As filed with the Securities and Exchange Commission on August __, 1994
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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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.)
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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:
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
_________________
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
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Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of
of Securities to to be Offering Aggregate Registration
be Registered Registered Price per Unit Offering Price Fee
Common Stock, $.50 par value 699,992 (1) $25.00 (2) $17,499,800 $6,034.32
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(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.
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
1. Forepart of Registration Statement and Outside Front Facing Page of Registration Statement; Cross-
Cover Page of Prospectus reference sheet; Outside front cover page of
Prospectus
2. Inside Front and Outside Back Cover Page of Available Information; Incorporation of
Prospectus Certain Documents by Reference; Inside Front
Cover Page of Prospectus; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges and Summary; The Companies; The Merger; Summary
Other Information 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 Not Applicable
Persons and Parties Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification Not Applicable
for Securities Act Liabilities
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- Not Applicable
3 or S-2 Registrants
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 Golden West
or S-2 Companies
18. Information if Proxies, Consents or Authorizations Golden West Shareholders' Meeting; The Merger;
are to be Solicited Security Ownership of Certain Beneficial Owners
of Golden West Capital Stock; Rights of Shareholders
Electing to Exercise Their Right to Dissent
19. Information if Proxies, Consents or Authorizations Not Applicable
are not be solicited or in an Exchange Offer</TABLE>
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GOLDEN WEST HOMES
1801 East Edinger, Suite 240
Santa Ana, California 92705
August 26, 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 ___________ a.m.,
local time, on September 23, 1994, at _____________________________________.
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, 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 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 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
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GOLDEN WEST HOMES
1801 EAST EDINGER, SUITE 240
SANTA ANA, CALIFORNIA 92705
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 23, 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 23, 1994, at ______________________,
commencing at ______ a.m., local time, to consider and vote upon the
following matter:
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 (the "Golden West Continuing Shareholders") and First Union
National Bank of North Carolina, as Escrow Agent, 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
August 26, 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.
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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 August 26, 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 23, 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 attached hereto as Annex I (the "Acquisition Agreement") and the
Agreement of Merger attached thereto as Exhibit A (the "Merger Agreement")
dated as of August 17, 1994 (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 "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 August 26, 1994.
______________________________________________________________________
The date of this Proxy Statement/Prospectus is August 26, 1994.
(Cover continued on next page)
1
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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 19, 1994 the closing price of Oakwood Common Stock
as reported on the New York Stock Exchange was $24.875. 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 to 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.
2
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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 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 18, 1994.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . 3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Shareholder Approval . . . . . . . . . . . . . . . . . . 7
The Companies . . . . . . . . . . . . . . . . . . . . . . 8
Effect of the Merger; Consideration . . . . . . . . . . . 8
Recommendations of the Boards of Directors . . . . . . . . 8
Effective Time of the Merger . . . . . . . . . . . . . . . 9
Indemnification and Escrow Arrangements . . . . . . . . . 9
Approval and Conditions to Consummation of the Merger . . 9
Termination of the Acquisition Agreement; No Shop
and Break-Up Fee Provisions . . . . . . . . . . . . . 10
Stock Options and Deferred Compensation . . . . . . . . . 10
Transaction Costs . . . . . . . . . . . . . . . . . . . . 11
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . 11
Federal Income Tax Consequences of the Merger . . . . . . 11
Accounting Treatment . . . . . . . . . . . . . . . . . . 12
Effects of Merger on Rights of Shareholders . . . . . . . 12
Interests of Certain Persons in the Merger . . . . . . . . 12
Listing on the New York Stock Exchange . . . . . . . . . . 12
Market Value Information . . . . . . . . . . . . . . . . . 12
SUMMARY CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . 13
Oakwood Homes Corporation . . . . . . . . . . . . . . . . 13
Golden West Homes . . . . . . . . . . . . . . . . . . . . 14
COMPARATIVE PER SHARE DATA . . . . . . . . . . . . . . . . . . . . . . . 16
GOLDEN WEST SHAREHOLDERS' MEETING . . . . . . . . . . . . . . . . . . . 17
Meeting of Shareholders . . . . . . . . . . . . . . . . . 17
Purpose of Meeting . . . . . . . . . . . . . . . . . . . . 17
Record Date: Voting Requirements at Meeting . . . . . . . 17
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 17
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background and Reasons for the Merger . . . . . . . . . . 19
Accounting Treatment . . . . . . . . . . . . . . . . . . . 20
Operations After the Merger . . . . . . . . . . . . . . . 20
Interests of Certain Persons in the Merger . . . . . . . . 20
THE ACQUISITION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 21
The Merger . . . . . . . . . . . . . . . . . . . . . . . . 21
Effective Time of the Merger . . . . . . . . . . . . . . . 21
Consideration to be Received in the Merger . . . . . . . . 21
Surrender of Certificates . . . . . . . . . . . . . . . . 21
Certain Covenants of Golden West . . . . . . . . . . . . 21
4
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Restrictions on Sales of Stock . . . . . . . . . . . . . . . . . . . 19
No-Shop Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 22
Certain Covenants of Oakwood . . . . . . . . . . . . . . . . . . . 23
Conditions to Consummation of the Merger . . . . . . . . . . . . . . 23
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Representations and Warranties . . . . . . . . . . . . . . . . . . . 25
Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . 30
Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . 30
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS OF
GOLDEN WEST CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . 33
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF GOLDEN WEST . . . . . . 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF GOLDEN WEST . . . . . . . . . . . . . . . . . 37
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 38
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . 41
Quarterly Operating Results . . . . . . . . . . . . . . . . . . . . . 42
BUSINESS OF GOLDEN WEST . . . . . . . . . . . . . . . . . . . . . . . 45
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Manufacturing Operations . . . . . . . . . . . . . . . . . . . . . . 46
Regional Markets . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Sales and Marketing . . . . . . . . . . . . . . . . . . . . . . . . 47
Warranty, Quality Control and Service . . . . . . . . . . . . . . . 47
Retailer Financing . . . . . . . . . . . . . . . . . . . . . . . . 47
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Government Regulation . . . . . . . . . . . . . . . . . . . . . . . 48
Home Buyer Financing . . . . . . . . . . . . . . . . . . . . . . . . 49
Manufacturing Facilities . . . . . . . . . . . . . . . . . . . . . . 50
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 51
Golden West Capital Stock . . . . . . . . . . . . . . . . . . . . . 51
COMPARATIVE RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . 52
CERTAIN FEDERAL TAX CONSEQUENCES OF MERGER . . . . . . . . . . . . . . . 54
RIGHTS OF SHAREHOLDERS ELECTING TO EXERCISE THEIR RIGHT TO DISSENT . . . 57
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . F-1
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS . . . . . . . . . . . II-1
5
<PAGE>
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-4
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
6
<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
Appendices.
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 ________m., on September 23, 1994 at
_______________________________ 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 August 26, 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 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 ____________ shares of Golden West
Common Stock or approximately _____% of the outstanding Golden West Common
Stock and an aggregate of _____________ shares of Golden West Preferred
Stock or approximately ____% 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.
7
<PAGE>
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.
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-The Merger."
8
<PAGE>
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 the number of shares of Oakwood Common
Stock issued in the name of such Golden West Continuing Shareholder.
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 and warranties 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."
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 the waiting period expires on
September 23, 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
9
<PAGE>
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 due diligence by Oakwood the results of
which shall be satisfactory to Oakwood; 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 Common or Preferred
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 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 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
10
<PAGE>
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 Stock 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 will 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."
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 Oakwood, Golden West and
certain principal Golden West Shareholders. 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.
11
<PAGE>
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.
12
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
Oakwood Homes Corporation
The selected 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 selected financial
information for the nine month periods ended June 30, 1993 and 1994 have
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.
(In thousands, except per share data)
<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>
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
As of September 30, As of June 30,
<S> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994
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.
13
<PAGE>
Golden West Homes
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 Proxy
Statement/Prospectus. 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 Proxy Statement/Prospectus. 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 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>
(In thousands, except per share data)
Six months
Fiscal Year Ended ended
Dec. 30, Dec. 29, Dec. 28, Dec. 26, Dec. 25, June 26, June 25,
1989 1990 1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C>
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. 30, Dec. 29, Dec. 28, Dec. 26, Dec. 25, June 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>
<PAGE>
14
___________________________________
(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.
<PAGE>
15
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.
<TABLE>
<CAPTION>
Oakwood Nine Months Ended
Fiscal Year Ended September 30, June 30,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
Income per share before extraordinary
item(1) $ .71 $.90 $ 1.22 $ .79 $ 1.07
Historical . . . . . . . . . . . . . . . .68 .85 1.20 .78 1.09
Pro forma(2) . . . . . . . . . . . . . .
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>
<TABLE>
<CAPTION>
Golden West Fiscal Year Ended Six Months Ended
Dec. 28, Dec. 26, Dec. 25, June 26, June 25,
1991 1992 1993 1993 1994
<S> <C> <C> <C> <C> <C>
Income per share before extraordinary item
Historical . . . . . . . . . . . . . . . $ .07 ($.02) $ .19 $(.08) $ .34
Equivalent of 23.1099373% of pro forma net income
per share of Oakwood Common .16 .20 .28 .18 .25
Stock . . . . . . . . . . . . . . . . . . .
Cash dividends declared per share
Historical . . . . . . . . . . . . . . . 0 0 0 0 0
Equivalent of 23.1099373% of cash dividend
declared on each share of Oakwood
Common Stock . . . . . . . . . . . . . . . .011 .014 .018 .014 .014
Book value
Historical(5) . . . . . . . . . . . . . . (3) (3) 3.14 (3) 3.53
Equivalent of 23.1099373% of pro forma
book value per share of Oakwood Common
Stock . . . . . . . . . . . . . . . . (3) (3) 2.59 (3) 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;
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.
17
<PAGE>
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 ______________m. on
September 23, 1994 at
_____________________________ 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
August 26, 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
17
<PAGE>
postage paid return envelope, along with the enclosed
Acknowledgment if the
shareholder is voting in favor of the Merger.
18
<PAGE>
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.
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.
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
19
<PAGE>
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 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.
20
<PAGE>
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.
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
21
<PAGE>
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 have been perfected in accordance with the
CGCL (the "Dissenters'
Shares"), will be converted into .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 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.
22
<PAGE>
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 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. It
is anticipated that this
will not be until approximately November 15, 1994 if the
Merger is consummated on
or before September 30, 1994 and approximately January
25, 1995 if it is consummated
after September 30, 1994.
23
<PAGE>
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 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.
24
<PAGE>
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 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 or Golden West in
a 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, including the
absence of any material
adverse change in the business of Oakwood or Golden West,
other than any change
that affects both Golden West and Oakwood in a
substantially similar matter; (ix)
the completion by Oakwood of its review of Golden West's
business and operations
and the results of such review are 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 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 Stock 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
25
<PAGE>
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 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. Either of such dates is referred to herein as
the "Release Date."
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.
26
<PAGE>
(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.
(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 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
27
<PAGE>
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 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.
28
<PAGE>
(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.
(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.
29
<PAGE>
(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.
(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
30
<PAGE>
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.
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.
31
<PAGE>
Termination
The Acquisition Agreement may be terminated and the
Merger abandoned at any
time prior to the Effective Date, 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
Date 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.
32
<PAGE>
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>
Approximate
Number of
Shares of Percentage Shares of
Golden West of Oakwood Common
Capital Stock Golden West Stock to be
Name and Address of Beneficially Owned(1) Common received
Beneficial Owner(3) Stock 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 . . . . . 325,000 12.3 75,107
866 West 18th Street
Costa Mesa, CA 92627
Celia Golden . . . . . . . . 234,000 8.8 54,077
46 Whitewater Drive
Corona del Mar, CA 92625
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.
33
<PAGE>
(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.
34
<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.
35
<PAGE>
<TABLE>
<CAPTION>
Six Months
Fiscal Year Ended Ended
December December December December December June 26, June 25,
30, 29, 28, 26, 25, 1993 1994
1989 1990 1991 1992 1993
(in thousands, except per share and selected operating data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Net sales . . . . . . . . . . . . $ 82,203 $ 85,344 $ 74,048 $ 74,427 $ 89,564 $ 40,324 $ 55,875
Cost of sales . . . . . . . . . . 68,786 69,842 61,749 62,146 73,248 33,660 44,553
Gross profit . . . . . . . . . . 13,417 15,502 12,299 12,281 16,316 6,664 11,322
Operating expenses:
Selling . . . . . . . . . . . . 5,732 6,251 5,746 5,872 7,687 3,470 4,857
General and administrative . . 5,595 6,282 5,860 5,961 7,068 3,102 4,581
Total operating 11,327 12,533 11,606 11,833 14,755 6,572 9,438
expenses . . . . .
Income from operations . . . . . 2,090 2,969 693 448 1,561 92 1,884
Interest expense, net . . . . . . 347 107 231 479 422 222 213
Income (loss) before provision (benefit)
for income taxes and extraordinary
item . . . . . . . . . . 1,743 2,862 462 (31) 1,139 (130) 1,671
Provision (benefit) for income
taxes . . . . . . . . . . . . . . 737 1,180 222 26 486 (34) 683
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) 988
Net income (loss) per common and
equivalent share(1) . . . . . . $ .29 $ .49 $ .07 $ .01 $ .19 $ (.08) $ .34
Weighted average common and
equivalent shares
outstanding(1) . . . . . . . . . 3,432 3,441 3,483 3,502 3,474 1,235(2) 2,867
</TABLE>
<TABLE>
<CAPTION>
As of As of
December 30, December 29, December 28, December 26, December 25, June 25,
1989 1990 1991 1992 1993 1994
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
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>
(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.
36
<PAGE>
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 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,
37
<PAGE>
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>
38
<PAGE>
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 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
39
<PAGE>
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 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
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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 Company 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
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
41
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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 this 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.
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.
42
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First Second Third Fourth
Quarter Quarter Quarter Quarter Total
(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
(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
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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.
44
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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.
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Golden West's product development and engineering
staff design 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 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.
46
<PAGE>
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
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
47
<PAGE>
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.
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
48
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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.
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
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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.
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,
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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:
Production
Area
Location Acres Square Feet Owned/Leased
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
(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.
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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
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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.
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
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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.
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.
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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.
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 West Common and Preferred
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
dissenters' 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
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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.
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
dissenter's rights in connection with the issuance of
Oakwood Common Stock in the
Merger.
56
<PAGE>
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, and 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.
57
<PAGE>
GOLDEN WEST HOMES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Public Accountants F-2
Consolidated Balance Sheets (Assets) F-3
Consolidated Balance Sheets (Liabilities and F-4
Shareholders' Equity)
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
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 26, December 25, June 25,
1992 1993 1994
(unaudited)
<S> <C> <C> <C>
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
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
F-3
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 26, December 25, June 25,
1992 1993 1994
(unaudited)
<S> <C> <C> <C>
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--2,500 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-4
<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
(unaudited) (unaudited)
<S> <C> <C> <C>
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-5
<PAGE>
GOLDEN WEST HOMES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock
Common Stock Series A Series B
Additional
Paid-In Retained
Shares Amount Shares Amount Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 29, 1990 . 1,235,000 $150,000 1,105,000 $850,000 12,500 $3,000,00 $ 500,000 $3,071,000 $7,571,000
Net Income . . . . . . -- -- -- -- -- -- -- 240,000 240,000
Balance December 28,
1991 . . . . . . . . . . 1,235,000 150,000 1,105,000 850,000 12,500 3,000,000 500,000 3,311,000 7,811,000
Net Income . . . . . . -- -- -- -- -- -- -- 33,000 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 7,844,000
Net Income . . . . . . -- -- -- -- -- -- -- 653,000 653,000
Purchase of Series B
Preferred Stock . . -- -- -- -- (12,500) (3,000,000) 1,850,000 -- (1,150,000)
Balance December 25, 1993 . 1,235,000 150,000 1,105,00 850,000 -- -- 2,350,000 3,997,000 7,347,000
Net Income . . . . . . -- -- -- -- -- -- -- 988,000 988,000
Exercise of Stock Options 52,000 52,000 -- -- -- -- -- -- 52,000
Income Tax Benefit from
Exercise of Non-
Qualified
Stock Options . . . -- -- -- -- -- -- 46,000 -- 46,000
Balance June 25, 1994
(Unaudited) . . . . 1,287,000 202,000 1,105,000 $850,000 -- -- $2,396,000 $4,985,000 $8,433,000
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
<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
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
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
</TABLE>
Noncash investing and financing activities:
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-7
<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:
Buildings . . . . . . . . . . . . . . . . . . . . . . .20-30 years
Leasehold improvements . . . . . . . . . . . . . . . .Term of lease
Machinery and equipment . . . . . . . . . . . . . . . .3-10 years
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.
F-8
<PAGE>
1. Summary of Significant Accounting Policies
and Other Information (cont'd)
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.
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:
December 26, December 25, June 25,
1992 1993 1994
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
Inventories are valued at the lower of cost
(first-in, first-out) or market. Cost includes material, labor and
manufacturing overhead.
F-9
<PAGE>
3. Accrued Expenses
Accrued expenses consist of the following:
December 26, December 25, June 25,
1992 1993 1994
Payroll and payroll $ 614,000 $1,104,000 $1,768,000
taxes . . . . . . .
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
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.
F-10
<PAGE>
4. Long-Term Debt and Line of Credit with Bank (continued)
As of December 25, 1993, principal payments on long-term debt
are as follows:
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
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.
5. Income Taxes
The components of the provision (benefit) for
income taxes are as follows:
Fiscal Years Ended Six Months Ended
December 28, December 26, December 25, June 26, June 25,
1991 1992 1993 1993 1994
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) (108,00) (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
F-11
<PAGE>
5. Income Taxes (continued)
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:
Fiscal Years Ended Six Months Ended
December 28, December 26, December 25, June 26, June 25,
1991 1992 1993 1993 1994
Provision (benefit) $157,000 $(11,000) $387,000 $(44,000) $568,000
computed
at statutory rate
State taxes 28,000 (2,000) 67,000 (8,000) 100,000
(benefit), net of
Federal benefit
Permanent 37,000 39,000 32,000 18,000 15,000
differences . . . .
$222,000 $26,000 $486,000 $(34,000) $683,000
The components of Golden West's deferred income tax provision (benefit)
are as follows:
Fiscal Years Ended Six Months Ended
December December December June June
28, 26, 25, 26, 25,
1991 1992 1993 1993 1994
AMT credits . . . . . . $ -- $ -- $(226,000) $ -- $ --
Net operating loss 190,000 138,000 699,000 -- 391,000
carryforwards . . . . .
Allowance for doubtful (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 59,000 (42,000) (39,000) (32,000) (113,000)
expenses . . . . . . .
Change in
valuation allowance . .(190,000) (138,000) (699,000) -- (391,000)
$ 16,000 $(68,000) $(442,000) $(108,000) $(264,000)
F-12
<PAGE>
5. Income Taxes (continued)
The components of the Company's net deferred
income tax benefit are as
follows:
December December June
26, 25, 25,
1992 1993 1994
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
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
F-13
<PAGE>
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:
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
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.
F-14
<PAGE>
The following is a summary of transactions relating to
the Plan for the years
ended December 26, 1992 and December 25, 1993:
Stock Options
Shares Price
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
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.
F-15
<PAGE>
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-16
<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.
<TABLE>
<CAPTION>
Item 21. Exhibits.
<S> <C>
2 Acquisition Agreement, including the Agreement of Merger attached
thereto as Exhibit 1 (filed herewith as Annex I).
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.
(filed herewith).
8 Opinion of Kennedy Covington Lobdell & Hickman, L.L.P. regarding
certain tax matters (filed herewith).
23.1 Consent of Price Waterhouse LLP (filed herewith).
23.2 Consent of Kennedy Covington Lobdell & Hickman, L.L.P. (see Exhibits 5
and 8).
23.3 Consent of Arthur Andersen & Co. (filed herewith).
II-1
<PAGE>
24 Power of Attorney (see page II-4).
99.1 Form of Acknowledgement (filed herewith as Exhibit J to Annex I)
99.2 Golden West Homes Form of Proxy (filed herewith).
</TABLE>
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
(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
II-2
<PAGE>
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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act,
the Registrant has duly
caused this 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 19, 1994.
OAKWOOD HOMES CORPORATION
By: /s/ Nicholas J. St. George
Name: Nicholas J. St. George
Title: President
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Nicholas J.
St. George, C. Michael Kilbourne and Douglas R. Muir his
true and lawful attorneys-
in-fact and agents, each acting alone, with full powers of
substitution and
resubstitution, for him and in his name, place and stead,
in any and all capacities,
to sign any and all amendments (including post-effective
amendments) to this
Registration Statement, and to file the same, with all
exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission,
granting unto said attorneys-in-fact and agents, each
acting alone, full power and
authority to do and perform each and every act and thing
requisite and necessary to
be done in and about the premises, as fully to all intents
and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorneys-in-
fact and agents, each acting alone, or his substitute or
substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration
Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
Director and Chairman _______________, 1994
Ralph L. Darling of the Board
/s/ Nicholas J. St. George Director and President August 19, 1994
Nicholas J. St. George (Principal Executive
Officer)
/s/ Robert D. Harvey Director and Executive August 19, 1994
Robert D. Harvey Vice President
/s/ A. Steven Michael Director and Executive August 19, 1994
A. Steven Michael Vice President
/s/ Dennis I. Meyer Director August 19, 1994
Dennis I. Meyer
/s/ Kermit G. Phillips, II Director August 19, 1994
Kermit G. Phillips, II
<PAGE>
/s/ S. Gray Steifel, Jr. Director August 19, 1994
S. Gray Steifel, Jr.
/s/ Sabin C. Streeter Director August 19, 1994
Sabin C. Streeter
Francis T. Vincent, Jr. Director _______________, 1994
/s/ Clarence W. Walker Director August 19, 1994
Clarence W. Walker
/s/ H. Michael Weaver Director August 19, 1994
H. Michael Weaver
/s/ C. Michael Kilbourne Vice President August 19, 1994
C. Michael Kilbourne Principal Financial
Officer)
/s/ Douglas R. Muir Treasurer (Principal August 19, 1994
Douglas R. Muir Accounting Officer)
<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
Page
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLES OF INCORPORATION AND BYLAWS
AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION 2
2.1 Articles of Incorporation . . . . . . . . . . . . 2
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Directors . . . . . . . . . . . . . . . . . . . . 2
2.4 Officers . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CONVERSION OF GOLDEN WEST STOCK; EXCHANGE OF CERTIFI-
CATES . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . 3
3.2 Fractional Shares . . . . . . . . . . . . . . . . 4
3.3 Exchange of Certificates . . . . . . . . . . . . . 5
3.4 Distributions with Respect to Unexchanged Shares
of Golden West Common Stock or Golden West Pre-
ferred Stock . . . . . . . . . . . . . . . . . . . 5
3.5 Stock Options . . . . . . . . . . . . . . . . . . 5
3.6 Withholding Rights . . . . . . . . . . . . . . . . 6
3.7 Dissenting Shares. . . . . . . . . . . . . . . . . 6
3.8 Transaction Expenses . . . . . . . . . . . . . . . 7
3.9 Escrow . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . 11
REPRESENTATIONS AND WARRANTIES OF GOLDEN WEST
AND THE SHAREHOLDERS . . . . . . . . . 11
4.1 Organization and Qualification; Subsidiaries . . . 11
4.2 Articles of Incorporation and Bylaws . . . . . . . 12
4.3 Capitalization. . . . . . . . . . . . . . . . . . 12
4.4 Authority Relative to this Agreement. . . . . . . 13
4.5 No Conflict; Required Filings and Consents . . . . 14
4.6 [Intentionally Omitted] . . . . . . . . . . . . . 14
4.7 Other Interests . . . . . . . . . . . . . . . . . 14
4.8 Financial Statements . . . . . . . . . . . . . . . 14
4.9 Subsequent Events . . . . . . . . . . . . . . . . 15
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4.10 Tax Matters . . . . . . . . . . . . . . . . . . . 16
4.11 Employees and Fringe Benefit Plans . . . . . . . . 17
4.12 Title to Assets . . . . . . . . . . . . . . . . . 19
4.13 Condition of Tangible Assets . . . . . . . . . . . 23
4.14 Leases . . . . . . . . . . . . . . . . . . . . . . 25
4.15 Adequacy of Assets . . . . . . . . . . . . . . . . 26
4.16 Arms-Length Transaction . . . . . . . . . . . . . 26
4.17 Lawfully Operating . . . . . . . . . . . . . . . . 26
4.18 No Litigation . . . . . . . . . . . . . . . . . . 27
4.19 [Intentionally Omitted]. . . . . . . . . . . . . . 27
4.20 Labor Matters . . . . . . . . . . . . . . . . . . 27
4.21 Pooling of Interests . . . . . . . . . . . . . . . 27
4.22 No Brokers . . . . . . . . . . . . . . . . . . . . 28
4.23 Oakwood Stock Ownership . . . . . . . . . . . . . 28
4.24 Bank Accounts . . . . . . . . . . . . . . . . . . 28
4.25 Insurance . . . . . . . . . . . . . . . . . . . . 28
4.26 Warranty and Product Liability Matters . . . . . . 28
4.27 Warranty, Repurchase and Other Service Obliga-
tions . . . . . . . . . . . . . . . . . . . . . . 29
4.28 Dealer Arrangements . . . . . . . . . . . . . . . 29
4.29 Guarantees . . . . . . . . . . . . . . . . . . . . 30
4.30 Prospective Changes . . . . . . . . . . . . . . . 30
4.31 Full Disclosure . . . . . . . . . . . . . . . . . 30
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . 30
REPRESENTATIONS AND WARRANTIES OF OAKWOOD AND MERGER
SUB . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Organization and Qualification . . . . . . . . . . 30
5.2 Articles of Incorporation and Bylaws. . . . . . . 31
5.3 Capitalization. . . . . . . . . . . . . . . . . . 31
5.4 Authority Relative to this Agreement. . . . . . . 31
5.5 No Conflict; Required Filings and Consents. . . . 32
5.6 SEC Filings; Financial Statements. . . . . . . . . 32
5.7 Absence of Changes . . . . . . . . . . . . . . . . 33
5.8 Absence of Litigation . . . . . . . . . . . . . . 33
5.9 Brokers . . . . . . . . . . . . . . . . . . . . . 34
5.10 Compliance . . . . . . . . . . . . . . . . . . . . 34
5.11 Full Disclosure . . . . . . . . . . . . . . . . . 34
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . 34
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Covenants of Oakwood and Golden West . . . . . . . 34
6.2 Covenants of Golden West . . . . . . . . . . . . . 37
6.3 Covenants of Oakwood . . . . . . . . . . . . . . . 40
6.4 Tax-Free Reorganization . . . . . . . . . . . . . 41
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ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . 41
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 41
7.1 Conditions to Each Party's Obligation to Effect
the Merger . . . . . . . . . . . . . . . . . . . . 41
7.2 Conditions to Obligation of Golden West to Effect
the Merger . . . . . . . . . . . . . . . . . . . . 42
7.3 Conditions to Obligation of Oakwood and Merger
Sub to Effect the Merger . . . . . . . . . . . . . 43
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . 46
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 46
8.1 Indemnification . . . . . . . . . . . . . . . . . 46
8.2 Notice . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . 47
TERMINATION . . . . . . . . . . . . . . . . . . . . . . 47
9.1 Termination by Mutual Consent . . . . . . . . . . 47
9.2 Termination by Either Oakwood or Golden West . . . 47
9.3 Termination by Golden West . . . . . . . . . . . . 48
9.4 Termination by Oakwood . . . . . . . . . . . . . . 48
9.5 Effect of Termination and Abandonment . . . . . . 48
9.6 Extension; Waiver . . . . . . . . . . . . . . . . 48
9.7 Termination Fee . . . . . . . . . . . . . . . . . 49
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . 49
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 49
10.1 Effectiveness of Representations and Warranties . 49
10.2 Notices . . . . . . . . . . . . . . . . . . . . . 50
10.3 Assignment, Binding Effect; Benefit . . . . . . . 51
10.4 Entire Agreement . . . . . . . . . . . . . . . . . 52
10.5 Amendment . . . . . . . . . . . . . . . . . . . . 52
10.6 Governing Law . . . . . . . . . . . . . . . . . . 52
10.7 Counterparts . . . . . . . . . . . . . . . . . . . 52
10.8 Headings . . . . . . . . . . . . . . . . . . . . . 52
10.9 Interpretation . . . . . . . . . . . . . . . . . . 52
10.10 Waivers . . . . . . . . . . . . . . . . . . . . . 52
10.11 Incorporation of Schedules and Exhibits. . . . . . 53
10.12 Severability . . . . . . . . . . . . . . . . . . . 53
10.13 Enforcement of Agreement. . . . . . . . . . . . . 53
10.14 Effectiveness . . . . . . . . . . . . . . . . . . 53
iii
<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 share-
holders 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 con-
tained herein, the parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the condi-
tions 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").
<PAGE>
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 termi-
nated 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 appro-
priate 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 desig-
nated 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 Incorpora-
tion 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.
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
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2.4 Officers. The officers of the Surviving Corporation
immediately after the Effective Time shall be the following
persons:
</TABLE>
<TABLE>
<CAPTION>
<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 outstand-
ing 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
3
<PAGE>
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, combina-
tion or exchange of shares, the Exchange Ratios shall be corre-
spondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or ex-
change 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 evi-
dencing any such shares shall thereafter represent the right to
receive, upon 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").
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<PAGE>
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), certifi-
cates 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 Ex-
change Ratio in respect of the shares of Golden West Common Stock
or Golden West Preferred Stock formerly evidenced by such certif-
icates 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 receiv-
ing 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 Dissent-
ing 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 accor-
dance with the Exchange Ratios in respect of the shares of Golden
West Common Stock or Golden West Preferred Stock formerly evi-
denced by such certificate, (b) any dividends or other certifi-
cate, 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 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,
5
<PAGE>
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 Ex-
change 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 Pre-
ferred 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
6
<PAGE>
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 collective-
ly 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 provi-
sions 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.
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 attor-
neys 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 there-
with) 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, draft-
ing and preparing this Agreement and attending the Closing, the
expenses of
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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 herein-
after 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 recapitaliza-
tion 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 respec-
tive interests in the Escrowed Shares.
8
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(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 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 re-
ceived 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 princi-
ples of law that a North Carolina court, in applying
North Carolina law, would use in the event of litiga-
tion 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 subsec-
tion (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 divid-
ed 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 set-
tlement of the Loss being determined or contested, be
applied thereto and any balance delivered to the Share-
holders in accordance with their then respective inter-
ests in the Escrowed Shares. Oakwood shall promptly
notify the Escrow Agent on or before the Release Date
indicating the number of Escrowed Shares the applica-
tion 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,
9
<PAGE>
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 maxi-
mum amount of the Loss and of the number of Escrowed
Shares to be returned to Oakwood for payment or reim-
bursement 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 provid-
ed in this Section 3.9, Escrow Agent is not a party to, bound by
or responsible for compliance with the provisions of this Agree-
ment. 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.
10
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF GOLDEN WEST
AND THE SHAREHOLDERS
Golden West and the Shareholders hereby jointly and several-
ly 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 Subsid-
iary 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).
4.1 Organization and Qualification; Subsidiaries. Golden
West and each subsidiary of Golden West (a "Golden West Subsid-
iary"), 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 govern-
mental 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 proper-
ties 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 opera-
tions 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.
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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 condi-
tions 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 invest-
ment (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 encum-
brances of any nature whatsoever. All offers and sales of Golden
West Common Stock and Golden West
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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 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 re-
quired 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 thereun-
der and hereunder. The execution and delivery of the Acknowledg-
ments at the Effective Time will have been duly and validly
authorized by all necessary action on the part of the Sharehold-
ers 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, reorganiza-
tion, 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.
13
<PAGE>
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 deliv-
ery 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 Subsidiar-
ies or as set forth on Schedule 4.7, Golden West does not own
directly or indirectly any interest or investment in any corpora-
tion, 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
14
earnings and cash
flows provided to Oakwood (including any 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 State-
ments 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 liabil-
ities, 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 pos-
sessed 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 (wheth-
er 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;
15
<PAGE>
(g) any change made or authorized in the Articles of
Incorporation or Bylaws of Golden West or any Golden West Subsid-
iary;
(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 Subsid-
iary to operate its business other than in the ordinary course of
business, any change from past practices in the manner of build-
ing or depleting inventories, incurring or collecting receiv-
ables, or incurring or paying trade payables or accrued liabili-
ties;
(k) any failure to maintain the books and records of Golden
West or any Golden West Subsidiary consistent with past practic-
es, 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 Subsid-
iaries 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; 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 intangi-
ble), 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, threat-
ened questions or examinations relating to, or claims asserted
for, Taxes or assessments against Golden West or any Golden West
Subsidiary.
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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 assess-
ments 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, pay-
roll, 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 compensa-
tion exceeds $50,000 per annum, and the annual rate of compensa-
tion (and bonuses) being paid to each such member of the Boards
of Directors, officer and employee as of the most recent practi-
cable 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 Retire-
ment Income Security Act of 1974, as amended ("ERISA") (collec-
tively, 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 determi-
nation 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 con-
tracts 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
17
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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 descrip-
tion 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 descrip-
tions, and summary annual reports) required to have been made or
distributed to participants, the Internal Revenue Service, the
United States Department of 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 bene-
fits 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 accor-
dance 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-discrimina-
tion 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 consumma-
tion 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
18
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 continu-
ing 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 "con-
trolled 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 inter-
ests, easements, reservations, restrictions, encumbrances and
other defects of title (collectively, the "Encumbrances"), other
than the Encumbrances set forth in Schedule 4.12(a) (the "Excep-
tions"), 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 limita-
tion 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 Golden West or any Golden West Subsid-
iary is in default under any Lease, and there does not exist any
event which with notice or the lapse of
19
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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 aggre-
gate would not constitute a Golden West Material Adverse Effect.
To the best knowledge of Golden West and any Golden West Subsid-
iary, 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 Subsid-
iary (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, re-
striction or easement, affecting the Property or with re-
spect 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 limita-
tion, any proceeding for condemnation) or governmental
investigation pending, threatened or contemplated against or
affecting the Property or the use thereof of any part;
20
<PAGE>
(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 improve-
ment 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 Sub-
sidiary 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 Subsid-
iaries as currently conducted and as proposed to be conduct-
ed 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 improve-
ments on the Property (the "Fixtures") and to all machinery and
equipment, computers, office supplies, furniture, parts, trans-
portation 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").
(c) Inventory. Golden West and each Golden West Subsidiary
has good and marketable fee simple title to all of their invento-
ries 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 mainte-
nance 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
21
<PAGE>
valid and enforceable claims of Golden West or the Golden West Sub-
sidiary, 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 Subsid-
iary, there is no basis upon which a valid claim may be made,
that any of the Intellectual Property or any use of the Intellec-
tual 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 commit-
ments 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 commit-
ments 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 Subsid-
iary, 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 credito-
rs' 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
22
<PAGE>
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.
(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, investiga-
tions 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 Insecti-
cide, 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;
23
<PAGE>
"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, polyc-
hlorinated 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 pursu-
ant 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, inject-
ing, 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;
24
<PAGE>
(b) no asbestos-containing materials or other Hazard-
ous Materials have been installed in or affixed to struc-
tures on any Golden West Property;
(c) Hazardous Materials have not at any time been
disposed of or otherwise Released on any Golden West Proper-
ty, 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 compli-
ance 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 Environmen-
tal 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 cur-
rently 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.
25
<PAGE>
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 Affili-
ates 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 public-
ly-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 outstand-
ing 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 Subsid-
iary 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"). "Affili-
ate" 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 other-
wise. "Relative" means any brother or sister (whether by whole
or half blood or adoption), spouse or lineal ascendant or descen-
dant.
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 affected
or (b) the provisions of any note, bond, mortgage, indenture,
contract, agreement, understanding, arrangement, commitment,
lease, license, permit, franchise or other instrument or obliga-
tion 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 Subsid-
iary 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
26
<PAGE>
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, regula-
tions, 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 Subsid-
iary. 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 liabili-
ties 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 Subsid-
iaries 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").
27
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 autho-
rized for the account or persons authorized to have access to the
vault or box.
4.25 Insurance. Golden West and the Golden West Subsidiar-
ies 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 Subsidiar-
ies 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 identi-
fies 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, individu-
ally 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 require-
ments 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
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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 Subsid-
iary, Schedule 4.27 describes (a) all material warranty obliga-
tions 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 Subsid-
iary, 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 affect-
ing 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
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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.
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 regula-
tions 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 busi-
ness.
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 represen-
tation, 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 repre-
sent 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 busi-
ness 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
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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 li-
censed 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 subsidiar-
ies, 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 nonassess-
able. 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.
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 trans-
actions contemplated herein have been duly and validly authorized
by all necessary corporate action and no other corporate proceed-
ings 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
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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, insol-
vency, 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 enforce-
ability 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 termina-
tion, 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 require-
ments, 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 re-
quired 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
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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 circum-
stances under which they were made, not misleading.
(b) Each of the consolidated financial statements (includ-
ing, 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 materi-
al in amount).
(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 ade-
quate.
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 earn-
ings 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 subsidiar-
ies 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 authori-
ty 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
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of Oakwood is subject to any order, writ, judgment, injunc-
tion, decree, determination or award which would have, individu-
ally 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 applica-
ble 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 perform-
ing 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 representa-
tion, 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 mislead-
ing 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 subsidiar-
ies 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 reason-
able efforts to preserve intact their present business organiza-
tions, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having busi-
ness dealings with them to the end that their goodwill and
ongoing businesses shall not be impaired in any material respect
at the Effective Time.
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(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, corre-
spondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial posi-
tion, or otherwise pertaining to the business and affairs, of
Golden West and Oakwood and their respective subsidiaries.
(c) Oakwood and Golden West and their respective subsidiar-
ies 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 applica-
ble provisions of the Securities Act, the Exchange Act and the
rules and regulations thereunder. Oakwood shall use all reason-
able 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 neces-
sary to make the statements therein, in light of the circumstanc-
es 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 effec-
tive 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)
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consents to the use of its name, and on behalf of its subsid-
iaries and affiliates, the names of such subsidiaries and affili-
ates 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 con-
sent) 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 Commis-
sion.
(g) Oakwood, Merger Sub and Golden West shall cooperate and
use their respective best efforts (i) to prepare all documenta-
tion, 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.
(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
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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 "Represen-
tatives"), 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 fur-
nishing information to, or entering into discussions or negotia-
tions 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 consulta-
tion with and based upon the advice of counsel, determines in
good faith that such action is necessary for the Board of Direc-
tors 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
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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 connec-
tion 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 Agree-
ment) 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 Incorpora-
tion or Bylaws;
(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 con-
sistent 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 rea-
sonable 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
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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 in-
crease in compensation or benefits of any kind to its em-
ployees, 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
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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
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 account-
ing 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 forego-
ing.
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 know-
ingly fail to take any action, that would jeopardize the treat-
ment 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
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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 subse-
quent 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 ful-
filled, 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 reorganiza-
tion 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 by any governmental
agency or public authority to restrain or prohibit the transac-
tions 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 transac-
tions 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 certifi-
cates 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
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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 certif-
icate 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 Pro-
spectus/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.
(h) Golden West shall have received good standing certifi-
cates 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 con-
tained 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.
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<PAGE>
(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 Pro-
spectus/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
44
<PAGE>
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 sub-
stantially 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 Stock. Pursuant to such Acknowl-
edgments, 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 Secre-
tary 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 noncompeti-
tion 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
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Oakwood and shall not disclose remedi-
ation, clean-up, monitoring, removal or other work deemed advis-
able 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 condi-
tion, 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, assess-
ments, 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. Notwith-
standing 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 indemnifica-
tion under this Article 8.1 shall expire on the first
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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; provid-
ed, however, that Oakwood shall be entitled to only one complete
satisfaction of a claim against the Shareholders; and provided
further, however, that each Shareholder's total monetary obliga-
tion 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 Acknowl-
edgment 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 enter-
ing 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 Agree-
ment 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
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issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibit-
ing 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 share-
holders 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 termina-
tion, 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 termi-
nated 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.
9.5 Effect of Termination and Abandonment. Upon termina-
tion 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 wilful 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 inaccura-
cies in the representations and warranties made to such party
48
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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 consum-
mated 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 princi-
pal shareholder shall have entered into a letter of intent,
agreement in principle or definitive agreement, or an understand-
ing 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 Busi-
ness 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 representa-
tions, 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
49
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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 represen-
tations 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 anniver-
sary 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 termina-
tion 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 follow-
ing 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:
(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
50
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(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 hereun-
der 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.
51
<PAGE>
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 amend-
ment shall be made which by law requires the further approval of
shareholders without obtaining such further 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 liabili-
ties 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 coun-
terparts 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
52
<PAGE>
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 non-
signing 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 Agree-
ment 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 unen-
forceable, 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 accor-
dance 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.
* * *
53
<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:
By: By:
Name:
Title:
GOLDEN ACQUISITION CORPORATION
ATTEST:
By: By:
Name:
Title:
GOLDEN WEST HOMES
ATTEST:
By: By:
Name:
Title:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Escrow
Agent
ATTEST:
By: By:
Name:
Title:
54
<PAGE>
EXHIBITS AND SCHEDULES
Exhibits
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 Acknowledgement
Exhibit K Form of Karsten Noncompetition Agreement
Exhibit L Form of Other Noncompetition Agreement
Schedules
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
<PAGE>
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
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
<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").
WITNESSETH:
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.
<PAGE>
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 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
2
<PAGE>
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
3
<PAGE>
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 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.
4
<PAGE>
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
5
<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 Corpora-
tion, a North Carolina corporation ("Oakwood"), Golden Acquisi-
tion 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 pub-
lished 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:
<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 "Agree-
ment"), 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 Secur-
ities") 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 disposi-
tion 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 Registra-
tion 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 stock-
holders 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 disposi-
tion is made in conformity with Rule 145 promulgated by the Commiss-
ion under the Act, or (iii) in the opinion of counsel reasonably
acceptable to Oakwood, or a "no-action" letter obtained by the
under-signed 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 exemp-
tion from such registration available other than to timely file all
reports as required
<PAGE>
Oakwood Homes Corporation
_____________, 1994
Page 2
under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.
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 SECURI-
TIES 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 DIS-
TRIBUTION 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 REQUIRE-
MENTS 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 Securi-
ties 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 Securi-
ties 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.
<PAGE>
Oakwood Homes Corporation
_____________, 1994
Page 3
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:
<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 Agree-
ment of Merger (such documents being referred to herein individu-
ally as a "Transaction Document" and collectively as the "Trans-
action Documents") and originals or copies, certified or other-
wise 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 signa-
tories, (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.
<PAGE>
Golden West Homes
_____________, 1994
Page 2
We have also assumed that the Transaction Documents and the
transactions evidenced thereby, are valid, binding and enforce-
able 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 exist-
ing 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 per-
form 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 con-
stitutes 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 compli-
ance by Oakwood and Merger Sub with the terms, condi-
tions and provisions of the Transaction Documents will
not, contravene or result in any breach or default
under (i) any provision of the articles of incorpora-
tion or bylaws of either Oakwood or Merger Sub, (ii) to
our best knowledge, any law, statute, rule or regula-
tion 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, conditions or provisions of any
material contract, undertaking, indenture or other
<PAGE>
Golden West Homes
_____________, 1994
Page 3
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 authori-
zation, 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 author-
ity 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 respec-
tive obligations thereunder.
6. Upon the filing of the Agreement of Merger with the
California Secretary of State, together with appropri-
ate officers' certificates and tax clearance certifi-
cates 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 autho-
rized 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 consid-
eration 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
<PAGE>
Golden West Homes
_____________, 1994
Page 4
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 regula-
tions, or relating to the obtaining of all neces-
sary 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 opin-
ions 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 transac-
tions 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 con-
flict of laws. As to matters governed by Califor-
nia law, we have relied upon the opinion of
<PAGE>
Golden West Homes
_____________, 1994
Page 5
Stradling, Yocca, Carlson & Rauth, P.C., Califor-
nia 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,
<PAGE>
FORM OF PRICE WATERHOUSE COMFORT LETTER EXHIBIT E
Page 1 of 4
[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.
<PAGE>
August [ ], 1994 EXHIBIT E
Board of Directors Page 2 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 2
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 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
<PAGE>
August [ ], 1994 EXHIBIT E
Board of Directors Page 3 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 3
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
<PAGE>
August [ ], 1994 EXHIBIT E
Board of Directors Page 4 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 4
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.
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,
<PAGE>
August [ ], 1994 EXHIBIT E
Board of Directors Page 5 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 5
7. For purposes of this letter, we have also read the following information
(set forth in the Registration Statement on the indicated pages) and have
performed the additional procedures stated below with respect to such
information. Our audit of the financial statements for the periods
referred to in the introductory paragraph of this letter comprised audit
tests and procedures deemed necessary for the purpose of expressing an
opinion on such financial statements taken as a whole. For neither the
periods referred to therein nor any other period did we perform audit
tests for the purpose of expressing an opinion on individual balances
of accounts or summaries of selected transactions such as those
enumerated below and, accordingly, we express no opinion thereon.
[Insert description of any procedures and results thereof. We do not plan to
ask that any procedures be performed pursuant to paragraph 7; accordingly,
paragraphs 7 and 8 will probably be deleted in the final letter.]
8. It should be understood that we make no representations as to questions
of legal interpretation or as to the sufficiency for your purposes of the
procedures enumerated in the preceding paragraph; also, such procedures
would not necessarily reveal any material misstatement of the amounts
or percentages listed above. Further, we have addressed ourselves
solely to the foregoing data as set forth in the Registration Statement
and make no representations as to the adequacy of disclosure or as to
whether any material facts have been omitted.
<PAGE>
FORM OF PRICE WATERHOUSE COMFORT LETTER UPDATE EXHIBIT F
Page 1 of 2
[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.
<PAGE>
September [ ], 1994 EXHIBIT F
Board of Directors Page 2 of 2
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 2
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,
<PAGE>
FORM OF ARTHUR ANDERSEN & CO. COMFORT LETTER EXHIBIT G
Page 1 of 4
[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
<PAGE>
August [ ], 1994 EXHIBIT G
Board of Directors Page 2 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 2
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:
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
<PAGE>
August [ ], 1994 EXHIBIT G
Board of Directors Page 3 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 3
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.
<PAGE>
August [ ], 1994 EXHIBIT G
Board of Directors Page 4 of 4
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 4
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.
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,
<PAGE>
FORM OF ARTHUR ANDERSEN COMFORT LETTER UPDATE EXHIBIT H
Page 1 of 2
[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.
<PAGE>
EXHIBIT H
Page 2 of 2
September [ ], 1994
Board of Directors
Oakwood Homes Corporation
and
Board of Directors
Golden West Homes
Page 2
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,
<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
1
<PAGE>
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.
2
<PAGE>
<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 mean-
ings 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 Acknowl-
edgment 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 amend-
ment. Oakwood may also waive receipt of an executed Acknowl-
edgment and Transmittal Letter from the recipient of this Ac-
knowledgment 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 under-
signed; however, no such waiver shall affect the obligations and
liabilities of the undersigned hereunder and under the Acquisi-
tion Agreement.
<PAGE>
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:
By Mail: By Hand:
Oakwood Homes Corporation Oakwood Homes Corporation
Post Office Box 7386 2225 South Holden Road
Greensboro, North Carolina Greensboro, North Carolina
27417-0386
Attention: Douglas R. Muir
(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 certifi-
cates (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 under-
signed hereby delivers to the Issuing Agent (i) the below-de-
scribed 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 togeth-
er with the undersigned's escrowed shares of Oakwood Common
Stock.
2
<PAGE>
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 certifi-
cate(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.
DESCRIPTION OF CERTIFICATE(S) DELIVERED
(See Instructions 3 and 4)
GOLDEN WEST COMMON STOCK
<TABLE>
<CAPTION>
Number of Shares of Com-
Name of Registered Owner Certificate mon Stock Represented by
(as they appear on certificate(s)) Number Such Certificate
<S> <C> <C>
Total Shares of
Common Stock
</TABLE>
DESCRIPTION OF CERTIFICATE(S) DELIVERED
(See Instructions 3 and 4)
GOLDEN WEST PREFERRED STOCK
<TABLE>
<CAPTION>
Number of Shares of Pre-
Name of Registered Owner Certificate ferred Stock Represented
(as they appear on certificate(s)) Number by Such Certificate
<S> <C> <C>
Total Shares of
Preferred Stock
</TABLE>
_______________________________________________________________________________
_______________________________________________________________________________
(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 In-
struction 3.)
3
<PAGE>
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)
PAYER'S NAME: OAKWOOD HOMES CORPORATION
Part 1-PLEASE PROVIDE YOUR TIN (SOCIAL ______________________
SECURITY NUMBER OR EMPLOYER IDENT- Social Security Number
SUBSTITUTE IFICATION NUMBER) IN THE BOX AT RIGHT OR
AND CERTIFY BY SIGNING AND DATING BE-
LOW ______________________
Form W-9 Employer Identification
Number
Department of
the Treasury
Internal Revenue
Service Payer's
Request for
Taxpayer iden-
tification Num-
ber [TIN]
Part 2 - Check the box if you are NOT subject to backup with-
holding 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 to backup withholding ( )
CERTIFICATION -- UNDER THE PENALTIES OF
PERJURY, I CERTIFY THAT THE INFORMATION
PROVIDED ON THIS FORM IS TRUE, CORRECT AND
COMPLETE Part 3 --
SIGNATURE DATE Awaiting tin ( )
4
<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 here-
with 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 guaran-
teed 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 sepa-
rate 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 de-
posit of the certificates of Golden West Stock to be exchanged there-
for 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 mutil-
ated 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 iden-
tification 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.
5
<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 Acquisi-
tion Agreement and as a condition thereof and inducement there-
for, 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:
<PAGE>
"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 Agree-
ment.
"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
(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
2
<PAGE>
(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, sharehold-
er, 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 Re-
stricted 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 infor-
mation 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
3
<PAGE>
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.
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 jurisdic-
tion to be invalid or unenforceable, such invalidity or unenforc-
eability 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 enforce-
ability 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.
4
<PAGE>
6. Miscellaneous. This Agreement and the Acquisition
Agreement constitute the sole and entire agreement and under-
standing 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 condi-
tions 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.
5
<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 Acquisi-
tion Agreement and as a condition thereof and inducement there-
for, 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:
<PAGE>
"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 Agree-
ment.
"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 Share-
holder 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
(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
2
<PAGE>
(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, sharehold-
er, 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 Re-
stricted 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 compe-
titors 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
3
<PAGE>
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.
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 jurisdic-
tion to be invalid or unenforceable, such invalidity or unenforc-
eability 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 enforce-
ability 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
4
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 under-
standing 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 condi-
tions 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
5
<PAGE>
SCHEDULE 3.5
STOCK OPTIONS
GOLDEN WEST SHARES
<TABLE>
<CAPTION>
OAKWOOD 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, 7/24/90 $1.000 39,000 39,000 4.33 9,012
Manufacturing
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.
<PAGE>
SCHEDULE 4.0
OFFICERS AND KEY EMPLOYEES
GOLDEN WEST HOMES
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
<PAGE>
SCHEDULE 4.0
OFFICERS AND KEY EMPLOYEES
GOLDEN CIRCLE FINANCIAL SERVICES
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
(2 of 2)
<PAGE>
SCHEDULE 4.1
GOLDEN WEST HOMES SUBSIDIARIES
STATE OF
NAME DATE FORMED INCORPORATION
Golden Circle Financial Services 10/19/93 California
Common Stock, 1,000 shares
authorized, 100 shares issued
and outstanding. 1
________
1 Golden West Homes owns 100% of the issued and outstanding Common Stock
of Golden Circle Financial Services.
<PAGE>
SCHEDULE 4.3
SHAREHOLDERS LIST
PREFERRED SERIES A STOCK:
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <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)
</TABLE>
(1 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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#: ###-##-####
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#: ###-##-####
</TABLE>
(2 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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#: ###-##-####
</TABLE>
(3 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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
145 East 92nd Street assets
New York, NY 10128
19,500 Shares issued on 6-30-89
SS#: ###-##-####
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
</TABLE>
(4 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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 and Celia Golden Residual Trust Jerry Golden and mother-in-law
46 Whitewater Drive of Harry Karsten
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#: ###-##-####
</TABLE>
(5 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
43 Steven Sherwood President of same company as
Clayton, Williams & Sherwood, Inc. director (Byron Williams)
800 Newport Center Drive, Suite 400
Newport Beach, CA 92660
3,224 Shares issued on 3-24-92
SS#: ###-##-####
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
9851 Change Circle supplier to Golden 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#: ###-##-####
</TABLE>
(6 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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#: ###-##-####
COMMON STOCK:
1 VOID
2 VOID
(See Certificates 9, 11 & 12)
</TABLE>
(7 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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#: ###-##-####
</TABLE>
(8 of 10)
<PAGE>
<TABLE>
<CAPTION>
Cert. Number Affiliation
<S> <C> <C>
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.
(9 of 10)
<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.
(10 of 10)
<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.
<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.
<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.
<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
(1 of 2)
<PAGE>
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.
(2 of 2)
<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.
<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
</TABLE>
(1 of 2)
<PAGE>
<TABLE>
<CAPTION>
BASE 1993
NAME TITLE AGE* SALARY BONUS EARNINGS
<S> <C> <C> <C> <C> <C>
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
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
(2 of 2)
<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:
(1 of 3)
<PAGE>
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.
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.
(2 of 3)
<PAGE>
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.
(3 of 3)
<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.
<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.
<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.
<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
Perris, CA 92571 buildings of 72,000 and 53,000 square feet.
2445 Pacific Blvd., South 11.1 Manufacturing facility consisting of 64,000
Albany, OR 97321 square feet.
20870 Highway 34 East 15.0 Manufacturing facility consisting of 109,000
Fort Morgan, CO 80701 square feet.
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 October 9, 1991
Insurance Company
Albany, Oregon First American Title Insurance April 26, 1991
Company of Oregon
Boise, Idaho Stewart Title June 7, 1994
Commitment for Title Insurance
Fort Morgan, Colorado Transamerica Title Insurance
Company March 16, 1994
</TABLE>
(1 of 2)
<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 of 11/30/99 Two, five-year
Albany, OR 97321 81,000 square feet terms
9998 Old Placerville Rd Martin Mueller 10.0 Manufacturing facility consisting of 4/30/96 One, five-year
Sacramento, CA 95827 06,000 square feet term
1801 E. Edinger Ave. Catellus Development Corporate offices of approximately 1/31/99 None
Suite 240 9,200 square feet and approximately
Santa Ana, CA 92705 2,600 square feet for Golden Circle
Financial Services
12331 Beach Blvd. Foremost Motors, Inc. 1.1 Golden Homes - Stanton Division 12/21/99 None
Stanton, CA 90680 (sub-lessor fee title retail office and display center
to the real property
is held by Orville
Heitkotter)
1315 Yellowstone Charles A. Moreno 2.25 Golden Homes - Pocatello Division 7/31/95 Nine, one-year
Pocatello, ID 83201 retail display center terms, first right
of refusal
21396 Highway 30 Joseph F. DiPietro 2.25 Golden Homes - Twin Falls Division 12/31/94 Ten, one-year
Twin Falls, ID 83301 approx. retail display center terms. Option to
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.
(2 of 2)
<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.
<PAGE>
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 gen-
eral 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.
<PAGE>
<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 record-
ed 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 Trans-
portation 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.
<PAGE>
<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.
<PAGE>
<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 penetrat-
ing 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.
<PAGE>
<PAGE>
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, record-
ed 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.
2
<PAGE>
<PAGE>
SCHEDULE 4.12(b)
PERMITTED ENCUMBRANCES
<TABLE>
<CAPTION>
INTEREST DUE PAYMENT BALANCE
INSTITUTION DESCRIPTION COLLATERAL RATE DATE TERMS 6/25/94
<S> <C> <C> <C> <C> <C> <C>
Bond Holders/ Industrial Revenue Bonds Deed of Trust, Variable 2011 Annual Installments $ 5,100,000
County of to purchase Perris security agreement (2.65% on of $200,000 from
Riverside facility and cash 7/19/94) 1994 to 1996 and
collateral account to $300,000 through
support Letter of Credit 2011.
issued by Wells
Fargo Bank
US Creditcorp Mortgage to purchase the Deed of Trust on 8.275% 2006 Monthly installments 890,858
Albany north facility land and buildings of $8,229 including
interest.
Wells Fargo Bank Installment note to Security agreement Prime plus 1998 Monthly installments 1,034,998
purchase 1,034,998 on all assets .75% of $19,167 plus
Lyon Series "B" except real interest.
Preferred stock property
Douglas Hawkins Seller carried financing Deed of Trust on 9.0% 1999 Monthly installments 815,937
to purchase the Fort Morgan, land and buildings of $17,645 including
Colorado facility interest plus $2300
impound for real
estate and property
taxes.
TOTAL $7,841,793
</TABLE>
See also Exhibit "A" attached hereto.
<PAGE>
SCHEDULE 4.12(b)
PERMITTED ENCUMBRANCES
<TABLE>
<CAPTION>
INTEREST DUE PAYMENT BALANCE
INSTITUTION DESCRIPTION COLLATERAL RATE DATE TERMS 6/25/94
<S> <C> <C> <C> <C> <C> <C>
Bond Holders/ Industrial Revenue Bonds Deed of Trust, Variable 2011 Annual Installments $ 5,100,000
County of Riverside to purchase Perris facility security agreement (2.65% on of $200,000 from
and cash collateral 7/19/94) 1994 to 1996 and
account to support $300,000 through
Letter of Credit 2011.
issued by Wells
Fargo Bank
US Creditcorp Mortgage to purchase the Deed of Trust on 8.275% 2006 Monthly installments 890,858
Albany north facility land and buildings of $8,229 including
interest.
Wells Fargo Bank Installment note to Security agreement Prime plus 1998 Monthly installments of 1,034,998
purchase installments of on all assets except .75% $19,167 plus interest.
Lyon Series "B" Preferred real property
stock
Douglas Hawkins Seller carried financing to Deed of Trust on 9.0% 1999 Monthly installments of 815,937
purchase the Fort Morgan, land and buildings $17,645 including
Colorado facility interest plus $2300
impound for real estate
and property taxes.
TOTAL $7,841,793
</TABLE>
See also the encumbrances listed on the financing statements attached hereto.
<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>
<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.
<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 & 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>
<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.
<PAGE>
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.
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.
<PAGE>
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).
<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
<PAGE>
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.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4-14
FORK93 GOLDEN WEST
HOMES
SCHEDULE OF
LEASES
LEASED
FORKLIFTS
PAYMENTS
VENDOR DIV CONT # MODEL SER # RATE/MO TERM MADE
- ------------------- -------- -------- -------------- ------- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CLARK CREDIT CORPORATION ALBANY 504,437.00 GPX30 FORKLIFT 79-9234 495.00 24 MO 2
CLARK CREDIT CORPORATION ALBANY 504,421.00 GPX25 FORKLIFT 36-9234 585.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,422.00 GPX30 FORKLIFT 35-9234 495.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,423.00 GPX30 FORKLIFT 34-9234 495.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,424.00 GPX30 FORKLIFT 33-9234 495.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,432.00 GPX30 FORKLIFT 74-9234 495.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,433.00 GPX30 FORKLIFT 75-9234 495.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,434.00 GPX30 FORKLIFT 76-9234 495.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,435.00 GPS30 2 SPEED 68-9270 875.00 24 MO 3
CLARK CREDIT CORPORATION ALBANY 504,436.00 GPX30 FORKLIFT 78-9234 495.00 24 MO 2
NATIONWIDE CREDIT SO CAL N-5161FP KOMATSU FG30G 11 491731a 364.87 60 MO 1
NATIONWIDE CREDIT SO CAL N-5409FP KOMATSU FG30G 11 491418a 364.87 60 MO 1
CLARK CREDIT CORPORATION SO CAL 463,767.00 CLK C500YS80 7685-09337575 878.00 60 MO 28
CLARK CREDIT CORPORATION SO CAL 468,354.00 C500YS80 Y685-04349215 862.45 60 MO 10
CLARK CREDIT CORPORATION SACRAMENTO 504,330.00 CLK C500YS80 C500Y-0365-9215 795.00 60 MO 1
CLARK CREDIT CORPORATION SACRAMENTO 458,563.00 GPS-30-FORKLIFT 140-7615 777.23 60 MO 40
CLARK CREDIT CORPORATION SACRAMENTO 504,220.00 GPX30-FORKLIFT 45-9232 638.00 60 MO 4
CLARK CREDIT CORPORATION SACRAMENTO 504,221.00 GPX30-FORKLIFT 66-9232 638.00 60 MO 4
CROWN CREDIT COMPANY COLORADO NA KOMATSU FG30G 11 491695A 603.49 60 MO 1
CROWN CREDIT COMPANY COLORADO NA KOMATSU FG30G 11 491740A 603.49 60 MO 1
TOTAL
</TABLE>
LEASED SERVICE TRUCKS
<TABLE>
<CAPTION>
VENDOR DIV ID # PYMT # RATE/MO EXPIRES STATUS
- ------------ ------ -------- ------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
HERTZ/PENSKE SO CAL 134,485.00 24.00 944.06 03-Jan-98
HERTZ/PENSKE SO CAL 134,486.00 24.00 944.06 03-Jan-98
HERTZ/PENSKE SO CAL 134,487.00 24.00 944.06 17-Jan-98
HERTZ/PENSKE SO CAL 134,490.00 24.00 944.06 20-Jan-98
TOTAL
</TABLE>
<PAGE>
CAPR SCHEDULE 4.15 AND 6.2(C)(IV)
CAPITAL EXPENDITURES
17-Aug-94 JUNE 25, THRU DECEMBER 31, 1994
OPEN APPROPRIATIONS
<TABLE>
<CAPTION>
APPROX.
TOTAL EXPENDITURE EXPENDITURE
DATE DIVISION APPR # DESCRIPTION AMOUNT SPENT PRIOR TO 10/1/94 THRU
6/25/94 9/30/94 12/31/94
<S> <C> <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
<PAGE>
<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 ysecured 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.
<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.
<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 f or additional potential litigation, claims and material loss
contingencies.
<PAGE>
SCHEDULE 4.22
BROKERS
Break-up fee due Wedbush-Morgan Securities as discussed in Article 3.8
Transaction Expenses.
<PAGE>
SCHEDULE 4.24
BANK ACCOUNTS
<TABLE>
<CAPTION>
AUTHORIZED
DESCRIPTION BANK ACCOUNT NO. SIGNERS
<S> <C> <C> <C>
GOLDEN WEST HOMES:
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
</TABLE>
(1 of 4)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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
</TABLE>
(2 of 4)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(self-insured) Ellen Ramlet* of Gates McDonald
Carolyn Wallace* of Gates McDonald
Golden West Emp.
Benefit Trust Wells Fargo 4602-056343 H.Karsten*
(self-insured) F.Jacobs*
R.Henry*
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
(3 of 4)
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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 First Interstate 22034472 F.Jacobs*
Twin 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.
(4 of 4)
<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 pre-
$2,000,000. Gen Aggregate mium above.
$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.
$1,000,000. Ea. Accident Estimated
$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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION TERM COMPANY POLICY NUMBER PREMIUM
<S> <C> <C> <C> <C>
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.
<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
7
<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.
8
<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
9
<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 tech-
nology, 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.
1
<PAGE>
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.
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.
2
<PAGE>
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.
3
<PAGE>
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.
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!
4
<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 AGREEMENT
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.
5
<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.
(1 of 11)
<PAGE>
SCHEDULE 4.28
TOP 25 DEALERS
<TABLE>
<CAPTION>
SALES VOLUME
SIX MONTHS ENDED DEALER BONUS (3)(4)
DEALER JUNE 1994 PROGRAM PROGRAMS OR CONCESSIONS
<S> <C> <C>
1. Golden Pacific Homes(1) $ 9,194,111 Standard and Quarterly (bullet) Provided $150,000 loan
Portland, OR 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. Inter-City Sales, Inc. 2,515,178 Special (bullet) 7% Annual Dealer Bonus Program
Albany, OR (bullet) Direct billing on all homes
3. Sunburst 2,490,179 Standard and Quarterly (bullet) Guaranteed delivery of 16 homes
DBA Pacific Housing Mfd. per month
Homes (bullet) Combine sales of Western Bridge
Eugene, OR
4. Golden Homes-Pocatello(1)(2) 2,358,015 Standard None
Pocatello, ID
5. LC Homes(1) 1,539,342 Standard (bullet) Golden West provides up to 5 display
Speulveda, CA homes
(bullet) Assignment of Escrow on customer
sold homes
6. A Home Doctor 1,497,639 Standard and Quarterly (bullet) Special curtailment program
DBA Jon Port Home Center (bullet) Flooring participation on certain
homes
</TABLE>
(2 of 11)
<PAGE>
<TABLE>
<CAPTION>
SALES VOLUME
SIX MONTHS ENDED DEALER BONUS (3)(4)
DEALER JUNE 1994 PROGRAM PROGRAMS OR CONCESSIONS
<S> <C> <C> <C>
7. Vic Cox Home Center 1,343,127 Standard and Quarterly None
Arlington, WA
8. Pacific Crest Homes(1) 1,245,379 Standard and Quarterly None
Bend, OR
9. Umpqua Valley Homes(1) 1,205,849 Standard and Quarterly (bullet) Bonus participation for Highland
Winchester, OR Vista purchases
10. TL Concepts(1) 1,165,668 Standard (bullet) Provided working capital loan to a
Medford, OR 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. Mobile Home Center 1,115,218 Standard and Quarterly (bullet) Stock homes include set-up
Oroville, CA allowance of $1,000 California and
$1,500 Oregon
(bullet) Freight allowance to a maximum of
$1,000 per home
12. Santiam Homes 1,107,860 Standard and Quarterly (bullet) Guaranteed 2 homes per week
Aumsville, OR
13. The Housing Mart 1,079,489 Standard and Quarterly None
Rochester, WA
14. R & B Communities(1) 1,067,123 Standard (bullet) Assignment of Escrow on customer
CA sold homes
</TABLE>
(3 of 11)
<PAGE>
<TABLE>
<CAPTION>
SALES VOLUME
SIX MONTHS ENDED DEALER BONUS (3)(4)
DEALER JUNE 1994 PROGRAM PROGRAMS OR CONCESSIONS
<S> <C> <C> <C>
15. Schmidt's Homes 1,050,218 Standard (bullet) $750 per home freight allowance
Salt Lake City, UT
16. Golden Homes-Stanton(1)(2) 894,265 Standard None
Stanton, CA
17. Terrace Homes 890,620 Standard (bullet) Bonus participation for
Florentine Estates ($1,000/home to 6/1/95)
Florence, OR
18. Mobile Corral(1) 851,306 Standard and Quarterly 20 day terms
Lewiston, ID
19. Florentine Estates(1) 840,640 None None
Florence, OR
20. Three C' Devcos(1) 834,918 Standard and Quarterly (bullet) Reimburse up to 30 days
flooring interest on all homes
San Ramon, CA (bullet) Reimburse flooring interest on
model displays in Lathrop Pedro.
21. New Vision Homes 733,897 Standard None
Crescent City, CA
22. Longview Hills(1) 701,379 Standard (bullet) Quarterly advertising
Newport, OR allowance in connection with
Ocean Hills
7
(4 of 11)
</TABLE>
<TABLE>
<CAPTION>
SALES VOLUME
SIX MONTHS ENDED DEALER BONUS (3)(4)
DEALER JUNE 1994 PROGRAM PROGRAMS OR CONCESSIONS
<S> <C> <C> <C>
23. Nationwide Homes (1) 629,616 Special (bullet) 6% quarterly dealer bonus program.
Las Vegas, NV (bullet) Special curtailment program
24. N L, Inc. (1) 587,037 Standard None
DBA The Meadows
Central Point, OR
25. Golden Homes-Twin 569,132 Standard None
Falls (1)(2)
Twin Falls, ID
TOTAL $37,507,205
</TABLE>
(1) Exclusive Retailer.
(2) Company owned.
(3) Standard refers to Golden West Homes annual program. See page 6 of 6 for
details.
(4) The Quarterly program is for selected high volume retailers. The volume
and bonus levels are as follows:
Oregon and Southern California
Volume Bonus
$ 500,000 - 749,000 1% retroactive
750,000 - 999,000 1.5% retroactive
1,000,000 and up 2.0% retroactive
Sacramento
Volume Bonus
$ 300,000 - 549,000 1% retroactive
550,000 - 799,000 1.5% retroactive
800,000 and up 2.0% retroactive
8
(5 of 11)
<PAGE>
SCHEDULE 4.28
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.
(6 of 11)
<PAGE>
Unfortunately, Golden Advantage did not work. The o r ganization 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 and
approach 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.
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.
(7 of 11)
<PAGE>
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.
(8 of 11)
<PAGE>
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.
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.
(9 of 11)
<PAGE>
SCHEDULE 4.28
DEALER AGREEMENTS
THE HOMES OF GOLDEN WEST
GOLDEN WEST HOMES
SOUTHERN CALIFORNIA DIVISION
RETAILER BONUS PROGRAM 1994 - 1995
EFFECTIVE FEBRUARY 26, 1994 THROUGH FEBRUARY 24, 1995
ANNUAL SALES VOLUME BONUS ACHIEVED
$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
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.
(10 of 11)
<PAGE>
Please sign, date and coy of bonus letter to acknowledge your receipt of this
letter.
Sincerely,
Ernie Kercmar
Sales Manager
______________________________ ______________________________
Date
(11 of 11)
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, $175,000 Amenities and furniture $19,000 Personal guarantee of
Gig Harbor, WA financing for model complex. Project principals.
is sold out and final balance should
be paid off in near future.
ITT Commercial Finance Calvada $300,000 to finance on-site costs for 181,000 Assignment of ITT'
model complex in Nevada. Three homes $400,000 Deed of Trust
remaining are being sold. on project.
ITT Commercial Finance Golden Pacific $131,000 Amenities for fourteen homes 120,000 Right to sell homes in
Homes - Portland in various parks which are for sale. parks and retailer bonus.
ITT Commercial Finance Highland Associates $125,000 Amenities for model complex. 125,000 Deeds of Trust on
five lots o
models are placed.
ITT Commercial Finance Patric Loomis/Ocean $500,000 Flooring line for Ocean Hills 500,000 Deeds of Trust in project.
Hills project in Waldport, OR.
ITT Commercial Finance Desert Mobile Home $188,000 In amenities for five-home 42,000 Deeds of Trust in project.
Sales model complex in Bullhead, AZ
subdivision. One home remaining
is for sale.
ITT Commercial Finance L C Homes Amenities financing for park display 30,000 Right to sell in project.
models. Two homes remaining and for
sale.
Bombardier Capital 3 C/ DEVCOs Construction costs for six homes in 581,000 Assignment of Bombardier'
Caldwell, Idaho. First Deed of Trust on
each lot.
</TABLE>
1
(1 of 2)
<TABLE>
<CAPTION>
Approximate
Guarantee Obligation
Institution Provided For Description at 7/26/94 Collateral
<S> <C> <C> <C> <C>
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 California.
homes 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 Golden Circle Financial Guarantee for 36 months for Loans and homes
Services Services the sale of six loans which
did not meet current
lending criteria of
Chemical. Non-recurring
situation to sell old or 203,000
repurchased homes.
TOTAL $2,105,000
(2 of 2)
</TABLE>
<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.
3
<PAGE>
SCHEDULE 6.1(h)
LETTERS OF CREDIT
<TABLE>
<CAPTION>
BANK ISSUE DATE EXPIRATION DATE LOC NUMBER AMOUNT DESCRIPTION
<S> <C> <C> <C> <C> <C>
Wells Fargo Bank October 15, 1991 October 15, 1996 SAS 160582 $5,175,787(1) 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.
4
<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.
<PAGE>
SCHEDULE 5.5
OAKWOOD CONSENTS
None.
<PAGE>
SCHEDULE 5.10
OAKWOOD COMPLIANCE EXCEPTIONS
None.
<PAGE>
SCHEDULE 7.3(o)
OFFICERS TO ENTER INTO NONCOMPETE AGREEMENTS
Bruce W. Stoyer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
Item 21
FORM S-4
REGISTRATION STATEMENT
OAKWOOD HOMES CORPORATION
Commission File Number 1-7444
EXHIBIT INDEX
Exhibit Description Page
2. Acquisition Agreement, including the Agreement
of Merger attached thereto as Exhibit 1 (filed
herewith as Annex I)
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 of Kennedy Covington Lobdell & Hickman,
L.L.P.
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Kennedy Covington Lobdell & Hickman,
L.L.P. (contained in Exhibit 5).
23.3 Consent of Arthur Andersen & Co.
24. Power of Attorney (see page II-4 of Form S-4)
99.1 Form of Acknowledgement (filed herewith as
Exhibit J to Annex I).
99.2 Golden West Homes Form of Proxy
<PAGE>
Exhibit 5
Kennedy Covington Lobdell & Hickman, L.L.P.
NationsBank Corporate Center
Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Myles E. Standish
704/331-7504 Facsimile 704/331-7598
August 21, 1994
Oakwood Homes Corporation
2225 South Holden Road
Greensboro, North Carolina 27417-0386
Gentlemen:
You have requested our opinion in connection with the registration
under the Securities Act of 1933, as amended, of 699,992 shares of the
$.50 par value Common Stock (the "Common Stock") of Oakwood Homes
Corporation (the "Company"), a North Carolina corporation, by the
Registration Statement on Form S-4 (the "Registration Statement") to be
filed by you with the Securities and Exchange Commission in connection
with the Company's acquisition of Golden West Homes ("Golden West")
pursuant to the terms of an Acquisition Agreement dated as of August 17,
1994 by and between the Company, Golden West, a California corporation,
Golden Acquisition Corporation, a California corporation and a wholly-
owned subsidiary of the Company, certain shareholders of Golden West and
First Union National Bank of North Carolina as Escrow Agent (the
"Acquisition Agreement").
We have made such investigations of law, examined original copies,
certified or otherwise identified to our satisfaction, of such
documents, corporate records, certificates of public officials and other
instruments, and received such statements from officers and
representatives of the Company, as we have deemed necessary for purposes
of this opinion.
Based upon the foregoing, we are of the opinion that the 699,992
shares of the Common Stock covered by the Registration Statement have
been duly and validly authorized and will be validly issued, fully paid
and nonassessable when issued in accordance with the terms of the
Acquisition Agreement and receipt by the Company of the consideration
therefor.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement.
Sincerely,
KENNEDY COVINGTON LOBDELL & HICKMAN
Exhibit 8
KENNEDY COVINGTON LOBDELL & HICKMAN, L.L.P.
ATTORNEYS AT LAW
NationsBank Corporate Center
Suite 4200
100 North Tryon Street
Charlotte, North Carolina 28202-4006
Telephone 704/331-7400
Facsimile 704/331-7598
August 19, 1994
Oakwood Homes Corporation
P. O. Box 7386
Greensboro, NC 27417-0386
Attention: Mr. C. Michael Kilbourne
Dear Sirs:
We have acted as counsel to Oakwood Homes Corporation, a North
Carolina corporation ("Oakwood") in connection with the planned
merger (the "Merger") of Golden Acquisition Corporation, a California
corporation and a wholly-owned subsidiary of Oakwood (the "Merger
Subsidiary") with and into Golden West Homes, a California corpora-
tion ("Golden West") pursuant to an Acquisition Agreement and an
Agreement of Merger dated as of August 17, 1994 among Oakwood, Merger
Subsidiary and Golden West (collectively, the "Merger Agreement").
Capitalized terms not otherwise defined herein shall have the same
meaning set forth in the Merger Agreement.
For purposes of the opinion set forth below, we have reviewed
and relied upon (i) the Merger Agreement, (ii) the Prospectus/Proxy
Statement included in the Registration Statement dated the date
hereof filed by Oakwood with the Securities and Exchange Commission
(the "Prospectus/Proxy Statement") and (iii) such other documents,
records and instruments as we have deemed necessary or appropriate as
a basis for our opinion. In addition, in rendering our opinion we
have relied upon certain statements, representations and warranties
made by Oakwood, Merger Subsidiary and Golden West, and in the Merger
Agreement and the Prospectus/Proxy Statement, which we have neither
investigated nor verified. We have assumed that such statements,
representations and warranties are true, accurate, complete, fully
satisfied, and will continue to be so through the date of the Merger
and that no actions that are inconsistent with such statements,
representations and warranties will be taken.
In addition, we have assumed the following:
(i) The Merger will be consummated in accordance with the
Merger Agreement as described in the Prospectus/Proxy
Statement (including satisfaction of all covenants and
conditions to the obligations of the parties without amend-
ment or waiver thereof).
<PAGE>
Oakwood Homes Corporation
August 19, 1994
Page 2
(ii) The Merger will qualify as a merger under the laws of
California.
(iii) Each of Oakwood, Merger Subsidiary and Golden West
will comply with all reporting obligations with respect to
the merger required under the Internal Revenue Code of
1986, as amended (the "Code"), and the Treasury Regulations
thereunder.
(iv) The Merger Agreement and all other documents and
instruments referred to therein or in the Prospectus/Proxy
Statement are valid and binding in accordance with their
terms.
(v) 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 or to cause Golden West to sell or otherwise
dispose of any of its assets or any of the assets acquired
from Merger Subsidiary, except for dispositions made in the
ordinary course of business or which would not cause the
Merger to fail to satisfy the "continuity of business
enterprise" requirements for valid reorganizations under
Section 368(a)(1)(A) of the Code.
(vi) Following the Effective Time, Golden West will hold
substantially all of both its properties and the properties
of Merged Subsidiary and will continue its historic busi-
ness or use a significant portion of its historic assets in
a business.
(vii) Following the Effective Time, the Golden West share-
holders shall retain the Oakwood Common Stock received in
the Merger in amounts and for such periods of time as shall
be required to satisfy the "continuity of interest" re-
quirements for valid reorganizations under Section 368(a)-
(1)(A) of the Code.
(viii) Following the Effective Time, neither the Golden
West shareholders nor Oakwood shall take any actions that
would cause the Merger to fail to qualify as a tax-
free reorganization under Section 368 of the Code.
(ix) Oakwood does not own nor has it owned during the past
five years any shares of stock of Golden West.
<PAGE>
Oakwood Homes Corporation
August 19, 1994
Page 3
(x) Neither Oakwood, Merger Subsidiary nor Golden West is
an investment company as defined in Sections 368(a)(2)(F)
of the Code.
(xi) Payment of cash in lieu of fractional interests of
Golden West Common Stock and Golden West Preferred Stock is
not a separately bargained for consideration and represents
a mere mechanical rounding off of the fractional share
interests.
(xii) The total cash consideration to be paid in the
proposed transaction to Golden West shareholders including
cash paid in lieu of fractional shares of Oakwood Common
Stock will not exceed 1% of the total consideration that
will be given in the transaction to the Golden West share-
holders in exchange for their Golden West Common Stock and
Golden West Preferred Stock.
(xiii) Prior to the Merger, Oakwood will be in "control" of
Merger Subsidiary within the meaning of Section 368(c) of
the Code.
(xiv) Oakwood has no plan or intention to have Golden West
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.
Any inaccuracy in, or breach of, any of the aforementioned
statements, representations, warranties and assumptions or any change
after the date hereof in applicable law could adversely affect our
opinion. No ruling has been (or will be) sought from the Internal
Revenue Service by Oakwood, Merger Subsidiary or Golden West as to
the Federal income tax consequences of any aspect of the Merger.
In rendering our opinion, we have considered the applicable
provisions of the Code, the Treasury Regulations thereunder, judicial
authorities, rulings of the Internal Revenue Service and such other
authorities as we have deemed relevant.
Based upon, and subject to, the foregoing as well as the limita-
tions set forth below, it is our opinion, under presently applicable
Federal income tax law, that:
(1) the Merger of Merger Subsidiary with and into Golden
West will be a reorganization within the meaning of
Section 368(a)(1)(A) of the Code by reason of applica-
tion of Section 368(a)(2)(E) of the Code;
<PAGE>
Oakwood Homes Corporation
August 19, 1994
Page 4
(2) no material gain or loss for Federal income tax pur-
poses will be recognized by Oakwood, Merger Subsidiary
or Golden West in the Merger;
(3) no gain or loss for Federal income tax purposes will
be recognized by Golden West stockholders who exchange
all of their shares of Golden West Common Stock or
Golden West Preferred Stock solely for shares of Oak-
wood Common Stock in the Merger (except with respect
to cash received in lieu of a fractional share inter-
est in Oakwood Common Stock);
(4) a Golden West stockholder who receives cash in lieu of
a fractional share interest in Oakwood Common Stock
pursuant to the Merger generally will recognize gain
or loss for Federal income tax purposes in an amount
equal to the difference between the cash payment re-
ceived and such Golden West stockholder's tax basis in
the fractional share interest.
No opinion is expressed as to any matter not specifically
addressed above. Also, no opinion is expressed as to the tax conse-
quences of any of the transactions under any foreign, state or local
tax law. Furthermore, our opinion is based on current Federal income
tax law and administrative practice, and we do not undertake to
advise you as to any changes after the Effective Time (as defined in
the Merger Agreement) and Federal income tax law or administrative
practice that may affect our opinion unless we are specifically
retained to do so.
The tax consequences described above may not be applicable to a
Golden West stockholder who acquired Golden West Common Stock pursu-
ant to the exercise of an employee stock option or otherwise as
compensation.
We hereby consent to the filing of this opinion as an exhibit to
the aforementioned Registration Statement. In giving this consent,
however, we do not admit that we are "experts" within the meaning of
Section 11 of the Securities Act of 1933, as amended, or within the
category of persons whose consent is required by Section 7 of said
Act.
This opinion has been delivered to you for the purpose of being
included as an exhibit to the Registration Statement and is intended
solely for your benefit. It may not be relied upon for any other
purpose or by any other person or entity.
Kennedy Covington Lobdell & Hickman, L.L.P.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of this Registration Statement on
Form S-4 of Oakwood Homes Corporation of our report dated November 1, 1993,
which appears on page 34 of Oakwood Homes Corporation's 1993 Annual Report
to Stockholders, which is incorporated by reference in its Annual Report on
Form 10-K for the year ended September 30, 1993. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears on page F-1 of such Annual Report on Form 10-K. We also consent
to the references to us under the headings "Experts" and "Selected Consolidated
Financial Information" in such Proxy Statement/Prospectus. However, it should
be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Consolidated Financial Information".
PRICE WATERHOUSE LLP
Winston-Salem, North Carolina
August , 1994
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN & CO.
Orange County, California
August 19, 1994
EXHIBIT 99.2
GOLDEN WEST HOMES
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 23, 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 23, 1994, commencing at _______,
local time, at _________________________ 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 (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 1 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").
____ FOR ____ AGAINST ____ ABSTAIN
(continued and to be signed and dated on the reverse side
and returned promptly in the enclosed envelope)
<PAGE>
<PAGE>
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, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
DATED:.............................
.....................................
(Signature)
.....................................
Please sign as name(s) appear
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.