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EXHIBIT 1.3
KB HOME
(A DELAWARE CORPORATION)
$250,000,000
9 1/2% SENIOR SUBORDINATED NOTES DUE 2011
UNDERWRITING AGREEMENT
----------------------
February 2, 2001
Banc of America Securities LLC
Xxxxxxx Xxxxx Xxxxxx Inc.
Banc One Capital Markets, Inc.
Credit Lyonnais Securities (USA) Inc.
As Representatives of the several Underwriters
c/o Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
KB Home, a Delaware corporation (the "Company"), confirms its agreement
with Banc of America Securities LLC and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Banc of America Securities LLC, Xxxxxxx Xxxxx Xxxxxx Inc.,
Banc One Capital Markets, Inc. and Credit Lyonnais Securities (USA) Inc. are
acting as representatives (in such capacity, the "Representatives"), with
respect to the sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of $250,000,000 aggregate principal amount of the
Company's 9 1/2% Senior Subordinated Notes due 2011 (the "Securities"). The
Securities are to be issued pursuant to an indenture dated as of November 19,
1996 (the "Indenture", which term as used herein includes the instrument
establishing the form and terms of the Securities) between the Company and
SunTrust Bank (as successor to SunTrust Bank, Atlanta), as trustee (the
"Trustee").
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The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-41549) 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 December 16, 1997 and copies of which have heretofore been
delivered to you. Such 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 the "Registration
Statement". 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
February 2, 2001 (the "Base Prospectus"), and has previously advised you of all
further information (financial and other) with respect to the Company set forth
therein. The Base Prospectus together with the Prospectus Supplement, in the
respective forms first provided to the Underwriters 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 Underwriters 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 Underwriters for such use. Unless the
context otherwise requires, 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 the Registration
Statement or the 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 the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934 (the "1934
Act") after the date of this Agreement which is or is deemed to be incorporated
by reference in the Registration Statement or the Prospectus, as the case may
be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the date
hereof (such date being hereinafter referred to as the "Representation Date") as
follows:
(i) The Company meets the requirements for use of Form S-3 under the
1933 Act and the 1933 Act Regulations. The Registration Statement, at the time
it became effective, as of the Representation Date, and the Base Prospectus, as
of its date and as of the Representation Date, complied and comply in all
material respects with the requirements of the
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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 Underwriters 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 Underwriters for such use) and at the
Closing Time referred to in Section 2 hereof, 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 (a) shall not apply to statements in or omissions
from the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the Representatives expressly for use in the 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 the Registration Statement (a "Form T-1").
(ii) Ernst & Young LLP, whose reports are incorporated by reference
into the Registration Statement, are independent public accountants with respect
to the Company 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 Statement 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 Statement, 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 Statement present fairly the information
required to be stated therein; the Company's ratios of earnings to fixed charges
and 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 Prospectus Supplement under the caption "Selected Consolidated
Financial Data," and in Exhibit 12 to the Registration Statement 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 Statement 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 Statement 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
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affairs or business prospects of the Company and its subsidiaries (which term,
as used in this Agreement, includes without limitation 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")) 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 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.
(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 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, 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 limited partnership. Each Significant Subsidiary has been duly
organized and is validly existing as a corporation or limited 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 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 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
any subsidiary of the Company (including, without limitation, any Partnership)
that is a "significant subsidiary" as defined in Rule 1-02 of
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Regulation S-X (as in effect on January 1, 1996), but substituting "5%" for
"10%" wherever "10%" appears in such definition.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements, 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 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; the
Securities have been duly authorized for issuance and sale to the Underwriters
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 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; the Indenture has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable in accordance with its 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; the Securities
and the Indenture conform in all material respects to the descriptions thereof
contained in the Prospectus; and, after giving effect to the sale of Securities
and the sale of any other securities registered pursuant to the Registration
Statement 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 amount of theretofore unsold securities registered pursuant to
the Registration Statement.
(viii) Neither the Company nor any of its Significant Subsidiaries is
in violation of its charter or in default in the performance or observance of
(A) any obligation, agreement, covenant or condition contained in the Company's
2000 Revolving Credit Facility dated as of October 3, 2000, among the Company,
the banks party thereto, Bank of America, N.A. as Administrative Agent, Credit
Lyonnais Los Angeles Branch, as Syndication Agent, Bank One, NA, as
Documentation Agent, and Banc of America Securities LLC, as Lead Arranger and
Sole Book Manager, including all amendments and supplements thereto, if any, and
any agreements entered into in connection therewith (the "Revolving Facility"),
and the 2000 Term Loan Agreement dated as of October 3, 2000, among the Company,
the banks party thereto, Bank of America, N.A., as Administrative Agent, Credit
Lyonnais Los Angeles Branch, as Syndication Agent, Bank One, NA, as
Documentation Agent, and Banc of America Securities LLC, as Lead Arranger and
Sole Book Manager, including all amendments and supplements thereto, if any, and
any agreements entered into in connection therewith (the "Term Facility" and,
together with the Revolving Facility, the "Revolving Loan Agreement"), or the
Company's 9-3/8% Senior Subordinated Notes due 2003 (the "9-3/8% Senior
Subordinated Notes") or the Indenture dated as of May 1, 1993 between the
Company and The First National Bank of Boston pursuant to which the 9-3/8%
Senior Subordinated Notes were issued (the "9-3/8% Senior Subordinated
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Indenture"), the Company's 9-5/8% Senior Subordinated Notes due 2006 (the
"9-5/8% Senior Subordinated Notes" and together with the 9-3/8% Senior
Subordinated Notes, the "Senior Subordinated Notes") or the Indenture or the
instrument establishing the form and terms of the 9-5/8% Senior Subordinated
Notes (collectively, the "9-5/8% Senior Subordinated Indenture"), the Company's
7-3/4% Senior Notes due October 15, 2004 (the "7-3/4% Senior Notes") or the
Indenture dated as of October 14, 1997 between the Company and SunTrust Bank (as
successor to SunTrust Bank, Atlanta), pursuant to which the 7-3/4% Senior Notes
were issued, including the instrument establishing the form and terms of the
7-3/4% Senior Notes (the "7-3/4% Senior Notes Indenture") or the Company's 8%
Debentures due August 16, 2003 (the "8% Debentures", and together with the
7-3/4% Senior Notes, the "Senior Notes") or the Senior Debt Securities Indenture
dated as of July 7, 1998 or First Supplemental Indenture dated as of July 7,
1998, each between the Company and First National Bank of Chicago as Trustee
pursuant to which the 8% Debentures were issued (collectively, the "8%
Debentures Indenture") (the Revolving Loan Agreement, the 9-3/8% Senior
Subordinated Notes, the 9-3/8% Senior Subordinated Indenture, the 9-5/8% Senior
Subordinated Notes, the 9-5/8% Senior Subordinated Indenture, the 7-3/4% Senior
Notes, the 7-3/4% Senior Notes Indenture, the 8% Debentures and the 8%
Debentures Indenture 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, the Indenture and the Securities and the
consummation of the transactions contemplated herein and therein and compliance
by the Company with its obligations hereunder and thereunder, have been duly
authorized by all necessary corporate action and 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 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 corresponding organizational documents of the Company or any of the
Significant Subsidiaries or any applicable law, administrative regulation or
administrative or court order or decree.
(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 the Registration
Statement (other than as disclosed therein), or which is not so disclosed and
(net of reserves and insurance) the Company believes might result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business
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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; 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 Statement, 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, or incorporated
by reference in, the 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 hereunder or the consummation by the Company of any of the other
transactions contemplated hereby, 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.
(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 1934 Act Regulations, and, when read
together with the other information in the Prospectus, at the time the
Registration Statement 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 Company has complied with, and is and will be in compliance
with, the provisions of that certain Florida act relating to disclosure of doing
business with Cuba, codified as Section 517.075 of the Florida statutes, and the
rules and regulations thereunder (collectively, the "Cuba Act") or is exempt
therefrom.
(xiv) The Securities and the Indenture conform in all material
respects to the respective statements relating thereto contained in the
Prospectus.
(xv) The Securities are subordinate in right of payment to the Senior
Notes and rank and will rank pari passu in right of payment with the Senior
Subordinated Notes.
(xvi) There are no holders of securities of the Company with currently
exercisable registration rights to have any securities registered as part of the
Registration Statement or included in the offering contemplated by this
Agreement.
(xvii) 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
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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.
(xviii) 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.
(xix) No default or event of default with respect to any Indebtedness
(as such term is defined the Prospectus Supplement) 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 the Indenture, the issuance and sale of the Securities or the consummation of
the transactions contemplated hereby or thereby.
(xx) 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.
(xxi) 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.
(b) Any certificate signed by any officer of the Company and delivered to
the Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
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SECTION 2. Sale and Delivery to Underwriters; 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 each Underwriter, and each Underwriter, severally and not jointly, agrees to
purchase from the Company, at 99% of the principal amount thereof, the aggregate
principal amount of Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional aggregate principal amount of Securities which
such Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(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 Representatives and the Company,
at 7:00 a.m., California time, on February 8, 2001, or such other time not later
than ten business days after such date as shall be agreed upon by the
Representatives 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 Representatives for the
respective accounts of the several Underwriters of certificates for the
Securities to be purchased by them. Certificates for the Securities shall be in
such denominations and registered in such names as the Representatives may
request in writing at least one full business day before Closing Time. It is
understood that each Underwriter has authorized the Representatives, 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. Banc of America
Securities LLC, individually and not as a representative of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for any
Securities to be purchased by any Underwriter whose payment therefor has not
been received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder. The certificates for the Securities
will be made available for examination and packaging by the Representatives 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 covenants with each
Underwriter as follows:
(a) The Company will notify the Representatives immediately, and confirm
the notice in writing, (i) of the effectiveness of any post-effective amendment
to the Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of the Prospectus or any amendment to the Registration
Statement or amendment or supplement to the Prospectus or any document to be
filed pursuant to the 1934 Act during any period when the Prospectus is required
to be delivered under the 1933 Act, (iii) of the receipt of any comments or
inquiries from the Commission relating to the Registration Statement or
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information and (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the 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.
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(b) The Company will give the Representatives notice of its intention to
file or prepare any post-effective amendment to the Registration Statement or
any amendment or supplement to the Prospectus (including any revised prospectus
which the Company proposes for use by the Underwriters in connection with the
offering of the Securities which differs from the Prospectus first provided to
the Underwriters 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 Representatives 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 Representatives or counsel
for the Underwriters shall reasonably object.
(c) The Company has delivered to the Representatives one copy of the
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 Representatives as many conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) as the Representatives may reasonably request.
(d) The Company will furnish to each 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 such Underwriter may reasonably request for the purposes
contemplated by the 1933 Act or the 1934 Act or the respective applicable rules
and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is necessary, in the
opinion of counsel for the Underwriters, 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
Representatives and counsel for the Underwriters) 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 Underwriters
a reasonable number of copies of such amendment or supplement.
(f) The Company will endeavor, in cooperation with the Underwriters, to
qualify the Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as the
Representatives may designate; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which it is
not so qualified. In each jurisdiction in which the Securities have been so
qualified, the Company 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
Representatives of the receipt by the Company of any notification with respect
to the suspension of qualification of the Securities for sale in any state or
jurisdiction or the initiating or threatening of any proceeding for such
purpose.
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(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, 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 Representatives and the Company deem appropriate,
and will file or 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 Banc of America
Securities 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 Underwriters 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.
(l) In accordance with the Cuba Act, if applicable, and without limitation
to the provisions of Sections 6 and 7 hereof, the Company agrees to indemnify
and hold harmless the Underwriters from and against any and all loss, liability,
claim, damage and expense whatsoever (including fees and disbursements of
counsel), as incurred, arising out of any violation by the Company of the Cuba
Act, if applicable.
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 Indenture (iii) the preparation, issuance and delivery of the certificates
for the Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel and accountants, (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 Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey, (vi) the printing and delivery to the
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Underwriters of copies of the Registration Statement as originally filed and of
each amendment thereto, of the preliminary prospectuses and any preliminary
prospectus supplements, and of the Prospectus and any amendments or supplements
thereto, (vii) the printing and delivery to the Underwriters 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 Representatives in accordance with
the provisions of Section 5 or Section 9(a)(i), the Company shall reimburse the
Underwriters for all of its out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties of the Company herein contained, to the performance by the Company of
its obligations hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor 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
Representatives of such timely filing or transmittal.
(b) At Closing Time the Representatives shall have received:
(1) The favorable opinion, dated as of Closing Time, of Xxxxxx, Xxxxxx
& Xxxxx LLP, counsel for the Company, in form and substance satisfactory to
counsel for the Underwriters, 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 (which term, as used in such opinion, shall
include the Officer's Certificate establishing the form and terms of
the Notes) has been duly authorized, executed and delivered by the
Company and (assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally or by
general equitable principles.
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(iii) The Securities are in the form established pursuant to the
Indenture, have been duly authorized for issuance and sale by the
Company and duly executed by the Company and, when 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
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally or by general
equitable principles, and will be entitled to the benefits of the
Indenture.
(iv) The issuance and delivery of the Securities, 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 9-3/8% Senior Subordinated Notes, the
9-3/8% Senior Subordinated Indenture, the 9-5/8% Senior Subordinated
Notes, the 9-5/8% Senior Subordinated Indenture, the 7-3/4% Senior
Notes, the 7-3/4% Senior Notes Indenture, the 8% Debentures or the 8%
Debentures Indenture.
(v) The Indenture has been qualified under the 1939 Act.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company.
(vii) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus.
(viii) The 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 the Registration Statement has
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(ix) At the time the Registration Statement became effective, the
Registration Statement (other than the financial statements and
supporting schedules included or incorporated by reference therein or
omitted therefrom and any Form T-1, as to which no opinion need be
rendered) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
In rendering such opinion, such counsel shall state that, insofar as
such opinion concerns the Indenture, the Securities or this Agreement (all
of which are
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governed by the laws of the State of New York), such counsel has assumed
without investigation that the law of the State of New York is the same as
the law of the State of California.
(2) The favorable opinion, dated as of Closing Time, of Xxxxxxxx X.
Xxxx, Esq., Director, Corporate Legal Affairs of the Company, in form and
substance satisfactory to counsel for the Underwriters, 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.
(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 limited 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 limited partnership, as the case may be to own, lease
and operate its properties and to conduct its business as described in
the Prospectus 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 partnership interests in each such Significant Domestic
Subsidiary which is a limited partnership have been duly authorized
(if applicable) and validly issued, are fully paid and non-assessable
and are owned by the Company (except to the extent that a minority
interest in such limited partnership is reflected
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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. As used in this Agreement,
the term "Significant Domestic Subsidiaries" means all Significant
Subsidiaries other than 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 authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization"
(except for subsequent issuances, if any, pursuant to the exercise of
options issued under employee benefit plans referred to in the
Prospectus or in the documents incorporated by reference therein); and
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 the
Registration Statement or the Prospectus or in the documents
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 the Registration
Statement or in the documents 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 or
incorporated by reference in the Registration Statement, 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.
(vi) The information under "Item 1. Business--Regulation and
Environmental Matters" and "Item 3. Legal Proceedings" in the
Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1999 and in Item 15 in Part II of the Registration
Statement, 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
the Registration Statement or to be filed or incorporated by reference
as exhibits thereto other than those described or referred to or filed
as exhibits thereto, the descriptions thereof or references thereto
are correct, and, to the best of such counsel's knowledge, no default
exists in the due
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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
sale of the Securities to the Underwriters, except such as may be
required under the 1933 Act, the 1933 Act Regulations, the 1939 Act,
the 1939 Act Regulations or state securities laws.
(ix) The issuance and delivery of the Securities, the execution
and delivery of this Agreement and the Indenture (which term, as used
in such opinion, shall include the Officer's Certificate establishing
the form and terms of the Securities), 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, (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 of the Company, 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 Prospectus Supplement) 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 the Indenture, the
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issuance and sale of the Securities or the consummation of the
transactions contemplated hereby or thereby.
In rendering such opinion, such counsel shall state that, insofar as
such opinion concerns the Indenture, the Securities or this Agreement (all
of which are governed by the laws of the State of New York), such counsel
has assumed without investigation that the law of the State of New York is
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 General
Corporation Law of the State of Delaware and the federal law of the United
States of America, 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 Representatives, so long
as each such opinion shall be dated as of the Closing Time and in form and
substance satisfactory to the Representatives, and shall expressly permit
the Underwriters to rely thereon as if such opinion were addressed to the
Underwriter.
(3) The favorable opinion, dated as of Closing Time, of Xxxxx & Wood
LLP, counsel for the Underwriters, with respect to the matters set forth in
(i) through (iii) and (v) through (ix) of subsection (b)(1) of this
Section.
(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 Brown & Wood LLP shall each additionally state that
nothing has come to their attention that would lead them to believe that
the 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 Underwriters 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 Underwriters for such use) or at Closing Time, included or 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
Statement and the Prospectus, any material adverse change in the condition,
financial or otherwise, or in the
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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 Representatives 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 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 has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to Closing Time, (iv) no stop
order suspending the effectiveness of the 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) the
rating assigned by any nationally recognized statistical rating organization to
any debt securities of the Company or any trust preferred securities, capital
securities or similar securities of any subsidiary of the Company has not been
lowered and no such rating agency has publicly announced that it has placed any
debt securities of the Company on what is commonly termed a "watch list" for a
possible downgrading. As used in this Section 5(c), the term "Prospectus" means
the Prospectus in the form first used to confirm sales of the Securities.
(d) At the Closing Time, the Representatives 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 Statement and the Prospectus (including, without
limitation, any pro forma financial statements).
(e) At Closing Time, the Securities shall have a rating of at least B1 from
Xxxxx'x Investor's Service Inc. and BB- from Standard & Poor's, and the Company
shall have delivered to the Representatives 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, 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 issued an order refusing to permit such application to
become effective or taken any similar action.
(g) At Closing Time, counsel for the Underwriters 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 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 in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for the
Underwriters.
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
Representatives by notice to the Company at any time at or prior to Closing
Time, and such termination shall be without
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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 agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any 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 the 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, any
preliminary prospectus supplement or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact 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
Banc of America Securities LLC), reasonably incurred in investigating, preparing
or defending against any litigation, or any investigation or proceeding by any
governmental agency or body, 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 any Underwriter through the Representatives expressly for use in a
Registration Statement (or any amendment thereto) or any preliminary prospectus,
preliminary prospectus supplement 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 or preliminary prospectus
supplement 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 such 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 by reference therein) was not sent or given by or on behalf of such
Underwriter to such person, if such is required by law, at or
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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) Each Underwriter severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company 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 the Registration Statement
(or any amendment thereto) or any preliminary prospectus, preliminary prospectus
supplement or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives expressly for use in
such Registration Statement (or any amendment thereto) or such preliminary
prospectus, such preliminary prospectus supplement 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. In the event of
indemnity pursuant to Section 6(d) below, the Company shall in no event be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from its 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.
(d) In addition to and without limitation of the Company's obligation to
indemnify the Underwriters, (i) the Company agrees to indemnify and hold
harmless UBS Warburg LLC (the "QIU") and each person, if any, who controls the
QIU within the meaning of Section 15 of the 1933 Act from and against any and
all loss, liability, claim, damage and expense whatsoever, as incurred, incurred
as a result of the QIU's participation as a "qualified independent underwriter"
within the meaning of Rule 2720 of the Conduct Rules of the National Association
of Securities Dealers, Inc. in connection with the offering of the Securities,
including, without limitation, any and all expense, as incurred (including the
fees and disbursements of counsel chosen by the QIU), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental body or agency, commenced or
threatened, or any claim whatsoever based upon the QIU's participation as
"qualified independent underwriter" as aforesaid; and (ii) in order to provide
for just and equitable contribution in circumstances in which the indemnity
agreement provided for in clause (i) of this Section 6(d) is for any reason held
to be unenforceable by the indemnified parties although applicable in accordance
with its
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terms, the Company shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by said indemnity
agreement incurred by the QIU, in such proportion as is appropriate to reflect
the relative fault of the Company, on the one hand, and the QIU, on the other
hand, in connection with the matters giving rise to the applicable losses,
liabilities, claims, damages and expenses; 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 clause (ii) of this
Section 6(d), each person, if any, who controls the QIU within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
QIU. The relative fault of the QIU on the one hand and the Company on the other
hand shall be determined by reference to, among other things, whether the
matters giving rise to the applicable losses, liabilities, claims, damages and
expenses relate to information supplied by the QIU or by the Company and the
parties' relative intent, knowledge, access to information and opportunity to
prevent such losses, liabilities, claims, damages and expenses. The Company
agrees that the QIU will be entitled to rely on the representations and
warranties of the Company contained in Section 1(a) hereof, or contained in
certificates of officers of the Company submitted pursuant hereto, as if it were
an Underwriter, and such representations and warranties shall survive delivery
of the Securities to the Underwriters.
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 Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and one or more of the Underwriters,
as incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount (calculated
as described below) with respect to the Securities bears to the public offering
price (calculated as described below) of the Securities and the Company is
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
public offering price of the Securities shall be deemed to be equal to 100% of
the principal amount thereof and the underwriting discount shall be deemed to be
equal to 1% of the principal amount thereof. For purposes of this Section, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the aggregate
principal amount of Securities set forth opposite their respective names in
Schedule A hereto and not joint.
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 submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or
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any controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) The Representatives 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 Statement, 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 the effect of which is such as to make it, in the judgment of
the Representatives, 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 by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange has been suspended, 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 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, (iv) if the rating assigned by any
nationally recognized statistical rating organization to any debt securities of
the Company or any trust preferred securities, capital securities or similar
securities 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 "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. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Securities which it
or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters or any other underwriters to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of the Defaulted Securities does not
exceed 10% of the aggregate principal amount of Securities to be purchased at
Closing Time, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount
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thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the aggregate principal amount of the Defaulted Securities exceeds
10% of the aggregate principal amount of Securities to be purchased at Closing
Time, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. 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
Underwriters shall be directed to them at Banc of America Securities LLC, 0 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X.
Xxxxxxxxxx; notices to the Company shall be directed to it at 00000 Xxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 attention of Xxxxx X. Xxxxxx, Vice
President and Treasurer.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors.
Except as provided in the last sentence of this Section 12, nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters 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. Except as provided
in the last sentence of this Section 12, this Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters and the Company 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 any Underwriter shall be deemed to be a successor
by reason merely of such purchase. Anything herein to the contrary
notwithstanding, the Company agrees that the provisions of Section 6(d) hereof
shall inure to the benefit of the QIU and its successors and controlling
persons, and shall be enforceable against the Company by the QIU and its
successors.
SECTION 13. 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.
[SIGNATURE PAGE FOLLOWS]
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
KB HOME
By: /s/ XXXXX X. XXXXXX
----------------------------------
Xxxxx X. Xxxxxx
Vice President and Treasurer
CONFIRMED AND ACCEPTED
as of the date first above written:
BANC OF AMERICA SECURITIES LLC
XXXXXXX XXXXX XXXXXX INC.
BANC ONE CAPITAL MARKETS, INC.
CREDIT LYONNAIS SECURITIES (USA) INC.
By: BANC OF AMERICA SECURITIES LLC
By: /s/ XXXX X. XXXXXXXXXX
-----------------------------------
Xxxx X. Xxxxxxxxxx
Managing Director
On behalf of each of the Underwriters
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SCHEDULE A
Aggregate
Principal
Amount
Name of Underwriter of Securities
------------------- -------------
Banc of America Securities LLC ......... $ 98,750,000
Xxxxxxx Xxxxx Xxxxxx Inc. .............. 98,750,000
Banc One Capital Markets, Inc. ......... 26,250,000
Credit Lyonnais Securities (USA) Inc. .. 26,250,000
------------
Total $250,000,000
