Continental Homes Holding Corp, et al. – ‘424B1’ on 4/16/96

As of:  Tuesday, 4/16/96   ·   Accession #:  950130-96-1247   ·   File #s:  333-01669, -01, -02, -03, -04, -05, -06, -07, -08, -09, -10, -11, -12, -13, -14, -15, -16, -17

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Prospectus   —   Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus                                            38    218K 

Document Table of Contents

424B1
1st Page of 38
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                              RULE NO. 424(b)(1)
                                                      REGISTRATION NO. 333-01669

PROSPECTUS                                                                      

$130,000,000  

CONTINENTAL HOMES HOLDING CORP. 

10% SENIOR NOTES DUE 2006 

------------  

The 10% Senior Notes due 2006 (the "Senior Notes") are being offered hereby 
(the "Offering") by Continental Homes Holding Corp. (the "Company"). Interest   
on the Senior Notes is payable semi-annually on April 15 and October 15 of      
each year, commencing October 15, 1996. The Senior Notes mature on April 15,    
2006.                                                                           

The Senior Notes will be redeemable at the option of the Company, in whole  
or in part, at any time on or after April 15, 2001 at the redemption prices     
set forth herein, plus accrued and unpaid interest, if any, to the date of      
redemption. In addition, at any time on or prior to April 15, 1999, the         
Company may redeem up to 33% of the aggregate principal amount of the Senior    
Notes originally issued with the net proceeds of one or more public offerings   
of its common stock at a redemption price equal to 110% of the aggregate        
principal amount of each Senior Note so redeemed, plus accrued and unpaid       
interest, if any, to the date of redemption; provided, however, that            
immediately after giving effect to any such redemption, not less than           
$86,667,000 principal amount of the Senior Notes remains outstanding.           

In the event of a Change of Control (as defined), the Company is required to
offer to repurchase all of the Senior Notes at a price equal to 101% of the     
aggregate principal amount thereof, plus accrued and unpaid interest, if any,   
to the date of repurchase. In addition, the Company will be obligated to make   
an offer to repurchase Senior Notes for cash at a price equal to 100% of the    
principal amount thereof, plus accrued and unpaid interest, if any, to the      
date of repurchase with the net cash proceeds of certain asset sales and if     
the Company's Net Worth (as defined) falls below a specified level for two      
consecutive fiscal quarters.                                                    

The Senior Notes will be general unsecured obligations of the Company,      
ranking senior in right of payment to all existing and future subordinated      
indebtedness of the Company and pari passu in right of payment with all         
existing and future senior indebtedness of the Company; however, the Senior     
Notes will be effectively subordinated to all secured indebtedness of the       
Company to the extent of the value of the assets securing such indebtedness.    
As of February 28, 1996, after giving effect to the Offering and the            
application of the proceeds therefrom, the Company would have had no secured    
indebtedness outstanding. The Senior Notes will be guaranteed (the              
"Guarantees"), on a joint and several basis, by all of the Restricted           
Subsidiaries (as defined) of the Company existing on the closing date of this   
Offering (collectively, the "Guarantors"). The Guarantees will be general       
unsecured obligations of the Guarantors, ranking senior in right of payment to  
all existing and future subordinated indebtedness of the Guarantors and pari    
passu in right of payment with all existing and future senior indebtedness of   
the Guarantors; however, the Guarantees will be effectively subordinated to     
all secured indebtedness of the Guarantors to the extent of the value of the    
assets securing such indebtedness. As of February 28, 1996, after giving        
effect to the Offering and the application of the proceeds therefrom, the       
Guarantors would have had approximately $16,903,000 of secured indebtedness     
outstanding.                                                                    

The Senior Notes have been approved for listing on the New York Stock       
Exchange, subject to official notice of issuance.                               

------------  

SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION  
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN     
THE SENIOR NOTES.                                                               

THESE SECURITIES HAVE  NOT BEEN APPROVED OR DISAPPROVED  BY THE SECURITIES  
AND  EXCHANGE  COMMISSION  OR  ANY  STATE  SECURITIES  COMMISSION  NOR  
HAS  THE  SECURITIES  AND   EXCHANGE  COMMISSION  OR  ANY   STATE 
SECURITIES COMMISSION  PASSED UPON THE  ACCURACY OR ADEQUACY  
OF THIS  PROSPECTUS. ANY REPRESENTATION TO  THE CONTRARY  
IS A CRIMINAL OFFENSE.                              

THE ATTORNEY GENERAL OF  THE STATE OF NEW YORK HAS  NOT PASSED ON OR  
ENDORSED THE  MERITS OF THIS OFFERING.  ANY REPRESENTATION  
TO THE CONTRARY IS UNLAWFUL.  

------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 

                                                                [Download Table]

                                                      UNDERWRITING              
                                          PRICE TO   DISCOUNTS AND  PROCEEDS TO 
                                         PUBLIC(1)   COMMISSIONS(2)  COMPANY(3) 
--------------------------------------------------------------------------------
                                                                                
Per Senior Note.......................    98.457%        1.207%       97.250%   
--------------------------------------------------------------------------------
Total.................................  $127,994,100   $1,569,100   $126,425,000

------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 
(1) Plus accrued interest, if any, from the date of original issuance.          
(2) The Company and the Guarantors have agreed to indemnify the Underwriters    
against certain liabilities, including liabilities under the Securities 
Act of 1933, as amended. See "Underwriting."                            
(3) Before deducting expenses of the Offering payable by the Company estimated  
at $500,000.                                                            

------------  

The Senior Notes are being offered, subject to prior sale, when, as and if  
delivered to and accepted by the Underwriters and subject to certain            
conditions. It is expected that delivery of the Senior Notes will be made at    
the offices of Smith Barney Inc., 388 Greenwich Street, New York, New York      
10013, on or about April 18, 1996.                                              

------------  

SMITH BARNEY INC.                                          SALOMON BROTHERS INC 

April 15, 1996                                                                  

424B1
2nd Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 2nd
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT     
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR NOTES   
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH    
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.                     

AVAILABLE INFORMATION 

The Company is subject to the informational requirements of the Securities  
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance       
therewith, files reports and other information with the Securities and          
Exchange Commission (the "Commission"). Reports, proxy and information          
statements and other information filed by the Company with the Commission       
pursuant to the informational requirements of the Exchange Act may be           
inspected and copied at the Public Reference Section maintained by the          
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the         
following Regional Offices maintained by the Commission: New York Regional      
Office, 7 World Trade Center, Suite 1300, New York, New York 10048 and Chicago  
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,          
Chicago, Illinois 60661. Copies of such material may be obtained from the       
Public Reference Section of the Commission at 450 Fifth Street, N.W.,           
Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy        
statements and other information concerning the Company (symbol "CON") can be   
inspected and copied at the offices of the New York Stock Exchange, 20 Broad    
Street, New York, New York 10005.                                               

The Company has filed with the Commission a registration statement (the     
"Registration Statement") under the Securities Act of 1933, as amended (the     
"Securities Act"), with respect to the Senior Notes offered hereby. This        
Prospectus does not contain all the information set forth in the Registration   
Statement, certain parts of which are omitted in accordance with the rules and  
regulations of the Commission. Reference is made to the Registration Statement  
and to the exhibits relating thereto for further information with respect to    
the Company and the Senior Notes offered hereby.                                

INCORPORATION OF DOCUMENTS BY REFERENCE 

The following documents, heretofore filed by the Company with the Commission
pursuant to the Exchange Act, are hereby incorporated by reference:             

 1. The Company's Annual Report on Form 10-K for the fiscal year ended May
31, 1995;                                                                   

2. The Company's Quarterly Report on Form 10-Q for the quarter ended    
August 31, 1995;                                                            

3. The Company's Quarterly Report on Form 10-Q for the quarter ended    
November 30, 1995; and                                                      

4. The Company's Quarterly Report on Form 10-Q for the quarter ended    
February 28, 1996.                                                          

Each document filed subsequent to the date of this Prospectus pursuant to   
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination  
of this Offering shall be deemed to be incorporated by reference in this        
Prospectus and shall be part hereof from the date of filing of such document.   
Any statement contained herein or in a document incorporated or deemed to be    
incorporated by reference herein shall be deemed to be modified or superseded   
for purposes of this Prospectus to the extent that a statement contained        
herein or in any other subsequently filed document which also is or is deemed   
to be incorporated by reference herein modifies or supersedes such statement.   
Any such statement so modified or superseded shall not be deemed, except as so  
modified or superseded, to constitute a part of this Prospectus.                

The Company will provide without charge to each person, including any       
beneficial owner, to whom a copy of this Prospectus has been delivered, upon    
the written or oral request of any such person, a copy of any document          
described above (other than exhibits). Requests for such copies should be       
directed to Continental Homes Holding Corp., 7001 N. Scottsdale Road, Suite     
2050, Scottsdale, Arizona 85253, Attention: Secretary, telephone number (602)   
483-0006.                                                                       

2 

424B1
3rd Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 3rd
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more 
detailed information and financial statements (including the notes thereto)     
appearing elsewhere or incorporated by reference in this Prospectus.            

THE COMPANY 

 Continental Homes Holding Corp. (the "Company") designs, constructs and sells
high quality single-family homes targeted primarily to entry-level and first-   
time move-up homebuyers. As of February 28, 1996, the Company was offering      
homes for sale in 64 communities in six markets. The Company is geographically  
diversified, currently operating in Phoenix, Arizona; Austin and San Antonio,   
Texas; Denver, Colorado; South Florida; and Southern California. The Company's  
revenues from home sales have increased from approximately $130,611,000 in      
fiscal 1991 to approximately $414,718,000 in fiscal 1995, while the Company's   
EBITDA (as defined) has increased from approximately $14,134,000 to             
approximately $43,531,000 over the same period. These increases are             
attributable to internal growth as well as acquisitions of existing             
homebuilders.                                                                   

The Company is a leading homebuilder in the Phoenix and Austin markets. The 
Phoenix metropolitan area is the Company's primary market and accounted for     
approximately 49% of the Company's revenues from homebuilding operations for    
the fiscal year ended May 31, 1995. In calendar 1995, the Company continued to  
be the leading non-retirement homebuilder in Phoenix for the eleventh           
consecutive year. The Phoenix market ranked second nationally for single-family 
housing starts in calendar 1995. The Austin market contributed approximately    
26% of the Company's revenues from homebuilding operations for the fiscal year  
ended May 31, 1995. The Company retained its number one ranking in Austin in    
calendar 1995 by delivering more single-family homes than any other             
homebuilder. The Company also has expanding operations in Denver, San Antonio,  
South Florida and Southern California. The Company complements its homebuilding 
activities by providing mortgage banking services in Arizona to its homebuyers  
and in Texas to its homebuyers and to third parties.                            

The Company markets its homes by emphasizing quality housing at affordable  
prices. The Company's operating strategy is to (i) design efficient floorplans  
to minimize construction costs, (ii) negotiate favorable pricing and terms from 
certain of its subcontractors which perform a high volume of work for the       
Company, (iii) closely monitor construction costs using the Company's custom-   
designed management information systems and (iv) maintain a supply of land to   
meet anticipated homebuilding requirements for approximately two to three       
years.                                                                          

The Company believes that it will continue to capitalize on the operating   
strategy that it has successfully implemented in the different geographical     
markets in which it operates. The Company entered the Austin, San Antonio and   
South Florida markets in July 1993, January 1994 and November 1994,             
respectively, through acquisitions of existing homebuilders. The Company will   
continue to review opportunities to enter new housing markets that have         
demonstrated periods of strong population and employment growth. The Company    
may enter such markets through either acquisitions or start-up operations.      

The Company has continued to experience improved demand for its homes. The  
aggregate sales value of new contracts signed increased 66% in the nine months  
ended February 28, 1996 to approximately $473,351,000 representing 3,538 homes  
(including approximately $24,326,000 in South Florida representing 173 homes)   
as compared with approximately $284,793,000 representing 2,193 homes (including 
$6,021,000 in South Florida representing 40 homes) for the nine months ended    
February 28, 1995. Sales in South Florida were included from November 1, 1994.  
At February 28, 1996, the Company had a backlog of signed contracts of 1,933    
homes with an aggregate sales value of approximately $270,555,000, as compared  
with 1,104 homes with an aggregate sales value of approximately $148,413,000 at 
the same time last year. The Company expects that substantially all homes under 
contract at February 28, 1996 will be delivered during the calendar year ending 
December 31, 1996.                                                              

The Company was incorporated in Delaware in June 1986. The Company's        
executive offices are located at 7001 N. Scottsdale Road, Suite 2050,           
Scottsdale, Arizona 85253; its telephone number is (602) 483-0006.              

3 

424B1
4th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 4th
THE OFFERING

Securities Offered......  $130,000,000 aggregate principal amount of 10% Senior 
        Notes due 2006 (the "Senior Notes").

Maturity Date...........  April 15, 2006.                                       

Interest Rate and         The Senior Notes will bear interest at the rate of    
Payment Dates..........  10% per annum. Interest will accrue from the Issue   
                       Date (as defined) and will be payable semi-annually
                       on April 15 and October 15 of each year, commencing
October 15, 1996.           

Optional Redemption.....  The Senior Notes will be redeemable at the option of  
                       the Company, in whole or in part, at any time on or
                     after April 15, 2001 at the redemption prices set
                      forth herein, plus accrued and unpaid interest, if
                       any, to the date of redemption. In addition, at any
                       time on or prior to April 15, 1999, the Company may
                         redeem up to 33% of the aggregate principal amount of
                        the Senior Notes originally issued with the net pro-
                       ceeds of one or more public offerings of its common
                        stock at a redemption price equal to 110% of the ag-
                      gregate principal of each Senior Note so redeemed,
                         plus accrued and unpaid interest, if any, to the date
                      of redemption; provided, however, that immediately
                        after giving effect to any such redemption, not less
                         than $86,667,000 principal amount of the Senior Notes
                       remains outstanding. See "Description of the Senior
Notes--Optional Redemption."

Offers to Purchase......  In the event of a Change of Control (as defined), the 
                         Company is required to offer to repurchase all of the
                       Senior Notes at a price equal to 101% of the aggre-
                       gate principal amount thereof, plus accrued and un-
                         paid interest, if any, to the date of repurchase. See
                         "Description of the Senior Notes--Certain Covenants--
                        Change of Control." In addition, the Company will be
                         obligated to make an offer to repurchase Senior Notes
                      for cash at a price equal to 100% of the principal
                        amount thereof, plus accrued and unpaid interest, if
                         any, to the date of repurchase with the net cash pro-
                         ceeds of certain asset sales and if the Company's Net
                        Worth (as defined) falls below a specified level for
                        two consecutive fiscal quarters. See "Description of
                      the Senior Notes--Certain Covenants--Limitation on
               Asset Sales and--Maintenance of Net Worth."

Ranking.................  The Senior Notes will be general unsecured obliga-    
                         tions of the Company, ranking senior in right of pay-
                        ment to all existing and future subordinated indebt-
                         edness of the Company and pari passu in right of pay-
                         ment with all existing and future senior indebtedness
                         of the Company; however, the Senior Notes will be ef-
                         fectively subordinated to all secured indebtedness of
                        the Company to the extent of the value of the assets
                        securing such indebtedness. As of February 28, 1996,
                        after giving effect to the Offering and the applica-
                     tion of the proceeds therefrom, the Company would
                 have had no secured indebtedness outstanding.

Guarantees..............  The Senior Notes will be guaranteed (the "Guaran-     
                       tees"), on a joint and several basis, by all of the
               Restricted Subsidiaries (as defined) of the

4 

424B1
5th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 5th
                         Company existing on the closing date of this Offering
                         (collectively, the "Guarantors"). The Guarantees will
                       be general unsecured obligations of the Guarantors,
                      ranking senior in right of payment to all existing
                       and future subordinated indebtedness of the Guaran-
                        tors and pari passu in right of payment with all ex-
                        isting and future senior indebtedness of the Guaran-
                     tors; however, the Guarantees will be effectively
                         subordinated to all secured indebtedness of the Guar-
                       antors to the extent of the value of the assets se-
                      curing such Indebtedness. As of February 28, 1996,
                        after giving effect to the Offering and the applica-
                        tion of the proceeds therefrom, the Guarantors would
                 have had approximately $16,903,000 of secured
                         indebtedness outstanding. See "Description of the Se-
nior Notes--The Guarantees."

Certain Covenants.......                                                        
                        The Indenture (as defined) will impose certain limi-
                     tations on the ability of the Company and its Re-
                       stricted Subsidiaries to, among other things, incur
                       additional indebtedness, pay dividends or make cer-
                        tain other restricted payments and investments, con-
                   summate certain asset sales, enter into certain
                      transactions with affiliates, redesignate an Unre-
                       stricted Subsidiary (as defined) to be a Restricted
                       Subsidiary, designate a Restricted Subsidiary as an
                       Unrestricted Subsidiary, incur liens, merge or con-
                   solidate with any other person or sell, assign,
                       transfer, lease, convey or otherwise dispose of all
                     or substantially all of its assets. The Indenture
                         will also impose limitations on the Company's ability
                        to restrict the ability of its Restricted Subsidiar-
                        ies to pay dividends or make certain payments to the
                        Company or any of its Restricted Subsidiaries and on
                      the ability of the Company's subsidiaries to issue
                   preferred stock. See "Description of the Senior
Notes--Certain Covenants."  

Use of Proceeds.........  The net proceeds of this Offering are estimated to be 
                         approximately $125,925,000. Such net proceeds will be
                         used to repurchase the Company's 12% Senior Notes due
                       1999 (the "Old Senior Notes") and to reduce certain
              other indebtedness. See "Use of Proceeds."

5 

424B1
6th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 6th
SUMMARY FINANCIAL INFORMATION 

The following table sets forth summary financial information regarding the  
results of operations and financial position of the Company. The summary        
financial information of the Company as of and for the five years ended May 31, 
1995 has been derived from financial statements of the Company audited by       
Arthur Andersen LLP. The summary financial information of the Company as of     
February 28, 1996 and for the nine months ended February 28, 1995 and 1996 have 
been derived from unaudited financial statements which, in the opinion of       
management, include all adjustments, consisting of only normal recurring        
adjustments, necessary for a fair presentation of such information for the      
unaudited interim periods. The operating results for the nine months ended      
February 28, 1996 are not necessarily indicative of results for the full fiscal 
year. This information should be read in conjunction with "Management's         
Discussion and Analysis of Results of Operations and Financial Condition" and   
the Company's Consolidated Financial Statements and Notes thereto incorporated  
by reference in this Prospectus.                                                

                                                        [Enlarge/Download Table]

                                                                            NINE MONTHS ENDED  
                                       YEAR ENDED MAY 31,                     FEBRUARY 28,     
                          ------------------------------------------------  ------------------ 
                            1991      1992      1993      1994      1995      1995      1996   
                          --------  --------  --------  --------  --------  --------  -------- 
                                              (DOLLARS IN THOUSANDS)                           
                                                                                               
INCOME STATEMENT DATA                                                                          
Revenues                                                                                       
 Home sales.............  $130,611  $164,815  $200,012  $340,031  $414,718  $305,753  $405,510 
 Land sales.............     4,977     3,114     4,113     1,095    10,658     7,958    11,420 
 Mortgage banking and                                                                          
  title operations......     2,930     1,905     2,426     6,967     6,707     4,945     8,357 
 Other income, net......        97       590       482       527       369       380       358 
                          --------  --------  --------  --------  --------  --------  -------- 
Total revenues..........   138,615   170,424   207,033   348,620   432,452   319,036   425,645 
                          --------  --------  --------  --------  --------  --------  -------- 
Costs and expenses                                                                             
 Homebuilding                                                                                  
 Cost of home sales.....   106,463   135,141   161,960   277,878   339,288   250,195   330,767 
 Cost of land sales.....     4,994     3,156     4,766     1,499    10,958     8,183    11,485 
 Selling, general and                                                                          
  administrative                                                                               
  expenses..............    15,514    18,648    20,836    37,065    46,308    33,549    45,080 
 Interest, net..........     2,239     1,341     5,498     4,456     4,993     3,886     4,026 
 Minority interest in                                                                          
  age-restricted                                                                               
  community.............       --        --        --        --        --        --       (164)
 Inventory writedown....     5,000     7,500       --        --        --        --        --  
 Mortgage banking and                                                                          
  title operations                                                                             
 Selling, general and                                                                          
  administrative                                                                               
  expenses..............     2,637     1,713     1,544     4,818     5,639     4,173     5,017 
 Interest, net..........       (51)     (178)       14      (233)     (199)     (352)     (123)
                          --------  --------  --------  --------  --------  --------  -------- 
Total costs and                                                                                
 expenses...............   136,796   167,321   194,618   325,483   406,987   299,634   396,088 
                          --------  --------  --------  --------  --------  --------  -------- 
Equity in loss of                                                                              
 unconsolidated joint                                                                          
 ventures...............    (1,342)     (948)     (332)      --        --        --        --  
                          --------  --------  --------  --------  --------  --------  -------- 
Income before taxes and                                                                        
 extraordinary items....       477     2,155    12,083    23,137    25,465    19,402    29,557 
Income taxes............       361       863     4,983    10,054    11,644     8,721    12,858 
                          --------  --------  --------  --------  --------  --------  -------- 
Income from operations..       116     1,292     7,100    13,083    13,821    10,681    16,699 
Extraordinary gain                                                                             
 (loss) from                                                                                   
 extinguishment of                                                                             
 debt(1)................       --      5,299       --        --        --        --       (859)
                          --------  --------  --------  --------  --------  --------  -------- 
Net income..............  $    116  $  6,591  $  7,100  $ 13,083  $ 13,821  $ 10,681  $ 15,840 
                          ========  ========  ========  ========  ========  ========  ======== 
Ratio of earnings to                                                                           
 fixed charges,                                                                                
 including mortgage                                                                            
 banking operations(2)..        (3)     1.44x     1.91x     2.36x     1.99x     2.05x     2.52x
Ratio of earnings to                                                                           
 fixed charges,                                                                                
 excluding mortgage                                                                            
 banking                                                                                       
 operations(2)(4).......        (3)     1.51x     2.01x     2.62x     2.11x     2.17x     2.68x
HOUSING DATA(5)                                                                                
Deliveries..............     1,249     1,470     1,769     2,831     3,202     2,357     3,098 
New contracts, net......     1,317     1,627     2,000     2,844     3,427     2,193     3,538 
Backlog at end of period                                                                       
 (units)................       486       669       900     1,136     1,493     1,104     1,933 
Backlog at end of period                                                                       
 ($ value)..............  $ 53,180  $ 76,215  $107,499  $147,242  $198,126  $148,413  $270,555 

6 

424B1
7th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 7th
                                                                [Download Table]

                                      FOUR FISCAL QUARTERS ENDED                  
                         ---------------------------------------------------------
                                         MAY 31,                                  
                         -------------------------------------------  FEBRUARY 28,
                          1991     1992     1993     1994     1995        1996    
                         -------  -------  -------  -------  -------  ------------
                                        (DOLLARS IN THOUSANDS)                    
                                                                                  
OTHER FINANCIAL DATA(6)                                                           
EBITDA(7)............... $14,134  $17,599  $24,846  $36,923  $43,531    $58,407   
Consolidated Interest                                                             
 Incurred...............  10,233    9,366   12,040   13,378   19,693     22,107   
Coverage Ratio..........    1.38x    1.88x    2.06x    2.76x    2.21x      2.64x  
Consolidated Interest                                                             
 Incurred, as adjust-                                                             
 ed(8)..................     --       --       --       --   $19,988    $21,825   
Coverage Ratio, as ad-                                                            
 justed(8)..............     --       --       --       --      2.18x      2.68x  

                                                        [Enlarge/Download Table]

                                           MAY 31,                       FEBRUARY 28, 1996   
                         -------------------------------------------- -----------------------
                           1991     1992     1993     1994     1995    ACTUAL  AS ADJUSTED(8)
                         -------- -------- -------- -------- -------- -------- --------------
                                                (DOLLARS IN THOUSANDS)                       
                                                                                             
BALANCE SHEET DATA                                                                           
Assets                                                                                       
 Homes, lots and                                                                             
  improvements in                                                                            
  production............ $ 93,739 $116,450 $142,589 $205,369 $291,331 $332,833    $332,833   
                         ======== ======== ======== ======== ======== ========    ========   
 Total homebuilding as-                                                                      
  sets.................. $118,411 $140,598 $172,798 $266,384 $350,659 $400,175    $397,277   
 Mortgage banking as-                                                                        
  sets..................   24,301   22,176   14,727   39,106   36,174   21,282      21,282   
                         -------- -------- -------- -------- -------- --------    --------   
 Total assets........... $142,712 $162,774 $187,525 $305,490 $386,833 $421,457    $418,559   
                         ======== ======== ======== ======== ======== ========    ========   
Debt                                                                                         
 Homebuilding........... $ 82,235 $ 81,293 $106,183 $144,048 $198,814 $233,061    $243,084   
 Mortgage banking.......   22,146   20,448    8,604   24,271   34,011   10,980      10,980   
                         -------- -------- -------- -------- -------- --------    --------   
 Total debt............. $104,381 $101,741 $114,787 $168,319 $232,825 $244,041    $254,064   
                         ======== ======== ======== ======== ======== ========    ========   
Stockholders' equity.... $ 28,562 $ 44,428 $ 51,550 $ 98,560 $110,479 $125,787    $119,727   
                         ======== ======== ======== ======== ======== ========    ========   

--------                                                                        
(1) Fiscal 1992 reflects the retirement of a note payable at an amount less     
than par. Nine months ended February 28, 1996 reflects the write-off of 
 unamortized discount and debt issuance costs related to the redemption of
 the Company's 6 7/8% Convertible Subordinated Notes due March 15, 2002 in
December 1995.                                                          
(2) For purposes of calculating the ratio of earnings to fixed charges,         
 earnings consist of income from operations before income taxes plus fixed
charges (net of capitalized interest). Fixed charges include interest   
 expense plus capitalized interest and a portion of operating lease rental
expense deemed to be representative of interest.                        
(3) Fiscal 1991 includes a pre-tax writedown of $5,000,000. After giving effect 
to such writedown, earnings for the fiscal year ended May 31, 1991 were 
  inadequate to cover fixed charges and resulted in a coverage deficiency of
$3,009,000.                                                             
(4) The Company believes that the ratio of earnings to fixed charges excluding  
  interest expense attributable to the Company's mortgage banking operations
   may be helpful to investors in understanding the Company's ability to cover
fixed charges for its homebuilding operations. See "Business--Mortgage  
Banking."                                                               
(5) Data for fiscal 1991 excludes the Company's proportionate share of homes    
sold and closed in unconsolidated joint ventures.                       
(6) Calculated in accordance with the definitions of such terms contained in    
   the Indenture and set forth herein under "Description of the Senior Notes--
Certain Definitions."                                                   
(7) EBITDA is a widely accepted financial indicator of a company's ability to   
  service debt. However, EBITDA should not be construed as an alternative to
  operating income or to cash flows from operating activities (as determined
   in accordance with generally accepted accounting principles) and should not
  be construed as an indication of the Company's operating performance or as
a measure of liquidity.                                                 
(8) As adjusted to give effect to the issuance and sale by the Company of the   
Senior Notes, the application of the estimated net proceeds therefrom as
described under "Use of Proceeds" (assuming that $98,190,000 aggregate  
principal amount of Old Senior Notes are acquired at a tender price of  
$1,091.80 for each Old Senior Note) and the extraordinary loss, net of  
taxes, related to the tender offer premium pursuant to the Offer to     
 Purchase (as defined) and the writeoff of debt issuance costs and the net
premium relating to the repurchase of the Old Senior Notes.             

7 

424B1
8th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 8th
RISK FACTORS  

Prospective purchasers of the Senior Notes should consider carefully the    
factors set forth below as well as the other information set forth or           
incorporated by reference in this Prospectus prior to investing in the Senior   
Notes.                                                                          

THE HOUSING INDUSTRY                                                            

Homebuilders, including the Company, are subject to various risks, such as  
economic recession, competitive overbuilding, changes in governmental           
regulation, increases in real estate taxes, energy costs or costs of materials  
and labor, the availability of suitable land, and the availability of           
construction funds or mortgage loans at rates acceptable to builders and        
homebuyers. In addition, increases in interest rates or a reduction in the      
deductibility of mortgage interest for federal tax purposes may have an         
adverse effect upon the Company's sales and could affect the availability of    
home financing to present and potential customers of the Company.               

LEVERAGE; POTENTIAL ADVERSE EFFECT OF INDEBTEDNESS ON FUTURE OPERATIONS         

As of February 28, 1996, after giving effect to the Offering and the        
application of the proceeds therefrom, the outstanding consolidated             
indebtedness of the Company would have been $243,084,000 (excluding mortgage    
banking related indebtedness) and the Company would have had stockholders'      
equity of $119,727,000. In addition, subject to the restrictions in the         
Indenture, the Company may incur additional indebtedness in the future, some    
of which may be secured. The Company's ability to make required debt service    
payments in the future will be dependent upon the Company's operating results,  
which are subject to financial, economic and other factors affecting the        
Company that are beyond its control. No assurance can be given that the         
Company will be able to make required debt service payments.                    

The degree to which the Company is leveraged could have an adverse impact on
the Company, including (i) increased vulnerability to adverse general economic  
and market conditions, (ii) impaired ability to expand and to respond to        
increased competition, (iii) impaired ability to obtain additional financing    
for future working capital, capital expenditures, general corporate or other    
purposes and (iv) requiring that a significant portion of cash provided by      
operating activities be used for the payment of debt obligations, thereby       
reducing funds available for operations and future business opportunities.      

COMPETITION                                                                     

The single-family residential housing industry is highly competitive and the
Company competes in each of its markets with numerous other national, regional  
and local homebuilders, some of which have greater resources than the Company.  
The Company's homes compete on the basis of quality, price, design, mortgage    
financing terms and location. See "Business--Operating Strategy." The Company   
also competes with developers of rental housing units and, to a lesser extent,  
condominiums.                                                                   

GROWTH THROUGH ACQUISITIONS                                                     

During the past three years, the Company has expanded its operations into   
new housing markets primarily by means of acquisitions of existing              
homebuilders. The Company entered the Austin, San Antonio and South Florida     
markets in July 1993, January 1994 and November 1994, respectively, through     
acquisitions of existing homebuilders. The Company will continue to review      
opportunities to enter new housing markets that have demonstrated periods of    
strong population and employment growth. However, there can be no assurance     
that the Company will be able to locate or acquire other suitable acquisition   
candidates on acceptable terms, or that it will be successful in managing the   
operations of the entities acquired and effectively and profitably integrating  
such operations into the Company. Additionally, there can be no assurance that  
any future acquisitions will not have a material adverse effect on the          
Company's operating results, particularly during the period immediately         
following such acquisitions.                                                    

8 

424B1
9th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 9th
DEPENDENCE ON KEY PERSONNEL                                                     

The Company's business is managed by a small number of executive officers.  
The loss of the services of one or more of these executive officers could have  
a material adverse effect on the business and operations of the Company.        

FRAUDULENT CONVEYANCE                                                           

The Company is a holding company which derives all of its operating income  
from its subsidiaries. The Company must rely on dividends and other             
distributions from its subsidiaries to generate the funds necessary to meet     
its obligations, including the payment of principal and interest on the Senior  
Notes. The ability of the Company's subsidiaries to pay such dividends or make  
such distributions will be subject to, among other things, applicable state     
laws and, under certain circumstances, restrictions contained in agreements or  
debt instruments that the Company or its subsidiaries may enter into after the  
date of the Indenture. All of the subsidiaries of the Company have jointly and  
severally guaranteed the Senior Notes.                                          

The Guarantees may be subject to review under federal or state fraudulent   
conveyance law. To the extent that a court were to find that (x) a Guarantee    
was incurred by a Guarantor with intent to hinder, delay, or defraud any        
present or future creditor, or the Guarantor contemplated insolvency with a     
design to prefer one or more creditors to the exclusion in whole or in part of  
others, or (y) such Guarantor did not receive fair consideration or reasonable  
equivalent value for issuing its Guarantee and such Guarantor (i) was           
insolvent, (ii) was rendered insolvent by reason of the issuance of such        
Guarantee, (iii) was engaged or about to engage in a business or transaction    
for which the remaining assets of such Guarantor constituted unreasonably       
small capital to carry on its business, or (iv) intended to incur, or believed  
that it would incur, debts beyond its ability to pay such debts as they         
matured, a court could avoid or subordinate such Guarantee in favor of the      
Guarantor's creditors. Among other things, a legal challenge of a Guarantee on  
fraudulent conveyance grounds may focus on the benefits, if any, realized by    
each Guarantor as a result of the issuance by the Company of the Senior Notes.  
The measure of insolvency for purposes of the foregoing will vary depending on  
the law of the jurisdiction being applied. Generally, however, an entity would  
be considered insolvent if the sum of its debts (including contingent or        
unliquidated debts) is greater than all its property at a fair valuation or if  
the present fair saleable value of its assets is less than the amount that      
will be required to pay its probable liability on its existing debts as they    
become absolute and matured. Pursuant to the terms of the Guarantees, the       
liability of each Guarantor is limited to the maximum amount of indebtedness    
permitted, at the time of the grant of such Guarantee, to be incurred in        
compliance with fraudulent conveyance or similar laws.                          

To the extent any Guarantee was avoided or subordinated as a fraudulent     
conveyance, limited as described above, or held unenforceable for any other     
reason, holders of the Senior Notes would, to such extent, cease to have a      
claim in respect of such Guarantee and, to such extent, would be creditors      
solely of the Company and any Guarantor whose Guarantee was not avoided,        
subordinated, limited, or held unenforceable. In such event, the claims of the  
holders of the Senior Notes against the issuer of an avoided, subordinated,     
limited or unenforceable Guarantee would be subject to the prior payment of     
all liabilities of such Guarantor. There can be no assurance that, after        
providing for all prior claims, there would be sufficient assets to satisfy     
the claims of the holders of the Senior Notes.                                  

REPURCHASE OF SENIOR NOTES UPON A CHANGE OF CONTROL                             

In the event of a Change of Control, the Company will be required to offer  
to repurchase all of the outstanding Senior Notes at a purchase price equal to  
101% of the aggregate principal amount thereof, plus accrued and unpaid         
interest, if any, to the repurchase date. There can be no assurance that the    
Company will have sufficient funds available or will be permitted by its other  
indebtedness agreements to repurchase the Senior Notes upon the occurrence of   
a Change of Control. The Change of Control purchase feature of the Senior       
Notes may in certain circumstances make more difficult or discourage a          
takeover of the Company and, thus, the removal of incumbent management. The     
Change of Control purchase feature, however, is not the result of               

9 

424B1
10th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 10th
management's knowledge of any specific effort to obtain control of the Company  
by means of a merger, tender offer, solicitation or otherwise, or part of a     
plan by management to adopt a series of anti-takeover provisions. See           
"Description of the Senior Notes--Certain Covenants--Change of Control."        

ABSENCE OF PUBLIC MARKET                                                        

The Senior Notes are a new issue of securities which have no established    
trading market. It is expected that the Senior Notes will be sold to a limited  
number of investors. The Company has been advised by the Underwriters that      
they intend to make a market in the Senior Notes after the consummation of      
this Offering; however, the Underwriters are not obligated to do so, and any    
such market-making, if commenced, may be terminated at any time without         
notice. In addition, the Senior Notes have been approved for listing on the     
New York Stock Exchange. No assurance can be given as to the liquidity of the   
trading market, if any, for the Senior Notes.                                   

USE OF PROCEEDS 

The net proceeds to the Company from the sale of the Senior Notes are       
estimated to be $125,925,000. The Company intends to use approximately          
$107,204,000 of the net proceeds to repurchase $98,190,000 aggregate principal  
amount of the Old Senior Notes (excluding accrued interest) and approximately   
$18,721,000 of the net proceeds to reduce temporarily outstanding amounts       
under certain of the Company's revolving lines of credit (bearing interest at   
rates varying from prime plus 1/4% to prime plus 1/2% at February 28, 1996)     
which were incurred for working capital purposes. The Company continually       
evaluates acquisition opportunities; however, the Company currently has no      
agreements or understandings with respect to the acquisition of any             
homebuilding operations.                                                        

The Company has made an offer to purchase (the "Offer to Purchase") for cash
all of the outstanding Old Senior Notes at a price equal to 109.18% of the      
principal amount thereof, plus accrued and unpaid interest, if any, to the      
repurchase date. The Offer to Purchase expires at 3:00 p.m. on April 19, 1996.  
If all of the Old Senior Notes are not tendered to the Company pursuant to the  
Offer to Purchase, the Company may seek to acquire the remaining Old Senior     
Notes by means of open market purchases or privately negotiated acquisitions.   
Although it has no obligation to do so, the Company currently intends to        
redeem on August 1, 1997 (the first day on which the Old Senior Notes are       
redeemable) any Old Senior Notes not tendered pursuant to the Offer to          
Purchase or otherwise repurchased by the Company at a redemption price equal    
to 104% of the principal amount thereof, plus accrued and unpaid interest, if   
any, to the redemption date. The Old Senior Notes bear interest at a rate of    
12% per annum and mature on August 1, 1999.                                     

10  

424B1
11th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 11th
CAPITALIZATION  

The following table sets forth the capitalization of the Company at February
28, 1996, and as adjusted to give effect to the issuance and sale by the        
Company of the Senior Notes and the application of the estimated net proceeds   
therefrom. See "Use of Proceeds."                                               

                                                                [Download Table]

                                                           FEBRUARY 28, 1996   
                                                          ---------------------
                                                           ACTUAL   AS ADJUSTED
                                                          --------  -----------
                                                             (IN THOUSANDS)    
                                                                               
Cash and cash equivalents................................ $ 19,894   $ 17,243  
                                                          ========   ========  
Debt(1)                                                                        
  Homebuilding                                                                 
    Notes payable (including current maturities of ap-                         
     proximately $20,624,000)(2)......................... $ 35,624   $ 16,903  
    10% Senior Notes due 2006............................      --     127,994  
    12% Senior Notes due 1999(3).........................  111,187     11,937  
    6 7/8% Convertible Subordinated Notes due November 1,                      
     2002................................................   86,250     86,250  
                                                          --------   --------  
      Total..............................................  233,061    243,084  
                                                          --------   --------  
  Mortgage banking                                                             
    Notes payable due within one year....................   10,268     10,268  
    Bonds payable........................................      712        712  
                                                          --------   --------  
      Total..............................................   10,980     10,980  
                                                          --------   --------  
        Total debt.......................................  244,041    254,064  
                                                          --------   --------  
Stockholders' equity                                                           
  Common Stock, $.01 par value; 20,000,000 shares                              
   authorized; 7,080,900 shares issued(4)................       71         71  
  Treasury stock, at cost, 93,740 shares.................      (81)       (81) 
  Capital in excess of par value.........................   59,610     59,610  
  Retained earnings(5)...................................   66,187     60,127  
                                                          --------   --------  
        Total stockholders' equity.......................  125,787    119,727  
                                                          --------   --------  
Total capitalization..................................... $369,828   $373,791  
                                                          ========   ========  

--------                                                                        
(1) See Note E of "Notes to Consolidated Financial Statements" incorporated     
herein by reference for further information regarding the terms of the  
Company's indebtedness.                                                 
(2) The Company is currently in discussions with a group of banks to obtain an  
unsecured revolving credit facility to be used for working capital and  
general corporate purposes. The new facility will replace all of the    
 Company's existing lines of credit (other than warehouse lines) which had
aggregate commitments of $90 million at February 28, 1996.              
(3) Assumes $98,190,000 aggregate principal amount of the Old Senior Notes is   
repurchased by the Company pursuant to the Offer to Purchase.           
(4) Excludes 3,631,556 shares reserved for issuance upon conversion of the 6    
7/8% Convertible Subordinated Notes due November 1, 2002 and 372,240    
shares reserved for issuance pursuant to options granted under the      
Company's stock option plans.                                           
(5) Adjusted to reflect the extraordinary loss, net of taxes, related to the    
tender offer premium pursuant to the Offer to Purchase and the write-off
of debt issuance costs and the net premium relating to the repurchase of
the Old Senior Notes.                                                   

11  

424B1
12th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 12th
BUSINESS  

The Company designs, constructs and sells high quality single-family homes  
targeted to primarily entry-level and first-time move-up homebuyers. As of      
February 28, 1996, the Company was offering homes for sale in 64 communities    
in six markets. The Company is geographically diversified, currently operating  
in Phoenix, Arizona; Austin and San Antonio, Texas; Denver, Colorado; South     
Florida; and Southern California. The Company also offers mortgage banking      
services in Arizona to its homebuyers and in Texas to its homebuyers and to     
third parties.                                                                  

OPERATING STRATEGY                                                              

The following are the major elements of the Company's operating strategy:   

Geographic Diversification. The Phoenix metropolitan area is the Company's  
primary market and accounted for approximately 49% of the Company's revenues    
from homebuilding operations for the fiscal year ended May 31, 1995. The        
Company began diversifying its operations by expanding into Denver in 1987 and  
Southern California in 1988. Over the last three years, the Company entered     
the Austin, San Antonio and South Florida markets through the acquisition of    
homebuilders with established operations. The Company will continue to review   
opportunities to enter new housing markets that have demonstrated periods of    
strong population and employment growth. The Company may enter such markets     
through either acquisitions or start-up operations.                             

Product. The Company sells single-family homes targeted primarily to entry- 
level and first-time move-up buyers. The Company emphasizes quality homes with  
distinctive design features offered at affordable prices within each of its     
markets. The Company believes that today's homebuyers are particularly value-   
oriented and that the entry-level and first-time move-up markets represent the  
largest segments of the homebuilding market. During fiscal 1995, the average    
sales price of the Company's homes was approximately $129,500. Additionally,    
the Company has entered into a joint venture to begin constructing retirement   
homes in Phoenix. This represents the Company's first project in the            
retirement market and may represent an area of future growth.                   

Cost Control. The Company controls the costs of construction through the    
efficient design of its homes and the favorable pricing it receives from        
certain subcontractors which perform a high volume of work for the Company.     
The Company's custom-designed management information systems also assist in     
controlling construction costs by making information available which allows     
the Company to monitor subcontractor performance and expenditures for each      
house built. As part of management's control of general and administrative      
expense, internal operations are continually monitored to reduce overhead and   
improve efficiency.                                                             

Inventory Management. The Company's objective is to maintain a supply of    
land to meet anticipated homebuilding requirements for approximately two to     
three years. At February 28, 1996, the Company had approximately 38 months of   
inventory based on actual deliveries in fiscal 1995. To further control         
inventory, the Company builds speculative units only to maintain a limited      
inventory of homes available for quick delivery or to continue the              
construction sequence in a particular subdivision.                              

Mortgage Banking. The Company's mortgage banking operations offer           
competitive financing alternatives to many of its homebuyers in Arizona and     
Texas (and to third parties in Texas), assisting customers through the loan     
application and approval process. These operations augment the Company's        
earnings and assist in home sales by enabling the Company to monitor the        
progress of mortgage applications.                                              

12  

424B1
13th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 13th
LAND ACQUISITION AND DEVELOPMENT                                                

As of February 28, 1996, the Company operated 19 subdivisions in Phoenix, 19
subdivisions in Austin, ten subdivisions in Denver, eight subdivisions in San   
Antonio, four subdivisions in South Florida and four subdivisions in Southern   
California. The following table summarizes the Company's available lot          
inventory at February 28, 1996 by location:                                     

AVAILABLE LOT INVENTORY 

                                                                [Download Table]

                                                                    SITES    
                                                                  AVAILABLE  
                                               HOMES UNDER       FOR FUTURE  
                                              CONSTRUCTION      CONSTRUCTION 
                               TOTAL LOTS --------------------- -------------
                               AVAILABLE  SOLD  SPECS(1) MODELS UNSOLD  SOLD 
                               ---------- ----- -------- ------ ------- -----
                                                                             
Phoenix.......................    3,938     827   186      50     2,798   77 
Texas(2)......................    5,574     475   178      41     4,800   80 
Denver........................    1,341     153    72      21     1,029   66 
South Florida.................    1,451     111    55      18     1,239   28 
Southern California...........      360      78    58       9       177   38 
                                 ------   -----   ---     ---   ------- ---- 
Total.........................   12,664   1,644   549     139    10,043  289 
                                 ======   =====   ===     ===   ======= ==== 

--------                                                                        
(1) Speculative units are unsold homes under construction.                      
(2) Includes operations in Austin and San Antonio.                              

The Company's objective is to maintain a supply of land to meet anticipated 
homebuilding requirements for approximately two to three years. At February     
28, 1995 and 1996, the Company had an aggregate of 9,864 and 10,043 unsold      
lots, respectively, which represents approximately 42 and 38 months of          
inventory, respectively, based on actual deliveries in each of fiscal 1994 and  
1995. The Company believes that an adequate supply of undeveloped land is       
available in its markets to maintain current levels of homebuilding.            

As of February 28, 1996, the Company also owned 417 acres in Carlsbad,      
California, located in San Diego County. Discretionary city entitlements for    
this project, which will result in approximately 760 dwelling units, were       
approved by the Carlsbad City Council in March 1995. The Company is currently   
working with state and federal governmental agencies regarding environmental    
issues with regard to the property and is preparing final improvement plans     
for the project. The Company is unable to predict the date on which all         
additional approvals necessary to commence development will be received, but    
it is currently actively seeking these additional approvals and will commence   
development as soon as the aforementioned approvals are received and financing  
is obtained.                                                                    

PRODUCT LINES                                                                   

The product line constructed by the Company in a particular subdivision is  
dependent upon many factors, including the housing generally available in the   
area, the needs of the particular market and the Company's cost of lots in the  
subdivision. The Company typically offers between three and sixteen floorplans  
within the same product line in each subdivision and often offers the same      
models in similar subdivisions. Models are periodically reviewed and updated    
to reflect changing homebuyer preferences. Both new models and design           
modifications are generally developed by Company employees.                     

Homes sold by the Company typically have three to five bedrooms, two or more
bathrooms and at least a two car garage. The Company offers a variety of        
options and upgrades, including the placement of certain walls, the style of    
kitchen and bathroom cabinetry, a selection of floor coverings and light        
fixtures, patios, decks, french doors and fireplaces, which allow homebuyers    
to customize their homes. Options and upgrades are generally priced to have a   
positive effect on profit margins.                                              

13  

424B1
14th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 14th
PRODUCT LINES 

                                                                [Download Table]

                                            LIVING AREA    BASE PRICE RANGE  
                                           (SQUARE FEET) AT FEBRUARY 28, 1996
                                           ------------- --------------------
                                                                             
Phoenix                                                                      
  Move-up single-family...................  1,391-3,761   $105,800-$217,600  
  Entry-level single-family...............  1,287-2,484   $ 86,300-$162,200  
Texas(1)                                                                     
  Move-up single-family...................  1,799-3,230   $123,300-$166,400  
  Entry-level single-family...............    924-2,807   $ 58,950-$153,250  
Denver                                                                       
  Move-up single-family...................  1,820-3,096   $151,800-$235,600  
  Entry-level single family...............  1,358-1,822   $134,900-$145,900  
South Florida                                                                
  Move-up single-family...................  1,615-2,511   $134,900-$171,900  
  Entry-level single-family...............  1,314-2,012   $ 89,900-$140,900  
Southern California                                                          
  Move-up single-family...................  2,980-4,093   $389,000-$439,000  
  Entry-level single-family...............  1,803-3,165   $149,900-$206,900  

--------                                                                        
(1) Includes operations in Austin and San Antonio.                              

HOMES DELIVERED 

                                                                [Download Table]

                                                             NINE MONTHS    
                                 YEAR ENDED MAY 31,      ENDED FEBRUARY 28, 
                             --------------------------- -------------------
                               1993     1994      1995     1995      1996   
                             -------- --------- -------- --------- ---------
                                                                            
Move-up single-family                                                       
  Revenues (000's).......... $ 56,293 $ 128,494 $208,026 $ 155,719 $ 164,646
  Units.....................      350       811    1,281       969       974
  Average sales price....... $160,800 $ 158,400 $162,400 $ 160,700 $ 169,000
Entry-level single-family                                                   
  Revenues (000's).......... $143,719 $ 206,615 $206,692 $ 150,034 $ 240,864
  Units.....................    1,419     1,976    1,921     1,388     2,124
  Average sales price....... $101,300 $ 104,600 $107,600 $ 108,100 $ 113,400
Townhomes and duplex homes                                                  
  Revenues (000's).......... $    --  $   4,922 $    --  $     --  $     -- 
  Units.....................      --         44      --        --        -- 
  Average sales price....... $    --  $ 111,900 $    --  $     --  $     -- 
Total                                                                       
  Revenues (000's).......... $200,012 $ 340,031 $414,718 $ 305,753 $ 405,510
  Units.....................    1,769     2,831    3,202     2,357     3,098
  Average sales price....... $113,100 $ 120,100 $129,500 $ 129,700 $ 130,900

Fluctuations in the number of homes delivered by product type are generally 
related to product availability, market conditions or the introduction of a new 
product.                                                                        

CONTRACT BACKLOG                                                                

Sales of the Company's homes are made pursuant to standard sales contracts  
which require a $500 to $2,500 deposit upon signing. The contract is generally  
cancellable if the customer is unable to obtain a mortgage commitment, usually  
within 60 days. A sale becomes part of backlog only upon receipt of a signed    
contract and a deposit. See "--Construction and Customer Service."              

14

424B1
15th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 15th
The following table summarizes information related to the Company's backlog 
at the dates indicated:                                                         

                                                                [Download Table]

                                                      FEBRUARY 28,         
                                              -----------------------------
                                                   1995           1996     
                                              -------------- --------------
                                              UNITS DOLLARS  UNITS DOLLARS 
                                              ----- -------- ----- --------
                                                 (DOLLARS IN THOUSANDS)    
                                                                           
Phoenix......................................   590 $ 76,355   904 $117,143
Texas........................................   297   31,400   555   59,930
South Florida................................    74   10,256   139   19,873
Denver.......................................    94   17,086   219   45,123
Southern California..........................    49   13,316   116   28,486
                                              ----- -------- ----- --------
  Total backlog.............................. 1,104 $148,413 1,933 $270,555
                                              ===== ======== ===== ========

The Company anticipates that substantially all of the homes in backlog at   
February 28, 1996 will be delivered during the calendar year ending December    
31, 1996.                                                                       

MARKETING                                                                       

The Company markets its homes to first-time and move-up buyers. Although the
Company utilizes the services of independent brokers, approximately 43% of the  
Company's homes sold in the nine months ended February 28, 1996 were sold by    
Company commissioned personnel (without the assistance of independent brokers)  
from sales offices located in furnished model homes in the subdivisions. Sales  
personnel are trained by the Company and attend weekly meetings to be updated   
on financing availability, construction schedules and marketing and             
advertising plans. Company sales personnel and independent brokers are          
generally paid a commission at the time of closing of between 1% to 2%          
(depending on the market) and 3%, respectively, of the sales price of the       
home. The Company uses radio, newspapers, magazines, billboard displays,        
special promotional events and, occasionally, television in its marketing       
program.                                                                        

The Company builds its homes under the guidelines and specifications of the 
Federal Housing Administration ("FHA") and the Veterans Administration ("VA"),  
thereby providing prospective buyers the added benefits of FHA-insured and VA-  
guaranteed mortgages.                                                           

CONSTRUCTION AND CUSTOMER SERVICE                                               

The Company designs and supervises the development and building of its      
projects. The construction period for the Company's homes during fiscal 1995    
ranged from 100 to 180 days in Phoenix, from 75 to 120 days in Texas, from 120  
to 180 days in Denver, from 90 to 120 days in South Florida and from 100 to     
150 days in Southern California.                                                

The actual construction is performed for a fixed price by independent       
subcontractors, who are generally selected on a competitive basis. All stages   
of construction are supervised by the Company's on-site superintendents who     
coordinate the activities of subcontractors, subject their work to quality and  
cost controls and monitor compliance with zoning and building codes. The        
Company's management information systems also assist the Company in             
controlling the costs of construction by making information available which     
allows the Company to monitor subcontractor performance and expenditures. The   
Company believes its relationships with its subcontractors are good.            

The Company provides homebuyers with a one-year warranty on its homes for   
non-structural defects and a two-year warranty with respect to structural       
defects. In addition, the Company purchases, in certain locations, builder's    
liability insurance protection for major structural defects in the third        
through tenth year.                                                             

In Phoenix, Denver, South Florida and Southern California, the Company      
constructs homes principally against orders which are evidenced by written      
contracts and modest escrow deposits. In each of fiscal 1995 and for the nine   
months ended February 28, 1996, approximately 16% of such contracts have been   
cancelled, a                                                                    

15  

424B1
16th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 16th
majority of such cancellations being attributable to the inability of the       
prospective purchaser to qualify for financing. The Company attempts to limit   
cancellations by training its sales force to determine the qualification of     
potential homebuyers at the sales office. The Company classifies a unit as      
speculative when construction commences on a unit that does not have a written  
contract. The Company may construct speculative units in order to maintain an   
inventory for quick delivery or to continue the construction sequence. The      
majority of the Company's speculative units are less than 50% complete. As a    
result of such cancellations and construction procedures, at February 28, 1995  
and 1996 the Company had respectively 571 and 549 speculative units under       
construction.                                                                   

MORTGAGE BANKING                                                                

The Company commenced mortgage banking operations in 1986 and all mortgage  
operations of the Company have been conducted by American Western Mortgage      
Company ("AWMC") and Miltex Management, Inc., which are approved by the FHA     
and VA as qualified mortgage lenders. As of July 1, 1995, all mortgage          
operations of the Company are being conducted by AWMC which has changed its     
name to CH Mortgage Company ("CHMC").                                           

As a mortgage banker, CHMC completes the processing of loan applications,   
performs credit checks, submits applications to mortgage lenders for approval,  
and originates and sells mortgage loans. CHMC has a $25,000,000 warehouse line  
of credit to fund the mortgage loans on an interim basis. CHMC bears the        
interest expense and receives the interest income while mortgages are           
warehoused. Accordingly, depending upon the relative interest rates of such     
loans and the related mortgages and the extent to which mortgages are           
financed, CHMC may have net interest income or expense during the warehouse     
period.                                                                         

CHMC establishes its interest rates and terms to facilitate the sale of the 
Company's homes through the originations of first mortgage loans utilizing      
programs established by the FHA, VA, GNMA and FNMA. Interest rates are          
generally established by prevailing market rates, although lower rates may be   
offered from time to time to remain competitive in certain markets.             

Each mortgage originated by CHMC contains the provision for a servicing fee 
(which is included as a part of the monthly payment made by the mortgagor) to   
be paid for the collection of, and accounting for, mortgage payments. This      
servicing fee provision is a separate interest in the mortgage that may be      
sold independently of, or together with, the mortgage itself. CHMC began        
retaining a portion of the servicing portfolio in fiscal 1991 and from time to  
time may continue to do so, although this is not expected to become a material  
part of the Company's business. During fiscal 1995, the Company sold            
significantly all of the servicing rights that were originated during such      
year, and during the third quarter of fiscal 1996, the Company sold             
significantly all of the servicing rights it had previously retained.           

COMPETITION                                                                     

The single-family residential housing industry is highly competitive, and   
the Company competes in each of its markets with numerous other national,       
regional and local homebuilders, some of which have greater resources than the  
Company. The Company's homes compete on the basis of quality, price, design,    
mortgage financing terms and location. See "--Operating Strategy." The Company  
also competes with developers of rental housing units and, to a lesser extent,  
condominiums.                                                                   

REGULATION                                                                      

The housing and mortgage banking industries are subject to extensive and    
complex regulations. The Company and its subcontractors must comply with        
various federal, state and local laws and regulations including zoning and      
density requirements, building, environmental, advertising and consumer credit  
rules and regulations as well as other rules and regulations in connection      
with its homebuilding and sales activities. These include                       

16  

424B1
17th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 17th
requirements as to building materials to be used, building designs and minimum  
elevation of properties. The Company's homes are inspected by local             
authorities where required, and homes eligible for insurance or guarantees      
provided by the FHA and VA, respectively, are subject to inspection by the FHA  
or VA.                                                                          

The Company is also subject to a variety of local, state and federal        
statutes, ordinances, rules and regulations concerning protection of health     
and the environment ("environmental laws"), as well as effects of               
environmental factors. The particular environmental laws which apply to any     
given homebuilding site vary greatly according to the site's location, the      
site's environmental condition and the present and former uses of the site.     
These environmental laws may result in delays, may cause the Company to incur   
substantial compliance and other costs, and can prohibit or severely restrict   
homebuilding activity in certain environmentally sensitive regions or areas.    

The Company's mortgage banking subsidiary must also comply with various     
federal and state laws and consumer credit rules and regulations as well as     
rules and regulations in connection with its mortgage lending activities.       
Additionally, mortgage loans originated under the FHA, VA, FNMA and GNMA are    
subject to rules and regulations imposed by such agencies.                      

EMPLOYEES                                                                       

At February 28, 1996, the Company and its subsidiaries employed             
approximately 508 persons, including corporate staff, sales personnel,          
construction personnel and mortgage and title staff. None of the Company's      
employees is covered by a collective bargaining agreement. The Company          
believes that its relations with its employees are good.                        

DESCRIPTION OF THE SENIOR NOTES 

The Senior Notes offered hereby are to be issued under an Indenture, dated  
as of April 15, 1996 (the "Indenture"), among the Company, the Guarantors and   
First Union National Bank, as Trustee (the "Trustee"), a copy of which is an    
exhibit to the Registration Statement of which this Prospectus is a part. The   
following summaries of certain provisions of the Indenture do not purport to    
be complete and are subject to, and are qualified in their entirety by          
reference to, all of the provisions of the Indenture, including the             
definitions therein of certain terms. Wherever particular defined terms of the  
Indenture are referred to, such defined terms are incorporated herein by        
reference. For purposes of this section and the Indenture, references to the    
"Company" include only the Company and not its subsidiaries.                    

GENERAL                                                                         

The Senior Notes will be limited to $150,000,000 aggregate principal amount,
$20,000,000 of which may be issued at a later date. The Senior Notes will       
mature on April 15, 2006. The Senior Notes will bear interest from the date of  
issuance, or from the most recent date to which interest has been paid or       
provided for, at the rate stated on the cover page hereof, payable in arrears   
on April 15 and October 15 of each year, commencing October 15, 1996 to the     
persons in whose names the Senior Notes are registered at the close of          
business on the first day of the month in which the interest payment date       
occurs. Interest will be computed on the basis of a 360-day year of twelve 30-  
day months.                                                                     

The Senior Notes will be general unsecured obligations of the Company,      
ranking senior in right of payment to all existing and future subordinated      
indebtedness of the Company and pari passu in right of payment with all         
existing and future senior indebtedness of the Company; however, the Senior     
Notes will be effectively subordinated to all secured indebtedness of the       
Company to the extent of the value of the assets securing such indebtedness.    
As of February 28, 1996, after giving effect to the Offering and the            
application of the proceeds therefrom, the Company would have had no secured    
indebtedness outstanding.                                                       

17  

424B1
18th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 18th
Principal and premium, if any, and interest on the Senior Notes are to be   
payable, and the Senior Notes offered hereby will be exchangeable and           
transfers thereof will be registrable, at the offices of the Company or its     
agent maintained for such purposes in The City of New York; provided that       
payment of interest may, at the option of the Company, be made by check mailed  
to a holder at his registered address.                                          

The Senior Notes offered hereby will be issued only in fully registered form
without coupons, in denominations of $1,000 and any integral multiple thereof.  
The Senior Notes are exchangeable and transfers thereof will be registered      
without charge therefor, but the Company may require payment of a sum           
sufficient to cover any tax or other governmental charge payable in connection  
therewith.                                                                      

THE GUARANTEES                                                                  

Each of the Guarantors will (so long as they remain Subsidiaries of the     
Company) unconditionally guarantee on a joint and several basis all of the      
Company's obligations under the Senior Notes, including its obligations to pay  
principal, premium, if any, and interest with respect to the Senior Notes. The  
Guarantees will be general unsecured obligations of the Guarantors, ranking     
senior in right of payment to all existing and future subordinated              
indebtedness of the Guarantors and pari passu in right of payment with all      
existing and future senior indebtedness of the Guarantors; however, the         
Guarantees will be effectively subordinated to all secured indebtedness of the  
Guarantors to the extent of the value of the assets securing such               
indebtedness. As of February 28, 1996, after giving effect to the Offering and  
the application of the proceeds therefrom, the Guarantors would have had        
approximately $16,903,000 of secured indebtedness outstanding. Except as        
provided in "Certain Covenants" below, the Company is not restricted from       
selling or otherwise disposing of any of the Guarantors.                        

The Indenture will provide that each Restricted Subsidiary (other than, in  
the Company's discretion, any Restricted Subsidiary the assets of which have a  
book value of not more than $1,000,000) will be a Guarantor.                    

The Indenture provides that if all or substantially all of the assets of any
Guarantor or all of the capital stock of any Guarantor is sold (including by    
issuance or otherwise) by the Company or any of its Subsidiaries in a           
transaction constituting an Asset Sale, and if the Net Proceeds from such       
Asset Sale are used in accordance with the covenant, "Limitation on Asset       
Sales," then such Guarantor (in the event of a sale or other disposition of     
all of the capital stock of such Guarantor) or the corporation acquiring such   
assets (in the event of a sale or other disposition of all or substantially     
all of the assets of such Guarantor) shall be released and discharged of its    
Guarantee obligations.                                                          

OPTIONAL REDEMPTION                                                             

The Senior Notes are redeemable at the option of the Company, in whole or in
part (in any integral multiple of $1,000), at any time on or after April 15,    
2001, on not less than 30 days nor more than 60 days notice mailed to the       
registered holders thereof at their last registered addresses, at the           
following redemption prices (expressed as percentages of the principal amount   
thereof), plus accrued and unpaid interest, if any, to the redemption date:     

                                                                [Download Table]

YEAR                               PERCENTAGE
----                               ----------
                                             
2001..............................   105.0%  
2002..............................   102.5%  
2003 and thereafter...............   100.0%  

In addition, if the Company consummates one or more public offerings of its 
Common Stock subsequent to the date of this Prospectus and on or prior to       
April 15, 1999, the Company may, at its option, redeem up to 33% of the         
original principal amount of the Senior Notes with the net proceeds of such     
offerings at 110% of the principal amount thereof, plus accrued and unpaid      
interest, if any, to the redemption date; provided, however, that immediately   
after giving effect to any such redemption not less than $86,667,000 principal  
amount of the Senior Notes remains outstanding.                                 

18  

424B1
19th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 19th
If less than all of the Senior Notes are to be redeemed, the Trustee will   
select the particular Senior Notes (or the portions thereof) to be redeemed     
either by lot, pro rata or by such other method as the Trustee shall deem fair  
and appropriate, but in any such event, in such manner as complies with         
applicable legal and stock exchange requirements. On or after the redemption    
date, interest will cease to accrue on the Senior Notes or portions thereof     
called for redemption.                                                          

CERTAIN COVENANTS                                                               

Change of Control.                                                            

In the event of a Change of Control (as defined below), each holder of      
Senior Notes shall have the right upon receipt of a Change of Control Notice    
(as defined below), at such holder's option, to require the Company to          
repurchase all of such holder's Senior Notes, or a portion thereof which is     
$1,000 or any integral multiple thereof, on the date (the "Change of Control    
Repurchase Date") that is 45 days after the date of the Change of Control       
Notice at a price equal to 101% of the principal amount thereof, plus accrued   
interest to the Change of Control Repurchase Date.                              

Within 30 days after the occurrence of a Change of Control, the Company or, 
at the request of the Company, the Trustee, shall deliver to all holders of     
record of the Senior Notes a notice (the "Change of Control Notice") of the     
occurrence of such Change of Control and of the repurchase right arising as a   
result thereof. The Company shall deliver a copy of the Change of Control       
Notice to the Trustee. To exercise the repurchase right, on or before the 30th  
day after the date of the Change of Control Notice, holders of Senior Notes     
must deliver written notice to the Company (or an agent designated by the       
Company for such purposes) of the holder's exercise of such right, together     
with the Senior Notes with respect to which the right is being exercised, duly  
endorsed for transfer. Such written notice shall be irrevocable.                

The right to require the repurchase of Senior Notes shall not continue after
a discharge of the Company from its obligations under the Senior Notes and the  
Indenture with respect to the Senior Notes in accordance with Article 8 of the  
Indenture.                                                                      

If the Change of Control Repurchase Date is between a regular record date   
for the payment of interest and the next succeeding interest payment date, any  
Senior Note to be repurchased must be accompanied by funds equal to the         
interest payable on such succeeding interest payment date on the principal      
amount to be repurchased (unless such Senior Note shall have been called for    
redemption, in which case no such payment shall be required), and the interest  
on the principal amount of the Senior Note being repurchased will be paid on    
such next succeeding interest payment date to the registered holder of such     
Senior Note on the immediately preceding record date. A Senior Note             
repurchased on an interest payment date need not be accompanied by any          
payment, and the interest on the principal amount of the Senior Note being      
repurchased will be paid on such interest payment date to the registered        
holder of such Senior Note on the immediately preceding record date.            

As used herein, a "Change of Control" of the Company means the occurrence of
any of the following events: (a) any "person" or "group" (as such terms are     
used in Sections 13(d) and 14(d) of the Exchange Act), excluding the            
Management Group (as defined below), is or becomes the "beneficial owner" (as   
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person   
shall be deemed to have "beneficial ownership" of all securities that such      
person has the right to acquire, whether such right is exercisable              
immediately, after the passage of time, upon the happening of an event or       
otherwise), directly or indirectly, of more than 50% of the total Voting Stock  
(as defined below) of the Company; provided, however, that the members of the   
Management Group do not have the right or ability by voting power, contract or  
otherwise to elect or designate for election a majority of the Board of         
Directors of the Company; (b) the Company consolidates with, or merges with or  
into, another Person or sells, assigns, conveys, transfers, leases or           
otherwise disposes of all or substantially all of its assets to any Person, or  
any Person consolidates with, or merges with or into, the Company, in any such  
event pursuant to a transaction in which the outstanding Voting Stock of the    
Company is converted into or exchanged for cash, securities or other property,  
other than any such transaction                                                 

19  

424B1
20th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 20th
where immediately after such transaction no "person" or "group" (as such terms  
are used in Sections 13(d) and 14(d) of the Exchange Act), excluding the        
Management Group, is the "beneficial owner" (as defined in Rules 13d-3 and      
13d-5 under the Exchange Act, except that a person shall be deemed to have      
"beneficial ownership" of all securities that such person has the right to      
acquire, whether such right is exercisable immediately, after the passage of    
time, upon the happening of an event or otherwise), directly or indirectly, of  
more than 50% of the total Voting Stock of the surviving or transferee          
corporation; provided, however, that the members of the Management Group do     
not have the right or ability by voting power, contract or otherwise, to elect  
or designate for election a majority of the Board of Directors of the Company;  
(c) at any time during any consecutive two-year period, individuals who at the  
beginning of such period constituted the Board of Directors of the Company      
(together with any new directors whose election by such Board of Directors or   
whose nomination for election by the stockholders of the Company was approved   
by a vote of a majority of the directors then still in office who were either   
directors at the beginning of such period or whose election or nomination for   
election was previously so approved) cease for any reason to constitute a       
majority of the Board of Directors of the Company then in office; or (d) the    
Company is liquidated or dissolved or adopts a plan of liquidation. The         
"Management Group" shall consist of the executive officers of the Company as    
of the date of the Indenture, members of their immediate families, certain      
trusts for their benefit, and legal representatives of, or heirs,               
beneficiaries or legatees receiving Common Stock (or securities convertible or  
exchangeable for Common Stock) under, any such person's estate. "Voting Stock"  
shall mean, with respect to any Person, Capital Stock of any class or kind      
normally entitled to vote in the election of the board of directors or other    
governing body of such Person.                                                  

If any repurchase pursuant to the foregoing provisions constitutes a tender 
offer as defined under the Exchange Act, the Company will comply with the       
requirements of Rule 14e-1 and any other tender offer rules under the Exchange  
Act which then may be applicable. The Company could, in the future, enter into  
certain significant transactions that would not constitute a Change of Control  
with respect to the Change of Control purchase feature of the Senior Notes.     
The Change of Control purchase feature of the Senior Notes may in certain       
circumstances make more difficult or discourage a takeover of the Company and,  
thus, the removal of incumbent management. The Change of Control purchase       
feature, however, is not the result of management's knowledge of any specific   
effort to obtain control of the Company by means of a merger, tender offer,     
solicitation or otherwise, or part of a plan by management to adopt a series    
of anti-takeover provisions.                                                    

The meaning of the phrase "all or substantially all" as used in the         
Indenture in the definition of "Change of Control" with respect to a sale of    
assets varies according to the facts and circumstances of the subject           
transaction, has no clearly established meaning under relevant law and is       
subject to judicial interpretation. Accordingly, in certain circumstances,      
there may be a degree of uncertainty in ascertaining whether a particular       
transaction would involve a disposition of "all or substantially all" of the    
assets of the Company, and therefore it may be unclear whether a Change of      
Control has occurred and whether the Senior Notes are subject to a Change of    
Control Offer.                                                                  

Maintenance of Net Worth.                                                     

In the event that the Company's Net Worth at the end of each of any two     
consecutive fiscal quarters (the last day of such second fiscal quarter being   
referred to as the "Trigger Date") is less than $20,000,000 (the "Minimum Net   
Worth"), then the Company shall make an offer to all holders (a "Net Worth      
Offer") to acquire on a pro rata basis on the date (the "Net Worth Repurchase   
Date") that is 45 days following the date of the Net Worth Notice (as defined   
below), Senior Notes in an aggregate principal amount equal to 10% of the       
initial outstanding principal amount of the Senior Notes (or if less than 10%   
of the aggregate principal amount of the Senior Notes issued are then           
outstanding, all the Senior Notes outstanding at the time) (the "Net Worth      
Offer Amount") at a purchase price of 100% of the principal amount thereof,     
plus accrued interest to the Net Worth Repurchase Date (the "Net Worth          
Price"). The Company may credit against the Net Worth Offer Amount the          
principal amount of Senior Notes acquired by the Company prior to the Trigger   
Date through purchase, optional redemption or exchange. The Company, however,   
may not credit a specific Note in more than one Net Worth Offer. In no event    
shall the failure to meet the Minimum Net Worth at the end of any fiscal        
quarter be counted toward the making of more than one Net Worth Offer. The      
Company shall notify the Trustee promptly after the                             

20  

424B1
21st Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 21st
occurrence of any of the events specified in this provision and shall notify    
the Trustee in writing if its Net Worth is equal to or less than the Minimum    
Net Worth for any fiscal quarter.                                               

Within 30 days after the Trigger Date, the Company, or, at the request of   
the Company, the Trustee, shall give notice of the Net Worth Offer to each      
holder (the "Net Worth Notice"). To accept a Net Worth Offer a holder shall     
deliver to the Company (or to a Paying Agent designated by the Company for      
such purpose), on or before the 30th day after the date of the Net Worth        
Notice, a written notice of the holder's acceptance of such offer, together     
with the Senior Notes with respect to which the offer is being accepted, duly   
endorsed for transfer to the Company. Such written notice may be withdrawn      
upon further written notice delivered to the Trustee on or prior to the third   
day preceding the Net Worth Repurchase Date.                                    

If the Net Worth Repurchase Date is between a regular record date for the   
payment of interest and the next succeeding interest payment date, any Senior   
Note to be repurchased must be accompanied by funds equal to the interest       
payable on such succeeding interest payment date on the principal amount to be  
repurchased (unless such Senior Note shall have been called for redemption, in  
which case no such payment shall be required), and the interest on the          
principal amount of the Senior Note being repurchased will be paid on such      
next succeeding interest payment date to the registered holder of such Senior   
Note on the immediately preceding record date. A Senior Note repurchased on an  
interest payment date need not be accompanied by any payment, and the interest  
on the principal amount of the Senior Note being repurchased will be paid on    
such interest payment date to the registered holder of such Senior Note on the  
immediately preceding record date.                                              

If any repurchase pursuant to the foregoing provisions constitutes a tender 
offer as defined under the Exchange Act, the Company will comply with the       
requirements of Rule 14e-1 and any other tender offer rules under the Exchange  
Act which then may be applicable.                                               

Limitation on Debt.                                                           

The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume, guarantee or otherwise       
become liable for ("Incur"), any Debt, except Permitted Debt. "Permitted Debt"  
means (a) Debt evidenced by the Senior Notes and the Guarantees, (b) Debt       
Incurred by the Company or any Guarantor under or in respect of a Bank          
Facility (including any guarantees related thereto) for working capital or      
general corporate purposes or evidenced by letters of credit; provided that     
the aggregate amount of all such Debt outstanding at any time pursuant to this  
clause (b) may not exceed $110,000,000, (c) Debt Incurred under a Warehouse     
Facility; provided that the amount of such Debt (including funding drafts       
issued thereunder) outstanding at any time pursuant to this clause (c)          
guaranteed by the Company or a Restricted Subsidiary may not exceed             
$30,000,000 and the amount of such Debt (excluding funding drafts issued        
thereunder) may not exceed 98% of the value of the Mortgages pledged to secure  
Debt thereunder, (d) Debt of the Company to any Guarantor or of any Restricted  
Subsidiary of the Company to the Company or to any Guarantor, (e) Existing      
Debt (without duplication of Debt indicated under clauses (a)-(d) above) of     
the Company and its Restricted Subsidiaries other than Debt to be repaid from   
the proceeds of the sale of the Senior Notes, (f) Non-Recourse Debt, (g) Debt   
in respect of performance, completion, guarantee, surety and similar bonds or   
banker's acceptances provided by the Company or any of its Restricted           
Subsidiaries in the ordinary course of business, (h) additional Debt of the     
Company or any Guarantor in an amount not to exceed $5,000,000 at any time      
outstanding, (i) Debt referred to in the definition of Interest Rate            
Protection Agreements, and (j) Refinancing Debt.                                

Notwithstanding the foregoing, and subject to the immediately succeeding    
paragraph, the Company and the Guarantors may Incur Debt if, at the time such   
Debt is so Incurred and after giving effect thereto and the application of the  
proceeds therefrom, the Company's Coverage Ratio shall not be less than 2.0 to  
1.0.                                                                            

The Company shall not, and the Company will not cause or permit any         
Guarantor to, directly or indirectly, Incur any Debt that purports to be by     
its terms (or by the terms of any agreement governing such Debt) subordinated   
to any other Debt of the Company or of such Guarantor, as the case may be,      
unless such Debt is also by its terms (or by the terms of any agreement         
governing such Debt) made expressly subordinated to the Senior Notes or the     
Guarantee of such Guarantor, as the case may be, to the same extent and in the  
same manner as such Debt is subordinated to such other Debt.                    

21  

424B1
22nd Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 22nd
Limitation on Restricted Payments.                                            

The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, make any Restricted Payment, if, after giving       
effect thereto (a) an Event of Default, or an event that through the passage    
of time or the giving of notice, or both, would become an Event of Default,     
shall have occurred and be continuing, or (b) the Company would be unable to    
incur $1.00 of additional Debt under the second paragraph set forth under the   
caption "Limitation on Debt," or (c) the aggregate amount of all Restricted     
Payments made by the Company and its Restricted Subsidiaries (the amount        
expended or distributed for such purposes, if other than cash, to be            
determined in good faith by the board of directors of the Company) from and     
after the date of the Indenture shall exceed the sum of (i) the aggregate of    
50% of the Consolidated Net Income of the Company accrued for the period        
(taken as one accounting period) commencing with April 15, 1996 to and          
including the first full month ended immediately prior to the date of such      
calculation (or, in the event Consolidated Net Income is a deficit, then minus  
100% of such deficit), (ii) the aggregate net proceeds (the amount of such      
proceeds, if other than cash, to be determined in good faith by the board of    
directors of the Company) received by the Company from the issuance or sale     
(other than to a Subsidiary of the Company) of its Capital Stock (other than    
Redeemable Stock), including the principal amount of any convertible or         
exchangeable notes or other convertible or exchangeable securities that are     
converted or exchanged into Capital Stock, from and after the date of the       
Indenture, and options, warrants and rights to purchase its Capital Stock       
(other than Redeemable Stock), (iii) in the case of the disposition or          
repayment of any Investment constituting a Restricted Payment made after the    
date of the Indenture (excluding any Investment described in clause (4) of the  
following paragraph, but including upon the redesignation of an Unrestricted    
Subsidiary as a Restricted Subsidiary), an amount equal to the lesser of the    
return of capital with respect to such Investment and the cost of such          
Investment, in either case, reduced (but not below zero) by the excess, if      
any, of the cost of the disposition of such Investment over the gain, if any,   
realized by the Company or such Restricted Subsidiary in respect of such        
disposition of such Investment and (iv) $5,000,000.                             

The foregoing paragraph will not prevent: (1) the payment of any dividend   
within 60 days after the date of its declaration if such dividend could have    
been made on the date of its declaration in compliance with the foregoing       
provisions; (2) so long as no Default or Event of Default shall have occurred   
and be continuing, the redemption, repurchase or other acquisition or           
retirement of any shares of any class of Capital Stock of the Company or any    
Subsidiary of the Company in exchange for, or out of the net cash proceeds of,  
a substantially concurrent (x) capital contribution to the Company from any     
Person (other than a Subsidiary of the Company) or (y) issue and sale of other  
shares of Capital Stock (other than Redeemable Stock) of the Company to any     
Person (other than to a Subsidiary of the Company); provided, however, that     
the amount of any such net cash proceeds that are utilized for any such         
redemption, repurchase or other acquisition or retirement shall be excluded     
from clause (ii) of the preceding paragraph; (3) so long as no Default or       
Event of Default shall have occurred and be continuing, any redemption,         
repurchase or other acquisition or retirement of subordinated Debt by exchange  
for, or out of the net cash proceeds of, a substantially concurrent (x)         
capital contribution to the Company from any Person (other than a Subsidiary    
of the Company) or (y) issue and sale of (A) Capital Stock (other than          
Redeemable Stock) of the Company to any Person (other than to a Subsidiary of   
the Company); provided, however, that the amount of any such net cash proceeds  
that are utilized for any such redemption, repurchase or other acquisition or   
retirement shall be excluded from clause (ii) of the preceding paragraph; or    
(B) Debt of the Company issued to any Person (other than a Subsidiary of the    
Company), so long as such Debt (x) has no stated maturity earlier than April    
15, 2006, (y) has a Weighted Average Life to Maturity equal to or greater than  
the remaining Weighted Average Life to Maturity of the Senior Notes and (z) is  
subordinated to the Senior Notes in the same manner and at least to the same    
extent as the subordinated Debt so purchased, exchanged, redeemed, acquired or  
retired; (4) Investments constituting Restricted Payments made as a result of   
the receipt of non-cash consideration from any Asset Sale made pursuant to and  
in compliance with the covenant described under "Limitation on Asset Sales";    
(5) so long as no Default or Event of Default has occurred and is continuing,   
the repurchase or redemption of shares of Capital Stock from any officer,       
director or employee of the Company or its Restricted Subsidiaries whose        
employment has been terminated or who has died or become disabled in an         
aggregate amount not to exceed $250,000 per annum; and (6) so long as no        
Default or Event of Default shall have occurred and be continuing, the making   
of Restricted Payments in an aggregate amount not to                            

22  

424B1
23rd Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 23rd
exceed $5,000,000, provided that amounts paid pursuant to clauses (5) and (6)   
(but not clauses (1), (2), (3) or (4)) shall reduce amounts available for       
future Restricted Payments.                                                     

Limitation on Dividend and Other Payment Restrictions Affecting Restricted    
Subsidiaries.                                                                   

The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, assume or otherwise cause or suffer to      
exist or to become effective any consensual encumbrance or restriction on the   
ability of any Restricted Subsidiary of the Company to (a) pay dividends or     
make any other distributions on its Capital Stock to the Company or any of its  
Restricted Subsidiaries; (b) make payments in respect of any Debt owed to the   
Company or any of its Restricted Subsidiaries; or (c) make loans or advances    
to the Company or any of the Company's Restricted Subsidiaries; provided,       
however, that the following restrictions shall not be prohibited pursuant to    
this provision: (i) those contained in the Indenture, a Bank Facility, a        
Warehouse Facility, any Non-Recourse Debt Incurred by the Carlsbad Subsidiary   
(to the extent that restrictions in such Non-Recourse Debt apply only to the    
Carlsbad Subsidiary or any Subsidiary thereof) and Refinancing Debt (to the     
extent restrictions contained in such Refinancing Debt are not more             
restrictive than those contained in the Debt being refinanced); (ii)            
consensual encumbrances or restrictions binding upon any person at the time     
such Person becomes a Subsidiary of the Company; provided that such             
encumbrances or restrictions are not created, incurred or assumed in            
contemplation of such Person becoming a Subsidiary of the Company and do not    
extend to any other property of the Company or another of its Subsidiaries;     
(iii) restrictions contained in security agreements permitted by the Indenture  
securing Debt permitted by the Indenture to the extent such restrictions        
restrict the transfer of assets subject to such security agreements; (iv) any   
encumbrance or restriction consisting of customary non-assignment provisions    
in leases to the extent such provisions restrict the transfer of the leases;    
(v) any encumbrance or restriction pursuant to an agreement in effect on the    
date of the Indenture; or (vi) any restrictions with respect to a Subsidiary    
of the Company imposed pursuant to an agreement which has been entered into     
for the sale or disposition of all or substantially all the capital stock or    
assets of such Subsidiary.                                                      

Limitation on Liens.                                                          

The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or permit to exist any Lien   
upon or with respect to any of the assets of the Company or any such            
Subsidiary, whether now owned or hereafter acquired, or on any income or        
profits therefrom, other than Liens which constitute Permitted Liens at the     
date such Liens are created, unless contemporaneously therewith or prior        
thereto all payments due under the Indenture and the Senior Notes are secured   
on an equal and ratable basis with the obligation or liability so secured       
until such time as such obligation or liability is no longer secured by a       
Lien. The Indenture will also provide that no Liens will be permitted to be     
created or suffered to exist on any Debt from the Company in favor of any       
Restricted Subsidiary and that such Debt will not be permitted to be sold,      
disposed of or otherwise transferred.                                           

Transactions with Affiliates.                                                 

The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, enter into any transactions with Affiliates of the  
Company unless (i) such transactions are between or among the Company and its   
Restricted Subsidiaries, (ii) such transactions are in the ordinary course of   
business and consistent with past practice or (iii) the terms of such           
transactions are fair and reasonable to the Company or such Restricted          
Subsidiary, as the case may be, and are at least as favorable as the terms      
which could be obtained by the Company or such Restricted Subsidiary, as the    
case may be, in a comparable transaction made on an arm's-length basis between  
unaffiliated parties. In the event of any transaction or series of              
transactions occurring subsequent to the date of the Indenture with an          
Affiliate of the Company which involves in excess of $2,500,000 and is not      
permitted under clause (i) of the preceding sentence, all of the disinterested  
members of the Board of Directors shall by resolution determine that such       
transaction or series of transactions meets the criteria set forth in clause    
(iii) of the preceding sentence. In the event of any transaction or series of   
transactions occurring subsequent to the date of the Indenture with an          
Affiliate of the Company which involves in excess of $10,000,000                

23  

424B1
24th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 24th
and is not permitted under clause (i) above, the Company will be required to    
deliver to the Trustee an opinion of an Independent Financial Advisor to the    
effect that the transaction is fair to the Company or the relevant Restricted   
Subsidiary, as the case may be, from a financial point of view.                 
Notwithstanding the foregoing, such provisions do not prohibit and will not     
apply to (1) any Restricted Payment which is permitted by the "Limitation on    
Restricted Payments" covenant or (2) the payment of compensation to directors   
of the Company who are not employees of the Company and wages and other         
compensation to officers of the Company or any of its Subsidiaries.             

Limitation on Asset Sales.                                                    

The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly consummate an Asset Sale, unless (i) the Company or  
such Restricted Subsidiary, as the case may be, receives consideration at the   
time of such Asset Sale at least equal to the fair market value (as determined  
in good faith by the board of directors of the Company or the Restricted        
Subsidiary, as the case may be) of the assets disposed of, and (ii) the         
consideration for such Asset Sale consists of at least 85% cash; provided that  
(x) the amount of liabilities assumed by the transferee, (y) any notes or       
other obligations received by the Company or such Restricted Subsidiary and     
immediately converted into cash or (z) with respect to the sale or other        
disposition of all of the Capital Stock of any Restricted Subsidiary, the       
amount of liabilities that remain the obligation of such Restricted Subsidiary  
subsequent to such sale or other disposition, shall be deemed to be "cash".     

Within 12 months from the date that any Asset Sale is consummated, the Net  
Proceeds thereof will be reinvested in Additional Assets or applied to the      
redemption or repurchase of Debt of the Company which ranks pari passu with     
the Senior Notes or Debt of a Restricted Subsidiary of the Company which is     
not subordinated to other debt of such Restricted Subsidiary (which, in each    
case, will be a permanent reduction of such Debt). To the extent that the Net   
Proceeds of an Asset Sale are not so applied, the Company or such Restricted    
Subsidiary, as the case may be, will, within 30 days from the expiration of     
such 12-month period, use the remaining Net Proceeds (less any amounts used to  
pay reasonable fees and expenses connected with a Net Proceeds Offer) to make   
an offer to repurchase the Senior Notes at a price equal to 100% of the         
principal amount thereof, plus accrued interest to the Net Proceeds Repurchase  
Date ("a Net Proceeds Offer").                                                  

Notwithstanding the foregoing, the Net Proceeds of an Asset Sale are not    
required to be applied in accordance with the preceding paragraph, unless and   
until the aggregate Net Proceeds for all such Asset Sales in a 12-month period  
exceeds $10,000,000.                                                            

To accept a Net Proceeds Offer a holder shall deliver to the Company (or to 
a Paying Agent designated by the Company for such purpose) on or before the     
30th day after the date of the Net Proceeds Offer, a written notice of the      
holder's acceptance of the Net Proceeds Offer, together with the Senior Notes   
with respect to which the offer is being accepted, duly endorsed for transfer   
to the Company. Such written notice may be withdrawn upon further written       
notice to the Trustee on or prior to the third day preceding the Net Proceeds   
Repurchase Date.                                                                

If the Net Proceeds Repurchase Date is between a regular record date for the
payment of interest and the next succeeding interest payment date, any Note to  
be repurchased must be accompanied by funds equal to the interest payable on    
such succeeding interest payment date on the principal amount to be             
repurchased (unless such Senior Note shall have been called for redemption, in  
which case no such payment shall be required), and the interest on the          
principal amount of the Senior Note being repurchased will be paid on such      
next succeeding interest payment date to the registered holder of such Senior   
Note on the immediately preceding record date. A Senior Note repurchased on an  
interest payment date need not be accompanied by any payment, and the interest  
on the principal amount of the Senior Note being repurchased will be paid on    
such interest payment date to the registered holder of such Senior Note on the  
immediately preceding record date.                                              

If any repurchase pursuant to the foregoing provisions constitutes a tender 
offer as defined under the Exchange Act, the Company will comply with the       
requirements of Rule 14e-1 and any other tender offer rules under the Exchange  
Act which then may be applicable.                                               

24  

424B1
25th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 25th
Any amount of Net Proceeds remaining after a Net Proceeds Offer shall be    
returned by the Trustee to the Company and may be used by the Company for any   
purpose not inconsistent with the Indenture.                                    

CERTAIN DEFINITIONS                                                             

In addition to the terms defined above, the Indenture contains, among other 
things, the following definitions:                                              

"Additional Assets" means assets used or usable by the Company or any of its
Restricted Subsidiaries in the operation of the existing lines of business of   
the Company and its Restricted Subsidiaries.                                    

"Affiliate" of any Person means (i) any other Person directly or indirectly 
controlling or controlled by or under direct or indirect common control with    
such Person and (ii) any other Person that beneficially owns at least 10% of    
the voting common stock of such Person. For the purposes of this definition,    
"control" when used with respect to any Person means the power to direct the    
management and policies of such Person, directly or indirectly, whether         
through the ownership of voting securities, by contract or otherwise; and the   
terms "controlling" and "controlled" have meanings correlative to the           
foregoing.                                                                      

"Asset Sale" for any Person means the sale, lease, conveyance or other      
disposition (including, without limitation, by merger, consolidation or sale    
and leaseback transaction, and whether by operation of law or otherwise) of     
any of that Person's assets (including, without limitation, the sale or other   
disposition of Capital Stock of any Subsidiary of such Person, whether by such  
Person or such Subsidiary) outside the ordinary course of business, whether     
owned on the date of the Indenture or subsequently acquired in one transaction  
or a series of related transactions, in which such Person and/or its            
Subsidiaries receive cash and/or other consideration (including, without        
limitation, the unconditional assumption of Indebtedness of such Person and/or  
its Subsidiaries) of $5,000,000 or more as to each such transaction or series   
of related transactions; provided, however, that (i) a transaction or series    
of related transactions that results in a Change of Control shall not           
constitute an Asset Sale, (ii) sales, leases, conveyances or other              
dispositions of real estate related to the homebuilding business of the         
Company or its Subsidiaries will not constitute Asset Sales, and (iii)          
transactions between the Company and any Guarantor, or among such Guarantors    
will not constitute Asset Sales.                                                

"Bank Facility" means, collectively, one or more commitments from one or    
more banks or other lending institutions to lend funds, together with any and   
all agreements, documents and instruments from time to time delivered in        
connection therewith as such commitments or any such agreements, documents or   
instruments may be in effect or amended, amended and restated, renewed,         
extended, restructured, supplemented or otherwise modified from time to time    
and any credit agreement, loan agreement, note purchase agreement, indenture    
or other agreement, document or instrument refinancing, refunding or otherwise  
replacing such Bank Facility, whether or not with the same agent, trustee,      
representative lenders or holders, and, subject to the proviso to the next      
succeeding sentence, irrespective of any changes in the terms and conditions    
thereof. Without limiting the generality of the foregoing, the term "Bank       
Facility" shall include any amendment, amendment and restatement, renewal,      
extension, restructuring, supplement or modification to any Bank Facility and   
all refundings, refinancings and replacements of any Bank Facility, including   
any agreement (i) extending the maturity of any Debt incurred thereunder or     
contemplated thereby, (ii) adding or deleting borrowers or guarantors           
thereunder; provided that such borrowers and issuers include one or more of     
the Company and its Subsidiaries and their respective successors and assigns,   
(iii) increasing the amount of Debt Incurred thereunder or available to be      
borrowed thereunder; provided that on the date thereof such Debt would not be   
prohibited by clause (b) of the definition of Permitted Debt set forth under    
the "Limitation on Debt" covenant, or (iv) otherwise altering the terms and     
conditions thereof in a manner not prohibited by the terms of the Indenture.    

"Carlsbad Property" means the 417 acres owned by the Carlsbad Subsidiary in 
Carlsbad, California, located in San Diego County.                              

"Common Stock" means the common stock, par value $.01 per share, of the     
Company.                                                                        

25  

424B1
26th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 26th
"Consolidated Interest Expense" of the Company means, for any period, the   
aggregate amount of interest which, in accordance with generally accepted       
accounting principles, would be included on an income statement for the         
Company and its Restricted Subsidiaries on a consolidated basis, whether        
expensed directly, or included as a component of cost of goods sold, or         
allocated to joint ventures or otherwise (including, but not limited to,        
imputed interest included on capitalized lease obligations, all commissions,    
discounts and other fees and charges owed with respect to letters of credit     
and bankers' acceptance financing, the net costs associated with hedging        
obligations, amortization of other financing fees and expenses, the interest    
portion of any deferred payment obligation, amortization of discount or         
premium, if any, and all other non-cash interest expense), excluding interest   
expense related to mortgage banking operations, plus the product of (x) the     
sum of (i) cash dividends paid on any Preferred Stock of the Company plus (ii)  
cash dividends, the principal amount of any debt securities issued as a         
dividend, the liquidation value of any Preferred Stock issued as a dividend     
and the fair market value (as determined by the Company's board of directors    
in good faith) of any other non-cash dividends, in each case, paid on any       
Preferred Stock of any Restricted Subsidiary of Company (other than a Wholly-   
Owned Restricted Subsidiary), times (y) a fraction, the numerator of which is   
one and the denominator of which is one minus the then current effective        
aggregate federal, state and local tax rate of the Company, expressed as a      
decimal.                                                                        

"Consolidated Interest Incurred" of the Company means, for any period, (a)  
the aggregate amount of interest which, in accordance with generally accepted   
accounting principles, would be included on an income statement for the         
Company and its Restricted Subsidiaries on a consolidated basis, whether        
expensed directly, or included as a component of cost of goods sold, or         
allocated to joint ventures or otherwise (including, but not limited to,        
imputed interest included on capitalized lease obligations, all commissions,    
discounts and other fees and charges owed with respect to letters of credit     
and bankers' acceptance financing, the net costs associated with hedging        
obligations, amortization of other financing fees and expenses, the interest    
portion of any deferred payment obligation, amortization of discount or         
premium, if any, and all other non-cash interest expense), excluding interest   
expense related to the Company's mortgage banking operations, plus or minus,    
without duplication, (b) the difference between capitalized interest for such   
period and the interest component of cost of goods sold for such period, plus   
(c) the product of (x) the sum of (i) cash dividends paid on any Preferred      
Stock of the Company plus (ii) cash dividends, the principal amount of any      
debt securities issued as a dividend, the liquidation value of any Preferred    
Stock issued as a dividend and the fair market value (as determined by the      
Company's Board of Directors in good faith) of any other non-cash dividends,    
in each case, paid on any Preferred Stock of any Subsidiary of the Company      
(other than a Wholly-Owned Restricted Subsidiary), times (y) a fraction, the    
numerator of which is one and the denominator of which is one minus the then    
current effective aggregate federal, state and local tax rate of the Company,   
expressed as a decimal.                                                         

"Consolidated Net Income" of the Company, for any period, means the net     
income (loss) of the Company and its Restricted Subsidiaries for such period,   
determined on a consolidated basis, in accordance with generally accepted       
accounting principles; provided that, without duplication, (i) the net income   
of any Person, other than a Restricted Subsidiary which is consolidated with    
the Company, in which any Person other than the Company and its Restricted      
Subsidiaries has an interest shall be included only to the extent of the        
amount of cash dividends or distributions actually paid to the Company or a     
Restricted Subsidiary during such period, (ii) the net income of any Person     
acquired in a pooling of interests transaction for any period prior to the      
date of such acquisition shall be excluded, (iii) the net income of any         
Subsidiary of the Company shall be excluded to the extent such Subsidiary is    
prohibited, directly or indirectly, from distributing such net income or any    
portion thereof to the Company or a Restricted Subsidiary, (iv) all             
extraordinary gains and losses (after taxes) that would be included on an       
income statement for such period shall be excluded and (v) all gains and        
losses (after taxes) attributable to Asset Sales shall be excluded; provided,   
that there shall be included in such net income, without duplication, the net   
income of any Unrestricted Subsidiary to the extent such net income is          
actually received by the Company or any of its Restricted Subsidiaries in cash  
during such period.                                                             

"Consolidated Non-cash Charges" of the Company means, for any period, the   
aggregate depreciation, amortization and other non-cash charges (other than     
reserves or expenses established in anticipation of future cash requirements    
such as reserves for taxes and uncollectible accounts) of the Company and its   
Restricted Subsidiaries on a consolidated basis for such period, as determined  
in accordance with generally accepted                                           

26  

424B1
27th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 27th
accounting principles; provided that Consolidated Non-cash Charges shall        
exclude (i) any charges that are not included for the purpose of determining    
Consolidated Net Income, (ii) any charges that are included for the purpose of  
determining Consolidated Interest Expense or Consolidated Tax Expense and       
(iii) any charges representing capitalized selling, general and administrative  
expenses that are expensed during such period as cost of goods sold.            

"Consolidated Tangible Assets" of the Company as of any date means the total
amount of assets of the Company and its Restricted Subsidiaries (less           
applicable reserves and less the assets securing the payment of Non-Recourse    
Debt of the Company and its Restricted Subsidiaries) on a consolidated basis    
at the end of the fiscal quarter immediately preceding such date, as            
determined in accordance with generally accepted accounting principles, less:   
(i) unamortized debt and debt issuance expense, deferred charges, goodwill,     
patents, trademarks, copyrights, and all other items which would be treated as  
intangibles on the consolidated balance sheet of the Company and its            
Restricted Subsidiaries prepared in accordance with generally accepted          
accounting principles and (ii) appropriate adjustments on account of minority   
interests of other Persons holding equity investments in Restricted             
Subsidiaries, in the case of each of clauses (i) and (ii) above, as reflected   
on the consolidated balance sheet of the Company and its Restricted             
Subsidiaries.                                                                   

"Consolidated Tangible Net Worth" of the Company means the Company's Net    
Worth less unamortized debt and debt issuance expense, deferred charges,        
goodwill, patents, trademarks, copyrights, and all other items which would be   
treated as intangibles on the consolidated balance sheet of the Company and     
its Restricted Subsidiaries prepared in accordance with generally accepted      
accounting principles.                                                          

"Consolidated Tax Expense" of the Company means, for any period, the        
aggregate of the tax expense of the Company and its Restricted Subsidiaries     
for such period, determined on a consolidated basis, in accordance with         
generally accepted accounting principles.                                       

"Coverage Ratio" of the Company means the ratio of the Company's EBITDA to  
its Consolidated Interest Incurred for the four fiscal quarters ending          
immediately prior to the date of determination. Notwithstanding clause (ii) of  
the definition of Consolidated Net Income, if the Debt which is being Incurred  
is Incurred in connecting with an acquisition by the Company or a Restricted    
Subsidiary, the Coverage Ratio shall be determined after giving effect to both  
the Consolidated Interest Incurred related to the Incurrence of such Debt and   
the EBITDA (x) of the Person becoming a Restricted Subsidiary of the Company    
or (y) in the case of an acquisition of assets that constitute substantially    
all of an operating unit or business, relating to the assets being acquired by  
the Company or a Restricted Subsidiary of the Company.                          

"Debt" means, as to any Person, without duplication, (a) any indebtedness of
such Person for borrowed money, (b) all indebtedness of such Person evidenced   
by bonds, debentures, notes, letters of credit, drafts or similar instruments,  
(c) all indebtedness of such Person to pay the deferred purchase price of       
property or services, but not including accounts payable and accrued expenses   
arising in the ordinary course of business, (d) all capitalized lease           
obligations of such Person, (e) all Debt of others secured by a Lien on any     
asset of such Person, whether or not such Debt is assumed by such Person or     
guaranteed by such Person, (f) Redeemable Stock of such Person and Preferred    
Stock of any Subsidiary of such Person, (g) all obligations of such Person      
with respect to Interest Rate Protection Agreements and (h) all Debt of others  
guaranteed by such Person. The amount of Debt of any Person at any date         
pursuant to clauses (a)-(d) and (f) above shall be as would appear as a         
liability upon a balance sheet of such Person prepared on a consolidated basis  
in accordance with generally accepted accounting principles. Notwithstanding    
the foregoing, "Debt" of the Company shall not include the amount reflected on  
a consolidated balance sheet of the Company with respect to options to acquire  
real property which was purchased by the Company and sold to a third party      
within 360 days of such purchase for consideration at least equal to the        
amount paid by the Company for such property less an amount equal to the value  
of such option.                                                                 

"EBITDA" for the Company, for any period, means, without duplication, the   
Consolidated Net Income of the Company plus, to the extent deducted in          
calculating Consolidated Net Income, the sum of (a) Consolidated Tax Expense,   
(b) Consolidated Interest Expense and (c) Consolidated Non-cash Charges.        

27  

424B1
28th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 28th
"Existing Debt" means all of the Debt of the Company and its Restricted     
Subsidiaries that was outstanding on April 15, 1996.                            

"guarantee" by any Person means any obligation, contingent or otherwise, of 
such Person directly or indirectly guaranteeing any Debt of any other Person    
and, without limiting the generality of the foregoing, any obligation, direct   
or indirect, contingent or otherwise, of such Person to purchase or pay (or     
advance or supply funds for the purchase or payment of) such Debt of such       
other Person (whether by agreement to keepwell or to maintain financial         
condition or otherwise), provided that the term "guarantee" shall not include   
endorsements for collection or deposit in the ordinary course of business.      

"Independent Financial Advisor" means a firm (i) which does not, and whose  
directors, officers and employees or Affiliates do not, have a direct or        
indirect financial interest in the Company and (ii) which, in the judgment of   
the Board of Directors of the Company, is otherwise independent and qualified   
to perform the task for which it is to be engaged.                              

"Interest Rate Protection Agreement" means any arrangement with any other   
Person whereby, directly or indirectly, such Person is entitled to receive      
from time to time periodic payments calculated by applying either a floating    
or a fixed rate of interest on a stated notional amount in exchange for         
periodic payments made by such Person calculated by applying a fixed or a       
floating rate of interest on the same notional amount and shall include,        
without limitation, interest rate swaps, caps, floors, collars and similar      
agreements; provided that any arrangement which is entered into by the Company  
or any of its Restricted Subsidiaries in connection with Debt Incurred by the   
Company or any of its Restricted Subsidiaries shall constitute Permitted Debt.  

"Investment" means, with respect to any Person, any direct or indirect loan 
or other extension of credit or capital contribution to (by means of any        
transfer of cash or other property to others or any payment for property or     
services for the account or use of others), or any purchase or acquisition by   
such Person of any Capital Stock, bonds, notes, debentures or other securities  
or evidences of Debt issued by, any other Person. "Investments" shall exclude   
extensions of trade credit by the Company and its Subsidiaries in the ordinary  
course of business in accordance with normal trade practices of the Company or  
such Subsidiary, as the case may be.                                            

"Lien" means, with respect to any asset, any mortgage, lien, pledge,        
assignment (including any assignment of rights to receive payments of money     
other than in connection with mortgage banking operations in the ordinary       
course of business), charge, security interest or encumbrance of any kind       
(including any conditional sale or other title retention agreement or any       
lease in the nature thereof) in respect of such asset, any agreement to grant   
to any Person any such Lien and any sale and leaseback of any asset.            

"Material Subsidiary" means any Restricted Subsidiary of the Company which  
accounted for 10 percent or more of the Consolidated Tangible Assets or EBITDA  
of the Company for the fiscal year ending immediately prior to any Default or   
Event of Default.                                                               

"Mortgage" means a first priority mortgage or first priority deed of trust  
on improved real property.                                                      

"Net Proceeds" with respect to any Asset Sale means (i) cash (in U.S.       
dollars or freely convertible into U.S. dollars) received by the Company or     
any of its Restricted Subsidiaries from such Asset Sale (including cash         
received as consideration for the assumption or incurrence of liabilities       
incurred in connection with or in anticipation of such Asset Sale), after (a)   
provision for all income or other taxes measured by or resulting from such      
Asset Sale to the Company or any of its Restricted Subsidiaries, whether or     
not offset by net operating loss and tax credit carry-forwards, (b) payment of  
all brokerage commissions and the underwriting fees and, without limitation,    
all other fees and expenses related to such Asset Sale, and (c) deduction of    
appropriate amounts to be provided by the Company or any of its Restricted      
Subsidiaries as a reserve, in accordance with generally accepted accounting     
principles, against any liabilities associated with the assets sold or          
otherwise disposed of in such Asset Sale (including, without limitation,        
pension and other post-employment benefit liabilities and liabilities related   
to environmental matters) or against any indemnification obligations            
associated with the sale or                                                     

28  

424B1
29th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 29th
other disposition of the assets sold or otherwise disposed of in such Asset     
Sale, and (ii) all noncash consideration received by the Company or any of its  
Restricted Subsidiaries from such Asset Sale upon the liquidation or            
conversion of such consideration into cash.                                     

"Net Worth" of the Company means, at any date, the aggregate of capital,    
surplus and retained earnings of the Company and its Restricted Subsidiaries    
as would be shown on a consolidated balance sheet of the Company prepared in    
accordance with generally accepted accounting principles, adjusted to exclude   
(to the extent included) investments by the Company and its Subsidiaries in     
joint ventures and the amount of equity attributable to Affiliates other than   
Restricted Subsidiaries of such Person.                                         

"Non-Recourse Debt" with respect to any Person means Debt of such Person for
which the sole legal recourse for collection of principal and interest on such  
Debt is against the specific property identified in the instruments evidencing  
or securing such Debt and such property was acquired with the proceeds of such  
Debt or such Debt was Incurred (i) within 90 days after the acquisition of      
such property or (ii) in respect of the Carlsbad Property.                      

"Permitted Investments" of any Person means Investments of such Person in   
(i) direct obligations of the United States or any agency thereof or            
obligations guaranteed by the United States or any agency thereof, in each      
case maturing within 180 days of the date of acquisition thereof, (ii)          
certificates of deposit maturing within 180 days of the date of acquisition     
thereof issued by a bank, trust company or savings and loan association which   
is organized under the laws of the United States or any state thereof having    
capital, surplus and undivided profits aggregating in excess of $250 million    
and a Keefe Bank Watch Rating of C or better, (iii) certificates of deposit     
maturing within 180 days of the date of acquisition thereof issued by a bank,   
trust company or savings and loan association organized under the laws of the   
United States or any state thereof other than banks, trust companies or         
savings and loan associations satisfying the criteria in (ii) above; provided   
that the aggregate amount of all certificates of deposit issued to the Company  
at any one time by such bank, trust company or savings and loan association     
will not exceed $100,000, (iv) commercial paper given the highest rating by     
two established national credit rating agencies and maturing not more than 180  
days from the date of the acquisition thereof, (v) repurchase agreements or     
money-market accounts which are fully secured by direct obligations of the      
United States or any agency thereof and (vi) in the case of the Company and     
its Subsidiaries, (1) any receivables or loans taken by the Company or a        
Subsidiary in connection with the sale of any asset otherwise permitted by the  
Indenture, (2) Investments in any Guarantor, (3) Investments in the Senior      
Notes or Debt pari passu with the Senior Notes, (4) Investments in evidences    
of Debt, securities or other property received from another Person by the       
Company or any of its Restricted Subsidiaries in connection with any            
bankruptcy proceeding or by reason of a composition or readjustment of debt or  
a reorganization of such Person or as a result of foreclosure, perfection or    
enforcement of any Lien in exchange for evidences of Debt, securities or other  
property of such Person held by the Company or any of its Restricted            
Subsidiaries, or for other liabilities or obligations of such other Person to   
the Company or any of its Restricted Subsidiaries that were created, in         
accordance with the terms of the Indenture, (5) Investments in Interest Rate    
Protection Agreements which constitute Permitted Debt and (6) Investments in    
an aggregate amount outstanding not greater than $30,000,000.                   

"Permitted Liens" with respect to the Company and its Restricted            
Subsidiaries means (i) Liens on assets of the Company or any Restricted         
Subsidiary of the Company securing Debt which may be incurred pursuant to the   
"Limitation on Debt" covenant, provided that the aggregate amount of Debt       
secured by Liens (excluding Non-Recourse Debt of the Company and Restricted     
Subsidiaries and Debt outstanding under the Warehouse Facility) may not exceed  
40 percent of the Company's Consolidated Tangible Assets; (ii) Liens securing   
a Warehouse Facility; provided that such Liens shall not extend to any assets   
other than the mortgages, promissory notes and other collateral that secures    
mortgage loans made by the Company or any of its Restricted Subsidiaries;       
(iii) Liens securing Non-Recourse Debt of the Company or any Restricted         
Subsidiary of the Company, provided that such Liens apply only to the property  
financed out of the net proceeds of such Non-Recourse Debt within 90 days of    
the incurrence of such Non-Recourse Debt (except that such 90 day limitation    
shall not apply with                                                            

29  

424B1
30th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 30th
respect to the Carlsbad Property); (iv) Liens securing Debt of a Person         
existing at the time that such Person is merged into or consolidated with the   
Company or a Restricted Subsidiary; provided that such Liens were not created   
in contemplation of such merger or consolidation and do not extend to any       
assets or property of the Company or any Restricted Subsidiary, other than the  
surviving Person and its Subsidiaries; (v) Liens on assets or property          
acquired by the Company or a Restricted Subsidiary; provided that such Liens    
were not created in contemplation of such acquisition and do not extend to any  
other assets or property (other than proceeds of such acquired assets or        
property); (vi) Liens in respect of Interest Rate Protection Agreements which   
constitute Permitted Debt; (vii) Liens for taxes, assessments or governmental   
charges or claims that either (a) are not yet delinquent or (b) are being       
contested in good faith by appropriate proceedings and as to which appropriate  
reserves have been established or other provisions have been made in            
accordance with generally accepted accounting principles; (viii) statutory      
Liens of landlords and carriers', warehousemen's, mechanics', suppliers',       
materialmen's, repairmen's or other Liens imposed by law and arising in the     
ordinary course of business; (ix) Liens (other than any Lien imposed by the     
Employee Retirement Income Security Act of 1974, as amended) incurred or        
deposits made in the ordinary course of business in connection with workers'    
compensation, unemployment insurance and other types of social security; (x)    
Liens incurred or deposits made to secure the performance of tenders, bids,     
leases, statutory obligations, surety and appeal bonds, progress payments,      
government contracts and other obligations of like nature (exclusive of         
obligations for the payment of borrowed money), in each case, incurred in the   
ordinary course of business; (xi) attachment or judgment Liens not giving rise  
to a Default or Event of Default; (xii) easements, rights-of-way, restrictions  
and other similar charges or encumbrances not materially interfering with the   
ordinary conduct of the business of the Company or any of its Subsidiaries;     
(xii) leases or subleases granted to others not materially interfering with     
the ordinary conduct of the business of the Company or any of its Restricted    
Subsidiaries; (xiv) Liens securing Refinancing Debt; provided that such Liens   
only extend to the assets securing the Debt being refinanced, such refinanced   
Debt was previously secured and such Liens do not extend to any other assets    
of the Company or the assets of any of the Company's other Subsidiaries;        
(xv) Liens securing Purchase Money Obligations (including capitalized lease     
obligations); (xvi) Liens existing on the date of the Indenture; (xvii) any     
contract to sell an asset provided such sale is otherwise permitted under the   
Indenture and (xviii) Liens on property or assets of any Restricted Subsidiary  
securing Debt of such Restricted Subsidiary owing to the Company or one or      
more Restricted Subsidiaries of the Company.                                    

"Person" means any individual, corporation, partnership, association, trust 
or other entity or organization, including a government or political            
subdivision or agency or instrumentality thereof.                               

"Preferred Stock" means, with respect to any Person, any and all shares,    
interests, participations or other equivalents (however designated) of such     
Person's preferred or preference stock whether now outstanding or issued after  
the date of the Indenture, and including, without limitation, all classes and   
series of preferred or preference stock.                                        

"Purchase Money Obligations" means Debt of any Person secured by Liens (i)  
on property purchased, acquired, or constructed by such Person or its           
Subsidiaries after the date of the Indenture and used in the ordinary course    
of business by such Person and (ii) securing the payment of all or any part of  
the purchase price or construction cost of such assets and limited to the       
property so acquired and improvements thereof; provided that such Debt is       
incurred no later than 90 days after the acquisition of such property or        
completion of such construction or improvements.                                

"Redeemable Stock" means, with respect to any Person, any class or series of
Capital Stock of such Person that is redeemable at the option of the holder     
(except pursuant to a change in control provision that does not (i) cause such  
Capital Stock to become redeemable in circumstances which would not constitute  
a Change of Control and (ii) require the Company to pay the redemption price    
therefor prior to the Change of Control Repurchase Date) or is subject to       
mandatory redemption or otherwise matures prior to the final stated maturity    
of the Senior Notes.                                                            

"Refinancing Debt" means Debt that refunds, refinances or extends any Senior
Notes, Existing Debt (other than Existing Debt to be repaid with the net        
proceeds of the offering of the Senior Notes) or other Debt incurred            

30  

424B1
31st Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 31st
by the Company or its Restricted Subsidiaries pursuant to the terms of the      
Indenture, but only to the extent that (i) the Refinancing Debt is              
subordinated to the Senior Notes to the same extent as the Debt being           
refunded, refinanced or extended, if at all, (ii) the Refinancing Debt is       
scheduled to mature either (a) no earlier than the Debt being refunded,         
refinanced or extended, or (b) after the maturity date of the Senior Notes,     
(iii) the portion, if any, of the Refinancing Debt that is scheduled to mature  
on or prior to the maturity date of the Senior Notes has a Weighted Average     
Life to Maturity at the time such Refinancing Debt is Incurred that is equal    
to or greater than the Weighted Average Life to Maturity of the portion of the  
Debt being refunded, refinanced or extended that is scheduled to mature on or   
prior to the maturity date of the Senior Notes, and (iv) the gross proceeds of  
such Refinancing Debt is an amount that is equal to or less than the aggregate  
principal amount then outstanding under the Debt being refunded, refinanced or  
extended (plus the premiums or other payments paid in connection therewith      
(which shall not exceed the stated amount of any premium or other payment       
required to be paid in connection with such a renewal, extension,               
substitution, refunding, refinancing, redemption, repurchase or replacement     
pursuant to the terms of the Debt being renewed, extended, substituted,         
refunded, refinanced, amended, modified, supplemented, redeemed, repurchased    
or replaced) and the expenses incurred in connection therewith).                

"Restricted Payments" means with respect to the Company or any Restricted   
Subsidiary (i) the declaration or payment of any dividend or other              
distribution on any shares of such Person's Capital Stock ((x) except           
dividends or distributions in additional shares of Capital Stock of the         
Company other than Redeemable Stock or (y) the declaration or payment of any    
dividend or other distribution by a Restricted Subsidiary to the Company or     
another Restricted Subsidiary), (ii) any payment on account of the purchase,    
redemption or other acquisition of (a) any shares of such Person's Capital      
Stock or (b) any option, warrant or other right to acquire shares of such       
Person's Capital Stock, except, in each case, Capital Stock held by the         
Company or a Restricted Subsidiary, (iii) any Investment (other than a          
Permitted Investment) in any Person, or (iv) any principal payment,             
redemption, repurchase, defeasance or other acquisition or retirement, prior    
to scheduled principal payment or scheduled maturity, of Debt of the Company    
or its Subsidiaries which is subordinated in right of payment to the Senior     
Notes (other than Debt held by the Company or a Restricted Subsidiary).         

"Restricted Subsidiary" means any Subsidiary which is not an Unrestricted   
Subsidiary.                                                                     

"Subsidiary" means, with respect to any Person, (i) any corporation or      
entity of which a majority of the capital stock having ordinary voting power    
to elect a majority of the board of directors or other Persons performing       
similar functions is at the time directly or indirectly owned by such Person    
or one or more of the other Subsidiaries of that Person or (ii) any             
partnership or joint venture at least a majority of the voting power of which   
is at the time directly or indirectly owned by such Person or one or more of    
the other Subsidiaries of that Person, or a combination thereof or a successor  
thereto.                                                                        

"Unrestricted Subsidiary" means each of the Subsidiaries of the Company     
(other than a Guarantor) so designated by a resolution adopted by the Board of  
Directors of the Company as provided below; provided that (a) neither the       
Company nor any of its other Subsidiaries (other than Unrestricted              
Subsidiaries) (1) provides any direct or indirect credit support for any Debt   
of such Subsidiary (including any undertaking, agreement or instrument          
evidencing such Debt) or (2) is directly or indirectly liable for any Debt of   
such Subsidiary, and (b) the creditors with respect to Debt for borrowed money  
of such Subsidiary have agreed in writing that they have no recourse, direct    
or indirect, to the Company or any other Subsidiary of the Company (other than  
Unrestricted Subsidiaries), including, without limitation, recourse with        
respect to the payment of principal or interest on any Debt of such             
Subsidiary. The Board of Directors of the Company may designate an              
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) any    
such redesignation will be deemed to be an Incurrence by the Company and its    
Restricted Subsidiaries of the Debt (if any) of such redesignated Subsidiary    
for purposes of the "Limitation on Debt" covenant set forth in the Indenture    
as of the date of such redesignation, (ii) any Debt of such Unrestricted        
Subsidiary could then be Incurred in accordance with the "Limitation on Debt"   
covenant set forth in the Indenture on the date of such redesignation and       
(iii) the Liens of such Unrestricted Subsidiary could then be incurred in       
accordance with the "Limitation on Liens" covenant set forth                    

31  

424B1
32nd Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 32nd
in the Indenture as of the date of such redesignation. Subject to the           
foregoing, the Board of Directors of the Company also may designate any         
Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) all   
previous Investments by the Company and its Restricted Subsidiaries in such     
Restricted Subsidiary (net of any returns previously paid on such Investments)  
will be deemed to be Restricted Payments at the time of such designation and    
will reduce the amount available for Restricted Payments under the              
"Limitations on Restricted Payments" covenant set forth in the Indenture,       
(ii) the Company and its Restricted Subsidiaries could incur $1.00 of           
additional Indebtedness under the Coverage Ratio test contained in the          
"Limitations on Debt" covenant set forth in the Indenture and (iii) no Default  
or Event of Default shall have occurred or be continuing. Any such designation  
or redesignation by the Board of Directors of the Company will be evidenced to  
the Trustee by the filing with the Trustee of a certified copy of the           
resolution of the Board of Directors of the Company giving effect to such       
designation or redesignation and an Officers' Certificate certifying that such  
designation or redesignation complied with the foregoing conditions and         
setting forth the underlying calculations.                                      

"Warehouse Facility" means a Bank Facility to finance the making of mortgage
loans originated by the Company or any of its Subsidiaries.                     

"Weighted Average Life to Maturity" means, when applied to any Debt or      
portion thereof, if applicable, at any date, the number of years obtained by    
dividing (i) the then outstanding principal amount of such Debt or portion      
thereof, if applicable, into (ii) the sum of the products obtained by           
multiplying (a) the amount of each then remaining installment, sinking fund,    
serial maturity or other required payment of principal, including payment at    
final maturity, in respect thereof, by (b) the number of years (calculated to   
the nearest one-twelfth) that will elapse between such date and the making of   
such payment.                                                                   

"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the 
Company of which 100% of the outstanding Capital Stock is owned by one or more  
Wholly Owned Restricted Subsidiaries of the Company or by the Company and one   
or more Wholly Owned Restricted Subsidiaries of the Company. For purposes of    
this definition, any directors' qualifying shares shall be disregarded in       
determining the ownership of a Subsidiary.                                      

EVENTS OF DEFAULT                                                               

The following shall constitute Events of Default with respect to the Senior 
Notes: (i) failure to pay the principal of any Note when such principal         
becomes due and payable at maturity, upon acceleration or otherwise, (ii)       
failure to pay interest when due, and such failure continues for a 30-day       
period; (iii) a default in the observance or performance of any other covenant  
or agreement of the Company or the Guarantors in the Note, the Guarantee or     
the Indenture that continues for the period and after the notice specified      
below; (iv) an event of default shall have occurred under one or more           
evidences of Debt of the Company or any of its Restricted Subsidiaries (other   
than Non-Recourse Debt) with an outstanding aggregate principal amount of       
$5,000,000 or more, whether such Debt now exists or is created hereafter,       
which event of default (1) consists of the failure by the Company or any        
Restricted Subsidiary to make any payment in respect of such Debt at its final  
maturity or (2) results in the acceleration of such Debt which acceleration     
shall be in effect; (v) any final judgment or judgments for payment of money    
in excess of $5,000,000 in the aggregate shall be rendered against the Company  
or any of its Restricted Subsidiaries and shall remain unstayed, unsatisfied    
or undischarged for the period and after the notice specified below; (vi)       
certain events of bankruptcy, insolvency or reorganization of the Company or    
Material Subsidiaries and (vii) any Guarantee of a Material Subsidiary ceases   
to be in full force and effect (other than in accordance with the terms of      
such Guarantee and the Indenture) or is declared null and void and              
unenforceable or found to be invalid or any Guarantor denies its liability      
under its Guarantee (other than by reason of release of a Guarantor from its    
Guarantee in accordance with the terms of the Indenture and the Guarantee).     
The Company is required to deliver to the Trustee within 120 days after the     
end of each fiscal year of the Company, an officer's certificate stating        
whether or not the signatories know of any default by the Company under the     
Indenture and the Senior Notes and, if any default exists, describing such      
default.                                                                        

A default under clause (iii) or (v) above is not an Event of Default until  
the Trustee or the holders of at least 25% in principal amount of the Senior    
Notes then outstanding notify the Company of the default and the                

32  

424B1
33rd Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 33rd
Company does not cure the default within 60 days. The notice must specify the   
default, demand that it be remedied and state that the notice is a "Notice of   
Default." If the holders of 25% in principal amount of Senior Notes then        
outstanding request the Trustee to give such notice on their behalf, the        
Trustee shall do so.                                                            

In case an Event of Default (other than an Event of Default resulting from  
certain events of bankruptcy, insolvency or reorganization of the Company)      
shall have occurred and be continuing, the Trustee, by notice to the Company,   
or the holders of 25% of the principal amount of the Senior Notes then          
outstanding, by notice to the Company and the Trustee, may declare the          
principal of the Senior Notes, plus accrued interest, to be immediately due     
and payable. In case an Event of Default resulting from certain events of       
bankruptcy, insolvency or reorganization of the Company shall occur, such       
amounts shall be due and payable without any declaration or any act on the      
part of the Trustee or the holders of the Senior Notes. Any declaration of      
acceleration may be rescinded and past defaults may be waived by the holders    
of a majority of the principal amount of the Senior Notes then outstanding      
upon conditions provided in the Indenture. Except to enforce the right to       
receive payment of principal or interest when due, no holder of a Note may      
institute any proceeding with respect to the Indenture or for any remedy        
thereunder unless such holder has previously given to the Trustee written       
notice of a continuing Event of Default and unless the holders of 25% of the    
principal amount of the Senior Notes then outstanding have requested the        
Trustee to institute proceedings in respect of such Event of Default and have   
offered the Trustee reasonable indemnity against loss, liability and expense    
to be thereby incurred, the Trustee has failed so to act for 60 days after      
receipt of the same and during such 60-day period the holders of a majority of  
the principal amount of the Senior Notes then outstanding have not given the    
Trustee a direction inconsistent with the request. Subject to certain           
restrictions, the holders of a majority in principal amount of the Senior       
Notes then outstanding will have the right to direct the time, method and       
place of conducting any proceeding for any remedy available to the Trustee or   
exercising any trust or power conferred on the Trustee. The Trustee, however,   
may refuse to follow any direction that conflicts with law or the Indenture,    
that is unduly prejudicial to the rights of any holder of a Note or that would  
involve the Trustee in personal liability and the Trustee may take any other    
action deemed proper by the Trustee which is not inconsistent with such         
direction.                                                                      

MERGERS AND CONSOLIDATIONS                                                      

Neither the Company nor any Guarantor will consolidate or merge with or     
into, or sell, lease, convey or otherwise dispose of all or substantially all   
of its assets (including, without limitation, by way of liquidation or          
dissolution), or assign any of its obligations under the Senior Notes, the      
Guarantees or the Indenture (as an entirety or substantially as an entirety in  
one transaction or series of related transactions), to any Person or permit     
any of its Restricted Subsidiaries to do any of the foregoing (in each case     
other than with the Company or another Wholly Owned Restricted Subsidiary)      
unless: (i) the Person formed by or surviving such consolidation or merger (if  
other than the Company or such Guarantor, as the case may be), or to which      
such sale, lease, conveyance or other disposition or assignment will be made    
(collectively, the "Successor"), is a corporation or other legal entity         
organized and existing under the laws of the United States or any state         
thereof or the District of Columbia, and the Successor assumes by supplemental  
indenture in a form reasonably satisfactory to the Trustee all of the           
obligations of the Company or such Guarantor, as the case may be, under the     
Senior Notes or such Guarantor's Guarantee, as the case may be, and the         
Indenture, (ii) immediately after giving effect to such transaction, no         
Default or Event of Default has occurred and is continuing, (iii) immediately   
after giving effect to such transaction and the use of any net proceeds         
therefrom, on a pro forma basis, the Consolidated Tangible Net Worth of the     
Company or the Successor (in the case of a transaction involving the Company),  
as the case may be, would be at least equal to the Consolidated Tangible Net    
Worth of the Company immediately prior to such transaction and (iv) in the      
case of a transaction involving the Company, immediately after giving effect    
to such transaction and the use of any net proceeds therefrom, on a pro forma   
basis, the Coverage Ratio of the Company or the Successor (in the case of a     
transaction involving the Company), as the case may be, would be such that the  
Company or the Successor (in the case of a transaction involving the Company),  
as the case may be, would be entitled to Incur at least $1.00 of additional     
Debt under such Coverage Ratio test in the "Limitation on Debt" covenant set    
forth in the Indenture. The foregoing provisions shall not apply to a           
transaction involving the consolidation or merger of a Guarantor with or into   
another person, or the sale, lease, conveyance or other                         

33  

424B1
34th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 34th
disposition of all or substantially all of the assets of such Guarantor, that   
results in such Guarantor being released from its Guarantee as provided under   
"The Guarantees" above.                                                         

DEFEASANCE                                                                      

Under the terms of the Indenture and the Senior Notes, the Company, at its  
option, (a) will be Discharged from any and all obligations in respect of the   
Senior Notes (except in each case for certain obligations to register the       
transfer or exchange of Senior Notes, replace stolen, lost or mutilated Senior  
Notes, maintain paying agencies and hold moneys for payment in trust) or (b)    
need not comply with the covenants of the Indenture nor be subject to the       
operation of the cross acceleration provisions described under "Events of       
Default," in each case, if the Company irrevocably deposits with the Trustee,   
in trust, money or U.S. Government Obligations (as defined in the Indenture)    
which through the payment of interest thereon and principal thereof in          
accordance with their terms will provide money in an amount sufficient to pay   
the principal of and interest on the Senior Notes on the dates such payments    
are due in accordance with the terms of the Senior Notes.                       

To exercise either option above, the Company is required to deliver to the  
Trustee an opinion of counsel that the holders of the Senior Notes will not     
recognize income, gain or loss for Federal income tax purposes as a result of   
such defeasance and will be subject to Federal income tax on the same amounts,  
in the same manner and at the same times as would have been the case if such    
defeasance had not occurred.                                                    

In the event the Company exercises its options under clause (b) of the      
second preceding paragraph and the Senior Notes are declared due and payable    
because of the occurrence of any Event of Default (other than the cross         
acceleration provisions described under "Events of Default" which will be       
inapplicable), the amount of money and U.S. Government Obligations on deposit   
with the Trustee will be sufficient to pay amounts due on the Senior Notes at   
the time of their stated maturity but may not be sufficient to pay amounts due  
on the Senior Notes at the time of the acceleration resulting from such Event   
of Default. However, the Company shall remain liable for such payments.         

REPORTS                                                                         

As long as any of the Senior Notes are outstanding, the Company will deliver
to the Trustee and mail to each Holder within 15 days after the filing of the   
same with the Commission copies of the quarterly and annual reports and of the  
information, documents and other reports with respect to the Company and the    
Guarantors, if any, which the Company and the Guarantors may be required to     
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.   
The Indenture will provide that, notwithstanding that neither the Company nor   
any of the Guarantors may be required to remain subject to the reporting        
requirements of Section 13 or 15(d) of the Exchange Act, the Company will       
continue to file with the Commission and provide the Trustee and Holders with   
such annual and quarterly reports and such information, documents and other     
reports with respect to the Company and the Guarantors as are required under    
Sections 13 and 15(d) of the Exchange Act. If filing of documents by the        
Company with the Commission as aforementioned in this paragraph is not          
permitted under the Exchange Act, the Company shall promptly upon written       
notice supply copies of such documents to any prospective holder. The Company   
and each Guarantor will also comply with the other provisions of Section        
314(a) of the Trust Indenture Act.                                              

AMENDMENT, SUPPLEMENT AND WAIVER                                                

Subject to certain exceptions, the Indenture or the Senior Notes may be     
amended or supplemented with the consent (which may include consents obtained   
in connection with a tender offer or exchange offer for Senior Notes) of the    
Holders of at least a majority in principal amount of Senior Notes then         
outstanding, and any existing Default or Event of Default (other than any       
continuing Default or Event of Default in the payment of interest on or the     
principal of the Senior Notes) under, or compliance with any provision of, the  
Indenture may be waived with the consent (which may include consents obtained   
in connection with a tender offer or exchange                                   

34  

424B1
35th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 35th
offer for Senior Notes) of the Holders of a majority in principal amount of     
the Senior Notes then outstanding. Without the consent of any Holder, the       
Company, the Guarantors and the Trustee may amend the Indenture or the Senior   
Notes or waive any provision of the Indenture to cure any ambiguity, defect or  
inconsistency, to comply with the "Mergers and Consolidations" section set      
forth in the Indenture, to provide for uncertificated Senior Notes in addition  
to certificated Senior Notes, to make any change that does not adversely        
affect the legal rights under the Indenture of any Holder, to comply with the   
qualification of the Indenture under the Trust Indenture Act, or to reflect a   
Guarantor ceasing to be liable on the Guarantees because it is no longer a      
Subsidiary of the Company.                                                      

Without the consent of each Holder affected, the Company may not (i) reduce 
the amount of Senior Notes whose Holders must consent to an amendment,          
supplement or waiver, (ii) reduce the rate of or change the time for payment    
of interest, including default interest, on any Note, (iii) reduce the          
principal of or change the fixed maturity of any Note or alter the provisions   
with respect to redemption under the "Optional Redemption" section set forth    
in the Indenture, (iv) make any Senior Notes payable in money other than that   
stated in the Note, (v) make any change in certain other provisions set forth   
in the Indenture, (vi) adversely modify the ranking or priority of the Senior   
Notes or any Guarantee, (vii) release any Guarantor from any of its             
obligations under its Guarantee or the Indenture otherwise than in accordance   
with the terms of the Indenture, or (viii) waive a continuing Default or Event  
of Default in the payment of principal of or interest on the Senior Notes.      

NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS OR EMPLOYEES         

The Indenture will provide that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Senior Notes, or for any claim   
based thereon or otherwise in respect thereof, and no recourse under or upon    
any obligation, covenant or agreement of the Company or any Guarantor in the    
Indenture or in any of the Senior Notes or because of the creation of any Debt  
represented thereby, shall be had against any shareholder, officer, director,   
employee or controlling person of the Company, any Guarantor or any successor   
Person thereof. Each Holder, by accepting such Senior Notes, will waive and     
release all such liability.                                                     

CONCERNING THE TRUSTEE                                                          

The Indenture contains certain limitations on the rights of the Trustee,    
should it become a creditor of the Company, to obtain payment of claims in      
certain cases, or to realize on certain property received in respect of any     
such claim as security or otherwise. The Trustee will be permitted to engage    
in other transactions; however, if it acquires any conflicting interest (as     
defined in the Indenture), it must eliminate such conflict or resign.           

The Holders of a majority in principal amount of the then outstanding Senior
Notes will have the right to direct the time, method and place of conducting    
any proceeding for exercising any remedy available to the Trustee, subject to   
certain exceptions. The Indenture provides that in case an Event of Default     
occurs and is not cured, the Trustee will be required, in the exercise of its   
power, to use the degree of care of a prudent person in similar circumstances   
in the conduct of his own affairs. Subject to such provisions, the Trustee      
will be under no obligation to exercise any of its rights or powers under the   
Indenture at the request of any Holder, unless such Holder shall have offered   
to the Trustee security and indemnity satisfactory to the Trustee.              

GOVERNING LAW                                                                   

The Indenture, the Senior Notes and the Guarantees will be governed by the  
internal laws of the State of New York.                                         

35  

424B1
36th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 36th
UNDERWRITING  

Under the terms and subject to the conditions of the Underwriting Agreement 
dated the date hereof, each Underwriter named below has agreed to purchase,     
and the Company has agreed to sell to such Underwriter, the principal amount    
of Senior Notes set forth opposite the name of such Underwriter below:          

                                                                [Download Table]

NAME                                                         PRINCIPAL AMOUNT
----                                                         ----------------
                                                                             
Smith Barney Inc. ..........................................   $ 78,000,000  
Salomon Brothers Inc........................................     52,000,000  
                                                               ------------  
  Total.....................................................   $130,000,000  
                                                               ============  

The Underwriters are obligated to take and pay for all of the Senior Notes  
offered hereby if any such Senior Notes are taken.                              

The Underwriters have advised the Company that they propose initially to    
offer part of the Senior Notes directly to the public at the public offering    
price set forth on the cover page hereof and part to certain dealers at a       
price that represents a concession not in excess of 0.025% of the public        
offering price of the Senior Notes. The Underwriters may allow, and such        
dealers may reallow, a concession not in excess of 1.25% of the public          
offering price of the Senior Notes to certain other dealers. After the public   
offering, the public offering price and such concessions may be changed from    
time to time by the Underwriters. The Underwriters have informed the Company    
that the Underwriters do not intend to confirm sales to accounts over which     
they exercise discretionary authority.                                          

The Company and the Guarantors have agreed to indemnify the Underwriters    
against certain liabilities, including liabilities under the Securities Act.    

The Senior Notes are a new issue of securities which have no established    
trading market. It is expected that the Senior Notes will be sold to a limited  
number of investors. The Company has been advised by the Underwriters that      
they intend to make a market in the Senior Notes after the consummation of      
this Offering; however, the Underwriters are not obligated to do so, and any    
such market-making, if commenced, may be terminated at any time without         
notice. In addition, the Senior Notes have been approved for listing on the     
New York Stock Exchange. No assurance can be given as to the liquidity of the   
trading market, if any, for the Senior Notes.                                   

Smith Barney Inc. has been retained by the Company to act as dealer manager 
in connection with the Offer to Purchase. In addition, Smith Barney Inc. has    
from time to time performed investment banking and other financial advisory     
services for the Company in the ordinary course of business and has received    
customary compensation. Smith Barney Inc. was one of the underwriters of the    
Company's public offering of $86,250,000 principal amount of 6 7/8%             
Convertible Subordinated Notes due November 1, 2002 in 1995.                    

Under the Rules of Fair Practice of the National Association of Securities  
Dealers, Inc. (the "NASD"), when more than 10% of the proceeds of a public      
offering of debt securities, not including underwriting compensation, is to be  
paid to a member of the NASD or an affiliate of a member, the yield at which    
the debt securities are distributed to the public must be no lower than that    
recommended by a "qualified independent underwriter" meeting certain            
standards. Smith Barney Inc. is a member of the NASD and will receive more      
than 10% of the net proceeds from the Senior Notes Offering as a result of the  
use of a portion of such proceeds to repurchase approximately $17.3 million of  
Old Senior Notes held by Smith Barney Inc. Salomon Brothers Inc has agreed to   
act as a qualified independent underwriter in connection with pricing the       
Senior Notes offered hereby and conducting due diligence. The yield on the      
Senior Notes, when sold to the public at the public offering price set forth    
on the cover page of this Prospectus, will be no less than that recommended by  
Salomon Brothers Inc. Salomon Brothers Inc will receive no additional           
compensation for its services as qualified independent underwriter.             

36  

424B1
37th Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 37th
LEGAL MATTERS 

Certain legal matters relating to the issuance and sale of the Notes offered
hereby are being passed upon for the Company by Cahill Gordon & Reindel (a      
partnership including a professional corporation), New York, New York, and for  
the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York, New York.   

EXPERTS 

 The audited financial statements incorporated by reference in this Prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as    
indicated in their report with respect thereto, and are incorporated herein in  
reliance upon the authority of said firm as experts in giving said report.      

37

424B1
Last Page of 38
TOC
1st
Previous
Next
↓Bottom
Just 38th
------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY    
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED  
HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,    
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-  
THORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTI-    
TUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER   
THAN THOSE TO WHICH IT RELATES NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR A    
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH     
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING     
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM  
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF      
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,     
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE      
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS COR-  
RECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.                              

----------- 

TABLE OF CONTENTS 

                                                                [Download Table]

                                                                            PAGE
                                                                            ----
                                                                                
Available Information......................................................   2 
Incorporation of Documents by Reference....................................   2 
Prospectus Summary.........................................................   3 
Risk Factors...............................................................   8 
Use of Proceeds............................................................  10 
Capitalization.............................................................  11 
Business...................................................................  12 
Description of the Senior Notes............................................  17 
Underwriting...............................................................  36 
Legal Matters..............................................................  37 
Experts....................................................................  37 

------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 

$130,000,000  

CONTINENTAL HOMES HOLDING CORP. 

10% SENIOR NOTES  
DUE 2006  

------- 

PROSPECTUS  

APRIL 15, 1996  

------- 

SMITH BARNEY INC. 

SALOMON BROTHERS INC  

------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B1’ Filing		Date		First		Last			Other Filings
		4/15/06		1		22
		11/1/02		11		36
		3/15/02		7
		4/15/01		1		18
		8/1/99		10
		4/15/99		1		18
		8/1/97		10
		12/31/96		3		15
		10/15/96		1		17
		4/19/96		10
		4/18/96		1
Filed on:		4/16/96
		4/15/96		1		38
		2/28/96		1		18			10-Q
		11/30/95		2					10-Q
		8/31/95		2					10-Q
		7/1/95		16
		5/31/95		2		12			10-K405,  DEF 14A
		2/28/95		3		16			10-Q
		11/1/94		3
									List all Filings