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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) SEPTEMBER 12, 2000
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SCHULER HOMES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 000-19891 99-0293125
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
828 FORT STREET MALL, 4TH FLOOR, HONOLULU, HAWAII 96813
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (808) 521-5661
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INAPPLICABLE
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(Former name or former address if changed since last report)
Exhibit Index located on page 7.
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ITEM 5. OTHER EVENTS
On September 12, 2000, Schuler Homes, Inc., a Delaware corporation
("Schuler"), Apollo Real Estate Investment Fund, L.P., a Delaware limited
partnership ("Apollo"), Blackacre WPH, LLC, a Delaware limited liability company
("Blackacre"), Highridge Pacific Housing Investors, L.P., a California limited
partnership ("Highridge"), AP WP Partners, L.P., a Delaware limited partnership
("APWP"), AP Western GP Corporation, a Delaware corporation ("AP Western"), AP
LHI, Inc., a California corporation ("APLHI"), and Lamco Housing, Inc., a
California corporation ("Lamco" and, together with Apollo, Blackacre, Highridge,
APWP, AP Western and APLHI, the "WP Partners"), entered into an Agreement and
Plan of Reorganization, dated as of September 12, 2000 (the "Reorganization
Agreement").
The Reorganization Agreement sets forth the terms and conditions of a
proposed transaction (the "Reorganization") pursuant to which, among other
things, a newly-formed holding company ("Newco") will acquire (1) all of the
outstanding shares of common stock of Schuler through the merger of a
wholly-owned Newco subsidiary with Schuler and (2) all of the partnership
interests in Western Pacific Housing Development Limited Partnership, a
California limited partnership ("WPHD"), and Western Pacific Development II
Limited Partnership, a California limited partnership ("WPHD II"), and all of
the membership interests in WPH-Porter, LLC, a Delaware limited liability
company ("WPHL" and, together with WPHD and WPHD II, "Western Pacific"; the
respective partnership and membership interests in Western Pacific are referred
to herein as the "WP Interests"). The WP Interests are currently held by the WP
Partners.
Pursuant to the Reorganization Agreement, existing Schuler
stockholders will exchange their shares of Schuler Homes, Inc. common stock for
shares of Class A common stock of Newco on a 1-to-1 basis. The WP Partners will
transfer the WP Interests through WPH-Schuler, LLC, a Delaware limited liability
company to be wholly-owned by the WP Partners (the "LLC"), in exchange for
shares of Class B common stock of Newco. Upon consummation of the Reorganization
Newco will issue to the LLC and Bankers Trust Company, a New York banking
corporation ("Bankers Trust"), an aggregate number of shares of Class B common
stock equal to the number of shares of Class A common stock to be issued to the
existing Schuler stockholders. From such aggregate number of shares of Class B
common stock, Bankers Trust shall receive an amount determined in accordance
with an existing loan agreement by and among WPHD, Bankers Trust and certain
other parties, and the LLC shall receive the remainder.
The Class B common stock will be converted into Class A common stock
on a 1-to-1 basis upon the election by the holder thereof or the sale to a
person who is not a beneficial owner of the Class B common stock immediately
after the consummation of the Reorganization. Pursuant to the Stockholders
Agreement described below, certain of such beneficial owners will agree not
to convert or sell such Class B common stock if such conversion or sale would
trigger a "Change of Control" or "Risk Event" under Schuler's senior notes or
subordinated notes indentures. In addition, the Class B common stock will be
automatically converted into Class A common stock on a 1-to-1 basis upon the
later to occur of (1) the date that is two days subsequent to the second
anniversary of the closing date of the Reorganization and (2) the day upon
which less than ten million shares of Class B common stock are issued and
outstanding; PROVIDED, HOWEVER, that such automatic conversion of Class B
common stock will not occur if, and for so long as, the
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Board of Directors of Newco determines that such automatic conversion would
result in a "Change of Control" or "Risk Event" under Schuler's senior notes or
subordinated notes indentures.
Holders of the Class A common stock, voting as a separate class,
initially will be entitled to elect five of Newco's nine directors, and holders
of the Class B common stock, voting as a separate class, initially will be
entitled to elect four directors. However, if there are fewer than 14,000,000
shares of Class B common stock outstanding, holders of Class A common stock,
voting as a separate class, will be entitled to elect six directors, and holders
of Class B common stock, voting as a separate class, will be entitled to elect
only three directors.
If and when only one class of Newco common stock is outstanding, the
holders will be entitled to elect the entire Board of Directors.
The Class A common stock will have one vote per share and the Class B
common stock will have 0.5 votes per share. However, the holders of a majority
of the outstanding shares of Class A common stock and Class B common stock, each
voting as a separate class, must approve certain major events, including a
merger, the sale of all or substantially all assets, a liquidation, and certain
kinds of recapitalizations. In addition, certain other matters, including
amendments to Newco's Bylaws or Certificate of Incorporation, require the
approval of the holders of two-thirds of the outstanding shares of Class A
common stock and Class B common stock, each voting as a separate class.
Consummation of the Reorganization is subject to the satisfaction or
waiver of certain conditions, including (1) the approval of the Reorganization
by the stockholders of Schuler, (2) the effectiveness of a registration
statement on Form S-4 registering with the Securities and Exchange Commission
the shares of Newco Common Stock to be issued in connection with the
Reorganization, (3) the approval of the listing of such shares of Newco Common
Stock on The Nasdaq Stock Market, (4) the expiration or termination of all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and (5) certain other customary conditions. Such
consummation is expected to occur in December, 2000 or early 2001. Upon
consummation of the Reorganization, Newco will be named Schuler Homes, Inc. and
will have a March 31 fiscal year end.
The Reorganization is intended to be a tax-free reorganization for
federal income tax purposes, and will be accounted for as a purchase
transaction.
Schuler and the WP Partners have agreed in the Reorganization Agreement
not to solicit, consider, encourage or accept any other inquiries, proposals or
offers to acquire or sell their respective businesses.
Upon consummation of the Reorganization Newco, the LLC, Apollo,
Blackacre, Highridge, the James and Patricia Schuler Foundation, a Hawaii
non-profit corporation (the "Foundation"), and James K. Schuler, as sole trustee
for the James K. Schuler Revocable Living Trust and the James K. Schuler 1998
Qualified Annuity Trust (collectively with the Foundation,
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"James Schuler") will enter into a Stockholders Agreement (the "Stockholders
Agreement") pursuant to which, among other things, the LLC, Apollo, Blackacre,
Highridge and James Schuler will agree (1) not to sell or acquire Newco
securities which would trigger a "Change of Control" or "Risk Event" under
Schuler's senior notes or subordinated notes indentures and, (2) with certain
exceptions, not to sell Class A common stock or Class B common stock during the
nine-month period following consummation of the Reorganization. In addition, the
parties will agree in the Stockholders Agreement that, following the automatic
conversion of all Class B common stock into Class A common stock, any time that
any of Apollo, Blackacre or Highridge or James Schuler owns one-ninth or more of
the total number of the issued and outstanding shares of Class A common stock,
such entity will be entitled to designate one Newco director for approximately
each one-ninth of outstanding shares it owns.
In addition, Newco, the LLC, Apollo, Blackacre, Highridge and James
Schuler will enter into a Registration Rights Agreement (the "Registration
Rights Agreement") upon consummation of the Reorganization which will grant to
LLC, Apollo, Blackacre, Highridge and James Schuler certain registration rights
with respect to Newco stock.
Simultaneously with the execution of the Reorganization Agreement,
James Schuler, which held approximately 52% of the shares of Schuler common
stock outstanding as of September 12, 2000, entered into a Voting Agreement
with Apollo, Blackacre and Highridge, pursuant to which James Schuler agreed
to vote its shares of Schuler common stock in favor of the Reorganization at
any meeting of Schuler stockholders held to consider and vote upon the
Reorganization. Accordingly, at the Schuler meeting of stockholders to be
held to vote on the Reorganization, the affirmative vote of the shares of
James Schuler as required by such Voting Agreement will be sufficient to
approve the Reorganization regardless of the votes cast by other Schuler
stockholders. Stockholders will not be eligible to exercise dissenters'
rights in connection with the Reorganization.
The Reorganization Agreement, the Voting Agreement, the form of
Stockholders Agreement, the form of Registration Rights Agreement and the form
of Newco Certificate of Incorporation are filed herewith as Exhibits 2.1, 2.2,
2.3, 2.4 and 2.5, respectively. The foregoing descriptions of these documents
are qualified in their entirety by reference to the full text of each of such
exhibits.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(c) Exhibits.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
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<S> <C>
2.1 Agreement and Plan of Reorganization, dated as of September 12, 2000,
among Schuler, Apollo, Blackacre, Highridge, APWP, AP Western, APLHI
and Lamco (the exhibits and schedules to such agreement are not filed
herewith (other than those set forth as Exhibits 2.3, 2.4 and 2.5) and
are listed on the table of contents of Exhibit 2.1. The registrant
hereby undertakes to furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon
request).
2.2 Voting Agreement, dated as of September 12, 2000, among Apollo, Blackacre,
Highridge and James Schuler.
2.3 Form of Stockholders Agreement among Newco, the LLC, Apollo, Blackacre,
Highridge and James Schuler.
2.4 Form of Registration Rights Agreement among Newco, the LLC, Apollo,
Blackacre, Highridge and James Schuler
2.5 Form of Newco Certificate of Incorporation.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCHULER HOMES, INC.
By: /s/ PAMELA S. JONES
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Pamela S. Jones,
Senior Vice President of
Finance and Chief Financial
Officer
Dated: September 18, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
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<S> <C>
2.1 Agreement and Plan of Reorganization, dated as of September 12, 2000,
among Schuler, Apollo, Blackacre, Highridge, APWP, AP Western, APLHI
and Lamco (the exhibits and schedules to such agreement are not filed
herewith (other than those set forth as Exhibits 2.3, 2.4 and 2.5) and
are listed on the table of contents of Exhibit 2.1. The registrant
hereby undertakes to furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon
request).
2.2 Voting Agreement, dated as of September 12, 2000, among Apollo,
Blackacre, Highridge and James Schuler.
2.3 Form of Stockholders Agreement among Newco, the LLC, Apollo, Blackacre,
Highridge and James Schuler.
2.4 Form of Registration Rights Agreement among Newco, the LLC, Apollo,
Blackacre, Highridge and James Schuler
2.5 Form of Newco Certificate of Incorporation.
</TABLE>
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