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
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(c) or Rule 14a-12
ORLEANS HOMEBUILDERS, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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[X] No fee required
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previously. Identify the previous filing by registration statement number,
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_____________
ORLEANS HOMEBUILDERS, INC.
One Greenwood Square, Suite 101
3333 Street Road
Bensalem, Pennsylvania 19020
_____________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 5, 2003
_____________
To the Stockholders of Orleans Homebuilders, Inc.:
The Annual Meeting of Stockholders of Orleans Homebuilders, Inc. (the
"Company") will be held on Friday, December 5, 2003, at 11:00 a.m., Philadelphia
time, at the offices of Wolf, Block, Schorr and Solis-Cohen LLP, 1650 Arch
Street, 22nd Floor, Philadelphia, Pennsylvania 19103 (Conference Room 3), for
the following purposes:
1. Election of directors;
2. Approval of the Amendment to the Orleans Homebuilders, Inc.
Incentive Compensation Plan;
3. Approval of the Orleans Homebuilders, Inc. Stock Award Plan; and
4. 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,
2003 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 27, 2003
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
______________
PROXY STATEMENT
_____________
This proxy statement, which is being sent to stockholders on or about
November 3, 2003, is furnished to stockholders of Orleans Homebuilders, Inc. in
connection with the solicitation of proxies for the Annual Meeting of
Stockholders (the "Annual Meeting"), by order of the board of directors of the
Company. The meeting will be held on Friday, December 5, 2003, at 11:00 a.m.,
Philadelphia time, at the offices of Wolf, Block, Schorr and Solis-Cohen LLP,
1650 Arch Street, 22nd Floor, Philadelphia, Pennsylvania, 19103 (Conference Room
3) 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, 2003. 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, 2003, the Company had outstanding 12,742,565 shares
of Common Stock, par value $.10 per share, which are eligible to be voted at the
Annual Meeting. Each share of Common Stock is entitled to one vote.
TABLE OF CONTENTS
VOTING AND REVOCABILITY OF PROXIES.............................................1
ELECTION OF DIRECTORS..........................................................2
Directors...................................................................3
Executive Officers..........................................................3
Committees and Meetings of the Board of Directors...........................4
Compensation of Directors...................................................5
APPROVAL OF THE AMENDMENT TO THE...............................................5
Eligibility.................................................................6
Administration..............................................................6
Bonus Payments Under the Incentive Plan.....................................6
Amendment, Suspension or Termination........................................7
Tax Aspects.................................................................8
APPROVAL OF THE ORLEANS HOMEBUILDERS, INC......................................8
Purpose ...................................................................8
Number of Shares Subject to Grants..........................................8
Administration..............................................................9
Participants................................................................9
Conditions of Vesting and Forfeiture........................................9
Amendment, Suspension or Termination........................................9
Change in Control...........................................................9
Effective Date and Term.....................................................9
Terms of Award..............................................................9
Certain Federal Income Tax Consequences....................................10
The Employee Retirement Income Security Act of 1974........................11
OTHER MATTERS.................................................................11
ADDITIONAL INFORMATION........................................................11
Section 16(a) Beneficial Ownership Reporting Compliance....................11
Security Ownership of Certain Beneficial Owners and Management.............12
[STUBBED]
TABLE OF CONTENTS
EXECUTIVE COMPENSATION........................................................14
Summary Compensation Table.................................................14
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values....................................................15
Option/SAR Grants Table....................................................15
Performance Graph..........................................................15
Compensation Committee Interlocks and Insider Participation................17
Employment Contracts with Named Executives.................................17
COMPENSATION COMMITTEE REPORT.................................................18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................20
AUDIT COMMITTEE REPORT........................................................22
ADDITIONAL INFORMATION REGARDING THE AUDITORS.................................23
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING.............23
ANNUAL REPORT ON FORM 10-K....................................................24
VOTING AND REVOCABILITY OF PROXIES
Each share of outstanding Orleans Homebuilders, Inc. (the "Company")
common stock, par value $.10 per share ("Common Stock"), entitles the holder to
one vote, without cumulation, on each matter to be voted upon at the Annual
Meeting. Under the Company's by-laws, the holders of a majority of the shares of
Common Stock issued and outstanding and entitled to vote at the Annual Meeting
shall constitute a quorum for the transaction of business at the Annual Meeting.
Shares of Common Stock present in person or represented by proxy (including
shares which abstain or do not vote with respect to one or more of the matters
presented for stockholder approval) will be counted for purposes of determining
whether a quorum exists.
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
the proxy, if it is properly executed and received prior to voting at the Annual
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); (2) "FOR" approval of the Amendment to the Orleans Homebuilders,
Inc. Incentive Compensation Plan; (3) "FOR" approval of the Orleans
Homebuilders, Inc. Stock Award Plan; and (4) 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 or by delivering a duly executed
proxy bearing a later date. The proxy shall be deemed revoked if a stockholder
is present at the meeting and elects to vote in person.
With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee. Under applicable Delaware law, votes that are
withheld and broker non-votes will be excluded entirely from the vote and will
not effect the outcome of the election of directors, as directors are elected by
a plurality of votes cast. The proposals to approve the Amendment to the Orleans
Homebuilders, Inc. Incentive Compensation Plan (the "Incentive Plan Proposal")
and the Orleans Homebuilders, Inc. Stock Award Plan (the "Stock Award Plan
Proposal," and together with the Incentive Plan Proposal, the "Plan Proposals")
require the approval of a majority of the shares present, in person or by proxy,
and entitled to vote at the meeting. Under applicable Delaware law, abstentions
with respect to the Plan Proposals will have the same effect as votes against
the proposals, and broker non-votes will have no effect on the outcome of the
vote on the Plan Proposals. Jeffrey P. Orleans, Chairman of the board of
directors 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 One, Proposal Two and
Proposal Three, which means that these proposals will be approved regardless of
the votes of the Company's other stockholders.
-1-
PROPOSAL ONE
ELECTION OF DIRECTORS
The stockholders are being asked to elect ten 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, Robert M. Segal, John W.
Temple and Michael T. Vesey, all of whom are currently directors of the Company.
Assuming a quorum is present, the ten 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) 57 Vice Chairman of the Board 1992
Jerome S. Goodman(3)(5)(6) 69 Director 2001
Robert N. Goodman(3)(5) 51 Director 1994
Andrew N. Heine(3) 74 Director 1994
David Kaplan(4) 59 Director 1994
Lewis Katz (6) 61 Director 1987
Jeffrey P. Orleans(1)(2)(6) 57 Chairman of the Board and Chief 1983
Executive Officer
Robert M. Segal 68 Director 2002
John W. Temple(4)(5) 66 Director 2002
Michael T. Vesey 44 Director, President and Chief 2001
Operating 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 (the "1992 Directors
Option Plan").
(2) Member of the committee designated to administer the 1995 Stock Option
Plan for Non-Employee Directors (the "1995 Director Option Plan
Committee"), of which Mr. Orleans is Chairman (the "1995 Plan").
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee.
(5) Member of the committee (the "1992 Incentive Stock Option Committee")
designated to administer the 1992 Incentive Stock Option Plan
(the "1992 Plan").
(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 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.
Mr. Goldman has been a director of Sterling Bank of New Jersey since March 2002.
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 from 1971
until 1998 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 and Marlton
Technologies, Inc.
Robert N. Goodman has been a director of the Company since April 1994.
Since 1998, he has served as President of Resmark Equity Partners, LLC (formerly
known as Olympic Realty Advisors II, LLC), 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.
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.
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.
Robert M. Segal has been a director of the Company since August 2002.
For more than five years, Mr. Segal has been a partner in the law firm Wolf,
Block, Schorr and Solis-Cohen LLP, which serves as general counsel to the
Company.
John W. Temple has been a director of the Company since April 2002. For
more than five years, Mr. Temple has been the President and Chief Executive
Officer of Temple Development Company, a real estate development company.
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.
Executive Officers
In addition to Messrs. Orleans, Goldman and Vesey, the following
persons serve as executive officers of the Company:
Robert Fitzsimmons, 50, has been the President of Masterpiece Homes,
Inc. ("MHI"), a wholly-owned subsidiary of the Company, since the Company's
acquisition of MHI in July 2003. For more than five years prior to the Company's
acquisition of MHI, Mr. Fitzsimmons had been the President and a member of the
Board of Directors of MHI.
-3-
Thomas Gancsos, 50, has been the Company's Division Manager for
Richmond, Virginia, since the Company acquired Parker & Lancaster Corporation
("PLC") in October 2000. Prior to that, he had been the Division Manager for PLC
since December 1999. From January 1998 through November 1999, Mr. Gancsos was
self-employed as a consultant and builder of custom homes and, from November
1995 through December 1997, he was the President of the Mid-Atlantic Region for
Ryland Group, a builder of residential homes.
J. Russell Parker, III, 59, has been the President of PLC and Parker &
Orleans Homebuilders, Inc., both wholly-owned subsidiaries of the Company, since
the Company's acquisition of PLC in October 2000. Prior to the Company's
acquisition of PLC, Mr. Parker had been the President and Chief Executive
Officer of PLC since 1997.
L. Anthony Piccola, 59, has been the Company's Division Manager for
Raleigh, North Carolina, since the Company acquired PLC in October 2000. Prior
to that, he was employed by PLC as the Division Manager for Raleigh for more
than five years.
Joseph A. Santangelo, 49, 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 and Secretary of the Company since
1987.
Gary G. Schaal, 53, is Executive Vice President-Sales and Marketing of
the Company. He has held that position since September 1995.
Thomas Vesey, 39, has been the Company's Division Manager for
Charlotte, North Carolina, since January 2002. Prior to that, he had been
employed by the Company from March 2000 to December 2001 to assist the Company
in evaluating and identifying opportunities for expansion into additional
markets and to assimilate acquisitions into the Company's operations. From April
1997 to March 2000, Mr. Vesey was employed by Hovnanian Enterprises, Inc. as the
Northeast Region Purchasing Manager. Mr. Vesey is the brother of Michael T.
Vesey, President and Chief Operating Officer of the Company.
All of the Company's executive officers serve at the discretion of the
board of directors.
Committees and Meetings of the Board of Directors
The board of directors held three meetings and acted twice by unanimous
consent during the fiscal year ended June 30, 2003 ("Fiscal 2003"). During
Fiscal 2003, all incumbent 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 of the board of directors on which they served during their
incumbency, except that Messrs. Heine, Kaplan, and Katz attended two of the
three meetings of the board of directors held during Fiscal 2003 and Mr. Kaplan
attended two of the three Fiscal 2003 audit committee meetings held while he was
a member of that committee.
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 is comprised of Jeffrey P. Orleans, Jerome S.
Goodman and Lewis Katz. 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 of directors. During Fiscal 2003, the
Executive Committee did not hold meetings, but acted once by written consent.
The Audit Committee is comprised of Jerome S. Goodman, Robert N.
Goodman and Andrew N. Heine, each of whom is independent as that term is defined
in Section 121(A) of the current listing standards of the American Stock
Exchange. The Audit Committee selects the independent accountants, reviews with
the independent accountants and management the adequacy of the system of
internal accounting controls of the Company and discusses with management and
the independent accountants the Company's annual financial statements and
principal accounting matters. During Fiscal 2003, the Audit Committee met five
times.
-4-
The Compensation Committee is comprised of David Kaplan and John W.
Temple. The Compensation Committee reviews the general compensation arrangements
and structure of the Company, reviews salaries and other compensation
arrangements for the executive officers and other key employees of the Company
and makes recommendations concerning such compensation to the board of
directors. The Compensation Committee met once during Fiscal 2003. The
Compensation Committee also met in August 2003 to discuss and approve bonuses
payable to the Company's executive officers and other key employees for Fiscal
2003.
None of the committees that administer the Company's stock incentive
plans held meetings in Fiscal 2003.
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 of
directors. This fee is paid in four equal quarterly installments and pro rated
for service less than a full year. In addition, each non-employee director is
entitled to receive an attendance fee of $5,000 for each board meeting ($2,500
if attending via teleconference) and $500 for each committee meeting. Any
director who is also an employee of the Company is not separately compensated
for his service as a director.
In addition to cash compensation, the Company has in the past granted
directors options to acquire Common Stock. Pursuant to the 1992 Directors Option
Plan, Mr. Katz received options to acquire 25,000 shares of Common Stock, which
have been exercised. Pursuant to the 1995 Plan, Messrs. Robert N. Goodman, Heine
and Kaplan were each granted options to acquire 25,000 shares of Common Stock in
1995, which are fully vested. Pursuant to the 1995 Plan, each of Messrs. Robert
N. Goodman, Heine, Kaplan and Katz were also each granted options to acquire
10,000 shares of Common Stock in 1998, which are fully vested. All stock options
were issued at the fair market value of the Common Stock on the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
PROPOSAL TWO
APPROVAL OF THE AMENDMENT TO THE
ORLEANS HOMEBUILDERS, INC. INCENTIVE COMPENSATION PLAN
The board of directors, and the Compensation Committee of the board of
directors, believe it is important to align the interests of the Company's
executive officers with those of the stockholders, and have operated an
incentive compensation plan since its initial adoption by the board of directors
on July 18, 1994, that provides for annual bonus compensation that is directly
related to the Company's net pre-tax profits. These bonus arrangements,
including the use of the Company's net pre-tax profit and the formulation by
which individual bonuses are determined, were established and approved by the
Compensation Committee and have been reviewed annually. The Orleans
Homebuilders, Inc. Incentive Compensation Plan (the "Incentive Plan"), as
adopted by the board of directors as of October 23, 2002, and approved by the
Company's stockholders, is an amendment and restatement of the incentive
compensation plan initially adopted by the board of directors in 1994. The
amendment to the Incentive Plan, adopted by action of the Company's board of
directors as of October 1, 2003 (the "2003 Amendment"), is subject to approval
by the Company's stockholders. Therefore, no bonuses will be payable under the
Incentive Plan, as determined after taking into account the 2003 Amendment,
unless and until the 2003 Amendment has been disclosed to and approved by the
Company's stockholders.
-5-
The board of directors of the Company recommends that the stockholders
of the Company ratify and approve the 2003 Amendment.
While the Incentive Plan generally continues the incentive compensation
plan that has been in effect since 1994, the 2003 Amendment will permit the
administrative committee for the Incentive Plan (hereinafter, the "Incentive
Plan Committee") to cause payment of all or of any portion of an approved bonus
award payable under the Incentive Plan to be made by means of a transfer to such
participant of shares of the Company's Common Stock which may be subject to
certain terms and conditions. Under the Incentive Plan, the number of shares of
Common Stock transferred to a participant in the Incentive Plan in lieu of the
cash bonus will be determined by reference to a per share exchange equal to a
price that is at least 75%, and is not more than 100%, of the closing price of
shares of the Company's Common Stock on the first business day following the end
of the relevant performance period, as established under the terms of the
Incentive Plan, to which the bonus award relates. Shares of the Company's common
stock will be transferred to participants in the Incentive Plan in the form of a
stock award granted under the Company's Stock Award Plan, which plan is also
proposed for approval by the Company's stockholders. The terms of the stock
award with respect to such matters as vesting and conditions of forfeiture, as
well as any restrictions that may be placed on the transfer or other disposition
of the shares, will be established by the Incentive Plan Committee. These terms
and conditions will be established as the Incentive Plan Committee deems
appropriate, at its sole discretion.
The following summary of the material features of the Incentive Plan,
as modified by the 2003 Amendment, does not purport to be complete and is
qualified in its entirety by the full text of the Incentive Plan, as amended, a
copy of which is attached as an Appendix to the copy of this Proxy Statement
filed by the Company with the Securities and Exchange Commission.
Eligibility
The executives and key employees who are eligible to participate in the
Incentive Plan are: Jeffrey P. Orleans, Chairman of the Board and Chief
Executive Officer of the Company; Benjamin D. Goldman, Vice Chairman of the
Board; Michael T. Vesey, President and Chief Operating Officer; and those other
executive officers and key employees who are designated as participants by the
Incentive Plan Committee. No participant in the Incentive Plan will be entitled
to any bonus payment if the participant has ceased to be employed by the Company
or any affiliate of the Company prior to the date of payment, other than where
the participant's employment has terminated by reason of death, disability or
retirement.
Administration
The Incentive Plan Committee will be the Compensation Committee of the
Board unless another committee is established by the board of directors to act
as the Incentive Plan Committee. The membership of the Incentive Plan Committee
will in all events consist of two or more members of the board of directors each
of whom qualifies as an "outside" director under certain Treasury Regulations
that relate to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Million Dollar Cap Rules"). The Incentive Plan Committee has the authority
and the responsibility for administering the Incentive Plan in a manner
consistent with its terms, making any and all discretionary determinations that
are required or permitted to be made under the terms of the Incentive Plan, and
interpreting the Incentive Plan document.
Bonus Payments Under the Incentive Plan
No amounts are payable as bonuses under the terms of the Incentive Plan
for any plan year (which is the same as the Company's fiscal year) unless the
Company recognizes some level of net pre-tax profits for that fiscal year. For
these purposes, the Company's net pre-tax profits are the Company's consolidated
operating profits determined before taxes and without taking into account
nonrecurring items, income or loss arising from extraordinary items,
discontinued operations, debt repurchases at a discount, or any bonuses paid or
accrued under the Incentive Plan. The Company's net pre-tax profits are
calculated in accordance with generally accepted accounting principles.
-6-
If there are net pre-tax profits for a fiscal year, the Incentive Plan
Committee will certify the level of such profits and 8% of such profits will be
paid out as bonuses. The bonus payable to Jeffrey P. Orleans with respect to
each plan year is 3% of the Company's net pre-tax profit for that year and the
bonus payable to Michael T. Vesey with respect to each plan year is 1 1/2% of
the Company's net pre-tax profit for that year. The bonus payable to any other
participant in the Incentive Plan will be determined by the Incentive Plan
Committee, but in no event will the bonus payable to any such other individual
exceed 1 1/2% of the Company's net pre-tax profits for the plan year. The
Incentive Plan Committee has no authority to increase the maximum bonus payable
to any participant under the Incentive Plan with respect to any plan year.
If the 2003 Amendment is approved by the Company's stockholders, the
bonuses payable under the Incentive Plan, as described above, may be paid in
whole or in part by means of a transfer of shares of the Company's Common Stock
to the participant in the Incentive Plan, the number of shares being transferred
being determined by conversion of the cash value of the bonus (or portion being
paid by means of a share transfer) into a number of shares using for this
purpose a per share valuation that is equal to not less than 75%, and not more
than 100%, of the closing price of the shares on the first business day
following the end of the Performance Period to which the bonus relates. The
shares of the Company's common stock will be transferred in the form of an award
under the Company's Stock Award Plan and shall be subject to requirements as to
vesting, conditions of forfeiture and restrictions on transfer or disposition as
the Incentive Plan Committee deems appropriate, at its sole discretion. The
conversion of any portion of a participant's bonus under the Incentive Plan into
a stock award shall not become applicable with respect to any participant who is
a "covered employee" (as that term is defined for purposes of the Million Dollar
Cap Rules discussed below) until the first performance period established
pursuant to the Incentive Plan that commences following the date the 2003
Amendment was adopted, unless the compensation payable to such covered employee
would not be subject to the limitations on deductibility imposed on the Company
pursuant the Million Dollar Cap Rules.
The following table sets forth the benefits paid under the terms of the
Company's incentive compensation plan for Fiscal 2003, which plan is being
continued, subject to the 2003 Amendment if approved by the stockholders:
Percentage of
Name Amount Pre-Tax Profits
---- ---------- ---------------
Jeffrey P. Orleans, Chairman & CEO $1,486,350 3.0%
Benjamin D. Goldman, Vice .Chairman 525,000 1.1%
Michael T. Vesey, President & CEO 743,175 1.5%
All Executive Officers as a Group 2,969,525 6.0%
All Other Officers and Key
Employees as a Group 1,009,075 2.0%
Amendment, Suspension or Termination
The board of directors has the right to amend or terminate the
Incentive Plan in whole or in part at any time. Unless it is otherwise
prohibited by law, any amendment that may be required to conform the Incentive
Plan to the performance-based compensation requirements of the Million Dollar
Cap Rules may be made by the Incentive Plan Committee, without action by the
entire board of directors. The Incentive Plan may not, however, be amended if
that amendment would change the class of individuals who are eligible to
participate in the Incentive Plan, or the formula by which maximum bonus
payments are determined, without stockholder approval.
-7-
Tax Aspects
Amounts payable as bonuses pursuant to the Incentive Plan will be
taxable compensation income to the participant for the taxable year in which the
bonus is actually paid. In general, compensation paid to employees of the
Company constitutes a compensation expense that is deductible for purposes of
the Company's federal income tax determination. Compensation in excess of
$1,000,000 payable to any one of the Company's chief executive officer or any of
its other four highest paid officers for any taxable year may, however, be
non-deductible because of the disallowance of that deduction under the Million
Dollar Cap Rules. It is intended that amounts payable as bonuses pursuant to the
provisions of the Incentive Plan will qualify as "performance-based"
compensation that is exempt from the limitations otherwise imposed pursuant to
the Million Dollar Cap Rules.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S
INCENTIVE COMPENSATION PLAN
PROPOSAL THREE
APPROVAL OF THE ORLEANS HOMEBUILDERS, INC.
STOCK AWARD PLAN
The board of directors adopted as of October 1, 2003, subject to
stockholder approval, and now recommends for approval by the stockholders, a new
restricted stock plan, designated as the Orleans Homebuilders, Inc. Stock Award
Plan (the "Stock Award Plan"). The following is a summary of the material terms
of the Stock Award Plan, and is qualified in all respects by the text of the
Stock Award Plan, a copy of which is attached as an Appendix to the copy of this
Proxy Statement filed by the Company with the Securities and Exchange
Commission. No awards may be made under the Stock Award Plan unless and until it
is approved by the Company's stockholders.
Under the Stock Award Plan, the Company may make grants of shares of
the Company's Common Stock ("Awards"), which may or may not be subject to
restrictions, to those persons eligible to participate.
Purpose
The purpose of the Stock Award Plan is to advance the interests of the
Company, its shareholders and its subsidiaries by providing selected employees
and members of the board of directors, upon whom the Company's sustained growth
and financial success depend, the opportunity to acquire or increase their
proprietary interest in the Company through issuances of shares, and to work in
conjunction with the provisions of the Company's Incentive Plan, so as to permit
all or a portion of the bonus awards payable under the Incentive Plan to be paid
by means of a transfer of shares under the Stock Award Plan. The Stock Award
Plan is also to provide employees receiving shares with additional incentive to
devote themselves to the future success of the Company and to improve the
ability of the Company to attract, retain and motivate individuals upon whom the
Company's sustained growth and financial success depend.
Number of Shares Subject to Grants
The Stock Award Plan provides for the grant of stock awards (each, an
"Award") of up to an aggregate of 400,000 shares of the Company's Common Stock,
assuming approval of the Stock Award Plan being submitted for shareholder
approval at the Annual Meeting. The number of shares of Common Stock which may
be granted under the Stock Award Plan is subject to adjustment to reflect
changes in the Company's capitalization. Any Common Stock which has been
conveyed back to the Company pursuant to the terms of the Award under which the
Common Stock was granted will thereafter be available for further grant under
the Stock Award Plan.
-8-
Administration
The Stock Award Plan is administered by a committee or committees
designated by the Board of Directors or by the Board of Directors itself in its
administrative capacity with respect to the Stock Award Plan (any committee of
the Board of Directors with administrative responsibility with respect to the
Stock Award Plan, or the Board of Directors itself, as the case may be, is
referred to as the "Stock Award Plan Committee"). Subject to the conditions set
forth in the Stock Award Plan, the Stock Award Plan Committee has full and final
authority to determine the number of shares of Common Stock that shall be
subject to any Award, the individual employees to whom and the time or times at
which such Awards shall be granted, the purchase price, if any, for the shares
subject to any Award, and the terms and provisions of the Award Agreement, which
may vary from Award to Award, all at the discretion of the Stock Award Plan
Committee. The Committee has the power and authority to (i) interpret the Stock
Award Plan, (ii) adopt, amend and revoke rules and regulations for its
administration that are not inconsistent with the express terms of the Stock
Award Plan, and (iii) waive requirements relating to formalities or other
matters that do not either modify the substance of the rights intended to be
granted by Awards or constitute a material amendment for any other purpose under
the Internal Revenue Code. The actions of the Committee are final, binding and
conclusive on all parties in interest.
Participants
Awards may be granted under the Stock Award Plan to any person who is a
an employee of the Company or any of its subsidiaries. As of June 30, 2003,
there were approximately 405 employees eligible to participate in the Stock
Award Plan. The Stock Award Plan Committee has the sole discretion to determine
whether an individual is an employee eligible to participate in the Stock Award
Plan.
Conditions of Vesting and Forfeiture
The Stock Award Plan Committee may specify in an agreement governing
the terms of an Award (an "Award Agreement") any conditions under which the
recipient of such Award may be required to forfeit the shares of Common Stock
covered by such Award either upon termination of the recipient's employment or
otherwise, and the terms and conditions under which an Award may become vested.
Amendment, Suspension or Termination
The Board may at any time and from time to time amend, suspend or
terminate the Stock Award Plan, but may not, without the approval of the
Company's stockholders, change the class of individuals eligible to receive an
Award or increase the maximum number of shares subject to Awards that may be
granted under the Stock Award Plan.
Change in Control
In the event there is a change in control with respect to the Company,
as that is defined in the Stock Award Plan, the Stock Award Plan Committee may
take whatever action it deems necessary or desirable with respect to Awards
which have not yet fully vested, including, without limitation, accelerating the
vesting date applicable to such Awards.
Effective Date and Term
The effective date of the Stock Award Plan is October 1, 2003. The
Stock Award Plan will terminate on the tenth anniversary of the date of its
adoption unless earlier terminated by the board of directors at its discretion.
Terms of Award
The Stock Award Plan Committee will determine the terms and conditions,
if any, applicable to Awards, which may include a period during which the Common
Stock subject to the Award may not be sold, assigned, transferred, pledged or
otherwise encumbered, conditions or a period of time before which the Awards are
not vested, and conditions in which the Awards are forfeited back to the
Company, and a purchase price that is required to be paid for receipt of an
Award. Unless otherwise determined by the Stock Award Plan Committee, a
recipient of an Award will have the same rights as an owner of Common Stock,
including the right to receive cash distributions and to vote the Common Stock,
assuming the purchase price for the shares, if any, has been paid. Awards under
the Stock Award Plan are to be evidenced by a written Award Agreement in such
form as is approved by the Stock Award Plan Committee.
-9-
Certain Federal Income Tax Consequences
The Stock Award Plan is not subject to the provisions of Section 401(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
If an Award is granted under the Stock Award Plan, the recipient may or
may not be subject to restrictions during a vesting period established with
respect to the Award. If an Award is fully vested as of the date it is granted,
the excess of the value of the shares transferred pursuant to the Award over the
amount, if any, that the recipient is required to pay for the shares is treated
as ordinary compensation income to the recipient, and will be a deductible
compensation expense to the Company (subject to limitations on deductibility
generally applicable to compensation payments). If the Award is subject to
restrictions during a vesting period that are properly treated as constituting a
"substantial risk of forfeiture" for federal income tax purposes, the recipient
of an Award will generally include in his or her taxable income for federal
income tax purposes the value of the shares over the amount, if any, paid for
the shares, as of the dates the shares become vested. This income will be
treated as ordinary compensation income in determining his or her tax liability
for the relevant year (as explained below).
In general, if property is transferred to an individual in connection
with arrangements related to compensation for services provided by that
individual, the excess of the fair market value of the property transferred over
the purchase price paid for the property, if any, is treated as taxable
compensation income (that is taxed as additional ordinary income). In the case
of an Award granted for no purchase price, the full value of the shares
transferred will be treated as compensation income of the grantee. This income
must be recognized, absent an election under Section 83(b) of the Code, as
explained below, at the time the shares cease to be subject to a "substantial
risk of forfeiture."
If shares transferred pursuant to an Award are subject to forfeiture
on, for example, a termination of employment of the recipient prior to the date
the shares "vest," that forfeiture possibility would normally be treated as
constituting a substantial risk of forfeiture for these purposes. The recipient
of such an Award would normally recognize the value of the shares granted as
they become vested, taking into account the value not as of the date the Award
was granted, but as of the vesting date of the shares. On a sale of the shares,
the Award recipient would calculate his or her capital gain or loss by reference
to the value of the shares on the vesting date, and would determine the
character of the gain or loss as long or short term by measuring the holding
period starting as of the vesting date.
The recipient of an Award that is subject to vesting may, however, make
an election under Section 83(b) of the Code. Such an election will cause the
recipient to recognize an amount of ordinary income equal to the fair market
value of the shares transferred as of the date the Award is granted (rather than
as of the vesting date), and on a subsequent sale of those shares, the holding
period would also be calculated by reference to the grant date rather than the
vesting date. If the shares are subsequently forfeited, the employee may not be
able to claim a loss under applicable tax rules (which only permit recognition
of a loss if there has been a purchase price paid for the shares, and only to
the extent of such purchase price).
To make an election under Section 83(b) of the Code, a recipient of an
Award that is subject to vesting must file the election no later than 30 days
after the date the Award has been granted. This is done by filing a written
statement with the IRS office where the employee files his or her returns, and a
copy with the Company. A copy of the filing must also be included in the
participant's tax return for the year of the purchase. The 83(b) election
statement must contain the following information: the name, address and taxpayer
identification number of the taxpayer, a description of the shares received, the
date of the Award and the taxable year for which the election is made, the
nature of the restrictions on the shares, the fair market value of the shares as
of the Award date, the purchase price paid for the shares, if any, and a
statement indicating that copies of the election have been furnished to other
persons as required. The statement must be signed and must indicate that it is
made under Section 83(b) of the Code. A copy of the 83(b) election is also
required to be filed along with the Award recipients federal income tax return
for the year in which the Award was granted.
-10-
In connection with any event relating to an Award, the Company may
require the recipient to remit or otherwise make available to the Company an
amount sufficient to satisfy any federal, state and/or local withholding tax
requirements prior to the deliver or transfer of any certificate for such shares
or take whatever other action the Company deems necessary to protect its
interests with respect to tax liabilities. The Company's obligations under the
Stock Award Plan shall be conditioned on the Award recipient's compliance to the
Company's satisfaction, with any tax withholding requirement.
The Employee Retirement Income Security Act of 1974
The Stock Award Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE PROPOSAL TO APPROVE THE
ORLEANS HOMEBUILDERS, INC. STOCK AWARD PLAN
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 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 2003 were
made on a timely basis except that: Mr. Joseph A. Santangelo failed to timely
report on Form 4 his exercise of options to acquire 20,000 shares of Common
Stock in January 2003; Mr. Jeffrey P. Orleans failed to timely file a Form 5 for
the fiscal year ended June 30, 2002 for the deferral of principal payments and
extension of the expiration of the right to convert the principal amount
outstanding under the Convertible Subordinated 7% Note held by Mr. Orleans; Mr.
Gary G. Schaal failed to timely report on Form 4 his exercise of options to
acquire 10,000 shares of Common Stock in March 2003; Mr. John W. Temple failed
to timely report on Form 4 his purchase of 5,000 shares of Common Stock in
February 2003 and his purchases of 4,900, and 100 shares of Common Stock in
March 2003; and Mr. Parker failed to timely report on Form 4 his sale of 300
shares of Common Stock in June 2003. Messrs. Santangelo, Orleans, Schaal, Temple
and Parker have since filed the appropriate Section 16(a) reports with respect
to these transactions.
-11-
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the close of business on
September 30, 2003, certain information with respect to the holdings of (i) each
director or nominee for director and each of the executive officers named in the
Summary Compensation Table, (ii) all executive officers, directors and nominees
for director as a group, and (iii) each stockholder who was known to the Company
to be the beneficial owner, as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, 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............... 11,310,528 (1) 70.4%
Benjamin D. Goldman, Vice Chairman of the Board........................ 1,146,221 (2) 9.0%
Jerome S. Goodman, Director............................................ 368,000 2.9%
Robert N. Goodman, Director............................................ 50,000 (3) *
Andrew N. Heine, Director.............................................. 35,000 (3) *
David Kaplan, Director................................................. 69,000 (3) *
Lewis Katz, Director................................................... 489,000 (4) 3.8%
Robert M. Segal, Director.............................................. 68,000 *
John W. Temple, Director............................................... 26,000 *
Michael T. Vesey, Director and President and Chief Operating Officer... 501,750 (5) 3.8%
Robert Fitzsimmons, President, Masterpiece Homes, Inc.................. 30,000 *
Thomas Gancsos, Division Manager....................................... - 0- *
J. Russell Parker, III, President, Parker Lancaster Corporation;
Parker & Orleans Homebuilders, Inc................................... 194,506 (6) 1.5%
L. Anthony Piccola, Division Manager................................... 20,256 (7)
Joseph A. Santangelo, Chief Financial Officer.......................... 102,500 (8) *
Gary G. Schaal, Executive Vice President............................... 85,000 (9) *
Thomas Vesey, Division Manager......................................... - 0 - *
All directors and executive officers
as a group (17 persons).............................................. 14,495,761(10) 86.5%
- -------------------
* 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) 1,333,334 shares which continue to be issuable upon
conversion of the $2,000,000 remaining on 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,
(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, and (e) 36,400 shares (for which Mr. Orleans disclaims
beneficial ownership) owned by the Jeffrey P. Orleans Charitable
Foundation. The address of Mr. Orleans is c/o Orleans Homebuilders,
Inc., 3333 Street Road, Suite 101, Bensalem, Pennsylvania 19020.
(2) The shares reflected include 606,282 shares (for which Mr. Goldman
disclaims beneficial ownership) held in separate trusts and custodial
accounts for the benefit of the children of Mr. Orleans, as to which
Mr. Goldman is, in each case, sole trustee or custodian. The address of
Mr. Goldman is c/o Orleans Homebuilders, Inc., 3333 Street Road, Suite
101, Bensalem, Pennsylvania 19020.
(3) The shares reflected include 35,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2003.
(4) The shares reflected include 10,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2003.
(5) The shares reflected include (a) 750 shares (for which Mr. Vesey
disclaims beneficial ownership) held as custodian for Mr. Vesey's minor
daughters, and (b) 335,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days of September 30,
2003.
-12-
(6) The shares reflected include an aggregate of 61,502 shares Mr. Parker
is entitled to receive in equal installments on October 12, 2003 and
2004 pursuant to his employment agreement with PLC and an aggregate of
61,502 shares Mr. Parker is entitled to receive in equal installments
on October 12, 2003 and 2004 pursuant to the Company's acquisition of
PLC.
(7) The shares reflected include an aggregate of 5,064 shares Mr. Piccola
is entitled to receive in equal installments on October 12, 2003 and
2004 pursuant to his employment agreement with PLC and an aggregate of
5,064 shares Mr. Piccola is entitled to receive in equal installments
on October 12, 2003 and 2004 pursuant to the Company's acquisition of
PLC.
(8) The shares reflected include 50,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2003 and 52,500 shares as to which Mr. Santangelo has
shared voting power.
(9) The shares reflected include 50,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2003.
(10) The shares reflected consist of (a) 550,000 shares subject to options
that are currently exercisable or will become exercisable with 60 days
of September 30, 2003, (b) 1,333,334 shares which continue to be
issuable upon conversion of the $2,000,000 remaining on Company's
$3,000,000 Convertible Subordinated 7% Note, (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, and (d)
133,132 shares Messrs. Parker and Piccola are entitled to receive in
equal installments on October 12, 2003 and 2004.
-13-
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 2003 and whose total annual
salary and bonus exceeded $100,000 in Fiscal 2003 (together with the Chief
Executive Officer, the "Named Executive Officers").
Annual Compensation
Restricted
Other Annual Stock Awards
Name and Principal Position Fiscal Year Salary Bonus Compensation $
- --------------------------- ----------- ------ ----- ------------ ------------
Jeffrey P. Orleans 2003 $300,000 $1,486,350 $114,378(1) $ --
Chairman and CEO 2002 300,000 954,570 3,400 --
2001 300,000 559,366 3,400 --
Benjamin D. Goldman 2003 225,000 525,000 3,667(2)(3) --
Vice Chairman of the Board 2002 225,000 416,500 3,400 --
2001 237,500 275,000 3,400 --
Michael T. Vesey 2003 235,000 743,175 3,667(2)(3) --
President and Chief Operating Officer 2002 217,500 477,285 3,400 --
2001 200,000 279,683 3,400 --
J. Russell Parker 2003 220,000 225,623(4) 5,500(2)(3) --
President 2002 220,000 415,300 5,289 --
Parker & Orleans Homebuilders, Inc. 2001 152,307 119,953 3,808 192,194 (5)
Parker Lancaster Corporation
Thomas Gancsos 2003 152,000 279,398(6) 4,209(2)(3) --
Division Manager 2002 152,000 200,577(6) 4,565 --
2001 94,846 67,492(6) 2,055 --
- -------------------
(1) For years other than Fiscal 2003, the amount shown is the amount
contributed by the Company to a 401(k) (defined contribution)
retirement plan for the benefit of Mr. Orleans. In addition to the
contribution to the 401(k) plan, for years other than Fiscal 2003, Mr.
Orleans also received other personal benefits, the value of which did
not exceed for any fiscal year the lesser of $50,000 or 10% of his
annual salary and bonus for that fiscal year. For Fiscal 2003, the
amount shown includes $94,844 for Mr. Orleans' personal use of aircraft
owned or paid for by the Company; Company contributions to a 401(k)
plan on behalf of Mr. Orleans; amounts paid by the Company for group
life insurance, medical insurance and certain automobile expenses.
(2) The amount shown is the amount contributed by the Company to a 40l(k)
(defined contribution) retirement plan.
(3) The Named Executive Officers also received various other personal
benefits, the value of which did not exceed for any fiscal year as to
such person the lesser of $50,000 or 10% of his annual salary and
bonus.
-14-
(4) Consists of incentive compensation awarded pursuant to an employment
agreement entered into by PLC and Mr. Parker, a former PLC shareholder,
in connection with the Company's acquisition of PLC in October 2000.
This employment agreement expired on October 12, 2003.
(5) Consists of the fair market value of 123,004 shares of Common Stock
that, pursuant to Mr. Parker's employment agreement with PLC entered
into on October 12, 2000, the Company is, subject to certain
conditions, required to issue to Mr. Parker in four equal annual
installments starting on October 12, 2001. The fair market value of the
shares is determined as of October 12, 2000. As of the end of Fiscal
2003, the fair market value of the shares not yet issued to Mr. Parker
was $658,071, based upon the closing price of the Common Stock on June
30, 2003.
(6) Excludes amounts paid by Mr. Parker to Mr. Gancsos pursuant to an
arrangement between Mr. Parker and Mr. Gancsos entered into prior to
the Company's acquisition of PLC in Fiscal 2001. For Fiscal 2001, the
amount paid by Mr. Parker was $16,540 and for Fiscal 2002, the amount
was $48,180. Mr. Parker has not yet made any payment under the
arrangement with respect to Fiscal 2003.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
The following table sets forth individual exercises of stock options
during Fiscal 2003 and year-end values by the Named Executive Officers.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
Shares June 30, 2003 (#) At June 30, 2003($)(1)
Acquired on Value ----------------------------- -----------------------------
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------- ---------------- --------------- ------------- -------------- -------------
Jeffrey P. Orleans -- -- -- -- -- --
Benjamin D. Goldman -- -- -- -- -- --
Michael T. Vesey -- -- 335,000 -- 3,034,250 --
J. Russell Parker, III -- -- -- -- -- --
Thomas Gancsos -- -- -- -- -- --
- -------------------
(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 30, 2003 was
$10.70 per share.
Option/SAR Grants Table
Neither the Chief Executive Officer nor the other Named Executive
Officers were granted stock options or stock appreciation rights during Fiscal
2003.
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, 2003 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, 1998 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 30, 2003 was $10.70 per share.
-15-
[GRAPHIC OMITTED]
-16-
Years Ending
June 1998 June 1999 June 2000 June 2001 June 2002 June 2003
--------- --------- --------- --------- --------- ---------
ORLEANS HOMEBUILDERS, INC. 100.00 78.95 65.81 126.74 360.00 450.53
AMEX MARKET VALUE (U.S. & FOREIGN) 100.00 109.74 131.83 120.58 104.26 111.04
S & P HOMEBUILDING 100.00 84.21 61.95 108.67 160.55 195.03
Compensation Committee Interlocks and Insider Participation
Mr. Katz served on the Compensation, 1992 Director Option Plan and 1992
Incentive Stock Option Committees of the board of directors for a portion of
Fiscal 2003. Mr. Katz does not presently serve on the Compensation Committee.
Mr. Katz is Of Counsel to Katz, Ettin, Levine, Kurzweil, Weber & Scialaeba,
P.A., which performed legal services for the Company during Fiscal 2003. In
addition, Mr. Orleans and Mr. Katz are partners in Palm Aire Associates, LP and
each owns a fifty percent equity interest in Resorts at Palm Aire, Inc., the
general partner of Palm Aire Associates, LP. Mr. Orleans and Mr. Katz are both
members of the board of directors of Resorts at Palm Aire, Inc.
Employment Contracts with Named Executives
Jeffrey P. Orleans
The Company entered into an employment agreement with Jeffrey P.
Orleans in June 1987. While the initial term of the agreement has expired, it
automatically renews for successive one year terms, unless either Mr. Orleans or
the Company gives notice of termination at least 180 days prior to the end of
the then current term. Pursuant to the employment agreement, Mr. Orleans is to
serve as Chairman of the board of directors and Chief Executive Officer of the
Company and is to be paid a base salary of $300,000, which may be increased from
time to time. In addition, Mr. Orleans is entitled to receive bonus compensation
equal to 3% of certain of the Company's pre-tax profits as defined by the
agreement. This bonus compensation is awarded in a manner consistent with the
Company's Incentive Compensation Plan described under the caption "Compensation
Committee Report on Executive Compensation."
Mr. Orleans' employment agreement also provides that if Mr. Orleans'
employment terminates as a result of his death or disability, he or his estate
is entitled to receive his base salary for the lesser of (a) a period of 120
days following such termination and (b) the balance of the then existing term
together with a prorated portion (based on the number of days employed) of bonus
compensation he would have received had his employment not terminated.
Under Mr. Orleans' employment agreement, he is also entitled to certain
fringe benefits, including health, travel and accident, long-term disability and
life insurance generally available to the Company's senior officers. The Company
also pays certain vehicle and air travel expenses for Mr. Orleans.
J. Russell Parker, III and Thomas Gancsos
The written employment agreements the Company had with Messrs. J.
Russell Parker, III and Thomas Gancsos have expired and the Company has not
entered into new written employment agreements. Messrs. Parker and Gancsos,
however, remain employees of the Company and their salaries and health and
similar benefits remain generally the same as provided under their written
employment agreements.
-17-
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Committee
The Compensation Committee consists of Messrs. Kaplan and Temple and is
chaired by Mr. Kaplan. The Compensation Committee reviews and recommends
salaries, bonuses and other forms of compensation for executive officers and
other key employees of the Company.
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
Compensation 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. Consistent with this philosophy, compensation
for the Company's executives consists of a base salary, a bonus and, in some
cases, stock options. In addition, if the Stock Award Plan is approved by the
Company's stockholders, executives' compensation may in the future also include
awards of stock which may be subject to various restrictions and terms.
Senior Executive Officers' Compensation
The compensation of the Company's three most senior executive officers,
Messrs. Orleans, Goldman and Vesey, is reviewed by the Compensation Committee
and approved by the board of directors. For Fiscal 2003, Mr. Orleans' base
salary was $300,000, which has been the same since 1994, Mr. Goldman's base
salary was $225,000, and Mr. Vesey's base salary was $235,000. Mr. Orleans'
compensation is also subject to his employment agreement with the Company
discussed above under the caption "Employment Contracts with Named Executives."
Other Executive Officers' Compensation
For Fiscal 2003, the Compensation Committee assumed the responsibility
for the cash and other compensation to be paid to Messrs. Santangelo and Schaal,
except for any compensation under the Company's incentive stock plans. The
compensation of Mr. Parker was set by his employment agreement with PLC which
expired in October 2003. The compensation of Messrs. Gancsos and Piccola was
determined and paid in a manner consistent with the terms set forth in their
employment agreements with PLC, which expired during Fiscal 2003. The amount and
nature of compensation to be received by the Company's executive officers was
determined in accordance with the recommendations of the Chief Executive
Officer.
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. The base salaries for Messrs. Gancsos, Parker and Piccola
for Fiscal 2003 were set by their employment agreements with PLC. The employment
agreements of Messrs. Gancsos and Piccola expired on October 12, 2002 and, since
such date, their base salary has been set in the same manner as the compensation
of the Company's other executive officers.
Incentive Compensation Programs
The Compensation Committee believes that it is important for the
Company to further align the interests of its executive officers and key
employees with the interests of the stockholders by establishing a direct link
between executive pay and the Company's operating financial performance.
Accordingly, effective as of July 1, 2002, the board of directors adopted the
Orleans Homebuilders, Inc. Incentive Compensation Plan, which was an amendment
and restatement of the incentive compensation plan initially adopted by the
board of directors in 1994. As of October 1, 2003, the board of directors has
also adopted an amendment to the Incentive Compensation Plan allowing payment of
all or a part of bonus awards under the Incentive Compensation Plan to be made
in shares of Common Stock, which may be subject to various restrictions and
terms.
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For Fiscal 2003, the board of directors 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 2003, pursuant to the Incentive Compensation Plan, 3% of
pre-tax profits were awarded to Mr. Orleans, 1.1% of pre-tax profits were
awarded to Mr. Goldman and 1.5% of pre-tax profits were awarded to Mr. Vesey. An
aggregate of approximately 2.4% of pre-tax profits were awarded to the Company's
other senior officers based upon their attainment of certain performance goals.
The incentive compensation plan discussed above does not apply to
Messrs. Gancsos, Parker or Anthony L. Piccola, executive officers in the
Company's southern region, or other key employees in the Company's southern
region. Mr. Parker's employment agreement with the Company expired on October
12, 2003 and the employment agreements of Messrs. Gancsos and Piccola expired on
October 12, 2002. Under these employment agreements, for Fiscal 2003
performance, Messrs. Parker and Piccola were entitled to receive certain
incentive compensation if certain pre-tax profits of the Company for Fiscal 2003
exceeded $1,750,000. The employment agreements also provided that Mr. Piccola
and Mr. Gancsos were also entitled to receive an annual bonus based upon a
sliding scale percentage (4% - 8%) of the pre-tax profits attributable to
certain operations in the Company's southern region for the Fiscal 2003 period
prior to October 12, 2002. Any bonus compensation provided to Messrs. Gancsos
and Parker for Fiscal 2003 attributable to periods after the expiration of their
employment agreements was awarded at the discretion of the Company. In addition,
any future awards of bonus or incentive compensation to Messrs. Gancsos, Parker,
and Piccola will be awarded at the Company's discretion.
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
holders of options, restricted stock and stock appreciation rights granted under
the 1992 Plan is directly tied to increases in the Company's stock price.
Therefore, these stock options and stock appreciation rights 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 generally include vesting
and termination provisions, which the board believes will encourage recipients
of grants made under the 1992 Plan to remain employees of the Company. Options
granted under the 1992 Plan generally 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.
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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.
Messrs. Gancsos, Parker and Piccola receive similar benefits pursuant to their
agreements with PLC. The board of directors believes that such benefits are
comparable to those offered by other real estate developers of similar size.
Except for benefits to Mr. Orleans, 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
John W. Temple
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Convertible Note
In 1996, Mr. Orleans advanced $3 million to the Company evidenced by a
$3 million Convertible Subordinated 7% Note (the "Convertible Note"). The
issuance of the Convertible Note was approved in advance by a Special Committee
of non-employee directors after receiving an opinion from an investment banking
firm that the terms were fair to the stockholders of the Company, other than Mr.
Orleans, from a financial point of view. During Fiscal 2002, maturity date of
the Convertible Note was extended one year to January 1, 2005. The Convertible
Note, as modified by certain deferral agreements, provides for interest payable
quarterly at 7% per annum and annual principal payments of $1 million beginning
January 1, 2003. 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. Mr. Orleans exercised his right to
convert the first annual principal payment of $1,000,000 into shares of the
Company's Common Stock and he received 666,666 shares of Common Stock pursuant
to the conversion.
Series D Preferred Stock
In October, 1998, the Company and Mr. Orleans entered into an Exchange
Agreement pursuant to which Mr. Orleans exchanged notes he held evidencing $3
million payable by the Company for 100,000 shares of Series D Preferred Stock.
The terms of the proposed exchange were approved by the board of directors after
receiving an opinion from an investment banking firm that the terms were fair to
the stockholders of the Company, other than Mr. Orleans, from a financial point
of view.
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 the redeemed 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 share. The closing price of the Company's Common
Stock on the American Stock Exchange on April 20, 1998 (the date of board of
directors approval of the issuance of the Series D Preferred Stock) was $1.19.
If Mr. Orleans were to convert the remaining outstanding principal of
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 3,333,334 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 30, 2003, would increase from
approximately 63% to approximately 71%.
-20-
Line of Credit
During the fiscal year ended June 30, 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, 2004, with annual interest at LIBOR plus 4%,
payable monthly. There were no principal or interest balances outstanding as of
June 30, 2003 and 2002.
Relationship with A.P. Orleans Insurance Agency Inc.
The Company places a majority of its corporate insurance through A.P.
Orleans Insurance Agency, Inc., of which Mr. Orleans is the sole shareholder.
The Company also uses A.P. Orleans Insurance Agency, Inc. to purchase surety
bonds that the Company is required to maintain with various municipalities as
part of its ongoing operations as a developer on specific projects in those
municipalities. The Company incurred aggregate expenses of approximately
$2,350,000 in Fiscal 2003 and aggregate expenses of approximately $1,472,000 in
Fiscal 2002 for these insurance policies. A.P. Orleans Insurance Agency, Inc.
received customary commissions from the insurance companies for serving as
broker.
Relationship with Title Insurer
Mr. Goldman and Mr. Orleans each own a 31% equity interest in a limited
partnership that has a consulting agreement with a third party real estate title
insurance company (the "Title Company"). The Company purchases real estate title
insurance and related closing services from the Title Company for various
parcels of land acquired by the Company. The Company paid the Title Company
approximately $80,000, $190,000, and $197,000, for the Company's fiscal years
ended June 30, 2003, 2002 and 2001, respectively. In addition, the Company's
homebuyers may elect to utilize the Title Company for the purchase of real
estate title insurance and real estate closing services but, the homebuyers are
under no obligation to do so.
Under the terms of the consulting agreement, which expires in July
2007, the limited partnership providing the consulting services is entitled to
receive 50% of the pre-tax profits attributable to certain operations of the
Title Company, subject to certain adjustments. In addition, the limited
partnership and the principals of the limited partnership, including Mr. Goldman
and Mr. Orleans, have agreed not to engage in the real estate title insurance
business or the real estate closing business during the term of the consulting
agreement.
Other
An entity in which Mr. Orleans owns a 67% interest, JPO-EAM Associates,
LP, purchased five residential units from the Company in July 2002 for an
aggregate purchase price of $316,795. The purchase price was determined by the
Company in accordance with New Jersey Consumer Office of Affordable Housing
regulations. The deeds for these units contain restrictions requiring that they
be rented to low and moderate income families for not less than 20 years. The
construction and sale of these homes assists the Company in satisfying certain
of its obligations to provide low and moderate income housing.
The Company, through its wholly-owned subsidiary Orleans Affordable
Housing LP is a limited partner in OKKS Development LP, a Pennsylvania limited
partnership, and a member of the general partner of OKKS Development LP, OKK
LLC, a Pennsylvania limited liability company. In the aggregate, the Company
indirectly owns a 28.33% equity interest in OKKS Development LP. OKKS
Development LP was formed for the purpose of engaging in certain residential
development activities which are primarily government assisted. The other
limited partners of OKKS Development LP and other members of OKK LLC include a
trust for the benefit of certain members of the family of Mr. Lewis Katz, a
member of the Company's board of directors. In Fiscal 2003, OKKS Development LP
was capitalized with initial contributions by the limited partners of $50,000
each. During Fiscal 2003 no profits were distributed to the limited partners of
OKKS Development LP or the members of OKK LLC. Since the end of Fiscal 2003, the
limited partners have contributed an additional $50,000 each to OKKS Development
LP.
-21-
Mr. Orleans owns a 33.5% equity interest in Marne Associates, LLC and
trusts for the benefit of certain members of his family collectively own a 16.5%
equity interest in Marne Associates, LLC. Mr. Benjamin Goldman, Vice Chairman of
the Company, is the trustee of each of the trusts. The Company has executed a
lease with Marne Associates, LLC for 8,000 square feet of office space in a
shopping center currently being constructed by Marne Associates, LLC. The
initial term is five years at $14 per square foot. The Company has the option to
renew the lease at the end of the initial term for an additional five years at
$16 per square foot.
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. Presently, Mr. Vesey is the Division Manager for
Charlotte, North Carolina. During Fiscal 2003 Mr. Thomas Vesey's annual salary
was $150,000 and he received a bonus of approximately $94,800 related to Fiscal
2003 performance.
J. Russell Parker, III, President, Parker Lancaster Corporation and
Parker & Orleans Homebuilders, Inc., owns 52% of the equity of Moorefield Title,
Inc. In Fiscal 2003, the Company made payments to Moorefield Title, Inc. of
approximately $88,860 for title insurance and related services and to reimburse
Moorefield Title, Inc. for certain expenses relating to Moorefield Title, Inc.
employees that perform services for the Company from time to time.
Mr. Robert M. Segal, a director of the Company, is a partner in the law
firm Wolf, Block, Schorr and Solis-Cohen LLP, which serves as the Company's
general counsel. Mr. Katz, also a director of the Company, is Of Counsel to the
law firm Katz, Ettin, Levine, Kurzweil, Weber & Scialaeba, P.A., which has
performed legal services for the Company in the past year.
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 is composed of three
independent directors, in accordance with the requirements of Section 121(A) of
the American Stock Exchange listing standards, and operates under a written
charter adopted by the Board of Directors. The charter was included in the
Company's Proxy Statement dated October 29, 2001.
The Audit Committee of the Board of Directors oversees the Company's
financial reporting process on behalf of the Board of Directors. Management has
the primary responsibility for the financial statements and the reporting
process including the system of internal control. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the Company's audited financial
statements for Fiscal 2003 with management including a discussion of the
quality, not just the acceptability, of accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for Fiscal 2003 with management and the Company's
independent public accountants. Specifically, the Audit Committee has discussed
with the independent public accountants the matters required to be discussed by
SAS 61 (Codification of Statements on Auditing Standards, AU Section 380).
The Audit Committee has received the written disclosures and the letter
from the Company's independent public accountants, PricewaterhouseCoopers LLP,
required by Independence Standards Board No. 1, Independence Discussions with
Audit Committees, and has discussed with the independent public accountants
their independence.
The Committee, consistent with Section 302 of the Sarbanes-Oxley Act of
2002 and the rules adopted thereunder, has met with management and the Company's
independent public accountants prior to the filing of officers' certifications
required by that statute to receive any information concerning (a) significant
deficiencies in the design or operation of internal controls which could
adversely affect the Company's ability to record, process, summarize and report
financial data and (b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls.
-22-
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for Fiscal
2003. The Audit Committee's recommendation was considered and accepted by the
Board of Directors.
Audit Committee
Jerome S. Goodman
Robert N. Goodman
Andrew N. Heine
ADDITIONAL INFORMATION REGARDING THE AUDITORS
PricewaterhouseCoopers LLP has been selected to be the independent
accountants for the Company for its 2004 Fiscal Year. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting to
make a statement if desired and to be available to respond to any appropriate
questions.
Audit Fees
The aggregate fees and expenses charged to the Company by
PricewaterhouseCoopers LLP for its audit of the Company's financial statements
for Fiscal 2003 and for its review of financial statements included in the
Company's quarterly reports on Form l0-Q for Fiscal 2003 were approximately
$150,000.
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 2003.
All Other Fees
The aggregate fees and expenses charged to the Company by
PricewaterhouseCoopers LLP for all other services, which include fees related to
business acquisitions, tax consultation, tax return preparation and accounting
consultation for Fiscal 2003 were approximately $68,425.
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.
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Pursuant to Securities Exchange Act of 1934 Rule 14a-8(e), proposals
which stockholders desire to have included in the Company's proxy statement for
the annual meeting in 2004 must be submitted in writing and received by the
Company at its principal executive officers on or before July 6, 2004. Any
Stockholder wishing to propose a nominee for membership on the Company's board
of directors should submit a recommendation in writing in accordance with the
foregoing, for consideration by the board of directors, indicating the nominee's
qualifications and other biographical information and providing confirmation of
the nominee's consent to serve as a director.
-23-
A stockholder may wish to have a proposal presented at the 2004 annual
meeting, but not to have such proposal included in the Company's proxy statement
and form of proxy relating to that meeting. If notice of any such proposal is
not received by the Company at its principal executive offices on or before
September 19, 2004 (45 calendar days prior to the anniversary of the mailing
date of this proxy statement), then such proposal shall be deemed "untimely" for
purposes of Securities and Exchange Commission Rule 14a-4(c). Therefore, the
Company's proxy committee will be allowed to use its discretionary voting
authority to vote against the stockholder proposal when and if the proposal is
raised at the 2004 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 Annual Meeting. The enclosed proxy grants the proxy committee
discretionary authority to vote on any matter properly brought before this
year's Annual 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 2003. 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 27, 2003
By Order of the Board of Directors
JOSEPH A. SANTANGELO,
Secretary-Treasurer and Chief Financial Officer
-24-
APPENDIX A
ORLEANS HOMEBUILDERS, INC.
INCENTIVE COMPENSATION PLAN
(Amended and Restated Effective July 1, 2002)
Purpose
The Orleans Homebuilders, Inc. Incentive Compensation Plan, as herein
amended and restated (the "Plan"), is an amendment and restatement of the
incentive compensation plan originally adopted by the Company on July 18, 1994,
and as previously in effect. The Plan is designed to reward those executives and
key employees of Orleans Homebuilders, Inc., a Delaware corporation (the
"Company") and its affiliates who are designated as Participants for achieving
corporate performance objectives, and to provide, in particular, a performance
incentive for these executives and key employees that is linked to the Company's
operating financial performance.
ARTICLE I - DEFINITIONS
1.1 "Board" shall mean the Board of Directors of the Company.
1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended
(the "Code").
1.3 "Committee" shall mean the Compensation Committee of the Board, or
such other committee as may be designated by the Board to act as the
administrative committee with respect to the Plan.
1.4 "Covered Employee" shall mean, with respect to any fiscal year of
the Company, each officer, other than the chief executive officer, whose
compensation for such fiscal year is required to be disclosed to shareholders in
the proxy statement relating to the annual meeting of stockholders of the
Company held during the next fiscal year pursuant to the executive compensation
disclosure rules promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
1.5 "Net Pre-Tax Profits" shall mean the Company's consolidated
operating profits determined before taxes and without taking into account
nonrecurring items, income or loss arising from extraordinary items,
discontinued operations, debt repurchase at a discount, or any amounts paid or
accrued pursuant to the Plan. The Company shall determine the Company's Net
Pre-Tax Profits applying for these purposes generally accepted accounting
principles.
1.6 "Participant" shall mean the following persons:
(a) Jeffrey P. Orleans, Chairman of the Board and Chief
Executive Officer of the Company;
(b) Benjamin D. Goldman, Vice Chairman of the Board;
(c) Michael T. Vesey, President and Chief Operating Officer;
and
1
(d) Such other of the Company's officers (within the meaning
of Section 16(a) under the Securities Exchange Act of 1934, as amended) and
other key employees as may be designated as Participants in the Plan by the
Committee.
1.7 "Performance Period" shall mean the Plan Year.
1.8 "Plan Year" shall mean the Company's fiscal year, beginning on July
1 and ending on June 30.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.1 Participation in the Plan for a Plan Year shall be open to those
employees who are designated as Participants pursuant to the Plan or by action
of the Committee from time to time.
2.2 If a Participant has not been a Participant for a full Plan Year,
such Participant's benefits payable under the Plan, if any, shall be limited to
a pro-rata portion of the benefit otherwise payable for such Plan Year based on
the portion of the Plan Year such Participant was a Participant in the Plan.
ARTICLE III - PERFORMANCE GOAL
No amount shall be payable pursuant to the Plan with respect to a Plan
Year unless the Company has Net Pre-Tax Profits for such Plan Year.
ARTICLE IV - DETERMINATION OF BONUS AWARDS
4.1 As soon as practicable following the end of a Performance Period,
the Committee shall determine whether the Company has any Net Pre-Tax Profits,
and shall, if there are such Net Pre-Tax Profits, determine the amount payable
pursuant to the Plan, as set forth below:
(a) The bonus payable to Jeffrey P. Orleans for each Plan Year
shall be equal to three percent (3%) of the Company's Net Pre-Tax Profit for
such Plan Year.
(b) The bonus payable to Michael T. Vesey for each Plan Year
shall be equal to one and one-half percent (1 1/2%) of the Company's Net Pre-Tax
Profit for such Plan Year.
(c) Subject to Section 4.2, the bonus payable to each other
Participant for each Plan Year shall be determined by the Committee; provided,
however, that in no event shall the bonus payable to any such other Participant
in any Plan Year exceed one and one-half percent (1 1/2%) of the Company's Net
Pre-Tax Profits for the Plan Year.
(d) Notwithstanding any other provisions of the Plan, the
aggregate payments to Participants under the Plan with respect to any Plan Year
shall equal eight percent (8%) of the Company's Net Pre-Tax Profits for such
Plan Year. The Committee shall take this aggregate payment amount into account
in its determination of the aggregate bonus amount awarded pursuant to Section
4.1(c).
2
4.2 The Committee shall have no discretion to increase the maximum
bonus payable to any Participant under the Plan, but shall have the right and
obligation to reduce the amount of or totally eliminate one or more such bonuses
(other than the bonuses payable to Messrs. Orleans and Vesey) so as to cause the
aggregate amount of bonuses payable under the Plan with respect to a Plan Year
to be equal to eight percent (8%) of the Company's Net Pre-Tax Profits for the
Plan Year).
4.3 Notwithstanding anything to the contrary in this Article IV, no
amount shall be payable under the Plan to any Participant who is not employed by
the Company or an affiliate of the Company as of the date payment is to be made
unless the Participant's termination of employment is attributable to the
Participant's death, disability, or retirement.
ARTICLE V - PAYMENT OF AWARDS
5.1 Approved bonus awards shall be payable by the Company in cash to
each Participant, or to his estate in the event of his death, in a single
payment or in installments, after the end of each Performance Period, but only
after the Committee has certified in writing that the relevant performance goal
for the Plan Year has been achieved.
5.2 If a bonus award is payable to a Participant who is no longer
employed by the Company or an affiliate of the Company by reason of such
Participant's death, disability or retirement, the amount of the bonus award
payable to such Participant shall be reduced to reflect the portion of the year
the Participant was a Participant in the Plan, as provided in Section 2.2,
above.
ARTICLE VI - OTHER TERMS AND CONDITIONS
6.1 No bonus award shall be paid under the Plan unless and until the
material terms have been disclosed to and approved by the Company's shareholders
by a majority of votes cast in a separate vote, either in person or by proxy,
including abstentions to the extent abstentions are counted as voting under
applicable state law, such requirements to be interpreted in a manner consistent
with the applicable provisions of Treasury Regulation Section 1.162-27,
promulgated pursuant to Section 162(m) of the Code.
6.2 No person shall have any legal claim to be granted an award under
the Plan and the Committee shall have no obligation to treat Participants
uniformly. Except as may be otherwise required by law, bonus awards under the
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary. Bonuses awarded under the
Plan shall be payable from the general assets of the Company and no Participant
shall have any claim with respect to any specific assets of the Company.
6.3 Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the employ of the
Company or any subsidiary or to maintain any Participant's compensation at any
level.
6.4 The Company or any of its subsidiaries may deduct from any award
any applicable withholding taxes or any amounts owed by the employee to the
Company or any of its subsidiaries.
3
ARTICLE VII - ADMINISTRATION
7.1 All members of the Committee shall be persons who qualify as
"outside directors" as defined under Section 162(m) of the Code.
7.2 The Committee shall have full power and authority to administer and
interpret the provisions of the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Committee deems necessary or advisable.
7.3 Except with respect to matters which under Section 162(m)(4)(C) of
the Code are required to be determined in the sole and absolute discretion of
the Committee, the Committee shall have full power to delegate to any officer or
employee of the Company the authority to administer and interpret the procedural
aspects of the Plan, subject to the Plan's terms, including adopting and
enforcing rules to decide procedural and administrative issues.
7.4 The Committee may rely on opinions, reports or statements of
officers or employees of the Company or any subsidiary thereof and of Company
counsel (inside or retained counsel), public accountants and other professional
or expert persons.
7.5 The Board reserves the right to amend or terminate the Plan in
whole or in part at any time. Unless otherwise prohibited by applicable law, any
amendment required to conform the Plan to the requirements of Section 162(m) of
the Code may be made by the Committee. No amendment may be made to the class of
individuals who are eligible to participate in the Plan, the performance
criteria specified in Article III or the maximum bonus payable to any
Participant as specified in Sections 4.1 and 4.2 without shareholder approval,
unless shareholder approval is not required in order for bonuses paid to Covered
Employees to constitute qualified performance-based compensation under Section
162(m) of the Code.
7.6 No member of the Committee shall be liable for any action taken or
omitted to be taken or for any determination made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and hold harmless each
member of the Committee against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Committee) arising out of any act or omission in connection with the
administration or interpretation of the Plan, unless arising out of such
person's own fraud or bad faith.
7.7 The place of administration of the Plan shall be in the
Commonwealth of Pennsylvania, and the validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of the Commonwealth of Pennsylvania.
4
AMENDMENT TO ORLEANS HOMEBUILDERS, INC.
INCENTIVE COMPENSATION PLAN
October 27, 2003
WHEREAS, the Board of Directors (the "Board") of Orleans Homebuilders,
Inc. (the "Company") has determined that it is appropriate to amend the Orleans
Homebuilders, Inc. Incentive Compensation Plan (the "Plan") with respect to the
payment of Bonus Awards (as defined in the Plan), so as to permit the payment of
all or any portion of a Bonus Award in the form of a transfer of the Company's
Common Stock, par value $.10, on the terms set forth herein; and
WHEREAS, the Board has the right, pursuant to Section 7.5 of the Plan,
to amend the Plan, subject to the approval of the Company's stockholders in the
case of an amendment that could cause bonuses paid to a Covered Employee (as
defined in the Plan) not to be qualified as performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, effective with respect to any bonuses paid under the Plan after
the date this Amendment has been adopted and approved by the Company's
stockholders, the Plan is hereby amended as follows:
A new Section 5.3 is added at the end of Article V of the Plan to read:
"5.3 Notwithstanding anything herein to the contrary,
the Committee may, at its discretion, provide for the payment
of all or of any portion of an approved bonus award to a
Participant by a transfer to such Participant of shares of the
Company's Common Stock, par value $.10 (the "Shares"), subject
to the following terms and conditions:
(a) The number of Shares transferred in lieu
of cash shall be determined by reference to a per share
exchange equal to a price that is at least 75%, and is no more
than 100%, of the closing price of such shares on the first
business day following the end of the Performance Period to
which the bonus award relates.
(b) The Shares shall be in the form of an
Award granted under the Company's Stock Award Plan.
1
(c) The terms of the Award shall be subject
to such requirements as to vesting of the Shares, conditions
of forfeiture and restrictions on transfer or disposition as
the Committee deems appropriate, at its sole discretion.
(d) The provisions of this Section 5.3 shall
not become effective with respect to any Participant who is a
Covered Employee until the first Performance Period that
commences following the adoption of this Amendment, except to
the extent that the compensation payable to such Covered
Employee would not be subject to the limitations on
deductibility imposed on the Company pursuant to Section
162(m) of the Code."
In all other respects, the Plan shall remain in full force and effect.
ORLEANS HOMEBUILDERS, INC.
By: Jeffrey P. Orleans
----------------------------------------
Jeffrey P. Orleans, Chairman and Chief
Executive Officer
2
APPENDIX B
ORLEANS HOMEBUILDERS, INC.
STOCK AWARD PLAN
As Adopted by the Board of Directors
(Effective as of October 1, 2003)
1. Purpose. Orleans Homebuilders, Inc. a Delaware corporation (the
"Company"), hereby adopts the Orleans Homebuilders, Inc. Stock Award Plan (the
"Plan"), for the purpose of permitting the grant awards of the Company's common
stock to those individuals eligible to participate in the Plan. The Plan is
intended to recognize the contributions made to Company by employees (including
employees who are members of the Board of Directors) of Company or any
Affiliate, to provide such persons with additional incentive to devote
themselves to the future success of Company or an Affiliate, and to improve the
ability of Company or an Affiliate to attract, retain, and motivate individuals
upon whom Company's sustained growth and financial success depend. Through the
Plan, Company will provide such persons with an opportunity to acquire or
increase their proprietary interest in Company, and to align their interest with
the interests of shareholders, through the transfer or issuance of the Company's
Common Stock, subject to such terms and conditions as may be established with
respect to any such Award. The Plan is also intended to permit grants of Awards
that will, when granted in connection with the terms of the Company's Incentive
Compensation Plan, constitute "performance-based compensation" as that term is
used for purposes of Section 162(m) of the Code, at the discretion of the
Committee.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent
corporation or a subsidiary corporation with respect to Company within the
meaning of Section 424(e) or (f) of the Code, of any successor provision.
(b) "Award" shall mean a transfer of Common Stock made
pursuant to the terms of the Plan subject to such terms, benefits or
restrictions as the Committee shall specify in the Award Agreement.
(c) "Award Agreement" shall mean the agreement between Company
and a Grantee with respect to an Award made pursuant to the Plan.
(d) "Board" means the Board of Directors of Company.
(e) "Capitalization Adjustment" means the adjustment to the
number or class of shares and payment, if any, required in connection with an
Award, as permitted to be made pursuant to the provisions of Section 9 of the
Plan.
(f) "Change of Control" shall be deemed to have occurred upon
the earliest to occur of the following dates:
(i) the date the stockholders of the Company (or the Board of
Directors, if stockholder action is not required) approve a plan or
other arrangement pursuant to which the Company will be dissolved or
liquidated; or
1
(ii) the date the stockholders of the Company (or the Board of
Directors, if stockholder action is not required) approve a definitive
agreement to sell or otherwise dispose of substantially all of the
assets of the Company; or
(iii) the date the stockholders of the Company (or the Board
of Directors, if stockholder action is not required) and the
stockholders of the other constituent corporation (or its board of
directors if stockholder action is not required) have approved a
definitive agreement to merge or consolidate the Company with or into
such other corporation, other than, in either case, a merger or
consolidation of the Company in which holders of shares of the
Company's Class A Common Stock immediately prior to the merger or
consolidation will have at least a majority of the voting power of the
surviving corporation's voting securities immediately after the merger
or consolidation, which voting securities are to be held in the same
proportion as such holders' ownership of Class A Common Stock of the
Company immediately before the merger or consolidation; or
(iv) the date any entity, person or group, within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act
of 1934, as amended, (other than (A) the Company or any of its
subsidiaries or any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its subsidiaries or (B) any
person who, on the date the Plan is effective, shall have been the
beneficial owner of or have voting control over shares of Common Stock
of the Company possessing more than twenty-five percent (25%) of the
aggregate voting power of the Company's Common Stock) shall have become
the beneficial owner of, or shall have obtained voting control over,
more than twenty five percent (25%) of the outstanding shares of the
Company's Class A Common Stock; or
(v) the first day after the date this Plan is effective when
directors are elected such that a majority of the Board of Directors
shall have been members of the Board of Directors for less than two (2)
years, unless the nomination for election of each new director who was
not a director at the beginning of such two (2) year period was
approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period.
(g) "Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute, and the rules and regulations issued pursuant
to that statute or any successor statute.
(h) "Committee" shall have the meaning set forth in Section 3
of the Plan.
(i) "Common Stock" shall mean the Company's Common Stock, par
value $.10 per Share.
(j) "Company" means Orleans Homebuilders, Inc., a Delaware
corporation.
(k) "Employee" means an employee of Company or an Affiliate.
2
(l) "Grantee" shall mean a person to whom an Award has been
granted pursuant to the Plan.
(m) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any successor statute, and the rules and regulations issued
pursuant to that statute or any successor statute.
(n) "Non-Employee Director" shall mean a member of the Board
who is a "non-employee director" as that term is defined in paragraph (b)(3) of
Rule 16b-3 and an "outside director" as that term is defined in Treasury
Regulations Section 1.162-27 promulgated under the Code.
(o) "Non-Employee Director Committee" means a committee
designated by the Board to act as the Committee with respect to the Plan that
consists solely of two or more Non-Employee Directors.
(p) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act, or any successor rule.
(q) "Section 16 Officers" means any person who is an "officer"
within the meaning of Rule 16a-1(f) promulgated under the Exchange Act or any
successor rule, and who is subject to the reporting requirements under Section
16 of the Exchange Act with respect to Company's Common Stock.
(r) "Securities Act" means the Securities Act of 1933, as
amended, or any successor statute, and the rules and regulations issued pursuant
to that statute or any successor statute.
(s) "Shares" means the shares of Common Stock of Company which
are granted as Awards under the Plan.
3. Administration of the Plan. The Board may administer the Plan and/or
it may, in its discretion, designate a committee or committees composed of two
or more of directors to operate and administer the Plan with respect to all or a
designated portion of the participants. To the extent that the Committee is
empowered to grant Awards to Section 16 Officers or persons whose compensation
might have limits on deductibility under Code Section 162(m), the Board may, at
its discretion, appoint a separate committee to administer the Plan with respect
to those persons, each member of such committee being a Non-Employee Directors.
Any such committee designated by the Board, and the Board itself in its
administrative capacity with respect to the Plan, is referred to as the
"Committee."
(a) Meetings. The Committee shall hold meetings at such times
and places as it may determine, shall keep minutes of its meetings. The
Committee may take action only upon the agreement of a majority of the whole
Committee. Any action which the Committee shall take through a written
instrument signed by all its members shall be as effective as though it had been
taken at a meeting duly called and held.
3
(b) Exculpation. No member of the Board of Directors shall be
personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan, provided that
this Subsection 3(b) shall not apply to (i) any breach of such member's duty of
loyalty to the Company or its stockholders, (ii) acts or omissions not in good
faith or involving intentional misconduct or a knowing violation of law, (iii)
acts or omissions that would result in liability under Section 174 of the
General Corporation Law of the State of Delaware, as amended, and (iv) any
transaction from which the member derived an improper personal benefit.
(c) Indemnification. Service on the Committee shall constitute
service as a member of the Board. Each member of the Committee shall be
entitled, without further act on the member's part, to indemnity from Company
and limitation of liability to the fullest extent provided by applicable law and
by Company's Articles of Incorporation and/or Bylaw in connection with or
arising out of any action, suit or proceeding with respect to the administration
of the Plan or the granting Awards thereunder in which the member may be
involved by reason of the member being or having been a member of the Committee,
whether or not the member continues to be such member of the Committee at the
time of the action, suit or proceeding.
(d) Interpretation. The Committee shall have the power and
authority to (i) interpret the Plan, (ii) adopt, amend and revoke rules and
regulations for its administration that are not inconsistent with the express
terms of the Plan, and (iii) waive requirements relating to formalities or other
matters that do not either modify the substance of the rights intended to be
granted by Awards or constitute a material amendment for any purpose under the
Code. Any such actions by the Committee shall be final, binding and conclusive
on all parties in interest.
4. Eligibility. All Employees of the Company shall be eligible to
receive Awards hereunder. The Committee, in its sole discretion, shall determine
whether an individual qualifies as an Employee.
5. Shares Subject to Plan. The aggregate maximum number of Shares for
which Awards may be granted pursuant to the Plan is four hundred thousand
(400,000). The number of shares which may be issued under the Plan shall be
subject to a permitted Capitalization Adjustment. The Shares shall be issued
from authorized and unissued Common Stock or Common Stock held in or hereafter
acquired for the treasury of Company. If Shares subject to an Award have been
conveyed back to Company pursuant to the terms of an Award Agreement, the Shares
that were conveyed back to Company shall again be available for issuance
pursuant to the terms of one or Awards, granted pursuant to the Plan.
6. Term of the Plan. The Plan is effective as of October 1, 2003, the
date as of which it was adopted by the Board, subject to the approval of the
Plan by the Company's stockholders in a manner required by state law. Unless and
until the Plan is so approved by the Company's stockholders, no Awards may be
granted. The Plan shall terminate on the tenth anniversary of the date of its
adoption, unless earlier terminated at the discretion of the Board.
7. Change of Control. In the event of a Change of Control, the
Committee may take whatever action it deems necessary or desirable with respect
to Awards which have not yet fully vested, including, without limitation,
accelerating the vesting date applicable to such Awards.
4
8. Terms and Conditions of Awards. Awards granted pursuant to the Plan
shall be evidenced by written Award Agreements in such form as the Committee
shall from time to time approve, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Shares. Each Award Agreement shall state the
number of Shares or other units or rights to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the
purchase price, if any, which applies to the Award. If the Board specifies a
purchase price, the Grantee shall be required to make payment on or before the
payment date specified in the Award Agreement. A Grantee shall make payment (i)
in cash, (ii) by certified check payable to the order of Company, or (iii) by
such other mode of payment as the Committee may approve.
(c) Grant. In the case of an Award which provides for a grant
of Shares without any payment by the Grantee, the grant shall take place on the
date specified in the Award Agreement. In the case of an Award which provides
for a payment, the grant shall take place on the date the initial payment is
delivered to Company, unless the Committee or the Award Agreement otherwise
specifies. Stock certificates evidencing Shares granted pursuant to an Award
shall be issued in the sole name of the Grantee.
(d) Conditions. The Committee may specify in an Award
Agreement any conditions under which the Grantee of that Award shall be required
to convey to Company the Shares covered by the Award. Upon the occurrence of any
such specified condition, the Grantee shall forthwith surrender and deliver to
Company the certificates evidencing such Shares as well as completely executed
instruments of conveyance. The Committee, in its discretion, may provide that
certificates for Shares transferred pursuant to an Award be held in escrow by
Company or its designee until such time as each and every condition has lapsed
and that the Grantee be required, as a condition of the Award, to deliver to
such escrow agent or Company officer stock transfer powers covering the Award
Shares duly endorsed by the Grantee. Unless otherwise provided in the Award
Agreement or determined by the Committee, dividends and other distributions made
on Shares held in escrow shall be deposited in escrow, to be distributed to the
party becoming entitled to the Shares on which the distribution was made. Stock
certificates evidencing Shares subject to conditions shall bear a legend to the
effect that the Shares evidenced thereby are subject to repurchase by, or
conveyance to, Company in accordance with the terms applicable to such Shares
under an Award made pursuant to the Plan, and that the Shares may not be sold or
otherwise transferred.
(e) Lapse of Conditions. Upon termination or lapse of all
forfeiture conditions, Company shall cause certificates without the legend
referring to Company's repurchase or acquisition right (but with any other
legends that may be appropriate) evidencing the Shares covered by the Award to
be issued to the Grantee upon the Grantee's surrender to Company of the legended
certificates held by the Grantee.
(f) Rights as Shareholder. Upon payment of the purchase
price, if any, for Shares covered by an Award and compliance with the
acknowledgment requirement of subsection 13(c), the Grantee shall have all of
the rights of a shareholder with respect to the Shares covered thereby,
including the right to vote the Shares and (subject to the provisions of
Subsection 13(d)) receive all dividends and other distributions paid or made
with respect thereto, except to the extent otherwise provided by the Committee
or in the Award Agreement.
5
9. Adjustments on Changes in Capitalization.
(a) In the event that the outstanding Shares are changed by
reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of shares and the like
(not including the issuance of Common Stock on the conversion of other
securities of Company which are convertible into Common Stock) or dividends
payable in Shares, an equitable adjustment may be made by the Committee as it
deems appropriate in the aggregate number of shares available under the Plan.
(b) The Committee shall have authority to determine the
adjustments to be made under this Section, and any such determination by the
Committee shall be final, binding and conclusive.
10. Amendment of the Plan. The Board may amend the Plan from time to
time in such manner as it may deem advisable. Nevertheless, the Board may not
change the class of persons eligible to receive Awards, or increase the maximum
number of Shares which may be granted as Awards under the Plan without obtaining
approval of the Company's stockholders in the manner required by state law. No
amendment to the Plan shall adversely affect any outstanding Award, however,
without the consent of the Grantee or Grantee, as the case may be.
11. No Commitment to Retain. The grant of an Award pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of Company or any Affiliate to retain the
Grantee or Grantee as an employee, director, consultant or advisor of Company or
any Affiliate, or in any other capacity.
12. Withholding of Taxes. In connection with any event relating to an
Award, Company shall have the right to (a) require the recipient to remit or
otherwise make available to Company an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery or
transfer of any certificates for such Shares, or (b) take whatever other action
it deems necessary to protect its interests with respect to tax liabilities,
including, without limitation, withholding any Shares, funds or other property
otherwise due to the Grantee or Grantee. The Company's obligations under the
Plan shall be conditioned on the Grantee's or Grantee's compliance, to Company's
satisfaction, with any withholding requirement.
6
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE ORLEANS HOMEBUILDERS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, DECEMBER 5, 2003
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
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 herein, all the Common Stock of Orleans
Homebuilders, Inc. held of record by the undersigned on the close of business on
October 22, 2003, at the Annual Meeting of Stockholders to be held on Friday,
December 5, 2003 and at any adjournment or postponement thereof.
UNLESS OTHERWISE SPECIFIED, ALL SHARES WILL BE VOTED "FOR" THE ELECTION
OF ALL NOMINEES FOR DIRECTOR LISTED, "FOR" THE PROPOSAL TO APPROVE THE AMENDMENT
TO THE ORLEANS HOMEBUILDERS, INC. INCENTIVE COMPENSATION PLAN AND "FOR" THE
PROPOSAL TO APPROVE THE ORLEANS HOMEBUILDERS, INC. STOCK AWARD PLAN. THIS PROXY
ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER
BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OF
POSTPONEMENT THEREOF.
--------------------------------------
Please be sure to sign and date Date
this Proxy in the box below. --------------------------------------
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Stockholder sign above Co-holder (if any) sign above
For All
1. ELECTION OF DIRECTORS For Withhold Except
[ ] [ ] [ ]
Nominees: Benjamin D. Goldman, Jerome S. Goodman, Robert N. Goodman,
Andrew N. Heine, David Kaplan, Lewis Katz, Jeffrey P. Orleans, Robert M. Segal,
John W. Temple and Michael T. Vesey.
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. APPROVAL OF THE AMENDMENT TO THE ORLEANS HOMEBUILDERS, INC. INCENTIVE
COMPENSATION PLAN.
For Against Abstain
[ ] [ ] [ ]
3. APPROVAL OF THE ORLEANS HOMEBUILDERS, INC. STOCK AWARD PLAN.
For Against Abstain
[ ] [ ] [ ]
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
You are urged to sign and return this proxy so that you may be sure that your
shares will be voted.
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^ ^
| Detach above card, sign, date and mail in postage paid envelope provided.|
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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 to Stockholders.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
- --------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
________________________________________________
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