EXHIBIT 1.8
KB HOME
(A DELAWARE CORPORATION)
$150,000,000
6 1/4% SENIOR NOTES DUE 2015
UNDERWRITING AGREEMENT
June 21, 2005
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
KB Home, a Delaware corporation (the "Company"), and the Company's
subsidiaries listed on Schedule A hereto (the "Guarantors") confirm their
agreement with Citigroup Global Markets Inc. ("Citigroup") and each of the other
underwriters, if any, named in Schedule B hereto (collectively, the
"Underwriters," which term shall also include any underwriters substituted as
hereinafter provided in Section 10 hereof), for whom Citigroup is acting as
representative (in such capacity, the "Representative"), with respect to the
sale by the Company and the purchase by the Underwriters, acting severally and
not jointly, of $150,000,000 aggregate principal amount of the Company's 6 1/4%
Senior Notes due 2015 (the "Securities"). The Securities will be unconditionally
guaranteed on a senior basis by each of the Guarantors (the "Guarantees")
pursuant to the Indenture (as defined below). In the event that only a single
Representative is named in the first sentence of this paragraph, then all
references herein to the "Representatives" shall be deemed to mean and refer to
such single Representative, mutatis mutandis. In the event that only a single
Underwriter is named on Schedule B hereto, then (i) all references herein to the
"Underwriters" shall be deemed to mean and refer to such single Underwriter,
mutatis mutandis, and (ii) the provisions of Section 10 shall not be applicable
and all references herein to Section 10 shall be disregarded.
The Securities are to be issued by "re-opening" an existing series of
debt securities issued by the Company designated as its "6 1/4% Senior Notes due
2015" (the "Existing Securities").
The Securities are to be issued pursuant to an Indenture (the "Original
Indenture") dated as of January 28, 2004, as amended and supplemented by the
First Supplemental Indenture (the "First Supplemental Indenture") thereto dated
as of January 28, 2004 and as further amended and supplemented by the Second
Supplemental Indenture (the "Second Supplemental Indenture") thereto dated as of
June 30, 2004 (as so amended and supplemented, the "Indenture"), each among the
Company, the Guarantors and SunTrust Bank, as trustee (the "Trustee").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-120458) (the
"Current Registration Statement") for the registration under the Securities Act
of 1933 (the "1933 Act") of, among other securities, debt securities, which
registration statement was declared effective by the Commission on November 29,
2004 and copies of which have heretofore been delivered to you. The Current
Registration Statement, as amended (if applicable) 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 November 29, 2004 (the
"Base Prospectus") relating to the Securities and Guarantees, and has previously
advised you of all further information (financial and other) with respect to the
Company and the Guarantors set forth therein. The Base Prospectus together with
the Prospectus Supplement, in the respective forms first provided to the
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. The Company may have also prepared a preliminary
prospectus supplement relating to the Securities and the Guarantees (a
"Preliminary Prospectus Supplement"), in which case such Preliminary Prospectus
Supplement, together with the Base Prospectus and all documents incorporated or
deemed to be incorporated by reference in such Preliminary Prospectus Supplement
or the Base Prospectus, are hereinafter referred to, collectively, as a
"Preliminary Prospectus."
All references in this Agreement to documents, financial statements and
schedules and other information which is "contained," "included," "stated,"
"described in" or "referred to" in the Registration Statement, the Prospectus or
any Preliminary Prospectus (and all other references of like import) shall be
deemed to mean and include all such documents, financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement, the Prospectus or such Preliminary
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, the Prospectus or any
Preliminary Prospectus shall be deemed to mean and include the filing of any
document under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
after the date of this Agreement (in the case of the Registration Statement or
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the Prospectus) or after the date of the applicable Preliminary Prospectus
Supplement (in the case of such Preliminary Prospectus), as the case may be,
which is or is deemed to be incorporated by reference in the Registration
Statement, the Prospectus or such Preliminary Prospectus, as the case may be.
The Company and the Guarantors understand that the Underwriters propose
to make a public offering of the Securities and the Guarantees as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
This Agreement, the Securities and the Indenture are hereinafter
sometimes referred to, collectively, as the "Operative Documents" and,
individually, as an "Operative Document."
All references herein to a "subsidiary" or "subsidiaries" of the Company
shall include, without limitation (i) the Guarantors and (ii) all other
subsidiaries of the Company, including any consolidated joint ventures in which
the Company or any of its other subsidiaries is a participant, any consolidated
limited and general partnerships in which the Company or any of its other
subsidiaries owns partnership interests and any consolidated limited liability
companies in which the Company or any of its other subsidiaries owns membership
interests (such joint ventures, limited and general partnerships and limited
liability companies being hereinafter called, collectively, the "Partnerships"
and, individually, a "Partnership").
SECTION 1. Representations and Warranties.
(a) The Company and the Guarantors, jointly and severally, represent and
warrant to each Underwriter as of the date hereof (such date being hereinafter
referred to as the "Representation Date") and as of the Closing Time (as defined
below) as follows:
(i) The Company and the Guarantors meet the requirements for use
of Form S-3 under the 1933 Act and the 1933 Act Regulations. The
Registration Statement, at the time it became effective and as of the
Representation Date, the Base Prospectus, as of its date and as of the
Representation Date, any Preliminary Prospectus, as of the date of the
related Preliminary Prospectus Supplement, and the Prospectus, as of the
date of the Prospectus Supplement, complied and comply in all material
respects with the requirements of the 1933 Act, the 1933 Act Regulations
(including Rule 415(a) of the 1933 Act Regulations), the 1939 Act and
the rules and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations"), and did not and as of the Representation Date
do not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the Representation
Date (unless the term "Prospectus" refers to a prospectus which has been
provided to the 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 does not and will not include an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection (i)
shall not apply to statements in or omissions from the
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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, is an independent registered
public accounting firm 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,
if applicable, of earnings to combined fixed charges and preferred stock
dividends (including the amounts the ratios would have been were
interest on the outstanding collateralized mortgage obligations of the
Company's wholly owned limited purpose financing subsidiaries included
in such ratios' calculation) included in the Base Prospectus under the
caption "Ratios of Earnings to Fixed Charges" and in the Prospectus
Supplement under the caption "Selected Consolidated Financial Data" and
in Exhibit 12 to the Registration 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 affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) except for
regular quarterly dividends in customary amounts per share on the
Company's common stock, par value $1.00 per share (the "Common Stock"),
there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock. As used in this
subsection (iv), the term "Registration Statement"
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means the Registration Statement as in effect on the date of this
Agreement and the term "Prospectus" means the Prospectus in the form
first used to confirm sales of the Securities.
(v) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Operative Documents; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse
effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(vi) Each Significant Subsidiary (as defined below) is either a
corporation or a Partnership. Each Significant Subsidiary has been duly
organized and is validly existing as a corporation or Partnership, as
the case may be, in good standing under the laws of the jurisdiction of
its organization, has power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and, in the case of each Significant Subsidiary that is a Guarantor, to
enter into and perform its obligations under the Operative Documents to
which it is a party, and is duly qualified to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise; all of
the issued and outstanding capital stock of each Significant Subsidiary
which is a corporation has been duly authorized and validly issued, is
fully paid and non-assessable and is owned (except for directors
qualifying shares and a nominal number of shares held by affiliated
parties) by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and all of the outstanding equity interests in each
Significant Subsidiary which is a Partnership have been duly authorized
(if applicable) and validly issued, are fully paid and (except for
general partnership interests) non-assessable and are owned by the
Company (except to the extent that a minority interest in the
Partnership is reflected in the Company's consolidated financial
statements included or incorporated by reference in the Prospectus),
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. For
purposes of this Agreement, "Significant Subsidiary" means (i) each
Guarantor and (ii) any subsidiary of the Company (including, without
limitation, any Partnership) that is a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X (as in effect on January 1,
1996), but substituting "8%" for "10%" wherever "10%" appears in such
definition. Schedule A hereto sets forth the names of the Guarantors
and, in the case of any Guarantor that is a limited partnership, the
names of all of its general partners and, in the case of each Guarantor
and each such general partner, its jurisdiction of organization and
whether
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such Guarantor or general partner, as the case may be, is a corporation,
limited or general partnership, limited liability company or other
entity.
(vii) (A) The authorized, issued and outstanding capital stock of
the Company is as set forth in the audited consolidated balance sheet as
of November 30, 2004 appearing in the Company's Annual Report on Form
10-K for the fiscal year then ended (except for subsequent issuances, if
any, pursuant to reservations, agreements or employee benefit plans
referred to or incorporated by reference in the Prospectus and except
for such stock dividends and increases in authorized capital stock as
are disclosed in the Prospectus Supplement (as defined below) under the
caption "Prospectus Supplement Summary -- Recent Developments"); 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;
(B) 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 against the Company in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles, and will be entitled to the benefits of
the Indenture;
(C) The Original Indenture, the First Supplemental Indenture and
the Second Supplemental Indenture have been duly authorized, executed
and delivered by the Company and each of the Guarantors and constitute
valid and binding agreements of the Company and each of the Guarantors,
enforceable against the Company and each of the Guarantors in accordance
with their terms, except in each case as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles, and the Indenture has been duly qualified
under the 1939 Act; and, after giving effect to the sale of Securities
and the sale of any other securities registered pursuant to the
Registration Statement and issued or to be issued prior to the delivery
of the Securities, the aggregate amount of Securities which will have
been issued and sold by the Company will not exceed the aggregate amount
of theretofore unsold securities registered pursuant to the Registration
Statement; and
(D) the Operative Documents and the Guarantees conform and will
conform in all material respects to the respective descriptions thereof
contained in the Prospectus.
(viii) The Company is not in violation of its charter or by-laws
and none of the Significant Subsidiaries is in violation of its charter
or by-laws or other organizational
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documents, and neither the Company nor any of its Significant
Subsidiaries is in default in the performance or observance of (A) any
obligation, agreement, covenant or condition contained in:
(1) the Company's Revolving Loan Agreement dated as of
October 24, 2003 among the Company, the banks party thereto, Bank
of America, N.A. as Administrative Agent, and the other parties
thereto, including all amendments and supplements thereto, if
any, and any promissory notes or other agreements, guarantees or
instruments entered into in connection therewith (the "Revolving
Loan Agreement"),
(2) the Company's 7-3/4% Senior Subordinated Notes due
2010, 9-1/2% Senior Subordinated Notes due 2011 or 8-5/8% Senior
Subordinated Notes due 2008 (collectively, the "Senior
Subordinated Notes"), the Indenture dated as of November 19, 1996
between the Company and SunTrust Bank (as successor to SunTrust
Bank, Atlanta), as amended and supplemented by the First
Supplemental Indenture thereto dated as of December 18, 2003
between the Company, SunTrust Bank and the guarantors named
therein, pursuant to which the Senior Subordinated Notes were
issued (as so amended and supplemented, the "Senior Subordinated
Indenture," which term, as used herein, includes the respective
instruments establishing the form and terms of the Senior
Subordinated Notes) or the guarantees (the "Senior Subordinated
Guarantees") of the Senior Subordinated Notes,
(3) the Amended and Restated Mortgage Loan Warehousing
Agreement, dated as of June 30, 2004, and the $300 million Master
Loan and Security Agreement, dated as of May 13, 2002, as amended
and restated, both of which agreements were entered into by a
subsidiary of the Company and the other parties thereto,
including all amendments and supplements thereto, if any, and any
promissory notes and other instruments or agreements entered into
in connection therewith (together, the "Mortgage Banking
Agreement"),
(4) 8-3/4% senior notes due 2009 (the "French Notes") of
KBSA (as defined below) or any indenture, fiscal agency agreement
or other instrument agreement under or pursuant to which the
French Notes were issued or are outstanding (as the same may be
amended or supplemented from time to time, the "French
Indenture"), or
(5) any outstanding debt securities previously issued
under the Indenture (the "Senior Notes"), the Indenture or the
guarantees of the Senior Notes (the "Senior Guarantees"),
(the Revolving Loan Agreement, the Senior Subordinated Notes, the Senior
Subordinated Indenture, the Senior Subordinated Guarantees, the Mortgage
Banking Agreement, the Senior Notes, the Indenture and the Senior
Guarantees are hereinafter called, collectively, the "Subject
Instruments" and, individually, a "Subject Instrument") or (B) any
obligation, agreement, covenant or condition contained in any other
contract, indenture,
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mortgage, loan agreement, note, lease or other instrument to which the
Company or any of the Significant Subsidiaries is a party or by which it
or any of them may be bound, or to which any of the property or assets
of the Company or any of the Significant Subsidiaries is subject, which
default or violation would have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise; and the execution, delivery and performance of this
Agreement and the other Operative Documents, and the consummation of the
transactions contemplated herein and in the other Operative Documents
and compliance by the Company and the Guarantors with their respective
obligations under this Agreement and the other Operative Documents to
which they are parties, have been duly authorized by all necessary
action, corporate or other, and will not conflict with or constitute a
breach of, or default under, or result in the 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
and the Prior Underwriting Agreement (as hereinafter defined)) for a
conflict, breach, default, lien, charge or encumbrance which would not
have a material adverse effect on the condition, financial or otherwise,
or the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, nor will such action
result in any violation of the provisions of the charter, by-laws or
other organizational documents of the Company or any of the Significant
Subsidiaries or any applicable law, administrative regulation or
administrative or court order or decree. For purposes of this paragraph
(viii), the term "Significant Subsidiary" shall include, without
limitation, Kaufman & Broad S.A. ("KBSA"), whether or not it is in fact
a "Significant Subsidiary" as defined.
(ix) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting
the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which is not so disclosed and (net of reserves and
insurance) which the Company believes might result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or which might materially and
adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement or
the other Operative Documents; all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of
which any of their respective property or assets is the subject which
are not described in or incorporated by reference in the Registration
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 the documents incorporated or
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deemed to be 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 or the Guarantees or the
consummation by the Company or any Guarantor of any of the other
transactions contemplated hereby or by any of the other Operative
Documents, except such as may be required and have been obtained under
the 1933 Act, the 1933 Act Regulations and the 1939 Act, and such as may
be required under state securities laws.
(xi) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
(xii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations"), and, when read together with the other information in the
Prospectus, at the 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 Securities rank and will rank senior in right of
payment to the Senior Subordinated Notes and pari passu in right of
payment with the Senior Notes. The Guarantees rank and will rank senior
in right of payment to the Senior Subordinated Guarantees and pari passu
in right of payment with the Senior Guarantees.
(xiv) There are no holders of securities of the Company with
currently exercisable registration rights to have any securities
registered as part of the Registration Statement or included in the
offering contemplated by this Agreement.
(xv) The Company and each of the Significant Subsidiaries have
good and marketable title to all of their respective properties, in each
case free and clear of all liens, encumbrances and defects, except (i)
customary liens and encumbrances arising in the ordinary course of the
Company's construction and development business and the financing
thereof, (ii) as stated or incorporated by reference in the Prospectus
or (iii) such as do not materially affect the value of such properties
in the aggregate to the Company and its subsidiaries considered as one
enterprise and do not materially interfere with the use made and
proposed to be made of such properties.
(xvi) The Company and its Significant Subsidiaries possess such
certificates, authorities and permits issued by the appropriate state,
federal and foreign regulatory agencies or bodies necessary to conduct
all material aspects of the business now operated by them, and neither
the Company nor any of its Significant Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such
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certificate, authority or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the condition, financial or otherwise,
or the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise.
(xvii) No default or event of default with respect to any
Indebtedness (as such term is defined in the Base Prospectus under the
caption "Description of Debt Securities -- Certain Definitions") of the
Company or any of its Significant Subsidiaries entitling, or which, with
notice or lapse of time or both, would entitle, the holders thereof to
accelerate the maturity thereof exists or will exist as a result of the
execution and delivery of this Agreement or any of the other Operative
Documents, the issuance and sale of the Securities or the Guarantees or
the consummation of the transactions contemplated hereby or thereby.
(xviii) The Company and each of the Significant Subsidiaries have
filed all tax returns required to be filed, which returns, as amended,
are complete and correct in all material respects, and neither the
Company nor any Significant Subsidiary is in default in the payment of
any taxes which were payable pursuant to said returns or any assessments
with respect to said returns which would materially and adversely affect
the condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise.
(xix) The Company and its Significant Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (A) transactions are executed in accordance with
management's general or specific authorization; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xx) There are not and will not be, at any time from and
including the date of this Agreement through and including the Closing
Time, any "Related Persons" (as defined in Article Eighth of the
Company's charter).
(xxi) None of the Operative Documents or the Guarantees is or
will be, and no payment by the Company or any of the Guarantors of any
amounts payable under or pursuant to any of the Operative Documents or
the Guarantees (including, without limitation, any principal, premium,
if any, or interest) is or will be, subject to any usury law or other
limitation on the rate or amount of interest or other amounts payable
thereunder or the yield thereon (collectively, "Usury Laws"), or
violates, contravenes or breaches, or will violate, contravene or
breach, any Usury Laws.
(xxii) Neither the Company nor any of the Guarantors is, and upon
issuance and sale of the Securities and the Guarantees as contemplated
by this Agreement and application of the net proceeds therefrom as
described in the Prospectus, neither the
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Company nor any of the Guarantors will be, an "investment company" or an
entity "controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended (the "1940 Act").
(xxiii) No subsidiary of the Company is a guarantor of, or is a
party to or bound by any instrument or agreement pursuant to which it is
or may be required to guarantee or cause another subsidiary of the
Company to guarantee, any borrowings, bonds, notes, debentures or other
indebtedness or lease obligations of the Company, except for the
Revolving Loan Agreement, the Senior Subordinated Indenture and the
Indenture. The Company is not a party to or bound by any instrument or
agreement pursuant to which it is or may be required to cause any of its
subsidiaries to guarantee any borrowings, bonds, notes, debentures or
other indebtedness or lease obligations of the Company, other than the
Revolving Loan Agreement, the Senior Subordinated Indenture and the
Indenture. The only persons or entities that have guaranteed the Senior
Subordinated Notes or the Senior Notes or any indebtedness or other
obligations of the Company under the Revolving Loan Agreement, the
Senior Subordinated Indenture or the Indenture are the Guarantors.
(xxiv) The Company and, to the best of its knowledge, its
officers and directors in their capacities as such, are in compliance
with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the
rules and regulations of the Commission promulgated in connection
therewith that are effective as of the date hereof, except where the
failure to so comply would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
(xxv) The Company and its Significant Subsidiaries are in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), except where such
noncompliance with Environmental Laws 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. There are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any
permit, license or approval or any related constraints on operating
activities or any potential liabilities to third parties) which 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.
(xxvi) Neither the Company nor any Significant Subsidiary has any
liability for any prohibited transaction or accumulated funding
deficiency (within the meaning of Section 412 of the Internal Revenue
Code of 1986, as amended) or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), to which the Company or any Significant Subsidiary
makes or ever has made
11
a contribution and in which any employee of the Company or any
Significant Subsidiary is or has ever been a participant, except where
such liability 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. With respect to such plans, the Company and each Significant
Subsidiary is in compliance in all material respects with all applicable
provisions of ERISA, except where such noncompliance 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.
(xxvii) The Securities and the Existing Securities will
constitute a single series of debt securities under the Indenture.
(xxviii) UBS Securities LLC ("UBS") has executed and delivered to
the Company a signed letter dated June 20, 2005 (the "Waiver Letter"),
pursuant to which UBS waived the provisions of Section 3(k) of the
Underwriting Agreement dated as of May 25, 2005 (the "Prior Underwriting
Agreement") among the Company, the Guarantors and UBS, insofar as such
Section 3(k) applies to the Securities, and the Waiver Letter is in full
force and effect.
(b) Any certificate signed by any officer or other authorized signatory
of the Company or any of the Guarantors and delivered to the Representatives or
to counsel for the Underwriters shall be deemed a joint and several
representation and warranty by the Company and the Guarantors to each
Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter, severally and not jointly,
agrees to purchase from the Company, at 100.614% of the principal amount thereof
plus $651,041.67 (such dollar amount being the amount of accrued interest on the
Securities from June 2, 2004 to but excluding the Closing Time), the aggregate
principal amount of Securities set forth in Schedule B 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, 10990 Wilshire Boulevard, Los Angeles, California,
or at such other place as shall be agreed upon by the Representatives and the
Company, at 7:00 a.m., California time, on June 27, 2005, 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
12
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. Citigroup, 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 and each Guarantor,
jointly and severally, covenant with each Underwriter as follows:
(a) During the period beginning on the date of this Agreement
through and including the date (the "Termination Date"), which date
shall not be earlier than the Closing Time, as evidenced by a notice
from Citigroup to the Company (which notice from Citigroup may be in
writing or oral), on which all of the Securities shall have been sold by
the Underwriters and the Prospectus is no longer required to be
delivered under the 1933 Act or the 1934 Act, 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 by the Company or any Guarantor, (iii) of the
receipt of any comments or inquiries from the Commission relating to the
Registration Statement, the Prospectus or the documents incorporated or
deemed to be incorporated by reference in the Registration Statement or
the Prospectus, (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the
Prospectus or the documents incorporated or deemed to be incorporated by
reference in the Registration Statement or the Prospectus or for
additional information and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of 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.
(b) During the period beginning on the date of this Agreement
through and including the Termination Date, 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.
13
(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, during the period beginning on the date of this Agreement
through and including the Termination Date, any event shall occur as a
result of which it is necessary, in the opinion of counsel for the
Underwriters or the Company, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the
Company will forthwith amend or supplement the Prospectus (in form and
substance satisfactory to the 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 and the Guarantors will endeavor, in cooperation
with the Underwriters, to qualify the Securities and the Guarantees for
offering and sale under the applicable securities laws of such states
and other jurisdictions of the United States as the Representatives may
designate; provided, however, that neither the Company nor any of the
Guarantors shall be obligated to qualify as a foreign corporation or
other entity, as the case may be, in any jurisdiction in which it is not
so qualified. In each jurisdiction in which the Securities or the
Guarantees have been so qualified, the Company and the Guarantors will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for so long as may
be required by applicable law. The Company will promptly advise the
Representatives of the receipt by the Company of any notification with
respect to the suspension of qualification of the Securities or the
Guarantees for sale in any state or jurisdiction or the initiating or
threatening of any proceeding for such purpose.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the
close of the period covered thereby (or 120 days in the case of the
close of the Company's fiscal year), an earnings statement (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations)
covering a
14
twelve-month period beginning not later than the first day of the
Company's fiscal quarter next following the date of this Agreement.
(h) The Company will use the net proceeds received by it from the
sale of the Securities in the manner to be specified in the Prospectus
Supplement under "Use of Proceeds."
(i) Immediately following the execution of this Agreement, the
Company will prepare a prospectus supplement, dated the date hereof (the
"Prospectus Supplement"), containing the terms of the Securities and the
Guarantees, the plan of distribution thereof and such other information
as may be required by the 1933 Act or the 1933 Act Regulations or as the
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
Citigroup, 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.
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 the Registration Statement as originally filed
and of each amendment thereto, (ii) the printing or reproduction of this
Agreement and the other Operative Documents, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, (iv) the
fees and disbursements of counsel and accountants to the Company and the
Guarantors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey, (vi) the printing and delivery to the Underwriter of copies of the
Registration Statement as originally filed and of each amendment thereto, of any
Preliminary Prospectuses and of the Prospectus and any amendments or supplements
thereto, (vii) the printing and delivery to the 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.
15
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 their 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 and the Guarantors herein contained, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to the following further conditions:
(a) At Closing Time no stop order suspending the effectiveness of
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
Munger, Tolles & Olson LLP, counsel for the Company and the
Guarantors, 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 has been duly authorized,
executed and delivered by the Company and each of the
California Guarantors (as defined below); assuming, solely
insofar as the opinion set forth below in this clause (ii)
relates to the Non-California Guarantors, that the
Indenture has been duly authorized, executed and delivered
by each of the Non-California Guarantors (as defined
below) under the laws of its state of organization, and
further assuming that the Indenture has been duly
authorized, executed and delivered by the Trustee, the
Indenture constitutes a valid and binding agreement of the
Company and each of the Guarantors, enforceable against
the Company and each of the Guarantors in accordance with
its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, fraudulent transfer or
other similar laws relating to or affecting enforcement of
creditors' rights generally or by general equitable
principles. As used herein, the term "California
Guarantors" means all of the Guarantors organized under
the laws of the State of California, and the term
"Non-California Guarantors" means all of the Guarantors
other than the California Guarantors.
16
(iii) The Securities are in the form established
pursuant to the Indenture, have been duly authorized and
executed by the Company and, when duly authenticated by
the Trustee in the manner provided for in the Indenture
and delivered pursuant to the provisions of the Indenture
and this Agreement against payment of the purchase price
therefor by the Underwriters as specified in this
Agreement, will have been duly delivered by the Company
and will constitute valid and binding obligations of the
Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, fraudulent transfer or other
similar laws relating to or affecting enforcement of
creditors' rights generally or by general equitable
principles.
(iv) The issuance and delivery of the Securities
and the Guarantees, the execution and delivery of this
Agreement and the Indenture, and the consummation of the
transactions contemplated herein and therein, will not
conflict with or constitute a breach of, or default under,
or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company or any of its Significant Subsidiaries pursuant
to, the Senior Subordinated Notes, the Senior Subordinated
Indenture, the Senior Subordinated Guarantees, the Senior
Notes, the Indenture or the Senior Guarantees.
(v) The Indenture has been qualified under the 1939
Act.
(vi) This Agreement has been duly authorized,
executed and delivered by the Company and each of the
California Guarantors.
(vii) 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.
(viii) The Registration Statement (other than the
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
no opinion need be rendered), at the time the Registration
Statement became effective, and the Prospectus (other than
the financial statements and schedules and other financial
and statistical data included or incorporated by reference
therein or omitted therefrom, as to which no opinion need
be rendered), on the date of the Prospectus Supplement,
each appeared on its face to be appropriately responsive
in all material respects to the applicable requirements of
the 1933 Act and the 1933 Act Regulations.
17
(ix) Neither the Company nor any of the Guarantors
is, and upon issuance and sale of the Securities and the
Guarantees as contemplated by this Agreement and
application of the net proceeds therefrom as described in
the Prospectus, neither the Company nor any of the
Guarantors will be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are
defined in the 1940 Act.
(x) The information in the Prospectus under the
captions "Risk Factors -- Risk Factors Relating to the
Notes Offered by this Prospectus Supplement -- Federal and
state laws allow courts, under specific circumstances, to
void guarantees and to require you to return payments
received from guarantors," "Description of the Notes,"
"Material United States Federal Income Tax Considerations"
and "Description of Debt Securities," to the extent that
such information constitutes matters of law, summaries of
legal matters, summaries of the Securities, the
Guarantees, the Indenture (as amended and supplemented by
any Officers' Certificate (as such term is defined in the
Indenture)) or other instruments, agreements or documents,
or legal conclusions, has been reviewed by such counsel
and is correct in all material respects.
In rendering such opinion, such counsel shall state that
such opinion covers matters governed by and arising under the
laws of the State of California, the General Corporation Law of
the State of Delaware and the federal laws of the United States
of America. In rendering such opinion, such counsel shall further
state that, for purposes of such opinion, such counsel has
assumed with the permission of the Underwriters that the laws of
the State of California govern the Operative Documents, the
Guarantees, the Senior Subordinated Notes, the Senior
Subordinated Indenture, the Senior Subordinated Guarantees, the
Senior Notes and the Senior Guarantees (all of which are by their
terms to be governed by the laws of the State of New York) and
such counsel expresses no opinion as to whether a court applying
California choice-of-law rules would apply the law of the State
of New York to such instruments.
(2) The favorable opinion, dated as of Closing Time, of
Kimberly N. King, Esq., Vice President and Corporate Secretary 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 and
to enter into and perform its obligations under the
Operative Documents to which it is a party.
(ii) To the best of such counsel's knowledge and
information, the Company is duly qualified as a foreign
corporation to transact business and is in good standing
in each jurisdiction in which such qualification is
18
required, except where the failure to so qualify would not
have a material adverse effect on the condition, financial
or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries (as
such term is defined in this Agreement) considered as one
enterprise.
(iii) Each of the Company's Significant Domestic
Subsidiaries (as defined below) has been duly organized
and is validly existing as a corporation or Partnership,
as the case may be, in good standing under the laws of the
jurisdiction of its incorporation or formation, as the
case may be, has power and authority as a corporation or
Partnership, as the case may be to own, lease and operate
its properties and to conduct its business as described in
the Prospectus and, in the case of each Significant
Domestic Subsidiary that is a Guarantor, to enter into and
perform its obligations under the Operative Documents to
which it is a party and, to the best of such counsel's
knowledge and information, is duly qualified to transact
business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not
have a material adverse effect on the Company and its
subsidiaries considered as one enterprise or on their
consolidated financial condition or earnings; to the best
of such counsel's knowledge and information, all of the
issued and outstanding capital stock of each such
Significant Domestic Subsidiary which is a corporation has
been duly authorized and validly issued, is fully paid and
non-assessable and is owned (except for directors'
qualifying shares and a nominal number of shares held by
affiliated parties) by the Company, directly or through
subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; and
to the best of such counsel's knowledge and information,
all of the issued and outstanding equity interests in each
such Significant Domestic Subsidiary which is a
Partnership have been duly authorized (if applicable) and
validly issued, are fully paid and (except for general
partnership interests) non-assessable and are owned by the
Company (except, if applicable, to the extent that a
minority interest in such Partnership is reflected in the
Company's consolidated financial statements included or
incorporated or deemed to be incorporated by reference in
the Prospectus), directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. As used in this
Agreement, the term "Significant Domestic Subsidiaries"
means (i) all of the Guarantors and (ii) all other
Significant Subsidiaries other than, solely in the case of
this clause (ii), any Significant Subsidiaries organized
and existing under the laws of any jurisdiction other than
the United States of America, any State thereof or the
District of Columbia.
(iv) The shares of issued and outstanding Common
Stock have been duly authorized and validly issued and are
fully paid and non-assessable.
19
(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 or deemed to
be incorporated by reference therein which are not
described as required, and there are no legal or
governmental proceedings pending or threatened which are
required to be disclosed in the Registration Statement or
in the documents incorporated or deemed to be incorporated
by reference therein, other than those disclosed therein,
and all pending legal or governmental proceedings to which
the Company or any subsidiary is a party or to which any
of their property is subject which are not described in
the Registration Statement or in the documents
incorporated or deemed to be incorporated by reference
therein, 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," "Item 1.
Business -- Risk Factors -- We are subject to substantial
legal and regulatory requirements regarding the
development of land, the homebuilding process and
protection of the environment, which can cause us to
suffer delays and incur costs associated with compliance
and which can prohibit or restrict homebuilding activity
in some regions or areas," and "Item 3. Legal Proceedings"
in the Company's Annual Report on Form 10-K for the fiscal
year ended November 30, 2004 and under "Risk Factors --
Risk Factors Relating to KB Home -- We are subject to
substantial legal and regulatory requirements regarding
the development of land, the homebuilding process and
protection of the environment, which can cause us to
suffer delays and incur costs associated with compliance
and which can prohibit or restrict homebuilding activity
in some regions or areas" in the Prospectus Supplement and
in Item 15 in Part II of the Registration 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) There are no contracts, indentures,
mortgages, loan agreements, notes, leases or other
instruments of which such counsel has knowledge that are
required to be described or referred to in the
Registration Statement or in the documents incorporated or
deemed to be incorporated by reference therein or to be
filed or incorporated by reference as exhibits thereto
other than those described or referred to therein or filed
or incorporated by reference as exhibits thereto, the
descriptions thereof and references thereto are correct,
to the best of such counsel's knowledge after due inquiry,
no default exists in the due performance or observance of
any obligation, agreement, covenant or condition contained
in any Subject Instrument, and, to the best of such
20
counsel's knowledge, no default exists in the due
performance or observance of any obligation, agreement,
covenant or condition contained in any other contract,
indenture, mortgage, loan agreement, note, lease or other
instrument so described, referred to or filed or
incorporated by reference, which default (other than in
the case of the Subject Instruments) could have a material
adverse effect on the Company and its subsidiaries
considered as one enterprise or on their consolidated
financial condition or earnings.
(viii) No authorization, approval, consent or order
of any court or governmental authority or agency is
required in connection with the issuance or sale of the
Securities or the Guarantees to the Underwriters or for
the performance by the Company or any of the Guarantors of
its obligations under the Operative Documents to which it
is a party, except such as may be required under the 1933
Act, the 1933 Act Regulations, the 1939 Act and the 1939
Act Regulations and such as may be required under state
securities laws.
(ix) The issuance and delivery of the Securities
and the Guarantees, the execution and delivery of this
Agreement and the Indenture, the consummation of the
transactions contemplated herein and therein, and the
performance by the Company and each of the Guarantors of
their respective obligations under the Operative Documents
to which they are parties, will not conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its
Significant Subsidiaries pursuant to, (A) any Subject
Instrument or (B) to the best of such counsel's knowledge
and information, any other contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which
the Company or any of its Significant Subsidiaries is a
party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any
of its Significant Subsidiaries is subject, nor will such
action result in any violation of the provisions of the
charter or by-laws or other organizational documents of
the Company or any of the Guarantors or any applicable
law, administrative regulation or administrative or court
decree.
(x) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than
the financial statements and supporting schedules included
or incorporated by reference therein, as to which no
opinion need be rendered), at the time they were filed
with the Commission, complied as to form in all material
respects with the requirements of the 1934 Act and the
1934 Act Regulations.
(xi) To the best of such counsel's knowledge and
information, no default with respect to any Indebtedness
(as such term is defined in the Base Prospectus under the
caption "Description of Debt Securities --
21
Certain Definitions") of the Company or any of its
subsidiaries entitling, or which, with notice or lapse of
time or both, would entitle, the holders thereof to
accelerate the maturity thereof exists or will exist as a
result of the execution and delivery of this Agreement or
any of the other Operative Documents, the issuance and
sale of the Securities or the Guarantees or the
consummation of the transactions contemplated hereby or
thereby.
(xii) The Indenture and this Agreement has been
duly authorized, executed and delivered by each of the
Non-California Guarantors under the laws of the state of
its organization and have been duly authorized by KBSA,
Inc. (the "Texas GP"), a Texas corporation and sole
general partner of KB Home Lone Star LP (the "Texas
Partnership"), under the laws of the State of Texas.
In rendering such opinion, such counsel shall state that
such opinion covers matters governed by and arising under the
laws of the State of California, the federal laws of the United
States of America, the General Corporation Law of the State of
Delaware, the corporate laws of the States of Arizona, Colorado
and Nevada and the corporate and limited partnership laws of the
State of Texas. Such counsel shall further state that, insofar as
such opinion concerns the Operative Documents (all of which are
by their terms governed by the laws of the State of New York) or
any other instrument or agreement that is not governed by the
laws of the State of California, such counsel has assumed without
investigation that the laws of the applicable jurisdiction
governing the Operative Documents or such other instruments or
agreements, as the case may be, are the same as the law of the
State of California. In addition, in rendering such opinion, such
counsel may, as to other matters governed by the law of any
jurisdiction other than the law of the State of California, the
federal laws of the United States of America, the General
Corporation Law of the State of Delaware, the corporate laws of
the States of Arizona, Colorado and Nevada and the corporate and
limited partnership laws of the State of Texas, either (a) assume
without any investigation that the law of the State of California
is the same as the law governing such other matters for all
purposes relevant to such opinion or (b) rely on an opinion or
opinions of local counsel satisfactory to the 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 Underwriters.
(3) The favorable opinion, dated as of Closing Time, of
Sidley Austin Brown & Wood LLP counsel for the Underwriters, with
respect to this Agreement, the Indenture, the Securities, the
Registration Statement, the Prospectus and such other matters as
the Underwriters may request.
(4) In giving their opinions required by subsections
(b)(1), (b)(2) and (b)(3), respectively, of this Section, Munger,
Tolles & Olson LLP, Kimberly N. King and Sidley Austin Brown &
Wood LLP shall each additionally state that no facts have come to
their attention that have caused them to believe that the
22
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 or as of any subsequent date on which
the Company filed an Annual Report on Form 10-K with the
Commission, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that
the Prospectus (except for financial statements and schedules and
other financial and statistical data included or incorporated by
reference therein or omitted therefrom, as to which counsel need
make no statement), at the Representation Date (unless the term
"Prospectus" refers to a prospectus which has been provided to
the Underwriter by the Company for use in connection with the
offering of the Securities which differs from the Prospectus
filed with at the Commission pursuant to Rule 424(b) of the 1933
Act Regulations, in which case at the time it is first provided
to the 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 or Prospectus, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the 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 of the Company
and the Guarantors in Section 1 are true and correct with the same force
and effect as though expressly made at and as of Closing Time, (iii) the
Company and each of the Guarantors has complied with all agreements and
satisfied all conditions set forth in this Agreement on its part to be
performed or satisfied at or prior to Closing Time, (iv) no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to the best of such officers' knowledge and information, no
proceedings for that purpose have been initiated or threatened by the
Commission, and (v) since the date of this Agreement, none of the
ratings assigned by any nationally recognized statistical rating
organization to any debt securities of the Company or any subsidiary of
the Company has been lowered and no such rating agency has publicly
announced that it has placed any debt securities of the Company or of
any subsidiary of the Company on what is commonly termed a "watch list"
for a possible downgrading. As used in this Section 5(c), the term
"Registration Statement" means the Registration Statement as in effect
on the date of this Agreement and "Prospectus" means the Prospectus in
the form first used to confirm sales of the Securities.
(d) At the Closing Time, the Representatives shall have received
from Ernst & Young LLP a letter dated such date, in form and substance
satisfactory to the Representatives, containing statements and
information of the type ordinarily included in
23
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 Ba1 from Moody's 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 Representatives, confirming that the Securities have such ratings.
(f) Prior to the Closing Time, if required by the 1933 Act, the
1933 Act Regulations, the 1939 Act or the 1939 Act Regulations, the
Trustee shall have filed with the Commission an application for the
purpose for determining the eligibility of the Trustee under the 1939
Act in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the 1939 Act and the Commission
shall not have 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 and Guarantees as herein contemplated and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Guarantors in connection with the issuance and sale of the
Securities and Guarantees as herein contemplated and in connection with
the other transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Representatives and counsel
for the Underwriters.
(h) Prior to the Closing Time, the Underwriters shall have been
furnished with a signed copy of the Waiver Letter and the Waiver Letter
shall be in full force and effect at the Closing Time.
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 liability of any party to any other
party except as provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 4, 6, 7 and 8 shall remain in effect.
SECTION 6. Indemnification.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless each Underwriter, its directors and officers 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
24
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 or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements
of counsel chosen by Citigroup), 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 the
Registration Statement (or any amendment thereto) or any Preliminary Prospectus
or the Prospectus (or any amendment or supplement thereto) or (2) in the Form
T-1; and (B) the foregoing indemnity agreement with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Securities, any officers or directors of such Underwriter 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 or deemed to be
incorporated by reference therein) was not sent or given by or on behalf of such
Underwriter to such person at or prior to the written confirmation of the sale
of such Securities to such person, if such Underwriter was required by law to
send or deliver the Prospectus (as so amended or supplemented, if applicable) to
such person at or prior to such written confirmation, 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 and its directors and each of its officers who signed the Registration
Statement, each Guarantor
25
and its directors and each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company or any Guarantor
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Preliminary Prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
Underwriter through the Representatives expressly for use in the Registration
Statement (or any amendment thereto) or such Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give written notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of any such action. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to any local
counsel), separate from their own counsel (i) in the case of indemnity pursuant
to Section 6(a), for the Underwriters, the directors and officers of any
Underwriter, and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act and (ii) in the case of indemnity pursuant
to Section 6(b), for the Company and its directors and each of its officers who
signed the Registration Statement, each Guarantor and its directors and each of
its officers who signed the Registration Statement and each person, if any, who
controls the Company or any Guarantor within the meaning of Section 15 of the
1933 Act, in each case 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. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is a party
and indemnity is provided hereunder, unless such settlement (x) includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (y) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
SECTION 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Sections 6(a) or (b) is for any reason held to be unenforceable by the
indemnified parties although applicable in accordance with its terms, the
Company and the Guarantors, on the one hand, and the Underwriters, on the other
hand, shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Guarantors and 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 Assumed Underwriting Discount (as defined
below) with respect to the Securities bears to the Assumed Public Offering Price
(as defined below) of the Securities and the Company and the Guarantors are
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For
26
purposes of the preceding sentence, the Assumed Public Offering Price of the
Securities shall be deemed to be equal to 100.661% of the principal amount
thereof and the Assumed Underwriting Discount shall be deemed to be equal to
0.047% of the principal amount thereof. For purposes of this Section, each
director and officer of any Underwriter and each person, if any, who controls
any 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 or any Guarantor, each officer of the Company or any Guarantor who
signed the Registration Statement, and each person, if any, who controls the
Company or any Guarantor within the meaning of Section 15 of the 1933 Act shall
have the same rights to contribution as the Company or such Guarantor, as the
case may be. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to aggregate principal amount of
Securities set forth opposite their respective names in Schedule B hereto and
not joint. The obligations of the Company and the Guarantors to contribute
pursuant to this Section 7 are joint and several.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company or any of the
Guarantors or any of the Company's other subsidiaries submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or any controlling person,
or by or on behalf of the Company or any of the Guarantors, and shall survive
delivery of the Securities to the 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 or the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development involving a prospective
change in national or international political, financial or economic conditions,
in each case the effect of which is such as to make it, in the judgment of the
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 or materially limited by the Commission or a national
securities exchange, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange or the Nasdaq National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices for securities have been required, by
either of said Exchanges or by the Nasdaq National Market or by order of the
Commission or any other governmental authority, or if a banking moratorium has
been declared by either federal, New York or California authorities, or (iv) if
the rating assigned by any nationally recognized statistical rating organization
to any debt securities of the Company or of any subsidiary of the Company shall
have been lowered or if any such rating agency shall have publicly announced
that it has placed any debt securities of the Company or any trust preferred
securities, capital securities or similar securities of any subsidiary of the
Company on what is commonly termed a
27
"watch list" for a possible downgrading. As used in this Section 9(a), the term
"Registration Statement" means the Registration Statement as in effect on the
date of this Agreement and "Prospectus" means the Prospectus in the form first
used to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof. Notwithstanding any such termination, the
provisions of Sections 4, 6, 7 and 8 shall remain in effect.
SECTION 10. 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 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 the Closing Time for a period not exceeding seven days in
order to effect any required changes in the 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 c/o Citigroup Global Markets Inc., 388
Greenwich Street, New York, New York 10013 (fax number: 212-816-7912),
Attention: General Counsel; and notices to the Company and the Guarantors shall
be directed to them at 10990 Wilshire Boulevard, Los Angeles, California 90024,
(fax number: 310-421-4280) Attention: Kimberly N. King, Esq., Vice President and
Corporate Secretary.
28
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Guarantors and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Guarantors and the Company and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and the Guarantors and their respective successors and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 13. Submission to Jurisdiction; Waiver of Jury Trial. No
proceeding related to this Agreement or the transactions contemplated hereby may
be commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company and the
Guarantors hereby consent to the jurisdiction of such courts and personal
service with respect thereto. The Company and the Guarantors hereby waive all
right to trial by jury in any proceeding (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company
and the Guarantors agree that a final judgment in any such proceeding brought in
any such court shall be conclusive and binding upon the Company and the
Guarantors and may be enforced in any other courts to whose jurisdiction the
Company or any of the Guarantors is or may be subject, by suit upon such
judgment.
SECTION 14. 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]
29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Guarantors a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Underwriters, the Company and the
Guarantors in accordance with its terms.
Very truly yours,
KB HOME
By: /s/ KELLY MASUDA
-------------------------------------
Name: Kelly Masuda
Title: Senior Vice President, Capital
Markets and Treasurer
KB HOME PHOENIX INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME COASTAL INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME NORTH BAY INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME SOUTH BAY INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME GREATER LOS ANGELES INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME COLORADO INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME NEVADA INC.
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
KB HOME LONE STAR LP
By: KBSA, Inc., its General Partner
By: /s/ KELLY M. ALLRED
------------------------------------
Name: Kelly M. Allred
Title: Vice President and Treasurer
CONFIRMED AND ACCEPTED
as of the date first above written:
CITIGROUP GLOBAL MARKETS INC.
By: /s/ MICHAEL S. WEISS
---------------------------------
Name: Michael Weiss
Title: Vice President
On behalf of each the Underwriters
SCHEDULE A
List of Guarantors
1. KB Home Phoenix Inc., an Arizona corporation
2. KB Home Coastal Inc., a California corporation
3. KB Home North Bay Inc., a California corporation
4. KB Home South Bay Inc., a California corporation
5. KB Home Greater Los Angeles Inc., a California corporation
6. KB Home Colorado Inc., a Colorado corporation
7. KB Home Nevada Inc., a Nevada corporation
8. KB Home Lone Star LP, a Texas limited partnership whose sole general
partner is KBSA, Inc., a Texas corporation
Schedule A
SCHEDULE B
Aggregate
Principal
Amount
Names of Underwriters of Securities
--------------------- -------------
CITIGROUP GLOBAL MARKETS INC................................. $150,000,000
Total................................................ $150,000,000
Schedule B