UCP, Inc. (NYSE:UCP) Files An 8-K Entry into a Material Definitive Agreement
Item1.01
| Entry into a Material Definitive Agreement. |
Agreement and Plan of Merger
On April10, 2017, UCP, Inc., a Delaware corporation (the
Company), Century Communities, Inc., a
Delaware corporation (Parent), and Casa
Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent (Merger Sub),
entered into an Agreement and Plan of Merger (the
Merger Agreement), to which the Company
will be merged with and into Merger Sub (the
Merger), with Merger Sub continuing as
the surviving entity in the Merger. The Board of Directors of the
Company (the Board) has unanimously
approved and declared advisable the Merger Agreement and the
transactions contemplated thereby and resolved to recommend that
the stockholders of the Company vote to adopt the Merger
Agreement and approve the Merger.
Subject to the terms and conditions set forth in the Merger
Agreement, at the effective time of the Merger (the
Effective Time), each issued and
outstanding share of ClassA Common Stock, par value $0.01 per
share, of the Company (the Company Common
Stock) (excluding any shares (i)owned by the
Company, Parent, Merger Sub or any of their respective
wholly-owned subsidiaries or (ii)held by any stockholder who
properly demands and perfects his, her or its appraisal rights
with respect to such shares) will be converted into the right to
receive and become exchangeable for (A)$5.32 in cash, without any
interest thereon (the Cash
Consideration) and (B)0.2309 (the Stock
Exchange Ratio) of a share of common stock, par
value $0.01 per share, of Parent (Parent Common
Stock) (the Stock
Consideration and, together with the Cash
Consideration, the Merger
Consideration). No fractional shares of Parent
Common Stock will be issued in the Merger, and Company
stockholders will receive cash in lieu of any fractional shares.
The Merger Agreement provides that, at the Effective Time, each
option to purchase shares of Company Common Stock (a
Company Option) will be converted into
an option (an Adjusted Option) to
purchase shares of Parent Common Stock on the same terms and
conditions (including vesting terms, conditions and schedules),
with the number of such shares of Parent Common Stock equal to
the product of (i)the total number of shares of Company Common
Stock underlying such Company Option, multiplied by (ii)the
Equity Award Exchange Ratio (as defined in the Merger Agreement
and below), and with the exercise price of such Adjusted Option
equal to the quotient obtained by dividing (i)the exercise price
per share applicable to such Company Option, by (ii)the Equity
Award Exchange Ratio. Additionally, at the Effective Time, each
restricted stock unit with respect to a share of Company Common
Stock (a Company Restricted Stock Unit)
will be converted into a restricted stock unit with respect to a
share of Parent Common Stock on the same terms and conditions
(including vesting terms, conditions and schedules), and relating
to a number of shares of Parent Common Stock equal to the product
of (i)the number of shares of Company Common Stock subject to
such Company Restricted Stock Unit, multiplied by (ii)the Equity
Award Exchange Ratio, with any fractional shares rounded to the
nearest whole number of shares of Parent Common Stock. As defined
in the Merger Agreement, the term Equity Award
Exchange Ratio shall be equal to the sum of (i)the
Stock Exchange Ratio and (ii)the quotient obtained by dividing
(x)the Cash Consideration by (y)the average closing sale price of
a share of Parent Common Stock as reported on the New York Stock
Exchange (the NYSE) for the five
consecutive trading days ending on and including the second
complete trading day immediately preceding the closing of the
Merger, rounded to the nearest ten-thousandth.
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The Company and
Parent will jointly prepare, and Parent will file with the U.S.
Securities and Exchange Commission (the
SEC), a registration statement on Form
S-4 (the Form S-4) in connection with
the issuance of shares of Parent Common Stock in the Merger,
which will include as a prospectus a proxy statement relating to
the meeting of the Companys stockholders to be held to vote on
the adoption of the Merger Agreement and approval of the
Merger.
The completion of
the Merger is subject to the satisfaction or waiver of certain
customary conditions, including (i)the adoption of the Agreement
by the Companys stockholders, (ii)the absence of any law or order
prohibiting the Merger, (iii)the effectiveness of the Form S-4
and the approval for listing on the NYSE of the Parent Common
Stock to be issued to the Merger, (iv)the receipt of certain tax
opinions, (v)the absence of a material adverse effect on the
Company or Parent and (vi)certain other customary conditions
relating to the parties representations and warranties in the
Merger Agreement and the performance of their respective
obligations. The Merger is further subject to the consummation of
the exchange (the Exchange) immediately
prior to the Effective Time by PICO Holdings, Inc., a California
corporation and the Companys majority stockholder
(PICO), of all of its Series A Units of
UCP, LLC, a Delaware limited liability company and subsidiary of
the Company (UCP LLC), for shares of
Company Common Stock to and in accordance with the terms of the
Exchange Agreement, dated as of July23, 2013 (the
Exchange Agreement), by and among the
Company, UCP LLC and PICO, with UCP LLC thereafter becoming a
wholly-owned subsidiary of the Company. The Merger is not subject
to approval by the stockholders of Parent or to any financing
condition, and Parent represents and warrants in the Merger
Agreement that it has cash on hand and available borrowing
capacity sufficient in the aggregate to fund all of its payment
obligations under the Merger Agreement and in connection with the
transactions contemplated thereby, including the Merger.
The Merger
Agreement contains customary representations and warranties made
by each of the Company and Parent, and also contains customary
pre-closing covenants, including covenants, among others, (i)by
the Company to operate its businesses in the ordinary course
consistent with past practice and to refrain from taking certain
actions without Parents consent, (ii)by the Company not to
solicit, initiate, or knowingly encourage or facilitate and,
subject to certain exceptions, not to participate in any
discussions or negotiations with, or otherwise knowingly
cooperate with, assist, or participate in any effort by, any
person (other than Parent and Merger Sub) regarding any proposal
of an alternative transaction, (iii)by the Company to call and
hold a special stockholders meeting and, subject to certain
exceptions, require the Board to recommend to the Companys
stockholders that they vote in favor of the adoption of the
Merger Agreement and approval of the Merger and (iv)by each of
Parent, Merger Sub and the Company to use all reasonable efforts
to obtain governmental, regulatory and third party
approvals.
The Merger
Agreement contains certain termination rights for each of the
Company and Parent, including in the event that (i)the parties
mutually agree to termination, (ii)the Merger is not consummated
on or before October15, 2017 (the Outside
Date), (iii) any law or order permanently prohibits
consummation of the Merger, (iv)any condition to the obligation
of either
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party to
consummate the Merger becomes incapable of satisfaction before
the Outside Date, (v)the requisite approval of the Companys
stockholders is not obtained, (vi)either party is in breach of
its respective representations and warranties or covenants under
the Merger Agreement such that a closing condition is not
satisfied (subject to notice and cure and other customary
exceptions), (vii)the Board changes its recommendation to the
Companys stockholders or (viii)the Company enters into an
agreement providing for a superior alternative
transaction.
Upon termination
of the Merger Agreement under specified circumstances, including
a change in the recommendation of the Board or a termination of
the Merger Agreement by the Company to enter into an agreement
providing for a superior alternative transaction, the Company
will be required to pay Parent a termination fee equal to
$7,050,000 in cash.
The foregoing
description of the Merger Agreement is only a summary, does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Merger Agreement, which is
attached hereto as Exhibit2.1 and incorporated herein by
reference. The Merger Agreement has been attached to provide
investors with information regarding its terms. It is not
intended to provide any other factual information about the
Company or Parent. In particular, the assertions embodied in the
representations and warranties contained in the Merger Agreement
are qualified by information in confidential disclosure schedules
provided by each of the Company and Parent in connection with the
signing of the Merger Agreement. These confidential disclosure
schedules contain information that modifies, qualifies and
creates exceptions to the representations and warranties and
certain covenants set forth in the Merger Agreement. Moreover,
certain representations and warranties in the Merger Agreement
were used for the purpose of allocating risk between the Company
and Parent rather than establishing matters as facts.
Accordingly, the representations and warranties in the Merger
Agreement should not be relied upon as characterizations of the
actual state of facts about the Company or Parent.
Voting
Agreement
Concurrently with
the execution and delivery of the Merger Agreement, on April10,
2017, Parent, Merger Sub, PICO, the Company and UCP LLC entered
into a voting support and transfer restriction agreement (the
Voting Agreement). to the terms of the
Voting Agreement, PICO agreed, among other things, to vote all
outstanding shares of Company Common Stock and ClassB common
stock, par value $0.01 per share, of the Company currently held
or thereafter acquired by PICO (the PICO
Shares) in favor of the adoption of the Merger
Agreement and against any proposal by third parties to acquire
the Company, and to take certain other actions in furtherance of
the transactions contemplated by the Merger Agreement, including
the Exchange, in each case subject to the limitations set forth
in the Voting Agreement. Among other such limitations, PICOs
obligation to vote in favor of the adoption of the Merger
Agreement will be reduced to such number of PICO Shares as is
equal to 28% of the aggregate outstanding voting power of the
Company if the Board changes its recommendation in respect of an
Intervening Event (as defined in the Merger Agreement), and the
Voting Agreement automatically terminates if the Merger Agreement
is terminated (including if the Company terminates the Merger
Agreement to accept a superior proposal).
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Subject to certain
exceptions, the Voting Agreement prohibits transfers by PICO of
any of the PICO Shares and certain other actions that would
impair the ability of PICO to fulfill its obligations under the
Voting Agreement. The Voting Agreement also contains
non-solicitation covenants with respect to alternative
transactions generally similar to those contained in the Merger
Agreement with respect to the Company, including similar
exceptions to those covenants permitting PICO to take any action,
including holding discussions with third parties in respect of
potential alternative transactions, concurrently taken by the
Company and the Board under the circumstances in which the
Company is permitted to take such actions under the Merger
Agreement.
Parent and PICO
also agreed in the Voting Agreement to certain post-closing
covenants if the Merger is consummated, including with respect to
PICOs ability to transfer the shares of Parent Common Stock it
receives as Stock Consideration in the Merger or to acquire
addition shares of Parent Common Stock and with respect to
certain tax matters under UCP LLCs operating agreement relating
to time periods prior to the consummation of the Exchange.
Under the Voting
Agreement, each of PICO, the Company and UCP LLC, as applicable,
irrevocably agreed to terminate (without any payments from, or
any cost or expense to, the Company, Parent or Merger Sub) the
following agreements, in each case subject to and contingent upon
the occurrence of the Effective Time: (i)the Exchange Agreement,
(ii)the Tax Receivable Agreement, dated as of July23, 2013, by
and among the Company, UCP LLC, and PICO, (iii)the Transition
Services Agreement, dated as of July23, 2013, by and between PICO
and the Company, and (iv)the Registration Rights Agreement, dated
July23, 2013, by and between the Company and PICO.
The Voting
Agreement will terminate automatically on the first to occur of
(i)the termination of the Merger Agreement and (ii)the Effective
Time.
The foregoing
description of the Voting Agreement is only a summary, does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Voting Agreement, which is
attached hereto as Exhibit10.1 and incorporated herein by
reference.
Agreement to
Exchange
Concurrently with
the execution and delivery of the Merger Agreement, on April10,
2017, the Company, UCP LLC and PICO entered into an agreement to
exchange (the Agreement to Exchange),
to which PICO exercised its right under the Exchange Agreement to
effect the Exchange. Under the Agreement to Exchange, the
Exchange will occur immediately prior to, and remain subject to
the consummation immediately thereafter of, the Merger.
The foregoing
description of the Agreement to Exchange is only a summary, does
not purport to be complete and is qualified in its entirety by
reference to the full text of the Agreement to Exchange, which is
attached hereto as Exhibit 10.2 and incorporated herein by
reference.
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| Item3.02 | Unregistered Sales of Equity Securities. |
The information
under Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 3.02 by reference.
The securities to
be issued to PICO in the Exchange will be issued in reliance on
the registration exemption contained in Section4(a)(2) of the
Securities Act of 1933, as amended (the Securities
Act), on the basis that the transaction did not
involve a public offering.
| Item5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements Certain Officers. |
On April10, 2017,
in connection with the transactions contemplated by the Merger
Agreement, the Company entered into an employment agreement
amendment (the Employment Agreement
Amendment) with Dustin L. Bogue, President and
Chief Executive Officer of the Company. The Employment Agreement
Amendment will become effective as of, and is subject to and
conditioned upon, the consummation of the Merger.
Under the
Employment Agreement Amendment, Mr.Bogues current employment
agreement will remain in effect, except that:
|
Mr.Bogues new title will be Regional President West, and he no longer will have a contractual right to report to the Board; |
|
Mr.Bogues annual cash incentive bonus in respect of the 2017 fiscal year will be determined in accordance with the annual performance goals or objectives established as of immediately prior to the closing of the Merger; |
|
The current vesting schedule for Mr.Bogues unvested Company Restricted Stock Units (which currently vest in calendar years 2018 through 2022) will instead vest (after giving effect to their conversion into Parent restricted stock units following the Merger) in three installments on each of the 60th day following the closing of the Merger, the first anniversary of the 60th day following the closing of the Merger and the second anniversary of the 60th day following the closing of the Merger, and will also vest in full upon a termination without cause or resignation for good reason; |
|
Mr.Bogue will receive a one-time transaction bonus 60 days following the closing of the Merger. Mr.Bogues bonus will be equal to three times the sum of his current base salary and average annual bonus for the past three completed fiscal years ($1,972,639 in total); |
|
Any Company Options held by Mr.Bogue at the Effective Time shall be canceled for no consideration; and |
|
Mr.Bogues change in control severance arrangements will be |
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|
Mr.Bogue will be entitled to receive, subject to a release, |
The foregoing
description of the Employment Agreement Amendment is only a
summary, does not purport to be complete and is qualified in its
entirety by reference to the full text of the Employment
Agreement Amendment, which is attached hereto as Exhibit10.3, and
incorporated herein by reference.
| Item5.03 |
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
In connection with
entering into the Merger Agreement, on April10, 2017, the Board
approved an amendment to the Amended and Restated Bylaws of the
Company, as amended (the Bylaws), which
became effective immediately. The amendment added a new
Section8.5 to the Bylaws that designates the Court of Chancery of
the State of Delaware, subject to jurisdictional limits, as the
sole and exclusive forum for certain legal claims and actions,
unless the Company consents in writing to the selection of an
alternate forum.
The foregoing
description of the amendment to the Bylaws is only a summary,
does not purport to be complete and is qualified in its entirety
by reference to the full text of the amendment, which is attached
hereto as Exhibit 3.1 and incorporated herein by
reference.
| Item8.01 | Other Events. |
On April11, 2017,
the Company and Parent issued a joint press release announcing
the entry by the Company, Parent and Merger Sub into the Merger
Agreement (the Press Release). A copy
of the Press Release is attached hereto as Exhibit99.1 and
incorporated herein by reference.
FORWARD-LOOKING
STATEMENTS
Statements
contained in this Current Report on Form 8-K regarding matters
that are not historical facts are forward-looking statements
within the meaning of the Private Securities Litigation Reform
Act of 1995. Because such statements are subject to risks and
uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements.
7
Important factors
that could cause actual results to differ materially from those
suggested by the forward-looking statements include, but are not
limited to, the occurrence of any event, change or other
circumstances that could give rise to the termination of the
merger agreement; the risk that the necessary stockholder
approvals may not be obtained; the risk that the necessary
regulatory approvals may not be obtained or may be obtained
subject to conditions that are not anticipated; the risk that the
proposed acquisition will not be consummated in a timely manner;
risks that any of the closing conditions to the proposed
acquisition may not be satisfied or may not be satisfied in a
timely manner; risks related to disruption of management time
from ongoing business operations due to the proposed acquisition;
the risk that Parent is unable to retain its investment grade
rating; failure to realize the benefits expected from the
proposed acquisition; the risk that the cost savings and any
other synergies from the acquisition may not be fully realized or
may take longer to realize than expected; the future cash
requirements of the combined company; general worldwide economic
uncertainties; failure to promptly and effectively integrate the
acquisition; and the effect of the announcement of the proposed
acquisition on the ability of Parent and the Company to retain
customers and retain and hire key personnel, maintain
relationships with suppliers, on their operating results and
businesses generally and those factors listed in Parents most
recently filed Annual Report on Form 10-K for the year ended
December31, 2016 and the Companys most recent Annual Report on
Form 10-K for the year ended December31, 2016, in each case,
filed with the SEC.
Changes in such
assumptions or factors could produce significantly different
results. There can be no assurance that the merger or any other
transaction described above will in fact be consummated in the
manner described, or at all. You should not place undue reliance
on these forward-looking statements, which speak only as of the
date of this document. Unless legally required, neither Parent
nor the Company assumes any obligation, and expressly disclaims
any such obligation, to update any forward-looking statement as a
result of new information or future events or
developments.
NO OFFER
OR SOLICITATION
The information in
this communication is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy any securities or the solicitation of
any vote or approval in any jurisdiction to or in connection with
the Merger or otherwise, nor shall there be any sale, issuance or
transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section10 of
the Securities Act and otherwise in accordance with applicable
law.
IMPORTANT
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with
the offering and sale of shares of Parent common stock in the
merger, Parent will file with the SEC a Registration Statement on
Form S-4 (the Registration Statement),
which will include a prospectus with respect to the shares to be
issued in the merger and a preliminary and definitive proxy
statement for the stockholders of the Company (the
Proxy Statement), which the Company
will mail to its stockholders. The definitive Registration
Statement and the Proxy Statement will contain important
information about the merger and related matters. WE URGE
INVESTORS AND STOCKHOLDERS TO
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CAREFULLY READ THE
REGISTRATION STATEMENT AND THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC AND ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PARENT, THE
COMPANY AND THE PROPOSED MERGER. Investors and stockholders will
be able to obtain copies of the Registration Statement, Proxy
Statement and other documents (when they become available) filed
with the SEC by Parent and the Company free of charge at the SECs
website, www.sec.gov. In addition, copies will be available free
of charge by accessing Parents website at
www.centurycommunities.com by clicking on the Investors link,
then clicking on Financial Information and then clicking on the
SEC Filings link or by accessing the Investor Relations section
of the Companys website at www.unioncommunityllc.com.
PARTICIPANTS IN THE
MERGER SOLICITATION
The Company, PICO,
Parent, and their respective directors and certain of their
respective executive officers and employees may be deemed to be
participants in the solicitation of proxies from the stockholders
of the Company in respect of the proposed acquisition
contemplated by the Proxy Statement. Information about the
Companys directors and executive officers is set forth in its
definitive proxy statement for its 2016 Annual Meeting of
Stockholders, which was filed with the SEC on April7, 2016,
information about PICOs directors and executive officers is set
forth in its definitive proxy statement for its 2017 Annual
Meeting of Stockholders, which was filed with the SEC on March21,
2017, and information about Parents directors and executive
officers is set forth in its definitive proxy statement for its
2017 Annual Meeting of Stockholders, which was filed with the SEC
on March29, 2017, in each case, together with any subsequent
current reports on Form 8-K filed to Item 5.02, as applicable to
the Company, PICO and Parent. These documents are available free
of charge from the sources indicated above, from the Company at
the Investor Relations section of its website
(http://www.unioncommunityllc.com), from PICOs website
(http://investors.picoholdings.com) and from Parents
website (http://www.centurycommunities.com).
| Item9.01 | Financial Statements and Exhibits |
(d)Exhibits
|
Exhibit No. |
Description |
|
| 2.1 |
Agreement and Plan of Merger, dated April10, 2017, among Century Communities, Inc., Casa Acquisition Corp., and UCP, Inc. |
|
| 3.1 |
Amendment to the Amended and Restated Bylaws, as amended, of UCP, Inc., effective April10, 2017 |
|
| 10.1 |
Voting Support and Transfer Restriction Agreement, dated April10, 2017, by and among Century Communities, Inc., PICO Holdings, Inc., UCP, Inc. and UCP, LLC |
9
| 10.2 |
Agreement to Exchange, entered into as of April10, 2017, by and among UCP, Inc., UCP, LLC and PICO Holdings, Inc. |
|
| 10.3 |
Amendment to Employment Agreement, dated April10, 2017, by and between Dustin L. Bogue and UCP, Inc. |
|
| 99.1 | Press Release, dated April11, 2017 |
|
Schedules have been omitted to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC. |
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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.
Dated: April 11,
2017
| UCP, INC | ||
| By: |
/s/ W. Allen Bennett |
|
| Name: | W. Allen Bennett | |
| Title: | General Counsel |
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EXHIBIT
INDEX
|
Exhibit No. |
Description |
|
| 2.1 |
Agreement and Plan of Merger, dated April10, 2017, among Century Communities, Inc., Casa Acquisition Corp., and UCP, Inc. |
|
| 3.1 |
Amendment to the Amended and Restated Bylaws, as amended, of UCP, Inc., effective April10, 2017 |
|
| 10.1 |
Voting Support and Transfer Restriction Agreement, dated April10, 2017, by and among Century Communities, Inc., PICO Holdings, Inc., UCP, Inc. and UCP, LLC |
|
| 10.2 |
Agreement to Exchange, entered into as of April10, 2017, by and among UCP, Inc., UCP, LLC and PICO Holdings, Inc. |
|
| 10.3 |
Amendment to Employment Agreement, dated April10, 2017, by and between Dustin L. Bogue and UCP, Inc. |
|
| 99.1 | Press Release, dated April11, 2017 |
| Schedules have been omitted |
About UCP, Inc. (NYSE:UCP)
UCP, Inc. is a homebuilder and land developer with a focus on residential land acquisition, development and entitlement, as well as home design, construction and sales. The Company operates in two segments: homebuilding and land development. The homebuilding and land segments include two geographic regions: West and Southeast. The Company operates in the states of California, Washington, North Carolina, South Carolina, and Tennessee. In California, the Company primarily operates in the Central Valley area (Fresno and Madera counties), the Monterey Bay area (Monterey County), the South San Francisco Bay area (Santa Clara and San Benito counties) and in Southern California (Los Angeles, Ventura and Kern counties). In Washington State, it operates in the Puget Sound area (King, Snohomish, Thurston and Kitsap counties). In North Carolina, South Carolina and Tennessee, its operations are in the Charlotte, Myrtle Beach and Nashville markets. UCP, Inc. (NYSE:UCP) Recent Trading Information
UCP, Inc. (NYSE:UCP) closed its last trading session down -0.05 at 9.30 with 30,855 shares trading hands.
