<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
CAPITAL PACIFIC HOLDINGS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MARQUIS L. CUMMINGS
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
------------------------------------------------------------------------
<PAGE> 2
CAPITAL PACIFIC HOLDINGS, INC.
4100 MACARTHUR BOULEVARD
SUITE 200
NEWPORT BEACH, CALIFORNIA 92660
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 24, 1997
The Annual Meeting of Stockholders (the "Meeting") of Capital Pacific
Holdings, Inc. (the "Company") will be held at the Sutton Place Hotel, 4500
MacArthur Blvd., Newport Beach, California, on July 24, 1997, at 9:00 a.m.
(Pacific Daylight Savings Time) for the following purposes:
1. To elect directors whose terms expire at the Meeting;
2. To amend the Company's Certificate of Incorporation to authorize
the issuance of up to Five Million (5,000,000) shares of preferred stock,
par value $.01 per share, in one or more series, on terms and conditions to
be established by the Board of Directors from time to time; and
3. To consider such other matters as may properly come before the
Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on June 16, 1997, will be entitled to notice of and to vote at the
Meeting or any adjournment thereof. The Company's stock transfer books will
remain open.
A Proxy Statement and Proxy solicited by the Board of Directors are
enclosed herewith. Please sign, date and return the Proxy promptly. All
stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors
/s/ MARQUIS L. CUMMINGS
--------------------------
MARQUIS L. CUMMINGS
Secretary
June 27, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE> 3
CAPITAL PACIFIC HOLDINGS, INC.
4100 MACARTHUR BOULEVARD
SUITE 200
NEWPORT BEACH, CALIFORNIA 92660
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 24, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Capital Pacific Holdings, Inc. (the
"Company") for use at the Annual Meeting of Stockholders (the "Meeting") to be
held on July 24, 1997, and at any adjournment thereof, for the purposes set
forth herein. All properly completed proxies will be voted in the manner
specified therein, if no choice as to Proxy Item No. 1 (Election of Directors)
is specified, proxies will be voted for the election to the Board of Directors
of the nominees listed below under "ELECTION OF DIRECTORS" and if no choice as
to Proxy Item No. 2 (Amendment to Certificate of Incorporation to Authorize the
Issuance of up to Five Million (5,000,000) Shares of Preferred Stock) is
specified, proxies will be voted for the Amendment. Any proxy given pursuant to
this solicitation may be revoked prior to the Meeting by delivering an
instrument revoking it or by delivering a duly executed proxy bearing a later
date to the Secretary of the Company. A stockholder may elect to attend the
Meeting and vote in person notwithstanding the fact that such stockholder has a
proxy outstanding.
The Board of Directors has established June 16, 1997, as the record date
for determining the stockholders entitled to notice of and to vote at the
Meeting. At the close of business on the record date, there were outstanding and
entitled to vote 14,995,000 shares of the Company's common stock, $.10 par value
per share (the "Common Stock"), with each share being entitled to one vote.
The Company intends to mail this Proxy Statement and the accompanying form
of proxy to stockholders on or about June 27, 1997. Copies of the Company's 1997
Annual Report will be mailed to the Company's stockholders along with this Proxy
Statement.
ELECTION OF DIRECTORS (PROXY ITEM NO. 1)
The Company's Board of Directors is comprised of five directors, each of
whom are to serve until the next meeting at which directors are elected. At the
Meeting, five persons will be elected to serve as directors.
Each of the nominees listed below is currently a director and has been
nominated by the Board to serve as a director of the Company until the next
annual meeting of the stockholders of the Company following his election. When
properly executed and returned, the enclosed proxy will be voted in favor of the
election of each of the nominees, unless authority to vote for a nominee is
withheld. In the event that a nominee is unable to serve (an event which is not
anticipated) or does not receive sufficient votes to be elected, then the person
acting pursuant to the authority granted under the proxy will cast votes for the
remaining nominee and, in his best judgment, for such other person as he may
select in place of such nominee.
<PAGE> 4
The following table sets forth the name, age, and background information
concerning the nominees. Information regarding the nominee's ownership of Common
Stock appears under the heading "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT" below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE INFORMATION ABOUT NOMINEES
- - --------------------- --- -------- ------------------------------------------------------------
<S> <C> <C> <C>
Hadi Makarechian 49 1992 Mr. Makarechian has been Chairman of the Board of the
Company since August, 1992 and served as Chief Executive
Officer of the Company from March, 1993 until May, 1996.
Mr. Makarechian was the founder and chairman of Capital
Pacific Homes Inc., a real estate development firm located
in Newport Beach, California, until it was merged into the
Company in 1994. For more than ten years prior to forming
Capital Pacific Homes, Inc. in 1990, Mr. Makarechian
conducted his real estate development business through
various corporate entities, each of which he was also
Chairman and founder.
Dale Dowers 41 1992 Mr. Dowers assumed his current position as President and
Chief Executive Officer in May, 1996. Mr. Dowers was
President and Chief Operating Officer of the Company from
March, 1993 until May 1996. Prior thereto, he was
Executive Vice President and Chief Operating Officer of
the Company from August, 1992 until March, 1993. From
December 1990 to August 1992 he was the President of
Capital Pacific Homes, Inc. From July 1989 to December
1990, he was the President for Southern California of
Costain Homes, Inc., a developer of single family housing
located in Newport Beach, California. During the period of
March 1988 to June 1989, Mr. Dowers was the President,
Irvine Division, of Barratt American, Inc., a homebuilder
in Irvine, California. From January 1987 to March 1988,
Mr. Dowers served in various positions with the Company.
Karlheinz M. Kaiser 38 1993 Mr. Kaiser is a principal with Christinger Partner AG, a
printing company in Switzerland. From August of 1992
through December 1994 Mr. Kaiser was a management
consultant with Friedli & Partner, a management consulting
firm in Switzerland. From January through August of 1992,
he was Vice President of Corporate Finance with Dai-Ichi
Kangyo Bank in Zurich. From July 1984 through December of
1991, Mr. Kaiser was Vice President of Omni Holding AG, a
Zurich-based international real estate holding company.
Allan L. Acree 54 1992 Mr. Acree is a principal in A.L. Acree & Associates, a real
estate consulting firm based in Rockville, Maryland. Prior
to forming A.L. Acree & Associates in 1989, Mr. Acree was
Vice President and Regional Manager of Goldome Realty
Credit Corporation for a period of more than five years.
William A. Funk 56 1994 Until June 1997, Mr. Funk was a principal and the Vice
President and Manager of The Austin Company, an
international design and construction firm based in
Cleveland, Ohio. Except for the period described below,
Mr. Funk has served in various positions with The Austin
Company for over 25 years. From May 1984 to June 1985, Mr.
Funk was a Vice President and Manager of the Carlson
Group, a design and construction firm in Boston,
Massachusetts.
</TABLE>
2
<PAGE> 5
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTORS' COMPENSATION
Each member of the Board of Directors of the Company who is not also an
officer of the Company is compensated at a rate of $4,000 per year, plus $1,000
for each meeting of the Board which he attends, and is reimbursed for the
expenses of attending meetings. The Board of Directors held five meetings during
the fiscal year ended February 28, 1997.
The Board of Directors has a standing Executive Committee whose current
members are Hadi Makarechian and Dale Dowers. Messrs. Makarechian and Dowers are
not compensated for serving on the Executive Committee.
The Board of Directors has a standing Audit Committee whose current members
are William A. Funk and Karlheinz M. Kaiser. Messrs. Funk and Kaiser each
receive $2,000 per year for participating on the Audit Committee. The Audit
Committee has the responsibility of reviewing the Company's financial
statements, evaluating internal accounting controls, reviewing reports of
regulatory authorities and determining that all audits and examinations required
by law are performed. The Audit Committee held one meeting during the fiscal
year ended February 28, 1997.
The Board of Directors has a standing Compensation Committee whose current
members are William A. Funk and Karlheinz M. Kaiser. Messrs. Funk and Kaiser
each receive $500 for each meeting attended. The primary function of the
Compensation Committee is to advise the Board of Directors with respect to all
matters relating to executive compensation. The Compensation Committee held two
meetings for the fiscal year ended February 28, 1997.
The Board of Directors does not have a standing nominating committee or
other standing committees performing similar functions.
Each current director who was a director at the time of such meetings
attended at least 75% of the total of the Board meetings and meetings of the
committees of the Board of which he is a member.
3
<PAGE> 6
EXECUTIVE OFFICERS
In addition to Messrs. Makarechian and Dowers, the Company's executive
officers are as follows:
<TABLE>
<CAPTION>
NAME AND POSITION INFORMATION ABOUT
WITH COMPANY AGE EXECUTIVE OFFICERS
- - ----------------------------------- --- --------------------------------------------------
<S> <C> <C>
Marquis L. Cummings 58 Prior to assuming his current position in January,
Vice President, Finance 1997, Mr. Cummings was Vice President -- Finance
Chief Financial Officer and and Administration for the San Diego division of
Secretary the Company from August 1987 until February
1991. He then served as Vice President of the
Company until October 1993 when he assumed the
position of Vice President -- Sales and
Marketing. In May 1994 Mr. Cummings assumed the
position of Director of Subsidiary
Operations -- Nevada. In April, 1995 Mr.
Cummings returned to California as Vice
President. From March, 1996 until assuming his
current position, Mr. Cummings served as the
Company's Vice President, Finance.
Stephen Couig 31 Mr. Couig joined the Company in his current
Treasurer and Senior Vice position in January 1997. Prior to joining the
President, Capital Markets and Company he served as Executive Vice President in
New Business Development charge of acquisitions for Troon Golf, a
Scottsdale, AZ based golf course owner and
operator. After receiving his MBA from Dartmouth
College in 1993 he was an Associate at Morgan
Stanley in the Equity Capital Markets department
focusing on business development opportunities
until 1996.
Craig A. Foster 43 Since joining the Company in 1985, Mr. Foster has
Vice President, Southern been responsible for arranging home buyer
California Sales and Marketing mortgage financing. In 1987 Mr. Foster assumed
the additional responsibility for managing the
Company's escrow operation. In 1992 Mr. Foster
added the duties of President of the Company's
design center to his responsibilities. In 1994
Mr. Foster added the duties of President of the
Company's mortgage brokerage operation (Capital
Communities Mortgage, Inc.) to his
responsibilities.
Tim Hamilton 42 Mr. Hamilton joined the Company as Vice
Vice President, Southern President -- Sales and Marketing in May, 1994.
California Product Development Since 1989 Mr. Hamilton had been a consultant to
the real estate industry. Prior to establishing
his consulting firm Mr. Hamilton spent more than
13 years as Vice President of Sales and
Marketing for Barratt American, a homebuilder in
Irvine, California.
Robert J. Trapp 53 From 1980 until he assumed his current position in
Vice President, Southern 1994, Mr. Trapp was responsible for all of the
California Operations Company's activities relating to governmental
regulations, civil engineering, offsite
construction, utility coordination, California
Department of Real Estate processing and
homeowners' associations.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME AND POSITION INFORMATION ABOUT
WITH COMPANY AGE EXECUTIVE OFFICERS
- - ----------------------------------- --- --------------------------------------------------
<S> <C> <C>
Robin V. Koenemann 39 From 1992 until he assumed his current position in
Vice President, Southern 1994, Mr. Koenemann served as Vice President of
California Operations Construction. From December, 1988 until joining
the Company in October, 1992, Mr. Koenemann was
Project Manager for Barratt American, a
homebuilder in Irvine, California. Prior to this
Mr. Koenemann served as Executive Vice President
and Division Manager for Richmond Homes, a
homebuilder in Colorado Springs, Colorado.
Steven Cienfuegos 48 Mr. Cienfuegos joined the Company in June 1996 as
Vice President, Southern Purchasing Manager and assumed his current
California Purchasing position in May 1997. Prior to joining the
Company, Mr. Cienfuegos served at Birtcher
Construction Ltd. for 4 years as a Project
Manager and Director of Business Development.
Mr. Cienfuegos directed site development and
model construction for Southwest Diversified
Inc., a Irvine developer, at Dana Point prior to
joining Birtcher Construction Ltd. Prior to
Southwest Diversified Mr. Cienfuegos served as
President of Construction for Stein-Brief Group,
a Laguna Niguel developer.
Donald J. Sajor 38 Mr. Sajor joined the Company as General Counsel in
Vice President and June 1994. Mr. Sajor served as Corporate Counsel
General Counsel with Catellus Development Corporation from March
1993 to June 1994. From April 1987 to March
1993, Mr. Sajor specialized in transactional
real estate and environmental law as an
associate with Pettis, Tester, Kruse & Krinsky.
Mr. Sajor was an associate with Gibson, Dunn &
Crutcher from September 1984 to April 1987.
</TABLE>
All executive officers serve at the pleasure of the Board of Directors.
5
<PAGE> 8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the cash compensation paid during the fiscal
years ended February 28, 1997, February 29, 1996 and February 28, 1995 to each
of the five most highly compensated officers of the Company in all capacities in
which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
FISCAL SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(E)
- - ---------------------------------------------------- ------ ------- ------- ------------
<S> <C> <C> <C> <C>
Hadi Makarechian -- Chairman 1997 257,500 190,426(a) 252
1996 135,420(b) 124,200(c) 252
1995 225,000 220,120(d) 252
Dale Dowers -- President and 1997 257,500 192,455(a) 252
Chief Executive Officer 1996 250,000 124,200(c) 252
1995 225,000 220,120(d) 252
Tim Hamilton -- Vice President, 1997 143,000 42,250 252
Southern California Product Development 1996 130,000 64,242 252
1995 125,590 1,000 252
Donald J. Sajor -- Vice President 1997 113,750 33,500 252
and General Counsel 1996 110,000 40,600 252
1995 78,141(f) -- 189
-- Robin V. Koenemann -- Vice President, 1997 121,350 14,000 252
Southern California Operations 1996 110,365 20,000 252
1995 104,000 1,000 252
</TABLE>
- - ---------------
(a) Bonuses were earned in FY 1997 but are to be paid in one or more subsequent
years.
(b) From July, 1995 until December, 1995, Mr. Makarechian voluntarily elected
to temporarily reduce his compensation to $1.00 per annum. This election
reduced his salary from $250,000 to $135,420 for FY 1996.
(c) Bonuses of $124,200 were earned in FY 1996 but were paid in FY 1997.
(d) Bonuses of $220,120 were earned in FY 1996 but were calculated based on FY
1995 results.
(e) Represents premiums paid by the Company for term life insurance for the
benefit of the insured.
(f) Represents amounts paid for the period June, 1994 through February, 1995.
STOCK OPTIONS
Effective February 28, 1995, the Company, as approved by the stockholders
of the Company in July, 1995, adopted the 1995 Stock Incentive Plan (the "1995
Plan"). The 1995 Plan permits a committee designated by the Board of the Company
to make awards to present and former key employees and directors of the Company
and its subsidiaries. Subject to various restrictions, awards could be in the
form of stock options, restricted or unrestricted stock, stock appreciation
rights or a combination of the above. The maximum number of shares or share
equivalents that may be awarded under the 1995 Plan is 1,500,000. No awards have
been made under the 1995 Plan.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
None of the executive officers is currently working under an employment
contract. On June 16, 1997 the Board of Directors approved an arrangement under
which executives of the Company and its subsidiaries designated by a committee
composed of the members of the Executive and Compensation Committees of the
Board of Directors would, in the event of a change in control of the Company
occurring during their employment by the Company, be eligible under the terms of
the arrangement for a bonus payment of up to one year's base compensation. No
such executives have been designated as of the date of this Proxy Statement but
designees could include one or more of the executive officers named above. The
Chairman and Chief Executive Officer shall not be eligible for any such bonus.
6
<PAGE> 9
COMPENSATION COMMITTEE DETERMINATION ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Company's Board of
Directors establishes the Company's general compensation policies, compensation
plans and specific compensation levels for the Company's Chairman and its Chief
Executive Officer and reviews the design, administration and effectiveness of
compensation programs for other key executives. The general policy and
philosophy of the Compensation Committee is to provide total compensation
opportunities that are competitive with the opportunities offered to executives
in similar positions at competing companies and that compensation with a strong
link to the financial performance of the Company enables the Company to attract
and retain the key personnel necessary to fuel continued growth and
profitability.
The Committee has examined the compensation of the executives of
comparatively placed homebuilders to determine whether or not the compensation
of the Company's Chairman and its Chief Executive Officer is within the range of
their peers. In undertaking such examination, the Committee has sought publicly
available information regarding homebuilders (the "Survey Companies") which are
at a similar stage in their growth and development to that of the Company and
therefore compete for the same executive personnel.
PERFORMANCE BASED COMPENSATION
Last year, the Committee recommended for FY 1996 (ending February 29, 1996)
an annual performance bonus to each of Messrs. Makarechian and Dowers of four
percent (4%) of the pre-tax income of the Company for such fiscal year.
In light of the Committee's general policy and philosophy as stated above,
and the financial performance of the Company, the Compensation Committee
determined in its meetings held in May, 1996 and April, 1997 to continue for FY
1997 the annual cash bonus for the Chairman and the CEO in the amount of four
percent (4%) of annual pre-tax income of the Company. These figures result in
cash bonuses in the range of that provided by the Survey Companies.
The time of payment of the FY 1997 bonus shall be determined by management.
Section 162(m) of the Internal Revenue Code of 1986 limits deductions for
certain executive compensation in excess of $1 million. The Code permits
deduction of compensation in excess of $1 million only if it is
performance-based, the criteria for award are specified in detail, and
stockholder approval is obtained prior to payment. The policy of the Company is
to maintain the tax deductibility of all compensation paid to its executives.
The annual cash bonus has been structured to meet the requirements for
deductibility. While the Compensation Committee does not anticipate any payments
exceeding $1 million under the compensation structure it has approved, any such
payments will be contingent upon shareholder approval.
BASE SALARY
The annualized base salary of the Chairman and CEO was $260,000 for Fiscal
Year 1997. The Committee has determined to recommend a nominal increase of
fifteen thousand dollars ($15,000) in the base salary of each of the Chairman
and CEO, primarily to take into account inflation.
/s/ WILLIAM A. FUNK
--------------------------------------
William A. Funk
/s/ KARLHEINZ KAISER
--------------------------------------
Karlheinz Kaiser
Dated: April 24, 1997
7
<PAGE> 10
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
returns for Capital Pacific Holdings Inc., American Stock Exchange Market Value
Index and Dow Jones Home Construction Industry Group.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
CAPITAL
MEASUREMENT PERIOD PACIFIC INDUSTRY
(FISCAL YEAR COVERED) HOLDINGS INDEX BROAD MARKET
--------------------- -------- -------- ------------
<S> <C> <C> <C>
1992 100 100 100
1993 92.59 110.35 95.37
1994 111.11 132.71 111.10
1995 77.78 97.12 101.91
1996 111.11 129.04 123.40
1997 77.78 139.19 131.47
</TABLE>
- - ---------------
(1) The above graph compares the performance of Capital Pacific Holdings, Inc.
with that of the American Stock Exchange Market Value Index and the Dow
Jones Home Construction Industry Group.
(2) The comparison of total return on investment (change in year end stock price
plus reinvested dividends) for each of the periods assumes that $100 was
invested on March 1, 1992 in each of Capital Pacific Holdings, Inc., the
American Stock Exchange Market Value Index and the Dow Jones Home
Construction Industry Group.
8
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of June 16, 1997, the number of shares of
Common Stock beneficially owned by each person known to the Company to own more
than five percent (5%) of the outstanding shares of Common Stock, by each
director of the Company or nominee who owned shares of Common Stock on that
date, by each of the officers that are among the five most highly compensated
officers of the Company, and by all directors and officers of the Company as a
group.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY OWNED(1) CLASS(1)
--------------------------------------------------- --------------------- ----------
<S> <C> <C>
CPH2, L.L.C. ...................................... 4,638,657 30.9%
4100 MacArthur Boulevard, Suite 200,
Newport Beach, CA 92660
Hadi Makarechian................................... 9,315,968(2) 62.1%
4100 MacArthur Boulevard, Suite 200,
Newport Beach, California 92660
Dale Dowers........................................ 1,922,723(3) 12.8%
4100 MacArthur Boulevard, Suite 200,
Newport Beach, California 92660
Roger Nix(4)....................................... 1,015,000 6.8%
4100 MacArthur Boulevard, Suite 200,
Newport Beach, CA 92660
All Directors and Officers of the Corporation
as a Group (13 persons).......................... 11,238,791 75.0%
</TABLE>
- - ---------------
(1) Unless otherwise indicated, the Company believes the beneficial owner has
sole voting and investment power over such shares. The percentage of shares
of Common Stock is calculated assuming that the beneficial owner has
exercised any options or other rights to subscribe held by such beneficial
owner that are currently exercisable or exercisable within 60 days, and that
no other options or rights to subscribe have been exercised by anyone else.
(2) Includes 2,715,934 shares of Common Stock held by CPH2, L.L.C., in which Mr.
Makarechian may be deemed to have a beneficial ownership interest due to his
ownership interest in CPH2, L.L.C. Mr. Makarechian and Mr. Dowers as a group
could be deemed beneficial owners of 11,238,691 shares of stock in the
Corporation.
(3) Includes 1,922,723 shares of Common Stock held by CPH2, L.L.C., in which Mr.
Dowers may be deemed to have a beneficial ownership interest due to his
ownership interest in CPH2, L.L.C. Mr. Dowers and Mr. Makarechian as a group
could be deemed beneficial owners of 11,238,691 shares of stock in the
Corporation.
(4) Mr. Nix is the former sole stockholder of Durable Homes, Inc.
9
<PAGE> 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH
OFFICERS, DIRECTORS AND AFFILIATES
The Company's policy is that all transactions between the Company and its
officers, directors and principal stockholder, and their respective affiliates,
must be on terms no less favorable to the Company than terms with unaffiliated
parties for similar transactions. All such transactions that are not in the
ordinary course of the Company's business must be approved by a majority of
independent directors who do not have a financial interest in the transaction.
INDEPENDENT AUDITORS
Arthur Andersen LLP served as the Company's independent auditors for the
fiscal year ended February 28, 1997, and it is anticipated that Arthur Andersen
LLP will be approved to serve as such for the current fiscal year.
Representatives of Arthur Andersen LLP will be present at the Meeting to
respond to appropriate questions and will have the opportunity to make a
statement if they desire to do so.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION TO AUTHORIZE THE ISSUANCE OF UP
TO FIVE MILLION (5,000,000) SHARES OF PREFERRED STOCK
(PROXY ITEM NO. 2)
The Board of Directors of the Company has approved, subject to stockholder
approval, an amendment to Article FOURTH of the Company's Second Restated
Certificate of Incorporation to authorize the issuance of up to Five Million
(5,000,000) shares of preferred stock, $.01 par value per share ("Preferred
Stock"), in one or more series on terms and conditions to be established by the
Board of Directors from time to time, and commonly known as "blank check"
Preferred Stock. The full text of the proposed amendment is as follows:
"FOURTH: The total number of shares of capital stock that the
Corporation shall have authority to issue is Thirty Million (30,000,000)
shares of Common Stock, par value $.10 per share (the "Common Stock"), and
Five Million (5,000,000) shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock").
A holder of record of one or more shares of the Common Stock shall
have one (1) vote on any matter submitted to a stockholder vote for each
share of the Common Stock held. Holders of the Common Stock are entitled to
the entire voting power, all dividends declared, and all assets of the
corporation upon liquidation, subject to the rights of the holders of the
Preferred Stock to such voting power, dividends, and assets upon
liquidation. Holders of the Common Stock shall not be entitled to any
preemptive or other subscription rights.
The Preferred Stock may be issued from time-to-time in one or more
classes or series pursuant to a resolution or resolutions adopted by the
Board of Directors. The Board of Directors of the Corporation shall have
full and complete authority by resolution from time to time, to establish
one or more series and to fix, determine and vary the voting rights,
designations, preferences, qualifications, privileges, limitations,
options, conversion rights and other special rights of each series,
including but not limited to, dividend rates and manner of payment,
preferential amounts payable upon voluntary or involuntary liquidation,
voting rights, conversion rights, redemption prices, terms and conditions
and sinking fund and stock purchase prices, terms and conditions."
The term "blank check" Preferred Stock refers to stock for which the
designations, preferences, conversion rights, cumulative rights, relative,
participating, optional and other rights, including voting rights,
qualifications, limitations, or restrictions thereof, are determined by the
Company's Board of Directors. The additional authorized shares that would be
available for issuance, if the proposed amendment to the Certificate of
Incorporation is approved, may be issued for any proper corporate purpose at any
time without further
10
<PAGE> 13
stockholder approval (subject, however, to applicable statutes or the rules of
the American Stock Exchange which may require stockholder approval for the
issuance of shares in certain circumstances). Each series of Preferred Stock may
rank senior to the Company's Common Stock with respect to dividends and
liquidation rights. No Preferred Stock is presently issued.
If approved by the stockholders, this provision of the Certificate of
Incorporation will authorize the Board of Directors to determine among other
things, with respect to each series of Preferred Stock which may be issued: (i)
the distinctive designation of such series and the number of shares constituting
such series, (ii) whether or not shares have voting rights and the extent of
such voting rights, if any, (iii) the election, term of office, filling of
vacancies, and other terms of the directorship of directors, if any, to be
elected by the holders of any one or more series of such Preferred Stock, (iv)
the dividend rights, if any, including the dividend rates, preferences with
respect to other series or classes of stock, the times of payment and whether
dividends shall be cumulative, (v) the redemption price, terms of redemption,
the amount of and provisions regarding any sinking fund for the purchase or
redemption thereof, (vi) the liquidation preferences and the amounts payable on
dissolution or liquidation, and (vii) the terms and conditions, if any, under
which shares of the series may be converted into any other series of class of
stock or debt of the Company. Holders of Common Stock have no preemptive rights
to purchase or otherwise acquire any Preferred Stock that may be issued in the
future.
The Board of Directors believes it is desirable to give the Company this
flexibility in considering such matters as raising additional capital,
acquisitions, or other corporate purposes. The authorization of such shares will
enable the Company to act promptly and without additional expense if appropriate
circumstances arise which require the issuance of such shares. The Company has
no current agreements, commitments, plans or intentions to issue any Preferred
Stock. Depending upon the circumstances in which Preferred Stock may be issued,
the overall effects of such issuance may be to render more difficult or to
discourage a merger, tender offer, proxy contest, or the assumption of control
by a holder of a large block of Common Stock and the removal of incumbent
management. For example, such shares could be used to create voting or other
impediments or to discourage persons seeking to gain control of the Company.
Such shares could be privately placed with purchasers favorable to the Board of
Directors in opposing such action. In addition, the Board of Directors could
authorize holders of a series of Preferred Stock to vote either separately as a
class or with the holders of the Company's Common Stock, on any merger, sale, or
exchange of assets by the Company or any other extraordinary corporate
transaction. The issuance of new shares also could be used to dilute the stock
ownership of a person or entity seeking to obtain control of the Company should
the Board of Directors consider an action of such entity or person not to be in
the best interests of the stockholders and the Company.
Until the Board determines the respective rights of the holders of one or
more series of Preferred Stock, it is not possible to state the actual effect of
the authorization of the Preferred Stock upon the rights of holders of Common
Stock. Typical effects of such issuance could include, however; (i) reduction of
the amount otherwise available for payment of dividends on Common Stock if
dividends are payable on Preferred Stock, (ii) restrictions on dividends on
Common Stock if dividends on the Preferred Stock are in arrears, (iii) dilution
of the voting power of Common Stock if the Preferred Stock has voting rights,
and (iv) restriction of the rights of holders of Common Stock to share in the
Company's assets upon liquidation until satisfaction of any liquidation
preference granted to the holders of Preferred Stock.
IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE SHARES OF COMMON STOCK
REQUESTED BY A PROXY DELIVERED TO THE BOARD OF DIRECTORS WILL BE VOTED FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE THE ISSUANCE OF UP TO FIVE MILLION (5,000,000) SHARES OF PREFERRED
STOCK.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE TO
APPROVE THE AMENDMENT.
11
<PAGE> 14
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the next
annual meeting of stockholders of the Company, and who wishes to have such
proposal included in the proxy statement and form of proxy prepared by the
management of the Company for that meeting, must notify the Company in writing
not later than February 28, 1998. The notice should be directed to Capital
Pacific Holdings, Inc., 4100 MacArthur Boulevard, Suite 200, Newport Beach,
California 92660, Attention: President.
SOLICITATION OF PROXIES
Proxies may be solicited on behalf of the Company by its officers and
employees, who will receive no additional compensation for such services,
through the mail, in person, and by telephone and by other telecommunication
methods. The cost of such solicitation will be borne by the Company. Brokers,
custodians, and other fiduciaries will be required to forward the Company's
proxy solicitation materials to the beneficial owners of Common Stock held in
their names, and the Company will reimburse such fiduciaries for the out-
of-pocket expenses incurred by them in connection with such activities.
The Company's Annual Report for the fiscal year ended February 28, 1997 is
being delivered to shareholders together with this Proxy Statement. Copies of
the annual report on Form 10-K for the fiscal year ended February 28, 1997 as
filed with the Securities and Exchange Commission (except for the Exhibits
thereto) may be obtained, free of charge, upon written request by any
stockholder delivered to Capital Pacific Holdings, Inc., 4100 MacArthur
Boulevard, Suite 200, Newport Beach, California 92660, Attention: Marquis L.
Cummings, Vice President Finance and Chief Financial Officer. Copies of all
exhibits to the annual report on Form 10-K are available upon a similar request,
subject to payment of a $.15 per page charge to reimburse the Company for its
expenses in supplying any exhibit.
THE COMPANY'S MANAGEMENT HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN, AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The Board of Directors knows of no matters other than the election of
directors and the amendment of the Certificate of Incorporation to be brought
before the Meeting. However, if any other matter should be presented for
consideration, it is the intention of the persons named as proxies in the
enclosed form of Proxy to vote the Proxy in accordance with their judgment.
By Order of the Board of Directors
/s/ MARQUIS L. CUMMINGS
---------------------------------
MARQUIS L. CUMMINGS
Secretary
Dated: June 27, 1997
12
<PAGE> 15
CAPITAL PACIFIC HOLDINGS, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JULY 24, 1997.
The undersigned hereby appoints Donald J. Sajor and Marquis L. Cummings, or
either of them with individual power of substitution, proxies to vote all shares
of Common Stock of Capital Pacific Holdings, Inc. which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders to be held on July 24,
1997, and at all adjournments thereof, as follows:
1. ELECTION OF DIRECTORS
Hadi Makarechian, Dale Dowers, Allan L. Acree, Karlheinz M. Kaiser, William
A. Funk
<TABLE>
<S> <C>
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below). for all nominees listed above.
</TABLE>
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- - --------------------------------------------------------------------------------
If no preference is indicated, this proxy will be voted "FOR" the nominees.
2. To approve an Amendment to the Company's Certificate of Incorporation to
authorize the issuance of up to Five Million (5,000,000) shares of preferred
stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
If no preference is indicated, this proxy will be voted "FOR" the amendment to
authorize five million (5,000,000) shares of Preferred Stock.
<PAGE> 16
3. In accordance with their best judgment upon such other matters as may
properly come before the Meeting.
-------------------------------------
Signature of Stockholder
-------------------------------------
Signature of Stockholder
IMPORTANT: Please sign this Proxy
exactly as your name or names appear
hereon. If shares are held by more
than one owner, each must sign.
Executors, administrators, trustees,
guardians, and others signing in a
representative capacity should give
their full titles.
DATED: , 1997
------------------------
BE SURE TO DATE THIS PROXY
