<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER , 1994
REGISTRATION NO. 33-55177
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OAKWOOD HOMES CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
NORTH CAROLINA 5271 56-0985879
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2225 S. HOLDEN ROAD
(P.O. BOX 7386)
GREENSBORO, N.C. 27417-0386
910/855-2400
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
C. MICHAEL KILBOURNE, VICE PRESIDENT
OAKWOOD HOMES CORPORATION
POST OFFICE BOX 7386
GREENSBORO, N.C. 27417-0386
910/855-2400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
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MYLES E. STANDISH, ESQ. JOHN R. STAHR, ESQ.
KENNEDY COVINGTON LOBDELL & HICKMAN, L.L.P. LATHAM & WATKINS
NATIONSBANK CORPORATE CENTER SUITE 2000
100 NORTH TRYON STREET, SUITE 4200 650 TOWN CENTER DRIVE
CHARLOTTE, N.C. 28202 COSTA MESA, CALIFORNIA 92626-1918
704/331-7400 714/540-1235
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. ( )
CALCULATION OF REGISTRATION FEE
[CAPTION]
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFER- REGISTRATION
BE REGISTERED REGISTERED PER UNIT ING PRICE FEE
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Common Stock,
$.50 par value.............. 699,992(1) $25.00(2) $17,499,800 $6,034.32(3)
</TABLE>
(1) Includes 87,116 shares issuable upon exercise of stock options. This
Registration Statement also applies to Rights under Oakwood's Shareholder
Protection Rights Agreement which are attached to and tradeable only with
the shares of Common Stock registered hereby. No registration fees are
required for such shares and such rights as they will be issued for no
additional consideration.
(2) Determined in accordance with Rule 457(f)(1) based upon the market value of
a share of Common Stock on August 17, 1994. Estimated solely for the purpose
of calculating the registration fee.
(3) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CROSS-REFERENCE SHEET
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ITEM NUMBER AND FORM S-4 CAPTION LOCATION IN PROSPECTUS
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1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus.................. Facing Page of Registration Statement; Cross-reference sheet; Outside
front cover page of Prospectus
2. Inside Front and Outside Back Cover Page of
Prospectus...................................... Available Information; Incorporation of Certain Documents by
Reference; Inside Front Cover Page of Prospectus; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information........................... Summary; The Companies; The Merger; Summary Consolidated Financial
Information; Comparative Per Share Data; Book Value Per Share; Market
Value Information
4. Terms of the Transactions....................... The Merger; The Acquisition Agreement
5. Pro Forma Financial Information................. Not Applicable
6. Material Contacts with the Company Being
Acquired........................................ Not Applicable
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters.................................... Not Applicable
8. Interests of Named Experts and Counsel.......... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities..................................... Not Applicable
10. Information with Respect to S-3 Registrants..... Not Applicable
11. Incorporation of Certain Documents by
Reference....................................... Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants..................................... Not Applicable
13. Incorporation of Certain Documents by
Reference....................................... Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants............... Not Applicable
15. Information with Respect to S-3 Companies....... Not Applicable
16. Information with Respect to S-2 or S-3
Companies....................................... Not Applicable
17. Information with Respect to Companies Other than
S-3 or S-2 Companies............................ Golden West
18. Information if Proxies, Consents or
Authorizations are to be Solicited.............. Golden West Shareholders' Meeting; The Merger; Security Ownership of
Certain Beneficial Owners of Golden West Capital Stock; Rights of
Shareholders Electing to Exercise Their Right to Dissent;
Incorporation By Reference
19. Information if Proxies, Consents or
Authorizations are not be solicited or in an
Exchange Offer.................................. Not Applicable
</TABLE>
<PAGE>
GOLDEN WEST HOMES
1801 EAST EDINGER, SUITE 240
SANTA ANA, CALIFORNIA 92705
September 1, 1994
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Golden West Homes ("Golden West") which will be held at 9:30 a.m., local time,
on September 30, 1994, at the Pacific Club, 4110 MacArthur Blvd., Newport Beach,
California.
At the Special Meeting, holders of Golden West Common and Preferred Stock
will be asked to consider a proposal to approve and adopt an Acquisition
Agreement dated as of August 17, 1994 (the "Acquisition Agreement"), among
Oakwood Homes Corporation, a North Carolina corporation ("Oakwood"), Golden
Acquisition Corporation, a California corporation and wholly-owned subsidiary of
Oakwood ("Oakwood Sub"), Golden West, the shareholders of Golden West who will
receive Oakwood Common Stock, $.50 par value (Oakwood Common Stock) pursuant to
the Acquisition Agreement (the "Golden West Continuing Shareholders") and First
Union National Bank of North Carolina, as Escrow Agent, and the Agreement of
Merger attached thereto as Exhibit A, providing for the merger of Oakwood Sub
with and into Golden West, with Golden West as the surviving corporation and
continuing as a wholly-owned subsidiary of Oakwood (the "Merger"). Under the
Acquisition Agreement, each share of Golden West Common and Preferred Stock
(other than shares, if any, held by shareholders who perfect their right to
dissent under the California General Corporation Law (the "CGCL")) will be
converted into the right to receive .231099373 of one share of Oakwood Common
Stock, and each stock option right to purchase one share of Golden West Common
Stock shall be converted into the right to purchase .231099373 of one share of
Oakwood Common Stock and the option exercise price will be adjusted by dividing
the current option exercise price by .231099373.
Under the Acquisition Agreement, each Golden West Continuing Shareholder
will be required, for a period of one year from the effective time of the
Merger, to indemnify Oakwood against any losses incurred by Oakwood as a result
of the incorrectness or breach of any representation, warranty or covenant made
by Golden West or the Golden West Continuing Shareholders in the Acquisition
Agreement and which in the aggregate exceed $150,000. Each Golden West
Continuing Shareholder will be obligated to place 10% of the shares of Oakwood
Common Stock issued to such Shareholder in connection with the Merger in escrow
which may be applied to satisfy such indemnification obligations. A condition to
closing the Merger requires that the holders of at least 85% of the capital
stock of Golden West execute Acknowledgments, whereby such shareholders
acknowledge the terms of the Acquisition Agreement, including the escrow and
indemnification provisions contained therein, and agree to be bound thereby and
attach thereto duly endorsed certificates for their shares of Golden West Common
and Preferred Stock. The Merger is intended to be tax free to Golden West's
shareholders for federal income tax purposes to the extent of the shares that
are exchanged solely for Oakwood Common Stock.
The proposed Merger is described more completely in the accompanying Proxy
Statement/Prospectus, the forepart of which includes a summary of the terms of
the Merger and certain other information relating to the proposed transaction. I
urge you to review carefully the Proxy Statement/Prospectus and accompanying
Annexes.
The Golden West Board of Directors has determined that the Merger is in the
best interests of Golden West and its shareholders. We are enthusiastic about
the combination with Oakwood, which we believe carries distinct advantages for
Golden West and its shareholders. Oakwood is a leading manufacturer and retailer
of manufactured homes, operating five manufacturing plants in North Carolina and
one plant in Texas (with plans to open two additional plants in Texas and one
plant in Tennessee during 1994) and approximately 145 sales centers located
principally in the southeastern and southwestern United States. Oakwood also
develops, manages and sells manufactured housing communities and operates
integrated finance and insurance subsidiaries.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND RELATED TRANSACTIONS AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE IN FAVOR OF THE MERGER AGREEMENT AND THE MATTERS
PRESENTED AT THE SPECIAL MEETING.
I hope you will attend the Special Meeting. However, whether or not you
plan to attend the meeting, please complete, sign and date the accompanying
proxy card and promptly return it in the enclosed prepaid envelope. If you are
present at the meeting you may, if you wish, withdraw your proxy and vote in
person.
Sincerely,
HARRY E. KARSTEN, JR.
Chairman of the Board and
Chief Executive Officer
<PAGE>
GOLDEN WEST HOMES
1801 EAST EDINGER, SUITE 240
SANTA ANA, CALIFORNIA 92705
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 30, 1994
TO THE SHAREHOLDERS OF GOLDEN WEST HOMES:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of Golden West Homes, a California corporation ("Golden West"), will
be held on September 30, 1994, at the Pacific Club, 4110 MacArthur Blvd.,
Newport Beach, California, commencing at 9:30 a.m., local time, to consider and
vote upon the following matter:
1. A proposal to approve and adopt an Acquisition Agreement dated as
of August 17, 1994 (the "Acquisition Agreement"), among Oakwood Homes
Corporation, a North Carolina corporation ("Oakwood"), Golden Acquisition
Corporation, a California corporation and wholly-owned subsidiary of
Oakwood ("Oakwood Sub"), Golden West, the shareholders of Golden West who
will receive Oakwood Common Stock (as hereinafter defined) pursuant to the
Acquisition Agreement (the "Golden West Continuing Shareholders") and First
Union National Bank of North Carolina, as Escrow Agent, and the Agreement
of Merger attached thereto as Exhibit A, providing for the merger of
Oakwood Sub with and into Golden West, with Golden West as the surviving
corporation and continuing as a wholly-owned subsidiary of Oakwood (the
"Merger"). Under the Acquisition Agreement, each share of Golden West
Common and Preferred Stock (other than shares, if any, held by shareholders
who perfect their dissenters' rights under the California General
Corporation Law) will be converted into the right to receive .231099373 of
one share of Common Stock of Oakwood, $.50 par value ("Oakwood Common
Stock"), and each stock option right to purchase one share of Golden West
Common Stock shall be converted into the right to purchase .231099373 of
one share of Oakwood Common Stock and the stock option exercise price will
be adjusted by dividing the option exercise price by .231099373.
The Merger and other related matters are more fully described in the
accompanying Proxy Statement/Prospectus, and annexes thereto, which form a part
of this Notice.
Approval of the Merger requires the affirmative vote of holders of a
majority of the outstanding shares of Golden West Common Stock voting as a class
and the affirmative vote of holders of a majority of the outstanding shares of
Golden West Preferred Stock voting as a class. Only shareholders of record at
the close of business on August 19, 1994, the record date for the Special
Meeting, are entitled to notice of and to vote at the Special Meeting and any
adjournment or postponements thereof.
Whether or not you plan to attend the Special Meeting, please fill in,
sign, date and return the enclosed form of proxy card promptly. A return
envelope is enclosed for your convenience and requires no postage for mailing in
the United States.
Sincerely,
HARRY E. KARSTEN, JR.
Chairman of the Board
and Chief Executive Officer
September 1, 1994
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
PROSPECTUS
OAKWOOD HOMES CORPORATION
699,992 SHARES
COMMON STOCK
$.50 PAR VALUE
PROXY STATEMENT
GOLDEN WEST HOMES
This Proxy Statement/Prospectus and the accompanying form of proxy are
being first furnished on or about September 1, 1994 in connection with the
solicitation of proxies by the Board of Directors of Golden West Homes, a
California corporation ("Golden West"), to be used at the Special Meeting of
Shareholders of Golden West to be held on September 30, 1994 (the "Golden West
Meeting"). At the Golden West Meeting, the holders of Golden West Common and
Preferred Stock (the "Golden West Shareholders") will be asked to consider and
vote upon a proposal to approve and adopt an Acquisition Agreement dated as of
August 17, 1994 attached hereto as Annex I (the "Acquisition Agreement") and the
Agreement of Merger attached thereto as Exhibit A (the "Merger Agreement")
(collectively, the "Agreement"), by and among Golden West, Oakwood Homes
Corporation, a North Carolina corporation ("Oakwood"), Golden Acquisition
Corporation, a California corporation ("Oakwood Sub"), the shareholders of
Golden West who receive Oakwood Common Stock in the Merger (the "Golden West
Continuing Shareholders") and First Union National Bank of North Carolina, as
Escrow Agent. The Agreement provides for the merger of Oakwood Sub with and into
Golden West with Golden West as the surviving corporation and continuing as a
wholly-owned subsidiary of Oakwood (the "Merger").
Pursuant to the terms of the Acquisition Agreement, each share of Golden
West Common Stock ("Golden West Common Stock") and Preferred Stock ("Golden West
Preferred Stock") (collectively, "Golden West Capital Stock"), except for shares
as to which dissenters' rights have been perfected under the California General
Corporation Law (the "CGCL"), outstanding as of the time the Merger is
consummated (the "Effective Time") will be converted into the right to receive
.231099373 of a share (the "Exchange Rate") of Oakwood Common Stock, $.50 par
value ("Oakwood Common Stock"). Cash will be paid in lieu of the issuance of
fractional shares of Oakwood Common Stock. Each Golden West Continuing
Shareholder will be obligated to indemnify and hold harmless Oakwood, for a
period of one year from the effective time of the Merger, against any losses
that Oakwood or Golden West incurs as a result of the incorrectness or breach of
any representations, warranties or covenants of Golden West contained in the
Acquisition Agreement which in the aggregate exceed $150,000. Ten percent of the
shares of Oakwood Common Stock issued in connection with the Merger to each
Golden West Continuing Shareholder will be held in escrow and may be applied to
satisfy the foregoing indemnification obligations. See "The Acquisition
Agreement -- Indemnification" and "The Acquisition Agreement -- Representations
and Warranties."
THE SECURITIES ISSUABLE PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS 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.
THIS PROXY STATEMENT/PROSPECTUS AND THE ACCOMPANYING FORM OF PROXY AND
ACKNOWLEDGMENT ARE FIRST BEING MAILED OR DELIVERED TO SHAREHOLDERS OF GOLDEN
WEST ON OR ABOUT SEPTEMBER 1, 1994.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS SEPTEMBER 1, 1994.
(Cover continued on next page)
<PAGE>
(continued from previous page)
In connection with the Merger, options to acquire Golden West Common Stock
("Golden West Options") will be converted into options to purchase a number of
shares of Oakwood Common Stock equal to the number of shares of Golden West
Common Stock covered by the Golden West Options multiplied by the Exchange Rate
and the option price shall be correspondingly adjusted. See "The
Merger -- Interests of Certain Persons in the Merger." A total of 612,876 shares
of Oakwood Common Stock will be issued in the Merger in exchange for Golden West
Capital Stock (subject to adjustment for payments in cash to dissenting Golden
West Shareholders and payment of fractional shares) and 87,116 shares of Oakwood
Common Stock will be reserved for issuance upon exercise of Golden West Options.
Oakwood Common Stock is traded on the New York Stock Exchange under the
symbol "OH." On August 31, 1994 the closing price of Oakwood Common Stock as
reported on the New York Stock Exchange was $28 1/8. Oakwood has filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
(the "Registration Statement") on Form S-4 pursuant to the Securities Act of
1933, as amended (the "Securities Act"), with respect to up to 699,992 shares of
Oakwood Common Stock issuable in connection with the Merger, of which this Proxy
Statement/Prospectus is a part and a reference to this document as a Proxy
Statement/Prospectus shall also constitute a reference to it as a prospectus.
ALL INFORMATION CONCERNING OAKWOOD CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS HAS BEEN FURNISHED BY OAKWOOD AND ALL INFORMATION
CONCERNING GOLDEN WEST PRIOR TO THE MERGER CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS HAS BEEN FURNISHED BY GOLDEN WEST. THE INFORMATION
CONTAINED HEREIN WITH RESPECT TO THE MERGER IS QUALIFIED BY REFERENCE TO THE
ACQUISITION AGREEMENT AND THE MERGER AGREEMENT ATTACHED HERETO AND INCORPORATED
HEREIN BY REFERENCE. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY OAKWOOD, GOLDEN WEST OR ANY OTHER PERSON. THIS PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE ASSETS, PROPERTIES OR AFFAIRS OF OAKWOOD OR GOLDEN WEST SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
1
<PAGE>
AVAILABLE INFORMATION
Oakwood is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the Public Reference Facilities maintained by the
Commission at 450 Fifth Street. N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 75 Park Place, New York, New York 10007 and
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such materials may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
Oakwood Common Stock is listed on the New York Stock Exchange and reports,
proxy statements and other information concerning Oakwood can be inspected at
the office of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
This Proxy Statement/Prospectus constitutes a part of the Registration
Statement filed by Oakwood under the Securities Act, with respect to the shares
of Oakwood Common Stock to be issued and upon exercise of options to purchase
Oakwood Common Stock proposed to be issued in the Merger. As permitted by the
rules issued by the Commission under the Securities Act, this Proxy
Statement/Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to Oakwood and Oakwood Common Stock. Any statements contained herein
concerning the provisions of any document filed with the Commission are not
necessarily complete, and each such statement is qualified by reference to the
copy of such document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are hereby incorporated
by reference in this Proxy Statement: (i) Oakwood's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993; (ii) Oakwood's Quarterly Reports
on Form 10-Q for the quarters ended December 31, 1993, March 31, 1994 and June
30, 1994; and (iii) the description of Oakwood's Common Stock contained in
Oakwood's Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act (and any amendment or report filed for the purpose of updating the
description).
All documents filed by Oakwood pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the Golden West Meeting are deemed to be a
part hereof from the date of filing of such documents. Any statement contained
in the document incorporated or deemed to be incorporated herein by reference
will be deemed to be modified or superseded for the purpose of this Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which is deemed to be incorporated herein by
reference modifies or supersedes such statement. Any such statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS, OTHER THAN
CERTAIN EXHIBITS TO SUCH DOCUMENTS, ARE AVAILABLE WITHOUT CHARGE UPON REQUEST
MADE TO OAKWOOD HOMES CORPORATION, ATTENTION: CORPORATE SECRETARY, 2225 SOUTH
HOLDEN ROAD, GREENSBORO, NORTH CAROLINA 27417 (TELEPHONE 910/855-2400). IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE DELIVERED TO
OAKWOOD BY SEPTEMBER 23, 1994.
2
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TABLE OF CONTENTS
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AVAILABLE INFORMATION.................................................................................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................................................ 2
SUMMARY OF PROXY STATEMENT/PROSPECTUS.................................................................................. 5
Shareholder Approval................................................................................................. 5
The Companies........................................................................................................ 5
Effect of the Merger; Consideration.................................................................................. 6
Recommendations of the Boards of Directors........................................................................... 6
Effective Time of the Merger......................................................................................... 6
Indemnification and Escrow Arrangements.............................................................................. 6
Approval and Conditions to Consummation of the Merger................................................................ 7
Termination of the Acquisition Agreement; No Shop and Break-Up Fee Provisions........................................ 7
Stock Options and Deferred Compensation.............................................................................. 8
Transaction Costs.................................................................................................... 8
Dissenters' Rights................................................................................................... 8
Federal Income Tax Consequences of the Merger........................................................................ 9
Accounting Treatment................................................................................................. 9
Effects of Merger on Rights of Shareholders.......................................................................... 9
Interests of Certain Persons in the Merger........................................................................... 9
Listing on the New York Stock Exchange............................................................................... 9
Market Value Information............................................................................................. 9
SUMMARY CONSOLIDATED FINANCIAL INFORMATION............................................................................. 10
Oakwood Homes Corporation............................................................................................ 10
Golden West Homes.................................................................................................... 11
COMPARATIVE PER SHARE DATA............................................................................................. 12
GOLDEN WEST SHAREHOLDERS' MEETING...................................................................................... 14
Meeting of Shareholders.............................................................................................. 14
Purpose of Meeting................................................................................................... 14
Record Date: Voting Requirements at Meeting.......................................................................... 14
Proxies.............................................................................................................. 14
THE MERGER............................................................................................................. 14
Background and Reasons for the Merger................................................................................ 15
Accounting Treatment................................................................................................. 16
Operations After the Merger.......................................................................................... 16
Interests of Certain Persons in the Merger........................................................................... 16
THE ACQUISITION AGREEMENT.............................................................................................. 17
The Merger........................................................................................................... 17
Effective Time of the Merger......................................................................................... 17
Consideration to be Received in the Merger........................................................................... 17
Surrender of Certificates............................................................................................ 17
Certain Covenants of Golden West..................................................................................... 18
No-Shop Provisions................................................................................................... 18
Restrictions on Sales of Stock....................................................................................... 19
Certain Covenants of Oakwood......................................................................................... 19
Conditions to Consummation of the Merger............................................................................. 19
Indemnification...................................................................................................... 20
Representations and Warranties....................................................................................... 21
Transaction Costs.................................................................................................... 25
Amendment and Waiver................................................................................................. 26
Termination.......................................................................................................... 26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF GOLDEN WEST CAPITAL STOCK........................................... 27
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF GOLDEN WEST............................................................. 28
</TABLE>
3
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GOLDEN WEST................... 29
Overview............................................................................................................. 29
Results of Operations................................................................................................ 30
Liquidity and Capital Resources...................................................................................... 32
Quarterly Operating Results.......................................................................................... 34
BUSINESS OF GOLDEN WEST................................................................................................ 35
General.............................................................................................................. 35
History.............................................................................................................. 35
Products............................................................................................................. 35
Manufacturing Operations............................................................................................. 36
Regional Markets..................................................................................................... 36
Sales and Marketing.................................................................................................. 36
Warranty, Quality Control and Service................................................................................ 37
Retailer Financing................................................................................................... 37
Employees............................................................................................................ 37
Competition.......................................................................................................... 38
Government Regulation................................................................................................ 38
Home Buyer Financing................................................................................................. 39
Manufacturing Facilities............................................................................................. 40
Legal Proceedings.................................................................................................... 40
Golden West Capital Stock............................................................................................ 40
COMPARATIVE RIGHTS OF SHAREHOLDERS..................................................................................... 41
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF MERGER...................................................................... 43
RIGHTS OF SHAREHOLDERS ELECTING TO EXERCISE THEIR RIGHT TO DISSENT..................................................... 44
LEGAL MATTERS.......................................................................................................... 45
EXPERTS................................................................................................................ 45
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS............................................................................. F-1
ANNEX I
Acquisition Agreement dated August 17, 1994 and all exhibits and schedules thereto
ANNEX II
Sections 1300-1312 of the California General Corporation Law
</TABLE>
4
<PAGE>
SUMMARY OF PROXY STATEMENT/PROSPECTUS
THE FOLLOWING IS A SUMMARY OF INFORMATION CONTAINED ELSEWHERE IN THE PROXY
STATEMENT/PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN A COMPLETE DESCRIPTION OF
THE TERMS OF THE MERGER AND THE OTHER MATTERS SUMMARIZED HEREIN AND IS QUALIFIED
IN ITS ENTIRETY BY, AND IS SUBJECT TO, THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, CONTAINED ELSEWHERE IN
REFERENCE TO THIS PROXY STATEMENT/PROSPECTUS AND ITS ANNEXES.
SHAREHOLDER APPROVAL
This Proxy Statement/Prospectus is being furnished to the Golden West
Shareholders in connection with the solicitation of proxies by and on behalf of
the Golden West Board of Directors for use at the Golden West Meeting to be held
at 9:30 a.m., on September 30, 1994 at the Pacific Club, 4110 MacArthur Blvd.,
Newport Beach, California and any adjournments thereof. The close of business on
August 19, 1994 is the record date (the "Record Date") for determining the
shareholders of Golden West entitled to vote at the Golden West Meeting. As of
the Record Date, there were 1,287,000 outstanding shares of Golden West Common
Stock and 1,105,000 outstanding shares of Golden West Preferred Stock, each
holder of which is entitled to one vote per share with respect to each matter to
be voted on at the Golden West Meeting (Golden West Common and Preferred Stock
being collectively referred to as "Golden West Capital Stock"). Holders of
Golden West Common and Preferred Stock are entitled to vote separately as a
class. This Proxy Statement/Prospectus and the enclosed proxy are first being
sent to Golden West Shareholders on or about September 1, 1994.
All proxies that are properly executed and received prior to the Golden
West Meeting will be voted in accordance with the instructions noted thereon.
ANY PROXY THAT DOES NOT SPECIFY TO THE CONTRARY WILL BE VOTED IN FAVOR OF THE
MERGER. Any Golden West Shareholder who submits a proxy will have the right to
revoke it, at any time before it is voted, by filing with the Secretary of
Golden West written notice of revocation or a duly executed later-dated proxy,
or by attending the Golden West Meeting and voting such Golden West Common or
Preferred Stock in person.
At the Golden West Meeting, Golden West Shareholders will consider and vote
upon a proposal to approve and adopt the Acquisition Agreement and the Agreement
of Merger pursuant to which Oakwood Sub will be merged with and into Golden West
with Golden West being the surviving entity and continuing as a wholly-owned
subsidiary of Oakwood. Approval and adoption of the Acquisition Agreement and
Agreement of Merger requires the affirmative vote of a majority of the
outstanding shares of Golden West Common and Preferred Stock, each voting as a
class.
Golden West Shareholders will be entitled to dissenters' rights with
respect to the Merger as provided for in Section 1300, ET SEQ., of the CGCL,
subject to satisfaction by such shareholder of the conditions for dissenters
rights established by Section 1300. However, it is a condition to the closing of
the Merger that the holders of no more than 10% of the outstanding shares of
Golden West Capital Stock assert their rights as a dissenter. See "The
Merger -- Rights of Shareholders Electing to Exercise Their Rights to Dissent."
The directors and executive officers of Golden West beneficially own, as of
the Record Date, an aggregate of 1,580,800 shares of Golden West Common Stock or
approximately 96.51% of the outstanding Golden West Common Stock and an
aggregate of 226,824 shares of Golden West Preferred Stock or approximately
20.53% of the outstanding Golden West Preferred Stock.
Holders of Oakwood Common Stock are not entitled to vote on the approval of
the Merger nor are they entitled to dissenters' rights with respect to the
Merger. As of July 31, 1994, there were 20,467,847 shares of Oakwood Common
Stock issued and outstanding.
THE COMPANIES
OAKWOOD. Oakwood, which was founded in 1946, designs, manufactures and
markets single section and multi-section manufactured homes and finances the
majority of its sales. Oakwood operates five manufacturing plants in North
Carolina and one in Texas and expects to complete and begin production at two
additional plants in Texas and one in Tennessee in 1994. Oakwood manufactured
homes are sold exclusively at retail through approximately 145 sales centers
located principally in the southeastern and southwestern United States. Oakwood
also develops, manages and sells manufactured housing communities and earns
commissions on homeowners and credit life insurance written for its customers.
Oakwood Homes Corporation's executive offices are located at 2225 South
Holden Road, Greensboro, North Carolina 27417-0386. Its telephone number is
910/855-2400.
5
<PAGE>
GOLDEN WEST. Golden West Homes designs, manufactures and markets primarily
multi-section manufactured homes for sale in the western and southwestern
regions of the United States. Golden West operates three factories that produce
homes primarily for the Oregon, Washington and California markets. Golden West
acquired a fourth factory in Colorado in March 1994, which is expected to start
production in September 1994. Golden West manufactured homes are sold
principally under eight brand names through approximately 170 independent
retailers, of which approximately 80 retailers sell Golden West homes
exclusively. Retailers include both manufactured home dealers and developers of
manufactured home communities. In October 1993, Golden West formed a
wholly-owned finance subsidiary, Golden Circle Financial Services ("Golden
Circle Financial"), to finance the sale of Golden West's homes.
Golden West Homes' principal executive offices are located at 1801 East
Edinger, Suite 240, Santa Ana, California 92705. Its telephone number is
714/835-4200.
EFFECT OF THE MERGER; CONSIDERATION
Upon consummation of the Merger, Oakwood Sub will be merged with and into
Golden West with Golden West being the surviving entity and continuing as a
wholly-owned subsidiary of Oakwood. At the Effective Time, each share of Golden
West Capital Stock issued and outstanding immediately prior to the Effective
Time (other than dissenting shares, if any) will be converted into the right to
receive .231099373 of a share of Oakwood Common Stock. See "The Acquisition
Agreement -- The Merger" and "The Acquisition Agreement -- Consideration to be
Received in the Merger."
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The Oakwood and Golden West Boards of Directors have approved and adopted
the Acquisition Agreement and the Agreement of Merger and the Golden West Board
of Directors has recommended that the Golden West Shareholders vote in favor of
the Acquisition Agreement and the Agreement of Merger. See "The
Merger -- Background and Reasons for the Merger."
EFFECTIVE TIME OF THE MERGER
If the Merger is approved by the requisite vote of the Golden West
Shareholders and the other conditions to the consummation of the Merger are
satisfied or, where permissible, waived, the Merger will become effective at the
time the Agreement of Merger is duly filed with the Secretary of State of the
State of California or at such a later time as may be specified in such
Agreement (the "Effective Time"). It is anticipated that the Agreement of Merger
will be so filed as soon as practicable after the satisfaction or, where
permissible, waiver of the conditions in the Acquisition Agreement. See "The
Acquisition Agreement -- Effective Time of the Merger."
INDEMNIFICATION AND ESCROW ARRANGEMENTS
Pursuant to the Acquisition Agreement, each Golden West Continuing
Shareholder will indemnify Oakwood for a period of one year from the Effective
Time against any losses that Oakwood or Golden West may suffer as a result of
the incorrectness or breach of any representation, warranty or covenant
contained in the Acquisition Agreement which in the aggregate exceed $150,000.
Ten percent of the shares of Oakwood Common Stock issued to each Golden West
Continuing Shareholder in connection with the Merger will be placed in escrow
(the "Escrowed Shares") and may be applied to satisfy such indemnification
obligations. Each Golden West Continuing Shareholder's indemnification
obligation shall not exceed the fair market value as of the Effective Time of
such shareholder's Escrowed Shares. If the Effective Time occurs on or before
September 30, 1994, the Escrowed Shares will be released to the Golden West
Shareholders upon the publication of Oakwood's audited consolidated financial
statements for the year ended September 30, 1994, if not earlier applied to
indemnify Oakwood. If the Effective Time occurs after September 30, 1994, the
Escrowed Shares will be released upon the publication of Oakwood's consolidated
financial statements for the quarter ending December 31, 1994, if not earlier
applied to indemnify Oakwood. Either of such dates shall be referred to herein
as the "Release Date." In certain circumstances, a portion of the Escrowed
Shares may be retained by the Escrow Agent after the Release Date pending
resolution or liquidation of certain claims. After the Release Date, the Golden
West Shareholders will be responsible for indemnifying Oakwood for a breach of
Golden West's representations, warranties and covenants in the Acquisition
Agreement until one year following the Effective Time in an amount not to exceed
the fair market value at the Effective Time of the Escrowed Shares issued in the
name of such Shareholder. See "The Acquisition Agreement -- Indemnification" and
"The Acquisition Agreement -- Representations and Warranties."
6
<PAGE>
APPROVAL AND CONDITIONS TO CONSUMMATION OF THE MERGER
The obligations of Oakwood and Golden West to consummate the Merger are
subject to the satisfaction or, where permissible, waiver of certain conditions
set forth in the Acquisition Agreement, including, among others, obtaining the
requisite approval of the Agreement by the Golden West Shareholders, the
effectiveness of the Registration Statement and the absence of any stop order
related thereto in effect or proceedings for such stop order, the receipt of
opinions with respect to certain tax matters, the receipt of any required
consents of governmental commissions, boards or other regulatory bodies required
in connection with the Merger and the approval for listing on the New York Stock
Exchange (subject to official notice of issuance) of the shares of Oakwood
Common Stock issuable in connection with the Merger.
The consummation of the Merger is also subject to the expiration of the
relevant waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"). Oakwood and Golden West filed under the HSR
Act on August 22, 1994, and August 23, 1994, respectively, and the waiting
period expires on September 21, 1994.
The obligation of Golden West to consummate the Merger is subject to
certain additional conditions, including the performance by Oakwood of its
obligations under the Acquisition Agreement required to be performed by it at or
prior to the Effective Time; the accuracy of the representations and warranties
of Oakwood contained in the Acquisition Agreement; the receipt of an opinion of
counsel that the Merger will qualify as a tax-free reorganization and with
respect to the federal income tax consequences of the Merger; the receipt of
comfort letters from Price Waterhouse LLP with respect to certain financial
statements of Oakwood incorporated by reference in the Registration Statement;
and the absence of any material adverse change in the financial condition,
business, operations or prospects of Oakwood from the date of the Acquisition
Agreement through the Effective Time, other than any change that affects both
Golden West and Oakwood in a substantially similar manner.
The obligation of Oakwood to consummate the Merger is also subject to
certain additional conditions, including the performance by Golden West of its
obligations under the Acquisition Agreement required to be performed by it at or
prior to the Effective Time; the accuracy of the representations and warranties
of Golden West contained in the Acquisition Agreement; completion of due
diligence by Oakwood regarding the business and operations of Golden West and
the results of such due diligence being satisfactory to Oakwood; the receipt by
Oakwood of a letter from Price Waterhouse LLP to the effect that the
transactions contemplated by the Acquisition Agreement may be treated by Oakwood
as a "pooling of interests" for accounting purposes; the receipt by Oakwood of
comfort letters from Arthur Andersen & Co. with respect to the financial
statements of Golden West contained in the Registration Statement; the absence
of any material adverse change in the financial condition, business, operations
or prospects of Golden West, other than any change that affects both Golden West
and Oakwood in a substantially similar manner; the receipt of approval of
certain third parties with respect to certain material contracts of Golden West;
the conversion of certain account balances in the Golden West Deferred
Compensation Plan into shares of Golden West Common Stock; the conversion of
Golden West Options into options to receive Oakwood Common Stock; the receipt by
Oakwood from holders of at least 85% of Golden West Capital Stock of executed
acknowledgments acknowledging the terms of the Acquisition Agreement and of duly
executed stock certificates; the execution of noncompetition agreements by
certain officers of Golden West; the receipt of Phase I Environmental Assessment
Reports on Golden West properties in form reasonably acceptable to Oakwood which
do not disclose any remediation, clean-up, monitoring, removal or other action
deemed advisable by the consultant; the completion of additional environmental
due diligence by Oakwood the results of which shall not reveal conditions which
would have a material adverse effect on Golden West; and the receipt of a
standstill agreement from each officer, director and 10% shareholder of Golden
West, Oakwood and Oakwood Sub agreeing not to sell Oakwood Common Stock or
Golden West Capital Stock for a designated period of time.
For a further description of the conditions to the Merger, see "The
Acquisition Agreement -- Conditions to Consummation of the Merger."
TERMINATION OF THE ACQUISITION AGREEMENT; NO SHOP AND BREAK-UP FEE PROVISIONS
The Acquisition Agreement may be terminated (i) at any time by the mutual
consent of Oakwood and Golden West; (ii) by either Oakwood or Golden West if (a)
the Merger is not consummated prior to November 15, 1994; (b) the approval of
the Merger by the Golden West Shareholders is not obtained; or (c) a federal or
state court or agency prohibits the transactions contemplated by the Acquisition
Agreement; (iii) by Golden West if (a) there is a breach by Oakwood or Oakwood
Sub of any representation or warranty set forth in the Acquisition Agreement
which would have a material adverse effect on Oakwood; (b) there has been a
material breach of any covenant or agreement by Oakwood or Oakwood Sub that has
not been cured after notice; or (c) prior to obtaining the approval of Golden
West Shareholders, Golden West receives an unsolicited proposal to merge,
consolidate, engage in a share exchange or similar transaction or sell 50% or
more of the assets or equity
7
<PAGE>
securities of Golden West and Golden West pays Oakwood a fee of $500,000; or
(iv) by Oakwood, if there is a breach by Golden West or any Golden West
subsidiary of any representation or warranty set forth in the Acquisition
Agreement which would have a material adverse effect on Golden West, a material
breach of a covenant or agreement by Golden West that has not been cured after
notice, or if the Merger will not qualify as a "pooling of interests."
Golden West has agreed to pay $500,000 to Oakwood in the event the Merger
is not consummated for any reason other than (i) or (iii) above or because the
Merger is terminated by Oakwood because (a) the Merger will not qualify as a
"pooling of interests"; (b) the results of Oakwood's review of the business and
operations of Golden West were not satisfactory to Oakwood; or (c) the results
of the environmental assessment were not satisfactory to Oakwood or the results
of Oakwood's additional due diligence with respect to environmental matters
revealed conditions or liabilities which would have a material adverse effect on
Golden West; and within 120 days of such a termination of the Acquisition
Agreement Golden West is involved in or enters into a letter of intent or
definitive agreement with respect to a merger, share exchange or similar
transaction or a sale of 50% or more of Golden West's assets or outstanding
Capital Stock. Golden West has agreed not to solicit or enter into negotiations
with respect to a Business Combination with any other entity prior to September
30, 1994. Golden West can, however, enter into negotiations with another entity
in response to an unsolicited offer concerning a Business Combination if Golden
West's Board of Directors determines that a failure to respond would violate its
fiduciary duty to the Golden West Shareholders and Golden West first provides
reasonable notice to Oakwood. See "The Acquisition Agreement -- No Shop
Provisions" and "The Acquisition Agreement -- Termination."
STOCK OPTIONS AND DEFERRED COMPENSATION
Prior to the Effective Time, and if Oakwood so requests, Golden West will
enter into an agreement satisfactory to Oakwood with each holder of an
outstanding Golden West Option pursuant to which the option to purchase shares
of Golden West Common Stock, whether or not currently exercisable, will be
converted at the Effective Time into an option to purchase Oakwood Common Stock.
The number of shares of Oakwood Common Stock to be received with respect to each
Golden West Option shall be determined by multiplying the number of shares
subject to the Golden West Option by the Exchange Rate and the option price
shall be determined by dividing the current option price by the Exchange Rate.
In addition, prior to the Effective Time, Messrs. Harry E. Karsten, Jr. and
Robert D. Totten and Ms. Celia Golden, as Beneficiary, will convert an aggregate
of $500,000 of their Golden West Deferred Compensation Plan account balances
into an aggregate of 260,000 shares of Golden West Common Stock (a conversion
price of approximately $1.92 per share) pursuant to the terms of the Deferred
Compensation Plan. Such shares of Golden West Common Stock may then be converted
into shares of Oakwood Common Stock pursuant to the terms and conditions of the
Merger. See "The Merger -- Interests of Certain Persons in the Merger."
TRANSACTION COSTS
In the event the Merger is consummated, Golden West will bear the first
$100,000 of expenses with respect to services provided by its attorneys,
accountants, investment bankers and financial advisors in connection with the
consummation of the Merger and the transactions contemplated by the Acquisition
Agreement ("Golden West Transaction Expenses"). In addition, in the event of a
review by the Commission of the Registration Statement on Form S-4 filed with
respect to the shares of Oakwood Common Stock to be issued in connection with
the Merger (the "Registration Statement"), Golden West will bear any incremental
costs (not to exceed $50,000) incurred by Golden West's attorneys or accountants
in responding to such review. The Acquisition Agreement provides that any
expenses in excess of $100,000 incurred by Golden West in connection with the
consummation of the Merger (other than the first $50,000 incurred as a result of
a Commission review of the Registration Statement) will be borne by the Golden
West Shareholders pro rata based on the number of shares of Golden West Capital
Stock owned. Golden West will bear all of Golden West's Transaction Expenses in
the event the Merger is not consummated. See "The Acquisition
Agreement -- Transaction Expenses."
DISSENTERS' RIGHTS
Under the CGCL, holders of Golden West Capital Stock who properly dissent
and vote against or abstain from voting with respect to the Merger have the
right to obtain a cash payment for the "fair value" of their shares (excluding
any element of value arising from the accomplishment or expectation of the
Merger). However, a condition to the consummation of the Merger requires that
the holders of no more than 10% of the outstanding shares of Golden West Capital
Stock exercise their right to dissent. See "Rights of Shareholders Electing to
Exercise Their Rights to Dissent."
8
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Although not free from doubt, the Merger should be a tax-free transaction
under the reorganization provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), resulting in no gain or loss to the Golden West Continuing
Shareholders (except for any cash received for fractional shares). This
conclusion is conditioned upon certain assumptions and the accuracy of certain
representations to be made by certain parties to the Agreement. If the facts
differ from such representations, the legal conclusions set forth herein would
change accordingly. See "Certain Federal Tax Consequences of the Merger."
The conclusion expressed above is not binding on either the Internal
Revenue Service or the courts. Therefore, there can be no assurance that the
Internal Revenue Service will not take a contrary position and sustain such
position in court. EACH GOLDEN WEST SHAREHOLDER IS URGED TO CONSULT WITH HIS OWN
TAX ADVISOR WITH RESPECT TO THE POTENTIAL FOREIGN, FEDERAL, STATE AND LOCAL TAX
CONSEQUENCES OF THE MERGER AS THEY RELATE TO HIS OWN PARTICULAR CIRCUMSTANCES.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a "pooling of interests" for
accounting and financial reporting purposes. It is a condition to the
consummation of the Merger that Oakwood receive an opinion to the effect that
the Merger will qualify as a "pooling of interests" transaction under generally
accepted accounting principles. See "The Merger -- Accounting Treatment."
EFFECTS OF MERGER ON RIGHTS OF SHAREHOLDERS
The rights of the holders of Golden West Common Stock are in general
similar to the rights of holders of Oakwood Common Stock, except that Golden
West is a California corporation and Oakwood is a North Carolina corporation and
Oakwood has adopted certain measures which may serve to make Oakwood a less
desirable takeover candidate. Holders of Golden West Preferred Stock, however,
will not be entitled to preferential treatment with respect to dividends and
other distributions as holders of Oakwood Common Stock. See "Comparative Rights
of Shareholders."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of Golden West's Board of Directors with
respect to the Merger, the Golden West Shareholders should be aware that certain
members of the Golden West Board of Directors and management, who will continue
as directors and employees of Golden West after the Merger, have certain
interests in the Merger in addition to those of holders of shares of Golden West
Capital Stock generally. Golden West's Board of Directors was aware of these
interests and considered them, among other factors, in approving the Merger, the
Acquisition Agreement and the Agreement of Merger. See "The Merger -- Interests
of Certain Persons in the Merger."
LISTING ON NEW YORK STOCK EXCHANGE
Application will be made for listing on the New York Stock Exchange (the
"NYSE") of the shares of Oakwood Common Stock to be issued in connection with
the Merger.
MARKET VALUE INFORMATION
The last sale price of Oakwood Common Stock on June 24, 1994, the last
trading day preceding the announcement of the proposed Merger, as reported on
the New York Stock Exchange, was $22.13 per share. There is no public market for
the Golden West Common or Preferred Stock.
9
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
OAKWOOD HOMES CORPORATION
The summary information presented below for each of the five fiscal years
in the period ended September 30, 1993 has been derived from the consolidated
financial statements of Oakwood, which have been audited by Price Waterhouse
LLP, independent accountants. The summary financial information for the nine
month periods ended June 30, 1993 and 1994 has been taken from unaudited
consolidated financial statements of Oakwood, which in the opinion of Oakwood's
management include all adjustments (which include only normal recurring
adjustments) necessary to present fairly the information set forth therein.
Results of operations for a nine month period are not necessarily indicative of
results of operations for a full year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED SEPTEMBER 30, JUNE 30,
1989 1990 1991 1992 1993 (1) 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Net sales......................................... $ 76,532 $106,955 $125,507 $184,648 $260,877 $170,500 $272,792
Financial services income....................... 18,257 21,861 28,976 39,110 50,051 36,116 44,181
Total revenues.................................... 106,355 137,194 162,634 231,592 322,311 213,659 325,676
Income before income taxes........................ 4,015 8,784 14,321 21,371 38,892 24,779 35,830
Net income........................................ 2,836 5,485 8,871 14,015 24,502 15,690 22,787
Net income per share
Primary......................................... $ .29 $ .56 $ .77 $ 1.00 $ 1.26 $ .83 $ 1.07
Fully diluted................................... .29 .55 .71 .90 1.22 .79 1.07
Cash dividends per share.......................... $ .043 $ .043 $ .048 $ .06 $ .08 $ .06 $ .06
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF
1989 1990 1991 1992 1993 JUNE 30, 1994
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 14,755 $ 12,791 $ 16,301 $ 17,200 $ 23,904 $ 27,878
Total assets...................................... 229,070 274,664 344,519 426,980 557,028 548,994
Notes and bonds payable........................... 147,488 187,755 226,006 228,942 255,765 218,854
Stockholders' investment.......................... 52,653 57,939 89,740 104,371 228,876 251,805
</TABLE>
(1) Includes a gain of approximately $1.6 million ($1 million after income
taxes, or $.05 per share) from the sale of manufactured housing communities.
10
<PAGE>
GOLDEN WEST HOMES
The summary consolidated financial data as of December 26, 1992 and
December 25, 1993 and for the years ended December 28, 1991, December 26, 1992
and December 25, 1993 are derived from audited consolidated financial statements
of Golden West included elsewhere in this Proxy Statement/Prospectus. The
summary consolidated financial data of Golden West as of December 30, 1989,
December 29, 1990 and December 28, 1991 and for the years ended December 30,
1989 and December 29, 1990 are derived from audited consolidated financial
statements of Golden West not included in this Proxy Statement/Prospectus. The
summary consolidated financial data of Golden West as of and for the six month
periods ended June 26, 1993 and June 25, 1994 are derived from unaudited
consolidated financial statements, but have been prepared on the same basis as
the audited consolidated financial statements included elsewhere herein and, in
the opinion of Golden West, include all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the information set forth
therein. The results for the six months ended June 25, 1994 are not necessarily
indicative of the results to be expected for a full year. The following
information should be read in conjunction with the Consolidated Financial
Statements of Golden West and the related notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations of
Golden West" included elsewhere in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
DEC. DEC. DEC. DEC. DEC. JUNE JUNE
30, 29, 28, 26, 25, 26, 25,
1989 1990 1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
Net sales........................................ $82,203 $85,344 $74,048 $74,427 $89,564 $40,324 $55,875
Income (loss) before provision for income taxes
and extraordinary item......................... 1,743 2,862 462 (31) 1,139 (130) 1,671
Income (loss) before extraordinary item.......... 1,006 1,682 240 (57) 653 (96) 988
Income per common and equivalent share before
extraordinary item (1)......................... $ .29 $ .49 $ .07 $ (.02) $ .19 $ (.08) $ .34
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
DEC. DEC. DEC. DEC. DEC. JUNE
30, 29, 28, 26, 25, 25,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 4,106 $ 4,609 $ 3,674 $ 2,929 $ 2,431 $ 1,403
Total assets.............................................. 19,761 18,727 22,759 21,654 27,545 28,967
Long-term debt, net of current portion.................... 4,500 3,500 7,315 6,201 6,706 7,228
Shareholders' equity...................................... 5,889 7,571 7,811 7,844 7,347 8,433
</TABLE>
(1) Adjusted to give effect to the conversion into Common Stock of all
outstanding Preferred Stock and certain rights under the Golden West
Deferred Compensation Plan. Common Share equivalents include 650,000 shares
of Common Stock issuable upon conversion of Series B Convertible Preferred
Stock. The Series B Convertible Preferred Stock was retired by the Company
in November 1993.
11
<PAGE>
COMPARATIVE PER SHARE DATA
The following tabulation reflects (a) the historical net income per share
of Oakwood Common Stock in comparison with the pro forma net income per share
after giving effect to the Merger on a pooling of interests basis; (b) the
historical net income per share of Golden West Common Stock in comparison with
the pro forma net income attributable to the .231099373 of a share of Oakwood
Common Stock which will be received for each share of Golden West Common and
Preferred Stock; (c) the actual cash dividends per share of Oakwood Common Stock
and Golden West Common Stock compared, in the case of Golden West, with the
equivalent of 23.1099373% of the cash dividends declared on each share of
Oakwood Common Stock; and (d) the historical book value per share of Oakwood
Common Stock and Golden West Common Stock in comparison with, in the case of
Oakwood, the pro forma book value per share after giving effect to the Merger
and, in the case of Golden West, the pro forma book value attributable to
.231099373 of a share of Oakwood Common Stock. The information presented in this
tabulation should be read in conjunction with the financial statements and the
notes thereto of Oakwood incorporated herein by reference and of Golden West
included elsewhere herein.
OAKWOOD
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS
SEPTEMBER 30, ENDED JUNE 30,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
Income per share before extraordinary item (1)
Historical....................................................................... $.71 $.90 $ 1.22 $.79 $ 1.07
Pro forma (2).................................................................... .68 .85 1.20 .78 1.09
Cash dividends declared per share
Historical....................................................................... .048 .06 .08 .06 .06
Book value
Historical....................................................................... (3) (3) 11.25 (3) 12.31
Pro forma (4).................................................................... (3) (3) 11.21 (3) 12.38
</TABLE>
GOLDEN WEST
<TABLE>
<CAPTION>
SIX
MONTHS
FISCAL YEAR ENDED ENDED
DEC. 28, DEC. 26, DEC. 25, JUNE 26,
1991 1992 1993 1993
<S> <C> <C> <C> <C>
Income per share before extraordinary item
Historical................................................................ $ .07 $(.02) $ .19 $(.08)
Equivalent of 23.1099373% of pro forma net income per share of Oakwood
Common Stock........................................................... .16 .20 .28 .18
Cash dividends declared per share
Historical................................................................ 0 0 0 0
Equivalent of 23.1099373% of cash dividend declared on each share of
Oakwood Common Stock................................................... .011 .014 .018 .014
Book value
Historical (5)............................................................ (3) (3) 3.14 (3)
Equivalent of 23.1099373% of pro forma book value per share of Oakwood
Common Stock........................................................... (3) (3) 2.59 (3)
<CAPTION>
JUNE 25,
1994
<S> <C>
Income per share before extraordinary item
Historical................................................................ $ .34
Equivalent of 23.1099373% of pro forma net income per share of Oakwood
Common Stock........................................................... .25
Cash dividends declared per share
Historical................................................................ 0
Equivalent of 23.1099373% of cash dividend declared on each share of
Oakwood Common Stock................................................... .014
Book value
Historical (5)............................................................ 3.53
Equivalent of 23.1099373% of pro forma book value per share of Oakwood
Common Stock........................................................... 2.86
</TABLE>
(1) Per share net income is presented on a fully diluted basis.
(2) With respect to the fiscal year data, reflects the net income per share of
Oakwood Common Stock by combining, on a pro forma basis, the results of
operations of Oakwood for the years ended September 30, 1991, 1992 and 1993
with the results of operations of Golden West for the years ended December
28, 1991, December 26, 1992 and December 25, 1993, respectively. With
respect to the data for the nine months ended June 30, 1993 and 1994,
reflects the results of operations of Oakwood for the nine months ended June
30, 1993 and 1994 and of Golden West for the nine months ended June 26, 1993
and June 25, 1994. Accordingly, Golden West's results of operations for the
three months ended December 25, 1993 are reflected in the pro forma net
income per share amounts for the year ended September 30, 1993 and the nine
months ended June 30, 1994. The pro forma net income per share data do not
reflect the nonrecurring costs of consummating the acquisition expected to
be incurred by Oakwood and Golden West, or the costs incurred by Golden West
in its proposed initial public offering of common stock. The amount of such
costs cannot presently be determined;
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however, management of Oakwood and Golden West currently estimate that the
aggregate of the acquisition costs and the public offering costs, both of
which will be charged to operations upon the consummation of the Merger,
will be in the range of $900,000 to $1.2 million (approximately $550,000 to
$750,000 after tax, or approximately $.02 to $.03 per share).
(3) Not presented.
(4) Reflects Oakwood Common Stock to be issued in exchange for Golden West
Common and Preferred Stock in connection with the Merger.
(5) Assumes conversion of Golden West Preferred Stock into Common Stock.
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GOLDEN WEST SHAREHOLDERS' MEETING
MEETING OF SHAREHOLDERS
This Proxy Statement/Prospectus is being furnished to the Golden West
Shareholders in connection with the solicitation of proxies by and on behalf of
the Golden West Board of Directors for use at the Special Meeting of
Shareholders of Golden West to be held at 9:30 a.m. on September 30, 1994 at the
Pacific Club, 4110 MacArthur Blvd., Newport Beach, California and any
adjournments thereof. The close of business on August 19, 1994 is the record
date for determining the Golden West Shareholders entitled to vote at the Golden
West Meeting. This Proxy Statement/Prospectus, the attached Notice of Special
Meeting and the accompanying form of Proxy are first being sent to the Golden
West Shareholders on or about September 1, 1994.
PURPOSE OF MEETING
At the Golden West Meeting, Golden West Shareholders will consider and vote
upon the Merger and a proposal to approve and adopt the Acquisition Agreement
and the Agreement of Merger pursuant to Section 1201 of the CGCL. The directors
of Golden West unanimously approved the Acquisition Agreement and Agreement of
Merger, having concluded that the Merger, the Acquisition Agreement and
Agreement of Merger are fair to and in the best interest of Golden West and its
shareholders. The Golden West Board of Directors recommends that the
shareholders of Golden West vote FOR the approval and adoption of the
Acquisition Agreement and Agreement of Merger. For further information, see "The
Merger -- Background and Reasons for the Merger."
RECORD DATE: VOTING REQUIREMENTS AT MEETING
Only Golden West Shareholders of record at the close of business on August
19, 1994 (the "Record Date") will be entitled to notice of and to vote at the
Golden West Meeting. Approval of the Merger requires the affirmative vote of
holders of a majority of the outstanding shares of Golden West Common and
Preferred Stock, each voting as a class. As of the Record Date, there were
1,287,000 shares of Golden West Common Stock and 1,105,000 shares of Golden West
Preferred Stock outstanding and entitled to be voted.
The directors and executive officers of Golden West and their affiliates
beneficially owned, as of the Record Date, 1,580,800 shares or approximately
96.51% of the outstanding shares of Golden West Common Stock and 226,824 shares
or approximately 20.53% of the outstanding shares of Golden West Preferred
Stock. Golden West has been advised that such directors and executive officers
intend to vote their shares in favor of approval of the Merger.
PROXIES
All proxies that are properly executed by Golden West Shareholders and
received by Golden West prior to the Golden West Meeting, and not subsequently
revoked, will be voted in accordance with the instructions noted thereon. A
proxy that does not specify to the contrary will be voted FOR approval and
adoption of the Acquisition Agreement and Merger Agreement. Any Golden West
Shareholder who submits a proxy will have the right to revoke it, at any time
before it is voted, by filing with the Secretary of Golden West written notice
of revocation or a duly executed later-dated proxy, or by attending the Golden
West Meeting and voting such Golden West Common or Preferred Stock, as the case
may be, in person.
All costs relating to the solicitation of proxies of Golden West
Shareholders will be borne by Golden West. Proxies may be solicited by officers,
directors and regular employees of Golden West and its subsidiaries personally,
by mail or by telephone or otherwise.
It is important that the proxies and Acknowledgments be returned promptly.
Shareholders who do not expect to attend the Golden West Meeting in person are
urged to mark, sign and date the accompanying proxy, and mail it in the enclosed
postage paid return envelope, along with the enclosed Acknowledgment if the
shareholder is voting in favor of the Merger.
THE MERGER
The detailed terms of the Merger are contained in the Acquisition Agreement
and the Agreement of Merger attached as Annex I to this Proxy
Statement/Prospectus. The following discussion describes the more important
aspects of the Merger and the terms of the Acquisition Agreement. This
description is not complete and is qualified by reference to the Acquisition
Agreement which is incorporated by reference herein.
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BACKGROUND AND REASONS FOR THE MERGER
BACKGROUND. In early 1994, Golden West met with investment bankers to
explore a public offering of Golden West Common Stock as a means of providing
capital for expansion and of providing Golden West Shareholders with a more
liquid investment. In February 1994, Golden West and Wedbush Morgan Securities
("Wedbush Morgan") entered into an agreement whereby Wedbush Morgan would serve
as lead underwriter in an initial public offering of Golden West Common Stock.
In April 1994, Golden West filed a Registration Statement with the
Commission to register 1,835,000 shares of Golden West Common Stock. At that
time, Golden West and Wedbush Morgan anticipated an initial public offering
price of approximately $7 to $9 per share. In April and May of 1994, Golden West
and Wedbush Morgan began preliminary marketing efforts. During May 1994, due
primarily to changes in stock market conditions, Golden West and Wedbush Morgan
determined that the initial public offering could only be achieved at a price
below the anticipated range. Accordingly, in late May 1994, Golden West decided
to delay the initial public offering and explore other alternatives.
On May 27, 1994, Golden West management contacted Oakwood management to
discuss Oakwood's interest in acquiring Golden West. Oakwood's management
indicated an interest in pursuing an acquisition of Golden West and commenced
discussions with Golden West's management. The management of Oakwood and Golden
West had previously met in May 1993 to discuss a similar transaction, but the
negotiations never passed beyond the preliminary stage. On June 1, 1994, Golden
West publicly announced the postponement of its public offering. During June
1994, Oakwood and Golden West management continued discussions about an
acquisition of Golden West, which discussions led to the signing on June 24,
1994 of a letter of intent between Oakwood and Golden West. The letter of intent
provides for Oakwood to acquire all of the outstanding Golden West Capital Stock
and Golden West Options in return for 700,000 shares of Oakwood Common Stock
(including shares subject to options to acquire Oakwood Common Stock).
Following execution of the letter of intent, discussions between
representatives of Oakwood and Golden West resumed with respect to the terms of
an Acquisition Agreement. In addition, the parties conducted due diligence
concerning the respective businesses. After approval by the respective Boards of
Directors of Oakwood and Golden West, the Acquisition Agreement was finalized
August 17, 1994. Golden West subsequently withdrew its Registration Statement.
The directors of Oakwood and Golden West have approved the Acquisition
Agreement and the Agreement of Merger, concluded that the Merger is in the best
interest of their respective shareholders and have authorized the consummation
of the Merger, subject to the approval by the Golden West Shareholders and
certain other conditions set forth in the Acquisition Agreement. The terms of
the Merger, including the formula pursuant to which shares of Golden West Common
and Preferred Stock will be exchanged for Oakwood Common Stock, are the result
of arms-length negotiations between Oakwood and Golden West management.
If the Merger is consummated, Golden West Shareholders who exchange Golden
West shares for Oakwood shares will receive marketable stock, subject in certain
cases to restrictions described in "Restrictions on Sales of Stock," and will
have an equity interest in a larger, vertically integrated enterprise. Oakwood
Common Stock is traded under the symbol "OH" on the New York Stock Exchange.
OAKWOOD REASONS FOR MERGER. The Merger will enable Oakwood to obtain
production capacity in the western region and portions of the southwestern and
mountain regions of the United States. This will allow Oakwood, which has
historically operated in the southeastern United States and more recently in
certain southwestern states, to accelerate its planned western expansion and
will provide manufactured homes to existing and planned retail sales centers,
particularly in areas that can be supplied by Golden West's underutilized
Perris, California facility and its recently acquired Fort Morgan, Colorado
facility. The Merger will allow Oakwood to obtain production capacity in these
areas at a cost reasonable in relation to obtaining comparable capacity by
alternative means and will allow Oakwood to utilize Golden West's existing
retail dealer network.
GOLDEN WEST REASONS FOR MERGER. The Golden West Board of Directors believes
that the terms of the Acquisition Agreement, the Agreement of Merger and the
Merger are fair to and in the best interests of Golden West and its
shareholders. The Merger will create one of the largest producers of
manufactured homes in the United States, offering significant opportunities for
efficiencies and economies not currently available to Golden West. The Merger
will result in an organization with the competitive strength necessary to
successfully compete against the largest companies in the industry. The size,
capital resources and expertise of Oakwood will expand the types of financing
offered by Golden Circle Financial Services (a wholly-owned finance subsidiary
of Golden West), creating opportunities to increase sales with financing to meet
the needs of the market. Oakwood's capital resources will also permit Golden
West to expand its manufacturing capacity and obtain needed working capital. In
addition, the combined enterprise created by the Merger may serve as a partial
hedge against the risks associated with the concentration of Golden West's
business in a limited number of geographic markets. The Golden
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West Board of Directors believes that the consideration to be received by the
Golden West Shareholders is fair and will provide Golden West Continuing
Shareholders with increased liquidity of their investment and the opportunity to
participate, in part, in any improvements in the markets in which Golden West
conducts its businesses, including improved geographic competitiveness and
operating efficiencies and synergies.
ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling of interests for accounting
and financial reporting purposes. Consummation of the Merger is conditioned upon
Oakwood receiving an opinion from Price Waterhouse LLP dated the Effective Time
of the Merger, to the effect that the Merger will qualify as a pooling of
interests transaction under generally accepted accounting principles and the
applicable rules and regulations of the Commission and the Commission shall not
have objected to such accounting treatment. Under this accounting method, (i)
the recorded historical cost basis of the assets and liabilities of both Oakwood
and Golden West generally will be carried forward to the operations of the
combined company generally at their recorded amounts and (ii) Oakwood financial
statements issued subsequent to the consummation of the Merger will be restated
to include the combined financial position, results of operations and cash flows
for Oakwood and Golden West for all periods presented therein.
OPERATIONS AFTER THE MERGER
After the consummation of the Merger, Oakwood expects that Golden West will
continue generally to operate its business as presently conducted. Oakwood has
no present plans for any merger, reorganization or liquidation or any sale or
transfer of a material amount of assets of Golden West to any third party.
Changes in business and economic conditions and other facts may result in
Oakwood's reconsideration of its plans. The Merger will allow Oakwood to
accelerate its planned western expansion and will provide manufactured homes to
existing and planned retail sales centers, particularly in areas that can be
supplied by Golden West's underutilized Perris, California facility and Golden
West's recently acquired Fort Morgan, Colorado facility. Oakwood also intends to
provide financing and insurance services in connection with sales of Golden West
manufactured homes.
Oakwood currently expects that the present executive officers of Golden
West will continue to serve, along with certain Oakwood officers, as executive
officers of Golden West after the Merger and certain members of Golden West's
Board of Directors will continue as directors of Golden West following the
Merger, along with certain Oakwood officers.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the Board of Directors of Golden West
with respect to the Merger, the Golden West Shareholders should be aware that,
in addition to the fact that certain members of the board directors and all
executive officers of Golden West will serve as directors and executive officers
of the surviving entity, certain members of Golden West's Board of Directors and
management have certain interests in the Merger that are in addition to the
interests of Golden West Shareholders generally. The Board of Directors of
Golden West was aware of these interests and considered them, among other
factors, in approving the Acquisition Agreement and Agreement of Merger. These
interests are as follows:
GOLDEN WEST STOCK OPTIONS. At the Effective Time, the Golden West Options
shall be converted, based on the Exchange Rate, into options to purchase Oakwood
Common Stock (rounded down to the nearest share). The exercise price per share
of Oakwood Common Stock under the new options shall be equal to the exercise
price per share of Golden West Common Stock under the original option divided by
the Exchange Rate (rounded up to the nearest cent). Such options shall in all
other respects remain subject to the same terms and conditions, including the
vesting schedule, set forth in the stock option plans and agreements pursuant to
which they were granted. Options to purchase a total of 377,000 shares of Golden
West Common Stock have been granted as follows: (i) options to purchase a total
of 221,000 shares of Golden West Common Stock were granted on July 24, 1990 at
an exercise price of $1.00 per share, (ii) an option to purchase 26,000 shares
of Golden West Common Stock was granted on February 4, 1992 at an exercise price
of $1.42 per share, (iii) options to purchase 104,000 shares of Golden West
Common Stock were granted on October 19, 1993 at an exercise price of $1.54 per
share and (iv) an option to purchase 26,000 shares of Golden West Common Stock
was granted on February 27, 1994 at an exercise price of $3.21 per share. Such
options become exercisable annually in 25% increments beginning on the first
anniversary of the date of grant. The options expire ten years after the date of
grant.
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DEFERRED COMPENSATION PLAN. Under Golden West's Deferred Compensation Plan,
Messrs. Harry E. Karsten, Jr. and Robert D. Totten and Ms. Celia Golden, as
Beneficiary, have account balances with such plan slightly in excess of an
aggregate of $500,000. Pursuant to the terms of the Deferred Compensation Plan,
the Deferred Compensation Plan account balances up to an aggregate total of
$500,000 may be converted into the equivalent of 260,000 shares of Common Stock
of the Company at the election of the participants. Prior to the Effective Time,
Messrs. Karsten and Totten will each convert $125,000 of their account balances
into 65,000 shares of Golden West Common Stock and Ms. Golden will convert
$250,000 of her account balance into 130,000 shares of Golden West Common Stock
(a conversion price of approximately $1.92 per share, which was established in
1988).
THE ACQUISITION AGREEMENT
The following is a summary description of certain terms of the Acquisition
Agreement, which is attached as Annex I to this Proxy Statement/Prospectus and
is incorporated herein by reference. Such description does not purport to be
complete and is qualified in its entirety by reference to the Acquisition
Agreement.
THE MERGER
The Acquisition Agreement provides that, upon the satisfaction or waiver of
certain conditions, Oakwood Sub will be merged with and into Golden West, with
Golden West continuing as the surviving corporation and a wholly-owned
subsidiary of Oakwood.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective at the time of filing of the Agreement of
Merger with the California Secretary of State or at such later time as the
parties shall have agreed upon and designated in the Agreement of Merger as the
Effective Time of the Merger, provided, however, the Merger shall not become
effective prior to the receipt of certain regulatory approvals and the
effectiveness of the Registration Statement. From and after the Effective Time,
the surviving corporation will possess all the assets, rights, privileges,
powers and franchises and be subject to all the liabilities, restrictions,
disabilities and duties of Oakwood Sub and Golden West, as provided under the
CGCL.
Until the Effective Time of the Merger occurs, Golden West Shareholders
will retain their rights as shareholders to vote on matters submitted to them by
the Golden West Board of Directors.
CONSIDERATION TO BE RECEIVED IN THE MERGER
In the Merger, each share of Golden West Capital Stock outstanding
immediately prior to the Effective Date, other than shares with respect to which
dissenters' rights shall be perfected in accordance with the CGCL (the
"Dissenters' Shares"), will be converted into the right to receive .231099373 of
a share of Oakwood Common Stock. No fractional shares of Oakwood Common Stock
will be issued in connection with the Merger. In lieu of fractional shares, a
cash payment will be made equal to the fractional interest which a Golden West
Shareholder would otherwise receive multiplied by the closing price of Oakwood
Common Stock on the New York Stock Exchange two business days before the
Effective Time. The total number of shares of Oakwood Common Stock issued or
reserved for issuance in connection with options issued by Oakwood in connection
with the Merger shall in the aggregate be no more than 700,000, less that number
of shares equal to the sum of the number of dissenting shares of Golden West
Capital Stock multiplied by the Exchange Ratio and the sum of all fractional
shares for which cash was or will be paid. Such total number of shares issuable
in connection with the Merger includes shares of Oakwood Common Stock to be
issued to Messrs. Harry E. Karsten, Jr. and Robert D. Totten and Ms. Celia
Golden, as Beneficiary, following the conversion of their account balances in
the Golden West Deferred Compensation Plan into shares of Golden West Common
Stock. See "The Merger -- Interests of Certain Persons in the Merger." If prior
to the Effective Time the outstanding shares of Oakwood Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through a change in Oakwood's capitalization, then an
appropriate and proportionate adjustment in the Exchange Rate will be made. For
a discussion of the rights of dissenting shareholders of Golden West, see
"Rights of Shareholders Electing to Exercise Their Rights to Dissent."
SURRENDER OF CERTIFICATES
Upon surrender of one or more duly endorsed certificates for Golden West
Capital Stock and an accompanying Acknowledgment, there will be issued and
mailed to the holder of such stock a certificate or certificates representing
the number of shares of Oakwood Common Stock to which such holder is entitled,
if any, and, where applicable, a check for the
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amount representing any fractional shares determined in the manner described
above, subject to the retention of certain shares of such Oakwood Common Stock
pursuant to the escrow provisions described below.
No dividend or other distribution payable after the Effective Time with
respect to Oakwood Common Stock will be paid to the holder of any unsurrendered
shares of Golden West Capital Stock until the holder surrenders the
certificate(s) therefor and an accompanying Acknowledgment, at which time the
holder will be entitled to receive all previously withheld dividends and
distributions, without interest.
After the Effective Time, there will be no transfers on Golden West's stock
transfer books of shares of Golden West Capital Stock issued and outstanding at
the Effective Time.
Neither Oakwood nor Golden West nor any other person will be liable to any
former Golden West Shareholders for any consideration properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
If a certificate for Golden West Capital Stock has been lost, stolen or
destroyed, Oakwood will issue the consideration properly payable in accordance
with the Acquisition Agreement upon receipt of appropriate evidence as to such
loss, defect or destruction, appropriate evidence as to the ownership of such
certificate by the claimant and appropriate and customary indemnification.
CERTAIN COVENANTS OF GOLDEN WEST
Golden West has agreed that prior to the Effective Time of the Merger it
will operate its business substantially as presently operated and only in the
ordinary course. In this connection, Golden West has agreed that it will not,
without the prior written consent of Oakwood (i) change any provision of its
Articles of Incorporation or Bylaws; (ii) change the number of shares of the
authorized, issued or outstanding capital stock of Golden West including the
issuance of or the grant of any option with respect to the authorized or issued
capital stock of Golden West or any subsidiary, or declare, set aside or pay any
dividend or other distribution in cash or in kind with respect to the
outstanding capital stock of Golden West; (iii) incur any liabilities or
obligations, whether directly, indirectly, or by way of guaranty, except in the
ordinary course of business consistent with past practices and prior periods;
(iv) except as expressly agreed to by Oakwood, make any capital expenditures
individually in excess of $25,000 or in the aggregate in excess of $100,000,
other than reasonable expenditures necessary to maintaining existing assets in
good working order and repair; (v) pay any bonuses to any executive officer of
Golden West, except as previously disclosed to Oakwood in the Acquisition
Agreement, or enter into any new or amend any existing employment agreement with
any persons, adopt any new or amend any existing employee benefit plan, except
as may be otherwise required by law, grant any increase in compensation or
benefits of any kind to its employees, officers or directors, except regularly
scheduled increases in the ordinary course of business and consistent with past
practices and policies, or effect any change with respect to the retirement
benefits to any class of employees or officers, except as otherwise required by
law; (vi) create or otherwise become liable with respect to any indebtedness for
money borrowed or purchase money indebtedness except in the ordinary course of
business; (vii) increase or deplete inventories, incur or collect receivables,
or incur or pay trade payables or accrue liabilities in any manner other than
consistent with past practices and prior periods and in the ordinary course of
business; (viii) cancel without payment or satisfaction in full, waive or extend
the time of deferments of any indebtedness inuring to the benefit the Golden
West; (ix) amend in any way any of its material contracts or agreements; (x)
fail to maintain in full force and effect all insurance carried by Golden West
at the time of the Acquisition Agreement; (xi) institute any changes in
management policy of a significant nature; (xii) take any action or fail to take
any action that would make any representation or warranty of Golden West in the
Acquisition Agreement untrue; or (xiii) make any agreement or commitment by or
on behalf of Golden West to do or take any of the actions referred to in items
(i) through (xii). In addition, Golden West has agreed not to take any action or
knowingly fail to take any action that would jeopardize the treatment of the
Merger as a "pooling of interests" for accounting purposes or jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a)(2)(E) of the Code.
NO-SHOP PROVISIONS
Golden West has also agreed that until September 30, 1994, neither Golden
West nor its shareholders, directors, officers or other representatives will
solicit any proposals or offers from any parties other than Oakwood with respect
to a merger, acquisition or similar transaction involving a significant portion
of the assets or equity securities of Golden West or engage in any negotiations
concerning such a proposal. Golden West is obligated to inform Oakwood
immediately if any such inquiries or proposals are received by it. However, in
the event any person makes an unsolicited written offer prior to approval of the
Merger by the Golden West Shareholders to acquire Golden West or its assets
pursuant to a merger, consolidation, share exchange, sale of stock, sale of
assets or other similar transaction, Golden West may enter into discussions with
such person
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if and only to the extent that the Golden West Board of Directors determines
that to proceed with the Merger would violate its fiduciary duties to the Golden
West Shareholders. In such event, Golden West is required to give Oakwood
reasonable notice prior to entering into such discussions.
RESTRICTIONS ON SALES OF STOCK
Each officer, director and 10% shareholder of Golden West, Oakwood Sub and
Oakwood is required to execute a standstill agreement pursuant to which they
agree not to sell any Golden West Capital Stock or Oakwood Common Stock
(including Oakwood Common Stock received in the Merger) from August 19, 1994
until the first date Oakwood publishes its financial results covering a period
of at least 30 days after the closing of the Merger.
Shares of Oakwood Common Stock to be received by Golden West Shareholders
who are deemed to be "affiliates" (as such term is defined in Rule 144 under the
Securities Act) of Golden West prior to the Merger ("Golden West Affiliates")
(the "Restricted Securities") may be resold by them only pursuant to an
effective registration statement under the Securities Act covering such
securities or in transactions permitted by the resale provisions of Rule 145(d)
under the Securities Act or as otherwise permitted under the Securities Act.
Under Rule 144 of the Securities Act, an affiliate is a person that directly or
indirectly controls or is controlled by or is under common control with Golden
West and may include certain officers and directors of Golden West, principal
shareholders of Golden West and certain other shareholders with special
relationships with Golden West. This Proxy Statement/Prospectus may not be used
by such affiliates in connection with any resale of their Restricted Securities.
Rule 145 requires that, in a resale of their Restricted Securities, Golden
West Affiliates comply with a volume restriction and other restrictions on the
manner of sale and that certain information about Oakwood be currently available
to the public. The volume restriction limits the number of shares that an
affiliate may transfer, in the aggregate, within any three-month period to the
greater of (i) 1% of the outstanding Oakwood Common Stock or (ii) the average
weekly reported trading volume in the Oakwood Common Stock during the preceding
four calendar weeks. A Golden West Affiliate may sell its shares without regard
to the volume restrictions and restrictions on the manner of sale if it has
owned the shares for at least two years, certain information about Oakwood is
currently available to the public and the Golden West Affiliate is not then an
affiliate of Oakwood. A Golden West Affiliate may also sell its shares of
Oakwood Common Stock without regard to the foregoing restrictions (including the
requirement that certain information about Oakwood is currently available to the
public) if it has held its shares for a period of at least three years and such
person has not been an affiliate of Oakwood for at least three months. A Golden
West Affiliate who is also an affiliate of Oakwood may sell its shares, subject
to the volume restrictions and restrictions on the manner of sale, if it has
held the shares of Oakwood Common Stock for a period of at least two years and
certain information about Oakwood is currently available to the public.
At least 30 days prior to the closing of the Merger, Golden West will
deliver to Oakwood a list of Golden West Affiliates and will deliver to Oakwood
a letter from each Golden West Affiliate acknowledging certain restrictions on
the resale of Oakwood Common Stock received in the Merger. Any Restricted
Securities to be received by Golden West Affiliates will bear a legend
referencing such restrictions on transfer.
CERTAIN COVENANTS OF OAKWOOD
Oakwood has agreed (i) that it will not knowingly take any action or fail
to take any action that would jeopardize the treatment of the Merger as a
"pooling of interests" for accounting purposes or that would cause the Merger to
fail to qualify as a reorganization within the meaning of Section 368(a)(2)(E)
of the Code, (ii) that it will prepare and submit to the NYSE a listing
application covering the shares of Oakwood Common Stock issuable in the Merger,
and use its best efforts to obtain, prior to the Effective Time, approval for
the listing of such Oakwood Common Stock, subject to official notice of
issuance, and (iii) that, without the prior written consent of Golden West,
Oakwood will not take any action which would cause the conditions to the
consummation of the Merger not to be fulfilled.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is conditioned upon the approval by the holders
of a majority of the aggregate issued and outstanding shares of Golden West
Common and Preferred Stock, each voting as a class. However, it is also a
condition to the consummation of the Merger that the holders of no more than 10%
of the Golden West Capital Stock elect or may elect to be dissenters with
respect to their shares of Golden West Capital Stock in connection with the
Merger. In addition, it is a condition to consummation of the Merger that
Oakwood receive executed Acknowledgments from holders of at least 85% of the
aggregate number of outstanding shares of Golden West Capital Stock, pursuant to
which such shareholders agree to be
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bound by the terms of the Acquisition Agreement, including the escrow and
indemnification provisions contained therein, accompanied by their duly endorsed
stock certificates for shares of Golden West Capital Stock.
The Merger is also conditioned upon the expiration of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended. The Hart-Scott-Rodino filings were made by Oakwood and Golden West
on August 22, 1994 and August 23, 1994, respectively, and the waiting period
expires on September 21, 1994.
The obligations of Oakwood and Golden West to consummate the Merger are
further conditioned, unless waived by the party benefitted by such condition,
upon (i) the absence of any action or proceeding by a court or other
governmental body or public authority to restrain or prohibit the transactions
contemplated by the Acquisition Agreement or to obtain an amount of damages or
other material relief in connection with the execution of the Acquisition
Agreement, and the absence of any notice that the transactions contemplated by
the Acquisition Agreement constitute a violation of law; (ii) the effectiveness
of the Registration Statement under the Securities Act, which shall not be
subject to any Commission stop order or any threatened stop order; (iii) the
absence of any material change in the financial condition, business or
operations of Oakwood or Golden West that would be likely to have a material
adverse effect on Oakwood or Golden West, other than a change that affects
Oakwood and Golden West in a substantially similar manner; (iv) the receipt of
opinions of counsel with respect to certain of the tax consequences of the
Merger; (iv) the receipt of all required governmental consents and approvals
with respect to the Merger, except for the filing of the Agreement of Merger;
(v) the receipt of copies by each of Oakwood and Golden West of all resolutions
adopted by the other's Board of Directors and the Golden West Shareholders in
connection with the approval of the Acquisition Agreement and the transactions
contemplated thereby; (vi) the listing of the shares of Oakwood Common Stock
issuable in connection with the Merger with the New York Stock Exchange; (vii)
the accuracy of representations and warranties contained in the Acquisition
Agreement; (viii) performance of all covenants and agreements contained in the
Acquisition Agreement; (ix) the completion by Oakwood of its review of Golden
West's business and operations and the results of such review being satisfactory
to Oakwood, (x) the receipt of opinions of counsel with respect to certain legal
matters, including the organization and good standing of Oakwood and Golden
West, the due authorization of the Acquisition Agreement by Oakwood and Golden
West and the valid issuance of the shares of Oakwood Common Stock being issued
to Golden West Continuing Shareholders; (xi) the receipt by Oakwood of a letter
from Price Waterhouse LLP to the effect that the Merger will qualify for
"pooling of interests" accounting treatment and a letter from Arthur Andersen &
Co. that no condition exists with respect to Golden West that would prevent the
Merger from being treated by Oakwood as a "pooling of interests"; (xii) the
receipt by Oakwood from Arthur Andersen & Co. of "comfort" letters with respect
to the procedures undertaken by Arthur Andersen & Co. with respect to the
financial statements of Golden West contained in the Registration Statement;
(xiii) the receipt by Golden West from Price Waterhouse LLP of "comfort" letters
with respect to the procedures undertaken by Price Waterhouse LLP with respect
to the financial statements of Oakwood contained in the Registration Statement;
(xiv) the conversion of an aggregate of $500,000 of the Deferred Compensation
Plan account balances of Messrs. Harry E. Karsten, Jr. and Robert D. Totten and
Ms. Celia Golden, as Beneficiary, into 260,000 shares of Golden West Common
Stock; (xv) the conversion of Golden West Options into options to receive
Oakwood Common Stock; (xvi) the receipt of all required consents; (xvii) the
receipt by Oakwood of an affiliate letter from each Golden West affiliate;
(xviii) the receipt by Oakwood of a current list of the federal tax
identification numbers of the Golden West Shareholders; (xix) the receipt by
Oakwood of a final statement of all Golden West transaction expenses and
evidence of the payment by the Golden West Shareholders of any transaction
expenses in excess of $100,000 other than such incremental costs incurred as a
result of a review by the Commission of the Registration Statement; (xx) the
receipt by Oakwood of executed noncompetition agreements from certain officers
of Golden West; (xxi) the receipt by Oakwood of Phase I Environmental Assessment
Reports covering all the real property owned or leased by Golden West by an
environmental consultant acceptable to Oakwood, which report must not disclose
any remediation, clean-up, monitoring, removal or other work deemed advisable by
the consultant, and the completion of any additional due diligence with respect
to environmental matters deemed necessary by Oakwood and such due diligence not
disclosing any condition or liability which Oakwood reasonably believes would
have a material adverse effect on Golden West and (xxii) the termination as of
the Effective Time of all indemnification agreements between Golden West and the
directors and officers of Golden West.
INDEMNIFICATION
The Acquisition Agreement provides that each Golden West Continuing
Shareholder will indemnify Oakwood with respect to any liability, damage or loss
incurred by Oakwood or Golden West as a result of the incorrectness or breach of
any representation, warranty or covenant made by Golden West in the Acquisition
Agreement (a "Loss") until the first anniversary of the Effective Time. Ten
percent of the shares of Oakwood Common Stock (the "Escrowed Shares") issued to
each Golden West Continuing Shareholder in connection with the Merger will be
placed in escrow with First Union National Bank
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of North Carolina, as escrow agent (the "Escrow Agent"), until (i) in the event
the Effective Time is on or before September 30, 1994, the publication of
Oakwood's audited consolidated financial statements for the year ended September
30, 1994 or (ii) in the event the Effective Time is after September 30, 1994,
the publication of Oakwood's consolidated financial statements for the quarter
ending December 31, 1994, and will be available to be applied to satisfy the
foregoing indemnification obligations.
A Golden West Continuing Shareholder's liability is limited to the value of
each Shareholder's Escrowed Shares, whether or not released, based on the fair
market value of such shares at the Effective Time. Oakwood, upon at least 30
days' prior written notice to the Golden West Continuing Shareholders, may apply
all or any part of the Escrowed Shares to the payment, settlement or discharge
of any Loss. Oakwood will defer instructing the Escrow Agent to return Escrowed
Shares to Oakwood with respect to a loss if Oakwood receives notice that a
Golden West Continuing Shareholder questions the propriety of such application
of the Escrowed Shares. Such dispute will be settled by arbitration. In the
event a Golden West Continuing Shareholder has disputed the application of the
Escrowed Shares by Oakwood or, on or before the Release Date, Oakwood has given
notice to the Escrow Agent and the Golden West Continuing Shareholders of the
existence of a claim for the discharge or settlement of a Loss which has not
been liquidated, the Escrow Agent will retain the appropriate number of Escrowed
Shares pending final determination of such claims.
The number of Escrowed Shares to be returned to Oakwood pursuant to such
indemnification will be determined by dividing the dollar amount of the Golden
West Continuing Shareholder's liability with respect to such Loss by the closing
price of a share of Oakwood Common Stock on the New York Stock Exchange at the
Effective Time. The registered holder of the Escrowed Shares will be entitled to
vote the Escrowed Shares and will be entitled to receive any dividend or
distribution thereon, other than dividends or distributions in the form of
capital stock of Oakwood, which will be held as part of the Escrowed Shares.
The indemnifying obligations of the Golden West Continuing Shareholders
will continue after the Release Date until the first anniversary of the
Effective Time, except as to any matter as to which Oakwood has given notice
prior to such date.
REPRESENTATIONS AND WARRANTIES
Pursuant to the Acquisition Agreement, Golden West and the Golden West
Continuing Shareholders have made certain representations and warranties to
Oakwood with respect to Golden West's properties and other assets and the
conduct of its business. All statements contained in the Schedules to the
Agreement are deemed to be representations and warranties under the Agreement.
The representations and warranties survive the Effective Time of the Merger and
terminate on the first anniversary date of the Effective Time. Each Golden West
Shareholder should read carefully the representations, warranties and covenants
contained in the Acquisition Agreement. Any representation or warranty made "to
the knowledge" of Golden West or that Golden West "knows" a particular fact or
circumstance includes the knowledge of officers and certain key employees of
Golden West after review of such individual's pertinent business records and
files and after inquiry with Golden West's attorneys and accountants. The
representations, warranties and covenants include the following matters:
(i) Golden West and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry out its business as it is now being conducted, and are duly
qualified or licensed as foreign corporations, and are in good standing, in each
jurisdiction where such qualification or licensing is necessary, except where
such failure to be so qualified or to be so organized or existing would not have
a material adverse effect on the business, results of operations or financial
condition of Golden West.
(ii) The Articles of Incorporation and Bylaws of Golden West and each of
its subsidiaries provided to Oakwood are complete and correct and are in full
force and effect, and neither Golden West nor any of its subsidiaries is in
violation of any provision of such Articles of Incorporation or Bylaws.
(iii) The authorized capital stock of Golden West consists of 20,000,000
shares of Golden West Common Stock and 1,105,000 of Golden West Preferred Stock,
of which 1,287,000 shares and 1,105,000 shares, respectively, were issued and
outstanding as of August 17, 1994. In addition, 377,000 shares of Golden West
Common Stock were reserved for future issuance pursuant to Golden West Options
and no such shares or options have been issued in violation of any preemptive
rights. In addition, the information provided to Oakwood with respect to the
names, addresses and social security numbers of record owners of all shares of
Golden West Capital Stock and the certificate numbers for such shares is
accurate and complete.
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(iv) Golden West has all necessary power and authority to execute and
deliver the Acquisition Agreement and to perform its obligations under such
agreement and to consummate the transactions contemplated thereby. The execution
and delivery of the Acquisition Agreement by Golden West and the consummation of
the Merger has been duly and validly authorized by Golden West, and the
Acquisition Agreement has been duly and validly executed and delivered by Golden
West and constitutes a legal, valid, binding and enforceable obligation of
Golden West. In addition, each Golden West Shareholder has all necessary power
and authority to execute and deliver his or its respective acknowledgment and
such execution and delivery has been duly and validly authorized by all
necessary action on the part of the Golden West Shareholders and, constitutes a
legal, valid and binding obligation of such Golden West Shareholder enforceable
against it in accordance with its terms.
(v) The execution and delivery of the Acquisition Agreement by Golden West
and the performance of the transactions contemplated thereby will not conflict
with or violate the Articles of Incorporation or Bylaws of Golden West or any of
its subsidiaries, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Golden West or by which any property or assets
of Golden West is bound, result in the breach of or constitute a default under,
result in the loss of a material benefit under or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Golden West
or any of its subsidiaries pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or any other instrument
or obligation to which Golden West is a party or is bound or affected.
In addition, the execution and delivery of the Acquisition Agreement and
Acknowledgments by each Golden West Shareholder will not require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority other than that required by the Exchange
Act, the Securities Act, state securities or Blue Sky Laws and state takeover
laws, the HSR Act and the filing or recordation of appropriate merger documents
as required by the CGCL.
(vi) Other than the subsidiary of Golden West and other investments
disclosed to Oakwood in the Acquisition Agreement, Golden West does not own
directly or indirectly any interest or investment in any corporation,
partnership, joint venture, business, trust or other entity.
(vii) The Golden West audited, consolidated financial statements for the
year ended December 25, 1993 and unaudited interim financial statements for each
quarter subsequent to December 25, 1993, comply with generally accepted
accounting principles and present fairly the financial position of Golden West,
and the statements of income, of shareholders' equity and of cash flows present
fairly the results of operations, changes in shareholders' equity and cash flows
of Golden West for the periods set forth therein. Golden West does not have any
liabilities, contingent or otherwise, whether due or to become due, known or
unknown as of the date of such financial statements other than as indicated on
the balance sheet or in the notes thereto, or which in the aggregate will not
have a material adverse effect on the business of Golden West.
(viii) Since March 26, 1994, except as disclosed to Oakwood in the
Acquisition Agreement or as specifically described in the footnotes to the
Golden West financial statements, there has not been (a) any material adverse
change in the business of Golden West and no such adverse change is reasonably
expected to occur; (b) any disposition or issuance by Golden West of any of its
capital stock or any option or right or privilege to acquire any of its capital
stock, any acquisition and retirement of any of its capital stock or any
dividend or other distribution on or with respect to its capital stock; (c) any
sale, mortgage, pledge, grant, dividend or other disposition or transfer of any
asset or interest owned or possessed by Golden West, other than in the ordinary
course of business; (d) any expenditure or commitment by Golden West for the
acquisition of assets of any kind other than in the ordinary course of business;
(e) any damage, destruction or loss of such character as to interfere materially
with the continued operation of or have a material adverse effect on any part of
the business of Golden West; (f) any increase or any agreement for the increase
of any compensation payable or to become payable by Golden West to any officer,
shareholder or key employee of Golden West; (g) any change made or authorized to
be made to the Articles of Incorporation or Bylaws of Golden West; (h) any loans
or advances by or to Golden West other than renewals or extensions of existing
indebtedness and uses of lines of credit; (i) any cancellation or payment by
Golden West or any Golden West Subsidiary of any indebtedness owed to Golden
West or any cancellation or settlement by Golden West of any claims against
others; (j) any failure by Golden West to operate its business other than in the
ordinary course of business; (k) any failure to maintain the books and records
of Golden West in accordance with past practices; (l) any change in accounting
practices; or (m) any agreement or commitment by or on behalf of Golden West to
do or take any of the actions referred to in clauses (a) through (l).
(ix) Golden West has duly filed all required tax returns and reports (or
has validly extended the due date thereof) and has paid all taxes required to be
paid or an adequate reserve has been established for such taxes and has provided
to Oakwood
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true and correct copies of certain tax returns beginning with the 1987 tax year.
In addition, the reserves for taxes contained in the financial statements and
carried on the books of Golden West are adequate to cover all tax liabilities as
of the date of the Acquisition Agreement. Since December 31, 1993, Golden West
has not incurred any tax liability other than in the ordinary course of business
and there are no tax liens upon any properties or assets of Golden West and,
except as shown in the financial statements, there are no pending or, to the
knowledge of Golden West, threatened questions or examinations relating to or
claims asserted for taxes or assessments against Golden West.
(x) Representations and warranties regarding employment, bonus,
compensation, pension, stock option, stock appreciation rights, profit-sharing,
retirement, medical, vacation, retiree medical, severance pay and other
agreements or fringe benefit plans, arrangements or practices of Golden West,
including the provision to Oakwood of accurate and complete descriptions of such
plans and assurance that Golden West has complied in all material respects with
all applicable federal, state and local laws with respect to such plans.
(xi) Representations and warranties (limited in certain circumstances to
the knowledge of Golden West) with respect to title to, rights to and the
condition of all real property owned or leased by Golden West (including
compliance with all applicable statutes, ordinances, orders, requirements, laws,
rules or regulations, including all environmental laws, rules and regulations)
and that there does not exist any event which would constitute a default by
either Golden West or the landlord under any such lease, except for defaults
that in the aggregate would not have a material adverse effect on Golden West.
In addition, representations and warranties that Golden West has good and
marketable fee simple title to all fixtures, structures and leasehold
improvements on such properties and to all of its equipment, free and clear of
all encumbrances other than those disclosed to Oakwood, which encumbrances do
not materially adversely affect the value or use of the property and has good
and marketable fee simple title to all of their inventories of manufactured
housing units and all personal property related thereto; that Golden West's
equipment is in good condition and repair; that all of Golden West's inventory
is usable or saleable in the ordinary course of business and each item of
inventory is in good condition and is not obsolete or materially defective; that
all accounts receivable of Golden West constitute and are valid and enforceable
claims of Golden West; that Golden West has the right to use the name "Golden
West Homes" and the name "Golden Circle Financial Corporation" where now used,
all other material trademarks or service marks, all other intellectual property
belonging to or used in the business of Golden West and, except as disclosed to
Oakwood in the Acquisition Agreement, neither Golden West nor any subsidiary of
Golden West is a party to any agreement with any person or entity with respect
to the use of such names; and that Golden West has disclosed to Oakwood in the
Acquisition Agreement all material contracts, agreements and commitments it is a
party to and that such contracts constitute valid and enforceable obligations
against Golden West and neither Golden West nor any of its subsidiaries is in
default in any material respect with respect to such contracts.
(xii) The fixtures, equipment and inventory located on the property owned
or leased by Golden West or any subsidiary of Golden West are in good condition
and all electrical, gas, water and sewer utilities serving such properties are
adequate; and that, to its knowledge, the properties Golden West owns, leases
and formerly owned or leased are or were at all times in compliance with all
environmental laws, rules and regulations and Golden West has not illegally or
improperly generated, used, treated, stored or disposed of hazardous materials
and that there are no threatened claims against Golden West or any of its
subsidiaries with respect to such matters.
(xiii) All leases of property or equipment by Golden West to or from any
other party have been fully disclosed to Oakwood in the Acquisition Agreement.
(xiv) Except as disclosed to Oakwood in the Acquisition Agreement, Golden
West has no planned capital expenditures individually in excess of $25,000.
(xv) Except as disclosed to Oakwood in the Acquisition Agreement, since
December 31, 1991, all material transactions with third persons involving Golden
West have been conducted on an arms-length basis and Golden West has disclosed
in the Acquisition Agreement any interest, ownership or profit participation of
any of the shareholders, officers or directors of Golden West or their
affiliates or relatives in businesses with which Golden West has had material
transactions or which are Golden West's competitors or potential competitors;
there are no outstanding loans or other advances to any shareholder, officer,
director or employee of Golden West or a Golden West subsidiary or respective
affiliates or relatives in excess of $2,500, except as disclosed in the
Acquisition Agreement; and, except as disclosed in the Acquisition Agreement,
none of the shareholders, officers or directors of Golden West or any of its
subsidiaries or their respective affiliates or relatives is an affiliate of any
dealer who sells manufactured homes of Golden West or any other entity that has
a material business relationship with Golden West.
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(xvi) Except as disclosed to Oakwood in the Acquisition Agreement, Golden
West is not in conflict with, or in default or violation of, any law, rule,
regulation, order, judgment or decree applicable to Golden West or by which any
property or asset of Golden West is bound or affected, or the provisions of any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Golden West is a party or
is bound or affected. Golden West and each of its subsidiaries are lawfully
conducting their business and their property has been and will be used and
operated in compliance with all laws, rules and regulations and other
restrictions.
(xvii) All pending and threatened law suits or administrative proceedings
or investigations against Golden West have been disclosed to Oakwood in the
Acquisition Agreement, none of which, if adversely determined, could have a
material adverse effect on the financial condition, results of operations,
business prospects, assets or liabilities of Golden West. All material "loss
contingencies" have been fully disclosed to Oakwood in the Acquisition
Agreement.
(xviii) Since December 31, 1989, Golden West has not been a party to any
collective bargaining agreement and has not been the subject of any union
activity or labor dispute, and Golden West has not violated any applicable
federal or state law or regulation relating to labor or labor practices and does
not have any liability to any of its employees, agents or consultants in
connection with grievances of such employees, agents or consultants.
(xix) Golden West has not taken or failed to take any action which would
prevent the Merger from being treated as a "pooling of interests."
(xx) All brokerage arrangements entered into in connection with the
negotiations leading to the Acquisition Agreement or the consummation of the
transactions contemplated thereby have been fully disclosed to Oakwood in the
Acquisition Agreement.
(xxi) Golden West and its subsidiaries own 79 shares of Oakwood Common
Stock and do not own any securities convertible into Oakwood Common Stock.
(xxii) All bank accounts, vaults and safe deposit boxes used by or in the
name of Golden West have been disclosed to Oakwood in the Acquisition Agreement.
(xxiii) Golden West has adequate fire and casualty insurance policies
sufficient to allow it to replace any of its properties or assets that might be
damaged or destroyed and sufficient business interruption insurance policies to
recover the full amount of any losses occasioned by any business interruption.
In addition, such policies have been fully disclosed to Oakwood in the
Acquisition Agreement.
(xxiv) The products and services of Golden West comply with all express and
implied warranties and the requirements and standards of all federal and state
laws and regulations governing the sale and financing of manufactured homes,
including the National Mobile Home Construction Safety Standards Act of 1974,
the Federal Consumer Credit Protection and the Federal Credit Opportunity Act
and, except as disclosed to Oakwood in the Acquisition Agreement, no product or
service warranty or liability claims are pending or threatened against Golden
West except such claims that in the aggregate would not have a material adverse
effect on Golden West.
(xxv) Golden West has fully described in the Acquisition Agreement all
warranty obligations of Golden West and all warranty contracts, agreements,
understandings or arrangements to which Golden West is a party or its property
or assets are bound and all service and repurchase contracts, agreements,
understandings or arrangements to which Golden West is a party or by which any
of its property is bound.
(xxvi) Golden West has disclosed in the Acquisition Agreement its
dealership arrangements and the amount and terms of any loans to any such
dealers, all arrangements which generally apply to its dealers, including those
which provide for rebates, discounts or other payments or concessions to its
dealers, and the 25 dealers who purchased the greatest number of manufactured
homes from Golden West during the six month period ended June 25, 1994 and a
description of the specific arrangements to provide any rebates, discounts or
other payments or concessions to each such dealer. Such dealer agreements are
valid and enforceable by Golden West in accordance with their respective terms.
Neither Golden West nor any other party to such dealer agreements is in default
in any material respect under the dealer agreements. Except as disclosed to
Oakwood in the Acquisition Agreement, Golden West has received no communication
that any dealer has ceased to sell or otherwise deal in manufactured housing, is
experiencing financial difficulties or will cease to do business or materially
reduce its level of business with Golden West or Oakwood following the closing
date of the Merger (or is considering the cessation or reduction of such
business) or that such relationship will be adversely affected by the
transactions contemplated by the Merger.
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(xxvii) Except as disclosed to Oakwood in the Acquisition Agreement,
neither Golden West nor its subsidiary is a guarantor or otherwise liable for
any liability or obligation of any other person.
(xxviii) Except as disclosed to Oakwood in the Acquisition Agreement,
Golden West knows of no impending changes in Golden West's business, assets,
liabilities, relations with employees, competitive situations or relations with
suppliers or customers, or of any governmental actions or regulations affecting
Golden West's business which could have a material adverse effect on the
business of Golden West, except for general economic conditions, matters having
a similar effect on Oakwood and Golden West, matters of general knowledge in the
industry of which Oakwood should be aware due to the nature of its business, or
pending or adopted federal laws and rules and regulations with general
applicability in the states where Oakwood currently does business.
(xxix) To Golden West's knowledge, all of the written information provided
by Golden West and each Golden West Shareholder to Oakwood and their
representations in the Acquisition Agreement and in the schedules and exhibits
thereto are true, correct and complete in all material respects and no such
representation, warranty or statement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty or statement not misleading to
Oakwood.
Pursuant to the Acquisition Agreement, Oakwood has also made certain
representations and warranties, including without limitation representations and
warranties regarding (i) the organization, capitalization and qualification of
Oakwood and Oakwood Sub; (ii) the authority of Oakwood and Oakwood Sub to enter
into the Acquisition Agreement and to consummate the transactions thereunder;
(iii) that the execution of the Acquisition Agreement and the performance of the
transactions contemplated thereby do not conflict with the organizational
documents of Oakwood or Oakwood Sub or any law, judgment or the equivalent or
constitute a breach or event of default under any instrument or obligation of
Oakwood, and do not require obtaining the approval of any governmental entity
except for that required by the Exchange Act, the Securities Act, the New York
Stock Exchange, state securities or blue sky laws, the HSR Act and the CGCL;
(iv) Oakwood has filed all required documents with the Commission, that each of
Oakwood's financial statements incorporated into this Proxy Statement/Prospectus
was prepared in accordance with generally accepted accounting principles and
presents fairly the consolidated financial position of Oakwood as of the date
thereof and that as of September 30, 1993, or any subsequent date for which a
balance sheet is provided, Oakwood does not have a known material liability
other than as indicated on the balance sheet and Oakwood's reserves for
uncollectible receivables and contingent liabilities were adequate; (v) the
absence of any material adverse change in Oakwood's business that has not been
disclosed in a report filed by Oakwood with the Commission and Oakwood has not
entered into any material contracts required to be filed with the Commission
that have not been so filed; (vi) the absence of any undisclosed material
threatened or pending litigation or claims against Oakwood or Oakwood Sub; and
(vii) that Oakwood is not in default or violation of any law, regulation or
order applicable to Oakwood or its property, except where such violation or
default would not prevent Oakwood from consummating the Merger and would not
have a material adverse effect on Oakwood. Oakwood's representations and
warranties will not survive the Merger and will not give rise to any indemnity
obligation.
TRANSACTION COSTS
Golden West will bear the first $100,000 of certain expenses incurred by
Golden West in connection with the Merger and the transactions contemplated by
the Acquisition Agreement ("Golden West Transaction Expenses") and, in the event
the Commission staff reviews the Registration Statement, any additional
incremental expenses, not to exceed $50,000, incurred by Golden West's
accountants and attorneys in responding to such review ("Golden West Review
Expenses"). Golden West Transaction Expenses include fees and expenses of the
attorneys, accountants and investment bankers or financial advisors of Golden
West or any Golden West Shareholder incurred in connection with negotiating,
drafting and preparing the Acquisition Agreement and the Registration Statement
(excluding any expenses related to the public offering of Golden West Common
Stock which was not consummated and any break-up fee due Wedbush Morgan in
connection therewith), attending the closing of the Merger, the expenses of due
diligence conducted by Golden West and the expenses relating to the Golden West
Meeting. The Golden West Shareholders shall bear all Golden West Transaction
Expenses in excess of $100,000 (exclusive of any Golden West Review Expenses, up
to $50,000) pro rata based on the number of shares of Golden West Capital Stock
owned by them at the Effective Time. Golden West will bear all Golden West
Transaction Expenses if the Merger is not consummated.
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AMENDMENT AND WAIVER
The Acquisition Agreement may be amended by Oakwood, Oakwood Sub or Golden
West at any time before or after approval by the Golden West Shareholders;
PROVIDED, that after any such approval, no amendment will be made which by law
requires further approval by such shareholders without such further approval.
Any such amendment must be in writing and signed on behalf of each of Oakwood,
Oakwood Sub and Golden West. At any time prior to the Effective Time, Oakwood or
Golden West may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties to the
Acquisition Agreement, (ii) waive any inaccuracies in the representations and
warranties made by the other party contained in the Acquisition Agreement or in
any document delivered pursuant thereto or (iii) waive compliance with any of
the agreements or conditions for the benefit of such party contained in the
Acquisition Agreement. Unless expressly provided therein, any amendment of the
Acquisition Agreement prior to the Effective Time will not affect the
obligations of any Golden West Continuing Shareholder under the Acquisition
Agreement, as amended.
TERMINATION
The Acquisition Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time, before or after the approval of the Merger by
the Golden West Shareholders, upon the mutual consent of Oakwood and Golden
West. In addition, the Acquisition Agreement may be terminated and the Merger
may be abandoned by either Golden West or Oakwood if (i) the Merger has not been
consummated by November 15, 1994; (ii) approval of the shareholders of Golden
West is not obtained; or (iii) if a federal or state court or governmental or
administrative agency or commission has taken action prohibiting the
transactions contemplated by the Acquisition Agreement and such order or action
has become final and nonappealable. The Acquisition Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time by
either Oakwood or Golden West in the event of a material breach by the other
party of any representation or warranty which would have a material adverse
effect on such breaching party or in the event of a material breach by the other
party of any covenant or agreement contained in the Agreement which cannot be or
has not been cured within thirty days after the giving of written notice to the
breaching party of such breach. In addition, Oakwood may terminate the
Acquisition Agreement if the Merger will not qualify for accounting by Oakwood
as a pooling of interests under generally accepted accounting principles and
under the applicable rules and regulations of the Commission.
Golden West has agreed to pay a $500,000 termination fee to Oakwood if the
Merger is not consummated for any reason other than a termination of the
Acquisition Agreement (a) by Golden West because of a breach by Oakwood of any
representation or warranty which would have a material adverse effect on Oakwood
or the material breach by Oakwood of any covenant or agreement contained in the
Acquisition Agreement which cannot be or has not been cured within thirty days
after the giving of written notice of such breach to Oakwood, (b) by mutual
consent of Oakwood and Golden West, (c) by Oakwood as a result of Oakwood's
dissatisfaction with its review of the business and operations of Golden West,
(d) by Oakwood because the environmental assessment reports disclose
remediation, clean-up, monitoring or other work deemed advisable by the
consultant or the results of Oakwood's additional due diligence with respect to
environmental matters is not satisfactory to Oakwood, or (e) by Oakwood because
the Merger will not qualify for accounting as a "pooling of interests;" and
within 120 days of such termination Golden West consummates or enters into or
agrees to enter into a merger, combination, share exchange or similar
transaction or sells or otherwise disposes of 50% or more of its assets or 50%
or more of the Golden West's Capital Stock is acquired by another entity.
Golden West may terminate the Acquisition Agreement in the event that prior
to approval of the Merger by the Golden West Shareholders, Golden West receives
an unsolicited proposal regarding a merger or sale of 50% or more of the assets
or equity securities of Golden West, and the Golden West Board of Directors
determines, upon the advice of counsel, that to proceed with the Merger would
violate its fiduciary duties to the Golden West Shareholders. In such event,
Golden West is also obligated to pay a $500,000 termination fee to Oakwood.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF GOLDEN WEST CAPITAL STOCK
COMMON STOCK
As of August 17, 1994, Golden West Capital Stock was held of record by 35
holders. The following table sets forth certain information concerning the
beneficial ownership of Golden West's Common Stock as of June 25, 1994, by (i)
each person who is known by Golden West to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each of Golden West's directors and
named executive officers and (iii) all Golden West's directors and executive
officers as a group. Shares outstanding are deemed to include shares of Golden
West Common and Preferred Stock and shares of Golden West Common Stock issuable
upon exercise of all conversion rights under the Golden West Deferred
Compensation Plan.
<TABLE>
<CAPTION>
PERCENTAGE
OF APPROXIMATE NUMBER OF
SHARES OF GOLDEN WEST GOLDEN WEST SHARES OF OAKWOOD
CAPITAL STOCK CAPITAL COMMON STOCK TO BE
NAME AND ADDRESS OF BENEFICIAL OWNER (3) BENEFICIALLY OWNED (1) STOCK RECEIVED IN MERGER (2)
<S> <C> <C> <C>
Harry E. Karsten, Jr............................................. 722,800 27.25% 167,038
Paul A. Karsten (4).............................................. 546,000 20.4 126,180
Harry E. and Heather J. Karsten Investment Trust................. 520,000 19.6 120,171
Peter B. Rothschild
866 West 18th Street
Costa Mesa, CA 92627........................................... 325,000 12.3 75,107
Celia Golden
46 Whitewater Drive
Corona del Mar, CA 92625....................................... 234,000 8.8 54,077
Frank D. Jacobs (5).............................................. 81,900 3.0 18,927(6)
Robert D. Totten................................................. 78,000 2.9 18,025
Robert J. Henry (5).............................................. 64,116 2.4 14,817(6)
Bruce W. Stoyer (5).............................................. 62,400 2.3 14,420(6)
John R. Stahr.................................................... 61,620 2.3 14,240
Robert C. Latimer (5)............................................ 49,400 1.8 11,416(6)
Byron L. Williams................................................ 24,388 * 5,636
Gary R. Mounts................................................... 13,000 * 3,004
All directors and executive officers as a group (11
persons)(7).................................................... 1,807,624 63.0% 417,737
</TABLE>
* Less than 1%
(1) Unless otherwise indicated, the persons named in the table have sole voting
and sole investment power with respect to all shares beneficially owned,
subject to applicable community property laws.
(2) No beneficial owner will own more than 1% of the issued and outstanding
Oakwood Common Stock following the Merger.
(3) The address of Messrs. H. Karsten, P. Karsten, Totten, Jacobs, Stahr, Henry,
Stoyer, Latimer, Williams and Mounts is c/o Golden West Homes, 1801 East
Edinger, Suite 240, Santa Ana, California 92705.
(4) Includes 520,000 shares of Golden West Common Stock beneficially owned as
the trustee of the Harry E. and Heather J. Karsten Investment Trust and
26,000 shares of Golden West Common Stock reserved for issuance under stock
options exercisable within sixty days of the date hereof.
(5) Includes 39,000 shares of Golden West Common Stock reserved for issuance
under stock options exercisable within sixty days of the date hereof.
(6) Includes 9,012 shares of Oakwood Common Stock reserved for issuance under
stock options exercisable within sixty days of the date hereof.
(7) The number of shares beneficially owned by the directors and executive
officers as a group includes 221,000 shares (51,072 shares of Oakwood Common
Stock following the Merger) of Golden West Common Stock reserved for
issuance under stock options exercisable within sixty days of the date
hereof but excludes 91,000 shares (21,030 shares of Oakwood Common Stock
following the Merger) reserved under options which become exercisable
thereafter and excludes (i) any shares under Golden West's ESOP since the
contributions to the ESOP will not be allocated to any employees until the
last day of the ESOP plan year (calendar year basis) and (ii) 65,000 shares
(15,021 shares of Oakwood Common Stock following the Merger) held by the
401(k) Plan.
27
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
OF GOLDEN WEST
The selected consolidated financial data as of December 26, 1992 and
December 25, 1993 and for the years ended December 28, 1991, December 26, 1992
and December 25, 1993 are derived from audited consolidated financial statements
of Golden West included elsewhere in this Prospectus/Proxy Statement. The
selected consolidated financial data of Golden West as of December 30, 1989,
December 29, 1990 and December 28, 1991 and for the years ended December 30,
1989 and December 29, 1990 are derived from audited consolidated financial
statements of Golden West not included in this Prospectus/Proxy Statement. The
selected consolidated financial data of Golden West as of and for the six month
periods ended June 26, 1993 and June 25, 1994 are derived from unaudited
consolidated financial statements, but have been prepared on the same basis as
the audited consolidated financial statements included elsewhere herein and, in
the opinion of Golden West include all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the information set forth
therein. The results for the six months ended June 25, 1994 are not necessarily
indicative of the results to be expected for the full year ending December 31,
1994. The following information should be read in conjunction with the
Consolidated Financial Statements of Golden West and the related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Golden West" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
FISCAL YEAR ENDED JUNE
DECEMBER 30, DECEMBER 29, DECEMBER 28, DECEMBER 26, DECEMBER 25, 26,
1989 1990 1991 1992 1993 1993
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
STATEMENT OF INCOME DATA:
Net sales............................... $ 82,203 $ 85,344 $ 74,048 $ 74,427 $ 89,564 $40,324
Cost of sales........................... 68,786 69,842 61,749 62,146 73,248 33,660
Gross profit............................ 13,417 15,502 12,299 12,281 16,316 6,664
Operating expenses:
Selling............................... 5,732 6,251 5,746 5,872 7,687 3,470
General and administrative............ 5,595 6,282 5,860 5,961 7,068 3,102
Total operating expenses........... 11,327 12,533 11,606 11,833 14,755 6,572
Income from operations.................. 2,090 2,969 693 448 1,561 92
Interest expense, net................... 347 107 231 479 422 222
Income (loss) before provision (benefit)
for income taxes and extraordinary
item.................................. 1,743 2,862 462 (31) 1,139 (130)
Provision (benefit) for income taxes.... 737 1,180 222 26 486 (34)
Income (loss) before extraordinary
item.................................. 1,006 1,682 240 (57) 653
Extraordinary item, gain from retirement
of debt............................... -- -- -- 90 -- --
Net income (loss)....................... 1,006 1,682 240 33 653 (96)
Net income (loss) per common and
equivalent share (1).................. $ .29 $ .49 $ .07 $ .01 $ .19 $ (.08)
Weighted average common and equivalent
shares outstanding (1)................ 3,432 3,441 3,483 3,502 3,474 1,235(2)
<CAPTION>
JUNE
25,
1994
<S> <C>
STATEMENT OF INCOME DATA:
Net sales............................... $55,875
Cost of sales........................... 44,553
Gross profit............................ 11,322
Operating expenses:
Selling............................... 4,857
General and administrative............ 4,581
Total operating expenses........... 9,438
Income from operations.................. 1,884
Interest expense, net................... 213
Income (loss) before provision (benefit)
for income taxes and extraordinary
item.................................. 1,671
Provision (benefit) for income taxes.... 683
Income (loss) before extraordinary
item..................................
Extraordinary item, gain from retirement
of debt............................... --
Net income (loss)....................... 988
Net income (loss) per common and
equivalent share (1).................. $ .34
Weighted average common and equivalent
shares outstanding (1)................ 2,867
</TABLE>
<TABLE>
<CAPTION>
AS OF
AS OF JUNE
DECEMBER 30, DECEMBER 29, DECEMBER 28, DECEMBER 26, DECEMBER 25, 25,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash and short-term investments................ $ 4,106 $ 4,609 $ 3,674 $ 2,929 $ 2,431 $ 1,403
Working capital................................ 3,122 4,268 3,308 2,184 2,918 3,696
Total assets................................... 19,761 18,727 22,759 21,654 27,545 28,967
Long-term debt, net of current portion......... 4,500 3,500 7,315 6,201 6,706 7,228
Shareholders' equity........................... 5,889 7,571 7,811 7,844 7,347 8,433
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
28
<PAGE>
(1) Adjusted to give effect to the conversion into Golden West Common Stock of
all outstanding Golden West Preferred Stock and rights under the Golden West
Deferred Compensation Plan. Common share equivalents include 650,000 shares
of Golden West Common Stock issuable upon conversion of Series B Convertible
Preferred Stock. The Series B Convertible Preferred Stock was retired by
Golden West in November 1993.
(2) Excludes common stock equivalents of approximately 2,080,000 shares as their
inclusion would have the effect of decreasing the loss per share amount
otherwise computed.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF GOLDEN WEST
The following information should be read in conjunction with Golden West's
historical financial statements included elsewhere in this Prospectus/Proxy
Statement and the information set forth under "Selected Consolidated Financial
and Operating Data of Golden West."
OVERVIEW
Golden West designs, produces and sells high quality manufactured homes. As
of June 25, 1994, Golden West sold its homes through approximately 170
independent retailers in eleven western states. Golden West believes that it is
among the four largest producers of multi-section manufactured homes in its
primary markets of Oregon, Washington and California. Golden West currently
operates three manufacturing facilities, one each in Oregon, Northern California
and Southern California. In March 1994, Golden West acquired a fourth factory in
Colorado which is expected to start production by September 1994.
Golden West's business is highly cyclical and is influenced by many of the
same national and regional economic and demographic factors that impact the
United States housing market generally, including inflation, interest rates,
availability of financing, regional population and employment trends and general
and regional economic conditions, as well as the availability of alternative
housing. In addition, Golden West is affected by the seasonal buying patterns of
purchasers of manufactured homes. A disproportionate share of Golden West's
total annual orders are received during the months of March through October.
Golden West's growth strategy has been to expand its market share in its
primary markets of Oregon, Washington and California while entering into new
markets in additional western and southwestern states. From fiscal 1992 to
fiscal 1993, shipments of Golden West's manufactured homes have increased from
2,215 to 2,494, respectively, or 12.6%. This growth was primarily due to a
significant increase in demand for manufactured housing in two of Golden West's
primary markets, Oregon and Washington, and Golden West's expansion into the
Idaho, Utah, New Mexico and Colorado markets, which more than offset decreases
in demand in California. Golden West's Fort Morgan, Colorado facility was
acquired to facilitate Golden West's expansion into certain western and
southwestern markets and to take advantage of the growth in those markets. The
Colorado facility is expected to supply homes to Oakwood sales centers now open
and to be opened in areas which can be efficiently served by the Fort Morgan
facility.
The increase in demand for manufactured housing, particularly in the
Pacific Northwest, has had, and is expected to continue to have, a favorable
effect on net sales. However, because the optimal distance to ship a home is
within 300 miles of the manufacturing facility, sales outside this 300 mile
radius involve higher shipping costs, some of which may be absorbed by Golden
West and may decrease Golden West's profit margins on those sales. The Albany,
Oregon manufacturing facility, which primarily serves the Pacific Northwest
region and the northern portion of the Mountain region, is currently operating
at or near capacity. To meet the increasing demand in the Pacific Northwest
region, Golden West transports homes to that region from its Sacramento,
California manufacturing facility. During the year ended December 25, 1993,
Golden West increased production capacity at its existing factories primarily
through improved operating efficiency.
Golden West's results of operations for fiscal 1991 were affected by the
poor operating results of Golden West's two Southern California manufacturing
facilities. These two facilities were consolidated into Golden West's Perris,
California facility beginning in the second half of fiscal 1991 and continuing
into fiscal 1992. Golden West's results of operations for fiscal 1992 were
affected by costs associated with this consolidation and the start-up of the
Perris facility.
As part of Golden West's growth strategy, Golden West began in late 1993 to
vertically integrate by opening select retail operations and starting Golden
Circle Financial. The impact of these new operations was to increase selling
expenses and
29
<PAGE>
general and administrative expenses without commensurate increases in sales in
the third and fourth quarters of 1993 and the first six months of 1994,
resulting in a decrease in operating profits. For the six months ended June 25,
1994, the retail operations contributed net sales of approximately $4.3 million,
increased selling expenses by approximately $600,000 and incurred an operating
loss of approximately $179,000. In the first six months of 1994, Golden Circle
Financial's operations increased revenues by approximately $360,000, increased
general and administrative expenses by approximately $310,000 and had operating
income of approximately $10,000.
Golden West also incurred approximately $165,000 in general and
administrative expenses in 1993 in connection with the start-up of Golden Circle
Financial. Golden West believes that the ability to finance the sale of Golden
West's homes through Golden Circle Financial will have a favorable impact on its
net sales.
RESULTS OF OPERATIONS
The following table sets forth certain consolidated statements of income
data as a percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
DECEMBER 28, DECEMBER 26, DECEMBER 25, JUNE 26, JUNE 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
Net sales....................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................................................... 83.4 83.5 81.8 83.5 79.7
Gross profit.................................................... 16.6 16.5 18.2 16.5 20.3
Selling expenses................................................ 7.8 7.9 8.5 8.6 8.7
General and administrative expenses............................. 7.9 8.0 7.9 7.7 8.2
Income from operations.......................................... 0.9 0.6 1.8 0.2 3.4
Interest expense, net........................................... 0.3 0.6 0.5 0.5 0.4
Income (loss) before provision (benefit) for income taxes....... 0.6 -- 1.3 (0.3) 3.0
Provision (benefit) for income taxes............................ 0.3 -- 0.6 (0.1) 1.2
Net income (loss)............................................... 0.3% --% 0.7% (0.2)% 1.8%
</TABLE>
SIX MONTHS ENDED JUNE 25, 1994 AND JUNE 26, 1993. Net sales increased 38.6%
to $55.9 million for the six months ended June 25, 1994 from $40.3 million for
the six months ended June 26, 1993. Unit sales increased 27.6% to 1,448 homes
for the first half 1994 quarter from 1,135 in the comparable period in 1993. The
sales volume increases in 1994 were due principally to the continued strong
demand for manufactured housing in the Western United States and increased
market share in those markets into which Golden West has recently entered.
Demand for manufactured housing also increased in California, which Golden West
believes is partly attributable to the earthquake in Northridge, California in
January 1994. Sales volume also increased in the first six months of 1994 due to
the increased number of retailers selling Golden West's homes in 1994,
particularly in new markets, as compared to the first six months of 1993. The
increase in sales in the Pacific Northwest was supplied by the Albany factory,
which increased its production significantly from the first half of 1993 to the
first half of 1994, and to a lesser extent by the Sacramento factory. In
addition, the increase in net sales was due to an increase in the average
selling price of Golden West's homes to offset higher lumber costs and changes
in product mix.
Gross profit for the six months ended June 25, 1994 was $11.3 million, an
increase of $4.7 million or 70.0% compared to the same period last year. As a
percentage of net sales, the gross profit margin rose to 20.3% in the six months
ended June 25, 1994 from 16.5% in the like period in 1993. The improved margin
was due primarily to greater operating efficiencies associated with a higher
sales volume which permits Golden West to achieve a more consistent production
cycle. In addition, the 1993 period was negatively impacted by a rapid rise in
the cost of lumber only a portion of which could be passed on in the form of
sales price increases.
Selling expenses consist primarily of sales personnel, warranty service,
promotional and freight costs. Selling expenses were $4.9 million or 8.7% of
sales for the 1994 period compared to $3.5 million, or 8.6% of sales for the
same period in 1993. The increase in expenditures was mainly a result of the
higher sales volume and costs associated with expanding sales in the Mountain
and Southwest states, including additional sales personnel, travel, promotion
and freight costs absorbed by Golden West. The increase in selling expenses was
also attributable to Golden West recently commencing retail operations in three
locations. The new retail operations consist of two retail sales lots in Idaho
(opened August 1993 and February 1994) and a retail sales lot in Orange County,
California (acquired February 1994). The cost of operating the retail operations
is
30
<PAGE>
principally reflected in selling expenses. During the start-up phase of such
operations, Golden West experienced increased selling expenses without a
commensurate increase in sales.
General and administrative expenses increased by $1.5 million or 47.4% to
$4.6 million in the first six months of 1994 from $3.1 million in the same
period in 1993. As a percentage of net sales, these expenses were 8.2% in 1994
and 7.7% in 1993. The increase in dollars expended was attributable to operating
expenses of the recently formed Golden Circle Financial subsidiary, higher
profit based management incentive compensation, additional personnel,
implementation of an employee stock ownership plan, and other related costs
needed to support the higher operating levels and the continuing implementation
of the TQM process.
Interest expense, net, was comparable in each of the six month periods
presented.
The provision for income taxes during the six months ended June 25, 1994
was $683,000 as compared to a benefit of $34,000 in the six months ended June
26, 1993. The increase in the income tax provision was due to profits in 1994.
FISCAL YEARS ENDED DECEMBER 25, 1993 AND DECEMBER 26, 1992. Net sales for
the year ended December 25, 1993 increased 20.3% to $89.6 million from $74.4
million for the fiscal year ended December 26, 1992. Golden West's unit sales
also rose to 2,494 homes in fiscal 1993 from 2,215 in fiscal 1992, an increase
of 12.6%. The increase was principally due to (i) significant growth in demand
in the Pacific Northwest, (ii) Golden West's increased market share in that
region and (iii) Golden West's successful marketing efforts in the Mountain
states. The Pacific Northwest states were principally supplied by increased
production at Golden West's Albany, Oregon factory, which was operating at or
near capacity much of the year, and by production from the Sacramento,
California facility. Golden West's growth in the Mountain and Southwest states
was supplied by production at Golden West's Sacramento and Perris, California
facilities. The increase in unit sales was partially offset by a decrease in
unit sales in California resulting primarily from the effects of depressed
conditions in that state. The increase in net sales was also due to an increase
in average selling prices in 1993 compared to 1992. Average selling prices
increased primarily as a result of increases in selling prices to offset
increased lumber costs and a shift in product mix towards higher priced homes.
Gross profit for the year ended December 25, 1993 was $16.3 million, a
32.9% increase from $12.3 million for the year ended December 26, 1992. Gross
profit margin improved to 18.2% in fiscal 1993 from 16.5% in fiscal 1992. The
higher profit margin was attributable to improved operating efficiencies
associated with a higher sales volume. The fiscal 1993 improvement was partially
offset by an increase in materials costs, as a percentage of net sales, caused
by higher lumber costs and the introduction of competitively priced products for
the Mountain states. The improvement in gross profit margin between periods was
partially attributable to unusually high manufacturing overhead and labor costs
in 1992 due to the consolidation of Golden West's two Southern California plants
into the Perris manufacturing facility beginning in the second half of 1991.
Selling expenses increased 30.9% to $7.7 million in fiscal 1993 as compared
to $5.9 million in fiscal 1992. As a percentage of net sales, these costs were
8.5% in fiscal 1993 compared to 7.9% in fiscal 1992. The increase in 1993 was
attributable to the higher volume, freight, sales personnel and other expenses
relating to expanding sales in the Mountain states. Increased freight costs in
1993 were primarily attributable to higher shipping costs incurred by Golden
West to ship homes from Golden West's Sacramento facility to satisfy demand in
excess of capacity of the Albany factory in the Pacific Northwest.
General and administrative expenses were $7.1 million or 7.9% of net sales
in fiscal 1993 as compared to $6.0 million or 8.0% of net sales in fiscal 1992.
The increase in dollars expended in 1993 is substantially due to higher profit
based management incentive compensation, costs associated with the start-up of
Golden West's retail finance subsidiary, Golden Circle Financial, and
implementation of a total quality management process.
Interest expense, net, for fiscal 1993 declined 20.2% to $517,000 from
$648,000 for fiscal 1992, resulting primarily from the prepayment of a $1.0
million note in late 1992.
The provision for income taxes increased $460,000 to $486,000 for the
fiscal year ended December 25, 1993 from $26,000 for the fiscal year ended
December 26, 1992. The increase was due to the higher income for fiscal 1993 as
compared to fiscal 1992. During 1992, Golden West prepaid a $1.0 million note
for $850,000 resulting in an extraordinary gain of $90,000, net of a $60,000
income tax provision.
FISCAL YEARS ENDED DECEMBER 26, 1992 AND DECEMBER 28, 1991. Net sales for
the year ended December 26, 1992 were $74.4 million as compared to $74.0 million
for the year ended December 28, 1991. Unit sales declined 6.7% to 2,215 in
fiscal 1992 from 2,375 in the prior year. Net sales increased as a result of an
increase in average selling prices due to increased prices to offset rising
lumber costs in the fourth quarter of fiscal 1992 and a shift in product mix
toward higher priced homes
31
<PAGE>
in 1992. Unit sales declined as a result of a decrease in sales in California of
389 units. This decrease was offset by an increase in unit sales in the Pacific
Northwest of 232 units. The increased volume in the Pacific Northwest was
supplied by increased production at the Albany factory.
Gross profit of $12.3 million and gross profit margin of 16.5% for fiscal
1992 were comparable to fiscal 1991. Selling expenses increased 2.2% to $5.9
million in fiscal 1992 from $5.7 million in fiscal 1991, primarily due to a
concerted Company effort, through increased employee overtime and increased use
of outside contractors, to improve customer satisfaction by reducing response
time for warranty service calls. General and administrative expenses for fiscal
1992 of $6.0 million were comparable to fiscal 1991.
Interest expense, net, for fiscal 1992 increased 22.5% to $648,000 from
$529,000 for fiscal 1991, due primarily to the $5.3 million in industrial
revenue bond financing obtained in October 1991. This financing was incurred in
connection with the purchase of the Perris manufacturing facility and the
consolidation of Golden West's then existing two Southern California
manufacturing facilities into the Perris facility. The increase in interest
expense was partially offset by the assumption of $1.4 million of indebtedness
by the buyer of Golden West's Chino, California facility in October 1991.
The provision for income taxes decreased $196,000 to $26,000 in fiscal 1992
compared to $222,000 in fiscal 1991. The reduction was a result of lower income
in fiscal 1992 as compared to fiscal 1991. In fiscal 1992, Golden West had an
extraordinary gain of $90,000, net of a $60,000 income tax provision, in
connection with the prepayment of a $1.0 million note.
LIQUIDITY AND CAPITAL RESOURCES
Golden West's principal sources of funds are cash flows from operations,
borrowings under its revolving line of credit and the sale of installment sale
contracts. Golden West's primary capital requirements are for operating
activities, installment sale financing, capital expenditures and acquisition and
start-up expenditures for manufacturing facilities.
As of June 25, 1994, Golden West had working capital of $3.7 million. Cash
flows provided (used) by operating activities for the six months ended June 25,
1994 and June 26, 1993 were $1,380,000 and ($1,912,000), respectively. The
increase in cash flows from operating activities in the first six months of 1994
was mainly attributable to the profit for the first six months of 1994,
increases in accounts payable due to timing of payments and increases in accrued
expenses due to higher payroll related costs. The decline in cash flows for the
first six months of 1993 was primarily a result of increases in accounts
receivable due to higher sales in June 1993 compared to December 1992.
Substantially all of the $2.7 million finished goods inventory as of June 25,
1994 was associated with Golden West's retail operations, including an $1.7
million increase attributable to such operations during the first half of fiscal
1994. Golden West also reduced its revolving line of credit debt by $1,500,000
during the six months ended June 25, 1994 with cash provided by operating
activities.
Capital expenditures for the first six months ended June 1994 and June 1993
were $642,000 and $246,000, respectively. Expenditures were primarily for
purchases of property, plant, equipment and betterments to improve operating
efficiency. However, included in the June 1994 amount is the purchase of a
manufacturing facility in Colorado for $1,050,000 of which the seller financed
$850,000 of the cost. In accordance with generally accepted accounting
principles, only the $200,000 down payment is considered in capital expenditures
in the Consolidated Statements of Cash Flows.
As of December 25, 1993, Golden West had working capital of $2.9 million as
compared to $2.2 million and $3.3 million as of December 26, 1992 and December
28, 1991, respectively. Cash flows provided (used) by operating activities for
fiscal years 1993, 1992 and 1991 were $(603,000), $1.2 million and $967,000,
respectively. The decrease in cash flows from operating activities in fiscal
1993 was primarily due to increased capital requirements to fund the growth of
Golden Circle Financial's portfolio of installment sale contracts, an increase
in accounts receivable as of fiscal 1993 year end due to higher December 1993
sales as compared to December 1992 sales, higher finished goods inventories as
of December 25, 1993 for Golden West's retail operations in Idaho, higher raw
materials purchased to support increased sales volume and higher finished goods
inventories in Sacramento due to inclement weather in its Mountain service area.
These uses of cash were partially offset by an increase in accounts payable
resulting from increased purchases of inventory and the timing of payments, an
increase in accrued expenses due to higher dealer volume bonuses and higher
accrued payroll caused by the increase in management incentive compensation and
an increase in the number of employees.
Capital expenditures for fiscal years 1993, 1992 and 1991 were $715,000,
$319,000 and $2.5 million, respectively. Expenditures in 1993 and 1992 were
mainly for normal property, plant and equipment and betterments to improve
operational efficiency. The large amount of capital expenditures in fiscal 1991
was primarily due to a $1.3 million purchase of an
32
<PAGE>
additional manufacturing facility in Albany, Oregon to expand production
capacity for the growing Pacific Northwest market, as well as other normal
property, plant and equipment additions. In addition to the $2.5 million cash
expenditures in 1991, Golden West acquired a manufacturing facility in Perris,
California (valued at $5.2 million) from a non-employee shareholder in a tax
free exchange for its Chino, California manufacturing facility (with a net book
value of $2.5 million). In connection with the exchange, the shareholder assumed
a $1.4 million mortgage on the Chino facility from Golden West, and Golden West
issued a note payable to the shareholder for $4.2 million. The $4.2 million note
payable was subsequently repaid from the proceeds of the industrial revenue bond
financing. The Perris, California facility was acquired to consolidate two
then-existing manufacturing plants in Southern California.
Golden West commenced operations of Golden Circle Financial in October
1993. During fiscal 1993, Golden West incurred approximately $165,000 in
expenses in connection with the start-up of its finance business, all of which
are reflected in general and administrative expenses. Golden Circle Financial
currently provides installment sale financing (of the manufactured home), which
financing is typically sold to a third party financial institution. Golden West
plans to expand Golden Circle Financial's operations to also provide mortgage
financing (of the manufactured home together with land) to buyers of Golden
West's homes. In addition, Golden West is currently pursuing additional credit
facilities to meet the capital requirements of significant expansion of its
financing operations.
Golden West has a $3.0 million revolving line of credit with a major bank
which provides for borrowings of up to 80% of Golden West's eligible accounts
receivable. Borrowings under this facility are collateralized by Golden West's
accounts receivable and inventories, and the loan agreement contains certain
financial covenants. The line of credit was recently extended through May 1995.
As of June 25, 1994, there was no outstanding balance under the line of credit.
As of June 25, 1994, Golden West had net operating loss carryforwards for
federal and state tax reporting purposes of approximately $6.2 million and
$800,000, respectively. These loss carryforwards, which are subject to annual
limitations of approximately $775,000, are available to offset future taxable
income through the year 2002 for both federal and state purposes. See Note 5 of
Notes to Consolidated Financial Statements.
Golden West believes that current working capital, amounts available under
its $3.0 million revolving line of credit and funds from the sale of installment
sale contracts will be sufficient to fund Golden West's operations and expansion
plans during fiscal 1994.
33
<PAGE>
QUARTERLY OPERATING RESULTS
The following table sets forth certain unaudited operating information for
the fiscal years ended December 26, 1992 and December 25, 1993 and the first two
quarters of the fiscal year ending December 31, 1994. The unaudited quarterly
information includes all adjustments, consisting of normal recurring
adjustments, which management considers necessary for a fair presentation of the
information shown. The operating results for any quarter are not necessarily
indicative of results of any future period.
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL YEAR ENDED DECEMBER 26, 1992
Net sales............................................................ $17,536 $19,464 $17,750 $19,677 $74,427
Gross profit......................................................... 2,557 3,241 3,124 3,359 12,281
Income (loss) from operations........................................ (490) 340 154 444 448
Net income (loss)(1)................................................. (369) 125 10 177 (57)
Net income (loss) per common and equivalent share (1)(2)(3).......... (.26) .04 .00 .05 (.02)
Weighted average number of common and equivalent shares outstanding
(2)(3)............................................................ 1,417(4) 3,500 3,502 3,503 3,502
Total homes sold..................................................... 545 580 517 573 2,215
FISCAL YEAR ENDED DECEMBER 25, 1993
Net sales............................................................ $17,726 $22,598 $23,954 $25,286 $89,564
Gross profit......................................................... 2,813 3,850 4,628 5,025 16,316
Income (loss) from operations........................................ (216) 309 829 639 1,561
Net income (loss).................................................... (197) 101 429 320 653
Net income (loss) per common and equivalent share (2)(3)............. (.14) .03 .12 .10 .19
Weighted average number of common and equivalent shares outstanding
(2)(3)............................................................ 1,417(4) 3,511 3,519 3,312 3,474
Total homes sold..................................................... 504 631 657 702 2,494
FISCAL YEAR ENDING DECEMBER 31, 1994
Net sales............................................................ $25,291 $30,584
Gross profit......................................................... 4,720 6,602
Income from operations............................................... 419 1,465
Net income........................................................... 182 806
Net income per common and equivalent share (3)....................... .06 .28
Weighted average number of common and equivalent shares outstanding
(3)............................................................... 2,975 2,929
Total homes sold..................................................... 667 781
</TABLE>
(1) Before extraordinary gain of $90,000 (net of income taxes of $60,000) or
$.03 per share in the fourth quarter.
(2) The computations of net income per common and equivalent share and weighted
average number of common and equivalent shares outstanding are different for
the year in total as compared to the quarters due to the exclusion of
certain antidilutive equivalent shares in certain quarters as described in
footnote 4.
(3) Adjusted to give effect to the conversion into Common Stock of all
outstanding Preferred Stock and certain rights under the Deferred
Compensation Plan. Common share equivalents included 650,000 shares of
Common Stock issuable upon conversion of Series B Convertible Preferred
Stock. The Series B Convertible Preferred Stock was retired by Golden West
in November 1993.
(4) Excludes common stock equivalents of approximately 2,080,000 shares as their
inclusion would have the effect of decreasing the loss per share amount
otherwise computed.
34
<PAGE>
BUSINESS OF GOLDEN WEST
GENERAL
Golden West designs, produces and sells high quality multi-section
manufactured homes for the western and portions of the southwestern regions of
the United States. Golden West operates three factories in Sacramento and
Perris, California and Albany, Oregon that produce homes primarily for the
Oregon, Washington and California markets and is among the four largest
producers of manufactured homes in these states. Golden West acquired a fourth
factory in Colorado in March 1994, which is expected to start production in
September 1994. Golden West's homes are sold principally under eight brand names
through approximately 170 independent retailers, of which approximately 80
retailers sell Golden West homes exclusively. Retailers include both
manufactured home dealers and developers of manufactured home communities.
Golden West manufactures homes designed as permanent, primary residences
ready for immediate occupancy. Most of Golden West's homes are constructed in
multiple sections at its factories to meet the home buyer's specifications,
which sections are then transported by independent trucking companies to the
homesites. Each home offers amenities comparable to those of site-built homes,
such as a family room, kitchen, dining room, living room, two or more bedrooms,
two full bathrooms and walk-in closets, as well as features such as drywall,
hardwood cabinetry, vaulted ceilings, sky lights, central heating and air
conditioning and national brand appliances. Home buyers may also choose to
include items such as a fireplace, microwave oven, intercom, wet bar and energy
conservation options. All Golden West primary residences are produced to meet or
exceed the Department of Housing and Urban Development's ("HUD") safety and
construction standards which emphasize durability and reduced energy
consumption. Golden West believes its multi-section homes have gained a
reputation for quality and are accepted as an affordable ownership alternative
to site-built homes, townhouses, condominiums and apartments.
Golden West focuses on moderate to high price multi-section manufactured
housing with primary residence homes ranging in size from approximately 800 to
2,500 square feet and generally selling at retail prices of $40,000 to $150,000,
excluding land. Recently, Golden West expanded its product line to include
smaller homes designed as second or vacation homes.
HISTORY
Golden West Homes was incorporated in California and began operations in
1965 and its Common Stock was publicly traded from 1969 through 1986. In 1986,
Golden West was acquired by a subsidiary of the William Lyon Company, a
residential developer. In 1988, Golden West was acquired in a leveraged buy-out
by The Karsten Company. The Karsten Company, founded at the time of the
leveraged buy-out by Harry E. Karsten, Jr., The Karsten Company's President and
Chief Executive Officer, was formed to function as a holding company and had no
independent business. The only subsidiaries of The Karsten Company were Golden
West and Golden Circle Financial, Golden West's finance subsidiary formed in
1993. In May 1994, The Karsten Company was merged into Golden West, with Golden
Circle Financial becoming a subsidiary of Golden West.
PRODUCTS
Golden West offers a wide variety of multi-section manufactured homes
principally under eight brand names. Innovative and flexible designs and a broad
range of decor and fixture options and several floor plans are available for
each brand of homes produced. Each manufactured home offers amenities comparable
to and are designed to be similar in appearance and function to site-built
housing. Exterior design features such as asphalt composition shingled roofs and
wood-type siding, when complemented by on-site improvements such as brick work,
construction of a garage and landscaping, result in housing that meets not only
the architectural but also the aesthetic standards of site-built homes. Such
on-site improvements are provided by independent contractors.
Golden West's product development and engineering staff designs homes,
including exteriors and floorplans, with input from plant and sales managers,
retailers and home owners. The staff also evaluates new materials, construction
techniques and computer aided technology in a continuous effort to improve
quality and designs. These efforts allow Golden West to customize floor plans
and design features to match individual customer preferences.
During 1993, Golden West began offering a line of park models, which are
smaller than typical manufactured homes and contain just under 400 square feet
and have an average retail price of approximately $22,000. These homes are built
to recreational vehicle standards rather than the HUD building code and are
designed as a second or vacation home. The park
35
<PAGE>
models are not presently a significant part of Golden West's net sales, and
Golden West has no present plans to significantly increase production of the
park models.
MANUFACTURING OPERATIONS
Golden West manufactures homes at its three manufacturing facilities. Based
on Golden West's normal manufacturing schedule of one shift per day for a
five-day week, Golden West believes its three facilities have an aggregate
production capacity of approximately 7,750 floor sections per year, depending
upon product mix. Golden West's manufacturing facilities produced 4,952 floor
sections in fiscal 1993. While the Albany facility was operating at or near
capacity during fiscal 1993, the Perris and Sacramento facilities had
significant available capacity during the same period.
On March 14, 1994, Golden West purchased a fourth manufacturing facility in
Fort Morgan, Colorado for approximately $1.1 million. The purchase price and
expected improvements, equipment, inventory and start-up costs are estimated to
total approximately $2.7 million. The Colorado facility is expected to start
production by September 1994 and to eventually add approximately 2,000 floor
sections to Golden West's annual capacity. Golden West has also recently
purchased approximately 9.5 acres of land in Idaho as a site for a potential
additional manufacturing facility.
Golden West purchases components and materials used in the manufacture of
its homes in the open market and is not dependent upon any particular supplier.
The principal raw materials purchased by Golden West for use in the construction
of its manufactured homes are lumber, steel, drywall, insulating materials,
siding materials, roofing materials, home appliances, plumbing fixtures, floor
coverings and windows. These raw materials are assembled and installed at
various stages on the production line. Construction of the manufactured homes
and the plumbing, heating and electrical systems installed in them must comply
with the standards set by HUD under the National Manufactured Home Construction
and Safety Standards Act of 1974. These HUD standards stress durability and
energy conservation. In addition, Golden West has its own extensive quality
control program.
REGIONAL MARKETS
As of June 25, 1994, Golden West sold its homes through approximately 170
independent retailers in eleven western states. During fiscal years 1991, 1992
and 1993, approximately 89.4%, 86.9% and 82.5%, respectively, of total Golden
West manufactured home sales were made in the Oregon, Washington and California
markets.
Golden West's markets, like the markets for all manufactured housing, are
regional in nature due to the limited distance a manufactured home can be
transported on a cost effective basis. In cases where Golden West must ship its
homes more than approximately 300 miles, shipping costs increase, some of which
may be absorbed by Golden West. Accordingly, Golden West attempts to maintain
manufacturing facilities which are geographically positioned so as to enable it
to ship its homes throughout Golden West's various regional markets in a cost
effective manner. Golden West services its primary markets of Oregon, Washington
and California from its manufacturing facilities in Albany, Oregon, Sacramento,
California and Perris, California. The Albany facility also supplies homes to
the Idaho market. The Sacramento facility also supplies homes to parts of the
Idaho, Nevada and Utah markets, and the Perris facility supplies homes to parts
of the Arizona, Nevada and Utah markets.
Golden West's Fort Morgan, Colorado facility was acquired to facilitate
Golden West's expansion into certain western and southwestern markets and to
take advantage of the growth in those markets. The Colorado facility is expected
to supply homes to Oakwood sales centers now open and to be opened in the area
which can be efficiently served by the Fort Morgan facility.
SALES AND MARKETING
Golden West produces homes against orders received from dealers and
developers, and does not generally maintain an inventory of unsold homes. Golden
West usually sells on 10 day payment terms. Typically, production of a home is
not started until confirmation of approval of financing is received from the
retailer's wholesale financing source. The retailer makes all sales to home
buyers and is responsible for transporting the homes to sales locations or the
buyer's home site. Title passes when the home is shipped from Golden West's
production facility.
Retailers provide the principal advertising for sales of Golden West's
homes. Golden West provides selling and advertising assistance to retailers,
including product brochures, videos and other point-of-sale materials.
Golden West's ten largest retailers collectively accounted for
approximately 39.6%, 41.7% and 44.0% of net sales during fiscal 1992 and 1993
and for the six months ended June 25, 1994, respectively. Golden Pacific Homes,
which has four
36
<PAGE>
locations in the Pacific Northwest and one location in Idaho, was Golden West's
largest customer during fiscal 1992 and 1993 and for the six months ended June
25, 1994, accounting for approximately 10.2%, 14.3% and 16.5% of net sales in
those periods, respectively. No other single retailer accounted for more than
5.3% of net sales during these periods. The loss of any major retailer or a
significant decrease in shipments to one or more of these retailers may have a
material adverse impact on Golden West's business.
Golden West decided in 1993 to expand into retail operations on a selected
basis by opening its own retail dealerships and by entering into selected
strategic alliances with its existing retailers. Golden West has commenced
retail operations at three locations, two in Idaho and one in California.
WARRANTY, QUALITY CONTROL AND SERVICE
Golden West attempts to adhere to strict quality standards and continuously
refines its design and production procedures to enhance consumer satisfaction
and to reduce warranty costs. In addition, in accordance with the construction
codes promulgated by HUD, an independent HUD approved inspector regularly
inspects Golden West's manufactured housing at Golden West's manufacturing
facilities for compliance with these regulations.
Golden West has historically offered a one-year full warranty to the home
buyer and has recently expanded its warranty to include a five-year warranty
against substantial defects in the basic structure of the manufactured home.
Most of the components not manufactured by Golden West carry manufacturers'
warranties running to the benefit of the home buyer. Golden West employs trained
servicemen and hires experienced independent contractors who provide on-site
warranty service.
In 1993, Golden West began a total quality management ("TQM") training
process to improve customer satisfaction and reduce defects at all levels within
Golden West. TQM is a process in which all employees are involved in decision
making to improve productivity and product quality. Golden West's TQM process
emphasizes customer satisfaction through improved quality control and warranty
service. One of the expected benefits of the TQM process is the reduction of
warranty service costs.
RETAILER FINANCING
Substantially all of Golden West's retailers finance home inventories
through wholesale credit lines under which a financial institution provides the
retailer with a credit line for the purchase price of the home and maintains a
security interest in the home as collateral. The wholesale credit line is used
by the retailer to finance the acquisition of its display models, as well as to
finance the initial purchase of a home from a manufacturer until the home buyer
has obtained permanent financing or otherwise pays the dealer for the installed
home. In connection with the wholesale financing arrangement, the financial
institution requires Golden West to enter into a repurchase agreement with the
financial institution under which Golden West is obligated, upon default by the
retailer, to repurchase its homes. Under the terms of such repurchase
agreements, Golden West agrees to repurchase homes at declining prices over the
period of the agreement (usually twelve months). If one or more of Golden West's
significant independent retailers were to default on their loan obligations,
Golden West could be required to repurchase a number of homes, which repurchase
could have a material adverse effect on Golden West's profitability. At June 25,
1994, Golden West estimates that its contingent liability under repurchase
agreements was approximately $26 million. During the fiscal years ended December
28, 1991, December 26, 1992 and December 25, 1993 and the six months ended June
25, 1994, Golden West repurchased approximately $0, $65,000, $186,000 and
$77,000, respectively, of its homes under repurchase agreements. Historically,
Golden West has been able to resell most of the homes it has repurchased without
incurring significant losses. The risk of loss under repurchase agreements is
mitigated by the decline over the period of the repurchase agreement of the
price Golden West is obligated to pay under such repurchase agreements, sales of
manufactured homes spread over numerous retailers and financing institutions and
the resale value of repurchased homes.
EMPLOYEES
As of June 25, 1994, Golden West employed approximately 768 persons, of
whom 606 were hourly production workers, 26 were production supervisors, 53 were
engaged in sales and service, six were in product development engineering and 77
were in executive, administrative and clerical positions, including seven
employed by Golden Circle Financial. Golden West's requirements are primarily
for semi-skilled labor, which Golden West considers to be in adequate supply.
Most of Golden West's production employees are eligible for incentive
compensation based upon the achievement of production and other goals. Golden
West is not a party to any collective bargaining agreement, and considers its
employee relations to be good.
37
<PAGE>
COMPETITION
The manufactured housing industry in the western United States is extremely
competitive, with particular emphasis on price, product features, after-sales
service, quality and financing terms. Many of Golden West's principal
competitors have greater capital resources than Golden West. Golden West
believes that its retailer network in Golden West's primary markets of Oregon,
Washington and California, name identification, ability to provide home buyer
financing through its finance subsidiary, emphasis on moderate to high priced
quality homes and a wide variety of flexible designs and customized features
permit it to compete effectively in these markets.
Golden West's homes also compete with other forms of housing, such as new
and existing site-built homes, townhouses, condominiums and apartments. Markets
for manufactured housing are affected by the same factors as are generally
applicable to the housing market as a whole, including interest rates, the
availability of financing, inflation, land costs, availability of land, zoning
restrictions and general economic conditions. Historically, manufactured homes
have been financed as personal property with financing that has shorter
maturities and higher interest rates than have been available for site-built
homes. In recent years, however, there has been a growing trend toward financing
manufactured housing with maturities more similar to those of the financing of
site-built homes, especially when the manufactured housing is attached to
permanent foundations on individually-owned lots.
GOVERNMENT REGULATION
Golden West's manufacture of homes is subject to the National Mobile Home
Construction and Safety Standards Act of 1974. In 1976, HUD promulgated
regulations under this Act establishing comprehensive national construction
standards that preempt conflicting state and local regulations. Compliance with
these HUD regulations enables Golden West to ship manufactured homes built in
one state to any other state. These HUD standards generally apply to the
plumbing, heating and electrical systems of each home, as well as to its
structural integrity, fire safety, wind loads and thermal protection. HUD-
approved inspection agencies regularly inspect Golden West's manufactured homes
for compliance with these regulations both during and upon completion of
construction. Golden West believes that its manufactured homes meet or surpass
all applicable regulatory requirements.
Golden West's manufactured homes are also subject to local zoning and
housing regulations. A number of states have adopted procedures governing the
installation of manufactured homes. Utility connections are subject to state and
local regulation, and must be complied with by the dealer or other person
installing the home. In addition, in certain cities and counties in areas where
Golden West's homes are sold, local governmental ordinances and regulations have
been enacted which restrict the placement of manufactured homes on privately
owned land or which require the placement of manufactured homes in manufactured
home communities. Such ordinances and regulations may adversely affect Golden
West's ability to sell manufactured homes for installation in cities and
counties where they are in effect. Certain of these ordinances and regulations
have been challenged through the court system in such jurisdictions. However, no
assurance can be given that such challenges will be successful, that such
challenges will be made to any other such ordinances or regulations or that
additional similar ordinances or regulations will not be enacted in the future.
Bonneville Power, a public electrical utility operating in all or part of
several western states, has agreements with utilities in Oregon, Washington,
western Idaho and western Montana which provide producers of manufactured
housing with a subsidy of $2,500 for each manufactured home built in accordance
with the Manufactured Housing Acquisition Program ("MAP") for installation in
these areas. MAP is a set of construction specifications and standards designed
to increase the energy efficiency of manufactured housing, which include
specifications for insulation and requirements that the manufactured home
contain certain energy conservation systems. Golden West currently constructs
all of its manufactured homes sold in areas served by Bonneville Power in
accordance with MAP, thereby making Golden West eligible to receive the $2,500
subsidy for such homes. Golden West credits this subsidy against the selling
price of its homes. MAP was originally scheduled to terminate in October 1994.
However, due to changes in certain federal standards affecting the manufactured
housing industry, MAP was recently re-negotiated, reducing the subsidy to
$1,500, effective in October 1994, and extending the program until 1996.
The transportation of manufactured homes on highways is subject to laws,
ordinances and regulations of various federal, state and local authorities. Such
regulations may prescribe size and road use limitations and impose lower than
normal speed limits and various other requirements. Golden West's homes are
transported to homesites by independent trucking companies who are contracted by
the retailer.
38
<PAGE>
A variety of laws affect the financing of manufactured homes by Golden West
through Golden Circle Financial. The Federal Consumer Credit Protection Act
(Truth-in-Lending) and Regulation Z promulgated thereunder require written
disclosure of information relating to such financing, including the amount of
the annual percentage rate and the finance charge. The Federal Fair Credit
Reporting Act also requires certain disclosures to potential customers
concerning credit information used as a basis to deny credit. The Federal Equal
Credit Opportunity Act and Regulation B promulgated thereunder prohibit
discrimination against any credit applicant based on certain specified grounds.
The Federal Trade Commission has adopted or proposed various Trade Regulation
Rules dealing with unfair credit and collection practices and the preservation
of consumers' claims and defenses. The Federal Trade Commission regulations also
require disclosure of a manufactured home's insulation specifications.
Installment sale contracts eligible for inclusion in the Government National
Mortgage Association Program are subject to the credit underwriting requirements
of the Federal Housing Administration and the Veterans Administration. A variety
of state laws also require licenses to do business and regulate the form of the
installment sale contracts and the allowable charges pursuant to installment
sale contracts.
Golden West is also subject to the Magnuson-Moss Warranty/Federal Trade
Commission Improvement Act which regulates the description of warranties on its
homes.
HOME BUYER FINANCING
Golden West, through its wholly-owned finance subsidiary, Golden Circle
Financial, finances the sale of certain homes manufactured by Golden West.
Golden Circle Financial, which started operations in October 1993, currently
provides installment sale contract financing in all eleven states in which
Golden West conducts its business. Golden West believes that the ability to
finance its sales through Golden Circle Financial provides it with a significant
opportunity to share in the profits associated with the financing of its homes
and a significant competitive advantage over competitors which lack this
ability. Golden West's ability to finance such sales (i) provides an attractive
alternative to financing from consumer finance companies and banks (which has
been available in the past on an inconsistent basis), (ii) provides a new source
of financing to certain creditworthy home buyers who may not otherwise qualify
for affordable financing from consumer finance companies and banks and (iii)
allows Golden West to facilitate its retailer's sales by shortening the credit
decision process and by minimizing the inconvenience to the home buyer of
obtaining credit.
Golden Circle Financial offers fixed rate loan programs to buyers of Golden
West's homes. Down-payment requirements typically range from 5% to 20% of the
purchase price, and can be made in cash, trade-in value of a previously-owned
manufactured home or appraised value of equity in any real property underlying
the home which is pledged as additional collateral. Repayment terms are
typically 20 years (but range from 7 to 25 years), depending upon the amount
financed, the amount of the down-payment and the home buyer's credit history.
Interest rates are fixed within three tiers depending upon the home buyer's
credit history, down-payment and collateral. Golden Circle Financial's strategy
is to provide highly competitive financing terms to those Golden West home
buyers who meet Golden Circle Financial's lending standards with prompt credit
approvals and funding of loans.
All Golden Circle Financial loans are originated through the purchase of
installment sale contracts from Golden West retailers. Golden Circle Financial
has entered into retailer manufactured housing financing agreements with Golden
West retailers, specifying that the decision to purchase the installment sale
contract is in the sole discretion of Golden Circle Financial. Golden Circle
Financial utilizes the Fair-Isaacs scoring system to facilitate fair and
equitable rate establishment for its loan programs. This scoring system only
examines the credit bureau report of the applicant, thereby eliminating
potentially discriminatory factors from the loan approval process.
Golden Circle Financial sells, and intends to continue to sell,
substantially all of its installment sale contracts to third party lending
institutions. Golden Circle Financial currently has an agreement (the "Purchase
Agreement") with a national financial institution (the "Purchase Lender") that
can be terminated by the Purchase Lender on six months notice. The Purchase
Lender purchases Golden Circle Financial installment sale contracts presented
that meet the underwriting criteria established in the Purchase Agreement.
Golden Circle Financial typically sells contracts at a premium to the Purchase
Lender within 7 days of closing of the financing. The Purchase Lender has the
right to review all installment sale contracts presented for purchase and to
reject any installment sale contract for any reason. As of June 25, 1994, the
Purchase Lender had not rejected any Golden Circle Financial contracts presented
to it. If the Purchase Lender rejects an installment sale contract, Golden
Circle Financial would then be required to sell such contract to another lending
institution or carry and service such contract itself. Golden Circle Financial
currently does not have any arrangement or agreement with other lending
institutions to purchase its installment sale contracts.
39
<PAGE>
Although Golden West's policy is to sell substantially all of its
installment sale contracts, Golden Circle Financial may from time to time extend
credit to home buyers who do not satisfy the established underwriting criteria
under the Purchase Agreement. Such credit is extended in circumstances where
Golden Circle Financial believes the terms and credit risks are favorable
although outside of the established underwriting criteria or where Golden Circle
Financial believes there to be a valid business reason for extending such
credit. Where appropriate, Golden Circle Financial seeks the Purchase Lender's
pre-approval before extending such financing, thereby ensuring that the Purchase
Lender will purchase such installment sale contracts. Installment sale contracts
carried by Golden Circle Financial are subject to normal lending risks and
Golden Circle Financial may incur costs in servicing delinquent contracts,
repossessing homes from customers who are unable to cure defaults and attempting
to sell repossessed homes. As of June 25, 1994, a $6,000 reserve was established
on installment sale contracts retained by Golden Circle Financial. Because of
the limited history of Golden Circle Financial's operations, no assurance can be
given that Golden West will not incur material losses on installment sale
contracts retained by Golden Circle Financial or that Golden West's reserves
will be adequate to cover potential losses.
For the nine month period from inception to June 25, 1994, Golden Circle
Financial had committed to finance approximately $24.8 million of installment
sales of which $8.8 million were funded. Of the $8.8 million funded contracts,
approximately $8.6 million have been sold to the Purchase Lender as of the date
of this Prospectus. Approximately $200,000 of funded loans, which do not meet
the Purchase Lender's underwriting criteria, have been retained by Golden Circle
Financial. Golden West believes that all of the committed unfunded loans meet
the Purchase Lender's underwriting criteria and, when funded, will be sold to
it.
Golden Circle Financial currently funds its operations by selling, on a
non-recourse basis, installment sale contracts in its portfolio to the Purchase
Lender with funds obtained from Golden West's $3.0 million revolving line of
credit. As of June 25, 1994, no amount was outstanding under the line of credit.
MANUFACTURING FACILITIES
The location and general description of Golden West's production facilities
are as follows:
<TABLE>
<CAPTION>
PRODUCTION AREA
LOCATION ACRES SQUARE FEET OWNED/LEASED
<S> <C> <C> <C>
Albany, Oregon (1)............................................ 12.0 81,000 Leased
Albany, Oregon (1)............................................ 11.1 64,000 Owned
Sacramento, California........................................ 10.0 106,000 Leased
Perris, California (2)........................................ 19.1 125,000 Owned
Fort Morgan, Colorado (3)..................................... 15.0 109,000 Owned
</TABLE>
(1) The two adjacent plants in Albany are considered one facility.
(2) The Perris facility consists of two buildings of 72,000 and 53,000 square
feet.
(3) The Fort Morgan facility was purchased in March 1994.
In addition to its production facilities, Golden West leases approximately
9,200 square feet of office space for Golden West's headquarters in Santa Ana,
California. The Albany manufacturing facility lease expires in November 1999,
the Sacramento manufacturing facility lease expires in April 1996 and the Santa
Ana corporate headquarters lease expires in January 1999. The leases covering
the production facilities each include an option to renew the lease for at least
an additional five years. Golden West also leases approximately 2,600 square
feet of office space for Golden Circle Financial expiring January 1999. Golden
West leases two retail locations in Idaho and one in California, expiring
between December 1994 and December 1999.
LEGAL PROCEEDINGS
Golden West is, from time to time, involved in litigation arising in the
ordinary course of its business, none of which, in the opinion of Golden West,
will have a material adverse effect on Golden West's financial position or
results of operations.
GOLDEN WEST CAPITAL STOCK
Prior to the Merger, there has been no public market for either the Golden
West Common Stock or the Golden West Preferred Stock. Golden West has not paid
any dividends on any class of Golden West equity securities within the two most
recent fiscal years.
40
<PAGE>
COMPARATIVE RIGHTS OF SHAREHOLDERS
At the Effective Time of the Merger, Golden West Shareholders (except any
dissenting Golden West Shareholder properly exercising dissenters' rights)
automatically will become shareholders of Oakwood, and the rights of such
shareholders will be determined by Oakwood's Articles of Incorporation, Bylaws
and the North Carolina Business Corporation Act (the "NCBCA"). The following is
a summary of the material differences in the rights of Golden West Shareholders
and holders of Oakwood Common Stock.
AUTHORIZED CAPITAL. The authorized capital stock of Oakwood consists of
100,000,000 shares of Oakwood Common Stock, par value $.50 per share, and
500,000 shares of Oakwood Preferred Stock, par value $100 per share. As of
August 19, 1994, 20,471,347 shares of Oakwood Common Stock were issued and
outstanding. In addition, as of the same date, 2,266,786 shares of Oakwood
Common Stock were reserved for issuance pursuant to Oakwood's stock option
plans. The Oakwood Preferred Stock may be issued in one or more series with such
terms, limitations and preferences as may be established by the Board of
Directors without further shareholder action. No shares of Oakwood Preferred
Stock are issued or outstanding. In the event of an unsolicited attempt to take
over Oakwood, it might be possible for the Board of Directors to issue Preferred
Stock with rights which could impede the completion of such a takeover or make
Oakwood a less attractive takeover candidate.
The authorized capital of Golden West consists of 20,000,000 shares of
Golden West Common Stock and 1,105,000 shares of Golden West Preferred Stock. As
of August 19, 1994, 1,287,000 shares of Golden West Common Stock were issued and
outstanding and 1,105,000 shares of Golden West Preferred Stock were issued and
outstanding. In addition, 377,000 shares of Golden West Common Stock were
reserved for future issuance pursuant to Golden West's stock option plans. The
holders of Golden West Preferred Stock are entitled to receive dividends when
and as declared by the Board of Directors of Golden West, and no dividend may be
declared on shares of Golden West Common Stock unless an equal dividend per
share is also declared on the Golden West Preferred Stock. In the event of a
dissolution or liquidation of Golden West, holders of Golden West Preferred
Stock are entitled to receive $.77 per share of Golden West Preferred Stock
before any payments or distributions are made to holders of Golden West Common
Stock. If the assets of Golden West are insufficient to make such payment, then
all of the assets of Golden West will be distributed ratably among the holders
of Golden West Preferred Stock. Each share of Golden West Preferred Stock is
convertible into one share of Golden West Common Stock, subject to adjustment in
the event of a change in capitalization and subject to immediate conversion in
the event of a public offering of Golden West Common Stock, the sale or
conveyance of all or substantially all of the assets of Golden West and on
September 30, 1995. Holders of Golden West Preferred Stock will, as a result of
the Merger, become holders of Oakwood Common Stock, and as such will not be
entitled to preferences with respect to dividends or other distributions on the
Oakwood Common Stock. The holders of Golden West Preferred and Common Stock are
each entitled to one vote per share.
SHAREHOLDER PROTECTION RIGHTS PLAN. In 1991, Oakwood adopted the Oakwood
Shareholder Protection Rights Plan (the "Rights Plan") and distributed to its
shareholders, with respect to each outstanding share of Oakwood Common Stock
held, one right (a "Right") to purchase one two-hundredth of a share of
Oakwood's Junior Participating Class A Preferred Stock, at a purchase price of
$40. The Rights are attached to the Oakwood Common Stock and are not exercisable
except under the limited circumstances set forth in the Rights Plan relating to
the acquisition of, or the commencement of a tender offer for, 20% or more of
the voting power of Oakwood. In the event that a person or group acquires 20% or
more of the Oakwood Common Stock without Oakwood's consent (an "Acquiring
Person"), each holder of a Right, other than the Acquiring Person, will be
entitled to acquire, upon payment of the exercise price, that number of shares
of Oakwood Common Stock having a market value equal to twice the exercise price.
Similarly, if, without the consent of Oakwood, Oakwood is acquired in a merger
or other business combination transaction, each holder of a Right will be
entitled to acquire voting shares of the acquiring company having a value of
twice the exercise price. The Rights may be redeemed at a price of $.01 per
Right by Oakwood anytime prior to any person or group acquiring 20% or more of
Oakwood's voting power or certain other triggering events and will expire on
August 22, 2001. Until the Rights separate from the Oakwood Common Stock, each
new share of Oakwood Common Stock, including shares issued or issuable pursuant
to the Merger, will have a Right attached. The Rights do not have voting or
dividend rights and, until they become exercisable, have no dilutive effect on
the earnings of Oakwood.
The Rights will not prevent a takeover of Oakwood, although they may
discourage a takeover or cause substantial dilution to a person or group that
acquires 20 percent or more of the Oakwood Common Stock unless the Rights are
first redeemed by the Board of Directors.
Golden West has no plan comparable to the Oakwood Shareholder Protection
Rights Plan.
41
<PAGE>
BOARD OF DIRECTORS. Oakwood's Board of Directors is divided into three
classes, each class to consist of as nearly equal a number of directors as
possible. The Oakwood Board of Directors currently has eleven members. Directors
are elected to three-year terms by a plurality of the votes cast by the holders
of shares entitled to vote in the election of directors. Holders of Oakwood
Common Stock do not have cumulative voting rights in the election of directors
so long as Oakwood has a class of securities registered under the Exchange Act.
Oakwood's Bylaws provide that a director may be removed from office with or
without cause by a vote of shareholders holding at least 75% of the shares
entitled to vote in an election of directors. However, unless the entire Board
of Directors is removed, an individual director may not be removed if the number
of shares voting against the removal would be sufficient to elect a director if
such shares were voted cumulatively at an annual election.
Golden West's Bylaws provide that Golden West's Board of Directors consists
of between three and five directors, as designated by either the Golden West
Board of Directors or the Golden West Shareholders, all of which directors are
in the same class. The Golden West Board of Directors currently has five members
who serve one-year terms. Under certain circumstances, Golden West Shareholders
are entitled to cumulative voting rights in the election of directors.
The CGCL provides that Golden West's Board of Directors may remove any
director who has been declared of unsound mind by an order of court or convicted
of a felony. The CGCL provides that a director of Golden West may be removed
without cause by a vote of shareholders holding a majority of the shares
entitled to vote in an election of directors. However, unless the entire Board
of Directors is removed, an individual director may not be removed if the number
of shares voting against the removal would be sufficient to elect a director if
such shares were voted cumulatively at an annual election.
MEETINGS OF SHAREHOLDERS. A special meeting of Oakwood's shareholders may
be called by the chief executive officer or the Board of Directors.
A special meeting of the Golden West Shareholders may be called at any time
by the Board of Directors, or by the Chairman of the Board, or by the President,
or by one or more shareholders holding shares in the aggregate entitled to cast
at least 10% of the votes of such meeting.
INSPECTION RIGHTS. Both CGCL and the NCBCA contain provisions granting
shareholders the right to inspect certain records of the Corporation. The NCBCA
limits the right of inspection to persons who (i) have been shareholders in the
North Carolina corporation for at least six months immediately preceding the
demand to inspect the corporation's records or (ii) hold at least 5% of the
corporation's outstanding shares of any class. In addition, the NCBCA provides
that a shareholder of a public corporation, such as Oakwood, is not entitled to
inspect or copy any accounting records of the corporation or any records of the
corporation with respect to any matter which the corporation determines in good
faith may, if disclosed, adversely affect the corporation and the conduct of its
business or may, at the time the shareholder's notice of demand is received by
the corporation, constitute material nonpublic information.
Under CGCL, a shareholder or shareholders holding at least 5% in the
aggregate of the outstanding voting shares of a corporation or who holds at
least 1% of such voting shares and has filed a Schedule 14B with the Commission
relating to the election of directors of the corporation has an absolute right
to inspect and copy the record of shareholder names and addresses and
shareholdings and/or to obtain from the transfer agent for the corporation a
list of shareholders who are entitled to vote for the election of directors. In
addition, the accounting books and records and minutes of proceedings of the
shareholders and the board of directors and the committees of the board of
directors are open to inspection upon the written demand to the corporation of
any shareholder at any reasonable time for a purpose reasonably related to such
shareholder's interests as a shareholder.
AMENDMENT TO BYLAWS. Oakwood's bylaws provide that the bylaws may be
amended, altered or repealed by action of the board of directors or the
shareholders. However, Section 3.2 of the Bylaws, regarding the number, term and
qualification of directors and Section 3.5 of the Bylaws, regarding the removal
of directors, may not be amended, repealed or annulled except by a vote of the
shareholders holding at least 75% of the shares of Oakwood entitled to vote.
The CGCL provides that Golden West's Bylaws may be amended or repealed by
approval of a majority of the outstanding shares or by the approval of the board
of directors, except that a bylaw specifying or changing a fixed number of
directors or the maximum or minimum number or changing from a fixed to a
variable board or vice versa may only be adopted by approval of a majority of
the outstanding shares. Golden West's Bylaws provide that Golden West's Bylaws
may be amended or repealed by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote. Subject to the foregoing
rights of the shareholders, the Golden West Bylaws may be amended or repealed by
Golden West's Board of Directors.
42
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF MERGER
The following discussion of certain federal income tax consequences of the
Merger is based on the current provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), applicable Treasury Regulations, judicial authority and
administrative rulings and practice. This discussion, however, does not address
all aspects of federal income taxation that may be relevant to a particular
Golden West Shareholder in light of his personal investment circumstances and to
certain types of shareholders subject to special treatment under the federal
income tax laws (for example, insurance companies, tax exempt organizations,
financial institutions or broker-dealers, persons who acquired their shares of
Golden West Capital Stock pursuant to the exercise of a stock option or pursuant
to their deferred compensation arrangement and persons who are not citizens or
residents of the United States or who are foreign corporations, foreign
partnerships or foreign estates or trusts) and does not discuss any aspects of
state, local or foreign taxation. In addition, this discussion does not address
the conversion of the Golden West Options into options to purchase shares of
Oakwood Common Stock pursuant to the Merger. Further, this discussion assumes
that all Golden West Shareholders have held their shares of Golden West Capital
Stock as capital assets.
There can be no assurance that the Internal Revenue Service (the "IRS")
will not take a contrary view to those expressed herein. No ruling from the IRS
has been or will be sought with respect to any aspect of the Merger. Moreover,
legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set forth
herein. Any such changes or interpretations may or may not be retroactive and
could affect the tax consequences to Golden West Shareholders.
EACH GOLDEN WEST SHAREHOLDER IS URGED TO CONSULT HIS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OF THE MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND FOREIGN
TAX LAWS, AND OF CHANGES IN APPLICABLE TAX LAWS.
QUALIFICATION OF THE MERGER AS A TAX-FREE REORGANIZATION
Although the matter is not free from doubt and is subject to the
assumptions in the next sentence, the Merger should be a tax-free reorganization
within the meaning of Section 368(a)(1) of the Code. The foregoing conclusion is
based on certain assumptions, including the following: (i) that the Merger will
be consummated in accordance with the Acquisition Agreement and the Agreement of
Merger; (ii) that Oakwood has no present plan or intention to liquidate Golden
West, to merge Golden West with or into another corporation, to sell or
otherwise dispose of the stock of Golden West, to cause Golden West to issue
additional shares of its stock that would result in Oakwood's loss of "control"
of Golden West within the meaning of Section 368(c) of the Code or to cause
Golden West to sell or dispose of any of its assets except for dispositions made
in the ordinary course of business or which would not cause the Merger to fail
to satisfy the "continuity of the business enterprise" requirements of Section
368(a)(1)(A) of the Code; (iii) that following the Effective Time, Golden West
will hold substantially all of its properties; (iv) that following the Effective
Time, the Golden West Continuing Shareholders will retain the Oakwood Common
Stock received in the Merger in amounts and for such periods of time as shall be
necessary to satisfy the "continuity of interest" requirements of Section
368(a)(1)(A) of the Code; and (v) that following the Effective Time, Oakwood
will not take any actions that would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a)(1) of the Code.
It is a condition to the closing of the Merger that both Oakwood and Golden
West receive an opinion of counsel that the Merger will qualify as a tax free
reorganization. Such opinions will rely upon the assumptions set forth above,
among others, and be based upon certain representations to be made by Oakwood,
Golden West and, in the case of the opinion from Golden West's counsel, the
principal shareholders of Golden West.
FEDERAL INCOME TAX CONSEQUENCES TO GOLDEN WEST CONTINUING SHAREHOLDERS
Assuming that the Merger constitutes a tax-free reorganization under
Section 368(a)(l) of the Code, (i) Golden West Continuing Shareholders (other
than Golden West Shareholders who exercise their right to dissent) will not
recognize gain or loss upon the receipt of Oakwood Common Stock in exchange for
their shares of Golden West Capital Stock; (ii) any Golden West Continuing
Shareholders receiving cash in lieu of a fractional share of Oakwood Common
Stock will recognize gain or loss equal to the difference between the amount of
cash received and the basis he would have had in the fractional share of Oakwood
Common Stock (such gain or loss being a long-term capital gain or loss if the
shares of Golden West Capital Stock being surrendered for such Oakwood Common
Stock were held by such Golden West Continuing Shareholder for more than one
year); and (iii) each Golden West Continuing Shareholder's tax basis in, and
holding period for, his shares of Golden West Capital Stock will carry over to
the Oakwood Common Stock received in exchange therefor.
43
<PAGE>
Any Golden West Shareholder who exercises his right to dissent in
connection with the Merger will recognize capital gain or loss equal to the
difference between (i) the amount of cash and the fair market value of any other
property received and (ii) the shareholder's tax basis in his shares of Golden
West Capital Stock.
If the Merger were not to constitute a reorganization under Section
368(a)(l) of the Code, each Golden West Continuing Shareholder would recognize
gain or loss equal to the difference between the fair market value of the
Oakwood Common Stock received and his basis in his shares of Golden West Capital
Stock. Such gain or loss would be long-term capital gain or loss, provided such
shares had been held for more than one year.
RIGHTS OF SHAREHOLDERS ELECTING TO EXERCISE THEIR RIGHT TO DISSENT
Under the CGCL, each Golden West Shareholder as of August 19, 1994 is
entitled to demand and receive payment of the fair value of all or any portion
of such holder's shares of Golden Capital Stock pursuant to Section 1300 ET SEQ.
of the CGCL owned by such holder if the Merger is consummated. The fair value of
such shares is determined as of the day before the first announcement of the
terms of the Merger, which occurred on August 19, 1994. Any Shareholder who
elects to perfect such holder's dissenter's rights and demands payment of the
fair value of such holder's shares of Golden West Common or Preferred Stock must
strictly comply with Section 1300 ET SEQ. of the CGCL. THE FOLLOWING SUMMARY
DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SECTIONS 1300 ET SEQ. OF THE CGCL, THE TEXT OF WHICH IS ATTACHED AS
ANNEX II TO
THIS PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. ANY
HOLDER OF SHARES OF GOLDEN WEST CAPITAL STOCK CONSIDERING DEMANDING DISSENTERS'
RIGHTS IS ADVISED TO CONSULT LEGAL COUNSEL. DISSENTERS' RIGHTS WILL NOT BE
AVAILABLE UNLESS AND UNTIL THE MERGER (OR A SIMILAR BUSINESS COMBINATION) IS
CONSUMMATED. To perfect the right to dissent and receive the fair value of such
holder's shares, the shareholder must neither vote for the Merger nor return an
executed proxy that is left blank. A dissenting shareholder must either vote
against the Merger or abstain from voting. A PROXY RETURNED WITHOUT VOTING
INSTRUCTIONS WILL BE VOTED IN FAVOR OF THE MERGER AND AS A RESULT SUCH GOLDEN
WEST SHAREHOLDER WILL LOSE SUCH HOLDER'S DISSENTER'S RIGHTS.
Within 10 days after the Golden West Meeting, Golden West will mail to each
Golden West Shareholder notice (the "Notice") of the approval of the Merger by
the Golden West Shareholders, accompanied by a copy of
(section mark)(section mark)1300-1304 of the California Corporation Code. The
Notice shall also state the price determined by Golden West to be the fair
market value of the dissenting shares and a brief description of the procedure
to be followed by a shareholder who elects to dissent.
Any dissenting shareholder who desires that Golden West purchase his shares
must make written demand upon Golden West for the purchase of such shares. The
demand must be made no later than 30 days after the Notice was mailed to the
shareholder. The shareholder's demand must state the number and class of shares
held of record by the shareholder which the shareholder demands that Golden West
purchase, as well as a statement by the shareholder as to what such holder
thinks the fair market value of such shares was as of the day prior to the
announcement of the Merger. The statement of fair market value constitutes an
offer by the shareholder to sell the shares at such price. Neither voting
against, abstaining from voting nor failing to vote on the Merger constitutes
such written demand.
Within the same 30 day period following the mailing of the Notice, the
dissenting shareholder must submit to Golden West for endorsement certificates
for any shares which the shareholder demands Golden West purchase. If Golden
West and the shareholder agree upon the price of the dissenting shares, the
dissenting shareholder is entitled to the agreed price with interest at the
legal rate on judgments from the date of such agreement. Payment must be made
within 30 days of the later of the date of the agreement between the shareholder
and Golden West or the date the contractual conditions to the Merger are
satisfied.
If Golden West and the shareholder cannot agree as to the fair market value
or as to the fact that such shares are dissenting shares, such shareholder may
file within six months of the date of mailing of the Notice a complaint with the
California Superior Court for the County of Orange demanding judicial
determination of such matters. Golden West will then be required to make any
payments in accordance with such judicial determination. If the complaint is not
filed within the specified six month period, the shareholder's rights as a
dissenter are lost.
Dissenting shares lose their status as such if (i) Golden West abandons the
Merger; (ii) the shares are transferred or are surrendered for conversion into
shares of another class; (iii) the shareholder and Golden West do not agree as
to the fair market value of such shares and a complaint is not filed within six
months of the date the Notice was mailed; or (iv) the dissenting shareholder
withdraws, with the consent of Golden West, his demand for purchase of the
dissenting shares.
44
<PAGE>
At the Effective Time, the shares of Golden West held by a shareholder
exercising such holder's dissenter's rights will be canceled, and such
shareholder will be entitled to no further rights except the right to receive
payment of the fair value of such holder's shares of Golden West Common or
Preferred Stock. However, if the shareholder fails to perfect or withdraws or
loses such holder's rights as a dissenter with respect to such holder's shares
of Golden West Capital Stock, such holder's shares of Golden West Common or
Preferred Stock will be exchanged for Oakwood Common Stock as provided in the
Agreement of Merger.
Under North Carolina law, shareholders of Oakwood are not entitled to
dissenters' rights in connection with the issuance of Oakwood Common Stock in
the Merger.
LEGAL MATTERS
The validity and legality of the Oakwood Common Stock offered hereby and
certain other legal matters will be passed upon for Oakwood by Kennedy Covington
Lobdell & Hickman, L.L.P., NationsBank Corporate Center, Suite 4200, 100 North
Tryon Street, Charlotte, North Carolina 28202. Clarence W. Walker, a partner of
the firm of Kennedy Covington Lobdell & Hickman, L.L.P., is a member of the
Board of Directors of Oakwood and Myles E. Standish, a partner in the firm of
Kennedy Covington Lobdell & Hickman, L.L.P., is an assistant secretary of
Oakwood and a director of certain of its subsidiaries. At August 10, 1994,
Messrs. Walker and Standish and other partners and associates of Kennedy
Covington Lobdell & Hickman, L.L.P. and their spouses and minor children owned
beneficially an aggregate of 52,997 shares of Oakwood Common Stock. Certain
legal matters will be passed upon for Golden West and the Golden West
Shareholders by Latham & Watkins, Costa Mesa, California. John R. Stahr, a
senior partner of Latham & Watkins, is a director of Golden West and owns 61,620
shares of Golden West Common Stock.
EXPERTS
The consolidated financial statements of Oakwood and its subsidiaries
incorporated in this Proxy Statement/Prospectus by reference to Oakwood's Annual
Report on Form 10-K for its fiscal year ended September 30, 1993 have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The consolidated financial statements of Golden West and its subsidiaries
as of December 26, 1992 and December 25, 1993 and for each of the three years in
the period ended December 25, 1993 included in this Proxy Statement/Prospectus
have been audited by Arthur Andersen & Co., independent public accountants, as
stated in their report appearing herein and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
45
<PAGE>
GOLDEN WEST HOMES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Public Accountants............................................................................... F-2
Consolidated Balance Sheets (Assets)................................................................................... F-3
Consolidated Balance Sheets (Liabilities and Shareholders' Equity)..................................................... F-4
Consolidated Statements of Income...................................................................................... F-5
Consolidated Statements of Shareholders' Equity........................................................................ F-6
Consolidated Statements of Cash Flows.................................................................................. F-7
Notes to Consolidated Financial Statements............................................................................. F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS
OF GOLDEN WEST HOMES:
We have audited the accompanying consolidated balance sheets of GOLDEN WEST
HOMES (a California corporation) and subsidiary as of December 26, 1992 and
December 25, 1993, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 25, 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Golden West Homes and
subsidiary as of December 26, 1992 and December 25, 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 25, 1993 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN & CO.
Orange County, California
February 22, 1994
(except with respect to the
matters discussed in Note 13 as to
which the dates are March 14, 1994
and April 11, 1994)
F-2
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER DECEMBER
26, 25, JUNE 25,
1992 1993 1994
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current Assets:
Cash and short-term investments................................................. $ 2,929,000 $ 2,431,000 $ 1,403,000
Restricted cash................................................................. 100,000 200,000 200,000
Accounts receivable, net of allowance for doubtful accounts of $70,000
in 1992, $80,000 in 1993 and $81,000 in 1994................................. 3,085,000 6,950,000 6,983,000
Retail finance contracts........................................................ -- 883,000 494,000
Notes receivable................................................................ 170,000 445,000 1,331,000
Inventories..................................................................... 2,934,000 4,304,000 5,510,000
Prepaid expenses and other current assets....................................... 290,000 486,000 106,000
Deferred income tax benefit..................................................... 269,000 711,000 975,000
Total current assets......................................................... 9,777,000 16,410,000 17,002,000
Property, Plant and Equipment, at cost:
Land............................................................................ 1,850,000 1,850,000 1,930,000
Buildings and leasehold improvements............................................ 5,373,000 5,588,000 6,803,000
Machinery and equipment......................................................... 2,983,000 3,259,000 3,412,000
10,206,000 10,697,000 12,145,000
Less -- Accumulated depreciation and amortization................................. (1,840,000) (2,444,000) (2,756,000)
8,366,000 8,253,000 9,389,000
Other Assets:
Purchase price in excess of net assets acquired, net of accumulated amortization
of $449,000 in 1992, $524,000 in 1993 and $551,000 in 1994................... 2,463,000 1,689,000 1,271,000
Restricted cash................................................................. 520,000 583,000 583,000
Other........................................................................... 528,000 610,000 722,000
3,511,000 2,882,000 2,576,000
$21,654,000 $27,545,000 $28,967,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of credit with bank........................................................ $ -- $ 1,500,000 $ --
Retail inventory financing...................................................... 137,000 116,000 662,000
Accounts payable................................................................ 1,755,000 4,194,000 5,141,000
Accrued expenses................................................................ 3,351,000 4,260,000 4,981,000
Dealer volume bonus............................................................. 2,236,000 2,978,000 1,908,000
Current portion of long-term debt............................................... 114,000 444,000 614,000
Total current liabilities.................................................... 7,593,000 13,492,000 13,306,000
Deferred Compensation............................................................. 16,000 -- --
Long-Term Debt, Net of Current Portion............................................ 6,201,000 6,706,000 7,228,000
Commitments and Contingent Liabilities
Shareholders' Equity:
Preferred stock, series A, without par value -- Authorized -- 1,105,000 shares,
issued and outstanding -- 1,105,000 shares................................... 850,000 850,000 850,000
Preferred stock, series B, without par value -- Authorized -- 20,000 shares,
issued and outstanding -- 12,500 shares at December 26, 1992 and none at
December 25, 1993 and June 25, 1994.......................................... 3,000,000 -- --
Common stock, without par value -- Authorized -- 20,000,000 shares, issued and
outstanding -- 1,235,000 shares at December 26, 1992 and December 25, 1993
and 1,287,000 at June 25, 1994............................................... 150,000 150,000 202,000
Additional paid-in capital........................................................ 500,000 2,350,000 2,396,000
Retained earnings................................................................. 3,344,000 3,997,000 4,985,000
Total shareholders' equity................................................... 7,844,000 7,347,000 8,433,000
$21,654,000 $27,545,000 $28,967,000
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
DECEMBER 28, DECEMBER 26, DECEMBER 25, JUNE 26, JUNE 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Net Sales........................................ $ 74,048,000 $ 74,427,000 $ 89,564,000 $40,324,000 $55,875,000
Cost of Sales.................................... 61,749,000 62,146,000 73,248,000 33,660,000 44,553,000
Gross Profit................................ 12,299,000 12,281,000 16,316,000 6,664,000 11,322,000
Operating Expenses:
Selling........................................ 5,746,000 5,872,000 7,687,000 3,470,000 4,857,000
General and administrative..................... 5,860,000 5,961,000 7,068,000 3,102,000 4,581,000
Total operating expenses.................... 11,606,000 11,833,000 14,755,000 6,572,000 9,438,000
Income From Operations........................... 693,000 448,000 1,561,000 92,000 1,884,000
Interest Income.................................. 298,000 169,000 95,000 42,000 86,000
Interest Expense................................. (529,000) (648,000) (517,000) (264,000) (299,000)
Income (Loss) Before Provision (Benefit) For
Income Taxes and Extraordinary Item............ 462,000 (31,000) 1,139,000 (130,000) 1,671,000
Provision (Benefit) for Income Taxes............. 222,000 26,000 486,000 (34,000) 683,000
Income (Loss) Before Extraordinary Item.......... 240,000 (57,000) 653,000 (96,000) 988,000
Extraordinary Item, Gain from Retirement of Debt
(Net of Income Taxes of $60,000)............... -- 90,000 -- -- --
Net Income (Loss)................................ $ 240,000 $ 33,000 $ 653,000 $ (96,000) $ 988,000
Net Income (Loss) Per Common and Equivalent
Share:
Before extraordinary item...................... $ .07 $ (.02) $ .19 $ (.08) $ .34
Extraordinary item............................. -- .03 -- -- --
Net Income (Loss) Per Common and Equivalent
Share.......................................... $ .07 $ .01 $ .19 $ (.08) $ .34
Weighted Average Common and Equivalent Shares
Outstanding.................................... 3,482,648 3,501,732 3,474,484 1,235,000 2,866,783
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK
ADDITIONAL
COMMON STOCK SERIES A SERIES B PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 29, 1990..... 1,235,000 $150,000 1,105,000 $850,000 12,500 $ 3,000,000 $ 500,000 $3,071,000
Net Income.................. -- -- -- -- -- -- -- 240,000
Balance December 28, 1991..... 1,235,000 150,000 1,105,000 850,000 12,500 3,000,000 500,000 3,311,000
Net Income.................. -- -- -- -- -- -- -- 33,000
Balance December 26, 1992..... 1,235,000 150,000 1,105,000 850,000 12,500 3,000,000 500,000 3,344,000
Net Income.................. -- -- -- -- -- -- -- 653,000
Purchase of Series B
Preferred Stock........... -- -- -- -- (12,500) (3,000,000) 1,850,000 --
Balance December 25, 1993..... 1,235,000 150,000 1,105,000 850,000 -- -- 2,350,000 3,997,000
Net Income.................. -- -- -- -- -- -- -- 988,000
Exercise of Stock Options... 52,000 52,000 -- -- -- -- -- --
Income Tax Benefit from
Exercise of Non-Qualified
Stock Options............. -- -- -- -- -- -- 46,000 --
Balance June 25, 1994
(Unaudited)................. 1,287,000 $202,000 1,105,000 $850,000 -- -- $2,396,000 $4,985,000
<CAPTION>
TOTAL
<S> <<C>
Balance December 29, 1990..... $7,571,000
Net Income.................. 240,000
Balance December 28, 1991..... 7,811,000
Net Income.................. 33,000
Balance December 26, 1992..... 7,844,000
Net Income.................. 653,000
Purchase of Series B
Preferred Stock........... (1,150,000)
Balance December 25, 1993..... 7,347,000
Net Income.................. 988,000
Exercise of Stock Options... 52,000
Income Tax Benefit from
Exercise of Non-Qualified
Stock Options............. 46,000
Balance June 25, 1994
(Unaudited)................. $8,433,000
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
DECEMBER 28, DECEMBER 26, DECEMBER 25, JUNE 26, JUNE 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)..................................... $ 240,000 $ 33,000 $ 653,000 $ (96,000) $ 988,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization......................... 436,000 707,000 772,000 375,000 348,000
Amortization of purchase price in excess of net assets
acquired............................................ 82,000 80,000 75,000 39,000 27,000
Loss on disposition of property, plant and
equipment........................................... 8,000 31,000 56,000 7,000 8,000
Income tax benefit from exercise of non-qualified
stock options....................................... -- -- -- -- 46,000
Income tax provision applied to purchase price in
excess of net assets acquired....................... 190,000 138,000 699,000 108,000 391,000
Decrease (increase) in deferred income tax benefit.... 16,000 (68,000 ) (442,000 ) (108,000) (264,000)
Gain from retirement of debt.......................... -- (150,000 ) -- -- --
Decrease (increase) in accounts and notes
receivable.......................................... 714,000 36,000 (4,140,000 ) (2,046,000) (919,000)
Decrease (increase) in retail finance contracts....... -- -- (883,000 ) -- 389,000
Decrease (increase) in inventories.................... (606,000 ) 282,000 (1,370,000 ) (433,000) (1,206,000)
Decrease (increase) in prepaid expenses and other
current assets...................................... (66,000 ) 42,000 (196,000 ) 54,000 380,000
Increase (decrease) in retail inventory financing..... -- 137,000 (21,000 ) 23,000 546,000
Increase (decrease) in accounts payable............... 470,000 (104,000 ) 2,439,000 567,000 947,000
Increase (decrease) in accrued expenses............... (196,000 ) (45,000 ) 1,013,000 495,000 769,000
Increase (decrease) in dealer volume bonus............ (321,000 ) 100,000 742,000 (897,000) (1,070,000)
Net cash provided by (used in) operating activities... 967,000 1,219,000 (603,000 ) (1,912,000) 1,380,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment............ (2,452,000 ) (319,000 ) (715,000 ) (246,000) (642,000)
Increase in other assets.............................. (429,000 ) (39,000 ) (82,000 ) (14,000) (112,000)
Net cash used in investing activities................. (2,881,000 ) (358,000 ) (797,000 ) (260,000) (754,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line of credit...... -- -- 1,500,000 700,000 (1,500,000)
Purchase of series B preferred stock.................. -- -- (1,150,000 ) -- --
Proceeds from issuance of debt........................ 6,438,000 -- 1,150,000 -- --
Proceeds from exercise of stock options............... -- -- -- -- 52,000
Repayments of debt.................................... (5,259,000 ) (964,000 ) (315,000 ) (208,000) (158,000)
Restricted cash deposits.............................. (110,000 ) (510,000 ) (163,000 ) (263,000) --
Payments of deferred compensation..................... (90,000 ) (132,000 ) (120,000 ) (79,000) (48,000)
Net cash provided by (used in) financing activities... 979,000 (1,606,000 ) 902,000 150,000 (1,654,000)
Decrease in cash...................................... (935,000 ) (745,000 ) (498,000 ) (2,022,000) (1,028,000)
Cash at beginning of period........................... 4,609,000 3,674,000 2,929,000 2,929,000 2,431,000
Cash at end of period............................... $ 3,674,000 $ 2,929,000 $ 2,431,000 $ 907,000 $ 1,403,000
SUPPLEMENTAL DISCLOSURE:
Cash paid for:
Interest.............................................. $ 503,000 $ 699,000 $ 499,000 $ 229,000 $ 287,000
Income taxes.......................................... $ 238,000 $ -- $ 35,000 $ 25,000 $ 409,000
Noncash investing and financing activities:
</TABLE>
During 1991, Golden West acquired from a non-employee shareholder an
operating facility valued at $5,224,000 in a tax free exchange for another
facility with a net book value of $2,474,000 (less an assumed mortgage of
$1,400,000). In connection with the exchange, a note payable in the amount of
$4,150,000 was issued which was subsequently repaid from proceeds of the
industrial revenue bond financing.
During the six months ended June 25, 1994, Golden West acquired an
operating facility in Colorado for $1,050,000. The purchase was facilitated
through a note in the amount of $850,000.
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 25, 1994 AND FOR THE SIX MONTHS ENDED
JUNE 26, 1993 AND JUNE 25, 1994 IS UNAUDITED.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
ACQUISITION. On May 5, 1988, the Karsten Company (Karsten) purchased all
outstanding shares of Golden West stock and in connection therewith acquired
certain assets and assumed certain liabilities of Golden West. This acquisition
was accounted for under the purchase method of accounting and, accordingly, the
purchase price has been allocated to the acquired net assets based upon the
estimated fair market value of assets and liabilities at the date of
acquisition. The difference between the purchase price and the fair value of net
assets acquired at the date of acquisition is reflected as purchase price in
excess of net assets acquired in the accompanying consolidated balance sheets
and is being amortized on a straight-line basis over a forty year period.
Subsequent to December 25, 1993, Karsten was merged into Golden West (see Note
13).
In connection with the acquisition, Golden West originally acquired net
operating loss carryforwards of approximately $13,000,000 which could be used to
offset future Federal taxable income and approximately $6,500,000 which could be
used to offset future state taxable income. As net operating loss carryforwards
were used to offset taxable income, the result was to reduce the purchase price
in excess of net assets acquired by the amount of the reduction of current
income taxes payable (See Note 5).
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of Karsten and its wholly owned subsidiaries Golden West and Golden
Circle Financial Services (Golden Circle Financial). All significant
intercompany accounts and transactions have been eliminated in consolidation.
CASH AND SHORT-TERM INVESTMENTS. Under Golden West's cash management
program, cash in excess of operating requirements is placed in short-term
investments. For purposes of the statement of cash flows, Golden West considers
all highly liquid short-term investments purchased with a maturity of three
months or less to be cash equivalents.
PROPERTY, PLANT AND EQUIPMENT. For financial reporting purposes,
depreciation and amortization are provided on a straight-line basis over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings............................................................................ 20-30 years
Leasehold improvements............................................................... Term of lease
Machinery and equipment.............................................................. 3-10 years
</TABLE>
Golden West capitalizes expenditures for betterment and major renewals.
Maintenance, repairs and minor renewals or improvements are charged to expense
as incurred. When assets are sold or retired, the cost and accumulated
depreciation are removed from the accounts and any resulting gain or loss is
included in income.
WARRANTY COSTS. Estimated product warranty costs are accrued at the time
products are sold.
DEALER VOLUME BONUS. Golden West provides incentives to dealers using a
predetermined formula applied to the volume of homes sold to the dealer during
the year. Such incentives (reflected as a reduction of gross sales) are recorded
at the time sales are recognized.
PRODUCT DEVELOPMENT COSTS. Product development costs are charged to expense
as incurred.
DEFERRED COMPENSATION. In prior years, Golden West had a deferred
compensation plan whereby a portion of compensation earned by certain key
employees was deferred. Effective May 5, 1988, no future compensation payable to
the participants may be deferred under the plan. The amounts deferred are fully
vested and are payable, in equal quarterly installments, over a ten year period.
Each participant has the option to waive a portion of their deferred
compensation in exchange for common stock of Golden West. In connection with
amendments to the plan in 1988, the participants are entitled to receive an
aggregate maximum of 260,000 shares for $500,000 of their deferred compensation
balances (See Note 13).
SALES RECOGNITION. Golden West manufactures its homes pursuant to dealer
orders, and sales are recognized upon completion and transfer of title to the
home.
F-7
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION -- Continued
ACCOUNTING PERIOD. Golden West's fiscal year ends on the last Saturday in
December which was December 28, 1991, December 26, 1992 and December 25, 1993,
and each of these years contained 52 weeks.
INCOME TAXES. Golden West accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
POSTRETIREMENT BENEFITS. Golden West has no benefit plans that qualify
under Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits other than Pensions" or Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits."
NET INCOME PER COMMON AND EQUIVALENT SHARE. Net income per common and
equivalent share amounts are based on the weighted average number of shares
outstanding during the period, including common stock equivalents resulting from
dilutive stock options, convertible series A preferred stock and shares issuable
under Golden West's deferred compensation plan. The 12,500 shares of convertible
series B preferred stock canceled November 30, 1993, have been adjusted to give
effect to a 52 for 1 stock split (see Note 13) for purposes of calculating
earnings per share. Fully diluted earnings per share has not been presented
since it is not materially different from primary earnings per share.
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 26, DECEMBER 25, JUNE 25,
1992 1993 1994
<S> <C> <C> <C>
Raw Materials.............................................. $1,341,000 $1,837,000 $1,842,000
Work in process............................................ 918,000 906,000 930,000
Finished goods............................................. 675,000 1,561,000 2,738,000
$2,934,000 $4,304,000 $5,510,000
</TABLE>
Inventories are valued at the lower of cost (first-in, first-out) or
market. Cost includes material, labor and manufacturing overhead.
3. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 26, DECEMBER 25, JUNE 25,
1992 1993 1994
<S> <C> <C> <C>
Payroll and payroll taxes.................................. $ 614,000 $1,104,000 $1,768,000
Accrued insurance.......................................... 1,392,000 1,087,000 748,000
Warranty service........................................... 625,000 732,000 799,000
Other...................................................... 720,000 1,337,000 1,666,000
$3,351,000 $4,260,000 $4,981,000
</TABLE>
F-8
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
4. LONG-TERM DEBT AND LINE OF CREDIT WITH BANK
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 26, DECEMBER 25, JUNE 25,
1992 1993 1994
<S> <C> <C> <C>
Industrial revenue bonds, variable interest rate (3.6% at December 25,
1993 and 3.05% at June 25, 1994), due in annual installments of
$200,000 from 1994 through 1996 and
$300,000 through 2011................................................ $5,200,000 $5,100,000 $5,100,000
8.375% note due May 1, 2006 (10.75% at December 25, 1993), payable in
monthly installments of $8,229, including interest, secured by land
and building......................................................... 915,000 900,000 891,000
12% note to shareholders paid off in April 1993 which was secured by
land and building and subordinated to the above note due May 1,
2006................................................................. 200,000 -- --
Installment note, interest at prime (6.0% at December 25, 1993 and
7.25% at June 25, 1994) plus .75% due in monthly principal
installments of $19,167 plus interest through November 1998, secured
by all assets except real property................................... -- 1,150,000 1,035,000
9% note due March 1, 1999, payable in monthly installments of $17,645,
including interest, secured by land and building..................... -- -- 816,000
6,315,000 7,150,000 7,842,000
Less: Current portion of long-term debt................................ (114,000) (444,000) (614,000)
$6,201,000 $6,706,000 $7,228,000
</TABLE>
Under the provisions of the industrial revenue bonds, Golden West is
required to provide a letter of credit to guarantee payment to bondholders. The
letter of credit, which is provided by a major bank through 1996, is secured by
land and buildings of the financed property, machinery and equipment, inventory
and receivables. Golden West was also required to deposit approximately $55,000
per month from November 1991 through April 1993 in a cash collateral account
classified as restricted cash in the accompanying consolidated balance sheets.
All mandatory bond redemptions are paid out of this account.
In December 1992, Golden West prepaid a $1,000,000 note which was
originally due April 30, 1995 for $850,000 resulting in an extraordinary gain
which is reflected in the accompanying consolidated statements of income net of
income taxes.
As of December 25, 1993, principal payments on long-term debt are as
follows:
<TABLE>
<S> <C>
Year ending in December:
1994.................................................................................... $ 444,000
1995.................................................................................... 455,000
1996.................................................................................... 454,000
1997.................................................................................... 556,000
1998.................................................................................... 559,000
1999 and thereafter..................................................................... 4,682,000
$ 7,150,000
</TABLE>
In March 1993, Golden West entered into an agreement with a major bank for
a $2,000,000 revolving line of credit which was increased to $3,000,000 in
November 1993 and is secured by receivables and inventory. The agreement, which
expires in May 1994, limits maximum borrowings to 80% of eligible accounts
receivable as defined. The interest rate charged on borrowings is .25% over the
bank's prime interest rate, which was 6% at December 25, 1993 and 7.25% at June
25, 1994. The amount outstanding at December 25, 1993 and June 25, 1994 was
$1,500,000 and $-0-, respectively. Under the terms of the line of credit, Golden
West is required to meet certain financial covenants.
F-9
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
5. INCOME TAXES
The components of the provision (benefit) for income taxes are as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
DECEMBER 28, DECEMBER 26, DECEMBER 25, JUNE 26, JUNE 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
Current:
Federal................................... $175,000 $131,000 $789,000 $ 63,000 $805,000
State..................................... 31,000 23,000 139,000 11,000 142,000
206,000 154,000 928,000 74,000 947,000
Deferred:
Federal................................... 14,000 (58,000) (376,000) (92,000) (224,000)
State..................................... 2,000 (10,000) (66,000) (16,000) (40,000)
16,000 (68,000) (442,000) (108,000) (264,000)
Total Provision........................... 222,000 86,000 486,000 (34,000) 683,000
Less: Provision related to extraordinary
item...................................... -- (60,000) -- -- --
$222,000 $ 26,000 $486,000 $ (34,000) $683,000
</TABLE>
The reported provision (benefit) for income taxes differs from the amount
computed by applying the statutory Federal income tax rate of 34% to the
consolidated income (loss) before provision (benefit) for income taxes and
extraordinary item as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
DECEMBER 28, DECEMBER 26, DECEMBER 25, JUNE 26, JUNE 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
Provision (benefit) computed at statutory
rate........................................ $157,000 $(11,000) $387,000 $(44,000) $568,000
State taxes (benefit), net of Federal
benefit..................................... 28,000 (2,000) 67,000 (8,000) 100,000
Permanent differences......................... 37,000 39,000 32,000 18,000 15,000
$222,000 $ 26,000 $486,000 $(34,000) $683,000
</TABLE>
The components of Golden West's deferred income tax provision (benefit) are
as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED SIX MONTHS ENDED
DECEMBER 28, DECEMBER 26, DECEMBER 25, JUNE 26, JUNE 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
AMT credits................................. $ -- $ -- $ (226,000) $ -- $ --
Net operating loss carryforwards............ 190,000 138,000 699,000 -- 391,000
Allowance for doubtful accounts............. (1,000) (8,000) (19,000) (23,000) (106,000)
Inventory reserve........................... -- -- (44,000) -- (10,000)
Warranty service accrual.................... (26,000) (16,000) (43,000) (8,000) (27,000)
Depreciation................................ (16,000) (2,000) (71,000) (45,000) (8,000)
Other non-deductible expenses............... 59,000 (42,000) (39,000) (32,000) (113,000)
Change in valuation allowance............... (190,000) (138,000) (699,000) -- (391,000)
$ 16,000 $ (68,000) $ (442,000) $(108,000) $(264,000)
</TABLE>
F-10
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
5. INCOME TAXES -- Continued
The components of the Company's net deferred income tax benefit are as
follows:
<TABLE>
<CAPTION>
DECEMBER 26, DECEMBER 25, JUNE 25,
1992 1993 1994
<S> <C> <C> <C>
AMT credits................................................ $ -- $ 226,000 $ 226,000
Net operating loss carryforwards........................... 3,130,000 2,431,000 2,040,000
Allowance for doubtful accounts............................ 30,000 49,000 155,000
Inventory reserve.......................................... -- 44,000 54,000
Warranty service accrual................................... 250,000 293,000 320,000
Depreciation............................................... (107,000) (36,000) (28,000)
Other non-deductible expenses.............................. 96,000 135,000 248,000
Valuation allowance........................................ (3,130,000) (2,431,000) (2,040,000)
$ 269,000 $ 711,000 $ 975,000
</TABLE>
The provision for income taxes is calculated before utilization of the net
operating loss carryforwards which were acquired as part of the purchase
described in Note 1. Utilization of the acquired net operating loss
carryforwards results in a reduction of the current income tax liability,
subject to certain annual limitations imposed by the Internal Revenue Code, as
well as a corresponding reduction of the amount of purchase price in excess of
net assets acquired recorded in connection with the acquisition (See Note 1).
The annual limitation as of December 25, 1993 is approximately $775,000 for
Federal and state purposes. For the year ended December 25, 1993, Golden West
utilized approximately $1,600,000 and $1,700,000 of the net operating loss
carryforwards as a reduction of the current Federal and state income tax
liabilities, respectively.
At December 25, 1993, Golden West had available net operating loss
carryforwards for Federal and state tax reporting purposes of approximately
$7,000,000 and $1,100,000, respectively. These loss carryforwards are available
through the year 2002 for Federal purposes and from 1994 to 2002 for state
purposes.
6. CAPITAL STOCK
Each share of series A preferred stock is convertible, at the option of the
holder, into common stock of Golden West at the rate of one common stock share
for each series A preferred share, subject to certain adjustments. In addition,
the stock shall automatically convert into common stock upon the closing of a
public offering or on September 30, 1995, whichever first occurs. The series A
preferred stock is entitled to receive dividends based on certain criteria and
has the same voting rights as common.
The series B preferred stock, which was held by the former owner of Golden
West, was purchased for $1,150,000 and canceled by Golden West in November 1993.
The $1,850,000 difference between the purchase price and the original stated
value of the preferred stock was credited to additional paid-in capital in the
accompanying consolidated balance sheets.
As a result of the purchase, the former owner of Golden West waived all
rights to convert the series B preferred stock to either a promissory note or
20% of voting stock.
7. COMMITMENTS AND CONTINGENT LIABILITIES
Golden West leases certain facilities and equipment under noncancellable
operating lease agreements which expire on various dates through 1999. Rental
expense for the years ended December 28, 1991, December 26, 1992 and December
25, 1993 was $1,273,000, $958,000 and $628,000, respectively. Rental expense for
the six months ended June 26, 1993 and June 25, 1994 was $380,000 and $388,000,
respectively. As of December 25, 1993, approximate minimum rental commitments
under noncancellable operating leases are payable as follows:
<TABLE>
<S> <C>
Year ending in December:
1994.................................................................................... $ 640,000
1995.................................................................................... 538,000
1996.................................................................................... 314,000
1997.................................................................................... 194,000
1998.................................................................................... 151,000
Thereafter.............................................................................. 11,000
$ 1,848,000
</TABLE>
F-11
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
7. COMMITMENTS AND CONTINGENT LIABILITIES -- Continued
Golden West has various incentive compensation programs (the Programs) for
executives, division managers and other factory employees. The Programs provide
for bonuses based on various percentages of sales and profit, as defined. Under
the Programs, Golden West incurred bonus expenses of approximately $1.8 million,
$1.9 million and $2.5 million for the years ended December 28, 1991, December
26, 1992 and December 25, 1993, respectively, and approximately $1,000,000 and
$1,300,000 for the six months ended June 26, 1993 and June 25, 1994,
respectively.
Golden West is contingently liable under terms of repurchase agreements
with financial institutions providing inventory financing for retailers of
Golden West's product. These arrangements, which are customary in the industry,
provide for the repurchase of products sold to retailers in the event of default
on payments by the retailer. Although Golden West is contingently liable under
these agreements, the risk of loss is spread over numerous retailers and
financing institutions and is further reduced by the resale value of repurchased
homes. Golden West estimates that its potential obligations under repurchase
agreements approximated $22 million at December 25, 1993. Losses under these
agreements have not been significant in the past.
Golden West is involved in various legal proceedings, most of which are
routine litigation incident to its business, and most of which are covered in
whole or in part by insurance. In the opinion of management, disposition of
these matters will not have a material adverse impact on Golden West's financial
position or results of operations.
8. 401(k) PLAN
Golden West has a 401(k) Savings Plan (the Plan) for full-time eligible
employees (defined as employees with one or more years of service and at least
21 years of age). Under the Plan, Golden West makes matching contributions based
on a pre-determined formula to an annual limitation, which was $150,000,
$160,000 and $180,000 in 1991, 1992 and 1993, respectively. The employee's
contributions vest immediately and Golden West contributions vest over a seven
year period.
9. STOCK OPTIONS
On April 24, 1990, the shareholders approved a Stock Option Plan (the Plan)
for executives and key employees covering 312,000 shares of common stock. On
November 1, 1993, shareholders approved an amendment to the Plan to increase the
number of shares authorized from 312,000 to 520,000. Under the Plan, Golden West
can issue both incentive and non-qualified options. Options are granted at not
less than the fair market value of the stock at the date such option is granted
and become exercisable over a four year period.
The following is a summary of transactions relating to the Plan for the
years ended December 26, 1992 and December 25, 1993:
<TABLE>
<CAPTION>
STOCK OPTIONS
SHARES PRICE
<S> <C> <C>
Outstanding, December 28, 1991.............................................. 278,200 $ 1.00
Granted................................................................... 26,000 1.42
Exercised................................................................. -- --
Canceled.................................................................. -- --
Outstanding, December 26, 1992.............................................. 304,200 1.00-1.42
Granted................................................................... 104,000 1.54
Exercised................................................................. -- --
Canceled.................................................................. (5,200) (1.00)
Outstanding, December 25, 1993.............................................. 403,000 $ 1.00-$1.54
Exercisable at December 25, 1993............................................ 211,250
Available for Grant at December 25, 1993.................................... 117,000
</TABLE>
F-12
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
10. FINANCE COMPANY
In October 1993, Golden West formed Golden Circle Financial, a wholly-owned
subsidiary, for the purpose of providing retail financing for Golden West's
homes. There were no revenues generated and approximately $165,000 of start-up
expenses incurred in 1993.
Golden Circle Financial is utilizing Golden West's bank revolving line of
credit for operating capital and has an agreement with a major financial
institution to purchase Golden Circle Financial retail finance contracts on a
non-recourse basis. At December 25, 1993, Golden West had provided $883,000 in
retail finance contracts, of which $592,000 were sold to the financial
institution in January 1994, and the balance is anticipated to be sold in 1994.
11. MAJOR CUSTOMER
For the years ended December 26, 1992 and December 25, 1993, Golden West
sold $7,578,000 and $12,827,000, respectively, of homes, representing 10% and
14%, respectively, of net sales to one customer. No other customer accounted for
more than 10% of net sales during 1992 or 1993. There were no customers for the
year ended December 28, 1991 which accounted for more than 10% of net sales. For
the six months ended June 26, 1993 and June 25, 1994, Golden West sold
$6,133,000 and $9,194,000, respectively, of homes, representing 15% and 16%,
respectively, of net sales to one customer.
12. EMPLOYEE STOCK OWNERSHIP PLAN
In January 1994, Golden West formed an employee stock ownership plan for
full time employees (defined as employees with one or more years of service and
at least 21 years of age). For 1994, Golden West's Board of Directors approved
an initial contribution of $100,000 together with a year end contribution of 10%
of 1994 pre-tax earnings.
13. SUBSEQUENT EVENTS
On March 14, 1994, Golden West purchased a manufacturing facility in Fort
Morgan, Colorado for $1,050,000. In connection with this purchase Golden West
signed an $850,000 note which is payable over five years at 9% interest.
On April 11, 1994, Golden West's Board of Directors approved the following
actions:
(a) an increase in the authorized shares of common and series A preferred
stock to 20,000,000 and 1,105,000, respectively, and a 52 for 1 stock
split of these series. All references in the accompanying consolidated
financial statements to the number of shares and per share amounts have
been restated to reflect the effect of these actions.
(b) a plan to merge Karsten into Golden West and to change its name to
Golden West Homes. The accompanying consolidated financial statements
have been revised to reflect these actions.
On April 11, 1994, the participants in the deferred compensation plan,
subject to the closing of a public offering, irrevocably elected to convert
$500,000 in their account balances into 260,000 shares of common stock upon the
closing of a public offering. The $500,000 is classified as additional paid-in
capital in the accompanying consolidated financial statements.
F-13
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 55-8-51 and 55-8-56 of the North Carolina Business Corporation Act
(the "Act") provide, in substance, that North Carolina corporations shall have
the power, under specified circumstances, to indemnify their directors,
officers, employees and agents in connection with proceedings brought against
them by a third-party or in the right of the corporation, by reason of the fact
that they were or are such directors, officers, employees or agents, against
expenses incurred in any such proceedings.
Section 9.5 of the Registrant's Bylaws provides that a director of the
Registrant shall have the right to be indemnified by the Registrant against
expenses, including reasonable attorneys' fees, incurred by him or her in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and whether or not
brought by or on behalf of the Corporation, arising out of his or her status as
such director or as an officer, employee or agent of the Registrant and any
liability incurred by him or her, including without limitation, satisfaction of
any judgment, money decree, fine, penalty or settlement, for which he or she may
have become liable in connection with any such action, suit or proceeding. The
Bylaws further contemplate that the indemnification provisions permitted
thereunder are not exclusive of any other rights to which such person may be
entitled apart from the provisions of the Bylaws, and shall not be limited by
the provisions for indemnification in Sections 55-8-51 through 55-8-56 of the
Act or any successor statutory provisions.
Section 55-8-57 of the Act also permits a corporation to purchase and
maintain insurance on behalf of its directors and officers against liabilities
which they may incur in their capacities as such, whether or not the corporation
would have the power to indemnify them under other provisions of the statute.
The Registrant has purchased insurance to provide for indemnification of
directors and officers.
Paragraph 11 of the Registrant's Articles of Incorporation provides that a
director of the Registrant shall have no personal liability arising out of any
action for monetary damages for breach of his or her duty as a director to the
full extent permitted by the laws of the State of North Carolina.
ITEM 21. EXHIBITS.
<TABLE>
<S> <C>
2 Acquisition Agreement, including the Agreement of Merger attached thereto as Exhibit A*
4 Shareholder Protection Rights Agreement between the Registrant and Wachovia Bank of North Carolina, N.A., as Rights
Agent (incorporated by reference to Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1991).
5 Opinion and Consent of Kennedy Covington Lobdell & Hickman, L.L.P.*
8 Opinion of Kennedy Covington Lobdell & Hickman, L.L.P. regarding certain tax matters*
23.1 Consent of Price Waterhouse LLP*
23.2 Consent of Kennedy Covington Lobdell & Hickman, L.L.P. (see Exhibits 5 and 8).
23.3 Consent of Arthur Andersen & Co.*
24 Power of Attorney*
99.1 Form of Acknowledgement*
99.2 Golden West Homes Form of Proxy (filed herewith).
</TABLE>
* Already filed.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) to file during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or event arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
II-1
<PAGE>
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information statement.
(2) that, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement related to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) to remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
(c)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or any
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Greensboro,
State of North Carolina, on August 31, 1994.
OAKWOOD HOMES CORPORATION
By: /s/ C. MICHAEL KILBOURNE
NAME: C. MICHAEL KILBOURNE
TITLE: VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
RALPH L. DARLING Director and Chairman of the Board , 1994
<S> <C> <C>
* Director and President (Principal Executive August 31, 1994
Officer)
NICHOLAS J. ST. GEORGE
* Director and Executive Vice President August 31, 1994
ROBERT D. HARVEY, SR.
* Director and Executive Vice President August 31, 1994
A. STEVEN MICHAEL
* Director August 31, 1994
DENNIS I. MEYER
* Director August 31, 1994
KERMIT G. PHILLIPS, II
* Director August 31, 1994
S. GRAY STEIFEL, JR.
* Director August 31, 1994
SABIN C. STREETER
Director , 1994
FRANCIS T. VINCENT, JR.
* Director August 31, 1994
CLARENCE W. WALKER
* Director August 31, 1994
H. MICHAEL WEAVER
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
<S> <C> <C>
/s/ C. MICHAEL KILBOURNE Vice President (Principal Financial August 31, 1994
Officer)
C. MICHAEL KILBOURNE
* Treasurer (Principal Accounting Officer) August 31, 1994
DOUGLAS R. MUIR
*By: /s/ C. MICHAEL KILBOURNE
C. MICHAEL KILBOURNE
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
ANNEX I
ACQUISITION AGREEMENT
AMONG
OAKWOOD HOMES CORPORATION,
GOLDEN ACQUISITION CORPORATION,
GOLDEN WEST HOMES,
CERTAIN SHAREHOLDERS OF GOLDEN WEST HOMES
AND
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
AS ESCROW AGENT
DATED AS OF AUGUST 17, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1............................................................................................................ Aa-1
THE MERGER......................................................................................................... Aa-1
1.1 The Merger..................................................................................................... Aa-1
1.2 The Closing.................................................................................................... Aa-1
1.3 Effective Time................................................................................................. Aa-1
ARTICLE 2............................................................................................................ Aa-1
ARTICLES OF INCORPORATION AND BYLAWS AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION....................... Aa-1
2.1 Articles of Incorporation...................................................................................... Aa-1
2.2 Bylaws......................................................................................................... Aa-2
2.3 Directors...................................................................................................... Aa-2
2.4 Officers....................................................................................................... Aa-2
ARTICLE 3............................................................................................................ Aa-2
CONVERSION OF GOLDEN WEST STOCK; EXCHANGE OF CERTIFICATES.......................................................... Aa-2
3.1 Conversion of Shares........................................................................................... Aa-2
3.2 Fractional Shares.............................................................................................. Aa-3
3.3 Exchange of Certificates....................................................................................... Aa-3
3.4 Distributions with Respect to Unexchanged Shares of Golden West Common Stock or Golden West Preferred Stock.... Aa-3
3.5 Stock Options.................................................................................................. Aa-4
3.6 Withholding Rights............................................................................................. Aa-4
3.7 Dissenting Shares.............................................................................................. Aa-4
3.8 Transaction Expenses........................................................................................... Aa-5
3.9 Escrow......................................................................................................... Aa-5
ARTICLE 4............................................................................................................ Aa-6
REPRESENTATIONS AND WARRANTIES OF GOLDEN WEST AND THE SHAREHOLDERS................................................. Aa-6
4.1 Organization and Qualification; Subsidiaries................................................................... Aa-7
4.2 Articles of Incorporation and Bylaws........................................................................... Aa-7
4.3 Capitalization................................................................................................. Aa-7
4.4 Authority Relative to this Agreement........................................................................... Aa-7
4.5 No Conflict; Required Filings and Consents..................................................................... Aa-8
4.6 [Intentionally Omitted]........................................................................................ Aa-8
4.7 Other Interests................................................................................................ Aa-8
4.8 Financial Statements........................................................................................... Aa-8
4.9 Subsequent Events.............................................................................................. Aa-9
4.10 Tax Matters................................................................................................... Aa-9
4.11 Employees and Fringe Benefit Plans............................................................................ Aa-10
4.12 Title to Assets............................................................................................... Aa-11
4.13 Condition of Tangible Assets.................................................................................. Aa-13
4.14 Leases........................................................................................................ Aa-15
4.15 Adequacy of Assets............................................................................................ Aa-15
4.16 Arms-Length Transaction....................................................................................... Aa-15
4.17 Lawfully Operating............................................................................................ Aa-15
4.18 No Litigation................................................................................................. Aa-16
4.19 [Intentionally Omitted]....................................................................................... Aa-16
4.20 Labor Matters................................................................................................. Aa-16
</TABLE>
Aa-ii
<PAGE>
<TABLE>
<S> <C>
4.21 Pooling of Interests.......................................................................................... Aa-16
4.22 No Brokers.................................................................................................... Aa-16
4.23 Oakwood Stock Ownership....................................................................................... Aa-16
4.24 Bank Accounts................................................................................................. Aa-16
4.25 Insurance..................................................................................................... Aa-17
4.26 Warranty and Product Liability Matters........................................................................ Aa-17
4.27 Warranty, Repurchase and Other Service Obligations............................................................ Aa-17
4.28 Dealer Arrangements........................................................................................... Aa-17
4.29 Guarantees.................................................................................................... Aa-17
4.30 Prospective Changes........................................................................................... Aa-18
4.31 Full Disclosure............................................................................................... Aa-18
ARTICLE 5............................................................................................................ Aa-19
REPRESENTATIONS AND WARRANTIES OF OAKWOOD AND MERGER SUB........................................................... Aa-19
5.1 Organization and Qualification................................................................................. Aa-19
5.2 Articles of Incorporation and Bylaws........................................................................... Aa-19
5.3 Capitalization................................................................................................. Aa-19
5.4 Authority Relative to this Agreement........................................................................... Aa-20
5.5 No Conflict; Required Filings and Consents..................................................................... Aa-20
5.6 SEC Filings; Financial Statements.............................................................................. Aa-20
5.7 Absence of Changes............................................................................................. Aa-21
5.8 Absence of Litigation.......................................................................................... Aa-21
5.9 Brokers........................................................................................................ Aa-21
5.10 Compliance.................................................................................................... Aa-21
5.11 Full Disclosure............................................................................................... Aa-21
ARTICLE 6............................................................................................................ Aa-21
COVENANTS.......................................................................................................... Aa-21
6.1 Covenants of Oakwood and Golden West........................................................................... Aa-21
6.2 Covenants of Golden West....................................................................................... Aa-23
6.3 Covenants of Oakwood........................................................................................... Aa-25
6.4 Tax-Free Reorganization........................................................................................ Aa-25
ARTICLE 7............................................................................................................ Aa-25
CONDITIONS......................................................................................................... Aa-25
7.1 Conditions to Each Party's Obligation to Effect the Merger..................................................... Aa-25
7.2 Conditions to Obligation of Golden West to Effect the Merger................................................... Aa-26
7.3 Conditions to Obligation of Oakwood and Merger Sub to Effect the Merger........................................ Aa-27
ARTICLE 8............................................................................................................ Aa-28
INDEMNIFICATION.................................................................................................... Aa-28
8.1 Indemnification................................................................................................ Aa-28
8.2 Notice......................................................................................................... Aa-29
ARTICLE 9............................................................................................................ Aa-29
TERMINATION........................................................................................................ Aa-29
9.1 Termination by Mutual Consent.................................................................................. Aa-29
9.2 Termination by Either Oakwood or Golden West................................................................... Aa-29
9.3 Termination by Golden West..................................................................................... Aa-29
9.4 Termination by Oakwood......................................................................................... Aa-29
9.5 Effect of Termination and Abandonment.......................................................................... Aa-30
9.6 Extension; Waiver.............................................................................................. Aa-30
</TABLE>
Aa-iii
<PAGE>
<TABLE>
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9.7 Termination Fee................................................................................................ Aa-30
ARTICLE 10........................................................................................................... Aa-30
GENERAL PROVISIONS................................................................................................. Aa-30
10.1 Effectiveness of Representations and Warranties............................................................... Aa-30
10.2 Notices....................................................................................................... Aa-30
10.3 Assignment, Binding Effect; Benefit........................................................................... Aa-31
10.4 Entire Agreement.............................................................................................. Aa-31
10.5 Amendment..................................................................................................... Aa-31
10.6 Governing Law................................................................................................. Aa-32
10.7 Counterparts.................................................................................................. Aa-32
10.8 Headings...................................................................................................... Aa-32
10.9 Interpretation................................................................................................ Aa-32
10.10 Waivers...................................................................................................... Aa-32
10.11 Incorporation of Schedules and Exhibits...................................................................... Aa-32
10.12 Severability................................................................................................. Aa-32
10.13 Enforcement of Agreement..................................................................................... Aa-32
10.14 Effectiveness................................................................................................ Aa-32
</TABLE>
Aa-iv
<PAGE>
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (the "Agreement"), is executed as of the 17th
day of August, 1994, by and among OAKWOOD HOMES CORPORATION, a North Carolina
corporation ("Oakwood"), GOLDEN ACQUISITION CORPORATION, a newly formed
California corporation and wholly-owned subsidiary of Oakwood ("Merger Sub"),
GOLDEN WEST HOMES, a California corporation ("Golden West"), the shareholders of
Golden West who receive Oakwood Common Stock (as hereinafter defined) under this
Agreement (the "Shareholders"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
a national banking association organized and existing under the laws of the
United States of America, as Escrow Agent (the "Escrow Agent").
RECITALS
A. The Boards of Directors of Oakwood, Merger Sub and Golden West each have
determined that a business combination pursuant to which Merger Sub will merge
with and into Golden West and Golden West will become a wholly-owned subsidiary
of Oakwood is in the best interests of the respective companies and their
shareholders, and accordingly have approved the merger provided for herein upon
the terms and subject to the conditions set forth herein.
B. For federal income tax purposes, it is intended that the merger provided
for herein qualify as a reorganization within the meaning of Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"), and
for financial accounting purposes be accounted for as a "pooling of interests."
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the California General Corporation Law
("CGCL"), at the Effective Time (as defined in Section 1.3), Merger Sub shall be
merged with and into Golden West and the separate corporate existence of Merger
Sub shall thereupon cease (the "Merger"). Golden West shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall be a wholly-owned subsidiary of Oakwood. In connection
with the Merger, each of Oakwood, Merger Sub and Golden West shall adopt an
Agreement of Merger substantially in the form of Exhibit A attached hereto (the
"Agreement of Merger").
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place (a) at the offices of
Kennedy Covington Lobdell & Hickman, L.L.P., NationsBank Corporate Center, Suite
4200, 100 North Tryon Street, Charlotte, North Carolina, at 9:00 am., Charlotte
time, as promptly as practicable (and in any event within two business days)
following the day on which the last to be fulfilled or waived of the conditions
set forth in Article 7 shall be fulfilled or waived in accordance herewith or
(b) at such other time, date or place as Oakwood and Golden West may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date," which date shall be the same as the date of the Effective Time (defined
below).
1.3 EFFECTIVE TIME. If all of the conditions to the Merger set forth in
Article 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause an Agreement of Merger meeting the requirements of Section
1101 of the CGCL to be properly executed and filed, together with appropriate
officers' certificates, in accordance with Section 1103 of the CGCL on the
Closing Date. The Merger shall become effective at the time of filing of the
Agreement of Merger or at such later time which the parties hereto shall have
agreed upon and designated in such filing as the effective time of the Merger
(the "Effective Time").
ARTICLE 2
ARTICLES OF INCORPORATION AND BYLAWS
AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Merger Sub
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law.
Aa-1
<PAGE>
2.2 BYLAWS. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.3 DIRECTORS. The directors of the Surviving Corporation immediately after
the Effective Time shall be the following persons:
Harry E. Karsten, Jr.
Nicholas J. St. George
A. Steven Michael
C. Michael Kilbourne
Robert D. Harvey, Sr.
Robert D. Totten
Gary R. Mounts
2.4 OFFICERS. The officers of the Surviving Corporation immediately after
the Effective Time shall be the following persons:
<TABLE>
<S> <C>
President and Chief Executive Officer: Harry E. Karsten, Jr.
Executive Vice President, Operations: Bruce W. Stoyer
Executive Vice President: A. Steven Michael
Senior Vice President: Robert J. Henry
Vice President, Chief Financial Officer and Secretary: Frank D. Jacobs
Vice President: C. Michael Kilbourne
Vice President: Robert C. Latimer
Vice President: Phillip E. Clark
Vice President: Paul A. Karsten
Treasurer: Douglas R. Muir
Assistant Secretary: Myles E. Standish
Assistant Secretary: Gwendalyn C. Scott
</TABLE>
ARTICLE 3
CONVERSION OF GOLDEN WEST STOCK; EXCHANGE OF CERTIFICATES
3.1 CONVERSION OF SHARES.
(a) Prior to the Effective Time, Harry E. Karsten, Jr., Robert D. Totten
and Celia Golden as Beneficiary shall convert an aggregate of $500,000 of their
combined Deferred Compensation Plan account balances into 260,000 shares of the
no par value Common Stock of Golden West ("Golden West Common Stock") pursuant
to the terms of the Golden West Deferred Compensation Plan, as amended (the
"Deferred Compensation Plan"), and otherwise on terms satisfactory to Oakwood.
At the Effective Time, by virtue of the Merger and without any action on the
part of Oakwood, Merger Sub, Golden West or the holders of any of their
respective securities, each share of Golden West Common Stock, issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares (if applicable and as defined in Section 3.7(a)), and each share of
Preferred Stock, no par value, of Golden West ("Golden West Preferred Stock "),
issued and outstanding immediately prior to the Effective Time (other than any
Dissenting Shares (if applicable)), shall be converted, subject to Section 3.2,
into the right to receive .231099373 of one share of the Common Stock, $.50 par
value, of Oakwood ("Oakwood Common Stock") (the "Exchange Ratio"). The shares of
Oakwood Common Stock issued pursuant to this Section 3.1, and the shares of
Oakwood Common Stock reserved for issuance pursuant to Section 3.5, shall in the
aggregate be no more than 700,000 less (a) the number of Dissenting Common
Shares (as defined in Section 3.7(a)) multiplied by the Exchange Ratio plus the
number of Dissenting Preferred Shares (as defined in Section 3.7(a)) multiplied
by the Exchange Ratio, and (b) the sum of all fractional shares for which cash
was or is to be paid pursuant to Section 3.2; provided, however, that, in any
event, if between the date of this Agreement and the Effective Time the
outstanding shares of Oakwood Common Stock or Golden West Common Stock or Golden
West Preferred Stock shall have been changed into a different number of shares
or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Exchange Ratios shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares. At the Effective Time, all shares of Golden West Common
Stock and Golden West Preferred Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares shall thereafter represent the
right to receive, upon
Aa-2
<PAGE>
the surrender of such certificate in accordance with the provisions of Section
3.3, certificates evidencing such number of whole shares of Oakwood Common Stock
into which such Golden West Common Stock or Golden West Preferred Stock was
converted in accordance with the Exchange Ratios. The holders of such
certificates previously evidencing such shares of Golden West Common Stock and
Golden West Preferred Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares except as otherwise
provided herein or by law. No fractional share of Oakwood Common Stock shall be
issued; and, in lieu thereof, a cash payment shall be made pursuant to Section
3.2.
(b) At the Effective Time, by virtue of the Merger and without any action
on the part of Oakwood, Merger Sub or Golden West, each share of capital stock
of Merger Sub issued and outstanding prior to the Effective Time, shall be
converted into the right to receive one share of Common Stock of Golden West as
the Surviving Corporation. From and after the Effective Time, Oakwood, as holder
of all of the outstanding shares of capital stock of Merger Sub, shall have the
right to receive Common Stock of Golden West as provided hereinabove upon its
surrender of the certificate or certificates representing all shares of the
capital stock of Merger Sub. Until surrender, each outstanding certificate which
prior to the Effective Time represented capital stock of Merger Sub shall be
deemed for all corporate purposes to evidence ownership of the number of whole
shares of Common Stock of Golden West into which the shares of capital stock of
Merger Sub have been so converted. From and after the Effective Time, Oakwood,
as owner of all outstanding shares of the capital stock of Merger Sub, shall
thereupon cease to have any rights with respect to such shares and its rights
shall be solely in respect of the Common Stock of Golden West into which such
shares of capital stock of Merger Sub have been so converted.
3.2 FRACTIONAL SHARES. No fraction of a share of Oakwood Common Stock shall
be issued in the Merger. In lieu of any such fractional shares, each holder of
Golden West Common Stock or Golden West Preferred Stock upon surrender of a
certificate for exchange pursuant to Section 3.3 shall be paid an amount in cash
(without interest), rounded to the nearest cent, determined by multiplying the
fractional interest to which such holder would otherwise be entitled (after
taking into account all shares of Golden West Common Stock or Golden West
Preferred Stock then held of record by such holder) by the closing price of the
Oakwood Common Stock on the New York Stock Exchange two business days before the
Effective Time (or, if such stock is not traded on the New York Stock Exchange
on such date, the closing price thereon on the immediately preceding day on
which the stock traded) (the "Closing Price").
3.3 EXCHANGE OF CERTIFICATES. At the Closing, Oakwood shall deliver to each
shareholder of Golden West, against receipt of duly endorsed certificates for
all of such shareholder's shares of Golden West Common Stock or Golden West
Preferred Stock and an executed Acknowledgment (as hereinafter defined),
certificates evidencing the number of whole shares of Oakwood Common Stock (less
the Escrowed Shares as provided below) that such shareholder has a right to
receive in accordance with the Exchange Ratio in respect of the shares of Golden
West Common Stock or Golden West Preferred Stock formerly evidenced by such
certificates and cash in lieu of fractional shares of Oakwood Common Stock to
which such shareholder is entitled pursuant to Section 3.2. After the Effective
Time, except for a shareholder receiving payment pursuant to the preceding
sentence, each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding shares of Golden
West Common Stock or Golden West Preferred Stock (other than Dissenting Shares,
if applicable) upon surrender thereof (and upon presentation of an executed
Acknowledgment) to Wachovia Bank of North Carolina, NA (the "Exchange Agent"),
as exchange agent for Oakwood, shall be entitled to receive in exchange therefor
(a) certificates evidencing that number of whole shares of Oakwood Common Stock
that such holder has the right to receive in accordance with the Exchange Ratios
in respect of the shares of Golden West Common Stock or Golden West Preferred
Stock formerly evidenced by such certificate, (b) any dividends or other
certificate, distributions to which such holder is entitled pursuant to Section
3.4 and (c) cash in lieu of fractional shares of Oakwood Common Stock to which
such holder is entitled pursuant to Section 3.2 (the distributions and cash
described in clauses (a), (b) and (c) being, collectively, the "Merger
Consideration"), and the certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of shares of Golden West Common Stock or
Golden West Preferred Stock that is not registered in the transfer records of
Golden West, shares of Oakwood Common Stock may be issued and paid in accordance
with this Article III to a transferee if the certificate evidencing such shares
of Golden West Common Stock or Golden West Preferred Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 3.3, each certificate
representing shares of Golden West Common Stock or Golden West Preferred Stock
shall be deemed at any time after the Effective Time to evidence only the right
to receive upon such surrender (and upon presentation of an executed
Acknowledgment) the Merger Consideration.
3.4 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES OF GOLDEN WEST COMMON
STOCK OR GOLDEN WEST PREFERRED STOCK. No dividends or other distributions
declared or made after the Effective Time with respect to Oakwood Common Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered certificate representing shares of
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Golden West Common Stock or Golden West Preferred Stock with respect to the
shares of Oakwood Common Stock they are entitled to receive until the holder of
such unsurrendered certificate shall surrender the certificate.
3.5 STOCK OPTIONS. At the Effective Time, Golden West's obligations with
respect to each outstanding Golden West Stock Option (as defined in Section 4.3)
to purchase shares of Golden West Common Stock, as amended in the manner
described in the following sentence, shall be assumed by Oakwood. The Golden
West Stock Options so assumed by Oakwood shall continue to have, and be subject
to, the same terms and conditions as set forth in the stock option plans and
agreements pursuant to which such Golden West Stock Options were issued as in
effect immediately prior to the Effective Time, except that (a) each Golden West
Stock Option shall be exercisable for that number of whole shares of Oakwood
Common Stock equal to the product of the number of shares of Golden West Common
Stock covered by such Golden West Stock Option immediately prior to the
Effective Time multiplied by the Exchange Ratio and rounded down to the nearest
whole number of shares of Oakwood Common Stock and (b) the price at which each
such Golden West Stock Option is exercisable shall be divided by the Exchange
Ratio. Oakwood shall (i) reserve for issuance the aggregate number of shares of
Oakwood Common Stock that will become issuable upon the exercise of such Golden
West Stock Options pursuant to this Section 3.5 and (ii) promptly after the
Effective Time issue to each holder of an outstanding Golden West Stock Option a
document evidencing the assumption by Oakwood of Golden West's obligations with
respect thereto under this Section 3.5. Nothing in this Section 3.5 shall affect
the schedule of vesting with respect to the Golden West Stock Options to be
assumed by Oakwood. Prior to the Effective Time and if Oakwood so requests,
Golden West shall enter into agreements satisfactory to Oakwood with each holder
of an outstanding Golden West Stock Option pursuant to which such holder agrees
to the assumption of his option by Oakwood as provided in this Section 3.5. For
each outstanding Golden West Stock Option, Schedule 3.5 sets forth (a) the
number of shares of Golden West Common Stock for which such option is
exercisable and the exercise price with respect thereto and (b) the number of
shares of Oakwood Common Stock for which each such option shall be exercisable
upon its assumption by Oakwood and the exercise price therefor as determined
pursuant to this Section 3.5.
3.6 WITHHOLDING RIGHTS. Oakwood, Golden West or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of or options for Golden West
Common Stock or Golden West Preferred Stock such amounts as Oakwood, Golden West
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code (hereinafter defined) or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Oakwood, Golden West or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Golden West Common Stock or Golden West Preferred Stock in respect
of which such deduction and withholding was made by Oakwood or the Exchange
Agent.
3.7 DISSENTING SHARES.
(a) If provided for under the CGCL, notwithstanding any other provision of
this Agreement to the contrary, shares of Golden West Common Stock or Golden
West Preferred Stock that are outstanding immediately prior to the Effective
Time and which are held by shareholders of Golden West who shall not have voted
in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing payment for such shares in accordance with Sections
1300 et seq. of the CGCL and who shall not have withdrawn such demand or have
been deemed or otherwise have forfeited the right to payment (such shares of
Golden West Common Stock being referred to as "Dissenting Common Shares," such
shares of Golden West Preferred Stock being referred to as "Dissenting Preferred
Shares" and the Dissenting Common Shares and the Dissenting Preferred Shares
being referred to collectively as the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
shareholders shall be entitled to receive payment of the fair market value of
such shares of Golden West Common Stock or Golden West Preferred Stock held by
them in accordance with the provisions of the CGCL, except that all Dissenting
Shares held by shareholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to payment for such shares of Golden
West Common Stock or Golden West Preferred Stock under the CGCL shall thereupon
be deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration, upon surrender in the manner provided in Section 3.3 of
the certificate or certificates that formerly evidenced such shares of Golden
West Common Stock or Golden West Preferred Stock.
(b) Golden West shall give Oakwood (i) prompt notice of any demands for
payment received by Golden West, withdrawals of such demands, and any other
instruments served pursuant to the CGCL and received by Golden West and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for payment under the CGCL. Golden West shall not, except with the prior written
consent of Oakwood, make any payment with respect to any demands for payment, or
offer to settle, or settle, any such demands.
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3.8 TRANSACTION EXPENSES. Golden West shall bear all Golden West
Transaction Expenses (hereinafter defined) in the event the Merger is not
consummated. In the event the Merger is consummated, Golden West shall bear only
the first $100,000 of Golden West Transaction Expenses and the shareholders of
Golden West, and not Golden West, shall bear all Golden West Transaction
Expenses in excess of $100,000; provided, however, that if the Form S-4 (as
hereinafter defined) is reviewed by the staff of the Securities and Exchange
Commission, then in addition to the first $100,000 of Golden West Transaction
Expenses, Golden West shall also bear the incremental costs (not to exceed
$50,000), over the first $100,000, incurred by Golden West's accountants and
attorneys in responding to such review. As among themselves, the Golden West
shareholders shall bear all such excess expenses pro rata based on the number of
shares of Golden West Common Stock and Golden West Preferred Stock owned by them
at the Effective Time. As used herein, "Golden West Transaction Expenses" means
the total amount of expenses incurred by Golden West or any Golden West
Subsidiary in connection with the Merger and the transactions contemplated by
this Agreement (excluding any expenses related to the initial public offering of
the Golden West Common Stock, which offering was never completed, and any
break-up fee due Wedbush Morgan Securities in connection therewith) for the
following: fees and expenses of the attorneys, accountants and investment
bankers or financial advisers of Golden West, any Golden West Subsidiary or any
Golden West shareholders, any travel expenses or other direct out-of-pocket
expenses of Golden West, any Golden West Subsidiary or any Golden West
shareholder incurred in connection with negotiating, drafting and preparing this
Agreement and attending the Closing, the expenses of the due diligence conducted
by Golden West hereunder, and the expenses relating to the Golden West
shareholders' meeting to approve the Merger (or the furnishing of consents to
the shareholders) (excluding the printing costs and filing fees of the Form S-4
(hereinafter defined)).
3.9 ESCROW. On the Closing Date, Oakwood shall deliver to the Escrow Agent,
a certificate with respect to each Shareholder for 10% of the shares of Oakwood
Common Stock (rounded down to the nearest whole share) that such Shareholder is
entitled to receive pursuant to Section 3.3 (such shares, together with all
shares issued in payment or distribution of any stock dividend on or split-up or
other recapitalization of, or in respect of, any such escrowed shares, and any
securities or other property issued or distributed with respect to such shares
in connection with any merger, consolidation or liquidation of Oakwood being
herein sometimes called the "Escrowed Shares"), to be held as specified in this
Section 3.9. Each such stock certificate shall be registered in the name of such
Shareholder and shall be duly endorsed in blank, or shall be accompanied by
stock powers duly signed in blank, by such Shareholder. The Escrowed Shares of
each Shareholder shall be applied to indemnify and hold harmless Oakwood against
and in respect of Losses (as defined in Section 8.1 hereof), in accordance with
the terms and conditions of this Agreement; provided, however, that no Escrowed
Shares shall be applied to indemnify Oakwood except to the extent that the
aggregate amount of Losses exceeds $150,000. The Shareholders shall be entitled
to vote the Escrowed Shares and shall be entitled to receive any dividend or
distribution thereon (other than dividends or distributions in the form of
capital stock of Oakwood, which shall be delivered to the Escrow Agent and held
as part of the Escrowed Shares). Except as provided in Section 3.9(c) hereof,
the Escrow Agent shall hold the Escrowed Shares according to the provisions of
this Section 3.9.
(a) Term of Escrow. Except as provided in Section 3.9(c) hereof, the
Escrowed Shares shall not be released from escrow until (a) if the Closing
occurs on or before September 30, 1994, the date on which Oakwood releases to
the public its financial results for the fiscal year ending September 30, 1994
or (b) if the Closing occurs after September 30, 1994, the date on which Oakwood
releases to the public its financial results for the fiscal quarter ending
December 31, 1994 (such date being hereinafter sometimes referred to as the
"Release Date").
(b) Formula for Number of Escrowed Shares to be Returned to Oakwood. The
number of Escrowed Shares to be returned to Oakwood in respect of each Loss
shall be computed by dividing the dollar amount of the Shareholders' liability
in respect of such Loss by the closing price of the Oakwood Common Stock on the
New York Stock Exchange at the Effective Time (or if such stock is not traded on
the New York Stock Exchange at the Effective Time, the immediately preceding day
on which the stock is traded on the New York Stock Exchange) (the "Closing
Value"), rounded up to the nearest whole share, subject to appropriate
adjustment in the event of a stock dividend on, or split-up or other
recapitalization of, or in respect of, the Escrowed Shares or in the event that
other securities or property have been deposited in escrow in connection with
any merger, consolidation or liquidation of Oakwood; and such Escrowed Shares to
be so returned shall be divided among the Shareholders in accordance with their
respective interests in the Escrowed Shares.
(c) Certification of Losses, Return of Shares to Oakwood and Delivery of
Balance to the Shareholders.
(i) Subject to subsection (c)(ii) below, Oakwood may, from time to
time, on not less than 30 days' written notice to the Shareholders given
prior to the Release Date, apply all or any part of the Escrowed Shares to
the payment, reimbursement, settlement or discharge of any Loss that has
occurred or will or may occur by instructing the Escrow Agent
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to return such Escrowed Shares to Oakwood; provided, however, that such
notice shall state with reasonable specificity the circumstances of such
asserted Loss and shall set forth the number of Escrowed Shares to be
applied in respect thereof.
(ii) Oakwood shall defer instructing the Escrow Agent to return
Escrowed Shares to it if it has received written notice from a Shareholder
questioning the propriety of such proposed application, in which case such
question shall be referred to and settled by arbitration by the American
Arbitration Association, as arbitrator. The arbitrator shall determine the
amount, if any, of such proposed application which is proper. The venue of
the arbitral proceedings shall be in Guilford County, North Carolina. The
proceedings shall be governed by the Rules of Commercial Arbitration of the
American Arbitration Association. In reaching their decision the arbitrator
shall apply the principles of law that a North Carolina court, in applying
North Carolina law, would use in the event of litigation on the same
issues. The decision rendered by the arbitrator shall be final and binding
on the parties hereto, including the Escrow Agent.
(iii) The Escrowed Shares, or any balance thereof held by the Escrow
Agent (x) as to which notice shall not have been given by Oakwood as
aforesaid on or prior to the Release Date and (y) reduced by the number of
Escrowed Shares to be retained pursuant to subsection (c)(iv), shall be
delivered to the Shareholders not more than five business days after the
Release Date; and such shares to be so returned shall be divided among the
Shareholders in accordance with their respective interests in the original
Escrowed Shares. Any Escrowed Shares held by the Escrow Agent on the
Release Date the application of which to a Loss has been deferred pursuant
to subsection (c)(ii) above or (c)(iv) below shall, upon final
determination or settlement of the Loss being determined or contested, be
applied thereto and any balance delivered to the Shareholders in accordance
with their then respective interests in the Escrowed Shares. Oakwood shall
promptly notify the Escrow Agent on or before the Release Date indicating
the number of Escrowed Shares the application of which has been deferred
pursuant to subsection (c)(ii) above or (c)(iv) below.
(iv) On or before the Release Date, Oakwood shall notify in writing
the Escrow Agent and the Shareholders of any claim for payment,
reimbursement, settlement or discharge of any Loss, the amount of which has
not been liquidated or determined and for which, therefore, no notice has
been given pursuant to subsection (c)(ii) above. In its notice, Oakwood
shall describe with reasonable specificity the nature, type and basis of
such claim and make a good faith estimate of the maximum amount of the Loss
and of the number of Escrowed Shares to be returned to Oakwood for payment
or reimbursement of such Loss, which number shall be retained by the Escrow
Agent pursuant to subsection (c)(iii).
(d) Duties of Escrow Agent. The Escrow Amount shall be held by Escrow Agent
on the terms and subject to the conditions set forth herein but Escrow Agent
shall have no responsibility with respect to this Agreement or obligation
hereunder other than to act as Escrow Agent in accordance herewith. Except as
provided in this Section 3.9, Escrow Agent is not a party to, bound by or
responsible for compliance with the provisions of this Agreement. It is
understood and agreed that the duties of Escrow Agent hereunder are ministerial
in nature and that Escrow Agent shall incur no liability except for and to the
extent of its willful misconduct or gross negligence.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF GOLDEN WEST
AND THE SHAREHOLDERS
Golden West and the Shareholders hereby jointly and severally make the
representations and warranties contained in this Article 4. Such representations
and warranties are made to provide Oakwood with assurance as to the status of
matters specified in this Article as of the date of this Agreement through the
Closing Date and are not intended to guarantee the future results of Golden West
or, except as may be expressly set forth in this Article 4, to give Oakwood
assurance as to any matters which may occur after the Effective Time. As
provided in Section 10.1, the representations and warranties in this Article 4
shall survive the Effective Time and terminate on the first anniversary date of
the Effective Time.
As used herein, where a statement is made "to the knowledge" or "the best
knowledge" of Golden West or a Golden West Subsidiary or a statement is made
that Golden West or a Golden West Subsidiary "knows" a particular fact or
circumstance, such knowledge shall include the knowledge of the officers and key
employees of Golden West and each Golden West Subsidiary named in Schedule 4.0
after (a) review by such officers and key employees of the pertinent business
records of Golden West and each Golden West Subsidiary in their files and (b)
inquiry by one or more of such officers and key employees of each attorney or
accountant retained by Golden West or any Golden West Subsidiary who is
reasonably believed to have relevant information about the matter as to which
such knowledge or lack of knowledge is asserted (the scope of such review and
inquiry being that of a reasonable person under the circumstances).
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4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Golden West and each
subsidiary of Golden West (a "Golden West Subsidiary"), which subsidiaries and
their capitalization are listed on Schedule 4.1, is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Golden West Material Adverse Effect (as defined below). Golden
West and each Golden West Subsidiary are duly qualified or licensed as foreign
corporations to do business, and are in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by them or the
nature of their business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Golden West Material Adverse
Effect. The term "Golden West Material Adverse Effect" means any change or
effect that is or would be materially adverse to the business, results of
operations or financial condition of Golden West and the Golden West
Subsidiaries, taken as a whole, excluding any changes or effects caused by
changes in general economic conditions or changes generally affecting Golden
West's industry.
4.2 ARTICLES OF INCORPORATION AND BYLAWS. Golden West has heretofore made
available to Oakwood a complete and correct copy of the Articles of
Incorporation and the Bylaws or equivalent organizational documents, each as
amended to date, of Golden West and each Golden West Subsidiary. Such Articles
of Incorporation, Bylaws and equivalent organizational documents are in full
force and effect. Neither Golden West or any Golden West Subsidiary is in
violation of any provisions of its Articles of Incorporation, Bylaws or
equivalent organizational documents.
4.3 CAPITALIZATION. The authorized capital stock of Golden West consists of
20,000,000 shares of Golden West Common Stock and 1,105,000 shares of Golden
West Preferred Stock. As of the date hereof, (i) 1,287,000 shares of Golden West
Common Stock were issued and outstanding, all of which shares were validly
issued, fully paid and nonassessable and were not issued in violation of any
preemptive rights, (ii) 377,000 shares of Golden West Common Stock were reserved
for future issuance pursuant to outstanding employee stock options granted
pursuant to Golden West's 1994 Stock Option Plan and any other employee stock
option plan or program (any employee or director stock option issued under any
such plan being a "Golden West Stock Option"), which options were not granted in
violation of any preemptive rights, (iii) 260,000 shares of Golden West Common
Stock were reserved for future issuance pursuant to the Deferred Compensation
Plan and (iv) 1,105,000 shares of Golden West Preferred Stock were issued and
outstanding, all of which shares were validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive rights. The
names and addresses of all of the record owners of the outstanding shares of
Golden West Common Stock and Golden West Preferred Stock, and the certificate
numbers for such shares are set forth in Schedule 4.3. Schedule 4.3 shall be
updated by Golden West, at least five days prior to the Closing, to include the
Social Security or Federal Tax I.D. numbers for all such record owners. Except
as set forth in Schedule 4.3 or Schedule 3.5, or except as set forth in this
Section 4.3, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Golden West or any Golden West Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, Golden West or any
Golden West Subsidiary. All shares of Golden West Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Schedule
4.3, there are no material outstanding contractual obligations of Golden West or
any Golden West Subsidiary to repurchase, redeem or otherwise acquire any shares
of Golden West Common Stock or any capital stock of any Golden West Subsidiary,
or make any material investment (in the form of a loan, capital contribution or
otherwise) in, any Golden West Subsidiary or any other person or entity. The
capitalization of each Golden West Subsidiary is set forth in Schedule 4.1. Each
outstanding share of capital stock of each Golden West Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and was not issued in
violation of any preemptive rights. Each such share owned by Golden West or
another Golden West Subsidiary is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Golden West's or such other Golden West Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever. All offers and
sales of Golden West Common Stock and Golden West Preferred Stock and the stock
of any Golden West Subsidiary prior to the date hereof were at all relevant
times duly registered under or exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and were duly
registered under or exempt from the registration requirements of the applicable
state securities or "blue sky" laws ("Blue Sky Laws").
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Golden West has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by
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Golden West and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action and no
other proceedings on the part of Golden West are necessary to authorize this
Agreement or to consummate the transactions contemplated herein (other than,
with respect to the Merger, any approval and adoption of this Agreement by the
holders of Golden West Common Stock and Preferred Stock and the filing and
recordation of appropriate merger documents as required by California law). This
Agreement has been duly and validly executed and delivered by Golden West and,
assuming the due authorization, execution and delivery by Oakwood and Merger
Sub, constitutes a legal, valid and binding obligation of Golden West
enforceable against it in accordance with its terms, subject to the effect of
any applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
(b) Each Shareholder has all necessary power and authority to execute and
deliver his or its respective Acknowledgment at the Effective Time and to
perform his or its obligations thereunder and hereunder. The execution and
delivery of the Acknowledgments at the Effective Time will have been duly and
validly authorized by all necessary action on the part of the Shareholders and
no other proceedings on the part of any Shareholder will have been necessary to
authorize the Acknowledgments. The Acknowledgment executed by each Shareholder
will have been duly and validly executed and delivered by him or it and,
assuming the due authorization, execution and delivery by Oakwood and Merger
Sub, constitute a legal, valid and binding obligation of such Shareholder
enforceable against it in accordance with its terms, subject to the effect of
any applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 4.5 or as set forth in the exceptions
in Section 4.5(b) below, the execution and delivery of this Agreement by Golden
West do not, and the performance of the transactions contemplated herein by
Golden West will not, (i) conflict with or violate the Articles of Incorporation
or Bylaws or equivalent organizational documents of Golden West or any Golden
West Subsidiary, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Golden West or any Golden West Subsidiary or by
which property or assets of Golden West or any Golden West Subsidiary is bound
or affected, or (iii) result in any breach of or constitute a default (or any
event which with notice or lapse of time or both would become a default) under,
result in the loss of a material benefit under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Golden West
or any Golden West Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Golden West or any Golden West Subsidiary is a party or by
which Golden West or any Golden West Subsidiary or any property or asset of
Golden West or any Golden West Subsidiary is bound or affected.
(b) The execution and delivery of this Agreement by Golden West and the
execution and delivery of the Acknowledgments by each Shareholder do not, and
the performance of this Agreement by Golden West and of the Acknowledgment by
each Shareholder will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign (each a "Governmental Entity"), except for (i)
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Securities Act, state securities or Blue Sky
Laws and state takeover laws, (ii) the pre-merger notification requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act") and (iii) filing and
recordation of appropriate merger documents as required by California law.
4.6 [INTENTIONALLY OMITTED].
4.7 OTHER INTERESTS. Other than the Golden West Subsidiaries or as set
forth on Schedule 4.7, Golden West does not own directly or indirectly any
interest or investment in any corporation, partnership, joint venture, business,
trust or other entity.
4.8 FINANCIAL STATEMENTS. Golden West has delivered to Oakwood its audited
consolidated financial statements for the year ended December 25, 1993 and
unaudited interim financial statements for each month and quarter subsequent to
December 25, 1993 (the "Financial Statements"). Each of the balance sheets
(excluding monthly balance sheets) provided to Oakwood (including the related
notes and schedules) fairly presents the financial position of Golden West and
the Subsidiaries as of its date and each of the statements of income, retained
earnings and cash flows provided to Oakwood (including any
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related notes and schedules but excluding monthly statements) fairly presents
the results of operations, retained earnings or cash flows of Golden West and
the Golden West Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments which would
not be material in amount or effect) in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. The Financial Statements have been prepared from
the books and records of Golden West and the Golden West Subsidiaries which
accurately and fairly reflect the transactions and dispositions of the assets of
Golden West and the Golden West Subsidiaries. As of December 25, 1993 or any
subsequent date for which a balance sheet is provided, neither Golden West or
any Golden West Subsidiary had any liabilities, contingent or otherwise, whether
due or to become due, known or unknown, as of such date other than as indicated
on the balance sheet, or in the notes thereto or which in the aggregate will not
have a Golden West Material Adverse Effect. Golden West and the Golden West
Subsidiaries have adequately funded all accrued employee benefit costs and such
funding (to the date thereof) is reflected in the balance sheet.
4.9 SUBSEQUENT EVENTS. Except as set forth in Schedule 4.9 or as
specifically described in the footnotes to the Financial Statements, since March
26, 1994, there has not been:
(a) any Golden West Material Adverse Change, and no such prospective
adverse change is reasonably expected to occur;
(b) any disposition or issuance by Golden West or any Golden West
Subsidiary of any of its capital stock, or of any option or right or privilege
to acquire any of its capital stock, or any acquisition or retirement by Golden
West of any of its capital stock, or any dividend or other distribution on or
with respect to its capital stock;
(c) any sale, mortgage, pledge, grant, dividend or other disposition or
transfer of any asset or interest owned or possessed by Golden West or any
Golden West Subsidiary, other than those occurring in the ordinary and regular
course of business consistent with past practices and prior periods;
(d) any expenditure or commitment by Golden West or any Golden West
Subsidiary for the acquisition of assets of any kind, other than expenditures or
commitments in the ordinary and regular course of business consistent with past
practices and prior periods;
(e) any damage, destruction or loss of such character as to interfere
materially with the continued operation of any part of the business of Golden
West or any Golden West Subsidiary (whether or not such loss was insured
against), or to have a Golden West Material Adverse Effect;
(f) any increase in the compensation payable or to become payable by Golden
West or any Golden West Subsidiary to any officer, shareholder or key employee
of Golden West or any Golden West Subsidiary, or any agreement therefor;
(g) any change made or authorized in the Articles of Incorporation or
Bylaws of Golden West or any Golden West Subsidiary;
(h) any loans or advances by or to Golden West or any Golden West
Subsidiary, other than renewals or extensions of existing indebtedness and uses
of lines of credit;
(i) any cancellation or payment by Golden West or any Golden West
Subsidiary of any indebtedness owing to it, or any cancellation or settlement by
Golden West or any Golden West Subsidiary of any claims against others;
(j) any failure by Golden West or any Golden West Subsidiary to operate its
business other than in the ordinary course of business, any change from past
practices in the manner of building or depleting inventories, incurring or
collecting receivables, or incurring or paying trade payables or accrued
liabilities;
(k) any failure to maintain the books and records of Golden West or any
Golden West Subsidiary consistent with past practices, or any write-down of
assets shown on the books and records of Golden West or any Golden West
Subsidiary, or the establishment of any reserves or accruals in an amount or
nature that is not consistent with past practices or prior periods;
(l) any change in accounting practices; or
(m) any agreement or commitment by or on behalf of Golden West or any
Golden West Subsidiary to do or to take any of the actions referred to in the
foregoing subparagraphs (a) through (l).
4.10 TAX MATTERS. Golden West and the Golden West Subsidiaries have duly
filed all Tax reports and returns required to be filed by them as of the date
hereof or have validly extended the due date for the filing thereof and have
duly paid all Taxes and other charges (whether or not shown on any Tax return)
due or claimed to be due from them by federal, foreign, state or local taxing
authorities as of the date hereof or an adequate reserve has been established
therefor in the Financial Statements;
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and true and correct copies of all federal income and state franchise and income
Tax reports and returns beginning with the 1987 tax year have been heretofore
delivered to Oakwood. The reserves for Taxes contained in the Financial
Statements and carried on the books of Golden West (rather than any reserve for
deferred taxes established to reflect temporary differences between book and tax
income) are adequate to cover all Tax liabilities as of the date of this
Agreement. Since December 31, 1993, neither Golden West or any Golden West
Subsidiary has incurred any material Tax liabilities other than in the ordinary
course of business; there are no Tax liens (other than liens for current Taxes
not yet due) upon any properties or assets of Golden West or any Golden West
Subsidiary (whether real, personal or mixed, tangible or intangible), and,
except as disclosed in Schedule 4.10 and as reflected in the Financial
Statements, there are no pending or, to the best knowledge of Golden West and
each Golden West Subsidiary, threatened questions or examinations relating to,
or claims asserted for, Taxes or assessments against Golden West or any Golden
West Subsidiary.
Neither Golden West or any Golden West Subsidiary has granted or been
requested to grant any extension of the limitation period applicable to any
claim for Taxes or assessments with respect to Taxes. Except as disclosed in
Schedule 4.10, neither Golden West or any Golden West Subsidiary is a party to
any Tax allocation or sharing agreement. Golden West and the Golden West
Subsidiaries have withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor or shareholder that required withholding as of the date
hereof. For purposes of this Agreement, "Tax" means any federal, state, local,
or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Internal Revenue Code of 1986, as
amended ("Code")), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
4.11 EMPLOYEES AND FRINGE BENEFIT PLANS.
(a) Schedule 4.11(a) sets forth the names and titles of all members of the
Boards of Directors and officers of Golden West and the Golden West Subsidiaries
and all employees of Golden West and the Golden West Subsidiaries whose annual
rate of compensation exceeds $50,000 per annum, and the annual rate of
compensation (and bonuses) being paid to each such member of the Boards of
Directors, officer and employee as of the most recent practicable date.
(b) Schedule 4.11(b) lists each employment, bonus, deferred compensation,
pension, stock option, stock appreciation right, profit-sharing or retirement
plan, arrangement or practice, each medical, vacation, retiree medical,
severance pay plan, and each other agreement or fringe benefit plan, arrangement
or practice, of Golden West or any Golden West Subsidiary, whether legally
binding or not, which affects its employees generally or affects one or more
groups of its employees, including all "employee benefit plans" as defined by
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (collectively, the "Plans").
(c) For each Plan which is an "employee benefit plan" under Section 3(3) of
ERISA, Golden West or the Golden West Subsidiary has delivered to Oakwood
correct and complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, the most recent trust statement or
other document detailing the investments and assets of such Plan, and all
related trust agreements, insurance contracts and funding agreements that
implement each such Plan.
(d) Neither Golden West or any Golden West Subsidiary has any commitment,
whether formal or informal and whether legally binding or not, (i) to create any
additional Plan; (ii) to modify or change any Plan in any material respect; or
(iii) to maintain for any period of time any such Plan. Schedule 4.11(d)
contains an accurate and complete description of the funding policies (and
commitments, if any) of Golden West or any Golden West Subsidiary with respect
to each such existing Plan. For any Plan that is an "employee stock ownership
plan" as defined by Section 4975(e)(7) of the Code or Section 407(d)(6) of ERISA
or is invested in any securities issued by Golden West or any of its affiliates,
Schedule 4.11(d) also contains an accurate and complete description of (x) how
and when the Plan acquired any such securities and the amount acquired and (y)
any borrowings or indebtedness incurred by the Plan with respect to any such
acquisition.
(e) None of Golden West or any Golden West Subsidiary or any Plan or any
trustee, administrator, fiduciary or sponsor of any Plan has engaged in any
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Code for which there is no statutory exemption in Section 408 of ERISA or
Section 4975 of the Code; all filings, reports and descriptions as to the Plans
(including Form 5500 Annual Reports, summary plan descriptions, and summary
annual reports) required to have been made or distributed to participants, the
Internal Revenue Service, the United States Department of
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Labor and other governmental agencies have been made in a timely manner; there
is no litigation, disputed claim, governmental proceeding or investigation
pending or, to the best knowledge of Golden West and each Golden West
Subsidiary, threatened with respect to any of the Plans, the related trusts or
other funding media, or any fiduciary, trustee, administrator or sponsor of the
Plans except (i) as described on Schedule 4.11(e) or (ii) for claims for health
or medical benefits arising in the normal course of plan administration that
have not progressed beyond the Plan's internal claims procedures and, if
granted, will not differ in any material respect from the plan benefits
historically provided under the Plan; except as described in Schedule 4.11(e),
such Plans have been established, maintained and administered in all material
respects in accordance with their governing documents and in compliance in all
material respects with all applicable provisions of ERISA and the Code; and,
except as described in Schedule 4.11(e), each Plan which is intended to be a
qualified plan under Section 401(a) of the Code has received, within the last
three years, a favorable determination letter from the Internal Revenue Service
with respect to its qualified plan status and, since the date of each most
recent determination letter, no event has occurred and no condition or
circumstance has existed that resulted or is likely to result in the revocation
of any such determination or that could adversely affect the qualified status of
any such Plan.
(f) Golden West and each Golden West Subsidiary have complied in all
material respects with all applicable federal, state and local laws, rules and
regulations relating to employees' employment and/or employment relationships,
including, without limitation, wage and hour related laws, anti-discrimination
laws, employee safety and workers compensation laws and COBRA (defined herein to
mean the requirements of Code Section 4980B, Proposed Treasury Regulation
Section 1.162-26 and Part 6 of Subtitle B of Title I of ERISA).
(g) Except as described in Schedule 4.11(g), the consummation of the
transactions contemplated by this Agreement will not (i) result in the payment
or series of payments by Golden West or any Golden West Subsidiary to any
employee or other person of an "excess parachute payment" within the meaning of
Section 280G of the Code, (ii) entitle any employee or former employee of Golden
West or any Golden West Subsidiary to severance pay, unemployment compensation
or any other payment, or (iii) accelerate the time of payment or vesting of any
stock option, stock appreciation right, deferred compensation or other employee
benefits under any Plan (including vacation and sick pay).
(h) None of the Plans which are "welfare benefit plans," within the meaning
of Section 3(1) of ERISA, provide for continuing benefits or coverage after
termination or retirement from employment, except for COBRA rights under a
"group health plan" as defined in Code Section 4980B(g) and ERISA Section 607.
(i) Neither Golden West nor any "affiliate" of Golden West (defined herein
to mean an entity which is a member of a "controlled group of corporations," or
under "common control," with Golden West as defined in Code Sections 414(b) or
(c) or in the regulations promulgated thereunder) has ever participated in,
contributed to or withdrawn from a multiemployer plan as defined in Section
4001(a)(3) of ERISA, and neither Golden West nor any Golden West Subsidiary has
incurred, or owes, any liability as a result of any partial or complete
withdrawal by any employer from such a multiemployer plan as described under
Sections 4201,4203 or 4205 of ERISA.
(j) None of Golden West nor any Golden West Subsidiary nor any "affiliate"
of Golden West (as defined above) has ever sponsored, maintained, participated
in or contributed to an employee benefit plan or arrangement that is or was
subject to Title IV of ERISA or any of the minimum funding standards or
requirements of Section 412 of the Code.
4.12 TITLE TO ASSETS.
(a) Real Property and Leasehold Interests. Schedule 4.12(a) describes all
real property and improvements owned by Golden West or any Golden West
Subsidiary (the "Real Property") and all leases of real property under which
Golden West or any Golden West Subsidiary is a lessee or sublessee (the
"Leases"). Golden West or a Golden West Subsidiary, as the case may be, has good
and marketable indefeasible fee simple title to the Real Property free and clear
of all liens, charges, security interests, easements, reservations,
restrictions, encumbrances and other defects of title (collectively, the
"Encumbrances"), other than the Encumbrances set forth in Schedule 4.12(a) (the
"Exceptions"), which Exceptions do not have a material adverse effect on the
current use or occupancy of the Real Property or the value thereof. Golden West
has delivered to Oakwood copies of all Leases, including all amendments or
supplements thereto and all notices from the landlord thereunder or its leasing
agent with respect thereto, all of which are specifically identified in Schedule
4.12(a). Golden West or the Golden West Subsidiary, as the case may be, has a
valid and enforceable leasehold interest under all of the Leases, subject only
to the terms and conditions set forth in the Leases, subject to the effect of
any applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law. Neither
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Golden West or any Golden West Subsidiary is in default under any Lease, and
there does not exist any event which with notice or the lapse of time or both
would constitute a default by either Golden West or any Golden West Subsidiary
thereunder, except for such defaults that in the aggregate would not constitute
a Golden West Material Adverse Effect. To the best knowledge of Golden West and
each Golden West Subsidiary, the landlord under each Lease is not in default
thereunder and there does not exist any event which with notice or the lapse of
time or both would constitute a default by such landlord thereunder, except for
such defaults that in the aggregate would not constitute a Golden West Material
Adverse Effect. To the best knowledge of Golden West and any Golden West
Subsidiary, each landlord under the Leases has good and marketable fee simple
title to the premises leased under the Lease, subject to the leasehold interest
of the lessee under the Lease. As to all such real property owned or leased by
Golden West or any Subsidiary (the "Property") except as disclosed in Schedule
4.12(a):
(i) Golden West and all Golden West Subsidiaries have adequate rights
of ingress and egress to all such Property;
(ii) to the best knowledge of Golden West and each Golden West
Subsidiary, there is no interest of any third party which impairs the
current use of the Property by Golden West or any Golden West Subsidiary;
(iii) the Property, as currently used by Golden West or any Golden
West Subsidiary, is not in violation of any existing applicable, federal,
state or local statute, ordinance, order, requirement, law, rule or
regulation (including, without limitation, building or environmental laws)
affecting the Property which in any material respect would affect the value
thereof or materially interfere with or materially impair the present and
continued use thereof in the usual and normal conduct of the business of
Golden West or any Golden West Subsidiary;
(iv) no notice of violation of any applicable, federal, state or local
statute, law, ordinance, rule, regulation, order or requirement, or of any
covenant, condition, restriction or easement, affecting the Property or
with respect to the use or occupancy of the Property, has been given to
Golden West or any Golden West Subsidiary (or, to their knowledge, any of
the lessors) by any governmental authority having jurisdiction over the
Property or by any other person entitled to enforce the same;
(v) to the best knowledge of Golden West and each Golden West
Subsidiary, there is no (A) intended public improvement which may involve
any charge being levied or assessed or which may result in the creation of
any lien upon the Property, (B) intended or proposed, federal, state or
local statute ordinance, order, requirement, law or regulation (including,
but not limited to, zoning changes) which may adversely affect the current
or proposed use of the Property, or (C) suit, action, or legal,
administrative, arbitration or other proceeding (including, without
limitation, any proceeding for condemnation) or governmental investigation
pending, threatened or contemplated against or affecting the Property or
the use thereof of any part;
(vi) there are no encroachments onto the Property or any improvements
on any adjoining property which in any material respect would affect the
value thereof or interfere with or materially impair the present and
continued use thereof in the usual and normal conduct of the business of
Golden West or any Golden West Subsidiary, and no improvement on the
Property materially encroaches on any adjoining property or any easements
or right-of-ways on, under or over the Property;
(vii) neither Golden West or any Golden West Subsidiary is in breach
of any, and each of them is currently complying in all material respects
with all covenants, conditions, restrictions, easements and similar matters
affecting the Property;
(viii) the buildings and improvements located on the Property, and the
present use thereof, comply with all city, state and local zoning laws,
ordinances and regulations; and
(ix) the water supply and sewage and waste disposal facilities
available at each such Property has been adequate for the business of
Golden West and the Golden West Subsidiaries as currently conducted and as
proposed to be conducted in the future.
(b) Fixtures and Equipment. Golden West or a Golden West Subsidiary, as the
case may be, has good and marketable fee simple title to all fixtures,
structures and leasehold improvements on the Property (the "Fixtures") and to
all machinery and equipment, computers, office supplies, furniture, parts,
transportation equipment and other tangible personal property (other than
Inventory (hereinafter defined)) used in the businesses of Golden West and the
Golden West Subsidiaries (the "Equipment"), free and clear of all Encumbrances
other than those set forth in Schedule 4.12(b) (the "Permitted Encumbrances").
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(c) Inventory. Golden West and each Golden West Subsidiary has good and
marketable fee simple title to all of their inventories of manufactured housing
units reflected on the balance sheet included in the consolidated financial
statements for Golden West and the Golden West Subsidiaries for the quarter
ended June 25, 1994 (the "June 25, 1994 Balance Sheet") and all furniture,
furnishings, raw materials, appliances, parts, tools and maintenance supplies
and other personal property related thereto as reflected in the June 25, 1994
Balance Sheet plus additions made to such inventories and other personal
property related thereto since June 25, 1994 and less such inventories and other
personal property related thereto disposed of in the ordinary course of business
since June 25, 1994 (the "Inventory"), free and clear of all Encumbrances except
those described in Schedule 4.12(c). Each item of Inventory is in good
condition, not obsolete or materially defective and useable or saleable in the
usual and ordinary course of business.
(d) Receivables. At the Closing, all accounts receivables of Golden West
and any Golden West Subsidiary reflected on the June 25, 1994 Balance Sheet plus
additional accounts receivable of Golden West or any Golden West Subsidiary
arising after June 25, 1994 and less any accounts receivables collected in full
after June 25, 1994 (the "Receivables") will constitute valid and enforceable
claims of Golden West or the Golden West Subsidiary, as the case may be,
enforceable by it in accordance with the terms of the instruments or documents
creating them.
(e) Intangible Property. Golden West has the rights to use (i) the name
"Golden West Homes" and the name "Golden Circle Financial Corporation" where now
used and any trademarks or service marks in connection therewith and the
goodwill of the business in connection therewith (collectively, the "Name") and
(ii) all other material trade names, trademarks, service marks, copyrights,
patents, and registrations thereof or applications therefor, and trade secrets,
secret processes, customer lists, inventions, formulae and other intellectual
property listed on Schedule 4.12(e) (with the Name, the "Intangible Property"),
in connection with its business as and where now conducted, and, except as
disclosed on Schedule 4.12(e), neither Golden West or any Golden West Subsidiary
is a party to any agreement with any other person or entity with respect to the
use of the Name. Each of Golden West and the Golden West Subsidiaries owns or
possesses all licenses and permits, and all rights to use all material
trademarks, trade names, software or copyrights necessary or being used to
conduct its business as and where now conducted and has not received any notice
of conflict with the asserted rights of any others. Listed on Schedule 4.12(e)
is an accurate and complete listing of all such trademarks, trade names,
software or copyrights owned by, registered, licensed or used by Golden West or
any Golden West Subsidiary which are material to the business of Golden West and
each Golden West Subsidiary taken as a whole. There are no instances where it
has been held or claimed, and, to the best knowledge of Golden West and each
Golden West Subsidiary, there is no basis upon which a valid claim may be made,
that any of the Intellectual Property or any use of the Intellectual Property by
Golden West or any Golden West Subsidiary infringes upon any rights of any third
party.
(f) Contract Rights. Schedule 4.12(f) sets forth all of the existing
executory material contracts, agreements and commitments of Golden West and each
Golden West Subsidiary of any kind or nature (excluding "Dealer Agreements" as
hereinafter defined), including without limitation contracts, agreements and
commitments which require Golden West or any Golden West Subsidiary to make
payments thereunder during the next 12 months from the date of this Agreement in
excess of $100,000 and including without limitation all joint venture,
partnership and participation agreements, license agreements, leases, notes or
other evidences of indebtedness, security agreements, mortgages, noncompetition
agreements, and powers of attorney, whether written or unwritten, and all
material supply agreements (collectively, the "Material Contracts"). The rights
of Golden West or any Golden West Subsidiary, as the case may be, under all
Material Contracts are valid and enforceable by Golden West or the Golden West
Subsidiary, as the case may be, in accordance with their respective terms except
as such enforceability may be limited by applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and by such principles
of equity as may affect the availability of equitable remedies. Neither Golden
West or the Golden West Subsidiary, as the case may be, is in default in any
material respects (nor does any circumstance exist which, with notice or the
passage of time or both, would result in such a default) under the Material
Contracts (including without limitation the Leases). To the best knowledge of
Golden West and each Golden West Subsidiary, the other party to each Material
Contract is not in default thereunder in any material respect (nor does any
circumstance exist which, with notice or the passage of time or both, would
result in such a default). All amendments or supplements to the Material
Contracts and all notices with respect to such Material Contracts are
specifically identified in Schedule 4.12(f).
4.13 CONDITION OF TANGIBLE ASSETS.
(a) Fixtures. The Fixtures are in good condition and repair, ordinary wear
and tear excepted, and all electric, gas, water and sewer utilities serving the
Property are adequate.
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(b) Hazardous Substances.
For purposes of this Agreement, the following terms shall have the
following meanings:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C.(section mark)(section mark)9601 ET
SEQ.;
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any way to
any Environmental Law (for purposes of (i) and (ii) below, "Claims") or to any
material provision of any permit issued under any such Environmental Law,
including without limitation:
(i) any and all Claims by governmental or regulatory authorities for
investigation, oversight, enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law;
and
(ii) any and all Claims by any third party seeking damages, response
costs, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment
arising from Hazardous Materials;
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, written policy, or rule of common law now in effect
and as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to the environment, health or safety, or hazardous, toxic or dangerous
materials, substances or wastes, including without limitation CERCLA; the Toxic
Substances Control Act, as amended, 15 U.S.C. (section mark)(section mark) 2601
ET SEQ.; the Clean Air Act, as amended, 42 U.S.C. (section mark)(section mark)
7401 ET SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
(section mark)(section mark) 1251 ET SEQ.; the Federal Insecticide, Fungicide,
and Rodenticide Act, as amended, 7 U.S.C. (section mark)(section mark) 136, ET
SEQ.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
(section mark)(section mark) 1801 ET SEQ.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. (section mark)(section mark) 6901 ET SEQ.
("RCRA"); the Safe Drinking Water Act, 42 U.S.C. (section mark)(section mark)
300f ET SEQ.; and any similar state or local law;
"Hazardous Materials" shall mean "hazardous substances" as defined in
Section 101(14) of CERCLA, "hazardous waste" and "hazardous constituents" as
defined in RCRA and its implementing regulations, and any other substances
defined as pollutants, contaminants, toxic, hazardous or harmful or dangerous to
human health or the environment under any federal, state or local law, rules,
regulation, ordinance, code or written policy, including, but not limited to:
(i) any petroleum or petroleum products, chlorinated solvents,
explosives, radioactive materials, asbestos, asbestos products, urea
formaldehyde foam insulation, polychlorinated biphenyls (PCB's), including
transformers or other equipment that contain dielectric fluid containing
detectible levels of polychlorinated biphenyls, and radon gas;
(ii) any hazardous, toxic or dangerous waste, substance or material
defined as such, or as harmful or dangerous to human health or the
environment, in (or for purposes of) any current Environmental Law or
currently listed as such pursuant to any Environmental Law; and
(iii) any other chemical, material or substance, the addition of which
to the air, earth, surface water or groundwater is prohibited, limited or
regulated by any Environmental Law;
"Improperly" means done in any manner that poses a threat to human health,
safety or the environment;
"Golden West Property" shall mean (i) any real property and improvements
presently owned, leased, used, operated or occupied by Golden West or any Golden
West Subsidiary, and (ii) any other real property and improvements at any
previous time owned, leased, used, operated or occupied by Golden West or any
Golden West Subsidiary (the "Former Property"); provided, however, that the
representations and warranties in this Section 4.13 relating to the condition of
any Former Property during the periods occurring after Golden West's or a Golden
West Subsidiary's ownership, lease, use, operation or occupation thereof shall
be made on the basis of the best knowledge of Golden West or the Golden West
Subsidiary;
"Release " means disposing, depositing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and
the like, into or upon any land or water (including surface or ground water) or
air, or otherwise entering into the environment.
Except as set forth on Schedule 4.13, to the best knowledge of Golden West
and each Golden West Subsidiary:
(a) Hazardous Materials have not at any time been illegally or
Improperly generated, used, treated or stored on, or transported to or
from, any Golden West Property;
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(b) no asbestos-containing materials or other Hazardous Materials have
been installed in or affixed to structures on any Golden West Property;
(c) Hazardous Materials have not at any time been disposed of or
otherwise Released on any Golden West Property, and Hazardous Materials
used on or generated at any Golden West Property have not at any time been
illegally or Improperly disposed of on any other property;
(d) Golden West and each Golden West Subsidiary is currently, and has
at all times in the past been, in compliance with all applicable
Environmental Laws and the material requirements of any permits issued
under such Environmental Laws with respect to any Golden West Property;
(e) there are no past, pending or, to the knowledge of Golden West
after reasonable inquiry, threatened Environmental Claims against Golden
West or any Golden West Subsidiary or any Golden West Property;
(f) there are no facts or circumstances, conditions or occurrences on
any Golden West Property or otherwise that could reasonably be anticipated
by Golden West or any Golden West Subsidiary:
(i) to form the basis of an Environmental Claim against Golden West
or any Golden West Property; or
(ii) to materially interfere with the ownership, occupancy or use
of such Golden West Property as currently used, or the ability to
transfer such Golden West Property, under any Environmental Law;
(g) there are not now, nor have there been at any time, any
aboveground or underground storage tanks located on any Golden West
Property.
(c) Equipment. All of the Equipment is in good condition and repair,
ordinary wear and tear excepted.
(d) Inventory. All of the Inventory consists of items of a quality and
quantity usable in the ordinary course of Golden West's and any Golden West
Subsidiary's business.
4.14 LEASES. Except as set forth in Schedule 4.14, none of the Property or
Equipment is leased by Golden West or any Golden West Subsidiary to any other
party and, except for the premises subject to the Leases, none of the real or
tangible personal property used in the business of Golden West or any Golden
West Subsidiary is leased by them from any other party.
4.15 ADEQUACY OF ASSETS. Except as set forth on Schedule 4.15, there are no
capital expenditures, individually in excess of $25,000, which Golden West or
any Golden West Subsidiary now plans to make.
4.16 ARMS-LENGTH TRANSACTION. Except as set forth in Schedule 4.16, since
December 31, 1991, all of the material transactions with third persons by Golden
West or a Golden West Subsidiary have been conducted on an arms-length basis.
Except as set forth on Schedule 4.16, to the best knowledge of Golden West and
each Golden West Subsidiary, none of the shareholders, officers or directors of
Golden West or their respective Affiliates or Relatives (as such capitalized
terms are hereafter defined) has any direct or indirect interest, ownership
(other than through non-controlling investments in securities of publicly-held
corporations) or profit participation in businesses which are competitors or
potential competitors of Golden West or a Golden West Subsidiary. Except as set
forth in Schedule 4.16, neither Golden West or a Golden West Subsidiary has any
outstanding loans or other advances to any shareholder, officer, director or
employee of Golden West or a Golden West Subsidiary or their respective
Affiliates or Relatives in excess of $2,500. Except as set forth on Schedule
4.16, to the best knowledge of Golden West and each Golden West Subsidiary, none
of the shareholders, officers or directors of Golden West or any Golden West
Subsidiary or their respective Affiliates or Relatives is an Affiliate of any
Dealer (as hereinafter defined) or of any other entity that has a material
business relationship with Golden West or any Golden West Subsidiary (a
"Material Business Entity"). "Affiliate" shall mean any person or entity which
(a) directly or indirectly controls, is controlled by or is under common control
with a specified person or entity, (b) owns or controls 5% or more of the
outstanding equity interests of a specified entity or (c) is an officer,
director, general partner, trustee, manager, administrator, representative or
agent of a specified entity. As used in this definition, the term "control"
means possession, directly or indirectly (through one or more intermediaries),
of the power to direct or cause the direction of management and policies of an
entity through an ownership of voting securities or other ownership interests,
contract, voting trust or otherwise. "Relative" means any brother or sister
(whether by whole or half blood or adoption), spouse or lineal ascendant or
descendant.
4.17 LAWFULLY OPERATING. Except as set forth in Schedule 4.17, neither
Golden West or any Golden West Subsidiary is in conflict with, or in default or
violation of, (a) any law, rule, regulation, order, judgment or decree
applicable to Golden West or any Golden West Subsidiary or by which any property
or asset of Golden West or any Golden West Subsidiary is bound or
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affected or (b) the provisions of any note, bond, mortgage, indenture, contract,
agreement, understanding, arrangement, commitment, lease, license, permit,
franchise or other instrument or obligation to which Golden West or any Golden
West Subsidiary is a party or by which Golden West or any Golden West Subsidiary
or any property or asset of Golden West or any Golden West Subsidiary is bound
or affected, nor does any circumstance exist which with notice or the passage of
time or both would result in such a conflict, default, or violation, except
where such conflict, violation or default would not prevent or delay
consummation of the Merger in any material respect, or otherwise prevent Golden
West or any Shareholder from performing its or his obligations under this
Agreement in any material respect, and would not, individually or in the
aggregate, have a Golden West Material Adverse Effect. Except as set forth in
Schedule 4.17, Golden West and each Golden West Subsidiary have been and
currently are conducting their business, and the Property has been and now is
being used and operated, in compliance with all statutes, regulations, bylaws,
orders, covenants, restrictions or plans of federal, state, regional, county or
municipal authorities, agencies or board applicable to the same. Golden West and
each Golden West Subsidiary hold all of the licenses, permits and other
governmental franchises required for the conduct of their respective businesses
as now conducted, except for such licenses, permits and franchises the lack of
which would not, either individually or in the aggregate, have a Golden West
Material Adverse Effect.
4.18 NO LITIGATION. Schedule 4.18 sets forth all pending and, to the best
knowledge of Golden West and each Golden West Subsidiary, threatened lawsuits or
administrative proceedings or investigations against Golden West and any Golden
West Subsidiary. There are currently no pending, or, to the best knowledge of
Golden West and each Golden West Subsidiary, threatened, lawsuits or
administrative proceedings or investigations against Golden West or any Golden
West Subsidiary or to which any of their assets are subject, which, if adversely
determined, could have a material adverse effect on the financial condition,
results of operations, business, prospects, assets, or liabilities of Golden
West or any Golden West Subsidiary. Neither Golden West or any Golden West
Subsidiary is subject to any currently existing order, writ, injunction, or
decree relating to its operations. Except as described in Schedule 4.18 there
are no material "loss contingencies" (as defined in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board in
March 1975 ("FAS 5")), which would be required by FAS 5 to be disclosed or
accrued in consolidated financial statements of Golden West and the Golden West
Subsidiaries were such statements prepared at the time this warranty is made or
deemed made.
4.19 [INTENTIONALLY OMITTED].
4.20 LABOR MATTERS. Since December 31, 1989, neither Golden West or any
Golden West Subsidiary has been a party to any collective bargaining agreement
and neither has been the subject of any union activity or labor dispute, and
there has not been any strike of any kind called or, to the best knowledge of
Golden West and each Golden West Subsidiary, threatened to be called against
Golden West or any Golden West Subsidiary. To the best knowledge of Golden West
and each Golden West Subsidiary, neither Golden West or any Golden West
Subsidiary has violated any applicable federal or state law or regulation
relating to labor or labor practices or has any liability to any of its
employees, agents, or consultants in connection with grievances by, or the
termination of, such employees, agents or consultants.
4.21 POOLING OF INTERESTS. To the best knowledge of Golden West and each
Golden West Subsidiary, Golden West has not taken or failed to take any action
which would prevent the accounting for the Merger as a pooling of interests in
accordance with Accounting Principles Board Opinion No. 16, the interpretative
releases issued pursuant thereto, and the pronouncements of the Securities and
Exchange Commission ("SEC").
4.22 NO BROKERS. Except as set forth on Schedule 4.22, neither Golden West
nor any Golden West Subsidiary has entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Golden West or a Golden West Subsidiary or Oakwood or Merger Sub to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby. Neither Golden West or any Golden West
Subsidiary is aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
4.23 OAKWOOD STOCK OWNERSHIP. As of the date hereof, Golden West owns 79
shares of Oakwood Common Stock. Golden West does not own any other securities
convertible into Oakwood Common Stock. No Golden West Subsidiary owns any shares
of Oakwood Common Stock or other securities convertible into Oakwood Common
Stock.
4.24 BANK ACCOUNTS. Schedule 4.24 describes all bank accounts, vaults and
safe deposit boxes used by, or in the name of, Golden West or any Golden West
Subsidiary, including the account, vault or box number, the institution at which
the account, vault or box is maintained, and the signatories authorized for the
account or persons authorized to have access to the vault or box.
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4.25 INSURANCE. Golden West and the Golden West Subsidiaries have fire and
casualty insurance policies with extended coverage (subject to certain
deductibles) sufficient to allow them to replace any of their properties or
assets that might be damaged or destroyed. Golden West and the Golden West
Subsidiaries have business interruption insurance policies with coverage
sufficient to allow them to recover the full amount of any losses occasioned by
any business interruption. Schedule 4.25 identifies all policies of insurance
now in effect covering the assets, properties and business of Golden West and
the Golden West Subsidiaries and all life insurance policies maintained by them.
Golden West has delivered an accurate and complete copy of each of the policies
listed on Schedule 4.25 to Oakwood. Neither Golden West or any Golden West
Subsidiary has done anything by way of action or inaction that invalidates any
of such policies in whole or in part where such invalidation would have,
individually or in the aggregate, a Golden West Material Adverse Effect.
4.26 WARRANTY AND PRODUCT LIABILITY MATTERS. Except as set forth in
Schedule 4.26, the products and services provided by Golden West and the Golden
West Subsidiaries are in compliance with and meet all express and implied
warranties and the requirements and standards of all federal and state laws and
regulations applicable to the sale or provision of such products and services
(including financial services), including without limitation the National Mobile
Home Construction and Safety Standards Act of 1974, the Federal Consumer Credit
Protection Act (Truth-in-Lending) and Regulation Z promulgated thereunder, all
applicable state consumer credit protection laws and similar laws, and the
Federal Credit Opportunity Act and Regulation B promulgated thereunder. Except
as set forth in Schedule 4.26, no product or service warranty or liability
claims are pending or, to the best knowledge of Golden West and each Golden West
Subsidiary, threatened against Golden West or any Golden West Subsidiary or in
respect of products of services sold or provided by it, except such claims that
in the aggregate would not have a Golden West Material Adverse Effect.
4.27 WARRANTY, REPURCHASE AND OTHER SERVICE OBLIGATIONS. To the best
knowledge of Golden West and each Golden West Subsidiary, Schedule 4.27
describes (a) all material warranty obligations of Golden West or any Golden
West Subsidiary and all material warranty contracts, agreements, understandings
or arrangements to which Golden West or any Golden West Subsidiary is a party or
by which any of its or their property or assets is bound, including without
limitation express warranties, implied warranties and warranties established by
a course of dealing and (b) all material service and repurchase contracts,
agreements, understandings or arrangements to which Golden West or any Golden
West Subsidiary is a party to or by which any of its or their property or assets
is bound. True and complete copies of such repurchase agreements have heretofore
been delivered to Oakwood.
4.28 DEALER ARRANGEMENTS. Schedule 4.28 describes, with respect to each
dealer to whom Golden West or a Golden West Subsidiary currently sells
manufactured homes (a "Dealer"), the terms of any loans to any Dealer. Any
agreement, understanding or arrangement between Golden West and/or any Golden
West Subsidiary, on the one hand, and a Dealer, on the other hand, is referred
to herein as a Dealer Agreement. True and complete copies of all written Dealer
Agreements have heretofore been delivered to Oakwood. Schedule 4.28 also sets
forth (a) a general description of the arrangements generally applicable to the
Dealers, including arrangements providing for rebates, discounts or other
payments or concessions to the Dealers and (b) a list of the 25 Dealers who
purchased the greatest number of manufactured homes from Golden West during the
previous 6 month period ended June 25, 1994 (based on the dollar amount of such
purchases and ranked in descending order) and a description of the specific
arrangements to provide any rebates, discounts or other payments or concessions
to each such Dealer. The rights of Golden West or any Golden West Subsidiary
under each Dealer Agreement are valid and enforceable by Golden West or the
Golden West Subsidiary, as the case may be, in accordance with their respective
terms except as such enforceability may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally and by
such principles of equity as may affect the availability of equitable remedies.
Neither Golden West or any Golden West Subsidiary, as the case may be, is in
default in any material respect (nor does any circumstance exist which, with
notice or the passage of time or both, would result in such a default) under the
Dealer Agreements. To the best knowledge of Golden West and each Golden West
Subsidiary, the other party to each Dealer Agreement is not in default
thereunder in any material respect (nor does any circumstance exist which, with
notice or the passage of time or both, would result in such a default). All
amendments or supplements to the Dealer Agreements and all notices with respect
to such Dealer Agreements are specifically identified in Schedule 4.28. Except
as disclosed on Schedule 4.28, no Dealer has indicated in any written or oral
communication to Golden West or a Golden West Subsidiary that such Dealer has
ceased to sell or otherwise deal in manufactured housing of Golden West, is
experiencing financial difficulties, or is considering the cessation of business
(or the material reduction in its level of business) with Golden West or Oakwood
following the Closing Date, or that Golden West's relationship with such Dealer
will be adversely affected by the transactions contemplated by the Merger.
4.29 GUARANTEES. Except as set forth on Schedule 4.29, neither Golden West
or any Golden West Subsidiary is a guarantor or otherwise liable for any
liability or obligation (including indebtedness) of any other person.
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4.30 PROSPECTIVE CHANGES. Except as set forth on Schedule 4.30, Golden West
knows of no impending changes in Golden West's and Golden West Subsidiaries'
business, assets, liabilities, relations with employees, competitive situation
or relations with suppliers or customers, or in any governmental actions or
regulations affecting Golden West's and Golden West Subsidiaries' business,
which, if they occur, could have a Golden West Material Adverse Effect, except
for (a) general economic conditions, (b) matters having a similar effect on
Oakwood and Golden West, (c) matters of general knowledge in the industry of
which Oakwood should be aware due to the nature of its business or (d) pending
or adopted federal statutes, laws and regulations with general applicability in
the states where Oakwood currently does business.
4.31 FULL DISCLOSURE. To the best knowledge of Golden West and each Golden
West Subsidiary, all of the written information provided by Golden West, each
Golden West Subsidiary and each Shareholder and their representations herein or
in the Schedules and Exhibits hereto are true, correct, and complete in all
material respects and no written representation, warranty, or statement made by
Golden West, any Golden West Subsidiary or any Shareholder in or pursuant to
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make such
representation, warranty, or statement, in light of the circumstances under
which it was made, not misleading to Oakwood.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF OAKWOOD AND MERGER SUB
Oakwood and Merger Sub hereby jointly and severally represent and warrant
to Golden West and the Shareholders that:
5.1 ORGANIZATION AND QUALIFICATION.
(a) Each of Oakwood and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have an
Oakwood Material Adverse Effect (as defined below). Merger Sub has not engaged
in any activities other than in connection with the transactions contemplated by
this Agreement. Oakwood and Merger Sub are each duly qualified or licensed as a
foreign corporation to do business, and each is in good standing, in each
jurisdiction where the character of the properties, owned, leased, or operated
by such entity or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have an
Oakwood Material Adverse Effect. The term "Oakwood Material Adverse Effect"
means any change or effect that is or would be materially adverse to the
business, results of operations or financial condition of Oakwood and its
subsidiaries, taken as a whole, excluding any changes or effects caused by
changes in general economic conditions or changes generally affecting Oakwood's
industry.
5.2 ARTICLES OF INCORPORATION AND BYLAWS. Oakwood has heretofore made
available to Golden West a complete and correct copy of the Articles of
Incorporation and the Bylaws, each as amended to date, of Oakwood and Merger
Sub. Such Articles of Incorporation and Bylaws are in full force and effect.
Neither Oakwood or Merger Sub is in violation of any provision of its Articles
of Incorporation or Bylaws, except for such violations that would not,
individually or in the aggregate, have an Oakwood Material Adverse Effect.
5.3 CAPITALIZATION. The authorized capital stock of Oakwood consists of
100,000,000 shares of Oakwood Common Stock, and 500,000 shares of Preferred
Stock, par value $.50 per share ("Oakwood Preferred Stock"). As of July 31,
1994, 20,467,847 shares of Oakwood Common Stock were issued and outstanding, all
of which shares were validly issued, fully paid and nonassessable. As of the
date hereof, no shares of Oakwood Preferred Stock are issued and outstanding.
The authorized capital stock of Merger Sub consists of 1,000 shares of common
stock, of which, as of the date hereof, 1,000 shares are issued and outstanding
and held of record by Oakwood free and clear of all liens, pledges, security
interests, claims or other encumbrances. These shares were validly issued, fully
paid and nonassessable. The shares of Oakwood Common Stock to be issued pursuant
to the Merger will, when issued, (a) be duly authorized, validly issued, fully
paid and nonassessable, (b) be free and clear of any liens and encumbrances
except for applicable resale restrictions under Rule 145 (as hereinafter
defined) and under any Affiliate Letter (as hereinafter defined), (c) not be
subject to any preemptive rights created by statute, Oakwood's Articles of
Incorporation or Bylaws or any agreement to which Oakwood is a party or by which
Oakwood is bound and (d) be registered under the Securities Act and the Exchange
Act and registered or exempt from registration under applicable Blue Sky Laws.
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5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Oakwood and Merger Sub
has all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement by Oakwood and
Merger Sub and the consummation by Oakwood and Merger Sub of the transactions
contemplated herein have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Oakwood or
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated herein (other than the filing and recordation of the
appropriate merger documents as required by California law). This Agreement has
been duly and validly executed and delivered by Oakwood and Merger Sub and,
assuming the due authorization, execution and delivery by Golden West,
constitutes a legal, valid and binding obligation of each of Oakwood and Merger
Sub, enforceable against them in accordance with its terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth in Schedule 5.5, the execution and delivery of this
Agreement by Oakwood and Merger Sub do not, and the performance of the
transactions contemplated herein by Oakwood and Merger Sub will not, (i)
conflict with or violate the Articles of Incorporation or Bylaws of Oakwood or
Merger Sub, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Oakwood or Merger Sub or by which any property
or asset of Oakwood or Merger Sub is bound or affected, or (iii) result in any
breach of or constitute a default (or any event which with notice or the passage
of time or both would result in a default) under, result in the loss of a
material benefit under or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Oakwood or Merger Sub pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Oakwood or Merger Sub is a
party or by which Oakwood or Merger Sub or any property or asset of Oakwood or
Merger Sub is bound or affected.
(b) The execution and delivery of this Agreement by Oakwood and Merger Sub
do not, and the performance of this Agreement by Oakwood and Merger Sub will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity, except (i) for (A) applicable
requirements, if any, of the Exchange Act, Securities Act, New York Stock
Exchange, Blue Sky Laws and state takeover laws, (B) the pre-merger notification
requirements of the HSR Act and (C) filing and recordation of appropriate merger
documents as required by California law, and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Oakwood or Merger Sub from performing its
obligations under this Agreement in any material respect, and would not,
individually or in the aggregate, have an Oakwood Material Adverse Effect.
5.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Oakwood has filed all forms, reports and documents required to be filed
by it with the SEC since September 30, 1993, and has heretofore delivered to
Golden West, in the form filed with the SEC, (i) its Annual Report on Form 10-K
for the fiscal year ended September 30, 1993, (ii) its Quarterly Reports on Form
10-Q for the periods ended December 31, 1993 and March 31, 1994, (iii) all proxy
statements relating to Oakwood's meetings of shareholders (whether annual or
special) held since January 1, 1994 and (iv) all other forms, reports and other
registration statements filed by Oakwood with the SEC since September 30, 1993
(the forms, reports and other documents referred to in clauses (i), (ii), (iii),
and (iv) above being referred to herein, collectively, as the "Oakwood SEC
Reports"). The Oakwood SEC Reports and any other forms, reports and other
documents filed by Oakwood with the SEC after the date of this Agreement (x)
were or will be prepared in accordance with the material requirements of the
Securities Act and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (y) did not at the time they were filed, or will not
at the time they are filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Oakwood SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the consolidated financial position, results
of operations and cash flows of Oakwood, as at the respective dates thereof and
for the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to be material in amount).
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(c) As of September 30, 1993, or any subsequent date for which a balance
sheet is provided, Oakwood had no known material liabilities, contingent or
otherwise, whether due or to become due, other than as indicated on the balance
sheet, or in the notes thereto, as of such date, and Oakwood's reserves for
uncollectible receivables and contingent liabilities were adequate.
5.7 ABSENCE OF CHANGES. Except as disclosed herein, in the Form S-4 (as
hereinafter defined), in any document incorporated by reference in the Form S-4
or in the Oakwood SEC Reports, (i) since September 30, 1993 there has not been
any material adverse change in the business, assets, liabilities, consolidated
earnings or financial condition of Oakwood nor are there any known circumstances
which may reasonably be anticipated to give rise hereafter to any such material
adverse change and (ii) as of the date of this Agreement, neither Oakwood nor
any of its subsidiaries has become a party to any agreement or amendment to an
existing agreement which would be required to be filed as an exhibit to or
described in Oakwood's next Annual Report on Form 10-K.
5.8 ABSENCE OF LITIGATION. Except as disclosed in the Oakwood SEC Reports
filed with the SEC prior to the date of this Agreement, there is no claim,
action, proceeding or investigation pending or, to the best knowledge of
Oakwood, threatened against Oakwood or any property or asset of Oakwood, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, which, individually or in the aggregate, would have
an Oakwood Material Adverse Effect. Except as disclosed in the Oakwood SEC
Reports filed with the SEC prior to the date of this Agreement, neither Oakwood
or any property or asset of Oakwood is subject to any order, writ, judgment,
injunction, decree, determination or award which would have, individually or in
the aggregate, an Oakwood Material Adverse Effect.
5.9 BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated herein based upon arrangements made by or on behalf of
Oakwood.
5.10 COMPLIANCE. Except as set forth in Schedule 5.10, Oakwood is not in
conflict with, or in default or violation of, (a) any law, rule, regulation,
order, judgment or decree applicable to Oakwood or by which any property or
asset of Oakwood is bound or affected, or (b) the provisions of any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Oakwood is a party or by which Oakwood
or any property or asset of Oakwood is bound or affected; except where such
conflict, violation or default would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent Oakwood from performing its
obligations under this Agreement in any material respect, and would not,
individually or in the aggregate, have an Oakwood Material Adverse Effect.
5.11 FULL DISCLOSURE. To the best knowledge of Oakwood, all of the written
information provided by it and its representations herein or in the Schedules
and Exhibits hereto are true, correct, and complete in all material respects and
no written representation, warranty, or statement made by Oakwood in or pursuant
to this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary to make such
representation, warranty, or statement, in light of the circumstances under
which it was made, not misleading to Golden West.
ARTICLE 6
COVENANTS
6.1 COVENANTS OF OAKWOOD AND GOLDEN WEST. During the period from the date
hereof and continuing until the Effective Time (except as expressly contemplated
or permitted hereby, or to the extent Golden West consents in writing in the
case of Oakwood's obligations and to the extent Oakwood consents in writing in
the case of Golden West's obligations) each of Oakwood and Golden West covenants
with the other that, insofar as the obligations relate to it:
(a) Oakwood and Golden West and their respective subsidiaries shall each
carry on and conduct their respective businesses only in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable efforts to preserve intact their present business
organizations, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business dealings with
them to the end that their goodwill and ongoing businesses shall not be impaired
in any material respect at the Effective Time.
(b) From the date hereof to the Effective Time, each of Golden West and
Oakwood and their respective subsidiaries shall allow all designated officers,
attorneys, accountants and other representatives of the other access at all
reasonable times during regular business hours to the records and files,
correspondence, audits and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or otherwise pertaining
to the business and affairs, of Golden West and Oakwood and their respective
subsidiaries.
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(c) Oakwood and Golden West and their respective subsidiaries shall
cooperate and promptly prepare and Oakwood shall file with the SEC as soon as
practicable a Registration Statement on Form S-4 (the "Form S-4") under the
Securities Act, with respect to the Oakwood Common Stock issuable in the Merger,
a portion of which Registration Statement shall also serve as the proxy
statement with respect to the meeting (or consent in lieu of a meeting) of the
shareholders of Golden West in connection with the Merger (the "Proxy
Statement/Prospectus"). The respective parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Oakwood shall use all reasonable
efforts, and Golden West will cooperate with Oakwood, to have the Form S-4
declared effective by the SEC as promptly as practicable. Oakwood shall use its
best efforts to obtain, prior to the effective date of the Form S-4, all
necessary state securities law permits or approvals required to carry out the
transactions contemplated by this Agreement. Each of Oakwood and Golden West
shall furnish all information concerning it and the holders of its capital stock
as the other may reasonably request in connection with such actions. As promptly
as practicable after the Form S-4 shall have become effective, Golden West shall
mail the Proxy Statement/Prospectus to its shareholders. Oakwood agrees that the
Proxy Statement/Prospectus and each amendment or supplement thereto at the time
of mailing thereof and at the time of the meeting of the shareholders of Golden
West, will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
relates to Golden West or any Golden West Subsidiary. Golden West and the Golden
West Subsidiaries agree that the information relating to them in the Proxy
Statement/Prospectus and each amendment or supplement thereto, at the time of
mailing thereof and at the time of the meeting of the shareholders of Golden
West (or during the period that consents are solicited or received), will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. No
amendment or supplement to the Proxy Statement/Prospectus will be made by
Oakwood or Golden West without the approval of the other party. Oakwood will
advise Golden West, promptly after it receives notice thereof, of the time when
the Form S-4 has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of the
Oakwood Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto
or requests by the SEC for additional information. Oakwood and Golden West each
hereby (i) consents to the use of its name, and on behalf of its subsidiaries
and affiliates, the names of such subsidiaries and affiliates and to the
inclusion of financial statements and business information relating to such
party and its subsidiaries and affiliates (in each case, to the extent required
by applicable securities laws) in the Form S-4 or Proxy Statement/Prospectus and
(ii) agrees to use its reasonable best efforts to obtain the written consent of
any person or entity retained by it which may be required to be named (as an
expert or otherwise) in such Form S-4 or Proxy Statement/Prospectus. The form of
Proxy (or consent) accompanying the Proxy Statement/Prospectus will state that a
vote by a Golden West shareholder in favor of the Merger shall also constitute a
consent by such shareholder to be bound by the terms of this Agreement,
including without limitation the escrow and indemnification provisions contained
herein, and shall be in a form reasonably satisfactory to Oakwood.
(d) Except as and to the extent required by law, Oakwood and Golden West
and their respective subsidiaries hereby agree not to disclose or use, and each
shall cause its representatives not to disclose or use, any confidential
information with respect to the other party(ies) hereto furnished, or to be
furnished, by such other party(ies) or their representatives in connection
herewith at any time or in any manner other than in connection with its
evaluation of the Merger. Except as required by law, and as set forth in this
subsection (d), neither Golden West or its representatives shall make any public
statements regarding the Merger or this Agreement without the prior approval of
Oakwood.
(e) Golden West and Oakwood shall each use its best efforts to obtain and
furnish to the other party prior to the Effective Time the written consents set
forth on Schedules 4.5 and 5.5.
(f) Oakwood, Merger Sub and Golden West shall cooperate and use their
respective best efforts to file a Notification and Report Form for Certain
Mergers and Acquisitions under the HSR Act with the Department of Justice and
the Federal Trade Commission.
(g) Oakwood, Merger Sub and Golden West shall cooperate and use their
respective best efforts (i) to prepare all documentation, to effect all filings
and to obtain all permits, consents, approvals and authorizations of all third
parties and other governmental authorities necessary to consummate the
transactions contemplated by this Agreement and (ii) to cause the transactions
contemplated by this Agreement to be consummated as expeditiously as is
reasonably practicable.
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(h) Set forth on Schedule 6.1(h) is a list of all letters of credit
(collectively, the "LOCs") of Golden West or any Golden West Subsidiary.
Oakwood, with the assistance of Golden West, shall cause replacement letters of
credit to be issued for any LOC to be canceled at the Effective Time.
(i) Promptly after the execution of this Agreement, each officer, director
and Significant Shareholder (hereinafter defined) of Golden West, Merger Sub and
Oakwood shall execute agreements substantially in the form attached hereto as
Exhibit B (the "Standstill Letters"), wherein they agree, from August 15, 1994
until the Publication Release Date (as hereinafter defined), not to sell any
Golden West Common Stock or Oakwood Common Stock or the equivalent of either,
including without limitation any Oakwood Common Stock received in the Merger.
"Publication Release Date" means the date on which Oakwood has published its
financial results (consisting of, at a minimum, sales and net income) covering a
period of at least thirty days subsequent to the Closing Date. "Significant
Shareholder" means a shareholder owning 10% or more of the outstanding common
stock of Golden West or Oakwood. Publication of financial results may take the
form of a post-effective amendment to a registration statement, a Form 10-Q or
8-K filing, the issuance of a quarterly earnings report or any other public
issuance of such financial results.
6.2 COVENANTS OF GOLDEN WEST. Golden West covenants and agrees that between
the date hereof and continuing until the Effective Time (except as expressly
contemplated or permitted hereby, or to the extent that Oakwood shall otherwise
consent in writing):
(a) Until September 30, 1994 (or earlier if this Agreement has been
terminated pursuant to Article 9 hereof), Golden West agrees (i) that it shall
not, and shall direct and use its best efforts to cause Golden West's directors,
officers, employees, shareholders, advisors, accountants and attorneys (the
"Representatives"), including such Representatives of any of Golden West's
affiliated entities or persons, not to initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its shareholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of Golden West or any Golden West Subsidiary (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (ii) that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing and will take the
necessary steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 6.2(a); and (iii) that it will notify
Oakwood immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it; provided, however, that nothing
contained in this Section 6.2(a) shall prohibit the Board of Directors of Golden
West from furnishing information to, or entering into discussions or
negotiations with, any person or entity that after the date hereof makes an
unsolicited written, bona fide proposal (an "Unsolicited Proposal") to acquire
Golden West or its assets pursuant to a merger, consolidation, share exchange,
sale of stock or sale of assets or other similar transaction, if, and only to
the extent that (A) the Board of Directors of Golden West, after consultation
with and based upon the advice of counsel, determines in good faith that such
action is necessary for the Board of Directors of Golden West to comply with its
fiduciary duties to shareholders under applicable law and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Golden West provides reasonable notice to Oakwood
to the effect that it is furnishing information to, or entering into discussions
or negotiations with, such person or entity.
(b) Golden West shall promptly after the date of this Agreement take all
action necessary in accordance with California law and its Articles of
Incorporation and Bylaws to convene a special meeting of Golden West's
shareholders (or seek consent in lieu of a meeting) for the purpose of
considering and approving the Merger and Golden West shall consult with Oakwood
in connection therewith. Golden West shall use its reasonable best efforts to
solicit from its shareholders proxies in favor of the Merger (and consenting to
be bound by the terms of this Agreement) and shall take all other actions
necessary or advisable to secure the vote or consent of shareholders required by
California law to approve the Merger, unless otherwise required by the
applicable fiduciary duties of directors of Golden West, as reasonably
determined by such directors in good faith after consultation with and based
upon the advice of independent legal counsel.
(c) Golden West and the Golden West Subsidiaries will make all normal and
customary repairs, replacements, and improvements to their facilities, will not
dispose of any assets other than at fair market value and with the prior written
consent of Oakwood, and without limiting the generality of the foregoing or the
covenants set forth in Section 6.1(a), neither Golden West or any Golden West
Subsidiary will, without the prior written consent of Oakwood:
(i) change any provision of its Articles of Incorporation or Bylaws;
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(ii) change the number of shares of the authorized, issued or
outstanding capital stock of Golden West or any Golden West Subsidiary,
including any issuance, purchase, redemption, split, combination or
reclassification thereof, or issue or grant any option, warrant, call,
commitment, subscription, right or agreement to purchase relating to the
authorized or issued capital stock of Golden West or any Golden West
Subsidiary, or declare, set aside or pay any dividend or other distribution
in cash or in kind with respect to the outstanding capital stock of Golden
West or any Golden West Subsidiary;
(iii) incur any liabilities or obligations, whether directly or
indirectly, or by way of guaranty, and whether or not evidenced by any
note, bond, debenture, or similar instrument, except in the ordinary course
of business consistent with past practices and prior periods;
(iv) except as set forth in Schedule 6.2(c)(iv), make any capital
expenditures individually in excess of $25,000 or in the aggregate in
excess of $100,000, other than reasonable expenditures necessary to
maintain existing assets in good working order and repair, reasonable wear
and tear excepted;
(v) pay any bonuses to any executive officer of Golden West or any
Golden West Subsidiary except as set forth on Schedule 6.2(c)(v); enter
into any new or amend in any respect any existing employment agreement with
any person; adopt any new or amend in any respect any existing Plan, except
as may be otherwise required by law; grant any increase in compensation or
benefits of any kind to its employees, officers or directors, except
regularly scheduled general increases in the ordinary course of business
and consistent with past practices and policies; or effect any change in
any respect in retirement benefits to any class of employees or officers,
except as otherwise required by law;
(vi) sell, mortgage, pledge, or otherwise dispose of or encumber any
asset owned by Golden West or any Golden West Subsidiary, other than sales,
mortgages, pledges, or other dispositions or encumbrances occurring in the
ordinary and regular course of business consistent with past practices and
prior periods;
(vii) increase or deplete inventories, incur or collect receivables,
or incur or pay trade payables or accrued liabilities in any manner other
than consistent with past practices and prior periods, and in the ordinary
course of business;
(viii) cancel without payment or satisfaction in full, waive or extend
the time for performance of, any notes, loans, or other obligations inuring
to the benefit of Golden West or any Golden West Subsidiary;
(ix) make any modification of or amendment to any of the contracts or
agreements listed or described on any Schedule to this Agreement;
(x) fail to maintain in full force and effect all insurance now
carried by Golden West or any Golden West Subsidiary;
(xi) institute any changes in management policy of a significant
nature;
(xii) take any action or fail to take any action that, if taken or
omitted, would be required to be disclosed under the provisions of Section
4.9 of this Agreement; or
(xiii) make any agreement or commitment by or on behalf of Golden West
to do or take any of the actions referred to in the foregoing subparagraphs
(i) through (xii).
(d) At least 30 days prior to the Closing Date, Golden West shall deliver
to Oakwood a list, which shall be reasonably satisfactory to Oakwood, of names
and addresses of those persons who were, in Golden West's reasonable judgment
after discussion with its counsel, Latham & Watkins, at the record date for its
shareholders' meeting to approve the Merger, "affiliates" (each such person, a
"Golden West Affiliate Shareholder") of Golden West within the meaning of Rule
145 of the rules and regulations promulgated under the Securities Act ("Rule
145"). Golden West shall provide Oakwood such information and documents as
Oakwood shall reasonably request for purposes of reviewing such list. Golden
West shall deliver or cause to be delivered to Oakwood prior to the Closing
Date, from each of the Golden West Affiliate Shareholders identified in the
foregoing list, an Affiliate Letter in the form attached hereto as Exhibit C (an
"Affiliate Letter"). Oakwood shall be entitled to place legends as specified in
such Affiliate Letters on the certificates evidencing any Oakwood Common Stock
to be received by such Affiliates pursuant to the terms of this Agreement and to
issue appropriate stop transfer instructions to the transfer agent for the
Oakwood Common Stock consistent with the terms of such Affiliate Letters.
(e) Without the prior written consent of Oakwood, Golden West shall not
take any action which would cause or would be likely to cause the conditions
upon the obligations of the parties hereto to effect the transactions
contemplated hereby not to be fulfilled, including without limitation, taking,
causing to be taken, or permitting or suffering to be taken or to exist any
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action, condition or thing which would cause the representations and warranties
made by Golden West or any Golden West Subsidiary herein not to be true, correct
and accurate as of any time between the date hereof and the Closing Date.
(f) Golden West shall promptly provide to Oakwood monthly and quarterly
consolidated financial statements of Golden West.
(g) Golden West shall prepare and provide to Oakwood, at least five days
prior to the Closing, an updated Schedule 4.3 listing the Social Security or
Federal Tax I.D. numbers for Golden West's shareholders.
(h) From and after the date hereof and until the Effective Time, Golden
West shall not (i) knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes; (ii) knowingly take any action, or knowingly
fail to take any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) (2)(E) of the Code; or (iii)
enter into any contract, agreement, commitment or arrangement with respect to
either of the foregoing.
6.3 COVENANTS OF OAKWOOD. Oakwood covenants and agrees that between the
date hereof and continuing until the Effective Time (except as expressly
contemplated or permitted hereby, or to the extent that Golden West shall
otherwise consent in writing):
(a) Oakwood shall promptly prepare and submit to the New York Stock
Exchange a listing application covering the shares of Oakwood Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time, approval for the listing of such Oakwood Common Stock, subject
to official notice of issuance.
(b) From and after the date hereof and until the Effective Time, Oakwood
shall not (i) knowingly take any action, or knowingly fail to take any action,
that would jeopardize the treatment of the Merger as a "pooling of interests"
for accounting purposes; (ii) knowingly take any action, or knowingly fail to
take any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) (2)(E) of the Code; or (iii)
enter into any contract, agreement, commitment or arrangement with respect to
either of the foregoing.
(c) Oakwood, prior to the Closing Date shall have delivered to Golden West
a copy of any reports filed with the SEC subsequent to the date of execution of
this Agreement.
(d) Without the prior written consent of Golden West, Oakwood shall not
take any action which would cause or tend to cause the conditions upon the
obligations of the parties hereto to effect the transactions contemplated hereby
not to be fulfilled, including without limitation, taking, causing to be taken,
or permitting or suffering to be taken or to exist any action, condition or
thing which would cause the representations and warranties made by Oakwood
herein not to be true, correct and accurate as of any time between the date
hereof and the Closing Date.
6.4 TAX-FREE REORGANIZATION. After the Effective Time, Oakwood and its
subsidiaries (which would include Golden West and the Golden West Subsidiaries)
shall not knowingly take any action that would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a)(2)(E) of the
Code as in effect at the Effective Time.
ARTICLE 7
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have been
approved in the requisite manner by the holders of the issued and outstanding
shares of capital stock of Golden West entitled to vote thereon, which approval
and the voting thereon shall be certified by the Chief Executive Officer of
Golden West.
(b) No action or proceeding shall have been instituted before a court or
other governmental body or by any governmental agency or public authority to
restrain or prohibit the transactions contemplated by this Agreement or to
obtain an amount of damages or other material relief in connection with the
execution of the Agreement or the related agreements or the consummation of the
Merger; and no governmental agency shall have given notice to any party hereto
to the effect that consummation of the transactions contemplated by this
Agreement would constitute a violation of any law or that it intends to commence
proceedings to restrain consummation of the Merger.
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(c) The Registration Statement shall have become effective, no stop orders
suspending its effectiveness shall have been issued, and no proceedings for that
purpose shall have been instituted or, to the knowledge of Oakwood or Golden
West, shall be contemplated.
(d) All consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory body
required in connection with the execution, delivery and performance of this
Agreement shall have been obtained or made, except for filings in connection
with the Merger and any other documents required to be filed after the Effective
Time and except where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a material
adverse effect on the business of Oakwood and Golden West, taken as a whole,
following the Effective Time.
(e) Oakwood shall have received from Golden West certified copies of all
resolutions adopted by the Board of Directors and shareholders of Golden West in
connection with this Agreement and the transactions contemplated hereby. Golden
West shall have received from Oakwood and Merger Sub certified copies of all
resolutions adopted by the Board of Directors of each respective company and the
shareholders of Merger Sub in connection with this Agreement and the
transactions contemplated hereby.
(f) The applicable waiting period under the HSR Act shall have expired or
been terminated.
(g) The shares of Oakwood Common Stock issuable in the Merger shall have
been approved for listing, subject to official notice of issuance, on the New
York Stock Exchange.
(h) Oakwood, Merger Sub and Golden West shall have executed and delivered
the Agreement of Merger and appropriate certificates for filing with the
Secretary of State of California.
7.2 CONDITIONS TO OBLIGATION OF GOLDEN WEST TO EFFECT THE MERGER. The
obligations of Golden West to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Oakwood shall have performed its agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the representations
and warranties of Oakwood and Merger Sub contained in this Agreement shall be
true and correct as of the Closing Date, and Golden West shall have received a
certificate of the president or the chief financial officer of Oakwood, dated
the Closing Date, certifying to such effect.
(b) From the date of this Agreement through the Effective Time, there shall
not have occurred any material change in the financial condition, business or
operations of Oakwood that would have or would be reasonably likely to have an
Oakwood Material Adverse Effect other than any such change that affects both
Golden West and Oakwood in a substantially similar manner.
(c) Golden West shall have received an opinion of its counsel satisfactory
to Golden West, generally to the effect that (i) the Merger qualifies as a
reorganization under Section 368(a)(2)(E) of the Code, (ii) no material gain or
loss will be recognized by Golden West as a result of the Merger and (iii)
shareholders of Golden West who receive in the Merger solely either Oakwood
Common Stock or Oakwood Common Stock and cash in lieu of fractional shares will
recognize no gain or loss for federal income tax purposes with respect to the
Oakwood Common Stock received in the Merger.
(d) Golden West shall have received a written opinion letter, dated as of
the Closing Date, from the legal counsel of Oakwood substantially in the form of
Exhibit D attached hereto; provided, however, that such opinion letter may also
contain any additional opinions reasonably requested by Golden West that relate
to matters that arise during Golden West's due diligence review or otherwise in
connection with the consummation of this Agreement and the transactions
contemplated hereby.
(e) Golden West shall have received a good standing certificate for Oakwood
from the Secretary of State of North Carolina and for Merger Sub from the
Secretary of State of California.
(f) Golden West shall have received from Price Waterhouse "comfort"
letters, (i) dated as of the effective date of the Prospectus/Proxy Statement,
substantially in the form of Exhibit E hereto, and (ii) dated either as of the
date of the Golden West shareholders' meeting to approve the Merger or if there
is no meeting dated as of the end of the period for soliciting and receiving
consents from the shareholders, a bringdown of the letter provided in
subparagraph (i) substantially in the form of Exhibit F hereto.
(g) Any modifications to the form of the Acknowledgement shall be
reasonably satisfactory to Golden West.
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(h) Golden West shall have received good standing certificates for Oakwood
from the Secretary of State of each state where Oakwood is qualified to do
business.
7.3 CONDITIONS TO OBLIGATION OF OAKWOOD AND MERGER SUB TO EFFECT THE
MERGER. The obligations of Oakwood and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) Golden West shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of Golden West contained in this Agreement shall
be true and correct as of the Closing Date, and Oakwood shall have received a
certificate of the Chief Executive Officer of Golden West, dated the Closing
Date, certifying to such effect.
(b) Oakwood shall be satisfied that the Merger will qualify for accounting
by Oakwood as a "pooling of interests" under generally accepted accounting
principles and under applicable rules and regulations of the SEC. In connection
therewith, Oakwood shall have received, on or before the Closing Date, (i) a
letter from Price Waterhouse (or any other accountants of Oakwood's choosing)
dated as of the Closing Date to the effect that the transactions contemplated by
this Agreement may be treated by Oakwood as a "pooling of interests" for
accounting purposes and (ii) a letter from Arthur Andersen & Co. dated as of the
Closing Date to the effect that no condition exists with respect to Golden West
that would prevent the transactions contemplated by this Agreement from being
treated by Oakwood as a "pooling of interests" for accounting purposes.
(c) Oakwood shall have received an opinion of its counsel satisfactory to
Oakwood, generally to the effect that (i) the Merger qualifies as a
reorganization under Section 368(a)(2)(E) of the Code, (ii) no material gain or
loss will be recognized by Golden West or Oakwood as a result of the Merger,
(iii) the net operating loss carry forwards of Golden West shall survive the
Merger and be available to offset future income of Golden West, subject to the
limitations under Section 382 of the Code, and (iv) the federal income tax
consequences of the Merger will not have a material adverse effect on Oakwood.
(d) Oakwood shall have received from Arthur Andersen & Co. "comfort"
letters, (i) dated as of the effective date of the Prospectus/Proxy Statement,
substantially in the form of Exhibit G hereto, and (ii) dated either as of the
date of the Golden West shareholders' meeting to approve the Merger or if there
is no meeting dated as of the end of the period for soliciting and receiving
consents from the shareholders, a bringdown of the letter provided in
subparagraph (i) substantially in the form of Exhibit H hereto.
(e) From the date of this Agreement through the Effective Time, there shall
not have occurred any material change in the financial condition, business,
operations or prospects of Golden West or the Golden West Subsidiaries, other
than any such change that affects both Golden West and Oakwood in a
substantially similar manner.
(f) Oakwood shall have received a written opinion letter, dated as of the
Closing Date, from the legal counsel of Golden West substantially in the form of
Exhibit I attached hereto; provided, however, that such opinion letter may also
contain any additional opinions reasonably requested by Oakwood that relate to
matters that arise during Oakwood's due diligence review or otherwise in
connection with the consummation of this Agreement and the transactions
contemplated hereby.
(g) Oakwood shall have completed to its satisfaction a review of Golden
West's business, operations and any matters raised in the Schedules to this
Agreement and the results of such review shall be satisfactory to Oakwood.
(h) Harry E. Karsten, Jr., Robert D. Totten and Celia Golden as Beneficiary
shall have converted an aggregate of $500,000 of their Deferred Compensation
Plan account balances into 260,000 shares of Golden West Common Stock in
accordance with the terms of the Deferred Compensation Plan and otherwise on
terms satisfactory to Oakwood.
(i) Golden West and the holder of each Golden West Stock Option shall have
entered into agreements satisfactory to Oakwood as described in Section 3.5.
(j) The consents set forth in Schedules 4.5 and 5.5 shall have been
obtained in form satisfactory to Oakwood.
(k) Oakwood shall have received an Affiliate Letter substantially in the
form attached hereto as Exhibit C from each Golden West Affiliate Shareholder.
(l) Oakwood shall have received an updated Schedule 4.3 listing the Social
Security or Federal Tax I.D. numbers of the Golden West shareholders.
(m) Oakwood shall have received duly endorsed certificates and executed
Acknowledgments substantially in the form of Exhibit J hereto, with such changes
as Oakwood may reasonably deem advisable (the "Acknowledgment"), from holders of
at least 85% of the aggregate number of outstanding shares of Golden West Common
Stock and Golden West Preferred
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Stock. Pursuant to such Acknowledgments, the Shareholders shall agree to be
bound by the terms of this Agreement including without limitation the escrow and
indemnification provisions contained herein.
(n) Oakwood shall have received good standing certificates for Golden West
and each Golden West Subsidiary from the Secretary of State of California and
from the Secretary of State of each state where Golden West or any Golden West
Subsidiary is qualified to do business.
(o) Harry E. Karsten, Jr. shall have executed a noncompetition agreement
substantially in the form of Exhibit K attached hereto and the officers of
Golden West listed on Schedule 7.3(o) shall have executed noncompetition
agreements, substantially in the form of Exhibit L attached hereto.
(p) Oakwood shall have received a final statement of all of the Golden West
Transaction Expenses dated as of the Closing Date, including without limitation
final statements of services from attorneys, accountants and any financial
advisors of Golden West, any Golden West Subsidiary or any Shareholder, and
Oakwood shall have received evidence satisfactory to it of payment by the
Shareholders of the Golden West Transaction Expenses in excess of $100,000.
(q) Oakwood shall have received Phase I environmental assessment reports
covering all of the real property owned or leased by Golden West or any Golden
West Subsidiary (which reports shall have been supplemented by additional Phases
and reports if deemed necessary by the environmental consultant preparing such
report to fully assess any environmental concerns) (the "Environmental
Assessment"), which reports shall be in form reasonably acceptable to Oakwood
and shall not disclose remediation, clean-up, monitoring, removal or other work
deemed advisable by the consultant. The costs of any Phase I environmental
assessment reports (and any additional Phases and reports) prepared at Oakwood's
request will be paid by Oakwood. Oakwood shall also have performed such
additional due diligence with respect to any potential environmental liability
of Golden West or any Golden West Subsidiary as it deems necessary or advisable
and such additional due diligence shall not disclose any condition, circumstance
or liability that would have, in Oakwood's reasonable judgment, either
individually or in the aggregate, a Golden West Material Adverse Effect.
(r) The number of holders of Golden West Common Stock and Golden West
Preferred stock who shall have asserted or may assert their rights as a
dissenter with respect to their shares of Golden West Common Stock or Golden
West Preferred Stock and who shall not have withdrawn or lost such dissenters'
rights shall not exceed 10% of the aggregate number of outstanding shares of
Golden West Common Stock and Golden West Preferred Stock.
(s) Oakwood shall have received a Standstill Letter from each officer,
director or Significant Shareholder of Golden West and of Oakwood and Merger
Sub.
(t) All indemnification agreements pursuant to which Golden West or any
Golden West Subsidiary is obligated to indemnify any director or officer of
Golden West or any Golden West Subsidiary shall have been terminated as of the
Closing Date.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION. The Shareholders shall, jointly and severally,
indemnify and hold harmless Oakwood, its successors and assigns, from and
against any and all liabilities, losses, damages, actions, suits, proceedings,
claims, demands, assessments, fines, penalties, judgments, fees, costs and
expenses (including reasonable accountants' and attorneys' fees) of every nature
and character (hereinafter referred to as a "Loss" or "Losses"), which Oakwood
or Golden West or their subsidiaries, their respective successors and assigns,
or any one or more of them, may sustain or incur, directly or indirectly,
arising out of or incident to or by reason of the falsity or incorrectness of
any representation or warranty made by the Shareholders or Golden West or any
Golden West Subsidiary in this Agreement or any breach of any representation or
warranty or of any covenant to be performed by or on the part of the
Shareholders, Golden West or any Golden West Subsidiary under this Agreement or
any document, certificate, or other agreement or instrument entered into,
furnished or to be furnished by the Shareholders, Golden West or any Golden West
Subsidiary pursuant to this Agreement. Notwithstanding any provisions in this
Section 8.1 to the contrary, no claim for indemnity shall be submitted by
Oakwood, its successors or assigns, and no indemnification shall be required by
the Shareholders, until and only to the extent that the aggregate amount of
Losses exceeds $150,000. All rights to indemnification under this Article 8.1
shall expire on the first anniversary of the Closing Date except as to any
matter as to which Oakwood has given notice pursuant to Section 8.2 prior to
such first anniversary date. Any liability of the Shareholders under this
Section 8.1 shall be in addition to and not in substitution or limitation of any
liability which it may otherwise have; provided, however, that Oakwood shall be
entitled to only one complete satisfaction of
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a claim against the Shareholders; and provided further, however, that each
Shareholder's total monetary obligation under this Agreement shall not exceed an
amount equal to the number of such Shareholder's shares of Oakwood Common Stock
that are to be originally escrowed pursuant to Section 3.9 multiplied by the
Closing Value, which limit on indemnification shall not be subject to reduction
as all or part of such shares are released from escrow.
8.2 NOTICE. If any matter shall arise which may involve or give rise to a
claim by Oakwood against the Shareholders under the provisions of this Section
8.1 (an "Indemnity Claim"), Oakwood shall give prompt notice thereof to the
Shareholders at their respective addresses provided in their respective
Acknowledgment stating with reasonable specificity the circumstances of the
Indemnity Claim and shall thereafter give prompt notice of any change therein.
8.3 THIRD PARTY CLAIMS. If the Indemnity Claim involves a claim made by any
third party (a "Third Party Claim"), Oakwood agrees to assume the defense of
such claim and to diligently pursue its defense until the conclusion of the
matter. Oakwood shall provide to the Shareholders copies of all pleadings and
pertinent documents relating to such Third Party Claim, shall keep the
Shareholders advised as to the status of the proceedings relating to such Third
Party Claim and shall obtain the prior written approval of the Shareholders who
held a majority of the outstanding shares of the Golden West Common Stock and
the Golden West Preferred Stock immediately prior to the Effective Time, which
approval shall not be unreasonably withheld, before entering into any settlement
of such Third Party Claim.
ARTICLE 9
TERMINATION
9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval of this Agreement by the shareholders of Golden West, by the mutual
consent of Oakwood and Golden West.
9.2 TERMINATION BY EITHER OAKWOOD OR GOLDEN WEST. This Agreement may be
terminated and the Merger may be abandoned by action or authorization of the
Board of Directors of either Oakwood or Golden West if (a) the Merger shall not
have been consummated by November 15, 1994, or (b) the approval of Golden West's
shareholders required by Section 7.1(a) shall not have been obtained at a
meeting duly convened therefor or at any adjournment thereof, or (c) a United
States federal or state court of competent jurisdiction or United States federal
or state governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; provided, however, that the party seeking to terminate
this Agreement pursuant to this clause (c) shall have used all reasonable
efforts to remove such injunction, order or decree.
9.3 TERMINATION BY GOLDEN WEST. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by the shareholders of Golden West, by action or authorization of
the Board of Directors of Golden West if (a) there has been a breach by Oakwood
or Merger Sub of any representation or warranty contained in this Agreement
which would have or would be reasonably likely to have an Oakwood Material
Adverse Effect, (b) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of Oakwood, which breach is
not curable or, if curable, is not cured within 30 days after written notice of
such breach is given by Golden West to Oakwood or (c) prior to the approval by
Golden West's shareholders of the transactions contemplated by this Agreement,
Golden West shall have received an Unsolicited Proposal and the Board of
Directors of Golden West, after consulting with its outside counsel, determines
that to proceed with the Merger would violate its fiduciary duties and, not
later than the time of such termination, Golden West has paid Oakwood the amount
of $500,000 as a termination fee in lieu of the fee required by Section 9.7.
9.4 TERMINATION BY OAKWOOD. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, by action or
authorization of the Board of Directors of Oakwood if (a) there has been a
breach by Golden West or any Golden West Subsidiary of any representation or
warranty contained in this Agreement which would have or would be reasonably
likely to have an Golden West Material Adverse Effect, (b) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of Golden West or any Golden West Subsidiary, which breach
is not curable or, if curable, is not cured within 30 days after written notice
of such breach is given by Oakwood to Golden West or the Subsidiary, or (c) the
Merger will not qualify for accounting by Oakwood as a "pooling of interests"
under generally accepted accounting principles and under applicable rules and
regulations of the SEC.
Aa-28
<PAGE>
9.5 EFFECT OF TERMINATION AND ABANDONMENT. Upon termination of this
Agreement pursuant to this Section, this Agreement shall be void and of no other
effect, and there shall be no liability by reason of this Agreement or the
termination thereof on the part of any party hereto (other than for the willful
breach by a party of any of its representations, warranties, covenants or
agreements contained herein), or on the part of the respective directors,
officers, employees, agents or shareholders of any of them.
9.6 EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto, by action taken or authorized by its Board of Directors, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
9.7 TERMINATION FEE.
(a) Golden West agrees that if (i) the Merger is not consummated for any
reason other than (A) termination of this Agreement by Golden West pursuant to
clause (a) or (b) of Section 9.3, (B) termination of this Agreement by mutual
consent of Oakwood and Golden West pursuant to Section 9.1, (C) termination by
Oakwood pursuant to clause (b) of Section 9.4 due to the failure to satisfy the
conditions to close set forth in either clause (g) or (q) of Section 7.3 or (D)
termination by Oakwood pursuant to clause (c) of Section 9.4 and (ii) on or
before 120 days after the termination of this Agreement, a Business Combination
(as defined below) shall have occurred or Golden West or its principal
shareholder shall have entered into a letter of intent, agreement in principle
or definitive agreement, or an understanding similar to any of the foregoing,
for a Business Combination, then Golden West shall pay to Oakwood an amount
equal to $500,000.
(b) Any payment required to be made pursuant to this Section 9.7 shall be
made as promptly as practicable but not later than five business days after the
occurrence of the Business Combination or the execution of the letter of intent,
agreement in principle or definitive agreement, or understanding similar to the
foregoing, for a Business Combination, whichever is earlier.
(c) For purposes of this Section 9.7, the term "Business Combination" shall
mean (i) a merger, consolidation, share exchange, business combination or
similar transaction involving Golden West; (ii) a sale, lease, exchange,
transfer or other disposition of 50% or more of the assets of Golden West and
each Golden West Subsidiary, taken as a whole, in a single transaction or series
of transactions; or (iii) the acquisition by a person or entity of 50% or more
of the Golden West Common Stock or Golden West Preferred Stock whether by sale
of stock, tender offer or exchange offer or otherwise.
ARTICLE 10
GENERAL PROVISIONS
10.1 EFFECTIVENESS OF REPRESENTATIONS AND WARRANTIES.
(a) Except as set forth in Section 10.1(b), the representations,
warranties, covenants and agreements of each party hereto shall remain operative
and in full force and effect, regardless of any investigation made by or on
behalf of any other party hereto, any person controlling any such party or any
of their officers or directors, whether prior to or after the execution of this
Agreement. Notice of any claim by Oakwood or Merger Sub for indemnification
hereunder (including a reasonable description of the alleged breach) must be
made prior to the expiration under Section 10.1(b) of the representation,
warranty, covenant or agreement upon which it is based. All statements contained
in the Schedules hereto shall be deemed to be representations and warranties by
the parties hereunder.
(b) The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article 9; except that (i) the representations and warranties set
forth in Article 4 shall survive the Effective Time and expire on the first
anniversary of the Effective Time, (ii) the agreements set forth in Articles 1,
2, 3, 8, 9 and 10 and Section 6.4 shall survive the Effective Time and (iii) and
the agreements set forth in Section 6.1(d) and in Articles 8, 9 and 10 hereof
shall survive termination pursuant to Article 9.
10.2 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered, mailed or transmitted, and shall be effective upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the facsimile numbers
specified below:
Aa-29
<PAGE>
(a) If to Oakwood or Merger Sub:
Oakwood Homes Corporation
2225 South Holden Road
Post Office Box 7386
Greensboro, North Carolina 27417-0386
Attention: C. Michael Kilbourne
Facsimile No.: (910) 852-1537
with a copy to:
Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center, Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202
Attention: Myles E. Standish, Esq.
Facsimile No.: (704) 331-7598
(b) If to Golden West:
Golden West Homes
1801 East Edinger Avenue
Suite 240
Santa Ana, California 92705
Attention: Harry E. Karsten, Jr.
Facsimile No.: (714) 835-6232
with a copy to:
Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, California 92626
Attention: John R. Stahr, Esq.
Facsimile No.: (714) 755-8290
(c) If to a Shareholder:
To his or its address set forth in the Acknowledgment
executed by such Shareholder
(d) If to the Escrow Agent:
First Union National Bank of North Carolina
Bond Administration Department
230 South Tryon Street
Charlotte, NC 28288-1179
Attention: Daniel J. Ober, Assistant Vice President
Facsimile No.: (704) 383-7316
10.3 ASSIGNMENT, BINDING EFFECT; BENEFIT. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
10.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and the Schedules
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings among the
parties with respect thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
10.5 AMENDMENT. This Agreement may be amended by the parties hereto at any
time before or after approval of matters presented in connection with the Merger
by the shareholders of Golden West, but after any such shareholder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further
Aa-30
<PAGE>
approval. This Agreement may not be modified or amended except by an instrument
in writing signed on behalf of Oakwood, Merger Sub and Golden West and, to the
extent such writing modifies or amends Section 3.9, the Escrow Agent. Any
amendment to this Agreement prior to the Effective Time shall not affect the
obligations and liabilities of any Shareholder under this Agreement, as amended,
unless expressly agreed to in such amendment.
10.6 GOVERNING LAW. The validity of this Agreement, the construction of its
terms and the determination of the rights and duties of the parties hereto shall
be governed by and construed in accordance with the laws of the United States
and those of the State of North Carolina applicable to contracts made and to be
performed wholly within such state.
10.7 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
10.8 HEADINGS. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.9 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations, partnerships, limited
liability companies, trusts, associations and other entities.
10.10 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. Any waiver hereunder by Oakwood shall
not release or otherwise affect the obligations of a Shareholder hereunder
except to the extent expressly provided in such waiver. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be construed
as a waiver of any prior or subsequent breach of the same or any other provision
hereunder. Oakwood may waive the condition to issuing shares of Oakwood Common
Stock to a Shareholder of receipt of an executed Acknowledgment from such
Shareholder; provided, however, that no such waiver shall affect (i) the
obligations and liabilities of any other Shareholder who has executed a
Acknowledgment or (ii) the obligations and liabilities of such non-signing
Shareholder hereunder as a Shareholder, including without limitation the
obligations and liabilities of such nonsigning Shareholder with respect to his
Escrowed Shares.
10.11 INCORPORATION OF SCHEDULES AND EXHIBITS. The Schedules and the
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
10.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.14 EFFECTIVENESS. This Agreement shall be effective upon the execution
hereof by Oakwood, Merger Sub and Golden West, and upon such execution shall
constitute a legal, valid and binding obligation of each of Oakwood, Merger Sub
and Golden West.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the any and year first written
above.
OAKWOOD HOMES CORPORATION
ATTEST:
<TABLE>
<S> <C>
By: /s/ C. Michael Kilbourne By: /s/ Nicholas J. St. George
Name: Nicholas J. St. George
Title: President
</TABLE>
GOLDEN ACQUISITION CORPORATION
ATTEST:
<TABLE>
<S> <C>
By: /s/ C. Michael Kilbourne By: /s/ Nicholas J. St. George
Name: Nicholas J. St. George
Title: President
</TABLE>
GOLDEN WEST HOMES
ATTEST:
<TABLE>
<S> <C>
By: /s/ Frank D. Jacobs By: /s/ Harry E. Karsten, Jr.
Name: Harry E. Karsten, Jr.
Title: President
</TABLE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Escrow Agent
ATTEST:
<TABLE>
<S> <C>
By: /s/ Terry Baker By: /s/ Daniel J. Ober
Name: Daniel J. Ober
Title: Assistant Vice President
</TABLE>
Aa-32
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Agreement of Merger
Exhibit B Standstill Letter
Exhibit C Affiliate Letter
Exhibit D Opinion of Oakwood counsel
Exhibit E Price Waterhouse Comfort Letter
Exhibit F Price Waterhouse Comfort Letter Bringdown
Exhibit G Arthur Andersen Comfort Letter
Exhibit H Arthur Andersen Comfort Letter Bringdown
Exhibit I Opinion of Golden West counsel
Exhibit J Form of Acknowledgment
Exhibit K Form of Karsten Noncompetition Agreement
Exhibit L Form of Other Noncompetition Agreement
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 3.5 Option Shares
Schedule 4.0 Officers
Schedule 4.1 Golden West Subsidiaries
Schedule 4.3 List of Shareholders; Golden West Options
Schedule 4.5 Golden West Consents
Schedule 4.7 Golden West Investments
Schedule 4.9 Subsequent Events
Schedule 4.10 Tax Matters
Schedule 4.11(a) Directors, Officers and Employees
Schedule 4.11(b) Fringe Benefit Plans
Schedule 4.11(d) Funding Policies
Schedule 4.11(e) Plan Claims and Litigation
Schedule 4.11(g) Benefit Plans -- Effect of Merger
Schedule 4.12(a) Real Property and Leasehold Interests and Exceptions
Schedule 4.12(b) Permitted Encumbrances
Schedule 4.12(c) Inventory Encumbrances
Schedule 4.12(e) Trademarks
Schedule 4.12(f) Material Contracts
Schedule 4.13 Environmental Matters
Schedule 4.14 Leases
Schedule 4.15 Capital Expenditures
Schedule 4.16 Certain Transactions
Schedule 4.17 Compliance Exceptions
Schedule 4.18 Litigation
Schedule 4.22 Brokers
Schedule 4.24 Bank Accounts
Schedule 4.25 Insurance
Schedule 4.26 Product Warranty Matters
Schedule 4.27 Warranty, Repurchase and Other Service Obligations
Schedule 4.28 Dealer Agreements
Schedule 4.29 Guarantees
Schedule 4.30 Prospective Changes
Schedule 5.5 Oakwood Consents
Schedule 5.10 Oakwood Defaults
</TABLE>
<PAGE>
EXHIBITS AND SCHEDULES
SCHEDULES (CONT'D)
<TABLE>
<S> <C>
Schedule 6.1(h) Letters of Credit
Schedule 6.2(c)(iv) Capital Expenditures
Schedule 6.2(c)(v) Bonuses
Schedule 7.3(o) Officers to Enter Into Noncompetition Agreements
</TABLE>
<PAGE>
EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER is dated as of this day of , 1994, by
and among GOLDEN ACQUISITION CORPORATION, a California corporation ("SUB"),
OAKWOOD HOMES CORPORATION, a North Carolina corporation ("Oakwood"), and GOLDEN
WEST HOMES, a California corporation ("Golden West").
W I T N E S S E T H :
WHEREAS, SUB has outstanding 1,000 shares of Common Stock, all of which are
owned of record and beneficially by Oakwood;
WHEREAS, Golden West has outstanding 1,287,000 shares of Common Stock,
without par value, and 1,105,000 shares of Preferred Stock, without par value;
and
WHEREAS, the Boards of Directors of Golden West, Oakwood and SUB deem it
advisable and in the best interests of Golden West, Oakwood and SUB and their
respective shareholders, that SUB merge with and into Golden West in a merger
(the "Merger") to be consummated under the terms and conditions set forth herein
and in accordance with the laws of the State of California; and
WHEREAS, the Boards of Directors of Golden West on August 11, 1994, of
Oakwood on July 20, 1994, and of SUB on , 1994, have, by
resolutions duly adopted, approved this Agreement of Merger; and
WHEREAS, the shareholders of Golden West on , 1994, and the
sole shareholder of SUB on , 1994 have approved the Merger pursuant
to the terms of this Agreement of Merger; and
WHEREAS, Oakwood has agreed that when the Merger becomes effective, and as
and when required hereby, it will deliver such shares of its Common Stock as
shall be required in exchange for the shares of Golden West Common Stock and
Golden West Preferred Stock outstanding on the effective date of the Merger; and
WHEREAS, Oakwood, SUB and Golden West have entered into an Acquisition
Agreement dated as of August , 1994 (the "Acquisition Agreement"), setting
forth certain agreements and conditions in connection with the Merger.
NOW, THEREFORE, the parties hereby agree that SUB shall be and is hereby
merged into Golden West (the "Surviving Corporation"), and that the terms and
conditions of the Merger and the mode of carrying them into effect, including
the manner of converting the shares of Golden West into shares of Oakwood, shall
be as follows:
1. MERGER; EFFECTIVE DATE OF MERGER.
1.1 The Merger shall be effected in accordance with the provisions of and
have the effect provided in Sections 1100 ET SEQ. of the California General
Corporation Law. Upon the effectiveness of the Merger, the separate existence of
SUB shall cease and Golden West shall succeed, without other transfer, to all
the rights, privileges, powers, immunities and franchises of SUB, all of the
properties and assets of SUB, and all of the debts, choses in action and other
interests due or belonging to SUB, and shall be subject to and responsible for
all the debts, liabilities and obligations of SUB in the same manner as if
Golden West had itself incurred them. All rights of creditors and all liens upon
the property of SUB shall be preserved unimpaired, limited to the property
affected by such liens immediately prior to the effective date of the Merger.
Any action or proceeding pending by or against SUB may be prosecuted to judgment
which shall bind Golden West, or Golden West may be proceeded against or
substituted in the place of SUB.
1.2 The Merger shall become effective on the date that this Agreement of
Merger is filed with and accepted by the Secretary of State of the State of
California (the "Effective Date").
1.3 If, at any time after the Effective Date, Golden West considers or is
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or record in
Golden West its right, title and interest in, to and under any of the rights,
properties or assets of SUB acquired or to be acquired by Golden West as a
A-1
<PAGE>
result of, or in connection with, the Merger or to otherwise carry out this
Agreement of Merger, then the officers and directors of Golden West shall and
will be authorized to execute and deliver, in the name and on behalf of Golden
West of SUB or otherwise, all such deeds, bills of sale, assignments and
assurances, and to take and do, in the name and on behalf of Golden West or SUB
or otherwise, all such other actions as may be necessary or desirable to vest,
perfect or record any and all right, title and interest in, to and under such
rights, properties or assets in Golden West or otherwise carry out this
Agreement of Merger.
2. SURVIVING CORPORATION'S ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS;
OFFICERS.
2.1 On the Effective Date, the Articles of Incorporation and Bylaws of SUB
as in effect on the Effective Date shall be the Articles of Incorporation and
Bylaws of the Surviving Corporation from and after the Effective Date (until
altered, amended or repealed in the manner specified therein or as provided by
law); provided, however, that on the Effective Date Article I of the Articles of
Incorporation shall be amended to read, in its entirety, as follows:
"The name of the corporation is Golden West Homes."
2.2 The directors and officers of SUB serving on the Effective Date shall
be the directors and officers of the Surviving Corporation until removed or
replaced in the manner specified in the Bylaws of the Surviving Corporation or
as provided by law.
3. CONVERSION OF SHARES.
3.1 Immediately upon the effectiveness of the Merger, each share of Golden
West Common Stock and each share of Golden West Preferred Stock issued and
outstanding on the Effective Date of the Merger (except for shares, if any, of
Golden West Common Stock or Golden West Preferred Stock which shall then
constitute "dissenting shares" within the meaning of Section 1300 ET SEQ. of the
California General Corporation Law ("Dissenting Shares")), shall be converted
into the right to receive .231099373 shares of the Common Stock of Oakwood. No
fractional shares of Oakwood Common Stock shall be issued or delivered upon the
conversion of Golden West shares into shares of Oakwood Common Stock hereunder;
rather, such fractional portion shall be paid in cash. The amount paid for a
fractional share shall be an amount equal to the fraction of the Oakwood share
otherwise due multiplied by the closing price of the Oakwood Common Stock on the
New York Stock Exchange two business days before the Effective Date (or, if the
Oakwood Common Stock is not traded on the New York Stock Exchange on such date,
the closing price thereon on the immediately preceding day on which the stock
traded).
3.2 Each holder of shares of Golden West Common Stock or Golden West
Preferred Stock, upon surrender on the Effective Date to Oakwood or at any
subsequent time to Wachovia Bank, N.A., as Exchange Agent, for cancellation of
the one or more certificates representing such shares, shall thereafter be
entitled to receive a certificate representing the number of shares of Oakwood
Common Stock and the cash in lieu of fractional shares as determined pursuant to
Section 3.1 of this Agreement.
3.3 Until surrender as hereinabove provided, (i) each outstanding
certificate which prior to the Effective Date represented shares of Golden West
Common Stock or Golden West Preferred Stock (other than certificates for
Dissenting Shares) shall be deemed for all corporate purposes, to evidence the
right to receive the aggregate number of shares of Oakwood Common Stock and cash
for fractional shares to be delivered with respect to such shares of Golden West
capital stock; and (ii) each outstanding certificate evidencing Dissenting
Shares shall evidence the right of the holders thereof to pursue such holders'
remedies as a dissenting shareholder as provided in the California General
Corporation Law.
3.4 All Oakwood Common Stock delivered upon the surrender for exchange of
shares of Golden West Common Stock or Golden West Preferred Stock in accordance
with the terms hereof shall be deemed to have been delivered in full
satisfaction of all rights pertaining to such shares of Golden West Common Stock
or Golden West Preferred Stock. There shall be no further registration of
transfers on the stock transfer books of Golden West of the shares of Golden
West Common Stock or Golden West Preferred Stock which were outstanding
immediately prior to the Effective Date. If for any reason certificates are
presented to Golden West after the Effective Date, they shall be canceled and
exchanged as provided herein.
3.5 Immediately upon the effectiveness of the Merger, each outstanding
share of capital stock of SUB, by virtue of the Merger, and without any action
on the part of the holder thereof, shall automatically be converted into and
become one share of Common Stock of Golden West as the Surviving Corporation.
From and after the Effective Date, Oakwood, as holder of all of the outstanding
shares of capital stock of SUB, shall have the right to receive Common Stock of
Golden West as provided hereinabove upon its surrender of the certificate or
certificates representing all shares of the capital stock of SUB. Until
surrender, each outstanding certificate which prior to the Effective Date
represented capital stock of SUB shall be
A-2
<PAGE>
deemed for all corporate purposes to evidence ownership of the number of whole
shares of Common Stock of Golden West into which the shares of capital stock of
SUB have been so converted. From and after the Effective Date, Oakwood, as owner
of all outstanding shares of the capital stock of SUB, shall thereupon cease to
have any rights with respect to such shares and its rights shall be solely in
respect of the Common Stock of Golden West into which such shares of capital
stock of SUB have been so converted.
4. TERMINATION AND AMENDMENT.
4.1 Notwithstanding the approval of this Agreement by the shareholders of
Golden West and SUB, this Agreement may be terminated at any time prior to the
Effective Date by the mutual agreement of the Boards of Directors of Oakwood,
SUB and Golden West.
4.2 Notwithstanding the approval of this Agreement by the shareholders of
Golden West and SUB, this Agreement shall terminate in the event that the
Acquisition Agreement shall be terminated prior to the Effective Date as therein
provided.
4.3 In the event of the termination of this Agreement as provided above,
this Agreement shall become void and there shall be no liability on the part of
Golden West, SUB or Oakwood or their respective officers or directors hereunder,
except as otherwise provided in the Acquisition Agreement.
4.4 This Agreement may be amended by the parties hereto at any time before
or after approval hereof by the shareholders of Golden West or SUB but, after
any such approval, no amendment shall be made which by law requires the further
approval of the shareholders of Golden West or SUB without first obtaining such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
IN WITNESS WHEREOF, the parties to this Agreement of Merger, pursuant to
the approval and authority duly given by resolutions adopted by the respective
Boards of Directors, have caused this Agreement of Merger to be executed in
their respective corporate names by the Chief Executive Officer, President or a
Vice President and attested by the Secretary or an Assistant Secretary of each
party hereto.
GOLDEN ACQUISITION CORPORATION
By:
, President
Attested by:
, Secretary
OAKWOOD HOMES CORPORATION
By:
, President
Attested by:
, Secretary
GOLDEN WEST HOMES
By:
, President
Attested by:
, Secretary
A-3
<PAGE>
EXHIBIT B
FORM OF STANDSTILL LETTER
[To be signed by directors, officers and Significant
Shareholders of Oakwood, Golden West and Merger Sub]
Oakwood Homes Corporation
2225 South Holden Road
Greensboro, North Carolina 27417
Ladies and Gentlemen:
Pursuant to the terms of the Acquisition Agreement dated as of
, 1994 (the "Agreement") among Golden West Homes, a California
corporation ("Golden West"), Oakwood Homes Corporation, a North Carolina
corporation ("Oakwood"), Golden Acquisition Corporation, a California
corporation that is a wholly-owned subsidiary of Oakwood ("Merger Sub"), certain
shareholders of Golden West and First Union National Bank of North Carolina, as
Escrow Agent, Merger Sub will be merged with and into Golden West, which will
become a wholly-owned subsidiary of Oakwood (the "Merger"). In connection with
the reporting of the Merger as a "pooling of interests" for accounting purposes,
I represent, warrant and covenant to Oakwood that, beginning on August 19, 1994,
I will not sell, transfer or otherwise dispose of (i) any shares of common
stock, $.50 par value per share, of Oakwood (the "Oakwood Securities"), (ii) any
shares of common stock, no par value per share, of Golden West or (iii) any
shares of preferred stock, no par value per share, of Golden West, which are
held by me on such date or acquired by me after such date, including without
limitation any Oakwood Securities received in the Merger, until after such time
as results covering at least 30 days of combined operations of Golden West and
Oakwood have been published by Oakwood, in the form of a quarterly earnings
report, an effective registration statement filed with the Commission, a report
to the Commission on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations.
Very truly yours,
Name:
(Print or Type)
Accepted this day of
, 1994 by
OAKWOOD HOMES CORPORATION
By:
Name:
Title:
B-1
<PAGE>
EXHIBIT C
FORM OF AFFILIATE LETTER
Oakwood Homes Corporation
2225 South Holden Road
Greensboro, North Carolina 27417
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Golden West Homes, a California corporation ("Golden
West"), as the term "affiliate" is defined for purposes of paragraphs (c) and
(d) of Rule 145 of the rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"). Pursuant to the terms of the Acquisition
Agreement dated as of , 1994 (the "Agreement"), among Golden West,
Oakwood Homes Corporation, a North Carolina corporation ("Oakwood"), Golden
Acquisition Corporation, a California corporation that is a wholly-owned
subsidiary of Oakwood ("Merger Sub"), certain shareholders of Golden West and
First Union National Bank of North Carolina, as Escrow Agent, Merger Sub will be
merged with and into Golden West, which will become a wholly-owned subsidiary of
Oakwood (the "Merger").
As a result of the Merger, I may receive shares of common stock, $.50 par
value per share, of Oakwood ("Oakwood Common Stock") or options to purchase
shares of Oakwood Common Stock (the "Oakwood Options") (the Oakwood Common
Stock, the Oakwood Options and any Oakwood Common Stock issued upon conversion
of the Oakwood Options are collectively referred to hereinafter as the "Oakwood
Securities ") in exchange for shares owned by me of common stock, no par value
per share, or preferred stock, no par value per share, of Golden West.
I represent, warrant and covenant to Oakwood that in the event I receive
any Oakwood Securities as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of the Oakwood
Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed the
requirements of such documents and other applicable limitations upon my ability
to sell, transfer or otherwise dispose of the Oakwood Securities to the extent I
felt necessary with my counsel or counsel for Golden West.
C. I have been advised that the issuance of Oakwood Common Stock (but not
the Oakwood Options) to me pursuant to the Merger has been registered with the
Commission under the Act on a Registration Statement on Form S-4. However, I
have also been advised that, since at the time the Merger was submitted for a
vote of the stockholders of Golden West, I may be deemed to have been an
affiliate of Golden West and the distribution by me of the Oakwood Securities
has not been registered under the Act, I may not sell, transfer or otherwise
dispose of the Oakwood Securities issued to me in the Merger unless (i) such
sale, transfer or other disposition has been registered under the Act, (ii) such
sale, transfer or other disposition is made in conformity with Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of counsel
reasonably acceptable to Oakwood, or a "no-action" letter obtained by the
undersigned from the staff of the Commission, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. I understand that Oakwood is under no obligation to register the sale,
transfer or other disposition of the Oakwood Securities by me or on my behalf
under the Act or to take any other action necessary in order to make compliance
with an exemption from such registration available other than to timely file all
reports as required under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
C-1
<PAGE>
E. I also understand that stop transfer instructions will be given to
Oakwood's transfer agent with respect to the Oakwood Common Stock and that there
will be placed on the certificates for the Oakwood Common Stock issued to me in
the Merger or issued to me upon conversion of the Oakwood Options, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
, 1994 BETWEEN THE REGISTERED HOLDER HEREOF AND
OAKWOOD HOMES CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF OAKWOOD HOMES CORPORATION."
F. I also understand that unless the transfer by me of my Oakwood
Securities has been registered under the Act or is a sale in conformity with the
provisions of Rule 145, Oakwood reserves the right to put the following legend
on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legend(s) set forth in paragraphs E
and, if applicable, F above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for purposes of
the Act or this Agreement. It is understood and agreed that such legend(s) and
the stop orders referred to above will be removed if (i) two years shall have
elapsed from the date the undersigned acquired the Oakwood Securities received
in the Merger and the provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) three years shall have elapsed from the date the undersigned
acquired the Oakwood Securities received in the Merger and the provisions of
Rule 145(d)(3) are then applicable to the undersigned, or (iii) Oakwood has
received either an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to Oakwood, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.
Execution of this letter should not be considered an admission on my part
that I am an "affiliate" of Golden West as described in the first paragraph of
this letter, or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
Very truly yours,
Name:
(Print or Type)
Accepted this day of
, 1994 by
OAKWOOD HOMES CORPORATION
By:
Name:
Title:
C-2
<PAGE>
EXHIBIT D
[Date]
Golden West Homes
1801 East Edinger Avenue
Suite 240
Santa Ana, California 92705
Re: Acquisition Agreement dated as of , 1994 (the "Acquisition
Agreement") by and among Oakwood Homes Corporation ("Oakwood"), Golden
Acquisition Corporation ("Merger Sub"), Golden West Homes ("Golden West"),
certain Shareholders of Golden West and First Union National Bank of North
Carolina, as Escrow Agent
Ladies and Gentlemen:
We have acted as counsel to Oakwood Homes Corporation and its wholly-owned
subsidiary, Golden Acquisition Corporation ("Merger Sub"), in connection with
the merger (the "Merger") of Merger Sub with and into Golden West pursuant to
the terms of the Acquisition Agreement. This opinion is given to you pursuant to
Section 7.2(d) of the Acquisition Agreement. All capitalized terms used and not
otherwise defined herein shall have the meanings ascribed to such terms in the
Acquisition Agreement.
In rendering the opinions set forth below, we have examined originals or
copies of the Acquisition Agreement and the Agreement of Merger (such documents
being referred to herein individually as a "Transaction Document" and
collectively as the "Transaction Documents") and originals or copies, certified
or otherwise identified to our satisfaction, of such other documents, corporate
records and certificates of public officials and corporate officers, and have
made such investigations of fact and law, as we have deemed relevant and
necessary as a basis for such opinions.
In giving the opinions expressed herein and making our investigations in
connection herewith, we have assumed (a) the due authorization, execution and
delivery by the parties thereto other than Oakwood and Merger Sub of the
documents examined by us, (b) the genuineness of all signatures of individuals,
(c) the due existence of all corporations other than Oakwood and Merger Sub and
the personal legal capacity of all individual signatories, (d) the authenticity
of all documents presented to us as originals, (e) the conformity to the
originals of all documents presented to us as copies, and (f) the integrity and
completeness of the corporate minute books of Oakwood and Merger Sub presented
to us for our examination, and we have no reason to believe that the foregoing
assumptions are unwarranted.
We have also assumed that the Transaction Documents and the transactions
evidenced thereby, are valid, binding and enforceable against all parties
thereto other than Oakwood and Merger Sub.
Based upon and subject to the foregoing, and subject to the comments and
qualifications set forth below, we are of the opinion that:
1. Oakwood is a corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina. Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California.
2. Oakwood and Merger Sub each has all requisite corporate power and
authority to conduct its business, own, lease and operate its properties and to
enter into and perform its obligations under the Transaction Documents.
3. The execution, delivery and performance by Oakwood and Merger Sub of the
Transaction Documents have been duly authorized by all necessary action on the
part of Oakwood and Merger Sub. The Transaction Documents have been duly
executed and delivered by Oakwood and Merger Sub, and assuming the due execution
and delivery by the other parties thereto, each Transaction Document constitutes
the legal, valid and binding obligation of Oakwood and Merger Sub, enforceable
against them in accordance with their respective terms.
4. The execution and delivery by Oakwood and Merger Sub of the Transaction
Documents do not, and the consummation of the transactions contemplated
thereunder and compliance by Oakwood and Merger Sub with the terms, conditions
and provisions of the Transaction Documents will not, contravene or result in
any breach or default under (i) any provision of the articles of incorporation
or bylaws of either Oakwood or Merger Sub, (ii) to our best knowledge, any law,
statute, rule or regulation of any administrative agency or governmental body,
or any judgment, order, writ, stipulation, injunction, award or decree of any
federal or North Carolina court, arbiter, administrative agency or governmental
body or (iii) any of the terms,
D-1
<PAGE>
conditions or provisions of any material contract, undertaking, indenture or
other agreement or instrument binding on Oakwood or Merger Sub and known to us.
5. Except for the filing of the Agreement of Merger with the California
Secretary of State and certain other filings not yet due as of the date hereof,
no authorization, approval or consent of, or declaration or filing with, or
taking of any action in respect of or by, any federal or North Carolina
governmental authority or regulatory body, is necessary or required in
connection with the execution and delivery by Oakwood and Merger Sub of the
Transaction Documents or the performance by Oakwood or Merger Sub of their
respective obligations thereunder.
6. Upon the filing of the Agreement of Merger with the California Secretary
of State, together with appropriate officers' certificates and tax clearance
certificates as required by the California General Corporation Law (the "CGCL"),
the Merger shall be effective in accordance with the CGCL.
7. The authorized capital stock of Oakwood consists of 100,000,000 shares
of Common Stock, $.50 par value per share ("Oakwood Common Stock"), and 500,000
shares of Preferred Stock, $100 par value per share. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, all of which are
issued and outstanding and owned by Oakwood.
8. The shares of Oakwood Common Stock to be issued in the Merger, when
issued upon the terms and for the consideration set forth in the Acquisition
Agreement and the Agreement of Merger, will have been duly authorized and will
be validly issued, fully paid and nonassessable, and will not have been issued
in violation of any preemptive rights.
9. The shares of Oakwood Common stock to be issued in the Merger have been
approved for listing on the New York Stock Exchange.
10. We have been informed by the Securities and Exchange Commission that
the Registration Statement on Form S-4 has become effective under the Securities
Act of 1933, as amended (the "Act"), and no stop order suspending the
effectiveness of the Registration Statement has been issued under the Act and no
proceedings therefor have been instituted or threatened by the Commission.
Our opinions set forth above are subject to the following additional
qualifications:
(i) Enforcement of the Transaction Documents may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or similar state or federal debtor relief laws in effect from time to time
and which affect the enforcement of creditors' rights in general.
(ii) Any part of the opinion set forth above relating to compliance
with or a lack of violation of the provisions of any laws, statutes, rules
or regulations, or relating to the obtaining of all necessary governmental
or regulatory approvals, is based solely upon a review of those authorities
which, in our experience, are normally applicable to transactions of the
type contemplated by the Transaction Documents.
(iii) Opinions or statements herein given "to the best of our
knowledge" or qualified as "known to us" and the factual matters on which
we have relied in giving other opinions herein (except for our opinions as
to corporate matters that we have given in reliance upon our own
investigation of the minute books of Oakwood and Merger Sub and
certificates of public officials and officers of Oakwood and Merger Sub)
are based upon (a) information coming to the attention of the lawyers in
our firm who have given substantive attention to the transactions
contemplated by the Transaction Documents and (b) the representations and
warranties of Oakwood and Merger Sub contained in the Agreement. We have
made no review of the public record.
(iv) We are licensed to practice law in the State of North Carolina.
Our opinions expressed above are limited to the laws of the State of North
Carolina and the federal laws of the United States, and we express no
opinion with respect to the laws of any other jurisdiction, including
principles of conflict of laws. As to matters governed by California law,
we have relied upon the opinion of Stradling, Yocca, Carlson & Rauth, P.C.,
California counsel, for purposes of this opinion letter.
The opinions expressed herein may be relied upon by Golden West Homes, its
Board of Directors and its counsel, and may not be relied upon by any other
party without the prior written consent of the undersigned.
Very truly yours,
D-2
<PAGE>
EXHIBIT E
FORM OF PRICE WATERHOUSE COMFORT LETTER
[effective date of registration statement]
Board of Directors
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Ladies and Gentlemen:
We have audited the consolidated financial statements of Oakwood Homes
Corporation (the "Company") and subsidiaries as of September 30, 1993 and 1992
and for each of the three years in the period ended September 30, 1993
incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended September 30, 1993 (the "Form 10-K"); our report with respect thereto
is also incorporated by reference in the Form 10-K. We have also audited the
Financial Statement Schedules listed in Item 14(a) of the form 10-K; our report
with respect thereto is included in the Form 10-K. The Form 10-K is incorporated
by reference in the registration statement on Form S-4 filed by the Company
under the Securities Act of 1933 (the "Act"). Such registration statement [, as
amended as of [effective date of registration statement],] is herein referred to
as the "Registration Statement."
This letter is being furnished in reliance upon your representation to us
that:
a. You are knowledgeable with respect to the due diligence review process
that an underwriter would perform in connection with a placement of securities
registered pursuant to the Act.
b In connection with the Registration Statement relating to the exchange of
securities of the Company for securities of Golden West Homes, the review
process you have applied to the information relating to the Company is
substantially consistent with the due diligence review process that an
underwriter would have performed pursuant to the Act.
In connection with the Registration Statement:
1. We are independent accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
2. In our opinion, the financial statements audited by us and incorporated
by reference in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Securities Exchange Act of 1934 and the published rules and regulations
thereunder with respect to registration statements on Form S-4.
3. We have not audited any financial statements of the Company as of any
date or for any period subsequent to September 30, 1993; although we have
conducted an audit for the year ended September 30, 1993, the purpose (and
therefore the scope) of such audit was to enable us to express our opinion on
the consolidated financial statements as of September 30, 1993 and for the year
then ended, but not on the financial statements for any interim period within
such year. Therefore, we are unable to and do not express any opinion on the
unaudited consolidated balance sheets and the unaudited consolidated statements
of income, of cash flows and of changes in stockholders' equity included in the
Company's quarterly reports on Form 10-Q for the quarters ended December 31,
1993, March 31, 1994 and June 30, 1994, incorporated by reference in the
Registration Statement, or on the financial position, results of operations or
cash flows as of any date or for any period subsequent to September 30, 1993.
4. For purposes of this letter, we have read the minutes of the 1994
meetings of the stockholders and the Board of Directors of the Company and its
subsidiaries, and of the Compensation and Audit Committees of the Board of
Directors of the Company, as set forth in the minute books at [five days prior
to effective date of the registration statement], officials of the Company
having advised us that the minutes of all such meetings through that date were
set forth therein (except for the minutes of the [insert applicable date(s)]
Board of Directors meeting which were not approved in final form, for which
drafts were provided to us; officials of the Company have represented that such
drafts include all substantive actions taken at such
E-1
<PAGE>
meeting), and have carried out other procedures to [five days prior to effective
date of the registration statement] (our work did not extend to the period from
[four days prior to effective date of the registration statement] to [effective
date of registration statement]) as follows:
a. With respect to the three month periods ended December 31, 1993 and
1992, the six month periods ended March 31, 1994 and 1993 and the nine
month periods ended June 30, 1994 and 1993, we have:
(1) performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial Information,
on the unaudited consolidated balance sheets and the unaudited
consolidated statements of income, of cash flows and of changes in
stockholders' equity included in the Company's quarterly reports on Form
10-Q for the quarters ended December 31, 1993, March 31, 1994 and June
30, 1994, incorporated by reference in the Registration Statement; and
(2) inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited consolidated financial statements referred to under a(1) above
comply as to form in all material respects with the applicable
accounting requirements of the Securities Exchange Act of 1934 as it
applies to Form 10-Q and the published rules and regulations thereunder.
b. With respect to the period from July 1, 1994 to July 31, 1994, we
have:
(1) read the unaudited consolidated financial data of the Company
and subsidiaries for July of both 1994 and 1993 furnished us by the
Company, officials of the Company having advised us that no such
financial data as of any date or for any period subsequent to July 31,
1994 were available; and
(2) inquired of certain officials of the Company who have
responsibility for financial and accounting matters as to whether the
unaudited financial data referred to under b(1) above are stated on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement.
The foregoing procedures do not constitute an audit made in accordance with
generally accepted auditing standards. Also, they would not necessarily reveal
matters of significance with respect to the comments in the following paragraph.
Accordingly, we make no representations as to the sufficiency of the foregoing
procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
a. (i) the unaudited consolidated financial statements described in
4a(1) above, incorporated by reference in the Registration Statement, do
not comply as to form in all material respects with the applicable
accounting requirements of the Securities Exchange Act of 1934 as it
applies to Form 10-Q and the published rules and regulations thereunder or
(ii) any material modifications should be made to the unaudited
consolidated financial statements described in 4a(1) for them to be in
conformity with generally accepted accounting principles; or
b. (i) at July 31, 1994 there was any change in the capital stock,
increase in long-term debt or any decrease in stockholders' equity of the
Company and subsidiaries consolidated as compared with amounts shown in the
June 30, 1994 consolidated balance sheet included in the Registration
Statement or (ii) for the period from July 1, 1994 to July 31, 1994, there
were any decreases, as compared with the corresponding period in the
preceding year, in consolidated net sales or in the total or per share
amounts of income before extraordinary items or of net income, except in
all instances for changes, increases or decreases which the Registration
Statement discloses have occurred or may occur.
6. As mentioned under 4b, Company officials have advised us that no
consolidated financial data as of any date or for any period subsequent to July
31, 1994 are available; accordingly, the procedures carried out by us with
respect to changes in financial statement items after July 31, 1994 have, of
necessity, been even more limited than those with respect to the periods
referred to in 4. We have made inquiries of certain officials of the Company who
have responsibility for financial and accounting matters as to whether there was
any change at [five days prior to effective date of the registration statement]
in the capital stock, increase in long-term debt or any decrease in
stockholders' equity of the Company and subsidiaries consolidated as compared
with amounts shown on the June 30, 1994 consolidated balance sheet incorporated
by reference in the Registration Statement. On the basis of these inquiries and
our reading of the minutes as described in 4, nothing came to our attention that
caused us to believe that there was any such change, increase or decrease,
except in all instances for changes, increases or decreases which the
Registration Statement discloses have occurred or may occur.
E-2
<PAGE>
This letter is solely for the information of, and assistance to, the
addressees in conducting and documenting their investigation of the affairs of
the Company in connection with the offering of the securities covered by the
Registration Statement, and is not to be used, circulated, quoted, or otherwise
referred to for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with or
referred to in whole or in part in the Registration Statement or any other
document, except that reference may be made to it in any list of closing
documents pertaining to the offering of the securities covered by the
Registration Statement.
Yours very truly,
E-3
<PAGE>
EXHIBIT F
FORM OF PRICE WATERHOUSE COMFORT LETTER UPDATE
[date of Golden West shareholders' meeting]
Board of Directors
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Ladies and Gentlemen:
We refer to our letter of [effective date of registration statement]
relating to the Registration Statement (No. - ) of Oakwood Homes Corporation.
We reaffirm as of the date hereof (and as though made on the date hereof) all
statements made in that letter, except that for purposes of this letter:
1. [The Registration Statement to which this letter relates is as amended
as of [ ].] [Insert date if registration statement has been amended; otherwise
delete paragraph].
2. The reading of minutes described in paragraph 4 of that letter has been
carried out through [five days prior to date of Golden West shareholders'
meeting].
3. The procedures and inquiries covered in paragraph 4 of that letter were
carried out to [five days prior to date of Golden West shareholders' meeting]
(our work did not extend to the period from [four days prior to date of Golden
West shareholders' meeting] to [date of Golden West shareholders' meeting],
inclusive).
4. The period covered in paragraph 4b of that letter is changed to the
period from July 1, 1994 to August 31, 1994; officials of the Company having
advised us that no such financial statements as of any date or for any period
subsequent to August 31, 1994 were available.
5. The references to July 31, 1994 in paragraph 5b of that letter are
changed to August 31, 1994.
6. The references to July 31, 1994 and [five days prior to effective date
of the registration statement] in paragraph 6 of that letter are changed to
August 31, 1994, and [five days prior to date of Golden West shareholders'
meeting], respectively.
This letter is solely for the information of, and assistance to, the
addressees in conducting and documenting their investigation of the affairs of
the Company in connection with the offering of the securities covered by the
Registration Statement, and is not to be used, circulated, quoted, or otherwise
referred to for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with or
referred to in whole or in part in the Registration Statement or any other
document, except that reference may be made to it in any list of closing
documents pertaining to the offering of the securities covered by the
Registration Statement.
Yours very truly,
F-1
<PAGE>
EXHIBIT G
FORM OF ARTHUR ANDERSEN & CO. COMFORT LETTER
[effective date of registration statement]
Board of Directors
Golden West Homes
and
Board of Directors
Oakwood Homes Corporation
Ladies and Gentlemen:
We have audited the consolidated financial statements of Golden West Homes
(the "Company") and subsidiary as of December 25, 1993 and December 26, 1992 and
for each of the three years in the period ended December 25, 1993 included in
the registration statement on Form S-4 filed by Oakwood Homes Corporation under
the Securities Act of 1933 (the "Act"). Such registration statement [, as
amended as of [effective date of registration statement],] is herein referred to
as the "Registration Statement."
This letter is being furnished in reliance upon your representation to us
that:
a. You are knowledgeable with respect to the due diligence review process
that an underwriter would perform in connection with a placement of securities
registered pursuant to the Act.
b. In connection with the Registration Statement relating to the exchange
of securities of Oakwood Homes Corporation for securities of the Company, the
review process you have applied to the information relating to Golden West is
substantially consistent with the due diligence review process that an
underwriter would have performed pursuant to the Act.
In connection with the Registration Statement:
1. We are independent accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
2. In our opinion, the financial statements audited by us and included in
the Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the published rules and
regulations thereunder with respect to registration statements on Form S-4.
3. We have not audited any financial statements of the Company as of any
date or for any period subsequent to December 25, 1993; although we have
conducted an audit for the year ended December 25, 1993, the purpose (and
therefore the scope) of such audit was to enable us to express our opinion on
the consolidated financial statements as of December 25, 1993 and for the year
then ended, but not on the financial statements for any interim period within
such year. Therefore, we are unable to and do not express any opinion on the
unaudited consolidated balance sheet as of June 25, 1994; the unaudited
consolidated statements of income, of cash flows and of changes in stockholders'
equity for the six month periods ended June 25, 1994 and June 26, 1993 included
in the Registration Statement, or on the financial position, results of
operations or cash flows as of any date or for any period subsequent to December
25, 1993.
4. For purposes of this letter, we have read the minutes of the 1994
meetings of the stockholders and the Board of Directors of the Company and its
subsidiaries, and of the Compensation and Audit Committees of the Board of
Directors of the Company, as set forth in the minute books at [five days prior
to effective date of the registration statement], officials of the Company
having advised us that the minutes of all such meetings through that date were
set forth therein (except for the minutes of the [insert applicable date(s)]
Board of Directors meeting which were not approved in final form, for which
drafts were provided to us; officials of the Company have represented that such
drafts include all substantive actions taken at such meeting), and have carried
out other procedures to [five days prior to effective date of the registration
statement] (our work did not extend to the period from [four days prior to
effective date of the registration statement] to [effective date of registration
statement]) as follows:
G-1
<PAGE>
a. With respect to the six month periods ended June 25, 1994 and June
26, 1993, we have:
(1) performed the procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial Information,
on the unaudited consolidated balance sheet as of June 25, 1994, the
unaudited consolidated statements of income, of cash flows and of
changes in stockholders' equity for the six month periods ended June 25,
1994 and June 26, 1993 included in the Registration Statement; and
(2) inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the
unaudited consolidated financial statements referred to under a(1) above
comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder.
b. With respect to the period from June 26, 1994 to July 30, 1994, we
have:
(1) read the unaudited consolidated financial data of the Company
and subsidiaries for July of both 1994 and 1993 furnished us by the
Company, officials of the Company having advised us that no such
financial data as of any date or for any period subsequent to July 30,
1994 were available; and
(2) inquired of certain officials of the Company who have
responsibility for financial and accounting matters as to whether the
unaudited financial data referred to under b(1) above are stated on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement.
The foregoing procedures do not constitute an audit made in accordance with
generally accepted auditing standards. Also, they would not necessarily reveal
matters of significance with respect to the comments in the following paragraph.
Accordingly, we make no representations as to the sufficiency of the foregoing
procedures for your purposes.
5. Nothing came to our attention as a result of the foregoing procedures,
however, that caused us to believe that:
a. (i) the unaudited consolidated financial statements described in
4a(1) above, included in the Registration Statement, do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the published rules and regulations thereunder or (ii) any
material modifications should be made to the unaudited consolidated
financial statements described in 4a(1) for them to be in conformity with
generally accepted accounting principles; or
b. (i) at July 30, 1994 there was any change in the capital stock,
increase in long-term debt or any decreases in consolidated net current
assets (working capital) or stockholders' equity of the Company and
subsidiary consolidated as compared with amounts shown in the June 25, 1994
consolidated balance sheet included in the Registration Statement or (ii)
for the period from June 26, 1994 to July 30, 1994, there were any
decreases, as compared with the corresponding period in the preceding year,
in consolidated net sales or in the total or per share amounts of income
before extraordinary items or of net income, except in all instances for
changes or decreases which the Registration Statement discloses have
occurred or may occur.
6. As mentioned under 4b, Company officials have advised us that no
consolidated financial data as of any date or for any period subsequent to July
30, 1994 are available; accordingly, the procedures carried out by us with
respect to changes in financial statement items after July 30, 1994 have, of
necessity, been even more limited than those with respect to the periods
referred to in 4. We have made inquiries of certain officials of the Company who
have responsibility for financial and accounting matters as to whether there was
any change at [five days prior to effective date of registration statement] in
the capital stock, increase in long-term debt or any decreases in consolidated
net current assets (working capital) or stockholders' equity of the Company and
subsidiary consolidated as compared with amounts shown on the June 25, 1994
consolidated balance sheet included in the Registration Statement. On the basis
of these inquiries and our reading of the minutes as described in 4, nothing
came to our attention that caused us to believe that there was any such change,
increase or decrease, except in all instances for changes, increases or
decreases which the Registration Statement discloses have occurred or may occur.
G-2
<PAGE>
This letter is solely for the information of, and assistance to, the
addressees in conducting and documenting their investigation of the affairs of
the Company in connection with the offering of the securities covered by the
Registration Statement, and is not to be used, circulated, quoted, or otherwise
referred to for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with or
referred to in whole or in part in the Registration Statement or any other
document, except that reference may be made to it in any list of closing
documents pertaining to the offering of the securities covered by the
Registration Statement.
Yours very truly,
G-3
<PAGE>
EXHIBIT H
FORM OF ARTHUR ANDERSEN COMFORT LETTER UPDATE
[date of Golden West shareholders' meeting]
Board of Directors
Golden West Homes
and
Board of Directors
Oakwood Homes Corporation
Ladies and Gentlemen:
We refer to our letter of [effective date of registration statement]
relating to the Registration Statement (No. - ) of Oakwood Homes Corporation.
We reaffirm as of the date hereof (and as though made on the date hereof) all
statements made in that letter, except that for purposes of this letter:
1. [The Registration Statement to which this letter relates is as amended
as of [ ].] [Insert date if registration statement has been amended; otherwise
delete paragraph].
2. The reading of minutes described in paragraph 4 of that letter has been
carried out through [five days prior to date of Golden West shareholders'
meeting].
3. The procedures and inquiries covered in paragraph 4 of that letter were
carried out to [five days prior to date of Golden West shareholders' meeting]
(our work did not extend to the period from [four days prior to date of Golden
West shareholders' meeting] to [date of Golden West shareholders' meeting],
inclusive).
4. The period covered in paragraph 4b of that letter is changed to the
period from June 26, 1994 to August 27, 1994; officials of the Company having
advised us that no such financial statements as of any date or for any period
subsequent to August 27, 1994 were available.
5. The references to July 30, 1994 in paragraph 5b of that letter are
changed to August 27, 1994.
6. The references to July 30, 1994 and [five days prior to effective date
of the registration statement] in paragraph 6 of that letter are changed to
August 27, 1994, and [five days prior to date of Golden West shareholders'
meeting], respectively.
This letter is solely for the information of, and assistance to, the
addressees in conducting and documenting their investigation of the affairs of
the Company in connection with the offering of the securities covered by the
Registration Statement, and is not to be used, circulated, quoted, or otherwise
referred to for any other purpose, including but not limited to the
registration, purchase, or sale of securities, nor is it to be filed with or
referred to in whole or in part in the Registration Statement or any other
document, except that reference may be made to it in any list of closing
documents pertaining to the offering of the securities covered by the
Registration Statement.
Yours very truly,
H-1
<PAGE>
EXHIBIT I
FORM OF OPINION OF GOLDEN WEST'S COUNSEL
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of California, with corporate power
and authority to conduct its business, own, lease and operate its properties and
enter into the Acquisition Agreement and Agreement of Merger (the "Agreements")
and perform its obligations thereunder. Golden Circle Financial Services, a
subsidiary of the Company ("GCFS"), has been duly incorporated and is validly
existing and in good standing under the laws of the State of California, with
corporate power and authority to conduct its business and own, lease and operate
its properties.
2. The execution, delivery and performance of the Agreements have been duly
authorized by all necessary corporate action of the Company, and the Agreements
have been duly executed and delivered by the Company. The Merger has been duly
and validly approved by the shareholders of the Company in accordance with the
General Corporation Law of the State of California (the "CGCL").
3. The Agreement of Merger constitutes a legally valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The opinions expressed in this paragraph 3 are subject to the
following limitations, qualifications and exceptions:
a. such opinions are subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors;
b. enforceability of the Agreement of Merger is subject to the effect
of general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief regardless of
whether considered in a proceeding in equity or at law;
c. certain rights, remedies and waivers contained in the Agreement of
Merger may be limited or rendered ineffective by applicable California laws
or judicial decisions governing such provisions; and
d. the unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent
acts or where such indemnification is contrary to public policy or
prohibited by law.
4. The execution and delivery of the Agreements by the Company and the
consummation of the merger by the Company pursuant to the Agreements do not (i)
to the best of our knowledge, violate any (a) federal or California statute,
rule or regulation applicable to the Company or (b) judgment, order, writ,
stipulation, injunction, award or decree of any federal or California court,
administrative agency or governmental body to which the Company or GCFS is
subject, (ii) violate the provisions of the Governing Documents, (iii) result in
the breach of or a default under any of the material agreements set forth in
Schedule 4.12(f) to the Acquisition Agreement or (iv) to the best of our
knowledge, except for the filing of the Agreement of Merger, require any
consents, approvals, authorizations, registrations, declarations or filings by
the Company under any federal or California statute applicable to the Company.
No opinion is expressed in clauses (i) and (iv) of this paragraph 4 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state law or of any antifraud laws or antitrust or trade
regulation laws and no opinion is expressed in clause (iv) of this paragraph 4
as to the application of federal and state securities laws.
5. The authorized capital stock of the Company consists of 20,000,000
shares of common stock, no par value (the "Common Stock"), of which 1,287,000
shares are issued and outstanding, and 1,105,000 shares of preferred stock, no
par value (the "Preferred Stock"), of which 1,105,000 shares are issued and
outstanding. All of the shares of issued and outstanding Common Stock and
Preferred Stock have been duly authorized and validly issued and are fully paid
and non-assessable and free of preemptive rights under California law and the
Governing Documents. To our knowledge based solely on a review of the minute
books of the Company, options to purchase 377,000 shares of Common Stock were
outstanding under the Company's 1994 Stock Option Plan, which options were not
granted in violation of any preemptive rights under California law or the
Governing Documents. The authorized capital stock of GCFS consists of 1,000
shares of common stock, no par value ("GCFS Common Stock"), of which 100 shares
are issued and outstanding and held of record by the Company. All of the shares
of issued and outstanding GCFS Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable and, free of preemptive
rights under California law and the Governing Documents.
6. Upon the filing of the Agreement of Merger with the California Secretary
of State, together with appropriate officers' certificates and tax clearance
certificates as required by the CGCL, the Merger shall be effective in
accordance with the CGCL.
I-1
<PAGE>
EXHIBIT J
TO BE COMPLETED BY EACH GOLDEN WEST SHAREHOLDER WHO
RECEIVES OAKWOOD COMMON STOCK IN THE MERGER.
ACKNOWLEDGMENT AND TRANSMITTAL LETTER
Oakwood Homes Corporation
2225 South Holden Road
Greensboro, North Carolina 27417
Ladies and Gentlemen:
The undersigned holder of Golden West Homes Common Stock or Preferred Stock
hereby acknowledges that he or she has received and reviewed (i) the
Prospectus/Proxy Statement dated , 1994 (hereinafter referred to
as the "Prospectus/Proxy Statement") and (ii) the Acquisition Agreement dated
August , 1994 by and among Oakwood Homes Corporation, Golden Acquisition
Corporation, Golden West Homes, certain shareholders of Golden West and First
Union National Bank, as Escrow Agent (hereinafter referred to as the
"Acquisition Agreement") attached as Annex I to the Prospectus/Proxy Statement.
Pursuant to the terms of the Acquisition Agreement, Golden Acquisition
Corporation, which is a wholly-owned subsidiary of Oakwood, will merge with and
into Golden West (the "Merger"), and after the Merger, Golden West will be a
wholly-owned subsidiary of Oakwood. Capitalized terms used but not otherwise
defined herein shall have the same meanings as are ascribed to them in the
Acquisition Agreement.
1. BINDING ACQUISITION AGREEMENT. The undersigned agrees to be bound by the
terms of the Acquisition Agreement, including without limitation the escrow and
indemnification provisions contained therein, and acknowledges that by signing
this Acknowledgment and Transmittal Letter, he or she is so bound as a party to
the Acquisition Agreement.
2. WAIVER AND AMENDMENT. Any waiver by Oakwood of a breach of or compliance
with any of the provisions or terms of the Acquisition Agreement and any
amendment to the Acquisition Agreement prior to shall not
release, waive or otherwise affect the obligations of the undersigned
shareholder except to the extent expressly provided in such waiver or amendment.
Oakwood may also waive receipt of an executed Acknowledgment and Transmittal
Letter from the recipient of this Acknowledgment and Transmittal Letter (the
"Recipient"); however, if the Recipient receives shares of Oakwood Common Stock
in the Merger, the Recipient will nonetheless be bound by the provisions of the
Acquisition Agreement, including without limitation the provisions relating to
escrow and indemnification, and any such waiver shall not affect the obligations
and liabilities of the Recipient with respect to its shares of Oakwood Common
Stock to be held in escrow pursuant to the Acquisition Agreement. Oakwood may
waive receipt of an executed Acknowledgment and Transmittal Letter from a
shareholder of Golden West other than the undersigned; however, no such waiver
shall affect the obligations and liabilities of the undersigned hereunder and
under the Acquisition Agreement.
3. TRANSMITTAL.
(a) Prior to the Effective Time. Prior to the Effective Time, this
Acknowledgment and Transmittal Letter should be completed, signed and mailed or
delivered with the certificates (and stock powers executed in blank as described
below) of the undersigned that previously represented shares of the no par value
Common Stock of Golden West or shares of the no par value Preferred Stock of
Golden West (shares of the Common Stock and the Preferred Stock are hereinafter
referred to collectively as the "Golden West Stock") to Oakwood:
<TABLE>
<CAPTION>
BY MAIL: BY HAND:
<S> <C>
Oakwood Homes Corporation Oakwood Homes Corporation
Post Office Box 7386 2225 South Holden Road
Greensboro, North Carolina 27417-0386 Greensboro, North Carolina
Attention: Douglas R. Muir
</TABLE>
J-1
<PAGE>
(b) After the Effective Time. After the Effective Time, this Acknowledgment
and Transmittal Letter should be completed, signed and mailed or delivered with
the undersigned's certificates (and stock powers executed in blank as described
below) that previously represented shares of Golden West Stock to Wachovia Bank
of North Carolina, N.A., as Transfer Agent:
BY MAIL:
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
Post Office Box 3001
Winston-Salem, NC 27102
Oakwood or Wachovia Bank, as the case may be, shall hereinafter be referred to
as the Issuing Agent.
(c) Delivery of Certificates and Stock Powers. The undersigned hereby
delivers to the Issuing Agent (i) the below-described certificates, which are
enclosed herewith, in exchange for (A) .231099373 shares of Oakwood Common Stock
for each such surrendered share of Golden West Stock and (B) cash in lieu of
fractional shares determined by multiplying the fractional interest to which the
undersigned would otherwise be entitled by the closing price of the Oakwood
Common Stock on the New York Stock Exchange two business days before the
Effective Time (or, if such stock is not traded on the New York Stock Exchange
on such date, the closing price thereon on the immediately preceding day on
which the stock traded), as provided in the Acquisition Agreement, and (ii) the
stock powers which were attached to this Acknowledgement and Transmittal Letter
and which have been executed in blank by the registered owner of the
certificates exactly as the name appears on the stock certificates. Such stock
powers are to be held in escrow by the Escrow Agent together with the
undersigned's escrowed shares of Oakwood Common Stock.
The undersigned hereby warrants that the undersigned is the legal owner,
free and clear of all claims and encumbrances, of the shares of Golden West
Stock described below and that the undersigned has full authority to deliver to
you the certificate(s) identified below. The undersigned will, upon request,
execute any additional documents necessary or desirable to complete the delivery
of such certificate(s).
Please issue (x) the shares of Oakwood Common Stock the undersigned is
entitled to receive and (y) a check in payment for fractional shares in the name
of the registered owner and please mail such shares and check to the registered
owner at the address specified below.
<TABLE>
<CAPTION>
DESCRIPTION OF CERTIFICATE(S) DELIVERED
(SEE INSTRUCTIONS 3 AND 4)
GOLDEN WEST COMMON STOCK
<S> <C> <C>
<CAPTION>
Number of Shares
Name of Registered Owner of Common Stock Represented
(as they appear on certificate(s)) Certificate Number by Such Certificate
<S> <C> <C>
Total Shares of Common Stock
</TABLE>
<TABLE>
<CAPTION>
DESCRIPTION OF CERTIFICATE(S) DELIVERED
(SEE INSTRUCTIONS 3 AND 4)
GOLDEN WEST PREFERRED STOCK
<S> <C> <C>
<CAPTION>
Number of Shares
Name of Registered Owner of Preferred Stock Represented
(as they appear on certificate(s)) Certificate Number by Such Certificate
<S> <C> <C>
Total Shares of Preferred Stock
</TABLE>
J-2
<PAGE>
(SIGNATURE(S) OF OWNER(S)) (SEE INSTRUCTION 3)
(Must be signed by registered owner(s) exactly as name(s) appear(s) on stock
certificate(s) or by person(s) authorized to become registered owner(s) by
certificates and documents transmitted herewith. If signature is by attorney,
executor, administrator, trustee or guardian or others acting in a fiduciary
capacity, please set forth full title and see Instruction 3.)
Name(s)
(PLEASE PRINT)
Address
(INCLUDE ZIP CODE)
(AREA CODE AND TELEPHONE NO.) (TAX IDENTIFICATION OR SOCIAL SECURITY
NO.)
Signature(s) Guaranteed By
(SEE INSTRUCTION 2)
Dated
(See Instruction 8)
<TABLE>
<S> <C> <C>
PAYER'S NAME: OAKWOOD HOMES CORPORATION
PART 1 -- PLEASE PROVIDE YOUR TIN (SOCIAL SECURITY
Social Security
NUMBER OR EMPLOYER IDENTIFICATION NUMBER) IN THE Number
SUBSTITUTE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING
BELOW OR
FORMW-9 Employer
Department of the Treasury Identification
Internal Revenue Service Number
PART 2 -- Check the box if you are NOT subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code because (1)
you have not been notified that you are subject to backup withholding as a
result of failure to report all interest or dividends or (2) the Internal
Revenue Service has notified you that you are no longer subject to backup
PAYER'S REQUEST FOR withholding
TAXPAYER
IDENTIFICATION
CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION
NUMBER (TIN) PROVIDED ON THIS FORM IS TRUE, CORRECT, AND COMPLETE
SIGNATURE DATE
<CAPTION>
PAYER'S NAME:
SUBSTITUTE
FORMW-9
Department of the Treasury
Internal Revenue Service
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION
NUMBER (TIN) PART 3 --
Awaiting TIN
</TABLE>
J-3
<PAGE>
INSTRUCTIONS
1. DELIVERY OF ACKNOWLEDGMENT AND TRANSMITTAL LETTER AND CERTIFICATES. This
Acknowledgment and Transmittal Letter or a photocopy hereof, filled in and
signed, must be used in connection with a delivery of certificates.
The method of delivery of all documents is at the option and risk of the
shareholder, but it is recommended that documents be delivered either personally
or by registered mail properly insured with return receipt requested.
2. GUARANTEE OF SIGNATURES. If the certificates delivered herewith are
registered in the name of a person other than the signer of this Acknowledgment
and Transmittal Letter, the certificates must be endorsed or accompanied by
stock powers signed by the registered owner(s) with the signature on the
endorsement or stock powers guaranteed as described below. The certificates need
not be endorsed or accompanied by any instrument of assignment or transfer other
than the Acknowledgment and Transmittal Letter registered in the name of the
person(s) signing the Acknowledgment and Transmittal Letter.
3. SIGNATURES ON LETTER OF TRANSMITTAL AND ENDORSEMENTS. In case of
endorsement or signatures by executors, administrators, trustees, guardians,
attorneys, corporations and the like, the certificates delivered must be
accompanied by evidence satisfactory to the Issuing Agent of authority of the
person to make the endorsement, or to sign, together with all supporting
documents necessary to validate the delivery. If certificates are delivered by
joint holders or owners, all such persons must sign. If certificates are
registered in different forms, it will be necessary to fill in, sign and submit
as many separate Acknowledgment and Transmittal Letters or photocopies thereof
as there are different registrations of certificates.
4. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate number(s) and the number of shares of Golden West Stock should be
listed on a separate signed schedule attached hereto.
5. DEPOSIT OF CERTIFICATES. Issuance of shares of Oakwood Common Stock and
payment for fractional shares will be made only against deposit of the
certificates of Golden West Stock to be exchanged therefor with the Issuing
Agent as set forth herein.
6. LOST OR STOLEN CERTIFICATES. Please notify the Issuing Agent in writing
at its address set forth above for the procedure to be followed if any
certificate has been lost, stolen, destroyed or mutilated and replacement
instructions will be mailed to you.
7. APPRAISAL RIGHTS. Shareholders who are seeking appraisal rights under
the California General Corporation Law should not deliver certificates for
shares pursuant to this Acknowledgment and Transmittal Letter.
8. SUBSTITUTE FORM W-9. If you have not previously provided the Issuing
Agent with your social security number or other taxpayer identification number
on Form W-9 or certified therein that you are not subject to back-up
withholding, you should complete the substitute Form W-9 included herein.
All questions with respect to this Acknowledgment and Transmittal Letter
will be determined by the Issuing Agent, which determinations shall be
conclusive and binding. Questions should be directed to the Issuing Agent at the
address set forth above or by telephone at .
Additional copies of this Acknowledgment and Transmittal Letter may be
obtained from the Issuing Agent at its address set forth above. Photocopies of
this Acknowledgment and Transmittal Letter will be accepted, however.
The services of the Issuing Agent shall terminate upon the first
anniversary of the Effective Time of the Merger, which anniversary will be on or
after . After that date, certificates may be delivered for
surrender only to Oakwood. If an Acknowledgment and Transmittal Letter is being
prepared at or after such time, please contact the Secretary of Oakwood at the
mailing address provided above or by telephone at for instructions
as to submitting the Acknowledgment and Transmittal Letter.
J-4
<PAGE>
EXHIBIT K
NON-COMPETE AGREEMENT
THIS AGREEMENT is dated as of the day of , 1994, by and among
OAKWOOD HOMES CORPORATION, a North Carolina corporation (the "Company"), and
HARRY E. KARSTEN, JR. ("Shareholder").
W I T N E S S E T H :
WHEREAS, pursuant to the Acquisition Agreement dated as of ,
1994 (the "Acquisition Agreement") by and among Golden West Homes, a California
corporation ("Golden West"), the Company, Golden Acquisition Corporation, a
California corporation that is a wholly-owned subsidiary of the Company ("Merger
Sub"), certain shareholders of Golden West and First Union National Bank of
North Carolina, as Escrow Agent, Merger Sub will be merged with and into Golden
West, which will become a wholly-owned subsidiary of the Company (the "Merger");
WHEREAS, Golden West is in the business of designing, manufacturing and
marketing manufactured homes and of financing certain of its sales of
manufactured homes through its wholly-owned finance subsidiary (the "Business");
WHEREAS, the value to the Company of the Merger is dependent in part upon
the Company's ability to continue for its own account the Business heretofore
conducted by Golden West and to obtain for its benefit the good will and going
concern value associated therewith; and
WHEREAS, in connection with the Closing under the Acquisition Agreement and
as a condition thereof and inducement therefor, and in consideration of the
receipt by the Shareholder of shares of the Company in exchange for his shares
of Golden West's capital stock, the Shareholder has agreed to enter into certain
covenants relating to competition and confidentiality as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged by the
Shareholder, the Shareholder does hereby agree with the Company as follows:
1. NON-COMPETITION, NON-DISCLOSURE AND RELATED MATTERS.
(a) In addition to other terms defined in this Agreement, the following
terms when used in this Agreement shall have the following meanings:
"Competition" means engagement (i) in the Business or (ii) in any business
which is the same as or substantially similar to the Business.
"Customer" means any Person to whom any products, processes, goods or
services have heretofore been sold or offered for sale, or from whom purchases
thereof have been solicited, at any time during the two years preceding the date
of this Agreement, by Golden West.
"Employee" means any individual employed by the Company or Golden West or
any of their affiliates on the date hereof or during the three years following
the date of this Agreement.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, trust or other entity.
"Restricted Period" means the period beginning on the date hereof and
ending on the third anniversary of the date hereof.
"Restricted Territory" means any of the following geographic areas (i) in
which any product, process, good or service has heretofore been manufactured,
provided, sold or offered or promoted for sale by Golden West during the two
years preceding the date of this Agreement or (ii) in which Golden West on the
date hereof plans or proposes in the immediate future to sell or promote sales
of any products, processes, goods or services as part of the Business:
(1) the State of California; or
(2) the State of Oregon; or
(3) the State of Colorado; or
(4) the State of Washington; or
(5) the State of Nevada; or
K-1
<PAGE>
(6) the State of Arizona; or
(7) the State of Idaho; or
(8) the State of Wyoming; or
(9) the State of Utah; or
(10) the State of New Mexico; or
(11) the State of Montana; or
(12) any county or similar political subdivision of any of the
foregoing States.
(b) The Shareholder agrees that during the Restricted Period he will not
either directly or indirectly:
(i) engage in any Competition in any Restricted Territory; or
(ii) be or become an employee, officer, director, shareholder,
partner, agent or consultant of, or acquire or have any material
proprietary or other equity interest in, or otherwise participate or assist
in the business of, any Person who engages in any Competition in any
Restricted Territory;
provided, that the Shareholder may own, directly or indirectly, solely as a
passive investment, securities issued by such Person if such securities are
publicly traded and do not constitute more than 1% in the aggregate of the
outstanding equity securities of such Person.
(c) The Shareholder agrees that during the Restricted Period he will not,
directly or indirectly through or on behalf of any other Person, solicit or
enter into any transaction with any Customer for the purpose of any sale to such
Customer of products, processes, goods or services the sale of which would
constitute Competition.
(d) The Shareholder agrees that during the Restricted Period he will not,
directly or indirectly through or on behalf of any other Person, induce or
attempt to induce any Employee to leave his or her employment with the Company
or Golden West or any of their affiliates.
(e) The Shareholder understands that in his capacity as a former
shareholder, director and officer of Golden West, he has obtained "Confidential
Information" (as hereinafter defined) relating to the business of Golden West.
As used herein, the term "Confidential Information" means and refers to any
information or compilations of information (including without limitation trade
secrets, technology, names, addresses or needs of customers, other customer or
supplier lists, formulae, patterns, devices, plans or processes or any other
proprietary information relating to the Business) of Golden West which is
private or confidential in that it is not known or available to the public and
gives Golden West an opportunity to obtain an advantage over competitors who do
not know or use it. The Shareholder shall not, without the prior written consent
of the Company, at any time during the Restricted Period (1) use or disclose any
such Confidential Information outside the Company (or its affiliated companies,
including Golden West), (2) aid in the removal from Golden West or delivery to
any third party of any such Confidential Information or (3) sell, exchange or
give away or otherwise dispose (or assist therein) of any such Confidential
Information now or hereafter owned by Golden West, whether or not the same shall
or may have been originated, discovered or developed by the Shareholder. The
Shareholder agrees that he will return all Confidential Information in his
possession to the Company immediately upon the date hereof. The Shareholder
acknowledges and confirms that he has or claims no proprietary interest in any
such information, or in any technology, invention, patent, trademark or other
intellectual property of, used or to be acquired by the Company.
(f) The Shareholder acknowledges that, in view of the nature of the
Business and the business objectives of the Company in entering into this
Agreement and the Acquisition Agreement, the restrictions contained in this
Section 1 are reasonably necessary to protect the legitimate business interests
of the Company, and that any violation of such restrictions will result in
irreparable injury to the Company for which damages will not be an adequate
remedy. The Shareholder therefore acknowledges that if he violates any such
restrictions, the Company shall be entitled to preliminary and injunctive relief
as well as to an equitable accounting of earnings, profits and other benefits
arising from such violation.
(g) If any of the provisions contained in this Section 1 shall for any
reason be held to be overly broad as to duration, scope, activity or subject,
any such provision shall be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
(h) The rights and remedies of the Company hereunder are not exclusive of
or limited by or in limitation of any other rights or remedies which it may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative.
K-2
<PAGE>
Without limiting the generality of the foregoing, the rights and remedies of the
Company hereunder, and the obligations and liabilities of the Shareholder
hereunder, are in addition to their respective rights, remedies, obligations and
liabilities under the law of unfair competition.
2. SEVERABILITY. Should any provision of this Agreement or part thereof be
held under any circumstances in any jurisdiction to be invalid or unenforceable,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision or other part of such provision, or of
such provision or part thereof under any other circumstances or in any other
jurisdiction.
3. GOVERNING LAW. The construction, validity and enforceability of this
Agreement shall be governed by the laws of the State of North Carolina.
4. WAIVER. The rights of the Company hereunder may be waived only by a
writing signed on behalf of the Company by its President or Vice President
expressly setting forth the rights so waived and the matters as to which they
are so waived, and any such waiver shall be limited to the matters expressly set
forth in such writing. No failure or delay of the Company in enforcing any of
its rights hereunder at any time shall constitute or evidence any waiver of such
rights.
5. CONSENT TO JURISDICTION. Each of the parties hereby consents and agrees
to the non-exclusive jurisdiction of all courts sitting in the State of North
Carolina in connection with any claim, dispute or controversy arising under or
in connection with this Agreement or any actual or alleged breach hereof.
6. MISCELLANEOUS. This Agreement and the Acquisition Agreement constitute
the sole and entire agreement and understanding between the parties hereto as to
the subject matter hereof, and supersedes all prior discussions, agreements and
understandings of every kind and nature between them as to such subject matter.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns. The captions of this Agreement are for convenience of reference only
and shall not affect in any manner any of the terms, covenants or conditions
hereof. Words of the masculine gender shall mean and include correlative words
of the feminine and neuter genders and words importing the singular number shall
mean and include the plural number and vice versa. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
IN WITNESS WHEREOF, this Agreement has been duly executed under seal by the
Company and the Shareholder and each has caused their respective seals to be
affixed hereto, as of the day and year first above written.
OAKWOOD HOMES CORPORATION
By:
Name:
Title:
[SEAL]
HARRY E. KARSTEN, JR.
K-3
<PAGE>
EXHIBIT L
NON-COMPETE AGREEMENT
THIS AGREEMENT is dated as of the day of , 1994, by and among
OAKWOOD HOMES CORPORATION, a North Carolina corporation (the "Company"), and
BRUCE W. STOYER ("Shareholder").
W I T N E S S E T H :
WHEREAS, pursuant to the Acquisition Agreement dated as of ,
1994 (the "Acquisition Agreement") by and among Golden West Homes, a California
corporation ("Golden West"), the Company, Golden Acquisition Corporation, a
California corporation that is a wholly-owned subsidiary of the Company ("Merger
Sub"), certain shareholders of Golden West and First Union National Bank of
North Carolina, as Escrow Agent, Merger Sub will be merged with and into Golden
West, which will become a wholly-owned subsidiary of the Company (the "Merger");
WHEREAS, Golden West is in the business of designing, manufacturing and
marketing manufactured homes and of financing certain of its sales of
manufactured homes through its wholly-owned finance subsidiary (the "Business");
WHEREAS, the value to the Company of the Merger is dependent in part upon
the Company's ability to continue for its own account the Business heretofore
conducted by Golden West and to obtain for its benefit the good will and going
concern value associated therewith; and
WHEREAS, in connection with the Closing under the Acquisition Agreement and
as a condition thereof and inducement therefor, and in consideration of the
receipt by the Shareholder of shares of the Company in exchange for his shares
of Golden West's capital stock, the Shareholder has agreed to enter into certain
covenants relating to competition and confidentiality as set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged by the
Shareholder, the Shareholder does hereby agree with the Company as follows:
1. NON-COMPETITION, NON-DISCLOSURE AND RELATED MATTERS.
(a) In addition to other terms defined in this Agreement, the following
terms when used in this Agreement shall have the following meanings:
"Competition" means engagement (i) in the Business or (ii) in any business
which is the same as or substantially similar to the Business.
"Customer" means any Person to whom any products, processes, goods or
services have heretofore been sold or offered for sale, or from whom purchases
thereof have been solicited, at any time during the two years preceding the date
of this Agreement, by Golden West.
"Employee" means any individual employed by the Company or Golden West or
any of their affiliates on the date hereof or during the two years following the
date of this Agreement.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, trust or other entity.
"Restricted Period" means the period beginning on the date hereof and
ending on the second anniversary of the date hereof; provided, however, that if
the employment of the Shareholder with Golden West shall have been terminated by
Golden West prior to the end of such two-year period, the Restricted Period
shall be the period after his termination for which the Company has agreed to
continue to pay Shareholder his base salary as severance, but in no event shall
such period be longer than the second anniversary of the date hereof.
"Restricted Territory" means any of the following geographic areas (i) in
which any product, process, good or service has heretofore been manufactured,
provided, sold or offered or promoted for sale by Golden West during the two
years preceding the date of this Agreement or (ii) in which Golden West on the
date hereof plans or proposes in the immediate future to sell or promote sales
of any products, processes, goods or services as part of the Business:
(1) the State of California; or
(2) the State of Oregon; or
(3) the State of Colorado; or
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<PAGE>
(4) the State of Washington; or
(5) the State of Nevada; or
(6) the State of Arizona; or
(7) the State of Idaho; or
(8) the State of Wyoming; or
(9) the State of Utah; or
(10) the State of New Mexico; or
(11) the State of Montana; or
(12) any county or similar political subdivision of any of the
foregoing States.
(b) The Shareholder agrees that during the Restricted Period he will not
either directly or indirectly:
(i) engage in any Competition in any Restricted Territory; or
(ii) be or become an employee, officer, director, shareholder,
partner, agent or consultant of, or acquire or have any material
proprietary or other equity interest in, or otherwise participate or assist
in the business of, any Person who engages in any Competition in any
Restricted Territory;
provided, that the Shareholder may own, directly or indirectly, solely as a
passive investment, securities issued by such Person if such securities are
publicly traded and do not constitute more than 1% in the aggregate of the
outstanding equity securities of such Person.
(c) The Shareholder agrees that during the Restricted Period he will not,
directly or indirectly through or on behalf of any other Person, solicit or
enter into any transaction with any Customer for the purpose of any sale to such
Customer of products, processes, goods or services the sale of which would
constitute Competition.
(d) The Shareholder agrees that during the Restricted Period he will not,
directly or indirectly through or on behalf of any other Person, induce or
attempt to induce any Employee to leave his or her employment with the Company
or Golden West or any of their affiliates.
(e) The Shareholder understands that in his capacity as a former
shareholder and officer of Golden West, he has obtained "Confidential
Information" (as hereinafter defined) relating to the business of Golden West.
As used herein, the term "Confidential Information" means and refers to any
information or compilations of information (including without limitation trade
secrets, technology, names, addresses or needs of customers, other customer or
supplier lists, formulae, patterns, devices, plans or processes or any other
proprietary information relating to the Business) of Golden West which is
private or confidential in that it is not known or available to the public and
gives Golden West an opportunity to obtain an advantage over competitors who do
not know or use it. The Shareholder shall not, without the prior written consent
of the Company, at any time during the Restricted Period (1) use or disclose any
such Confidential Information outside the Company (or its affiliated companies,
including Golden West), (2) aid in the removal from Golden West or delivery to
any third party of any such Confidential Information or (3) sell, exchange or
give away or otherwise dispose (or assist therein) of any such Confidential
Information now or hereafter owned by Golden West, whether or not the same shall
or may have been originated, discovered or developed by the Shareholder. The
Shareholder agrees that he will return all Confidential Information in his
possession to the Company immediately upon the date hereof. The Shareholder
acknowledges and confirms that he has or claims no proprietary interest in any
such information, or in any technology, invention, patent, trademark or other
intellectual property of, used or to be acquired by the Company.
(f) The Shareholder acknowledges that, in view of the nature of the
Business and the business objectives of the Company in entering into this
Agreement and the Acquisition Agreement, the restrictions contained in this
Section 1 are reasonably necessary to protect the legitimate business interests
of the Company, and that any violation of such restrictions will result in
irreparable injury to the Company for which damages will not be an adequate
remedy. The Shareholder therefore acknowledges that if he violates any such
restrictions, the Company shall be entitled to preliminary and injunctive relief
as well as to an equitable accounting of earnings, profits and other benefits
arising from such violation.
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(g) If any of the provisions contained in this Section 1 shall for any
reason be held to be overly broad as to duration, scope, activity or subject,
any such provision shall be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
(h) The rights and remedies of the Company hereunder are not exclusive of
or limited by or in limitation of any other rights or remedies which it may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative. Without limiting the generality of the foregoing, the rights and
remedies of the Company hereunder, and the obligations and liabilities of the
Shareholder hereunder, are in addition to their respective rights, remedies,
obligations and liabilities under the law of unfair competition.
2. SEVERABILITY. Should any provision of this Agreement or part thereof be
held under any circumstances in any jurisdiction to be invalid or unenforceable,
such invalidity or unenforceability shall not affect the validity or
enforceability of any other provision or other part of such provision, or of
such provision or part thereof under any other circumstances or in any other
jurisdiction.
3. GOVERNING LAW. The construction, validity and enforceability of this
Agreement shall be governed by the laws of the State of North Carolina.
4. WAIVER. The rights of the Company hereunder may be waived only by a
writing signed on behalf of the Company by its President or Vice President
expressly setting forth the rights so waived and the matters as to which they
are so waived, and any such waiver shall be limited to the matters expressly set
forth in such writing. No failure or delay of the Company in enforcing any of
its rights hereunder at any time shall constitute or evidence any waiver of such
rights.
5. CONSENT TO JURISDICTION. Each of the parties hereby consents and agrees
to the non-exclusive jurisdiction of all courts sitting in the State of North
Carolina in connection with any claim, dispute or controversy arising under or
in connection with this Agreement or any actual or alleged breach hereof.
6. MISCELLANEOUS. This Agreement and the Acquisition Agreement constitute
the sole and entire agreement and understanding between the parties hereto as to
the subject matter hereof, and supersedes all prior discussions, agreements and
understandings of every kind and nature between them as to such subject matter.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns. The captions of this Agreement are for convenience of reference only
and shall not affect in any manner any of the terms, covenants or conditions
hereof. Words of the masculine gender shall mean and include correlative words
of the feminine and neuter genders and words importing the singular number shall
mean and include the plural number and vice versa. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
IN WITNESS WHEREOF, this Agreement has been duly executed under seal by the
Company and the Shareholder and each has caused their respective seals to be
affixed hereto, as of the day and year first above written.
OAKWOOD HOMES CORPORATION
By:
Name:
Title:
[SEAL]
BRUCE W. STOYER
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<PAGE>
SCHEDULE 3.5
STOCK OPTIONS
<TABLE>
<CAPTION>
OAKWOOD SHARES
GOLDEN WEST SHARES NUMBER OF SHARES
DATE OF OPTION NUMBER EXERCISABLE AT OPTION NUMBER OF
NAME TITLE GRANT PRICE OF SHARES 7/31/94 PRICE SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
Robert C. Latimer Vice President,
Manufacturing 7/24/90 $1.000 39,000 39,000 4.33 9,012
Bruce W. Stoyer Executive Vice President 7/24/90 $1.000 39,000 39,000 4.33 9,012
Frank D. Jacobs Vice President, Finance 7/24/90 $1.000 39,000 39,000 4.33 9,012
Robert J. Henry Senior Vice President 7/24/90 $1.000 39,000 39,000 4.33 9,012
Phillip E. Clark Vice President -- General
Manager 7/24/90 $1.000 39,000 39,000 4.33 9,012
Andrew R. Van Zyl General Manager 7/24/90 $1.000 13,000 13,000 4.33 3,004
Paul A. Karsten Vice President -- General
Manager 7/24/90 $1.000 13,000 13,000 4.33 3,004
Paul A. Karsten Vice President -- General
Manager 2/04/92 $1.423 26,000 13,000 6.16 6,008
Andrew R. Van Zyl General Manager 10/19/93 $1.538 13,000 -- 6.66 3,004
Jesse Curacco General Manager 10/19/93 $1.538 13,000 -- 6.66 3,004
Sheri Wenz Senior Vice President --
GCFS 10/19/93 $1.538 26,000 -- 6.66 6,008
Paul W. Astles Director of Human Resources 10/19/93 $1.538 26,000 -- 6.66 6,008
Andrew Scott Karsten Director of Marketing 10/19/93 $1.538 26,000 -- 6.66 6,008
Bruce W. Stoyer Executive Vice President 2/27/94 $3.211 26,000 -- 13.90 6,008
Total 377,000 234,000
</TABLE>
NOTES:
1. The number of Golden West shares and option price have been adjusted to give
effect to the 52-for-one stock split
2. Options vest 25% per year on the first four anniversaries of the date of
grant.
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<PAGE>
SCHEDULE 4.0
OFFICERS AND KEY EMPLOYEES
<TABLE>
<CAPTION>
GOLDEN WEST HOMES
<S> <C>
OFFICERS:
Harry Karsten, Jr. Chairman of the Board, President and Chief Executive Officer
Robert J. Henry Senior Vice President
Bruce Stoyer Executive Vice President, Operations
Frank D. Jacobs Vice President, Chief Financial Officer and Secretary
Robert C. Latimer Vice President, Manufacturing
Phillip Clark Vice President, General Manager
Paul Andrew Karsten Vice President, General Manager
KEY EMPLOYEES
Andrew Van Zyl General Manager
Jesse Carrasco General Manager
Paul Astles Director, Human Resources
<CAPTION>
GOLDEN CIRCLE FINANCIAL SERVICES
<S> <C>
Harry Karsten President and Chief Executive Officer
L. Sheryl Wenz Senior Vice President
Frank D. Jacobs Secretary/Treasurer and Chief Financial Officer
William D. Capps Vice President
</TABLE>
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<PAGE>
SCHEDULE 4.1
GOLDEN WEST HOMES SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OF
NAME DATE FORMED INCORPORATION
<S> <C> <C>
Golden Circle Financial Services Common Stock, 1,000 shares authorized,
100 shares issued and outstanding. (1)..................................................... 10/19/93 California
</TABLE>
(1) Golden West Homes owns 100% of the issued and outstanding Common Stock of
Golden Circle Financial Services.
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<PAGE>
SCHEDULE 4.3
SHAREHOLDERS LIST
PREFERRED SERIES "A" STOCK:
<TABLE>
<CAPTION>
CERT. NUMBER AFFILIATION
<S> <C> <C>
1 Phillip E. Clark and Officer
Anna M. Clark, jt. ten.
451 S. Walnut Street
Boise, ID 83712
26,000 Shares issued 5-5-88
Phillip Clark SS#: ###-##-####
2 Phillip E. Clark (IRA) Officer
451 S. Walnut Street
Boise, ID 83712
19,500 Shares issued 5-5-88
Phillip Clark SS#: ###-##-####
3 Mrs. Anna M. Clark (IRA) Spouse of Officer
451 S. Walnut Street
Boise, ID 83712
19,500 Shares issued 5-5-88
SS#: ###-##-####
4 VOID
5 VOID
(Sold see revised certificate 38)
6 VOID
(Sold see revised certificate 43 & 44)
7 VOID
(Sold see certificate 45)
8 VOID
(Sold , see certificate 53)
9 John Hook and Former retailer
Peggy Hook, jt. ten
3827 Via Manzana
San Clemente, CA 92672
32,500 Shares issued on 5-5-88
SS#: Peggy: ###-##-####
10 VOID
(Sold, see certificate 51)
11 William H. Dennis and Employee
Sandra K. Dennis, jt. ten.
1121 W. Oak Avenue
Fullerton, CA 92633
6,500 Shares issued on 5-5-88
SS#: ###-##-####
12 VOID
13 VOID
(Revised, see certificate 40)
14 VOID
(Revised, see certificate 41)
15 John R. Stahr Director and Legal Counsel
Latham & Watkins
650 Town Center Drive, 20th Floor
Costa Mesa, CA 92626
32,500 Shares issued on 5-5-88
John Stahr SS#: ###-##-####
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
CERT. NUMBER AFFILIATION
<S> <C> <C>
16 Mr. Peter Rothschild Friend of Harry Karsten
Rothschild Industries, Inc.
866 West 18th Street
Costa Mesa, CA 92627
325,000 Shares issued on 5-5-88
Peter Rothschild SS#: ###-##-####
17 Theodore C. Powne and Retailer
Cathy L. Powne, jt. ten
866 Casa Grande Court
Modesto, CA 95355
26,000 Shares issued on 5-5-88
SS#: ###-##-####
18 VOID
(Sold, see certificate 49 & 50)
19 Jack O'Bannon Major Supplier
Fontana Wood Products, Inc.
P.O. Box 1030
Fontana, CA 92335
26,000 Shares issued on 5-5-88
Jack O'Bannon SS#: ###-##-####
20 VOID
21 Frank D. Jacobs Officer
27236 Villanueva
Mission Viejo, CA 92691
15,600 Shares issued on 6-30-89
SS#: ###-##-####
22 Richard A. Jacobson Retailer
1638 Victorian Way
Eugene, OR 97401
10,400 Shares issued on 6-30-89
SS#: ###-##-####
23 Robert C. Latimer and Officer
Earlene L. Latimer, jt. ten.
26053 Dumont Road
Hemet, CA 92344
10,400 Shares issued on 6-30-89
SS#: ###-##-####
24 Larry Marple Retailer
C/O Golden Pacific Homes
9950 S.E. 82nd Avenue
Portland, OR 97266-7302
26,000 Shares issued on 6-30-89
SS#: ###-##-####
25 Rypinski Family Trust Friend of Harry Karsten
ATTN: Alan Rypinski
2321 Santiago
Newport Beach, CA 92660
36,400 Shares issued on 6-30-89
SS#: ###-##-####
26 Bruce Stoyer Officer
3190 Fir Oaks Drive, S.W.
Albany, OR 97321
23,400 Shares issued 6-30-89
SS#: ###-##-####
27 Richard Keim Manages portion of 401(k) plan assets
145 East 92nd Street
New York, NY 10128
19,500 Shares issued on 6-30-89
SS#: ###-##-####
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
CERT. NUMBER AFFILIATION
<S> <C> <C>
28 VOID
(Revised, see certificate 42)
29 William Frederickson III Friend of Harry Karsten
and Debra L. Frederickson
c/o Rollins Leasing Corp.
2000 East Wilshire, 2nd Floor
Santa Ana, CA 92705
15,600 Shares issued on 6-30-89
SS#: Bill-548-54-3644
Debbie: ###-##-####
30-34 VOID
35 Anthony P. Evans and Retailer
Joan O'Brien, jt. ten
Evans & O'Brien, Inc.
1031 Fair Oaks Way
Sunnyvale, CA 94089
36,400 Shares issued on 2-6-90
SS#: Anthony: ###-##-####
Joan: ###-##-####
36 VOID
37 Marlin T. McKeever Insurance broker for Golden West
Susan J. McKeever, jt. ten
Andreini & Company
18400 Von Karman Avenue, Suite 100
Irvine, CA 92715
7,384 Shares issued on 5-1-90
SS#: ###-##-####
38 VOID
(Revised, see certificate 42)
39 Celia Golden, Trustee of the Widow of Golden West founder Jerry Golden and
Jerry and Celia Golden Residual Trust mother-in-law of Harry Karsten
46 Whitewater Drive
Corona Del Mar, CA 92625
104,000 Shares issued on 5-1-90
SS#: ###-##-####
40 Commerce Bank Cust. FBO Legal Counsel to Golden West
Robert W. Shaffer, Jr.
12011 San Vicente Blvd., Suite 600
Los Angeles, CA 90049
39,000 Shares issued on 5-5-88
SS#: ###-##-####
41 Commerce Bank Cust. FBO Legal Counsel to Golden West
Barry I. Gold
12011 San Vicente Blvd., Suite 600
Los Angeles, CA 90049
26,000 Shares issued on 5-5-88
SS#: ###-##-####
42 Commerce Bank Cust. FBO Officer
Robert J. Henry
IRA#1-2976-1
5463 Provence Place
Riverside, CA 92506
25,116 Shares issued on 6-30-89
SS#: ###-##-####
43 Steven Sherwood President of same company as director (Byron
Clayton, Williams & Sherwood, Inc. Williams)
800 Newport Center Drive, Suite 400
Newport Beach, CA 92660
3,224 Shares issued on 3-24-92
SS#: ###-##-####
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
CERT. NUMBER AFFILIATION
<S> <C> <C>
44 BBC Family Trust Director
ATTN: Byron L. Williams
Clayton, Williams & Sherwood, Inc.
800 Newport Center Drive, Suite 400
Newport Beach, CA 92660
3,276 Shares issued on 3-24-92
SS#: ###-##-####
45 VOID
(Sold, see certificate 51)
46 Loretta Faye Otto Widow of former employee and supplier to Golden
9851 Change Circle West
Huntington Beach, CA 92646
32,500 Shares issued on 3-8-93
SS#: ###-##-####
47 Dean R. & Valerie D. Otto, jt. ten Son of former employee
39 Mill Valley Road
Pomona, CA 91766
16,276 Shares issued on 3-8-93
48 Michael S. & Nancy L. Otto, jt. ten Son of former employee
P.O. Box 276
Eden, Utah 84310
FOR OVERNIGHT SERVICE:
1425 WEST 2675 NORTH
OGDEN, UTAH 84404
16,224 Shares issued on 3-8-93
SS#: ###-##-####
49 John R. Stahr, Trustee Director
UDT DTD march 19, 1965
For the Stahr Family
(separate property)
4639 Roxbury Road
Corona Del mar, CA 92625
16,120 Shares issued on 3-8-93
SS#: ###-##-####
50 BBC Williams Family Trust Director
Attn: Bryon L. Williams
Clayton, Williams & Sherwood, Inc.
800 Newport Center Drive, Suite 400
Newport Beach, CA 92660
8,112 Shares issued on 3-8-93
SS#: ###-##-####
51 Union Bank Trustee for 401(k) Plan investment
Golden West Homes
401 (k) Savings Plan
1801 E. Edinger, Suite 240
Santa Ana, CA 92705
65,000 Shares issued on 3-8-93
52 George A. Molsbarger Friend of Harry Karsten
1201 Alta Loma Road
W. Hollywood, CA 90266
8,268 Shares issued on 5-5-88
SS#: ###-##-####
53 Frank D. and Kathleen Jacobs, jt. ten. Officer
27236 Villanueva
Mission Viejo, CA 92691
27,300 Shares issued 1-4-94
SS#: ###-##-####
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
CERT. NUMBER AFFILIATION
<S> <C> <C>
COMMON STOCK:
1 VOID
2 VOID
(See Certificates 9, 11 & 12)
3 Andrew S. Karsten Son of Harry Karsten
c/o Harry Karsten
4533 Perham Road
Corona Del Mar, CA 92625
13,000 Shares issued on 12-1-93
SS#:###-##-####
4 Deborah S. Karsten Knight Daughter of Harry Karsten
c/o Harry Karsten
4533 Perham Road
Corona Del Mar, CA 92625
13,000 Shares issued 12-1-93
SS#: ###-##-####
5 Byron L. Williams Director
Clayton, Williams & Sherwood, Inc.
800 Newport Center Drive, Suite 400
Newport Beach, CA 92660
13,000 Shares issued on 3-4-94
SS#: ###-##-####
6 John R. Stahr Director and legal counsel
Latham & Watkins
Center Tower -- 20th Floor
650 Town Center Drive
Costa Mesa, CA 92626
13,000 Shares issued on 3-4-94
SS#: ###-##-####
7 Gary Mounts Director
HomeVue
23181 Verdugo Drive
Laguna Hills, CA 92653
13,000 Shares issued on 3-4-94
SS#: ###-##-####
8 Robert D. Totten Director
957 S. Barton Court
Anaheim, CA 92805
13,000 Shares issued on 3-4-94
SS#: ###-##-####
9 Frank D. Jacobs, Trustee ESOP Plan
Employee Stock Ownership Program
(Transferred from Certificate #2)
31,200 Shares
10 VOID
(Issued in error)
11 Harry Karsten & Heather Karsten Investment Trust Officer
(Transferred from Certificate #2)
520,000 Shares issued on 5/27/94
12 Harry Karsten Officer
(Transferred from Certificate #2)
657,800 Shares issued on 5/27/94
</TABLE>
NOTE: The number of shares has been adjusted to give effect to a 52 for 1 stock
split in April 1994.
S-8
<PAGE>
SCHEDULE 4.3
SUBSIDIARY LOAN & CAPITAL CONTRIBUTION
On October 12, 1993, Golden West provided to Golden Circle Financial
Services a $1,000,000 line of credit for working capital needs. The line of
credit is evidenced by a promissory note bearing interest at the Wells Fargo
prime rate plus 1.50% and is due and payable on December 31, 1995. Golden West
also contributed $100,000 in capital to purchase all 100 shares of outstanding
Common Stock of Golden Circle.
S-9
<PAGE>
SCHEDULE 4.3
GOLDEN WEST OPTIONS
I. See Schedule 3.5 for a list of the outstanding options of Golden West
Homes as of the date of this Agreement.
II. Although not contractually or legally obligated to issue such options,
Golden West intended to issue 15,000 options to certain key employees
in connection with its Initial Public Offering that was not realized.
III. Participants in the Golden West Deferred Compensation Plan have the
right to elect to convert up to an aggregate of $500,000 of their
account balances into shares of Golden West Common Stock.
S-10
<PAGE>
SCHEDULE 4.5
REQUIRED FILINGS AND CONSENTS
I. Revolving Line of Credit Agreement and Note dated March 1, 1993 between
Golden West and Wells Fargo Bank, National Association.
(Bullet) Section V.12 of the Agreement prohibits a merger (a written
waiver from Wells Fargo is required).
II. Both the 401(k) Savings Plan and Employee Stock Ownership Plan permit
a successor company to adopt each plan following a merger. However, if
no adoption occurs within 90 days of such event, the plans are
automatically terminated.
III. Office Lease dated April 12, 1993 between Catellus Development
Corporation and Golden West (Santa Ana property).
(Bullet) Section 16 prohibits the assignment or transfer of the lease
without the prior written consent of the landlord. The same
Section 16 states that a merger or transfer of a controlling
interest of Golden West shall constitute an assignment.
IV. Reimbursement Agreement dated October 1, 1991 between Wells Fargo and
Golden West (in connection with that certain Loan Agreement dated
October 1, 1991 between Industrial Development Authority of the County
of Riverside and Golden West).
(Bullet) Section 7.6 of the Agreement prohibits a merger (a written
waiver from Wells Fargo is required).
V. Loan Agreement dated October 1, 1991 between Industrial Development
Authority of the County of Riverside and Golden West.
(Bullet) Section 5.02 requires that prior to a merger, the Trustee and
Wells Fargo Bank shall be furnished with a certificate of an
officer of Golden West stating that none of the covenants of
the Loan Agreement will be violated as a result of the merger.
A copy of the merger documents are to be given to the Trustee,
Wells Fargo Bank and IDA within thirty days after the delivery
of such documents.
VI. Lease dated December 1, 1969 between Winat Properties and Golden West,
as amended (Albany property).
(Bullet) Section 13 prohibits the assignment of the lease or any
interests of the lessee by operation of law without the
written consent of the lessor.
S-11
<PAGE>
SCHEDULE 4.7
GOLDEN WEST INVESTMENTS
Golden West Homes does not own directly or indirectly any interest or
investment in any corporation, partnership, joint venture, business trust or
other entity except for a nominal number of shares of stock in publicly held
companies in the manufactured housing industry to be on their mailing list. The
total investment in all companies is approximately $1,300.
S-12
<PAGE>
SCHEDULE 4.9
SUBSEQUENT EVENTS
B. Although not contractually or legally obligated to do so, Golden West
has proposed to issue 15,000 options to purchase Golden West Common Stock to
four individuals. See Schedule 4.3.
On April 11, 1994, Golden West Homes Board of Directors approved the
following actions: (i) an increase in the number of shares of Common and Series
A Preferred Stock to 20,000,000 and 1,105,000, respectively and a 52 for 1 stock
split of these series, and (ii) plan to merge the Karsten Company into Golden
West Homes and to change its name to Golden West Homes. On May 20, 1994, the
Karsten Company was merged into Golden West Homes, with the Articles of
Incorporation and By-Laws of the Karsten Company becoming the Articles of
Incorporation and By-Laws of Golden West Homes.
D. EXPENDITURES:
1. Golden West Homes purchased approximately 9.5 acres in Idaho from
Harry Karsten for approximately $136,000.
2. On June 16, 1994, the Board of Directors approved a capital
expenditure of $750,000 to increase production capacity at the Albany,
Oregon facility.
3. In April 1994, Golden West Homes contributed $100,000 to the ESOP,
which funds were used to purchase 31,200 shares of Golden West Homes Common
Stock from Harry Karsten at a purchase price of $100,000 or $3.21 per
share.
F. COMPENSATION:
In April 1994, Golden West Homes revised its compensation system for
officers, key employees and most divisional supervisory personnel. Base pay was
increased and bonus programs were changed from only sales volume or bonus base
profit to a set maximum based on three criteria: (i) profits, (ii)
implementation of the total quality management program and (iii) reduction of
Price of Non-Conformance (PONC). See Schedule 4-11(a).
In April 1994, the Deferred Compensation Plan participants (the
"Participants") elected to convert $500,000 in their account balances into
260,000 shares of Golden West Homes Common Stock upon the closing of a public
offering. Prior to the closing date, the Participants will make a written
election to convert up to $500,000 in their account balances into 260,000 shares
of Golden West Common Stock upon the closing of the Merger.
G. See B above.
S-13
<PAGE>
SCHEDULE 4.10
TAX MATTERS
Golden West Homes entered into a tax sharing agreement with GWH Holding
Company (Subsidiary of the William Lyon Company) on May 5, 1988 in connection
with the acquisition of Golden West Homes by the Karsten Company.
Golden West Homes received approval to change its method of accounting for
deducting product liability claims and deducting workers compensation claims.
These Section 481(a) adjustments are $563,000 and $510,000, respectfully, and
will begin with taxable year ending December 31, 1994.
Golden West Homes is currently appealing a Notice of Determination from the
State of California Board of Equalization for the period of 10/1/88 thru 9/20/91
in the amount of $123,484. Golden West has provided a reserve of $100,000 to
cover this potential liability.
S-14
<PAGE>
SCHEDULE 4.11(A)
ANNUAL COMPENSATION WHICH COULD EXCEED $50,000
<TABLE>
<CAPTION>
BASE 1993
NAME TITLE AGE* SALARY BONUS EARNINGS
<S> <C> <C> <C> <C> <C>
ALBANY DIVISION
Andrew R. Van Zyl General Manager 50 $48,000 2.5% of BBP $204,199
Clark Fuller Production Manager 49 43,000 2.5% of BBP 108,850
Jerry Berndt Sales Manager 50 33,000 2.0% of BBP 159,195
Keith Hood Purchasing Manager 36 30,000 1.0% of BBP 83,525
Kent Hazelwood Community Development Manager 50 65,000 New Business 56,700
Harvey Resaloso Foreman 26 20,100 .0682% of Sales 58,985
Thomas Scwab Asst. Production Manager 47 25,200 .0682% of Sales 64,043
David Pearce Asst. Production Manager 41 22,000 .0682% of Sales 59,463
Patrick Benjamin Foreman 46 20,100 .0682% of Sales 59,244
Perry Meier Foreman 37 18,900 .0682% of Sales 58,511
Po Leung Foreman 43 20,100 .0682% of Sales 58,985
Gary Hill Foreman 39 18,800 .0682% of Sales 57,685
Rick Torgenson Service Manager 35 26,000 .0483% of Sales 51,312
James Rettinger Code Compliance Manager 47 40,000 .046% of Sales 64,049
Wayne Houghtaling Asst. Sales Manager 48 27,000 .106% of Sales 80,543
Ronald Rau Asst. Sales Manager 53 27,000 .106% of Sales 82,548
SOUTHERN CALIFORNIA DIVISION
Jesse Carrasco General Manager 54 80,000 (1) 39,616(2)
Arturo Barcenas Production Manager 44 50,000 (1) 46,262
Ernie Kercmar Sales Manager 46 75,000 (1) --
John Brean Purchasing Manager 39 55,000 (1) 49,000
Henry Pequero Asst. Production Manager 45 40,000 (1) 48,318
Larry Smith Sales Representative 47 40,000 (1) 41,423
Richard Hecker Sales Representative 53 40,000 (1) 53,461
William Dennis Code Compliance Manager 57 40,000 (1) 39,000
George Folmar Foreman/Human Resources 50 40,000 (1) 39,614
SACRAMENTO DIVISION
Paul Karsten Vice President-General Manager 51 90,000 (1) 74,000
Ed Stevenson Production Manager 60 50,000 (1) 48,291
James Oblizalo Sales Manager 48 65,000 (1) --
Richard Wagner Purchasing Manager 41 50,000 (1) 46,430
COLORADO DIVISION
Phillip Clark Vice President-General Manager 56 90,000 (1) 76,000
Mark Irving Sales Manager 31 70,000 up to max of $20,000 --
Ron Arnett Purchasing Manager 44 50,000 up to max of $25,000 --
Hector Orozco Production Manager 40 50,000 up to max of $25,000 42,687
</TABLE>
S-15
<PAGE>
<TABLE>
<CAPTION>
BASE 1993
NAME TITLE AGE* SALARY BONUS EARNINGS
<S> <C> <C> <C> <C> <C>
CORPORATE
Harry Karsten President and CEO 53 200,000 (1) 205,416
Robert Henry Senior Vice President 52 100,000 (1) 126,399
Frank Jacobs Vice President -- Finance 48 100,000 (1) 109,708
Robert Latimer Vice President -- Manufacturing 51 90,000 (1) 135,240
Bruce Stoyer Executive Vice President 52 150,000 (1) 269,651
Paul Astles Director of Human Resources 49 100,000 (1) 7,692(2)
Scott Karsten Director of Marketing 33 80,000 (1) 49,423
Greg Avants MIS Manager 47 70,807 up to max of $5,000 68,488
William Papa Controller 49 68,000 up to max of $5,000 62,238
Mark Ezzo Civil Engineer 33 60,000 up to max of $5,000 55,723
GOLDEN CIRCLE FINANCIAL SERVICES
Sheri Wenz Senior Vice President 41 90,000 up to max of $45,000 16,000(2)
William Capps Vice President 45 60,000 up to max of $6,000 10,000
Brad Knapp Director, Mortgage Finance 38 75,000 up to max of $7,500 --
</TABLE>
NOTES:
1. A new compensation program was put in effect for these individuals on April
1, 1994 which increased their base salary and also gave them a chance to earn
a bonus of up to 50% of their base salary. The bonus is broken into three
portions: (i) projected income from operations for their division; (ii)
reduction of price of Non-Conformance; (iii) Implementation of Total Quality
Program.
2. Worked only portion of 1993.
* Age as of July 26, 1994
S-16
<PAGE>
SCHEDULE 4.11(B)
FRINGE BENEFIT PLANS
The following sets forth the various benefit plans available to employees
of Golden West Homes and subsidiary.
1. BONUS PLANS
a. Officers:
Officers can earn a bonus up to 50% of their base salary if certain
criteria are met as follows:
(i) Projected profit levels
(ii) Implementation of the Total Quality Management Program
(iii) Reduction of Price of Non-Conformance (varies by individual)
b. Key Employees:
Sacramento and Southern California
For these two divisions all managers, foremen, sales people can earn up to
50% of their base salary determined on the same criteria as noted above for
officers.
Albany
The general manager, sales manager, purchasing manager and production
manager earn bonuses based on "Bonus Base Profit" [defined as income before
taxes, bonuses, 401(k) contribution and ESOP contribution].
Sales people, foremen, salaried service people, cost accountant are paid
based on monthly shipping volume.
c. Hourly Production workers:
These individuals can earn an hourly incentive based on reducing labor
costs below targeted pool levels.
d. Other Salaried Employees:
Based on the position, these individuals can earn between $1,000 and $5,000
based on profits of the company and their individual efforts in
implementing the total quality management process.
2. PROFIT SHARING PLANS
a. 401(k) Plan:
The Company offers a 401(k) plan for all employees 21 years of age and who
have a minimum of One year of continuous service. The Board of Directors
approves the matching contribution and total company contribution. See the
plan document for further details.
b. ESOP Plan:
In January 1994, Golden West Homes formed an ESOP. For 1994, the Board of
Directors approved an initial contribution of $100,000 plus 10% of pre-tax
profits for the year. See the plan document for further details.
3. GROUP INSURANCE
The Company offers a comprehensive medical and dental plan for all full time
employees. Eligibility is the first of the month following 90 days of
continuous service. See the plan booklet for further details. Employees are
required to contribute a portion of the cost as follows:
a. Employee only coverage -- $35 per month.
b. Employee plus dependent -- $135 per month.
The Company also offers, at no cost to the employee, term life insurance at
different levels based on position and seniority. Certain employees have the
option to purchase additional life insurance.
The Company does not have a retired employee medical program.
S-17
<PAGE>
4. VACATION
The Company has a vacation pay policy based on seniority for all employees.
See the Employee Handbook, which is deemed to be part of this Schedule 4.11(b)
for details.
5. SEVERANCE PAY
The Company does not have a formal severance pay program.
6. DISABILITY INSURANCE
Salaried employees are covered by a limited disability insurance program at no
cost to them. They have the option to upgrade to a more comprehensive plan at
an additional cost.
7. DEFERRED COMPENSATION
In 1975, the Company established a deferred compensation plan for Harry
Karsten, Robert Totten and Jerry Golden. The Plan was amended in 1988 which
suspended any further deferrals. Upon conversion of up to $500,000 of the
individuals account balances into Golden West stock and payment of any excess
balances, the plan will terminate.
8. STOCK OPTION PLAN
Golden West Homes 1994 Stock Option Plan serves as the successor equity
incentive program to the 1990 Stock Option Plan for Executives and Key
Employees. The new was Plan adopted by the Board of Directors on April 11,
1994. All outstanding stock options and unvested share issuances under the
Prior Plan have been incorporated into the Plan but will continue to be
governed by the terms and conditions of the specific instruments evidencing
those options and issuances. A total of 548,000 shares of Common Stock are
available for issuance under the Plan, of which 377,000 shares are reserved
for issuance under options presently outstanding under the Prior Plan, and
171,000 shares are available for future option grants.
9. See the Employee Handbook for discussion of other benefit programs.
S-18
<PAGE>
SCHEDULE 4.11(D)
FUNDING POLICIES
I. The 401(k) Plan is funded by contributions by Golden West and its affiliates
to the trust established pursuant to the 401(k) Plan. Union Bank is the
trustee of the 401(k) Plan. Contributions to the trust are made by Golden
West and its affiliates in accordance with the terms of the 401(k) Plan. The
assets of the trust currently consist of shares of Golden West preferred
stock and other investments, as discussed below.
The 401(k) Plan currently holds 65,000 shares of Golden West Preferred
Stock. The 401(k) Plan acquired the Preferred Stock upon the merger of The
Karsten Company into Golden West. In March 1993, shares of The Karsten
Company preferred stock were contributed to the 401(k) Plan by Golden West
as part of its discretionary matching contribution to the 401(k) Plan for
the plan year ended December 31, 1993. The contribution of The Karsten
Company preferred stock to the 401(k) Plan was made at the direction of the
Board of Directors of Golden West. The shares of Golden West Preferred Stock
held by the 401(k) Plan (i) are voted by Union Bank and (ii) are valued for
401(k) Plan purposes, including determining the value of contributed shares
at the time of contribution, by the Golden West Board of Directors.
The assets of the trust other than Golden West Preferred Stock are invested
at the direction of Palley-Needleman Asset/Management, Inc. and Keim-Wilson
Associates. Those assets are held in equity and debt securities and other
investments selected by the investment managers.
II. The ESOP is funded by contributions by Golden West and its affiliates to the
trust established pursuant to the ESOP. Frank D. Jacobs is the trustee of
the ESOP. Contributions are made in cash or property by Golden West and its
affiliates to the trust in accordance with the terms of the ESOP. The assets
of the trust are invested at the direction of the trustee. 31,200 shares of
Golden West Common Stock were purchased by the ESOP from Harry E. Karsten,
Jr. in April 1994.
S-19
<PAGE>
SCHEDULE 4.11(E)
BENEFIT PLANS COMPLIANCE
I. The 401(k) Savings Plan of Golden West Homes (the "401(k) Plan") provides
that an employee must complete 365 days of service before becoming eligible
to participate in the 401(k) Plan. An employee becomes a participant in the
401(k) Plan on the first January 1 or July 1 on which the employee satisfies
the service requirement and certain other eligibility requirements. The
401(k) Plan further provides that a former employee who was not an employee
on the first January 1 or July 1 on which the eligibility requirements were
satisfied will become a participant effective upon reemployment in an
eligible position. Golden West recently determined that approximately 20
employees who satisfied the service requirement prior to terminating
employment, and who had not become participants in the 401(k) Plan, were
required to complete the service requirement upon reemployment. As a result,
those employees were not permitted to participate in the 401(k) Plan in
accordance with the terms of the 401(k) Plan.
II. Golden West adopted The Employee Stock Ownership Plan of Golden West Homes
(the "ESOP") effective as of January 1, 1994. Golden West has not yet
applied for a determination letter from the Internal Revenue Service with
respect to the ESOP.
III. The ESOP purchased 31,200 shares of Golden West Common Stock from Harry E.
Karsten, Jr. in April 1994. Those shares were purchased from Mr. Karsten
pursuant to the Stock Purchase Agreement, dated as of April 25, 1994,
between Harry E. Karsten, Jr. and Frank D. Jacobs, as trustee of the ESOP.
The ESOP paid $100,000 in cash for the shares. The value of the shares was
not determined by an independent appraiser. Golden West intends to obtain
an independent appraisal of the value of the shares as of the date of
purchase.
S-20
<PAGE>
SCHEDULE 4.11(G)
BENEFIT PLANS -- EFFECT OF MERGER
I. Pursuant to the terms of the Deferred Compensation Plan, as amended, the
participants will be electing to convert an aggregate of $500,000 of
their account balances into Golden West Common Stock. The Merger will
accelerate the date on which the shares of Golden West Common Stock are
issued and delivered to the participants.
S-21
<PAGE>
SCHEDULE 4.12(A)
REAL PROPERTY
<TABLE>
<CAPTION>
LOCATION ACRES DESCRIPTION OF PROPERTY
<S> <C> <C>
3100 N. Perris Blvd. 19.1 Manufacturing facility consisting of two buildings of 72,000
Perris, CA 92571 and 53,000 square feet.
2445 Pacific Blvd., 11.1 Manufacturing facility consisting of 64,000 square feet.
South Albany, OR 97321
20870 Highway 34 East 15.0 Manufacturing facility consisting of 109,000 square feet.
Fort Morgan, CO 80701
451 S. Walnut Street 9.5 Land for future manufacturing plant.
Boise, ID 83712-8350
</TABLE>
ENCUMBRANCES
See schedule 4.12(b) and the matters listed on Exhibits A, B, C and D
attached hereto, which are based on the following Title Reports already provided
to Oakwood:
<TABLE>
<CAPTION>
PROPERTY LOCATION TITLE REPORT DATE ISSUED
<S> <C> <C>
Perris, California Fidelity National Title Insurance Company October 9, 1991
Albany, Oregon First American Title Insurance Company of Oregon April 26, 1991
Boise, Idaho Stewart Title Commitment for Title Insurance June 7, 1994
Fort Morgan, Colorado Transamerica Title Insurance Company March 16, 1994
</TABLE>
S-22
<PAGE>
SCHEDULE 4.12(A)
LEASEHOLD INTERESTS
<TABLE>
<CAPTION>
LEASE
LOCATION LANDLORD ACRES DESCRIPTION OF PROPERTY EXPIRATION OPTIONS
<S> <C> <C> <C> <C> <C>
2500 Walnut S.W. Winat Properties 12.0 Manufacturing facility consisting 11/30/99 Two, five-year
Albany, OR 97321 of 81,000 square feet terms
9998 Old Placerville Rd Martin Mueller 10.0 Manufacturing facility consisting 4/30/96 One, five-year
Sacramento, CA 95827 of 06,000 square feet term
1801 E. Edinger Ave. Catellus Corporate offices of 1/31/99 None
Suite 240 Development approximately 9,200 square feet
Santa Ana, CA 92705 and approximately 2,600 square
feet for Golden Circle Financial
Services
12331 Beach Blvd. Foremost Motors, 1.1 Golden Homes -- Stanton Division 12/21/99 None
Stanton, CA 90680 Inc. retail office and display center
(sub-lessor fee
title to the real
property is held
by Orville
Heitkotter)
1315 Yellowstone Charles A. Moreno 2.25 Golden Homes -- 7/31/95 Nine, one-year
Pocatello, ID 83201 Pocatello Division terms, first
retail display center right of refusal
21396 Highway 30 Joseph F. 2.25 Golden Homes -- 12/31/94 Ten, one-year
Twin Falls, ID 83301 DiPietro approx. Twin Falls Division terms. Option to
retail display center purchase for
$225,000 expiring
12/31/94
Amalgam and Gold River Dettling-Davis .5 Mobile home storage month None
Rancho Cordova, CA to month
</TABLE>
LEASES BEING NEGOTIATED
1. Apartment for Bruce Stoyer, Executive Vice President, near Sacramento,
California factory for approximately six months which is expected to
commence September 1994.
2. Office space in Corona, California, for product development group for
one year term, with options to renew, which is expected to commence
September 1994.
3. Retail sales location in Idaho Falls, Idaho, expected to commence
January 1995.
S-23
<PAGE>
EXHIBIT A
(PERRIS, CALIFORNIA TITLE EXCEPTIONS)
1. Ad valorem real estate taxes for the current year and subsequent years,
which are not yet payable.
2. Rights of way of public streets now existing and affecting the property.
3. Matters shown on Record of Survey filed in Book 12, Page 20, Records of
Survey of Riverside County, California.
4. Covenants, conditions and restrictions (deleting therefrom any
restrictions based on race, color or creed) set forth in Instrument No.
84-156197, Riverside County Public Records.
5. Rights of others pursuant to dedication statement on map of subdivision
shown on Parcel Map 23610 in the Riverside County Public Records.
6. Matters which a correct survey and inspection of the property would
reveal including any rights, interests, or claims which may exist or arise by
reason of the following facts shown on a survey plat entitled "A.L.T.A. Survey",
dated May 1991 prepared by Sanderson & Gutierrez Civil Engineers:
1. The fact that a gasoline pump exists on said land.
2. The fact that a natural gas meter exists on said land.
3. The fact that a fence exists inside the Westerly boundary of said
land.
4. The fact that light stands exists on said land.
5. The fact that trees located along the eastern boundary of said land
are situated partly onto adjoining lands.
6. The fact that a water vault is located on said land.
7. The fact that a sign board is located on said land.
8. The fact that a GTE vault is located on said land.
9. The fact that several manholes are located on said land.
10. The fact that several Edison Box is located on said land.
11. (Intentionally deleted)
12. The fact that several fire hydrants are located on said land.
13. (Intentionally deleted)
14. The fact that a fence located on Parcels 1 and 2 of said land and
running on a general Southerly direction encroaches onto land adjoining
said land to the South.
15. The fact that a gate located between the common boundaries of
Parcels 1 and 2 is situated on said land.
16. The fact that an interior fence running in a general East/West
direction crosses several parcels of said land.
7. Water rights, claims or title to water, whether or not shown by the
public records.
8. Easements granted by Golden West's predecessors in title to the property
which are not known to Golden West and are not shown by the public records.
S-24
<PAGE>
EXHIBIT B
(ALBANY, OREGON TITLE EXCEPTIONS)
1. Ad valorem real estate taxes for the current year and subsequent years,
which are not yet payable.
2. Rights of way of public streets now existing and affecting the property.
3. Easement for underground distribution lines in favor of Pacific Power
and Light Company recorded in MF Vol. 162, page 808 and rerecorded in MF Vol.
226, Page 61, Linn County Public Records.
4. Easement for gas pipeline over westerly ten (10) feet of the property in
favor of Northwest Natural Gas Company recorded at MF Vol. 166, Page 429, Linn
County Public Records.
5. Easement for slope easements and drainage and drainage facilities in
favor of the State of Oregon Department of Transportation recorded in MF Vol.
411, Page 970, Linn County Public Records.
6. Trust Deed to U.S. Bank of Washington, N.A. for the benefit of U.S.
Creditcorp in the original principal amount of $938,000 recorded in MF Vol. 561,
Page 80, Linn County Public Records and Assignment of Leases and Rents recorded
in MF Vol. 561, Page 84, said records.
7. Matters that would be revealed by a correct survey and an inspection of
the property which are not shown by the public records.
8. Easements granted by Golden West's predecessors in title to the property
which are not known to Golden West and are not shown by the public records.
S-25
<PAGE>
EXHIBIT C
(BOISE, IDAHO TITLE EXCEPTIONS)
1. Ad valorem real estate taxes for the current year and subsequent years,
which are not yet payable.
2. Right of way of Madison Road.
3. Easement for ingress and egress in favor of Marilyn Rasgorshek, et al.,
recorded January 18, 1994 as Instrument No. 9401569 of the Canyon County Public
Records.
4. Deed of Trust in the original principal amount of $93,100 from Harry E.
Karsten and Heather J. Karsten, husband and wife, to Pioneer Title Company of
Canyon County for the benefit of Marilyn Rasgorshek et. al. dated January 11,
1994 and recorded January 18, 1994 as Instrument No. 9401570.
5. Matters that would be revealed by a correct survey and an inspection of
the property which are not shown by the public records.
6. Easements granted by Golden West's predecessors in title to the property
which are not known to Golden West and are not shown by the public records.
S-26
<PAGE>
EXHIBIT D
(FORT MORGAN, COLORADO TITLE EXCEPTIONS)
1. Ad valorem real estate taxes for the current year and subsequent years,
which are not yet payable.
2. Reservation of right of the proprietor of any penetrating vein or lode
to extract his ore, in U.S. Patent recorded October 24, 1889 in Book 12 at page
191.
3. Right of way for road purposes as specified in that road petition
recorded July 7, 1883 in Book 15 at page 1, said road to be not less than 60
feet in width.
4. Right of way for road purposes as specified in that road petition
recorded July 12, 1892 in Book 15 at page 38, said road to be not less than 60
feet in width.
5. Undivided 1/2 interest in all oil, gas and other mineral rights,
provided that the owner of the property shall have the sole and exclusive right,
at its discretion, to lease or initiate or cause production of any such mineral
rights, as reserved by Clyde E. Barkley in Deed to the City of Fort Morgan,
Colorado, a municipal corporation, recorded February 20, 1970 in Book 716 at
page 653, and any and all assignments thereof or interests therein.
6. Easement and right of way for roads, streets, ditches, pipelines,
electric and telephone poles, lines and cables as are now or as shall hereafter
be constructed thereon and therein, as reserved by the City of Fort Morgan,
Colorado in Deed to Fort Morgan Industrial Foundation, Inc., recorded May 21,
1970 in Book 717 at page 860, said easement to be within, upon, over and across
the North 50 feet and the East 50 feet of the North 820 feet of the East 880
feet of the SE 1/4 of Sec. 4, Twp. 3 N., Rge. 57 W. 6th P.M.
7. Right of Way for road purposes as shown on the Fort Morgan Master Street
Plan, recorded September 1, 1981 in Book 5 at page 93.
8. Matters contained in East Platte Avenue Industrial Park Sanitation
District Service Plan, recorded November 1, 1982 in Book 835 at page 556; and
Plat of Proposed East Platte Avenue Industrial Park Sanitation District, part of
Section 4, Twp. 3 N., Rge. 57 West of the 6th P.M., recorded November 17, 1982
in Book 835 at page 974.
9. Right of way of the Southside Lateral and Reservoir Company ditch along
the East side of the SE1/4 of Sec. 4 referred to in Articles of Incorporation of
said company, filed May 20, 1897 in Special File #153.
10. Right of way of the Platte Avenue Company ditch along the South side of
the County road on the North side of the SE1/4 of Sec. 4 referred to in Articles
of Incorporation of said company, filed June 30, 1898 in Special File #165.
11. Undivided 1/2 interest in all oil, gas and other mineral rights, as
conveyed by The City of Fort Morgan, Colorado in Mineral Deed to The Farmers
State Bank of Fort Morgan, Fort Morgan, Colorado, Trustee, recorded September 1,
1977 in Book 774 at page 669, and any and all assignments thereof or interests
therein.
12. Deed of Trust from GOLDEN WEST HOMES, a California corporation, to the
Public Trustee of the County of Morgan for the use of DOUGLAS H. HAWKINS
securing the original principal amount of $850,000.00 dated March 14, 1994 and
recorded March 15, 1994 in Book 965 at Page 588.
13. Easement to Mountain Bell Telephone Company, recorded October 2, 1981
in Book 821 at page 502.
14. Easement to Public Service Company of Colorado, recorded October 2,
1981 in Book 821 at page 514.
15. Easement to Morgan County Rural Electric Association, recorded January
22, 1982 in Book 825 at page 656.
16. Easement to City of Fort Morgan, Colorado, recorded November 22, 1989
in Book 917 at page 513.
17. Matters that would be revealed by a correct survey and an inspection of
the property which are not shown by the public records.
18. Easements granted by Golden West's predecessors in title to the
property which are not known to Golden West and are not shown by the public
records.
S-27
<PAGE>
SCHEDULE 4.12(B)
PERMITTED ENCUMBRANCES
<TABLE>
<CAPTION>
INTEREST DUE
INSTITUTION DESCRIPTION COLLATERAL RATE DATE PAYMENT TERMS
<S> <C> <C> <C> <C> <C>
Bond Holders/ Industrial Revenue Bonds to Deed of Trust, Variable 2011 Annual Installments of
County of Riverside purchase Perris facility security agreement (2.65% on $200,000 from 1994 to 1996
and cash collateral 7/19/94) and $300,000 through 2011.
account to support
Letter of Credit
issued by Wells
Fargo Bank
US Creditcorp Mortgage to purchase the Deed of Trust on 8.275% 2006 Monthly installments of
Albany north facility land and buildings $8,229 including interest.
Wells Fargo Bank Installment note to purchase Security agreement Prime plus 1998 Monthly installments of
Lyon Series "B" Preferred on all assets .75% $19,167 plus interest.
stock except real
property
Douglas Hawkins Seller carried financing to Deed of Trust on 9.0% 1999 Monthly installments of
purchase the Fort Morgan, land and buildings $17,645 including interest
Colorado facility plus $2300 impound for real
estate and property taxes.
TOTAL
<CAPTION>
BALANCE
INSTITUTION 6/25/94
<S> <C>
Bond Holders/
County of Riverside
$5,100,000
US Creditcorp
890,858
Wells Fargo Bank
1,034,998
Douglas Hawkins
815,937
$7,841,793
</TABLE>
See also Exhibit "A" attached hereto.
S-28
<PAGE>
SCHEDULE 4.12(B) -- EXHIBIT A
The encumbrances set forth on the following UCC filings are hereby
incorporated by reference:
<TABLE>
<CAPTION>
STATE FILE NUMBER DATE FILED
<S> <C> <C>
California 91222298 10-17-91
California 92045072 3-05-92
California 93062515 3-29-93
California 94039285 2-28-94
California 94100484 5-19-94
California 94105551 5-26-94
California 91115425 5-28-94
California 93173557 8-25-93
California 93246959 12-08-93
Idaho 614022 5-26-94
Idaho 614247 5-27-94
Colorado 942050698 7-07-94
Nevada 92 03786 4-29-92
(amended on 2-17-94)
Nevada 92 02781 3-22-93
(amended on 7-26-94)
</TABLE>
S-29
<PAGE>
SCHEDULE 4.12(C)
INVENTORY ENCUMBRANCES
<TABLE>
<CAPTION>
SECURED CREDITOR DESCRIPTION
<S> <C>
Wells Fargo Bank Security interest in all inventory as collateral for line of credit, letter of credit and term
loan.
ITT Commercial Finance Security interest in homes floor planned by ITT for Company retail locations (Golden Homes) to a
maximum of $750,000.
</TABLE>
See also 4.12(b) and the attachments hereto.
S-30
<PAGE>
SCHEDULE 4.12(E)
GOLDEN WEST HOMES TRADEMARKS
AS OF JULY 21, 1994
<TABLE>
<CAPTION>
TRADEMARK STATUS
<S> <C>
GOLDEN ESTATE Filed February 24, 1994; Serial No. 74/493,615; Official Action pending
GOLDEN HOMES Filed April 1991; Serial No. 74/153,802; Statement of Use Filed September 20, 1993;
Official Action pending
GOLDEN WEST U.S. Trademark Registration No. 928,158 granted February 1, 1972
GOLDEN WEST & Wagon Design California Trademark Registration No. 44,557 granted April 3, 1965; Expires April 3,
1995
GOLDEN WEST HOMES U.S. Trademark Registration No. 1,780,300 granted July 6, 1993
GOLDEN WEST HOMES & Design Filed January 30, 1992; Serial No. 74/241,789; Official Action pending
VILLA WEST Re-filed February 25, 1994; Serial No. 74/494,434; Official Action pending
"WE BUILD HOMES AND DREAMS" U.S. Trademark Registration No. 1,648,163 granted June 18, 1991
</TABLE>
S-31
<PAGE>
SCHEDULE 4.12(F)
MATERIAL CONTRACTS
1. Revolving Line of Credit Agreement and Note ("Line of Credit") dated March
1, 1993 between Golden West and Wells Fargo Bank, National Association
("Wells Fargo").
2. Letter Agreement dated November 1, 1993 amending Line of Credit.
3. Letter Agreement dated December 15, 1993 amending Line of Credit.
4. Real Estate Note for $938,000 dated April 2, 1991 by Golden West in favor of
U.S. Creditcorp of Portland, Oregon ("U.S. Creditcorp").
4. Revision Agreement effective May 1, 1991 by Golden West and U.S. Creditcorp.
5. Promissory Note for $850,000 dated March 14, 1994 by Golden West in favor of
Douglas H. Hawkins ("Hawkins").
6. Commercial Contract to Buy and Sell Real Estate dated February 9, 1994
between Golden West and Hawkins.
7. Amendment to Commercial Contract to Buy and Sell Real Estate dated March 1,
1994 between Golden West and Hawkins.
8. Loan Purchase Operating Agreement between Golden Circle Financial Services
("Golden Circle") and Chemical Financial Services Corporation.
9. Office Lease dated April 12, 1993 between Catellus Development Corporation
("Catellus Development") and Golden West.
10. Lease Amendment dated November 3, 1993 between Catellus Development and
Golden West.
11. Standard Industrial Lease dated May 5, 1988 and Lease Addendum (concurrently
executed) between GWH Holding Company ("GWH Holding") and Golden West.
12. Second Lease Addendum dated November 16, 1989 between GWH Holding and Golden
West.
13. Third Lease Addendum dated February 1991 between Martin Mueller and Ruth
Dixon Mueller, as Trustees for The Martin Mueller and Ruth Dixon Trust, and
Golden West.
14. Lease dated December 1, 1969 between Winat Properties and Golden West.
15. Amendment to Lease dated March 21, 1989 between Winat Properties and Golden
West.
16. Second Amendment to Lease dated May 31, 1994 between Winat Properties and
Golden West.
17. Retailer Manufactured Housing Financing Agreements.
18. Indemnification Agreements with Directors and Officers.
19. Series A Preferred Stock Purchase Agreements.
20. Manufactured Home-Manufacturers' Acquisition Program Agreement dated
February 18, 1992 between Bonneville Power Administration and Golden West
(for the Albany, Oregon manufacturing facility).
21. Manufactured Home-Manufacturers' Acquisition Program Agreement dated October
5, 1992 between Bonneville Power Administration and Golden West (for the
Sacramento, California manufacturing facility).
22. Amendment to Manufactured Home-Manufacturers' Acquisition Program
Agreements.
23. Purchase and Sale Agreement between Golden West and Harry Karsten, Jr.
24. Loan Agreement dated October 1, 1991 between Industrial Development
Authority of the County of Riverside ("IDA") and Golden West.
25. Reimbursement Agreement dated October 1, 1991 between Wells Fargo and Golden
West.
26. First Amendment to Reimbursement Agreement dated November 1, 1993 between
Golden West and Wells Fargo.
27. Second Amendment to Reimbursement Agreement dated December 15, 1993 between
Golden West and Wells Fargo.
S-32
<PAGE>
28. Letter of Credit to Guarantee Payment to Bondholders dated October 15, 1991
by Golden West in favor of State Street Bank & Trust Company of California,
N.A.
29. Stock Purchase Agreement dated November 16, 1993 between Golden West and GWH
Holding.
30. Trust Agreement Pursuant to the Employee Stock Ownership Plan of Golden West
Homes dated April 29, 1994 between Frank D. Jacobs and Golden West.
31. Line of Credit/Promissory Note between Golden West Homes and Golden Circle
Financial dated as of October 12, 1993.
32. Repurchase agreements as described in Schedule 4.27.
33. Golden West has committed to pay approximately $200,000 in operating
expenses and certain development costs of the Ocean Hills subdivision
located in Waldport, Oregon.
34. Golden West has committed to loan $150,000 to Golden Pacific Homes in
Portland Oregon, secured by dealer bonus, to establish an exclusive Golden
West sales location in Yakima, Washington. In connection with this loan,
Golden West will be granted an option to purchase a one-half interest in the
dealership for forgiveness of the debt.
35. Letter Agreement dated June 2, 1994 amending Line of Credit.
36. Stock Purchase Agreement dated as of April 25, 1994 between Harry E.
Karsten, Jr. and Frank D. Jacobs as trustee of the Golden West ESOP.
37. Lease Amendment dated as of June 1, 1994 between Catellus Development
Corporation and Golden West Homes (Santa Ana Property).
S-33
<PAGE>
SCHEDULE 4.13
ENVIRONMENTAL MATTERS
I. The information and disclosures contained in the following Phase I Reports
and Preliminary Site Assessment Reports concerning the Golden West
Properties previously supplied to Oakwood and in the Phase II Reports
currently being prepared by Oakwood are hereby incorporated by reference:
A. Preliminary Site Assessment Report for the Perris, CA property prepared
by Hekimian & Associates, Inc. and dated April 25, 1991.
B. Soil and Asbestos Sampling Laboratory Test Results for the Perris, CA
property prepared by Hekimian & Associates, Inc. and dated April 25,
1991.
C. Phase I Environmental Assessment for the Fort Morgan, CO property
prepared by Colorado Groundwater Resource Services, Inc. and dated
March 8, 1994.
D. Phase I Environmental Assessment for the Nampa, ID property
prepared by Chen-Northern, Inc. and dated December 1993.
E. Preliminary Site Characterization for Suspect Contaminants
for the Albany, OR property prepared by Northwest Envirocon
and dated April 15, 1991.
F. Phase I Environmental Assessment for the Albany, OR
property prepared by Northwest Envirocon and dated March
27, 1991.
G. Phase I Environmental Assessment for the Sacramento, CA
property prepared by Northwest Envirocon and dated
September 22, 1993.
H. Final Site Inspection Report for the Mather Air
Force Base, California prepared by IT Corporation
and dated August 1990.
II. Certain small underground tanks were removed from the Perris and Fort
Morgan properties when Golden West first took possession of these
properties.
III. Environmental Claims (see also Schedule 4.18):
A. Golden West Homes v. Citizens for a Better Environment
(Bullet) Potential future filing of a claim for violation of Section 313
of the Emergency Planning and Community Right-To-Know Act, 42
U.S.C. (section mark) 11023. Current claim by CBE concerning the
failure to File Form Rs at the Moreno Valley facility for the
years 1988 through 1991 is in the final stages of settlement.
B. Rio Bravo Facility (formerly know as Rio Bravo Waste Disposal
Facility)
A claim was generated by a PRP Group regarding the
clean-up of the Rio Bravo Facility. Golden West was
unilaterally placed in a tier IV liability grouping by the
PRP Group. Ultimately, Golden West's liability as a Tier IV
group member was approximated to be between $75,000 to
$90,000. Rather than defending the lawsuit brought by the PRP
Group, Golden West elected to join the PRP Group.
The PRP Group approached all Tier IV, V and VI group
members about settling their respective liability. Golden
West agreed to this in exchange for payment of $75,000.
Shaffer, Gold & Rubaum, counsel for Golden West, was able to
persuade one of Golden West's insurance carriers to take
responsibility for the claim and to pay the entire $75,000
liability.
The release executed by Golden West in conjunction with
its resolution with the PRP Group specifically provides that
the settlement relates solely to the remediation of the Rio
Bravo facility and not any personal injury claims that might
be filed by third parties. Shaffer, Gold & Rubaum has had
discussions with the lead attorney for the PRP Group, who
stated that, to date, no claim or threatened claim by any
third party has arisen in connection with the contamination
of the Rio Bravo facility.
C. Note: The Phase I report concerning the Sacramento, California property
contains certain disclosures regarding the possibility of jet fuel
contamination of that Golden West property from the adjacent United
States Air Force Base.
S-34
<PAGE>
FORK 93
SCHEDULE 4.14
GOLDEN WEST HOMES
SCHEDULE OF LEASES
LEASED FORKLIFTS
<TABLE>
<CAPTION>
PAYMENTS
VENDOR DIVISION CONTROL# MODEL SERIAL# RATE/MO TERM MADE
<S> <C> <C> <C> <C> <C> <C> <C>
Clark Credit Corporation Albany 504,437 GPX30 Forklift 79-9234 $495.00 24 mo 2
Clark Credit Corporation Albany 504,421 GPX25 Forklift 36-9234 585.00 24 mo 3
Clark Credit Corporation Albany 504,422 GPX30 Forklift 35-9234 495.00 24 mo 3
Clark Credit Corporation Albany 504,423 GPX30 Forklift 34-9234 495.00 24 mo 3
Clark Credit Corporation Albany 504,424 GPX30 Forklift 33-9234 495.00 24 mo 3
Clark Credit Corporation Albany 504,432 GPX30 Forklift 74-9234 495.00 24 mo 3
Clark Credit Corporation Albany 504,433 GPX30 Forklift 75-9234 495.00 24 mo 3
Clark Credit Corporation Albany 504,434 GPX30 Forklift 76-9234 495.00 24 mo 3
Clark Credit Corporation Albany 504,435 GPS30 2 Speed 68-9270 875.00 24 mo 3
Clark Credit Corporation Albany 504,436 GPX30 Forklift 78-9234 495.00 24 mo 2
Nationwide Credit So Cal N-5161FP Komatsu FG30G11 491731a 364.87 60 mo 1
Nationwide Credit So Cal N-5409FP Komatsu FG30G11 491418a 364.87 60 mo 1
Clark Credit Corporation So Cal 463,767 CLK C500YS80 7685-09337575 878.00 60 mo 28
Clark Credit Corporation So Cal 468,354 C500YS80 Y685-04349215 862.45 60 mo 10
Clark Credit Corporation Sacramento 504,330 CLK C500YS80 C500Y-0365-9215 795.00 60 mo 1
Clark Credit Corporation Sacramento 458,563 GPS-30-Forklift 140-7615 777.23 60 mo 40
Clark Credit Corporation Sacramento 504,220 GPX30-Forklift 45-9232 638.00 60 mo 4
Clark Credit Corporation Sacramento 504,221 GPX30-Forklift 66-9232 638.00 60 mo 4
Crown Credit Company Colorado NA Komatsu FG30G11 491695A 603.49 60 mo 1
Crown Credit Company Colorado NA Komatsu FG30G11 491740A 603.49 60 mo 1
Total
</TABLE>
LEASED SERVICE TRUCKS
<TABLE>
<CAPTION>
VENDOR DIVISION ID# PAYMENT RATE/MO. EXPIRES STATUS
<S> <C> <C> <C> <C> <C> <C>
Hertz/Penske So Cal 134,485 $24.00 $944.06 03-Jan-98
Hertz/Penske So Cal 134,486 24.00 944.06 03-Jan-98
Hertz/Penske So Cal 134,487 24.00 944.06 17-Jan-98
Hertz/Penske So Cal 134,490 24.00 944.06 20-Jan-98
Total
</TABLE>
S-35
<PAGE>
SCHEDULE 4.15 AND 6.2(C)(IV)
CAPITAL EXPENDITURES
JUNE 25, THRU DECEMBER 31, 1994
OPEN APPROPRIATIONS
<TABLE>
<CAPTION>
APPROX. EXPENDITURE
TOTAL EXPENDITURE 10/1/94
SPENT PRIOR TO THRU
DATE DIVISION APPR # DESCRIPTION AMOUNT 6/25/94 9/30/94 12/31/94
<C> <S> <C> <C> <C> <C> <C> <C>
30-Jun-94 Albany Albany Plant Expansion 750,000 125,000 625,000
30-Jun-94 Ft Morgan Plant Set Up & Equipment 725,000 13,152 711,848 0
30-Jun-94 G Circle Coin Software 50,000 50,000 0
30-Jun-94 G Circle Mortgage Ware Software 26,000 26,000 0
30-Jun-94 G Circle Computers & Equipment 34,000 34,000 0
30-Jun-94 G Circle Furniture 34,200 34,200 0
30-Jun-94 GLD Homes Start Up Idaho Falls 160,000 10,000 150,000
30-Jun-94 So Cal Water Purification System 30,000 30,000
03-Jun-94 Various Other (Under $25,000) 154,354 154,354 0
1,963,554 13,152 1,145,402 805,000
</TABLE>
S-36
<PAGE>
SCHEDULE 4.16
ARMS-LENGTH TRANSACTIONS
I. Certain Transactions:
A. In June 1994, Golden West entered into a real estate purchase
agreement with Harry E. Karsten, Jr. whereby Mr. Karsten is
obligated to sell approximately 9.5 acres of land in Idaho for a
cash price of approximately $43,000. In addition, pursuant to the
purchase agreement, the Company will assume a promissory note in
the amount of $93,100 which is secured by a first deed of trust
encumbering the property. The promissory note bears interest at 8%
and is due in two equal installments on January 17, 1995 and
January 17, 1996. Mr. Karsten originally acquired the land from an
independent third party in January 1994 for approximately $133,000.
B. In April 1994, Golden West contributed $100,000 to its Employee
Stock Ownership Plan, which funds were used to purchase 31,200
shares of Golden West Common Stock from Harry Karsten, Jr. at a
purchase price of $100,000 or $3.21 per share.
II. Golden West loaned $20,000 to Robert C. Latimer, an officer of Golden
West. The loan is secured by 10,400 shares of Golden West Preferred
Stock owned by Mr. Latimer.
III. See Schedule 4.3 for a listing of affiliations and business
relationships of officers, directors and shareholders of Golden West.
S-37
<PAGE>
SCHEDULE 4.17
COMPLIANCE EXCEPTIONS
Except for those situations or circumstances discussed in Schedules
4.11(e), 4.13 and 4.18, no compliance exceptions have been noted.
S-38
<PAGE>
SCHEDULE 4.18
LITIGATION
PENDING LITIGATION
1. GOLDEN WEST HOMES ADV. THE MOBILE HOME PLACE
Superior Court of California, County of Tuolumne
Case No. CV-036522
2. GOLDEN WEST HOMES ADV. CITIZENS FOR A BETTER ENVIRONMENT ("CBE")
United States District Court -- Central District of California
(Complaint and Consent Decree will be filed simultaneously)
3. GOLDEN WEST HOMES ADV. FE VILLADOR
California State Division of Labor Standards
Case No. 18-20715-002-520/608
4. GOLDEN WEST HOMES ADV. MICHELLE R. ANDERSON
Oregon Bureau of Labor & Industries
Case No. EE-EM-SX-940502-4367
THREATENED LITIGATION
1. GOLDEN WEST HOMES -- SUE KNIGHT
Potential fire loss claim in Granbury, Texas
2. GOLDEN WEST HOMES -- JOAN MCGARRY
Possible trip and fall personal injury subrogation claim -- Santa
Barbara, California
3. GOLDEN WEST HOMES -- SHANNON L. GRISSOM
Attorney's demand letter dated July 7, 1994 for alleged unlawful
employment practice demanding back wages and reinstatement to former
position
See Schedules 4.13 and 4.26 for additional litigation and claims and
Schedule 4.28 for additional potential litigation, claims and material loss
contingencies.
S-39
<PAGE>
SCHEDULE 4.22
BROKERS
Break-up fee due Wedbush-Morgan Securities as discussed in Article 3.8
"Transaction Expenses".
S-40
<PAGE>
SCHEDULE 4.24
BANK ACCOUNTS
<TABLE>
<CAPTION>
DESCRIPTION BANK ACCOUNT NO. AUTHORIZED SIGNERS
GOLDEN WEST HOMES:
<S> <C> <C> <C>
So. Cal. Imprest Wells Fargo 4602-056582 H. Karsten*
Santa Ana, CA F. Jacobs*
C. Latimer* $10,000 limit
J. Carrasco* $10,000 limit
J. Brean**
P. Patterson**
W. Dennis**
Albany Imprest Wells Fargo 4602-0556608 H. Karsten*
F. Jacobs*
B. Stoyer* $10,000 limit
R. Van Zyl* $10,000 limit
C. Fuller**
K. Hood**
G. Berndt**
Albany Depository Key Bank of Oregon 60-1929 H. Karsten*
P.O. Box 399 F. Jacobs*
Albany, OR 97321 R. Henry*
(503) 967-6830
Sacramento Imprest Wells Fargo 4602-056590 H. Karsten*
F. Jacobs*
B. Stoyer* $10,000 limit
A. Karsten* $10,000 limit
E. Stevenson**
J. Oblizalo**
Wagner**
Ft. Morgan Imprest Wells Fargo 4602-113151 P. Clark* $10,000 limit
H. Karsten*
F. Jacobs*
M. Irving**
H. Orozco**
R. Arnett**
CORPORATE ACCOUNTS:
General Disbursement Wells Fargo 4602-056665 H. Karsten*
F. Jacobs*
R. Henry*
W. Papa $100,000 limit
Depository Bank of America 14589-1666 H. Karsten*
(dealer direct deposits) Costa Mesa F. Jacobs*
R. Henry*
Concentration Wells Fargo 4602-056327 H. Karsten*
F. Jacobs*
R. Henry*
Hourly Payroll Wells Fargo 4602-056301 H. Karsten*
F. Jacobs*
R. Henry*
Salaried Payroll Wells Fargo 4602-056319 H. Karsten*
F. Jacobs*
R. Henry*
Workers Comp Wells Fargo 4602-056335 Mark Foler* of Gates McDonald
(self-insured) Ellen Ramlet* of Gates McDonald
Carolyn Wallace* of Gates McDonald
Golden West Emp. Wells Fargo 4602-056343 H. Karsten*
Benefit Trust F. Jacobs*
(self-insured) R. Henry*
</TABLE>
S-41
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION BANK ACCOUNT NO. AUTHORIZED SIGNERS
<S> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C> <C> <C>
SPECIALTY ACCOUNTS:
Overland Tax Free Wells Fargo 64-77735665 H. Karsten*
R. Henry*
F. Jacobs*
Overland Sweep Wells Fargo 4602-056327 F. Jacobs*
H. Karsten*
R. Henry*
GOLDEN CIRCLE FINANCIAL SERVICES:
Overland Sweep Wells Fargo 4417-810447 H. Karsten* to $75,000 over need another signature
F. Jacobs* to $75,000 over need another signature
S. Wenz* to $75,000 over need another signature
R. Henry* to $75,000 over need another signature
W. Papa* to $75,000 over need another signature
General Account Wells Fargo 4660-022799 H. Karsten* to $75,000 over need another signature
F. Jacobs* to $75,000 over need another signature
S. Wenz* to $75,000 over need another signature
R. Henry* to $75,000 over need another signature
W. Papa* to $75,000 over need another signature
GOLDEN HOMES:
Golden Homes Wells Fargo 4602-102642 H. Karsten* up to $100,000
General Account R. Henry* up to $100,000
F. Jacobs* up to $100,000
W. Papa* up to $100,000
Golden Homes-Imprest First Interstate 32017495 R. Henry*
Pocatello 950 Yellowstone Avenue F. Jacobs*
P.O. Box 57 B. Nelms*
Boise, ID 83757-0032
Golden Homes-Imprest Twin First Interstate 22034472 F. Jacobs*
Falls 113 Main Avenue West B. Nelms*$2,500 limit
P.O. Box 57 D. Hoyer*$2,500 limit
Boise, ID 83757-0022 R. Henry*
Golden Homes First Interstate 32017509 F. Jacobs*
Deposit Account 950 Yellowstone Avenue R. Henry*
Pocatello P.O. Box 57
Boise, ID 83757-0032
Golden Homes First Interstate 22034499 F. Jacobs*
Deposit Account 113 Main Avenue West R. Henry*
Twin Falls P.O. Box 57
Boise, ID 83757-0022
</TABLE>
* Indicates single signer.
** Indicates that two signatures are required.
S-42
<PAGE>
SCHEDULE 4.25
GOLDEN WEST HOMES, INC.
SCHEDULE OF INSURANCE POLICIES
<TABLE>
<CAPTION>
DESCRIPTION TERM COMPANY POLICY NUMBER PREMIUM
<S> <C> <C> <C> <C>
PROPERTY 5/1/94-95 Zurich American CPO 7982469 $ 316,001.
Buildings $8,952,075.
Contents $6,110,000.
Business Income $4,350,000.
Boiler & Machinery $5,000,000.
GENERAL LIABILITY 5/1/94-95 Zurich American CPO 7982469 Included with property
premium above.
$2,000,000. Gen Aggregate
$2,000,000. Product Aggregate
$1,000,000. Ea. Occurrence
$1,000,000. Pers. & Adv. Liab.
$300,000. Fire Damage Limit
$5,000. Medical Expenses
$1,000,000. Employee Benefits Liab.
AUTOMOBILE 5/1/94-95 Zurich American BAP 7982470 $ 49,945.
$1,000,000. Liability
$1,000,000. Uninsured Motorist
$5,000. Medical Payments
$500. Comprehensive Deductible
$500. Collision Deductible
UMBRELLA 5/1/94-95 Hartford Specialty 72 HUSL 0789 $ 120,000.
$14,000,000. Aggregate
$14,000,000. Ea. Occurrence
$10,000. Self Insured Retention
WORKERS COMP 5/1/94/95 Firemans Fund 720KWP 80640479 $1,988,208.
Estimated
$1,000,000. Ea. Accident
$1,000,000. Policy Limit
$1,000,000. Ea. Employee
D.I.C. 5/1/94-95 Associated Int'l IM312077 $ 15,410.
$5,000,000. Loss Limit
PENSION BOND 5/24/93-96 Hartford Insurance 57 CBB HB9076 $ 300.
3 Yr Prepaid
MFG. HOUSING BONDS
Arizona 12/24/93-94 Aetna 83S100729088 $ 400.
Idaho 12/31/93-94 Aetna 83S100729109 $ 400.
Washington 1/1/94-95 Aetna 83S100730213 $ 800.
New Mexico 9/1/93-95 Aetna 83S100770716 $ 1,000.
Idaho 12/31/93- Aetna 83S100789195 $ 400.
12/31/94
Arizona 12/24/93- Aetna 83S100729107 $ 400.
12/24/94
Arizona 1/28/94- Aetna 83S100795661 $ 100.
1/28/95
California 5/14/94- Aetna 83S100814042 $ 100.
5/14/95
Idaho 12/31/93- Aetna 83S100826472 $ 400.
12/31/94
Idaho 1/25/94- Aetna 83S100858661
12/31/95
Oregan 5/25/94- Aetna 83S100881980
5/25/95
</TABLE>
LIFE INSURANCE
Golden West Homes is the beneficiary of a $4,000,000 life insurance policy on
Harry Karsten, Jr.
S-43
<PAGE>
SCHEDULE 4.26
PRODUCT WARRANTY MATTERS
PENDING LITIGATION
1. Haberman/Bozier v. Pulliam Properties, et al.
Superior Court of California, County of Orange
Case No. 674372
2. Golden West Homes adv. Woodward
Tehama County, California Justice Court
Case No. 5841
3. Golden West Homes adv. Mike & Phyllis Reed
Superior Court of Washington, County of Snohomish
Case No. 94-2-00306-1
THREATENED LITIGATION
1. Golden West Homes -- Bill Wilson
Potential warranty -- defects claim in Billings, Montana
See also Schedule 4.13 and 4.18 for additional litigation and claims
S-44
<PAGE>
SCHEDULE 4.27
WARRANTY
GENERAL DESCRIPTION
Golden West Homes has historically offered a one year warranty. On May 15,
1994, the company introduced a five year warranty which is comprised of a one
year comprehensive warranty and the remaining four years limited to certain
structural defects. Copies of the warranty are attached.
Golden West has always believed in customer satisfaction and, as a result,
has a history of offering warranty service beyond the specific warranty period.
For example, situations have arisen when a home was just past the warranty
period, the customer had a legitimate complaint, and Golden West repaired the
home. Also, Golden West has made the necessary repairs even though a home was
well past the warranty period (i.e. five years) and the problem was probably but
not clearly the responsibility of the manufacturer.
A specific example of the foregoing is when the company repaired roofs on
homes well beyond the warranty period where there was moisture in the roof
cavity which could have been caused by improper set-up (leaks, etc.) or a tear
in the vapor barrier. In 1993, Golden West made seventeen such roof repairs at
an approximate cost of $47,000, and in 1994 through July, five additional homes
were repaired. As of August lst, no homes in the service backlog required this
type of repair.
S-45
<PAGE>
IMPORTANT INFORMATION
ABOUT YOUR GOLDEN WEST
FIVE YEAR WARRANTY PROGRAM
After Homes and Weekend
Emergency Warranty Repair Number:
1-800-822-8087
THE HOMES OF GOLDEN WEST
S-46
<PAGE>
GOLDEN WEST HOMES
FIVE-YEAR WARRANTY PROGRAM
FROM ITS VERY FIRST HOME IN 1965, GOLDEN WEST HOME'S REPUTATION FOR
QUALITY, DESIGN AND VALUE HAS BEEN EVIDENT IN THE MORE THAN 70,000 HOMES THE
COMPANY HAS BUILT. WE TAKE PRIDE IN THE TECHNOLOGY, INNOVATION AND TEAM WORK
THAT GOES INTO EVERY HOME WE BUILD. IT IS THIS PRIDE AND RESPECT FOR OUR
CUSTOMERS THAT SETS GOLDEN WEST APART.
SIMPLY PUT, GOLDEN WEST GUARANTEES ITS PRODUCTS AND WORKMANSHIP AGAINST
DEFECTS.
GENERAL WARRANTY INFORMATION
Your warranty will begin on the date of original delivery of your home by
an Authorized Golden West Retailer.
Under the terms of the warranty your new home will be repaired at the site
of your home without charge for parts or labor. It is your obligation to provide
Golden West with written notice immediately after you discover any defect in
your home.
Golden West will contact you to arrange a time for the repairs to be made.
Your presence may be required at your home when the repairs are completed to
assure your satisfaction.
THAT IMPORTANT FIRST YEAR
Golden West Homes warrants your new home to be free from defects in all
materials and workmanship during that all important first year.
Certain equipment and materials installed in your home are warranted by the
original manufacturer of the equipment or materials which provides its warranty
and service directly for your benefit, and these items are not covered by your
Golden West warranty. Such items include roofing and siding materials,
appliances such as furnaces, refrigerators and water heaters and windows.
Cosmetic defects identified after your move-in will be attributed to the
moving of your possessions into the home and will not be covered by the
warranty.
YEARS TWO THROUGH FIVE
Your new home is warranted against substantial defects in its basic
structure for five (5) years from the date of original delivery to you.
The "basic structure" consists of the chassis, subfloor structure, wood
framing inside interior and exterior walls, roof structure or roof rafters (not
including exterior roof coverings, wall and floor covering and finishes), gas
and water plumbing, (not including toilets, faucets and fixtures), and
electrical wiring, (not including circuit breakers, receptacles, switches and
lighting fixtures).
WHAT IS NOT INCLUDED
Golden West Homes 5-Year Warranty does not cover:
Damage due to abuse, misuse, negligence, accidental damage, damage caused
by the move-in process, and normal wear to any surfaces, including floor
coverings, countertops, walls, doors, and cabinetry, or finishes of wall,
ceilings or exterior coverings, drywall cracks due to settling of home.
Normal deterioration due to wear or exposure.
Damage due to any changes, remodeling or modifications of the home.
Draperies, furniture, tires, wheels or axles.
Appliances or accessories covered by original manufacturer's
warranties.
Defects caused by transportation, improper installation or leveling
of the home, or soil conditions at the homeowner's site.
S-47
<PAGE>
Defects caused by servicing, modifications, improvements or
alterations to your home by anyone other than Golden West.
Defects caused by kerosene heaters, wood burning stoves or other
types of fuel burning appliances.
Damage resulting from failure to carry out your homeowner
responsibilities contained in Golden West Homes' Homeowner or
Installation Manuals.
Loss of time, inconvenience, commercial loss, loss of use of home,
incidental charges such as telephone charges, lodging expenses or
any other incidental or consequential damages.
Any home located outside the United States.
The Golden West 5-Year Warranty is not transferable to any
subsequent purchasers of your new home.
RESPONSIBILITIES OF EACH PARTY
HOMEOWNER'S RESPONSIBILITIES
You should familiarize yourself with your home by first inspecting the home
and listing those defects you consider in need of correction. Immediately
contact your authorized Golden West Retailer for corrections as required.
Read your Homeowner Manual and fill out all applicable warranty and
registration cards. When contacting Golden West, it is necessary for you to
provide your new home serial number and the name of the Retailer from whom it
was purchased.
RETAILER'S RESPONSIBILITIES
The Retailer from whom you purchased your home is an independent
organization who is authorized to sell Golden West Homes. The two independent
companies work together to assure customer satisfaction. The Retailer is not
authorized to make representations concerning your home on behalf of Golden
West.
The Retailer is responsible for coordinating the transportation,
installation, the pre-occupancy inspection, and, if necessary, performing minor
repairs and adjustments to your home. Golden West is not responsible for defects
or damages to your home caused by the Retailer.
The Retailer is responsible for coordination of repairs required to correct
defects in any amenities or services provided by the Retailer or other third
parties, such as, but not limited to, air conditioning, side-built garages,
patios, awnings, room additions, etc. In the event that the homeowner hires
his/her own contractor without approval from the Retailer, the Retailer will not
be liable.
MANUFACTURER'S RESPONSIBILITIES
Upon receipt of prompt notification following discovery by the Retailer or
homeowner of a substantial defect covered by this warranty, Golden West will
repair the defect or take other reasonable action as required at no cost to you.
HOW DO I OBTAIN WARRANTY SERVICE?
TO OBTAIN INITIAL WARRANTY SERVICE
Immediately after your discover a defect in your home, contact your
authorized Golden West Retailer who is responsible for initial adjustments
required after installation, minor repair and other warranty service.
Please allow the Retailer and/or Golden West factory service adequate time
to schedule your appointment, gather necessary materials, and address your
service needs.
If, after a reasonable time, your Retailer or Golden West Factory Service
Department has not been responsive to your needs, you should contact the General
Manager of the factory where your home was built.
S-48
<PAGE>
SPECIAL NOTICE
This Golden West Warranty applies only to the original home buyer
and only so long as the home is located at the original site of
installation.
If you reside in a state that does not allow some of the limitations
or exclusions expressed herein, all other stated limitations and
exclusions are applicable.
Any implied warranty of merchantability or fitness for a particular
purpose applicable to the items or components covered by the one
year express warranty is limited in duration to the one-year period.
This warranty gives you specific legal rights, and you many also
have other rights which may vary from state to state.
The remedies provided in this warranty are the homeowner's exclusive
remedies. The manufacturer is not responsible for any undertaking,
representation or warranty made by a retailer or other person.
GOLDEN WEST HOMES IS A "CUSTOMER-DRIVEN EMPLOYEE-OWNED" COMPANY DEDICATED
TO PROVIDING THE HIGHEST QUALITY HOMES AND SERVICES AVAILABLE. EACH AND EVERY
ONE OF US KNOWS THAT OUR FUTURE SUCCESS IS DETERMINED BY HOW WELL WE SATISFY
EVERY HOMEOWNER.
WELCOME TO SATISFACTION! WELCOME TO GOLDEN WEST!
S-49
<PAGE>
SCHEDULE 4.27
REPURCHASE AGREEMENTS
Golden West Homes is contingently liable under terms of repurchase
agreements with most financial institutions providing inventory financing for
retailers of Golden West products. Repurchase agreements have been executed with
the following institutions which finance the majority of Golden West's retailers
products:
ITT Commercial Finance
Transamerica
Bombardier
Ford Consumer Finance
Green Tree
Golden West has also executed internally developed or mutually agreeable
repurchase agreements, if required by local banks or other institutions
providing financing for company retailers.
These arrangements, which are customary in the industry, provide for the
repurchase of products sold to retailers in the event of default on payments by
the retailer.
SERVICE ARRANGEMENT
Golden West has a service arrangement to replace defective siding panels
for Cladwood, the manufacturer of the panel. Approximately 125 homes have been
identified with defective panels, of which 90 have been repaired to date. The
remaining 30 homes are scheduled to be repaired during the next several months.
Golden West is using three crews to independent contractors to perform the
repairs and Cladwood has reimbursed all costs associated with the repairs.
Cladwood has identified and corrected the problem with their siding panels.
S-50
<PAGE>
SCHEDULE 4.28
DEALER AGREEMENTS
GENERAL DESCRIPTION
Sales of Golden West homes are generally created through the following
channels of distribution:
2. Retailers with one or more sales lots.
3. Retailers who are also involved in development.
4. Subdivisions or rental communities who sell exclusively within the
development.
5. A small portion is generated through sales to "non-stocking" resale
dealers, in-fill developers and foreign countries.
Certain retailers elect to sell Golden West products exclusively. However,
all terms and conditions are the same as for non-exclusive retailers.
The establishment of retail distribution has evolved over time. Market area
boundaries are generally known and the majority of the agreements between
manufacturer and retailer are verbal. It is the exception rather than the rule
to have a formalized written document outlining the terms and conditions of the
business relationship.
Golden West has written policies outlining the parameters and procedures
for Retailer Application, Processing Prospective Customer Solicitation and
Credit Terms. As an overview, once a market need is determined, existing
retailers and those willing to enter the market are evaluated. After selection,
company policies, especially those relating to credit, are explained prior to
initiation of sales. Homes are sold on the basis of pre-approved "flooring" or
C.O.D. Standard payment terms are 10 days. There have been corporate approved
exceptions to these rules such as direct billing, extended terms and assignment
of escrow.
Retailers may earn an annual bonus based on sales volume. Programs are
consistent between divisions, however, for business reasons, quarterly and other
special plans have been approved by Corporate.
Golden West currently offers a five year warranty on all homes comprised of
a one year full warranty and the remaining four limited to certain structural
defects. In certain situations Golden West will extend the warranty period past
these time periods. See Schedule 4.27 for further details on warranty.
The following sets forth sales volume for the top 25 retailers along with
any special terms or concessions.
TOP 25 DEALERS
<TABLE>
<CAPTION>
SALES VOLUME
SIX MONTHS ENDED DEALER BONUS (3)(4)
DEALER JUNE 1994 PROGRAM
<C> <S> <C> <C>
1. Golden Pacific Homes (1) $ 9,194,111 Standard and Quarterly
Portland, OR
2. Inter-City Sales, Inc. 2,515,178 Special
Albany, OR
3. Sunburst 2,490,179 Standard and Quarterly
DBA Pacific Housing Mfd. Homes
Eugene, OR
4. Golden Homes-Pocatello (1)(2) 2,358,015 Standard
Pocatello, ID
5. LC Homes (1) 1,539,342 Standard
Sepulveda, CA
6. A Home Doctor 1,497,639 Standard and Quarterly
DBA Jon Port Home Center
7. Vic Cox Home Center 1,343,127 Standard and Quarterly
Arlington, WA
8. Pacific Crest Homes (1) 1,245,379 Standard and Quarterly
Bend, OR
9. Umpqua Valley Homes (1) 1,205,849 Standard and Quarterly
Winchester, OR
<CAPTION>
DEAL PROGRAMS OR CONCESSIONS
<C> <<C>
1. (Bullet) Provided $150,000 loan to establish
dealership in Boise, Idaho which is secured by
dealer bonus. Golden West has option to
purchase one-half of dealership for
forgiveness of debt.
(Bullet) No curtailments for one year
(Bullet) Direct billing for a maximum of nine
customer sold homes at a time.
2. (Bullet) 7% Annual Dealer Bonus Program
(Bullet) Direct billing on all homes
3. (Bullet) Guaranteed delivery of 16 homes per
month
(Bullet) Combine sales of Western Bridge
4. None
5. (Bullet) Golden West provides up to 5 display
homes
(Bullet) Assignment of Escrow on customer sold
homes
6. (Bullet) Special curtailment program
(Bullet) Flooring participation on certain homes
7. None
8. None
9. (Bullet) Bonus participation for Highland Vista
purchases
</TABLE>
S-51
<PAGE>
<TABLE>
<C> <S> <C> <C>
10. TL Concepts (1) 1,165,668 Standard
Medord, OR
11. Mobile Home Center 1,115,218 Standard and Quarterly
Oroville, CA
12. Santiam Homes 1,107,860 Standard and Quarterly
Aumsville, OR
13. The Housing Mart 1,079,489 Standard and Quarterly
Rochester, WA
14. R & B Communities (1) 1,067,123 Standard
CA
15. Schmidt's Homes 1,050,218 Standard
Salt Lake City, UT
16. Golden Homes-Stanton (1)(2) 894,265 Standard
Stanton, CA
17. Terrace Homes 890,620 Standard
Florence, OR
18. Mobile Corral (1) 851,306 Standard and Quarterly
19. Florentine Estates (1) 840,640 None
Florence, OR
20. Three C's Devco (1) 834,918 Standard and Quarterly
San Ramon, CA
21. New Vision Homes 733,897 Standard
Crescent City, CA
22. Longview Hills (1) 701,379 Standard
Newport, OR
23. Nationwide Homes (1) 629,616 Special
Las Vegas, NV
24. N L, Inc. (1) 587,037 Standard
DBA The Meadows
Central Point, OR
25. Golden Homes-Twin Falls (1)(2) 569,132 Standard
Twin Falls, ID
TOTAL $ 37,507,205
<CAPTION>
10. (Bullet) Provided working capital loan to a
maximum of $100,000 to expand business maturing
3/1/95, which is secured by dealer
bonus. Current balance is $5,000.
(Bullet) Special curtailment program
11. (Bullet) Stock homes include set-up allowance of
$1,000 California and $1,500 Oregon
(Bullet) Freight allowance to a maximum of
$1,000 per home
12. (Bullet) Guaranteed 2 homes per week
13. None
14. (Bullet) Assignment of Escrow on customer sold
homes
15. (Bullet) $750 per home freight allowance
16. None
17. (Bullet) Bonus participation for Florentine
Estates ($1,000/home to 6/1/95)
18. (Bullet) 20 day terms
19. None
20. (Bullet) Reimburse up to 30 days flooring
interest on all homes
(Bullet) Reimburse flooring interest on model
displays in Lathrop and Don Pedro.
21. None
22. (Bullet) Quarterly advertising allowance in
connection with Ocean Hills
23. (Bullet) 6% quarterly dealer bonus program
(Bullet) Special curtailment program
24. None
25. None
</TABLE>
(1) Exclusive Retailer.
(2) Company owned.
(3) Standard refers to Golden West Homes annual program. See page 6 of 6 [S-53]
for details.
(4) The Quarterly program is for selected high volume retailers. The volume and
bonus levels are as follows:
OREGON AND SOUTHERN CALIFORNIA
<TABLE>
<CAPTION>
VOLUME BONUS
<S> <C> <C>
$ 500,000 - 749,000 1% retroactive
750,000 - 999,000 1.5% retroactive
1,000,000 and up 2.0% retroactive
</TABLE>
SACRAMENTO
<TABLE>
<CAPTION>
VOLUME BONUS
<S> <C> <C>
$ 300,000 - 549,000 1% retroactive
550,000 - 799,000 1.5% retroactive
800,000 and up 2.0% retroactive
</TABLE>
S-52
<PAGE>
THE HOMES OF GOLDEN WEST
GOLDEN WEST HOMES
SOUTHERN CALIFORNIA DIVISION
RETAILER BONUS PROGRAM 1994 - 1995
EFFECTIVE FEBRUARY 26, 1994 THROUGH FEBRUARY 24, 1995
<TABLE>
<CAPTION>
ANNUAL SALES VOLUME BONUS ACHIEVED
<C> <S>
$ 0 - 299,000 0%
300,000 - 699,999 2% Retroactive
700,000 - 1,099,999 3% Retroactive
1,100,000 - 1,499,999 4% Retroactive
1,500,000 - And Above 5% Retroactive
</TABLE>
TERMS AND CONDITIONS
1. The 1994-1995 program runs from February 26, 1994 through February 24,
1995.
2. All purchases must be delivered February 24, 1995.
3. Bonus will be paid by Golden West within 45 days from the end of the
bonus year.
4. Units must be picked up within 3 days of agreed upon completion date, or
after notification the home may be disqualified for bonus purposes.
5. Retailer sales from multi-lot locations may be combined as long as all
locations are owned by the same dealer.
6. Bonus will be paid on the net amount purchased from all divisions less
freight charges, purchased furniture, miscellaneous billings, sales
allowances, credit memos. Golden West reserves the right to offset
outstanding obligations of the retailer from earned retailer bonus.
7. The homes must be paid strictly adhering to our payment policy, which is
cash (COD) or prearranged financing. In order to allow for weekends,
holidays, and normal delivery, we will make no deductions provided the
payment is in our office by the 15th day after the date of invoice.
Payment received on the 16th day or after will be excluded from the
bonus.
Please sign, date and coy of bonus letter to acknowledge your receipt of
this letter.
Sincerely,
Ernie Kercmar
Sales Manager
<TABLE>
<S> <C>
Date
</TABLE>
S-53
<PAGE>
SPECIAL DEALER SITUATIONS
1. GROVE HOMES -- For several years, this retailer was Golden West's
highest volume customer. The decline in the California market and sales
growth in the Pacific Northwest significantly altered the ranking of
customers, but Grove continued to be in the top ten and was 9th in 1993.
Grove remained exclusive and loyal to Golden West despite constant
offers from other manufacturers for higher dealer bonuses and other
programs. Over the last few years, Golden West has made loans to Grove,
secured by the retailer annual bonus. The loans have always been repaid
promptly and in full.
On August l, 1993, Golden West entered into a unique arrangement with
Grove, whereby, the company would open sales centers in Idaho and Ben
Nelms, Grove's owner, would manage these locations for a salary offset
against 50% of the profits.
Grove informed Golden West in March of 1993 that he was experiencing a
severe cash shortage and needed a loan to pay various tax obligations.
We agreed to establish a credit line of $250,000 secured by bonuses due
in Idaho and ownership in his Southern California sales lot in Hemet,
California.
Currently, we have advanced $225,000 against this line of credit. There
is some question as to Grove's viability and a $100,000 reserve has been
provided in the event the note isn't repaid. Golden West needs a sales
location in Southern California and if Grove doesn't survive, the amount
due of $125-150,000 could be offset by exchanging this balance for the
net assets of the Hemet sales center.
2. AMERICAN HERITAGE (3 C'S DEVCO) -- This customer is a former land
developer/builder from Northern California. The California housing
recession took its toll on 3 C's and they decided to enter the
manufactured housing business in 1991. They formed American Heritage
and, over the next few years, sales increased to the level of $1,623,000
in 1993, which is significant for Golden West's Sacramento Division.
The owner, Gary Chase, was demanding regarding product design and
specifications but over time, he became a strong company supporter. As
an example, he actively encouraged the company to become involved in
retail financing, particularly mortgages. When Golden Circle Financial
Services was started, we formed a joint venture with a subsidiary of 3
C's Devco called Financial Advantage. The specific purpose of this
venture, which was called Golden Advantage, was to provide construction
and permanent mortgage financing for manufactured homes and land.
Unfortunately, Golden Advantage did not work. The organization put
together by Gary Chase over-promised and under-performed. Based on
numerous complaints from our retailers and the obvious lack of business,
Golden West withdrew its support and involvement in approximately March
of this year.
American Heritage aggressively expanded their activities and became
involved in several developments in Northern California and Idaho. The
product andapproach to the market was unique and did not present a
problem to existing retailers. Golden West's only form of special
accommodation was signing repurchase agreements for inventory, including
site improvements, which was secured by title to the underlying land. We
also agreed to waive curtailments for up to two years.
In the interim, American Heritage purchased a modular factory in
Pocatello, Idaho and developed a plan to take the company public. In
that regard, they asked Harry Karsten to join the Board and he accepted.
It became apparent to him that the company had serious organizational
limitations. In addition, he was going to be placed in a position where
there was a conflict of interest and, therefore, resigned after
attending one meeting.
Some of Financial Advantage's projects are not working out as planned.
Based on my knowledge and the input of others, the problem was caused
because of an attempt to utilize products in Idaho which were
significantly higher priced than the market. Although there has been no
direct finger pointing, it appears that they are positioning themselves
to blame Golden West for unacceptable product quality for their lack of
sales.
In conclusion, Financial Advantage currently has approximately 25 homes
totaling $1,332,000 in inventory. Of these, nine or ten are allegedly
sold and supposed to close by July 31st. All indications are that
Financial Advantage is having cash flow problems and Golden West may
have to repurchase the homes. Based on the value of the underlying land,
which we have as security, we believe that we will not suffer a
significant financial loss. There is also the possibility of litigation.
A reserve of $100,000 has been provided as a precaution.
S-54
<PAGE>
3. OCEAN HILLS -- This development is a manufactured housing subdivision
located in Walport, Oregon. It has panoramic views of the Pacific Ocean
and, when completed, will be one of the finest examples of manufactured
housing in the Western United States.
Golden West became involved in this project early in the development
process. The negotiations resulted in an arrangement whereby we would
provide the funds for a model complex and sales center in consideration
for participation in the profits of the retail home and land sales, in
addition to the assurance that 100% of the homes would be manufactured
by Golden West. Due to weather delays and limitations in production at
Golden West's Albany Division, completion of the project has taken
longer than anticipated. Currently, Golden West has invested $448,000
with a commitment to fund an additional $127,000 in operating expenses.
Golden West has also guaranteed a $500,000 flooring line to finance the
models and set-up costs for Pat Loomis, who is marketing the project and
providing the dealer license.
Even though this is an exceptional project, we have considerably
exceeded our original financial commitment and it may take some time
before achieving an adequate return on the company's investment. Golden
West is secured by 2nd trust deeds on the lots upon which the homes are
sited plus a $400,000 blanket deed of trust on the first phase of the
development. The property, consisting of approximately 165 lots, of
which 35 are improved, has a $322,000 mortgage and the estimated market
value is $2,500,000.
The property owner indicated during a recent meeting that there could be
grounds for a lawsuit if Golden West failed to make additional
contributions to the project. This problem appears to be rectified as
Golden West will make the agreed contributions. The likelihood of a
lawsuit is minimal.
4. DENNIS DEMETRE -- This individual was the principal in a dealership
located in Jamestown, California called The Mobile Home Place. The
business was started in the late 1980's by Dennis Demetre whose prior
experience was in residential development. I met him during a visit to
the area and convinced him to become a Golden West dealer.
Over the two or three years that we did business with The Mobile Home
Place, he purchased homes from other manufacturers such as Silvercrest,
Fuqua, etc. His performance was less than satisfactory and in 1991 he
only purchased four homes. After several conversations regarding
performance, The Mobile Home Place was canceled and another retailer was
established. Dennis was very upset by this, primarily because of his
claim that he had several sales pending. Our position was modified to
accommodate any pending sales for a period of approximately 90 days.
Recently Mr. Demetre has filed a lawsuit against Golden West stating
that we have infringed upon his exclusive territory. This lawsuit is
frivolous and without merit. However, it must be recognized as a
potential liability. Our legal counsel states that the maximum exposure
in the doubtful event that Golden West would lose this lawsuit is
$150,000.
5. RANCHO VIEJO -- This is a 189 home subdivision located in North San
Diego County, California. Golden West competed vigorously for this
project against the Silvercrest Division of Redman. We matched their
offer which required providing five homes, including garages, for the
model complex. If the development orders four or more homes per month
from Golden West, the company absorbs the interest cost. If they order
three or less, the interest is billed to Rancho Viejo. During the
building of the model complex, they were billed interest and are paid
current.
In order to secure the investment, there is an agreement with the
landowner that the model complex will be purchased by the developer or
Golden West has the right to remove or to sell the homes in place in the
event of any dispute or severance of the relationship. In addition, the
investment is secured by a executed promissory note and 2nd trust deed
on two finished lots for every home on display which is currently at
Luce, Forward, Hamilton and Scrippts, Attorneys for the Resolution Trust
Corporation, Conservators for the Great American Federal Savings
Association for recordation.
Customer homes are paid for through a construction loan process whereby
GMAC issues a guarantee of payment letter at the time customer homes are
ordered from the factory. Upon opening, five homes were sold immediately
and an inventory of spec homes was required. Because GMAC will not floor
spec homes, Golden West agreed to either sell the homes to the developer
C.O.D. or upon receiving a flooring commitment by a financial
institution, the company would allow special payment terms of 45 days
from the date of invoice for four homes whose total amount due will not
exceed $200,000. A $475.00 charge per home is included on each invoice
for finance charges.
S-55
<PAGE>
6. HIGHLAND AT VISTA RIDGE -- This is a 200 lot subdivision located in
Roseburg, Oregon. This subdivision will open as soon as a final legal
description is filed by the county recorders office. The county
assessors office has cleared the recordation of the legal description by
payment in advance of property taxes by Highland. Golden West has agreed
to indemnify ITT Diversified Credit Corporation for an additional
$125,000 above the normal flooring line for site work and amenities. In
addition to ITT's collateral filing, Golden West has a signed promissory
note and executed deed of trust at the recorders office awaiting
recordation. This project is owned free and clear by the developer with
only the trust deeds of ITT and Golden West awaiting recordation.
S-56
<PAGE>
SCHEDULE 4.29
GUARANTEES
<TABLE>
<CAPTION>
APPROXIMATE
GUARANTEE OBLIGATION
INSTITUTION PROVIDED FOR DESCRIPTION AT 7/26/94 COLLATERAL
<S> <C> <C> <C> <C>
ITT Commercial Finance Lake Sales, Gig Harbor, WA $175,000 Amenities and $ 19,000 Personal guarantee of
furniture financing for principals.
model complex. Project is
sold out and final balance
should be paid off in near
future.
ITT Commercial Finance Calvada $300,000 to finance on-site 181,000 Assignment of ITT's
costs for model complex in $400,000 Deed of Trust on
Nevada. Three homes project.
remaining are being sold.
ITT Commercial Finance Golden Pacific $131,000 Amenities for 120,000 Right to sell homes in
Homes-Portland fourteen homes in various parks and retailer bonus.
parks which are for sale.
ITT Commercial Finance Highland Associates $125,000 Amenities for 125,000 Deeds of Trust on five lots
model complex. on which models are placed.
ITT Commercial Finance Patric Loomis/Ocean Hills $500,000 Flooring line for 500,000 Deeds of Trust in project.
Ocean Hills project in
Waldport, OR.
ITT Commercial Finance Desert Mobile Home Sales $188,000 In amenities for 42,000 Deeds of Trust in project.
five-home model complex in
Bullhead, AZ subdivision.
One home remaining is for
sale.
ITT Commercial Finance L C Homes Amenities financing for 30,000 Right to sell in project.
park display models. Two
homes remaining and for
sale.
Bombardier Capital 3 C's DEVCO Construction costs for six 581,000 Assignment of Bombardier's
homes in Caldwell, Idaho. First Deed of Trust on each
lot.
Bombardier Desert Mobile Homes Guarantee on homes 91,000 Second Deed of Trust on two
purchased from March 1993 homes in Santa Paula,
to August 1993. Three homes California.
remain which are for sale.
ORIX USA Corp. Newport Pacific Tahoe Six homes financed under a 213,000 Personal guarantee by park
Verde, Ltd.; Newport five-year leasing owner.
Pacific Upland Cascade, arrangement by ORIX.
Ltd.; and Newport Pacific
Capital Properties
Chemical Financial Services Golden Circle Financial Guarantee for 36 months for 203,000 Loans and homes
Services the sale of six loans which
did not meet current
lending criteria of
Chemical. Non-recurring
situation to sell old or
repurchased homes.
TOTAL $2,105,000
</TABLE>
S-57
<PAGE>
SCHEDULE 4.30
PROSPECTIVE CHANGES
I. Bonneville Power, a public electrical utility operating in all or part
of several western states, has agreements with utilities in Oregon,
Washington, western Idaho and western Montana which provide producers
of manufactured housing with a subsidy of $2,500 for each manufactured
home built in accordance with the Manufactured Housing Acquisition
Program ("MAP") for installation in these areas. The Company currently
constructs all of its manufactured homes sold in areas served by
Bonneville Power in accordance with MAP, thereby making the Company
eligible to receive the $2,500 subsidy for such homes. MAP was
originally scheduled to terminate in October 1994. However, due to
changes in certain federal standards affecting the manufactured housing
industry, MAP has recently been re-negotiated. The subsidy will be
reduced to $1,500 in October 1994 and the program extended until April
1996.
II. Senate Bill 750 an amendment to the California Health and Safety Code
relating to installation of manufactured homes requires, effective
September 20, 1994, that all manufactured homes not on permanent
foundation have tie-town devices.
III. Competitive changes in Golden West marketing regions are as follows:
1. Palm Harbor plans to construct a factory in Millersburg, Oregon.
2. Guerdon plan to construct factories in Pendleton, Oregon and
Colorado.
3. Several manufacturers have expanded production capacity at existing
facilities in the Pacific Northwest and Mountain regions.
S-58
<PAGE>
SCHEDULE 5.5
OAKWOOD CONSENTS
NONE.
S-59
<PAGE>
SCHEDULE 5.10
OAKWOOD COMPLIANCE EXCEPTIONS
NONE.
S-60
<PAGE>
SCHEDULE 6.1(H)
LETTERS OF CREDIT
<TABLE>
<CAPTION>
BANK ISSUE DATE EXPIRATION DATE LOC NUMBER AMOUNT
<S> <C> <C> <C> <C>
Wells Fargo Bank October 15, 1991 October 15, 1996 SAS 160582 $ 5,175,787(1)
<CAPTION>
BANK DESCRIPTION
<S> <C>
Wells Fargo Bank Issued to State Street Bank as Trustee for the
Industrial Development Authority of the County
of Riverside to back Variable Rate Demand
Industrial Revenue Bonds.
</TABLE>
(1) Declines each October when mandatory redemptions are made.
S-61
<PAGE>
SCHEDULE 6.2(C)(V)
BONUSES
Bonuses were paid based on sales and profit criteria for the second quarter
ended June 25, 1994 to officers and certain employees under existing
compensation programs. See Schedule 4.11(a) "Annual Compensation in excess of
$50,000" for specific details on bonuses. No other bonuses or plan revisions
have been made since the compensation system was revised effective April 1,
1994.
S-62
<PAGE>
SCHEDULE 7.3(O)
OFFICERS TO ENTER INTO NONCOMPETE AGREEMENTS
BRUCE W. STOYER
S-63
<PAGE>
ANNEX II
CHAPTER 13. DISSENTERS' RIGHTS
<TABLE>
<CAPTION>
SECTION
<S> <C>
1300. Reorganization or short-form merger; dissenting shares; corporate purchase at fair market value; definitions.
1301. Notice to holders of dissenting shares in reorganizations; demand for purchase; time; contents.
1302. Submission of share certificates for endorsement; uncertificated securities.
1303. Payment of agreed price with interest; agreement fixing fair market value; filing; time of payment.
1304. Action to determine whether shares are dissenting shares or fair market value; limitation; joinder; consolidation;
determination of issues; appointment of appraisers.
1305. Report of appraisers; confirmation; determination by court; judgment; payment; appeal; costs.
1306. Prevention of immediate payment; status as creditors; interest.
1307. Dividends on dissenting shares.
1308. Rights of dissenting shareholders pending valuation; withdrawal of demand for payment.
1309. Termination of dissenting share and shareholder status.
1310. Suspension of right to compensation or valuation proceedings; litigation of shareholders' approval.
1311. Exempt shares.
1312. Right of dissenting shareholder to attack, set aside or rescind merger or reorganization; restraining order or
injunction; conditions.
</TABLE>
(SECTION MARK) 1300. REORGANIZATION OR SHORT-FORM MERGER; DISSENTING SHARES;
CORPORATE PURCHASE AT FAIR MARKET
VALUE; DEFINITIONS
(a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and (b) or
subdivision (e) or (f) of Section 1201, each shareholder of the corporation
entitled to vote on the transaction and each shareholder of a subsidiary
corporation in a short-form merger may, by complying with this chapter, require
the corporation in which the shareholder holds shares to purchase for cash at
their fair market value the shares owned by the shareholder which are dissenting
shares as defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or depreciation
in consequence of the proposed action, but adjusted for any stock split, reverse
stock split, or share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
Section 25100 or (B) listed on the list of OTC margin stocks issued by the
Board of Governors of the Federal Reserve System, and the notice of meeting
of shareholders to act upon the reorganization summarizes this section and
Sections 1301, 1302, 1303 and 1304; provided, however, that this provision
does not apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law or
regulation; and provided, further, that this provision does not apply to
any class of shares described in * * * subparagraph (A) or (B) if demands
for payment are filed with respect to 5 percent or more of the outstanding
shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in * * * subparagraph
(A) or (B) of paragraph (1) (without regard to the provisos in that
paragraph), were voted against the reorganization, or which were held of
record on the effective date of a short-form merger; provided, however,
that * * * subparagraph (A) rather than * * * subparagraph (B) of this
paragraph applies in any case where the approval required by Section 1201
is sought by written consent rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
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(SECTION MARK) 1301. NOTICE TO HOLDERS OF DISSENTING SHARES IN REORGANIZATIONS;
DEMAND FOR PURCHASE; TIME; CONTENTS
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such sections.
The statement of price constitutes an offer by the corporation to purchase at
the price stated any dissenting shares as defined in subdivision (b) of Section
1300, unless they lose their status as dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) or paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.
(SECTION MARK) 1302. SUBMISSION OF SHARE CERTIFICATES FOR ENDORSEMENT;
UNCERTIFICATED SECURITIES
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.
(SECTION MARK) 1303. PAYMENT OF AGREED PRICE WITH INTEREST; AGREEMENT FIXING
FAIR MARKET VALUE; FILING; TIME OF PAYMENT
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.
(SECTION MARK) 1304. ACTION TO DETERMINE WHETHER SHARES ARE DISSENTING SHARES OR
FAIR MARKET VALUE; LIMITATION; JOINDER; CONSOLIDATION;
DETERMINATION OF ISSUES; APPOINTMENT OF APPRAISERS
(a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of the
shares, then the shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after the date on which
notice of the approval by the outstanding shares (Section 152) or notice
pursuant to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.
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(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
(SECTION MARK) 1305. REPORT OF APPRAISERS; CONFIRMATION; DETERMINATION BY COURT;
JUDGMENT; PAYMENT; APPEAL; COSTS
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file a report
in the office of the clerk of the court. Thereupon, on the motion of any party,
the report shall be submitted to the court and considered on such evidence as
the court considers relevant. If the court finds the report reasonable, the
court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such further
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
(SECTION MARK) 1306. PREVENTION OF IMMEDIATE PAYMENT; STATUS AS CREDITORS;
INTEREST
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
(SECTION MARK) 1307. DIVIDENDS ON DISSENTING SHARES
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.
(SECTION MARK) 1308. RIGHTS OF DISSENTING SHAREHOLDERS PENDING VALUATION;
WITHDRAWAL OF DEMAND FOR PAYMENT
Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation
consents thereto.
(SECTION MARK) 1309. TERMINATION OF DISSENTING SHARE AND SHAREHOLDER STATUS
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
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(b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
(SECTION MARK) 1310. SUSPENSION OF RIGHT TO COMPENSATION OR VALUATION
PROCEEDINGS; LITIGATION OF SHAREHOLDERS' APPROVAL
If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings under
Sections 1304 and 1305 shall be suspended until final determination of such
litigation.
(SECTION MARK) 1311. EXEMPT SHARES
This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in
respect to such shares in the event of a reorganization or merger.
(SECTION MARK) 1312. RIGHT OF DISSENTING SHAREHOLDER TO ATTACK, SET ASIDE OR
RESCIND MERGER OR REORGANIZATION; RESTRAINING ORDER OR
INJUNCTION; CONDITIONS
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set aside
or rescinded, except in an action to test whether the number of shares required
to authorize or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal terms of the reorganization are
approved pursuant to subdivision (b) of Section 1202, is entitled to payment in
accordance with the terms and provisions of the approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days'
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.
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EXHIBIT INDEX
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99.2 Golden West Homes Form of Proxy (filed herewith)
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EXHIBIT 99.2
GOLDEN WEST HOMES
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 30, 1994
The undersigned hereby appoints Harry E. Karsten, Jr. and Frank D. Jacobs,
and each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes any of them to represent and to vote, as designated below, all
the shares of the Common Stock, no par value per share (the "Golden West Common
Stock"), and all the shares of the Preferred Stock, no par value per share (the
"Golden West Preferred Stock"), of Golden West Homes, a California corporation
("Golden West"), the undersigned is entitled to vote at the Special Meeting of
Shareholders of Golden West (the "Special Meeting") to be held on September 30,
1994, commencing at 9:30 a.m., local time, at the Pacific Club, 4110 MacArthur
Blvd., Newport Beach, California or any adjournment or postponement thereof.
THIS PROXY, IF PROPERLY EXECUTED AND DELIVERED, WILL REVOKE ALL PRIOR
PROXIES.
1. To consider and vote upon a proposal to approve and adopt an Acquisition
Agreement dated as of August 17, 1994 (the "Acquisition Agreement"),
among Oakwood Homes Corporation, a North Carolina corporation
("Oakwood"), Golden Acquisition Corporation, a California corporation
and wholly-owned subsidiary of Oakwood ("Oakwood Sub"), Golden West, the
shareholders of Golden West who will receive Oakwood Common Stock (as
hereinafter defined) pursuant to the Acquisition Agreement and First
Union National Bank of North Carolina, as Escrow Agent, and the
Agreement of Merger attached thereto as Exhibit A, providing for the
merger of Oakwood Sub with and into Golden West, with Golden West as the
surviving corporation and continuing as a wholly-owned subsidiary of
Oakwood. Under the Acquisition Agreement, each share of Golden West
Common and Preferred Stock (other than shares, if any, held by
shareholders who perfect their dissenters' rights under the California
General Corporation Law) will be converted into the right to receive
.231099373 of one share of Common Stock of Oakwood, $.50 par value
("Oakwood Common Stock").
( ) FOR ( ) AGAINST ( ) ABSTAIN
(continued and to be signed and dated on the reverse side and returned
promptly in the enclosed envelope)
Shares represented by all properly executed proxies will be voted in
accordance with instructions appearing on the proxy and in the discretion of the
proxy holders as to any other matter that may properly come before the Special
Meeting. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED FOR ITEM
1.
Dated: ,
(SEAL)
(Signature)
(SEAL)
(Signature)
PLEASE SIGN AS NAME(S) APPEAR ON THIS
PROXY, AND DATE THIS PROXY. IF A JOINT
ACCOUNT, EACH JOINT OWNER MUST SIGN. IF
SIGNING FOR A CORPORATION OR
PARTNERSHIP AS AGENT, ATTORNEY OR
FIDUCIARY, INDICATE THE CAPACITY IN
WHICH YOU ARE SIGNING.
