-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DmGloOarx+0bhfefBj8yQRwBjp09t+tPXzQvx80dv2IV982QfSM2IUzW0I8k/b4k vCfBXg6iETrtgePAGLmMfQ== 0000902595-99-000051.txt : 19990224 0000902595-99-000051.hdr.sgml : 19990224 ACCESSION NUMBER: 0000902595-99-000051 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990223 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KAUFMAN & BROAD HOME CORP CENTRAL INDEX KEY: 0000795266 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 953666267 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-38387 FILM NUMBER: 99547257 BUSINESS ADDRESS: STREET 1: 10990 WILSHIRE BLVD CITY: LOS ANGELES STATE: CA ZIP: 90024 BUSINESS PHONE: 3102314000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEWIS RANDALL W CENTRAL INDEX KEY: 0001080274 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1156 N. MOUNTAIN AVENUE CITY: UPLAND STATE: CA ZIP: 91785 BUSINESS PHONE: 9099850971 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. __) KAUFMAN AND BROAD HOME CORPORATION ---------------------------------- (Name of Issuer) Common Stock ------------ (Title of Class of Securities) 486168107 --------- (CUSIP Number) Randall W. Lewis 1156 N. Mountain Ave. Upland, California 91785 (909) 985-0971 --------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 7, 1999 ------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d- 1(e),13d-1(f) or 13d-1(g), check the following box: [ ] The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 1 CUSIP NO. 486168107 Schedule 13D 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Randall W. Lewis 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP<*> (a)[X ] (b)[ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS PF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER<*> 2,034,924 8 SHARED VOTING POWER* 400,000 9 SOLE DISPOSITIVE POWER* 2,034,924 10 SHARED DISPOSITIVE POWER* 400,000 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON<*> 2,434,924 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11<*> 5.1% 14 TYPE OF REPORTING PERSON IN <*> SEE ITEMS 2 AND 5 OF TEXT BELOW 2 CUSIP NO. 486168107 Schedule 13D 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON LH Whitney, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP<*> (a) [ X ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS AF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d)OR 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER<*> 1,900,000 8 SHARED VOTING POWER<*> 0 9 SOLE DISPOSITIVE POWER<*> 1,900,000 10 SHARED DISPOSITIVE POWER<*> 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON <*> 1,900,000 12 CHECK BOX IF THE AGGREGATE AMOUNT N ROW 11 EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11<*> 4.0* 14 TYPE OF REPORTING PERSON CO <*> SEE ITEMS 2 AND 5 OF TEXT BELOW 3 CUSIP NO. 486168107 Schedule 13D 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON Gitan Enterprises, Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP<*> (a) [ X ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS PF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d)OR 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION California NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER<*> 24,613 8 SHARED VOTING POWER<*> 0 9 SOLE DISPOSITIVE POWER<*> 24,613 10 SHARED DISPOSITIVE POWER<*> 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON <*> 24,613 12 CHECK BOX IF THE AGGREGATE AMOUNT N ROW 11 EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11<*> 0.05% 14 TYPE OF REPORTING PERSON CO <*> SEE ITEMS 2 AND 5 OF TEXT BELOW 4 CUSIP NO. 486168107 Schedule 13D 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON LHE Platte, LLC 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP<*> (a) [ X ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS PF 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d)OR 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: 7 SOLE VOTING POWER<*> 0 8 SHARED VOTING POWER<*> 400,000 9 SOLE DISPOSITIVE POWER<*> 0 10 SHARED DISPOSITIVE POWER<*> 400,000 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON <*> 400,000 12 CHECK BOX IF THE AGGREGATE AMOUNT N ROW 11 EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11<*> 0.8% 14 TYPE OF REPORTING PERSON CO <*> SEE ITEMS 2 AND 5 OF TEXT BELOW 5 CUSIP NO. 486168107 Schedule 13D ITEM 1. SECURITY AND ISSUER This report relates to the Common Stock of Kaufman and Broad Home Corporation (the "Company") which has its principal executive offices located at 10990 Wilshire Boulevard, Los Angeles, California 90024. ITEM 2. IDENTITY AND BACKGROUND This statement is being filed by Randall W. Lewis, in his individual capacity and as a member of LH Whitney, LLC ("Whitney"), as the sole shareholder and President of Gitan Enterprises, Inc. ("Gitan") and as the sole shareholder and President of Coronet Construction of Nevada, Inc., Regal Construction Co., Inc. and Gitan, each a member of Lewis Holding Company, LLC, which in turn is a member of LHE Platte, LLC ("Platte"). Mr. Lewis' principal business address is 1156 N. Mountain Avenue, Upland, California 91785 and his present occupation is Senior Vice President of the Company. The Company is engaged in the homebuilding business. Whitney is a limited liability company formed under the laws of the State of Delaware with its principal and business address at 1156 N. Mountain Avenue, Upland, California 91785. The principal business of Whitney is to hold the Common Stock of the Company. Gitan is a corporation organized under the laws of the State of California with its principal and business address at 1156 N. Mountain Avenue, Upland, California 91785. The principal business of Gitan is to hold the Common Stock of the Company and other securities. Randall W. Lewis is the sole shareholder and President of Gitan. Platte and Lewis Holding Company, LLC are limited liability companies formed under the laws of the State of Delaware with their principal and business addresses at 1156 N. Mountain Avenue, Upland, California 91785. The principal business of Platte is to hold the Common Stock of the Company and the principal business of Lewis Holding Company, LLC is to hold member interests in Platte and other limited liability companies. Coronet Construction of Nevada, Inc. is a Nevada corporation with its principal and business address at 3325 Ali Baba Lane, Suite 603, Las Vegas, Nevada 89118. The principal business of Coronet Construction of Nevada, Inc. is to hold a member interest in Lewis Holding Company, LLC. Randall W. Lewis is the sole shareholder and President of Coronet Construction of Nevada, Inc. Regal Construction Co., Inc. is a California corporation with its principal and business address at 1156 N. Mountain Avenue, Upland, California 91785. The principal business of Regal Construction Co., Inc. is to hold a member interest in Lewis Holding Company, LLC. Randall W. Lewis is the sole shareholder and President of Regal Construction Co., Inc. Mr. Lewis, Whitney, Gitan and Platte may constitute a "group" for purposes of Section 13d of the Securities Exchange Act of 1934. 6 CUSIP NO. 486168107 Schedule 13D For purposes of this statement, Whitney, Gitan, Platte, Lewis Holding Company, LLC, Coronet Construction of Nevada, Inc. and Regal Construction Co., Inc. are collectively referred to as the "Entities". During the last five years, none of Mr. Lewis or any of the Entities has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to federal or state securities laws or finding any violation with respect to such laws. Mr. Lewis is a citizen of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Mr. Lewis, Gitan and Platte acquired all of their shares of Company Common Stock pursuant to that certain Purchase Agreement, executed as of January 7, 1999 (the "Purchase Agreement"), by and among the Company and the Sellers (which included Mr. Lewis, Gitan and Platte) and the Corporations named therein. Pursuant to the Purchase Agreement, the Company acquired substantially all the homebuilding assets of the Lewis Homes group of companies. Whitney acquired its shares of Company Common Stock from LHN Platte, LLC, which in turn acquired its shares pursuant to the Purchase Agreement. ITEM 4. PURPOSE OF TRANSACTION Mr. Lewis, Gitan and Platte acquired their shares of Company Common Stock pursuant to the Purchase Agreement. Whitney acquired its shares of Company Common Stock from LHN Platte, LLC, which in turn acquired its shares pursuant to the Purchase Agreement. In connection with the Purchase Agreement, the Company and certain identified Shareholders (including Mr. Lewis, Whitney, Gitan and Platte), entered into a Shareholder Agreement, dated as of January 7, 1999 (the "Shareholder Agreement"). Pursuant to the Shareholder Agreement, among other things, the Company has agreed to elect a designee of the Shareholders to serve on the Company's Board of Directors until the Company's annual meeting of shareholders held in 2000 (the "2000 Annual Meeting"). Randall W. Lewis has been elected to the Company's Board of Directors. The Board of Directors of the Company is not obligated to nominate Mr. Lewis for reelection at the 2000 Annual Meeting. If, before the 2000 Annual Meeting, Mr. Lewis for any reason shall become unable or otherwise shall cease to serve as a director, the Shareholders are entitled to designate another person from those listed on Exhibit A to the Shareholder Agreement to complete Mr. Lewis' term of office and the Company is obligated as soon as practicable to use its best efforts to cause the Board of Directors of the Company to elect such designee to complete the term. The Shareholder Agreement also provides that each Shareholder agrees to vote and to grant or withhold a written consent with respect to (or, if and to the extent that a Shareholder is the beneficial but not the record owner, agrees to cause to be voted and to cause a written consent to be granted or withheld with respect to) all shares of Common Stock of the 7 CUSIP NO. 486168107 Schedule 13D Company that such Shareholder beneficially owns (whether acquired pursuant to the Purchase Agreement or otherwise) in the manner recommended by the Board of Directors of the Company on all matters submitted to a vote of the Company's shareholders; provided, however, that the Shareholder shall be entitled to vote and to grant or withhold a written consent with respect to their shares in favor of the election to the Board of Directors of the Company of any person designated by them in accordance with the Shareholder Agreement. The foregoing agreement regarding voting is suspended automatically and becomes ineffective if (a) the aggregate beneficial ownership of the Common Stock of the Company by the Shareholders becomes less than 10% of the outstanding Common Stock of the Company or (b) the Board of Directors of the Company does not nominate the Shareholders' designee for election at the 2000 Annual Meeting or a subsequent annual meeting at which directors of the designee's class are nominated for election. The Shareholder Agreement also provides that no Shareholder shall, directly or indirectly, offer, sell or transfer any shares of Common Stock of the Company that such Shareholder beneficially owns (whether acquired pursuant to the Purchase Agreement or otherwise), without offering the Company right of first refusal in the manner provided in the Shareholder Agreement and except in compliance with certain exceptions set forth in the Shareholder Agreement. Other than as described above, and as contemplated by the Shareholder Agreement, none of Mr. Lewis or any of the Entities has any plans or proposals which relate to, or may result in, the matters listed on Items 4(a)-(j) of Schedule 13D (although they reserve the right to develop such). However, as a director of the Company, Mr. Lewis may be called on to consider one or more of such matters in the future. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Mr. Lewis beneficially owns 2,434,924 shares, equal to approximately 5.1% of the outstanding shares of the Common Stock of the Company, of which 110,311 shares are held of record by Mr. Lewis (0.2%), 1,900,000 shares are held of record by Whitney (4.0%), 24,613 shares are held of record by Gitan (0.05%) and 400,000 shares are held of record by Platte (0.8%). Except as set forth in the Shareholder Agreement, Mr. Lewis exercises sole voting power and sole dispositive power over all of the shares owned of record by Mr. Lewis, Whitney and Gitan and, as a result of his ownership and control of Coronet Construction of Nevada, Inc., Regal Construction Co., Inc. and Gitan , which are members of Lewis Holding Company, LLC, which in turn is a member of Platte, has shared voting and dispositive power with respect to the shares held of record by Platte. Except as discussed in the following sentence and as otherwise described herein, none of Mr. Lewis, Whitney, Gitan or Platte has acquired or disposed of any of the Company's Common Stock during the past 60 days. On January 7, 1999, Platte purchased a total of 2,223,108 shares of Company Common Stock pursuant to the Purchase Agreement, and immediately transferred all of such shares except the 400,000 it currently owns as follows: 990,000 shares to LH Ranier, LLC; 816,827 shares to LH Evans LLC; and 16,281 shares to LH Jagerhorn, LLC. 8 CUSIP NO. 486168107 Schedule 13D ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER See Item 4 for a description of the Purchase Agreement and the Shareholder Agreement, which are incorporated herein by reference. Certain identified Shareholders (including Mr. Lewis, Whitney, Gitan and Platte) and the Company have entered into a Registration Rights Agreement, dated as of January 7, 1999 (the "Registration Rights Agreement"), pursuant to which the Shareholders are entitled to certain "demand registration rights" with respect to their shares of the Company Common Stock. The Company will not be obligated to file a registration statement relating to a demand registration request: (1) sooner than July 1, 2000 (except that after July 1, 1999, the Company will be obligated to file a registration statement if the request for the registration statement is with respect to shares of the Company Common Stock held by or on behalf of the estate of a deceased Shareholder); (2) for an aggregate of more than 2,000,000 shares of Common Stock during each of (i) the six-month period commencing July 1, 2000, (ii) the twelve-month period commencing January 1, 2001, and (iii) the six-month period commencing January 1, 2002 (each such period being a "Demand Period"); (3) more than once in any one of the Demand Periods; (4) within a period of two months after the effective date of any other registration statement of the Company demanded under the Registration Rights Agreement or (5) if such registration request is for a number of securities which have an aggregate market value less than $10 million. The Registration Right Agreement also grants the Shareholders certain "piggyback registration rights" at any time prior to July 1, 2002, subject to certain exceptions. Whitney has executed and delivered a Collateralized and Guaranteed Promissory Note (the "Note), dated January 7, 1999, in the original principal amount of $56,287,500, payable to LHN Platte, LLC. The Note was issued in exchange for the shares of the Company Common Stock acquired by Whitney. The Note will not bear interest during the first 90 days of its term. Thereafter, all fixed principal will bear interest at the rate of 8% per annum, compounded annually. Through and including the second anniversary of the Note, accrued interest will not be payable currently. Thereafter, interest only (accrued from the second anniversary of the Note) will be payable monthly beginning February 1, 2002 and on the first day of each month thereafter, with a final installment, consisting of all fixed principal and all accrued but unpaid interest, payable on the fifth anniversary of the Note. The principal of the Note can vary as described in the copy of the Note attached hereto as Exhibit 5 and incorporated herein by reference. Payment of the Note is collateralized by a first lien accommodation pledge by Mr. Lewis, in his individual capacity, of certain securities owned by Mr. Lewis other than Company Common Stock. The full, prompt and timely payment of the Note is also guaranteed by Randall W. Lewis. Except as set forth above, to the best of Mr. Lewis' knowledge, no contracts, arrangements, understandings or relationships (legal or otherwise) exist among the persons named in Item 2 or among such persons and any other persons with respect to any securities of the Company, including but not limited to, transfer or voting of any such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. 9 CUSIP NO. 486168107 Schedule 13D The descriptions of the Purchase Agreement, Shareholder Agreement, Registration Rights Agreement and the Note contained or incorporated herein by reference are qualified in their entirety by the copies of the Purchase Agreement, Shareholder Agreement, Registration Rights Agreement and the Note referenced or attached as exhibits to this statement. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1 Joint Filing Agreement. Exhibit 2 Purchase Agreement, executed January 7, 1999, by and among the Company and the Sellers and Corporations named therein (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 22, 1999 by the Company). Exhibit 3 Shareholder Agreement, dated January 7, 1999, by and among the Company and the Shareholders listed on the signature page thereto (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 22, 1999 by the Company). Exhibit 4 Registration Rights Agreement, dated as of January 7, 1999, by and among the Company and the Shareholders listed on the signature page thereto (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 22, 1999 by the Company). Exhibit 5 Collateralized and Guaranteed Promissory Note, dated January 7, 1999, with LH Whitney, LLC, as payor, and LHN Platte, LLC, as payee. 10 CUSIP NO. 486168107 Schedule 13D SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: February 22, 1999 /S/ Randall W. Lewis -------------------------------- Randall W. Lewis LH WHITNEY, LLC By: /s/ Randall W. Lewis ------------------------------ Randall W. Lewis, its member GITAN ENTERPRISES, INC. By: /s/ Randall W. Lewis --------------------------------- Randall W. Lewis, President LHE PLATTE, LLC By: Lewis Holding Company, LLC, its member By: Coronet Construction of Nevada, Inc., its member By: /s/ Randall W. Lewis ------------------------------- Randall W. Lewis, President 11 EX-1 2 EXHIBIT 1 - JOINT FILING AGREEMENT (PURSUANT TO RULE 13D-1(F)) CUSIP NO. 486168107 Schedule 13D Joint Filing Agreement (Pursuant to Rule 13d-1(f)) In accordance with Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including amendments thereto) with respect to the Common Stock of Kaufman and Broad Home Corporation and further agree that this Joint Filing Agreement be included as an exhibit to such joint filing. Each party to this Joint Filing Agreement expressly authorizes Randall W. Lewis to file on such party's behalf any and all amendments to such Statement. Each such party undertakes to notify Randall W. Lewis of any changes giving rise to an obligation to file an amendment to Schedule 13D and it is understood that in connection with this Statement and all amendments thereto each such party shall be responsible only for information supplied by such party. In evidence thereof, the undersigned, being duly authorized, hereby execute this Agreement this 22nd day of February, 1999. /s/ Randall W. Lewis --------------------------------- Randall W. Lewis LH WHITNEY, LLC By: /s/ Randall W. Lewis ------------------------------ Randall W. Lewis, its member GITAN ENTERPRISES, INC. By: /s/ Randall W. Lewis ------------------------------- Randall W. Lewis, President LHE PLATTE, LLC By: Lewis Holding Company,LLC, its member By: Coronet Construction of Nevada, Inc., its member By: /s/ Randall W. Lewis ------------------------------- Randall W. Lewis, President 12 EX-5 3 EXHIBIT 5 - COLLATERALIZED AND GUARANTEED PROMISSORY NOTE COLLATERALIZED AND GUARANTEED PROMISSORY NOTE Los Angeles, California January 7, 1999 FOR VALUE RECEIVED, the undersigned, the payor listed as such on Exhibit "A" ("Payor"), promises to pay to the order of the party listed as "Payee" on Exhibit "A" at Upland, California, or at such other place as the holder of this Note may from time to time designate, the principal amount (the "Principal") specified below, together with interest thereon as specified below. 1. The Principal shall not bear interest during the first (90) days of the term of this Note. Commencing upon the ninety-first (91st) day of the term of this Note, all Fixed Principal (as ultimately determined below) shall bear interest at the rate of eight percent (8%) per annum, compounded annually and computed on the basis of a 360-day year of 30-day months, until paid in full. Through and including the second anniversary of this Note, accrued interest shall not be payable currently; thereafter, interest only (accrued from the second anniversary of this Note) shall be payable monthly, beginning February 1, 2002, and the first day of each month thereafter, with a final installment, consisting of all Fixed Principal and all accrued but unpaid interest, payable on the fifth anniversary of this Note. Interest accrued on all Fixed Principal shall be computed retroactively (to the ninety-first (91st) day of the term of this Note) upon each portion of Fixed Principal once the amount of that portion of Fixed Principal becomes known. 2. The Principal balance of this Note shall vary from time to time as provided below, and for purposes of determining the Principal balance of this Note the following terms shall have the following meanings: The "Collared Region" shall be the region bounded as an upper boundary by the Upper Limit (inclusive of that boundary) and as a lower boundary by the Lower Limit (inclusive of that boundary). The "Contingency Period" shall be the period (inclusive of its boundaries) beginning on the day immediately following the Initial 90 Days and ending on the earlier of: (i) the second anniversary of this Note, and (ii) the date on which all of the Kaufman and Broad Stock has been sold, transferred or otherwise disposed of by Payor to unaffiliated persons or entities. The "Fixed Principal" shall mean any portion(s) of the Principal of this Note which has (have) become fixed in amount pursuant to any provision of this Note. The "Initial 90 Days" shall be the first ninety (90) days of the term of this Note. The "Kaufman and Broad Stock" shall be the common stock, par value, $1.00 per share, of Kaufman and Broad Home Corporation, a Delaware corporation, purchased by Payor from Payee with this Note. The "Lower Limit" shall be the amount which is equal to 88.4% of the 90 Day Principal. The "90 Day Principal" shall be the Principal at the end of the Initial 90 Days. The "Original Principal" shall be the amount shown on Exhibit "A." The "Recomputed Principal" on any day shall equal the product of (i) the sum set forth on Exhibit "A" as the "Number of Shares" and (ii) the closing price on that date (or the last trading day immediately preceding the date of determination, if the date of determination is not a trading day) quoted on the New York Stock Exchange (or any successor exchange on which such shares shall be listed) for the common stock, par value $1.00 per share, of Kaufman and Broad Home Corporation, a Delaware corporation. The "Upper Limit" shall be the amount which is equal to 125% (with rounding down to the next lowest cent) of the 90 Day Principal. 3. The Principal of this Note on the date hereof shall equal the Original Principal. On any day thereafter during the Initial 90 Days, the Principal of this Note shall equal the Recomputed Principal on that day. On any day thereafter during the Contingency Period, the Principal of this Note shall equal the Recomputed Principal on that day; provided, however, if (i) the Recomputed Principal on any such day shall exceed the Upper Limit, then the Principal shall equal the Upper Limit, and (ii) if the Recomputed Principal on any such day shall be less than the Lower Limit, then the Principal shall equal the Lower Limit. 4. All Principal of this Note not theretofore fixed in amount pursuant to any other provision of this Note shall become fixed (as determined above) on the final day of the Contingency Period and thereafter shall cease to fluctuate. 5. Notwithstanding anything to the contrary stated herein, if any portion of the Kaufman and Broad Stock is sold, transferred or otherwise disposed of ("Sold") by Payor to any unaffiliated person or entity during the term of this Note, the following shall apply: (a) that portion of the Principal balance of this Note evidencing Payor's payment for the Kaufman and Broad Stock so Sold (the "Sold Shares Principal Amount") shall be fixed in amount as of the date of that Sale (if it has not already become fixed pursuant to any other provision of this Note) and shall not fluctuate thereafter during the remainder of the term of this Note; and (b) the remaining balance of the Principal of this Note (i.e. that portion evidencing Payor's payment for the Kaufman and Broad Stock not Sold by Payor) shall continue to be governed by the provisions of Sections 2-5 of this Note, mutatis mutandis, and for these purposes the "Number of Shares" shall be reduced by the number of shares of the Kaufman and Broad Stock so Sold. 6. All or any portion of the outstanding Principal of this Note may be prepaid at any time by Payor, without penalty or premium, provided only that all interest then accrued but unpaid thereon is also paid in full at that time. For purposes of computing the accrued interest so due and payable, the amount of Principal prepaid shall constitute Fixed Principal as of the date of prepayment. 7. This Note shall be fully collateralized by a first lien pledge of assets as more particularly described in a Pledge Agreement (Stock), of even date herewith, made by the party identified as the "Pledgor" on Exhibit A, in favor of Payee. 8. The full, prompt and timely payment of this Note shall be guaranteed by a Guaranty, of even date herewith, by the party identified as the "Guarantor on Exhibit "A", in favor of Payee. 9. If this Note is not paid when due, the undersigned promises to pay all costs and expenses of collection, whether or not suit is filed hereon; such costs and expenses shall include, without limitation, all costs, expenses and attorneys' fees actually incurred by the holder hereof in connection with any insolvency, bankruptcy, arrangements or other similar proceedings involving the undersigned which in any way affects the exercise by the holder hereof of its legal rights and remedies under this Note. 10. No single or partial exercise of any power hereunder shall preclude other or further exercise thereof or the exercise of any other power. No delay or omission on the part of the holder hereof in exercising any right hereunder shall operate as a waiver of such right or any other right under this Note. The acceptance of any amount due and payable hereunder shall not operate as a waiver with respect to any other amount then owing and unpaid. 11. Presentment, demand, protest, notices of protest, dishonor and nonpayment of this Note and all notices of every kind are hereby waived by all parties to this Note, whether the undersigned, principal, surety, guarantor or endorser, except as provided herein. To the extent permitted by applicable law, the defense of the statute of limitations is hereby waived by the undersigned. 12. Principal and interest evidenced hereby are payable only in lawful money of the United States. The receipt of a check shall not, in itself, constitute payment hereunder unless and until paid in good funds. [this space intentionally left blank] 13. This Note is to be governed by and construed in accordance with the laws of the State of California except to the extent United States federal law permits the holder to contract for, charge or receive a greater amount of interest. In any action brought under or arising out of this Note, the undersigned hereby consents to the in personam jurisdiction of any state or federal court sitting in Los Angeles, California, waives any claim or defense that such forum is not convenient or proper, and consents to service of process by any means authorized by California law. 14. THE UNDERSIGNED HEREBY WAIVES, AND COVENANTS THAT THE UNDERSIGNED WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS NOTE, THE SUBJECT MATTER HEREOF OR ANY DOCUMENT RELATING HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR IN TORT OR OTHERWISE. PAYOR LH WHITNEY, LLC, a Delaware Limited liability company By: Regal Construction Co., Inc., a California corporation, its Member By: /s/ RANDALL W. LEWIS -------------------------- Randall W. Lewis, its President EXHIBIT "A" to Collateralized and Guaranteed Promissory Notes 1. Payor: LH Whitney, LLC 2. Payee: LHN Platte, LLC 3. Original Principal: $56,287,500 4. Number of Shares: 1,900,000 5. Pledgor: Randall W. Lewis 6. Guarantor: Randall W. Lewis -----END PRIVACY-ENHANCED MESSAGE-----