<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 26, 1993
Date of earliest event reported: October 15, 1993
J.M. PETERS COMPANY, INC.
(exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware File No. 0-15925 95-2956559
- - -------- ---------------- ----------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
</TABLE>
3501 Jamboree Road, Suite 200, Newport Beach, California 92660
- - -------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 854-2500
<PAGE> 2
ITEM 2. Acquisition or Disposition of Assets.
On October 15, 1993, with an effective date of September 1, 1993, J.M.
Peters Company, Inc. ("JMP") purchased 100% of the outstanding capital stock
("Purchased Shares") of Durable Homes, Inc., a Nevada corporation ("Durable"),
by assuming the obligations of Capital Pacific Homes, Inc. ("CPH") under a
definitive purchase agreement (the "Purchase Agreement") executed by CPH and
Roger Nix ("Nix") on September 17, 1993. JMP's board of directors, by
unamimous vote of disinterested directors on September 23, 1993, approved the
terms of the Purchase Agreement and JMP's acquisition of Durable.
The consideration for the Purchased Shares was $1,300,000 in cash and 1,015,000
newly issued shares of common stock, par value $.10, of JMP representing 6.77%
of the outstanding shares of JMP. In addition, Durable issued a promissory note
to NIX in the amount of $400,000. The cash portion of the payment was provided
out of readily available funds of JMP and were not borrowed.
There are no material relationships between any officer or director of JMP and
NIX or Durable.
ITEM 7. Financial Statements, Proforma Financial Information and Exhibits.
The following Consolidated Financial Statements and Proforma Financial
Information are included under this item:
Consolidated Proforma Balance Sheet of J.M. Peters Company, Inc., as
of August 31, 1993.
Consolidated Proforma Statements of Operations for the Year Ended
February 28, 1993, and for the Six Months Ended August 31, 1993.
Notes to Consolidated Proforma Financial Statements.
Balance Sheet of Durable Homes, Inc., as of June 30, 1993.
Statements of Operations of Durable Homes, Inc., for the Six Months
Ended June 30, 1992 and 1993.
EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
Exhibit 2.1 Purchase and Sale Agreement dated September 17, 1993, by and between CPH and NIX and Durable.
Exhibit 2.2 Assignment and Assumption Agreement dated September 24, 1993, by and between Capital Pacific Homes, Inc.,
and J.M. Peters Company, Inc.
</TABLE>
<PAGE> 3
J.M. PETERS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
August 31, 1993
(UNAUDITED)
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
Allocation of As
J.M. Peters Purchase Price(A) Adjusted
----------- ------------------ ----------
<S> <C> <C> <C>
Cash and cash equivalents $9,304 $(965) $8,339
Restricted cash 1,733 - 1,733
Accounts and notes receivable 1,727 - 1,727
Residential inventory 115,170 16,655 131,825
Prepaid expenses and other assets 2,930 467 3,397
--------- ----------- ----------
$130,864 $16,157 $147,021
========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $36,034 $6,523 $42,557
Due to Capital Pacific Homes 850 150 1,000
Accounts payable and accrued
liabilities 18,240 3,980(B) 22,220
Negative goodwill - 726 726
---------- ---------- ----------
Total liabilities 55,124 11,379 66,503
---------- ---------- ----------
Minority Interest in Joint
Ventures 31,233 2,114 33,347
Stockholders' equity:
JMP Special stock, par
value $.01 per share; 5,000,000
shares authorized; none
outstanding - - -
JMP Common stock, par value $.10
per share, 60,000,000
shares authorized; 13,980,000
issued and outstanding 1,398 102 1,500
Additional paid-in capital 207,824 2,562 210,386
Retained earnings (deficit) (164,715) - (164,715)
---------- ---------- ----------
Total stockholders' equity 44,507 2,664 47,171
---------- ---------- ----------
$130,864 $16,157 $147,021
========== ========== ==========
</TABLE>
The pro forma data has been prepared assuming that the acquisition had
occured as of August 31, 1993. The pro forma adjustments are based upon
available information and certain assumptions that management believes are
reasonable. The pro forma financial information does not purport to represent
what the Company's financial position or results of operations would actually
have been had the acquisition in fact occurred on the assumed date or at the
beginning of the period indicated or to project the Company's financial
position or results of operations for any future date or period.
<PAGE> 4
ITEM 7. Continued
Footnotes to proforma consolidated financial statements of J.M. Peters Company,
Inc.
(A) To effect the purchase of Durable, JMP issued 1,015,000 shares of JMP
Common Stock and paid $1,300,000 in cash. The JMP Common Stock had a market
value of $2.625 per share at the time of the transaction and the company
incurred approximately $250,000 of direct acquisition costs for a total
purchase price of $4,214,375 which has been allocated as follows ($000's):
<TABLE>
<S> <C>
Cash and cash equivalents . . . . . . . . . . . . . . $ 335
Real estate inventories . . . . . . . . . . . . . . . 16,655
Other assets . . . . . . . . . . . . . . . . . . . . . 467
Accounts payable and other liabilities . . . . . . . . (3,880)
Notes payable . . . . . . . . . . . . . . . . . . . . (6,523)
Minority interest in Joint Ventures . . . . . . . . . (2,114)
Excess of fair value of net assets acquired over
purchase price (negative goodwill) . . . . . . . . . (726)
-------
Total . . . . . . . . . . . . . . . . . . . . . . $ 4,214
=======
</TABLE>
(B) Includes $400,000 note payable issued by Durable to Nix and $218,000
liablility to Nix related to a one year consulting agreement.
<PAGE> 5
ITEM 7. Continued
J.M. PETERS COMPANY, INC. AND SUBSIDIARIES WITH DURABLE HOMES, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
J.M. PETERS DURABLE HOMES
SIX MONTHS SIX MONTHS PRO FORMA
AUGUST 31, 1993 AUGUST 31, 1993 COMBINED
------------------------------------------------
<S> <C> <C> <C>
Sales of homes and land $11,445 $21,178 $32,623
Interest and other income 809 171 980
------------------------------------------------
12,254 21,349 33,603
------------------------------------------------
Costs and expenses:
Cost of homes and land 11,509 16,788 28,297
Selling, general and
administrative 3,904 2,941 6,845
Minority interest in income -69 207 138
Interest 418 - 418
------------------------------------------------
15,762 19,936 35,698
------------------------------------------------
Income (loss) before income
taxes (3,508) 1,413 (2,095)
Income tax benefit - 224(A) 224(A)
------------------------------------------------
NET INCOME (LOSS) ($3,508) $1,189 ($2,319)
------------------------------------------------
Income (loss) per common share ($0.25) ($0.15)
Weighted average number of
common shares 13,980 14,995
</TABLE>
(A) The income tax expense reflects C corporation taxes reduced by the
applicable net operating loss available from the Company to partially
offset such taxes.
(B) The pro forma data have been prepared assuming that the acquisition
had occured as of March 1, 1992. The pro forma adjustments are based
upon available information and certain assumptions that management
believes are reasonable. The pro forma financial information does not
purport to represent what the Company's financial position or results of
operations would actually have been had the acquisition in fact occurred
on the assumed date or at the beginning of the periods indicated or to
project the Company's financial position or results of operations for any
future date or period.
<PAGE> 6
ITEM 7. Continued
J.M. PETERS COMPANY, INC. AND SUBSIDIARIES WITH DURABLE HOMES, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
(In thousands except per share data)
<TABLE>
<CAPTION>
J.M. PETERS DURABLE HOMES
YEAR ENDED YEAR ENDED PRO FORMA
FEBRUARY 28, 1993 DECEMBER 31, 1992 COMBINED
(AUDITED) (AUDITED)
------------------------------------------------
<S> <C> <C> <C>
Sales of homes and land $72,148 $35,977 $108,125
Interest and other income 3,554 207 3,761
------------------------------------------------
75,702 36,184 111,886
------------------------------------------------
Costs and expenses:
Cost of homes and land 68,257 28,570 96,827
Selling, general and
administrative 9,764 5,082 14,846
Adjustments to carrying value of
real estate projects 75,476 - 75,476
Interest 8,538 - 8,538
------------------------------------------------
162,035 33,652 195,687
------------------------------------------------
Income (loss) before income
taxes (86,333) 2,532 (83,801)
Income tax benefit (1,792) 254(A) (1,538)
------------------------------------------------
NET INCOME (LOSS) ($84,541) $2,278 ($82,263)
================================================
Income (loss) per common share ($6.05) ($5.49)
Weighted average number of
common shares 13,980 14,995
</TABLE>
__________
(A) The income tax expense reflects C corporation taxes reduced by the
applicable net operating loss available from the Company to partially
offset such taxes.
(B) The pro forma data have been prepared assuming that the acquisition
had occured as of March 1, 1992. The pro forma adjustments are based
upon available information and certain assumptions that management
believes are reasonable. The pro forma financial information does not
purport to represent what the Company's financial position or results of
operations would actually have been had the acquisition in fact occurred
on the assumed date or at the beginning of the periods indicated or to
project the Company's financial position or results of operations for any
future date or period.
<PAGE> 7
DURABLE HOMES, INC.
BALANCE SHEET
JUNE 30, 1993
ASSETS
<TABLE>
<S> <C>
ASSETS:
CASH 390,162
RECEIVABLES 130,204
INVENTORIES 18,131,992
PREPAID EXPENSES AND DEPOSITS 228,106
PROPERTY AND EQUIPMENT, NET 252,392
OTHER ASSETS 161,500
----------
TOTAL ASSETS 19,294,356
==========
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
BORROWINGS 8,175,694
CONSTRUCTION PAYABLES 3,471,672
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 463,668
----------
TOTAL LIABILITIES 12,111,034
----------
MINORITY INTEREST IN VENTURES 2,089,572
----------
SHAREHOLDER'S EQUITY
COMMON STOCK, NO PAR VALUE;
2,000 SHARES AUTHORIZED;
1,000 SHARES ISSUED AND OUTSTANDING 50,000
RETAINED EARNINGS 5,043,750
----------
5,093,750
----------
TOTAL LIABILITIES AND
SHAREHOLDER'S EQUITY 19,294,356
==========
</TABLE>
<PAGE> 8
DURABLE HOMES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1992 & 1993
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
REVENUES:
SALES 17,935,511 17,333,901
OTHER 2,058 61,550
---------- ----------
17,937,569 17,395,451
---------- ----------
COSTS AND EXPENSES:
COST OF SALES 14,398,504 13,822,317
SELLING & MARKETING 1,303,117 1,338,140
GENERAL AND ADMINISTRATIVE 1,190,438 958,789
DEPRECIATION 51,000 64,000
MINORITY INTEREST IN INCOME 89,572 0
---------- ----------
17,032,631 16,183,246
---------- ----------
NET INCOME 904,938 1,212,205
RETAINED EARNINGS, BEGINNING OF PERIOD 5,555,212 5,733,766
DISTRIBUTIONS TO SHAREHOLDER 1,416,400 1,414,081
---------- ----------
RETAINED EARNINGS, END OF PERIOD 5,043,750 5,531,890
========== ==========
</TABLE>
<PAGE> 9
Durable Homes, Inc.
Financial Statements
December 31, 1992
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
February 25, 1993
To the Board of Directors and Shareholder
of Durable Homes, Inc.
In our opinion, the accompanying balance sheet and related statements of income
and retained earnings and of cash flows present fairly, in all material
respects, the financial position of Durable Homes, Inc. at December 31, 1992
and 1991, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Salt Lake City, Utah
February 25, 1993
Price Waterhouse
<PAGE> 11
DURABLE HOMES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
ASSETS
Cash $ 1,032,000 $ 2,072,000
Receivables (Notes 2 and 9) 237,000 146,000
Inventories (Note 3) 16,533,000 11,359,000
Prepaid expenses and deposits 388,000 308,000
Property and equipment, net (Note 4) 240,000 345,000
Other assets 162,000 209,000
----------- ------------
$18,592,000 $ 14,439,000
=========== ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Borrowings (Note 5) $ 8,830,000 $ 6,064,000
Construction payables 3,591,000 2,013,000
Accounts payable and accrued expenses (Note 6) 566,000 578,000
----------- ------------
12,987,000 8,655,000
----------- ------------
Shareholder's equity
Common stock, no par value - 2,000 shares
authorized; 1,000 shares issued and outstanding 50,000 50,000
Retained earnings 5,555,000 5,734,000
----------- ------------
5,605,000 5,784,000
----------- ------------
$18,592,000 $14,439,000
=========== ============
</TABLE>
See accompanying notes to financial statements
- 1 -
<PAGE> 12
Durable Homes, Inc.
Statement of Income and Retained Earnings
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1992 1991
<S> <C> <C>
Revenues
Sales $ 35,977,000 $ 31,461,000
Other 207,000 34,000
36,184,000 31,495,000
----------- -----------
Costs and expenses
Cost of sales 28,395,000 24,121,000
Developer fees (Note 7) 175,000 234,000
Selling, general and administrative 4,955,000 4,494,000
Depreciation 127,000 93,000
---------- ----------
33,652,000 28,942,000
---------- ----------
Net income 2,532,000 2,553,000
Retained earnings at beginning of period 5,734,000 5,379,000
Distributions to shareholder (2,711,000) (2,198,000)
---------- -----------
Retained earnings at end of period $ 5,555,000 $ 5,734,000
=========== ===========
</TABLE>
See accompanying notes to financial statements
- 2 -
<PAGE> 13
Durable Homes, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31,
1992 1991
<S> <C> <C>
Cash flows from operating activities
Cash received from customers $ 35,960,000 $ 31,398,000
Cash paid to contractors, suppliers and
employees (37,164,000) (28,185,000)
Interest received 41,000 82,000
----------- -----------
Net cash (used in) provided by operating
activities (1,163,000) 3,295,000
Cash flows from investing activities
Purchase of property and equipment (138,000) (233,000)
Proceeds from sale of other assets 38,000 218,000
Purchase of other assets (38,000) (49,000)
Payments received on notes receivable 79,000
Issuance of notes receivable (24,000) (77,000)
------------ -----------
Net cash used in investing activities (162,000) (62,000)
------------ -----------
Cash flows from financing activities
Proceeds from borrowings 33,382,000 24,779,000
Repayment of borrowings (30,616,000) (26,186,000)
Distributions to shareholder (2,481,000) (2,198,000)
------------ -----------
Net cash provided by (used in) financing
activities 285,000 (3,605,000)
----------- ------------
Net decrease in cash (1,040,000) (372,000)
Cash at beginning of period 2,072,000 2,444,000
----------- -------------
Cash at end of period $1,032,000 $ 2,072,000
=========== =============
</TABLE>
(Continued)
See accompanying notes to financial statements
- 3 -
<PAGE> 14
Durable Homes, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1992 1991
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
(USED IN) PROVIDED BY OPERATING ACTIVITIES
Net income $ 2,532,000 $ 2,553,000
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities
Depreciation 127,000 93,000
Loss on sale of property and equipment 22,000
Gain on sale of other assets (29,000)
Change in assets and liabilities
(Increase) decrease in receivables (206,000) 14,000
(Increase) decrease in inventories (5,174,000) 1,588,000
(Increase) decrease in prepaid expenses and deposits (80,000) 36,000
Decrease in other assets 50,000
Increase (decrease) in construction payables 1,578,000 (581,000)
Decrease in accounts payable and accrued expenses (12,000) (379,000)
------------ -----------
Net cash (used in) provided by operating activities $ (1,163,000) $ 3,295,000
============ ===========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Distributions to the shareholder of the Company during the year ended December
31, 1992 include receivables of $139,000, other assets of $35,000 and property
and equipment of $56,000.
See accompanying notes to financial statements
- 4 -
<PAGE> 15
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Durable Homes, Inc. (the Company) is engaged in the development,
construction and sale of residential real estate. A summary of
significant accounting policies follows:
INVENTORIES
Inventories, comprising land held for development and single-family
homes and condominiums under construction, are stated at the lower of
cost or market.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated
depreciation. Depreciation is determined using accelerated methods
over the useful lives of the assets which range from three to seven
years. Expenditures for maintenance and repairs are charged to
expense as incurred.
REVENUE RECOGNITION
Revenue from the sale of residential properties is recognized when
legal title passes to the purchaser at closing.
CAPITALIZED INTEREST
Interest on construction loans is capitalized in inventory during the
development and construction period. During the years ended December
31, 1992 and 1991, total interest of $592,000 and $906,000,
respectively, was incurred and capitalized.
INCOME TAXES
The Company has elected to be taxed as an S-corporation whereby the
income tax effects of the Company's activities accrue directly to the
shareholder.
RECLASSIFICATIONS
Certain reclassifications have been made to the calendar 1991
financial statements to conform with the current year financial
statement format.
2. RECEIVABLES
Receivables comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Accounts receivable $ 41,000 $ 9,000
Notes receivable 62,000 77,000
Receivable from related party (See Note 9) 134,000 50,000
---------- ---------
$ 237,000 $146,000
========== =========
</TABLE>
The notes receivable are unsecured notes from corporations and
individuals that bear interest at rates that range from 6 to 10
percent and are payable upon demand.
- 5 -
<PAGE> 16
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992
3. INVENTORIES
Inventories comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C> <C>
Land under development $ 9,091,000 $ 5,932,000
Single-family homes under construction 5,714,000 4,038,000
Condominiums under construction 1,728,000 1,389,000
------------- ------------
$ 16,533,000 $ 11,359,000
============= =============
</TABLE>
Inventories included approximately $148,000 and $359,000 of
capitalized interest at December 31, 1992 and 1991.
4. PROPERTY AND EQUIPMENT
Property and equipment comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Automobiles $ 189,000 $ 353,000
Office furniture and equipment 217,000 171,000
Model home furniture 122,000 44,000
---------- ----------
528,000 568,000
Less accumulated depreciation (288,000) (223,000)
---------- ----------
$ 240,000 $ 345,000
========== ==========
</TABLE>
- 6 -
<PAGE> 17
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992
5. BORROWINGS
Borrowings comprise:
<TABLE>
<CAPTION>
DECEMBER 31,
1992 1991
<S> <C> <C>
Construction loans payable to banks
and mortgage companies, interest at
prime plus 1.5 percent to 2 percent,
maturing in 1993, secured by certain
inventories $ 6,856,000 $ 5,797,000
Notes payable to corporations and
partnerships, interest from 9 percent
to 11 percent, maturing 1993, secured
by certain inventories 1,653,000
Construction loan payable to a bank,
interest at prime plus 1.5 percent,
maturing April 1, 1993, unsecured 200,000
Notes payable to a bank, interest
from 12.02 percent to 12.75 percent,
monthly instalments of $2,750, secured
by automobiles 71,000 196,000
Note payable to individual, interest
at 18 percent payable monthly, principal
due August 1993, unsecured 50,000 50,000
Note payable to a partnership, interest
at prime plus 3 percent, quarterly
principal instalment of $5,200, secured
by partnership interest ------------ 21,000
$ 8,830,000 $ 6,064,000
============ ============
</TABLE>
Substantially all construction loans have been guaranteed by the
shareholder of the Company.
- 7 -
<PAGE> 18
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992
The following summarizes the scheduled maturities of all borrowings at
December 31, 1992:
YEAR ENDING DECEMBER 31,
<TABLE>
<S> <C>
1993 $ 8,785,000
1994 22,000
1995 20,000
1996 3,000
-------------
$ 8,830,000
===========
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses comprise:
<TABLE>
<CAPTION> DECEMBER 31,
1992 1991
<S> <C> <C>
Accounts payable $ 40,000 $ 20,000
Accrued bonuses and profit sharing 407,000 448,000
Accrued developer fees 10,000 62,000
Other 109,000 48,000
---------- ----------
$ 566,000 $ 578,000
========== ==========
</TABLE>
7. DEVELOPER FEES
The Company has purchased certain undeveloped land from a corporation
in which a director of the Company is a shareholder. As partial
consideration for the purchase, the Company assigned to the
corporation an undivided interest in the net profits derived from the
sale of certain inventories. During the current year, the undivided
interest percentage decreased from 50 percent to 25 percent for
current and future projects. The corporation's share of net profits
for the years ended December 31, 1992 and 1991 was $115,000 and
$166,000, respectively, and is recorded as developer fees.
During 1991, the Company purchased the escrow position in certain
undeveloped land from a corporation in which the brother of the
shareholder of the Company is a shareholder. As partial
consideration, the Company assigned to the corporation an undivided 20
percent interest in the net profits derived from the sale of certain
inventories. The corporation's share of net profits for the years
ended December 31, 1992 and 1991 was $60,000 and $68,000, respectively,
and is recorded as developer fees.
- 8 -
<PAGE> 19
Durable Homes, Inc.
Notes to Financial Statements
December 31, 1992
8. PROFIT SHARING PLAN
The Company administers a defined contribution profit sharing plan for
eligible employees. Employees begin participating in the plan after
completing one year of service and attaining the age of 21. Under the
provisions of the plan, the Board of Directors determines the annual
contribution to the plan. Profit sharing expense for each of the
years ended December 31, 1992 and 1991 was $125,000.
9. RELATED PARTY TRANSACTIONS
The shareholder of the Company is a minority shareholder of an
advertising agency. Advertising costs incurred for services rendered
by the advertising agency for the years ended December 31, 1992 and
1991 were $477,000 and $235,000.
The Company holds unsecured non-interest bearing receivables totalling
$134,000 from two corporations in which the shareholder of the Company
owns 50 percent and 51 percent interests. The receivables are
guaranteed by the shareholder of the Company and are payable on
demand.
- 9 -
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
J.M. PETERS COMPANY, INC.
Dated: October 26, 1993 By: /s/ GREGORY R. PETERSEN
-----------------------
Gregory R. Petersen
Vice President, Chief
Financial Officer and
Secretary
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit Number Description Page Number
- - -------------- ------------------------- -----------
<S> <C> <C>
Exhibit 2.1 Purchase and Sale Agreement
dated September 17, 1993, by
and between CPH and NIX and
Durable.
Exhibit 2.2 Assignment and Assumption
Agreement dated September 24,
1993, by and between Capital
Pacific Homes, Inc., and
J.M. Peters Company, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
<PAGE> 2
ADDENDUM TO PURCHASE AGREEMENT
This Addendum to Purchase Agreement (the "Addendum") is entered
into effective as of September 17, 1993, by and between Roger Nix, an
individual (the "Seller"), Capital Pacific Homes, Inc., a Delaware corporation,
together with any assignee thereof pursuant to Section 5.4 below ("Purchaser"),
and Durable Homes, Inc., a Nevada corporation (the "Company"), as an addendum
to that certain Purchase Agreement among Seller, Purchaser and the Company of
even date herewith (the "Purchase Agreement").
The following paragraph is hereby added as a first paragraph at
the beginning of Section 4.12 of the Purchase Agreement:
"For a period of five (5) years after the Closing, Capital
Pacific Homes, Inc. (even if Capital Pacific Homes, Inc. has
otherwise assigned all of its rights under the Purchase
Agreement to Peters or any other person or entity) shall have
the right and option to purchase from Seller and his
transferees, heirs, successors and assigns (except any of the
Peters Shares sold to the public pursuant to a registration
statement under the Securities Act of 1933) such portion of the
Peters Shares as will bring the number of Shares of Peters
Stock owned by Capital Pacific Homes, Inc. to 80.05% of the
total number of shares of Peters stock outstanding from time to
time, by giving Seller written notice of such election to
purchase (a "Purchase Notice") at any time and from time to
time. The rights of Capital Pacific Homes, Inc. pursuant to
this Section may be exercised at one time or in two or more
separate purchases of portions of the Peters Shares; in
addition, such election(s) may be exercised as to the Peters
Shares owned by some, but not all, of the holders of the Peters
Shares from time to time. In the event of the repurchase of
Peters Shares pursuant to this Section, the purchase price
shall be the greater of (i) the closing price for shares of
Peters stock for the business day immediately preceding the
date of the Purchase Notice (adjusted for any stock splits,
reverse splits or other changes in the number of publicly
traded shares of Peters stock taking effect after the date of
the Closing) as set forth in the Wall Street Journal, or (ii)
$3.41 per share, escalated at the rate of 10% per annum from
the date of the Closing through the date of the Purchase Notice
(the "Repurchase Price"). The Repurchase Price shall be paid
in cash upon delivery of the Peters Shares to be repurchased,
endorsed for transfer or accompanied by stock powers executed
in blank, with the closing to take place on a date specified by
Capital Pacific Homes, Inc. not more than thirty (30) days
subsequent to the Purchase Notice. The parties acknowledge
that the Repurchase Price may vary from time to time, based on
the date of the Purchase Notice for each particular block of
Peters Shares to be repurchased pursuant to this Section."
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Addendum as part of the Purchase Agreement as of the date first written
above.
"SELLER"
/s/ ROGER NIX
_______________________________
Roger Nix, an individual
"PURCHASER"
Capital Pacific Homes, Inc., a
Delaware corporation
/s/ HADI MAKARECHIAN
By:____________________________
Hadi Makarechian,
Chairman of the Board
"COMPANY"
Durable Homes, Inc., a Nevada
corporation
/s/ ROGER NIX
By:____________________________
Roger Nix,
Chairman of the Board and
Chief Executive Officer
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<PAGE> 4
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is entered
into effective as of September 17, 1993, by and between Roger Nix, an
individual (the "Seller"), Capital Pacific Homes, Inc., a Delaware corporation,
together with any assignee thereof pursuant to Section 5.4 below ("Purchaser"),
and Durable Homes, Inc., a Nevada corporation (the "Company").
ARTICLE I
PURCHASE AND SALE
1.1 Purchase and Sale of Durable Shares.
Subject to the terms and conditions of this Agreement, Purchaser agrees to
purchase and acquire from Seller, and Seller agrees to sell, assign, transfer
and deliver to Purchaser, 100% of the outstanding capital stock of the Company
(the "Durable Shares").
1.2 Purchase Price. In consideration for the
Durable Shares, Purchaser shall pay Seller an aggregate purchase price (the
"Purchase Price"), payable as follows:
(i) In cash, the sum of One Million
Three Hundred Thousand Dollars ($1,300,000) (the "Cash Portion");
(ii) A Promissory Note in the amount of Four
Hundred Thousand Dollars ($400,000), with the Company as maker, in the
form attached hereto as Exhibit A (the "Note"); and
(iii) 6.92233% of the shares of outstanding
common stock of J.M. Peters Company, Inc., a Delaware corporation
("Peters") (currently 967,742 shares), subject to the provisions of
Section 4.3 (the "Peters Shares").
In addition, Purchaser shall cause Seller to be paid the
amounts specified in the consulting agreement set forth in Section 4.9 below.
1.3 Structuring as Assets Purchase. At
Purchaser's election, Purchaser shall have the right to effect the transactions
contemplated by this Agreement as an asset purchase of all of the Company's
assets, with liabilities allocated as set forth in this Agreement, by giving
written notice of such election to Seller and the Company. In the event of
such election, all provisions of this Agreement shall be construed as if
drafted to apply to the transaction as an asset purchase and sale, and the Note
will be a non-recourse obligation of Purchaser secured by the purchased assets
with a value not less than 110% of the full amount of the Note.
<PAGE> 5
1.4 Initial Deposit. Within five (5) days after
execution of this Agreement, Purchaser shall deposit with Seller the sum of One
Hundred Fifty Thousand Dollars ($150,000) toward the Cash Portion of the
Purchase Price (the "Initial Deposit"). The Initial Deposit shall be
nonrefundable to Purchaser, unless Seller or the Company breaches any
representations, warranties or covenants set forth in this Agreement and
Purchaser terminates this Agreement.
ARTICLE II
ESCROW AND CLOSING
2.1 Escrow. Seller and Purchaser shall open an
escrow (the "Escrow") at Nevada Title Company, 3320 West Sahara Avenue, Suite
200, Las Vegas, Nevada 89102 ("Escrow Holder") through which the transactions
contemplated by this Agreement shall be consummated. Each of Seller and
Purchaser shall pay one half ( 1/2) of the fees and costs charged by Escrow
Holder.
2.2 Release of Cash Portion. Subject to
Purchaser's rights under Section 4.1, on or before October 29, 1993 on a date
specified by Purchaser upon forty-eight (48) hours' written notice to Seller
(the "Release Date"), the following shall occur:
(a) Deliveries by Purchaser.
Purchaser shall deliver:
(i) to Escrow Holder, by cashier's
check or wire transfer, the sum of One Million One Hundred Fifty
Thousand Dollars ($1,150,000) as the remainder of the Cash Portion
not previously delivered to Seller as the Initial Deposit;
(ii) to Escrow Holder, the Note
executed by Purchaser and undated;
(iii) to Escrow Holder, one or more
stock certificates representing the Peters Shares, in the name of
Seller or endorsed in blank or accompanied by stock powers endorsed
in blank;
(iv) to the appropriate persons or
entities, such mutual escrow instructions and other documents as are
reasonably requested by Escrow Holder in connection with the Escrow;
(v) to Seller, the certificate
required of Purchaser pursuant to Section 3.3; and
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(vi) such other documents as are
reasonably required of Purchaser to effect the transactions
contemplated by this Agreement.
(b) Deliveries by Seller. Seller
shall deliver (and, as appropriate, shall cause the Company to deliver):
(i) to Escrow Holder, one or
more stock certificates representing the Durable Shares, endorsed in
blank or accompanied by stock powers endorsed in blank;
(ii) to Purchaser, such resignations
of the officers and directors of the Company as Purchaser may request;
(iii) to Purchaser, the Irrevocable
Proxy in the form attached hereto as Exhibit B, executed by Seller and
dated as of the Release Date;
(iv) to Purchaser, such mutual escrow
instructions and other documents as are reasonably requested by Escrow
Holder in connection with the Escrow;
(v) to Purchaser, the certificate
required of Seller and the Company pursuant to Section 3.3;
(vi) to Escrow Holder, in the event
Purchaser elects to structure this transaction as an asset purchase,
such warranty deeds, bills of sale, assignments of tangible and
intangible property and other instruments of transfer as are customary
in asset purchases of this type (including evidence of title insurance
reasonably acceptable to Purchaser at Purchaser's expense); and
(vii) to the appropriate persons or
entities, such other documents as are reasonably required of Seller to
effect the transactions contemplated by this Agreement.
(c) Deliveries Upon Release Date.
The mutual escrow instructions shall provide that, upon Escrow Holder's receipt
of the deliveries described in Sections 2.2(a) and (b), Escrow Holder shall
deliver the remaining portion of the Cash Portion to Seller, by Escrow Holder's
check or wire transfer, and shall hold the remainder of the documents delivered
to Escrow Holder (the "Escrowed Documents") in the Escrow, pending the Closing
or other disposition pursuant to this Agreement. Upon delivery to Seller on
the Release Date, the Cash Portion of the Purchase Price shall be nonrefundable
to Purchaser unless Seller breaches his covenants under this Agreement or it is
determined that Seller or the Company have breached any representations and
warranties set forth in this Agreement.
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(d) Closing. Subject to Purchaser's
rights under Section 4.1, the consummation of the transactions contemplated by
this Agreement (the "Closing") shall occur on March 1, 1994, subject to
Purchaser's right to close earlier at any time immediately upon written notice
to Escrow Holder and Seller. If the Closing occurs, upon the Closing Escrow
Holder shall deliver to Seller the Note (dated as of the Closing date) and the
Peters Shares and any associated stock powers, if applicable, and shall deliver
to Purchaser the Durable Shares and any associated stock powers, if applicable
(or, in the event Purchaser elects to structure this transaction as an asset
purchase, all instruments of transfer of the Company's assets and related
documents, after due filing or recordation as is customary), and shall deliver
to the appropriate party all other documents held in the Escrow.
(e) Simultaneous Delivery. All
proceedings to take place on the Release Date or Closing Date, as the case may
be, shall be considered to take place simultaneously on such date, and no
delivery or payment shall be considered to have been made on such date until
all deliveries, payments and proceedings due to occur under this Agreement on
such date have been completed.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller and
the Company. Seller and the Company jointly and severally represent and
warrant to Purchaser as follows:
(a) Authority and Enforceability.
All actions on the part of Seller and the Company necessary for the
authorization, execution and delivery of this Agreement and for the
consummation of the transactions contemplated hereby, have been duly and
validly taken. This Agreement has been duly executed and delivered by Seller
and the Company and constitutes a valid and legally binding obligation of
Seller and the Company enforceable against Seller and the Company in accordance
with its terms.
(b) Organization of the Company.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the state of Nevada.
(c) Charter Documents; No Conflicts.
True and complete copies of the Company's Articles of Incorporation and Bylaws,
as in effect on the date hereof, are attached hereto as Exhibit C and Exhibit
D, respectively. Neither the execution and delivery of this Agreement, nor
consummation of the transactions contemplated hereby, nor compliance with any
of the provisions hereof, will conflict with or result in the breach or
violation
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<PAGE> 8
of, or default under, or give any other party any right to modify, accelerate
or cancel, any of the terms, conditions or provisions of the Company's Articles
of Incorporation or Bylaws or any note, bond, mortgage, indenture, license,
lease, loan agreement, judgment, order, decree or other agreement or instrument
or obligation to which Seller or the Company is a party or by which Seller or
the Company or any of its properties or assets is bound.
(d) Capitalization. There are 1,000
shares of the common stock of the Company issued and outstanding, and all of
such shares are duly and validly authorized and issued to Seller and are fully
paid and nonassessable. No options, warrants or other rights to purchase or
otherwise acquire any shares of the Company's capital stock are outstanding.
(e) Title to Assets. The Company has good
and marketable title to all of the real and personal property reflected in the
Financial Statements (as defined in Section 3.1(m) below) or described in
attached Exhibit E (collectively, the "Company Assets"), and no other person or
entity has any right, title or interest in or to the Company Assets, and all of
the assets of the Company are free and clear of any claims, liens (including
tax liens), encumbrances, security agreements, leases and other restrictions,
except as otherwise set forth in attached Exhibit F. None of the assets of the
Company is subject to any pending or threatened condemnation, attachment,
enforcement or similar proceedings, except as set forth in the Exhibits to this
Agreement.
(f) Title to the Durable Shares.
Seller is the sole legal and beneficial owner of the Durable Shares. No other
person or entity has any right, title, or interest, beneficially or of record,
in or to the Durable Shares. The Durable Shares are free and clear of any
claims, liens (including tax liens), encumbrances, security agreements,
equities, options, charges or restrictions (subject to applicable securities
laws), and can be delivered and surrendered to Purchaser pursuant to this
Agreement without obtaining the consent or approval of any other person or
governmental authority. Upon the transfer and delivery of the Durable Shares
to Purchaser in accordance with this Agreement, Purchaser will become the owner
and holder of the Durable Shares, free and clear of all liens, encumbrances,
pledges, claims, charges and restrictions on transfer, except for restrictions
on transfer imposed pursuant to applicable law. Seller is not a party to any
voting trust, proxy or other agreement or understanding with respect to the
voting of any of the Durable Shares except for the irrevocable proxy to be
granted to Purchaser as described in attached Exhibit B.
(g) Investment Intent. Seller is
acquiring the Peters Shares with investment intent for Seller's own account and
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<PAGE> 9
not with a view to or for sale in connection with any distribution of the
Peters Shares. Seller understands that the Peters Shares have not been, and
will not be, registered under the Securities Act of 1933 or any state
securities laws, and are being transferred to Seller in reliance upon federal
and state exemptions for transactions not involving any public offering.
(h) Payment of Taxes. The Company
has paid all federal, state and local income, franchise, employment, workers'
compensation, property and other taxes as required pursuant to applicable law
and has filed all tax returns required under applicable law. Neither Seller
nor the Company has been advised that any of its federal, state or local tax
returns have been or are being audited nor has either received notice of any
delinquent payment or disputed amount of taxes or similar imposition owing. In
the event this transaction is structured as an asset purchase, the Company and
Seller shall take all actions as required by all applicable federal, state and
local law or regulation to prevent Purchaser from incurring any successor
liability for any tax liability of Seller or the Company.
(i) Default. To the respective
knowledge of Seller and the Company, and except as otherwise disclosed in
attached Exhibit G, the Company is not in default under any contract,
commitment or agreement to which it is a party or to which any of its assets
may be subject or bound, and there is no default or event that, with notice or
lapse of time, or both, would constitute a default by any party to any such
agreement, nor does Seller or the Company have knowledge of any fact which
reasonably can be expected to cause either to be in default under any such
agreement in the future.
(j) Violations of Law. Except as
otherwise set forth in attached Exhibit G, the Company holds all licenses,
franchises, permits, authorizations and other approvals necessary for the
lawful conduct of its business. To the respective knowledge of Seller and the
Company, neither the Company nor its assets is in violation of any applicable
statutes, laws, ordinances, rules, regulations (including, but not limited to,
any of the foregoing related to employment discrimination, occupational safety,
environmental condition, conservation, natural resources, zoning, land use,
antitrust, unfair competition, labor practices or corrupt practices) of any
federal, state, local or foreign governmental body, agency or subdivision
having, asserting or claiming jurisdiction over the Company or any of its
assets or operations, and neither has received any notice of any such actual or
alleged violation, existing or in the past.
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(k) Litigation. Except as described
in attached Exhibit F, there are no claims, disputes, actions, proceedings or
investigations of any nature pending or, to the respective knowledge of Seller
and the Company, threatened against or involving Seller or the Company or its
assets, and neither Seller nor the Company has any knowledge of any basis for
any such claim, dispute, action, proceeding or investigation.
(l) No Brokers. No person or any
other entity is entitled to any brokerage commission, finder's fee or like
payment in connection with the transactions contemplated by this Agreement due
to any agreement, engagement or representation made by or on behalf of Seller
or the Company.
(m) Financial Information. The
unaudited balance sheet of the Company as at August 31, 1993, the audited
balance sheet of the Company for the year ending December 31, 1992, the
statements of income and cash flow of the Company for the period ending August
31, 1993 and for certain other periods during 1993, and the audited statement
of income and cash flow for the year ending December 31, 1992 each are attached
to this Agreement as Exhibit I. The foregoing described financial statements
attached as Exhibit I, together with all financial statements of the Company
for prior dates and periods that have been provided to Purchaser (collectively,
the "Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
period indicated (except as specifically disclosed therein), fairly present the
financial condition of the Company at the dates thereof and the results of
operations of the Company for the periods indicated, respectively, and are true
and correct in all material respects and did not omit any liability or
contingent liability of the Company at the dates thereof, respectively. The
amount of reserves for expenses specified in the Addendum to the Financial
Statements attached to Exhibit I are sufficient to cover all expenses of the
Company allocable to periods prior to August 31, 1993. There has been no
adverse change in the business, financial condition, operations, results of
operations or future prospects of the Company since August 31, 1993.
(n) No Adverse Developments. Except
as described in the Exhibits to this Agreement, neither Seller nor the Company
has any knowledge of any fact, circumstance, condition or event which has or
may have an adverse affect on the Company or its current or contemplated
business other than conditions or events affecting the real estate development
business generally.
For the purposes of this Section, "knowledge of" as to Seller means the actual
knowledge of Seller together with the knowledge that Seller would have after
diligent inquiry regarding the matter in question, and "knowledge of" as to the
Company means the actual knowledge of any of the current corporate officers of
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<PAGE> 11
the Company together with the knowledge that any of them would have after
diligent inquiry regarding the matter in question.
3.2 Representations and Warranties of Purchaser.
Purchaser represents and warrants to Seller as follows:
(a) Authority and Enforceability.
Upon the Closing, all actions on the part of Purchaser necessary for the
authorization, execution and delivery of this Agreement and for the
consummation of the transactions contemplated hereby, will have been duly and
validly taken. This Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and legally binding obligation of such
Purchaser enforceable against Purchaser in accordance with its terms.
(b) Capitalization of Peters. The
967,742 shares of Peters stock owned by Capital Pacific Homes, Inc. represent
6.92233% of the issued and outstanding common stock of Peters. The Peters
Shares are duly and validly authorized and issued to Purchaser and are fully
paid and nonassessable. No options, warrants or other rights to purchase or
otherwise acquire any of the Peters Shares are outstanding.
(c) Title to the Peters Shares. The
Peters Shares are free and clear of any claims, liens, encumbrances, security
agreements, equities, options, charges or restrictions (subject to applicable
securities laws), and can be delivered and surrendered to Seller pursuant to
this Agreement without obtaining the consent or approval of any other person or
governmental authority. Upon the transfer and delivery of the Peters Shares to
Seller in accordance with this Agreement, Seller will become the owner and
holder of the Peters Shares, free and clear of all liens, encumbrances,
pledges, claims, charges and restrictions on transfer, except for restrictions
on transfer imposed pursuant to this Agreement or applicable securities law.
(d) Investment Intent. Purchaser is
acquiring the Durable Shares with investment intent for such Purchaser's own
account and not with a view to or for sale in connection with any distribution
of the Durable Shares. Purchaser understands that the Durable shares have not
been, and will not be, registered under the Securities Act of 1933 or any state
securities laws, and are being transferred to Purchaser in reliance upon
federal and state exemptions for transactions not involving any public
offering.
(e) No Brokers. No person or any
other entity is entitled to any brokerage commission, finder's fee or like
payment in connection with the transactions contemplated by this Agreement, due
to any agreement, engagement or representation made by or on behalf of
Purchaser.
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3.3 Remaking and Survival of Representations and
Warranties. Each of the representation and warranties of the parties set forth
in this Article III shall be remade on the Release Date by a certificate
delivered by Seller to Purchaser as to the representations and warranties set
forth in Section 3.1, and a certificate by Purchaser to Seller as to the
representations and warranties set forth in Section 3.2. The representations
and warranties of the parties set forth in this Article III shall survive the
Release Date and the Closing.
ARTICLE IV
ADDITIONAL COVENANTS AND AGREEMENTS
4.1 Purchaser's Due Diligence. Seller and the
Company shall provide Purchaser and its agents with full access to all of the
Company's books, records, property, employees and agents for the Purchaser's
purposes of investigating and conducting due diligence regarding the Company's
assets, liabilities and business operations, and Seller and the Company and its
employees and agents shall fully cooperate with Purchaser in its
investigations, both before and after the Release Date. If Purchaser discovers
during its investigations of the Company matters which may be of concern to
Purchaser in its sole and absolute discretion, Purchaser may give Seller
written notice of termination of this Agreement at any time prior to the
Closing, in which event neither Seller nor Purchaser shall have any further
rights or obligations under this Agreement except as to breaches or other
matters occurring prior to such termination. Purchaser's obligations under
this Agreement are expressly contingent upon approval of this Agreement and all
transactions contemplated hereby by Purchaser's Board of Directors.
4.2 Continued Operation of the Company. Seller
shall not permit the Company to undergo any material change in its operations,
indebtedness or other liabilities and shall not permit the Company to transfer
any material assets or any right or interest therein. In addition, Seller
shall not accept any payments from the Company, whether by the way of
dividends, repayments of debt, salary or otherwise, or permit the Company to
make any payments to any other party, except for continued payments of regular
salaries to existing employees and required payments to lenders,
subcontractors, material suppliers and other vendors of the Company under
existing agreements, in each case, as they become due and payable.
4.3 Non-Dilution. Prior to the earlier of the
Closing or April 1, 1994, Seller shall not, voluntarily, involuntarily or by
operation of law, assign or transfer any of the Durable Shares, and Seller and
the Company shall not permit the Company to issue any additional stock or other
equity interest in the Company or otherwise take any steps which would dilute
the
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Durable Shares. In any event, 100% of the stock or other equity interest in
the Company shall be subject to this Agreement and Purchaser's rights hereunder
to acquire all of the stock and other equity interest in the Company at the
Closing for the Purchase Price (or 100% of the assets of the Company in the
event Purchaser elects to structure the transaction as an asset purchase). In
the event Peters issues additional stock or other equity interest prior to or
concurrently with the Closing, or repurchases or otherwise retires any
outstanding shares prior to the Closing, as the case may be, the number of
Peters Shares to be delivered to Seller upon the Closing shall be increased or
decreased proportionately so that the number of shares transferred to Seller
equals 6.92233% of the total outstanding shares of common stock of Peters as of
the Closing. Notwithstanding the foregoing, in the event that this Agreement
is assigned by Purchaser to Peters such that the Peters Shares are shares being
issued directly by Peters to Seller at the Closing, the total number of Peters
Shares delivered to Seller upon the Closing shall be the lesser of 1,015,000
shares or 6.76667% of the total outstanding shares of the common stock of
Peters upon the Closing. In the event this Agreement is assigned to Peters
after Purchaser has delivered into the Escrow the 967,742 shares of Peters
stock owned by Capital Pacific Homes, Inc., the stock certificate(s) and other
documents evidencing such shares that are held in the Escrow shall be returned
to Capital Pacific Homes, Inc. upon delivery by Peters into Escrow one or more
stock certificates representing the replacement Peters Shares, as calculated
pursuant to this Section.
4.4 Restricted Durable Shares; Registration
Rights. In the event that, after the Closing, Peters shall in its sole
discretion determine to effect any registration under the Securities Act of
1933, as amended, with respect to the offer of any of its securities by it or
others pursuant to a registration statement (other than a registration relating
solely to the sale of securities to participants in a Peters stock plan or a
registration in any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Peters Shares), and Purchaser is contractually
entitled to register any shares of Peters stock owned by Purchaser in
connection with such offering, Purchaser shall provide Seller with prompt
notice thereof. In the event that, within fifteen (15) days of such notice,
Seller elects by written notice to Purchaser to pursue registration of the
Peters Shares then owned by Seller, Purchaser shall assign to Seller any rights
Purchaser may then have, or otherwise obtain for Seller the right, to include
Seller's Peters Shares in such registration on a pro rata basis with the number
of Purchaser's shares that Purchaser is entitled to register (i.e., the same
proportion that the number of the Peters Shares owned by Seller bears to the
total number of shares of Peters stock owned by Purchaser), provided that (i)
Seller shall bear the entire
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expense allocable to the registration of its shares, including, but not limited
to, all underwriters' discounts and commissions properly allocable to Peters
Shares (expenses not more appropriately allocated by another means shall be
allocated proportionately based upon the number of shares being registered by
Seller as a percentage of the total number of shares of Peters stock being
registered), (ii) in no event shall Peters be obligated to qualify to do
business in any jurisdiction where it would not otherwise be required to be so
qualified or to take any action which would subject it to tax or the service of
process in any state where it would not otherwise be subject thereto; (iii)
such registration or qualification shall not be required to be effective for a
period in excess of ninety (90) days after the first distribution of shares
described in the registration statement relating thereto; (iv) in the event
that Peters' offering is underwritten, Seller shall be required to sell its
shares to or through the underwriters or other parties upon terms generally
comparable to the terms applicable to shares being offered by Peters or others,
and (v) if any underwriter in good faith reasonably determines that the number
of shares sought to be included in the registration statement by Seller and any
other secondary holders of Peters stock proposed to be included in the
registration statement (including shares of Purchaser) is more than can be
reasonably sold at the proposed price, then the number of shares which Seller
and Purchaser will be permitted to include in such registration statement will
be reduced pro rata to an amount reasonably acceptable to the underwriter. The
registration rights set forth in this Section shall terminate at such time as
all of the Peters Shares held by Seller may be sold pursuant to Rule 144 under
the Securities Act of 1933 during any three-month period and, if earlier, shall
terminate with respect to all Peters Shares transferred by Seller to any third
party immediately upon such transfer.
4.5 Tax Elections and Reporting. If the Closing
occurs as a stock purchase, Purchaser shall have the right to make the election
under Internal Revenue Code 338(h)(10) to treat this transaction as an asset
sale for tax purposes, and Seller agrees to join in any federal and state
elections relating thereto. Seller and Purchaser agree to coordinate and agree
upon the proper tax reporting of the transactions under this Agreement.
4.6 Indemnity by Seller and the Company. The
parties acknowledge that the Company currently has projects in various stages
of completion, including lots subject to option but not yet purchased, owned
lots, units under construction, completed units in inventory, completed units
subject to reservations or purchase agreements and units already sold and
subject to warranty claims and other potential claims for defects in materials
and workmanship, breaches of contracts, etc. (collectively, "Sales Claims").
Seller hereby agrees to
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indemnify Purchaser and the Company and their respective officers, employees,
directors and other agents, and hold them harmless and defend them (by counsel
selected by them reasonably acceptable to Seller) from and against any and all
claims, demands, liabilities, liens, costs, expenses, penalties, damages and
losses, including, but not limited to, attorneys' fees and court costs actually
and reasonably incurred by Purchaser and arising out of (i) Sales Claims
relating to any dwelling unit sold by the Company prior to the Release Date or
any transaction relating to any such dwelling unit, (ii) any breach of the
representations, warranties, covenants or agreements of Seller or the Company
contained in this Agreement (even if the damaged party knew, had reason to know
or is deemed to know of any such breach at the time of the Release Date), (iii)
any federal, state or local income, franchise, employment, workers'
compensation, property or other tax or similar imposition against Seller or the
Company required to be paid or withheld, but not so paid or withheld, prior to
the Release Date, and (iv) any other liability or obligation of the Company or
Seller relating to the Company accruing, or arising out of any event occurring,
prior to the Release Date, except for liabilities contained in the Financial
Statements or described in attached Exhibits F, G or H attached hereto.
4.7 Indemnification by Purchaser. The parties
acknowledge that Seller has signed personal guaranties with respect to various
liabilities of the Company to unrelated third parties, as described in attached
Exhibit J (the "Guaranties"). If the Closing occurs, Purchaser hereby agrees
to indemnify Seller and hold Seller harmless and defend Seller (by counsel
selected by Purchaser and reasonably acceptable to Seller) from and against any
and all claims, demands, liabilities, liens, costs, expenses, penalties,
damages and losses, including, but not limited to, attorneys' fees and court
costs actually and reasonably incurred by Seller and arising out of (i) the
Loan Guaranties except to the extent payment is required of Seller thereunder
due to any event occurring prior to the Release Date, including, but not
limited to, any pre-Release Date breaches of covenants or conditions or
misrepresentations by the Company or Seller, (ii) any breach of the
representations, warranties, covenants or agreements of Purchaser contained in
this Agreement (even if Seller knew, had reason to know or is deemed to know of
any such breach at the time of the Release Date), (iii) any federal, state or
local income, franchise, employment, workers' compensation, property or other
tax or similar imposition against Purchaser or the Company applicable to any
period after the Release Date, and (iv) any other liability or obligation of
the Company or Purchaser relating to the Company accruing, or arising out of
any event occurring, after the Release Date, except for any matter covered by
Seller's indemnities set forth in Section 4.7 above.
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<PAGE> 16
4.8 Covenant Not to Compete. Without the prior
written consent of Purchaser, Seller shall not directly or indirectly (whether
through any partnership which Seller is a member, as a consultant, through a
trust of which Seller is a beneficiary or trustee, through a corporation or
other association in which Seller has any interest, legal or equitable, or as
an employee or in any other capacity whatsoever) engage in the businesses of
acquisition, ownership, development, construction or sale of dwelling units in
any county in the United States in which Purchaser, the Company or Peters may
conduct business from time to time. Seller's covenant not to compete shall
extend until five (5) years after the date of the Release Date as to Clark
County, Nevada, and three (3) years after the Closing as to any other county
in the United States in which Purchaser, the Company or Peters conducts
business from time to time, plus any additional period during which Seller or
any affiliated party (i.e., any member of Seller's immediate family or any
partnership, corporation, trust or other association in which Seller or any
member of Seller's immediate family has a legal or equitable interest)
continues to own any stock in Peters. In addition to the foregoing, until
five (5) years after the date of the Closing as to any business or transaction
in Clark County, Nevada, and until three (3) years after the Closing as to any
business or transaction in any other county in the United States, Seller shall
not hire, solicit for hire, or otherwise engage in any business transaction
with, any current employee of the Company, whether as an employee, associate,
partner, consultant or other business relation. Seller and Purchaser agree
that the duration and area as to which Seller's covenant not to compete and
nonsolicitation covenant are to be effective are reasonable and directly relate
to providing Purchaser with the reasonable benefits of its bargain as to the
value of the Durable Shares and to the Company's ability to be reasonably
profitable in the future. In the event that any court determines that Seller's
covenant not to compete or nonsolicitation covenant is unreasonable and
unenforceable as to time period or area, or both, Seller and Purchaser agree
that Seller's covenants shall remain in full force and effect for the greatest
time period and in the greatest area that does not render the covenants
unenforceable. Seller and Purchaser intend that Seller's covenant not to
compete and nonsolicitation covenant each shall be deemed to be a series of
separate covenants, one for each and every county described above in this
Section.
4.9 Consulting Agreement. For the period ending
one (1) year following the Release Date, Seller agrees to provide consulting
services to Purchaser and the Company as reasonably requested, including
attending meetings relating to the Company's business with lenders,
governmental officials and other third parties. As part of Seller's
obligations under this Section, Seller shall expend such time and effort as is
necessary to cause
13
<PAGE> 17
an orderly transition of management and decision making at the Company to help
ensure that the business operations and relationships of the Company are not
interrupted, impeded or otherwise compromised. In addition, after the one-year
primary period of consulting specified above, Seller shall continue to
cooperate with the Company and its officers and directors, without additional
compensation, to answer questions, advise from time to time and assist the
Company in legal and other proceedings concerning matters occurring or accruing
prior to the Closing. To compensate Seller for his services pursuant to this
Section, Purchaser shall pay, or shall cause the Company to pay, to Seller the
sum of $218,000 in twelve (12) monthly installments of $18,167, beginning on
the date one (1) month after the date of the Release Date. Seller shall not be
an employee of Purchaser or the Company, but will perform services under this
Section in the capacity of an independent contractor. Seller shall perform
such services in accordance with his own methods and means and shall not be
subject to control by the Company or Purchaser as to the methods of work or the
times, hours or locations of work (except for Seller's reasonable cooperation
as to the scheduling of meetings and fulfillment of reasonable deadlines).
Seller understands that, since he will not be an employee of the Company or
Purchaser, no amount for federal, state or municipal taxes will be withheld
from amounts paid to him pursuant to the Section, and neither the Company nor
Purchaser shall be obligated to make any payments on Seller's behalf relating
to disability, workers' compensation, hospitalization, insurance or other
similar matters. As to any payments that the Company or Purchaser may be
required to make pursuant to law on behalf of Seller in connection with this
services under this Section, all such payments, to the extent permitted by law,
shall be deducted from the amounts otherwise payable to Seller pursuant to this
Section. The Company shall be a third-party beneficiary to the provisions of
this Section.
4.10 Legends on Certificates. Upon delivery to
Seller, all certificates evidencing the Peters Shares shall be endorsed with
the following or substantially similar legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH THE
DISTRIBUTION THEREOF AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("SECURITIES ACT"). THESE SECURITIES MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING SUCH
SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY'S COUNSEL, STATING THAT SUCH SALE,
TRANSFER, OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND FROM THE REGISTRATION
OR
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<PAGE> 18
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS.
4.11 Confidentiality. Except as otherwise
required by law, Seller and the Company shall keep strictly confidential all
information and documentation relating to the transactions contemplated by this
Agreement (including the fact that such transactions are contemplated), and
shall not disclose any information or documentation relating to such
transactions to any person or entity other than those employees or agents of
the Company to the extent that such disclosure is necessary to permit the
consummation of the transactions contemplated by this Agreement. If the
Closing does not occur, the foregoing provisions of this Section will continue
in force in perpetuity. Upon the Closing, if it occurs, the form and content
of all press releases or other public communications by or on behalf of Seller
of the Company shall be subject to the approval of Purchaser and Peters for a
period of six (6) months after the Closing, and, except as otherwise required
by law, Seller shall continue to keep the terms and conditions of the
transactions contemplated by this Agreement strictly confidential and shall not
disclose them to any person or entity other than private communications to
Seller's attorneys, accountants and other parties to the extent they reasonably
need to know such information.
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<PAGE> 19
Purchaser shall have the right to cause Seller to sell
the Subject Shares to any third party who acquires all of the shares of Peters
stock owned by Capital Pacific Homes, Inc., by giving Seller written notice of
such election to sell (the "Sale Notice") at any time and from time to time.
In the event of a sale of Subject Shares pursuant to this paragraph by a buyer
of Peters stock owned by Capital Pacific Homes, Inc., the sale price and other
terms of the sale shall be the same as the price and terms at which Capital
Pacific Homes, Inc. sells it shares of Peters stock to such buyer. The closing
of such sale of Subject Shares shall occur concurrently with the closing of the
sale of Peters stock owned by Capital Pacific Homes, Inc. to such buyer.
Upon and at all times subsequent to delivery to Seller,
all certificates evidencing the Peters Shares will be endorsed with the
following or substantially similar legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A FIVE
YEAR OPTION TO REPURCHASE AND AN OPTION TO CAUSE A SALE TO A THIRD
PARTY, EACH GRANTED PURSUANT TO SECTION 4.12 OF THE PURCHASE AGREEMENT
DATED SEPTEMBER 17, 1993 AMONG ROGER NIX, CAPITAL PACIFIC HOMES, INC.,
AND DURABLE HOMES, INC., THE RELEVANT PORTIONS OF WHICH ARE AVAILABLE
AT THE OFFICES OF THE ISSUER. NO TRANSFER OF SUCH SECURITIES WILL BE
EFFECTED ON THE BOOKS OF THE ISSUER UNLESS ACCOMPANIED BY EVIDENCE OF
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THE PURCHASE
AGREEMENT.
Prior to effecting any transfer of the Peters Shares, Seller (and any
subsequent holder) shall obtain from any proposed transferee, and provide to
Purchaser, such proposed transferee's acknowledgement of, and agreement to be
bound by, the terms of this Section 4.12.
ARTICLE V
GENERAL PROVISIONS
5.1 Entire Agreement; Amendment. This
Agreement, together with all exhibits hereto, sets forth the entire
understanding of the parties, and supersedes all prior arrangements and
communications, whether oral or written, with respect to the subject matter
hereof, specifically including the letter agreement among the parties dated
September 8, 1993.
5.2 Severability. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
16
<PAGE> 20
the other provisions of this Agreement, and this Agreement shall be construed
in all respects as if the invalid or unenforceable provision were omitted.
5.3 Notices. All notices, demands and
communications hereunder shall be in writing and shall be deemed to be duly
given upon personal delivery or five (5) days after being mailed from the State
of California or the State of Nevada by registered or certified United States
mail, postage pre-paid, return receipt requested, addressed to the parties at
the addresses herein set forth, or at such other address as any party shall
have furnished to the other parties in writing:
<TABLE>
<S> <C>
If to Seller: Roger Nix
2800 W. Sahara Avenue
Suite 5F
Las Vegas, Nevada 89102
If to the Company: Durable Homes, Inc.
2800 W. Sahara Avenue
Suite 5F
Las Vegas, Nevada 89102
Attention: Roger Nix
If to Purchaser: Capital Pacific Homes, Inc.
3501 Jamboree Road, Suite 200
Newport Beach, CA 92660
Attention: Hadi Makarechian
With a copy to: Hewitt & McGuire
3501 Jamboree Road, Suite 250
Newport Beach, CA 92660
Attention: Jay F. Palchikoff
and a copy to: Wiley Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Attention: Dag Wilkinson
</TABLE>
5.4 Assignment. This Agreement shall not be
assignable by Seller or the Company. Purchaser shall have the right to assign
its rights and obligations under this Agreement to another person or entity to
whom title of the Durable Shares (or title to the assets of the Company in the
event the transactions are structured as an asset purchase) will be transferred
upon the Closing, but only if such assignee assumes all of Purchaser's
remaining obligations under this Agreement in writing. Without limiting the
generality of the foregoing, Purchaser may assign its rights and obligations
under this Agreement to Peters, in which event Peters shall reimburse Purchaser
for any cash consideration previously deposited into the Escrow or transferred
to Seller and shall assume all of Purchaser's remaining obligations hereunder.
Purchaser shall be
17
<PAGE> 21
relieved of its obligations under this Agreement upon such assumption by the
assignee. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
5.5 Governing Law and Venue. This Agreement and
the rights and obligations of the parties hereunder shall be governed by and
construed in accordance with the internal laws, but not the laws pertaining to
conflict or choice of laws, of the State of Nevada. The exclusive forum for
the determination of any action relating to this Agreement shall be either an
appropriate court of the State of Nevada in Clark County or the appropriate
court of the United States in the State of California.
5.6 Attorneys' Fees. If either party to this
Agreement brings an action against the other party to interpret or enforce this
Agreement, the prevailing party shall be entitled to recover its costs and
expenses, including without limitation attorneys' fees and costs actually and
reasonably incurred in connection with such action, including any appeal of
such action.
5.7 No Waiver. No waiver of any provision of
this Agreement or any rights or obligations of any party hereunder shall be
effective, except pursuant to a written instrument signed by the party or
parties waiving compliance, and any such waiver shall be effective only in the
specific instance and for the specific purpose stated in such writing.
5.8 Cooperation and Further Assurances. Seller
shall, and shall cause the Company to, fully cooperate with Purchaser in good
faith to execute any and all reasonable documents and to perform all actions
reasonably necessary or appropriate to effect the consummation of the
transactions contemplated by this Agreement, both before or after the Closing.
5.9 Incorporation of Exhibits. Each of the
Exhibits referred to in this Agreement is incorporated into this Agreement by
this reference.
5.10 Captions and References to Articles and
Sections. The titles of the articles and sections to this Agreement are for
convenience only and are not a part of this Agreement and do not in any way
limit, amplify or explain any of the provisions of this Agreement. All uses of
the words "Article" and "Section" in this Agreement are references to articles
and sections of this Agreement, unless otherwise specified.
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<PAGE> 22
5.11 Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto have
executed this Agreement as of the date first written above.
"SELLER"
/s/ ROGER NIX
__________________________________________
Roger Nix, an individual
"PURCHASER"
Capital Pacific Homes, Inc., a Delaware
corporation
/s/ HADI MAKARECHIAN
By:___________________________________________
Hadi Makarechian,
Chairman of the Board
"COMPANY"
Durable Homes, Inc., a Nevada corporation
/s/ ROGER NIX
By:_____________________________________________
Roger Nix,
Chairman of the Board and Chief
Executive Officer
19
<PAGE> 1
EXHIBIT 2.2
<PAGE> 2
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT (this "Agreement") is made and effective this 24th day
of September, 1993 by and between Capital Pacific Homes, Inc., a Delaware
corporation ("Assignor") and J.M. Peters Company, Inc., a Delaware corporation
("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor, Roger Nix, an individual ("Seller") and Durable
Homes, Inc., a Nevada corporation (the "Company") are parties to a Purchase
Agreement effective September 17, 1993 and an Addendum thereto of even date
therewith, with respect to, among other things, the sale and purchase of all of
the issued and outstanding shares of capital stock in the Company (such
Purchase Agreement and Addendum, as the same have been or may hereafter be
amended, modified or supplemented from time to time, are referred to herein as
the "Purchase Agreement");
WHEREAS, the Purchase Agreement provides that Assignor may assign and
delegate its rights and obligations thereunder to Assignee;
WHEREAS, Assignor has delivered to Seller a deposit under the Purchase
Agreement in the amount of $150,000 (the "Deposit") and has incurred internal
and out-of-pocket costs, fees, and expenses, including legal and accounting
fees and due diligence expenses in connection with the Purchase Agreement;
WHEREAS, Assignor desires to assign and delegate and Assignee desires
to accept and assume the Purchase Agreement and all rights and obligations of
the purchaser thereunder except as otherwise set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Assignor and Assignee agree as follows:
1. Assignment. Except as set forth below, Assignor hereby
assigns, transfers and conveys to Assignee all Assignor's right, title and
interest in, to and under the Purchase Agreement, including all rights,
benefits and privileges of Assignor thereunder, and delegates to Assignee all
Assignor's obligations under the Purchase Agreement. Without limiting the
generality of the assignment set forth hereinabove, Assignor hereby transfers
to Assignee all Assignor's right, title and interest in and to the Deposit.
Notwithstanding the foregoing, Assignor does not assign or delegate, and hereby
retains for itself, all of Assignor's rights and obligations under Section 4.12
of the Purchase Agreement (as supplemented by the Addendum referred to
hereinabove).
<PAGE> 3
- 2 -
2. Assumption. Assignee hereby (i) accepts the foregoing
assignment and delegation and assumes and agrees to perform the obligations of
the Assignor arising from and after the date hereof under the Purchase
Agreement (except under Section 4.12 thereof) and to be bound by the terms of
the Purchase Agreement and (ii) agrees to pay Assignor an amount equal to the
sum of the amount of the Deposit plus $150,000.
3. Notice. The parties shall notify Seller in writing of
the assignment and assumption set forth herein.
4. Amendment; Waiver. This Agreement may not be amended,
modified or supplemented, nor may any provisions hereof be waived, except by
written instrument signed by the parties.
5. Binding Effect. The covenants and agreements set forth
herein shall be binding upon, and inure to the benefit of, the respective
successors and assigns of the parties.
6. Further Assurances. The parties shall cooperate with
each other with respect to the subject matter of this Agreement and shall take
such further actions and execute such further instruments or documents as
either party may reasonably request from time to time to implement the purposes
of this Agreement.
7. Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be an original, but which taken
together shall constitute only one agreement.
8. Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of California
without reference to principals of conflicts of laws thereof.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement
to be duly executed as of the date first above written.
CAPITAL PACIFIC HOMES, INC.
/s/ HADI MAKARECHIAN
By:______________________________
Title: Chairman
J.M. PETERS COMPANY, INC.
/s/ HADI MAKARECHIAN
By:________________________________
Title: Chairman
