EXHIBIT 1.2
$20,000,000
CONTINENTAL HOMES HOLDING CORP.
10% Senior Notes due 2006
UNDERWRITING AGREEMENT
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January __, 1997
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Continental Homes Holding Corp., a Delaware corporation (the
"Company"), proposes, upon the terms and conditions set forth herein, to issue
and sell $20,000,000 aggregate principal amount of its 10% Senior Notes due
2006 (the "Notes") to you (the "Underwriter"). The Notes will be guaranteed
(the "Guarantees"), on a joint and several basis, by all of the Company's
subsidiaries which are signatories hereto (the "Guarantors"). The Notes and
the Guarantees are collectively referred to herein as the "Securities." The
Securities will be issued pursuant to the provisions of an Indenture dated as
of April 15, 1996 (the "Indenture"), among the Company, the Guarantors and
First Union National Bank, as Trustee (the "Trustee").
The Company and the Guarantors wish to confirm as follows their
agreement with you, in connection with the purchase of the Securities by the
Underwriter.
1. Registration Statement and Prospectus. The Company and
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the Guarantors have prepared and filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-3 under the Act (the "registration statement")
relating to the Securities. The term "Registration Statement" as used in this
Agreement means the registration statement (including all financial schedules
and exhibits), as supplemented or amended prior to the execution of this
Agreement. If it is contemplated, at the time this Agreement is executed, that
a post-effective amendment to the registration statement will be filed and must
be declared effective before the offering of the Securities may commence, the
term "Registration Statement" as used in this Agreement means the registration
statement as amended by said post-effective amendment. Any registration
statement filed by the Company and the Guarantors pursuant to Rule 462(b) under
the Act is referred to as the "Rule 462(b) Registration Statement," and after
such filing the term Registration Statement shall include the Rule 462(b)
Registration Statement. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in this
Agreement means the prospectus subject to completion in the form included in
the registration statement at the time of
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the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As
used herein, the term "Incorporated Documents" means the documents which at the
time are incorporated by reference in the registration statement, the
Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. The Company hereby
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agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Underwriter and, upon the basis of the representations, warranties
and agreements of the Company and the Guarantors herein contained and subject
to all the terms and conditions set forth herein, the Underwriter agrees to
purchase from the Company, at a purchase price of _____% of the principal
amount thereof, $20,000,000 aggregate principal amount of Securities.
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3. Terms of Public Offering. The Company has been advised
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by you that you propose to make a public offering of the Securities as soon
after the Registration Statement and this Agreement have become effective as in
your judgment is advisable and to offer the Securities upon the terms set forth
in the Prospectus.
4. Delivery of the Securities and Payment Therefor.
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Delivery to the Underwriter of and payment for the Securities shall be made at
the office of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at
10:00 A.M., New York City time, on January __, 1997 (the "Closing Date"). The
place of closing for the Securities and the Closing Date may be varied by
agreement between you and the Company.
The Securities will be delivered to you for your account against
payment of the purchase price therefor by wire transfer of immediately
available funds to the Company and registered in such names and in such
denominations as you shall request prior to 9:30 A.M., New York City time, on
the second business day preceding the Closing Date. The Securities to be
delivered to you shall be made available to you in New York City for inspection
and packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date.
5. Agreements of the Company and the Guarantors. The
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Company and each of the Guarantors, jointly and severally, agree with the
Underwriter as follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement or a post-effective amendment
thereto or any Rule 462(b)
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Registration Statement to be declared effective before the offering of the
Securities may commence, the Company and the Guarantors will endeavor to cause
any such registration statement or such post-effective amendment to become
effective as soon as possible and will advise you promptly and, if requested by
you, will confirm such advice in writing, when any such registration statement
or such post-effective amendment has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time referred to in
paragraph (e) below, of any change in the Company's condition (financial or
other), business, prospects, properties, net worth or results of operations, or
of the happening of any event, which, in each case, makes any statement of a
material fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any additions
to or changes in the Registration Statement or the Prospectus (as then amended
or supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the
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Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) three
signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and
all exhibits to the registration statement, (ii) such number of conformed
copies of the registration statement as originally filed and of each amendment
thereto, but without exhibits, as you may request, (iii) such number of copies
of the Indenture and of the Incorporated Documents, without exhibits, as you
may request, and (iv) three copies of the exhibits to the Incorporated
Documents.
(d) The Company and the Guarantors will not file any amendment to
the Registration Statement or make any amendment or supplement to the
Prospectus or, prior to the earlier of (i) the end of the period of time
referred to in the first sentence in subsection (e) below and (ii) the first
anniversary of the Closing Date, file any document which, upon filing becomes
an Incorporated Document, of which you shall not previously have been advised
or to which, after you shall have received a copy of the document proposed to
be filed, you shall reasonably object.
(e) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as a prospectus is
required by the Act to be delivered in connection with sales by the Underwriter
or any dealer, the Company will expeditiously deliver to the
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Underwriter and each dealer, without charge, as many copies of the Prospectus
(and of any amendment or supplement thereto) as you may request. The Company
and each of the Guarantors consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Securities are offered by the Underwriter and by all dealers to whom Securities
may be sold, both in connection with the offering and sale of the Securities
and for such period of time thereafter as the Prospectus is required by the Act
to be delivered in connection with sales by the Underwriter or any dealer. If
during such period of time any event shall occur that in the judgment of the
Company or in the opinion of counsel for the Underwriter is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to supplement or amend the Prospectus (or to file under the Exchange Act any
document which, upon filing, becomes an Incorporated Document) in order to
comply with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the Commission an
appropriate supplement or amendment thereto (or to such document), and will
expeditiously furnish to the Underwriter and dealers a reasonable number of
copies thereof. In the event that the Company and you, as Underwriter, agree
that the Prospectus should be amended or supplemented before the Closing Date,
the Company, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed amendment or
supplement.
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(f) The Company and the Guarantors will cooperate with you and
with counsel for the Underwriter in connection with the registration or
qualification of the Securities for offering and sale by the Underwriter and by
dealers under the securities or Blue Sky laws of such jurisdictions as you may
designate and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided that in no event shall the Company or any Guarantor be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, or to
taxation in any jurisdiction where it is not now so subject.
(g) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering
a twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(h) So long as any of the Securities are outstanding, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as you may request.
(i) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof
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(otherwise than pursuant to notice given by you terminating this Agreement
pursuant to Section 10 or Section 11 hereof) or if this Agreement shall be
terminated by you because of any failure or refusal on the part of the Company
or the Guarantors to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse you for all out-of-pocket
expenses (including reasonable fees and expenses of your counsel) incurred by
you in connection herewith.
(j) The Company will apply the net proceeds from the sale of the
Securities substantially in accordance with the description set forth in the
Prospectus.
6. Representations and Warranties of the Company and the
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Guarantors. The Company and each of the Guarantors, jointly and severally,
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represent and warrant to the Underwriter that:
(a) The Company and the Guarantors have reasonable grounds
to believe that they meet all of the requirements for filing on Form S-3 under
the Act. The registration statement in the form in which it became effective
and also in such form as it may be when any post-effective amendment thereto
shall become effective, any Rule 462(b) Registration Statement in the form in
which it becomes effective, and the Prospectus (and any supplement or amendment
thereto) when filed with the Commission under Rule 424(b) under the Act,
complied or will comply in all material respects with the provisions of the Act
and will not at any such times 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,
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except that this representation and warranty does not apply to statements in or
omissions from the registration statement or the prospectus made in reliance
upon and in conformity with (i) information relating to the Underwriter
furnished to the Company in writing by or on behalf of the Underwriter
expressly for use therein, or (ii) the Trustee's Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended (the
"1939 Act").
(b) The Incorporated Documents heretofore filed, when they
were filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), complied in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, any
further Incorporated Documents so filed during the period a prospectus is
required by the Act to be delivered in connection with sales by the Underwriter
or any dealer will, when they are filed, comply in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder;
no such document when it was filed (or, if an amendment with respect to any
such document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and no such further document, when it is filed during the period a
prospectus is required by the Act to be delivered in connection with sales by
the Underwriter or any dealer, will contain an untrue statement of a material
fact or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
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(c) The financial statements of the Company and its
subsidiaries set forth in the Registration Statement and Prospectus (and any
amendment and supplement thereto) fairly present in all material respects the
financial condition of the Company and its subsidiaries as of the dates
indicated and the results of operations and changes in financial position for
the periods therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein).
(d) The Company and each of its subsidiaries has been duly
incorporated and is an existing corporation in good standing under the laws of
its jurisdiction of incorporation, has all requisite power and authority
(corporate and other) to conduct its business as described in the Registration
Statement and Prospectus and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or in which the conduct
of its business requires such qualification, except where the failure to be so
qualified, considering all such cases in the aggregate, would not have a
material adverse effect on the business, properties, financial position or
results of operations of the Company and its subsidiaries taken as a whole; and
all of the outstanding shares of capital stock of each such subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable and
(except as otherwise stated in the Registration Statement) are owned
beneficially by the Company subject to no security interest, other encumbrance
or adverse claim. Except for the Company's [6-7/8% Convertible Subordinated
Notes due November 2002] and options to purchase common stock granted pursuant
to the Company's stock option plans, there are no outstanding rights,
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warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interest in the Company or any
of its subsidiaries.
(e) All of the outstanding shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), and all other equity
securities of the Company have been duly authorized and are validly issued,
fully paid and non-assessable. The stockholders of the Company have no
preemptive rights with respect to the Common Stock. No person has any rights
to the registration of securities by reason of the Company's filing the
Registration Statement with the Commission or otherwise.
(f) Except as contemplated in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, or entered into
any transactions, not in the ordinary course of business, that are material to
the Company and its subsidiaries taken as a whole, and there has not been any
material change, on a consolidated basis, in the capital stock, current
liabilities or long-term obligations of the Company and its subsidiaries taken
as a whole, or any material adverse change, in the condition (financial or
other), business, net worth, results of operations or properties of the Company
and its subsidiaries taken as a whole.
(g) Except as set forth in the Prospectus, neither the
Company nor any of its subsidiaries is in violation, and, to the best knowledge
of the Company, no
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director, officer, or employee of the Company or any of its subsidiaries is in
violation, of any law, ordinance, administrative or governmental rule or
regulation or court decree (including, without limitation, any relating to
environmental regulation) applicable to it or them, and there is not pending
or, to the knowledge of the Company, threatened any action, suit, or proceeding
(including, without limitation, any relating to environmental regulation) to
which the Company or any of its subsidiaries is a party, or, to the best
knowledge of the Company, to which any director, officer or employee of the
Company is a party, before or by any court or governmental agency or body, that
in either case might result in any material adverse change in the condition
(financial or other), business, net worth or results of operations of the
Company and its subsidiaries taken as a whole, or might materially and
adversely affect the properties or assets thereof.
(h) There are no contracts or documents of the Company or
any of its subsidiaries that are required to be filed as exhibits to the
Registration Statement or to the Incorporated Documents by the Act or the
Exchange Act and the rules and regulations thereunder that have not been so
filed.
(i) Each of this Agreement and the Indenture has been duly
authorized, executed and delivered by the Company and each Guarantor and each
is a legal, valid and binding agreement of the Company and each Guarantor
enforceable in accordance with its terms, except to the extent that (a)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of equity
(regardless of
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whether enforcement is considered in a proceeding at law or in equity); and (b)
with respect to this Agreement, as rights to indemnity and contribution
hereunder may be limited by federal or state laws relating to securities or the
policies underlying such laws.
(j) The Indenture has been duly qualified under the 1939
Act, complies with the applicable provisions of the 1939 Act and conforms in
all material respects to the description thereof in the Registration Statement
and the Prospectus.
(k) The Securities will conform in all material respects to
the description thereof in the Registration Statement and the Prospectus. The
Securities have been duly authorized by the Company and each of the Guarantors,
as applicable, and, when executed and authenticated in accordance with the
Indenture and delivered to you against payment therefor in accordance with the
terms hereof and the Indenture, will have been validly issued and delivered and
will constitute valid and binding obligations of the Company and the Guarantors
enforceable against the Company and the Guarantors in accordance with their
terms, except as such enforcement may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
(l) The performance of this Agreement and the Indenture and
the consummation of the transactions herein and therein contemplated, will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default
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under, any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them is bound or to which any
of the property of the Company or any of its subsidiaries is subject, the
charter or bylaws of the Company or any of its subsidiaries, or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties, which breach, violation or default, with respect to any
such agreement or instrument, would have a material adverse effect on the
condition (financial or other), business, net worth, results of operations or
properties of the Company and its subsidiaries taken as a whole; no consent,
approval, authorization or order of, or filing with, any court or governmental
agency or body is required for the consummation of the transactions
contemplated by this Agreement or the Indenture in connection with the issuance
or sale of the Securities, except such as may be required under the Act or
state securities or Blue Sky laws; and the Company and each of the Guarantors
has full corporate power and authority to authorize, issue and sell the
Securities as contemplated by this Agreement and the Indenture.
(m) Neither the Company nor any Guarantor has taken nor
will take, directly or indirectly, any action designed to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(n) The Company and each of its subsidiaries has all
material governmental licenses, certificates, permits, authorizations,
approvals, franchises or other rights necessary to engage in the business
currently conducted by it
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as described in the Prospectus, except such as may be necessary for the
development of and construction on specific properties or as do not materially
adversely affect the condition (financial or other), business, net worth,
results of operations or properties of the Company and its subsidiaries taken
as a whole, and the Company has no reason to believe that any governmental body
or agency is considering limiting, suspending or revoking any such license,
certificate, permit, authorization, approval, franchise or right.
(o) Neither the Company nor any of its subsidiaries is in
breach or violation of any of the terms and provisions of, or in default under,
any agreement or instrument to which the Company or any of its subsidiaries is
a party or by which it or any of them is bound or to which any of the property
of the Company or any of its subsidiaries is subject, which breach, violation
or default would have a material adverse effect on the condition (financial or
other), business, net worth, results of operations or properties of the Company
and its subsidiaries taken as a whole.
(p) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(q) The Company has complied with all provisions of Florida
Statutes, (SECTION)517.075, relating to issuers doing business in Cuba.
7. Indemnification and Contribution. (a) The Company and
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each of the Guarantors, jointly and severally,
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agree to indemnify and hold harmless the Underwriter and each person, if any,
who controls the Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information relating to the Underwriter furnished in writing to the Company
by or on behalf of the Underwriter expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph (a)
with respect to any Prepricing Prospectus shall not inure to the benefit of the
Underwriter (or to the benefit of any person controlling the Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Securities by the Underwriter to any person if a copy of the
Prospectus shall not have been delivered or sent to such person within the time
required by the Act and the regulations thereunder, and the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such Prepricing Prospectus was corrected in the Prospectus,
provided that the Company has delivered the Prospectus to the Underwriter in
requisite quantity on a timely basis to permit
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such delivery or sending. The foregoing indemnity agreement shall be in
addition to any liability which the Company or the Guarantors may otherwise
have.
(b) If any action, suit or proceeding shall be brought against
the Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Company and the Guarantors, the Underwriter
or such controlling person shall promptly notify the Company and the Guarantors
and the Company and the Guarantors shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. The
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Underwriter or such controlling person unless (i) the Company
has agreed in writing to pay such fees and expenses, (ii) the Company and the
Guarantors have failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both the Underwriter or such controlling person and the
Company or the Guarantors and the Underwriter or such controlling person shall
have been advised by its counsel that representation of such indemnified party
and the Company or the Guarantors by the same counsel would be inappropriate
under applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the Company and the
Guarantors shall not have the right to assume the defense of such action, suit
or proceeding on behalf of the Underwriter or such controlling person). It is
understood, however, that the Company or the Guarantors shall,
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in connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Underwriter
and controlling persons not having actual or potential differing interests with
you or among themselves, which firm shall be designated in writing by Smith
Barney Inc., and that all such fees and expenses shall be reimbursed as they
are incurred. The Company and the Guarantors shall not be liable for any
settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Company and the Guarantors agree to indemnify and hold harmless the
Underwriter, to the extent provided in the preceding paragraph, and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) The Underwriter agrees to indemnify and hold harmless the
Company, the Guarantors, their directors, their officers who sign the
Registration Statement, and any person who controls the Company or the
Guarantors within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company
and the Guarantors to the Underwriter, but only with respect to information
relating to the Underwriter furnished in writing by or on behalf of the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the
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Company, the Guarantors, any of their directors, any such officer, or any such
controlling person, based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against the Underwriter pursuant to this
paragraph (c), the Underwriter shall have the rights and duties given to the
Company by paragraph (b) above (except that if the Company shall have assumed
the defense thereof the Underwriter shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at the Underwriter's expense), and
the Company, the Guarantors, their directors, any such officer, and any such
controlling person, shall have the rights and duties given to the Underwriter
by paragraph (b) above. The foregoing indemnity agreement shall be in addition
to any liability which the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors on the one hand and the Underwriter on the other
hand from the offering of the Securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the
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Company and the Guarantors on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Guarantors on the one hand and the Underwriter on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriter, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company and the Guarantors on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company and the Guarantors on the one hand or by
the Underwriter on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company, the Guarantors and the Underwriter agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any
21
claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price of the
Securities underwritten by it and distributed to the public exceeds the amount
of any damages which the Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7, the
agreements of the Company and the Guarantors set forth in this Agreement and
the representations and warranties of the Company and the Guarantors set forth
in this Agreement shall remain operative and in full force and
22
effect, regardless of (i) any investigation made by or on behalf of the
Underwriter or any person controlling the Underwriter, the Company, the
Guarantors, their directors or officers or any person controlling the Company,
(ii) acceptance of any Securities and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Underwriter or any person
controlling the Underwriter, or to the Company, the Guarantors, their directors
or officers, or any person controlling the Company or the Guarantors, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 7.
8. Conditions of Underwriter's Obligation. The obligation
--------------------------------------
of the Underwriter to purchase the Securities hereunder is subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the registration statement or a post-effective amendment
thereto or the Rule 462(b) Registration Statement to be declared effective
before the offering of the Securities may commence, the registration statement
or such post-effective amendment and such Rule 462(b) Registration Statement
shall have become effective not later than 5:30 P.M., New York City time, on
the date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 424 and 430A under
the Act shall have been timely made; no stop order suspending the effectiveness
of the registration statement or the Rule 462(b) Registration Statement, if
any, shall have been issued and no proceeding for that purpose shall have been
instituted or, to the knowledge of the Company or the Underwriter, threatened
by the Commission, and any request of the Commission for additional information
(to be
23
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the satisfaction of the staff of the Commission.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company and
its subsidiaries, taken as a whole, not contemplated by the Prospectus, which
in your opinion, as Underwriter, would materially adversely affect the market
for the Securities, or (ii) any event or development relating to or involving
the Company or any officer or director of the Company or involving any of its
subsidiaries which makes any statement made in the Prospectus untrue or which,
in the opinion of the Company and its counsel or the Underwriter and its
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be
stated therein or necessary in order to make the statements therein not
misleading, if amending or supplementing the Prospectus to reflect such event
or development would, in your opinion, as Underwriter, materially adversely
affect the market for the Securities.
(c) You shall have received on the Closing Date, an opinion of
Cahill Gordon & Reindel, counsel for the Company, dated the Closing Date and
addressed to you, as Underwriter, to the effect that:
(i) Each of the Company and each of its subsidiaries
incorporated in the State of Delaware (each a "Delaware Guarantor") has been
duly incorporated and is an
24
existing corporation in good standing under the laws of its jurisdiction of
incorporation; has all requisite corporate power and authority to conduct its
business as described in the Registration Statement and Prospectus and is duly
qualified to do business in each jurisdiction in which such counsel has been
advised it owns or leases real property or in which the conduct of its business
requires such qualification, except where the failure to be so qualified,
considering all such cases in the aggregate, would not have a material adverse
effect on the business, net worth, properties, financial position or results of
operations of the Company and its subsidiaries taken as a whole; all of the
outstanding shares of capital stock of each such Delaware Guarantor have been
duly authorized and validly issued, are fully paid and non-assessable and, to
the knowledge of such counsel (except as otherwise stated in the Registration
Statement), are owned beneficially by the Company subject to no security
interest, other encumbrance or adverse claim; and to the knowledge of such
counsel, except for the Company's [6-7/8% Convertible Subordinated Notes due
November 2002] and options to purchase common stock granted pursuant to the
Company's stock option plans, there are no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any of its
subsidiaries;
(ii) All of the outstanding shares of Common Stock have been
duly authorized and are validly issued, fully paid and non-assessable;
(iii) Based solely on telephonic advice from the Commission,
the Registration Statement and any Rule 462(b) Registration Statement have
become effective under the Act;
25
any required filing of the Prospectus pursuant to Rule 424(b) has been made in
accordance with Rule 424(b); and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement have been issued and no proceeding for that purpose has
been instituted or threatened by the Commission;
(iv) The Registration Statement when it became effective,
any Rule 462(b) Registration Statement when it became effective and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, appeared to comply as to
form in all material respects with the requirements of the Act; and the
Incorporated Documents, when they were filed with the Commission under the
Exchange Act, appeared to comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder (it
being understood that such counsel need express no opinion as to the financial
statements or other financial and statistical data included in any of the
documents mentioned in this clause and as to the Statement of Eligibility on
Form T-1);
(v) There is no statute or contract or other document known
to such counsel of a character required to be described in the Registration
Statement, the Prospectus or the Incorporated Documents or to be filed as an
exhibit to the Registration Statement or the Incorporated Documents, which is
not described or filed as required;
(vi) The Company and each Delaware Guarantor have corporate
authority to enter into this Agreement and the Indenture and to issue the
Securities. Each of this Agreement
26
and the Indenture has been duly authorized, executed and delivered by the
Company and each Delaware Guarantor. Assuming due authorization, execution and
delivery by the parties thereto other than the Company and any Delaware
Guarantor, each of this Agreement and the Indenture is the legal, valid and
binding obligation of the Company and each Guarantor, enforceable against it in
accordance with its terms, except that (a) the enforceability thereof may be
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' and debtors' rights and remedies generally, (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought and (c) rights to indemnification and
contribution under this Agreement may be limited by Federal and state
securities laws or the policies underlying such laws;
(vii) The Indenture has been duly qualified under the 1939
Act and conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus;
(viii) The Securities conform in all material respects to
the description thereof in the Prospectus. The Securities have been duly
authorized by the Company and each Delaware Guarantor and, when executed and
authenticated in accordance with the terms of the Indenture and delivered to
the Underwriter against payment therefor in accordance with the terms of this
Agreement and the Indenture, will have been validly issued and delivered by the
Company and each Delaware Guarantor, and assuming due authorization, execution
and
27
delivery by the Guarantors other than the Delaware Guarantors, will constitute
valid and binding obligations of the Company and each Guarantor enforceable
against the Company and each Guarantor in accordance with their terms, subject
to (a) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' and debtors' rights and remedies generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought;
(ix) The execution and delivery of this Agreement, the
Indenture and the Securities, the performance of this Agreement, the Indenture
and the Securities and the consummation of the transactions herein and therein
contemplated, will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute or any material
agreement or instrument known to such counsel to which the Company or any
Delaware Guarantor is a party or by which it is bound or to which any of the
property of the Company or any Delaware Guarantor is subject, the Company's
charter or by-laws, the charter or by-laws of any Delaware Guarantor or any
order, rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any Delaware Guarantor
or any of their properties; and no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is required for
the consummation of the transactions contemplated by this Agreement or the
Indenture in connection with the issuance or sale of the Securities by the
Company and the Delaware Guarantors, except such as have been obtained under
the Act and such as may be required under state securi-
28
ties laws (as to which such counsel need express no opinion) in connection with
the purchase and distribution of the Securities by the Underwriter;
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company and the Guarantors, representatives of the independent public
accountants for the Company, your representatives and representatives of your
counsel at which the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, on the basis of the foregoing (relying as to materiality to a large
extent upon the opinions of officers and other representatives of the Company),
no facts have come to such counsel's attention that lead them to believe that
the Registration Statement or any Rule 462(b) Registration Statement, at the
time they became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, that the Prospectus, as of its date
and as of the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel is not requested to and need
not express any comment with respect to the financial statements and schedules
and other financial and statistical data included or incorporated by reference
in the Registration Statement or Prospectus and the Statement of Eligibility on
Form T-1).
29
(d) You shall have received on the Closing Date, an opinion of
Timothy C. Westfall, Esq., general counsel to the Company, dated the Closing
Date and addressed to you, as Underwriter, to the effect that:
(i) Each of the Company's subsidiaries incorporated in the
State of Arizona (each an "Arizona Guarantor") has been duly incorporated and
is an existing corporation in good standing under the laws of the State of
Arizona; has all requisite corporate power and authority to conduct its
business as described in the Registration Statement and Prospectus and is duly
qualified to do business in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such qualification,
except where the failure to be so qualified, considering all such cases in the
aggregate, would not have a material adverse effect on the business, net worth,
properties, financial position or results of operations of the Company and its
subsidiaries taken as a whole; all of the outstanding shares of capital stock
of each Arizona Guarantor have been duly authorized and validly issued, are
fully paid and non-assessable and, to the knowledge of such counsel, (except as
otherwise stated in the Registration Statement) are owned beneficially by the
Company subject to no security interest, other encumbrance or adverse claim,
and there are no outstanding rights, warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of capital stock
or other equity interest in the Arizona Guarantors;
(ii) There are no legal or governmental proceedings pending
or threatened to which the Company or any Arizona Guarantor is a party or to
which any of its property or assets is subject, including ordinary routine
litigation
30
incidental to its business, which are, considered in the aggregate, likely to
result in any material adverse effect on the business, properties, net worth,
financial position or results of operations of the Company and its subsidiaries
taken as a whole;
(iii) Each Arizona Guarantor has corporate authority to
enter into this Agreement and the Indenture and to issue its Guarantee. Each
of this Agreement and the Indenture has been duly authorized, executed and
delivered by each Arizona Guarantor;
(iv) The Guarantees of the Arizona Guarantors have been duly
authorized by the Arizona Guarantors and, when the Securities are executed and
authenticated in accordance with the terms of the Indenture and delivered to
the Underwriter against payment therefor in accordance with the terms of this
Agreement and the Indenture, will have been validly issued and delivered;
(v) The execution and delivery of this Agreement, the
Indenture and the Guarantees by the Arizona Guarantors and the performance of
this Agreement, the Indenture and the Guarantees and the consummation of the
transactions herein and therein contemplated by the Arizona Guarantors, will
not result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute or any material agreement or instrument
known to such counsel to which any Arizona Guarantor is a party or by which it
is bound or to which any of the property of any Arizona Guarantor is subject,
any Arizona Guarantor's charter or by-laws, or any order, rule or regulation
known to such counsel of any court or governmental agency or body having
31
jurisdiction over any Arizona Guarantor or any of its properties; and no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the consummation by the Arizona
Guarantors of the transactions contemplated by this Agreement or the Indenture
in connection with the issuance or sale of the Securities, except such as have
been obtained under the Act and such as may be required under state securities
laws (as to which such counsel need express no opinion) in connection with the
purchase and distribution of the Securities by the Underwriter.
(e) You shall have received on the Closing Date, an opinion of
Christopher J. Chambers, Esq., general counsel to L&W Investments, dated the
Closing Date and addressed to you, as Underwriter, to the effect that:
(i) L&W Investments, Inc., a California corporation and a
wholly-owned subsidiary of the Company ("L&W"), is a corporation duly organized
and validly existing under the laws of the State of California and has the
power and authority to engage in its business as currently conducted;
(ii) L&W has corporate authority to enter into this
Agreement and the Indenture and to issue its Guarantee. Each of this Agreement
and the Indenture has been duly authorized, executed and delivered by L&W;
(iii) L&W's Guarantee has been duly authorized by L&W and,
when the Securities are executed and authenticated in accordance with the terms
of the Indenture and delivered to the Underwriter against payment therefor in
accordance with
32
the terms of this Agreement and the Indenture, will have been validly issued
and delivered;
(iv) The execution and delivery of this Agreement, the
Indenture and its Guarantee by L&W and the performance of this Agreement, the
Indenture and its Guarantee and the consummation of the transactions herein and
therein contemplated by L&W, will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any statute or any
material agreement or instrument known to such counsel to which L&W is a party
or by which it is bound or to which any of the property of L&W is subject,
L&W's charter or by-laws, or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over
L&W or any of its properties; and no consent, approval, authorization or order
of, or filing with, any court or governmental agency or body is required for
the consummation by L&W of the transactions contemplated by this Agreement or
the Indenture in connection with the issuance or sale of the Securities, except
such as have been obtained under the Act and such as may be required under
state securities laws (as to which such counsel need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriter.
(f) You shall have received on the Closing Date, an opinion of
Terry E. Mitchell, Esq., general counsel to Milburn Investments, Inc., dated
the Closing Date and addressed to you, as Underwriter, to the effect that:
(i) Milburn Investments, Inc., Continental Homes of Texas,
Inc., Miltex Management, Inc., Travis County Title Company, Acheter, Inc.,
R.O.S. Corporation and
33
Settlement Corporation, each a Texas corporation and a wholly-owned subsidiary
of the Company, Miltex Financial IV General Partnership and Miltex Mortgage of
Texas Limited Partnership, each a Texas partnership, (each a "Texas Guarantor")
are corporations or partnerships, as applicable, duly organized and validly
existing under the laws of the State of Texas and have the power and authority
to engage in their businesses as currently conducted; all of the outstanding
shares of capital stock of each Texas Guarantor which is a Texas corporation
have been duly authorized and validly issued, are fully paid and non-assessable
and, to the knowledge of such counsel, (except as otherwise stated in the
Registration Statement) are owned beneficially by the Company subject to no
security interest, other encumbrance or adverse claim, and there are no
outstanding rights, warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity interest
in the Texas Guarantors;
(ii) There are no legal or governmental proceedings pending
or threatened to which any Texas Guarantor is a party or to which any of its
property or assets is subject, including ordinary routine litigation incidental
to its business, which are, considered in the aggregate, likely to result in
any material adverse effect on the business, properties, net worth, financial
position or results of operations of the Company and its subsidiaries taken as
a whole;
(iii) Each Texas Guarantor has authority (corporate or
other) to enter into this Agreement and the Indenture and to issue its
Guarantee. Each of this Agreement and the Indenture has been duly authorized,
executed and delivered by each Texas Guarantor;
34
(iv) The Guarantees of the Texas Guarantors have been duly
authorized and, when the Securities are executed and authenticated in
accordance with the terms of the Indenture and delivered to the Underwriter
against payment therefor in accordance with the terms of this Agreement and the
Indenture, will have been validly issued and delivered ;
(v) The execution and delivery of this Agreement, the
Indenture and the Guarantees by the Texas Guarantors and the performance of
this Agreement, the Indenture and the Guarantees and the consummation of the
transactions herein and therein contemplated by the Texas Guarantors, will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute or any material agreement or instrument
known to such counsel to which any Texas Guarantor is a party or by which it is
bound or to which any of the property of any Texas Guarantor is subject, any
Texas Guarantor's charter, by-laws, partnership agreement or other constituent
document, or any order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over any Texas Guarantor or
any of its properties; and no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for the
consummation by the Texas Guarantors of the transactions contemplated by this
Agreement or the Indenture in connection with the issuance or sale of the
Securities, except such as have been obtained under the Act and such as may be
required under state securities laws (as to which such counsel need express no
opinion) in connection with the purchase and distribution of the Securities by
the Underwriter.
(g) You shall have received on the Closing Date, an
35
opinion of Davis & Ceriani, P.C., counsel to CH Mortgage Company, dated the
Closing Date and addressed to you, as Underwriter, to the effect that:
(i) CH Mortgage Company, a Colorado corporation and a
wholly-owned subsidiary of the Company ("CH Mortgage"), is a corporation duly
organized and validly existing under the laws of the State of Colorado and has
the power and authority to engage in its business as currently conducted;
(ii) CH Mortgage has corporate authority to enter into this
Agreement and the Indenture and to issue its Guarantee. Each of this Agreement
and the Indenture has been duly authorized, executed and delivered by CH
Mortgage;
(iii) CH Mortgage's Guarantee has been duly authorized by CH
Mortgage and, when the Securities are executed and authenticated in accordance
with the terms of the Indenture and delivered to the Underwriter against
payment therefor in accordance with the terms of this Agreement and the
Indenture, will have been validly issued and delivered;
(iv) The execution and delivery of this Agreement, the
Indenture and its Guarantee by CH Mortgage and, the performance of this
Agreement, the Indenture and its Guarantee and the consummation of the
transactions herein and therein contemplated by CH Mortgage and will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute or any material agreement or instrument known to
such counsel to which CH Mortgage is a party or by which it is bound or to
which any of the property of CH Mortgage is subject, CH Mortgage's charter
36
or by-laws, or any order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over CH Mortgage or any of
its properties; and no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the consummation
by CH Mortgage of the transactions contemplated by this Agreement or the
Indenture in connection with the issuance or sale of the Securities, except
such as have been obtained under the Act and such as may be required under
state securities laws (as to which such counsel need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriter.
(h) You shall have received on the Closing Date, an opinion of
Salomon, Kanner, Damian & Rodriguez, P.A., counsel to Continental Homes of
Florida, Inc., dated the Closing Date and addressed to you, as Underwriter, to
the effect that:
(i) Continental Homes of Florida, Inc., a Florida
corporation and a wholly-owned subsidiary of the Company ("CH Florida"), is a
corporation duly organized and validly existing under the laws of the State of
Florida and has the power and authority to engage in its business as currently
conducted;
(ii) CH Florida has corporate authority to enter into this
Agreement and the Indenture and to issue its Guarantee. Each of this Agreement
and the Indenture has been duly authorized, executed and delivered by CH
Florida;
(iii) CH Florida's Guarantee has been duly authorized by CH
Florida and, when the Securities are executed and authenticated in accordance
with the terms of the
37
Indenture and delivered to the Underwriter against payment therefor in
accordance with the terms of this Agreement and the Indenture, will have been
validly issued and delivered;
(iv) The execution and delivery of this Agreement, the
Indenture and its Guarantee, by CH Florida and the performance of this
Agreement, the Indenture and its Guarantee and the consummation of the
transactions herein and therein contemplated by CH Florida, will not result in
a breach or violation of any of the terms and provisions of, or constitute a
default under, any statute or any material agreement or instrument known to
such counsel to which CH Florida is a party or by which it is bound or to which
any of the property of CH Florida is subject, CH Florida's charter or by-laws,
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over CH Florida or any of its
properties; and no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the consummation
by CH Florida of the transactions contemplated by this Agreement or the
Indenture in connection with the issuance or sale of the Securities, except
such as have been obtained under the Act and such as may be required under
state securities laws (as to which such counsel need express no opinion) in
connection with the purchase and distribution of the Securities by the
Underwriter.
(i) You shall have received on the Closing Date an opinion of
Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriter, dated the
Closing Date and addressed to you, as Underwriter, with respect to the matters
referred to in clauses (iii), (iv), (vi) through (viii) and in the last
paragraph of the foregoing paragraph (c) and such other
38
related matters as you may request.
(j) You shall have received letters addressed to you, as
Underwriter, and dated the date hereof and the Closing Date from Arthur
Andersen LLP, independent certified public accountants, substantially in the
forms heretofore approved by you.
(k) (i) No stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement, if any, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission at or
prior to the Closing Date; (ii) there shall not have been any change in the
capital stock of the Company nor any material increase in the short-term or
long-term debt of the Company or its subsidiaries (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); (iii)
there shall not have been, since the respective dates as of which information
is given in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole; (iv) the Company and its subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company and its
Subsidiaries, taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or
39
any amendment or supplement thereto); and (v) all the representations and
warranties of the Company and the Guarantors contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received
certificates, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company and the chief financial officer
and another authorized officer of each of the Guarantors (or such other
officers as are acceptable to you), to the effect set forth in this Section
8(k) and in Section 8(l) hereof.
(l) The Company and the Guarantors shall not have failed at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(m) There shall not have been any announcement by any "nationally
recognized statistical rating organization", as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
debt securities of the Company, or (ii) it is reviewing its rating assigned to
any debt securities of the Company with a view to possible downgrading, or with
negative implications, or direction not determined.
(n) The Company and the Guarantors shall have furnished or caused
to be furnished to you such further certificates and documents as you shall
have reasonably requested.
(o) The Securities have been authorized for listing
40
on the New York Stock Exchange, Inc., subject to notice of issuance.
All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are satisfactory in
form and substance to you and your counsel.
Any certificate or document signed by any officer of the Company or
the Guarantors and delivered to you, as Underwriter, or to counsel for the
Underwriter, shall be deemed a representation and warranty by the Company or
the Guarantors to the Underwriter as to the statements made therein.
9. Expenses. The Company agrees to pay the following costs
--------
and expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing (or reproduction),
and filing with the Commission of the registration statement (including
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectus, each amendment or supplement to any of them, this Agreement, the
Indenture and the Statement of Eligibility of the Trustee; (ii) the printing
(or reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the registration
statement, each Prepricing Prospectus, the Prospectus, the Incorporated
Documents, and all amendments or supplements to any of them, as may be
reasonably requested for use in connection with the offering and sale of the
Securities; (iii) the preparation, printing (or reproduction), execution and
delivery of the Indenture and the preparation, printing, authentication,
issuance and delivery of the
41
Securities, including any stamp taxes in connection with the original issuance
of the Securities; (iv) the printing (or reproduction) and delivery of the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Securities; (v) the listing of the Securities on the New York Stock
Exchange, Inc. and the registration of the Securities under the Exchange Act;
(vi) the registration or qualification of the Securities for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Underwriter relating to the preparation, printing (or
reproduction), and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc.; (viii) the fees and expenses of the Trustee; (ix)
the fees and expenses associated with obtaining ratings for the Securities from
nationally recognized statistical rating organizations; (x) the transportation
and other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the Securities; and
(xi) the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company.
10. Effective Date of Agreement. This Agreement shall become
---------------------------
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto
42
or any Rule 462(b) Registration Statement to be declared effective before the
offering of the Securities may commence, when notification of the effectiveness
of any such registration statement or such post-effective amendment has been
released by the Commission. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying you, or by
you, as Underwriter, by notifying the Company.
Any notice under this Section 10 may be made by telegram, telecopy
or telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be
------------------------
subject to termination in your absolute discretion, without liability on the
part of the Underwriter to the Company or the Guarantors by notice to the
Company, if prior to the Closing Date, (i) trading in the Common Stock of the
Company shall be suspended or subject to any restriction or limitation not in
effect on the date of this Agreement; (ii) trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, (iii) a general
moratorium on commercial banking activities in New York or Arizona shall have
been declared by either federal or state authorities, or (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in your judgment, impracticable or inadvisable to
commence or continue the offering of the Securities on the terms set forth on
the cover page of the Prospectus or to enforce contracts for the resale
43
of the Securities by the Underwriter. Notice of such termination may be given
to the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
12. Information Furnished by the Underwriter. The statements
----------------------------------------
set forth in the last paragraph on the cover page, the stabilization legend on
the inside cover page, and the statements in the first and third paragraphs
under the caption "Underwriting" in the Prospectus, constitute the only
information furnished by or on behalf of the Underwriter through you as such
information is referred to in Sections 6(b) and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections
-------------
5, 10 and 11 hereof, notice given pursuant to any provision of this Agreement
shall be in writing and shall be delivered (i) if to the Company or the
Guarantors, at the office of the Company at 7001 N. Scottsdale Road, Suite
2050, Scottsdale, Arizona 85253, Attention: Donald R. Loback, Chief Executive
Officer, with a copy to: Cahill Gordon & Reindel, 80 Pine Street, New York,
New York 10005, Attention: John P. Mitchell, Esq.; or (ii) if to you, as
Underwriter, Smith Barney Inc., 388 Greenwich Street, New York, New York 10013,
Attention: Manager, Investment Banking Division, with a copy to Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022,
Attention: Vincent Pisano.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Company, the Guarantors, their respective directors and
officers, and the other controlling persons referred to in Section 7 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by
44
virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from the Underwriter of any of the Securities in his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be
----------------------------
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
45
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Underwriter.
Very truly yours,
CONTINENTAL HOMES HOLDING CORP.
By ........................
Name:
Title:
ACHETER, INC.
By ........................
Name:
Title:
CH MORTGAGE COMPANY
By ........................
Name:
Title:
CHI CONSTRUCTION COMPANY
By ........................
Name:
Title:
CHI FINANCE CORP.
By ........................
Name:
Title:
46
CONTINENTAL HOMES, INC.
By ........................
Name:
Title:
CONTINENTAL HOMES OF
FLORIDA, INC.
By ........................
Name:
Title:
CONTINENTAL HOMES OF TEXAS, INC.
By ........................
Name:
Title:
KDB HOMES, INC.
By ........................
Name:
Title:
L&W INVESTMENTS INC.
By ........................
Name:
Title:
MILBURN INVESTMENTS, INC.
By ........................
Name:
Title:
MILTEX FINANCIAL IV GENERAL
PARTNERSHIP
By ........................
Name:
Title:
47
MILTEX MANAGEMENT, INC.
By ........................
Name:
Title:
MILTEX MORTGAGE OF TEXAS
LIMITED PARTNERSHIP
By ........................
Name:
Title:
RANCHO CARILLO, INC.
By ........................
Name:
Title:
R.O.S. CORPORATION
By ........................
Name:
Title:
SETTLEMENT CORPORATION
By ........................
Name:
Title:
TRAVIS COUNTY TITLE COMPANY
By ........................
Name:
Title:
48
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
By SMITH BARNEY INC.
By ..........................
Managing Director
49