EXHIBIT 1.8
KB HOME
(A DELAWARE CORPORATION)
$300,000,000
5 7/8% SENIOR NOTES DUE 2015
UNDERWRITING AGREEMENT
----------------------
December 7, 2004
Credit Suisse First Boston LLC
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
KB Home, a Delaware corporation (the "Company"), and the Company's
subsidiaries listed on Schedule A hereto (the "Guarantors") confirm their
agreement with the Underwriter named in Schedule B hereto (the "Underwriter"),
for whom Credit Suisse First Boston LLC is acting as representative (in such
capacity, the "Representative"), with respect to the sale by the Company and the
purchase by the Underwriter of $300,000,000 aggregate principal amount of the
Company's 5 7/8% Senior Notes due 2015 (the "Securities"). The Securities will
be unconditionally guaranteed on a senior basis by each of the Guarantors (the
"Guarantees") pursuant to the Indenture (as defined below).
The Securities are to be issued pursuant to an Indenture (the "Original
Indenture") dated as of January 28, 2004, as amended and supplemented by the
First Supplemental Indenture (the "First Supplemental Indenture") thereto dated
as of January 28, 2004 and as further amended and supplemented by the Second
Supplemental Indenture (the "Second Supplemental Indenture") thereto dated as of
June 30, 2004 (as so amended and supplemented, the "Indenture"), each among the
Company, the Guarantors and SunTrust Bank, as trustee (the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-71630) (the "Prior
Registration Statement") for the registration under the Securities Act of 1933
(the "1933 Act") of, among other securities, debt securities, which registration
statement was declared effective by the Commission on January 28, 2002 and
copies of which have heretofore been delivered to you. The Company has also
filed with the Commission a registration statement on Form S-3 (No. 333-120458)
(the "Current Registration Statement") for the registration under the 1933 Act
of, among other securities, debt securities, which registration statement was
declared effective by the Commission on November 29, 2004 and copies of which
have heretofore been delivered to you. The Current Registration Statement also
constituted post-effective amendment no. 1 to the Prior Registration Statement.
Each of the Prior Registration Statement and the Current Registration Statement,
as amended at the date of this Agreement and including all documents
incorporated or deemed to be incorporated by reference therein, is hereinafter
referred to as, individually, a "Registration Statement" and, collectively, the
"Registration Statements." The Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). The Company proposes to file
with the Commission pursuant to Rule 424(b) of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") the Prospectus
Supplement (as defined in Section 3(i) hereof) and the related prospectus dated
November 29, 2004 (the "Base Prospectus") relating to the Securities and
Guarantees, and has previously advised you of all further information (financial
and other) with respect to the Company and the Guarantors set forth therein. The
Base Prospectus together with the Prospectus Supplement, in the respective forms
first provided to the Underwriter for use in confirming sales of the Securities,
including all documents incorporated or deemed to be incorporated by reference
therein through the date hereof, are hereinafter referred to as, collectively,
the "Prospectus," except that if any revised prospectus or prospectus supplement
shall be provided to the Underwriter by the Company for use in connection with
the offering and sale of the Securities which differs from the Prospectus
(whether or not such revised prospectus or prospectus supplement is required to
be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations),
the term "Prospectus" shall refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first provided to
the Underwriter for such use. The Company may have also prepared a preliminary
prospectus supplement relating to the Securities and the Guarantees (a
"Preliminary Prospectus Supplement"), in which case such Preliminary Prospectus
Supplement, together with the Base Prospectus and all documents incorporated or
deemed to be incorporated by reference in such Preliminary Prospectus Supplement
or the Base Prospectus, are hereinafter referred to, collectively, as a
"Preliminary Prospectus."
All references in this Agreement to documents, financial statements and
schedules and other information which is "contained," "included," "stated,"
"described in" or "referred to" in a Registration Statement, the Prospectus or
any Preliminary Prospectus (and all other references of like import) shall be
deemed to mean and include all such documents, financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in such Registration Statement, the Prospectus or such Preliminary
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to a Registration Statement, the Prospectus or any
Preliminary Prospectus shall be deemed to mean and include the filing of any
document under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
after the date of this Agreement (in the case of such Registration Statement or
the Prospectus) or after the date of the applicable Preliminary Prospectus
Supplement (in the case of such Preliminary Prospectus), as the case may be,
which is or is deemed to be incorporated by reference in such Registration
Statement, the Prospectus or such Preliminary Prospectus, as the case may be.
The Company and the Guarantors understand that the Underwriter proposes
to make a public offering of the Securities and the Guarantees as soon as the
Representative deems advisable after this Agreement has been executed and
delivered.
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This Agreement, the Securities and the Indenture are hereinafter
sometimes referred to, collectively, as the "Operative Documents" and,
individually, as an "Operative Document."
All references herein to a "subsidiary" or "subsidiaries" of the
Company shall include, without limitation (i) the Guarantors and (ii) all other
subsidiaries of the Company, including any consolidated joint ventures in which
the Company or any of its other subsidiaries is a participant, any consolidated
limited and general partnerships in which the Company or any of its other
subsidiaries owns partnership interests and any consolidated limited liability
companies in which the Company or any of its other subsidiaries owns membership
interests (such joint ventures, limited and general partnerships and limited
liability companies being hereinafter called, collectively, the "Partnerships"
and, individually, a "Partnership").
SECTION 1. Representations and Warranties.
(a) The Company and the Guarantors, jointly and severally, represent
and warrant to the Underwriter as of the date hereof (such date being
hereinafter referred to as the "Representation Date") and as of the Closing Time
(as defined below) as follows:
(i) The Company and the Guarantors meet the requirements for
use of Form S-3 under the 1933 Act and the 1933 Act Regulations. Each
Registration Statement, at the time it became effective, the Current
Registration Statement, as of the Representation Date, the Base
Prospectus, as of its date and as of the Representation Date, any
Preliminary Prospectus, as of the date of the related Preliminary
Prospectus Supplement, and the Prospectus, as of the date of the
Prospectus Supplement, complied and comply in all material respects
with the requirements of the 1933 Act, the 1933 Act Regulations
(including Rule 415(a) of the 1933 Act Regulations), the 1939 Act and
the rules and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations"), and did not and as of the Representation Date
do not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Underwriter by the Company
for use in connection with the offering of the Securities which differs
from the Prospectus filed with the Commission pursuant to Rule 424(b)
of the 1933 Act Regulations, in which case at the time it is first
provided to the Underwriter for such use) and at the Closing Time does
not and will not include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and warranties
in this subsection (i) shall not apply to statements in or omissions
from either Registration Statement or the Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by the Underwriter through the Representative expressly for use
in such Registration Statement or the Prospectus or the information
contained in any Statement of Eligibility of a trustee under the 1939
Act filed or incorporated by reference as an exhibit to either
Registration Statement (a "Form T-1").
(ii) Xxxxx & Young LLP, whose reports are incorporated by
reference into the Registration Statements, are independent public
accountants with respect to the Company
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and its subsidiaries as required by the 1933 Act and the 1933 Act
Regulations.
(iii) The financial statements included or incorporated by
reference in the Registration Statements and the Prospectus present
fairly the financial position of the Company and its consolidated
subsidiaries as at the dates indicated and the results of operations of
the Company and its consolidated subsidiaries for the periods
specified; except as otherwise stated in the Registration Statements,
said financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis; the supporting schedules included or
incorporated by reference in the Registration Statements present fairly
the information required to be stated therein; the Company's ratios of
earnings to fixed charges and, if applicable, of earnings to combined
fixed charges and preferred stock dividends (including the amounts the
ratios would have been were interest on the outstanding collateralized
mortgage obligations of the Company's wholly owned limited purpose
financing subsidiaries included in such ratios' calculation) included
in the Base Prospectus under the caption "Ratios of Earnings to Fixed
Charges" and in the Prospectus Supplement under the caption "Selected
Consolidated Financial Data" and in Exhibit 12 to the Registration
Statements have been calculated in compliance with Item 503(d) of
Regulation S-K of the Commission; and the pro forma financial
statements, if any, and related notes thereto included in the
Registration Statements and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(iv) Since the respective dates as of which information is
given in the Registration Statements and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
except for regular quarterly dividends in customary amounts per share
on the Company's common stock, par value $1.00 per share (the "Common
Stock"), there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock. As used in this subsection (iv), the term "Registration
Statements" means the Registration Statements as in effect on the date
of this Agreement and the term "Prospectus" means the Prospectus in the
form first used to confirm sales of the Securities.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Operative Documents; and the Company is duly qualified as a foreign
corporation to
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transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(vi) Each Significant Subsidiary (as defined below) is either
a corporation or a Partnership. Each Significant Subsidiary has been
duly organized and is validly existing as a corporation or Partnership,
as the case may be, in good standing under the laws of the jurisdiction
of its organization, has power and authority to own, lease and operate
its properties and to conduct its business as described in the
Prospectus and, in the case of each Significant Subsidiary that is a
Guarantor, to enter into and perform its obligations under the
Operative Documents to which it is a party, and is duly qualified to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise; all of the issued and outstanding capital stock of each
Significant Subsidiary which is a corporation has been duly authorized
and validly issued, is fully paid and non-assessable and is owned
(except for directors qualifying shares and a nominal number of shares
held by affiliated parties) by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; and all of the outstanding
equity interests in each Significant Subsidiary which is a Partnership
have been duly authorized (if applicable) and validly issued, are fully
paid and (except for general partnership interests) non-assessable and
are owned by the Company (except to the extent that a minority interest
in the Partnership is reflected in the Company's consolidated financial
statements included or incorporated by reference in the Prospectus),
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. For
purposes of this Agreement, "Significant Subsidiary" means (i) each
Guarantor and (ii) any subsidiary of the Company (including, without
limitation, any Partnership) that is a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X (as in effect on January 1,
1996), but substituting "8%" for "10%" wherever "10%" appears in such
definition. Schedule A hereto sets forth the names of the Guarantors
and, in the case of any Guarantor that is a limited partnership, the
names of all of its general partners and, in the case of each Guarantor
and each such general partner, its jurisdiction of organization and
whether such Guarantor or general partner, as the case may be, is a
corporation, limited or general partnership, limited liability company
or other entity.
(vii) (A) The authorized, issued and outstanding capital stock
of the Company is as set forth in the audited consolidated balance
sheet as of November 30, 2003 appearing in the Company's Annual Report
on Form 10-K for the fiscal year then ended (except for subsequent
issuances, if any, pursuant to reservations, agreements or employee
benefit plans referred to or incorporated by reference in the
Prospectus); the shares of issued and outstanding Common Stock have
been duly authorized and validly issued and are fully paid and
non-assessable; the Common Stock, the Company's
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authorized but unissued special common stock, par value $1.00 per share
(the "Special Common Stock"), and the Company's authorized and unissued
preferred stock, par value $1.00 per share (the "Preferred Stock"),
conform to the respective statements relating thereto included in the
Prospectus;
(B) the Securities have been duly authorized for issuance and
sale to the Underwriter pursuant to this Agreement and, when issued by
the Company, authenticated by the Trustee and delivered pursuant to the
provisions of the Indenture and this Agreement against payment of the
consideration set forth herein, the Securities will have been duly
executed and delivered by the Company and will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles, and will be entitled to the benefits of
the Indenture;
(C) The Original Indenture, the First Supplemental Indenture
and the Second Supplemental Indenture have been duly authorized,
executed and delivered by the Company and each of the Guarantors and
constitute valid and binding agreements of the Company and each of the
Guarantors, enforceable against the Company and each of the Guarantors
in accordance with their terms, except in each case as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles, and the Indenture
has been duly qualified under the 1939 Act; and, after giving effect to
the sale of Securities and the sale of any other securities registered
pursuant to either Registration Statement and issued or to be issued
prior to the delivery of the Securities, the aggregate amount of
Securities which will have been issued and sold by the Company will not
exceed the aggregate amount of theretofore unsold securities registered
pursuant to the Registration Statements; and
(D) the Operative Documents and the Guarantees conform and
will conform in all material respects to the respective descriptions
thereof contained in the Prospectus.
(viii) The Company is not in violation of its charter or
by-laws and none of the Significant Subsidiaries is in violation of its
charter or by-laws or other organizational documents, and neither the
Company nor any of its Significant Subsidiaries is in default in the
performance or observance of (A) any obligation, agreement, covenant or
condition contained in:
(1) the Company's Revolving Loan Agreement dated as
of October 24, 2003 among the Company, the banks party
thereto, Bank of America, N.A. as Administrative Agent, and
the other parties thereto, including all amendments and
supplements thereto, if any, and any promissory notes or other
agreements, guarantees or instruments entered into in
connection therewith (the "Revolving Loan Agreement"),
(2) the Company's 7-3/4% Senior Subordinated Notes
due 2010,
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9-1/2% Senior Subordinated Notes due 2011 or 8-5/8% Senior
Subordinated Notes due 2008 (collectively, the "Senior
Subordinated Notes"), the Indenture dated as of November 19,
1996 between the Company and SunTrust Bank (as successor to
SunTrust Bank, Atlanta), as amended and supplemented by the
First Supplemental Indenture thereto dated as of December 18,
2003 between the Company, SunTrust Bank and the guarantors
named therein, pursuant to which the Senior Subordinated Notes
were issued (as so amended and supplemented, the "Senior
Subordinated Indenture," which term, as used herein, includes
the respective instruments establishing the form and terms of
the Senior Subordinated Notes) or the guarantees (the "Senior
Subordinated Guarantees") of the Senior Subordinated Notes,
(3) the Amended and Restated Mortgage Loan
Warehousing Agreement, dated as of June 30, 2004, and the $300
million Master Loan and Security Agreement, dated as of May
13, 2002, as amended and restated, both of which agreements
were entered into by a subsidiary of the Company and the other
parties thereto, including all amendments and supplements
thereto, if any, and any promissory notes and other
instruments or agreements entered into in connection therewith
(together, the "Mortgage Banking Agreement"),
(4) 8-3/4% senior notes due 2009 (the "French Notes")
of KBSA (as defined below) or any indenture, fiscal agency
agreement or other instrument agreement under or pursuant to
which the French Notes were issued or are outstanding (as the
same may be amended or supplemented from time to time, the
"French Indenture"), or
(5) any outstanding debt securities previously issued
under the Indenture (the "Senior Notes"), the Indenture or the
guarantees of the Senior Notes (the "Senior Guarantees"),
(the Revolving Loan Agreement, the Senior Subordinated Notes, the
Senior Subordinated Indenture, the Senior Subordinated Guarantees, the
Mortgage Banking Agreement, the Senior Notes, the Indenture and the
Senior Guarantees are hereinafter called, collectively, the "Subject
Instruments" and, individually, a "Subject Instrument") or (B) any
obligation, agreement, covenant or condition contained in any other
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of the Significant Subsidiaries
is a party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any of the Significant
Subsidiaries is subject, which default or violation would have a
material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise; and the execution,
delivery and performance of this Agreement and the other Operative
Documents, and the consummation of the transactions contemplated herein
and in the other Operative Documents and compliance by the Company and
the Guarantors with their respective obligations under this Agreement
and the other Operative Documents to which they are parties, have been
duly authorized by all necessary action, corporate or other, and will
not conflict with or constitute a breach of, or default under, or
result in the
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creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Significant
Subsidiaries pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Company or any
of the Significant Subsidiaries is a party or by which it or any of
them may be bound (including, without limitation, the Subject
Instruments), or to which any of the property or assets of the Company
or any of the Significant Subsidiaries is subject, except (other than
in the case of the Subject Instruments) for a conflict, breach,
default, lien, charge or encumbrance which would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, nor will such action result
in any violation of the provisions of the charter, by-laws or other
organizational documents of the Company or any of the Significant
Subsidiaries or any applicable law, administrative regulation or
administrative or court order or decree. For purposes of this paragraph
(viii), the term "Significant Subsidiary" shall include, without
limitation, Xxxxxxx & Broad S.A. ("KBSA"), whether or not it is in fact
a "Significant Subsidiary" as defined.
(ix) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting
the Company or any of its subsidiaries, which is required to be
disclosed in either Registration Statement (other than as disclosed
therein), or which is not so disclosed and (net of reserves and
insurance) which the Company believes might result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or which might materially
and adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement or
the other Operative Documents; all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of
which any of their respective property or assets is the subject which
are not described in or incorporated by reference in the Registration
Statements, including ordinary routine litigation incidental to the
business, are, considered in the aggregate and net of reserves and
insurance, not material to the Company and its subsidiaries considered
as one enterprise; and there are no contracts or documents of the
Company or any of its subsidiaries which are required to be filed as
exhibits to the documents incorporated or deemed to be incorporated by
reference in either Registration Statement by the 1933 Act or by the
1933 Act Regulations which have not been so filed or incorporated by
reference.
(x) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance and sale of the Securities or the Guarantees or the
consummation by the Company or any Guarantor of any of the other
transactions contemplated hereby or by any of the other Operative
Documents, except such as may be required and have been obtained under
the 1933 Act, the 1933 Act Regulations and the 1939 Act, and such as
may be required under state securities laws.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
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(xii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in
the Prospectus, at the respective times the Registration Statements and
any amendments thereto became effective, at the Representation Date and
at Closing Time, did not, do not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(xiii) The Securities rank and will rank senior in right of
payment to the Senior Subordinated Notes and pari passu in right of
payment with the Senior Notes. The Guarantees rank and will rank senior
in right of payment to the Senior Subordinated Guarantees and pari
passu in right of payment with the Senior Guarantees.
(xiv) There are no holders of securities of the Company with
currently exercisable registration rights to have any securities
registered as part of either Registration Statement or included in the
offering contemplated by this Agreement.
(xv) The Company and each of the Significant Subsidiaries have
good and marketable title to all of their respective properties, in
each case free and clear of all liens, encumbrances and defects, except
(i) customary liens and encumbrances arising in the ordinary course of
the Company's construction and development business and the financing
thereof, (ii) as stated or incorporated by reference in the Prospectus
or (iii) such as do not materially affect the value of such properties
in the aggregate to the Company and its subsidiaries considered as one
enterprise and do not materially interfere with the use made and
proposed to be made of such properties.
(xvi) The Company and its Significant Subsidiaries possess
such certificates, authorities and permits issued by the appropriate
state, federal and foreign regulatory agencies or bodies necessary to
conduct all material aspects of the business now operated by them, and
neither the Company nor any of its Significant Subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
(xvii) No default or event of default with respect to any
Indebtedness (as such term is defined in the Base Prospectus under the
caption "Description of Debt Securities -- Certain Definitions") of the
Company or any of its Significant Subsidiaries entitling, or which,
with notice or lapse of time or both, would entitle, the holders
thereof to accelerate the maturity thereof exists or will exist as a
result of the execution and delivery of this Agreement or any of the
other Operative Documents, the issuance and sale of the Securities or
the Guarantees or the consummation of the transactions contemplated
hereby or thereby.
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(xviii) The Company and each of the Significant Subsidiaries
have filed all tax returns required to be filed, which returns, as
amended, are complete and correct in all material respects, and neither
the Company nor any Significant Subsidiary is in default in the payment
of any taxes which were payable pursuant to said returns or any
assessments with respect to said returns which would materially and
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xix) The Company and its Significant Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xx) There are not and will not be, at any time from and
including the date of this Agreement through and including the Closing
Time, any "Related Persons" (as defined in Article Eighth of the
Company's charter).
(xxi) None of the Operative Documents or the Guarantees is or
will be, and no payment by the Company or any of the Guarantors of any
amounts payable under or pursuant to any of the Operative Documents or
the Guarantees (including, without limitation, any principal, premium,
if any, or interest) is or will be, subject to any usury law or other
limitation on the rate or amount of interest or other amounts payable
thereunder or the yield thereon (collectively, "Usury Laws"), or
violates, contravenes or breaches, or will violate, contravene or
breach, any Usury Laws.
(xxii) Neither the Company nor any of the Guarantors is, and
upon issuance and sale of the Securities and the Guarantees as
contemplated by this Agreement and application of the net proceeds
therefrom as described in the Prospectus, neither the Company nor any
of the Guarantors will be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxiii) No subsidiary of the Company is a guarantor of, or is
a party to or bound by any instrument or agreement pursuant to which it
is or may be required to guarantee or cause another subsidiary of the
Company to guarantee, any borrowings, bonds, notes, debentures or other
indebtedness or lease obligations of the Company, except for the
Revolving Loan Agreement, the Senior Subordinated Indenture and the
Indenture. The Company is not a party to or bound by any instrument or
agreement pursuant to which it is or may be required to cause any of
its subsidiaries to guarantee any borrowings, bonds, notes, debentures
or other indebtedness or lease obligations of the Company, other than
the Revolving Loan Agreement, the Senior Subordinated Indenture and the
Indenture. The only persons or entities that have guaranteed the Senior
Subordinated Notes or the
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Senior Notes or any indebtedness or other obligations of the Company
under the Revolving Loan Agreement, the Senior Subordinated Indenture
or the Indenture are the Guarantors.
(xxiv) The Company and, to the best of its knowledge, its
officers and directors in their capacities as such, are in compliance
with the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and
the rules and regulations of the Commission promulgated in connection
therewith that are effective as of the date hereof, except where the
failure to so comply would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(b) Any certificate signed by any officer or other authorized signatory
of the Company or any of the Guarantors and delivered to the Representative or
to counsel for the Underwriter shall be deemed a joint and several
representation and warranty by the Company and the Guarantors to the Underwriter
as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to the Underwriter, and the Underwriter agrees to purchase from the
Company, at 99.357% of the principal amount thereof, the aggregate principal
amount of Securities set forth in Schedule B opposite the name of the
Underwriter.
(b) Payment of the purchase price for the Securities shall be made at
the offices of the Company, 00000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx,
or at such other place as shall be agreed upon by the Representative and the
Company, at 7:00 a.m., California time, on December 15, 2004, or such other time
not later than ten business days after such date as shall be agreed upon by the
Representative and the Company (such time and date of payment and delivery of
the Securities being herein called "Closing Time"). Payment shall be made to the
Company by wire transfer of immediately available funds to a bank account
designated by the Company, against delivery to the Representative for the
account of the Underwriter of certificates for the Securities to be purchased by
it. Certificates for the Securities shall be in such denominations and
registered in such names as the Representative may request in writing at least
one full business day before Closing Time. It is understood that the Underwriter
has authorized the Representative, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Securities which it
has agreed to purchase. The certificates for the Securities will be made
available for examination and packaging by the Representative not later than
10:00 a.m. (New York City time) on the last business day prior to Closing Time
in New York, New York.
SECTION 3. Covenants of the Company. The Company and each Guarantor,
jointly and severally, covenant with the Underwriter as follows:
(a) During the period beginning on the date of this Agreement
through and including the date (the "Termination Date") which is the
later of (x) the Closing Time
11
and (y) the date, as evidenced by a notice from Credit Suisse First
Boston LLC to the Company (which notice from Credit Suisse First Boston
LLC may be in writing or oral), on which all of the Securities shall
have been sold by the Underwriter and the Prospectus is no longer
required to be delivered under the 1933 Act or the 1934 Act, the
Company will notify the Representative immediately, and confirm the
notice in writing, (i) of the effectiveness of any post-effective
amendment to either Registration Statement, (ii) of the mailing or the
delivery to the Commission for filing of the Prospectus or any
amendment to either Registration Statement or amendment or supplement
to the Prospectus or any document to be filed pursuant to the 1934 Act
by the Company or any Guarantor, (iii) of the receipt of any comments
or inquiries from the Commission relating to either Registration
Statement, the Prospectus or the documents incorporated or deemed to be
incorporated by reference in either Registration Statement or the
Prospectus, (iv) of any request by the Commission for any amendment to
either Registration Statement or any amendment or supplement to the
Prospectus or the documents incorporated or deemed to be incorporated
by reference in either Registration Statement or the Prospectus or for
additional information and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of either Registration
Statement or the initiation of any proceedings for that purpose. The
Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) During the period beginning on the date of this Agreement
through and including the Termination Date, the Company will give the
Representative notice of its intention to file or prepare any
post-effective amendment to either Registration Statement or any
amendment or supplement to the Prospectus (including any revised
prospectus which the Company proposes for use by the Underwriter in
connection with the offering of the Securities which differs from the
Prospectus first provided to the Underwriter for use in confirming
sales of the Securities, whether or not such revised prospectus is
required to be filed pursuant to Rule 424(b) of the 1933 Act
Regulations), will furnish the Representative with copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which the
Representative or counsel for the Underwriter shall reasonably object.
(c) The Company has delivered to the Representative one copy
of each Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated
by reference therein and documents incorporated or deemed to be
incorporated by reference therein) and will also deliver to the
Representative as many conformed copies of each Registration Statement
as originally filed and of each amendment thereto (without exhibits) as
the Representative may reasonably request.
(d) The Company will furnish to the Underwriter, from time to
time during the period when the Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as the Underwriter may
reasonably request for the purposes contemplated by the 1933 Act or
12
the 1934 Act or the respective applicable rules and regulations of the
Commission thereunder.
(e) If, during the period beginning on the date of this
Agreement through and including the Termination Date, any event shall
occur as a result of which it is necessary, in the opinion of counsel
for the Underwriter or the Company, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a
purchaser, the Company will forthwith amend or supplement the
Prospectus (in form and substance satisfactory to the Representative
and counsel for the Underwriter) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing
at the time it is delivered to a purchaser, not misleading, and the
Company will furnish to the Underwriter a reasonable number of copies
of such amendment or supplement.
(f) The Company and the Guarantors will endeavor, in
cooperation with the Underwriter, to qualify the Securities and the
Guarantees for offering and sale under the applicable securities laws
of such states and other jurisdictions of the United States as the
Representative may designate; provided, however, that neither the
Company nor any of the Guarantors shall be obligated to qualify as a
foreign corporation or other entity, as the case may be, in any
jurisdiction in which it is not so qualified. In each jurisdiction in
which the Securities or the Guarantees have been so qualified, the
Company and the Guarantors will file such statements and reports as may
be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required by applicable
law. The Company will promptly advise the Representative of the receipt
by the Company of any notification with respect to the suspension of
qualification of the Securities or the Guarantees for sale in any state
or jurisdiction or the initiating or threatening of any proceeding for
such purpose.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby (or 120 days in the case of the
close of the Company's fiscal year), an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a twelve-month period beginning not later than the first day
of the Company's fiscal quarter next following the date of this
Agreement.
(h) The Company will use the net proceeds received by it from
the sale of the Securities in the manner to be specified in the
Prospectus Supplement under "Use of Proceeds."
(i) Immediately following the execution of this Agreement, the
Company will prepare a prospectus supplement, dated the date hereof
(the "Prospectus Supplement"), containing the terms of the Securities
and the Guarantees, the plan of distribution thereof and such other
information as may be required by the 1933 Act or the 1933 Act
Regulations or as the Representative and the Company deem appropriate,
and will file or
13
transmit for filing with the Commission in accordance with such Rule
424(b) of the 1933 Act Regulations copies of the Prospectus (including
such Prospectus Supplement).
(j) The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file
all documents required to be filed with the Commission pursuant to
Sections 13, 14 or 15 of the 1934 Act within the time periods required
by the 1934 Act and the 1934 Act Regulations.
(k) During a period from and including the date of this
Agreement through and including the day which is 30 days after the date
of this Agreement, the Company will not, without the prior written
consent of Credit Suisse First Boston LLC, directly or indirectly,
issue, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, any debt securities or any securities convertible
into or exchangeable or exercisable for any debt securities (except for
the Securities sold to the Underwriter pursuant to this Agreement);
provided that the foregoing shall not prevent the Company from making
borrowings under the Revolving Loan Agreement or under bank credit
lines.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the printing and filing of each Registration Statement as originally filed
and of each amendment thereto, (ii) the printing or reproduction of this
Agreement and the other Operative Documents, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriter, (iv) the
fees and disbursements of counsel and accountants to the Company and the
Guarantors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriter in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Underwriter of copies of each
Registration Statement as originally filed and of each amendment thereto, of any
Preliminary Prospectuses and of the Prospectus and any amendments or supplements
thereto, (vii) the printing and delivery to the Underwriter of copies of the
Blue Sky Survey, (viii) the fees and expenses of the Trustee, including the fees
and disbursements of counsel for the Trustee in connection with the Indenture
and the Securities, (ix) any fees payable in connection with the rating of the
Securities, and (x) any fees and expenses of a depositary in connection with
holding the Securities in book-entry form.
If this Agreement is terminated by the Representative in accordance
with the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse
the Underwriter for all of its out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The obligations of
the Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Company and the Guarantors herein contained, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness
of either Registration Statement shall have been issued under the 1933
Act or proceedings therefor
14
initiated or threatened by the Commission. The Prospectus (including
the Prospectus Supplement referred to in Section 3(i) hereof) shall
have been filed or transmitted for filing with the Commission pursuant
to Rule 424(b) of the 1933 Act Regulations within the prescribed time
period, and prior to Closing Time the Company shall have provided
evidence satisfactory to the Representative of such timely filing or
transmittal.
(b) At Closing Time the Representative shall have received:
(1) The favorable opinion, dated as of Closing Time,
of Xxxxxx, Xxxxxx & Xxxxx LLP, counsel for the Company and the
Guarantors, in form and substance satisfactory to counsel for
the Underwriter, to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Delaware.
(ii) The Indenture has been duly authorized,
executed and delivered by the Company and each of the
California Guarantors (as defined below); assuming
that the Indenture has been duly authorized, executed
and delivered by each of the Non-California
Guarantors (as defined below) under the laws of its
state of organization, and further assuming that the
Indenture has been duly authorized, executed and
delivered by the Trustee, the Indenture constitutes a
valid and binding agreement of the Company and each
of the Guarantors, enforceable against the Company
and each of the Guarantors in accordance with its
terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent
transfer or other similar laws relating to or
affecting enforcement of creditors' rights generally
or by general equitable principles. As used herein,
the term "California Guarantors" means all of the
Guarantors organized under the laws of the State of
California, and the term "Non-California Guarantors"
means all of the Guarantors other than the California
Guarantors.
(iii) The Securities are in the form
established pursuant to the Indenture, have been duly
authorized and executed by the Company and, when duly
authenticated by the Trustee in the manner provided
for in the Indenture and delivered pursuant to the
provisions of the Indenture and this Agreement
against payment of the purchase price therefor
specified herein, will have been duly delivered by
the Company and will constitute valid and binding
obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company
in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent
conveyance, fraudulent transfer or other similar laws
relating to or affecting enforcement of creditors'
rights generally or by general equitable principles.
15
(iv) The issuance and delivery of the
Securities and the Guarantees, the execution and
delivery of this Agreement and the Indenture, and the
consummation of the transactions contemplated herein
and therein, will not conflict with or constitute a
breach of, or default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company or any of its Significant Subsidiaries
pursuant to, the Senior Subordinated Notes, the
Senior Subordinated Indenture, the Senior
Subordinated Guarantees, the Senior Notes, the
Indenture or the Senior Guarantees.
(v) The Indenture has been qualified under
the 1939 Act.
(vi) This Agreement has been duly
authorized, executed and delivered by the Company and
each of the California Guarantors.
(vii) Each Registration Statement is
effective under the 1933 Act and, to the best of such
counsel's knowledge and information, no stop order
suspending the effectiveness of either Registration
Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the
Commission.
(viii) The Registration Statements (other
than the financial statements and supporting
schedules and other financial and statistical data
included or incorporated by reference therein or
omitted therefrom and any Form T-1, as to which no
opinion need be rendered), at the respective times
the Registration Statements became effective, and the
Prospectus (other than the financial statements and
schedules and other financial and statistical data
included or incorporated by reference therein or
omitted therefrom, as to which no opinion need be
rendered), on the date of the Prospectus Supplement,
each appeared on its face to be appropriately
responsive in all material respects to the applicable
requirements of the 1933 Act and the 1933 Act
Regulations.
(ix) Neither the Company nor any of the
Guarantors is, and upon issuance and sale of the
Securities and the Guarantees as contemplated by this
Agreement and application of the net proceeds
therefrom as described in the Prospectus, neither the
Company nor any of the Guarantors will be, an
"investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the
1940 Act.
(x) The information in the Prospectus under
the captions "Risk Factors -- Risk Factors Relating
to the Notes Offered by this Prospectus Supplement --
Federal and state laws allow courts, under specific
circumstances, to void guarantees and to require you
to return payments received from guarantors,"
"Description of the Notes," "Material United States
Federal Income Tax Considerations" and "Description
of Debt Securities," to the extent that such
information constitutes matters of law,
16
summaries of legal matters, summaries of the
Securities, the Guarantees, the Indenture (as amended
and supplemented by any Officers' Certificate (as
such term is defined in the Indenture)) or other
instruments, agreements or documents, or legal
conclusions, has been reviewed by such counsel and is
correct in all material respects.
In rendering such opinion, such counsel shall state
that such opinion covers matters governed by and arising under
the laws of the State of California, the General Corporation
Law of the State of Delaware and the federal laws of the
United States of America. In rendering such opinion, such
counsel shall further state that, for purposes of such
opinion, such counsel has assumed with the permission of the
Underwriter that the laws of the State of California govern
the Operative Documents, the Guarantees, the Senior
Subordinated Notes, the Senior Subordinated Indenture, the
Senior Subordinated Guarantees, the Senior Notes and the
Senior Guarantees (all of which are by their terms to be
governed by the laws of the State of New York) and such
counsel expresses no opinion as to whether a court applying
California choice-of-law rules would apply the law of the
State of New York to such instruments.
(2) The favorable opinion, dated as of Closing Time,
of Xxxxxxxx X. Xxxx, Esq., Vice President, Corporate Legal
Affairs and Secretary of the Company, in form and substance
satisfactory to counsel for the Underwriter, to the effect
that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of the State of Delaware and
has corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Prospectus and to enter into and
perform its obligations under the Operative Documents
to which it is a party.
(ii) To the best of such counsel's knowledge
and information, the Company is duly qualified as a
foreign corporation to transact business and is in
good standing in each jurisdiction in which such
qualification is required, except where the failure
to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects
of the Company and its subsidiaries (as such term is
defined in this Agreement) considered as one
enterprise.
(iii) Each of the Company's Significant
Domestic Subsidiaries (as defined below) has been
duly organized and is validly existing as a
corporation or Partnership, as the case may be, in
good standing under the laws of the jurisdiction of
its incorporation or formation, as the case may be,
has power and authority as a corporation or
Partnership, as the case may be to own, lease and
operate its properties and to conduct its business as
described in the Prospectus and, in the case of each
Significant Domestic Subsidiary that is a Guarantor,
to enter into and perform its
17
obligations under the Operative Documents to which it
is a party and, to the best of such counsel's
knowledge and information, is duly qualified to
transact business and is in good standing in each
jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of
property or the conduct of business, except where the
failure to so qualify would not have a material
adverse effect on the Company and its subsidiaries
considered as one enterprise or on their consolidated
financial condition or earnings; to the best of such
counsel's knowledge and information, all of the
issued and outstanding capital stock of each such
Significant Domestic Subsidiary which is a
corporation has been duly authorized and validly
issued, is fully paid and non-assessable and is owned
(except for directors qualifying shares and a nominal
number of shares held by affiliated parties) by the
Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; and to the best
of such counsel's knowledge and information, all of
the issued and outstanding equity interests in each
such Significant Domestic Subsidiary which is a
Partnership have been duly authorized (if applicable)
and validly issued, are fully paid and (except for
general partnership interests) non-assessable and are
owned by the Company (except, if applicable, to the
extent that a minority interest in such Partnership
is reflected in the Company's consolidated financial
statements included or incorporated or deemed to be
incorporated by reference in the Prospectus),
directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. As used in this
Agreement, the term "Significant Domestic
Subsidiaries" means (i) all of the Guarantors and
(ii) all other Significant Subsidiaries other than,
solely in the case of this clause (ii), any
Significant Subsidiaries organized and existing under
the laws of any jurisdiction other than the United
States of America, any State thereof or the District
of Columbia.
(iv) The shares of issued and outstanding
Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable.
(v) To the best of such counsel's knowledge
and information, there are no statutes or regulations
required to be described in either Registration
Statement or the Prospectus or in the documents
incorporated or deemed to be incorporated by
reference therein which are not described as
required, and there are no legal or governmental
proceedings pending or threatened which are required
to be disclosed in either Registration Statement or
in the documents incorporated or deemed to be
incorporated by reference therein, other than those
disclosed therein, and all pending legal or
governmental proceedings to which the Company or any
subsidiary is a party or to which any of their
property is subject which are not described in the
Registration Statements or in the documents
incorporated or deemed to be incorporated by
reference therein, including
18
ordinary routine litigation incidental to the
business, are, considered in the aggregate and net of
reserves and insurance, not material to the Company
and its subsidiaries considered as one enterprise.
(vi) The information under "Item 1.
Business--Regulation and Environmental Matters,"
"Item 1. Business -- Risk Factors -- We are subject
to substantial legal and regulatory requirements
regarding the development of land, the homebuilding
process and protection of the environment, which can
cause us to suffer delays and incur costs associated
with compliance and which can prohibit or restrict
homebuilding activity in some regions or areas," and
"Item 3. Legal Proceedings" in the Company's Annual
Report on Form 10-K for the fiscal year ended
November 30, 2003 and under "Risk Factors -- Risk
Factors Relating to KB Home -- We are subject to
substantial legal and regulatory requirements
regarding the development of land, the homebuilding
process and protection of the environment, which can
cause us to suffer delays and incur costs associated
with compliance and which can prohibit or restrict
homebuilding activity in some regions or areas" in
the Prospectus Supplement and in Item 15 in Part II
of the Registration Statements, to the extent that
such information constitutes matters of law,
summaries of legal matters, summaries of securities,
instruments, agreements or other documents or legal
conclusions, has been reviewed by such counsel and is
correct in all material respects.
(vii) To the best of such counsel's
knowledge and information, there are no contracts,
indentures, mortgages, loan agreements, notes, leases
or other instruments required to be described or
referred to in either Registration Statement or in
the documents incorporated or deemed to be
incorporated by reference therein or to be filed or
incorporated by reference as exhibits thereto other
than those described or referred to therein or filed
or incorporated by reference as exhibits thereto, the
descriptions thereof and references thereto are
correct, and, to the best of such counsel's
knowledge, no default exists in the due performance
or observance of any obligation, agreement, covenant
or condition contained in (A) any Subject Instrument
or (B) any other contract, indenture, mortgage, loan
agreement, note, lease or other instrument so
described, referred to or filed or incorporated by
reference, which default (other than in the case of
the Subject Instruments) could have a material
adverse effect on the Company and its subsidiaries
considered as one enterprise or on their consolidated
financial condition or earnings.
(viii) No authorization, approval, consent
or order of any court or governmental authority or
agency is required in connection with the issuance or
sale of the Securities or the Guarantees to the
Underwriter or for the performance by the Company or
any of the Guarantors of its obligations under the
Operative Documents to which it is a party, except
such as may be required under the 1933 Act, the 1933
Act Regulations,
19
the 1939 Act and the 1939 Act Regulations and such as
may be required under state securities laws.
(ix) The issuance and delivery of the
Securities and the Guarantees, the execution and
delivery of this Agreement and the Indenture, the
consummation of the transactions contemplated herein
and therein, and the performance by the Company and
each of the Guarantors of their respective
obligations under the Operative Documents to which
they are parties, will not conflict with or
constitute a breach of, or default under, or result
in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company or any of its Significant Subsidiaries
pursuant to, (A) any Subject Instrument or (B) to the
best of such counsel's knowledge and information, any
other contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company
or any of its Significant Subsidiaries is a party or
by which it or any of them may be bound, or to which
any of the property or assets of the Company or any
of its Significant Subsidiaries is subject, nor will
such action result in any violation of the provisions
of the charter or by-laws or other organizational
documents of the Company or any of the Guarantors or
any applicable law, administrative regulation or
administrative or court decree.
(x) The documents incorporated or deemed to
be incorporated by reference in the Prospectus (other
than the financial statements and supporting
schedules included or incorporated by reference
therein, as to which no opinion need be rendered), at
the time they were filed with the Commission,
complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act
Regulations.
(xi) To the best of such counsel's knowledge
and information, no default with respect to any
Indebtedness (as such term is defined in the Base
Prospectus under the caption "Description of Debt
Securities -- Certain Definitions") of the Company or
any of its subsidiaries entitling, or which, with
notice or lapse of time or both, would entitle, the
holders thereof to accelerate the maturity thereof
exists or will exist as a result of the execution and
delivery of this Agreement or any of the other
Operative Documents, the issuance and sale of the
Securities or the Guarantees or the consummation of
the transactions contemplated hereby or thereby.
(xii) The Indenture and this Agreement has
been duly authorized, executed and delivered by each
of the Non-California Guarantors under the laws of
the state of its organization and have been duly
authorized by KBSA, Inc. (the "Texas GP"), a Texas
corporation and sole general partner of KB Home Lone
Star LP (the "Texas Partnership"), under the laws of
the State of Texas.
20
In rendering such opinion, such counsel shall state
that such opinion covers matters governed by and arising under
the laws of the State of California, the federal laws of the
United States of America, the General Corporation Law of the
State of Delaware, the corporate laws of the States of
Arizona, Colorado and Nevada and the corporate and limited
partnership laws of the State of Texas. Such counsel shall
further state that, insofar as such opinion concerns the
Operative Documents (all of which are by their terms governed
by the laws of the State of New York) or any other instrument
or agreement that is not governed by the laws of the State of
California, such counsel has assumed without investigation
that the laws of the applicable jurisdiction governing the
Operative Documents or such other instruments or agreements,
as the case may be, are the same as the law of the State of
California. In addition, in rendering such opinion, such
counsel may, as to other matters governed by the law of any
jurisdiction other than the law of the State of California,
the federal laws of the United States of America, the General
Corporation Law of the State of Delaware, the corporate laws
of the States of Arizona, Colorado and Nevada and the
corporate and limited partnership laws of the State of Texas,
either (a) assume without any investigation that the law of
the State of California is the same as the law governing such
other matters for all purposes relevant to such opinion or (b)
rely on an opinion or opinions of local counsel satisfactory
to the Representative, so long as each such opinion shall be
dated as of the Closing Time and in form and substance
satisfactory to the Representative, and shall expressly permit
the Underwriter to rely thereon as if such opinion were
addressed to the Underwriter.
(3) The favorable opinion, dated as of Closing Time,
of Xxxxxx Xxxxxx Xxxxx & Xxxx LLP, counsel for the
Underwriter, with respect to this Agreement, the Indenture,
the Securities, the Registration Statements, the Prospectus
and such other matters as the Underwriter may request.
(4) In giving their opinions required by subsections
(b)(1), (b)(2) and (b)(3), respectively, of this Section,
Xxxxxx, Xxxxxx & Xxxxx LLP, Xxxxxxxx X. Xxxx and Xxxxxx Xxxxxx
Xxxxx & Xxxx LLP shall each additionally state that no facts
have come to their attention that have caused them to believe
that either Registration Statement (except for financial
statements and schedules and other financial and statistical
data included or incorporated by reference therein or omitted
therefrom and any Form T-1, as to which counsel need make no
statement), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (except for financial statements and schedules and
other financial and statistical data included or incorporated
by reference therein or omitted therefrom, as to which counsel
need make no statement), at the Representation Date (unless
the term "Prospectus" refers to a prospectus which has been
provided to the Underwriter by the Company for use in
connection with the offering of the Securities which differs
from the Prospectus filed with at the Commission pursuant to
Rule 424(b) of the 1933 Act Regulations, in which case at the
time it is first provided to the Underwriter for such use) or
at Closing Time, included or
21
includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) At Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given
in the Registration Statements or Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Representative shall have
received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company, dated as of Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and
warranties of the Company and the Guarantors in Section 1 are true and
correct with the same force and effect as though expressly made at and
as of Closing Time, (iii) the Company and each of the Guarantors has
complied with all agreements and satisfied all conditions set forth in
this Agreement on its part to be performed or satisfied at or prior to
Closing Time, (iv) no stop order suspending the effectiveness of either
Registration Statement has been issued and, to the best of such
officer's knowledge and information, no proceedings for that purpose
have been initiated or threatened by the Commission, and (v) since the
date of this Agreement, none of the ratings assigned by any nationally
recognized statistical rating organization to any debt securities of
the Company or any subsidiary of the Company has been lowered and no
such rating agency has publicly announced that it has placed any debt
securities of the Company or of any subsidiary of the Company on what
is commonly termed a "watch list" for a possible downgrading. As used
in this Section 5(c), the term "Registration Statements" means the
Registration Statements as in effect on the date of this Agreement and
"Prospectus" means the Prospectus in the form first used to confirm
sales of the Securities.
(d) At the Closing Time, the Representative shall have
received from Ernst & Young LLP a letter dated such date, in form and
substance satisfactory to the Underwriter, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
financial information included and incorporated by reference in the
Registration Statements and the Prospectus (including, without
limitation, any pro forma financial statements).
(e) At Closing Time, the Securities shall have a rating of at
least Ba1 from Xxxxx'x Investor's Service Inc. and BB+ from Standard &
Poor's, and the Company shall have delivered to the Representative a
letter from each such rating agency or other evidence satisfactory to
the Underwriter, confirming that the Securities have such ratings.
(f) Prior to the Closing Time, if required by the 1933 Act,
the 1933 Act Regulations, the 1939 Act or the 1939 Act Regulations, the
Trustee shall have filed with the Commission an application for the
purpose for determining the eligibility of the Trustee under the 1939
Act in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the 1939 Act and the Commission
shall not have
22
issued an order refusing to permit such application to become effective
or taken any similar action.
(g) At Closing Time, counsel for the Underwriter shall have
been furnished with such documents and opinions as they may require for
the purpose of enabling them to pass upon the issuance and sale of the
Securities and Guarantees as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Guarantors in connection with the issuance and sale of the
Securities and Guarantees as herein contemplated and in connection with
the other transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Representative and counsel
for the Underwriter.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representative by notice to the Company at any time at or prior to
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 4, 6, 7 and 8 shall remain in effect.
SECTION 6. Indemnification.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the 1933 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in either
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus or the Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by Credit Suisse First Boston LLC), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body,
23
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that (A) the foregoing indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission (1) made in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter through the Representative expressly for use in
either Registration Statement (or any amendment thereto) or any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto) or (2) in
the Form T-1; and (B) the foregoing indemnity agreement with respect to any
Preliminary Prospectus shall not inure to the benefit of the Underwriter from
whom the person asserting any such losses, claims, damages or liabilities
purchased Securities, or any person controlling the Underwriter, if a copy of
the Prospectus (as it may then be amended or supplemented if the Company shall
have furnished any amendments or supplements thereto, but excluding documents
incorporated or deemed to be incorporated by reference therein) was not sent or
given by or on behalf of the Underwriter to such person, if such is required by
law, at or prior to the written confirmation of the sale of such Securities to
such person and if the Prospectus (as so amended or supplemented, if applicable)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense, except that this clause (B) shall not be applicable if such defect
shall have been corrected in a document which is incorporated or deemed to be
incorporated by reference in the Prospectus.
(b) The Underwriter agrees to indemnify and hold harmless the Company
and its directors and each of its officers who signed either Registration
Statement, each Guarantor and its directors and each of its officers who signed
either Registration Statement, and each person, if any, who controls the Company
or any Guarantor within the meaning of Section 15 of the 1933 Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in such Registration Statement (or any amendment thereto) or any
Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by the Underwriter through the Representative expressly for use
in such Registration Statement (or any amendment thereto) or such Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give written notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. In the case of indemnity pursuant to Section 6(a) or
6(b) above, the indemnifying parties shall in no event be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
24
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 6(a) or (b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Guarantors, on the one hand, and the Underwriter, on the other
hand, shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Guarantors and the Underwriter, as incurred, in such proportions
that the Underwriter is responsible for that portion represented by the
percentage that the Assumed Underwriting Discount (as defined below) with
respect to the Securities bears to the Assumed Public Offering Price (as defined
below) of the Securities and the Company and the Guarantors are responsible for
the balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of the preceding sentence, the Assumed Public
Offering Price of the Securities shall be deemed to be equal to 100.007% of the
principal amount thereof and the Assumed Underwriting Discount shall be deemed
to be equal to 0.650% of the principal amount thereof. For purposes of this
Section, each person, if any, who controls the Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
Underwriter, and each director of the Company or any Guarantor, each officer of
the Company or any Guarantor who signed either Registration Statement, and each
person, if any, who controls the Company or any Guarantor within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
Company or such Guarantor, as the case may be. The obligations of the Company
and the Guarantors to contribute pursuant to this Section 7 are joint and
several.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or any of the
Guarantors or any of the Company's other subsidiaries submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or any controlling person,
or by or on behalf of the Company or any of the Guarantors, and shall survive
delivery of the Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a) The Representative may terminate this Agreement, by notice to the
Company, at any time at or prior to Closing Time (i) if there has been, since
the date of this Agreement or since the respective dates as of which information
is given in the Registration Statements or the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development involving a prospective
change in national or international political, financial or economic conditions,
in each case the effect of which is such as to make it, in the judgment of the
Representative, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in the securities of the
Company has been suspended or materially limited by the Commission or a national
securities exchange, or if trading generally on
25
either the American Stock Exchange or the New York Stock Exchange or the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by either of said Exchanges or by the Nasdaq National Market
or by order of the Commission or any other governmental authority, or if a
banking moratorium has been declared by either federal, New York or California
authorities, or (iv) if the rating assigned by any nationally recognized
statistical rating organization to any debt securities of the Company or of any
subsidiary of the Company shall have been lowered or if any such rating agency
shall have publicly announced that it has placed any debt securities of the
Company or any trust preferred securities, capital securities or similar
securities of any subsidiary of the Company on what is commonly termed a "watch
list" for a possible downgrading. As used in this Section 9(a), the term
"Registration Statements" means the Registration Statements as in effect on the
date of this Agreement and "Prospectus" means the Prospectus in the form first
used to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof. Notwithstanding any such termination, the
provisions of Sections 4, 6, 7 and 8 shall remain in effect.
SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to them at Credit Suisse First Boston LLC, 00
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxxxx Xxxxxxx, High
Yield Capital Markets, with a copy to Credit Suisse First Boston LLC, 0000
Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx Xxxxx; and
notices to the Company and the Guarantors shall be directed to them at 00000
Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxx X. Xxxx,
Esq., Vice President, Corporate Legal Affairs and Secretary.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter, the Guarantors and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriter, the Guarantors and the Company and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriter,
the Company and the Guarantors and their respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from the Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 12. Governing Law and Time. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Unless otherwise set forth
herein, specified times of day refer to New York City time.
26
[SIGNATURE PAGE FOLLOWS]
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Guarantors a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Underwriter, the Company and the Guarantors
in accordance with its terms.
Very truly yours,
KB HOME
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President, Treasury and Risk
Management
KB HOME PHOENIX INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME COASTAL INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME NORTH BAY INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME SOUTH BAY INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME GREATER LOS ANGELES INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME COLORADO INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME NEVADA INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
KB HOME LONE STAR LP
By: KBSA, Inc., its General Partner
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
CONFIRMED AND ACCEPTED
as of the date first above written:
CREDIT SUISSE FIRST BOSTON LLC
By: By: /s/ XXXX XXXXX
------------------------
Name: Xxxx Xxxxx
Title: Director
SCHEDULE A
List of Guarantors
1. KB Home Phoenix Inc., an Arizona corporation
2. KB Home Coastal Inc., a California corporation
3. KB Home North Bay Inc., a California corporation
4. KB Home South Bay Inc., a California corporation
5. KB Home Greater Los Angeles Inc., a California corporation
6. KB Home Colorado Inc., a Colorado corporation
7. KB Home Nevada Inc., a Nevada corporation
8. KB Home Lone Star LP, a Texas limited partnership whose sole general
partner is KBSA, Inc., a Texas corporation
Schedule A
SCHEDULE B
Aggregate
Principal
Amount
Name of Underwriter of Securities
------------------- -------------
CREDIT SUISSE FIRST BOSTON LLC............................................................ $300,000,000
Total............................................................................ $300,000,000
Schedule A
