a number of
federal courts have ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside the
state of enactment.
The Company, directly or through subsidiaries, conducts business in
California, Arizona, New Mexico and Nevada, some of which states have enacted
takeover laws. The Purchasers do not know whether any of these laws will, by
their terms, apply to the Offer and have not complied with any such laws. Should
any person seek to apply any state takeover law, the Purchasers will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer,
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, the Purchasers might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, the Purchasers might be unable to accept for payment any
Series A Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer. In such case, the Purchasers may not be obligated to
accept for payment any Series A Shares tendered. See Section 14.
16. FEES AND EXPENSES
Except as set forth below, the Purchasers will not pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Series A Shares pursuant to the Offer.
Purchaser has retained ChaseMellon Consulting Services, L.L.C. to act as
the Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as the
Depositary in connection with the Offer. The Information Agent may contact
stockholders by mail, electronic mail, telephone, facsimile, telegraph and
personal interviews, and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners of
Series A Shares. The Information Agent and the Depositary will receive
reasonable and customary compensation for their services, will be reimbursed for
certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith, including certain
liabilities under the federal securities laws. Brokers, dealers, commercial
banks and trust companies will be reimbursed by the Purchasers for customary
mailing and handling expenses incurred by them in forwarding the Offer materials
to their customers.
17. MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Series A Shares in any jurisdiction in which the making of
the Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchasers may, in their discretion, take such action
as they may deem necessary to make the Offer in any such jurisdiction and extend
the Offer to holders of Series A Shares in such jurisdiction.
30
<PAGE> 33
The Purchasers have filed with the Commission the Schedule 14D-1,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. The Schedule 14D-1 and any amendments thereto,
including exhibits, may be inspected at, and copies may be obtained from, the
same places and in the same manner as set forth in Section 7 above (except that
they will not be available at the regional offices of the Commission). The
Company's recommendation with respect to the Offer and other information
required to be disseminated to stockholders pursuant to Rule 14d-9 is contained
in the Company's Schedule 14D-9, which is being mailed to stockholders herewith
and which has been filed by the Company with the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASERS NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
WILLIAM LYON
WILLIAM H. LYON
October 7, 1999
31
<PAGE> 34
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Series A Shares and any
other required documents should be sent by each stockholder or such
stockholder's broker, dealer, bank, trust company or other nominee to the
Depositary as follows:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Registered/Certified Mail: By Hand: Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Rd.
South Hackensack, NJ 07606 13th Floor Mail Stop - Reorg. Dept.
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Transmission
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile by Telephone:
(201) 296-4860
</TABLE>
Questions and requests for assistance or for additional copies of the Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at the telephone number and location listed
below. You may also contact your broker, dealer, bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 West 33rd Street
14th Floor
New York, NY 10001
For Information Telephone:
(888) 566-9474
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 7, 1999
BY
WILLIAM LYON
AND
WILLIAM H. LYON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, NOVEMBER 5, 1999, UNLESS THE OFFER IS EXTENDED. WILLIAM LYON
AND WILLIAM H. LYON (COLLECTIVELY, THE "PURCHASERS") HAVE AGREED, UNDER CERTAIN
CIRCUMSTANCES AND SUBJECT TO THE TERMS AND CONDITIONS OF THE OFFER, TO EXTEND
THE OFFER FROM TIME TO TIME UNTIL THE CLOSING OF THE ACQUISITION (AS DEFINED IN
THE OFFER TO PURCHASE).
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand: Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Rd.
South Hackensack, NJ 07606 13th Floor Mail Stop-Reorg. Dept.
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile
(For Eligible Institutions Only):
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SERIES A SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
SERIES A SHARE CERTIFICATE(S) AND SERIES A SHARE(S) TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) APPEAR(S) ON SHARE CERTIFICATE(S))
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SERIES A NUMBER
SHARE SHARES REPRESENTED OF SERIES A
CERTIFICATE BY SHARE SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
Total Series A Shares
- ------------------------------------------------------------------------------------------------------------------------
[ ] Indicate in this box the order (by certificate number) in which Series A Shares are to be purchased in event of
proration. (Attach additional list if necessary.)(3) See Instruction 8. Shares: 1st: 2nd:
3rd: 4th:
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Series A Shares represented by Share Certificates
delivered to the Depositary are being tendered hereby. See Instruction 4.
(3) If you do not designate an order, in the event that less than all Series A Shares tendered are purchased due to
proration, Series A Shares will be selected for purchase by the Depositary. See Instruction 8.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be used by stockholders of The Presley
Companies either if certificates for Series A Shares (as such term is defined
below) are to be forwarded herewith or, unless an Agent's Message (as defined in
Instruction 2 below) is utilized, if delivery of Series A Shares is to be made
by book-entry transfer to an account maintained by ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") at the Book-Entry Transfer Facility
(pursuant to the procedures set forth in Section 3 of the Offer to Purchase).
Stockholders who deliver Series A Shares by book-entry transfer are referred to
herein as "Book-Entry Stockholders" and other stockholders who deliver Series A
Shares are referred to herein as "Certificate Stockholders."
Stockholders whose certificates for Series A Shares (the "Series A Share
Certificates") are not immediately available or who cannot deliver either their
Series A Share Certificates for, or a Book-Entry Confirmation (as defined in
Section 2 of the Offer to Purchase) with respect to the Series A Shares and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) and who wish to tender their
Series A Shares must tender their Series A Shares pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
DELIVERY OF DOCUMENTS TO BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF SERIES A SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE DEPOSITARY'S ACCOUNT WITH THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING. (ONLY PARTICIPANTS IN THE BOOK-ENTRY FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER.)
Name of Tendering Institution:
Account Number: at The Depository Trust Company
Transaction Code Number:
[ ] CHECK HERE IF SERIES A SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING. PLEASE ENCLOSE A NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Owner(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If delivery is by book-entry transfer:
Name of Tendering Institution:
Account Number: at The Depository Trust Company
Transaction Code Number:
-2-
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to William Lyon, an individual, and William
H. Lyon, an individual (together, the "Purchasers"), the above-described shares
of Series A Common Stock, par value $.01 per share (the "Series A Shares"), of
The Presley Companies, a Delaware corporation (the "Company"), pursuant to
Purchasers' offer to purchase up to 10,678,792 of the outstanding Series A
Shares (subject to adjustment as described in the Offer to Purchase) at a price
of $0.655 per Series A Share, net to the tendering stockholder in cash, without
interest thereon (the "Offer Price") upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 7, 1999, receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which, together
with any amendments or supplements thereto or hereto, collectively constitute
the "Offer"). The undersigned understands that (i) all Series A Shares, up to a
maximum of 10,678,792 Series A Shares, properly tendered and not properly
withdrawn prior to the Expiration Date (as defined in the Offer to Purchase)
will be purchased at the Offer Price, upon the terms and subject to the
conditions of the Offer, including its proration provisions, (ii) the Purchasers
will return all other Series A Shares not purchased pursuant to the Offer,
including Series A Shares not purchased because of proration, and (iii) the
Purchasers reserve the right to transfer or assign, in whole, or from time to
time in part, to one or more of their affiliates, the right to purchase all or
any portion of the Series A Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchasers of their obligations
under the Offer or prejudice the rights of tendering stockholders to receive
payment for Series A Shares validly tendered and accepted for payment pursuant
to the Offer.
Upon the terms and subject to the terms and conditions of the Offer, and
effective upon acceptance for payment of, and payment for, the Series A Shares
tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon
the order of, the Purchasers all right, title and interest in and to all the
Series A Shares that are being tendered hereby and any and all dividends on the
Series A Shares (including, without limitation any and all non-cash dividends,
distributions, rights, other Series A Shares, or other securities issued or
issuable in respect of such Series A Shares on or after the date of the Offer to
Purchase (collectively, "Distributions")) and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact and proxy
to the undersigned with respect to such Series A Shares (and Distributions),
with full power of substitution (such power of attorney and proxy being deemed
to be an irrevocable power coupled with an interest), to (i) deliver Series A
Share Certificates (and Distributions), or transfer ownership of such Series A
Shares (and Distributions) on the account books maintained by the Book-Entry
Transfer Facility, together, in any such case, with all accompanying evidences
of transfer and authenticity, to or upon the order of the Purchasers upon
receipt by the Depositary, (ii) present such Series A Shares (and Distributions)
for transfer on the books of the Company, and (iii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Series A Shares
(and Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints the Purchasers, and each of them, as attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to the full extent of
such stockholder's rights with respect to all Series A Shares (and
Distributions) tendered by such stockholder and accepted for payment by the
Purchasers, to vote in such manner as each such attorney-in-fact and proxies of
the undersigned or his substitute shall, in his sole discretion, deem proper at
any annual, special, adjourned or postponed meeting of stockholders, with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall, in his sole discretion, deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall, in his sole discretion, deem proper with respect
to, all of the Series A Shares (and Distributions) tendered hereby and accepted
for payment by the Purchasers. This appointment will be effective if and when,
and only to the extent that, the Purchasers accept such Series A Shares for
payment pursuant to the Offer. This power of attorney and proxy are irrevocable
and are granted in consideration of the acceptance for payment of such Series A
Shares in accordance with the terms of the Offer. Such acceptance for payment
shall, without further action, revoke any prior powers of attorney and proxies
granted by the undersigned at any time with respect to such Series A Shares (and
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). The Purchasers require that, in order for Series
A Shares (or other Distributions) to be deemed validly tendered, immediately
upon the Purchasers' acceptance for
-3-
<PAGE> 4
payment of such Series A Shares, the Purchasers must be able to exercise full
voting rights with respect to such Series A Shares (and Distributions),
including voting at any meeting of the Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Series A
Shares tendered hereby and all Distributions, that the undersigned owns the
Series A Shares tendered hereby within the meaning of Rule 14e-4 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that
the tender of Series A Shares hereby complies with Rule 14e-4 under the Exchange
Act, and that when the same are accepted for payment by the Purchasers, the
Purchasers will acquire good, marketable and unencumbered title thereto and to
all Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchasers to be necessary or desirable to
complete the sale, assignment and transfer of the Series A Shares tendered
hereby and all Distributions. In addition, the undersigned shall remit and
transfer promptly to the Depositary for the account of the Purchasers all
Distributions in respect of the Series A Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, the Purchasers shall be entitled to all rights
and privileges as owner of each such Distribution and may withhold the entire
purchase price of the Series A Shares tendered hereby or deduct from such
purchase price, the amount or value of such Distribution as determined by the
Purchasers in their sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer to the Purchase this tender is
irrevocable.
The undersigned understands that the valid tender of Series A Shares
pursuant to any one of the procedures described in Section 3 of the Offer to
Purchase and in the Instructions hereto will constitute a binding agreement
between the undersigned and the Purchasers upon the terms and subject to the
conditions of the Offer, including its proration provisions (and if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment). The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchasers may not be required to accept for
payment any of the Series A Shares tendered hereby.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchasers may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Series A Shares
tendered, or may accept for payment less than all of the Series A Shares
tendered hereby. In any such event, the undersigned understands that
certificate(s) for any Series A Shares delivered herewith but not tendered or
purchased will be returned to the undersigned at the address indicated above,
unless otherwise indicated under the "Special Payment Instruction" or "Special
Delivery Instructions" boxes below. The undersigned recognizes that under
certain conditions, the Purchasers have the right to extend the Offer and
subject to the withdrawal rights, as set forth in Section 4 of the Offer to
Purchase, retain all tendered Series A Shares until the Expiration Date as so
extended. The undersigned recognizes that the Purchasers have no obligation,
pursuant to the Special Payment Instructions, to transfer any certificate for
Series A Shares from the name of its registered holder, or to order the
registration or transfer of Series A Shares tendered by book-entry transfer, if
the Purchasers do not purchase any of the Series A Shares represented by such
certificate or tendered by such book-entry transfer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Series A Shares purchased and/or
return any Share Certificates not tendered or accepted for payment in the
name(s) of the registered holder(s) appearing above under "Description of Series
A Shares Tendered." Similarly, unless otherwise indicated under "Special
Delivery Instructions," please mail the check for the purchase price of all
Series A Shares purchased and/or return any certificates for Series A Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Series A Shares Tendered." In the event that the boxes
entitled "Special Payment Instructions" and "Special Delivery Instructions" are
both completed, please issue the check for the purchase price of all Series A
Shares purchased and/or return any certificates evidencing Series A Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Series A Shares tendered herewith by
book-entry
-4-
<PAGE> 5
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
the Purchasers have no obligation, pursuant to the "Special Payment
Instructions," to transfer any Series A Shares from the name of the registered
holder thereof if the Purchasers do not accept for payment any of the Series A
Shares so tendered.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING THE SERIES A SHARES THAT
YOU OWN HAVE BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 12.
Number of the Series A Shares represented by lost, destroyed or stolen
certificates: ________________
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of the
Series A Shares accepted for payment (less the amount of any federal
income and backup withholding tax required to be withheld) or certificates
for the Series A Shares not tendered or not accepted for payment are to be
issued in the name of someone other than the undersigned.
Issue: [ ] check
[ ] certificate(s):
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Series A
Shares accepted for payment (less the amount of any federal income and
backup withholding tax required to be withheld) or certificates for Series
A Shares not tendered or not purchased are to be sent to someone other
than the undersigned or to the undersigned at an address other than that
shown under "Description of Series A Shares Tendered."
Mail: [ ] check
[ ] certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
-5-
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated
- ------------------------, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Series A Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm
- --------------------------------------------------------------------------------
Capacity (full title)
- --------------------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security No.
- ----------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
-6-
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Signatures on all Letters of Transmittal must
be guaranteed by a member firm of a registered national securities exchange
which is a participant in the Security Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program, or by a commercial bank or trust company having an
office or correspondent in the United States (each of the foregoing being
referred to as an "Eligible Institution"), unless the Series A Shares tendered
thereby are tendered (a) by a registered stockholder who has not completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" on the Letter of Transmittal, or (b) for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of
the Company either if Series A Share certificates are to be forwarded herewith
or, unless an Agent's Message is utilized, if delivery of Series A Shares is to
be made by book-entry transfer pursuant to the procedures set forth herein and
in Section 3 of the Offer to Purchase. For a stockholder to validly tender
Series A Shares pursuant to the Offer, either (a) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, or an Agent's Message (in connection with
book-entry transfer), and any other required documents, must be received by the
Depositary at one of its addresses set forth herein prior to the Expiration Date
and either (i) certificates for tendered Series A Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii) Series
A Shares must be delivered pursuant to the procedures for book-entry transfer
set forth herein and in Section 3 of the Offer to Purchase and a Book-Entry
Confirmation must be received by the Depositary prior to the Expiration Date or
(b) the tendering stockholder must comply with the guaranteed delivery
procedures set forth herein and in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Series A Shares are not immediately
available or who cannot deliver their certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot comply
with the book-entry transfer procedures on a timely basis may tender their
Series A Shares by properly completing and duly executing the Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
herein and in Section 3 of the Offer to Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Purchasers, must be received by the Depositary prior to the Expiration Date,
and (iii) the certificates for all tendered Series A Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all tendered Series A
Shares), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents, must be received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the New York Stock
Exchange (the "NYSE") is open for business.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Series A Shares, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against the participant.
The signatures on this Letter of Transmittal cover the Series A Shares
tendered hereby.
THE METHOD OF DELIVERY OF THE SERIES A SHARES, THIS LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. THE
SERIES A SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER OF THE OFFER TO
PURCHASE. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
-7-
<PAGE> 8
No alternative, conditional or contingent tenders will be accepted, and no
fractional Series A Shares will be purchased. All tendering stockholders, by
executing this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of acceptance of their Series A Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Series A Shares Tendered" is inadequate, the number of Series A Shares tendered
and the Series A Share certificate numbers with respect to such Series A Shares
should be listed on a separate signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Series A Shares evidenced by any
Series A Share certificate delivered to the Depositary herewith are to be
tendered hereby, fill in the number of Series A Shares that are to be tendered
in the box entitled "Number of Series A Shares Tendered." In any such case, new
certificate(s) for the remainder of the Series A Shares that were evidenced by
the old certificates will be sent to the registered holder, unless otherwise
provided in the appropriate box on this Letter of Transmittal, as soon as
practicable after the Expiration Date or the termination of the Offer. All
Series A Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Series A
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Series A Shares tendered hereby are held of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Series A Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Series A Share certificate or stock
power is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to the Purchasers of the authority of such person
so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Series A Shares listed and transmitted hereby, no endorsements of Series A Share
certificates or separate stock powers are required unless payment or
certificates for Series A Shares not tendered or not accepted for payment are to
be issued in the name of a person other than the registered holder(s).
Signatures on any such Series A Share certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Series A Shares evidenced by certificates listed and
transmitted hereby, the Series A Share certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the Series A Share
certificates. Signature(s) on any such Series A Share certificates or stock
powers must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchasers will pay all stock transfer taxes with respect to the transfer
and sale of any Series A Shares to them or their order pursuant to the Offer.
If, however, payment of the purchase price of any Series A Shares purchased is
to be made to, or if certificates for Series A Shares not tendered or not
accepted for payment are to be registered in the name of, any person other than
the registered holder(s), or if tendered certificates are registered in the name
of any person other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered holder(s)
or such other person) payable on account of the transfer to such other person
will be deducted from the purchase price of such Series A Shares purchased
unless evidence satisfactory to the Purchasers of the payment of such taxes, or
exemption therefrom, is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Series A Shares accepted for payment is to be issued in the name
of, and/or Series A Share certificates for Series A Shares not accepted for
payment or not tendered are to be issued in the name of and/or returned to, a
person other than the signer of this Letter of Transmittal or if a check is to
be sent, and/or such certificates are to be returned, to a person other than the
signer of this Letter of Transmittal, or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal
-8-
<PAGE> 9
should be completed. Any stockholder(s) delivering Series A Shares by book-entry
transfer may request that Series A Shares not purchased be credited to such
account maintained at the Book-Entry Transfer Facility as such stockholder(s)
may designate in the box entitled "Special Payment Instructions." If no such
instructions are given, any such Series A Shares not purchased will be returned
by crediting the account at the Book-Entry Transfer Facility designated above as
the account from which such Series A Shares were delivered.
8. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 2 of
the Offer to Purchase, stockholders may designate the order in which their
Series A Shares are to be purchased in the event of proration. The order of
purchase may have an effect on the Federal income tax treatment of the purchase
price for the Series A Shares purchased. If you do not designate an order, in
the event that less than all Series A Shares tendered are purchased due to
proration, Series A Shares will be selected for purchase by the Depositary.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at the address and phone number set forth
below.
10. WAIVER OF CONDITIONS. Subject to the Purchase Agreement, the
Purchasers reserve the absolute right in their sole discretion to waive, at any
time or from time to time, any of the specified conditions of the Offer, in
whole or in part, in the case of any Series A Shares tendered.
11. BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Series A Shares in the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify, under
penalties of perjury, that such TIN is correct and that such stockholder is not
subject to backup withholding.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Series A Shares. If the Series A Shares are held in more than one name or are
not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, individual retirement
accounts and certain foreign individuals and entities) are not subject to backup
withholding. Foreign and nonresident alien stockholders should complete and sign
the main signature form and a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid backup withholding.
See the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for more instructions.
12. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Series A Shares has been lost, destroyed or stolen, the stockholder
should promptly notify the Depositary by checking the box immediately preceding
the special payment/special delivery instructions and indicating the number of
Series A Shares lost. The stockholder will then be instructed as to the steps
that must be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Series A Share certificates have been
followed.
-9-
<PAGE> 10
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE, AND EITHER CERTIFICATES FOR TENDERED
SERIES A SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SERIES A SHARES MUST BE
DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR
TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or additional copies of the Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent at its address or telephone number set
forth below.
-10-
<PAGE> 11
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Series A Shares
are accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his or her social security number. If a tendering stockholder is subject to
backup withholding, such stockholder must cross out item (2) of the
Certification box on the Substitute Form W-9. If the Depositary is not provided
with the correct taxpayer identification number, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Series A Shares purchased
pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, individual retirement
accounts, and certain foreign individuals and entities) are not subject to these
backup withholding and reporting requirements. In order for a foreign individual
to qualify as an exempt recipient, that stockholder must submit a statement,
signed under penalties of perjury, attesting to that individual's exempt status.
Such statements can be obtained from the Depositary. Exempt stockholders, other
than foreign individuals, should furnish their TIN, write "Exempt" on the face
of the Substitute Form W-9 below, and sign, date and return the Substitute Form
W-9 to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Series A Shares purchased pursuant to the Offer, the stockholder
is required to notify the Depositary of such stockholder's correct taxpayer
identification number by completing the form contained herein certifying that
the taxpayer identification number provided on Substitute Form W-9 is correct
(or that such stockholder is awaiting a taxpayer identification number).
What Number to Give the Depositary
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, such stockholder
should write "Applied For" in the space provided for in the TIN in Part 1, and
sign and date the Substitute Form W-9. If "Applied For" is written in Part 1 and
the Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price until a TIN is provided to
the Depositary.
-11-
<PAGE> 12
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- ------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. ---------------------------------
DEPARTMENT OF THE TREASURY Social Security Number
INTERNAL REVENUE SERVICE (If awaiting TIN, write
"Applied For")
OR
---------------------------------
Employer Identification Number
(If awaiting TIN, write
"Applied For")
-------------------------------------------------------------------------------------------
PART 2 -- CERTIFICATE -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued for me), and
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION (2) I am not subject to backup withholding because: (a) I am exempt from backup
NUMBER (TIN) withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding.
-------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out PART 3 --
item (2) above if you have been notified by the IRS Awaiting TIN [ ]
that you are currently subject to backup withholding
because of under-reporting interest or dividends on
your tax returns. However, if after being notified
by the IRS that you are subject to backup
withholding, you receive another notification from
the IRS that you are no longer subject to backup
withholding, do not cross out such item (2). (Also
see instructions in the enclosed Guidelines).
- ------------------------------------------------------------------------------------------------------------------------------
Signature: --------------------------------------------------------------------------- Date: -----------------------1999
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-12-
<PAGE> 13
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number to the Depositary by the
time of payment, 31% of all reportable payments made to me thereafter will be
withheld, but that such amounts will be refunded to me if I provide a certified
Taxpayer Identification Number to the Depositary within sixty (60) days.
<TABLE>
<S> <C>
- ------------------------------------------------------------ -----------------------------
Signature Date
</TABLE>
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
-13-
<PAGE> 14
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent as set forth below:
The Information Agent for the Offer is:
CHASEMELLON CONSULTING SERVICES, L.L.C.
450 West 33rd Street
14th Floor
New York, New York 10001
(888) 566-9474
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 7, 1999
BY
WILLIAM LYON
AND
WILLIAM H. LYON
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
("Share Certificates") evidencing shares of Series A Common Stock, par value
$.01 per share (the "Series A Shares"), of The Presley Companies, a Delaware
corporation (the "Company"), are not immediately available, (ii) time will not
permit all required documents to reach ChaseMellon Shareholder Services, L.L.C.,
as Depositary (the "Depositary"), prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase (as defined below)), or (iii) the procedure
for book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Depositary. See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail-Stop Reorg. Department
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
For Information Telephone:
(888) 566-9474
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to William Lyon, an individual, and William
H. Lyon, an individual, (together the "Purchasers"), upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 7,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"), receipt of
each of which is hereby acknowledged, the number of Series A Shares specified
below pursuant to the guaranteed delivery procedures described in Section 3 of
the Offer to Purchase.
Number of Series A Shares:
------------------------------------------------------------------------------
Certificate No(s). (if available):
------------------------------------------------------------------------------
Check box if Series A Shares will be tendered by book-entry transfer: [ ]
Account Number at The Depository Trust Company:
--------------------------------------------------------------
Name(s) of Record Holder(s):
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(Please Type or Print)
Address(es):
------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Tel. No.:
------------------------------------------------------------------------------
Signature(s)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Dated:
-------------------------- , 1999
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a commercial bank or trust company having an office or
correspondent in the United States or a firm that is a member in good standing
of a registered national securities exchange and which is a participant in any
of the Securities Transfer Agents Medallion Program, the New York Stock
Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion
Program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees (a) that the above named person(s) "own(s)"
the Series A shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, (b) that the tender of Series A
Shares effected hereby complies with Rule 14e-4, and (c) to deliver to the
Depositary, at one of its addresses set forth above, Share Certificates
evidencing the Series A Shares tendered hereby in proper form for transfer, or
confirmation of book-entry transfer of such Series A Shares into the
Depositary's accounts at the Book-Entry Transfer Facility, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) with any required signature guarantees, or an Agent's
Message (as defined in Section 2 of the Offer to Purchase), and any other
documents required by the Letter of Transmittal, within three New York Stock
Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
Share Certificates to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
Name of Firm:
--------------------------------------
Address:
--------------------------------------------
-----------------------------------------------------
(Zip Code)
Area Code and Telephone No.:
----------------------
- -----------------------------------------------------
(Authorized Signature)
Name:
- ----------------------------------------------
(Please Print)
Title:
- -----------------------------------------------
Dated:
- ----------------------------------------------
NOTE: DO NOT SEND SHARE CERTIFICATE(S) WITH THIS NOTICE OF GUARANTEED DELIVERY.
SHARE CERTIFICATE(S) SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL
-2-
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 10,678,792 OUTSTANDING SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
AT
$0.655 NET PER SHARE
BY
WILLIAM LYON
AND
WILLIAM H. LYON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, NOVEMBER 5, 1999, UNLESS THE OFFER IS EXTENDED. WILLIAM
LYON AND WILLIAM H. LYON (COLLECTIVELY, THE "PURCHASERS") HAVE AGREED, UNDER
CERTAIN CIRCUMSTANCES AND SUBJECT TO THE TERMS AND CONDITIONS OF THE OFFER, TO
EXTEND THE OFFER FROM TIME TO TIME UNTIL THE CLOSING OF THE ACQUISITION (AS
DEFINED IN THE OFFER TO PURCHASE).
October 7, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by William Lyon, an individual, and William H. Lyon,
an individual (together, the "Purchasers"), to act as Information Agent in
connection with the Purchasers' offer to purchase up to 10,678,972 shares
(subject to adjustment as provided in the Offer to Purchase) of the Series A
Common Stock, par value $.01 per share (the "Series A Shares"), of The Presley
Companies, a Delaware corporation (the "Company"), at a price of $0.655 per
Series A Share, net to the tendering stockholder in cash, without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Purchasers' Offer to Purchase, dated October 7, 1999 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Series A Shares registered in your name or in the
name of your nominee.
For your information and for forwarding to your clients for whom you hold
Series A Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. The Offer to Purchase dated October 7, 1999;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
Series A Shares and all other required documents cannot be delivered to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") by the
Expiration Date (as defined in the Offer to Purchase);
4. A printed form of letter which may be sent to your clients for
whose accounts you hold Series A Shares registered in your name or in the
name of your nominees, with space provided for obtaining such clients'
instructions with regard to the Offer; and
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by
the Company.
The Company has advised the Purchasers that it expects to distribute in a
separate mailing to holders of record of the Company's Common Stock as of
September 15, 1999 a Proxy Statement/Prospectus with respect to the Merger (as
defined in the Offer to Purchase).
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchasers will be deemed to have accepted for payment, and
will pay for, the Series A Shares validly tendered and not properly withdrawn
prior to the Expiration Date (as defined in the Offer to Purchase), up to a
maximum of 10,678,792 Series A Shares, as, if and when the Purchasers give oral
or written notice to the Depositary of the Purchasers' acceptance of such Series
A Shares for payment pursuant to the Offer. In the event that more than
10,678,972 Series A
<PAGE> 2
Shares are validly tendered and not withdrawn as of the Expiration Date, the
Purchasers will accept for payment, and thereby purchase, Series A Shares on a
pro rata basis (adjusted downward to avoid acceptance for payment of fractional
shares) upon the terms and subject to the conditions of the Offer. In all cases,
payment for Series A Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Series A
Shares (or timely confirmation of a book-entry transfer of such Series A Shares
into the Depositary's account at The Depository Trust Company) pursuant to the
procedures set forth in Sections 2 and 3 of the Offer to Purchase, (ii) the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in Section 2 of the Offer to Purchase), and (iii) any other documents
required by the Letter of Transmittal.
The Purchasers will not pay any fees or commissions to any broker or dealer
or any other person (other than the Information Agent and the Depositary) in
connection with the solicitation of tenders of Series A Shares pursuant to the
Offer. The Purchasers will, however, upon request, reimburse you for reasonable
and customary mailing and handling expenses incurred by you in forwarding the
enclosed materials to your clients. The Purchasers will pay any stock transfer
taxes incident to the transfer to them of validly tendered Series A Shares,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 5, 1999, UNLESS THE OFFER IS
EXTENDED. THE PURCHASERS HAVE AGREED, UNDER CERTAIN CIRCUMSTANCES AND SUBJECT TO
THE TERMS AND CONDITIONS OF THE OFFER, TO EXTEND THE OFFER FROM TIME TO TIME
UNTIL THE CLOSING OF THE ACQUISITION (AS DEFINED IN THE OFFER TO PURCHASE).
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees and any other required documents, and certificates
evidencing the tendered Series A Shares (or an "Agent's Message" in connection
with a book-entry delivery of Series A Shares), should be delivered to the
Depositary by 12:00 midnight, New York City time, on Friday, November 5, 1999,
all in accordance with the instructions set forth in the Letter of Transmittal
and the Offer to Purchase.
If holders of Series A Shares wish to tender Series A Shares, but it is
impracticable for them to forward their certificates evidencing Series A Shares
or other required documents to the Depositary prior to the Expiration Date or to
comply with the procedures for book-entry transfer on a timely basis, a tender
may be effected by following the guaranteed delivery procedures specified in
Section 3 of the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
undersigned, as Information Agent, at the address and telephone number set forth
below and on the back cover of the Offer to Purchase.
Very truly yours,
ChaseMellon Consulting Services,
L.L.C.
as Information Agent
450 West 33rd Street
14th Floor
New York, New York 10001
Telephone: (888) 566-9474
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE PURCHASERS, THE COMPANY, THE INFORMATION
AGENT, THE DEPOSITARY OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY
OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE
STATEMENTS CONTAINED THEREIN.
-2-
<PAGE> 1
OFFER TO PURCHASE FOR CASH
UP TO 10,678,792 OUTSTANDING SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
AT
$0.655 NET PER SHARE
BY
WILLIAM LYON
AND
WILLIAM H. LYON
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 5, 1999, UNLESS THE OFFER IS EXTENDED.
WILLIAM LYON AND WILLIAM H. LYON (COLLECTIVELY, THE "PURCHASERS") HAVE AGREED,
UNDER CERTAIN CIRCUMSTANCES AND SUBJECT TO THE TERMS AND CONDITIONS OF THE
OFFER, TO EXTEND THE OFFER FROM TIME TO TIME UNTIL THE CLOSING OF THE
ACQUISITION (AS DEFINED IN THE OFFER TO PURCHASE).
October 7, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated October 7,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the offer by William Lyon, an individual, and William H. Lyon, an individual
(together, the "Purchasers"), to purchase up to 10,678,792 outstanding shares
(subject to adjustment as described in the Offer to Purchase) of Series A Common
Stock, par value $.01 per share (the "Series A Shares"), of The Presley
Companies, a Delaware corporation (the "Company"), at a price of $0.655 per
Series A Share, net to the tendering stockholder in cash, without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase. THIS MATERIAL IS BEING SENT TO YOU AS THE
BENEFICIAL OWNER OF SERIES A SHARES HELD BY US FOR YOUR ACCOUNT BUT NOT
REGISTERED IN YOUR NAME. A TENDER OF SUCH SERIES A SHARES CAN BE MADE ONLY BY US
AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SERIES A SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Series A Shares held by us for your account, upon the
terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer is being made for up to 10,678,792 outstanding Series A
Shares (subject to adjustment as described in the Offer to Purchase). In
the event that more than 10,678,972 Series A Shares are validly tendered
and not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Purchasers will accept for payment, and thereby purchase,
Series A Shares on a pro rata basis (adjusted downward to avoid acceptance
for payment of fractional shares) upon the terms and subject to the
conditions of the Offer.
2. The Offer Price is $0.655 per Series A Share, net to the tendering
stockholder in cash, without interest thereon.
<PAGE> 2
3. The Offer, proration period and withdrawal rights will expire at
12:00 midnight, New York City time, on Friday, November 5, 1999, unless the
Offer is extended. The Purchasers have agreed, under certain circumstances
and subject to the terms and conditions of the Offer, to extend the Offer
from time to time until the closing of the Acquisition (as defined in the
Offer to Purchase).
4. The Offer is being made as part of a series of transactions that
are expected to result in (a) the acquisition by Presley Homes, a
California corporation ("Presley Homes") and a wholly owned subsidiary of
the Company, of substantially all of the real estate and related assets and
liabilities of William Lyon Homes, Inc. ("WLHI"), a California corporation
owned by the Purchasers, (b) the purchase by the Purchasers of outstanding
Series A Shares pursuant to the Offer and the purchase by WLHI (or one or
more of its affiliates) of outstanding shares of the Company's Series B
Common Stock ("Series B Shares") pursuant to the Series B Stock Purchase
Agreements, each as described in the Offer to Purchase, such that following
such purchases, the Purchasers and their affiliates own up to 49.9% of the
outstanding Common Stock of the Company, and (c) the merger of the Company
with and into Presley Merger Sub, Inc., a newly-formed Delaware corporation
and a wholly owned subsidiary of the Company (the "Merger").
5. The Offer is conditioned upon, among other things, (a) there being
validly tendered and not withdrawn, prior to the expiration of the Offer,
at least 1,989,180 Series A Shares, subject to adjustment as described in
the Offer to Purchase (the "Minimum Condition"), (b) WLHI (or one or more
of its affiliates) continuing to have, as of the expiration of the Offer,
the legally enforceable right to purchase Series B Shares pursuant to each
of the Series B Stock Purchase Agreements, (c) the consummation of the
Acquisition pursuant to the Purchase Agreement (as defined in the Offer to
Purchase), and (d) approval of the Merger by holders of a majority of the
outstanding Series A Shares and Series B Shares voting together as a single
class.
6. A Special Committee of independent members of the Board of
Directors of the Company has unanimously determined that the Purchase
Agreement and the transactions contemplated thereby are fair to and in the
best interests of the Company and its stockholders, and in furtherance of
the transactions contemplated by the Purchase Agreement, has recommended
that holders of Series A Shares (other than the Purchasers and certain
holders of Series B Shares) accept the Offer and tender their Series A
Shares pursuant to the Offer; provided, however, that such holders of
Series A Shares should consult with their financial and tax advisors prior
to tendering their Series A Shares in the Offer.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Series A Shares by the
Purchaser pursuant to the Offer.
Payment for Series A Shares purchased pursuant to the Offer will in all
cases be made only after timely receipt by ChaseMellon Shareholder Services,
L.L.C. (the "Depositary") of (a) Series A Share certificates or timely
confirmation of the book-entry transfer of such Series A Shares into the account
maintained by the Depositary at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (b) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined in the Offer) in connection with a book-entry
delivery, and (c) any other documents required by the Letter of Transmittal.
Accordingly, payment may not be made to all tendering stockholders at the same
time depending upon when certificates for or confirmations of book-entry
transfer of such Series A Shares into the Depositary's account at the Book-Entry
Transfer Facility are actually received by the Depositary.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Series A Shares in any jurisdiction in which the
making of the Offer or the acceptance thereof would not be in compliance with
the securities, blue sky or other laws of such jurisdiction.
-2-
<PAGE> 3
If you wish to have us tender any or all of your Series A Shares, please so
instruct us by completing, executing and returning to us the instruction form
contained in this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize the tender of your Series A Shares, all such
Series A Shares will be tendered unless otherwise specified on the instruction
form contained in this letter. Your instructions should be forwarded to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
-3-
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
UP TO 10,678,792 OUTSTANDING SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 7, 1999 and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the offer by William Lyon and William H. Lyon (together, the
"Purchasers") to purchase up to 10,678,792 outstanding shares of Series A Common
Stock, par value $.01 per share (the "Series A Shares"), of The Presley
Companies, a Delaware corporation, at a price equal to $0.655 per Series A
Share, net to the tendering stockholder in cash.
This will instruct you to tender to the Purchasers the number of Series A
Shares indicated below (or, if no number is indicated below, all Series A
Shares) held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
Number of Series A Shares to be Tendered*:
- ------------------------------------------------------------
Dated: ______________________________, 1999
SIGN HERE
Signature(s):
- --------------------------------------------------------------------------------
Print or Type Name(s):
- --------------------------------------------------------------------------------
Print or Type Address(es):
- -------------------------------------------------------------------------------
Area Code and Telephone Number(s):
- ------------------------------------------------------------------
Taxpayer Identification or Social Security Number(s):
- -------------------------------------------------
[ ] Indicate in this box the order (by certificate number) in which Series A
Shares are to be purchased in event of proration. (Attach additional list if
necessary)**
See Instruction 8 to the Letter of Transmittal.
Shares: 1st:________ 2nd:________ 3rd:________ 4th:________ 5th:________
- ---------------
* Unless otherwise indicated, it will be assumed that all Series A Shares held
by us for your account are to be tendered.
** If you do not designate an order, in the event that less than all the Series
A Shares tendered are purchased due to proration, Series A Shares will be
selected for purchase by the Depositary. See Instruction 8 to the Letter of
Transmittal.
-4-
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. Social security numbers and IRS individual taxpayer identification
numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer
identification numbers have nine digits separated by only one hyphen: i.e.
00-0000000. The table below will help determine the number to give the payer.
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- -----------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account, or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a minor The minor(2)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
5. Sole proprietorship account The owner(3)
- -----------------------------------------------------------
- -----------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- -----------------------------------------------------------
6. A valid trust, estate, or Legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(4)
7. Corporate account The corporation
8. Association, club, The organization
religious, charitable,
educational or other
tax-exempt organization
9. Partnership account The partnership
10. A broker or registered The broker or nominee
nominee
11. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district, or prison)
that receives agricultural
program payments
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Card, Form W-7,
Application for IRS Individual Taxpayer Identification Number, or Form SS-4,
Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding include the following:
- An organization exempt from tax under section 501 (a) of the Internal
Revenue Code (the "Code"), or an individual retirement account, or a
custodial account under Code section 403(b)(7) if the account satisfies the
requirements of Code section 401(f)(2).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
Other payees that MAY BE EXEMPT from backup withholding include:
- A corporation.
- A financial institution.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A trust exempt from tax under section 664 or described in section 4947 of
the Code.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM, AND RETURN IT TO THE PAYER.
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payments of dividends and patronage dividends that generally are exempt from
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under Code section
1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Code section 404(k) payments made by an ESOP.
Payments of interest that generally are exempt from backup withholding include
the following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
Code section 852).
- Payments described in Code section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under Code section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return. The
IRS may also provide this information to the Department of Justice for civil and
criminal litigation and to cities, States and the District of Columbia to carry
out their tax laws. Payers must be given the numbers whether or not recipients
are required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonments.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
This announcement is not an offer to purchase or a solicitation of an offer to
sell Series A Shares. The Offer is made solely by the Offer to Purchase and the
related Letter of Transmittal and is not being made to (nor will tenders be
accepted from or on behalf of) holders of Series A Shares in any jurisdiction
in which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. In any jurisdiction in which the
applicable laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchasers by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
UP TO 10,678,792 SHARES OF SERIES A COMMON STOCK
OF
THE PRESLEY COMPANIES
AT
$0.655 NET PER SHARE
BY
WILLIAM LYON
AND
WILLIAM H. LYON
William Lyon and William H. Lyon (together, the "Purchasers") hereby
offer to purchase up to an aggregate of 10,678,792 shares (subject to
adjustment) of the outstanding Series A Common Stock, $0.01 par value per share
(the "Series A Shares"), of The Presley Companies, a Delaware corporation (the
"Company"), at a price of $0.655 per Series A Share, net to the tendering
stockholder in cash, without interest thereon (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
October 7, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, as extended or amended from time to time, together
constitute the "Offer"). The Purchasers have commenced the Offer pursuant to
the terms of the Purchase Agreement (as defined below) for the purpose of
acquiring such number of Series A Shares as will enable the Purchasers and
their respective affiliates to own up to 49.9% of the outstanding Common Stock
of the Company and to enable the Acquisition and the Merger (as such terms are
defined below) to be consummated.
----------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 5, 1999, UNLESS THE
OFFER IS EXTENDED.
----------------------------------------------------------------------
The Offer is being made pursuant to the Purchase Agreement and Escrow
Instructions dated as of October 7, 1999 (the "Purchase Agreement"), by and
among William Lyon Homes, Inc., a California corporation owned by the
Purchasers ("WLHI"), the Purchasers, the Company and Presley Homes, a
California corporation and a wholly owned subsidiary of the Company ("Presley
Homes"). The Purchase Agreement provides for, among other things, the
acquisition by Presley Homes of substantially all of the real estate and
related assets of WLHI for the cash purchase price of $48,000,000 (subject to
adjustment), together with the assumption of substantially all liabilities of
WLHI (the "Acquisition"). The Purchase Agreement also contemplates that (a) the
Company will be merged with and into Presley Merger Sub, Inc., a newly-formed
Delaware corporation and a wholly owned subsidiary of the Company (the
"Merger"), and (b) WLHI (or one of more of its affiliates) will consummate the
purchase of up to 15,566,837 shares of the Company's Series B Common Stock,
$0.01 par value per share (the "Series B Shares"), pursuant to separate Stock
Purchase and Sale Agreements (the "Series B Stock Purchase Agreements") between
WLHI and each of GS Credit Partners, L.P., ING (U.S.) Capital, LLC, and The
Chase Manhattan Bank, as Trustee for First Plaza Group Trust (collectively, the
"Series B Stockholders"). Each Series B Share is convertible into one Series A
Share.
A SPECIAL COMMITTEE OF INDEPENDENT MEMBERS OF THE BOARD OF DIRECTORS OF
THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE PURCHASE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS, AND IN FURTHERANCE OF THE TRANSACTIONS
CONTEMPLATED BY THE PURCHASE AGREEMENT, HAS RECOMMENDED THAT HOLDERS OF SERIES
A SHARES (OTHER THAN THE PURCHASERS AND THE SERIES B STOCKHOLDERS) ACCEPT THE
OFFER AND TENDER THEIR SERIES A SHARES PURSUANT TO THE OFFER; PROVIDED,
HOWEVER, THAT SUCH HOLDERS OF SERIES A SHARES ARE ADVISED TO CONSULT WITH THEIR
FINANCIAL AND TAX ADVISORS PRIOR TO TENDERING THEIR SERIES A SHARES IN THE
OFFER.
<PAGE> 2
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW)
OF THE OFFER AT LEAST 1,989,180 SERIES A SHARES, SUBJECT TO ADJUSTMENT AS
DESCRIBED IN THE OFFER TO PURCHASE (THE "MINIMUM CONDITION"), (ii) WLHI (OR ONE
OR MORE OF ITS AFFILIATES) CONTINUING TO HAVE, AS OF THE EXPIRATION DATE, THE
LEGALLY ENFORCEABLE RIGHT TO PURCHASE SERIES B SHARES PURSUANT TO EACH OF THE
SERIES B STOCK PURCHASE AGREEMENTS, (iii) THE CONSUMMATION OF THE ACQUISITION,
AND (iv) APPROVAL OF THE MERGER BY HOLDERS OF A MAJORITY OF THE OUTSTANDING
SERIES A SHARES AND SERIES B SHARES VOTING TOGETHER AS A SINGLE CLASS. THE OFFER
IS ALSO CONDITIONED ON OTHER TERMS AND CONDITIONS CONTAINED IN THE OFFER TO
PURCHASE. SEE SECTIONS 1 AND 14 OF THE OFFER TO PURCHASE.
If any condition to the Offer is not satisfied as of the Expiration Date
of the Offer, the Purchasers may, subject to the terms of the Purchase
Agreement, (i) terminate the Offer and return all tendered Series A Shares to
tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights
as set forth in Section 4 of the Offer to Purchase, retain all such tendered
Series A Shares until the Expiration Date of the Offer as so extended, (iii)
other than as described in Section 14 of the Offer to Purchase, waive such
condition and, subject to any requirement to extend the period of time during
which the Offer is open, purchase all Series A Shares validly tendered and not
withdrawn as of the Expiration Date, or (iv) delay acceptance for payment of
(whether or not Series A Shares have theretofore been accepted for payment), or
payment for, any Series A Shares tendered and not withdrawn, subject to
applicable law, until satisfaction or waiver of the conditions to the Offer.
Notwithstanding the foregoing, upon consummation of the Acquisition in
accordance with the terms of the Purchase Agreement all of the conditions to
the offer shall be deemed to have been satisfied (other than the condition that
there be no action, legislation, regulation, ruling or judgment instituted or
pending which would make illegal or otherwise prohibit consummation of the
Offer, the Merger or the purchase by WLHI of the Series B Shares as
contemplated under the Purchase Agreement and the Series B Stock Purchase
Agreements, or impose a limitation on the ability of the Purchasers to acquire,
hold or vote shares of Common Stock of the Company, or require divestiture by
the Purchasers or their respective affiliates of shares of Common Stock or
divestiture by the Company of any material portion of its business or assets
taken as a whole). In the Purchase Agreement, the Purchasers have agreed,
subject to the conditions in Section 14 of the Offer to Purchase and their
rights under the Offer, to accept for payment and pay for Series A Shares
tendered pursuant to the Offer as soon as the Purchasers are legally permitted
to do so under applicable law.
The Purchasers have agreed that if, after receiving the advice of counsel,
the Company determines that the consummation of the Offer and/or the purchases
by WLHI (or one or more of its affiliates) of Series B Shares under the Series B
Stock Purchase Agreements would result in an "ownership change" of the Company
for federal tax purposes or other adverse tax consequences to the Company, the
Purchasers will reduce the number of Series A Shares sought pursuant to the
Offer (but not below the number of Series A Shares required to satisfy the
Minimum Condition) to avoid such "ownership change" or other adverse federal
tax consequence.
The term Expiration Date means 12:00 midnight, New York City time, on
Friday, November 5, 1999 (the "Initial Expiration Date"), unless and until the
Purchasers, as provided below, shall have extended the period of time for which
the Offer is open, in which event the term "Expiration Date" means the latest
time and date at which the Offer as so extended by the Purchasers, shall
expire. Pursuant to the Purchase Agreement, the Purchasers, subject to the
terms and conditions of the Offer, have agreed to extend the period of time
during which the Offer is open if, on the Initial Expiration Date, (i) the
Minimum Condition shall not have been satisfied or waived by the Purchasers, or
(ii) the Acquisition shall not have been consummated or the stockholders of the
Company shall not have approved the Merger due to delays in (a) obtaining
necessary governmental or regulatory approvals of, or necessary third party
consents to, either of the Acquisition or the Merger, or (b) obtaining the
financing required to satisfy the conditions to the Acquisition, or (c)
obtaining the release of WLHI from certain performance bonds, guarantees and
other obligations as set forth in the Purchase Agreement. Under such
circumstances, the Purchasers have agreed to extend the Expiration Date of the
Offer from time to time and for such number of business days as may be
necessary to allow for such conditions to be satisfied and for the closing of
the Offer to be substantially coterminous with the closing of the Acquisition;
provided, however, that in no event shall the Purchasers be obligated to extend
the expiration of the Offer beyond November 30, 1999 (or thirty calendar days
thereafter in the event that the closing of the Acquisition or the stockholder
vote upon the Merger is delayed due to further delays in the process of
obtaining necessary governmental or regulatory approvals). The Purchasers
expressly reserve the right to decrease or waive the Minimum Condition and
otherwise to amend the terms and conditions of the Offer; provided that,
without the written consent of the Company, no amendment may be made which (1)
decreases the Offer Price, (2) decreases the number of Series A Shares sought,
or (3) amends the terms of the Offer in any manner adverse to the holders of
Series A Shares.
If the Purchasers extend the Offer, or if the Purchasers (whether before or
after their acceptance for payment of Series A Shares) are delayed in their
purchase of or payment for Series A Shares or are unable to pay for Series A
Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchasers' rights under the Offer, the Depositary may retain tendered Series A
Shares on behalf of the Purchasers, and such Series A Shares may not be
withdrawn except to the
<PAGE> 3
extent tendering stockholders are entitled to withdrawal rights as described in
Section 4 of the Offer to Purchase. The ability of the Purchasers to delay the
payment for Series A Shares which the Purchasers have accepted for payment is,
however, limited to Rule 14e-1(c) under the Exchange Act, which requires that a
bidder pay the consideration offered or return the securities deposited by or on
behalf of holders of securities promptly after the termination or withdrawal of
the bidder's offer.
For purposes of the Offer, the Purchasers will be deemed to have accepted
for payment, and thereby purchased, Series A Shares validly tendered and not
withdrawn as, if, and when the Purchasers give oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary"), of the Purchasers'
acceptance of such Series A Shares for payment. Upon the terms and subject to
the conditions of the Offer, payment for Series A Shares accepted for payment
pursuant to the Offer will be made by deposit of the aggregate purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from the Purchasers and transmitting
payment to such tendering stockholders. In all cases, payment for Series A
Shares purchased pursuant to the Offer will be made only after timely receipt by
the Depositary of (i) the certificates evidencing such Series A Shares (the
"Share Certificates"), or timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Series A Shares, if such procedure is
available into the Depositary's account at The Depository Trust Company
("Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3 of the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase), and (iii) any other documents required by the
Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE
PRICE FOR SERIES A SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
If more than 10,678,792 Series A Shares have been validly tendered and not
withdrawn as of the Expiration Date, the Purchasers will accept for payment and
purchase Series A Shares from tendering stockholders on a pro rata basis, which
calculation will be adjusted downward to avoid acceptance for payment of
fractional shares. Proration for each stockholder tendering Series A Shares
will be based on the ratio of the number of Series A Shares tendered by each
stockholder to the total number of Series A Shares validly tendered and not
properly withdrawn. Tendering stockholders may designate in the Letter of
Transmittal the order in which their Series A Shares are to be purchased if
proration is required. If the stockholder does not designate an order in the
Letter of Transmittal, Series A Shares will be selected for purchase by the
Depositary. In the event that proration is required, the Purchasers will
announce the final results of proration as soon as practicable, but in no event
later than five business days following the Expiration Date. The Purchasers
will not pay for any Series A Shares tendered until after the final proration
factor has been determined.
Series A Shares tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date, and, unless theretofore accepted for payment by
the Purchasers pursuant to the Offer, may also be withdrawn at any time after
December 5, 1999, or at such later time as may apply if the Offer is extended.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of the Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Series A Shares to be withdrawn, the number of Series A Shares to be withdrawn
and the name of the registered holder, if different from that of the person who
tendered such Series A Shares. If Share Certificates evidencing Series A Shares
to be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the release of such Share Certificates, the serial numbers shown
on such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Series A Shares have been tendered for the account of
an Eligible Institution. If Series A Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Series A Shares.
Any Series A Shares properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn Series
A Shares may be re-tendered at any time prior to the Expiration Date by
following one of the procedures described in Section 3 of the Offer to Purchase.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rules 14d-4(c) and
14e-1(d) under the Exchange Act.
The information required to be disclosed by paragraph 14d-6(e)(1)(vii)
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
The Company has provided to the Purchasers a list containing the names and
addresses of the record holders of Series A Shares and lists of securities
positions of Series A Shares held in stock depositories for the purpose of
disseminating
<PAGE> 4
the Offer to stockholders of the Company. This Offer to Purchase and the related
Letter of Transmittal and other relevant materials will be mailed to record
holders of Series A Shares and will be furnished to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Series A Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. IN ADDITION, RECORD HOLDERS OF SERIES A SHARES AS OF
SEPTEMBER 15, 1999 WILL BE RECEIVING BY MAIL PROXY MATERIALS PREPARED BY THE
COMPANY AND CONTAINING IMPORTANT FINANCIAL AND OTHER INFORMATION RELATING TO THE
MERGER AND THE ACQUISITION. HOLDERS OF SERIES A SHARES SHOULD LIKEWISE REVIEW
THESE PROXY MATERIALS CAREFULLY BEFORE MAKING ANY DECISION WITH RESPECT TO THE
OFFER.
Any questions or requests for assistance or for copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent as set forth below, and copies will be
furnished promptly at the Purchasers' expense. No fees or commissions will be
payable to brokers, dealers or other persons (other than the Information Agent
and the Depository) for soliciting tenders of Series A Shares pursuant to the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO OF CHASEMELLON CONSULTING SERVICES, L.L.C.]
ChaseMellon Consulting Services, L.L.C.
450 West 33rd Street, 14th Floor
New York, New York 10001
Banks and Brokers, please call: (212) 273-8083
All others call toll-free: (888) 566-9474
October 7, 1999
<PAGE> 1
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
DATED AS OF OCTOBER 7, 1999
BY AND AMONG
WILLIAM LYON HOMES, INC., A CALIFORNIA CORPORATION,
WILLIAM LYON, AN INDIVIDUAL,
WILLIAM H. LYON, AN INDIVIDUAL,
PRESLEY HOMES, A CALIFORNIA CORPORATION,
AND
THE PRESLEY COMPANIES, A DELAWARE CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<C> <C>
1. Purchase and Sale...................................................................2
1.1 Seller's Assets..............................................................2
1.2 Partnership Assets...........................................................4
2. Assets Excluded from Purchase.......................................................5
3. Purchase Price, Adjustments and Allocation..........................................6
3.1 Purchase Price...............................................................6
3.2 Adjustment to Purchase Price.................................................6
3.3 Allocation of Purchase Price; Tax Filings...................................10
4. Assumption of Liabilities..........................................................10
4.1 Contracts...................................................................10
4.2 Accounts Payable and Accrued Liabilities....................................11
4.3 Employee Obligations........................................................11
5. Liabilities Not Assumed............................................................11
6. Opening of Escrow..................................................................12
7. Close of Escrow....................................................................12
8. Title Report.......................................................................13
9. The Series A Offer.................................................................13
9.1 Commencement and Conditions.................................................13
9.2 Satisfaction of Conditions..................................................14
9.3 Lyon SEC Filings............................................................14
9.4 Presley-Del.'s Actions With Respect to the Series A Offer...................15
9.5 Over- or Under-Subscription of Offer........................................16
9.6 Successors in Interest to Lyons.............................................17
10. Presley-Del./New Presley Merger and Other Matters..................................17
11. Representations and Warranties of Seller...........................................18
11.1 Good Standing...............................................................18
11.2 Power.......................................................................19
11.3 Requisite Action............................................................19
11.4 Authority...................................................................19
11.5 Binding Agreements..........................................................19
11.6 Partnership and Membership Interests in Real Property.......................19
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
11.7 Income Tax Information......................................................19
11.8 Condition of Personal Property Assets.......................................19
11.9 Financial Statements; Contingencies; Conduct of Business Since
December 31, 1998...........................................................20
11.10 Contracts...................................................................20
11.11 Zoning......................................................................20
11.12 Governmental Notices........................................................21
11.13 Undisclosed Defects.........................................................21
11.14 No Unrecorded Interests.....................................................21
11.15 Real Property in Compliance.................................................21
11.16 Public Improvements.........................................................21
11.17 No Other Agreements.........................................................21
11.18 Litigation..................................................................22
11.19 Environmental Matters.......................................................22
11.20 Endangered or Threatened Species............................................23
11.21 Accounts Receivable.........................................................23
11.22 Employment Contracts and Benefits...........................................24
11.23 Insurance Policies..........................................................25
11.24 Authority and Consents......................................................25
11.25 Plant Closing...............................................................26
11.26 No Brokers or Finders.......................................................26
11.27 Knowledge Convention........................................................26
12. Representations and Warranties of Buyer and Presley-Del............................26
12.1 Power.......................................................................26
12.2 Requisite Action............................................................26
12.3 Authority...................................................................26
12.4 No Conflicts................................................................26
12.5 No Brokers or Finders.......................................................26
12.6 Legal Proceedings...........................................................27
12.7 Plant Closing...............................................................27
13. Survival of Representations and Warranties; Indemnity..............................27
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
13.1 Survival of Representations and Warranties..................................27
13.2 Seller's Indemnity Obligation...............................................27
13.3 Buyer's and Presley-Del.'s Indemnity Obligation.............................28
13.4 Notice......................................................................28
14. Seller's Obligations Before Closing................................................28
14.1 Buyer's Access to Premises and Information..................................28
14.2 Conduct of Business in Normal Course........................................29
14.3 Preservation of Real Property and Operations................................29
14.4 Maintenance of Insurance....................................................29
14.5 Maintenance of Intangibles..................................................29
14.6 Employees and Compensation..................................................29
14.7 Other Transactions..........................................................29
14.8 Notification of Certain Matters.............................................29
14.9 Permits and Approvals; Third Party Consents.................................30
14.10 Supplements to Schedules....................................................30
14.11 Financing...................................................................30
15. Presley-Del.'s and Buyer's Obligations Before Closing..............................30
15.1 Cooperation in Securing Consents of Third Parties...........................30
15.2 Resale Certificate..........................................................30
15.3 Conduct of Business in Normal Course........................................30
15.4 Financing...................................................................30
15.5 Notification of Certain Matters.............................................31
16. Conditions Precedent to Presley-Del.'s and Buyer's Performance.....................31
16.1 Accuracy of Seller's Representations and Warranties; Satisfaction of
Covenants...................................................................31
16.2 Regulatory Approvals and Other Consents.....................................31
16.3 No Material Adverse Change..................................................31
16.4 Opinion of Seller's Counsel.................................................32
16.5 Absence of Litigation.......................................................33
16.6 Title Policy................................................................33
16.7 Assignment of Real Property Documents.......................................33
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
16.8 Solvency Opinion............................................................33
16.9 Financing...................................................................34
16.10 No "Ownership Change".......................................................34
16.11 Series A Offer..............................................................34
16.12 Presley-Del. Stockholder Approval...........................................34
16.13 Series B Purchase Agreements................................................34
16.14 Cancellation of Lyon Stock Options..........................................34
17. Conditions Precedent to Seller's Performance.......................................34
17.1 Accuracy of Buyer's and Presley-Del.'s Warranties...........................34
17.2 Regulatory Approvals and Other Consents.....................................35
17.3 Opinion of Buyer's and Presley-Del.'s Counsel...............................35
17.4 Absence of Litigation.......................................................36
17.5 Series A Offer..............................................................36
17.6 Presley-Del. Stockholder Approval...........................................36
17.7 Release of Seller From Certain Assumed Liabilities..........................36
17.8 Series B Purchase Agreements................................................36
17.9 No "Ownership Change".......................................................36
18. The Parties' Obligations after Closing.............................................37
18.1 Employee Matters............................................................37
18.2 WARN Act....................................................................37
18.3 Maintenance of Seller's Corporate Existence; Tangible Net Worth.............37
18.4 Corporate Governance........................................................37
18.5 Further Agreements..........................................................38
18.6 Post Closing Obligations....................................................39
18.7 Management of Certain Excluded Projects Following the Closing...............39
19. Escrow Closing Obligations.........................................................39
19.1 Deliveries by Seller to Escrow Holder.......................................39
19.2 Deliveries by Buyer to Escrow Holders.......................................41
19.3 Disbursements and Other Actions by Escrow Holder............................41
20. Escrow Cancellation................................................................42
20.1 Charges.....................................................................42
</TABLE>
-iv-
<PAGE> 6
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
21. Escrow Costs; Taxes and Assessments................................................42
21.1 Escrow and Other Costs......................................................42
21.2 Real Property Taxes and Assessments.........................................43
21.3 Supplemental Real Property Taxes............................................43
21.4 Other Taxes.................................................................43
22. Condemnation and Destruction.......................................................43
22.1 Condemnation................................................................43
22.2 Fire or Other Casualty During Escrow........................................44
23. Waiver and Consent.................................................................44
24. Miscellaneous......................................................................44
24.1 Successors and Assigns......................................................44
24.2 Expenses....................................................................44
24.3 Attorney's Fees.............................................................45
24.4 Notices.....................................................................45
24.5 Gender and Name.............................................................46
24.6 Entire Agreement............................................................46
24.7 Captions....................................................................47
24.8 Time of Essence.............................................................47
24.9 Governing Law...............................................................47
24.10 Invalidity of Provision.....................................................47
24.11 Amendments..................................................................47
24.12 Counterparts................................................................47
24.13 Schedules and Exhibits......................................................47
24.14 Time References.............................................................47
24.15 Construction of Agreement...................................................47
24.16 No Recording Without Consent................................................47
24.17 Parties in Interest.........................................................48
24.18 Specific Performance and Waiver of Rescission Rights........................48
25. Termination Events.................................................................48
26. Effect of Termination..............................................................49
27. No Solicitation....................................................................49
</TABLE>
-v-
<PAGE> 7
LIST OF SCHEDULES*
Schedule 1.1(a) - Seller's Real Property
Schedule 1.1(c)(iii) - Seller's Intangible Property
Schedule 1.1(c)(vi) - Other Assets
Schedule 1.2 - The Partnerships
Schedule 1.2(a) - Partnership Real Property
Schedule 1.2(c)(iii) - Partnership Intangible Property
Schedule 1.2(c)(vi) - Other Partnership Assets
Schedule 2.6 - Excluded Assets
Schedule 4.1 - Specified Contracts
Schedule 5.9 - Excluded Liabilities
Schedule 11.10 - Conflicts with Contracts
Schedule 11.24 - Consents, Waivers and Releases
Schedule 12.4 - Presley Conflicts
Schedule 17.7 - Releases from Third Parties
Schedule 19.1(b) - Properties Under Option or Contract
EXHIBITS*
Exhibit A - Escrow Holder's General Provisions
Exhibit B - Conditions to Series A Offer
Exhibit C - Form of Certificates of Ownership and Merger
Exhibit D - Form of Seller's Affidavit
Exhibit E - Form of Cancellation of Lyon Stock Options
Exhibit F - Form of Seller Grant Deeds
Exhibit G - Form of Assignment of Plans and Warranties
Exhibit H - Form of Bill of Sale
Exhibit I - Form of Assignment of Other Assets
Exhibit J - Form of Assignment and Assumption of Leaseholds
Exhibit K - Form of Assignment and Assumption Agreement
- -----------
* Except for Exhibit B to the Purchase Agreement and Escrow Instructions, the
Schedules and Exhibits are not filed herewith. The Filer hereby agrees to
furnish supplementally a copy of any omitted Schedule or Exhibit upon the
request of the Commission.
-vi-
<PAGE> 8
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
To: First American Title Insurance Company
114 East Fifth Street
Santa Ana, California 91701
Escrow Officer: Toni Rice-Groetch
Telephone: (714) 558-3211
Telecopier: (714) 647-2139 Escrow No.: N991215G
THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement") is made
and entered into as of October 7, 1999, and constitutes an agreement by and
among WILLIAM LYON HOMES, INC., a California corporation ("Seller"), WILLIAM
LYON, an individual, WILLIAM H. LYON, an individual (William Lyon and William H.
Lyon are collectively referred to herein as the "Lyons"), PRESLEY HOMES, a
California corporation ("Buyer"), and THE PRESLEY COMPANIES, a Delaware
corporation ("Presley-Del."). This Agreement also constitutes escrow
instructions of Buyer, Seller and Presley-Del. to First American Title Insurance
Company, 114 East Fifth Street, Santa Ana, California 91701 ("Escrow Holder")
for its Escrow No. N991215G. Seller, the Lyons, Buyer and Presley-Del. are
hereinafter collectively referred to as the "Parties," and each individually as
a "Party."
RECITALS:
WHEREAS, Seller is engaged in the business of residential development in
the State of California; and
WHEREAS, Buyer desires to purchase, and Seller desires to sell,
substantially all of Seller's real estate assets and certain other assets of
Seller related thereto for a cash purchase price of $48 million (subject to
adjustment as provided herein) and the assumption by Buyer of substantially all
of the liabilities of Seller relating to such assets, all as provided for herein
(such purchase and assumption being referred to herein as the "Acquisition");
and
WHEREAS, Seller has entered into separate Stock Purchase and Sale
Agreements dated as of July 6, 1999 (collectively, the "Series B Purchase
Agreements") with each of GS Credit Partners, L.P., ING (U.S.) Capital, L.L.C.,
and The Chase Manhattan Bank, as Trustee for First Plaza Group Trust
(collectively, the "Series B Shareholders"), which provide for the purchase by
Seller from the Series B Shareholders of an aggregate of 9,434,813 shares
(subject to adjustment as provided therein) of Series B Common Stock of
Presley-Del. for a cash price of $0.655 per share (such transactions being
referred to herein collectively as the "Series B Purchases"); and
WHEREAS, the Lyons propose to purchase a number of the issued and
outstanding shares of Presley-Del. Series A Common Stock, par value $.01 per
share (the "Series A Common Stock"), such that, after such purchase (and after
giving effect to the Series B Purchases and to the disposition by the Lyons on
August 13, 1999 of an aggregate of 3,000,000 shares of Series A Common Stock of
Presley-Del.), the Lyons and their affiliates would own approximately 49% (but
not more than 49.9%) of the outstanding Common Stock of Presley-Del; and
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<PAGE> 9
WHEREAS, in furtherance thereof, the Lyons propose to make a cash tender
offer (the "Series A Offer") to acquire, for a purchase price of $0.655 per
share, 10,678,792 shares (subject to adjustment as provided herein) of Series A
Common Stock.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the Parties hereby
agree, and Escrow Holder is instructed, as follows.
1. Purchase and Sale.
1.1 Seller's Assets. Subject to the terms and conditions set forth in
this Agreement, on the Closing Date (as hereinafter defined), Seller will sell,
convey, transfer, assign, and deliver to Buyer or to Buyer's Permitted Assigns
(as hereinafter defined), as applicable, and Buyer or Buyer's Permitted Assigns,
as applicable, will purchase and accept delivery from Seller of the following
assets of Seller:
(a) Real Property. All of Seller's rights, title and interest in
and to all of that certain real property located in the State of
California and more particularly described on Schedule 1.1(a) attached
hereto (collectively, "Seller's Real Property"), inclusive of (i) any
and all buildings, structures, fixtures and improvements located on or
in Seller's Real Property, and (ii) all of Seller's rights, privileges
and easements appurtenant to or used in connection with any of Seller's
Real Property and/or any of the improvements, buildings, structures or
fixtures located therein or thereon, including, without limitation, all
minerals, oil, gas and other hydrocarbon substances, all development
rights, all entitlement rights, air rights, water, water rights and
water stock relating to any of Seller's Real Property, all strips and
gores, all of Seller's rights, title and interest in and to any streets,
alleys, easements, rights-of-way, public ways, and all other rights of
Seller appurtenant, adjacent or connected to any of Seller's Real
Property, but exclusive of any parcels and improvements included in
Seller's Real Property which are sold by Seller prior to the Closing in
the ordinary course of Seller's business.
(b) Personal Property. All supplies, materials, work in process,
equipment, machinery, furniture, fixtures, motor vehicles, claims and
rights under leases (as lessor or lessee), contracts, notes, evidences
of indebtedness, purchase and sales orders, copyrights, service marks,
trademarks, trade names, trade secrets, licenses and permits (to the
extent transferable) and deposits (collectively, "Personal Property
Assets") that are owned, leased or licensed by Seller and used in
connection with or relate to the development, marketing or sale of
Seller's Real Property ("Seller's Personal Property").
(c) Other Seller Assets.
(i) All receivables, escrow and other proceeds, purchase
deposits, cash, real estate assets (including improvements) and other
assets
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<PAGE> 10
(inclusive of any interest or other amounts earned thereon) of
Seller existing as of the Closing Date and which were earned, acquired
or generated by Seller in the conduct of its real estate development
business, including without limitation those arising out of or relating
to any of the following:
(A) sales, transfers, assignments or other dispositions of
real property and related assets, improvements and other rights
by Seller between January 1, 1999 and the Closing Date, including
without limitation, sales, transfers, assignments or other
dispositions of any portion of Seller's Real Property, Seller's
Personal Property or Seller's interests in the Partnerships (as
defined in Section 1.2 hereof) in the ordinary course of business
after the date hereof and prior to the Closing Date;
(B) purchases or other investments in real estate
development and related assets after the date hereof and prior to
the Closing Date; and
(C) Seller's right to receive capital, profits, assets,
allocations, returns (whether preferred or not), distributions,
fees or other payments from any of the Partnerships (as defined
in Section 1.2 hereof) between January 1, 1999 and the Closing
Date.
(ii) All accruals and cash reserves of Seller in respect of or
relating to any of the Assumed Liabilities (as defined in Section 5
below).
(iii) All of Seller's right, title and interest in and to the
intangible property identified on Schedule 1.1(c)(iii).
(iv) All sales data, customer lists, mailing lists, supplier and
contractor lists, and marketing and advertising materials relating to
the marketing and sale of Seller's Real Property.
(v) All of Seller's rights under the Contracts (as defined in
Section 4.1 hereof).
(vi) All other assets of Seller identified on Schedule
1.1(c)(vi).
(vii) All of Seller's books and records relating to any of
Seller's Real Property, Seller's Personal Property or any of the other
assets to be transferred pursuant to this Section 1.1(c).
All of the foregoing assets of Seller to be sold, assigned and
transferred at Closing by Seller to Buyer (other than Seller's Excluded Assets
as defined in Section 2 below) are hereinafter collectively referred to as
"Seller's Assets."
1.2 Partnership Assets. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date (as hereinafter defined), Seller shall
cause each of the partnerships and limited liability companies identified on
Schedule 1.2 attached hereto
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<PAGE> 11
(collectively, the "Partnerships") to sell, convey, transfer, assign, and
deliver to Buyer or to Buyer's Permitted Assigns (as hereinafter defined), as
applicable, and Buyer or Buyer's Permitted Assigns, as applicable, will purchase
and accept delivery of, the following assets of each Partnership:
(a) Partnership Real Property. All of each Partnership's rights,
title and interest in and to all of that certain real property located
in the State of California as more particularly described on Schedule
1.2(a) attached hereto (collectively, the "Partnership Real Property,"
and together with Seller's Real Property, the "Real Property"),
inclusive of (i) any and all buildings, structures, fixtures and
improvements located on or in the Partnership Real Property, and (ii)
each of the Partnership's rights, privileges and easements appurtenant
to or used in connection with any of the Partnership Real Property
and/or any of the improvements, buildings, structures or fixtures
located therein or thereon, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances, all development rights, all
entitlement rights, air rights, water, water rights and water stock
relating to any of the Partnership Real Property, all strips and gores,
all of each Partnership's rights, title and interest in and to any
streets, alleys, easements, rights-of-way, public ways, and all other
rights of each of the Partnerships appurtenant, adjacent or connected to
any of the Partnership Real Property, but exclusive of any parcels and
improvements included in the Partnership Real Property which are sold by
any of the Partnerships prior to the Closing and in the ordinary course
of business.
(b) Partnership Personal Property. All Personal Property Assets
(as defined in Section 1.1(b) hereof) that are owned, leased or licensed
by any of the Partnerships and used in connection with or relate to the
development, marketing or sale of the Partnership Real Property
(collectively, the "Partnership Personal Property," and together with
Seller's Personal Property, the "Personal Property").
(c) Other Partnership Assets.
(i) All receivables, escrow and other proceeds, purchase
deposits, cash, real estate assets (including improvements) and other
assets (inclusive of any interest or other amounts earned thereon) of
any of the Partnerships existing as of the Closing Date and which were
earned, acquired or generated by any of the Partnerships in the conduct
of their respective real estate development businesses, including
without limitation those arising out of or relating to any of the
following:
(A) sales, transfers, assignments or other dispositions
of real property and related assets, improvements and other
rights by any of the Partnerships between January 1, 1999 and the
Closing Date, including without limitation sales, transfers,
assignments or other dispositions of any portion of the
Partnership Real Property or the Partnership Personal Property
after the date hereof and prior to the Closing Date; and
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<PAGE> 12
(B) purchases or other investments in real estate
development and related assets after the date hereof and prior to
the Closing Date.
(ii) All accruals and cash reserves of the Partnerships in
respect of or relating to any of the Assumed Liabilities (as defined in
Section 5 below) of the Partnerships.
(iii) All of each Partnership's right, title and interest in
and to the intangible property identified on Schedule 1.2(c)(iii).
(iv) All sales data, customer lists, mailing lists, supplier
and contractor lists, and marketing and advertising materials relating
to the marketing and sale of the Partnership Real Property.
(v) All of each Partnership's obligations and liabilities
under any of the Contracts (as defined in Section 4.1 hereof).
(vi) All other assets of the Partnerships identified on
Schedule 1.2(c)(vi).
(vii) All of the Partnerships' books and records relating to
any of the Partnership Real Property, the Partnership Personal Property
or any of the other assets to be transferred pursuant to this Section
1.2.
All of the foregoing assets of the Partnerships to be sold,
assigned and transferred at Closing by such Partnerships to Buyer or Buyer's
Permitted Assigns (other than the Excluded Assets as defined in Section 2 below)
are hereinafter collectively referred to as the "Partnership Assets," and
together with Seller's Assets, as the "Assets."
2. Assets Excluded from Purchase. Notwithstanding Section 1
hereof, the following assets of Seller and/or the Partnerships shall not be
transferred and sold to Buyer (or Buyer's Permitted Assigns) pursuant to Section
1, but shall be retained by Seller and/or the Partnerships, as applicable (the
"Excluded Assets"):
2.1 Seller's and the Partnerships' rights and claims to tax refunds
and adjustments of any kind (other than those relating to property taxes paid or
payable with respect to property owned by Seller or any of the Partnerships as
of December 31, 1998 or acquired by Seller or any of the Partnerships after such
date);
2.2 The consideration delivered to Seller pursuant to this Agreement;
2.3 Seller's and the Partnerships' articles of incorporation,
corporate seals, minute books, stock books, books of account, partnership
agreements, organizational documents and other corporate, partnership or limited
liability company records and all income tax records and nontransferable
licenses and permits; provided however, that copies of such corporate,
partnership, limited liability company, tax and accounting records and
nontransferable permits shall be delivered to Buyer at the Closing;
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<PAGE> 13
2.4 Any assets acquired by Seller or any of the Partnerships after the
Closing Date (other than with proceeds which constitute any part of the Assets
to be transferred pursuant to Sections 1.1(c) or 1.2(c));
2.5 All cash reserves of Seller or any of the Partnerships in an
amount equal to the amount of any and all recorded accounts payable or accrued
liabilities in respect of or relating to any of the Excluded Liabilities under
Section 5 hereof;
2.6 Such other Excluded Assets as are identified on Schedule 2.6.
3. Purchase Price, Adjustments and Allocation.
3.1 Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be (i) the assumption of the Assumed Liabilities (as defined
herein), plus (ii), subject to Section 3.2 below, Forty-Eight Million Dollars
($48,000,000), which shall be payable, together with Buyer's share of any escrow
closing costs, through the Escrow created pursuant to Section 6 hereof and as
provided for herein. The cash portion of the Purchase Price, together with
Buyer's share of any escrow closing costs, shall be deposited in Escrow by Buyer
in cash or other immediately available funds on or prior to the Close of Escrow.
3.2 Adjustment to Purchase Price. The Purchase Price for the Assets
was determined based on the value of the real property and related assets,
rights and improvements owned directly or indirectly by Seller and the
Partnerships as of December 31, 1998 and held for development and/or resale or
otherwise used in their respective real estate development businesses
(collectively referred to as the "1998 Real Estate Development Assets"). Buyer
and Seller intend that the 1998 Real Estate Development Assets, together with
all income, receivables, escrow and other proceeds, purchase deposits, cash and
other assets earned or received by Seller or any of the Partnerships from the
sale of any of the 1998 Real Estate Development Assets (including any assets
purchased or acquired with the sale proceeds thereof) or otherwise earned or
acquired by Seller or any of the Partnerships in the ordinary course of business
since January 1, 1999 and through the Closing Date (the "Operating Period"),
shall inure to the benefit of Buyer (or Buyer's Permitted Assigns), net of any
such assets or amounts which have been or will be used by Seller or any of the
Partnerships prior to the Closing Date to pay or satisfy land acquisition or
development costs, capital expenditures, principal of or interest on
indebtedness, accounts payable, accrued liabilities, employee wages and
benefits, taxes and other liabilities and operating expenses existing at
December 31, 1998 or incurred by Seller or any of the Partnerships in the
ordinary course of business during the Operating Period.
In furtherance of the foregoing, Buyer and Seller agree that the
$48,000,000 cash portion of the Purchase Price shall be:
(a) reduced by the aggregate amount (if any) of:
(i) except to the extent recorded or otherwise provided
for on the books of Seller as of December 31, 1998, any dividends,
redemption payments or other similar distributions (whether of cash or
property) made by Seller during the Operating Period to any of its
stockholders in respect of their stock;
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<PAGE> 14
(ii) except to the extent recorded or otherwise
provided for on the books of Seller or the applicable Partnership
as of December 31, 1998, the unpaid balance (outstanding as of
the Closing Date, and inclusive of any interest) of any loans or
other advances, and the unreimbursed portion of any other
payments, made during the Operating Period by Seller to or for
the personal benefit of any of its shareholders or affiliates, or
by any of the Partnerships to or for the personal benefit of any
partner (or affiliate of such partner) other than Seller, but
excluding (A) any loans or advances, the right to receive
repayment of which is included among the Assets to be transferred
to Buyer pursuant to either Section 1.1(c) or Section 1.2(c)
hereof, (B) any advances or other payments made in the form of
salary or other compensation for services rendered to Seller or
any of the Partnerships in the ordinary course of business, and
(C) any payments made or amounts incurred in respect of legal,
financial and tax accounting, appraisal or financial advisory
fees and expenses incurred in connection with the transactions
contemplated by this Agreement (it being the intent of the
Parties that any adjustments for such fees and expenses be
governed by clause (viii) of this Section 3.2(a));
(iii) the amount of any payments made or liabilities
accrued by Seller during the Operating Period in respect of any
of the following items, but only to the extent that the payment
or other liability had not been accrued and reflected or
otherwise provided for on Seller's or the applicable
Partnership's books and records as of December 31, 1998:
(A) bonuses and other compensation to directors,
officers and employees of Seller or any of the Partnerships
for services rendered prior to December 31, 1998;
(B) warranty expenses related to real estate
assets sold and closed prior to December 31, 1998;
(C) payments (and related legal fees) made in
settlement of legal claims, other than claims relating to
any of the Assets or Assumed Liabilities; and
(D) any significant and unusual charitable
contributions made by Seller or any of the Partnerships
during the Operating Period;
(iv) the value of any real estate assets identified as
"Excluded Assets" on Schedule 2.6, such value to be (A) with
respect to any such asset acquired after December 31, 1998, the
net book value of such asset as of the Closing Date (as reflected
on Seller's or the applicable Partnership's books and records and
determined in accordance with generally accepted accounting
principles), and (B) with respect to any such asset owned by
Seller or any of the Partnerships as of December 31, 1998, the
fair value of such asset as of January 1, 1999 as adjusted for
any increases or decreases in the carrying value of the
particular asset(s) as of the Closing Date;
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<PAGE> 15
(v) the amount of any operating expenses incurred or
accrued by Seller or any of the Partnerships during the Operating
Period in respect of or relating directly to any of the Excluded
Assets;
(vi) the amount of any non-cash adjustments made on the
books and records of Seller or any of the Partnerships during the
Operating Period for write-offs or abandonment of assets which
were recorded on the books at December 31, 1998 (other than with
respect to any Excluded Assets), but only to the extent such
amount exceeds $500,000 in the aggregate;
(vii) the amount of any cash reserves to be retained by
Seller or any of the Partnerships pursuant to Section 2.4 hereof
in respect of Excluded Liabilities; and
(viii) any amounts (A) paid by Seller or any of the
Partnerships during the Operating Period (except to the extent
that the corresponding liability was recorded on the books and
records of Seller or the applicable Partnership as of December
31, 1998), or (B) incurred by Seller or any of the Partnerships
during the Operating Period and accrued on the books and records
of Seller or the applicable Partnership as of the Closing Date,
in the case of (A) and (B), to the extent such amounts were paid
or incurred in respect of legal, financial or tax accounting,
appraisal or financial advisory fees or expenses incurred in
connection with the transactions contemplated by this Agreement,
but only to the extent such amounts exceed $1,250,000 in
the aggregate;
and
(b) increased by the aggregate amount (if any) of:
(i) any capital contribution to or other equity
investment made in Seller by any of its shareholders during the
Operating Period, provided that if such contribution or
investment is made after the date hereof, such contribution or
investment has been approved by Buyer in writing;
(ii) any accounts payable, accrued liabilities and/or
indebtedness secured by or relating to any of the Excluded
Assets;
(iii) warranty reserves reflected on the books and
records of Seller or any of the Partnerships as of the Closing
Date, but only to the extent that such reserves are retained by
Seller; and
(iv) tax refunds, insurance recoveries, utility
deposits and any other assets acquired by Seller or any of the
Partnerships during the Operating Period in exchange for or in
respect of any claims or other assets which were not reflected on
their respective books and records as of December 31, 1998;
provided, however, that except as expressly provided in Section 3.2(a)(viii)
above, nothing contained in this Section 3.2 or elsewhere in this Agreement
shall be interpreted or construed to
8
<PAGE> 16
cause a reduction in the Purchase Price for any amounts paid or incurred by
Seller or any of the Partnerships in respect of legal, financial and tax
accounting, appraisal, lender commitment, financial advisory, exchange agent,
depositary, printing, filing and registration, escrow, title, recording property
transfer and other fees and expenses incurred by Seller, the Partnerships or
their respective affiliates in connection with the transactions contemplated by
this Agreement.
Any adjustment to the Purchase Price shall be determined in
accordance with the foregoing provisions of this Section 3.2 based upon a review
of Seller's and the Partnerships' respective books and records by Ernst & Young
LLP or such other independent accounting firm as may be acceptable to Buyer and
Seller (the "Independent Auditor"). Buyer and Seller shall instruct the
Independent Auditor to perform a preliminary review of such books and records
and notify Buyer, Seller and Escrow Holder in writing not later than five (5)
business days prior to the Closing Date of the Independent Auditor's estimate of
any proposed adjustment to the Purchase Price pursuant to this Section 3.2, such
notice to include reasonable detail as to the nature and calculation of any such
proposed adjustment. Unless Buyer or Seller shall deliver written notice to
Escrow Holder prior to the Closing Date of its objection to any such proposed
adjustment, such adjustment shall be made to the Purchase Price at the Closing
through Escrow. If either Buyer or Seller notifies Escrow Holder in writing
prior to the Closing of its objections to the Independent Auditor's estimated
adjustment, Escrow Holder shall withhold the amount of the proposed adjustment
from the Purchase Price and continue to hold such amount in Escrow (in an
interest bearing account) until such adjustment amount is finally determined in
accordance with the procedures set forth in the following paragraphs.
Following the Closing, Buyer and Seller shall instruct the
Independent Auditor to complete a review of Seller's books and records through
the Closing Date for the purpose of determining the final adjustment (if any) to
the Purchase Price pursuant to this Section 3.2. The Independent Auditor shall
complete such review and deliver to Buyer and Seller written notice of its final
determination of any adjustment to the Purchase Price pursuant to this Section
3.2 within 30 calendar days of the Closing Date. If Buyer and Seller agree with
the Independent Auditor's determination (or fail to deliver written notice of
any objection within 10 business days of receipt of such determination), such
determination shall become final and conclusive for all purposes under this
Agreement. If either Buyer or Seller shall disagree with such determination, it
shall notify the other Party, Escrow Holder and the Independent Auditor in
writing of such objection within 10 business days, such notice to set forth in
reasonable detail the basis for such objection. Buyer and Seller shall make a
good faith attempt to resolve any differences and to agree upon a final
adjustment amount, but if such Parties are unable reach agreement within 20
calendar days of the date of the objection notice, the matter will be directed
to Arthur Andersen LLP or another independent accounting firm acceptable to
Buyer and Seller, whose determination pursuant to this Section 3.2 shall be
binding and conclusive for all purposes under this Agreement. The fees and
expenses of such firm shall be shared equally by Buyer and Seller.
Within two (2) business days of the final determination of any
adjustment to the Purchase Price pursuant to this Section 3.2, Buyer and Seller
shall instruct Escrow Holder to remit to such Parties any funds remaining in
Escrow in such relative amounts as are necessary and appropriate to effect such
adjustment, together with any interest earned on such funds from the Closing
Date. After disbursement of any of the funds remaining in Escrow, any additional
amounts due and owing between Buyer and Seller as a result of any adjustment of
the Purchase
9
<PAGE> 17
Price pursuant to this Section 3.2 shall be paid within five (5)
business days of the final determination, together with interest on such
additional amount from the Closing Date to the date of payment calculated on the
basis of the prime rate in effect on the Closing Date and published in The Wall
Street Journal.
3.3 Allocation of Purchase Price; Tax Filings. Buyer and Seller
agree to negotiate in good faith with respect to the allocation of the Purchase
Price among the Assets and the Assumed Liabilities. Buyer and Seller agree that
their agreed upon allocation shall be used, reported and implemented for all
federal, state, local and other tax purposes.
4. Assumption of Liabilities. At the Closing, Buyer and Buyer's
Permitted Assigns shall assume, and agree to pay, perform and discharge, or
cause to be paid, performed and discharged, all of Seller's and each of the
Partnerships' obligations and liabilities under or with respect to the
following:
4.1 Contracts. All (a) subcontract agreements on Seller's or the
Partnerships' (as applicable) standard forms of contract for services, materials
or supplies to be incorporated into the works of improvement on the Real
Property, (b) purchase and sale agreements on Seller's or the Partnerships' (as
applicable) standard forms of contract and escrow instructions on Seller's, the
Partnerships' or escrow holders' standard forms for the sale of individual lots
to home buyers which sales have not closed escrow on or before the Closing, (c)
subdivision agreements, development agreements and other entitlement agreements
to which Seller or any of the Partnerships is a party with Governmental Entities
(as hereinafter defined in Section 10.1) relating to the Real Property, (d) all
obligations and liabilities of Seller and any of the Partnerships under
construction or performance bonds, guaranties and similar commitments entered
into in connection with the development of the Real Property, and (e) the
contracts, leases, instruments (including debt instruments), profit
participation agreements and other agreements listed on Schedule 4.1. (The
contracts identified in the previous sentence are hereinafter referred to as the
"Contracts.");
4.2 Accounts Payable and Accrued Liabilities. Accounts payable
and accrued liabilities of Seller and the Partnerships arising in the ordinary
course of business with respect to the Assets and their respective development
businesses; and
4.3 Employee Obligations. Any liabilities or obligations of
Seller and the Partnerships to pay compensation, salary, wages or other benefits
(including vacation, sick leave, retirement, health and other similar benefits)
to employees of Seller or any of the Partnerships who are hired to continue
employment with Buyer or any of Buyer's Permitted Assigns following the Closing
Date, but only to the extent that such liabilities or obligations (a) are
accrued and reflected or otherwise provided for on Seller's or the applicable
Partnership's books and records as of the Closing Date, (b) are disclosed on the
list or in other documents delivered to Buyer pursuant to Section 11.22 of this
Agreement, or (c) represent compensation, salary, wages or other benefit
obligations incurred by Seller or any of the Partnerships with respect to the
payment period in which the Closing Date occurs.
All of the foregoing liabilities and obligations of Seller and
the Partnerships to be assumed, paid, performed and/or discharged by Buyer or
Buyer's Permitted Assigns (other than the Excluded Liabilities set forth in
Section 5 below) are hereinafter collectively referred to as the "Assumed
Liabilities."
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5. Liabilities Not Assumed. Notwithstanding Section 4 of this Agreement,
Buyer and Buyer's Permitted Assigns shall not directly or indirectly assume,
pay, perform, discharge or be responsible for any of the liabilities or
obligations of Seller or any of the Partnerships or any of their respective
affiliates, whether liquidated or unliquidated, known or unknown, actual or
inchoate, accrued, contingent or otherwise, which are identified below (the
"Excluded Liabilities"):
5.1 Any liabilities or obligations incurred, arising from or out
of, or in connection with or as a result of, any alleged or actual defect, or
any alleged or actual breach of warranty (whether express or implied), with
respect to any portion of the Real Property (including all improvements thereon)
worked on by Seller, the Partnerships or any of their respective contractors,
subcontractors or other affiliates prior to the Closing Date;
5.2 Any liabilities or obligations incurred, arising from or out
of, or in connection with or as a result of, any claim, action, suit,
litigation, arbitration or administrative or other proceeding made by or against
Seller or any of the Partnerships either (a) before the Closing Date, or (b)
after the Closing Date with respect to events which occurred or conditions which
existed before the Closing Date (except, in the case of clause (b) hereof only,
for such liabilities and obligations which have been expressly assumed by Buyer
pursuant to Section 4 of this Agreement);
5.3 Any obligation, liability or expense of Seller or any of the
Partnerships for taxes (other than property taxes relating to the Real Property
or any other real estate assets included in the Assets to be transferred to
Buyer pursuant to Section 1 hereof);
5.4 Any obligation, liability or expense relating to or arising
out of the Excluded Assets;
5.5 Any liabilities or obligations of Seller or any of the
Partnerships which are incurred or arise after the Closing Date from, or out of,
or in connection with, this Agreement;
5.6 Any liabilities or obligations of Seller to its shareholders
in respect of their ownership interest in Seller, or any of the Partnerships to
their respective Partners;
5.7 Any liabilities or obligations for indebtedness secured by
mortgages, deeds of trust or other liens or security interests on or in the
Assets, which indebtedness is non-recourse to Seller or the Partnerships (as
applicable) or as to which Seller or the Partnerships (as applicable) are not
directly or indirectly liable or as to which Seller or the Partnerships (as
applicable) do not provide credit support;
5.8 Any liabilities or obligations of Seller or the Partnerships,
or costs and expenses incurred in connection with them, to the extent Seller or
the Partnerships have the right to be indemnified or reimbursed by an insurer or
other third party with respect to such liabilities or obligations; and
5.9 Those liabilities and obligations set forth on Schedule 5.9
hereto.
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6. Opening of Escrow. As soon as reasonably possible after the execution
of this Agreement, Buyer, Seller (on behalf of itself and the Partnerships) and
Presley-Del. shall open an escrow ("Escrow") with Escrow Holder. Escrow Holder
shall notify all Parties in writing of the date of Opening of Escrow. As used in
this Agreement, the term "Opening of Escrow" shall mean the date on which three
(3) copies of this Agreement signed by Buyer, Seller and Presley-Del. are
delivered to Escrow Holder. Upon receipt of such items, Escrow Holder is hereby
instructed to open the Escrow, to insert the Escrow Number on page 1 of each
copy of this Agreement, to insert the date of the Opening of Escrow on the
signature page of each copy of this Agreement, to sign the signature page of
each copy of this Agreement, and to deliver one (1) complete copy of this
Agreement to Seller and one (1) complete copy of this Agreement to Buyer and
Presley-Del. This Agreement shall also constitute instructions to Escrow Holder.
Escrow Holder's general provisions are attached hereto as Exhibit "A" and
incorporated by reference herein. If there is any conflict between the
provisions of this Agreement and the provisions of Exhibit "A", the provisions
of this Agreement shall control as among Presley-Del., Buyer and Seller, but the
provisions of Exhibit "A" shall control as to the duties of Escrow Holder.
7. Close of Escrow. The closing ("Closing") of the purchase and sale of
the Real Property and the Assets shall take place through the Escrow when all of
the conditions to Closing have been satisfied, but in no event later than
November 30, 1999 (the "Closing Date"); provided, however, that if the Closing
of the Acquisition or the Series A Offer (as hereinafter defined) has not
occurred by November 30, 1999 due to delays in obtaining governmental or
regulatory approvals of any of the transactions contemplated by this Agreement,
then the Parties agree to extend the Closing Date for up to an additional 30
calendar days to allow the process of obtaining such approvals to be completed.
As used in this Agreement, the final act of the "Closing" or the "Close of
Escrow" shall refer to the date on which Buyer deposits the Purchase Price into
Escrow and "Seller's Grant Deeds" (as hereinafter defined) conveying the Real
Property to Buyer (or Buyer's Permitted Assigns) are recorded through Escrow in
the Official Records of the Counties in which each respective parcel of Real
Property is located. All other deliveries pursuant to Section 15 and Section 16
hereof shall have taken place prior to the recording of any of such Seller's
Grant Deeds.
8. Title Report. Seller has caused Escrow Holder to provide Buyer with
preliminary title reports issued by First American Title Insurance Company, 114
East Fifth Street, Santa Ana, California 91701, with respect to the Real
Property, together with copies of all documents referred to therein and maps of
the Real Property showing the location of all easements (collectively, the
"Title Documents"). Buyer's failure to approve or disapprove the preliminary
title reports (and any exceptions thereon) by delivery of written notice thereof
to Seller and Escrow Holder within thirty (30) calendar days of the date of this
Agreement shall be deemed Buyer's approval. Seller shall take commercially
reasonable actions to remove from title to the Real Property as of the Closing
Date any matters and exceptions reasonably objected to by Buyer in writing
within such period.
9. The Series A Offer.
9.1 Commencement and Conditions. (a) Provided that this Agreement
shall not have been terminated in accordance with its terms and, subject to
Section 9.2 below, none of
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<PAGE> 20
the events set forth in Exhibit "B" shall have occurred and be existing, as
promptly as practicable (but in no event later than five business days after the
public announcement of the execution of this Agreement), the Lyons shall
commence (within the meaning of Rule 14d-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), a cash tender offer to
acquire up to 10,678,792 shares of Series A Common Stock at $0.655 per share
(the "Offer Price"), subject to adjustment to ensure that the Lyons' purchase of
Presley-Del. Common Stock pursuant to the Series A Offer and/or the Series B
Purchase Agreements does not result in an "ownership change" of Presley-Del. for
Federal income tax purposes or which would have an adverse effect on
Presley-Del.'s (or its successor's) ability to utilize its net operating losses
for tax purposes. Subject to the conditions set forth in Exhibit "B" hereto, the
Lyons shall use reasonable efforts to consummate the Series A Offer in
accordance with its terms and to accept for payment and pay for shares of Series
A Common Stock tendered pursuant to the Series A Offer as soon as the Lyons are
legally permitted to do so under applicable law. The Series A Offer shall be
made by means of the Offer to Purchase (as defined below) and shall be subject
only to the conditions set forth in Exhibit "B" hereto and shall reflect, as
appropriate, the other terms set forth in this Agreement. The Lyons may decrease
or waive the Minimum Condition (as defined in Exhibit "B" hereto) but shall not
decrease the Offer Price or decrease the number of shares of Series A Common
Stock sought, or amend any other condition of the Series A Offer in any manner
adverse to the holders of the shares of Series A Common Stock without the
written consent of Presley-Del. The Lyons may increase the amount they offer to
pay per share in the Series A Offer, and the Series A Offer may be extended to
the extent required by law in connection with such increase, in each case
without the consent of Presley-Del.
(b) If, after receiving the advice of counsel, Presley-Del.
determines that the consummation of the Series A Offer and/or Series B Purchases
would result in an "ownership change" of Presley-Del. for Federal tax purposes
or other adverse tax consequence to Presley-Del., Presley-Del. will notify the
Lyons, who will reduce the number of shares of Series A Common Stock sought
pursuant to the Series A Offer (but not below the number of shares required to
satisfy the Minimum Condition) to avoid such "ownership change" or other adverse
tax consequence.
(c) If on the initial scheduled expiration date of the Series A
Offer, which shall be no earlier than twenty (20) business days after the date
upon which the Series A Offer is commenced, any of the following shall have
occurred and be continuing:
(i) the condition set forth in clause (i) of Exhibit "B"
hereto shall not have been satisfied or waived by the Lyons; or
(ii) either of the conditions set forth in clause (ii) or
clause (iii) of Exhibit "B" hereto shall not have been satisfied
or waived by the Lyons due to delays in (A) obtaining necessary
governmental or regulatory approvals of, or any necessary third
party consents to, any of the transactions contemplated by the
Agreement, or (B) obtaining the financing required to satisfy the
condition set forth in Section 16.9 of this Agreement, or (C)
obtaining the releases necessary to satisfy the condition set
forth in Section 17.7 of this Agreement;
then the Lyons shall extend the expiration date of the Series A Offer from time
to time and for
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<PAGE> 21
such number of business days as may be necessary to allow for such conditions to
be satisfied and for the closing of the Series A Offer to be substantially
coterminous with the closings of the other transactions contemplated under this
Agreement; provided, however, that in no event shall the Lyons be obligated to
extend the expiration date of the Series A Offer beyond November 30, 1999 (or 30
calendar days thereafter in the event that the Closing Date is extended pursuant
to Sections 7 and 25.3 hereof).
9.2 Satisfaction of Conditions. Notwithstanding the provisions of
Section 9.1, upon consummation of the Acquisition in accordance with the terms
of this Agreement, all of the conditions set forth in Exhibit "B" (other than
the condition specified in Section (iv)(a) thereof) shall be deemed to have been
satisfied, and the Lyons' obligation to consummate the Series A Offer hereunder
shall not be subject to such conditions that are deemed satisfied hereunder.
9.3 Lyon SEC Filings. Concurrently with the commencement of the
Series A Offer, the Lyons shall file with the SEC a tender offer statement on
Schedule 14D-1 with respect to the Series A Offer (the "Schedule 14D-1"). The
Schedule 14D-1 will include, as exhibits, an Offer to Purchase (the "Offer to
Purchase") and a form of letter of transmittal. The Lyons will take all steps
necessary to cause the Offer to Purchase, form of letter of transmittal and
other exhibits to the Schedule 14D-1, together with any amendments and
supplements thereto (the "Offer Documents"), to be filed with the SEC and to be
disseminated to holders of the Series A Common Stock, in each case as and to the
extent required by applicable Federal securities laws. The Lyons and Seller, on
the one hand, and Presley-Del. and Buyer, on the other hand, will promptly
correct any information provided by such Party for use in the Offer Documents if
and to the extent that it shall have become false or misleading in any material
respect, and the Lyons will take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of the Series A Common Stock, in each case as and to the extent required
by applicable Federal securities laws. Presley-Del. and Buyer and their counsel
shall be given the opportunity to review the initial Schedule 14D-1 before it is
filed with the SEC. The Lyons will provide Presley-Del. and Buyer and their
counsel in writing with any comments or other communications, whether written or
oral, that the Lyons or their counsel may receive from time to time from the SEC
or its staff with respect to the Offer Documents, promptly after the receipt of
such comments or other communications. The Offer Documents (as hereinafter
defined) will comply in all material respects with the provisions of applicable
Federal securities laws and, on the date filed with the SEC and on the date
first published or sent or given to Presley-Del.'s stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
9.4 Presley-Del.'s Actions With Respect to the Series A Offer.
(a) Presley-Del. hereby represents that a Special Committee of
its Board of Directors, at a meeting duly called and held, has, pursuant to
authority granted to it by Presley-Del.'s Board of Directors, (i) unanimously
determined that this Agreement and the transactions contemplated hereby, taken
together, are fair to and in the best interests of Presley-Del. and the holders
of the Series A Common Stock (other than the Lyons), provided that each such
holder of Series A Common Stock is advised to consult with their financial and
tax advisors regarding the impact thereof on such holder, (ii) received the
opinion of Warburg Dillon Read LLC, financial
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advisor to the Special Committee of the Board of Directors, to the effect that
the shares of common stock of New Presley and/or, to the extent any holder of
Series A Common Stock (other than the Lyons and the Series B Shareholders)
tenders shares of Series A Common Stock in the Offer, the cash that may be
received by each holder of Series A Common Stock (other than the Lyons and the
Series B Shareholders), subject to the pro ration provisions of the Offer, after
giving effect to the transactions contemplated by this Agreement, is fair to the
holders of the Series A Common Stock (other than the Lyons and the Series B
Shareholders) from a financial point of view, (iii) approved this Agreement and
the transactions contemplated hereby, and (iv) resolved to recommend that the
holders of the Series A Common Stock (other than the Lyons and the Series B
Shareholders) accept the Series A Offer and tender their shares pursuant
thereto; provided, however, that such holders of Series A Common Stock should
consult with their financial and tax advisors prior to tendering their shares in
the Series A Offer, and provided further that, subject to the provisions
contained in Section 27 of this Agreement, such recommendation may be withdrawn,
modified, or changed if, in the opinion of Presley-Del.'s Board of Directors or
its Special Committee, after consultation with counsel, the failure to take such
action would be inconsistent with their fiduciary duties under applicable law.
(b) As soon as practicable on or after the date the Series A
Offer is commenced, Presley-Del. shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which shall contain Presley-Del.'s recommendation with respect to the Series A
Offer. At the time the Offer Documents are first mailed to the holders of Series
A Common Stock, or as soon as practicable thereafter, Presley-Del. shall mail or
cause to be mailed to the holders of its Series A Common Stock as of the
applicable record date the Schedule 14D-9 together with the Offer Documents.
Presley-Del. further agrees to take all steps necessary to cause the Schedule
14D-9 to be disseminated to the holders of the Series A Common Stock, as and to
the extent required by applicable Federal securities laws. Each of Presley-Del.,
on the one hand, and the Lyons, on the other hand, agrees to promptly correct
any information provided by it or him for use in the Schedule 14D-9 if and to
the extent that it shall have become false and misleading in any material
respect. Presley-Del. further agrees to take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be filed with the SEC and to be disseminated
to holders of the Series A Common Stock, in each case as and to the extent
required by applicable Federal securities laws. In addition, Presley-Del. agrees
to provide the Lyons and their counsel with any comments, whether written or
oral, that Presley-Del. or its counsel may receive from time to time from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
of such comments or other communications.
(c) In connection with the Series A Offer, Presley-Del. will
furnish or cause to be furnished to the Lyons such information and assistance as
the Lyons or their agents may reasonably request in communicating the Series A
Offer to the record and beneficial holders of the Series A Common Stock. Except
for such steps as are necessary to disseminate the Offer Documents, the Lyons
shall hold in confidence the information referred to in the preceding sentence,
will use such information only in connection with the Series A Offer, and, if
this Agreement is terminated, will, upon request by Presley-Del., deliver or
cause to be delivered to Presley-Del. all copies of such information then in its
possession or the possession of its agents or representatives.
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(d) The information supplied by Presley-Del. expressly for
inclusion in the Offer Documents and the Schedule 14D-9 will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
The Schedule 14D-9 will comply in all material respects with the provisions of
applicable Federal securities laws and, on the date filed with the SEC and on
the date first published or sent or given to Presley-Del.'s stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, except that no representation is made by Presley-Del. or
Buyer with respect to statements made therein based on information furnished by
the Lyons for inclusion in the Schedule 14D-9.
9.5 Over- or Under-Subscription of Offer. In the event that the
Series A Offer is over-subscribed, the Lyons will purchase shares of Series A
Common Stock from each tendering holder of Series A Common Stock on a pro rata
basis such that the Lyons and their affiliates will not acquire, directly or
indirectly, a number of shares of Common Stock that would result in an
"ownership change" of Presley-Del. for Federal income tax purposes or other
adverse tax consequence of Presley-Del. In the event that the Series A Offer is
under-subscribed, Seller (or Seller's assignee) will purchase additional shares
of Common Stock from each holder of Series B Common Stock on a pro rata basis
pursuant to the Series B Purchase Agreements such that the Lyons and their
affiliates will hold up to 49.9% of the outstanding Common Stock (but in no
event shall they acquire a number of shares of Common Stock that would result in
an "ownership change" for Federal income tax purposes or other adverse tax
consequence that would limit Presley-Del. from utilizing its tax net operating
losses).
9.6 Successors in Interest to Lyons. William Lyon and William H.
Lyon agree that, in the event of the death, disability or other incapacity of
either of them, their respective estates or other successors in interest shall
be obligated to consummate the Series A Offer in accordance with the terms
hereof.
10. Presley-Del./New Presley Merger and Other Matters.
10.1 Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, each of the Parties shall use its respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable (subject to any
applicable laws) to consummate and make effective the merger, in accordance with
the terms set forth in the Certificate of Ownership and Merger attached hereto
as Exhibit "C" (the "Certificate of Ownership and Merger"), of Presley-Del. with
and into its wholly owned subsidiary, Presley Merger Sub, Inc. ("New Presley")
(the "Merger"), as promptly as practicable including, but not limited to (a) the
preparation and filing of all forms, registrations and notices required to be
filed to consummate the Merger and the taking of such actions as are necessary
to obtain any requisite approvals, consents, orders, exemptions or waivers by
any third party or any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (each,
a "Governmental Entity"), and (b) the satisfaction of the conditions to the
closing of the Merger (the "Merger Closing"). In addition, none of the Parties
shall take any action after the date hereof that would reasonably be
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expected to materially delay the obtaining of, or result in not obtaining, any
permission, approval or consent from any Governmental Entity necessary to be
obtained prior to the Merger Closing.
10.2 Prior to the Merger Closing, each Party shall promptly
consult with the other Parties hereto with respect to, provide any necessary
information with respect to, and provide the other Parties (or their respective
counsel) with copies of, all filings made by such Party with any Governmental
Entity or any other information supplied by such Party to a Governmental Entity
in connection with this Agreement or the Merger. Each Party hereto shall
promptly inform the other of any communication from any Governmental Entity
regarding the Merger. If any Party hereto or affiliate thereof receives a
request for additional information or documentary material from any such
Governmental Entity with respect to the Merger, then such Party shall endeavor
in good faith to make, or cause to be made, as soon as reasonably practicable
and after consultation with the other Parties, an appropriate response in
compliance with such request. To the extent that transfers, amendments or
modifications of permits (including environmental permits) are required as a
result of the execution of this Agreement or consummation of the Merger, the
Parties shall use their best efforts to effect such transfers, amendments or
modifications.
10.3 Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to require any Party to commence any litigation against any
entity in order to facilitate the consummation of the Merger or to defend
against any litigation brought by any Governmental Entity seeking to prevent the
consummation of the Merger.
10.4 Presley-Del. has filed with the SEC a proxy statement with
respect to the Merger, which will also serve as a prospectus with respect to the
common stock of New Presley (the "Proxy Statement/Prospectus") and be included
in a Registration Statement to be filed with the SEC on Form S-4 (the
"Registration Statement"). The Parties agree to use their best reasonable
efforts to cause the Registration Statement to be declared effective by the SEC.
Presley-Del. agrees to promptly mail the Proxy Statement/Prospectus to its
stockholders after the Registration Statement has been declared effective by the
SEC. Seller shall cooperate with Presley-Del. and New Presley in preparing the
Proxy Statement/Prospectus and in seeking the declaration of effectiveness of
the Registration Statement by the SEC.
10.5 Each of William Lyon, William H. Lyon and Seller agree to
vote all shares of Common Stock owned by them for the Merger at the special
meeting of stockholders of Presley-Del. called for such purpose (the
"Stockholders' Meeting").
10.6 Subject to satisfaction of the conditions to the Merger, and
after receiving the requisite approval of Presley-Del.'s stockholders at the
Stockholders' Meeting, and after the Closing and the consummation of the
purchase of shares of Common Stock pursuant to the Series A Offer and the terms
of the Series B Purchase Agreements, Presley-Del. agrees to cause the
Certificate of Ownership and Merger to be promptly filed with the Secretary of
State of the State of Delaware.
10.7 All notices to third parties and all other publicity
concerning the Merger will be jointly planned and coordinated by and between the
Parties. No Party will act unilaterally in this regard without the prior written
approval of the others unless required under
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<PAGE> 25
applicable securities laws (in which case each party agrees to give reasonable
notice to and consult with the other parties prior to issuing any such release,
statement, or other notice); however, this approval will not be unreasonably
withheld.
11. Representations and Warranties of Seller. Seller hereby makes the
following representations and warranties to Buyer as of the date hereof:
11.1 Good Standing. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of California and has full
corporate power and authority to own the Assets. Each of the Partnerships is
duly organized, validly existing, and in good standing under the laws of their
respective states of formation and have full power and authority to own the Real
Property owned by such Partnerships. The ownership of their properties does not
require Seller or any of the Partnerships to be qualified in any jurisdiction
other than California.
11.2 Power. Seller has the corporate power, right and authority
to enter into this Agreement and the instruments referenced herein, and to
consummate the transactions contemplated hereby.
11.3 Requisite Action. All requisite corporate action has been
taken by Seller in connection with the entering into of this Agreement, the
execution and delivery of the instruments referenced herein, and the
consummation of the transactions contemplated hereby. All requisite partnership
action has been taken by the Partnerships in connection with the Acquisition.
11.4 Authority. The individuals executing this Agreement and the
instruments referenced herein on behalf of Seller have been duly authorized by
Seller and have the legal power, right and actual authority to bind Seller to
the terms and conditions hereof and thereof.
11.5 Binding Agreements. This Agreement and the Series B Purchase
Agreements (in the form previously filed with the SEC as exhibits to William
Lyon's Statement on Schedule 13D relating to the Common Stock) have been duly
executed and delivered by Seller and, assuming due and valid authorization,
execution and delivery thereof by Presley-Del., Buyer, and the Series B
Shareholders, as applicable, this Agreement and the Series B Purchase Agreements
are valid and binding obligations of Seller enforceable against Seller in
accordance with their terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws of general application affecting enforcement of creditors' rights
generally, and (b) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought. To Seller's knowledge, each of the Series B
Purchase Agreements is a valid and binding agreement against each of the Series
B Shareholders which is a party thereto.
11.6 Partnership and Membership Interests in Real Property. The
partnership and limited liability company interests identified on Schedule 1.2
hereto, together with the partnership and limited liability company interests
identified on Schedule 2.6, are the only
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interests that Seller has in any partnership, limited liability company,
corporation, or other organization through which Seller has an interest in Real
Property.
11.7 Income Tax Information. Seller is not a non-resident alien,
a foreign corporation, a foreign partnership, a foreign trust, or a foreign
estate (as those terms are defined in the United States Internal Revenue Code of
1986, as amended (the "Code"), and Income Tax Regulations) for purposes of
United States income taxation. Seller is a California resident within the
meaning of Section 18662 of the California Revenue and Taxation Code. In
connection therewith, Seller shall, and shall cause each of the Partnerships to,
deliver to Escrow Holder for delivery to Buyer at the Closing an affidavit
("Seller's Affidavit") in the form attached hereto as Exhibit "D".
11.8 Condition of Personal Property Assets. Seller and each of
the Partnerships has good and marketable title to the Personal Property which it
owns, free and clear of any claim, charge, easement, encumbrance, security
interest, lien, option or pledge (collectively, "Encumbrances"), except for
Encumbrances for taxes which are not yet due and payable and except for such
encumbrances as Seller has otherwise disclosed to Buyer or Presley-Del. in
writing on or prior to the date of this Agreement. Except as has been disclosed
to Buyer or Presley-Del. in writing on or prior to the date of this Agreement,
Seller and each of the Partnerships have all rights, power and authority to
sell, convey, assign, transfer and deliver the Personal Property to Buyer in
accordance with the terms of this Agreement. At the Closing, Seller shall, and
shall cause the Partnerships to, deliver the Personal Property to Buyer, free
and clear of any Encumbrances except for such as relate to any of the Assumed
Liabilities and except for such matters as would, if strictly enforced, have no
adverse effect upon the continued use and operation of the Personal Property in
the manner in which it has heretofore been used by Seller or the Partnerships or
upon the value of the Personal Property. Except as has been disclosed to Buyer
or Presley-Del. in writing on or prior to the date of this Agreement, the
furniture, computers, vehicles and other equipment included in the Personal
Property are in a good state of maintenance and repair, ordinary wear and tear
excepted.
11.9 Financial Statements; Contingencies; Conduct of Business
Since December 31, 1998. (a) Seller has delivered to Buyer financial statements,
including a balance sheet and related statements of operations, stockholders'
equity and cash flows, for each of Seller and each of the Partnerships as of and
for the period ended December 31, 1998, which financial statements (in the case
of Seller only) are audited, and as of and for the interim period ended June 30,
1999, which financial statements are unaudited. To Seller's knowledge, neither
Seller nor any of the Partnerships has any liabilities except liabilities that
(i) are reflected or disclosed in the financial statements referred to above,
(ii) were incurred after June 30, 1999 in the ordinary course of business, or
(iii) are set forth in any Schedule attached hereto or have otherwise been
disclosed in writing to Buyer or Presley-Del. on or prior to the date hereof.
(b) Since December 31, 1998, (i) Seller and the Partnerships have
conducted their respective businesses in the ordinary course and consistent with
past practices, and (ii) there have been no dividends, redemptions or other
distributions by Seller in respect of its outstanding common stock.
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11.10 Contracts. Each Contract is valid and subsisting; Seller
and/or the applicable Partnership has duly performed all of its material
obligations thereunder to the extent that such obligations to perform have
accrued; and no material breach or default, alleged material breach or default,
or event which would (with the passage of time, notice or both) constitute a
breach or default thereunder by Seller or any of the Partnerships, as the case
may be (or, to the best knowledge of Seller, any other party or obligor with
respect thereto), has occurred or as a result of this Agreement or its
performance will occur. Except as set forth in Schedule 11.10, consummation of
the transactions contemplated by this Agreement will not (and will not give any
person a right to) terminate or modify any rights of, or accelerate or augment
any obligation of, Seller or any of the Partnerships under any of the Contracts.
11.11 Zoning. Except as has been disclosed to Buyer or
Presley-Del. in writing on or prior to the date of this Agreement, (a) to
Seller's knowledge, the zoning of each parcel of Real Property permits
residential use (except for 12.2 acres located in Rancho Cucamonga, which
permits commercial use) or such other uses (such as schools, parks, common areas
and similar uses) which are currently contemplated under Seller's or the
applicable Partnership's development plans for such parcel, and (b) neither
Seller nor any of the Partnerships has commenced, or received notice of the
commencement of, any proceeding that would affect the present zoning
classification of any such parcel.
11.12 Governmental Notices. Except as has been disclosed to Buyer
or Presley-Del. in writing on or prior to the date of this Agreement, (a)
neither Seller nor any of the Partnerships has received any notification from
any governmental authority imposing any special assessments on the Real Property
or bringing any condemnation actions against the Real Property, or any part
thereof, nor is Seller or any of the Partnerships aware of any special
assessments or condemnation actions being contemplated, and (b) neither Seller
nor any of the Partnerships has received any notification from the Department of
Building and Safety, Health Department or any other Governmental Entity having
jurisdiction over the Real Property requiring any work to be done on or
affecting the Real Property, the cost of which is reasonably expected to
materially increase the development costs previously budgeted by Seller or the
applicable Partnership for such parcel of Real Property.
11.13 Undisclosed Defects. Except as has been disclosed to Buyer
or Presley-Del. in writing on or prior to the date of this Agreement, to the
knowledge of Seller, (a) no defect or condition of the Real Property,
improvements thereon or soil exists that may materially adversely affect Buyer's
proposed development of the Real Property, and (b) all of the improvements built
on the Real Property by Seller or any of the Partnerships have been built in a
good and workmanlike manner and comply in all material respects with all plans
and specifications, building codes and all applicable laws.
11.14 No Unrecorded Interests. Except as has been disclosed to
Buyer or Presley-Del. in writing on or prior to the date of this Agreement, and
to the knowledge of Seller, there are no unrecorded leases, licenses, or other
possessory interests in the Real Property.
11.15 Real Property in Compliance. Except as has been disclosed
to Buyer or Presley-Del. in writing on or prior to the date of this Agreement,
and to the knowledge of Seller, the Real Property is in compliance in all
material respects with all applicable laws and
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regulations and all covenants, conditions, restrictions, easements and similar
matters affecting the Real Property.
11.16 Public Improvements. Except as has been disclosed to Buyer
or Presley-Del. in writing on or prior to the date of this Agreement, and to the
knowledge of Seller, there are no intended public improvements that may involve
any charge being levied or assessed, or that may result in the creation of any
lien that would have a material adverse effect upon Buyer's ability to develop
the Real Property.
11.17 No Other Agreements. To Seller's knowledge, except as has
otherwise been disclosed to Buyer or Presley-Del. in writing on or prior to the
date of this Agreement, neither Seller nor any of the Partnerships has any oral
or written commitments to, or understandings or agreements with, any private
party or any Governmental Entity that would materially adversely affect (a)
Buyer's (or Buyer's Permitted Assigns') ownership of the Real Property, the
Personal Property, the Contracts and the other Assets, or (b) the proposed
development of the Real Property.
11.18 Litigation. Except as has been disclosed to Buyer or
Presley-Del. on or prior to the date of this Agreement, there is no material
action, suit, claim, inquiry, proceeding or investigation by or before any court
or governmental or other regulatory or administrative agency or commission
pending or, to Seller's knowledge, threatened against or involving Seller, any
of the Partnerships, the Assets or the Real Property, or which questions or
challenges the validity of this Agreement or any action taken or to be taken by
Seller or the Partnerships pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement; and to Seller's knowledge, except
as has been disclosed to Buyer or Presley-Del. on or prior to the date of this
Agreement, there is no valid basis for any such action, proceeding or
investigation. Neither Seller, the Partnerships, the Assets, or the Real
Property are subject to any judgment, writ, injunction, order or decree which
individually or in aggregate may have a material adverse effect on (a) Buyer's
(or Buyer's Permitted Assigns') development of the Real Property, (b) Buyer's
(or Buyer's Permitted Assigns') ownership of the Real Property, the Personal
Property, the Contracts and the other Assets, or (c) Seller's or the
Partnerships' ability to consummate the transactions contemplated hereby.
11.19 Environmental Matters. Except as has been disclosed to
Buyer or Presley-Del. on or prior to the date of this Agreement:
(a) To the knowledge of Seller, Seller and each of the
Partnerships are in compliance in all material respects with all applicable
Federal, state and local laws and regulations relating to pollution or
protection of human health or the environment, including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata, and
natural resources (together "Environmental Laws" and including, without
limitation, the California Environmental Quality Act, as amended, Cal. Pub. Res.
Code Section 21000 et seq., the National Environmental Policy Act, as amended,
42 U.S.C. Section 4321 et seq., and laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic or hazardous substances or wastes, petroleum and
petroleum products, asbestos or asbestos-containing materials, polychlorinated
biphenyls, lead or lead-based paints or materials, or radon
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("Materials of Environmental Concern")), or otherwise relating to the
manufacture, generation, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern, or the
preservation of the environment or mitigation of adverse effects thereon and
each law and regulation with regard to record keeping, notification, disclosure,
and reporting requirements respecting Materials of Environmental Concern.
(b) Neither Seller nor any of the Partnerships has received any
written communication, whether from a governmental authority, citizens group,
employee or otherwise, which alleges that there is any restriction on the use or
development of the Real Property on account of the presence of Materials of
Environmental Concern on, under or in the vicinity of the Real Property.
(c) There is no claim, action, investigation or proceeding (each,
an "Environmental Claim") by any person or entity alleging potential liability
(including, without limitation, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (i) the presence, or release into the environment, of any Material of
Environmental Concern on or adjacent to any parcel included in the Real
Property, or (ii) any violation, or alleged violation, of any Environmental Law,
that in either case is pending or, to Seller's knowledge, threatened against
Seller or any of the Partnerships or, to Seller's knowledge, against any person
or entity whose liability for any Environmental Claim Seller or any of the
Partnerships has retained or assumed either contractually or by operation of
law.
(d) To Seller's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents involving or with
respect to the Real Property, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that could reasonably be expected to form the basis of any
Environmental Claim against Seller or any of the Partnerships or, to Seller's
knowledge, against any person or entity whose liability for any Environmental
Claim Seller or any of the Partnerships has retained or assumed either
contractually or by operation of law.
(e) To Seller's knowledge, Seller has provided to Buyer all
assessments, reports, data, results of investigations or audits, and other
information that is in the possession of, or reasonably available to, Seller or
any of the Partnerships regarding environmental matters pertaining to or the
environmental condition of the Real Property, or the compliance (or
noncompliance) by Seller or any of the Partnerships with any Environmental Laws,
with respect to the Real Property.
11.20 Endangered or Threatened Species. To the knowledge of Seller,
except as has been disclosed to Buyer or Presley-Del. in writing on or prior to
the date of this Agreement, Buyer's and each of the Partnerships' proposed
development of the Real Property will not involve the taking of any endangered
or threatened species of animals, plants or insects. To the knowledge of Seller,
there are no environmental or biological characteristics of the Real Property
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which, under existing law, will adversely affect Buyer's (or Buyer's Permitted
Assigns') proposed development of the Real Property.
11.21 Accounts Receivable. As of the date hereof, all of the
accounts receivable shown on the most recent interim financial statements of
Seller and each of the Partnerships (the "Accounts Receivable"), except to the
extent of reserves with respect thereto: (a) arose from valid sales in the
ordinary course of business; (b) to the knowledge of Seller, are valid and
legally enforceable obligations of the persons purported to be liable thereon
and are fully collectible; (c) to the knowledge of Seller, are free of any
defense, counterclaim, setoff or deduction; and (d) reflect adequate reserves
for doubtful accounts and any trade discounts, on a basis consistent with that
of prior years.
11.22 Employment Contracts and Benefits. (a) Seller has
previously delivered to Buyer copies, descriptions and/or a list of all
employment contracts and collective bargaining agreements, and all compensation,
pension, retirement, deferred compensation, health care, bonus, profit-sharing,
stock option or other plans, trusts, funds, agreements or arrangements,
providing for employee remuneration or benefits to any of Seller's present
officers, employees and sales agents (collectively, "Employee Benefit Plans")
and to which Seller or any of the Partnerships is a party or by which Seller or
any of the Partnerships is bound. Such copies, descriptions and list, taken
together, sets forth for the present officers, employees and sales agents of
Seller and each of the Partnership's complete information with respect to
withholding accounts, accrued vacation, sick leave and other amounts, and all
other accruals and accounts held for employee benefit, including but not limited
to, any insurance policies or accounts. Except as set forth in such copies or
descriptions or on such list, neither Seller nor any of the Partnerships has
entered into any severance or similar arrangement in respect of any present or
former officer, employee or sales agent that will result in any absolute or
contingent obligation of Buyer to make any payment to any present or former
officer, employee or sales agent following termination of employment.
(b) Except as set forth in such copies or descriptions or the list
delivered to Buyer pursuant to this Section 11.22 or as otherwise
disclosed in the schedules hereto or in the financial statements
delivered pursuant to Section 11.9 hereof, and to Seller's knowledge,
(i) Neither Seller nor any of the Partnerships, nor any
entity (an "ERISA Affiliate") which, together with any of
them, is deemed a "single employer" within the meaning of
Section 4001(a)(15) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), nor any of the
plans so listed which is an "employee welfare benefit plan"
or "employee pension benefit plan" as such terms are defined
in Sections 3(1) and 3(2) of ERISA (such plans being
referred to herein as "ERISA Plans"), nor any trust created
thereunder, nor any trustee or administrator thereof, has
engaged in a transaction or has taken or failed to take any
action in connection with which Buyer or Presley-Del. could
be subject to a tax imposed pursuant to Section 4980B of the
Internal Revenue Code (the "Code").
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(ii) Each of the plans so listed or described has been
operated and administered in all material respects in
accordance with applicable laws, including but not limited
to ERISA and the Code.
(iii) Each of the ERISA Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code
is so qualified.
(iv) No amounts payable under the plans so listed or
any other agreement or arrangement to which Seller, the
Partnerships, or any ERISA Affiliate is a party will fail to
be deductible for Federal income tax purposes by virtue of
Section 280G of the Code.
(v) No "leased employee," as that term is defined in
Section 414(n) of the Code, performs services for Seller or
any of the Partnerships.
(vi) There are no liens against the Assets under
Section 412(n) of the Code or Sections 302(f) or 4068 of
ERISA.
(vii) None of Seller, the Partnerships or any of their
respective ERISA Affiliates is, or at anytime during the
previous six (6) years was, obligated to contribute to any
"multi-employer plan" within the meaning of Section 3(37) of
ERISA or any plan subject to Title IV of ERISA.
(viii) Except for such obligations and liabilities as
are assumed by Buyer pursuant to Section 4.3 of this
Agreement, from and after the Closing, Buyer will have no
obligation to contribute to, or any liability in respect of,
any Employee Benefit Plan sponsored or maintained by Seller,
any Partnership or any ERISA Affiliate, or to which Seller,
any Partnership or any ERISA Affiliate is or was obligated
to contribute.
11.23 Insurance Policies. Seller and the Partnerships, as
applicable, have maintained and now maintain (a) insurance on all of the Assets
and the Real Property of a type customarily insured, covering property damage
and loss of income by fire or other casualty consistent with industry practice,
and (b) adequate insurance protection against all liabilities, claims and risks
against which it is customary to insure including, without limitation, property
damage, comprehensive general liability and workers compensation. Seller and the
Partnerships, as applicable, are not in default with respect to payment of
premiums on any such policy. Seller has previously delivered to Buyer complete
copies of all such insurance policies of Seller and the Partnerships. All such
insurance policies are in full force and effect.
11.24 Authority and Consents. Except as set forth on Schedule
11.24, the consummation of the transactions contemplated by this Agreement will
not result in or constitute any of the following: (a) a default or an event
that, with the giving of notice, the lapse of time, or both, would be a default,
breach, or violation of the articles of incorporation or bylaws of Seller or the
organizational documents of any Partnership or any lease, license, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of
trust, or other agreement, instrument or arrangement to which Seller or any
Partnership is a party or by which it or the Assets are or the Real Property
bound; (b) an event that would permit any party to terminate any
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agreement or to accelerate the maturity of any indebtedness or other obligation
of Seller or any of the Partnerships; or (c) the creation or imposition of any
lien, charge, or encumbrance on any of the Assets or the Real Property. On or
before the Closing, Seller shall obtain consents, waivers or releases of all
material interests set forth on Schedule 11.24. Buyer will reasonably cooperate
with Seller in obtaining the consents, waivers or releases of all interests set
forth on Schedule 11.24. All such consents, waivers or releases, unless absolute
and unconditional, shall be on terms acceptable to Seller and Buyer in its
reasonable discretion.
11.25 Plant Closing. Subject to Buyer's performance of the
covenant set forth in Section 18.1 hereof, and on the basis of Presley-Del.'s
and Buyer's representation in Section 12.7 hereof, Seller represents to Buyer
and Presley-Del. that neither it nor, to Seller's knowledge, any of Seller's
affiliates, intends to implement a "plant closing" or a "mass lay-off", as those
terms are defined in the Worker Adjustment and Retraining Notification Act (the
"WARN Act"), 29 U.S.C. Sections 2101 et seq., within one hundred fifty (150)
days of the Closing.
11.26 No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other person or firms engaged by or acting
on behalf of Seller in connection with the negotiation, execution or performance
of this Agreement or the transactions contemplated hereby, is or will be
entitled to any broker's or finder's or similar fees or other commissions as a
result of this Agreement or the transactions.
11.27 Knowledge Convention. Whenever reference is made in this
Agreement to Seller's knowledge or awareness, such knowledge or awareness
includes only the present actual knowledge of any of William Lyon, Chief
Executive Officer, Thomas Mitchell, President of Southern California Division,
Douglas Bauer, President of Northern California Division and Chief Financial
Officer, Richard S. Robinson, Senior Vice President, or Michael Grubbs, Vice
President and Corporate Controller.
12. Representations and Warranties of Buyer and Presley-Del. Buyer and
Presley-Del. hereby represent and warrant to Seller and to the Lyons as follows:
12.1 Power. Each of Presley-Del. and Buyer has the legal power,
right and authority to enter into this Agreement and the instruments referenced
herein, and to consummate the Acquisition and the Merger.
12.2 Requisite Action. Except for the approval of Presley-Del.'s
stockholders of the Merger, which Presley-Del. agrees to seek at the
Stockholders' Meeting prior to the Closing, all requisite action has been taken
by each of Presley-Del. and Buyer in connection with entering into this
Agreement, the execution and delivery of the instruments referenced herein by
Presley-Del. or Buyer, and the consummation of the Acquisition and the Merger.
12.3 Authority. The individuals executing this Agreement and the
instruments referenced herein on behalf of each of Presley-Del. and Buyer have
the power, right and actual authority to bind such Party to the terms and
conditions hereof and thereof.
12.4 No Conflicts. Except as set forth on Schedule 12.4 hereto,
the execution, delivery and performance of this Agreement by each of
Presley-Del. and Buyer will not violate the provisions of, or constitute a
breach or default under (a) the charter documents or bylaws of
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each such Party, (b) any law to which such Party is subject, or (c) any contract
to which such Party is a party that is material to the financial condition,
results of operations, business, assets, liabilities, or prospects of such
Party.
12.5 No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other person or firms engaged by or acting
on behalf of Buyer or Presley-Del. in connection with the negotiation, execution
or performance of this Agreement or the transactions contemplated by this
Agreement, is or will be entitled to any broker's or finder's or similar fees or
other commissions as a result of this Agreement or such transactions, except for
Warburg Dillon Read LLC, as to which Seller shall have no liability.
12.6 Legal Proceedings. There is no order or action pending or,
to the best knowledge of Buyer or Presley-Del., threatened in writing against or
affecting Buyer or Presley-Del. that individually or when aggregated with one or
more other actions or orders has or might reasonably be expected to have a
material adverse effect on Buyer's or Presley-Del.'s ability to perform this
Agreement or any other aspect of the transactions contemplated by this
Agreement.
12.7 Plant Closing. Presley-Del and Buyer represent to Seller
that they do not intend to implement a "plant closing" or a "mass lay-off", as
those terms are defined in the WARN Act, in respect of Seller's Business within
one hundred fifty (150) days of the Closing, it being understood that such
representation does not extend to the intentions of William Lyon, Chairman of
the Board of Presley-Del.
13. Survival of Representations and Warranties; Indemnity.
13.1 Survival of Representations and Warranties. The
representations and warranties of Seller contained in or made pursuant to this
Agreement (and the corresponding indemnification obligations set forth in
Section 13.2 hereof) shall survive for a period of one (l) year after the
Closing Date; provided, however, that if a claim or notice is duly given under
this Section 13 with respect to a breach by Seller of any representation or
warranty made hereunder prior to the expiration of such one (1) year period,
such representation or warranty (and the corresponding indemnification
obligation) shall continue (but only with respect to the claim referenced in the
notice) until the applicable claim is finally resolved.
13.2 Seller's Indemnity Obligation. From and after the Closing
Date, Seller agrees to indemnify and hold harmless Buyer and Presley-Del. from
and against any damage, claim, liability or expense, including, without
limitation, reasonable attorney's fees and expenses (collectively, "Losses"),
based upon or arising from: (a) any breach by Seller of its representations and
warranties contained in or made pursuant to this Agreement; (b) any breach by
Seller of its covenants, obligations or other agreements to be performed by
Seller pursuant to this Agreement; and (c) any of the Excluded Liabilities;
provided, however, that (x) Seller's liability under this Section 13.2 for a
particular Loss shall be reduced, dollar for dollar, to the extent that such
Loss has already resulted in a reduction of the Purchase Price pursuant to
Section 3.2(a) of this Agreement; (y) Seller shall not be liable with respect to
the matters described in clause (a) or clause (b) of this Section 13.2 unless
and until the Losses incurred by Buyer and Presley-Del. with respect to such
matters shall exceed $500,000 (the "Threshold") on a cumulative basis, at which
time Seller shall only be liable to Buyer and Presley-Del. for the
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amount by which such Losses exceed the Threshold; and (z) in no event shall
Seller's aggregate liability (not including liabilities that are covered by
Seller's or any of the Partnership's insurance or indemnification of Seller or
any of the Partnerships by third parties) to the Buyer and Presley-Del. for all
matters indemnified under clause (a) or clause (b) of this Section 13.2 exceed
$2,400,000. Notwithstanding any other provision contained herein to the
contrary, in no event shall Seller's liability to the Buyer or Presley-Del. for
indemnification under clause (c) with respect to any Excluded Liability
referenced in Section 5.1 hereof exceed the amount of Seller's available
insurance coverage therefor. The remedies provided in this Section 13.2 shall be
the sole and exclusive remedy to Buyer and Presley-Del. with respect to all
claims relating to the breach by Seller of any representations, warranties,
covenants or other obligations under this Agreement.
13.3 Buyer's and Presley-Del.'s Indemnity Obligation. From and
after the Closing Date, Buyer and Presley-Del. each agree, jointly and
severally, to indemnify and hold harmless Seller from and against any Losses
based upon or arising from: (a) any breach by Buyer or Presley-Del. of their
respective representations and warranties contained in or made pursuant to this
Agreement; (b) any breach by Buyer or Presley-Del. of their respective
covenants, obligations or other agreements to be performed by Buyer or
Presley-Del. pursuant to this Agreement; and (c) any of the Assumed Liabilities;
provided, however, that neither Presley-Del. nor Buyer shall have any liability
with respect to the matters described in clause (a) or clause (b) of this
Section 13.3 unless and until the Losses incurred by Seller with respect to such
matter shall exceed the Threshold on a cumulative basis, at which time Buyer
shall only be liable to Seller for the amount by which such Losses exceed the
Threshold. In no event shall Buyer's or Presley-Del.'s aggregate liability (not
including liabilities that are covered by Buyer's or Presley-Del.'s insurance or
indemnification from third parties) to the Seller for all matters indemnified
under clause (a) or clause (b) of this Section 13.3 exceed $2,400,000. The
remedies provided in this Section 13.3 shall be the sole and exclusive remedy to
Seller with respect to all claims relating to the breach by Presley-Del. and
Buyer of any representations, warranties, covenants or other obligations under
this Agreement.
13.4 Notice. Any party seeking indemnification (an "Indemnified
Party") with respect to any Losses shall give notice thereof to the party
required to provide indemnity hereunder (the "Indemnifying Party") within ten
(10) days after receipt by the Indemnified Party of notice of any demand, claim,
or circumstances which could give rise to a claim, or the commencement (or
threatened commencement) of any action, proceeding, or investigation, which
could give rise to a right to indemnification pursuant to this Section 13.
Notwithstanding the foregoing, the rights of any Indemnified Party to be
indemnified in respect of any Losses resulting from the asserted liability shall
not be adversely affected by the Indemnified Party's failure to give or delay in
giving notice unless (and then only to the extent that) the Indemnifying Party
is materially prejudiced thereby.
14. Seller's Obligations Before Closing. Seller warrants, covenants and
agrees that from the date of this Agreement until the Closing:
14.1 Buyer's Access to Premises and Information. Buyer and its
counsel, accountants and other representatives will have reasonable access
during normal business hours to the Real Property and all properties, books,
accounts, records, contracts and documents of or
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relating to Seller and any of the Partnerships. Seller will furnish or cause to
be furnished to Buyer and its representatives all data and information
concerning the Real Property, the Assets and the Contracts that may reasonably
be requested.
14.2 Conduct of Business in Normal Course. Seller will, and
Seller will cause each of the Partnerships to, carry on its respective business
activities in substantially the same manner as they previously have been carried
out, and such entities will not, without first obtaining Buyer's written
consent, make or institute any unusual or novel methods of purchase, sale,
lease, management, accounting or operation that vary materially from those
methods used by Seller and the applicable Partnership as of the date of this
Agreement.
14.3 Preservation of Real Property and Operations. Seller will
use its best efforts, and will cause each of the Partnerships to use its best
efforts, to preserve their business organizations intact to the extent they
relate to the Real Property, to keep available to Seller and the Partnerships
their present officers and employees, and to preserve their present
relationships with suppliers, contractors, customers and others having business
relationships with them. Seller shall take no action, and Seller shall not cause
the Partnerships to take any action, that would reasonably be expected to
materially impair the value of the Real Property.
14.4 Maintenance of Insurance. Seller will, and shall cause each
of the Partnerships to, continue to carry its existing insurance.
14.5 Maintenance of Intangibles. Seller will not do, or agree to
do, or cause any of the Partnerships to do, any of the following acts without
the prior written consent of Buyer: (a) waive or compromise any material right
or claim; or (b) cancel, without full payment, any material note, loan, or other
obligation owing to Seller or any of the Partnerships.
14.6 Employees and Compensation. Seller will not do, or agree to
do, or cause any of the Partnerships to do, any of the following acts other than
in the ordinary course and consistent with past practice: (a) make any material
change in compensation payable, or to become payable, to any officer, employee,
sales agent, or representative; or (b) make any material change in benefits
payable to any officer, employee, sales agent, or representative under any bonus
or pension plan or other contract or commitment.
14.7 Other Transactions. Without Buyer's prior written consent,
(a) Seller shall not distribute cash, securities or other property to any
shareholder of Seller in respect of its interest in Seller, and (b) Seller shall
not, and shall not cause any of the Partnerships to, enter into any material
contract, commitment or transaction not in the ordinary course of its respective
business.
14.8 Notification of Certain Matters. Seller shall give prompt
notice to Buyer of (a) the occurrence, or failure to occur, of any event that
would be likely to cause any of its representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date, and (b) any failure on its
part to comply with or satisfy, in any material respect, any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall modify Seller's
representations or warranties or its obligations under
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this Agreement. Seller shall give prompt notice to the other Parties hereto of
any notice or other communication from any third party alleging that the consent
of such third party is or may be required in connection with the transactions
contemplated by this Agreement.
14.9 Permits and Approvals; Third Party Consents. Seller will use
its best efforts to obtain any governmental or third party approvals that may be
necessary for Seller to consummate the transactions contemplated by this
Agreement.
14.10 Supplements to Schedules. From time to time prior to the
Closing Date, Seller may supplement or amend the Schedules referred to herein
with respect to any matter arising after the date hereof that, if existing or
occurring at the date hereof, would have been required to be set forth or
described in such Schedules; provided, however, that unless otherwise agreed by
the Parties, no such amendment or supplement shall modify Seller's
representations or warranties or its obligations under this Agreement.
14.11 Financing. Seller shall use its best efforts to cooperate
with Buyer and Presley-Del. in obtaining financing for the Acquisition,
including the preparation of any disclosure documents requested by Buyer or
Presley-Del.
15. Presley-Del.'s and Buyer's Obligations Before Closing. Buyer
and Presley-Del. warrant, covenant and agree that from the date of this
Agreement until the Closing:
15.1 Cooperation in Securing Consents of Third Parties. Buyer
will use its best reasonable efforts to assist Seller in obtaining the consent
of all necessary persons and agencies to the assignment and transfer to Buyer of
the Real Property, the Personal Property, the Contracts and the other
properties, Assets and any other agreements to be assigned and transferred under
the terms of this Agreement. Buyer agrees to use its best reasonable efforts to
obtain all approvals and permits of Governmental Entities and third parties that
may be necessary for Buyer to consummate the transactions contemplated by this
Agreement.
15.2 Resale Certificate. Buyer will furnish any resale
certificate or other documents reasonably requested by Seller to comply with the
provisions of the sales and use tax laws of the State of California.
15.3 Conduct of Business in Normal Course. Presley-Del. and Buyer
will carry on their business activities in substantially the same manner as they
previously have been carried out and will not make or institute any unusual or
novel methods of purchase, sale, lease, management, accounting or operation that
vary materially from those methods used by Presley-Del. and Buyer as of the date
of this Agreement.
15.4 Financing. Presley-Del. and Buyer shall use reasonable
efforts to obtain financing and take other action such that, as of the Closing
Date, (a) Buyer will have (i) borrowing capacity under the terms of its existing
bank credit facility, and/or (ii) obtained other bank or third-party financing
on terms reasonably acceptable to Buyer, in any case, in an amount sufficient to
enable Buyer to finance the Acquisition as contemplated herein (inclusive of any
refinancing of existing indebtedness with respect to the Real Property), and (b)
no event of default (or other act or event which would permit acceleration of
the indebtedness) shall have
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occurred and be continuing with respect to Presley-Del.'s 12 1/2% Senior Notes
due 2001 as a result of the transactions contemplated by this Agreement.
15.5 Notification of Certain Matters. Buyer shall give prompt
notice to Seller of (a) the occurrence, or failure to occur, of any event that
would be likely to cause any of its representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Closing Date, and (b) any failure on its
part to comply with or satisfy, in any material respect, any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall modify Presley-Del.'s or
Buyer's representations or warranties or its obligations under this Agreement.
Presley-Del. or Buyer shall give prompt notice to Seller of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
16. Conditions Precedent to Presley-Del.'s and Buyer's Performance.
The obligations of Presley-Del. and Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at or before
the Closing, of all the conditions set forth below in this Section 16 and to
the performance by Seller of its obligations set forth in Section 19.1.
Presley-Del. and Buyer may waive any or all of these conditions in whole or in
part without prior notice.
16.1 Accuracy of Seller's Representations and Warranties;
Satisfaction of Covenants. All representations and warranties by Seller, or in
any written statement that is delivered to Buyer by Seller under this Agreement,
that are qualified as to materiality shall be true and complete and any such
representations and warranties that are not so qualified shall be true and
complete in all material respects, in each case as of the date of this Agreement
and as of the Closing Date (as if made on the Closing Date); each of Seller and
the Lyons shall have performed, satisfied, and complied in all material respects
with all covenants, agreements and conditions required of it and them,
respectively, by this Agreement; and each of Seller and the Lyons shall have
delivered a certificate to the foregoing effect, dated the Closing Date, and
signed by a duly authorized officer of Seller (in the case of Seller's
certificate) and the Lyons (in the case of the Lyons' certificate).
16.2 Regulatory Approvals and Other Consents. The Parties shall
have received all required regulatory approvals and third party consents
(including, without limitation, lender consents, but not including those
consents which, if not received, would not have a material adverse effect on the
Parties or their ability to effect the Acquisition), in each case without the
imposition of any condition which is reasonably unacceptable to Presley-Del. or
Buyer.
16.3 No Material Adverse Change. Since the date of this Agreement
through the Closing Date, there shall not have been (a) any change to the Real
Property or Assets that materially adversely affects the value of the Real
Property or Assets taken as a whole, or (b) any material increase in the Assumed
Liabilities other than as may have occurred in the ordinary course of business
and be substantially offset in amount by a corresponding increase in the value
of the Assets to be purchased hereunder.
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16.4 Opinion of Seller's Counsel. Buyer shall have received from
O'Melveny and Myers LLP, counsel for Seller, an opinion dated as of the Closing
Date, in form and substance reasonably satisfactory to Buyer and its counsel,
that:
(a) Due Incorporation. Seller has been duly incorporated and is
validly existing and in good standing under the laws of the State of
California, with corporate power to own its properties and assets, to
enter into this Agreement and to perform its obligations hereunder. Each
of the Partnerships has been validly formed and is in good standing in
the State of its formation, with the power to own its properties and
assets.
(b) Due Authorization Execution and Delivery. The execution,
delivery and performance of this Agreement have been duly authorized by
all necessary corporate action on the part of Seller, and this Agreement
has been duly executed and delivered by Seller.
(c) Enforceability. This Agreement constitutes the legally valid
and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
affecting creditors' rights generally (including, without limitation,
fraudulent conveyance laws) and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
(d) No Consents Required. No order, consent, permit or approval
of any California or Federal governmental authority that such counsel
has, in the exercise of customary professional diligence, recognized as
applicable to the Seller or to transactions of the type contemplated by
this Agreement is required on the part of Seller for the execution and
delivery of, and the performance by Seller on or prior to the date of
such opinion under this Agreement, except for such as have been
obtained.
(e) No Violation of Charter Documents, Agreements, Orders, Etc.
The Seller's execution and delivery of, and performance of its
obligations on or prior to the date of such opinion under, this
Agreement do not (i) violate the Seller's articles of incorporation or
bylaws, (ii) violate, breach or result in a default under any of the
Contracts identified, in good faith, to such counsel in an officer's
certificate as being material to Seller and the Partnerships taken as a
whole (which Seller hereby agrees shall be, as of the Closing Date, all
of the Contracts material to Seller and the Partnerships taken as a
whole), or (iii) breach or otherwise violate any judgment or decree of
any California or Federal court or governmental authority binding on the
Seller and identified to such counsel in an officer's certificate. Such
counsel need express no opinion as to the effect of the Seller's
performance of its obligations in this Agreement on the Seller's
compliance with financial covenants in any loan agreement to which it is
a party.
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In rendering such opinion, counsel for Seller may rely on
certificates of officers and directors of Seller as to factual matters,
certificates of public officials, and opinions of associate counsel approved by
Buyer.
16.5 Absence of Litigation. No action, suit, or proceeding before
any court or any Governmental Entity, which could reasonably be expected to have
a material adverse effect on the Real Property, the Assets or the transactions
contemplated by this Agreement or to their consummation, shall have been
instituted or threatened in writing on or before the Closing Date.
16.6 Title Policy. The Title Company shall have issued or be
committed to issue to Buyer or to Buyer's Permitted Assigns, at Seller's
expense, standard coverage CLTA owner's policies of title insurance ("Title
Policies") in the total amount for each parcel of Real Property as set forth on
Schedule 1.1(a) and Schedule 1.2(a) (as such Schedules shall be updated at the
Closing to omit parcels which have been sold and to add parcels which have been
acquired by Seller since the date of this Agreement in the ordinary course of
business), together with a CLTA 101.4 mechanic's lien endorsement, dated as of
the Close of Escrow, insuring Buyer (or Buyer's Permitted Assigns, as
applicable) as the fee owner of the Real Property, and showing title to Seller's
Real Property vested in Buyer (or Buyer's Permitted Assigns) subject only to:
(a) Nondelinquent general and special real property taxes, bonds
and assessments, which shall be prorated as of the Close of Escrow;
(b) All exceptions approved by Buyer.
If Buyer requires any endorsements to the Title Policy (other than
mechanic's lien coverage), or if Buyer requires an American Land Title
Association ("ALTA") policy of title insurance or a binder in lieu of a policy
of title insurance, then: (i) Buyer shall make such election in a timely manner
so as to not interfere with or delay the Close of Escrow; (ii) Seller shall pay
only the cost of the CLTA owner's policy described above and the mechanic's lien
endorsement; and (iii) Buyer shall pay the additional cost of obtaining any
other endorsements or such ALTA policy or binder, including, without limitation,
any survey costs.
16.7 Assignment of Real Property Documents. Seller shall have
assigned to Buyer all documents, warranties, rights and claims, including, but
not limited to, reports, plans, surveys, maps, development agreements,
conditions of approval, entitlements, subdivision agreements, licenses and
permits, studies, drawings, books and records, financial data, and all other
similar documents or materials issued or prepared in connection with the
ownership, operation, use and development of the Real Property. Such assignment
shall be in the form of the "Assignment of Plans and Warranties" (as hereinafter
defined).
16.8 Solvency Opinion. Presley-Del. shall have received a solvency
opinion (in form and substance reasonably satisfactory to Presley-Del.) from
Houlihan Lokey Howard & Zukin Financial Advisors (or such other firm of national
standing and reasonably acceptable to Presley-Del. and Seller) with respect to
the solvency of Presley-Del. and New Presley following the consummation of the
Transactions.
16.9 Financing. As of the Closing Date, (a) Buyer will have (i)
borrowing capacity under the terms of its existing bank credit facility, and/or
(ii) obtained other bank or
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third-party financing on terms reasonably acceptable to Buyer, in any case, in
an amount sufficient to enable Buyer to finance the Acquisition as contemplated
herein (inclusive of any refinancing of existing indebtedness with respect to
the Real Property), and (b) no event of default (or other act or event which
would permit acceleration of the indebtedness) shall have occurred and be
continuing with respect to Presley-Del.'s 12 1/2% Senior Notes due 2001 as a
result of the transactions contemplated by this Agreement.
16.10 No "Ownership Change". Presley-Del. shall have determined to
its satisfaction that the purchases of shares of Common Stock pursuant to the
Series A Offer and the Series B Purchase Agreements will not result in an
"ownership change" of Presley-Del. for Federal tax purposes that would impair
Presley-Del.'s ability to utilize its tax net operating losses.
16.11 Series A Offer. The conditions to the Series A Offer set forth
in Exhibit "B" hereto (other than the condition in clause (ii) thereof) shall
have been satisfied or waived by the Lyons.
16.12 Presley-Del. Stockholder Approval. The stockholders of
Presley-Del., by a vote sufficient under applicable law and Presley-Del's
Certificate of Incorporation, shall have approved the Merger.
16.13 Series B Purchase Agreements. Each of the Series B Purchase
Agreements shall be in full force and effect and enforceable by Seller against
the Series B Shareholders in accordance with their terms.
16.14 Cancellation of Lyon Stock Options. William Lyon shall have
executed and delivered to Presley-Del. an instrument in the form of Exhibit E
attached hereto, canceling his outstanding options to acquire 750,000 shares of
Presley-Del. Common Stock.
17. Conditions Precedent to Seller's Performance. The obligations of
Seller to sell and transfer the Assets under this Agreement are subject to the
satisfaction, at or before Closing, of all the following conditions set forth in
this Section 17 and to the performance by Buyer and Presley-Del. of their
respective obligations set forth in Section 19.2 below. Seller may waive any or
all of these conditions in whole or in part without prior notice.
17.1 Accuracy of Buyer's and Presley-Del.'s Warranties. All
representations and warranties by Buyer and Presley-Del. contained in this
Agreement or in any written statement delivered by Buyer or Presley-Del. under
this Agreement that are qualified as to materiality shall be true and complete
and any such representations and warranties that are not so qualified shall be
true and complete in all material respects, in each case as of the date of this
Agreement and as of the Closing Date (as if made on the Closing Date). Buyer and
Presley-Del. shall have performed and complied with all covenants and agreements
and satisfied all conditions that they are required by this Agreement to
perform, comply with, or satisfy, before or at the Closing; and Buyer and
Presley-Del. shall have each delivered to Seller a certificate to the foregoing
effect, dated as of the Closing Date and signed by a duly authorized officer of
each entity.
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17.2 Regulatory Approvals and Other Consents. The Parties shall have
received all required regulatory approvals and third party consents (including,
without limitation, lender consents, but not including those consents which, if
not received, would not have a material adverse effect on the Parties or their
ability to effect the Acquisition), in each case without the imposition of any
condition which is reasonably unacceptable to Seller.
17.3 Opinion of Buyer's and Presley-Del.'s Counsel. Buyer and
Presley-Del. shall have furnished to Seller opinions, dated as of the Closing
Date, of each of Irell & Manella LLP and Morris, Nichols, Arsht & Tunnell,
counsel for Buyer and Presley-Del., and Nancy M. Harlan, Esq., Senior Vice
President and General Counsel of Presley-Del., each opinion to be in form and
substance reasonably satisfactory to Seller and its counsel, and such opinions
collectively to be to the effect that:
(a) Due Incorporation. Buyer and Presley-Del. have each been
duly incorporated and are validly existing and in good standing under
the laws of their respective states of incorporation, with corporate
power to own their properties and assets, to enter into this Agreement
and to perform their respective obligations hereunder.
(b) Due Authorization, Execution, and Delivery. The execution,
delivery and performance of this Agreement have been duly authorized by
all necessary corporate action on the part of Buyer and Presley-Del.,
and this Agreement has been duly executed and delivered by each of Buyer
and Presley-Del.
(c) Enforceability. This Agreement constitutes the legally valid
and binding obligation of Buyer and Presley-Del., enforceable against
them in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and by general principles of
equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law.
(d) No Consents Required. No order, consent, permit or approval
of any California or Federal governmental authority that such counsel
has, in the exercise of customary professional diligence, recognized as
applicable to Buyer or Presley-Del. or to transactions of the type
contemplated by this Agreement is required on the part of Buyer or
Presley-Del. for the execution and delivery of, and the performance by
Buyer and Presley-Del. under this Agreement, except for such as have
been obtained.
(e) No Violation of Charter Documents, Agreements, Orders, Etc.
Buyer's and Presley-Del.'s execution or delivery of, and performance of
their respective obligations under, this Agreement do not (i) violate
Buyer's or Presley-Del.'s respective charter documents, (ii) violate,
breach, or result in a default under, any existing obligation of or
restriction on either Buyer or Presley-Del. under any agreement
identified to such counsel in an officer's certificate as being material
to Buyer or Presley-Del., or (iii) breach or otherwise violate any
judgment or decree of any California or Federal court or governmental
authority binding on Buyer or Presley-Del and identified in an officer's
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certificate of Buyer and Presley-Del. Such counsel need express no
opinion as to the effect of Buyer's or Presley-Del.'s performance under
this Agreement on such Parties' compliance with financial covenants in
any loan agreement which either of them is a party.
In rendering such opinion, counsel for Buyer may rely on
certificates of officers and directors of Presley-Del. and/or Buyer as to
factual matters, certificates of Governmental Entities and opinions of associate
counsel approved by Seller.
17.4 Absence of Litigation. No action, suit, or proceeding before
any court or any governmental body or authority, pertaining to the transactions
contemplated in this Agreement or to their consummation, shall have been
instituted or threatened in writing on or before the Closing Date.
17.5 Series A Offer. The conditions to the Series A Offer set forth
in Exhibit "B" hereto (other than the condition set forth in clause (ii)
thereof) shall have been satisfied or waived by the Lyons.
17.6 Presley-Del. Stockholder Approval. The stockholders of
Presley-Del., by a vote sufficient under applicable law and Presley-Del.'s
Certificate of Incorporation, shall have approved the Merger.
17.7 Release of Seller From Certain Assumed Liabilities. Seller
shall have been released from its obligations under the contracts and
instruments identified on Schedule 17.7, such releases to be in form and
substance reasonably satisfactory to Seller.
17.8 Series B Purchase Agreements. The Series B Purchase Agreements
shall continue to be in full force and effect, and shall be enforceable by
Seller against the Series B Shareholders in accordance with their terms;
provided, however, that the condition set forth in this Section 17.8 shall be
deemed to have been satisfied if any failure of the Series B Purchase Agreements
to be in full force and effect and enforceable by Seller against the Series B
Shareholders is due solely to a breach of such Series B Purchase Agreements by
Seller.
17.9 No "Ownership Change". Seller and the Lyons shall have
determined to their satisfaction that the purchases of shares of Common Stock
pursuant to the Series A Offer and the Series B Purchase Agreements will not
result in an "ownership change" of Presley-Del. for Federal tax purposes that
would impair Presley-Del.'s ability to utilize its tax net operating losses.
18. The Parties' Obligations after Closing.
18.1 Employee Matters.
(a) Effective as of the Closing Date, Buyer will offer
employment on an "at will" basis to officers, employees and sales agents
of Seller on such terms and conditions of employment that are
substantially similar in the aggregate to the terms and conditions
applicable to similarly situated employees of Buyer. Buyer shall credit
each Seller Employee who accepts such offer of employment for his or her
service with Seller
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for purposes of eligibility, benefit accrual and vesting with respect to
vacation, personal and sick days and benefits under each ERISA Plan
maintained by Buyer and provided to such Seller Employee.
(b) Seller shall take all actions necessary to comply with the
applicable requirements of Section 4980B of the Code and part 6 of
Subtitle B of Title I of ERISA ("COBRA") and any comparable state or
local law with respect to the termination of its employees and the
employees of the Partnerships in connection with the transactions
contemplated by this Agreement. Seller, the Partnerships and their ERISA
Affiliates will continue any group health plan coverage to their
employees to the extent necessary to prevent Buyer from being deemed to
be a successor employer of Seller, any Partnership or any of their ERISA
Affiliates within the meaning of Proposed Treasury Regulations Section
54.4980B-9 Q&A-8(c).
18.2 WARN Act. The Parties acknowledge and agree that, for the
purposes of the WARN Act, any person who is a Seller Employee who accepts
Buyer's offer of employment made pursuant to Section 18.1 hereof shall be
considered to be an employee of Buyer immediately upon the Closing and the
Parties agree to comply with any applicable requirements of the WARN Act with
respect to such Seller Employees.
18.3 Maintenance of Seller's Corporate Existence; Tangible Net
Worth. The Lyons and Seller agree to maintain the corporate existence of Seller
for a period of one (1) year after the Closing Date and to maintain a Tangible
Net Worth (as defined below) of not less than $2.4 million for a period of one
(1) year after the Closing Date, and for such period thereafter as such one (1)
year period may be extended with respect to certain representations and
warranties as provided in Section 13.1 above. The term "Tangible Net Worth" as
used herein shall be equal to the difference between (a) the sum of Seller's
cash; accounts receivable; liquid securities and investments; other current
assets; real property and other property (but not including goodwill or other
intangibles) and (b) the sum of Seller's accounts payable; accrued salary and
wages; accrued sales and other tax liabilities; bank revolver and term loans.
Calculation of Tangible Net Worth shall take into account any reserves,
including, without limitation, reserves for uncollectible accounts receivable.
18.4 Corporate Governance. The Lyons and Seller shall, and shall
cause Presley-Del. and New Presley to, comply with all applicable Federal and
state law and all applicable listing criteria of the New York Stock Exchange,
Inc. (or such other securities exchange on which the New Presley Common Stock
shall be listed) concerning the corporate governance of Presley-Del. and New
Presley, as applicable, following consummation of the Series A Offer, including
obligations in respect of New Presley's stockholders, directors, officers and
otherwise.
18.5 Further Agreements. Each of the Parties hereto agrees to
cooperate in good faith with each other, and to execute and deliver such further
documents and perform such other acts as may be reasonably necessary or
appropriate to consummate and carry into effect the transactions contemplated
under this Agreement including, but not limited to, the following:
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(a) Prior to the Closing and the consummation of the Series A
Offer, the Series B Purchase Agreements and the Merger, upon the terms
and subject to the conditions of this Agreement, the Parties shall use
their respective reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done and cooperate with each
other in order to do, all things necessary, proper or advisable (subject
to any applicable laws) to consummate the Closing and the other
transactions contemplated hereby as promptly as practicable including,
but not limited to (i) the preparation and filing of all forms,
registrations and notices required to be filed to consummate the Closing
and the other transactions contemplated hereby and the taking of such
actions as are necessary to obtain any requisite approvals,
authorizations, consents, orders, licenses, permits, qualifications,
exemptions or waivers by any third party or Governmental Entity, (ii)
the preparation of any disclosure documents requested by Buyer in order
to facilitate financing of the Acquisition, and (iii) the satisfaction
of the other parties' conditions to Closing. In addition, no party
hereto shall take any action after the date hereof that could reasonably
be expected to materially delay the obtaining of, or result in not
obtaining, any permission, approval or consent from any Governmental
Entity or other person required to be obtained prior to Closing or
consummation of the other transactions contemplated hereby.
(b) Prior to the Closing and the consummation of the other
transactions contemplated hereby, each Party shall promptly consult with
the other Parties hereto with respect to, provide any necessary
information with respect to, and provide the other Parties (or their
respective counsel) with copies of, all filings made by such Party with
any Governmental Entity or any other information supplied by such Party
to a Governmental Entity in connection with this Agreement or the
transactions contemplated hereby. Each Party hereto shall promptly
inform the others of any communication received by such Party from any
Governmental Entity regarding the transactions contemplated hereby. If
any Party hereto or affiliate thereof receives a request for additional
information or documentary material from any such Governmental Entity
with respect to any of the transactions contemplated hereby, then such
Party shall endeavor in good faith to make, or cause to be made, as soon
as reasonably practicable and after consultation with the other Parties,
an appropriate response in compliance with such request. To the extent
that transfers, amendments or modifications of permits (including
environmental permits) are required as a result of the execution of this
Agreement or consummation of the transactions contemplated hereby, the
Parties shall use their best efforts to effect such transfers,
amendments or modifications.
18.6 Post Closing Obligations. (a) Seller will, and will use its
best efforts to cause each of the Partnerships to, execute, acknowledge, and
deliver any further deeds, assignments, conveyances, and other assurances,
documents, and instruments of transfer, necessary or reasonably requested by
Buyer, and will take any other action consistent with the terms of this
Agreement that may be necessary or reasonably requested by Buyer for the purpose
of assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all property to be conveyed and transferred under
this Agreement, including, without limitation, the Real Property. If requested
by Buyer, Seller will prosecute or otherwise enforce in its own name (or the
name of the Partnerships) for the benefit of Buyer any claims, rights or
benefits that are transferred to Buyer under this Agreement and that require
prosecution
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or enforcement in Seller's name (or the name of the Partnerships). Any
prosecution or enforcement of claims, rights, or benefits under this paragraph
will be solely at Buyer's expense, unless the prosecution or enforcement is made
necessary by a breach of this Agreement by the Seller.
(b) Seller shall remain liable and indemnify and defend Buyer, in
accordance with the provisions of Section 13.2, for any claims involving any
actual or alleged construction defect or breach of warranty with respect to
homes which are sold by Seller or the Partnerships and which close escrow prior
to the close of Escrow. Buyer shall be liable and indemnify and defend Seller,
in accordance with the provisions of Section 13.3, for any claims involving any
actual or alleged construction defect or breach of warranty with respect to
homes where no work had commenced prior to the close of Escrow. Notwithstanding
any other provision of this Agreement, to the extent that construction has begun
on any improvements prior to close of Escrow hereunder, or a home has been
started but has not yet closed escrow as of such date, Buyer and Seller shall
each remain liable for any claims for alleged construction defects or breach of
warranty for any work done by or for them, respectively, on the Real Property,
and each shall indemnify the other, in accordance with the provisions of
Sections 13.2 and 13.3, respectively for any claims arising from work done by or
for them. The intent of this provision is to maximize insurance coverage,
whether purchased for the benefit of Buyer, any Permitted Assignee of Buyer,
Seller, or any Partnership, and nothing contained in this Agreement shall be
construed to reduce or change coverage to the detriment of any of Buyer, any
Permitted Assignee of Buyer, Seller, or any Partnership. Specifically, the
Parties agree that the floors and ceilings for indemnity set forth in Sections
13.2 and 13.3 shall not be construed to affect or limit in any way any insurance
coverage of any party.
18.7 Management of Certain Excluded Projects Following the Closing.
Following the Closing, Buyer agrees to manage and to provide such other related
services as Seller may reasonably request with respect to the real estate
development projects which are identified on Schedule 2.6 hereto as Excluded
Assets. Seller shall reimburse Buyer for all costs incurred by Buyer in the
performance of such management services.
19. Escrow Closing Obligations.
19.1 Deliveries by Seller to Escrow Holder. Subject to the
conditions set forth in Section 17 hereof, Seller hereby covenants and agrees to
deliver, and shall cause each of the Partnerships to deliver, as applicable, to
Escrow Holder on or prior to the Closing Date the following instruments and
documents, the delivery of each of which shall be a condition to the Close of
Escrow for the benefit of Buyer:
(a) Grant Deeds. Grant Deeds, duly executed and acknowledged by
Seller or the applicable Partnership, conveying the Real Property to
Buyer (or Buyer's Permitted Assigns), in the form attached hereto as
Exhibit "F" (the "Seller Grant Deeds")."
(b) Assignments of Deposits. Assignments of all of Seller's and
the Partnerships' rights (including the right to any deposit made by
Seller), with consents signed by the sellers, optionors or other
parties, in a form reasonably acceptable to Buyer,
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of any purchase agreements, escrow instructions, options, rights of
first refusal or other agreements to purchase or acquire real property,
including, but not limited to, the properties listed on Schedule
19.1(b).
(c) Assignments of Plans and Warranties. Two (2) copies of each
Assignment of Plans and Warranties, executed by Seller or the applicable
Partnership, in the form attached hereto as Exhibit "G" (the
"Assignments of Plans and Warranties").
(d) Bills of Sale. Two (2) copies of each Bill of Sale conveying
the Personal Property, executed by Seller or the applicable Partnership,
in the form attached hereto as Exhibit "H" (the "Bills of Sale"). Any
other instruments of transfer, such as Department of Motor Vehicle
title, shall be in the form required by law or as reasonably acceptable
to Buyer.
(e) Assignments of Other Assets. Two (2) copies, executed by
Seller or the applicable Partnership, of each of the instruments of
assignment and transfer of all other Assets to be transferred by Seller
or any of the Partnerships pursuant to Section 1.1(c) and Section 1.2(c)
hereof, respectively. The general assignments shall be in the form
attached hereto as Exhibit "I" (the "Assignments of Other Assets"). Any
other instruments of transfer shall be in the form required by law,
executed by the entity holding the asset and reasonably acceptable to
Buyer.
(f) Assignments and Assumption of Leaseholds. Two (2) copies of
assignments and assumption of all leaseholds, properly executed and
acknowledged by Seller and the applicable Partnerships, and accompanied
by all consents of lessors required by this Agreement and the leases
being assigned. The assignment and assumption shall be in the form
attached hereto as Exhibit "J" (the "Assignment and Assumption of
Leaseholds").
(g) Seller's Affidavits. The Seller's Affidavits, duly executed
by Seller and each of the Partnerships, respectively.
(h) Assignment and Assumption Agreements. Two (2) copies,
executed by Seller or the applicable Partnership, of an Assignment and
Assumption Agreement in the form attached hereto as Exhibit "K" (the
"Assignment and Assumption Agreements").
19.2 Deliveries by Buyer to Escrow Holders. Subject to the
conditions set forth in Section 16 hereof, Buyer hereby covenants and agrees to
deliver to Escrow Holder on or prior to the Closing Date the following, the
delivery of each of which shall be a condition to the Close of Escrow for the
benefit of Seller:
(a) Funds. The Purchase Price, together with Buyer's share of
any Escrow closing costs and prorations in the amount determined by
Escrow Holder consistent with the terms hereof, shall be delivered to
Escrow Holder by Buyer in cash or other immediately available funds not
later than the business day immediately prior to the Closing Date.
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<PAGE> 47
(b) Assignments of Plans and Warranties. Two (2) copies of the
Assignments of Plans and Warranties, executed by Buyer.
(c) Assignment and Assumption Agreements. Two (2) copies of the
Assignment and Assumption Agreement, executed by Buyer.
(d) Assignments and Assumption of Leaseholds. Two (2) copies of
each Assignment and Assumption of leasehold, executed by Buyer.
19.3 Disbursements and Other Actions by Escrow Holder. Upon the
Close of Escrow, and when all required funds and documents have been deposited
into the Escrow, Escrow Holder shall promptly undertake all of the following in
the following order:
(a) Cause Seller's Grant Deeds for the Real Property (with
documentary transfer tax information to be affixed after recording) to
be recorded in the Official Records of the County in which the Real
Property is located.
(b) Disburse all funds deposited with Escrow Holder by Buyer in
payment of the Purchase Price for the Assets and in payment of Buyer's
share of any Escrow closing costs and prorations as follows:
(i) Deduct from the funds deposited with Escrow Holder by
Buyer in payment of Buyer's share of any Escrow closing costs and prorations the
amount of all such items chargeable to the account of Buyer hereunder;
(ii) Deduct from the funds deposited with Escrow Holder by
Buyer in payment of the Purchase Price all items chargeable to the account of
Seller, including, without limitation, the amount of any deeds of trust, tax
liens or other monetary encumbrances to be paid by Seller and Seller's share of
any Escrow closing costs and prorations;
(iii) Disburse the remaining balance of the Purchase Price
(as such may be adjusted pursuant to Section 3.2) to Seller (or to Seller's
designee) promptly upon the Close of Escrow. Any funds deposited by or on behalf
of Buyer in excess of the sum of the Purchase Price and Buyer's share of any
Escrow closing costs and prorations shall be returned to Buyer (except for any
amounts which are to be withheld pursuant to Section 3.2).
(c) Deliver the Seller's Affidavit to Buyer.
(d) Deliver one (1) copy of the (i) Bill of Sale, (ii)
Assignment of Plans and Warranties, (iii) each Assignment and Assumption
of Leasehold, (iv) Assignment of Other Assets, and (v) Assignment and
Assumption Agreement to Buyer, and one (1) copy to Seller and each of
the Partnerships.
(e) Cause the Title Policy described in Section 16.6 above to be
delivered to Buyer.
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<PAGE> 48
20. Escrow Cancellation. If any Party defaults with respect to its
obligations hereunder, or if Escrow is not in a condition to close by the agreed
Closing Date, Escrow Holder shall continue to comply with the instructions
contained herein until a written demand has been made by a party entitled to do
so for the cancellation of Escrow. Escrow Holder shall notify the other party of
any such demand.
20.1 Charges. If the Close of Escrow fails to occur due to Seller's
default, Seller shall pay all Escrow cancellation charges. If the Close of
Escrow fails to occur due to Buyer's default, Buyer shall pay all Escrow
cancellation charges. If the Close of Escrow fails to occur for any reason other
than the foregoing, Buyer and Seller shall each pay one-half (1/2) of any Escrow
cancellation charges, and each party shall release the other party from all
liability hereunder for the failure of the Close of Escrow to occur, provided
that any other funds deposited by Buyer into Escrow, together with all interest
earned thereon in Escrow, less Buyer's one-half (1/2) share of any Escrow
cancellation charges, shall be returned to Buyer. "Escrow cancellation charges"
means all fees, charges and expenses charged by Escrow Holder as well as all
charges related to the services of the Title Company in connection with title
matters relating to this Escrow.
21. Escrow Costs; Taxes and Assessments.
21.1 Escrow and Other Costs. Subject to Section 20.1 above, Buyer
and Seller shall each pay one-half (1/2) of Escrow Holder's escrow fees for the
Escrow. Seller shall bear the cost of all documentary transfer taxes and the
cost of the CLTA standard owner's title policy described in Section 16.6 above
including the mechanic's lien endorsement. If Buyer requires any other
endorsements to the Title Policy, or if Buyer requires an ALTA policy of title
insurance or a binder in lieu of a policy of title insurance, then Buyer shall
pay the additional cost of obtaining such endorsements or such ALTA policy or
binder, including, without limitation, any survey cost. Buyer and Seller shall
each bear their own respective legal and accounting costs, if any, outside of
Escrow. All recording costs or fees and all other costs or expenses not
otherwise provided for in this Agreement shall be apportioned or allocated
between Buyer and Seller in the manner customary in Orange County, California.
21.2 Real Property Taxes and Assessments. All nondelinquent general
and special real property taxes, bonds and assessments with respect to the Real
Property shall be paid by Buyer outside of Escrow. To the extent that the
applicable tax assessor parcels, or any assessment district or other tax
parcels, which have been established as of the Closing include both the Real
Property hereunder and other adjacent real property, then the applicable
nondelinquent general and special real property taxes, bonds and assessments
shall be allocated between the Real Property hereunder and such other adjacent
real property based on acreage. Finally, if the regular tax bill or bills for
the Real Property for the fiscal year in which this Escrow closes are not
available as of the Closing, Buyer shall pay all such general and special real
property taxes, bonds and assessments for the Property outside of Escrow based
upon the then current fiscal year's regular tax bill or bills within thirty (30)
days following the date such regular tax bill or bills are actually received by
the parties. Any Mello-Roos assessments, special assessments, district
assessments or any other bonds and assessments with respect to the Real Property
shall not be paid in full by Buyer.
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21.3 Supplemental Real Property Taxes. With respect to any
supplemental taxes assessed against the Real Property pursuant to California
Revenue and Taxation Code Section 75, et seq., Buyer and Seller hereby agree
between themselves that Buyer shall be obligated to pay all such supplemental
taxes assessed against the Property for any period from and after January 1,
1999.
21.4 Other Taxes. Buyer will pay all sales and use taxes arising
from the transfer of the Assets.
22. Condemnation and Destruction.
22.1 Condemnation. If all or any material portion of any particular
development project included in the Real Property is taken prior to the Close of
Escrow as a result of condemnation (including the filing of any notice of
intended condemnation or proceedings in the nature of eminent domain), then
Seller shall immediately notify Buyer of such fact. In such event, Buyer shall
have the option to terminate its obligation to acquire such project (the
"Condemnation Excluded Property") under this Agreement upon written notice to
Seller given not later than thirty (30) days after Buyer's receipt of such
notice, and the remainder of this Agreement shall remain in full force and
effect; provided, however, that the Purchase Price shall be reduced by the
amount allocated to the Condemnation Excluded Property by mutual determination
of the parties hereto. Buyer shall have no right to terminate its obligations
with respect to any project under this Agreement as a result of any taking of a
portion of such project that is not a material portion. If Buyer does not elect
or has no right to terminate as to such project, Seller shall assign and turn
over to Buyer, and Buyer shall be entitled to receive and keep, all awards for
the taking by condemnation of such project and Buyer shall be deemed to have
accepted the Real Property subject to the taking without reduction in the
Purchase Price.
22.2 Fire or Other Casualty During Escrow. If there is damage to any
portion of the Real Property or if any portion of the Real Property is destroyed
by earthquake, flood, landslide, fire or other casualty prior to the Closing
Date, then this Agreement shall remain in full force and effect, and all
insurance proceeds payable to Seller or any of the Partnerships with respect to
such damage or destruction, if any, shall be assigned and delivered by Seller to
Buyer at the Close of Escrow hereunder, and Buyer shall receive, as a credit
against the Purchase Price, an amount equal to the deductible amount with
respect to the insurance.
23. Waiver and Consent. Either party may specifically and expressly
waive in writing any breach by the other party of any provision of this
Agreement, but no such waiver shall constitute a further or continuing waiver of
any preceding or succeeding breach of the same or any other provision. A waiving
party may at any time thereafter require further compliance by the other party
with any breach so waived. The consent by one party to any act by the other for
which such consent was required shall not be deemed to imply consent or waiver
of the necessity of obtaining such consent for the same or any similar acts in
the future. No waiver or consent shall be implied from silence or any failure of
a party to act, except as otherwise specified in this Agreement.
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24. Miscellaneous.
24.1 Successors and Assigns. Buyer shall not voluntarily or by
operation of law assign or transfer any right, interest or obligation hereunder
without Seller's prior written consent, which consent shall not be unreasonably
delayed or withheld by Seller. Each and all of the covenants and conditions and
other terms of this Agreement shall inure to the benefit of and shall be binding
upon the respective heirs, executors, administrators, successors and assigns of
Buyer, Presley-Del. (including New Presley) and Seller. As used in this Section
24, the term "successors" shall refer to the successors to all or substantially
all of the assets of a party and to a party's successors by merger or
consolidation. Notwithstanding the foregoing, Buyer shall have the right,
without the consent of Seller or the Lyons, to transfer Buyer's rights and
interests under this Agreement to a partnership, limited liability company or
other entity, so long as Buyer retains at least a fifty percent (50%) interest
in such partnership, limited liability company or other entity (such a
partnership, limited liability company or other entity being herein referred to
as a "Permitted Assign").
24.2 Expenses. Subject to Sections 3.2, 19.3, 20.1, 21.1, 24.3, 25.5
and 27 hereof, (a) Presley-Del. shall pay all fees, costs, and expenses incurred
in connection with obtaining the fairness and solvency opinions referenced in
Sections 9.4(a) and 16.8 hereof or required under the Indenture relating to
Presley-Del.'s 12 1/2% Senior Notes due 2001, and any appraisals of assets of
Presley-Del. or of Buyer that may be required in connection with obtaining any
requisite financing for Buyer to consummate the Acquisition, and (b) Seller
shall pay all fees, costs, and expenses incurred in connection with obtaining
financing commitments and any appraisals of assets of Seller that may be
required in connection with the Acquisition, or the satisfaction of the
condition set forth in Section 16.9 hereof. Subject to the provisions of Section
3.2, and except as provided in Sections 19.3, 20.1, 21.1, 24.3, 25.5 and 27
hereof and in this Section 24.2, each Party shall pay its own expenses incurred
in connection with the transactions contemplated hereby.
24.3 Attorney's Fees. If any legal action is instituted among any of
Seller, the Lyons and Buyer and Presley-Del. or Escrow Holder in connection with
this Agreement, then the prevailing party or parties shall be entitled to
recover from the losing party or parties all of its costs and expenses,
including court costs and reasonable attorneys' fees.
24.4 Notices. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
(including telex and telegraphic communications) and shall be (as elected by the
person giving such notice) hand delivered by messenger or courier service,
telecommunicated with confirming copy by mail, or mailed by United States mail
(postage prepaid), registered or certified, return receipt requested, addressed
as follows:
If to Buyer or Presley-Del.: The Presley Companies
19 Corporate Plaza
Newport Beach, California 92660
Attention: Nancy M. Harlan, Esq.
Telephone: (949) 640-6400
Telecopier: (949) 640-1818
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Mailing Address:
P.O. Box 6110
Newport Beach, California 92658-6110
With a copy to: The Presley Companies
19 Corporate Plaza
Newport Beach, California 92660
Attention: David M. Siegel
Telephone: (949) 640-6400
Telecopier: (949) 640-1710
Mailing Address:
P.O. Box 6110
Newport Beach, California 92658-6110
With a copy to: Keith P. Bishop, Esq.
Irell & Manella LLP
840 Newport Center Drive, Ste. 500
Newport Beach, California 92660
Telephone: (949) 760-0991
Telecopier: (949) 760-5200
With a copy to: Brian J. McCarthy, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071-3144
Telephone: (213) 687-5000
Telecopier: (213) 687-5600
If to Seller or the Lyons: William Lyon Homes, Inc.
4490 Von Karman Avenue
Newport Beach, California 92660-2008
Attention: William Lyon
Telephone: (949) 833-3600
Telecopier: (949) 476-2178
With a copy to: David A. Krinsky, Esq.
O'Melveny & Myers LLP
610 Newport Center Drive, Ste. 1700
Newport Beach, California 92660
Telephone: (949) 760-9600
Telecopier: (949) 823-6994
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If to Escrow Holder: First American Title Insurance Company
114 East Fifth Street
Santa Ana, California 91701
Escrow Officer: Toni Rice-Groetch
Telephone: (714) 558-3211
Telecopier: (714) 647-2139
Each notice shall be deemed delivered: (1) on the date delivered if by personal
delivery, (2) on the date telecommunicated if by telegraph, (3) on the date of
transmission with confirmed answer back if by telex or telecopier, and (4)
seventy-two (72) hours after deposit in the United States mail (postage prepaid)
if by registered or certified mail. By giving to the other parties at least
fifteen (15) days' written notice, the parties to this Agreement and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
and each shall have the right to specify as its address any other address within
the State of California.
24.5 Gender and Name. In this Agreement (unless the context requires
otherwise), the masculine, feminine and neuter genders and the singular and the
plural shall be deemed to include one another, as appropriate.
24.6 Entire Agreement. This Agreement and its Exhibits constitute
the entire agreement between the parties hereto pertaining to the subject matter
hereof, and the final, complete and exclusive expression of the terms and
conditions thereof. All prior agreements, representations, negotiations and
understandings of the parties hereto, oral or written, express or implied, are
hereby superseded and merged herein.
24.7 Captions. The captions used herein are for convenience only and
are not a part of this Agreement and do not in any way limit or amplify the
terms and provisions hereof.
24.8 Time of Essence. Time is of the essence of every provision of
this Agreement in which time is an element.
24.9 Governing Law. This Agreement and the Exhibits attached hereto
have been negotiated and executed in the State of California and shall be
governed by and construed in accordance with the laws of the State of California
without giving effect to conflicts of laws principles.
24.10 Invalidity of Provision. If any provision of this Agreement as
applied to either party or to any circumstance shall be adjudged by a court of
competent jurisdiction to be void or unenforceable for any reason, the same
shall in no way affect (to the maximum extent permissible by law) any other
provision of this Agreement, the application of any such provision under
circumstances different from those adjudicated by the court, or the validity or
enforceability of the Agreement as a whole.
24.11 Amendments. No addition to or modification of any provision
contained in this Agreement shall be effective unless fully set forth in writing
by both Buyer and Seller.
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24.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
24.13 Schedules and Exhibits. All Schedules and Exhibits to this
Agreement are incorporated herein by this reference as though fully set forth in
the body hereof.
24.14 Time References. Any references in this Agreement to time for
performance of obligations or elapsed time shall mean consecutive calendar days,
months, or years, as applicable, unless otherwise explicitly indicated herein.
In the event that the day on which Buyer or Seller is required to take any
action-under the terms of this Agreement is not a business day, such action
shall be taken on the next succeeding business day. Whenever notice, approval or
disapproval must be given to Escrow Holder and Escrow Holder is closed on the
last day for taking such action, then the parties shall have until 5:00 p.m. on
the first following day Escrow Holder is open to take such action.
24.15 Construction of Agreement. The agreements contained herein
shall not be construed in favor of or against either party, but shall be
construed as if both parties prepared this Agreement.
24.16 No Recording Without Consent. Pending the Close of Escrow,
neither Buyer nor Seller shall, without the consent of the other party, record
this Agreement or a short form or memorandum hereof, or take any other action
that would materially and adversely affect the marketability of Seller's title
to the Property.
24.17 Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns; nothing in this Agreement is intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement; and no provision will give any third persons any right
of subrogation or action against any party to this Agreement other than those
obligations expressly assumed in writing by Buyer. Except for the Assumed
Liabilities, Buyer is not assuming, and shall not be deemed to assume, any
liability of any kind or nature whatsoever (i) of Seller, or (ii) arising out of
or in connection with the Assets or Seller's operations or construction of
improvements.
24.18 Specific Performance and Waiver of Rescission Rights. Each
Party's obligation under this Agreement is unique. If any Party should default
in its obligations under this Agreement, the Parties each acknowledge that it
would be extremely impracticable to measure the resulting damages; accordingly,
the nondefaulting Party or Parties, in addition to any other available rights or
remedies, may sue in equity for specific performance, and the Parties each
expressly waive the defense that a remedy in damages will be adequate. Despite
any breach or default by any of the Parties of any of their respective
representations, warranties, covenants, or agreements under this Agreement, if
the purchase and sale contemplated by it has been consummated, each of the
Parties waives any rights that they may have to rescind this Agreement or the
transaction consummated by it provided that this waiver will not affect any
other rights or remedies available to the parties under this Agreement or under
the law.
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25. Termination Events. This Agreement may, by written notice delivered
prior to the Closing Date, be terminated:
25.1 by mutual consent of Buyer, Presley-Del. and Seller;
25.2 by Buyer, Presley-Del. or Seller if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the Parties hereto shall use their
reasonable efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, shares pursuant to the
Series A Offer or the Series B Purchases and such order, decree, ruling or other
action shall have become final and non-appealable;
25.3 by Buyer, Presley-Del. or Seller if the Closing has not
occurred (other than through the failure of any Party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before November 30, 1999; provided, however, that if the Closing has not
occurred by such date due to delays in obtaining governmental or regulatory
approvals with respect to the Acquisition, the Series A Offer or the Merger,
then the Parties agree to extend the Closing Date for up to an additional 30
calendar days to allow the process of obtaining such approvals to be completed;
25.4 by Buyer or Presley-Del. if Seller shall have failed to
commence the Series A Offer on or prior to the time required in Section 9.1
hereof; provided, however, that Buyer may not terminate this Agreement pursuant
to this Section 25.4 if Buyer is at such time in material breach of its
obligations under this Agreement;
25.5 by Buyer or Presley-Del. in connection with entering into a
definitive agreement as permitted under this Agreement in respect of
Presley-Del.'s Board of Directors' fiduciary duties to Presley-Del.'s
stockholders; provided, however, that Buyer has complied with all provisions of
this Agreement, including the notice provisions of Section 27 hereof, and that
Buyer makes concurrent payment to Seller of fees and expenses as required by
Section 27 hereof;
25.6 by Buyer or Presley-Del. if Seller shall have breached in any
material respect any of its respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach cannot be or has not
been cured within 30 days after the giving of written notice by Buyer to Seller,
as applicable;
25.7 by Seller if, due to an occurrence not involving a breach by
Seller or the Lyons of their obligations hereunder, which breach makes it
impossible to satisfy any of the conditions set forth in Exhibit "B" hereto, the
Lyons shall have failed to commence the Series A Offer on or prior to the time
required under Section 9.1(a) hereof;
25.8 by Seller if, prior to the purchase of shares of Common Stock
by Seller pursuant to the Series A Offer, Presley-Del.'s Board of Directors
shall have withdrawn, modified or changed in a manner adverse to Seller its
approval or recommendation of the Series A Offer or the Merger or shall have
recommended an Acquisition Proposal or shall have executed an agreement in
principle or definitive agreement relating to an Acquisition Proposal (as
hereinafter
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<PAGE> 55
defined) or similar business combination with a person or entity other than
Seller or its affiliates; or
25.9 by Seller if Buyer or Presley-Del. shall have breached in any
material respect any representation, warranty, covenant or other agreement
contained in this Agreement, which breach cannot be or has not been cured within
30 days after the giving of written notice to Buyer or Presley-Del., as
applicable.
26. Effect of Termination. If this Agreement is terminated pursuant to
Section 25 hereof prior to the Closing, all further obligations of the parties
under this Agreement shall terminate; provided, however, that a termination of
this Agreement shall not relieve any party of any liability it may have for
breach of any representation or warranty or nonperformance of any covenant or
obligation hereunder, or constitute a waiver of any available remedy (including
specific performance, if available) for any such breach or nonperformance.
27. No Solicitation. Each of the Parties agrees that, prior to the
Closing, neither it nor any of its directors, officers, employees,
representatives or agents (including financial advisors and attorneys)
(collectively referred to herein as "Representatives") will (a) solicit,
initiate, encourage or facilitate the submission of, or consider, enter into
discussions concerning or agree to, any Acquisition Proposal (as defined below)
other than from the other party hereto, or (b) 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 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 27, if
the Board of Directors of Presley-Del. or Seller, 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 (i) 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 the Parties,
and (ii) 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 with the
transactions contemplated by this Agreement
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(including, without limitation, all attorneys', accountants', financial
advisors', bankers', appraisers' and similar professional fees and expenses).
For purposes of this Section 27, the term "Acquisition Proposal"
means 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, lots or parcels in the ordinary course of
business).
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
WILLIAM LYON WILLIAM LYON HOMES, INC.
(as to Sections 9.1-9.3, 9.5-9.6, 10.1-10.6, a California corporation
10.7, 18.3, 18.4, 18.5, 24.1-24.18 and 27, only)
/s/ William Lyon By: /s/ William Lyon
- ----------------------------------------------- --------------------------
William Lyon Its: President and CEO
---------------------
"SELLER"
WILLIAM H. LYON
(as to Sections 9.1-9.3, 9.5-9.6, 10.1-10.6,
10.7, 18.3, 18.4, 18.5, 24.1-24.18 and 27, only)
/s/ William H. Lyon
- -----------------------------------------------
William H. Lyon
THE PRESLEY COMPANIES, PRESLEY HOMES,
a Delaware corporation a California corporation
By: Nancy M. Harlan By: Nancy M. Harlan
-------------------------------- -------------------------
Its: Senior Vice President and Its: Senior Vice President and
General Counsel General Counsel
----------------------- --------------------
By: Linda L. Foster By: Linda L. Foster
---------------------------- -------------------------
Its: Vice President and Its: Vice President and
Corporate Secretary Corporate Secretary
----------------------- --------------------
"PRESLEY-DEL." "BUYER"
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First American Title Insurance Company, the Escrow Holder under
this Agreement, hereby certifies that the date of Opening of Escrow pursuant to
Section 6 of this Agreement is October __, 1999.
FIRST AMERICAN TITLE INSURANCE COMPANY
a California corporation
By:
----------------------------------------
Its:
-----------------------------------
"ESCROW HOLDER"
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EXHIBIT B
CONDITIONS TO THE SERIES A OFFER
The capitalized terms used in this Exhibit "B" shall have the
meaning set forth in the Purchase Agreement and Escrow Instructions to which
this Exhibit is attached, except that the term "Agreement" shall be deemed to
refer to such Purchase Agreement and Escrow Instructions.
CONDITIONS TO THE OFFER. Notwithstanding any other provisions of
the Series A Offer, the Lyons shall not be required to accept for payment or pay
for any tendered shares of Series A Common Stock and may terminate or, subject
to the terms of the Agreement, amend the Series A Offer, if (i) there shall not
be validly tendered and not properly withdrawn prior to the expiration date for
the Series A Offer (the "Expiration Date") that number of shares of Series A
Common Stock which, when added to (x) the number of shares of Common Stock owned
by Seller, the Lyons and their affiliates as of the date of such test (exclusive
of the shares underlying the stock options to be cancelled as contemplated in
Section 16.14 of the Agreement), and (y) the number of shares of Common Stock
held by each of the Series B Shareholders which such holders are legally
obligated to sell to Seller pursuant to the Series B Purchase Agreements
(including pursuant to Seller's option to purchase additional shares of Series B
Common Stock in the event of an undersubscribed Series A Offer), would aggregate
at least 45% of the outstanding number of shares of Common Stock (the "Minimum
Condition"); (ii) the Acquisition has not been consummated in accordance with
the terms of the Agreement; (iii) the stockholders of Presley-Del. shall not
have approved the Merger by the requisite vote at the Stockholders' Meeting; or
(iv) at any time on or after the date of the Agreement and prior to the time of
payment for any shares of Common Stock, any of the following events (each, an
"Event") shall have occurred and be continuing as of the Expiration Date:
(a) there shall be any action taken, instituted or pending, or
any statute, rule, regulation, legislation, interpretation, ruling,
condition, judgment, order or injunction enacted, enforced, promulgated,
proposed, amended, issued or deemed applicable to the Series A Offer,
the Series B Purchases, the Acquisition or the Merger, by any
Governmental Entity, that could reasonably be expected to, directly or
indirectly: (1) make illegal or otherwise prohibit consummation of the
Series A Offer, the Series B Purchases, the Acquisition or the Merger as
contemplated by the Agreement, (2) impose a limitation on the ability of
the Lyons effectively to acquire, hold or exercise full rights of
ownership of the Common Stock, including, without limitation, the right
to vote any shares acquired or owned by the Lyons on all matters
properly presented to Presley-Del.'s or New Presley's stockholders, or
(3) require divestiture by the Lyons, Seller or their respective
affiliates of shares of Common Stock of Presley-Del. or any material
portion of the business or assets of Presley-Del. taken as a whole; or
(b) (1) the representations of Presley-Del. and Buyer set forth
in the Merger Agreement shall not be true and correct in any material
respect as of the date of the Agreement and as of consummation of the
Series A Offer as though made on and as of such date, (2) Presley-Del.
or Buyer shall have failed to comply in all material respects with their
respective covenants and agreements set forth in the Agreement, (3)
there shall
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have occurred any events or changes which have had or could reasonably
be expected to have a material adverse effect on the business, assets,
prospects, condition (financial and other) and results of operations of
Presley-Del. taken as a whole; or
(c) (1) it shall have been publicly disclosed, or the Lyons and
Seller shall have otherwise learned, that beneficial ownership
(determined for the purposes of this paragraph (c) as set forth in Rule
13d-3 promulgated under the Exchange Act) of 50% or more of the
outstanding shares of Common Stock has been acquired by any person
(including Presley-Del. and the Buyer or any of their subsidiaries or
affiliates) or group (as defined in Section 13(d)(3) under the Exchange
Act), (2) the Board of Directors of Presley-Del. or any committee
thereof shall have withdrawn, or shall have modified or amended in a
manner adverse to the Lyons and Seller, the approval, adoption or
recommendation, as the case may be, of the Series A Offer or the Merger,
or approved or recommended any, merger, consolidation, other business
combination, sale of material assets, takeover proposal or other
acquisition of shares of Common Stock other than the Series A Offer, the
Acquisition, the Merger and the other transactions contemplated by the
Agreement, (3) a third party shall have entered into a definitive
agreement or a written agreement in principle with Presley-Del. with
respect to a tender offer or exchange offer for any shares of Common
Stock or a merger, consolidation, other business combination with
Presley-Del. or sale of material assets with or involving Presley-Del.
or any of its subsidiaries (except as specifically permitted by the
Agreement), or (4) the Board of Directors of Presley-Del. or any
committee thereof shall have resolved to do any of the foregoing and
such resolution shall be made public; or
(d) Presley-Del., the Buyer and the Seller shall have reached an
agreement that the Series A Offer, the Acquisition or the Agreement be
terminated, or the Agreement shall have been otherwise terminated in
accordance with its terms; or
(e) there shall have occurred, and continued to exist, (1) any
general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange (excluding any coordinated
trading half-triggered solely as a result of a specified decrease in a
market index and suspensions on limitations resulting solely from
physical damage or interference with such exchanges not related to
market conditions), or (2) a banking moratorium in the United States or
other limitation on the extension of credit, or (3) a commencement of a
war, armed hostilities or other national or international calamity
involving the United States and having a material adverse effect on the
business, assets, prospects, condition (financial and other) and results
of operations of Presley-Del., taken as a whole, or materially adversely
affecting or delaying the Series A Offer, or (4) in the case of any
condition, circumstance or event referenced in any of the foregoing
clauses (1), (2) and (3) and existing at the time of the commencement of
the Series A Offer, a material acceleration or worsening thereof; or
(f) the Series B Purchase Agreements shall no longer be in full
force or effect, or the Series B Purchase Agreements shall no longer be
enforceable against the Series B Shareholders in accordance with their
terms (except for any such failure to be in full force or effect or
enforceable which is due solely to a breach thereof by Seller); or
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(g) it is reasonably determined that upon consummation of the
Series A Offer, the Series B Purchases and the Merger, (1) the shares of
Common Stock will cease to be listed on the New York Stock Exchange or
another national securities exchange, or will not be quoted on an
inter-dealer quotation system of a registered national securities
association, or (2) the shares of Common Stock to be outstanding
immediately following consummation of such transactions will be held of
record by less than 300 persons.
The foregoing conditions are for the benefit of the Lyons and may
be asserted by them regardless of the circumstances giving rise to any such
conditions and may be waived by them, in whole or in part, at any time and from
time to time in their reasonable discretion, in each case, subject to the terms
of the Agreement, including Section 9.2 thereof. Subject to Section 9.2 of the
Agreement, the failure by the Lyons at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any reasonable determination by the Lyons concerning the events described
in this Exhibit "B" will be final and binding on all Parties.
B-3
<PAGE> 1
EXHIBIT (C)(2)
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of this 6th day of July, 1999 by and among William Lyon Homes, Inc., a
California corporation ("Purchaser"), and The Chase Manhattan Bank, as Trustee
for First Plaza Group Trust ("Seller").
RECITALS:
WHEREAS, Purchaser, The Presley Companies, a Delaware corporation
("Presley-Del."), and Presley Homes, a California corporation ("Presley-Cal."),
are parties to a letter of intent dated May 3, 1999 attached hereto as Exhibit A
(the "Letter of Intent") which sets forth such parties' mutual, preliminary
understanding with respect to Presley-Cal.'s proposed acquisition of
substantially all of the assets of Purchaser (the "Acquisition") and Purchaser's
proposal to acquire a portion of the outstanding shares of Common Stock of
Presley-Del.; and
WHEREAS, the Letter of Intent contemplates that Purchaser 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 the 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 the Presley Del. Common Stock which,
when added to the number of shares of Presley-Del Common Stock already owned by
Purchaser and its affiliates (and after giving effect to dispositions of
Presley-Del. Common Stock held by Purchaser and its affiliates as contemplated
in the Letter of Intent), will cause Purchaser and its affiliates to own an
aggregate of approximately 49% (but in no event more than 49.9%) of the shares
of Presley-Del. Common Stock outstanding; and
WHEREAS, Seller owns shares of Presley-Del. Series B Common Stock
and, as part of the Series B Offer, Seller and Purchaser desire to enter into
this Agreement to provide for the sale by Seller to Purchaser of 4,186,748
shares (subject to adjustment as provided herein) of such Series B Common Stock
on the terms and subject to the conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants set forth in this Agreement, the
parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Shares. At the Closing (as defined in
Section 1.3 of this Agreement), and on the terms and subject to the conditions
set forth in
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<PAGE> 2
this Agreement, Seller agrees to sell, transfer and deliver to Purchaser, and
Purchaser hereby agrees to purchase and acquire from Seller, 4,186,748 shares of
Presley-Del. Series B Common Stock (the "Shares") for a cash price of $0.655 per
share, or an aggregate purchase price of $2,742,319.94 (the "Purchase Price").
The number of Shares of Presley-Del. Series B Common Stock to be purchased and
sold hereunder, and the aggregate Purchase Price to be paid therefor, shall be
subject to adjustment as provided in Section 4.1 and Section 7.12 of this
Agreement.
1.2 Deliveries at Closing. At the Closing, Seller shall deliver to
Purchaser the certificate or certificates representing the Shares, duly endorsed
for transfer to, or accompanied by duly executed stock powers in favor of,
Purchaser or its nominee, and otherwise in a form acceptable for transfer on the
books of Presley-Del., against payment by Purchaser of the Purchase Price by
wire transfer of immediately available funds to the account specified on
Schedule 1.2 attached hereto.
1.3 Closing. Unless otherwise agreed by the parties hereto, the
closing of the transaction contemplated in this Article I (the "Closing") shall
take place at the offices of Purchaser at 9:00 a.m. Pacific time on the second
business day following the delivery by Purchaser to Seller of written notice to
the effect that the conditions set forth in Sections 5.3(c), 5.3(d) and 5.3(e)
of this Agreement have been satisfied or waived. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date of
this Agreement and as of the Closing Date as follows (it being understood and
agreed that Purchaser makes no representations or warranties in connection with
the purchase and sale of the Shares hereunder other than as set forth in this
Article II and in Section 7.10 hereof):
2.1 Due Incorporation; Authority. Purchaser has been duly
incorporated and is validly existing in good standing under the laws of the
State of California. Purchaser has the corporate power and corporate authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement, and the performance of Purchaser's
obligations hereunder, have been duly authorized by all necessary corporate
action on the part of Purchaser.
2.2 Binding Obligation. This Agreement has been duly executed and
delivered by Purchaser, and constitutes the legal, valid and binding obligation
of Purchaser, enforceable in accordance with its terms against Purchaser, except
that (a) such enforcement may be limited by the effect of applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws relating to or affecting
creditors rights generally; and (b) such enforcement may be limited by general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing and the
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<PAGE> 3
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law.
2.3 No Conflict or Violation. Purchaser's execution and delivery of,
and performance of its obligations under, this Agreement do not (a) violate
Purchaser's articles of incorporation or bylaws, (b) constitute a material
breach or default under any existing obligation of or restriction on Purchaser
under any other agreement to which Purchaser is a party, or (c) breach or
otherwise violate any law, statute, rule, regulation, order or decree applicable
to Purchaser. No consent, order, permit or approval of any person or
governmental authority is required on the part of Purchaser for the execution
and delivery of, and performance of its obligations under, this Agreement.
2.4 Investment Intent. Purchaser is purchasing the Shares for its
own account and not with a view to distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). Purchaser is an
"accredited investor," as such term is defined in Rule 501(a) under the
Securities Act, which, by reason of its business and financial experience, has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the investment in the
Shares. Purchaser understands that (a) the Shares have not been registered under
the Securities Act and may not be offered or sold unless the Shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available, (b) if any transfer of the
Shares is to be made in reliance on an exemption under the Securities Act,
Presley-Del. may require an opinion of counsel satisfactory to it that such
transfer may be made pursuant to such exemption, and (c) so long as deemed
appropriate by Presley-Del., the Shares may bear a legend to the effect of
clauses (a) and (b) of this paragraph.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser as of the date of this
Agreement and as of the Closing Date as follows (it being understood and agreed
that Seller makes no representations or warranties in connection with the
purchase and sale of the Shares hereunder other than as set forth in this
Article III and in Section 7.10 hereof):
3.1 Organization and Good Standing; Authority. Seller has been duly
organized and is validly existing in good standing under the laws of its
jurisdiction of organization. Seller has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement, and the performance of Seller's obligations
hereunder, have been duly authorized by all necessary corporate, partnership or
trust action (as the case may be) on the part of Seller.
3.2 Binding Obligation. This Agreement has been duly executed and
delivered by Seller, and constitutes the legal, valid and binding obligation of
Seller, enforceable in accordance with its terms against Seller, except that (a)
such enforcement
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<PAGE> 4
may be limited by the effect of applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws relating to or affecting creditors rights
generally; and (b) such enforcement may be limited by general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law.
3.3 No Conflict or Violation. Seller's execution and delivery of,
and performance of its obligations under, this Agreement do not (a) violate
Seller's charter or other organizational documents, (b) to Seller's knowledge,
constitute a material breach or default under any existing obligation of or
restriction on Seller under any other agreement to which Seller is a party, or
(c) breach or otherwise violate any law, statute, rule, regulation, order or
decree applicable to Seller. No consent, order, permit or approval of any person
or governmental authority is required on the part of Seller for the execution
and delivery of, and performance of its obligations under, this Agreement.
3.4 Share Ownership. Seller's record and beneficial ownership of
Presley-Del. equity securities is correctly set forth on Schedule 3.4 attached
hereto. Seller owns all of the Shares of record and beneficially, free and clear
of any charge, claim, property interest, right of first refusal, condition,
lien, option, pledge, security interest or other adverse claim or interest of
any kind (collectively, "Encumbrances"). At the Closing, Seller will transfer to
Purchaser good title to the Shares, free and clear of all Encumbrances except
for such Encumbrances as may be imposed by applicable securities laws or as may
be otherwise expressly provided herein.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Purchase and Sale of Additional Series B Shares.
(a) Seller acknowledges that it is Purchaser's objective,
following the Closing of the Series A Offer and the Series B Offer, to
own (together with Purchaser's affiliates) an aggregate of approximately
49% (but in no event more than 49.9%) of Presley-Del.'s outstanding
Common Stock. In the event that the Series A shareholders do not tender
a sufficient number of shares of Series A Common Stock in response to
the Series A Offer to enable Purchaser and its affiliates (after taking
into account the Series B shares to be acquired pursuant to the Series B
Offer and after giving effect to the possible disposition by Purchaser
and its affiliates of up to 8% of the outstanding shares of Presley-Del.
Common Stock as contemplated in the Letter of Intent) to achieve the
desired ownership target, Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, at a price of $0.655
per share in cash, an additional number of shares of Series B Common
Stock owned by Seller so as to enable Purchaser and its affiliates to
reach the desired ownership target. The number of additional shares of
Series B Common Stock to be sold by Seller pursuant to this Section 4.1
shall be determined in accordance with the following formula:
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<PAGE> 5
Number of Additional Shares = A x B
---
C
Where A = Total number of additional shares of Presley-Del.
Common Stock necessary to enable Purchaser and its
affiliates to achieve the desired ownership target;
B = Total number of shares of Presley-Del. Common Stock
owned by Seller (after giving effect to the sale of the
Shares specified in Section 1.1 of this Agreement); and
C = Total number of shares of Presley-Del. Common Stock
owned by each of the Series B shareholders identified on
Schedule 3.4 attached hereto (after giving effect to the
sale of the Shares specified in Section 1.1 of this
Agreement and in Section 1.1 of each of the agreements
entered into with the other Series B Shareholders in
connection with the Series B Offer).
(b) The number of additional shares of Series B Common Stock to
be purchased pursuant to this Section 4.1 (if any) shall be set forth in
the notice delivered by Purchaser to Seller in accordance with Section
1.3 of this Agreement. The purchase and sale of any additional shares of
Series B Common Stock pursuant to this Section 4.1 shall occur in the
same manner and at the same time as the transaction provided for in
Article I of this Agreement. The term "Shares," as used in this
Agreement, shall refer equally to any additional shares of Series B
Common Stock purchased and sold pursuant to this Section 4.1.
4.2 Agreements Not to Tender, Transfer or Acquire Shares. Seller hereby
agrees that, prior to the Closing, Seller will not:
(a) transfer or dispose of any interest in, tender (pursuant to
the Series A Offer or otherwise), or pledge or otherwise create (or
allow to exist) any Encumbrance on, any shares of Presley-Del. Common
Stock which it owns (except as contemplated in this Agreement);
(b) convert any Series B shares which it owns into Series A
shares; or
(c) acquire any beneficial interest in shares of Presley-Del.
Common Stock or any options, warrants or other rights to acquire shares
of Presley-Del. Common Stock.
Notwithstanding anything herein to the contrary, any affiliate of Seller which,
in the ordinary course of its business, engages in any of the following
activities may engage in such activities (other than for its own account) with
respect to shares of Presley-Del. Common Stock and options, warrants or other
rights to acquire shares of Presley-Del.
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<PAGE> 6
Common Stock: brokerage, investment advisory, investment company, financial
advisory, anti-raid advisory, financing, asset management, trading, market
making, arbitrage and other similar activities.
4.3 Restriction on Sales of Presley-Del Common Stock by Purchaser.
Purchaser hereby agrees that during the period from the Closing Date through and
including the third anniversary of the Closing Date, Purchaser and its
affiliates will not sell or otherwise transfer for value any shares of
Presley-Del. Common Stock (other than the 7,939,589 shares of Series A Common
Stock which are currently owned by Purchaser and its affiliates) unless such
sale takes place in connection with a transaction in which all other holders of
Presley-Del. Common Stock are afforded an opportunity to participate pro rata
(based on ownership of Presley-Del. Common Stock) and on the same terms and
conditions as Purchaser and its affiliates. Notwithstanding the foregoing,
nothing contained in this Section 4.3 shall prohibit any transfer of
Presley-Del. Common Stock by Purchaser or any of its affiliates to (a) any other
affiliate of Purchaser, (b) William Lyon, his spouse or any of his lineal
descendants, (c) any person who acquires such shares under the terms of a will
or by the laws of descent and distribution, or (d) any trustee of any trust, the
beneficiaries of which consist only of William Lyon, his spouse or lineal
descendants, or any charitable organization as defined in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, provided that any such permitted
transferee first agrees in writing to be bound by this Section 4.3 to the same
extent as Purchaser and its affiliates.
4.4 Consent to Transactions; Agreement to Vote in Favor of
Presley-Del. Charter Amendments. Seller hereby approves of and consents to the
transactions contemplated in the Letter of Intent, a copy of which has
previously been provided to Seller. Subject to the condition set forth in the
next sentence, Seller hereby agrees to vote all shares of Presley-Del. Common
Stock which it (or any of its affiliates) owns in favor of the transactions
contemplated by such Letter of Intent which are submitted for a vote of
Presley-Del. stockholders and for which approval has been recommended by the
Presley-Del. Board of Directors. In particular, but conditioned upon the
understanding that such provisions will not be effective until after the closing
of the Series A Offer, the Series B Offer and the Acquisition, Seller agrees to
vote all shares of Presley-Del. Common Stock which it (or any of its affiliates)
owns in favor of certain provisions proposed to be added to Presley-Del.'s
certificate of incorporation (whether by amendment, merger or otherwise) which
would restrict the transfer of Presley-Del shares by holders of 5% or more of
its outstanding shares so as to avoid triggering certain tax law provisions
which could result in the loss of Presley-Del.'s net operating losses for tax
purposes.
ARTICLE V
CONDITIONS TO CLOSING
The obligation of Purchaser and Seller to effect the Closing shall
be subject to the following conditions:
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5.1 Conditions Precedent to Purchaser's and Seller's Obligations.
Purchaser's and Seller's respective obligations to consummate the purchase and
sale of the Shares hereunder and to take the other actions required to be taken
at the Closing are subject to the satisfaction as of the Closing Date of the
condition that the purchase and sale of the Shares as contemplated in this
Agreement shall not violate or contravene any applicable law, statute, rule,
regulation, order or decree of any governmental authority.
5.2 Conditions Precedent to Seller's Obligation to Close. Seller's
obligations to sell the Shares and to take the other actions required to be
taken by Seller at the Closing are subject to the satisfaction as of the Closing
Date of each of the following conditions (each of which may be waived by Seller,
in whole or in part):
(a) the representations and warranties of Purchaser contained in
this Agreement must have been true and correct in all respects on the
date of this Agreement and shall be true and correct in all respects as
of the Closing Date as if made on the Closing Date; and
(b) Purchaser shall have performed all of the covenants and
obligations that Purchaser is required to perform or to comply with at
or prior to the Closing pursuant to this Agreement.
5.3 Conditions Precedent to Purchaser's Obligation to Close.
Purchaser's obligations to purchase the Shares and to take the other actions
required to be taken by Purchaser at the Closing are subject to the satisfaction
as of the Closing Date of each of the following conditions (each of which may be
waived by Purchaser, in whole or in part):
(a) The representations and warranties of Seller contained in
this Agreement must have been true and correct in all respects on the
date of this Agreement and shall be true and correct in all respects as
of the Closing Date as if made on the Closing Date;
(b) Seller shall have performed all of the covenants and
obligations that Seller is required to perform or to comply with at or
prior to the Closing pursuant to this Agreement;
(c) The stockholders of Presley-Del., by a vote sufficient under
applicable law, shall have approved certain provisions which are
proposed to be added to Presley-Del.'s certificate of incorporation
and/or bylaws to restrict transfers of shares of Presley-Del. Common
Stock by holders of 5% or more of the outstanding Common Stock so as to
avoid triggering the change-in-control tax provisions which could result
in a loss of Presley-Del.'s net operating losses for tax purposes, and
Presley-Del. shall have notified Purchaser in writing of its intention
to effect such provisions (by filing with the Delaware Secretary of
State a certificate of amendment or certificate of merger) following and
conditioned only upon the closing of the Series A Offer and the Series B
Offer;
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(d) Presley-Cal. and Purchaser shall have closed the
Acquisition;
(e) Purchaser shall have purchased (or shall have the legally
enforceable right to purchase) shares of Presley-Del. Common Stock
pursuant to the Series A Offer and/or the Series B Offer such that the
number of shares so purchased, when added to the number of shares of
Presley-Del. Common Stock then owned by Purchaser and its affiliates,
causes Purchaser and its affiliates to own at least 49% (but not more
than 49.9%) of the outstanding shares of Presley-Del. Common Stock; and
(f) upon the closing of the Series B Offer, no person (other
than Purchaser and its affiliates) shall own beneficially 5% or more of
the outstanding Common Stock of Presley-Del.
ARTICLE VI
TERMINATION
6.1 Termination Events. This Agreement may, by written notice
delivered prior to the Closing, be terminated:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or Seller (if such party is not itself then in
breach), if a material breach of this Agreement has been committed by
the other party, and such breach has not been waived or cured within 10
calendar days of the date written notice of such breach is delivered to
the breaching party;
(c) by Purchaser or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before November 15, 1999, or such later date as the parties may agree
upon in writing;
(d) (i) by Purchaser, if any of the conditions in Section 5.3 of
this Agreement has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of Purchaser to perform its obligations under this
Agreement), or (ii) by Seller, if any of the conditions in Section 5.2
of this Agreement has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of Seller to perform its obligations under this
Agreement); or
(e) by Purchaser or Seller, if Purchaser, Presley-Del. and
Presley-Cal. terminate the Letter of Intent (or any definitive agreement
entered into with respect to the transactions contemplated by the Letter
of Intent), or the Letter of Intent (or any such definitive agreement)
expires in accordance with its terms prior to the Closing Date.
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6.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 6.1 hereof, all further obligations of the parties under this
Agreement shall terminate; provided, however, that a termination of this
Agreement shall not relieve any party of any liability it may have for breach of
any representation or warranty or nonperformance of any covenant or obligation
hereunder, or constitute a waiver of any available remedy (including specific
performance, if available) for any such breach or nonperformance.
ARTICLE VII
GENERAL PROVISIONS
7.1 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
7.2 Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California, without regard to conflict of laws principles.
7.3 Entire Agreement. This Agreement contains all of the agreements
between the parties with respect to the matters contained herein and supersedes
all prior written or oral and all contemporaneous oral agreements or
understandings between the parties pertaining to any such matters. No provision
of this Agreement may be amended or added to except by an agreement in writing
signed by the parties to this Agreement or their respective successors in
interest and expressly stating that it is an amendment of this Agreement.
7.4 Further Assurances. The parties agree to do such further acts
and things and to execute and deliver such additional agreements and instruments
as any other party may reasonably require to consummate, evidence or confirm the
agreements contained herein in the manner contemplated hereby.
7.5 Assignment. This Agreement and the rights, duties, and
obligations hereunder may not be assigned by any party prior to the Closing
without the prior written consent of the other party, and any attempted
assignment is void. Notwithstanding the foregoing, either Purchaser or Seller
may assign its rights and delegate its obligations under this Agreement to one
or more of their respective affiliates (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended) or, in the case of
Seller, to any successor trust or successor trustee of Seller, provided that, in
each case, (a) the assignee first agrees in writing to be bound by the terms of
this Agreement, and (b) any such assignment and delegation shall not relieve
Purchaser or Seller of any of its obligations hereunder.
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7.6 Successors and Assigns. Subject to Section 7.5 hereof, this
Agreement shall be binding upon each of the parties to it and their respective
successors and permitted assigns.
7.7 Severability. In the event any provision of this Agreement shall
finally be determined to be unlawful, such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
7.8 Expenses. Each party shall bear its own expenses in connection
with the transactions contemplated hereunder. Each party further represents and
warrants 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
transactions contemplated hereunder.
7.9 Applicability in the Event of Conversion, Reclassification or
Exchange of Series B Common Stock. In the event that shares of Presley-Del.
Series B Common Stock are converted, reclassified or split into, or otherwise
exchanged for, other securities of the same or different issuer, the terms and
provisions of this Agreement shall be deemed to apply to such other securities
with the same force and effect (with such adjustments to the number of
securities and the purchase price thereof as may be necessary or appropriate to
give effect to the parties' intent and the transactions contemplated hereunder).
7.10 Acknowledgement. Purchaser and Seller acknowledge that each of
them has a representative who is a director of Presley Del. and that each of
Purchaser and Seller may be deemed to be an affiliate of Presley-Del. (as such
term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended). Purchaser and Seller further acknowledge that each of them may have
confidential information concerning Presley-Del.'s business and affairs which is
not public and may be considered material. Recognizing the foregoing, neither
Purchaser nor Seller has requested, desires or requires the other to disclose
any confidential information relating to Presley-Del. or otherwise. Each of
Purchaser and Seller has conducted its own investigation, to the extent it has
determined necessary or desirable, in connection with the purchase and sale of
the Shares hereunder and expressly further acknowledges that (a) it has not
relied upon any representation, warranty or statement (other than the limited
representations, warranties and statements contained in this Agreement) made by,
nor upon any analysis of, the other in connection with the transactions
contemplated hereunder, (b) it has made its own investment analysis and decision
to purchase or sell (as the case may be) the Shares based upon such information
as it has deemed appropriate, and (c) it is voluntarily assuming all risks
associated with the purchase or sale (as the case may be) of the Shares
hereunder resulting from the failure to receive any such representations,
warranties, statements or confidential information
7.11 Relationship to Other Series B Purchase Agreements. The parties
acknowledge that, in connection with the Series B Offer, Purchaser has entered
into or proposes to enter into agreements with the other holders of Presley-Del.
Series B
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<PAGE> 11
Common Stock to purchase from such holders additional shares of Presley-Del.
Common Stock (such other agreements are attached hereto as Exhibit B and are
being referred to herein as the "Other Series B Agreements"). Purchaser agrees
that such Other Series B Agreements are to be identical in form and substance to
this Agreement, with only such differences as relate to the identity of the
seller and the number of shares of Presley-Del. Common Stock to be purchased and
sold thereunder (it being understood that in the case of Foothill Capital
Corporation, such number is 710,574 shares of Presley-Del. Series B Common
Stock, and in the case of each of the other Series B stockholders, such number
is that number of Series B shares as is necessary to reduce the total number of
shares of Presley-Del. Common Stock (including any Presley-Del. Series A shares)
owned by such Series B stockholder to below 5% of the total number of shares of
Presley-Del. Common Stock outstanding). If the terms and conditions contained in
any of the Other Series B Agreements are modified from the terms or conditions
contained in this Agreement in any respect which is more advantageous to the
seller or sellers party thereto, Purchaser and Seller agree that (a) Purchaser
shall deliver to Seller prompt written notice of such modification (including
the text thereof), (b) this Agreement shall be deemed to be amended to reflect
such more advantageous terms or conditions (unless Seller notifies Purchaser to
the contrary in writing), and (c) Purchaser and Seller, upon request, will
promptly execute such agreements or instruments as may be necessary to evidence
such amendment.
7.12 Increase in Series A Offering Price. In the event that the
purchase price paid by Purchaser in the Series A Offer is increased above $0.655
per share in cash, then the purchase price to be paid by Purchaser under this
Agreement for each of the Shares shall be increased by the same incremental
amount above $0.655 per share.
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase and Sale Agreement as of the day and year first above written.
"PURCHASER"
WILLIAM LYON HOMES, INC.
By: /s/ William Lyon
------------------------------------
William Lyon
Chairman, President and CEO
"SELLER"
THE CHASE MANHATTAN BANK,
AS TRUSTEE OF FIRST PLAZA GROUP TRUST
By: /s/ John F. Weeda
------------------------------------
John F. Weeda
Vice President
12
<PAGE> 13
SCHEDULE 3.4
SHARE OWNERSHIP
<TABLE>
<CAPTION>
Series A Shares Series B Shares
<S> <C> <C>
First Plaza Group Trust 1,697,325 5,099,206
GS Credit Partners, L.P. --- 5,920,362
ING (U.S.) Capital LLC (as nominee of
ING Equity Partners, L.P. I)
--- 4,547,269
Foothill Capital Corporation --- 1,836,109
</TABLE>
<PAGE> 14
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of this 6th day of July, 1999 by and among William Lyon Homes, Inc., a
California corporation ("Purchaser"), and GS Credit Partners, L.P., ("Seller").
RECITALS:
WHEREAS, Purchaser, The Presley Companies, a Delaware corporation
("Presley-Del."), and Presley Homes, a California corporation ("Presley-Cal."),
are parties to a letter of intent dated May 3, 1999 attached hereto as Exhibit A
(the "Letter of Intent") which sets forth such parties' mutual, preliminary
understanding with respect to Presley-Cal.'s proposed acquisition of
substantially all of the assets of Purchaser (the "Acquisition") and Purchaser's
proposal to acquire a portion of the outstanding shares of Common Stock of
Presley-Del.; and
WHEREAS, the Letter of Intent contemplates that Purchaser 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 the 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 the Presley Del. Common Stock which,
when added to the number of shares of Presley-Del Common Stock already owned by
Purchaser and its affiliates (and after giving effect to dispositions of
Presley-Del. Common Stock held by Purchaser and its affiliates as contemplated
in the Letter of Intent), will cause Purchaser and its affiliates to own an
aggregate of approximately 49% (but in no event more than 49.9%) of the shares
of Presley-Del. Common Stock outstanding; and
WHEREAS, Seller owns shares of Presley-Del. Series B Common Stock
and, as part of the Series B Offer, Seller and Purchaser desire to enter into
this Agreement to provide for the sale by Seller to Purchaser of 3,310,579
shares (subject to adjustment as provided herein) of such Series B Common Stock
on the terms and subject to the conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants set forth in this Agreement, the
parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Shares. At the Closing (as defined in
Section 1.3 of this Agreement), and on the terms and subject to the conditions
set forth in
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<PAGE> 15
this Agreement, Seller agrees to sell, transfer and deliver to Purchaser, and
Purchaser hereby agrees to purchase and acquire from Seller, 3,310,579 shares of
Presley-Del. Series B Common Stock (the "Shares") for a cash price of $0.655 per
share, or an aggregate purchase price of $2,168,429.25 (the "Purchase Price").
The number of Shares of Presley-Del. Series B Common Stock to be purchased and
sold hereunder, and the aggregate Purchase Price to be paid therefor, shall be
subject to adjustment as provided in Section 4.1 and Section 7.12 of this
Agreement.
1.2 Deliveries at Closing. At the Closing, Seller shall deliver to
Purchaser the certificate or certificates representing the Shares, duly endorsed
for transfer to, or accompanied by duly executed stock powers in favor of,
Purchaser or its nominee, and otherwise in a form acceptable for transfer on the
books of Presley-Del., against payment by Purchaser of the Purchase Price by
wire transfer of immediately available funds to the account specified on
Schedule 1.2 attached hereto.
1.3 Closing. Unless otherwise agreed by the parties hereto, the
closing of the transaction contemplated in this Article I (the "Closing") shall
take place at the offices of Purchaser at 9:00 a.m. Pacific time on the second
business day following the delivery by Purchaser to Seller of written notice to
the effect that the conditions set forth in Sections 5.3(c), 5.3(d) and 5.3(e)
of this Agreement have been satisfied or waived. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date of
this Agreement and as of the Closing Date as follows (it being understood and
agreed that Purchaser makes no representations or warranties in connection with
the purchase and sale of the Shares hereunder other than as set forth in this
Article II and in Section 7.10 hereof):
2.1 Due Incorporation; Authority. Purchaser has been duly
incorporated and is validly existing in good standing under the laws of the
State of California. Purchaser has the corporate power and corporate authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement, and the performance of Purchaser's
obligations hereunder, have been duly authorized by all necessary corporate
action on the part of Purchaser.
2.2 Binding Obligation. This Agreement has been duly executed and
delivered by Purchaser, and constitutes the legal, valid and binding obligation
of Purchaser, enforceable in accordance with its terms against Purchaser, except
that (a) such enforcement may be limited by the effect of applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws relating to or affecting
creditors rights generally; and (b) such enforcement may be limited by general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing and the
2
<PAGE> 16
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law.
2.3 No Conflict or Violation. Purchaser's execution and delivery of,
and performance of its obligations under, this Agreement do not (a) violate
Purchaser's articles of incorporation or bylaws, (b) constitute a material
breach or default under any existing obligation of or restriction on Purchaser
under any other agreement to which Purchaser is a party, or (c) breach or
otherwise violate any law, statute, rule, regulation, order or decree applicable
to Purchaser. No consent, order, permit or approval of any person or
governmental authority is required on the part of Purchaser for the execution
and delivery of, and performance of its obligations under, this Agreement.
2.4 Investment Intent. Purchaser is purchasing the Shares for its
own account and not with a view to distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). Purchaser is an
"accredited investor," as such term is defined in Rule 501(a) under the
Securities Act, which, by reason of its business and financial experience, has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the investment in the
Shares. Purchaser understands that (a) the Shares have not been registered under
the Securities Act and may not be offered or sold unless the Shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available, (b) if any transfer of the
Shares is to be made in reliance on an exemption under the Securities Act,
Presley-Del. may require an opinion of counsel satisfactory to it that such
transfer may be made pursuant to such exemption, and (c) so long as deemed
appropriate by Presley-Del., the Shares may bear a legend to the effect of
clauses (a) and (b) of this paragraph.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser as of the date of this
Agreement and as of the Closing Date as follows (it being understood and agreed
that Seller makes no representations or warranties in connection with the
purchase and sale of the Shares hereunder other than as set forth in this
Article III and in Section 7.10 hereof):
3.1 Organization and Good Standing; Authority. Seller has been duly
organized and is validly existing in good standing under the laws of its
jurisdiction of organization. Seller has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement, and the performance of Seller's obligations
hereunder, have been duly authorized by all necessary corporate, partnership or
trust action (as the case may be) on the part of Seller.
3.2 Binding Obligation. This Agreement has been duly executed and
delivered by Seller, and constitutes the legal, valid and binding obligation of
Seller, enforceable in accordance with its terms against Seller, except that (a)
such enforcement
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<PAGE> 17
may be limited by the effect of applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws relating to or affecting creditors rights
generally; and (b) such enforcement may be limited by general principles of
equity, including concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity or at law.
3.3 No Conflict or Violation. Seller's execution and delivery of,
and performance of its obligations under, this Agreement do not (a) violate
Seller's charter or other organizational documents, (b) to Seller's knowledge,
constitute a material breach or default under any existing obligation of or
restriction on Seller under any other agreement to which Seller is a party, or
(c) breach or otherwise violate any law, statute, rule, regulation, order or
decree applicable to Seller. No consent, order, permit or approval of any person
or governmental authority is required on the part of Seller for the execution
and delivery of, and performance of its obligations under, this Agreement.
3.4 Share Ownership. Seller's record and beneficial ownership of
Presley-Del. equity securities is correctly set forth on Schedule 3.4 attached
hereto. Seller owns all of the Shares of record and beneficially, free and clear
of any charge, claim, property interest, right of first refusal, condition,
lien, option, pledge, security interest or other adverse claim or interest of
any kind (collectively, "Encumbrances"). At the Closing, Seller will transfer to
Purchaser good title to the Shares, free and clear of all Encumbrances except
for such Encumbrances as may be imposed by applicable securities laws or as may
be otherwise expressly provided herein.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Purchase and Sale of Additional Series B Shares.
(a) Seller acknowledges that it is Purchaser's objective,
following the Closing of the Series A Offer and the Series B Offer, to
own (together with Purchaser's affiliates) an aggregate of approximately
49% (but in no event more than 49.9%) of Presley-Del.'s outstanding
Common Stock. In the event that the Series A shareholders do not tender
a sufficient number of shares of Series A Common Stock in response to
the Series A Offer to enable Purchaser and its affiliates (after taking
into account the Series B shares to be acquired pursuant to the Series B
Offer and after giving effect to the possible disposition by Purchaser
and its affiliates of up to 8% of the outstanding shares of Presley-Del.
Common Stock as contemplated in the Letter of Intent) to achieve the
desired ownership target, Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, at a price of $0.655
per share in cash, an additional number of shares of Series B Common
Stock owned by Seller so as to enable Purchaser and its affiliates to
reach the desired ownership target. The number of additional shares of
Series B Common Stock to be sold by Seller pursuant to this Section 4.1
shall be determined in accordance with the following formula:
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<PAGE> 18
Number of Additional Shares = A x B
---
C
Where A = Total number of additional shares of Presley-Del.
Common Stock necessary to enable Purchaser and its
affiliates to achieve the desired ownership target;
B = Total number of shares of Presley-Del. Common Stock
owned by Seller (after giving effect to the sale of the
Shares specified in Section 1.1 of this Agreement); and
C = Total number of shares of Presley-Del. Common Stock
owned by each of the Series B shareholders identified on
Schedule 3.4 attached hereto (after giving effect to the
sale of the Shares specified in Section 1.1 of this
Agreement and in Section 1.1 of each of the agreements
entered into with the other Series B Shareholders in
connection with the Series B Offer).
(b) The number of additional shares of Series B Common Stock to
be purchased pursuant to this Section 4.1 (if any) shall be set forth in
the notice delivered by Purchaser to Seller in accordance with Section
1.3 of this Agreement. The purchase and sale of any additional shares of
Series B Common Stock pursuant to this Section 4.1 shall occur in the
same manner and at the same time as the transaction provided for in
Article I of this Agreement. The term "Shares," as used in this
Agreement, shall refer equally to any additional shares of Series B
Common Stock purchased and sold pursuant to this Section 4.1.
4.2 Agreements Not to Tender, Transfer or Acquire Shares. Seller
hereby agrees that, prior to the Closing, Seller will not:
(a) transfer or dispose of any interest in, tender (pursuant to
the Series A Offer or otherwise), or pledge or otherwise create (or
allow to exist) any Encumbrance on, any shares of Presley-Del. Common
Stock which it owns (except as contemplated in this Agreement);
(b) convert any Series B shares which it owns into Series A
shares; or
(c) acquire any beneficial interest in shares of Presley-Del.
Common Stock or any options, warrants or other rights to acquire shares
of Presley-Del. Common Stock.
Notwithstanding anything herein to the contrary, Goldman, Sachs & Co. and its
affiliates may, in the ordinary course of its and its affiliates' business,
engage in brokerage, investment advisory, investment company, financial
advisory, anti-raid advisory, financing, asset management, trading, market
making, arbitrage and other similar
5
<PAGE> 19
activities with respect to shares of Presley-Del. Common Stock and options,
warrants or other rights to acquire shares of Presley-Del. Common Stock.
4.3 Restriction on Sales of Presley-Del Common Stock by Purchaser.
Purchaser hereby agrees that during the period from the Closing Date through and
including the third anniversary of the Closing Date, Purchaser and its
affiliates will not sell or otherwise transfer for value any shares of
Presley-Del. Common Stock (other than the 7,939,589 shares of Series A Common
Stock which are currently owned by Purchaser and its affiliates) unless such
sale takes place in connection with a transaction in which all other holders of
Presley-Del. Common Stock are afforded an opportunity to participate pro rata
(based on ownership of Presley-Del. Common Stock) and on the same terms and
conditions as Purchaser and its affiliates. Notwithstanding the foregoing,
nothing contained in this Section 4.3 shall prohibit any transfer of
Presley-Del. Common Stock by Purchaser or any of its affiliates to (a) any other
affiliate of Purchaser, (b) William Lyon, his spouse or any of his lineal
descendants, (c) any person who acquires such shares under the terms of a will
or by the laws of descent and distribution, or (d) any trustee of any trust, the
beneficiaries of which consist only of William Lyon, his spouse or lineal
descendants, or any charitable organization as defined in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, provided that any such permitted
transferee first agrees in writing to be bound by this Section 4.3 to the same
extent as Purchaser and its affiliates.
4.4 Consent to Transactions; Agreement to Vote in Favor of
Presley-Del. Charter Amendments. Seller hereby approves of and consents to the
transactions contemplated in the Letter of Intent, a copy of which has
previously been provided to Seller. Subject to the condition set forth in the
next sentence, Seller hereby agrees to vote all shares of Presley-Del. Common
Stock which it (or any of its affiliates) owns in favor of the transactions
contemplated by such Letter of Intent which are submitted for a vote of
Presley-Del. stockholders and for which approval has been recommended by the
Presley-Del. Board of Directors. In particular, but conditioned upon the
understanding that such provisions will not be effective until after the closing
of the Series A Offer, the Series B Offer and the Acquisition, Seller agrees to
vote all shares of Presley-Del. Common Stock which it (or any of its affiliates)
owns in favor of certain provisions proposed to be added to Presley-Del.'s
certificate of incorporation (whether by amendment, merger or otherwise) which
would restrict the transfer of Presley-Del shares by holders of 5% or more of
its outstanding shares so as to avoid triggering certain tax law provisions
which could result in the loss of Presley-Del.'s net operating losses for tax
purposes.
ARTICLE V
CONDITIONS TO CLOSING
The obligation of Purchaser and Seller to effect the Closing shall
be subject to the following conditions:
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<PAGE> 20
5.1 Conditions Precedent to Purchaser's and Seller's Obligations.
Purchaser's and Seller's respective obligations to consummate the purchase and
sale of the Shares hereunder and to take the other actions required to be taken
at the Closing are subject to the satisfaction as of the Closing Date of the
condition that the purchase and sale of the Shares as contemplated in this
Agreement shall not violate or contravene any applicable law, statute, rule,
regulation, order or decree of any governmental authority.
5.2 Conditions Precedent to Seller's Obligation to Close. Seller's
obligations to sell the Shares and to take the other actions required to be
taken by Seller at the Closing are subject to the satisfaction as of the Closing
Date of each of the following conditions (each of which may be waived by Seller,
in whole or in part):
(a) the representations and warranties of Purchaser contained in
this Agreement must have been true and correct in all respects on the
date of this Agreement and shall be true and correct in all respects as
of the Closing Date as if made on the Closing Date; and
(b) Purchaser shall have performed all of the covenants and
obligations that Purchaser is required to perform or to comply with at
or prior to the Closing pursuant to this Agreement.
5.3 Conditions Precedent to Purchaser's Obligation to Close.
Purchaser's obligations to purchase the Shares and to take the other actions
required to be taken by Purchaser at the Closing are subject to the satisfaction
as of the Closing Date of each of the following conditions (each of which may be
waived by Purchaser, in whole or in part):
(a) The representations and warranties of Seller contained in
this Agreement must have been true and correct in all respects on the
date of this Agreement and shall be true and correct in all respects as
of the Closing Date as if made on the Closing Date;
(b) Seller shall have performed all of the covenants and
obligations that Seller is required to perform or to comply with at or
prior to the Closing pursuant to this Agreement;
(c) The stockholders of Presley-Del., by a vote sufficient under
applicable law, shall have approved certain provisions which are
proposed to be added to Presley-Del.'s certificate of incorporation
and/or bylaws to restrict transfers of shares of Presley-Del. Common
Stock by holders of 5% or more of the outstanding Common Stock so as to
avoid triggering the change-in-control tax provisions which could result
in a loss of Presley-Del.'s net operating losses for tax purposes, and
Presley-Del. shall have notified Purchaser in writing of its intention
to effect such provisions (by filing with the Delaware Secretary of
State a certificate of amendment or certificate of merger) following and
conditioned only upon the closing of the Series A Offer and the Series B
Offer;
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<PAGE> 21
(d) Presley-Cal. and Purchaser shall have closed the
Acquisition;
(e) Purchaser shall have purchased (or have the legally
enforceable right to purchase) shares of Presley-Del. Common Stock
pursuant to the Series A Offer and/or the Series B Offer such that the
number of shares so purchased, when added to the number of shares of
Presley-Del. Common Stock then owned by Purchaser and its affiliates,
causes Purchaser and its affiliates to own at least 49% (but not more
than 49.9%) of the outstanding shares of Presley-Del. Common Stock; and
(f) upon the closing of the Series B Offer, no person (other
than Purchaser and its affiliates) shall own beneficially 5% or more of
the outstanding Common Stock of Presley-Del.
ARTICLE VI
TERMINATION
6.1 Termination Events. This Agreement may, by written notice
delivered prior to the Closing, be terminated:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or Seller (if such party is not itself then in
breach), if a material breach of this Agreement has been committed by
the other party, and such breach has not been waived or cured within 10
calendar days of the date written notice of such breach is delivered to
the breaching party;
(c) by Purchaser or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before November 15, 1999, or such later date as the parties may agree
upon in writing;
(d) (i) by Purchaser, if any of the conditions in Section 5.3 of
this Agreement has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of Purchaser to perform its obligations under this
Agreement), or (ii) by Seller, if any of the conditions in Section 5.2
of this Agreement has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of Seller to perform its obligations under this
Agreement); or
(e) by Purchaser or Seller, if Purchaser, Presley-Del. and
Presley-Cal. terminate the Letter of Intent (or any definitive agreement
entered into with respect to the transactions contemplated by the Letter
of Intent), or the Letter of Intent (or any such definitive agreement)
expires in accordance with its terms prior to the Closing Date.
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<PAGE> 22
6.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 6.1 hereof, all further obligations of the parties under this
Agreement shall terminate; provided, however, that a termination of this
Agreement shall not relieve any party of any liability it may have for breach of
any representation or warranty or nonperformance of any covenant or obligation
hereunder, or constitute a waiver of any available remedy (including specific
performance, if available) for any such breach or nonperformance.
ARTICLE VII
GENERAL PROVISIONS
7.1 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
7.2 Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California, without regard to conflict of laws principles.
7.3 Entire Agreement. This Agreement contains all of the agreements
between the parties with respect to the matters contained herein and supersedes
all prior written or oral and all contemporaneous oral agreements or
understandings between the parties pertaining to any such matters. No provision
of this Agreement may be amended or added to except by an agreement in writing
signed by the parties to this Agreement or their respective successors in
interest and expressly stating that it is an amendment of this Agreement.
7.4 Further Assurances. The parties agree to do such further acts
and things and to execute and deliver such additional agreements and instruments
as any other party may reasonably require to consummate, evidence or confirm the
agreements contained herein in the manner contemplated hereby.
7.5 Assignment. This Agreement and the rights, duties, and
obligations hereunder may not be assigned by any party prior to the Closing
without the prior written consent of the other party, and any attempted
assignment is void. Notwithstanding the foregoing, either Purchaser or Seller
may assign its rights and delegate its obligations under this Agreement to one
or more of their respective affiliates (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended), provided that, in each
case, (a) the assignee first agrees in writing to be bound by the terms of this
Agreement, and (b) any such assignment and delegation shall not relieve
Purchaser or Seller of any of its obligations hereunder.
7.6 Successors and Assigns. Subject to Section 7.5 hereof, this
Agreement shall be binding upon each of the parties to it and their respective
successors and permitted assigns.
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<PAGE> 23
7.7 Severability. In the event any provision of this Agreement shall
finally be determined to be unlawful, such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
7.8 Expenses. Each party shall bear its own expenses in connection
with the transactions contemplated hereunder. Each party further represents and
warrants 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
transactions contemplated thereunder.
7.9 Applicability in the Event of Conversion, Reclassification or
Exchange of Series B Common Stock. In the event that shares of Presley-Del.
Series B Common Stock are converted, reclassified or split into, or otherwise
exchanged for, other securities of the same or different issuer, the terms and
provisions of this Agreement shall be deemed to apply to such other securities
with the same force and effect (with such adjustments to the number of
securities and the purchase price thereof as may be necessary or appropriate to
give effect to the parties' intent and the transactions contemplated hereunder).
7.10 Acknowledgement. Purchaser and Seller acknowledge that each of
them may be deemed to be an affiliate of Presley-Del. (as such term is defined
in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). Purchaser
and Seller further acknowledge that each of them may have confidential
information concerning Presley-Del.'s business and affairs which is not public
and may be considered material. Recognizing the foregoing, neither Purchaser nor
Seller has requested, desires or requires the other to disclose any confidential
information relating to Presley-Del. or otherwise. Each of Purchaser and Seller
has conducted its own investigation, to the extent it has determined necessary
or desirable, in connection with the purchase and sale of the Shares hereunder
and expressly further acknowledges that (a) it has not relied upon any
representation, warranty or statement (other than the limited representations,
warranties and statements contained in this Agreement) made by, nor upon any
analysis of, the other in connection with the transactions contemplated
hereunder, (b) it has made its own investment analysis and decision to purchase
or sell (as the case may be) the Shares based upon such information as it has
deemed appropriate, and (c) it is voluntarily assuming all risks associated with
the purchase or sale (as the case may be) of the Shares hereunder resulting from
the failure to receive any such representations, warranties, statements or
confidential information.
7.11 Relationship to Other Series B Purchase Agreements. The parties
acknowledge that, in connection with the Series B Offer, Purchaser has entered
into or proposes to enter into agreements with the other holders of Presley-Del.
Series B Common Stock to purchase from such holders additional shares of
Presley-Del. Common Stock (such other agreements are attached hereto as Exhibit
B and are referred to herein as the "Other Series B Agreements"). Purchaser
agrees that such Other Series B Agreements are to be identical in form and
substance to this Agreement, with only such
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<PAGE> 24
differences as relate to the identity of the seller and the number of shares of
Presley-Del. Common Stock to be purchased and sold thereunder (it being
understood that in the case of Foothill Capital Corporation, such number is
710,574 shares of Presley-Del. Series B Common Stock, and in the case of each of
the other Series B stockholders, such number is that number of Series B shares
as is necessary to reduce the total number of shares of Presley-Del. Common
Stock (including any Presley-Del. Series A shares) owned by such Series B
stockholder to below 5% of the total number of shares of Presley-Del. Common
Stock outstanding). If the terms and conditions contained in any of the Other
Series B Agreements are modified from the terms or conditions contained in this
Agreement in any respect which is more advantageous to the seller or sellers
party thereto, Purchaser and Seller agree that (a) Purchaser shall deliver to
Seller prompt written notice of such modification (including the text thereof),
(b) this Agreement shall be deemed to be amended to reflect such more
advantageous terms or conditions (unless Seller notifies Purchaser to the
contrary in writing), and (c) Purchaser and Seller, upon request, will promptly
execute such agreements or instruments as may be necessary to evidence such
amendment.
7.12 Increase in Series A Offering Price. In the event that the
purchase price paid by Purchaser in the Series A Offer is increased above $0.655
per share in cash, then the purchase price to be paid by Purchaser under this
Agreement for each of the Shares shall be increased by the same incremental
amount above $0.655 per share.
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<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase and Sale Agreement as of the day and year first above written.
"PURCHASER"
WILLIAM LYON HOMES, INC.
By: /s/ William Lyon
------------------------------------
William Lyon
Chairman, President and CEO
"SELLER"
GS CREDIT PARTNERS, L.P.
By: /s/ Robert O'Shea
------------------------------------
Robert O'Shea
Managing Director
12
<PAGE> 26
SCHEDULE 3.4
SHARE OWNERSHIP
<TABLE>
<CAPTION>
Series A Shares Series B Shares
<S> <C> <C>
First Plaza Group Trust 1,697,325 5,099,206
GS Credit Partners, L.P. -- 5,920,362
ING (U.S.) Capital LLC (as nominee of
ING Equity Partners, L.P. I)
-- 4,547,269
Foothill Capital Corporation -- 1,836,109
</TABLE>
<PAGE> 27
STOCK PURCHASE AND SALE AGREEMENT
THIS STOCK PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
into as of this 6th day of July, 1999 by and among William Lyon Homes, Inc., a
California corporation ("Purchaser"), and ING (U.S.) Capital, LLC, formerly
known as ING (U.S.) Capital Corporation ("Seller").
RECITALS:
WHEREAS, Purchaser, The Presley Companies, a Delaware corporation
("Presley-Del."), and Presley Homes, a California corporation ("Presley-Cal."),
are parties to a letter of intent dated May 3, 1999 attached hereto as Exhibit A
(the "Letter of Intent") which sets forth such parties' mutual, preliminary
understanding with respect to Presley-Cal.'s proposed acquisition of
substantially all of the assets of Purchaser (the "Acquisition") and Purchaser's
proposal to acquire a portion of the outstanding shares of Common Stock of
Presley-Del.; and
WHEREAS, the Letter of Intent contemplates that Purchaser 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 the 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 the Presley Del. Common Stock which,
when added to the number of shares of Presley-Del Common Stock already owned by
Purchaser and its affiliates (and after giving effect to dispositions of
Presley-Del. Common Stock held by Purchaser and its affiliates as contemplated
in the Letter of Intent), will cause Purchaser and its affiliates to own an
aggregate of approximately 49% (but in no event more than 49.9%) of the shares
of Presley-Del. Common Stock outstanding; and
WHEREAS, Seller owns shares of Presley-Del. Series B Common Stock
and, as part of the Series B Offer, Seller and Purchaser desire to enter into
this Agreement to provide for the sale by Seller to Purchaser of 1,937,486
shares (subject to adjustment as provided herein) of such Series B Common Stock
on the terms and subject to the conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants set forth in this Agreement, the
parties agree as follows:
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<PAGE> 28
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Shares. At the Closing (as defined in
Section 1.3 of this Agreement), and on the terms and subject to the conditions
set forth in this Agreement, Seller agrees to sell, transfer and deliver to
Purchaser, and Purchaser hereby agrees to purchase and acquire from Seller,
1,937,486 shares of Presley-Del. Series B Common Stock (the "Shares") for a cash
price of $0.655 per share, or an aggregate purchase price of $1,269,053.33 (the
"Purchase Price"). The number of Shares of Presley-Del. Series B Common Stock to
be purchased and sold hereunder, and the aggregate Purchase Price to be paid
therefor, shall be subject to adjustment as provided in Section 4.1 and Section
7.12 of this Agreement.
1.2 Deliveries at Closing. At the Closing, Seller shall deliver to
Purchaser the certificate or certificates representing the Shares, duly endorsed
for transfer to, or accompanied by duly executed stock powers in favor of,
Purchaser or its nominee, and otherwise in a form acceptable for transfer on the
books of Presley-Del., against payment by Purchaser of the Purchase Price by
wire transfer of immediately available funds to the account specified on
Schedule 1.2 attached hereto.
1.3 Closing. Unless otherwise agreed by the parties hereto, the
closing of the transaction contemplated in this Article I (the "Closing") shall
take place at the offices of Purchaser at 9:00 a.m. Pacific time on the second
business day following the delivery by Purchaser to Seller of written notice to
the effect that the conditions set forth in Sections 5.3(c), 5.3(d) and 5.3(e)
of this Agreement have been satisfied or waived. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date of
this Agreement and as of the Closing Date as follows (it being understood and
agreed that Purchaser makes no representations or warranties in connection with
the purchase and sale of the Shares hereunder other than as set forth in this
Article II and in Section 7.10 hereof):
2.1 Due Incorporation; Authority. Purchaser has been duly
incorporated and is validly existing in good standing under the laws of the
State of California. Purchaser has the corporate power and corporate authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement, and the performance of Purchaser's
obligations hereunder, have been duly authorized by all necessary corporate
action on the part of Purchaser.
2.2 Binding Obligation. This Agreement has been duly executed and
delivered by Purchaser, and constitutes the legal, valid and binding obligation
of
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<PAGE> 29
Purchaser, enforceable in accordance with its terms against Purchaser, except
that (a) such enforcement may be limited by the effect of applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws relating to or affecting
creditors rights generally; and (b) such enforcement may be limited by general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
2.3 No Conflict or Violation. Purchaser's execution and delivery of,
and performance of its obligations under, this Agreement do not (a) violate
Purchaser's articles of incorporation or bylaws, (b) constitute a material
breach or default under any existing obligation of or restriction on Purchaser
under any other agreement to which Purchaser is a party, or (c) breach or
otherwise violate any law, statute, rule, regulation, order or decree applicable
to Purchaser. No consent, order, permit or approval of any person or
governmental authority is required on the part of Purchaser for the execution
and delivery of, and performance of its obligations under, this Agreement.
2.4 Investment Intent. Purchaser is purchasing the Shares for its
own account and not with a view to distribution thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). Purchaser is an
"accredited investor," as such term is defined in Rule 501(a) under the
Securities Act, which, by reason of its business and financial experience, has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the investment in the
Shares. Purchaser understands that (a) the Shares have not been registered under
the Securities Act and may not be offered or sold unless the Shares are
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available, (b) if any transfer of the
Shares is to be made in reliance on an exemption under the Securities Act,
Presley-Del. may require an opinion of counsel satisfactory to it that such
transfer may be made pursuant to such exemption, and (c) so long as deemed
appropriate by Presley-Del., the Shares may bear a legend to the effect of
clauses (a) and (b) of this paragraph.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Purchaser as of the date of this
Agreement and as of the Closing Date as follows (it being understood and agreed
that Seller makes no representations or warranties in connection with the
purchase and sale of the Shares hereunder other than as set forth in this
Article III and in Section 7.10 hereof):
3.1 Organization and Good Standing; Authority. Seller has been duly
organized and is validly existing in good standing under the laws of its
jurisdiction of organization. Seller has the power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement, and the performance of Seller's obligations
hereunder, have been duly authorized by all
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<PAGE> 30
necessary corporate, partnership, limited liability company or trust action (as
the case may be) on the part of Seller.
3.2 Binding Obligation. This Agreement has been duly executed and
delivered by Seller, and constitutes the legal, valid and binding obligation of
Seller, enforceable in accordance with its terms against Seller, except that (a)
such enforcement may be limited by the effect of applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws relating to or affecting
creditors rights generally; and (b) such enforcement may be limited by general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
3.3 No Conflict or Violation. Seller's execution and delivery of,
and performance of its obligations under, this Agreement do not (a) violate
Seller's charter or other organizational documents, (b) to Seller's knowledge,
constitute a material breach or default under any existing obligation of or
restriction on Seller under any other agreement to which Seller is a party, or
(c) breach or otherwise violate any law, statute, rule, regulation, order or
decree applicable to Seller. No consent, order, permit or approval of any person
or governmental authority is required on the part of Seller for the execution
and delivery of, and performance of its obligations under, this Agreement.
3.4 Share Ownership. Seller's record and beneficial ownership of
Presley-Del. equity securities is correctly set forth on Schedule 3.4 attached
hereto. Seller owns all of the Shares of record and beneficially, free and clear
of any charge, claim, property interest, right of first refusal, condition,
lien, option, pledge, security interest or other adverse claim or interest of
any kind (collectively, "Encumbrances"). At the Closing, Seller will transfer to
Purchaser good and title to the Shares, free and clear of all Encumbrances
except for such Encumbrances as may be imposed by applicable securities laws or
as may be otherwise expressly provided herein.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Purchase and Sale of Additional Series B Shares.
(a) Seller acknowledges that it is Purchaser's objective,
following the Closing of the Series A Offer and the Series B Offer, to
own (together with Purchaser's affiliates) an aggregate of approximately
49% (but in no event more than 49.9%) of Presley-Del.'s outstanding
Common Stock. In the event that the Series A shareholders do not tender
a sufficient number of shares of Series A Common Stock in response to
the Series A Offer to enable Purchaser and its affiliates (after taking
into account the Series B shares to be acquired pursuant to the Series B
Offer and after giving effect to the possible disposition by Purchaser
and its affiliates of up to 8% of the outstanding shares of Presley-Del.
Common Stock as contemplated in the Letter of Intent) to achieve the
desired
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<PAGE> 31
ownership target, Seller hereby agrees to sell to Purchaser, and
Purchaser hereby agrees to purchase from Seller, at a price of $0.655
per share in cash, an additional number of shares of Series B Common
Stock owned by Seller so as to enable Purchaser and its affiliates to
reach the desired ownership target. The number of additional shares of
Series B Common Stock to be sold by Seller pursuant to this Section 4.1
shall be determined in accordance with the following formula:
Number of Additional Shares = A x B
---
C
Where A = Total number of additional shares of Presley-Del.
Common Stock necessary to enable Purchaser and its
affiliates to achieve the desired ownership target;
B = Total number of shares of Presley-Del. Common Stock
owned by Seller (after giving effect to the sale of the
Shares specified in Section 1.1 of this Agreement); and
C = Total number of shares of Presley-Del. Common Stock
owned by each of the Series B shareholders identified on
Schedule 3.4 attached hereto (after giving effect to the
sale of the Shares specified in Section 1.1 of this
Agreement and in Section 1.1 of each of the agreements
entered into with the other Series B Shareholders in
connection with the Series B Offer).
(b) The number of additional shares of Series B Common Stock to
be purchased pursuant to this Section 4.1 (if any) shall be set forth in
the notice delivered by Purchaser to Seller in accordance with Section
1.3 of this Agreement. The purchase and sale of any additional shares of
Series B Common Stock pursuant to this Section 4.1 shall occur in the
same manner and at the same time as the transaction provided for in
Article I of this Agreement. The term "Shares," as used in this
Agreement, shall refer equally to any additional shares of Series B
Common Stock purchased and sold pursuant to this Section 4.1.
4.2 Agreements Not to Tender, Transfer or Acquire Shares. Seller
hereby agrees that, prior to the Closing, Seller will not:
(a) transfer or dispose of any interest in, tender (pursuant to
the Series A Offer or otherwise), or pledge or otherwise create (or
allow to exist) any Encumbrance on, any shares of Presley-Del. Common
Stock which it owns (except as contemplated in this Agreement);
(b) convert any Series B shares which it owns into Series A
shares; or
5
<PAGE> 32
(c) acquire any beneficial interest in shares of Presley-Del.
Common Stock or any options, warrants or other rights to acquire shares
of Presley-Del. Common Stock.
Notwithstanding anything herein to the contrary, any affiliate of Seller which,
in the ordinary course of its business, engages in any of the following
activities may engage in such activities (other than for its own account) with
respect to shares of Presley-Del. Common Stock and options, warrants or other
rights to acquire shares of Presley-Del. Common Stock: brokerage, investment
advisory, investment company, financial advisory, anti-raid advisory, financing,
asset management, trading, market making, arbitrage and other similar
activities.
4.3 Restriction on Sales of Presley-Del Common Stock by Purchaser.
Purchaser hereby agrees that during the period from the Closing Date through and
including the third anniversary of the Closing Date, Purchaser and its
affiliates will not sell or otherwise transfer for value any shares of
Presley-Del. Common Stock (other than the 7,939,589 shares of Series A Common
Stock which are currently owned by Purchaser and its affiliates) unless such
sale takes place in connection with a transaction in which all other holders of
Presley-Del. Common Stock are afforded an opportunity to participate pro rata
(based on ownership of Presley-Del. Common Stock) and on the same terms and
conditions as Purchaser and its affiliates. Notwithstanding the foregoing,
nothing contained in this Section 4.3 shall prohibit any transfer of
Presley-Del. Common Stock by Purchaser or any of its affiliates to (a) any other
affiliate of Purchaser, (b) William Lyon, his spouse or any of his lineal
descendants, (c) any person who acquires such shares under the terms of a will
or by the laws of descent and distribution, or (d) any trustee of any trust, the
beneficiaries of which consist only of William Lyon, his spouse or lineal
descendants, or any charitable organization as defined in Section 501(c)(3) of
the Internal Revenue Code of 1986, as amended, provided that any such permitted
transferee first agrees in writing to be bound by this Section 4.3 to the same
extent as Purchaser and its affiliates.
4.4 Consent to Transactions; Agreement to Vote in Favor of
Presley-Del. Charter Amendments. Seller hereby approves of and consents to the
transactions contemplated in the Letter of Intent, a copy of which has
previously been provided to Seller. Subject to the condition set forth in the
next sentence, Seller hereby agrees to vote all shares of Presley-Del. Common
Stock which it (or any of its affiliates) owns in favor the transactions
contemplated by such Letter of Intent which are submitted for a vote of
Presley-Del. stockholders and for which approval has been recommended by the
Presley-Del. Board of Directors. In particular, but conditioned upon the
understanding that such provisions will not be effective until after the closing
of the Series A Offer, the Series B Offer and the Acquisition, Seller agrees to
vote all shares of Presley-Del. Common Stock which it (or any of its affiliates)
owns in favor of certain provisions proposed to be added to Presley-Del.'s
certificate of incorporation (whether by amendment, merger or otherwise) which
would restrict the transfer of Presley-Del shares by holders of 5% or
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<PAGE> 33
more of its outstanding shares so as to avoid triggering certain tax law
provisions which could result in the loss of Presley-Del.'s net operating losses
for tax purposes.
ARTICLE V
CONDITIONS TO CLOSING
The obligation of Purchaser and Seller to effect the Closing shall
be subject to the following conditions:
5.1 Conditions Precedent to Purchaser's and Seller's Obligations.
Purchaser's and Seller's respective obligations to consummate the purchase and
sale of the Shares hereunder and to take the other actions required to be taken
at the Closing are subject to the satisfaction as of the Closing Date of the
condition that the purchase and sale of the Shares as contemplated in this
Agreement shall not violate or contravene any applicable law, statute, rule,
regulation, order or decree of any governmental authority.
5.2 Conditions Precedent to Seller's Obligation to Close. Seller's
obligations to sell the Shares and to take the other actions required to be
taken by Seller at the Closing are subject to the satisfaction as of the Closing
Date of each of the following conditions (each of which may be waived by Seller,
in whole or in part):
(a) the representations and warranties of Purchaser contained in
this Agreement must have been true and correct in all respects on the
date of this Agreement and shall be true and correct in all respects as
of the Closing Date as if made on the Closing Date; and
(b) Purchaser shall have performed all of the covenants and
obligations that Purchaser is required to perform or to comply with at
or prior to the Closing pursuant to this Agreement.
5.3 Conditions Precedent to Purchaser's Obligation to Close.
Purchaser's obligations to purchase the Shares and to take the other actions
required to be taken by Purchaser at the Closing are subject to the satisfaction
as of the Closing Date of each of the following conditions (each of which may be
waived by Purchaser, in whole or in part):
(a) The representations and warranties of Seller contained in
this Agreement must have been true and correct in all respects on the
date of this Agreement and shall be true and correct in all respects as
of the Closing Date as if made on the Closing Date;
(b) Seller shall have performed all of the covenants and
obligations that Seller is required to perform or to comply with at or
prior to the Closing pursuant to this Agreement;
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<PAGE> 34
(c) The stockholders of Presley-Del., by a vote sufficient under
applicable law, shall have approved certain provisions which are
proposed to be added to Presley-Del.'s certificate of incorporation
and/or bylaws to restrict transfers of shares of Presley-Del. Common
Stock by holders of 5% or more of the outstanding Common Stock so as to
avoid triggering the change-in-control tax provisions which could result
in a loss of Presley-Del.'s net operating losses for tax purposes, and
Presley-Del. shall have notified Purchaser in writing of its intention
to effect such provisions (by filing with the Delaware Secretary of
State a certificate of amendment or certificate of merger) following and
conditioned only upon the closing of the Series A Offer and the Series B
Offer;
(d) Presley-Cal. and Purchaser shall have closed the
Acquisition;
(e) Purchaser shall have purchased (or have the legally
enforceable right to purchase) shares of Presley-Del. Common Stock
pursuant to the Series A Offer and/or the Series B Offer such that the
number of shares so purchased, when added to the number of shares of
Presley-Del. Common Stock then owned by Purchaser and its affiliates,
causes Purchaser and its affiliates to own at least 49% (but not more
than 49.9%) of the outstanding shares of Presley-Del. Common Stock; and
(f) upon the closing of the Series B Offer, no person (other
than Purchaser and its affiliates) shall own beneficially 5% or more of
the outstanding Common Stock of Presley-Del.
ARTICLE VI
TERMINATION
6.1 Termination Events. This Agreement may, by written notice
delivered prior to the Closing, be terminated:
(a) by mutual consent of Purchaser and Seller;
(b) by Purchaser or Seller (if such party is not itself then in
breach), if a material breach of this Agreement has been committed by
the other party, and such breach has not been waived or cured within 10
calendar days of the date written notice of such breach is delivered to
the breaching party;
(c) by Purchaser or Seller if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on
or before November 15, 1999, or such later date as the parties may agree
upon in writing;
(d) (i) by Purchaser, if any of the conditions in Section 5.3 of
this Agreement has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than
through the failure of
8
<PAGE> 35
Purchaser to perform its obligations under this Agreement), or (ii) by
Seller, if any of the conditions in Section 5.2 of this Agreement has
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Seller to perform its obligations under this Agreement); or
(e) by Purchaser or Seller, if Purchaser, Presley-Del. and
Presley-Cal. terminate the Letter of Intent (or any definitive agreement
entered into with respect to the transactions contemplated by the Letter
of Intent), or the Letter of Intent (or any such definitive agreement)
expires in accordance with its terms prior to the Closing Date.
6.2 Effect of Termination. If this Agreement is terminated pursuant
to Section 6.1 hereof, all further obligations of the parties under this
Agreement shall terminate; provided, however, that a termination of this
Agreement shall not relieve any party of any liability it may have for breach of
any representation or warranty or nonperformance of any covenant or obligation
hereunder, or constitute a waiver of any available remedy (including specific
performance, if available) for any such breach or nonperformance.
ARTICLE VII
GENERAL PROVISIONS
7.1 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
7.2 Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California, without regard to conflict of laws principles.
7.3 Entire Agreement. This Agreement contains all of the agreements
between the parties with respect to the matters contained herein and supersedes
all prior written or oral and all contemporaneous oral agreements or
understandings between the parties pertaining to any such matters. No provision
of this Agreement may be amended or added to except by an agreement in writing
signed by the parties to this Agreement or their respective successors in
interest and expressly stating that it is an amendment of this Agreement.
7.4 Further Assurances. The parties agree to do such further acts
and things and to execute and deliver such additional agreements and instruments
as any other party may reasonably require to consummate, evidence or confirm the
agreements contained herein in the manner contemplated hereby.
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<PAGE> 36
7.5 Assignment. This Agreement and the rights, duties, and
obligations hereunder may not be assigned by any party prior to the Closing
without the prior written consent of the other party, and any attempted
assignment is void. Notwithstanding the foregoing, either Purchaser or Seller
may assign its rights and delegate its obligations under this Agreement to one
or more of their respective affiliates (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended), provided that, in each
case, (a) the assignee first agrees in writing to be bound by the terms of this
Agreement, and (b) any such assignment and delegation shall not relieve
Purchaser or Seller of any of its obligations hereunder.
7.6 Successors and Assigns. Subject to Section 7.5 hereof, this
Agreement shall be binding upon each of the parties to it and their respective
successors and permitted assigns.
7.7 Severability. In the event any provision of this Agreement shall
finally be determined to be unlawful, such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect.
7.8 Expenses. Each party shall bear its own expenses in connection
with the transactions contemplated hereunder. Each party further represents and
warrants 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
transactions contemplated hereunder.
7.9 Applicability in the Event of Conversion, Reclassification or
Exchange of Series B Common Stock. In the event that shares of Presley-Del.
Series B Common Stock are converted, reclassified or split into, or otherwise
exchanged for, other securities of the same or different issuer, the terms and
provisions of this Agreement shall be deemed to apply to such other securities
with the same force and effect (with such adjustments to the number of
securities and the purchase price thereof as may be necessary or appropriate to
give effect to the parties' intent and the transactions contemplated hereunder).
7.10 Acknowledgement. Purchaser and Seller acknowledge that each of
them has a representative who is a director of Presley-Del. and that each of
Purchaser and Seller may be deemed to be an affiliate of Presley-Del. (as such
term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended). Purchaser and Seller further acknowledge that each of them may have
confidential information concerning Presley-Del.'s business and affairs which is
not public and may be considered material. Recognizing the foregoing, neither
Purchaser nor Seller has requested, desires or requires the other to disclose
any confidential information relating to Presley-Del. or otherwise. Each of
Purchaser and Seller has conducted its own investigation, to the extent it has
determined necessary or desirable, in connection with the purchase and sale of
the Shares hereunder and expressly further acknowledges that (a) it has not
relied upon any representation, warranty or statement (other than the limited
representations, warranties and statements contained in this Agreement) made by,
nor upon any analysis
10
<PAGE> 37
of, the other in connection with the transactions contemplated hereunder, (b) it
has made its own investment analysis and decision to purchase or sell (as the
case may be) the Shares based upon such information as it has deemed
appropriate, and (c) it is voluntarily assuming all risks associated with the
purchase or sale (as the case may be) of the Shares hereunder resulting from the
failure to receive any such representations, warranties, statements or
confidential information.
7.11 Relationship to Other Series B Purchase Agreements. The parties
acknowledge that, in connection with the Series B Offer, Purchaser has entered
into or proposes to enter into agreements with the other holders of Presley-Del.
Series B Common Stock to purchase from such holders additional shares of
Presley-Del. Common Stock (such other agreements are attached hereto as Exhibit
B and referred to herein as the "Other Series B Agreements"). Purchaser agrees
that such Other Series B Agreements are to be identical in form and substance to
this Agreement, with only such differences as relate to the identity of the
seller and the number of shares of Presley-Del. Common Stock to be purchased and
sold thereunder (it being understood that in the case of Foothill Capital
Corporation, such number is 710,574 shares of Presley-Del. Series B Common
Stock, and in the case of each of the other Series B stockholders, such number
is that number of Series B shares as is necessary to reduce the total number of
shares of Presley-Del. Common Stock (including any Presley-Del. Series A shares)
owned by such Series B stockholder to below 5% of the total number of shares of
Presley-Del. Common Stock outstanding). If the terms and conditions contained in
any of the Other Series B Agreements are modified from the terms or conditions
contained in this Agreement in any respect which is more advantageous to the
seller or sellers party thereto, Purchaser and Seller agree that (a) Purchaser
shall deliver to Seller prompt written notice of such modification (including
the text thereof), (b) this Agreement shall be deemed to be amended to reflect
such more advantageous terms or conditions (unless Seller notifies Purchaser to
the contrary in writing), and (c) Purchaser and Seller, upon request, will
promptly execute such agreements or instruments as may be necessary to evidence
such amendment.
7.12 Increase in Series A Offering Price. In the event that the
purchase price paid by Purchaser in the Series A Offer is increased above $0.655
per share in cash, then the purchase price to be paid by Purchaser under this
Agreement for each of the Shares shall be increased by the same incremental
amount above $0.655 per share.
11
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase and Sale Agreement as of the day and year first above written.
"PURCHASER"
WILLIAM LYON HOMES, INC.
By: /s/ William Lyon
------------------------------------
William Lyon
Chairman, President and CEO
"SELLER"
ING (U.S.) CAPITAL LLC
By: /s/ Fred Assenheimer
------------------------------------
Fred Assenheimer
Senior Vice President
12
<PAGE> 39
SCHEDULE 3.4
SHARE OWNERSHIP
<TABLE>
<CAPTION>
Series A Shares Series B Shares
<S> <C> <C>
First Plaza Group Trust 1,697,325 5,099,206
GS Credit Partners, L.P. -- 5,920,362
ING (U.S.) Capital LLC (as nominee of
ING Equity Partners, L.P. I)
-- 4,547,269
Foothill Capital Corporation -- 1,836,109
</TABLE>
<PAGE> 1
EXHIBIT (C)(3)
NONQUALIFIED STOCK OPTION AGREEMENT
(Consultant)
This NONQUALIFIED STOCK OPTION AGREEMENT is made as of this 20th day of
May, 1994, between THE PRESLEY COMPANIES, a Delaware corporation (the
"COMPANY"), and WILLIAM LYON ("OPTIONEE"). All capitalized terms not
specifically defined herein shall have the meanings set forth in the Company's
Amended and Restated 1991 Stock Option Plan (the "PLAN").
R E C I T A L S
A. The Plan provides for the granting to key employees, directors (other
than members of the hereafter defined Committee), consultants and advisers of
the Company or of its subsidiary corporations (as defined in the Plan) as the
Committee may from time to time select, of options to purchase shares of Series
A Common Stock of the Company.
B. Optionee is a key consultant to The Presley Companies, a California
corporation ("CALIFORNIA PRESLEY"), a subsidiary of the Company.
C. Pursuant to the Plan, the Committee has determined that it is to the
advantage and best interests of the Company and its stockholders to grant a
nonqualified stock option to Optionee covering 750,000 shares of the Company's
Series A Common Stock (or any class of stock into which such Series A Common
Stock is converted or reclassified as provided in Section 15 of the Plan) (each
herein sometimes referred to as "COMMON STOCK") as an inducement to remain in
the service of the Company and as an incentive for increased effort during such
service, and has approved the execution of this Nonqualified Stock Option
Agreement between the Company and Optionee.
D. The option granted hereby is not intended to qualify as an "INCENTIVE
STOCK OPTION" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "CODE").
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company grants to Optionee the right and option
("OPTION") to purchase on the terms and conditions hereinafter set forth, all
or any part of an aggregate of 750,000 shares of the Common Stock at the
purchase price of $2.875 per share, which price is equal to the fair market
value of such stock (as determined pursuant to Section 4) on the date of this
Agreement. The Option shall be exercisable from time to time in accordance with
the provisions of this Agreement or earlier in accordance with Section 5.
<PAGE> 2
2. Vesting. Optionee may not purchase any shares by exercise of this
Option between the date of this Agreement and the first anniversary date of this
Agreement. On and for a period of five years after the following anniversary
dates of this Agreement, this Option may be exercised up to the indicated
percentage of shares covered by this Option (the shares as to which the Option
vests herein sometime called "VESTED OPTION SHARES"), subject to Section 5
below:
<TABLE>
<CAPTION>
Cumulative
Percentage of
Percentage of Originally
Originally Covered Shares
Covered Shares as to Which
Anniversary as to Which Option is
Date Option Vests Exercisable
---- ------------ -----------
<S> <C> <C>
First 33 1/3% 33 1/3%
Second 33 1/3% 66 2/3%
Third 33 1/3% 100%
</TABLE>
Subject to earlier termination under Section 5, at any time after shares covered
by this Agreement become Vested Option Shares, but no later than the fifth
anniversary date of the date shares become Vested Option Shares (the "EXPIRATION
DATE" with respect to such Shares), Optionee may purchase all or any part of
the Vested Option Shares which Optionee theretofore failed to purchase. In each
case the number of shares which may be purchased shall be calculated to the
nearest full share. Unless Optionee indicates otherwise in writing when it
exercises this Option, Optionee shall be deemed to exercise Vested Option Shares
in the order in which they vested.
Notwithstanding the foregoing provisions or the provisions of Section 5 of
this Agreement to the contrary, upon the occurrence of a Change of Control all
shares of Common Stock covered hereby which have not yet become Vested Option
Shares shall thereupon become Vested Option Shares, and from and after the
occurrence of such Change of Control and until the Expiration Date for each
Vested Option Share, the Optionee shall be entitled to exercise his rights under
this Agreement with respect to such Vested Option Share. For the purposes of
this Agreement, a "CHANGE OF CONTROL" shall be deemed to have occurred if a
Change of Control has occurred for the purposes of Exhibit A hereto.
3. Manner of Exercise. Each exercise of this Option shall be by means of
a written notice of exercise delivered to the Company, specifying the number of
shares to be purchased and accompanied by payment to the Company of the full
purchase price of the shares to be purchased solely (i) in cash or by check
payable to the order of the Company, (ii) by delivery of shares of Common Stock
of the Company already owned by, and in the possession of the Optionee, or (iii)
by delivery to a
2
<PAGE> 3
broker of a copy of the notice of exercise, specifying the number of shares
with respect to which this Option is to be exercised and instructing the broker
to sell the shares issuable upon exercise of the Option and to deliver to the
Company from the sale proceeds of such shares an amount equal to the exercise
price of the Option, or any combination thereof. Shares of common Stock used to
satisfy the exercise price of this Option shall be valued at their fair market
value determined (in accordance with Section 4 on the date of exercise (or if
such date is not a business day, as of the close of the business day
immediately preceding such date). This Option may not be exercised for a
fraction of a share and no partial exercise of this Option may be for less than
one hundred (100) shares.
This Option may be exercised (i) during the lifetime of Optionee only
by Optionee; (ii) to the extent permitted by the Committee or by the terms of
this Agreement, Optionee's spouse if such spouse obtained the Option pursuant to
a qualified domestic relations order as defined by the Code or Title I of ERISA,
or the rules thereunder ("QUALIFIED DOMESTIC RELATIONS ORDER"); and (iii) after
Optionee's death by his or her transferees by will or the laws of descent or
distribution.
4. Fair Market Value of Common Stock. The fair market value of a share of
Common Stock of the Company shall be determined for purposes of the Plan by
reference to the closing price on the principal stock exchange on which such
shares are then listed or, if such shares are not then listed on a stock
exchange, by reference to the closing price (if approved for quotation on the
NASDAQ National Market System) or the mean between the bid and asked price (if
other over-the-counter issue) of a share as supplied by the National Association
of Securities Dealers, Inc. through NASDAQ (or its successor in function), in
each case as reported by The Wall Street Journal, for the business day
immediately preceding the date on which the option is exercised (or, if for any
reason no such price is available, in such other manner as the Committee may
deem appropriate to reflect the then fair market value thereof).
5. Death or Permanent Disability. If prior to a Change of Control,
Optionee dies or becomes "PERMANENTLY DISABLED," the Option shall expire with
respect to each of the shares covered hereby which are not Vested Option Shares
at such date, and the Option shall expire with respect to each of the Vested
Option Shares on the earlier of (i) the Expiration Date applicable to such
Shares, or (ii) a date twelve months after the date of such death or "permanent
disability," to the extent exercisable on the date of death or "permanent
disability," and shall thereafter expire and be void and of no further force or
effect. During such period after death, the Option may, to the extent that it
remained unexercised (but
3
<PAGE> 4
exercisable by Optionee according to the Option's terms) on the date of such
death, be exercised by the person or persons to whom Optionee's rights under the
Option shall pass by Optionee's will or by the laws of descent and distribution
or by Optionee's spouse who obtained the Option pursuant to a Qualified Domestic
Relations Order. For the purposes of this Agreement, "permanent disability"
shall be determined in accordance with Section 22(e)(3) of the Code.
6. Shares to be Issued in Compliance with Federal Securities Laws and
Exchange Rules. By accepting the Option, Optionee represents and agrees, for
Optionee and his or her legal successors (by will or the laws of descent and
distribution or through a Qualified Domestic Relations Order), that none of the
shares purchased upon exercise of the option will be acquired with a view to any
sale, transfer or distribution of said shares in violation of the Securities Act
of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or any applicable state "blue sky" laws. If required by
the Committee at the time the Option is exercised, Optionee or any other person
entitled to exercise the Option shall furnish evidence satisfactory to the
Company (including a written and signed representation) to such effect in form
and substance satisfactory to the Company, including an indemnification of the
Company in the event of any violation of the Securities Act or state blue sky
laws by such person.
7. Withholding of Taxes. Upon the exercise of this Option, the Company
shall have the right to require Optionee or Optionee's legal successor to pay
the Company the amount of any taxes which the Company may be required to
withhold with respect to such shares.
8. No Assignment. This Option and all other rights and privileges
granted hereby shall not be transferred, either voluntarily or by operation of
law otherwise than by will or the laws of descent and distribution or pursuant
to a Qualified Domestic Relations Order. Upon any attempt to so transfer or
otherwise dispose of this Option or any other right or privileges granted
hereby contrary to the provisions hereof, this Option and all rights and
privileges contained herein shall immediately become null and void and of no
further force or effect.
9. Adjustment for Reorganizations, Stock Splits, etc. If the outstanding
shares of Common Stock (or any other class of shares or securities which shall
have become issuable upon the exercise of this Option pursuant to this
sentence) are increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, an appropriate and
4
<PAGE> 5
proportionate adjustment shall be made in the maximum number and kind of
shares receivable upon the exercise of this Option, without change in the total
price applicable to the unexercised portion of this Option, but with a
corresponding adjustment in the price for each share or other unit of any
security covered by this option.
Upon the occurrence of (i) the dissolution or liquidation of the
Company, (ii) a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation or as a result of which it is the surviving corporation and its
outstanding voting securities are converted to or reclassified as cash,
securities of another corporation or other property (unless the principal
purpose of such transaction is to change the state of the Company's
incorporation), or (iii) a sale of assets of the Company or its subsidiaries
having a fair market value equal to more than eighty percent (80%) of the total
fair market value of the Company's assets to an entity which is not controlling,
controlled by or under common control with the Company, then, subject to the
following sentence, this Option shall terminate. Notwithstanding the foregoing,
the Committee shall provide in writing in connection with any such transaction
for any or all of the following alternatives (separately or in combination)
which shall, as nearly as practicable, preserve the benefits of outstanding
options which have accrued to the holders thereof (or if such transaction is
being entered into after a Change of Control, Optionee may elect the following
alternative (d) if the Committee has provided for any other of the following
alternatives, such election to be made by Optionee in writing delivered to the
Company no later than two (2) business days before the date of the transaction);
(a) for this Options to become immediately exercisable as to all shares covered
hereby, if all such shares are not then Vested Option Shares; (b) for the
assumption by the successor corporation of this Option or the substitution by
such corporation for this Option of new options covering the stock of the
successor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; (c) for the
continuance of the Plan by such successor corporation in which event the Plan
and the options theretofore granted shall continue in the manner and under the
terms so provided; or (d) for the payment in cash or stock in lieu of and in
complete satisfaction of this Option.
Adjustments under this Section 9 shall be made by the Board or the
Committee, whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional shares of
stock shall be issued under this Option on any such adjustment.
10. No Rights as a Stockholder Until Issuance of Stock Certificate.
Neither Optionee nor any other person legally
5
<PAGE> 6
entitled to exercise this Option shall be entitled to any of the rights or
privileges of a stockholder of the Company in respect of any shares issuable
upon any exercise of this Option unless and until a certificate or certificates
representing such shares shall have been actually issued and delivered to
Optionee.
11. Agreement Subject to Stock Option Plan. The Option hereby granted is
subject to, and the Company and Optionee agree to be bound by, all of the terms
and conditions of the Plan, as the same shall be amended from time to time in
accordance with the terms thereof, but no such amendment shall adversely affect
Optionee's rights under this Option without the prior written consent of
Optionee.
12. Execution. The interpretation, performance and enforcement of this
Agreement shall be governed by the internal substantive laws of the State of
California.
THE PRESLEY COMPANIES,
a Delaware Corporation
By: /s/ WADE H. CABLE
--------------------------------
Wade H. Cable
Title: President
-------------------------
OPTIONEE
/s/ WILLIAM LYON
-----------------------------------
William Lyon
6
<PAGE> 7
By her signature below, the spouse of Optionee agrees to be bound by all
of the terms and conditions of the foregoing Agreement.
OPTIONEE'S SPOUSE
/s/ WILLA DEAN LYON
--------------------------------
Willa Dean Lyon
7
<PAGE> 8
EXHIBIT A
Change of Control
"Change of Control" means the occurrence of any of the following: (i)
Delaware Presley shall cease to own the number of outstanding shares of
California Presley's capital stock necessary to elect a majority of the Board
of Directors of California Presley; (ii) the sale, lease, exchange or transfer,
in one or a series of transactions, (any such sale, lease, exchange or transfer
herein a "Disposition") of all or substantially all of the Employer's assets to
any "person" or "group" of persons (as such terms are used for the purposes of
Section 13(d) and Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") and the regulations thereunder) such that any person or group
(other than a group of which 70% or more of the voting power of the voting
stock referred to below held by such group is owned beneficially by one or more
Permitted Holders or their Related Parties if the person or persons to which
the Disposition is made assume this Agreement) owns, controls or acquires a
direct or indirect interest in more than 50% of the voting power of the voting
stock of the person or persons that acquire such assets by a Disposition, (iii)
the acquisition by any person or group (as defined above) (other than a group
of which 70% or more of the voting power of the voting stock of Delaware
Presley held by such group is owned beneficially by one or more Permitted
Holders or their Related Parties) of a direct or indirect beneficial interest
in more than 50% of the voting power of the voting stock of Delaware Presley by
way of merger or consolidation or otherwise, (iv) the consummation of any
transaction the result of which is that any person or group (as defined above)
(other than a group of which 70% or more of the voting power of the voting
stock of the Company held by such group is owned beneficially by one or more
Permitted Holders or their Related Parties) owns, directly or indirectly, more
than 50% of the voting power of the voting stock of Delaware Presley, or (v) if
at any time during any period of up to 24 consecutive months, commencing after
the date of this Agreement, individuals who at the beginning of such 24-month
period were directors of Delaware Presley cease for any reason to constitute a
majority of the Board of Directors of Delaware Presley unless the persons
replacing such individuals were nominated by a majority of the Board of
Directors of Delaware Presley.
"Permitted Holders" means either of (a) William Lyon, or (b) any of
Foothill Capital Corporation, Pearl Street, L.P., International Nederlanden
(U.S.) Capital Corporation, First Plaza Group Trust, and Whippoorwill/Presley
Obligation Trust - 1994.
"Related Party" means with respect to any Permitted Holder (A) any person
(as defined above in Change of Control)
8
<PAGE> 9
which owns, directly or indirectly, more than 80% of the securities entitled to
elect a majority of the board of directors, or other comparable governing
group, of the Permitted Holder; any corporation, association or other business
entity of which more than 80% of the securities entitled to elect a majority of
the board of directors, or other comparable governing group of such entity, is
owned, directly or indirectly, by a Permitted Holder; or in the case of an
individual, any spouse or immediate family member of such Permitted Holder; or
(B) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or persons beneficially holding 80% or more
controlling interest of which consist of such Permitted Holder and/or such
other persons referred to in the immediately preceding clause (A).
9
<PAGE> 1
EXHIBIT (C)(4)
November 17, 1998
General James E. Dalton
Chairman
The Special Committee of the Board of Directors
The Presley Companies
19 Corporate Plaza
Newport Beach, California 92660
Dear Jim:
In connection with your consideration (the "Evaluation") of a possible
transaction (the "Transaction") with William Lyon Homes, Inc. (the "Company"),
you have requested access to certain information which is either non-public or
proprietary in nature.
In consideration for and as a condition to furnishing such information
to you, you agree to treat any Evaluation Material (defined below) in accordance
with the provisions set forth below, acknowledging the confidential and
proprietary nature of such Evaluation Material.
As used herein, the term "Evaluation Material" shall mean any and all
financial, technical, commercial or other information concerning the business
and affairs of the Company or its affiliates that has been or may hereafter be
provided or shown to you or your representatives in connection with the
Transaction, which shall include without limitation employees, officers,
directors, representatives, or agents or controlling persons and potential
financing sources, which shall collectively be referred to as "Representatives,"
irrespective of the form of the communication by the Company or by its
representatives or agents (including attorneys), and all notes, analyses,
compilations, studies or other material prepared by you or your Representatives
containing or based in whole or in part on any information provided or shown by
the Company or by its representatives or agents. The term "Evaluation Material"
does not include information which (i) was or becomes generally available to the
public other than as a result of a disclosure by you or your Representatives in
violation of this Agreement, (ii) was available to you on a non-confidential
basis prior to its disclosure to you by the Company or its representatives or
agents, provided that, to your knowledge after reasonable inquiry, the source of
such information does not have a contractual or fiduciary confidentiality
obligation to the Company, or (iii) becomes
<PAGE> 2
General James E. Dalton
November 17, 1998
Page 2
available to you on a non-confidential basis from a source other than the
Company or its representatives or agents, provided that, to your knowledge after
reasonable inquiry, such source is not subject to a contractual or fiduciary
confidentiality obligation to the Company.
It is understood that you may disclose any of the Evaluation Material
only to those of your Representatives who require such material for the purpose
of evaluating a possible Transaction, provided that Representatives shall be
informed by you of the confidential nature of the Evaluation Material and shall
treat the Evaluation Material confidentially in accordance with the conditions
hereof and be bound by the terms hereof and that you shall be responsible for
any breach of this letter agreement by any Representatives.
You agree that the Evaluation Material will be kept confidential by you
and your Representatives and, except with the specific prior written consent of
the Company or as expressly otherwise permitted by the terms hereof, will not be
disclosed by you or your Representatives. You further agree that you and your
Representatives will not use any of the Evaluation Material for any reason or
purpose other than to evaluate a possible Transaction.
Without the prior written consent of the Company, you and your
Representatives will not disclose to any person (i) the fact that the Evaluation
Material has been made available to you or that you inspected any portion of the
Evaluation Material, or (ii) the fact that any discussions or negotiations are
taking place concerning a possible Transaction, including the status thereof and
the knoll-edge that the Company may be considering a Transaction, unless, in the
opinion of counsel, such disclosure is required under the United States
securities laws, in which case you may disclose the fact of such negotiations
and discussions to the extent required by the United States securities laws,
subject to the following sentence. You hereby agree that in the event that you,
in the opinion of counsel, determine that such disclosure is required, no such
disclosures shall be made unless and until you consult with the Company or use
reasonable efforts to consult with the Company regarding the necessity and form
of any such disclosure.
In the event that you or any of your Representatives are requested or
become legally compelled under the terms of a subpoena or order issued by a
court of competent jurisdiction or by a governmental body to make any disclosure
which is prohibited or otherwise constrained by this letter agreement, you agree
that you or such Representative, as the case may be, will, at the Company's
expense, (i) immediately provide the Company with written notice of the
existence, terms and circumstances surrounding such request(s) so that it may
seek an appropriate protective order or other
<PAGE> 3
General James E. Dalton
November 17, 1998
Page 3
appropriate remedy, (ii) cooperate with the Company in its efforts to decline,
resist or narrow such requests and (iii) if disclosure of such information is
required in the opinion of counsel, exercise your best efforts to obtain an
order or other reliable assurance that confidential treatment will be accorded
to such disclosed information.
If you determine that you do not wish to proceed with the Transaction,
you will promptly advise us of that decision. In that case, or in the event that
we, in our sole discretion, so request or the Transaction is not consummated by
you, you will promptly deliver to us all Evaluation Material, including all
copies, reproductions, summaries, analyses or extracts thereof or based thereon
in your possession or in the possession of any Representative of yours, or in
the case of summaries, analyses or extracts prepared by you which include
Evaluation Material, promptly destroy (or cause the destruction of) such
materials.
You acknowledge that none of the Company, its Representatives and none
of the respective employees, officers, directors, representatives, agents or
controlling persons of its Representatives make any express or implied
representations or warranty as to the accuracy or completeness of any Evaluation
Material, and you agree that none of such persons shall have any liability to
you or any of your Representatives relating to or arising from your or their use
of any Evaluation Material or for any errors therein or omissions therefrom. You
also agree that you are not entitled to rely on the accuracy or completeness of
any Evaluation Material and that you shall be entitled to rely solely on such
representations and warranties as may be provided to you in any definitive
agreement relating to the Transaction, subject to the terms and conditions of
such agreement.
You agree that until a definitive agreement regarding the Transaction
has been executed by you and the Company, neither the Company nor any of its
Representatives are under any legal obligation nor shall have any liability to
you of any nature whatsoever with respect to the Transaction by virtue of this
letter agreement.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege
hereunder.
The validity or unenforceability of any provision of this letter
agree-ment shall not affect the validity or enforceability of any other
provisions of this letter agreement, which shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
<PAGE> 4
General James E. Dalton
November 17, 1998
Page 4
You hereby acknowledge that money damages are an inadequate remedy for
breach or anticipated breach of this letter agreement because of the difficulty
of ascertaining the amount of damage that will be suffered in the event that
this agreement is breached. Therefore, in the event of a breach or anticipated
breach of this letter agreement by you or your Representatives, the Company may,
in addition to the remedies available to it, obtain specific performance of this
letter agreement and/or a restraining order and/or injunction to prohibit such
violation. In addition, you hereby waive any requirement for the securing or
posting of any bond in connection with such remedy. The parties herein
acknowledge and agree that an injunction is a proper, but not exclusive, remedy
available to the Company and that the harm from any violation of the covenants
set forth herein would be irreparable and immediate.
This letter agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California.
If you are in agreement with the foregoing, please sign and return one
copy of this letter agreement, which thereupon will constitute our agreement
with respect to the subject matter hereof.
Very truly yours,
WILLIAM LYON HOMES, INC.
By: /s/ William Lyon
--------------------------------
Name: William Lyon
Title:
Agreed and Accepted by:
THE PRESLEY COMPANIES
By: /s/ James E. Dalton
-------------------
Name: James E. Dalton
Title: Chairman, Special Committee
of the Board of Directors
<PAGE> 1
EXHIBIT 99.1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act
of 1934, as amended, the persons named below agree to the joint filing on behalf
of each of them of a Statement on Schedule 13D and a Tender Offer Statement on
Schedule 14D-1 (including, in each case, amendments thereto) with respect to the
Series A Common Stock, par value $0.01 per share, of The Presley Companies, and
further agree that this Joint Filing Agreement be included as an exhibit to such
joint filing. In evidence thereof, the undersigned hereby execute this Joint
Filing Agreement as of October 7, 1999
/s/ William Lyon
--------------------------------
William Lyon
/s/ William H. Lyon
--------------------------------
William H. Lyon
