Item
1.01. Entry into a Material Definitive Agreement
On May
13, 2009, Cavalier Homes, Inc. (“
Company
”) and the
members of the Cavalier Homes Committee for Change (the “
Committee
”)
including, Legacy Housing, LTD., GPLH, LC, Shipley Brothers, LTD., K-Shipley,
LLC, D-Shipley, LLC, B-Shipley, LLC, Federal Investors Servicing, LTD, Federal
Investors Management, L.C., Kenneth E. Shipley, Curtis D. Hodgson, Douglas M.
Shipley, Billy G. Shipley and Michael R. O’Connor (each, a “
Committee Member
,”
and collectively, the “
Committee Members
”)
entered into an agreement (the “
Settlement
Agreement
”) to settle the proxy contest pertaining to the election of
directors to the Board at the Company’s 2009 Annual Meeting of Stockholders (the
“
2009 Annual
Meeting
”).
Pursuant
to the terms of the Settlement Agreement, the Company has agreed to (i) increase
the number of seats on its Board from eight to ten, (ii) appoint Curtis D.
Hodgson and Kenneth E. Shipley (the “
New Directors
”) to
serve as directors of the Company for a term to end no earlier than the
Company’s 2009 Annual Meeting, and (iii) nominate the New Directors, along with
the current members of the Company’s Board, for election as directors of the
Company for terms expiring at the Company’s 2010 Annual Meeting of Stockholders
(the “
2010 Annual
Meeting
”) or until their successors are duly elected and
qualified.
The
Company has also agreed that its Board will recommend that the Company’s
stockholders vote in favor of and solicit proxies for the New Directors at the
2009 Annual Meeting.
In
addition, the Company further agreed not to increase the size of the Board to
more than ten directors at any time before the 2010 Annual Meeting unless
approved by a majority of independent directors and at least one of the New
Directors. Until the second anniversary of the Settlement Agreement, if any
director who is not a New Director retires from the Board as a result of such
director having reached his seventieth birthday, any vacancy on the Board
created by such retirement shall not be filled. In the event that any New
Director leaves the Board prior to the 2010 annual meeting, the Committee shall
be entitled to recommend to the Board replacement director(s), and the Board
shall not unreasonably withhold acceptance of any such replacement
director(s).
In
exchange, Curtis D. Hodgson has irrevocably withdrawn his notice to the Company
of his intention to nominate Michael R. O’Connor at the 2009 Annual Meeting and
his demand to inspect certain of the Company’s books and records, and the
Committee has agreed to immediately cease all efforts related to its own proxy
solicitation. Committee Members have also agreed to cause or instruct the record
owner to cause all shares of the Company’s common stock beneficially owned by
them to be present and voted for all of the directors nominated by the Board for
election at the 2009 Annual Meeting.
In
addition, the Company has agreed, within five business days of receiving
reasonable documentation with respect to such expenses, to reimburse the
Committee in an amount equal to the Committee’s actual out-of-pocket expenses
incurred prior to the date of the Settlement Agreement in connection with the
proxy contest, including the preparation of related filings with the Securities
and Exchange Commission (the “
SEC
”) and the fees
and disbursements of counsel and other advisors, up to a maximum reimbursement
of $200,000.
Furthermore,
so long as any of the New Directors or their designated replacements are members
of the Board, each of the Committee and each Committee Member agree that neither
they nor any of their respective affiliates will, without consent of the Board:
(i) participate in the “solicitation” of “proxies” (as such terms are used in
the proxy rules of the SEC), (ii) seek to advise or influence any Person with
respect to the voting of any securities of the Company, (iii) form, join or in
any way participate in a “group” as defined under Section 13(d) of the
Securities Exchange Act of 1934 (the “
Exchange Act
”), with
respect to the securities of the Company and (iv) initiate, propose or otherwise
“solicit” (as such term is used in the proxy rules of the SEC) the Company’s
stockholders for the approval of stockholder proposals whether made pursuant to
Rule 14a-8 or Rule 14a-4 under the Exchange Act.
The New
Directors have each additionally agreed that while serving as directors of the
Company and for a period of one year following his resignation or departure from
the Board, he would not use any confidential information learned in his capacity
as a Board member in any way that would be competitive to the
Company.
The
Company and the Committee Members have additionally agreed to a mutual release
of claims arising in respect of, or in connection with, the nomination and
election of directors at the 2009 Annual Meeting.
In connection with the
Settlement Agreement and
to allow adequate time for the Company to
properly notify the Company’s stockholders of its newly proposed slate of
directors, the 2009 Annual Meeting has been postponed until May 26, 2009,
beginning at 2:00 P.M., Central Daylight Time, at The Summit Club at the
Regions-Harbert Plaza, 1901 6
th
Avenue
North, Suite 3100, Birmingham, Alabama 35203.
The
Agreement is attached hereto as Exhibit 10.1 and incorporated into this Item
1.01 by reference. The foregoing summary description of the Agreement is
qualified in its entirety by reference to the Agreement.
Item
5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
(d) Pursuant
to the Settlement Agreement, effective May 13, 2009, by and between the Company
and the Committee as described in Item 1.01, the Board of Directors of the
Company appointed Curtis D. Hodgson and Kenneth E. Shipley to serve as directors
of the Company to serve in such capacity until the 2009 Annual Meeting or until
their successors are duly elected and qualified. As of these appointments, the
Company’s Board of Directors is comprised of ten members, including Mr. Hodgson
and Mr. Shipley.
Curtis D. Hodgson, age
54,
was appointed to the Board of Directors in 2009. Mr. Hodgson (i)
co-founded Legacy Housing, LTD. (“Legacy”) in May 2005, (ii) has served as vice
president and secretary of GLPH, LC (“GLPH”), the general partner of Legacy,
since May 2005 and (iii) has been the sole stockholder and president of Cusach,
Inc., a wholesaler and retailer of manufactured homes, since 1980. Mr. Hodgson
has a Bachelor of Science degree from the University of Michigan and received
his J.D. from the University of Texas
.
Kenneth
E. Shipley, age 50, was appointed to the Board of Directors in 2009. Mr.
Shipley (i) co-founded Legacy in May 2005, (ii) has served as manager, president
and assistant secretary of GLPH since May 2005, (iii) has served as manager and
president of K-Shipley, the general partner of Shipley Brothers, LTD., since
March 2001, (iv) has served as manager of Federal Investors Management, L.C.,
the general partner of Federal Investors Servicing, LTD., a company that
primarily engages in the business of mobile home financing, since 1990, and (v)
has been the owner and operator of Bell Mobile Homes, a wholesaler and retailer
of manufactured homes in Levelland, Texas, since 1981.
Item
9.01. Financial Statements and Exhibits
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10.1
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Settlement
Agreement, dated as of May 13, 2009, by and between Cavalier Homes, Inc.
and the members of the Cavalier Homes Committee for Change including,
Legacy Housing, LTD., GPLH, LC, Shipley Brothers, LTD., K-Shipley, LLC,
D-Shipley, LLC, B-Shipley, LLC, Federal Investors Servicing, LTD, Federal
Investors Management, L.C., Kenneth E. Shipley, Curtis D. Hodgson, Douglas
M. Shipley, Billy G. Shipley and Michael R.
O’Connor.
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99.1
|
Cavalier
Homes, Inc. press release dated May 14,
2009.
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