EXHIBIT 5.1
November 12, 2004
KB HOME
10990 Wilshire Boulevard
Los Angeles, CA 90024
Re: Registration Statement on Form S-3 (Registration No. 333-_____)
Ladies and Gentlemen:
We have acted as counsel for KB HOME, a Delaware corporation (the
"Company"), in connection with the Company's Registration Statement on Form S-3
(No. 333-_____) (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, for the
registration of the sale by the Company from time to time of up to
$1,500,000,000 maximum aggregate initial offering price of (a) its debt
securities ("Debt Securities"), (b) shares of its Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), (c) shares of its Common Stock, par
value $1.00 per share (the "Common Stock"), (d) warrants to purchase Debt
Securities, Preferred Stock, Common Stock or other securities of the Company or
another issuer (the "Warrants"), which will be issued pursuant to a warrant
agreement (the "Warrant Agreement") to be entered into by the Company and a
warrant agent (the "Warrant Agent"), (e) depositary shares evidencing fractional
interests in shares of the Company's Preferred Stock ("Depositary Shares"),
which will be issued pursuant to a deposit agreement (the "Deposit Agreement")
to be entered into by the Company and a depositary (the "Depositary"), and (f)
contracts to purchase shares of Common Stock ("Stock Purchase Contracts") and
units consisting of a Stock Purchase Contract and other securities which may
secure the holders' rights obligations to purchase the Common Stock underlying
the Stock Purchase Contracts ("Stock Purchase Units"), which will be issued
pursuant to a purchase contract agreement and, if applicable, a pledge agreement
(together, the "Stock Purchase Contract Agreements") to be entered into by the
Company and a purchase contract agent (the "Purchase Contract Agent").
We have also acted as counsel to KB Home Coastal Inc., a California
corporation, KB Home Colorado Inc., a Colorado corporation, KB Home Greater Los
Angeles Inc., a California corporation, KB Home Lone Star LP, a Texas limited
partnership, KB Home Nevada Inc., a Nevada corporation, KB Home North Bay Inc.,
a California corporation, KB Home Phoenix Inc., an Arizona corporation, and KB
Home South Bay Inc., a California corporation (collectively, the "Guarantors"),
in connection with the registration on the Registration Statement of the sale by
the Guarantors of their guarantees (the "Guarantees") of the Debt Securities.
The Debt Securities, Preferred Stock, Common Stock, Warrants, Depositary
Shares, Stock Purchase Contracts, Stock Purchase Units and Guarantees are herein
collectively referred to as the "Securities". Debt Securities, Preferred Stock,
Warrants, Stock Purchase Contracts and Stock Purchase Units may be convertible
or exchangeable for Securities or other securities of the Company or another
issuer. The Debt Securities and Guarantees will be issued under (i) the
-1-
indenture, dated as of January 28, 2004, among the Company, the Guarantors and
SunTrust Bank, as Trustee (the "Base Indenture"), a First Supplemental
Indenture, dated as of January 28, 2004, among the Company, the Guarantors and
SunTrust Bank, as Trustee (the "First Supplemental Indenture"), and a Second
Supplemental Indenture, dated as of June 30, 2004, among the Company, the
Guarantors and SunTrust Bank, as Trustee (the "Second Supplemental Indenture,"
and together with the Base Indenture and the First Supplemental Indenture, the
"Senior Indenture"), (ii) the form of Senior Subordinated Indenture, presently
undated (the "Senior Subordinated Indenture"), filed as exhibit 4.11 to the
Registration Statement, or (iii) the form of Subordinated Indenture, presently
undated (the "Subordinated Indenture"), filed as exhibit 4.13 to the
Registration Statement.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as we have deemed necessary or advisable
for purposes of this opinion.
Based upon foregoing, we are of the opinion that:
1. For Debt Securities and Guarantees issued pursuant to the Senior
Indenture, when the specific terms of a particular Debt Security and Guarantee
have been duly authorized and established in accordance with such Indenture, and
such Debt Security and Guarantee have been duly authorized, executed,
authenticated, issued and delivered in accordance with such Indenture, against
payment therefor or upon exchange in accordance with the applicable underwriting
or other agreement, such Debt Security will constitute the valid and binding
obligation of the Company subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable principles
and such Guarantee will constitute the valid and binding obligation of each
Guarantor subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equitable principles.
2. For Debt Securities and Guarantees issued pursuant to the Senior
Subordinated Indenture or the Subordinated Indenture, when the Company, the
Guarantors and a trustee execute and deliver the Senior Subordinated Indenture
or the Subordinated Indenture, as the case may be, and the specific terms of a
particular Debt Security and Guarantee have been duly authorized and established
in accordance with the applicable Indenture, and such Debt Security and
Guarantee have each been duly authorized, executed, authenticated, issued and
delivered in accordance with the applicable Indenture, against payment therefor
or upon exchange in accordance with the applicable underwriting or other
agreement, such Debt Security will constitute the valid and binding obligation
of the Company subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equitable principles and such
Guarantee will constitute the valid and binding obligation of each Guarantor
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equitable principles.
-2-
3. When the issuance of Common Stock has been duly authorized, the
certificates for such Common Stock have been duly executed by the Company,
countersigned by the transfer agent therefor and duly delivered to the
purchasers thereof, against payment therefor in accordance with the applicable
underwriting or other agreement, such Common Stock (including any Common Stock
duly issued (a) upon the exchange or conversion of any Debt Security or
Preferred Stock that is exchangeable or convertible into Common Stock, (b) upon
the exercise of any Warrant exercisable for Common Stock, or (c) upon settlement
of any Stock Purchase Contract or Stock Purchase Units), will be validly issued,
fully paid and nonassessable.
4. When the issuance of Preferred Stock has been duly authorized, the
Certificate of Designations establishing the terms of such Preferred Stock has
been duly approved and executed by the Company and filed with the Secretary of
State of the State of Delaware, the certificates for such Preferred Stock have
been duly executed by the Company, countersigned by the transfer agent therefor
and delivered to the purchasers thereof, against payment therefor in accordance
with the applicable underwriting or other agreement, such Preferred Stock
(including any Preferred Stock duly issued (a) upon the exchange or conversion
of any Debt Security that is exchangeable or convertible into Preferred Stock,
(b) upon the exercise of any Warrant exercisable for Preferred Stock, or (c)
withdrawn upon surrender of any Depositary Shares) will be validly issued, fully
paid and nonassessable.
5. When the Company and a Warrant Agent execute and deliver a Warrant
Agreement and the specific terms of a particular Warrant have been duly
authorized and established in accordance with such Warrant Agreement, and such
Warrant has been duly authorized, executed, countersigned, issued and delivered
in accordance with such Warrant Agreement, against payment therefor in
accordance with the applicable underwriting or other agreement, such Warrant
will constitute the valid and binding obligation of the Company subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equitable principles.
6. When the Company and a Depositary execute and deliver a Deposit
Agreement and the specific terms of particular Depositary Shares have been duly
authorized and established in accordance with such Deposit Agreement, and such
Depositary Shares have been duly authorized, executed, countersigned, issued and
delivered in accordance with such Deposit Agreement, against payment therefor in
accordance with the applicable underwriting or other agreement, such Depositary
Shares will constitute the valid and binding obligations of the Company subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equitable principles.
7. When the Company and a Purchase Contract Agent execute and deliver
the Stock Purchase Contract Agreements and the specific terms of particular
Stock Purchase Contracts and, if applicable, Stock Purchase Units have been duly
authorized and established in accordance with such Stock Purchase Contract
Agreements, and such Stock Purchase Contracts and, if applicable, Stock Purchase
Units have been duly authorized, executed, countersigned, issued and delivered
in accordance with such Stock Purchase Contract Agreements, against payment
therefor in accordance with the applicable underwriting or other agreement, such
Stock Purchase Contracts
-3-
and, if applicable, such Stock Purchase Units will constitute the valid and
binding obligations of the Company subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equitable principles.
In connection with the opinions expressed above, we have assumed that,
at or prior to the time of delivery of any such Security, (a) the Company's
Board of Directors and, in the case of Guarantees, each Guarantor's Board of
Directors, shall have each duly established the terms of such Security and duly
authorized the issuance and sale of such Security, in each case in accordance
with applicable law, and such authorization shall not have been modified or
rescinded; (b) the Registration Statement shall have been declared effective and
such effectiveness shall not have been terminated or rescinded; (c) the Senior
Indenture shall have been duly authorized, executed and delivered by the
applicable Trustee and shall have been qualified under the Trust Indenture Act
of 1939, as amended; (d) the Senior Subordinated Indenture and the Subordinated
Indenture shall have each been duly authorized, executed and delivered by the
Company and the Guarantors in accordance with applicable law and the applicable
Trustee and shall have been qualified under the Trust Indenture Act of 1939, as
amended; (e) the applicable Certificate of Designations, if any, shall have been
duly approved and executed by the Company in accordance with applicable law and
filed with the Secretary of State of the State of Delaware in accordance with
Delaware law; (f) the applicable Warrant Agreement, if any, shall have been duly
authorized, executed and delivered by the Company in accordance with applicable
law and the applicable Warrant Agent; (g) the applicable Deposit Agreement, if
any, shall have been duly authorized, executed and delivered by the Company in
accordance with applicable law and the applicable Depositary; (h) the applicable
Stock Purchase Contract Agreements shall each have been duly authorized,
executed and delivered by the Company in accordance with applicable law and the
applicable Purchase Contract Agent; (i) there will not have occurred any change
in law affecting the validity or enforceability of such Security; and (j) in
connection with the issuance and sale of Debt Securities, Preferred Stock,
Warrants, Stock Purchase Contracts or Stock Purchase Units convertible into or
exchangeable for securities of another issuer, such other issuer shall have
taken any and all necessary and appropriate steps to enable the Company lawfully
to deliver securities, and, if applicable, a prospectus related thereto, of such
other issuer upon such conversion or exchange.
We hereby confirm that this opinion includes the laws of the State of
New York.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and the reference to our name and the discussion of our
opinion under the caption "Legal Matters" in the Registration Statement and the
related Prospectus. In giving such consent, we do not thereby admit that we are
in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
MUNGER, TOLLES & OLSON LLP
-4-