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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: November 20, 1998
Commission File Number: 0-22299
SAXTON INCORPORATED
(Exact name of registrant as specified in its charter)
NEVADA 88-0223654
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5440 West Sahara Ave., Third Floor
Las Vegas, Nevada 89146
(702) 221-1111
(Address and telephone number of principal executive offices)
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SAXTON INCORPORATED AND SUBSIDIARIES
CURRENT REPORT ON FORM 8-K
NOVEMBER 20, 1998
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Page
Number
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Item 1. Change in Control of Registrant 3
Item 5. Closing of Acquisition of Diamond Key Homes, Inc. 4
SIGNATURES 5
EXHIBIT INDEX 6
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SAXTON INCORPORATED
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
James C. Saxton and Dorothy J. Saxton, who are husband and wife and
together beneficially own 3,755,798 shares of the common stock of Saxton
Incorporated (the "Company") and subsidiaries, or approximately 49.0% of the
outstanding shares, have pledged to certain banks a total of 3,111,560 shares of
common stock, or approximately 40.6% of the outstanding shares.
The following is further information regarding such pledges:
(a.) On October 14, 1998, Mr. Saxton pledged 1,000,000 shares to secure a
repayment of a loan to him by First Security Bank of Nevada ("First
Security") of $2,500,000 payable on January 13, 1999. This loan bears
interest at an annual rate equal to First Security's Index Rate (which
is currently at 7.75%), plus 0.5%. On November 5, 1998, the principal
amount was increased to $5,500,000, and the maturity date was
extended to February 3, 1999, and an additional 611,560 shares were
pledged to secure its repayment. Mr. Saxton has reloaned the proceeds
of this loan to the Company for use in connection with the acquisition
by the Company of the capital stock of Diamond Key Homes, Inc.
Mr. Saxton's loan to the Company is payable on February 3, 1999 and
bears interest at the annual rate of 12.0%.
(b.) On November 3, 1998, Mrs. Saxton pledged 600,000 shares to secure
repayment of a loan to Mr. Saxton by Community Bank of Nevada
("Community Bank") of $2,000,000 payable on January 5, 1999. This
loan bears interest at the annual rate of 9.0%. Mr. Saxton has
reloaned the proceeds to the Company for use in connection with the
acquisition by the Company of the capital stock of Diamond Key Homes,
Inc. Mr. Saxton's loan to the Company is payable on January 5, 1999
and bears interest at the annual rate of 12.0%.
(c.) On November 5, 1998, the Company borrowed $2,000,000 from Park City
Bank, a division of Draper Bank & Trust ("Park City Bank"), payable
on February 5, 1999 and bearing interest at an annual rate equal to
the prime rate, plus 2.0%. Mr. Saxton has guaranteed the repayment
of this loan, and Mrs. Saxton has pledged 600,000 shares to secure
its repayment. In the event that the ratio of the loan to the
reported market value of such shares exceeds 50% of the original
principal amount of such loan for a period of five consecutive
business days, such loan-to-value ratio must be reduced by either
a principal payment by the Company to Park City Bank or the pledge by
Mr. Saxton of additional shares of Common Stock of the Company
or other marketable securities so that the principal reduction
payment or pledge of additional securities keeps the loan-to-value
ratio below 50%. The proceeds of this loan were used in connection
with the acquisition by the Company of the capital stock of Diamond
Key Homes, Inc.
(d.) On November 5, 1998, the Company borrowed $1,000,000 from U.S. Savings
Bank ("U.S. Savings"), payable on February 3, 1999 and bearing
interest at the annual rate of 9.0%. Mr. Saxton has guaranteed the
repayment of this loan and has pledged 300,000 shares to secure its
repayment. The proceeds of this loan were used in connection with the
acquisition by the Company of the capital stock of Diamond Key Homes,
Inc.
The Company intends to refinance the loans from Mr. Saxton, Park City Bank
and U.S. Savings prior to their maturities. The Company understands that Mr.
Saxton intends to repay in full the loans from First Security and Community Bank
upon repayment of the loans he has made to the Company.
In the event that any of the loans from First Security, Community Bank,
Park City Bank or U.S. Savings are not repaid when due, the lender would have
the right to vote the pledged shares, to have them registered in its name, to
sell them and otherwise to exercise the rights of ownership of the shares.
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ITEM 5. CLOSING OF ACQUISITION OF DIAMOND KEY HOMES, INC.
On November 13, 1998 the Company closed its acquisition of the
outstanding capital stock of Diamond Key Homes, Inc. and certain related
entities, a Phoenix, Arizona homebuilder which specializes in entry-level and
move-up homes in the greater Phoenix and Tucson, Arizona markets. The
purchase price was approximately $10.8 million (subject to certain audit
adjustments) paid in cash at closing, with an additional amount of $2.0
million to be paid 50% in cash and 50% in common stock one year from the date
of closing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAXTON INCORPORATED
November 20, 1998 By: By: /s/ Kirk Scherer
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Kirk Scherer
Executive Vice-President of Finance
and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Melody J. Sullivan
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Melody J. Sullivan
Vice-President and Chief Accounting Officer
(Principal Accounting Officer)
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EXHIBIT INDEX
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Exhibit No. Description
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10.1 Amendment to Purchase Agreement
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Exhibit No. 10.1
AMENDMENT TO PURCHASE AGREEMENT
This Amendment to Purchase Agreement, dated as of November 13, 1998 (this
"AMENDMENT"), is made by and among Saxton Incorporated ("SAXTON"), Diamond Key
Homes, Inc., Diamond Key Construction LLC, Larison P. Clark ("SELLER") and Lisa
B. Clark ("CLARK"). Reference is made to that certain Stock and Membership
Interest Purchase Agreement dated as of October 7, 1998 (as amended hereby, the
"PURCHASE AGREEMENT"), by and among Saxton, Seller, Clark and the other parties
thereto. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Purchase Agreement.
1. The Purchase Agreement is hereby amended by the addition thereto of
paragraph (e) to Section 2.3 to read as follows:
(e) Closing Net Book Equity shall be determined after giving effect
to cash distributions by the Company to Seller and by the LLC to
Seller and Clark in an aggregate amount equal to the excess of 42.5%
of the combined estimated book income of the Company and the LLC for
the period January 1, 1998 through November 6, 1998 over the sum of
(i) the aggregate amount of prior cash distributions by the Company to
Seller in respect of Seller's estimated 1998 federal and state income
tax liabilities attributable to net income of the Company and (ii) the
aggregate amount of prior cash distributions by the LLC to Seller and
Clark in respect of Seller's and Clark's estimated 1998 federal and
state income tax liabilities attributable to net income of the LLC
(all such distributions for tax purposes being collectively, the
"INITIAL DISTRIBUTIONS")
Within 30 days after the Company has filed its 1998 federal Form
1120-S and its Arizona Form 120-S and the LLC has filed its 1998
federal form 1065 and its Arizona Form 165, Closing Net Book Equity
shall be redetermined as if the Initial Distributions by the Company
to Seller and by the LLC to Seller and Clark had been based on the
actual incremental federal and state income tax liabilities of Seller
and Clark attributable to Seller's distributive share of 1998 tax
items of the Company and to Seller's and Clark's distributive shares
of 1998 tax items of the LLC (such redetermination being, the
"REDETERMINATION").
If the Closing Net Book Equity after the Redetermination is
greater than prior to the Redetermination, Buyer shall pay to Seller
50% of such difference. If the Closing Net Book Equity after the
Redetermination is less than prior to the Redetermination, Seller
shall pay to Buyer 50% of such difference.
2. The Purchase Agreement is hereby amended by the addition thereto
of Section 3.29 to read as follows:
Section 3.29 ADEQUATE FUNDING FOR FUTURE LOT LOANS AND CONSTRUCTION
LOANS
The Company and the LLC have adequate funding commitments, or are
able to obtain adequate funding commitments, without incurring costs
in excess of the financing costs of existing financing, for finished
lot loans and pre-sold homes construction loans, required in the
normal course of business consistent with past practices, for the
sixty day period commencing on the Closing Date, without the use of
any additional funds from Guaranty Federal Bank, F.S.B.
3. The Purchase Agreement is hereby further amended by the amendment
and replacement of Section 4.7 to read as follows:
4.7 FILINGS
Buyer has timely made all filings required under the Securities
Exchange Act of 1934, as amended, and, except as set forth on Schedule
4.7, none of such filings contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
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4. The Purchase Agreement is hereby further amended by the amendment
and replacement of the definition of "Closing Net Book Equity" to read
as follows:
"CLOSING NET BOOK EQUITY" means 150% of the net book equity of
the Company and the LLC determined as of November 6, 1998 by the
Auditors pursuant to Section 2.3 of the Agreement; provided, however,
that in making such determination all monies directly spent and
expenses directly incurred by the Company and the LLC relating to the
Taliverde Lot 94 shall be considered a distribution of equity to
Seller.
5. The Purchase Agreement is hereby further amended to provide that,
notwithstanding anything to the contrary contained in the Purchase
Agreement or herein, Buyer shall not be obligated to deposit the
Closing Escrow Deposit. Any payments to be made upon any adjustments
made pursuant to Section 2.3 of the Purchase Agreement shall be made
directly by Buyer or Seller, as the case may be. Additionally,
notwithstanding anything to the contrary contained in the Purchase
Agreement or herein, any references in the Purchase Agreement to the
"Closing Escrow Deposit" or the "Closing Escrow Deposit Account" shall
be deemed null and void and any provision of the Purchase Agreement
containing any such reference shall be given effect to without taking
into account any such reference.
6. Except with respect to the amendments to the Purchase Agreement
expressly set forth above and except for the Limited Waiver dated
November 13, 1998, by and between Saxton Incorporated, Seller, the
Company and the LLC (a copy of which is attached hereto as EXHIBIT 1),
no provision of the Purchase Agreement is hereby amended or waived.
7. This Amendment may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of
which when executed shall be deemed an original, all of which taken
together shall constitute one and the same Amendment.
SAXTON INCORPORATED, DIAMOND KEY HOMES, INC.
A Nevada corporation an Arizona corporation
By: By:
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Name: Name:
Title: Title:
LARISON P. CLARK DIAMOND KEY CONSTRUCTION LLC,
An Arizona limited liability company
By:
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LISA B. CLARK
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