1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)December 4, 1996
Cavco Industries, Inc.
(Exact Name of Registrant as Specified in Charter)
Arizona 0-8822 86-0214910
(State or other jurisdiction (Commission (IRS Employer Identi-
of incorporation) File Number) fication No.)
1001 North Central Avenue, Eighth Floor, Phoenix, AZ 85004
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 602/256-6263
301 East Bethany Home Road, Suite C-178, Phoenix, AZ 85012
(Former name or former address, if changed since last report)
Page 1 of 10
2
Item 5. Other Events.
On December 4, 1996, Cavco Industries, Inc. ("Cavco" or the "Issuer")
entered into that certain Agreement and Plan of Merger dated as of December 4,
1996 (the "Merger Agreement") by and among the Issuer, Centex Real Estate
Corporation ("CREC"), MFH Holding Company, a Nevada corporation (the "Holding
Company"), MFH Acquisition Company, an Arizona corporation and wholly-owned
subsidiary of the Holding Company (the "Merger Subsidiary") and certain
shareholders of Cavco (the "Shareholder Parties"). The Shareholder Parties are
Al R. Ghelfi, the Chairman of Cavco, his spouse, Janet M. Ghelfi and Janal
Limited Partnership, an Arizona limited partnership ("Janal"). The general
partners of Janal are trusts of which Al R. Ghelfi and Janet M. Ghelfi are the
sole trustees. Janal is the holder of 1,650,000 shares of Cavco common stock,
representing approximately 48.8% of the outstanding shares. Al R. Ghelfi and
Janet M. Ghelfi individually hold, as their community property, an additional
180,729 shares of Cavco common stock, representing approximately 5.32% of the
outstanding shares.
Consummation of the transactions set forth in the Merger Agreement is
conditioned, among other things, upon the Merger Agreement being approved and
adopted by the holders of a majority of the outstanding shares of Cavco common
stock, expiration of applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act, absence of any injunction or certain other legal
matters restraining or prohibiting such transactions, the truth and accuracy of
certain representations and warranties, compliance with certain covenants
contained in the Merger Agreement and other usual and customary closing
conditions.
If the transactions contemplated by the Merger Agreement are
consummated, the Merger Subsidiary will merge with and into Cavco (the
"Merger"), the Shareholder Parties will contribute 783,441 shares of Cavco
common stock to the Holding Company in exchange for Holding Company shares, and
all other shares of Cavco common stock (other than shares held by dissenting
shareholders, if any, who exercise dissenters' rights pursuant to Arizona law)
will be converted into the right to receive $26.75 per share in cash (the
"Merger Consideration"). In exchange for Holding Company shares, CREC will
contribute cash to the Holding Company in an
Page 2 of 10
3
amount sufficient to pay the Merger Consideration and any amounts payable to
dissenting shareholders. Each Merger Subsidiary share that is outstanding will
be converted into the right to receive one share of common stock in Cavco, as
the surviving corporation, and the corporate existence of the Merger Subsidiary
will cease.
Upon consummation of the transactions contemplated by the Merger
Agreement, Cavco, as the surviving corporation, will be a wholly owned
subsidiary of the Holding Company. CREC will hold approximately 78% of the
common stock of the Holding Company, and the Shareholder Parties will hold the
remaining approximately 22% of such common stock. CREC, the Holding Company and
the Shareholder Parties have agreed to enter into a Shareholders' Agreement upon
consummation of the Merger, pursuant to which all of their shares will be
subject to certain transfer restrictions, and the shares held by the Shareholder
Parties will be subject to certain put options (beginning in 2000) and certain
call options (beginning in 2002)whereby CREC may acquire all of the Shareholder
Parties' interest in the Holding Company on the terms and conditions set forth
therein (the "Holding Company Shareholders' Agreement"). The Holding Company
Shareholders' Agreement also provides for certain rights of the Shareholder
Parties and CREC to designate directors, super-majority board approval
requirements for significant actions and transactions and agreements relating to
the payment of dividends. The descriptions set forth in this Report of the
transactions contemplated by the Merger Agreement and the proposed Holding
Company Shareholders' Agreement are qualified in their entirety by reference to
the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1, and the
Holding Company Shareholders' Agreement, the form of which is attached as
Exhibit D to the Merger Agreement, each of which is incorporated herein by this
reference.
The Merger Agreement provides that the Merger Agreement may be
terminated by the parties in certain circumstances, including by mutual consent,
or by either party in the event of (i) regulatory, governmental or judicial
actions restraining or prohibiting the transaction, (ii) failure to obtain the
required shareholder approval, (iii) a material violation or breach by the other
party of the representations, warranties and covenants contained in the Merger
Agreement, or (iv) failure to consummate
Page 3 of 10
4
the Merger by December 31, 1997. In addition, either party may terminate the
Merger Agreement in the event the Board of Directors of Cavco shall have
authorized Cavco to enter into an agreement with a third party with respect to
an alternative acquisition proposal meeting certain conditions specified in the
Merger Agreement, as summarized below.
Cavco has agreed that, upon execution of the Merger Agreement and until
the transactions contemplated thereby have been consummated (or until the Merger
Agreement is terminated), neither Cavco nor its representatives will initiate
any contact with, solicit, encourage or enter into or continue any discussions,
negotiations, understandings or agreements with any third parties with respect
to any other acquisition proposal or disclose any non-public information
regarding Cavco or any of its businesses to such third parties. Notwithstanding
the foregoing, to the extent that the Board of Directors of Cavco (or a
committee thereof) reasonably determines based on the advice of its counsel that
it is required to do so by virtue of its fiduciary obligations under applicable
law, the Company may furnish and discuss non-public information concerning Cavco
or its businesses in response to unsolicited requests therefor and may
participate in discussions and negotiations and enter into agreements regarding
an alternative transaction, provided certain conditions are met. In general,
Cavco may furnish and discuss such information with any third party the Board of
Directors reasonably determines is financially qualified to consummate a
proposed transaction and may enter into negotiations with such a third party if
(i) the consideration to be paid to the shareholders other than the Shareholder
Parties under the alternative transaction exceeds by at least $1,000,000 the
amount payable to such shareholders under the Merger Agreement; (ii) the
alternative transaction is not subject to any conditions or limitations which
make it not likely to be consummated; (iii) the terms and conditions of the
alternative transaction are no less favorable to such shareholders than the
transactions contemplated by the Merger Agreement, (iv) Cavco shall have timely
notified CREC of the alternative transaction and (v) CREC shall not have
delivered to Cavco a counteroffer topping such alternative transaction by at
least $1,000,000 in consideration to the shareholders other than the Shareholder
Parties (a "Topping Offer"). In general, Cavco may enter into an agreement with
a
Page 4 of 10
5
third party with respect to such transaction if (i) the foregoing conditions are
met, (ii) the third party offer has not been materially and adversely modified,
(iii) at least ten days shall have passed since CREC was notified, and CREC
shall not have responded with a Topping Offer and (iv) Cavco has paid to CREC
certain termination fees and expenses described below.
The Merger Agreement provides for payment to CREC by Cavco of a
termination fee of $2,500,000 and reimbursement of certain expenses in an amount
up to $300,000 in the event that the Merger Agreement is terminated by Cavco in
order to accept an alternative proposal from a third party as described above,
or if the Merger Agreement is terminated for any other reason, other than (i) by
mutual consent; (ii) certain governmental actions restraining or prohibiting the
transaction; (iii) because the Merger has not been consummated by December 31,
1997 and CREC elects to terminate; or (iv) because Cavco and the Shareholder
Parties have elected to terminate due to a material violation or breach by CREC.
The Merger Agreement also provides for the payment to Cavco by CREC of a
termination fee and reimbursement of expenses, in the same amounts, in the event
that the Merger Agreement is terminated because (i) the Merger has not been
consummated by December 31, 1977 and CREC elects to terminate, or (ii) Cavco and
the Shareholder Parties elect to terminate due to a material violation or breach
by CREC.
The foregoing descriptions of certain provisions of the Merger
Agreement are qualified in their entirety by reference to the Merger Agreement,
a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by
this reference.
As stated above, one of the conditions for consummation of the
transactions set forth in the Merger Agreement is the approval of the holders of
a majority of the outstanding shares of Cavco common stock. On December 4, 1996,
the Shareholder Parties entered into a Voting Agreement with CREC, whereby the
Shareholder Parties agreed to vote all 1,830,729 shares of Cavco common stock
owned by them (representing approximately 54% of the total shares presently
outstanding) in favor of the Merger Agreement and against any inconsistent
transactions. In addition, the Shareholder Parties have agreed to restrict their
ability to sell or transfer any such shares or to grant any
Page 5 of 10
6
proxies or to enter into any other voting arrangements with respect to such
shares. The descriptions set forth in this Report of the terms of the Voting
Agreement are qualified in their entirety by reference to the Voting Agreement,
a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by
this reference.
Also on December 4, 1996, the Shareholder Parties entered into a Stock
Purchase Agreement with CREC, whereby the parties have agreed that in the event
the Merger Agreement is terminated for any reason other than (i) by mutual
consent, (ii) because the Merger has not been consummated by December 31, 1997
and CREC elects to terminate, or (iii) because of a material violation or breach
by CREC, the Shareholder Parties will sell to CREC, and CREC will purchase from
the Shareholder Parties, an aggregate of 1,047,288 shares of Cavco common stock
(representing approximately 31% of the total shares presently outstanding) (the
"Subject Share Purchase"). If the transactions contemplated by the Stock
Purchase Agreement are consummated, the Shareholder Parties and CREC have agreed
to enter into a Shareholders' Agreement with regard to their shares of Cavco
common stock (the "Cavco Shareholders' Agreement") and to use their best efforts
to cause the Company to become a party thereto. The Cavco Shareholders'
Agreement provides for certain transfer restrictions on the Cavco common stock
held by CREC and the Shareholder Parties and provides that such shares will be
subject to certain put options (beginning in 2000) and certain call options
(beginning in 2002) whereby CREC may acquire all of the Shareholder Parties'
Cavco common stock on the terms and conditions set forth therein. The Cavco
Shareholders' Agreement also provides certain agreements among the Shareholder
Parties and CREC with respect to the election of directors, super-majority board
approval requirements for significant actions and transactions and agreements
relating to the payment of dividends. The descriptions set forth in this Report
of the terms of the Stock Purchase Agreement and the proposed Cavco
Shareholders' Agreement are qualified in their entirety by reference to the
Stock Purchase Agreement, a copy of which is attached hereto as Exhibit 99.2,
and the Cavco Shareholders' Agreement, the form of which is attached as Exhibit
B to the Stock Purchase Agreement, each of which is incorporated herein by this
reference.
Page 6 of 10
7
On December 4, 1996, Cavco and Al R. Ghelfi, the Chairman of Cavco,
agreed to enter into a Consulting Agreement, which will become effective upon
the consummation of the transactions contemplated by the Merger Agreement or
alternatively, upon consummation of the Subject Share Purchase, as the case may
be. The term of the Consulting Agreement is five years; however, either party
may accelerate the expiration date if CREC acquires all of the Shareholder
Parties' Cavco common stock. During the term of the Consulting Agreement, Al
Ghelfi has agreed to provide consulting services requested by the Board of
Directors of Cavco in connection with its business. Upon effectiveness of the
Consulting Agreement, Al Ghelfi will be entitled to receive consulting fees,
reimbursement of expenses and certain group benefits, on the terms and
conditions specified in the Consulting Agreement. The Consulting Agreement also
provides that Al Ghelfi will not engage in certain activities competitive with
the business of Cavco for a period of three (3) years following termination of
the Consulting Agreement in certain circumstances. The description set forth in
this Report of the terms of the Consulting Agreement is qualified in its
entirety by reference to the Consulting Agreement, a copy of which is attached
hereto as Exhibit 99.3 and is incorporated herein by this reference.
On December 4, 1996, Cavco and Brent M. Ghelfi, the President and Chief
Executive Officer of Cavco, agreed to enter into a five-year Employment
Agreement, which will become effective upon consummation of the transactions
contemplated by the Merger Agreement or alternatively, upon consummation of the
Subject Share Purchase, as the case may be. During the term of the Employment
Agreement, Brent Ghelfi has agreed to continue to serve as Chief Executive
Officer of the Company, subject to the direction of the Board of Directors. Upon
effectiveness of the Employment Agreement, Brent Ghelfi will be entitled to
receive salary and cash bonuses, reimbursement of expenses, and other specified
individual and group benefits, pursuant to the terms and conditions set forth in
the Employment Agreement, and in addition, will be entitled to receive certain
options to purchase shares of common stock of Centex Corporation, the parent
company of CREC. The Employment Agreement also provides that Brent Ghelfi will
not engage in certain activities competitive with the business of Cavco for a
period of three (3) years following termination of the Employment Agreement in
certain circumstances.
Page 7 of 10
8
The description set forth in this Report of the terms of the Employment
Agreement is qualified in its entirety by reference to the Employment Agreement,
a copy of which is attached hereto as Exhibit 99.4 and incorporated herein by
this reference.
Item 7. Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
(2.1) Agreement and Plan of Merger dated as of
December 4, 1996, among Centex Real Estate
Corporation, a Nevada corporation, MFH Holding
Company, a Nevada corporation, MFH Acquisition
Company, an Arizona corporation, Cavco
Industries, Inc., an Arizona corporation, Al R.
Ghelfi, Janet M. Ghelfi and Janal Limited
Partnership, an Arizona limited partnership.
(99.1) Voting Agreement dated as of December 4, 1996,
between Centex Real Estate Corporation, a Nevada
corporation, and Al R. Ghelfi, Janet M. Ghelfi
and Janal Limited Partnership, an Arizona
limited partnership.
(99.2) Stock Purchase Agreement dated as of December 4,
1996, between Centex Real Estate Corporation, a
Nevada corporation, and Al R. Ghelfi, Janet M.
Ghelfi and Janal Limited Partnership, an Arizona
limited partnership.
(99.3) Consulting Agreement dated as of December 4,
1996, by and between Cavco Industries, Inc., an
Arizona corporation, and Al R. Ghelfi.
Page 8 of 10
9
(99.4) Employment Agreement dated as of December 4,
1996, by and between Cavco Industries, Inc., an
Arizona corporation, and Brent M. Ghelfi.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report on Form 8-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
CAVCO INDUSTRIES, INC.
Dated: December 12, 1996 By /s/ Brent M. Ghelfi
---------------------------
Brent M. Ghelfi,
President and
Chief Executive
Officer
Page 9 of 10