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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AVATAR HOLDINGS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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AVATAR
HOLDINGS INC.
255 Alhambra Circle
Coral Gables, Florida 33134
(305) 442-7000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 28, 1998
To the Stockholders of Avatar Holdings Inc.:
The Annual Meeting of Stockholders of Avatar Holdings Inc. will be held at
the Hyatt Regency Coral Gables, 50 Alhambra Plaza, Coral Gables, Florida on May
28, 1998, at 10:00 a.m. local time, for the following purposes:
1. To elect ten directors.
2. To consider and vote upon a proposal to amend and restate Avatar's
Certificate of Incorporation.
3. To approve the appointment of Ernst & Young LLP, independent
accountants, to act as auditors for Avatar for the year ending December
31, 1998.
4. To transact such other business as properly may come before the meeting,
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 31, 1998 as
the record date for the determination of stockholders entitled to receive notice
of, and to vote at, the Annual Meeting or any adjournment or adjournments
thereof.
YOUR ATTENTION IS DIRECTED TO THE PROXY STATEMENT ATTACHED TO THIS NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS FOR INFORMATION WITH RESPECT TO THOSE PERSONS
WHO WILL BE ENTITLED TO VOTE AT THE MEETING AND OTHER RELEVANT MATTERS.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
POSTAGE-PREPAID ENVELOPE PROVIDED FOR YOUR CONVENIENCE. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON IF YOU WISH.
By Order of the Board of Directors,
Juanita I. Kerrigan
Vice President and Secretary
Dated: April 28, 1998.
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AVATAR HOLDINGS INC., 255 ALHAMBRA CIRCLE,
CORAL GABLES, FLORIDA 33134 (305) 442-7000
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 28, 1998
This Proxy Statement and the enclosed form of proxy are furnished to the
stockholders of Avatar Holdings Inc., a Delaware corporation ("Avatar"), in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of Avatar for use at the Annual Meeting of Stockholders to be held at
the place and time and for the purposes set forth in the annexed Notice of
Annual Meeting of Stockholders.
VOTING RIGHTS AND PROXY INFORMATION
Record Date; Voting Rights
Pursuant to the By-Laws of Avatar, the Board of Directors has fixed the
close of business on March 31, 1998 as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting or any adjournment
or adjournments thereof.
At the close of business on March 31, 1998, 9,170,102 shares of Common
Stock, $1.00 par value, of Avatar ("Common Stock"), which constitutes the only
class of voting securities of Avatar, were outstanding and entitled to vote. For
each share of Common Stock held of record as of the close of business on March
31, 1998, stockholders are entitled to one vote, except in regard to the
election of directors, for which there will be cumulative voting as described
under the heading "Election of Directors." In accordance with Avatar's By-Laws,
the holders of a majority of the outstanding shares of Common Stock, present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting.
On February 2, 1998, Avatar issued $115,000,000 principal amount of its 7%
Convertible Subordinated Notes due 2005 (the "7% Notes"). At the close of
business on March 31, 1998, $115,000,000 principal amount of 7% Notes were
outstanding which are in the aggregate convertible into an aggregate of
3,616,352 shares of Common Stock. Ownership of 7% Notes does not entitle any
holder thereof to any voting rights in connection with this Annual Meeting of
Stockholders.
Proxies
When a proxy is received, properly executed, in time for the Annual
Meeting, the shares represented thereby will be voted at the meeting as
directed. If no such direction is specified, such shares will be voted: (1) FOR
the election as directors of Avatar of the ten nominees named therein; (2) FOR
approval of the proposal to amend and restate Avatar's Certificate of
Incorporation; (3) FOR approval of the appointment of Ernst & Young LLP,
independent accountants, as auditors of Avatar for the year ending December 31,
1998; and (4) in connection with the transaction of such other business as
properly may come before the meeting in accordance with the judgment of the
person or persons voting the proxy. Any stockholder who executes a proxy may
revoke it at any time prior to its exercise by giving written notice of such
revocation to the Secretary of Avatar. In addition, a stockholder who attends
the meeting may vote in person, thereby cancelling any proxy previously given by
such stockholder.
Nominees for director will be elected by a plurality of the votes cast at
the Annual Meeting by the holders of Common Stock present in person or by proxy
and entitled to notice of, and to vote at, the Annual Meeting. Consequently,
only shares that are voted in favor of a particular nominee will be counted
toward such nominee's achievement of a plurality. Shares present at the meeting
that are not voted for a particular nominee or shares present by proxy where the
stockholder properly withheld authority to vote for such nominees (including
broker non-votes) will not be counted toward such nominee's achievement of a
plurality.
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The affirmative vote of a majority of the outstanding shares of Common
Stock is necessary to approve the proposal to amend and restate Avatar's
Certificate of Incorporation. Abstentions and broker non-votes will have the
same effect as votes against the proposal. The affirmative vote of a majority of
the shares of Common Stock present in person or by proxy and entitled to notice
of, and to vote at, the Annual Meeting is necessary to ratify the appointment of
Ernst & Young LLP as auditors for the year ending December 31, 1998. Abstentions
will have the same effect as votes against the proposal because the shares are
considered present at the meeting but are not affirmative votes, and broker
non-votes will not be counted in respect of the proposal.
This proxy statement and the form of proxy enclosed herewith, and the
accompanying Annual Report of Avatar for the fiscal year ended December 31,
1997, including financial statements, were first mailed to stockholders of
record as of the close of business on March 31, on or about April 28, 1998.
PRINCIPAL STOCKHOLDERS AND SECURITY
OWNERSHIP OF MANAGEMENT
Principal Stockholders
The following table sets forth, as of March 31, 1998, information with
respect to each person or entity known by the Board of Directors to be the
beneficial owner of more than 5% of the outstanding Common Stock. Except as
otherwise indicated, all shares are owned directly.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
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Odyssey Partners, 31 West 52nd Street 2,107,763(2)(3) 23.0%
L.P. New York, NY 10019
Spears, Benzak, 45 Rockefeller Plaza 2,196,701(4) 22.5%
Salomon & New York, NY 10111
Farrell, Inc.
Ronald Baron 767 Fifth Avenue 1,006,299(5) 11.0%
24th Floor
New York, NY 10153
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(1) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants, rights
or conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person, but
not deemed outstanding for the purpose of calculating the percentage owned by
each other person listed. As of March 31, 1998, there were 9,170,102 shares of
Common Stock outstanding.
(2) Does not include shares owned by Leon Levy, who is Chairman of the
Board and a member of the Executive Committee of Avatar and is a general partner
of Odyssey Partners, L.P., a Delaware limited partnership ("Odyssey"). Mr. Levy,
Jack Nash, Stephen Berger, Joshua Nash, Brian Wruble and Nash Family
Partnership, L.P., by virtue of being general partners of Odyssey, share voting
and dispositive power with respect to the Common Stock owned by Odyssey and,
accordingly, may each be deemed to own beneficially the Common Stock owned by
Odyssey. Each of the aforesaid persons has expressly disclaimed any such
beneficial ownership (within the meaning of Exchange Act Rule 13d-3(d)(1)) which
exceeds the proportionate interest in the Common Stock which he or it may be
deemed to own as a general partner of Odyssey. Avatar has been advised that no
other person exercises (or may be deemed to exercise) any voting or
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investment control over the Common Stock owned by Odyssey. Odyssey is a private
investment partnership. Mr. Levy's ownership of Common Stock is indicated in the
table included in "Security Ownership of Management."
(3) By virtue of its present Common Stock ownership, Odyssey may be deemed
to be a "control" person of Avatar within the meaning of that term as defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended.
(4) Includes 600,471 shares issuable upon conversion of $19,095,000
principal amount of 7% Notes. The information as to securities owned was
furnished to Avatar by Spears, Benzak, Salomon & Farrell, Inc. Based upon
information set forth in the Schedule 13G, dated February 13, 1998, filed by
KeyCorp, the parent holding company of Spears, Benzak, Salomon & Farrell, Inc.
(a registered investment adviser), such 7% Notes and such shares are held for
the benefit of various of its clients; it has revocable shared dispositive power
with such clients; and it has no power to vote or direct the vote of such
shares.
(5) Based upon information set forth in the Schedule 13G, dated February
13, 1998, Ronald Baron owns 15,000 shares of Avatar and may be deemed to own an
additional 41,000 by reason of his position as a General Partner of an
investment partnership. Mr. Baron also may be deemed to own an additional
950,299 shares on behalf of investment advisory clients of Baron Capital
Management, Inc. and BAMCO, Inc., both registered investment advisers of which
he is the controlling person, and he expressly disclaims beneficial ownership of
such shares.
Securities Ownership of Management
The following table sets forth, as of March 31, 1998, information with
respect to the outstanding shares of Common Stock beneficially owned by each
present director, nominee for director, by each of the Named Executive Officers
identified herein under the caption "Summary Compensation Table", and by all
present directors and executive officers of Avatar as a group. Except as
otherwise indicated, all shares are owned directly.
AMOUNT AND NATURE OF PERCENT OF
NAME OR GROUP BENEFICIAL OWNERSHIP(1)(2) CLASS(2)
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Leon Levy 3,014,689(3) 30.8%
Milton Dresner 3,644(4) *
Edwin Jacobson None *
Gerald D. Kelfer 48,144(5)
Leon T. Kendall 200(6) *
Martin Meyerson 2,347(7) *
Gernot H. Reiners 628(8) *
Kenneth T. Rosen 1,000 *
Fred Stanton Smith 943(8) *
Henry King Stanford 200 *
Dennis J. Getman None
Charles L. McNairy 314(8) *
G. Patrick Settles None
All directors and executive officers as a
group (consisting of 14 persons of whom 11
beneficially own shares of Common Stock) 3,072,266(3)(4)(5)(6)(7)(8) 31.2%
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* Represents less than one percent.
(1) The information as to securities owned by directors, officers and
nominees was furnished to Avatar by such directors, officers and nominees.
(2) Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants, rights
or conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage
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\owned by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed. As of March 31, 1998, there
were 9,170,102 shares of Common Stock outstanding.
(3) Includes 2,107,763 shares owned by Odyssey. Mr. Levy is a general
partner of Odyssey and therefore may be deemed to own beneficially the shares of
Common Stock owned by Odyssey. See Notes (2) and (3) to the preceding table
included in "Principal Stockholders." Also includes 628,930 shares issuable upon
conversion of $20,000,000 principal amount of 7% Notes owned by Mr. Levy.
(4) Includes 3,144 shares issuable upon conversion of $100,000 principal
amount of 7% Notes.
(5) Includes 45,000 shares issuable upon exercise of options which became
exercisable as of February 13, 1998 and 3,144 shares issuable upon conversion of
$100,000 principal amount of 7% Notes.
(6) Does not include 200 shares owned by Mr. Kendall's wife for her own
account, as to which shares Mr. Kendall disclaims beneficial ownership.
(7) Does not include 847 shares owned by Mr. Meyerson's wife, as to which
shares Mr. Meyerson disclaims beneficial ownership.
(8) Includes 628, 943 and 314 shares, respectively, issuable upon
conversion of $20,000, $30,000 and $10,000, respectively, principal amounts of
7% Notes.
1. ELECTION OF DIRECTORS
Ten directors are to be elected for the ensuing year and until their
respective successors are duly elected and qualified. Stockholders have
cumulative voting rights with respect to election of directors. Under cumulative
voting, each stockholder is entitled to the same number of votes per share as
the number of directors to be elected (or, for purposes of this election, ten
votes per share). A stockholder may cast all such votes for a single nominee or
distribute them among the nominees, as he wishes, either by so marking his
ballot at the meeting or by specific voting instructions sent to Avatar with a
signed proxy. In connection with the solicitation of proxies, discretionary
authority to cumulate votes is being solicited. Unless authority to vote for the
nominees for director is withheld, it is the intention of the persons named in
the accompanying proxy to vote the proxies in such manner as will elect as
directors the nominees named below.
All of the nominees were elected at the May 29, 1997 Annual Meeting of
Avatar's Stockholders, except Gernot H. Reiners who was elected by the Board of
Directors at its meeting held September 25, 1997. The Board of Directors met
seven times during 1997, including the annual meeting of directors held
immediately following the 1997 Annual Meeting of Stockholders.
The Board of Directors does not contemplate that any of the persons named
below will be unable, or will decline, to serve. However, if any of such persons
is unable or declines to serve, the persons named in the accompanying proxy may
vote for another person or persons in their discretion.
The following table sets forth certain information with respect to each
nominee for director. Except as otherwise indicated, each nominee has held his
present occupation or occupations for more than the past five years and has not
been principally employed by any subsidiary or affiliate of Avatar. There are no
family relationships between any nominee, director or executive officer of
Avatar.
PRINCIPAL OCCUPATION OR
NAME AGE OCCUPATIONS AND DIRECTORSHIPS
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Leon Levy 72 Chairman of the Board of Avatar since January 22, 1981;
Director since General Partner, Odyssey Partners, L.P., a private
September 1980 investment partnership; Chairman of the Board of
Oppenheimer funds; former Chairman of the Board
(1974-1985) of Oppenheimer Management Corp.
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PRINCIPAL OCCUPATION OR
NAME AGE OCCUPATIONS AND DIRECTORSHIPS
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Gerald D. Kelfer 52 Vice Chairman of the Board of Avatar since December 1996,
Director since Chief Executive Officer since July 31, 1997 and President
October 1996 since February 13, 1997; formerly a principal in Odyssey
Partners, L.P., from July 1994 to February 1997; and
Executive Vice President, Senior General Counsel and
Director of Olympia & York Companies, from 1985 to 1994.
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Milton Dresner 72 Founding Partner, The Highland Companies, since 1960, a
Director since diversified real estate development and management organi-
July 1995 zation; Director: Hudson General Corporation, Childtime
Childcare, BioTime, Inc.
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Edwin Jacobson 68 Chairman of the Executive Committee of Avatar since June
Director since 15, 1992; Chief Executive Officer of Avatar from February
June 1992 27, 1994 to July 31, 1997; also, formerly President from
February 27, 1994 to February 13, 1997; also, President
and Chief Executive Officer, CMC Heartland Partners, an
operating general partnership of a public limited
partnership engaged in the real estate business, since
September 1990; and President and Chief Executive Officer,
since June 1985, of Heartland Technology, Inc. (formerly
Milwaukee Land Company), an electronics products
manufacturer; also formerly President and Chief Executive
Officer, Chicago Milwaukee Corporation, an investment
company, from June 1985 until its dissolution in September
1996.
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Leon T. Kendall 69 Professor of Finance and Real Estate, Kellogg School of
Director since Management, Northwestern University, since September 1988;
May 1983 formerly Chairman of the Board, Mortgage Guaranty
Insurance Corporation, and Vice Chairman of the Board,
MGIC Investment Corporation, from December 1981 to
December 1989; Director of: Universal Foods Corporation;
Core Cap, Inc.; and Chicago Board -- Options Exchange.
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Martin Meyerson 75 Chairman, University of Pennsylvania Foundation, The
Director since University Professor of Public Policy and Planning, and
May 1981 President Emeritus, University of Pennsylvania, since
February 1981, and President thereof from 1970 to 1981;
President, FISCIT (Switzerland/U.S.); Director, Universal
Health Services, Inc.; First Union Atlantic, Board member;
Chairman, Marconi International Foundation.
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Gernot H. Reiners 56 Partner, Real Estate Capital Partners, a real estate
Director since advisory and management firm, since September 15, 1997;
October 1997 Former Managing Partner and a member of the Board of
Managers of BHF-BANK AG from May 1992 to March 1997 and
Co-Manager of the Bank's New York Branch from March 1987
to May 1992.
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Kenneth T. Rosen 49 Professor of Business Administration, since 1979, and
Director since Chairman of the Fisher Center for Real Estate and Urban
September 1994 Economics, since 1981, University of California, Berkeley;
also President, Rosen Consulting Group, a real estate
consulting business, since 1990, and Chief Executive
Officer of ERE Rosen Real Estate Securities, a registered
investment adviser, since February 1995; Director: Golden
West Financial Corporation, The PMI Group, Inc.
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PRINCIPAL OCCUPATION OR
NAME AGE OCCUPATIONS AND DIRECTORSHIPS
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Fred Stanton Smith 69 Vice Chairman of the Board, The Keyes Company, a real
Director since estate brokerage, financing, management, insurance and de-
September 1980 velopment firm, since January 28, 1992; formerly
President, The Keyes Company; Director, Eagle National
Bank.
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Henry King Stanford 82 President Emeritus, The University of Miami since July
Director since 1981, and President Emeritus, University of Georgia since
September 1980 July 1987; formerly President, The University of Miami,
from July 1962 to June 1981; also formerly Interim
President, University of Georgia, from July 1986 to June
1987.
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INFORMATION REGARDING THE BOARD OF DIRECTORS
Certain Committees of the Board
To assist it in carrying out its duties, the Board of Directors has
established an Executive Committee, an Audit Committee and a Community Affairs
Committee, the current members of which are as follows:
COMMUNITY AFFAIRS
EXECUTIVE COMMITTEE AUDIT COMMITTEE COMMITTEE INCENTIVE PLAN COMMITTEE
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Edwin Jacobson(1)(2) Leon T. Kendall(1) Henry King Stanford(1) Leon T. Kendall(1)
Leon Levy(2) Milton Dresner Martin Meyerson Milton Dresner
Gerald D. Kelfer(2) Martin Meyerson Fred Stanton Smith Kenneth T. Rosen
Fred Stanton Smith Fred Stanton Smith
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(1) Chairman
(2) Officer of Avatar
The Board of Directors has not established a Nominating Committee and, as
more fully described below and under "Executive Compensation and Other
Information -- Executive Committee and Incentive Plan Committee Report on
Executive Compensation," the Executive Committee performs the functions of a
compensation committee.
Executive Committee
The Executive Committee of the Board of Directors has authority to exercise
most powers of the full Board of Directors in connection with matters which
arise during the intervals between meetings of the Board of Directors. In
addition to such other functions as are assigned to it from time to time by the
Board of Directors, the Executive Committee also reviews and approves or
recommends to the Board the compensation and terms of employment of all officers
and employees of Avatar and its subsidiaries whose base salaries exceed $100,000
per annum. The Executive Committee met four times during the fiscal year ended
December 31, 1997.
Audit Committee
The Audit Committee of the Board of Directors recommends to the Board of
Directors the appointment of the independent auditors, subject to approval by
the stockholders of Avatar; reviews the independent auditors' report and
management letters and reports to the Board of Directors with respect thereto;
reviews with the internal auditors Avatar's accounting policies and procedures,
including its internal accounting controls and internal auditing procedures;
determines whether there are any conflicts of interest in financial or business
matters between Avatar and any of its officers or employees; and reviews the
recommendations of the independent auditors. The Audit Committee also performs
such other tasks as are assigned to it from time to time by the Board of
Directors. The Audit Committee met six times during the fiscal year ended
December 31, 1997.
Community Affairs Committee
The Community Affairs Committee of the Board of Directors monitors the
reputation and standing in the community of Avatar and its various subsidiaries
and divisions, and oversees the interaction of Avatar with the community. The
Community Affairs Committee also performs such other tasks as are assigned to it
from time to time by the Board of Directors. The Community Affairs Committee met
once during the fiscal year ended December 31, 1997.
Incentive Plan Committee
The Incentive Plan Committee of the Board of Directors, subject to the 1997
Incentive and Capital Accumulation Plan (the "Incentive Plan"), establishes
rules and regulations for administration of the Incentive Plan and authorizes
and/or approves grants thereunder. The Incentive Plan Committee selects the
officers and other key employees to receive grants and determines the form,
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amount and other terms and conditions of grants. The Incentive Plan Committee
met twice during the fiscal year ended December 31, 1997.
Directors' Compensation
Pursuant to resolutions of the Board of Directors, compensation for
directors who are not salaried employees of Avatar is $17,500 per annum. A
member of the Executive Committee who is not a salaried employee of Avatar
receives a fee of $500 for attendance at each meeting. Members and the Chairman
of the Audit Committee receive additional compensation of $12,000 and $14,000
per annum, respectively. Members and the Chairman of the Community Affairs
Committee receive additional compensation of $2,000 per annum plus a fee of $500
for attendance at each meeting. Members and the Chairman of the Incentive Plan
Committee receive additional compensation of $1,000 per annum plus a fee of $500
for attendance at each meeting.
Directors' Attendance
In fiscal year 1997 all of the incumbent directors attended 75% or more of
the aggregate of their respective Board and Committee meetings.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth information with respect to compensation of
the Chief Executive Officer, the former Chief Executive Officer and the three
other highest paid executive officers of Avatar whose total salary and bonus was
$100,000 or more for the year ended December 31, 1997 (these five executive
officers being hereinafter referred to as the "Named Executive Officers").
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
---------------------------------------- ---------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING ALL OTHER
POSITION(S) YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION(2)
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Gerald D. Kelfer(3) 1997 $383,367(3)(4) $ --(4) $44,513(5) 225,000 $ --
Chief Executive Officer
and President
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Edwin Jacobson(6) 1997 $325,000(4) $ --(4) $ --
Chairman of the Executive 1996 325,000 -- --
Committee 1995 325,000 -- --
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Dennis J. Getman 1997 $208,000 $20,000(4) $2,375
Executive Vice President 1996 208,000 15,000 2,250
and General Counsel 1995 208,000 12,500 2,250
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Charles L. McNairy 1997 $178,654 $15,000(4) $2,375
Executive Vice President, 1996 175,000 15,000 2,250
Treasurer and 1995 169,000 11,500 2,250
Chief Financial Officer
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G. Patrick Settles 1997 $120,645 $ -- $1,810
Vice President and 1996 117,143 -- 1,757
Assistant 1995 113,745 -- 1,706
General Counsel
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(1) Of the Named Executive Officers, Messrs. Kelfer, Jacobson, Getman and
McNairy also received automobile allowances and/or the use of company-leased
automobiles. Avatar also provides group life, health, hospitalization and
medical reimbursement plans which do not discriminate in scope, terms or
operation in favor of officers and are available to all full-time employees.
The aggregate value of these and any additional perquisite and other
personal benefits cannot be specifically or precisely ascertained but do
not, in any event, exceed 10% of the total annual salary and bonus reported
for each of the Named Executive Officers.
(2) Reflects for each Named Executive Officer Avatar's contribution to the
401(k) Plan.
(3) Includes director's fees of $2,598 paid prior to Mr. Kelfer's employment as
an executive officer. Mr. Kelfer has served as Chief Executive Officer since
July 31, 1997, as President since February 13, 1997 and as a member of the
Board since October 1996 and as Vice Chairman thereof since December 1996.
See "Employment and Other Agreements" below.
(4) For discussion of Avatar's employment agreements with Mr. Kelfer and Mr.
Jacobson and its incentive compensation agreements with Messrs. Getman and
McNairy, see "Employment and Other Agreements" below.
(5) Represents payments by Avatar of relocation expenses and temporary living
and commutation costs aggregating $29,432 and $15,081, respectively. See
"Employment and Other Agreements" below.
(6) In addition to his position as Chairman of the Executive Committee, Mr.
Jacobson served as Chief Executive Officer from February 27, 1994 to July
31, 1997, and as President from February 27, 1994 to February 13, 1997. See
"Employment and Other Agreements" below.
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Option/SAR Grants in 1997
The following table shows all grants of options to the Named Executive
Officers of the Corporation in 1997:
INDIVIDUAL GRANTS(1)
---------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING PERCENT OF TOTAL
OPTIONS/SARS OPTIONS/SARS GRANTED TO EXERCISE MARKET EXPIRATION
NAME GRANTED (#) EMPLOYEES IN 1997 PRICE($/SH) PRICE($/SH) DATE
---- ------------ ----------------------- ----------- ----------- ----------
Gerald D. Kelfer..... 225,000 91.8% $ 34.00 $ 34.00 2/13/07
Edwin Jacobson....... 0
Dennis J. Getman..... 0
Charles L. McNairy... 0
G. Patrick Settles... 0
GRANT DATE
NAME PRESENT VALUE(2)(3)
---- -------------------
Gerald D. Kelfer..... $3,732,750
Edwin Jacobson.......
Dennis J. Getman.....
Charles L. McNairy...
G. Patrick Settles...
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(1) For discussion of terms of options granted to Mr. Kelfer, see "Employment
and Other Agreements -- Non-qualified Stock Option Agreement with Mr.
Kelfer" below.
(2) Present value on the grant date was determined by using the Black-Scholes
option pricing model. The model as applied used the applicable grant date
and the exercise price shown on the table, and the fair market value of
Common Stock on the grant date, which was the same as the exercise price.
The model assumed (i) a risk-free rate of return of 6.38%, which was the
implied rate on 10-year U.S. Treasury 7 5/8% bonds on the grant date; (ii) a
stock price volatility of 17.6% and (iii) the exercise of all options on the
final day of their 10-year terms. No discount from the theoretical value was
taken to reflect the waiting period prior to vesting, the limited
transferability of the options, and the likelihood of the options being
exercised in advance of the final day of their terms.
(3) There is no assurance that the values actually realized upon the exercise of
these options will be at or near the present values shown in the table as of
the date of grant. The Black-Scholes option pricing model is a widely used
mathematical formula for estimating option values that incorporates various
assumptions that may not hold true over the 10-year life of these options.
For example, assumptions are required about the risk-free rate of return as
well as about the dividend yield on Common Stock and the volatility of the
Common Stock over the 10-year period. Also, the Black-Scholes model assumes
that an option holder can sell the option at any time at a fair price that
includes a premium for the remaining time value of the option. However, an
optionee can realize an option's value before maturity only by exercising
and thereby sacrificing the option's remaining time value. Although the
negative impact of this and other restrictions on the value of this type of
option is well recognized, there is no accepted method for adjusting the
theoretical option value for them. The values set forth in the table should
not be viewed in any way as a forecast of the performance of Avatar's Common
Stock, which will be influenced by future events and unknown factors.
Aggregated Option Exercises in 1997 and
Option Values at December 31, 1997
During 1997 no options were exercised by any Named Executive Officer and no
options held by any Named Executive Officer were in-the-money at December 31,
1997.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT
DECEMBER 31, 1997(#)
-------------------------
NAME EXERCISABLE/UNEXERCISABLE
- ---- -------------------------
Gerald D. Kelfer........................................ 0/225,000
Edwin Jacobson.......................................... 0/0
Dennis J. Getman........................................ 0/0
Charles L. McNairy...................................... 0/0
G. Patrick Settles...................................... 0/0
Employment and Other Agreements
Employment Agreement With Gerald Kelfer
On February 13, 1997 (the "Commencement Date"), Avatar entered into an
employment agreement with Mr. Kelfer, pursuant to which Mr. Kelfer will continue
to be nominated as a director of Avatar and will be employed as President and,
subject to his election by the Board of Directors, Vice Chairman of the Board
until February 13, 2002 (unless sooner terminated in accordance with the
agreement). Avatar has agreed to pay Mr. Kelfer a base salary of $450,000 for
the first year of employment, with an annual increase of $20,000 on each
anniversary of the Commencement Date and a $500,000 bonus per annum, payable no
later than 30 days after each applicable anniversary of the Commencement Date.
Avatar also agreed to pay all reasonable relocation expenses of
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Mr. Kelfer and Mr. Kelfer's family (not to exceed $30,000 in the aggregate) and
provide Mr. Kelfer and his family with temporary living quarters near Avatar's
principal office, as well as his and his family's commutation costs (not to
exceed $30,000 in the aggregate). Such relocation expenses and temporary living
and commutation costs aggregated $29,432 and $15,081, respectively.
Mr. Kelfer's employment agreement will terminate automatically upon Mr.
Kelfer's death and may be voluntarily terminated: (i) by Avatar, for "Cause" or
if Mr. Kelfer becomes "Permanently Disabled" and (ii) by Mr. Kelfer, for "Good
Reason" as such terms are defined in the employment agreement. In addition,
Avatar may, at its election, terminate the employment agreement on the second
anniversary of the Commencement Date so long as Avatar gives Mr. Kelfer at least
60 days' prior written notice of such termination (except upon a "Change of
Control," as defined in the employment agreement).
In the event of Mr. Kelfer's death, his estate will receive his accrued but
unpaid base salary and a prorated bonus through the date of termination. In the
event of Mr. Kelfer's Permanent Disability, he will continue to receive his base
salary and a prorated bonus until he is terminated by Avatar upon written
notice. If Mr. Kelfer is terminated by Avatar for Cause, or Mr. Kelfer
terminates his employment for other than Good Reason, he is entitled to receive
his base salary (but not his bonus) through the date of termination. If Mr.
Kelfer is terminated by Avatar other than for Permanent Disability or for Cause,
or Mr. Kelfer terminates his employment for Good Reason, Mr. Kelfer is entitled
to receive his base salary and bonus for the balance of the term of his
employment agreement. Following termination, Mr. Kelfer is required to mitigate
damages during the period of time he is entitled to receive any payments from
Avatar. If Avatar elects to terminate Mr. Kelfer's employment effective the
second anniversary of the Commencement Date, Mr. Kelfer will be entitled to
receive $450,000 over the 12-month period following termination.
Nonqualified Stock Option Agreement with Mr. Kelfer
Pursuant to the Incentive Plan which was approved by Avatar's stockholders
at the 1997 Annual Meeting, on February 13, 1997 Avatar entered into a
Nonqualified Stock Option Agreement with Mr. Kelfer pursuant to which Mr. Kelfer
was granted an option (the "Option") to purchase 225,000 shares of Avatar Common
Stock at $34.00 per share (such price being in the judgment of the Incentive
Plan Committee of the Board not less than 100% of the Fair Market Value as
defined in the Incentive Plan). The Option is not intended to qualify as an
"incentive stock option" under Section 422 of the Code.
The Option became exercisable with respect to 45,000 shares on February 13,
1998 and will become exercisable with respect to 45,000 additional shares on
each February 13 thereafter through 2002, and any unexercised portion of the
Option will expire on February 13, 2007. The Option is generally
non-transferable except that Mr. Kelfer may transfer the Option to his spouse,
certain relatives and certain entities for the benefit of such persons.
Mr. Kelfer may pay the exercise price in cash or by executing a
non-recourse promissory note (bearing interest at the then applicable federal
rate per annum, payable semiannually, secured by shares of common stock being
purchased), so long as the amount of the note does not exceed 66 2/3% (or such
lesser percentage as would be permitted by applicable margin regulations) of the
aggregate exercise price of the Avatar Common Stock then being purchased
pursuant to exercise of the Option. Such note is payable five years from the
exercise date or, if earlier, (i) termination of employment by Avatar for Cause
or by Mr. Kelfer other than for Good Reason or (ii) sale by Mr. Kelfer of
underlying shares.
Upon Mr. Kelfer's death or Permanent Disability, the Option is exercisable
for one year from the date of termination. If Avatar exercises its right to
terminate Mr. Kelfer's employment (other than for Cause) prior to the second
anniversary of his employment, the Option to the extent not already exercised,
will remain exercisable until August 13, 1999, only to the extent that it would
have been exercisable on or prior to February 13, 1999. If Mr. Kelfer's
employment is terminated by Mr. Kelfer
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for Good Reason or terminated by Avatar (other than for Cause) following the
second anniversary of the Commencement Date, the Option remains exercisable in
full. If Mr. Kelfer's employment is terminated by Avatar for Cause or by Mr.
Kelfer for other than Good Reason, the Option, to the extent not theretofore
exercised, will become null and void.
Employment Agreements With Edwin Jacobson
On July 27, 1995, Avatar entered into an employment agreement with Mr.
Jacobson (the "1995 Agreement"), which was approved at the May 23, 1996 Annual
Meeting of Stockholders and became effective on June 16, 1997, following the
termination of the prior employment agreement dated June 15, 1992 (as amended as
of March 1, 1994, the "1992 Agreement"). Pursuant to the 1995 Agreement, Mr.
Jacobson continued his employment as Chairman of the Executive Committee and
President and Chief Executive Officer of Avatar and was entitled to receive a
base salary of not less than $400,000 per annum (in addition to certain other
payments) until the termination of such agreement on June 16, 2000 (unless
sooner terminated in accordance with the agreement).
On February 13, 1997, the 1992 Agreement and the 1995 Agreement were
amended to modify his duties to those of Chief Executive Officer and Chairman of
the Executive Committee. Pursuant to the amendment Mr. Jacobson was provided the
right to change his duties and responsibilities (including resignation as Chief
Executive Officer), in which event, subject to the approval of the Board of
Directors, for the balance of the contract term Mr. Jacobson would continue as
Chairman of the Executive Committee and perform such other duties as may be
reasonably requested by the Board of Directors.
On June 16, 1997, Mr. Jacobson exercised his right under the amended 1995
Agreement to change his duties and responsibilities and to resign as Chief
Executive Officer effective as of July 31, 1997. The amended 1995 Agreement was
further amended to modify Mr. Jacobson's duties to those of Chairman of the
Executive Committee, to reduce his base salary to $325,000 per annum and to
eliminate provisions for final payment and mitigation.
The 1995 Agreement, as amended, will automatically terminate upon Mr.
Jacobson's death; and may be terminated voluntarily: (i) by Avatar, for "Cause"
or if Mr. Jacobson becomes "Permanently Disabled" and (ii) by Mr. Jacobson, for
"Good Reason" (as such terms are defined in the 1995 Agreement. If Mr.
Jacobson's employment is terminated by his death or Permanent Disability, by
Avatar for Cause, or by Mr. Jacobson other than for Good Reason, Mr. Jacobson or
his estate will receive his base salary through the date of termination and any
incentive compensation payable pursuant to the Awards discussed below. If Avatar
terminates Mr. Jacobson's employment other than for Cause, or if Mr. Jacobson
terminates his employment for Good Reason, then Mr. Jacobson will be entitled to
receive his full base salary through June 6, 2000 and any incentive compensation
payable under the Awards.
Pursuant to each of the 1992 Agreement and the 1995 Agreement, Mr. Jacobson
was granted an "Award" (as defined in such agreements) based upon an aggregate
of 150,000 shares and 75,000 shares, respectively, of Avatar Common Stock
(subject to adjustment in certain events). The Awards granted under the 1992
Agreement are now fully vested, and those granted under the 1995 Agreement vest
ratably during the term of such agreement. Such Awards provide for Mr. Jacobson
to receive, within ten days following June 16, 2000 (or the termination date, if
earlier), a cash payment equal to the excess of a formula amount based upon the
closing prices of Avatar Common Stock during a specified period prior to June
16, 2000 (or the termination date, if earlier), over the closing price of Avatar
Common Stock on the date of grant of each Award, multiplied by the number of
shares which will have become vested. If Mr. Jacobson's employment is terminated
under the 1995 Agreement as a result of Mr. Jacobson's death, by Avatar on
account of his Permanent Disability, or by him for Good Reason, 50% of his
remaining unvested shares will vest and any remaining unvested shares will be
forfeited. If Mr. Jacobson's employment is terminated by Avatar for Cause, any
unvested shares will be forfeited.
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Incentive Awards For Dennis Getman and Charles McNairy
On January 18, 1993 and September 9, 1993, respectively, Avatar entered
into incentive compensation agreements with Mr. Getman and Mr. McNairy, whereby
each of Mr. Getman and Mr. McNairy was granted a stock-based long-term incentive
Award (an "Award") based upon an aggregate of 15,000 shares of Avatar Common
Stock (subject to adjustment in certain events), respectively, which vests with
respect to 3,000 shares per year on each of the first five anniversary dates of
each agreement. Such Awards provide for each of Mr. Getman and Mr. McNairy to
receive, within ten days following the respective fifth anniversary date (or the
respective termination date, if earlier) of their agreements, a cash payment
equal to the excess of a formula amount based upon the closing prices of Avatar
Common Stock during a specified period prior to the respective fifth anniversary
date (or the respective termination date, if earlier) over the closing price of
Avatar Common Stock on the respective date of grant of each Award, multiplied by
the number of shares which will have become vested. As of January 18, 1998, the
incentive agreement with Mr. Getman expired without payment thereunder to Mr.
Getman because the formula amount as of the expiration date was less than the
closing price of Avatar Common Stock on the date of grant of the Award.
Notwithstanding any statement incorporating future filings in whole or in
part, including this Proxy Statement, in any of Avatar's previous filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, the following report and the Performance Graph below shall not be
incorporated by reference into any such filing.
Executive Committee and Incentive Plan Committee Report on Executive
Compensation
The Executive Committee of Avatar's Board of Directors traditionally
performs the functions of a compensation committee, including the review and
approval of compensation and terms of employment for all officers and those
employees of Avatar and its subsidiaries whose base salaries exceed $100,000 per
annum. The compensation arrangements regarding any executive officer who is also
a member of the Executive Committee have been acted on and approved by the Board
of Directors (with such member not participating) or a committee thereof
composed of outside directors.
Avatar's executive compensation is intended to reward, retain and motivate
management. In determining salary levels for the executive officers, primary
consideration is given to each executive's level of responsibility and
individual performance, as well as compensation generally received by executives
in the real estate business.
In 1997 Avatar established the 1997 Incentive and Capital Accumulation Plan
(the "Incentive Plan"). The Incentive Plan is administered by an Incentive Plan
Committee of the Board of Directors, which was created at the same time, and
among other things, establishes the terms and restrictions deemed appropriate
for awards under the Incentive Plan as circumstances warrant. In addition, in
1997 the Incentive Plan Committee approved certain employment arrangements by
authorization of the Board of Directors, as described below.
The Incentive Plan is intended to provide incentives which will attract and
retain highly competent persons as key employees of Avatar and its subsidiaries,
by providing them with opportunities to acquire shares of stock or to receive
monetary payments based on the value of such shares pursuant to the Benefits
described therein. The Incentive Plan also is intended to assist in aligning the
interest of Avatar's key employees with those of its stockholders. The Incentive
Plan provides for a variety of awards that can be flexibly administered to carry
out the purposes of the Incentive Plan and permit Avatar to modify incentives in
light of changing developments in management compensation.
In February and June 1997, the Incentive Plan Committee (acting by
authorization of the Board of Directors) and the Executive Committee,
respectively, approved certain amendments to Avatar's Employment Agreements with
Edwin Jacobson to enable him to devote time to other matters while
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continuing to perform his duties as Chairman of the Executive Committee. These
amendments also reduce Mr. Jacobson's base salary and eliminate the final
payment and mitigation provisions under his Employment Agreements. See
"Employment and Other Agreements -- Employment Agreements with Edwin Jacobson."
In February 1997, the Incentive Plan Committee authorized, and the Board of
Directors ratified, the employment of Gerald D. Kelfer as President of Avatar.
Mr. Kelfer became Chief Executive Officer of Avatar upon Mr. Jacobson's
resignation from that office in July 1997 and was authorized to develop and
implement a new business strategy, building on what had been achieved by prior
and existing management. The Incentive Plan Committee, under authorization of
the Board of Directors, approved Mr. Kelfer's Employment Agreement which
provides for a base salary, annual incentive and long-term compensation. Avatar
also entered into a Nonqualified Stock Option Agreement with Mr. Kelfer pursuant
to which the Incentive Plan Committee granted him options under the Incentive
Plan. See "Employment and Other Arrangements -- Employment Agreement with Gerald
Kelfer" and "Nonqualified Stock Option Agreement with Mr. Kelfer."
March 19, 1998 EXECUTIVE COMMITTEE INCENTIVE PLAN COMMITTEE
Edwin Jacobson, Chairman Leon T. Kendall, Chairman
Gerald D. Kelfer Milton Dresner
Leon Levy Kenneth T. Rosen
Fred Stanton Smith
Compensation Committee Interlocks and Insider Participation
The members of the Executive Committee are Messrs. Jacobson, Kelfer, Levy
and Smith. Mr. Jacobson serves as Chairman of the Executive Committee; Mr. Levy
serves as Chairman of the Board of Directors; and Mr. Kelfer serves as Vice
Chairman of the Board of Directors, Chief Executive Officer and President. The
members of the Incentive Plan Committee are Messrs. Dresner, Kendall and Rosen.
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Performance Graph
The following graph provides a comparison of the cumulative total returns
based on an investment of $100 after the close of the market on December 31,
1992 in Avatar's Common Stock, the NASDAQ Market Index and a composite peer
group index (the "Peer Index") for the periods indicated, in each case assuming
reinvestment of any dividends. The cumulative total returns for the NASDAQ
Market Index were prepared by Media General Financial Services, Inc. ("Media
General"). The Peer Index is a combination of the Real Estate Subdividers and
Developers Index and the Water Utilities Index, each of which is published by
Media General. The cumulative total returns for each index were prepared by
Media General and were combined by Avatar to form the Peer Index based on the
relative percentage of Avatar's assets applicable to each of Avatar's lines of
business (i.e., real estate and water utilities) at the end of each year
depicted in the graph.
Measurement Period Avatar Holdings
(Fiscal Year Covered) Inc. NASDAQ Peer Index
1992 100.00 100.00 100.00
1993 96.76 119.95 116.93
1994 109.35 125.94 111.82
1995 100.72 163.35 132.67
1996 92.09 202.99 157.38
1997 81.83 248.30 214.00
Certain Relationships and Related Transactions
On January 28, 1998, Leon Levy, Avatar's Chairman of the Board, purchased
$20,000,000 aggregate principal amount of Avatar's 7% Notes in an underwritten
public offering of the 7% Notes. In connection with his purchase, Avatar agreed
to provide Mr. Levy with certain registration rights, with respect to the 7%
Notes issued to Mr. Levy, any shares of Common Stock issued upon conversion of
such 7% Notes and certain shares of Common Stock owned by him.
2. APPROVAL OF RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved, subject to approval by the
stockholders at the Annual Meeting, a Restated Certificate of Incorporation (the
"Restated Certificate") that includes, among other things, a modification of the
existing indemnification obligations of Avatar. If adopted, the amended
indemnification provisions contained in the Restated Certificate will replace,
for directors, officers, employees and agents, the indemnification provisions
currently contained in Article Sixth of Avatar's Certificate of Incorporation,
as amended ("Current Article Sixth"). The Restated Certificate is intended to
clarify Avatar's obligation to indemnify directors, officers and
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employees to the fullest extent permitted under applicable law and to allow
Avatar greater flexibility regarding indemnification of agents by eliminating
mandatory indemnification as to persons serving in such capacity. In addition,
subject to stockholder approval of the Restated Certificate, the Board of
Directors intends to amend and restate Avatar's By-Laws to include text that is
substantially similar to the indemnification provisions of the Restated
Certificate and, within the limits imposed by the Delaware General Corporation
Law (the "DGCL"), to expand and clarify the application of the indemnification
provisions. If approved by the stockholders at the Annual Meeting, the Restated
Certificate will become effective upon its filing with the Secretary of State of
the State of Delaware.
Since 1980, when Current Article Sixth was originally adopted in connection
with the reorganization of Avatar, Delaware corporate law relating to
indemnification of directors, officers, employees and agents has undergone
numerous changes. In order to maintain and, in certain instances, expand the
full, mandatory indemnification of directors, officers and employees of Avatar
and its majority-owned subsidiaries ("Subsidiaries"), the Restated Certificate
(i) provides that the indemnification extended to directors, officers and
employees of Avatar and its Subsidiaries shall be to the fullest extent
permitted under the DGCL or any other applicable law AS CURRENTLY OR HEREAFTER
IN EFFECT, thereby avoiding the necessity of a stockholder vote each time the
indemnification provisions of the DGCL or any other applicable law are amended,
(ii) explicitly requires advancement of litigation expenses and costs, and (iii)
eliminates the requirement, contained in Current Article Sixth, that the Board
of Directors or the stockholders of Avatar make a determination that applicable
statutory standards of conduct have been met prior to any grant of
indemnification.
The Board of Directors believes that the modification to the
indemnification provisions is advisable because, by adopting a flexible approach
to indemnification of agents and maintaining mandatory indemnification of
directors, officers and employees, it will enhance the ability of the Board of
Directors to continue to attract and retain qualified directors, officers and
employees and to encourage persons to serve as agents of Avatar and its
Subsidiaries. In addition, relocation of Avatar's indemnification provisions
relating to agents from the Certificate of Incorporation to the By-Laws, as well
as the inclusion in the By-Laws of the more detailed provisions regarding terms
and conditions of indemnification generally, will enable the Board of Directors
to amend these provisions, subject to the requirements of applicable law and
Avatar's Certificate of Incorporation, without approval of the stockholders.
There is not presently pending or, to Avatar's knowledge, threatened any
litigation or proceeding involving a director, officer, employee or agent of
Avatar in which indemnification would be required or permitted by the Restated
Certificate. In addition to any indemnity provided by Avatar's Certificate of
Incorporation and By-Laws, Avatar maintains liability insurance which, subject
to certain exceptions and limitations, insures directors and officers against
any claim or claims made against them for any actual or alleged error,
misstatement or misleading statement, act or omission, neglect or breach of duty
while acting in their capacities as such directors and officers.
Each member of the Board of Directors may have a personal interest in the
adoption of the amendments to the indemnification provisions of the Restated
Certificate. The Board believes that approval of the Restated Certificate is in
the best interests of Avatar and its stockholders.
In addition to the amendment to the indemnification provisions, the
Restated Certificate, if adopted, would amend the Certificate of Incorporation
in certain other respects. Specifically, Articles Second, Seventh, Ninth and
Eleventh would be amended to correct the name and address of Avatar's registered
agent, to conform certain provisions to the requirements of Section 102(b)(2) of
the DGCL (which requires that the provisions be stated verbatim as set forth in
such section), to update a reference to the Securities Exchange Act of 1934, as
amended, and to clarify without any substantive change, the language regarding
elimination and limitation of director liability pursuant to Section 102(b)(7)
of the DGCL.
The foregoing summary of the proposed changes to Avatar's Certificate of
Incorporation is not intended to be complete and is qualified in its entirety by
reference to the copy of the Restated
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Certificate that is annexed to this Proxy Statement as Annex A and has been
marked to indicate changes to the Certificate of Incorporation as currently in
effect. The locations of proposed deletions are indicated by carats "(symbol)"
and proposed additions are indicated as underlined.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ACCOMPANYING PROXY BE VOTED FOR
SUCH APPROVAL AND IT IS INTENDED THAT THE PROXIES WILL BE VOTED IN SUCH MANNER
UNLESS OTHERWISE DIRECTED.
3. APPOINTMENT OF AUDITORS
Ernst & Young LLP, independent accountants, audited the financial
statements of Avatar for the fiscal year ended December 31, 1997. Such audit
services consisted of the firm's examination of and report on the annual
financial statements and assistance and consultation in connection with filings
with the Securities and Exchange Commission and other matters.
Representatives of Ernst & Young LLP are expected to attend the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
Based upon the recommendation of the Audit Committee, and subject to
approval by the stockholders, the Board of Directors has appointed Ernst & Young
LLP, independent accountants, as auditors of Avatar for the fiscal year ending
December 31, 1998. Approval by the stockholders will require the affirmative
vote of a majority of the votes present at the meeting in person or by proxy and
entitled to be cast. The Board of Directors recommends that the accompanying
proxy be voted FOR such approval and it is intended that the proxies will be
voted in such manner unless otherwise directed.
1999 STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting in
1999 must be received by the office of the Secretary, Avatar Holdings Inc., P.O.
Box 523000, Miami, Florida 33152, no later than December 30, 1998.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Avatar's
officers and directors, and any persons who own more than ten percent of
Avatar's Common Stock to file reports of initial ownership of Avatar's Common
Stock and subsequent changes in that ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent beneficial owners
are also required to furnish Avatar with copies of all Section 16(a) forms they
file. Based solely upon a review of the copies of the forms furnished to Avatar,
or written representations from certain reporting persons that no Forms 5 were
required, Avatar believes that during the 1997 fiscal year all Section 16(a)
filing requirements were complied with.
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ADDITIONAL INFORMATION
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the accompanying material will be paid by Avatar. In
addition to the solicitation of proxies by mail, Avatar will request brokers and
securities dealers to obtain proxies from and send proxy material to their
principals. Expenses incurred in this connection will be reimbursed by Avatar.
Proxies may be solicited personally, by telephone or telegraph, by the directors
and officers of Avatar without additional compensation. The Board of Directors
knows of no business to come before the meeting other than as stated in the
Notice of Annual Meeting of Stockholders. Should any business other than that
set forth in such Notice properly come before the meeting, or any adjournment or
adjournments thereof, it is the intention of the persons named in the
accompanying proxy to vote such proxy in accordance with their judgment on such
matters.
By Order of the Board of Directors,
Juanita I. Kerrigan
Vice President and Secretary
Dated: April 28, 1998.
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Annex A
RESTATED
CERTIFICATE OF INCORPORATION
OF
AVATAR HOLDINGS INC.
------------------------
AVATAR HOLDINGS INC., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Avatar Holdings Inc. (the "Corporation").
The original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on October 6, 1970 under the name
"GAC Corporation" and was amended and restated by a Restated Certificate filed
with the Secretary of State on December 20, 1973 and further amended by
Certificates of Amendment filed with the Secretary of State on October 1, 1980,
June 7, 1982 and February 19, 1987.
2. This Restated Certificate of Incorporation, which restates and further
amends the provisions of the Certificate of Incorporation, was duly adopted by
the Board of Directors and the holders of a majority of the shares of stock
entitled to vote in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
3. The text of the Certificate of Incorporation, as heretofore amended or
supplemented and as currently in effect, is hereby restated and further amended
to read in its entirety as follows:
FIRST: The name of the Corporation is AVATAR HOLDINGS INC.
SECOND: The registered office of the Corporation is located at 1013 Centre
Road, in the City of Wilmington, in the County of New Castle, in the State of
Delaware. The name of its registered agent at that address is Corporation
Service Company.
THIRD: The Corporation is organized for the purpose of engaging in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The Corporation shall be authorized to issue two classes of stock
to be designated, respectively, Common Stock and Preferred Stock; the total
number of shares of all classes of stock which the Corporation shall have
authority to issue shall be twenty million five hundred thousand (20,500,000),
of which the total number of authorized shares of Common Stock shall be fifteen
million five hundred thousand (15,500,000) and the total number of shares of
Preferred Stock shall be five million (5,000,000); and the par value of each
share of Common Stock shall be one dollar ($1.00) and the par value of each
share of Preferred Stock shall be ten cents ($.10). A statement of the voting
powers and of the designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of each class of stock is as follows:
Section 1. Common Stock
(a) All shares of Common Stock shall be identical with each other in
every respect. The Common Stock may be issued from time to time as the
Board of Directors shall determine and on such terms and conditions and for
such consideration as shall be fixed by the Board of Directors.
(b) The Common Stock is subject to all the powers, rights, privileges,
preferences and priorities of the Preferred Stock as are stated and
expressed herein and as shall be stated and
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expressed in any resolution or resolutions adopted by the Board of
Directors pursuant to authority expressly granted to and vested in it by
the provisions of Section 2 of this Article Fourth.
(c) Except as otherwise provided in Section 3(b) of this Article
Fourth in connection with the election of directors, each holder of Common
Stock shall have one vote in respect of each share of Common Stock held by
him of record on all matters voted upon by holders of Common Stock.
Section 2. Preferred Stock
The Board of Directors is expressly vested with authority to issue the
Preferred Stock from time to time in one or more series, of such rank, with such
distinctive serial designations, and on such terms and conditions and for such
consideration, as may be stated or expressed in the resolution or resolutions
providing for the issue of such stock, and in such resolution or resolutions
providing for the issue of shares of each particular series the Board of
Directors is also expressly vested with authority to fix:
(i) the number of shares to constitute such series, provided that,
unless otherwise stated in any such resolution or resolutions, such
number of shares which are not outstanding may be increased or decreased
by the Board of Directors;
(ii) the rate and times at which, and the conditions under which,
dividends shall be payable on shares of such series, and the status of
such dividends as cumulative or noncumulative and as participating or
nonparticipating and whether such dividends shall be payable in
preference to, or the terms under which such dividends shall be payable
in relation to, the dividends payable on any other class or classes or
any other series of stock;
(iii) with respect to any series of Preferred Stock which is to be
redeemable, whether shares of such series shall be redeemable at the
option of the holder thereof or the Corporation or upon the happening of
a specified event, and the cash, property or rights, including
securities of any other corporation for which, the price or prices or
rate or rates, including any adjustments, at which, and the time or
times and/or terms and conditions, if any, at or upon which, shares of
such series shall be redeemable;
(iv) with respect to any series of Preferred Stock which is to be
convertible or exchangeable, whether shares of such series shall be
convertible or exchangeable at the option of the holder thereof or the
Corporation or upon the happening of a specified event, the other class
or classes of stock or other series of Preferred Stock for which, the
price or prices or rate or rates of exchange, including any adjustments,
at which, and the time or times and/or terms and conditions, if any, at
or upon which, shares of such series shall be convertible or
exchangeable;
(v) the terms of the sinking fund or redemption or purchase
account, if any, to be provided for shares of such series including the
extent to and manner in which such sinking fund or redemption or
purchase account shall be applied to the purchase or redemption of such
series for retirement or for other corporate purposes;
(vi) the rights of the holders of shares of such series upon the
liquidation, dissolution or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation;
(vii) the limitations, if any, applicable, while such series is
outstanding, on the payment of dividends or making of distributions on,
or the acquisition of, or the use of monies for the purpose or
redemption of, the Common Stock or any class of stock ranking, as to
dividends or upon liquidation, on a parity with or junior to the shares
of such series;
(viii) the full or limited voting rights, if any, to be provided
for shares of such series including, without limitation, whether or not
the holders of any such series having voting
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rights shall have the right to cumulate votes for the election of
directors as provided in Section 3(b) of this Article Fourth; and
(ix) any other preferences and relative, participating, optional or
other such special rights, and the qualifications, limitations or
restrictions thereon, of shares of such series;
so far as not inconsistent with the provisions of the Certificate of
Incorporation, as amended to the date of such resolution or resolutions, and to
the full extent now or hereafter permitted by the laws of the State of Delaware.
All shares of Preferred Stock shall be identical and of equal rank except in
respect to the particulars that may be fixed by the Board of Directors as
provided above; PROVIDED, HOWEVER, that all shares of each series shall be
identical and of equal rank except as to the time from which cumulative
dividends, if any, thereon shall cumulate.
The Board of Directors is also expressly vested with authority to amend any
of the provisions of any resolution or resolutions providing for the issue of
any series of Preferred Stock, subject to any class voting rights of the holders
of any series of Preferred Stock contained in the resolution or resolutions
providing for the issue of such series and subject to the requirements of the
laws of the State of Delaware.
Shares of Preferred Stock which have been issued and reacquired in any
manner by the Corporation (excluding, until the Corporation elects to retire
them, shares which are held as treasury shares but including shares redeemed,
shares purchased and retired, whether through the operation of a retirement or
sinking fund or otherwise, and shares which, if convertible or exchangeable,
have been converted into or exchanged for shares of stock of any other class or
classes or series) shall, upon compliance with any applicable provisions of the
laws of the State of Delaware, have the status of authorized and unissued shares
of Preferred Stock and may be reissued as a part of the series of which they
were originally a part (if the terms of such series do not prohibit such
reissue) or as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock the terms of which do not prohibit such reissue.
Section 3. General
(a) No dividend shall be declared or paid on any capital stock of the
Corporation which shall impair the capital of the Corporation nor shall any
distribution of assets be made to any stockholder unless the value of the
assets of the Corporation remaining after such payment or distribution is
at least equal to the aggregate of its debts, liabilities and capital. A
director shall be fully protected in relying in good faith upon the books
of account of the Corporation or statements prepared by any of its officers
or by independent public accountants as to the value and amount of the
assets, liabilities, net profits, capital stock and surplus of the
Corporation, or any other facts pertinent to the existence and amount of
surplus or other funds from which dividends might properly be declared and
paid.
(b) At each election of members of the Board of Directors, each holder
of shares of Common Stock entitled to vote thereat, and each holder of
shares of any series of Preferred Stock entitled to vote thereat for which
the Board of Directors has expressly granted the right to cumulate votes
for the election of directors pursuant to Section 2 of this Article Fourth,
shall have the right to vote the number of shares of such class or series
of stock owned by him for as many persons as there are directors to be
elected at such election by holders of such class or series of stock, or to
cumulate such votes and give one candidate as many votes as the number of
directors to be elected at such election by holders of such class or series
of stock multiplied by the number of shares of such class or series of
stock owned by such stockholder, or to distribute such votes on the same
principle among as many candidates as such stockholder shall think best.
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24
(c) No holder of any shares of capital stock of the Corporation of any
class now or hereafter authorized shall be entitled as a matter of right to
purchase, subscribe for or otherwise acquire any shares of capital stock of
the Corporation of any class now or hereafter authorized or any securities
convertible into or exchangeable for any such share, or any warrants or
other instruments (or securities carrying such warrants or other
instruments) evidencing rights or options to subscribe for, purchase or
otherwise acquire any such shares, whether such shares, securities,
warrants or other instruments be unissued or issued and thereafter acquired
by the Corporation; PROVIDED, HOWEVER, that nothing herein shall preclude
or limit the Board of Directors from granting any such rights in connection
with the issuance of shares of any class or series of capital stock of the
Corporation.
(d) The number of authorized shares of any class or classes of stock
may be increased or decreased by the affirmative vote of the holders of a
majority of the shares of stock of the Corporation entitled to vote,
without any requirement that such increase or decrease be approved by a
class vote on the part of any such class or classes or on the part of any
other class of stock of the Corporation, except as otherwise may be
provided in the resolution or resolutions fixing the voting rights of any
series of Preferred Stock pursuant to Section 2 of this Article Fourth.
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation and for further
definition, limitation and regulation of the powers of the Corporation and of
its Directors and stockholders:
Section 1. The number of Directors of the Corporation shall be such as
from time to time shall be fixed by, or in the manner provided in, the
By-Laws. Election of Directors shall be by ballot unless the By-Laws
provide otherwise.
Section 2. The Board of Directors shall have power without the assent or
vote of the stockholders to make, alter, amend, change, add to or repeal
the By-Laws of the Corporation.
Section 3. The Directors in their discretion may submit any contract or
act for approval or ratification at any annual meeting of the stockholders
or at any meeting of the stockholders called for the purpose of considering
any such act or contract, and any contract or act that shall be approved or
be ratified by a majority of the votes (except as otherwise prohibited by
law or prohibited pursuant to any Plan or Agreement) of the voting stock of
the Corporation which is represented in person or by proxy at such meeting
and entitled to vote thereat (provided that a lawful quorum of stockholders
be there represented in person or by proxy) shall be as valid and as
binding upon the Corporation and upon all the stockholders as though it had
been approved or ratified by every stockholder of the Corporation, whether
or not the contract or act would otherwise be open to legal attack because
of Directors' interest, or for any other reason.
SIXTH: Each person who was or is made a party or is threatened to be made a
party to or is involved in any manner in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
or a person of whom he or she is the legal representative is or was a director,
officer or employee of the Corporation or a majority-owned subsidiary of the
Corporation, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer or employee, shall be indemnified and held
harmless by the Corporation in accordance with and to the fullest extent
permitted from time to time by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended (the "DGCL") (but, if
permitted by applicable law, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) or any other applicable laws as presently or hereafter in
effect, and such indemnification shall continue as to a person who has ceased to
be a director, officer or employee and shall inure to the benefit of his or her
heirs, executors and administrators; PROVIDED, HOWEVER, that the Corporation
shall indemnify any
4
25
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors or is a proceeding to enforce such person's
claim to indemnification pursuant to the rights granted by this Article Sixth.
The Corporation shall pay the expenses (including legal fees) incurred by such
person in defending any such proceeding in advance of its final disposition;
provided, however, that an advancement of expenses incurred by such person in
his or her capacity as a director, officer or employee shall be made only upon
receipt (unless the Board of Directors waives such requirement to the extent
permitted by applicable law) of an undertaking, by or on behalf of such person,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
person is not entitled to be indemnified by the Corporation as authorized in
this Article Sixth or otherwise, and provided further, that, in the case of a
director or officer, such an undertaking shall be required only if and to the
extent required by the DGCL.
The rights to indemnification and advancement of expenses provided by, or
granted pursuant to, this Article Sixth shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of this Certificate of Incorporation, provision of the By-laws,
agreement, vote of stockholders or disinterested Directors or otherwise. No
repeal, modification or amendment of, or adoption of any provision inconsistent
with, this Article Sixth, nor, to the fullest extent permitted by applicable
law, any modification of law, shall adversely affect any right or protection of
any person granted pursuant hereto with respect to any events that occurred
prior to the time of such repeal, amendment, adoption or modification.
SEVENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware, may, in the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders of the
Corporation, as the case may be, and also on the Corporation.
EIGHTH: The Corporation shall mail periodic reports to security holders, no
less than once each year, and shall include profit and loss statements and
balance sheets prepared in accordance with generally accepted accounting
principles.
NINTH: Section 1. The Corporation shall not merge or consolidate with any
individual, firm, corporation or partnership in which any controlling
stockholder has a direct or indirect interest of 50% or more of the Common Stock
of the company unless, the holders of at least the majority of the outstanding
stock of the Corporation, exclusive of those shares held by such Controlling
Stockholders (as hereinafter defined) approve the merger or consolidation.
Section 2. For the purposes of this Article Ninth, (i) "Controlling
Stockholder" shall mean any individual, firm, corporation or other entity which,
as of the record date for the determination of stockholders entitled to notice
of and to vote on any of the transactions described in Section 1 of this Article
Ninth, or immediately prior to the consummation of any such transaction, is the
beneficial owner of 50% or more of the outstanding voting shares; (ii) an
individual, firm, corporation or other
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26
entity shall be the beneficial owner of any voting stock (A) which it has the
right to acquire pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise, or (B) which are beneficially owned,
directly or indirectly, by it or any of its "affiliates" or "associates" (as
those terms are defined in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended, or any successor federal rule
or statute, all as the same shall be in effect from time to time), or by any
other individual, firm, corporation or other entity with which it or any
"affiliate" or "associate" (as defined above) of it has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of the Corporation. Voting stock which may be issuable
by the Corporation pursuant to any agreement, or upon exercise of conversion
rights, warrants or options, or otherwise, shall not be considered outstanding
voting stock.
TENTH: The Corporation reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders, Directors, and other persons herein are granted subject to this
reservation.
ELEVENTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (A) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (B) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (C) under Section 174 of the Delaware General Corporation Law
or (D) for any transaction from which the director derives an improper personal
benefit. If the Delaware General Corporation Law is amended after approval by
the stockholders of this Article Eleventh to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law as so amended. Neither
the amendment nor repeal of this Article Eleventh, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this Article
Eleventh shall eliminate or reduce the effect of this Article Eleventh in
respect of any matter occurring, or any cause of action, suit or claim that, but
for this Article Eleventh would accrue or arise, prior to such amendment, repeal
or adoption of an inconsistent provision.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by Gerald D. Kelfer, its President and Vice Chairman
of the Board, and attested by Juanita I. Kerrigan, its Vice President and
Secretary, this day of , 1998.
By:
----------------------------------
Gerald D. Kelfer
President and Vice Chairman of the
Board
Attest:
- ------------------------------------
Juanita I. Kerrigan
Vice President and Secretary
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Notice of 1998
Annual Meeting
and Proxy
Statement
- --------------------------------------------------------------------------------
AVATAR
HOLDINGS INC.
28
ANNEX B
PROXY
AVATAR HOLDINGS INC.
255 ALHAMBRA CIRCLE
CORAL GABLES, FLORIDA 33134
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gerald D. Kelfer and Juanita I. Kerrigan
as Proxies, each with the power to appoint his or her substitute; and hereby
authorizes them to represent and vote, as designated on the reverse side, all
the shares of Common Stock of Avatar Holdings Inc. held of record by the
undersigned at the close of business on March 31, 1998 at the Annual Meeting
of Stockholders to be held on May 28, 1998, or any adjournment or adjournments
thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please mark
your votes /X/
as indicated
in this example
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3.
FOR all nominees listed at left (except WITHHOLD AUTHORITY
as marked to the contrary below). to vote for all nominees listed.
Item 1 - ELECTION OF TEN DIRECTORS
Nominees: L. Levy, M. Dresner, E. Jacobson,
G.D. Kelfer, L.T. Kendall, M. Meyerson, G.H. Reiners / / / /
K.T. Rosen, F.S. Smith, H.K. Stanford.
(INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name in the space provided below.)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2 - APPROVAL OF THE
PROPOSAL TO AMEND AND
RESTATE THE CERTIFICATE / / / / / /
OF INCORPORATION OF
AVATAR HOLDINGS INC.
Item 3 - APPROVAL OF THE
APPOINTMENT OF
ERNST & YOUNG LLP,
INDEPENDENT / / / / / /
ACCOUNTANTS,
AS AUDITORS OF
AVATAR HOLDINGS INC.
FOR 1998.
Item 4 - In their discretion the Proxies are authorized to vote upon such other business as may properly come
before the meeting.
Date: , 1998
----------------------------------------------------------------
- ----------------------------------------------------------------------------
(Signature)
- ----------------------------------------------------------------------------
(Signature if held jointly)
Please sign exactly as name appears. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.