CAPITAL PROPERTIES, INC.
100 Dexter Road
East Providence, Rhode Island 02914
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 28, 1998
PLEASE TAKE NOTICE that the 1998 annual meeting of shareholders
of Capital Properties, Inc. (the "Company") will be held at the
offices of Hinckley, Allen and Snyder, 1500 Fleet Center in
Providence, Rhode Island, on Tuesday, April 28, 1998 at 2:00
o'clock P.M., local time, for the following purposes:
(1) To elect five directors to serve for a term of one
year until their successors are elected and
qualified;
(2) To approve the appointment of Lefkowitz,
Garfinkel, Champi & DeRienzo P.C. as independent
auditors of the accounts of the Company for 1998;
and
(3) To transact such other business, if any, as may
properly come before the meeting or any adjournment
or adjournments thereof.
Holders of record of the common stock on the books of the Company
as of the close of business on March 2, 1998 will be entitled to
vote.
By Order of the Board of Directors
EDWIN G. TORRANCE
Secretary
CAPITAL PROPERTIES, INC.
East Providence, Rhode Island
March 26, 1998
Kindly fill in, date and sign the enclosed proxy and promptly
return it in the enclosed addressed envelope, which requires no
postage if mailed in the United States. If you are personally
present at the meeting, the proxy will not be used without your
consent.
<PAGE>
CAPITAL PROPERTIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 28, 1998
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of
Capital Properties, Inc. (the "Company"), in connection with the
annual meeting of shareholders to be held April 28, 1998, and the
Company will bear the cost of such solicitation. It is expected
that the solicitation of proxies will be primarily by mail.
Proxies may also be solicited personally by regular employees of
the Company at nominal cost. The Company may reimburse brokerage
houses and other custodians, nominees and fiduciaries holding
stock for others in their names, or in those of their nominees,
for their reasonable out-of-pocket expenses in sending proxy
materials to their principals or beneficial owners and obtaining
their proxies. Any shareholder giving a proxy has the power to
revoke it at any time prior to its exercise, but the revocation
of a proxy will not be effective until notice thereof has been
given to the Secretary of the Company. Notice of revocation may
be delivered in writing to the Secretary prior to the meeting or
may be transmitted orally to the Secretary at the meeting. Every
properly signed proxy will be voted in accordance with the
specifications made thereon.
This proxy statement and the accompanying proxy are expected to
be first sent to shareholders on March 26, 1998.
VOTING AT MEETING
Only shareholders of record at the close of business on March 2,
1998, will be entitled to vote at the meeting. Under the
Company's articles of incorporation, each shareholder has one
vote for every share owned. On the record date, there were
3,000,000 shares of common stock of the Company outstanding.
There were no other outstanding securities of the Company
entitled to vote.
The directors will be elected in each case by vote of the holders
of a majority of the shares present or represented at the
meeting.
Shares represented by proxies which are marked "withhold
authority" with respect to the election of any particular nominee
for director, "abstain" with respect to the approval of
independent auditors, or to deny discretionary authority on any
other matters will be counted as shares present and entitled to
vote, and accordingly any such marking of a proxy will have the
same effect as a vote against the proposal to which it relates.
Brokers who hold shares in street name may lack authority to vote
such shares on certain items, absent specific instructions from
their customers. Shares subject to such "broker non-votes" will
not be treated as shares entitled to vote on the matters to which
they relate and therefore will be treated as not present at the
meeting for those purposes, but otherwise will have no effect on
the outcome of the voting on such matters. It is not presently
anticipated that any matter which might be the subject of a
"broker non-vote" will come before the annual meeting.
ELECTION OF DIRECTORS
At the annual meeting, five directors are to be elected to hold
office until the next annual meeting and until their respective
successors are elected and qualified. The proxies named in the
accompanying proxy, who have been designated by the Board of
Directors, intend to vote, unless otherwise instructed, for the
election to the Board of Directors of the persons named below,
all of whom are now directors of the Company. Certain
information concerning such nominees is set forth below:
<TABLE>
<C> <S> <S>
Principal Occupation Director
Name and Age During Past Five Years Since
Robert H. Eder (65) Chairman of the Company, 1995
June 30, 1995 to present;
Chairman, Providence and
Worcester Railroad Company,
1983 to present
Ronald P. Vice President of the Company, 1998
Chrzanowski (55) November 12, 1997 to December
31, 1997; President of the
Company, January 1, 1998 to
present; Vice President of
Providence and Worcester
Railroad Company, 1983-1997.
James H. Dodge (57) Chairman, Chief Executive 1997
Officer and President,
Providence Energy Corporation
Harold J. Harris (69) President, Wm. H. Harris, 1995
Inc. (Retailer)
Henry S. Consultant, 1994 to present; 1990
Woodbridge, Jr.(69) Retired, 1993-l994;
President, Rhode Island Anti-
Drug Coalition, 1991-1993
</TABLE>
Mr. Eder is also a director of Providence and Worcester Railroad
Company. Mr. Dodge is also a director of Providence Energy
Corporation. Mr. Harris is also a director of The Fairchild
Corporation.
The Board of Directors has an Audit Committee and a Compensation
Committee both currently comprised of James H. Dodge, Harold J.
Harris and Henry S. Woodbridge, Jr. The Audit Committee is
responsible for overseeing the establishment and maintenance of
an effective financial control environment for the Company, for
overseeing procedures for evaluating the system of internal
accounting control and for evaluating audit performance. The
Compensation Committee is responsible for recommending to the
full Board of Directors appropriate compensation levels for all
officers of the Company. The Board does not have a nominating
committee or a committee performing a similar function.
The Board of Directors held six meetings during the fiscal year
ended December 31, 1997 and the Audit Committee and Compensation
Committee each held one meeting during the fiscal year ended
December 31, 1997.
Directors, other than directors who are employed by the Company,
received a fee of $750 for attendance at each meeting of the
Board of Directors, together with related transportation and
living expenses. Each member of the Audit and Compensation
Committee received $250 for each attended meeting of that
committee.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued
by the Company during the three-year period ended December 31,
1997, to each of its executive officers who earned more than
$100,000 in salary and bonus in 1997, for services rendered in
all capacities to the Company during 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<C> <S> <S> <S>
All Other
Name and Principal Compensation
Position Year Salary($) $ (1)
Robert H. Eder, 1997 $155,000 $ --
Chairman
Barbara J. Dreyer, 1997 150,000 11,250
President and 1996 150,000 11,250
Treasurer 1995 128,400 9,630
</TABLE>
(1) Amounts paid directly to the retirement accounts of employees
under the Company's simplified employee pension plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
On March 2, 1998, to the best of the Company's knowledge, no
person (including any "group", as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) was the
beneficial owner of more than five per cent of the Company's
outstanding common stock, $1.00 par value, except as follows:
<TABLE>
<C> <S> <S>
Number of Percent
Name and Address shares held of Class
Robert H. Eder and Linda Eder 1,569,738(1) 52.3%
2441 S.E. Bahia Way
Stuart, Florida 34996
Lance S. Gad 164,280 5.5%
250 Fence Row Drive
Fairfield, Connecticut 06430
</TABLE>
(1) Robert H. Eder and Linda Eder are husband and wife, and each
holds 784,869 shares directly.
The following table reflects as of March 2, 1998, the beneficial
ownership of shares of common stock of the Company by directors,
nominees for director and officers of the Company, all shares
being owned directly except as otherwise noted:
<TABLE>
<C> <S>
Name of Individual or Shares Percent
Identification of Group Owned of Class
Ronald P. Chrzanowski.............. 1,560 *
James H. Dodge..................... 300 *
Barbara J. Dreyer.................. 5,200 *
Robert H. Eder (1)................. 1,569,738 52.3%
Harold J. Harris................... 7,500 *
Henry S. Woodbridge, Jr............ 4,500 *
All directors and officers
as a group (7).................. 1,589,098 53.0%
</TABLE>
(1) Includes 784,869 shares held by his wife, Linda Eder.
*Less than 1%
CERTAIN TRANSACTIONS
In 1988, in accordance with a plan of distribution, the Company
transferred the ownership of Providence and Worcester Railroad
Company (Railroad) to the Company's shareholders. The Company
and Railroad have a common controlling shareholder. As part of
the plan, the Company received a promissory note in the amount of
$9,377,000 payable over a period of twenty years with interest at
12% per year, prepayable at any time without penalty.
Prepayments reduced the required monthly payments without
changing the term of the note.
During 1995, Railroad informed the Company that it had secured a
commitment from a bank which would enable it to borrow funds in
an amount sufficient to prepay the entire balance of its note at
an interest rate below 10%. The Company and Railroad negotiated
an agreement reducing the interest rate to 10% upon Railroad's
prepayment of $1,800,000 on its note, the proceeds of which were
used by the Company to prepay in full its note payable to a bank
in the amount of $1,755,000.
The agreement further provided that the first $200,000 of any
future prepayments would reduce the required monthly payments
over the remaining term of the note. Thereafter, 50% of any
additional prepayments will reduce the required monthly payments,
and the balance will be applied to reduce the note in inverse
order of maturity of the remaining principal payments. During
1996, Railroad made a voluntary prepayment of $200,000, which
prepayment (together with the interest rate adjustment) results
in a current monthly payment of principal and interest over the
remaining eleven-year term in the amount of $53,000.
During 1995, the Company also entered into an agreement with
Railroad releasing a portion of the collateral securing the note
in exchange for the right to acquire Wilkesbarre Pier (the Pier)
in East Providence, Rhode Island for the sum of $1, subject to
Railroad's retaining the right to use the Pier for certain
purposes. The Pier is used by the Company for the berthing of
vessels which off-load petroleum products which are transported
by pipeline to the petroleum storage facilities.
The note is secured by a first mortgage on a significant portion
of Railroad's operating right-of-way in Massachusetts, exclusive
of the track structure (which includes rails, ties, fasteners and
ballast).
Since 1985, the Company had been a party to an agreement (the
Pier Operating Agreement) covering the operation and maintenance
of the Pier. In 1991, the Pier Operating Agreement was amended
by the parties then subject to it, which were the Company,
Railroad and two oil companies. The Pier Operating Agreement
provided that the parties would share the annual cost
of operating and maintaining the Pier based on their relative
usage of the Pier as measured by vessel berthing hours.
In October 1997, Railroad was notified by one of the two oil
companies party to the Pier Operating Agreement (the Withdrawing
Company) that the Withdrawing Company was withdrawing from the
Pier Operating Agreement on April 1, 1998 and that it would no
longer be using the Pier after December 31, 1997. The other oil
company had previously discontinued utilizing the Pier but never
withdrew from the Pier Operating Agreement .
In December 1997, Railroad and the Withdrawing Company entered
into a new agreement (New Agreement) whereby the Withdrawing
Company agrees to pay annual minimum fees for five years
commencing January 1, 1998, which range from $185,000 to
$235,000. Under the terms of the New Agreement, the owner of the
Pier is not required to make any repairs to the Pier. The New
Agreement may be terminated by the Withdrawing Company upon
ninety days' notice only in the event of a failure of a component
of the Pier that the owner does not repair.
In January 1998, the Company exercised its right to acquire the
Pier from Railroad for $1, and Railroad assigned its rights under
the New Agreement to the Company.
On February 17, 1998, Railroad filed a Form S-1 Registration
Statement with the Securities and Exchange Commission to sell an
additional 1,000,000 shares of common stock. The Registration
Statement sets forth that a portion of the funds to be raised
will be used to retire in full its note to the Company. The
Registration Statement became effective on March 18, 1998.
Accordingly, it is anticipated that this payment will be made on
or before March 31, 1998.
A trust for the benefit of the Company's controlling shareholder
(the "Trust") was party to an agreement (the "Pipeline
Agreement") with respect to the use of two petroleum pipelines
located in East Providence which connect the Wilkesbarre Pier to
the Facilities owned by the Company's wholly-owned subsidiary,
Capital Terminal Company. Since February 1983, the Company and
any operator of its Facilities have had the right to use the
pipelines for the transportation of petroleum products in
consideration for which the Company assumed all of the Trust's
obligations for repair and maintenance under the Pipeline
Agreement and agreed to pay to the Trust a fee based upon the
number of barrels of product transported through the pipelines.
The fee is subject to adjustment as of October 1 of each year to
reflect changes in the Consumer Price Index (1967 = 100). For
the twelve month period ending September 30, 1997, the Company
paid $20,000 to the Trust and was not required to make any
payment with respect to maintenance and other expenses.
In December 1997, the Trust entered into an agreement with the
Withdrawing Company which owns the two petroleum pipelines,
whereby the Withdrawing Company released the Trust from liability
in connection with the pipelines for any costs incurred to date
by the Withdrawing Company, and the Trust would only be
responsible in the future for its proportionate share of a repair
or replacement to the pipelines in excess of $25,000.
The Company had the option to purchase the rights of the Trust
under the Pipeline Agreement and exercised its option in January
1998, acquiring all rights of the Trust for $50,000.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has recommended
that Lefkowitz, Garfinkel, Champi & DeRienzo P.C., who acted as
independent auditors of the accounts of the Company for 1997, be
appointed as independent auditors of the accounts of the Company
for the year 1998. The Company has recently been advised by
Lefkowitz, Garfinkel, Champi & DeRienzo P.C. that they have no
direct financial interest or any material indirect financial
interest in the Company, nor have they had any connection during
the past three years with the Company in the capacity of
promoter, underwriter, voting trustee, director, officer or
employee.
It is expected that a representative of Lefkowitz, Garfinkel,
Champi & DeRienzo P.C. will be present at the annual meeting with
the opportunity to make a statement if he so desires and that
such representative will be available to respond to appropriate
questions.
FINANCIAL STATEMENTS
A copy of the annual report of the Company for the year ended
December 31, 1997 is enclosed. Such report is not part of this
proxy statement.
ADDITIONAL INFORMATION
The Company will provide without charge to each shareholder
entitled to vote at the 1998 annual meeting, on the written
request of any such shareholder, a copy of the Company's annual
report to the Securities and Exchange Commission on Form 10-KSB
for the year 1997. Requests for copies of such report should be
addressed to the Company at 100 Dexter Road, East Providence,
Rhode Island 02914, Attention: Treasurer.
PROPOSALS FOR 1999 ANNUAL MEETING
The 1999 annual meeting of the shareholders of the Company is
scheduled to be held April 27, 1999. If a shareholder intending
to present a proposal at that meeting wishes to have a proper
proposal included in the Company's proxy statement and form of
proxy relating to the meeting, the shareholder must submit the
proposal to the Company not later than November 27, 1998.
OTHER MATTERS
No business other than that set forth in the attached Notice of
Meeting is expected to come before the annual meeting, but should
any other matters requiring a vote of shareholders arise,
including a question of adjourning the meeting, the persons named
in the accompanying proxy will vote thereon according to their
best judgment in the interests of the Company. In the event any
of the nominees for the office of director should withdraw or
otherwise become unavailable for reasons not presently known, the
persons named as proxies will vote for other persons in their
place in what they consider the best interests of the Company.
By Order of the Board of Directors
EDWIN G. TORRANCE
Secretary
CAPITAL PROPERTIES, INC.
Dated March 26, 1998
<PAGE>
CAPITAL PROPERTIES, INC.
Annual Meeting of Shareholders -- April 28, 1998
The undersigned, whose signature appears on the reverse side of
this proxy, hereby appoints Robert H. Eder and Stephen J.
Carlotti, or either of them, each with full power of
substitution, acting jointly or singly if only one be present and
acting, with all the powers the undersigned would possess if
personally present, to vote the stock of the undersigned in
Capital Properties, Inc. at the annual meeting of shareholders to
be held April 28, 1998 in Providence, Rhode Island, and at any
adjournments thereof, as follows:
1. ELECTION OF DIRECTORS:
FOR all nominees listed below WITHHOLD AUTHORITY to vote
except as marked to the for all nominees listed
contrary below ___ below ______
R. H. Eder, R. P. Chrzanowski, J. H. Dodge, H. J. Harris, and
H. S. Woodbridge, Jr.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_________________________________________________________________
2. PROPOSAL TO APPROVE THE APPOINTMENT OF LEFKOWITZ, GARFINKEL,
CHAMPI & DERIENZO P.C. as independent public accountants of the
Company for 1998:
_____FOR _____AGAINST _____ABSTAIN
3. In their discretion, upon such other matters as may properly
come before the meeting.
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 Proposals 1
and 2.
PLEASE DATE, SIGN AND RETURN THIS PROXY
(Sign exactly as your names appear Dated__________________1998
hereon. When signing as attorney,
executor, administrator, trustee, Signed_____________________
guardian or in a corporate capacity,
please give full title as such. ___________________________
In case of joint tenants or multiple
owners, each party must sign.)
