<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>
INCO HOMES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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
[LOGO OF INCO HOMES]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 8, 1997
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of INCO HOMES CORPORATION (the "Company") which will be held at the Ontario
Airport Hilton, 700 North Haven Avenue, Ontario, California 91764 at 1:00 p.m.
on September 8, 1997 for the following purposes:
1. To elect to the board two directors;
2. To consider and vote upon a proposal to ratify the selection
of Price Waterhouse LLP as independent public accountants for
the Company for the fiscal year ending December 31, 1997; and
3. To act upon such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on July 31, 1997
as the record date for determining those stockholders who will be entitled to
vote at the meeting. The stock transfer books will not be closed between the
record date and the date of the meeting.
Representation of at least a majority of all outstanding shares of
Common Stock of Inco Homes Corporation is required to constitute a quorum.
Accordingly, it is important that your shares be represented at the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may
be revoked at any time prior to the time it is voted.
Please read the proxy material carefully. Your vote is important and
the Company appreciates your cooperation in considering and acting on the
matters presented.
Very truly yours,
Ira C. Norris
Chairman of the Board,
President and Chief
Executive Officer
Upland, California
July 17, 1997
<PAGE> 3
STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS OF
INCO HOMES CORPORATION
TO BE HELD SEPTEMBER 8, 1997
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of INCO HOMES CORPORATION ("Inco Homes" or the
"Company") of proxies to be voted at the Annual Meeting of Stockholders which
will be held at 1:00 p.m. on September 8, 1997 at the Ontario Airport Hilton,
700 North Haven Avenue, Ontario, California 91764 or at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. This Proxy Statement and the proxy card were
first mailed to stockholders on or about August 4, 1997.
VOTING RIGHTS AND SOLICITATION
The close of business on July 31, 1997 was the record date for
stockholders entitled to notice of and to vote at the Annual Meeting. As of that
date, Inco Homes had 1,637,096 shares of Common Stock, $.01 par value per share
(the "Common Stock"), issued and outstanding. All of the shares of the Company's
Common Stock outstanding on the record date are entitled to vote at the Annual
Meeting, and stockholders of record entitled to vote at the meeting will have
one (1) vote for each share so held on the matters to be voted upon.
Shares of the Company's Common Stock represented by proxies in the
accompanying form which are properly executed and returned to Inco Homes will be
voted at the Annual Meeting of Stockholders in accordance with the stockholders'
instructions contained therein. In the absence of contrary instructions, shares
represented by such proxies will be voted FOR the election of each of the
directors as described herein under "Proposal 1--Election of Directors" and FOR
ratification of the selection of accountants as described herein under "Proposal
2--Ratification of Selection of Independent Public Accountants." Management does
not know of any matters to be presented at this Annual Meeting other than those
set forth in this Proxy Statement and in the Notice accompanying this Proxy
Statement. If other matters should properly come up before the meeting, the
proxy holders will vote on such matters in accordance with their best judgment.
Any stockholder has the right to revoke his or her proxy at any time before it
is voted. Election of directors by stockholders shall be determined by a
plurality of the votes cast by the stockholders entitled to vote at the election
present in person or represented by proxy. Abstentions and broker non-votes are
each included in the determination of the number of shares present for quorum
purposes. Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders, whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
The entire cost of soliciting proxies will be borne by Inco Homes.
Proxies will be solicited principally through the use of the mails, but, if
deemed desirable, may be solicited personally or by telephone, telegraph or
special letter by officers and regular Inco Homes employees for no additional
compensation. Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the Company's Common Stock, and such persons may be
reimbursed for their expenses.
1
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
The members of the Board of Directors of Inco Homes are classified into
three classes, one of which is elected at each Annual Meeting of Stockholders to
hold office for a three-year term and until successors of such class have been
elected and qualified. The nominees for the Board of Directors are set forth
below. The proxy holders intend to vote all proxies received by them in the
accompanying form for the nominees for director listed below. In the event that
any nominee is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them for the nominees listed
below. As of the date of this Proxy Statement, the Board of Directors is not
aware of any nominee who is unable or will decline to serve as a director.
NOMINEES TO BOARD OF DIRECTORS
<TABLE>
<CAPTION>
CLASS AND YEAR IN
DIRECTOR WHICH TERM WILL
NAME PRINCIPAL OCCUPATION SINCE EXPIRE AGE
---- -------------------- ----- ------ ---
<S> <C> <C> <C> <C>
Ronald L. Neeley Former Chief Executive Officer, 1993 Class III 60
Maintenance Warehouse/America 2000
Corporation
Robert H. Daskal Senior Vice President and Chief 1995 Class III 56
Financial Officer, Olympic Cascade 2000
Financial Corporation
</TABLE>
Ronald L. Neeley has served as a director of the Company since May
1993. Mr. Neeley was the founder and Chief Executive Officer of Maintenance
Warehouse/America Corporation, the nation's largest distributor of replacement
parts for plumbing, electrical and hardware products to the multi-family housing
and hospitality markets. Mr. Neeley recently sold Maintenance Warehouse/America
Corporation and will continue on a temporary basis as a consultant.
Robert H. Daskal has served as a director of the Company since May
1995. Mr. Daskal is Senior Vice President and Chief Financial Officer of Olympic
Cascade Financial Corporation, a financial services holding company. Mr. Daskal
was the Executive Vice President and Chief Financial Officer of Inco Homes
Corporation from October 1994 to January 15, 1997. Prior to joining the Company,
Mr. Daskal was Executive Vice President-Finance and Chief Financial Officer of
UDC Homes, Inc., a homebuilder in Tempe, Arizona, from 1985 to 1994. UDC Homes,
Inc. filed a petition for relief under Chapter 11 of the U.S. Bankruptcy code in
May 1995.
2
<PAGE> 5
DIRECTORS NOT STANDING FOR ELECTION
The members of the Board of Directors who are not standing for election
at this year's Annual Meeting are set forth below.
<TABLE>
<CAPTION>
CLASS AND YEAR
DIRECTOR IN WHICH TERM
NAME PRINCIPAL OCCUPATION SINCE WILL EXPIRE AGE
---- -------------------- ----- ----------- ---
<S> <C> <C> <C> <C>
Ira C. Norris Chairman of the Board, President and 1993 Class I 60
Chief Executive Officer of Inco 1999
Homes Corporation
Thomas E. Gibbs, Jr. Attorney in private practice 1995 Class 54
II 1998
John F. Seymour, Jr. Chief Executive Officer, Southern 1995 Class 59
California Housing Development II 1998
Corporation
</TABLE>
Ira C. Norris founded the Company in 1976. Mr. Norris has served as the
Chairman of the Board and Chief Executive Officer of the Company since 1993. Mr.
Norris has served as President of the Company since 1976. From 1968 to 1976, Mr.
Norris served as a Corporate Vice President and Division Operating Manager of
Kaufman and Broad, Inc., a company engaged in the real estate and life insurance
business. From 1960 to 1968, he was an independent builder/developer in Los
Angeles and the San Fernando Valley suburbs.
Thomas E. Gibbs, Jr. has served as a director of the Company since
December 1995. Mr. Gibbs is an attorney in private practice of law specializing
in real estate, corporate and commercial law with an emphasis on real estate
syndication and investments. Mr. Gibbs has over twenty years of experience
representing residential real estate developers.
John F. Seymour, Jr. has served as a director of the Company since
December 1995. Mr. Seymour has been the chief executive officer of Southern
California Housing Development Corporation, a non-profit organization, since
January 1995. Prior to joining Southern California Housing Development
Corporation, Mr. Seymour served for two years as the Executive Director of the
California Housing Finance Agency which directs billions of dollars of capital
vital to affordable housing. In January 1991, Mr. Seymour was appointed by
Governor Pete Wilson to be his successor in the United States Senate, where he
served until January 1993. From April 1982 to January 1991, Mr. Seymour served
as a California State Senator for the 35th Senate District. Mr. Seymour is a
director of Irvine Apartment Communities, a Real Estate Investment Trust.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings
during fiscal 1996. Each director attended 100% of the meetings of the Board and
meetings held by all committees of the Board on which he served.
The Company has an Audit Committee and a Compensation Committee. There
is no nominating committee or committee performing the functions of such
committee.
The Audit Committee meets with the Company's financial management and
its independent accountants at various times during each year and reviews
internal control conditions, audit plans and results, and financial reporting
procedures. This Committee, currently consisting of John F. Seymour, Jr., Ira C.
Norris and Ronald L. Neeley, held two meetings during fiscal 1996.
The Compensation Committee reviews and approves the Company's
compensation arrangements for key employees and administers the 1992 Stock
Option/Stock Issuance Plan. This Committee, currently consisting of
3
<PAGE> 6
Thomas E. Gibbs, Jr., Ira C. Norris and Ronald L. Neeley, held no meetings
during fiscal 1996, although it acted by unanimous written consent.
DIRECTOR REMUNERATION
Each non-employee member of the Board is paid an annual retainer fee of
$10,000 and reimbursed for all out-of-pocket costs incurred in connection with
attendance at meetings of the Board of Directors of the Company. All 1996 and
1997 directors fees will be paid with non-registered shares of Common Stock of
the Company on a quarterly basis. The number of shares to be issued to each
director will be determined by dividing $2,500 by (i) the closing price of the
Common Stock on the day of the quarter's board meeting, or (ii) if no board
meeting is held in a particular calendar quarter, the closing price of the
Common Stock on the last trading day of the calendar quarter. Upon joining the
Board, each non-employee Board member also received an option grant for 1,250
shares of Common Stock pursuant to the Company's automatic option grant program
under the Company's 1992 Stock Option/Stock Issuance Plan. The exercise price
per share for grants made to Ronald L. Neeley was $56.25, to Thomas E. Gibbs,
Jr. and John F. Seymour, Jr. was $6.00, and to Robert H. Daskal was $2.622, the
fair market value per share of Common Stock on the respective grant date.
Similar automatic option grants in the amount of 834 shares are made annually to
each individual who continues to serve as a non-employee Board member on the
date of each subsequent Annual Meeting of Stockholders, provided that such
individual has served as a non-employee Board member for at least six months
prior to the date of such meeting. Accordingly, in May 1996, Ronald L. Neeley
received an option grant for 834 shares of Common Stock with an exercise price
of $4.875 per share. Automatic option grants may be exercised in full six months
after the grant date, provided the eligible director remains a member of the
board through that date. Such automatic grants will cease for any non-employee
Board member who has been granted a cumulative total of options to purchase
5,417 shares of Common Stock. Common Stock shares and per share amounts
described above have been restated to give effect to the Company's one-for-six
reverse stock split, which became effective January 16, 1997.
4
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 1997 by (i) each person
who is known to the Company to own beneficially more than 5% of the outstanding
shares of the Common Stock of the Company, (ii) each director, (iii) each
officer listed in the Summary Compensation Table, and (iv) all directors and
executive officers as a group. All shares are subject to the named person's sole
voting and investment power except where otherwise indicated. Common Stock
shares and per share amounts have been restated to give effect to the Company's
one-for-six reverse stock split which became effective January 16, 1997.
<TABLE>
<CAPTION>
NAME AND ADDRESS
OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED
- ------------------- -------------------------
NUMBER PERCENTAGE
------ ----------
<S> <C> <C>
Ira C. Norris(1)..................................................... 409,587 25.02%
1282 West Arrow Highway
Upland, CA 91786
Overland Opportunity Fund, LLC (2) 200,000 12.22%
147 East Olive Avenue
Monrovia, CA 91016
Overland Company, Inc. (2)........................................... 200,000 10.89%
147 East Olive Avenue
Monrovia, CA 91016
Ronald L. Neeley(4)(5)(6)............................................ 142,385 8.64%
P.O. Box 371347
San Diego, CA 92137
Wellington Management Company, LLP (7)............................... 128,017 7.82%
75 State Street
Boston, MA 02109
First Financial Fund, Inc.(8) ....................................... 128,017 7.82%
One Seaport Plaza - 25th Floor
New York, NY 10292
Robert H. Daskal (9)................................................. 18,167 1.10%
John F. Seymour, Jr. (10)............................................ 1,384 *
Thomas E. Gibbs, Jr.(10)(11) ........................................ 1,267 *
Norman B. Gold (12) ................................................. 2,501 *
Lynn C. Parkes (12) ................................................. 834 *
All directors and executive officers as a group
(7 persons)(1)(4)(5)(6)(9)(10)(11)(12)............................... 576,125 34.45%
</TABLE>
- ---------------
(1) Includes (i) 337,418 shares of Common Stock owned by Norris Living
Trust Dated 2/17/89, a family trust of which Mr. Norris and his wife,
Nancy D. Norris, serve as trustees, (ii) 834 shares of Common Stock
owned by Mr. Norris and his wife jointly, and (iii) 2,657 shares of
Common Stock owned of record by Mr. Norris' wife.
(2) In December 1996, the Company entered into a Common Stock Purchase
Agreement with Overland Opportunity Fund, LLC to sell 200,000 shares of
the Company's common stock in a private transaction. The stock was
issued in January and
5
<PAGE> 8
February, 1997 for a total purchase price of $750,000. The Company also
granted Overland Opportunity Fund, LLC the right to require the Company
to register the stock for public sale with the Securities and Exchange
Commission. Schedule 13D states that in its capacity as a real estate
investment company, Overland Opportunity Fund, LLC may be deemed
beneficial owner of the shares. The Schedule 13D indicates that
Overland Opportunity Fund, LLC has sole voting power and sole
dispositive power. Schedule 13D also disclaims beneficial ownership by
Overland Opportunity Fund, LLC, of the warrant described in (3) below
owned by Overland Company, Inc., an affiliated corporation. Certain
equity owners of Overland Opportunity Fund, LLC are also equity owners
of Overland Company, Inc.
(3) In December 1996, the Company issued a warrant to purchase 200,000
shares of common stock in a private transaction to Overland Company,
Inc. The warrant was issued as compensation for all services to be
performed pursuant to a Consulting Agreement entered into in December
1996. The Consulting Agreement is for a term of two years during which
Overland Company, Inc. on a non-exclusive basis, shall seek out,
investigate and pursue residential development projects and present
them to the Company for its consideration and approval. The warrant may
be exercised within eighteen months of the date of the agreement at a
price of $5.25 per share. If at least half of the warrant shares are
not exercised during this period, then half of the warrant shares will
expire, with the balance exercisable over an additional eighteen month
period at $9.75 per share. Overland Company, Inc. may also convert the
warrant or any portion thereof into shares of common stock using a
formula based upon the fair market value of the Company's common stock
on the conversion date. Schedule 13D states that in its capacity as a
real estate investment and consulting company, Overland Company, Inc.
may be deemed beneficial owner of the warrant. The Schedule 13D
indicates that Overland Company, Inc. has sole voting power and sole
dispositive power. Schedule 13D also disclaims beneficial ownership by
Overland Company, Inc. of the shares of common stock described in (2)
above owned by Overland Opportunity Fund, LLC, an affiliated limited
liability company. Certain equity owners of Overland Opportunity Fund,
LLC are also equity owners of Overland Company, Inc.
(4) Includes 130,713 shares of Common Stock owned by Neeley Revocable
Family Trust Dated 9/15/81, as amended, of which Mr. Neeley is a
co-trustee with his wife.
(5) Includes warrants to purchase 7,920 shares of the Company's Common
Stock, currently exercisable at $60.00 per share, which were granted to
the Neeley Revocable Family Trust Dated 9/15/81, as amended.
(6) Includes options held by Mr. Neeley to purchase 1,250 shares of Common
Stock currently exercisable at a price of $56.25 per share, 834 shares
of Common Stock currently exercisable at a price of $25.50 per share,
834 shares of Common Stock currently exercisable at a price of $11.25
per share and 834 shares of Common Stock currently exercisable at a
price of $4.875 per share. These options were granted pursuant to the
Company's automatic option grant program for non-employee Board
members.
(7) Beneficial ownership is as of December 31, 1996, per Schedule 13G, that
states that in its capacity as investment advisor, it may be deemed
beneficial owner of the shares owned by its investment counseling
clients. The Schedule 13G indicates that Wellington Management Company,
LLP has no voting power and shared dispositive power.
(8) Beneficial ownership is as of December 31, 1996, per Schedule 13G, that
states that in its capacity as an investment company, it may be deemed
beneficial owner of the shares. The Schedule 13G indicates that First
Financial Fund, Inc. has sole voting power and shared dispositive
power.
(9) Includes 250 shares of Common Stock owned by Mr. Daskal and his wife
jointly and an option held by Mr. Daskal to purchase 12,500 shares of
Common Stock currently exercisable at a price of $6.75 per share. Mr.
Daskal also has options to purchase 1) 1,250 shares of Common Stock
exercisable July 15, 1997 at $2.622 per share and 2) 4,167 shares of
Common Stock exercisable September 13, 1997 at $3.75 per share.
(10) Includes options held by Mr. Seymour and Mr. Gibbs, respectively, to
purchase 1,250 shares of Common Stock, respectively, currently
exercisable at $6.00 per share. These options were granted pursuant to
the Company's automatic option grant program for non-employee Board
members.
(11) Includes 17 shares of Common Stock held by Gibbs Family Trust Dated
2/19/93, of which Mr. Gibbs is a co-trustee with his wife.
(12) Includes options held by Mr. Gold and Ms. Parkes, respectively, to
purchase 417 shares of Common Stock, respectively, currently
exercisable at a price of $6.75 per share. Mr. Gold and Ms. Parkes also
have options to purchase 2,084 and 417 shares of Common Stock,
respectively, exercisable September 13, 1997 at $3.75 per share.
* Percentage of shares beneficially owned does not exceed 1% of the class
so owned.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the compensation paid by the Company for
the years ended December 31, 1996, 1995, and 1994 to the Chief Executive
Officer, and the only other executive officer who were executive officers of the
Company at December 31, 1996 whose total annual salary and bonus were in excess
of $100,000 at December 31, 1996 (the "named executive officers"). No executive
officer who would have been otherwise includable in such table on the basis of
salary and bonus earned for the 1996 fiscal year has resigned or terminated
employment during such fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
AWARDS
ANNUAL COMPENSATION ----------------
------------------------ SECURITIES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY (1) BONUS OPTIONS/SARS (#) COMPENSATION (2)
-------- ---- ---------- ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Ira C. Norris 1996 $360,000 (3) $ 0 0 $7,856 (4)
Chairman of the Board, 1995 360,000 0 0 10,409 (5)
President and Chief 1994 604,197 0 0 0
Executive Officer
Robert H. Daskal (6) 1996 240,000 0 4,167 (11) 1,203 (7)
Executive Vice President 1995 218,500 500 (8) 12,500 (9)(11) 600 (7)
and Chief Financial Officer 1994 0 0 2,500 (11) 26,500 (10)
</TABLE>
- ----------
(1) Salary includes employee contributions under the Company's 401(k) Plan.
(2) Excludes a nominal amount, not in excess of $500 per employee annually,
for life insurance premiums.
(3) Includes $75,000 accrued in 1996, but not yet paid.
(4) Represents medical expenses of $4,849 and auto expenses of $2,072 paid
by the Company, and $935 of the Company's contribution under the
Company's 401(k) Plan.
(5) Represents medical expenses of $6,846 and auto expenses of $3,563 paid
by the Company.
(6) Mr. Daskal ceased to be an officer and employee of the Company as of
January 15, 1997 but will continue to serve as a director.
(7) Represents the Company's contributions under the Company's 401(k) Plan.
(8) Includes a bonus of $500 accrued in 1995 and paid in 1996.
(9) Includes options to purchase 2,500 shares granted in exchange for the
options originally granted in 1994.
(10) Includes $17,000 paid in 1994, and $9,500 accrued in 1994 but paid in
1995, for consulting services.
(11) Restated for reverse stock split.
7
<PAGE> 10
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1992 Stock Option/Stock Issuance Plan for the 1996
fiscal year to the named executive officers. The table also lists potential
realizable values of such options on the basis of assumed annual compounded
stock appreciation rates of 5% and 10% over the life of the options which are
set at a maximum of 10 years.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
- -------------------------------------------------------------------------------------- -----------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR(2) ($/SH) (3) DATE 5% (4) 10% (4)
---- -------------- -------------- ---------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Ira C. Norris 0 N/A N/A N/A N/A N/A
Robert H. Daskal 4,167 (5) 21.8% $3.75 (5) 09/12/06 $9,827 $24,904
</TABLE>
- ----------------
(1) Each listed option granted to a named executive officer becomes
exercisable for 25% of the option shares after 12 months of continued
service from the date of grant. The option will become exercisable for
the balance of the shares in a series of 36 successive equal monthly
installments upon the optionee's completion of each additional month of
service measured from the first anniversary of the date of grant. Each
option will become immediately exercisable for all of the option shares
in the event the Company is acquired by merger or sale of substantially
all of the Company's assets or outstanding Common Stock, unless the
option is assumed or otherwise replaced by the acquiring entity. The
Compensation Committee has authority to provide for the acceleration of
each option in connection with certain hostile tender offers or proxy
contests for Board membership. Each option includes a limited stock
appreciation right pursuant to which the option, if in effect for at
least six months, will automatically be cancelled upon the occurrence
of certain hostile tender offers, in return for a cash distribution
from the Company based on the tender offer price per share. Each option
has a maximum term of 10 years, subject to earlier termination in the
event of the optionee's cessation of service with the Company.
(2) Includes options granted pursuant to the Company's automatic option
grant program for non-employee directors.
(3) The exercise price of each option may be paid in cash, in shares of
Common Stock valued at fair market value on the exercise date or
through a cashless exercise procedure involving a same-day sale of the
purchased shares. The Company may also finance the option exercise by
loaning the optionee sufficient funds to pay the exercise price for the
purchased shares and the federal and state tax liability incurred in
connection with such exercise. The Compensation Committee has the
authority to reprice outstanding options through the cancellation of
those options and the grant of replacement options with an exercise
price equal to the lower fair market value of the option shares on the
regrant date.
(4) The potential realizable value is reported net of the option price, but
before income taxes associated with exercise. These amounts represent
assumed annual compounded rates of appreciation at 5% and 10% only from
the date of grant to the expiration date of the option. There is no
assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year option term will be at the assumed 5% and 10% levels or at any
other defined level. Unless the market price of the Common Stock does
in fact appreciate over the option term, no value will be realized from
the option grants made to the executive officers.
(5) Restated for reverse stock split.
8
<PAGE> 11
OPTION/SAR EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the unexercised options held as of the end of the
last fiscal year. None of the named executive officers exercised options to
purchase the Company's Common Stock during the last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NAME NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT FY-END OPTIONS/SARS AT FY-END (MARKET PRICE
OF SHARES AT FY-END ($1.875) LESS
EXERCISE PRICE) (1)
----------------------------------------- ---------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- -------------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Ira C. Norris 0 0 0 0
Robert H. Daskal 12,500(1) 4,167(1)(2) 0 0
================================ ==================== ==================== =================== ===================
</TABLE>
(1) Restated for reverse stock split.
(2) Option is exercisable September 13, 1997.
OPTION AND SAR REPRICING
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE
UNDERLYING OF STOCK EXERCISE PRICE AT
OPTIONS/SARS AT TIME OF TIME OF NEW
REPRICED OR REPRICING OR REPRICING OR EXERCISE
NAME DATE AMENDED (#)(1) AMENDMENT ($)(1) AMENDMENT ($)(1) PRICE ($)(1)
---- ---- -------------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Robert H. Daskal 10/02/95 2,500 $6.75 $14.25 $6.75
Executive Vice
President and Chief
Financial Officer (2)
Lynn C. Parkes 10/02/95 417 6.75 56.25 6.75
Controller
</TABLE>
- ----------
(1) Restated for reverse stock split.
(2) Mr. Daskal ceased to be an officer and employee of the Company as of
January 15, 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors
sets the base salary of the Company's executive officers and approves individual
bonus programs for executive officers. Option grants to executive officers are
made by the Committee, and the Committee has complete discretion in establishing
the terms of each such grant. The following is a summary of policies of the
Committee that affect the compensation paid to executive officers, as reflected
in the tables and text set forth elsewhere in this Proxy Statement.
9
<PAGE> 12
Compensation Philosophy
- -----------------------
The Committee applies a consistent philosophy to compensation for all
employees, including executive officers. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork that is focused on meeting the expectations of
customers and stockholders.
The Company strives to pay competitively. The Company is committed to
providing a pay program that helps attract and retain quality
employees. To ensure that pay is competitive, the Company compares its
pay practices with those of competing companies and sets its pay
parameters based on this review. In general, the compensation for the
Company's executive officers approximate the compensation for the
comparison group, reflecting the Company's relative position within the
group. The Committee reviewed several compensation surveys of nearly
100 real estate development and management companies prepared by a firm
that specializes in real estate compensation studies. Many of the
public homebuilders included in the peer group index reflected on the
Performance Graph were also included in the compensation survey.
The Company pays for relative sustained performance. Executive officers
are rewarded based upon corporate performance and individual
performance. Corporate performance is evaluated by reviewing the extent
to which strategic and business plan goals are met, including such
factors as operating profit and performance relative to competitors.
Individual performance is evaluated by reviewing development progress
against set objectives and the degree to which Company values are
fostered.
The Company strives for fairness in the administration of pay. The
Company strives to balance the compensation paid to a particular
individual and the compensation paid to other persons both inside the
Company and at comparable companies.
General Compensation Policy
- ---------------------------
The Committee's overall policy is to offer the Company's executive
officers competitive cash-based and equity-based compensation opportunities
based upon their individual performance, the financial performance of the
Company and their contribution to that performance. One of the Committee's
primary objectives is to have a substantial portion of each officer's
compensation contingent upon the Company's performance as well as upon his or
her own level of performance.
The principal factors taken into account in establishing each executive
officer's compensation package are summarized below. Additional factors may be
taken into account to a lesser degree, and the relative weight given to each
factor varies with each individual in the sole discretion of the Committee. The
Committee may in its discretion apply entirely different factors, such as
different measures of financial performance, for future fiscal years.
Cash-Based Compensation. The Committee sets base salary for executive
officers on the basis of individual performance, years of experience, the salary
levels in effect for comparable positions with other companies in the industry
and internal comparability considerations. The aggregate amount of the Company's
annual bonus pool is based on a percentage of the Company's pre-tax income. This
amount is allocated to executive officers, including the Chief Executive
Officer, on the basis of the officer's salary level, years of experience,
operating performance and individual performance. No bonus was accrued or paid
to the Chief Executive Officer in 1996. The Company also has a tax-qualified
profit sharing plan to which it can contribute a portion of profits and such
contribution is allocated to eligible participants in proportion to their total
compensation for the year relative to the total aggregate compensation for all
eligible participants. The Company believes that all employees share the
responsibility of achieving profits. In addition, the Company has a 401(k) plan
to which it makes matching contributions.
Long-Term Equity-Based Compensation. The Committee intends to make
stock option grants on an annual basis. Each grant is designed to align the
interests of the executive officer with those of the stockholders and provide
each individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. Each grant
generally allows the officer to acquire shares of the Company's Common Stock at
10
<PAGE> 13
a fixed price per share (the market price on the grant date) over a specified
period of time (up to 10 years), thus providing a return to the officer only if
he or she remains in the employ of the Company and the market price of the
shares appreciates over the option term. The size of the option grant to each
executive officer generally is set at a level that is intended to create a
meaningful opportunity for stock ownership based upon the individual's current
position with the Company, but there is also taken into account the size of
comparable awards made to individuals in similar positions in the industry as
reflected in external surveys, the individual's potential for future
responsibility and promotion over the option term, the individual's individual
performance in recent periods. Generally, as an officer's level of
responsibility increases, a greater portion of his or her total compensation
will be dependent upon Company performance and stock price appreciation rather
than base salary. The relative weight given to these factors varies with each
individual in the sole discretion of the Committee.
CEO Compensation. In setting the compensation payable to the Company's
CEO, the Compensation Committee has sought to establish a level of base salary
competitive with that paid by companies within the industry which are comparable
in size to the Company and by companies outside of the industry with which the
Company competes for executive talent. The CEO has voluntarily reduced his
salary from $360,000 to $240,000, commencing in 1997. He will be eligible to
receive an annual bonus under the Company's executive incentive plan. No bonus
was accrued or paid to the CEO in 1994, 1995 or 1996.
Deduction Limit for Executive Compensation
- ------------------------------------------
Section 162(m) of the Internal Revenue Code ("Section 162(m)"), enacted
in 1993, limits federal income tax deductions for compensation paid to the Chief
Executive Officer and the four other most highly compensated officers of a
public company to $1.0 million per year, but contains an exception for
performance-based compensation that satisfies certain conditions. The stock
options granted to its executives currently do not qualify for the
performance-based exception to the deduction limit.
Because it is unlikely that compensation payable to any Company
executive would exceed the deduction limit in the near future, the Committee has
not yet considered whether it will seek to qualify compensation or will prohibit
the payment of compensation that would exceed the deduction limit. However, in
approving the amount and form of compensation for Company executives, the
Committee will continue to consider all elements of cost to the Company of
providing that compensation.
Reports on Option Exchange and Executive Compensation submitted by the
Compensation Committee of the Company's Board of Directors:
Ira C. Norris
Ronald L. Neeley
Thomas E. Gibbs, Jr.
11
<PAGE> 14
PERFORMANCE GRAPH
The following performance graph shows the percentage change in
cumulative total return to a holder of the Company's Common Stock, assuming
dividend reinvestment, compared with the cumulative total return, assuming
dividend reinvestment, of the Standard & Poor's 500 Stock Index, the Standard &
Poor's SmallCap 600 Index and the peer group indicated below, during the period
from April 1, 1993 (the date prior to the Company's initial public offering)
through December 31, 1996. The Company has changed its comparison to the
Standard & Poor's SmallCap 600 Index from the Standard & Poor's 500 Stock Index.
The Company considers its capitalization more closely reflective of the
companies indexed in the S&P SmallCap 600 Index.
COMPARISON OF CUMULATIVE TOTAL RETURN*
APRIL 1, 1993 TO DECEMBER 31, 1996
[CHART]
<TABLE>
<CAPTION>
4/1/93 12/31/93 12/31/94 12/31/95 12/31/96
------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Inco Homes $100.00 $ 80.00 $ 15.31 $ 8.75 $ 3.12
S&P 500 Stock Index $100.00 $105.78 $107.18 $147.45 $181.31
S&P SmallCap 600 Index $100.00 $114.69 $109.22 $141.94 $172.20
Peer Group $100.00 $119.69 $ 75.79 $101.84 $ 95.94
</TABLE>
* $100 invested on 4/1/93 in stock, group or index.
12
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ira C. Norris, the Chairman of the Board, President and Chief Executive
Officer of the Company, was a member of the Compensation Committee of the Board
of Directors in 1996.
Transactions with Ira C. Norris and Entities Controlled by Ira C. Norris
The Company leases its corporate headquarters in Upland, California
from Inco Plaza, Ltd. Inco Plaza, Ltd. is a limited partnership owned 80% by G&N
Investments, Ltd., its sole general partner. G&N Investments, Ltd. is a limited
partnership owned 70% by Nancy and Ira C. Norris, its sole general partners. The
lease, subject to extension by the Company, expires in September 2000 and
provides for the lease by the Company of approximately 6,800 square feet of
rentable area at an initial monthly base rent of $8,823. Rent increases
annually, as of October 1996, based upon the Consumer Price Index. The Company
believes that this lease is on as favorable terms as those that could have been
obtained from unaffiliated third parties. In 1996, the Company incurred rental
expense of $107,000 with Inco Plaza, Ltd. for the use of office space.
The Company advanced funds to Victor Valley Commercial Properties over
several years prior to 1992. Victor Valley Commercial Properties is a limited
partnership owned 50% by G&N Investments, Ltd., its sole general partner. In
May, 1996, this unsecured receivable from Victor Valley Commercial Properties
approximated $293,000. At that time, the Company assigned this advance to Ira C.
Norris in exchange for a cash payment of $293,000.
The Company engaged Nancy Orman Interiors ("NOI"), an interior
decorating firm, to decorate certain of the Company's model homes. The firm is
owned by Nancy Norris, the wife of Ira C. Norris. NOI analyzes the demographic
information prepared by the Company, designs the interior areas, purchases the
furnishings, hires the subcontractors and installs the furnishings with the
assistance of the Company's employees. NOI's fees primarily include its direct
costs and a fee for its design services. In 1996, the Company incurred costs of
$200,000 to NOI, of which approximately $153,000 represented reimbursement for
out-of-pocket expenses and items purchased for the Company and approximately
$47,000 represented fees for its design services. The Company believes that
these services were provided on as favorable terms as those that could have been
obtained from unaffiliated third parties.
At December 31, 1996, the Company had received from Ira C. Norris
unsecured advances net of paybacks totaling $676,000 for working capital
purposes. This amount includes accrued interest of $13,000. As of June 30, 1997
this amount had increased to $2.1 million, which includes accrued interest of
$71,000. The Company has issued several notes to Mr. Norris, bearing interest at
10.0%, which mature either on September 30, 1997 or December 31, 1997.
Additionally, in June 1997, the Norris Living Trust, of which Mr. Norris is a
beneficiary and trustee, loaned the Company $500,000 secured by undeveloped land
owned by the Company in Victorville and Palmdale, California. The note bears
interest at 10% and is due in June 1998.
Historically, certain of the predecessor subsidiaries of the Company
(the "S Subsidiaries") were treated for federal and state income tax purposes as
S Corporations under Subchapter S of the Internal Revenue Code of 1986, as
amended, and under comparable state tax laws. As a result, the earnings from the
S Subsidiaries through the day preceding the date of termination of the S
Subsidiaries' status as S Corporations, which was April 1993 (the "Termination
Date"), have been or will be, as the case may be, taxed, with certain
exceptions, for federal and state income tax purposes directly to Ira C. Norris,
the sole stockholder of the S Subsidiaries, rather than to the Company. In March
1993, the Company and Mr. Norris entered into a Tax Indemnification Agreement,
which generally provided that Mr. Norris would be indemnified by the Company
with respect to federal and state income taxes (plus interest and penalties)
shifted from an S Subsidiary taxable year subsequent to the Termination Date to
a taxable year in which the S Subsidiary was an S Corporation, and the Company
would be indemnified by Mr. Norris with respect to federal and state income
taxes (plus interest and penalties) shifted from Mr. Norris in a taxable year
ending on or before the Termination Date to the Company for taxable years ending
either before or after the Termination Date. Pursuant to this agreement, Mr.
Norris also agreed to indemnify the Company against any amounts that may be paid
to the IRS as a result of tax deductions disallowed due to excessive
compensation paid to him, as well as fifty percent of all out-of-pocket costs
incurred in defending an IRS challenge. In November 1993, Mr. Norris paid
$247,000 to the Company in satisfaction of such indemnification obligation.
13
<PAGE> 16
Transactions with Overland Opportunity Fund, LLC and Overland Company, Inc.
At the time the Company entered into a Common Stock Purchase Agreement
with Overland Opportunity Fund, LLC, the Company, in consideration of a $50,000
payment, gave Overland Opportunity Fund, LLC an exclusive option to purchase
approximately 71 acres of commercial property located in the Company's Eagle
Ranch project. The Company sold its Eagle Ranch project in June 1997. The buyer
of the property assumed the Company's option obligation.
In December 1996, the Company issued a warrant to Overland Company,
Inc. to purchase shares of the Company's Common Stock. The warranty was issued
as compensation for all services to be performed pursuant to a Consulting
Agreement entered into in December 1996. See "Security Ownership of Management."
The Company is the managing general partner of, and has a 50% interest
in, Freedom-Eagle Ranch Housing Partners ("FERHP"), a limited partnership. One
of the owners of both Overland Opportunity Fund, LLC and Overland Company, Inc.
holds a 5.55% limited partnership interest in FERHP. FERHP was formed in May
1996 to obtain land from the Company and develop 166 single family homes in
Victorville, California. See "Form 10-K Item 1. Business-Table II-Current and
Planned Projects." This limited partner has contributed $100,000 to FERHP, none
of which has been repaid. This limited partner has also been paid a fee of
$18,000 from FERHP, and earns a fee of .5% of the net sales price as single
family homes developed by FERHP close escrow.
One of the owners of both Overland Opportunity Fund, LLC and Overland
Company, Inc., is a general partner in Victorville 163 Partners, L.P. In
November 1996, the Company entered into a Development and Marketing Agreement
with Victorville 163 Partners, L.P. to develop, construct and market 163 lots
owned by Victorville 163 Partners, L.P. in Victorville, California. All
financing and bonding will be the responsibility of Victorville 163 Partners,
L.P. The Company will receive compensation in the form of overhead draws,
development fees and sales and marketing fees totaling approximately 8.0% of the
gross sales price of the homes. The Company will assume the home warranty costs
for which it will be paid $750 per house.
In June 1997, the Company sold a parcel of vacant land of approximately
13 acres it owned in Murrieta, California to Overland Opportunity Fund, LLC for
a price of $110,000.
Transaction with Ronald L. Neeley
In January 1993, the Company entered into a loan agreement with a
revocable trust of Ronald L. Neeley pursuant to which the Company had the right
to borrow up to $3 million. $1.76 million was borrowed under this loan
agreement, which amount was repaid in full in April 1993. No further borrowings
can be made under the terms of this loan agreement. In connection with this
loan, the Company issued a warrant to Mr. Neeley to purchase 7,920 shares
(restated for reverse stock split) of the Company's Common Stock at an exercise
price of $60.00 per share (restated for reverse stock split), the Company's
initial public offering price. The warrant is exercisable in October 1993 and
expires in April 1998. As of the date hereof, the warrant has not been
exercised.
In June 1997, the Neeley Revocable Family Trust, of which Mr. Neeley is
a beneficiary and trustee, loaned the Company $500,000 secured by undeveloped
land owned by the Company in Victorville and Palmdale, California. The note
bears interest at 15% and is due in June 1998.
Transactions with Thomas E. Gibbs, Jr.
The Company is the managing general partner of, and has a 51.295%
interest in, Palmdale Vistas Housing Developments, Ltd. ("Palmdale Vistas"), a
limited partnership. Mr. Gibbs holds a 1.295% limited partner's interest in
Palmdale Vistas, and also a 23% general partner's interest and a 1.376% limited
partner's interest in Palmdale Vistas Housing Investments, a limited partnership
which holds a 47.41% limited partnership interest in Palmdale Vistas. Palmdale
Vistas was formed in June 1989 to purchase land and develop approximately 261
single family homes in Palmdale, California. See "Form 10-K Item 1.
Business-Table II-Current and Planned Projects." Mr. Gibbs has contributed
$120,000 to Palmdale Vistas, none of which has been repaid.
14
<PAGE> 17
In June 1996, the Company signed a $600,000 Secured Participation Note
with ALG 1996-1 ("ALG"). Mr. Gibbs holds a 25% general partner's interest in
ALG. The note bears interest at the prime rate plus 3.0% per annum and matures
in June 1998. The Company pays interest monthly to ALG and will pay down
portions of the note upon closings of completed single family homes in a 151
unit subdivision in Adelanto, California. Additionally, 45% of the net income
from the sale of these homes will be paid by the Company to ALG. See "Form 10-K
Item 1. Business-Table II-Current and Planned Projects."
The Company is the managing general partner of, and has a 50% interest
in, Triumph-Lancaster Housing Partners ("Triumph"), a limited partnership. The
Gibbs Family Trust, of which Mr. Gibbs is a beneficiary and trustee, holds a 50%
limited partner's interest in Triumph. Triumph was formed in August 1996 to
purchase land and develop 78 single family homes in Lancaster, California. See
"Form 10-K Item 1. Business-Table II-Current and Planned Projects." The Gibbs
Family Trust has contributed $190,000 to Triumph, none of which has been repaid.
In November 1996, Ted Gibbs loaned $75,000 to Triumph. In February 1997, Triumph
repaid this loan to Mr. Gibbs in full, including interest at the rate of prime
plus 2.5% per annum.
In October 1996, the Company signed a $1.2 million Secured
Participation Note with Hunters Ridge Investment Partners ("HRIP"). Mr. Gibbs is
the managing general partner of HRIP, with a 56.25% interest. The note bears
interest at 10.0% per annum and matures in December 1998. The Company pays
interest monthly to HRIP and will pay down portions of the note upon closings of
completed single family homes in an 83 unit subdivision in Fontana, California.
Additionally, 50% of the net income from the sale of these homes will be paid by
the Company to HRIP. See "Form 10-K Item 1. Business-Table II-Current and
Planned Projects."
The Company incurred legal fees of approximately $16,400 to Mr. Gibbs
in 1996, and will incur additional legal fees in 1997. The other members of the
Board of Directors agreed at their March 3, 1997 meeting to pay Mr. Gibbs for
his legal services up to $25,000 with non-registered common stock of the
Company. The number of shares issued will be based upon the closing price of
$3.25 per share on March 3, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten-percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file.
Overland Opportunity Fund, LLC, the beneficial owner of 200,000 shares
of the Company's Common Stock (restated for reverse stock split), and Overland
Company, Inc., the beneficial owner of a warrant to acquire 200,000 shares of
the Company's Common Stock (restated for reverse stock split), did not file
their respective Form 3's covering those acquisitions on a timely basis. See
"Item 12. Security Ownership of Certain Beneficial Owners and Management."
Except as stated above and based solely upon review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, the Company believes that there was compliance for the
fiscal year ended December 31, 1996 with all Section 16(a) filing requirements
applicable to the Company's officers, directors and greater than ten-percent
beneficial owners.
15
<PAGE> 18
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Price Waterhouse LLP served as independent public
accountants for the Company for the fiscal year ended December 31, 1996. The
Board of Directors desires the firm to continue in this capacity for the current
fiscal year. Accordingly, a resolution will be presented to the meeting to
ratify the selection of Price Waterhouse LLP by the Board of Directors as
independent public accountants to audit the accounts and records of the Company
for the fiscal year ending December 31, 1997, and to perform other appropriate
services. In the event that stockholders fail to ratify the selection of Price
Waterhouse LLP, the Board of Directors would reconsider such selection.
A representative of Price Waterhouse LLP will be present at the Annual
Meeting to respond to appropriate questions and to make a statement if such
representative desires to do so.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered at the 1998 Annual
Meeting of Stockholders must be received by Inco Homes no later than December
19, 1997. The proposal must be mailed to the Company's principal executive
offices, 1282 West Arrow Highway, Upland, CA 91786, Attention: Ira C. Norris.
Such proposals may be included in next year's proxy statement if they comply
with certain rules and regulations promulgated by the Securities and Exchange
Commission.
OTHER MATTERS
Management does not know of any matters to be presented at this Annual
Meeting other than those set forth herein and in the Notice accompanying this
Proxy Statement.
It is important that your shares be represented at the meeting,
regardless of the number of shares which you hold. YOU ARE, THEREFORE, URGED TO
EXECUTE PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH HAS
BEEN ENCLOSED FOR YOUR CONVENIENCE. Stockholders who are present at the meeting
may revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
Ira C. Norris
Chairman of the Board, President
and Chief Executive Officer
July 17, 1997
Upland, California
16
<PAGE> 19
INCO HOMES CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
---------------
1997 ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 8, 1997
---------------
The undersigned stockholder of Inco Homes Corporation, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated July 17, 1997, and hereby appoints
Ira C. Norris and Norman B. Gold, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution and resubstitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1997 Annual Meeting of Shareholders of Inco Homes Corporation, to be held on
September 8, 1997, at 1:00 p.m., local time, at the Ontario Hilton Hotel, 700
North Haven Avenue, Ontario, California 91764, and at any postponements or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS
(1) ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY
(except as noted to the contrary below) to vote for each nominee listed below
</TABLE>
Robert H. Daskai Ronald L. Neeley
(Instructions: To withhold authority to vote for any one or more nominee(s),
write the name(s) of such nominee(s) in the space provided
below)
- --------------------------------------------------------------------------------
(2) PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL 1997
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued and to be signed on reverse side.)
<PAGE> 20
(continued from other side)
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any postponements or adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE VOTED FOR PROPOSALS 1 AND 2, AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. IF
ANY NOMINEE BECOMES UNAVAILABLE FOR ANY REASON, THE PERSONS NAMED AS PROXIES
SHALL VOTE FOR THE ELECTION OF SUCH OTHER PERSON AS THE BOARD OF DIRECTORS MAY
PROPOSE TO REPLACE SUCH NOMINEE.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Dated: , 1997
---------------------
-------------------------------------
Signature or signatures
of stockholder
(This Proxy must be signed exactly as
your name appears hereon. Executors,
administrators, trustees, etc. should
give full title as such. If the
shareholder is a corporation, a duly
authorized officer should sign on
behalf of the corporation and should
indicate his or her title.)
