SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11 or Rule 14a-12
ORLEANS HOMEBUILDERS, INC.
(formerly known as FPA Corporation)
(Name of Registrant as Specified in Its Charter)
-----------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
__________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
(5) Total fee paid:
__________________________________________________________________________
/ / Fee paid previously with preliminary materials.
__________________________________________________________________________
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
__________________________________________________________________________
(2) Form, Schedule or Registration Statement no.:
__________________________________________________________________________
(3) Filing Party:
__________________________________________________________________________
(4) Date Filed:
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ORLEANS HOMEBUILDERS, INC.
3333 Street Road, Suite 101
Bensalem, Pennsylvania 19020
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 6, 2001
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To the Stockholders of Orleans Homebuilders, Inc.:
The Annual Meeting of Stockholders of Orleans Homebuilders, Inc. (the
"Company") will be held on Thursday, December 6, 2001, at 11:00 a.m.,
Philadelphia time, at the offices of Drinker Biddle & Reath LLP, One Logan
Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103 (Conference
Room 20A), for the following purposes:
1. Election of directors; and
2. Transaction of such other business as properly may be brought
before the meeting or any adjournment thereof.
The board of directors has fixed the close of business on October 22,
2001 as the record date for determining the stockholders entitled to notice of
and to vote at the meeting. Only stockholders of record on the transfer books of
the Company at the close of business on that date are entitled to notice of and
to vote at the meeting.
It is important that your shares be represented and voted at the
meeting. Please mark, sign, date and return the enclosed proxy in the envelope
provided for that purpose even if you plan to attend the meeting. A person
giving a proxy has the power to revoke it by written notice to the secretary of
the company, and any stockholder who is present at the meeting may withdraw the
proxy and vote in person. Stockholders who hold their shares through a broker
(in "street name") should follow the voting instructions provided by their
broker.
October 29, 2001
By Order of the Board of Directors
JOSEPH A. SANTANGELO,
Secretary-Treasurer and Chief Financial Officer
ORLEANS HOMEBUILDERS, INC.
Corporate Headquarters:
One Greenwood Square, Suite 101
3333 Street Road
Bensalem, Pennsylvania 19020
Telephone Number: (215) 245-7500
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PROXY STATEMENT
------------
This proxy statement which is being sent to stockholders on or about
October 29, 2001, is furnished to stockholders of Orleans Homebuilders, Inc. in
connection with the solicitation of proxies for the Annual Meeting of
Stockholders, by order of the board of directors of the Company. The meeting
will be held on Thursday, December 6, 2001, at 11:00 a.m., Philadelphia time, at
the offices of Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry
Streets, Philadelphia, Pennsylvania, 19103 for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders.
The record date of stockholders entitled to notice of and to vote at
the meeting has been fixed as the close of business on October 22, 2001. Only
stockholders of record at the close of business on the record date shall be
entitled to notice of and to vote at the meeting.
As of October 22, 2001, the Company had outstanding 11,357,893 shares
of Common Stock, par value $.10 per share, which are eligible to be voted.
Table of Contents
Page
VOTING AND REVOCABILITY OF PROXIES.....................................................................................1
ELECTION OF DIRECTORS..................................................................................................2
Directors.....................................................................................................3
Executive Officers............................................................................................4
Committees and Meetings of the Board of Directors.............................................................4
Compensation of Directors.....................................................................................5
OTHER MATTERS..........................................................................................................6
ADDITIONAL INFORMATION.................................................................................................6
Section 16(a) Beneficial Ownership Reporting Compliance.......................................................6
Security Ownership of Certain Beneficial Owners and Management................................................7
EXECUTIVE COMPENSATION.................................................................................................8
Summary Compensation Table....................................................................................8
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values.............................9
Option/SAR Grants Table.......................................................................................9
Performance Graph.............................................................................................9
Compensation Committee Interlocks and Insider Participation..................................................11
COMPENSATION COMMITTEE REPORT.........................................................................................11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................................................13
AUDIT COMMITTEE REPORT................................................................................................15
ADDITIONAL INFORMATION REGARDING THE AUDITORS.........................................................................16
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING.....................................................17
ANNUAL REPORT ON FORM 10-K............................................................................................17
APPENDIX A: ORLEANS HOMEBUILDERS, INC. AUDIT COMMITTEE CHARTER......................................................A-1
-i-
VOTING AND REVOCABILITY OF PROXIES
Each share of outstanding Common Stock entitles the holder to one vote,
without cumulation, on each matter to be voted upon at the meeting. The presence
at the meeting, in person or by proxy, of the holders of a majority of the
shares of Common Stock entitled to vote is necessary to constitute a quorum.
Shares of the Company's Common Stock represented by any unrevoked proxy
in the enclosed form will be voted in accordance with the specifications made on
such proxy, if it is properly executed and received prior to voting at the
meeting. Any properly executed proxy received on a timely basis on which no
specification has been made by the stockholder will be voted (1) "FOR" the
election as directors of the nominees listed herein (or for such substitute
nominees as may be nominated in the event the initial nominees become
unavailable); and (2) in the discretion of the proxy committee of the board of
directors, upon all other matters requiring a vote of stockholders which may
properly come before the meeting and of which the board of directors was not
aware a reasonable time before this solicitation.
The enclosed proxy is being solicited on behalf of the board of
directors of the Company and any costs of solicitation will be borne by the
Company. Such costs include preparation, printing and mailing of the Notice of
Annual Meeting of Stockholders, the proxy, this proxy statement and the Annual
Report, which are herewith enclosed. The solicitation will be conducted
principally by mail, although directors, officers and regular employees of the
Company may solicit proxies personally or by telephone or telegram. Arrangements
will be made with brokerage houses and other custodians, nominees and
fiduciaries for proxy material to be sent to their principals, and the Company
will reimburse such persons for their reasonable expenses in so doing.
The proxy committee, selected by the board of directors, consists of
Jeffrey P. Orleans, Chief Executive Officer and Chairman of the board of
directors of the Company, and Benjamin D. Goldman, Vice Chairman of the board of
directors of the Company. If the enclosed proxy is executed and returned, it
may, nevertheless, be revoked at any time before it has been exercised upon
written notice to the Secretary of the Company. The proxy shall be deemed
revoked if a stockholder is present at the meeting and elects to vote in person.
Jeffrey P. Orleans, Chairman of the Board and Chief Executive Officer,
controls a majority of the voting power of the Common Stock. Mr. Orleans has
informed the Company that he intends to vote his shares of Common Stock in favor
of Proposal 1, which means that this proposal will be approved regardless of the
votes of the Company's other stockholders.
ELECTION OF DIRECTORS
The stockholders are being asked to elect eight directors, who will
comprise the entire board of directors of the Company, to serve for the ensuing
year and until their successors are duly elected and qualified. The nominees are
Messrs. Benjamin D. Goldman, Jerome S. Goodman, Robert N. Goodman, Andrew N.
Heine, David Kaplan, Lewis Katz, Jeffrey P. Orleans and Michael T. Vesey all of
whom are currently directors of the Company. Assuming a quorum is present, the
eight nominees receiving the highest number of votes cast at the meeting will be
elected directors. For such purposes, the withholding of authority to vote or
the specific direction not to cast a vote, such as a broker non-vote, will not
constitute the casting of a vote in the election of directors.
In the event that any nominee for director should become unavailable,
which event the board of directors does not anticipate, it is intended that
votes will be cast pursuant to the enclosed proxy for such substitute nominee as
may be nominated by the board of directors unless otherwise indicated by the
stockholder on the proxy.
Name Age Present Position with the Company Director Since
---- --- --------------------------------- --------------
Benjamin D. Goldman(1)(2) 55 Vice Chairman of the Board 1992
Jerome S. Goodman 67 Director 2001
Robert N. Goodman(3) 49 Director 1994
Andrew N. Heine(3) 72 Director 1994
David Kaplan(3)(4)(5) 57 Director 1994
Lewis Katz(1)(4)(5)(6) 59 Director 1987
Jeffrey P. Orleans(1)(2)(6) 55 Chairman of the Board and Chief 1983
Executive Officer
Michael T. Vesey 42 Director, President and Chief Operating 2001
Officer
-----------
(1) Member of the committee designated to administer the 1992 Stock Option
Plan for Non-Employee Directors (the "1992 Director
Option Plan Committee"), of which Mr. Orleans is Chairman.
(2) Member of the committee designated to administer the 1995 Plan (the
"1995 Director Option Plan Committee").
(3) Member of the Audit Committee, of which Mr. Kaplan is Chairman.
(4) Member of the Compensation Committee, of which Mr. Kaplan is Chairman.
(5) Member of the committee designated to administer the 1992 Plan (the
"1992 Incentive Stock Option Committee"), of which Mr. Kaplan is
Chairman.
(6) Member of the Executive Committee.
2
Directors
Jeffrey P. Orleans has served as Chairman of the Board and Chief
Executive Officer of the Company since September 1986. From September 1986 to
May 1992, he also served as President of the Company. In addition, Mr. Orleans
is a general partner of Orleans Builders & Developers and served as the Chief
Executive Officer and the sole shareholder of Orleans Construction Corp., a
residential real estate developer, until its acquisition by the Company on
October 22, 1993. Mr. Orleans is a Trustee of Pennsylvania Real Estate
Investment Trust.
Benjamin D. Goldman was elected Vice-Chairman of the Board in April
1998 and has been a director of the Company since May 1992. From May 1992 until
April 1998, he served as President and Chief Operating Officer of the Company.
Lewis Katz has been a director of the Company since 1987. From 1972 to
1997, he was a partner in the law firm of Katz, Ettin, Levine, Kurzweil, Weber &
Scialaeba, P.A., Cherry Hill, New Jersey, which has performed legal services for
the Company in the past year, and he is now Of Counsel to such law firm. Mr.
Katz is a director of Central Parking Corporation.
Jerome S. Goodman has been a director of the Company since April 2001.
Mr. Goodman was a director of Aetna Inc. from 1988 to May 2001. Mr. Goodman
retired as Chairman of Travel One upon the sale of that firm to American Express
Company on November 15, 1998. He had served as Chairman of Travel One since 1971
and was the sole shareholder from 1971 to 1994. He was a trustee of Resource
Asset Investment Trust, a real estate investment trust, from 1997 to 1999. Mr.
Goodman is a director of The Maine Merchant Bank, LLC.
Robert N. Goodman has been a director of the Company since April 1994.
For more than five years, he has served as President and Chief Operating Officer
of Goodtab Corporation, Los Angeles, California, which is engaged principally in
real estate and financial consulting on a nationwide basis. Since 1998, Mr.
Goodman has served as President of Olympic Realty Advisors, a finance company
providing equity and debt capital for single family residential homebuilding
projects in California. Mr. Goodman owns a controlling equity interest in JDT
Consulting Group, the sole general partner of La Jolla Village Professional
Center Associates, L.P., a California limited partnership. La Jolla Village
filed for a Petition under Chapter 11 of the Federal Bankruptcy Code on April
23, 1996.
Andrew N. Heine has been a director of the Company since April 1994.
For more than five years, Mr. Heine has been an attorney and private investor.
Mr. Heine is a director of Citizens Communications Company.
David Kaplan has been a director of the Company since April 1994. Since
1996, Mr. Kaplan has been a principal in Autumn Hill Capital, Inc., a real
estate advisory and investment banking firm, and managing partner of Kingsbridge
Partners LLC, a real estate investment firm. Prior to that time, he was a
principal of Victor Capital Group, L.P., which engaged in real estate advisory
services and investment banking.
Michael T. Vesey has been a director of the Company since September
2001 and has served as President and Chief Operating Officer of the Company
since April 1998. From July 1994 to April 1998, he was the Executive Vice
President-Project Management of the Company. Prior to 1994, Mr. Vesey was
responsible for project management of the Company's Pennsylvania communities.
3
Executive Officers
In addition to Messrs. Orleans, Goldman and Vesey the following persons
serve as executive officers of the Company:
Joseph A. Santangelo, 47, is Chief Financial Officer, Treasurer and
Secretary of the Company. He has held the position of Chief Financial Officer
since July 1994, and he has been Treasurer of the Company since 1987.
Gary G. Schaal, 51, is Executive Vice President-Sales and Marketing of
the Company. He has held that position since September 1995. From July 1987 to
November 1994, Mr. Schaal was a Senior Vice President of Scarborough Corporation
and a Vice President of Scarborough Homes, Inc.
Committees and Meetings of the Board of Directors
The board of directors held three meetings during the fiscal year ended
June 30, 2001. The Company has standing Executive, Audit, Compensation, 1992
Incentive Stock Option, 1992 Director Option Plan and 1995 Director Option Plan
Committees. The board of directors does not have a standing Nominating
Committee. The functions of a Nominating Committee are carried on by the board
of directors as a whole.
The Executive Committee has and exercises the authority of the board of
directors in the management of the business and affairs of the Company between
meetings of the board. During Fiscal 2001, the Executive Committee held no
formal meetings.
The Audit Committee selects the independent accountants, reviews with
the independent accountants the adequacy of the system of internal accounting
controls of the Company and discusses with management and the independent
accountants the annual financial statements and principal accounting matters.
During Fiscal 2001, the Audit Committee met two times.
The Compensation Committee reviews the general compensation
arrangements and structure of the Company, reviews salaries and other
compensation arrangements for the executive officers of the Company and makes
recommendations concerning such compensation to the board of directors. The
Compensation Committee held no formal meetings during Fiscal 2001.
The 1992 Incentive Stock Option Committee administers the Company's
1992 Plan and awards grants thereunder. The 1992 Incentive Stock Option
Committee held no formal meetings during Fiscal 2001.
The 1992 Director Option Plan Committee awards options under the 1992
Director Option Plan. The 1992 Director Option Plan Committee held no formal
meetings during Fiscal 2001.
The 1995 Director Option Committee was established in February 1995 to
administer the 1995 Plan. The 1995 Director Option Committee held no formal
meetings during Fiscal 2001.
During Fiscal 2001, all incumbent directors, except for Mr. Katz (who
attended two of the three meetings of the board of directors) attended in person
or by conference call at least 75% of the total number of meetings of the board
of directors and meetings of the committees for the board on which they served
during their incumbency.
4
Compensation of Directors
Each director who is not an employee of the Company is entitled to
receive a basic fee of $6,000 annually for his service on the Board, plus an
attendance fee of $1,500 for each Board meeting and $500 for each Committee
meeting.
Each director of the Company who was not an employee of the Company or
any affiliate of the Company and who had been a director for at least three
years as of January 4, 1993 was granted an option to purchase 25,000 shares of
the Company's Common Stock under the 1992 Stock Option Plan for Non-Employee
Directors (the "1992 Director Option Plan"). Under the 1992 Director Option
Plan, shares subject to an option became eligible for purchase on a cumulative
basis in equal installments of 6,250 shares each, beginning on August 19, 1994,
the date stockholders approved the 1992 Director Option Plan, and on January 1
of each of the years 1994 through 1996, inclusive. Each option granted under the
1992 Director Option Plan expires 10 years from the date of the grant and is
subject to earlier termination upon the occurrence of certain events, including
under certain circumstances termination of service on the board of directors.
Mr. Katz has received options for 25,000 shares under the 1992 Director Option
Plan.
On February 27, 1995, the board of directors adopted, subject to
stockholder approval, the 1995 Stock Option Plan for Non-employee Directors.
Under the 1995 Plan, options for 25,000 shares of the Company's Common Stock
were granted on February 28, 1995, subject to stockholder approval, to each
director who was not an employee of the Company or any affiliate of the Company
or who was ineligible to participate in any other stock option plan of the
Company on February 28, 1995. Options for 25,000 shares each were granted to
Messrs. Goodman, Heine and Kaplan. Under the terms of the 1995 Plan, 6,250
shares of Common Stock became eligible for purchase on December 8, 1995, the
date that the 1995 Plan was approved by the Company's stockholders, and on each
of February 28, 1996, 1997 and 1998.
On April 20, 1998, the board of directors adopted, subject to
stockholder approval, amendments to the 1995 Plan. Under the amended 1995 Plan,
options for 10,000 shares of the Company's Common Stock were granted to each
director who was not an employee of the Company or any affiliate of the Company
and who is ineligible to receive grants under any other stock option plan of the
Company in effect on that date. Options for 10,000 shares each were granted to
Messrs. Goodman, Heine, Kaplan and Katz. Under the terms of the 1995 Plan, 2,500
shares of Common Stock became eligible for purchase on December 11, 1998, the
date that the amendments to the 1995 Plan were approved by the Company's
stockholders, and on each of April 20, 1999, 2000 and 2001.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION
OF EACH OF THE NOMINEES FOR DIRECTOR.
5
OTHER MATTERS
The board of directors is not aware at present of any other matters
which will or may come before the meeting and which require a vote of the
stockholders. If any such matter is properly brought before the meeting, the
proxy committee will vote thereon in its discretion, to the extent permitted by
the rules and regulations of the Securities and Exchange Commission and Delaware
corporate law. You are urged to mark, sign and date your proxy and return it
immediately.
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's executive officers and directors and persons who own more than ten
percent of a registered class of the Company's equity securities (collectively,
the "reporting persons") to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and to furnish the Company with
copies of these reports.
Based on the Company's review of the copies of the reports received by
it, and written representations, if any, received from reporting persons with
respect to the filing of reports on Forms 3, 4 and 5, the Company believes that
all filings required to be made by the reporting persons for Fiscal 2001 were
made on a timely basis except that Mr. Orleans failed to file timely a Form 4
for two minor transactions, which have since been reported. In addition, Mr.
Orleans has now reported shares held in accounts for his minor children which
should have been reported on an earlier Section 16(a) report.
6
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of the close of business on September
24, 2001, certain information with respect to the beneficial shareholdings of
each director or nominee, each of the executive officers named in the Summary
Compensation Table, and all executive officers and directors as a group, as well
as the holdings of each stockholder who was known to the Company to be the
beneficial owner, as defined in Rule 13d-3 under the Exchange Act, of more than
5% of the Company's shares of Common Stock, based upon Company records or
Securities and Exchange Commission records. Each of the persons listed below has
sole voting and investment power with respect to such shares, unless otherwise
indicated.
Number of Shares Percent of
Name of Beneficial Owner Beneficially Owned Class
------------------------ ------------------ ----------
Jeffrey P. Orleans, Chairman and Chief Executive Officer.................. 11,324,128(1) 73.7%
Jerome S. Goodman, Director............................................... 368,000 3.2
Robert N. Goodman, Director............................................... 50,000(2) *
Benjamin D. Goldman, Director and Vice Chairman of the Board.............. 1,199,840(3) 10.2
Lewis Katz, Director...................................................... 489,000(4) 4.3
Joseph A. Santangelo, Chief Financial Officer............................. 102,500(5) *
Michael T. Vesey, Director , President and Chief Operating Officer........ 411,700(6) 3.5
David Kaplan, Director.................................................... 69,000(7) *
Gary Schaal, Executive Vice President..................................... 85,000(8) *
Andrew N. Heine, Director................................................. 35,000(9) *
All directors and executive officers
As a group (10 persons)................................................. 14,134,168(10) 86.9
-------------
* Less than 1% of the outstanding shares of Common Stock of the Company.
(1) The shares reflected include (a) 5,000 shares of 10,000 shares owned by
a privately-held corporation, of which Mr. Orleans is a 50%
stockholder, (b) 2,000,000 shares issuable upon conversion of the
Company's $3,000,000 Convertible Subordinated 7% Note, (c) 42,000
shares owned by a privately held partnership, of which Mr. Orleans is a
majority partner, and (d) 2,000,000 shares issuable upon conversion of
100,000 shares of the Company's Series D Preferred Stock, which has a
liquidation value of $3,000,000. The address of this person is c/o
Orleans Homebuilders, Inc., 3333 Street Road, Suite 101, Bensalem,
Pennsylvania 19020.
(2) The shares reflected consist of (a) 15,000 shares owned by Goodtab
Corporation (of which Mr. Goodman is the sole shareholder) and (b)
35,000 shares issuable upon exercise of the vested portion of
outstanding stock options.
(3) Includes (a) 400,000 shares issuable upon exercise of the vested
portion of outstanding stock options and (b) 606,282 shares (for which
Mr. Goldman disclaims beneficial ownership) held in separate trusts for
the benefit of the children of Mr. Orleans, as to which Mr. Goldman is,
in each case, sole trustee. The address of this person is c/o Orleans
Homebuilders, Inc., 3333 Street Road, Suite 101, Bensalem, Pennsylvania
19020.
(4) The shares reflected include 35,000 shares issuable upon exercise of
the vested portion of outstanding stock options.
(5) The shares reflected include 70,000 shares issuable upon the exercise
of vested portion of outstanding stock options.
(6) The shares reflected include (a) 700 shares (for which Mr. Vesey
disclaims beneficial ownership) held as custodian for Mr. Vesey's minor
daughters, and (b) 245,000 shares issuable upon exercise of the vested
portion of outstanding stock options.
(7) The shares reflected include 35,000 shares issuable upon exercise of
the vested portion of outstanding stock options.
(8) Includes 60,000 shares issuable upon the exercise of the vested portion
of outstanding stock options.
(9) Consists of 35,000 shares issuable upon exercise of the vested portion
of outstanding stock options.
(10) The shares reflected consist of (a) 915,000 shares issuable upon
exercise of the vested portion of outstanding stock options, and (b)
2,000,000 shares issuable upon conversion of the Company's $3,000,000
Convertible Subordinated 7% Note, and (c) 2,000,000 shares issuable
upon conversion of 100,000 shares of the Company's Series D Preferred
Stock, which has a liquidation value of $3,000,000.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information as to all compensation paid
by the Company for services in each of the Company's last three fiscal years
ended June 30 to (i) the Company's Chief Executive Officer and (ii) the four
most highly compensated officers other than the Chief Executive Officer who were
serving as executive officers at the end of Fiscal 2001 and whose total annual
salary and bonus exceeded $100,000 in Fiscal 2001 (together with the Chief
Executive Officer, the "Named Executive Officers").
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Number of
Other Annual Securities
Compensation Underlying
Name and Principal Position Fiscal Year Salary Bonus ------------ Options
---------------------------- ----------- ------ ----- (1) -------
Jeffrey P. Orleans
Chairman and CEO 2001 $300,000 $559,366 $3,400 --
2000 300,000 400,830 3,200 --
1999 300,000 285,390 3,200 --
Benjamin D. Goldman
Vice Chairman of the Board 2001 237,500 275,000 3,400 --
2000 250,000 200,415 3,200 --
1999 250,000 142,695 3,200 --
Michael T. Vesey
President and Chief Operating Officer 2001 200,000 279,683 3,400 --
2000 200,000 200,415 3,200 --
1999 200,000 142,695 3,200 --
Joseph A. Santangelo
Chief Financial Officer,
Secretary and Treasurer 2001 135,000 137,500 3,400 --
2000 135,000 80,000 3,200 --
1999 135,000 54,000 3,100 --
Gary G. Schaal
Executive Vice President
Sales and Marketing 2001 125,000 126,030 3,400 --
2000 125,000 100,208 2,500 --
1999 125,000 95,130 2,129 --
-----------------
(1) Includes $3,400 contributed by the Company to a 401(k) (defined
contribution) retirement plan.
8
On July 18, 1994, the board of directors, upon the favorable
recommendation of the Compensation Committee, adopted a bonus compensation plan
to be applied in Fiscal 1995 and thereafter. For a summary of the bonus plan
(including recent amendments thereto) and certain awards made thereunder, see
"Compensation Committee Report on Executive Compensation."
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth individual exercises of stock options
during Fiscal 2001 and year-end values by the Named Executive Officers.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
June 30, 2001 (#) At June 30, 2001($)(1)
---------------------- ----------------------
Shares
Acquired on Value
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Orleans -- -- -- -- -- --
Benjamin D. Goldman -- -- 400,000 -- $900,000 --
Michael T. Vesey -- -- 245,000 90,000 324,750 $130,000
Joseph A. Santangelo -- -- 70,000 -- 101,975 --
Gary G. Schaal -- -- 60,000 -- 96,875 --
------------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. The
closing market price of the Company's Common Stock on June 29, 2001 was
$3.000 per share.
Option/SAR Grants Table
Neither the Chief Executive Officer nor the other most highly
compensated executed officers named in the "Summary Compensation Table" above,
were granted stock options or stock appreciation rights during the fiscal year
ended June 30, 2001.
Performance Graph
The graph set forth below compares the yearly percentage change in the
cumulative total stockholder return on the Common Stock of the Company during
the five years ended June 30, 2001 with (1) the cumulative total return on the
American Stock Exchange Index and (2) the cumulative total return on a selected
peer group index. The Company's peer group is the Standard & Poor's Homebuilding
Index. The comparison assumes $100 was invested on June 30, 1996 in the
Company's Common Stock and in each of the foregoing indices and assumes the
reinvestment of any dividends. The closing market price of the Company's Common
Stock as of June 29, 2001 was $3.000.
9
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
[OBJECT OMITTED]
Years Ending
June 1996 June 1997 June 1998 June 1999 June 2000 June 2001
--------- --------- --------- --------- --------- ---------
ORLEANS HOMEBUILDERS, INC. 100.00 80.55 211.11 166.67 138.93 267.56
AMEX MARKET VALUE 100.00 107.33 134.64 151.76 178.74 177.21
S & P HOMEBUILDING 100.00 118.61 200.00 168.47 123.97 217.58
10
Compensation Committee Interlocks and Insider Participation
During Fiscal 2001, Messrs. Kaplan and Katz served on the Compensation
Committee of the board of directors. Mr. Katz is Of Counsel to Katz, Ettin,
Levine, Kurzweil, Weber & Scialaeba, P.A., which has performed legal services
for the Company in the past year. On July 18, 1994, the 1992 Incentive Stock
Option Committee was reconstituted with Messrs. Kaplan and Katz as its members.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Committee
The Compensation Committee consists of Messrs. Kaplan and Katz. The
Committee is chaired by Mr. Kaplan and reviews and recommends salaries, bonuses
and other forms of compensation for officers and key employees of the Company.
On July 18, 1994, the members of the current Compensation Committee were
appointed as the members of the 1992 Incentive Stock Option Committee.
Overview and Philosophy
The Compensation Committee is mindful of the need to align the
interests of management with the interests of the Company's stockholders. The
establishment of the 1992 Plan was designed to permit the Company to attract and
retain talented managers and motivate such managers to enhance profitability and
stockholder returns. The Committee believes that the utilization of stock option
plans serves the interests of the stockholders, especially by permitting the
Company to preserve cash for other operational purposes. The Committee believes
that the objectives of the stockholders will be best achieved by having a
substantial portion of executive cash compensation tied to annual corporate
earnings and by providing incentives to management through the use of stock
options.
Senior Executive Officers' Compensation
In Fiscal 1994, after approval by the board of directors and review of
the matter by the Compensation Committee, it was determined that the
compensation of the Company's Chairman and Chief Executive Officer, Jeffrey P.
Orleans, would be $300,000 and the salary of Benjamin D. Goldman, Vice Chairman
of the Board, would be $250,000, each on an annualized basis. During Fiscal
1998, the salary of Michael T. Vesey, President and Chief Operating Officer was
increased to $200,000 on an annualized basis. During Fiscal 2001, the salary of
Mr. Goldman was decreased to $225,000 on an annualized basis.
Other Executive Officers' Compensation
The Compensation Committee has assumed responsibility for the cash and
other incentive compensation, if any, to be paid to the Company's executive
officers and key employees, other than compensation under the Company's stock
option plans. The amount and nature of the compensation received by the
Company's executives was determined in accordance with the recommendations of
the Chief Executive Officer. The executive compensation program consists of
three major components: base salaries, potential for annual bonuses and stock
options.
11
Base Salary
The compensation to executive officers of the Company is generally in
the low range of base salary amounts paid to comparable executive officers at
similar companies. Increases in base salaries have been limited over the last
several fiscal years and are adjusted based on the performance of an individual
executive, increased responsibilities assumed by such executive, compensation
trends in the real estate industry and general market compensation levels for
comparable positions.
Incentive Compensation Programs
The Compensation Committee believes that it is important for the
Company to further align its executive officers and key employees with the
stockholders' interests by establishing a direct link between executive pay and
the Company's operating financial performance. Accordingly, on July 18, 1994,
the board of directors, upon the favorable recommendation of the Compensation
Committee, adopted a bonus compensation plan to be applied in Fiscal 1995 and
thereafter, which, as amended by the board of directors on September 16, 1999,
to be retroactive to July 1, 1998, is as follows:
A total of eight percent (8%) of the Company's consolidated
operating profits (before taxes and excluding nonrecurring
items, income or loss arising from extraordinary items,
discontinued operations, debt repurchase at a discount, and
the amount of awards under the Bonus Plan ("Pre-Tax Profits"),
if any) shall be allocated for award as bonus compensation.
Three percent (3%) of the Pre-Tax Profits shall be awarded as
an incentive to the Chairman and one and one-half percent
(1.5%) of the Pre-Tax Profits shall be awarded to each of the
Vice Chairman and President and Chief Operating Officer,
respectively, provided each is in office at the end of the
fiscal year, subject to certain exceptions. Two percent (2%)
of the Pre-Tax Profits shall be allocated for award at the
discretion of the Chairman in consultation with the Vice
Chairman to other executive officers and key employees of the
Company whose performance merits recognition under goals and
policies established by the Board. Any award will be pro-rated
for any eligible employee who has served less than the full
year with the Company.
For Fiscal 2001, the Board continued management performance goals,
which included continued growth in profitability, reduction of unproductive
assets, acquisition and financing of new and existing assets, and improvements
by management to reduce overhead and increase efficiency. With respect to Fiscal
2001, pursuant to the Bonus Plan, 3.0% of the Pre-Tax Profits were awarded to
Mr. Orleans and 1.5% of the Pre-Tax Profits were awarded to each of Messrs.
Goldman and Vesey, respectively. The remaining 2.0% of Pre-Tax Profits was
awarded to the Company's other senior officers based upon their attainment of
certain performance goals, except that Mr. Schaal was awarded 0.75% of the
Pre-Tax Profits of northern region operations under a separate agreement with
him.
1992 Incentive Stock Option Plan
The 1992 Plan established by the board of directors is intended to
align directly the interests of the Company's executives and the stockholders in
the enhancement of stockholder value. The ultimate value, if any, received by
option holders is directly tied to increases in the Company's stock price and,
therefore, stock options serve to link closely the interests of management and
stockholders by motivating executives to make decisions that will serve to
increase the long-term return to the stockholders. Additionally, grants under
the 1992 Plan include vesting and termination provisions, which the board
believes will encourage option holders to remain employees of the Company.
Generally, options granted under the 1992 Plan have exercise prices equal to the
fair market value of the Company's Common Stock on the date of grant, become
exercisable in installments within a period of three years from the date of
grant, and are contingent upon the grantee's continued employment. The number of
shares for which options may be granted to an individual varies according to his
or her job title, level of responsibility, and performance results.
12
With respect to stock option awards granted in previous fiscal years,
considerations of the 1992 Incentive Stock Option Plan Committee have included
recognition of the Company's progress with respect to its restructuring and
financing transactions, the fact that the Company has been engaged in several of
these long-term transactions of substantial complexity extending over several
years and the effect of continuing efforts to restore profitability by reducing
overhead and increasing operating efficiency. The Company's success is
considered to depend in large part on the sustained effort and commitment of
management. The board of directors and Compensation Committee believe that
option awards provide long-term incentive to focus managers on building
profitability and stockholder value and, as a consequence, intend to continue to
utilize option awards in the future.
Other Benefits
The Company makes available health care benefits and a 401(k) plan for
executive officers on terms generally available to all Company employees. The
board of directors believes that such benefits are comparable to those offered
by other real estate developers of similar size. The amount of perquisites as
determined in accordance with the rules of the Securities and Exchange
Commission relating to executive compensation, did not exceed $50,000 or 10% of
the salary of any executive officer in the last fiscal year.
The Compensation Committee
David Kaplan, Chairman
Lewis Katz
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Convertible Note
In connection with the Company's discretionary secured line of credit
in the maximum principal amount of $6.6 million entered into in April 1996, the
Company and the lending bank agreed to enter into certain arrangements with
Jeffrey P. Orleans, Chairman and Chief Executive Officer of the Company,
relating to existing borrowings by the Company from Mr. Orleans. These
arrangements included the subordination to the bank of $3 million of advances by
Mr. Orleans to the Company.
The Board appointed a Special Committee of non-employee directors to
review and recommend the permanent terms of the aggregate $3 million in advances
by Mr. Orleans to the Company and the terms of an additional $2 million to be
advanced by Mr. Orleans to the Company. On July 9, 1996, after receiving the
report of the Special Committee and a preliminary report from Howard, Lawson &
Co., an investment banking firm, on the fairness of the proposed terms, the
board of directors unanimously approved the proposed terms (Mr. Orleans
abstaining), and delegated to the Special Committee the authority to approve the
final documentation, subject to the receipt of a written opinion from Howard,
Lawson & Co. as to the fairness of the proposed terms to the shareholders of the
Company. In August 1996, after receipt of an opinion from Howard, Lawson & Co.,
to the effect that the proposed arrangements with Mr. Orleans relating to such
advances were fair to the stockholders of the Company, other than Mr. Orleans,
from a financial point of view, the Special Committee approved the documentation
under which these advances would be made by Mr. Orleans to the Company.
13
The $3 million advance by Mr. Orleans to the Company referred to above
is evidenced by the Company's $3 million Convertible Subordinated 7% Note (the
"Convertible Note"), issued pursuant to a note purchase agreement dated as of
August 1, 1996, as amended and restated as of June, 1997. During Fiscal 2001,
Mr. Orleans agreed to extend the maturity date one year to January 1, 2004,
provided the terms of the original Convertible Note are not modified. The
Convertible Note provides for interest payable quarterly at 7% per annum and
principal payments of $1 million beginning January 1, 2002. The Convertible Note
contains commercially standard default and other provisions. The holder of the
Convertible Note may convert all or any portion (in integral multiples of $1
million) of the principal amount of the Convertible Note into shares of the
Company's Common Stock at a conversion price of $1.50 per share, subject to
adjustment for splits, combinations, and other capital changes. The closing
price of the Company's Common Stock on the American Stock Exchange on July 8,
1996, the date the board of directors approved the terms of the borrowing, was
$1.125 per share.
Series D Preferred Stock
On April 20, 1998, the Board approved, subject to the receipt of a
written opinion confirming the fairness of the transaction from an investment
banking firm satisfactory to the Board, the exchange with Mr. Orleans of an
aggregate of $3 million of indebtedness represented by a $2 million variable
rate note and two demand notes in the aggregate principal amount of $1,000,000
for shares of the Company's Series D Preferred Stock (the "Series D Preferred
Stock"). On September 24, 1998, the Board received the written opinion of
Howard, Lawson & Co. to the effect that the proposed exchange with Mr. Orleans
was fair to the stockholders of the Company, other than Mr. Orleans, from a
financial point of view. The Board then took final action to authorize the terms
of the Series D Preferred Stock and the execution of an Exchange Agreement with
Mr. Orleans. On October 20, 1998, the Company entered into an Exchange Agreement
with Mr. Orleans under which Mr. Orleans exchanged the variable rate note and
the demand notes for 100,000 shares of Series D Preferred Stock.
The Series D Preferred Stock has a liquidation value of $3,000,000, or
$30.00 per share, and requires annual dividends of 7% of the liquidation value.
The dividends are cumulative and payable quarterly. The Series D Preferred Stock
is redeemable by the Company at any time after December 31, 2003, in whole or in
part, at a cash redemption price equal to the liquidation value plus all accrued
and unpaid dividends on such shares to the date of redemption. The Series D
Preferred Stock is convertible into 2,000,000 shares of Common Stock at a
conversion price of $1.50 per common share. The closing price of the Company's
Common Stock on the American Stock Exchange on April 20, 1998 (the date of Board
approval of the issuance of the Series D Preferred Stock) was $1.19.
If Mr. Orleans were to convert the Convertible Note and the Series D
Preferred Stock in full at its initial conversion prices of $1.50 per share, his
beneficial ownership of the Company's Common Stock would increase by 4,000,000
shares, and his percentage ownership of the outstanding common stock of the
Company, based on the number of shares of Common Stock outstanding on September
24, 2001, would increase from approximately 64.5% to approximately 73.7%.
Purchase Money Mortgage
In December 1997, the Company purchased land from Mr. Orleans in
exchange for a $500,000 Purchase Money Mortgage (the "PMM"), plus a share of
one-half of the gross profit in excess of 16% on a portion of the homes built
and sold on this land. During Fiscal 1998, the Company repaid $200,000 of the
PMM and began development of the land. The remaining balance of $300,000 will be
repaid from the proceeds of units sold at this development. During Fiscal 2001
and 2000, 48 lots and 32 lots, respectively, have settled and the Company
incurred additional costs of approximately $145,000 and $161,000, respectively,
for Mr. Orleans' share of the gross profit. As of June 30, 2001, the Company
paid Mr. Orleans approximately $276,000 under this agreement. The PMM bears
interest at 7% annually and is due no later than 60 months from the date of
issuance.
14
Line of Credit and Mount Laurel Homes
During Fiscal 1999, the Company entered into an agreement with Mr.
Orleans for a $4,000,000 unsecured line of credit. The agreement provides for an
annual review by Mr. Orleans for a one-year extension and currently expires June
30, 2002, with annual interest at LIBOR plus 4% payable monthly. The total
outstanding principal and interest was $3,619,000 at June 30, 2001. Also during
Fiscal 1999, Mr. Orleans purchased four low income homes, with an aggregate
sales value of approximately $176,000. These transactions satisfied, in part,
the Company's low income housing requirements in Mount Laurel Township, New
Jersey.
Relationship with Orleans Construction Corp.
Prior to October 22, 1993, the date of acquisition by the Company of
Orleans Construction Corp., a real estate company which was wholly owned by Mr.
Orleans, Orleans Construction had advanced funds to, borrowed funds from, and
paid expenses and debt obligations on behalf of Orleans Builders and Developers,
L.P., a partnership in which Mr. Orleans owns a majority interest. At June 30,
2001, the Company owed the partnership an aggregate amount of $869,000. These
advances are payable on demand and bear interest at 7% annually. The interest
incurred on these advances amounted to $90,000 for Fiscal 2001.
Relationship with A.P. Orleans Insurance Agency Inc.
During Fiscal 2001, the Company placed a majority of its corporate
insurance through A.P. Orleans Insurance Agency Inc., of which Mr. Orleans is
the sole shareholder. The Company incurred an aggregate of approximately
$525,000 in Fiscal 2000 and an aggregate of approximately $767,000 in Fiscal
2001 for these insurance policies. A.P. Orleans Insurance received customary
commissions from the insurance companies for serving as broker.
Other
In November 1999, the company engaged David Kaplan, a director of the
company, to provide services in connection with the acquisition of Parker &
Lancaster Corporation. In accordance with the terms of the arrangement, the
Company paid Mr. Kaplan $60,000 during Fiscal 2000 and $50,000 in Fiscal 2001
and will pay $40,000 in Fiscal 2002.
On March 20, 2000, Thomas Vesey, the brother of Michael T. Vesey,
President and Chief Operating Officer of the Company, was hired to assist the
Company in evaluating and identifying opportunities for expansion into
additional market areas. Thomas Vesey is Executive Vice President of the
Company's southern region operations. During Fiscal 2001, his salary was
increased to $150,000 on an annualized basis. In addition, he also received a
$25,000 bonus related to Fiscal 2001 performance.
In the opinion of the board of directors, all of the transactions
described in "Certain Relationships and Related Transactions," insofar as they
involve transactions by affiliates of the Company with the Company, are on terms
that are comparable to, or not less favorable than, terms which would have been
obtainable by the Company from unaffiliated third parties.
AUDIT COMMITTEE REPORT
The Audit Committee of the board of directors consists of three
directors, all of whom are independent as defined under the American Stock
Exchange's listing standards, and operates under a written charter adopted by
the board of directors, which is attached to this proxy statement as Appendix A.
The Audit Committee has prepared the following report on its activities with
respect to the Company's financial statements for Fiscal 2001.
15
o The Audit Committee has reviewed and discussed the audited
financial statements with management and PricewaterhouseCoopers
LLP, independent accountants for the Company;
o The Audit Committee has discussed with PricewaterhouseCoopers LLP
the matters required to be discussed by Statements of Auditing
Standards No. 61, which include, among other items, matters
related to the conduct of the audit of the financial statements
for Fiscal 2001;
o The Audit Committee has received written disclosures and the
letter from PricewaterhouseCoopers LLP required by Independence
Standards Board Standard No. 1, and has discussed with
PricewaterhouseCoopers LLP its independence from the Company; and
o Based on the review and discussions referred to above, the audit
committee has recommended to the board of directors that the
audited financial statements be included in the Company's Annual
Report on Form 10-K for Fiscal 2001, for filing with the
Securities and Exchange Commission.
Audit Committee
David Kaplan, Chairman
Robert N. Goodman
Andrew N. Heine
ADDITIONAL INFORMATION REGARDING THE AUDITORS
Audit Fees
The aggregate fees charged to the Company by PricewaterhouseCoopers LLP
for its audit of the Company's financial statements for Fiscal 2001 and for its
review of financial statements included in the Company's quarterly reports on
Form 10-Q for Fiscal 2001 were approximately $120,000.
Financial Information Systems Design and Implementation Fees
There were no services performed or fees charged to the Company by
PricewaterhouseCoopers LLP for information technology services for Fiscal 2001.
All Other Fees
The aggregate fees charged to the Company by PricewaterhouseCoopers LLC
for all other services, which include fees related to business acquisitions,
employee benefit plan audits, tax consultation, tax return preparation and
accounting consultation for Fiscal 2001 were approximately $304,000.
The Audit Committee has considered the nature of the above-listed
services provided by PricewaterhouseCoopers LLP and determined that such
services are compatible with their provision of independent audit services.
PricewaterhouseCoopers LLP has been selected to be the independent
accountants for the Company for its 2002 Fiscal Year. A representative of
PricewaterhouseCoopers LLP is expected to be present at the meeting to make a
statement if desired and will be available to respond to any appropriate
questions.
16
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Proposals which stockholders desire to have included in the Company's
Proxy Statement for the Annual Meeting in 2002 pursuant to Exchange Act Rule
14a-5(e) must be received by the Company on or before June 29, 2002.
Securities and Exchange Commission rules establish a different deadline
for submission of stockholder proposals that are not intended to be included in
the Company's proxy statement with respect to discretionary voting. The deadline
for these proposals for the 2002 Annual Meeting of Stockholders is September 14,
2002 (45 calendar days prior to the anniversary of the mailing date of this
proxy statement.) If a stockholder gives notice of such proposal after this
deadline, the Company's proxy committee will be allowed to use their
discretionary voting authority to vote against the stockholder proposal when and
if the proposal is raised at the 2002 Annual Meeting of Stockholders.
The Company has not been notified by any stockholder of such
stockholder's intent to present a stockholder proposal from the floor at this
year's meeting. The enclosed proxy grants the proxy committee discretionary
authority to vote on any matter properly brought before this year's meeting.
ANNUAL REPORT ON FORM 10-K
THE COMPANY, UPON REQUEST, WILL FURNISH TO RECORD AND BENEFICIAL
HOLDERS OF ITS COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-K (INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR
FISCAL 2001. COPIES OF EXHIBITS TO THE FORM 10-K ALSO WILL BE FURNISHED UPON
REQUEST AND UPON PAYMENT OF A REASONABLE FEE. ALL REQUESTS SHOULD BE DIRECTED TO
JOSEPH A. SANTANGELO, SECRETARY-TREASURER AND CHIEF FINANCIAL OFFICER, AT THE
OFFICES OF THE COMPANY SET FORTH ON PAGE ONE OF THIS PROXY STATEMENT.
October 29, 2001 By Order of the Board of Directors
JOSEPH A. SANTANGELO,
Secretary-Treasurer and Chief Financial Officer
17
Appendix A
ADOPTED: May 18, 2000
ORLEANS HOMEBUILDERS, INC.
Audit Committee Charter
Purpose
The primary purpose of the Audit Committee (the "Committee") is to
assist the Board of Directors (the "Board") in fulfilling its responsibility to
oversee management's conduct of the Company's financial reporting process,
including by making inquiries of the internal accounting staff and outside
auditor to determine that management has maintained the integrity and
reliability of: (i) the financial reports and other financial information
provided by the Company to any governmental or regulatory body, the public or
other users thereof; (ii) the Company's systems of internal accounting and
financial controls; and (iii) the annual independent audit of the Company's
financial statements.
The Committee is authorized to retain outside counsel, auditors or
other experts to advise the Committee. The Board and the Committee are in place
to represent the Company's shareholders; accordingly, the outside auditor is
ultimately accountable to the Board and the Committee.
The Committee shall review the adequacy of this charter on an annual
basis.
Membership
The Committee shall consist of not fewer than three members of the
Board, and the Committee's composition will meet the requirements of the audit
committee policy of the American Stock Exchange.
Accordingly, all of the members will be directors:
1. Who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
2. Who: (a) are able to read and understand fundamental financial
statements, such as the Company's balance sheet, income statement
and cash flow statement; or (b) who will be able to do so within a
reasonable period of time after appointment to the Committee. In
addition, at least one member of the Committee will have employment
experience in finance or accounting or any comparable experience or
background resulting in the member's financial sophistication.
The members and Chairman of the Committee shall be chosen by the Board
of Directors.
Key Functions
The Committee and the Board recognize that the Company's management is
responsible for preparing the Company's financial statements and that the
outside auditor is responsible for auditing those financial statements.
Additionally, the Committee and the Board recognize that financial management,
including the internal accounting staff, as well as the outside auditor, have
more time and knowledge and more detailed information concerning the Company
than do Committee members; consequently, in carrying out its responsibilities,
the Committee is not providing any expert or special assurance as to the
Company's financial statements or any professional certificate as to the outside
auditor's work. It is not the duty of the Committee to plan or conduct audits or
to determine whether the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
The following functions shall be the common recurring activities of the
Committee in carrying out its responsibilities. These functions are set forth as
a guide with the understanding that the Committee may diverge from this guide as
it considers appropriate given the circumstances.
1. The Committee shall review with management and the outside auditor the
audited financial statements to be included in the Company's annual report
on Form 10-K (or the annual report to shareholders if distributed prior to
the filing of Form 10-K) and review and consider with the outside auditor
the matters required to be discussed by Statement of Auditing Standards
("SAS") No. 61, as amended or supplemented. Such matters generally include,
among others, the consistency of the application of the Company's
accounting policies as well as the quality of the accounting principles and
underlying estimates used in preparation of the Company's financial
statements.
2. As a whole, or through the Committee chair, the Committee shall confirm
that the outside auditor has, prior to the Company's filing of Form 10-Q,
reviewed the Company's interim financial results to be included in the
Company's quarterly reports to be filed with the Securities and Exchange
Commission and consider any matters raised by the outside auditor under SAS
No. 61, as amended or supplemented.
3. The Committee shall discuss with management and the outside auditor the
quality and adequacy of the Company's internal controls.
4. The Committee shall:
a. request from the outside auditor annually a formal
written statement delineating all relationships
between the auditor and the Company consistent with
Independence Standards Board Standard No. 1;
b. discuss with the outside auditor any such disclosed
relationships and their impact on the independence of
the outside auditor; and
c. if, as a result of such written statement or
discussions, the Committee deems it advisable,
recommend that the Board take appropriate action to
oversee the independence of the outside auditor.
5. The Committee subject to any action that may be taken by the Board, shall
have the ultimate authority and responsibility to select (or nominate for
shareholder approval), evaluate and, where appropriate, replace the outside
auditor.
6. The Committee shall review with the outside auditor the scope of its annual
audit.
7. The Audit Committee shall report on its activities at the annual meeting of
the Board of Directors.
A-2
FORM OF REVOCABLE PROXY
ORLEANS HOMEBUILDERS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, DECEMBER 6, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE MARK VOTES AS IN THIS EXAMPLE /X/
The undersigned, revoking all prior proxies, hereby appoints Jeffrey P. Orleans
and Benjamin D. Goldman, or any of them, with full power of substitution, as the
undersigned's proxies and hereby authorizes them to represent and to vote, as
designated below, all the Common Stock of Orleans Homebuilders, Inc. held of
record by the undersigned on the close of October 22, 2001, at the Annual
Meeting of Stockholders to be held on Thursday, December 6, 2001 and at any
adjournment or postponement thereof.
1. ELECTION OF DIRECTORS
Nominees: Jeffrey P. Orleans, Benjamin D. Goldman, Jerome S. Goodman,
Robert N. Goodman, Andrew N. Heine, David Kaplan, Lewis Katz
and Michael T. Vesey.
|_| FOR |_| WITHHOLD AUTHORITY |_| FOR ALL EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided
below.
------------------------------------------------------
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
You are urged to sign and return this proxy so that you may be sure that your
shares will be voted.
Please be sure to sign and date this Proxy in box below.
Date
----------------------------------------------------------
Stockholder sign above ------Co-holder (if any) sign above
--------------------------------------------------------------------------------
* Detach above card, sign, date and mail in postage paid envelope provided. *
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND
IN ACCORDANCE WITH THE PROXIES' BEST JUDGMENT UPON OTHER MATTERS PROPERLY COMING
BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears hereon, date and return promptly.
When shares are held by joint tenants, both should sign. Executors,
administrators, trustees and other fiduciaries should indicate their capacity
when signing.
The above signed acknowledges receipt from Orleans Homebuilders, Inc.
prior to the execution of this proxy, of a Notice of the Annual Meeting of
Stockholders, a Proxy Statement and an Annual Report of Stockholders.