EXHIBIT 4.25
OFFICERS' CERTIFICATE AND GUARANTORS' OFFICERS' CERTIFICATE
PURSUANT TO SECTIONS 201 AND 301 OF THE INDENTURE
Dated: June 27, 2005
Kimberly N. King, Vice President and Corporate Secretary, and Kelly
Masuda, the Senior Vice President, Capital Markets and Treasurer, of KB Home, a
Delaware corporation (the "Company"), and Kimberly N. King, the Secretary, and
Kelly M. Allred, the Vice President and Treasurer, of KB Home Phoenix Inc., an
Arizona corporation, KB Home Coastal Inc., a California corporation, KB Home
North Bay Inc., a California corporation, KB Home South Bay Inc., a California
corporation, KB Home Greater Los Angeles Inc., a California corporation, KB Home
Colorado Inc., a Colorado corporation, KB Home Nevada Inc., a Nevada
corporation, and KBSA, Inc., a Texas corporation (the "General Partner") and
general partner of KB Home Lone Star LP, a Texas limited partnership (the
"Partnership") (collectively and including, without limitation, the Partnership
but excluding the General Partner, the "Guarantors"), hereby certify as follows:
The undersigned, having read the appropriate provisions of the
Indenture dated as of January 28, 2004 (the "Original Indenture"), as amended
and supplemented by the First Supplemental Indenture dated as of January 28,
2004 (the "First Supplemental Indenture") and the Second Supplemental Indenture
dated as of June 30, 2004 (the "Second Supplemental Indenture"; the Original
Indenture, as amended and supplemented by the First Supplemental Indenture and
the Second Supplemental Indenture, is hereinafter called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (the "Trustee"),
including Sections 103, 201, 301 and 303 thereof and the definitions in such
Indenture relating thereto, and certain other corporate and partnership
documents and records, and having made such examination and investigation as, in
the opinion of the undersigned, each considers necessary to enable the
undersigned to express an informed opinion as to whether or not the conditions
set forth in the Indenture relating to the establishment of the terms of an
additional $150,000,000 aggregate principal amount of the Company's 6 1/4%
Senior Notes due 2015 (the "Additional Notes") and the form of certificate
evidencing the Additional Notes have been complied with, and whether the
conditions in the Indenture relating to the authentication and delivery by the
Trustee of the Additional Notes have been complied with, certify that (1) the
terms of the Additional Notes were established by resolutions duly adopted by
unanimous written consent of the Executive Committee of the Board of Directors
of the Company (the "Executive Committee") on June 21, 2005 and by the
undersigned officers of the Company pursuant to authority delegated to them by
resolutions duly adopted by unanimous written consent of the Board of Directors
of the Company on November 8, 2004 and by unanimous written consent of the
members of the Executive Committee on June 21, 2005 (collectively, the "Company
Resolutions") and such terms are as set forth in the Annex A hereto, and the
issuance, form and terms of the Additional Notes were approved and the
guarantees of the Notes and all related Guaranteed Obligations (as defined in
the Indenture) by the Guarantors were approved and confirmed by resolutions duly
adopted by each Guarantor's Board of Directors (other than the Partnership) and
the General Partner on June 21, 2005 (collectively, the "Guarantors'
Resolutions") and by the undersigned officers of each Guarantor (other than the
Partnership) and of the General Partner, on behalf of themselves and the
Guarantors, pursuant to authority delegated to them by resolutions duly adopted
by unanimous written consent of the Board of Directors of each Guarantor (other
than the Partnership) and the General Partner on June 21, 2005, (2) the form of
certificate evidencing the Additional Notes was established and approved by the
undersigned pursuant to authority delegated to them by the Company Resolutions
and the Guarantors' Resolutions and shall be in substantially the form attached
as Annex C hereto, (3) a true, complete and correct copy of the Company
Resolutions and the Guarantors' Resolutions, which were duly adopted by the
Board of Directors of the Company and the Executive Committee or by each
Guarantor's Board of Directors (other than the Partnership) and the Board of
Directors of the General Partner, as the case may be, and are in full force and
effect on the date hereof, are attached as exhibits to the Certificate of the
Secretary of the
Company of even date herewith, and (4) the form and terms of the Additional
Notes have been established pursuant to Sections 201 and 301 of the Indenture
and comply with the Indenture and, in the opinion of the undersigned, all
conditions provided for in the Indenture (including, without limitation, those
set forth in Sections 103, 201, 301 and 303 of the Indenture) relating to the
establishment of the terms of the Additional Notes and the form of certificate
evidencing the Additional Notes, and relating to the authentication and delivery
of the Additional Notes, have been complied with.
This certificate may be executed by the parties hereto in counterparts,
each of which when so executed shall be deemed to be an original, with the same
effect as if the signatures thereto and hereto were on the same instrument, but
all such counterparts shall together constitute but one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
2
IN WITNESS WHEREOF, we have hereunto set our hands as of the date first
written above.
By: /s/ KIMBERLY N. KING
------------------------------------
Kimberly N. King
Vice President and Corporate
Secretary of KB Home
By: /s/ KELLY MASUDA
------------------------------------------
Kelly Masuda
Senior Vice President, Capital Markets and
Treasurer of KB Home
3
By: /s/ KIMBERLY N. KING
-----------------------------------
Kimberly N. King
Secretary of each of the Guarantors
(other than the Partnership) and of
the General Partner (as such terms
are defined in the foregoing
Officers' Certificate)
By: /s/ KELLY M. ALLRED
---------------------------------------
Kelly M. Allred
Vice President and Treasurer of each of
the Guarantors (other than the
Partnership) and of the General Partner
(as such terms are defined in the
foregoing Officers' Certificate)
4
ANNEX A
Capitalized terms used in this Annex A and not otherwise defined herein
have the same definitions as in the Indenture referred to in the Officers'
Certificate and Guarantors' Officers' Certificate of which this Annex A
constitutes a part.
(1) The Company has heretofore established a series of Securities known
and designated as the "6 1/4% Senior Notes due 2015", has heretofore issued
$300,000,000 aggregate principal amount of Securities of such series and hereby
"re-opens" such series for the issuance of $150,000,000 aggregate principal
amount of additional Securities of such series. The $300,000,000 aggregate
principal amount of Securities of such series that have been heretofore issued
are hereinafter sometimes called the "Prior Notes," the additional Securities of
such series to be issued hereby are sometimes hereinafter called the "Additional
Notes" and all of the Securities of such series are hereinafter sometimes called
the "Notes."
(2) The aggregate principal amount of the Additional Notes which may be
authenticated and delivered under the Indenture shall be $150,000,000 and the
aggregate principal amount of the Notes which may be authenticated and delivered
under the Indenture is limited to $450,000,000 (of which $300,000,000 aggregate
principal amount of Notes have been previously issued and are outstanding),
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305,
306, 905 or 1107 of the Indenture; provided, however, such series may be
re-opened by the Company for the issuance of additional Notes of such series, so
long as any such additional Notes have the same form and terms (other than date
of issuance and the date from which interest thereon shall begin to accrue), and
carry the same right to receive accrued and unpaid interest, as the Notes
theretofore issued; provided, however, that, notwithstanding the foregoing, such
series may not be reopened if the Company has effected defeasance or covenant
defeasance with respect to the Notes pursuant to Section 402(2) or 402(3),
respectively, of the Indenture or has effected satisfaction and discharge with
respect to the Notes pursuant to Section 401 of the Indenture; and provided,
further, that no additional Notes may be issued at a price that would cause such
additional Notes to have "original issue discount" within the meaning of Section
1273 of the Internal Revenue Code of 1986, as amended.
(3) The Additional Notes are to be issuable only as Registered
Securities without Coupons. The Additional Notes shall be initially issued in
book-entry form and represented by one or more permanent global Notes deposited
with or on behalf of and registered in the name of the Depositary or its nominee
(the "Global Notes"). The initial depositary (the "Depositary") for the Global
Notes shall be The Depository Trust Company, the depositary arrangements shall
be those employed by whoever shall be the Depositary with respect to the Global
Notes from time to time, and the Trustee shall be entitled to make endorsements
on any Global Notes to reflect any increases or decreases in the principal
amount thereof. Notwithstanding the foregoing, certificated Additional Notes in
definitive form ("Certificated Notes") may be issued in exchange for Global
Notes under the circumstances contemplated by the seventh paragraph of Section
305 of the Original Indenture.
(4) The Additional Notes shall be sold to the Underwriter at a price of
100.614% of the principal amount thereof plus accrued interest thereon in the
amount of $651,041.67 (representing accrued interest from June 2, 2005).
(5) Except for the aggregate principal amount of the Additional Notes,
the price at which the Additional Notes shall be sold to the Underwriter and the
date on which the Additional Notes shall be originally issued (all of which are
as set forth in this Annex A), the Additional Notes shall have the same terms
and provisions as the Prior Notes, which terms and provisions are as set forth
in Annex I to the Officers' Certificate and Guarantors' Officers' Certificate
dated June 2, 2005 establishing the form and
terms of the Prior Notes (the "Prior Certificate") (a copy of the Prior
Certificate being attached as Annex B to the Officers' Certificate and
Guarantors' Officers' Certificate of which this Annex A constitutes a part) and
in the form of Additional Note attached as Annex C to the Officers' Certificate
and Guarantors' Officers' Certificate of which this Annex A constitutes a part,
all of which terms and provisions are incorporated by reference in and made a
part of this Annex A as if set forth in full herein; provided, however, that,
anything in the Prior Certificate to the contrary notwithstanding, the aggregate
principal amount of Additional Notes, the price at which the Additional Notes
shall be sold to the Underwriter and the date on which the Additional Notes
shall be originally issued shall be as set forth in this Annex A and not as set
forth in the Prior Certificate. For the avoidance of doubt, it is hereby
confirmed that, except as provided in the immediately preceding sentence, all of
the terms and provisions set forth in the Prior Certificate shall apply, mutatis
mutandis, to the Additional Notes, including, without limitation, the provisions
set forth in Sections (10), (15), (16), (18) and (21) of the Prior Certificate.
(6) The Notes shall have the benefit of the Guarantees and the
Guarantors hereby confirm that the principal of and premium, if any, and
interest on the Notes and all related Guaranteed Obligations shall be guaranteed
pursuant to the Guarantees and otherwise in accordance with and subject to the
limitations set forth in Article Sixteen of the Indenture.
(7) The Notes shall rank senior in right of payment to the Company's
8-5/8% Senior Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due
2010 and 9-1/2% Senior Subordinated Notes due 2011 (the "Senior Subordinated
Notes") and shall constitute "Senior Indebtedness" as defined in the Indenture
dated as of November 19, 1996, as amended and supplemented by the First
Supplemental Indenture thereto dated as of December 18, 2003 (as so amended and
supplemented, the "Senior Subordinated Indenture"), by and between the Company,
the guarantors party thereto and the Trustee, as successor trustee. Each
Guarantor's Guarantee of the Notes shall rank senior in right of payment to its
guarantee of the Senior Subordinated Notes and shall constitute "Guarantor
Senior Indebtedness" as defined in the Senior Subordinated Indenture.
(8) The Additional Notes shall be issued on June 27, 2005.
ANNEX B
Prior Certificate
[Certificate follows.]
OFFICERS' CERTIFICATE AND GUARANTORS' OFFICERS' CERTIFICATES
PURSUANT TO SECTIONS 201 AND 301 OF THE INDENTURE
Dated: June 2, 2005
Kimberly N. King, Vice President and Corporate Secretary, and Kelly
Masuda, the Senior Vice President, Capital Markets and Treasurer, of KB Home, a
Delaware corporation (the "Company"), and Kimberly N. King, the Secretary, and
Kelly M. Allred, the Vice President and Treasurer, of KB Home Phoenix Inc., an
Arizona corporation, KB Home Coastal Inc., a California corporation, KB Home
North Bay Inc., a California corporation, KB Home South Bay Inc., a California
corporation, KB Home Greater Los Angeles Inc., a California corporation, KB Home
Colorado Inc., a Colorado corporation, KB Home Nevada Inc., a Nevada
corporation, and KBSA, Inc., a Texas corporation (the "General Partner") and
general partner of KB Home Lone Star LP, a Texas limited partnership (the
"Partnership") (collectively and including, without limitation, the Partnership
but excluding the General Partner, the "Guarantors"), hereby certify as follows:
The undersigned, having read the appropriate provisions of the
Indenture dated as of January 28, 2004 (the "Original Indenture"), as amended
and supplemented by the First Supplemental Indenture dated as of January 28,
2004 (the "First Supplemental Indenture") and the Second Supplemental Indenture
dated as of June 30, 2004 (the "Second Supplemental Indenture"; the Original
Indenture, as amended and supplemented by the First Supplemental Indenture and
the Second Supplemental Indenture, is hereinafter called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (the "Trustee"),
including Sections 103, 201, 301 and 303 thereof and the definitions in such
Indenture relating thereto, and certain other corporate and partnership
documents and records, and having made such examination and investigation as, in
the opinion of the undersigned, each considers necessary to enable the
undersigned to express an informed opinion as to whether or not the conditions
set forth in the Indenture relating to the establishment of the terms of the
Company's 6 1/4% Senior Notes due 2015 (the "Notes") and the form of certificate
evidencing the Notes have been complied with, and whether the conditions in the
Indenture relating to the authentication and delivery by the Trustee of the
Notes have been complied with, certify that (1) the terms of the Notes were
established by resolutions duly adopted by unanimous written consent of the
Executive Committee of the Board of Directors of the Company (the "Executive
Committee") on May 25, 2005 and by the undersigned officers of the Company
pursuant to authority delegated to them by resolutions duly adopted by unanimous
written consent of the Board of Directors of the Company on November 8, 2004 and
by unanimous written consent of the members of the Executive Committee on May
25, 2005 (collectively, the "Company Resolutions") and such terms are as set
forth in the Annex I hereto, and the issuance, form and terms of the Notes were
approved and the guarantees of the Notes and all related Guaranteed Obligations
(as defined in the Indenture) by the Guarantors were approved and confirmed by
resolutions duly adopted by each Guarantor's Board of Directors (other than the
Partnership) and the General Partner on May 25, 2005 (collectively, the
"Guarantors' Resolutions") and by the undersigned officers of each Guarantor
(other than the Partnership) and of the General Partner, on behalf of themselves
and the Guarantors, pursuant to authority delegated to them by resolutions duly
adopted by unanimous written consent of the Board of Directors of each Guarantor
(other than the Partnership) and the General Partner on May 25, 2005, (2) the
form of certificate evidencing the Notes was established and approved by the
undersigned pursuant to authority delegated to them by the Company Resolutions
and the Guarantors' Resolutions and shall be in substantially the form attached
as Annex II hereto, (3) a true, complete and correct copy of the Company
Resolutions and the Guarantors' Resolutions, which were duly adopted by the
Board of Directors of the Company and the Executive Committee or by each
Guarantor's Board of Directors (other than the Partnership) and the Board of
Directors of the General Partner, as the case may be, and are in full force and
effect on the date hereof, are attached as exhibits to the Certificate of the
Secretary of the Company of
even date herewith, and (4) the form and terms of the Notes have been
established pursuant to Sections 201 and 301 of the Indenture and comply with
the Indenture and, in the opinion of the undersigned, all conditions provided
for in the Indenture (including, without limitation, those set forth in Sections
103, 201, 301 and 303 of the Indenture) relating to the establishment of the
terms of the Notes and the form of certificate evidencing the Notes, and
relating to the authentication and delivery of the Notes, have been complied
with.
This certificate may be executed by the parties hereto in counterparts,
each of which when so executed shall be deemed to be an original, with the same
effect as if the signatures thereto and hereto were on the same instrument, but
all such counterparts shall together constitute but one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, we have hereunto set our hands as of the date first
written above.
By: /s/ KIMBERLY N. KING
-------------------------------------
Kimberly N. King
Vice President and Corporate
Secretary of KB Home
By: /s/ KELLY MASUDA
------------------------------------------
Kelly Masuda
Senior Vice President, Capital Markets and
Treasurer of KB Home
By: /s/ KIMBERLY N. KING
------------------------------------
Kimberly N. King Secretary of each
of the Guarantors (other than the
Partnership) and of the General
Partner (as such terms are defined
in the foregoing Officers'
Certificate)
By: /s/ KELLY M. ALLRED
----------------------------------------
Kelly M. Allred
Vice President and Treasurer of each of
the Guarantors (other than the
Partnership) and of the General Partner
(as such terms are defined in the
foregoing Officers' Certificate)
ANNEX I
Capitalized terms used in this Annex I and not otherwise defined herein
have the same definitions as in the Indenture referred to in the Officers'
Certificate and Guarantors' Officers' Certificate of which this Annex I
constitutes a part.
(1) The Securities of the series established hereby shall be known and
designated as the 6 1/4% Senior Notes due 2015 and are sometimes hereinafter
called the "Notes."
(2) The aggregate principal amount of the Notes which may be
authenticated and delivered under the Indenture is limited to $300,000,000,
except for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305,
306, 905 or 1107 of the Indenture; provided, however, such series may be
re-opened by the Company for the issuance of additional Notes of such series, so
long as any such additional Notes have the same form and terms (other than date
of issuance and the date from which interest thereon shall begin to accrue), and
carry the same right to receive accrued and unpaid interest, as the Notes
theretofore issued; provided, however, that, notwithstanding the foregoing, such
series may not be reopened if the Company has effected defeasance or covenant
defeasance with respect to the Notes pursuant to Section 402(2) or 402(3),
respectively, of the Indenture or has effected satisfaction and discharge with
respect to the Notes pursuant to Section 401 of the Indenture; and provided,
further, that no additional Notes may be issued at a price that would cause such
additional Notes to have "original issue discount" within the meaning of Section
1273 of the Internal Revenue Code of 1986, as amended.
(3) The Notes are to be issuable only as Registered Securities without
Coupons. The Notes shall be initially issued in book-entry form and represented
by one or more permanent global Notes deposited with or on behalf of and
registered in the name of the Depositary or its nominee (the "Global Notes").
The initial depositary (the "Depositary") for the Global Notes shall be The
Depository Trust Company, the depositary arrangements shall be those employed by
whoever shall be the Depositary with respect to the Global Notes from time to
time, and the Trustee shall be entitled to make endorsements on any Global Notes
to reflect any increases or decreases in the principal amount thereof.
Notwithstanding the foregoing, certificated Notes in definitive form
("Certificated Notes") may be issued in exchange for Global Notes under the
circumstances contemplated by the seventh paragraph of Section 305 of the
Original Indenture.
(4) The Notes shall be sold to the Underwriter at a price of 99.533% of
the principal amount thereof.
(5) The Stated Maturity of the Notes on which the principal thereof is
due and payable shall be June 15, 2015.
(6) The principal of the Notes shall bear interest at the rate of 6
1/4% per annum from June 2, 2005 or from the most recent date to which interest
has been paid or duly provided for, payable semiannually in arrears on June 15
and December 15 (each, an "Interest Payment Date") of each year, commencing
December 15, 2005, to the Persons in whose names such Notes (or one or more
Predecessor Securities) are registered at the close of business on the June 1 or
December 1, respectively, immediately prior to such Interest Payment Dates
(each, a "Regular Record Date") regardless of whether such Regular Record Date
is a Business Day. Interest on the Notes will be computed on the basis of a
360-day year consisting of twelve 30-day months. No Additional Amounts shall be
payable on the Notes.
(7) The Notes are redeemable, as a whole at any time or from time to
time in part, at the option of the Company on the terms and subject to the
conditions set forth in the Indenture and in the
form of Note which appears as Annex II to the Officers' Certificate and
Guarantors' Officers' Certificate of which this Annex I constitutes a part.
(8) The Notes shall not be repayable or redeemable at the option of the
Holders prior to the Stated Maturity of the principal thereof (except as
provided in Article Five of the Indenture) and shall not be subject to a sinking
fund or analogous provision.
(9) The Borough of Manhattan, The City of New York is hereby designated
as a Place of Payment for the Notes.
(10) The Company hereby appoints the Trustee, acting through the office
of the Trustee located at c/o SunTrust Robinson Humphrey Capital Markets, 125
Broad Street, 3rd Floor, New York, New York 10004, in the Borough of Manhattan,
The City of New York, as the Company's Office or Agency for the purposes
specified in Section 1002 of the Indenture; provided, however, subject to
Section 1002 of the Indenture, the Company may at any time remove the Trustee as
its Office or Agency in the Borough of Manhattan, The City of New York
designated for such purposes and may from time to time designate one or more
other Offices or Agencies for such purposes and may from time to time rescind
such designation, so long as the Company shall at all times maintain an Office
or Agency for such purposes in the Borough of Manhattan, The City of New York.
(11) The Notes shall be issued in denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
(12) The principal of, premium, if any, and interest on the Notes shall
be payable in Dollars.
(13) Sections 402(2) and 402(3) of the Indenture shall apply to the
Notes; provided that (i) the Company may effect defeasance and covenant
defeasance pursuant to Sections 402(2) and 402(3), respectively, only with
respect to all (and not less than all) of the Outstanding Notes, and (ii) the
only covenants that shall be subject to covenant defeasance shall be those
expressly referred to in Section 402(3) of the Indenture.
(14) The Notes shall not be convertible into or exchangeable for other
securities.
(15) Anything in the Indenture or the Notes to the contrary
notwithstanding, payments of the principal of and premium, if any, and interest
on the Global Notes shall be made by wire transfer.
(16) To the extent that any provision of the Indenture or the Notes
provides for the payment of interest on overdue principal of, or premium, if
any, or interest on, the Notes, then, to the extent permitted by law, interest
on such overdue principal, premium, if any, and interest shall accrue at the
rate of interest borne by the Notes.
(17) The Notes shall have such other terms and provisions as are set
forth in the form of Note attached as Annex II to the Officers' Certificate and
Guarantors' Officers' Certificate of which this Annex I constitutes a part, all
of which terms and provisions are incorporated by reference in and made a part
of this Annex I as if set forth in full herein.
(18) As used in the Indenture with respect to the Notes and in the
certificates evidencing the Notes, all references to "premium" on the Notes
shall mean any amounts (other than accrued interest) payable upon the redemption
of any Notes in excess of 100% of the principal amount of such Notes.
(19) The Notes shall have the benefit of the Guarantees and the
Guarantors hereby confirm that the principal of and premium, if any, and
interest on the Notes and all related Guaranteed Obligations shall be guaranteed
pursuant to the Guarantees and otherwise in accordance with and subject to the
limitations set forth in Article Sixteen of the Indenture.
(20) The Notes shall rank senior in right of payment to the Company's
8-5/8% Senior Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due
2010 and 9-1/2% Senior Subordinated Notes due 2011 (the "Senior Subordinated
Notes") and shall constitute "Senior Indebtedness" as defined in the Indenture
dated as of November 19, 1996, as amended and supplemented by the First
Supplemental Indenture thereto dated as of December 18, 2003 (as so amended and
supplemented, the "Senior Subordinated Indenture"), by and between the Company,
the guarantors party thereto and the Trustee, as successor trustee. Each
Guarantor's Guarantee of the Notes shall rank senior in right of payment to its
guarantee of the Senior Subordinated Notes and shall constitute "Guarantor
Senior Indebtedness" as defined in the Senior Subordinated Indenture.
(21) Section 101 of the Original Indenture is hereby amended, solely
insofar as relates to the Notes, by deleting the definition of "Subject Notes"
appearing in such Section 101 and replacing such definition with the following:
"'Subject Notes' means, with respect to any series of
Securities issued under this Indenture, (1) Securities of any other
series issued under this Indenture and (2) the Company's 8-5/8% Senior
Subordinated Notes due 2008, 7-3/4% Senior Subordinated Notes due 2010
and 9-1/2% Senior Subordinated Notes due 2011, or any of the
foregoing."
ANNEX II
Form of Certificate Evidencing the Notes
[Form of certificate evidencing the notes follows.]
THIS NOTE IS A GLOBAL SECURITY REFERRED TO IN THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE
IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. R-01 Principal Amount: $300,000,000
CUSIP No. 48666KAM1 (or such other principal amount
ISIN No. US48666KAM18 as is set forth on Schedule A hereto)
KB Home
6 1/4% Senior Notes due 2015
KB Home, a Delaware corporation (hereinafter called the "Company",
which term includes any successor corporation under the Indenture referred to
below), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000) or
such other principal amount as is set forth on Schedule A hereto on June 15,
2015, and to pay interest thereon from June 2, 2005, or from the most recent
date to which interest has been paid or duly provided for, semiannually in
arrears on June 15 and December 15 of each year (each, an "Interest Payment
Date"), commencing December 15, 2005, and at Maturity, at the rate of 6 1/4% per
annum, until the principal hereof is paid or duly made available for payment.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The interest so payable and punctually paid
or duly provided for on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 1 or December 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date shall forthwith cease to be payable
to the Person who was the Holder hereof on the relevant Regular Record Date by
virtue of having been such Holder, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in such
Indenture.
Payment of the principal of and premium, if any, and interest on this
Note will be made at the Office or Agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that, at the
option of the Company, interest may be paid by check mailed to the
2
address of the Person entitled thereto as such address shall appear in the
Security Register or by transfer to an account maintained by the payee with a
bank located in the United States; and provided, further, that if this Note is a
global Note registered in the name of a Depository or its nominee, then,
anything in the Indenture or the Notes to the contrary notwithstanding, payments
of the principal of and premium, if any, and interest on this Note shall be made
by wire transfer.
This Note is one of a duly authorized issue of Securities of the
Company (herein called the "Notes") issued and to be issued in one or more
series under an Indenture dated as of January 28, 2004 (the "Original
Indenture"), as amended and supplemented by the First Supplemental Indenture
dated as of January 28, 2004 (the "First Supplemental Indenture"), and by the
Second Supplemental Indenture dated as of June 30, 2004 (the "Second
Supplemental Indenture"; the Original Indenture, as amended and supplemented by
the First Supplemental Indenture and the Second Supplemental Indenture and all
other indentures supplemental thereto, is herein called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and the
Holders of the Notes, and the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated on the
face hereof, initially limited (subject to exceptions provided in the Indenture
and subject to the right of the Company to reopen such series for issuance of
additional Securities of such series upon the terms and subject to the
conditions specified in the Indenture) in aggregate principal amount to
$300,000,000.
Payments of principal of and premium, if any, and interest on the Notes
are fully, irrevocably and unconditionally guaranteed, jointly and severally, by
the Guarantors on the terms and subject to the limitations set forth in the
Indenture. A Guarantor may be released from its obligations under the Indenture
and those obligations may be reinstated, all on the terms and subject to the
conditions set forth in the Indenture.
The Notes may be redeemed, in whole or from time to time in part, at
the Company's option on any date (each, a "Redemption Date") at a Redemption
Price equal to the greater of: (a) 100% of the principal amount of the Notes to
be redeemed, and (b) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed (exclusive of
interest accrued to the applicable Redemption Date) discounted to such
Redemption Date on a semiannual basis, assuming a 360-day year consisting of
twelve 30-day months, at the Treasury Rate plus 35 basis points, plus, in the
case of both clause (a) and (b) above, accrued and unpaid interest on the
principal amount of the Notes being redeemed to such Redemption Date.
Notwithstanding the foregoing, installments of interest on Notes whose Stated
Maturity is on or prior to the relevant Redemption Date will be payable to the
Holders of such Notes (or one or more Predecessor Securities) registered as such
at the close of business on the relevant Regular Record Date according to their
terms and the provisions of the Indenture.
As used in this Note, the following terms have the meanings set forth
below:
"Treasury Rate" means, with respect to any Redemption Date for the
Notes:
(a) the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Board of
Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Comparable
Treasury Issue (if no maturity is within three months before or
after the Final Maturity Date for the Notes, yields for the two
published maturities most closely corresponding to the Comparable
Treasury Issue shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line
basis, rounding to the nearest month); or
(b) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such
yields, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.
3
The Treasury Rate shall be calculated on the third Business Day preceding the
applicable Redemption Date. As used in the immediately preceding sentence and in
the definition of "Reference Treasury Dealer Quotations" below, the term
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Comparable Treasury Issue" means, with respect to any Redemption Date
for the Notes, the United States Treasury security selected by the Independent
Investment Banker as having a maturity comparable to the remaining term of the
Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the Notes to be
redeemed.
"Independent Investment Banker" means, with respect to any Redemption
Date for the Notes, UBS Securities LLC and its successors or, if such firm or
any successor to such firm, as the case may be, is unwilling or unable to select
the Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any Redemption Date
for the Notes:
(a) the average of four Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or
(b) if the Trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means UBS Securities LLC and its successors
(provided, however, that if such firm or any such successor, as the case may be,
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Trustee, after consultation with the Company,
will substitute therefor another Primary Treasury Dealer) and three other
Primary Treasury Dealers selected by the Trustee after consultation with the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Final Maturity Date" means June 15, 2015.
Notice of any redemption by the Company will be mailed at least 30 days
but not more than 60 days before any Redemption Date to each Holder of Notes to
be redeemed. If less than all the Notes are to be redeemed at the option of the
Company, the Trustee will select, in such manner as it deems fair and
appropriate, the Notes (or portions thereof) to be redeemed. Unless the Company
defaults in payment of the Redemption Price (including, without limitation,
interest, if any, accrued to the applicable Redemption Date), on and after the
applicable Redemption Date interest will cease to accrue on the Notes or
portions thereof called for redemption on such Redemption Date.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of and accrued and unpaid interest on the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders of the Securities of
each series issued under the Indenture at any time by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities at the time
4
Outstanding of each series affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities of any series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company and the Guarantors with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note, at the time, place and rate, and in the coin or currency,
herein and in the Indenture prescribed.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Security
Register upon surrender of this Note for registration of transfer at the Office
or Agency of the Company maintained for the purpose in any place where the
principal of and interest on this Note are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or by his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in fully registered form without coupons in
the denominations of $1,000 and integral multiples of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations set forth
therein, the Notes are exchangeable for a like aggregate principal amount of
Notes of authorized denominations as requested by the Holders surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith, other than
in certain cases provided in the Indenture.
Prior to due presentment of this Note for registration of transfer, the
Company, the Guarantors, the Trustee and any agent of the Company, any Guarantor
or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note shall be overdue, and
none of the Company, the Guarantors or the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture contains provisions whereby (i) the Company and the
Guarantors may be discharged from their obligations with respect to the Notes
(subject to certain exceptions) or (ii) the Company may be released from its
obligations under specified covenants and agreements in the Indenture, in each
case if the Company irrevocably deposits with the Trustee money and/or
Government Obligations sufficient to pay and discharge the entire indebtedness
on all Notes, and satisfies certain other conditions, all as more fully provided
in the Indenture. In addition, the Indenture shall cease to be of further effect
(subject to certain exceptions) with respect to the Notes when (1) either (A)
all Notes previously authenticated and delivered have been delivered (subject to
certain exceptions) to the Trustee for cancellation, or (B) all Notes (i) have
become due and payable or (ii) will become due and payable at their Stated
Maturity within one year or (iii) are to be called for redemption within one
year and, in the case of (i), (ii) or (iii) above, the Company has irrevocably
deposited with the Trustee money in an amount sufficient to pay and discharge
the entire indebtedness on all such Notes not theretofore delivered to the
Trustee for cancellation in respect of principal, premium, if any, and interest
to the date of such deposit (if such Notes have become due and payable) or to
the Stated Maturity or Redemption Date thereof, as the case may be, and (2) the
Company satisfies certain other conditions, all as more fully provided in the
Indenture.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Note which are defined in the Indenture and not
defined herein shall have the meanings assigned to them in the Indenture.
5
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee under the Indenture by the manual signature of one of
its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture (including, without limitation, the Guarantees) or be valid
or obligatory for any purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signatures of its duly authorized officers.
Dated: June 2, 2005
KB HOME
By: By:
---------------------------------- ----------------------------------
Name: Kimberly N. King Name: Kelly Masuda
Title: Vice President and Title: Senior Vice President,
Corporate Secretary Capital Markets and
Treasurer
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities of the
series designated therein referred to
in the within-mentioned Indenture.
SUNTRUST BANK, as Trustee
By: ------------------------------------
Authorized Signatory
7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
TEN ENT--as tenants by the entireties
JT TEN--as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-- _______Custodian_____________
(Cust) (Minor)
under the Uniform Gift to Minors Act
------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
--------------------------------------
FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
---------------------------------------------------
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PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
the within security and all rights thereunder, hereby irrevocably constituting
and appointing
______________________________________________________________________Attorney
to transfer said security on the books of the Company with full power
of substitution in the premises.
Dated: Signed:
----------------------------------- ---------------------------
Notice: The signature to this assignment must correspond with the name
as it appears upon the face of the within security in every particular, without
alteration or enlargement or any change whatever.
8
SCHEDULE A
The initial principal amount of this global Note is Three Hundred Million
Dollars ($300,000,000). The following increases or decreases in the principal
amount of this global Note have been made:
Principal amount of
Amount of increase Amount of decrease in this global Note Signature of
in principal amount principal amount of following such authorized signatory
Date made of this global Note this global Note decrease or increase of Trustee
- --------- ------------------- ---------------------- -------------------- --------------------
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ANNEX C
Form of Additional Note
[Form of certificate evidencing the notes follows.]
THIS NOTE IS A GLOBAL SECURITY REFERRED TO IN THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE
IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. R-02 Principal Amount: $150,000,000
CUSIP No. 48666KAM1 (or such other principal amount
ISIN No. US48666KAM18 as is set forth on Schedule A hereto)
KB Home
6 1/4% Senior Notes due 2015
KB Home, a Delaware corporation (hereinafter called the "Company",
which term includes any successor corporation under the Indenture referred to
below), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000)
or such other principal amount as is set forth on Schedule A hereto on June 15,
2015, and to pay interest thereon from June 2, 2005, or from the most recent
date to which interest has been paid or duly provided for, semiannually in
arrears on June 15 and December 15 of each year (each, an "Interest Payment
Date"), commencing December 15, 2005, and at Maturity, at the rate of 6 1/4% per
annum, until the principal hereof is paid or duly made available for payment.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. The interest so payable and punctually paid
or duly provided for on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the June 1 or December 1 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date shall forthwith cease to be payable
to the Person who was the Holder hereof on the relevant Regular Record Date by
virtue of having been such Holder, and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than 10 days prior to such Special Record Date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in such
Indenture.
Payment of the principal of and premium, if any, and interest on this
Note will be made at the Office or Agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that, at the
option of the Company, interest may be paid by check mailed to the
2
address of the Person entitled thereto as such address shall appear in the
Security Register or by transfer to an account maintained by the payee with a
bank located in the United States; and provided, further, that if this Note is a
global Note registered in the name of a Depository or its nominee, then,
anything in the Indenture or the Notes to the contrary notwithstanding, payments
of the principal of and premium, if any, and interest on this Note shall be made
by wire transfer.
This Note is one of a duly authorized issue of Securities of the
Company (herein called the "Notes") issued and to be issued in one or more
series under an Indenture dated as of January 28, 2004 (the "Original
Indenture"), as amended and supplemented by the First Supplemental Indenture
dated as of January 28, 2004 (the "First Supplemental Indenture"), and by the
Second Supplemental Indenture dated as of June 30, 2004 (the "Second
Supplemental Indenture"; the Original Indenture, as amended and supplemented by
the First Supplemental Indenture and the Second Supplemental Indenture and all
other indentures supplemental thereto, is herein called the "Indenture"), each
among the Company, the Guarantors and SunTrust Bank, as trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Guarantors, the Trustee and the
Holders of the Notes, and the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated on the
face hereof, currently limited (subject to exceptions provided in the Indenture
and subject to the right of the Company to reopen such series for issuance of
additional Securities of such series upon the terms and subject to the
conditions specified in the Indenture) in aggregate principal amount to
$450,000,000.
Payments of principal of and premium, if any, and interest on the Notes
are fully, irrevocably and unconditionally guaranteed, jointly and severally, by
the Guarantors on the terms and subject to the limitations set forth in the
Indenture. A Guarantor may be released from its obligations under the Indenture
and those obligations may be reinstated, all on the terms and subject to the
conditions set forth in the Indenture.
The Notes may be redeemed, in whole or from time to time in part, at
the Company's option on any date (each, a "Redemption Date") at a Redemption
Price equal to the greater of: (a) 100% of the principal amount of the Notes to
be redeemed, and (b) the sum of the present values of the remaining scheduled
payments of principal and interest on the Notes to be redeemed (exclusive of
interest accrued to the applicable Redemption Date) discounted to such
Redemption Date on a semiannual basis, assuming a 360-day year consisting of
twelve 30-day months, at the Treasury Rate plus 35 basis points, plus, in the
case of both clause (a) and (b) above, accrued and unpaid interest on the
principal amount of the Notes being redeemed to such Redemption Date.
Notwithstanding the foregoing, installments of interest on Notes whose Stated
Maturity is on or prior to the relevant Redemption Date will be payable to the
Holders of such Notes (or one or more Predecessor Securities) registered as such
at the close of business on the relevant Regular Record Date according to their
terms and the provisions of the Indenture.
As used in this Note, the following terms have the meanings set forth
below:
"Treasury Rate" means, with respect to any Redemption Date for the
Notes:
(a) the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Board of
Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Comparable
Treasury Issue (if no maturity is within three months before or
after the Final Maturity Date for the Notes, yields for the two
published maturities most closely corresponding to the Comparable
Treasury Issue shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line
basis, rounding to the nearest month); or
(b) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such
yields, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.
3
The Treasury Rate shall be calculated on the third Business Day preceding the
applicable Redemption Date. As used in the immediately preceding sentence and in
the definition of "Reference Treasury Dealer Quotations" below, the term
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which
is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Comparable Treasury Issue" means, with respect to any Redemption Date
for the Notes, the United States Treasury security selected by the Independent
Investment Banker as having a maturity comparable to the remaining term of the
Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the Notes to be
redeemed.
"Independent Investment Banker" means, with respect to any Redemption
Date for the Notes, UBS Securities LLC and its successors or, if such firm or
any successor to such firm, as the case may be, is unwilling or unable to select
the Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee after consultation with the Company.
"Comparable Treasury Price" means, with respect to any Redemption Date
for the Notes:
(a) the average of four Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or
(b) if the Trustee obtains fewer than four such Reference Treasury
Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means UBS Securities LLC and its successors
(provided, however, that if such firm or any such successor, as the case may be,
shall cease to be a primary U.S. Government securities dealer in New York City
(a "Primary Treasury Dealer"), the Trustee, after consultation with the Company,
will substitute therefor another Primary Treasury Dealer) and three other
Primary Treasury Dealers selected by the Trustee after consultation with the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date for the Notes, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Final Maturity Date" means June 15, 2015.
Notice of any redemption by the Company will be mailed at least 30 days
but not more than 60 days before any Redemption Date to each Holder of Notes to
be redeemed. If less than all the Notes are to be redeemed at the option of the
Company, the Trustee will select, in such manner as it deems fair and
appropriate, the Notes (or portions thereof) to be redeemed. Unless the Company
defaults in payment of the Redemption Price (including, without limitation,
interest, if any, accrued to the applicable Redemption Date), on and after the
applicable Redemption Date interest will cease to accrue on the Notes or
portions thereof called for redemption on such Redemption Date.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of and accrued and unpaid interest on the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Guarantors and the rights of the Holders of the Securities of
each series issued under the Indenture at any time by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities at the time
4
Outstanding of each series affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Securities of any series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company and the Guarantors with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note, at the time, place and rate, and in the coin or currency,
herein and in the Indenture prescribed.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Security
Register upon surrender of this Note for registration of transfer at the Office
or Agency of the Company maintained for the purpose in any place where the
principal of and interest on this Note are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or by his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in fully registered form without coupons in
the denominations of $1,000 and integral multiples of $1,000 in excess thereof.
As provided in the Indenture and subject to certain limitations set forth
therein, the Notes are exchangeable for a like aggregate principal amount of
Notes of authorized denominations as requested by the Holders surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith, other than
in certain cases provided in the Indenture.
Prior to due presentment of this Note for registration of transfer, the
Company, the Guarantors, the Trustee and any agent of the Company, any Guarantor
or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note shall be overdue, and
none of the Company, the Guarantors or the Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture contains provisions whereby (i) the Company and the
Guarantors may be discharged from their obligations with respect to the Notes
(subject to certain exceptions) or (ii) the Company may be released from its
obligations under specified covenants and agreements in the Indenture, in each
case if the Company irrevocably deposits with the Trustee money and/or
Government Obligations sufficient to pay and discharge the entire indebtedness
on all Notes, and satisfies certain other conditions, all as more fully provided
in the Indenture. In addition, the Indenture shall cease to be of further effect
(subject to certain exceptions) with respect to the Notes when (1) either (A)
all Notes previously authenticated and delivered have been delivered (subject to
certain exceptions) to the Trustee for cancellation, or (B) all Notes (i) have
become due and payable or (ii) will become due and payable at their Stated
Maturity within one year or (iii) are to be called for redemption within one
year and, in the case of (i), (ii) or (iii) above, the Company has irrevocably
deposited with the Trustee money in an amount sufficient to pay and discharge
the entire indebtedness on all such Notes not theretofore delivered to the
Trustee for cancellation in respect of principal, premium, if any, and interest
to the date of such deposit (if such Notes have become due and payable) or to
the Stated Maturity or Redemption Date thereof, as the case may be, and (2) the
Company satisfies certain other conditions, all as more fully provided in the
Indenture.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
All terms used in this Note which are defined in the Indenture and not
defined herein shall have the meanings assigned to them in the Indenture.
5
Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee under the Indenture by the manual signature of one of
its authorized signatories, this Note shall not be entitled to any benefits
under the Indenture (including, without limitation, the Guarantees) or be valid
or obligatory for any purpose.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by the manual or facsimile signatures of its duly authorized officers.
Dated: June 27, 2005
KB HOME
By: By:
--------------------------- ---------------------------------
Name: Kimberly N. King Name: Kelly Masuda
Title: Vice President and Title: Senior Vice President,
Corporate Secretary Capital Markets and
Treasurer
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the Securities of the
series designated therein referred to
in the within-mentioned Indenture.
SUNTRUST BANK, as Trustee
By:
------------------------------
Authorized Signatory
7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
TEN ENT--as tenants by the entireties
JT TEN--as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-- ________Custodian_____________
(Cust) (Minor)
under the Uniform Gift to Minors Act
------------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
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FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s)
and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
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PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
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the within security and all rights thereunder, hereby irrevocably constituting
and appointing
_______________________________________________________________________Attorney
to transfer said security on the books of the Company with full power
of substitution in the premises.
Dated: Signed:
-------------------------- --------------------------------
Notice: The signature to this assignment must correspond with the name
as it appears upon the face of the within security in every particular, without
alteration or enlargement or any change whatever.
8
SCHEDULE A
The initial principal amount of this global Note is One Hundred Fifty
Million Dollars ($150,000,000). The following increases or decreases in the
principal amount of this global Note have been made:
Principal amount of
Amount of increase Amount of decrease in this global Note Signature of
in principal amount principal amount of following such authorized signatory
Date made of this global Note this global Note decrease or increase of Trustee
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