<PAGE>
[LOGO]
C. BREWER HOMES, INC.
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 29, 1997
To our Stockholders:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of C. BREWER HOMES, INC. (the "Company"), which will be held at the Company's
Kaimana model complex located at 17 Poniu Circle, Wailuku, Hawaii 96793 at 9:00
a.m. on August 29, 1997 for the following purposes:
1. To elect six directors to the Board of Directors;
2. To consider and vote upon a proposal to ratify the selection of Coopers
& Lybrand L.L.P. as independent public accountants for the Company for
the fiscal year ending March 31, 1998; and
3. To act upon such other business as may properly come before the meeting
or any adjournment or postponement thereof.
These matters are more fully described in the Proxy Statement accompanying
this Notice.
The Board of Directors has fixed the close of business on June 30, 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 Class A
Common Stock and Class B Common Stock of C. Brewer Homes, Inc., considered as a
single class, excluding Treasury Stock, 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.
Sincerely yours,
/s/ John W.A. Buyers
John W.A. Buyers
CHAIRMAN OF THE BOARD
August 1, 1997
Honolulu, Hawaii
<PAGE>
STOCKHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
OF
C. BREWER HOMES, INC.
TO BE HELD ON AUGUST 29, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of C. BREWER HOMES, INC. ("C. Brewer Homes" or the "Company")
of proxies to be voted at the 1997 Annual Meeting of Stockholders, which will be
held at 9:00 a.m. on August 29, 1997 at the Company's Kaimana model complex
located at 17 Poniu Circle, Wailuku, Hawaii, 96793, or at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
1997 Annual Meeting of Stockholders. This Proxy Statement and the proxy card
were first mailed to stockholders on or about August 1, 1997. The Company's 1997
Annual Report is being mailed to stockholders concurrently with this Proxy
Statement. The 1997 Annual Report is not to be regarded as proxy soliciting
material or as a communication by means of which any solicitation of proxies is
to be made.
VOTING RIGHTS AND SOLICITATION
The close of business on June 30, 1997 was the record date for stockholders
entitled to notice of and to vote at the 1997 Annual Meeting of Stockholders. As
of that date, C. Brewer Homes had 3,392,089 shares of Class A Common Stock, $.01
par value per share, and 4,943,911 shares of Class B Common Stock, $.01 par
value per share (collectively, the "Common Stock"), issued and outstanding. All
of the shares of the Company's Common Stock outstanding on the record date,
except for Treasury Stock, are entitled to vote at the 1997 Annual Meeting of
Stockholders, and stockholders of record entitled to vote at the meeting will
have one vote for each share of Class A Common Stock and three votes for each
share of Class B Common Stock so held with regard to each matter 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 C. Brewer Homes
will be voted at the 1997 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
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 at the meeting. 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 C. Brewer 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 C. Brewer 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
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PROPOSAL 1
ELECTION OF DIRECTORS
A board of six directors will be elected at the 1997 Annual Meeting of
Stockholders. 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, unless instructions to the
contrary are marked on the proxy. In the event that a nominee is unable or
declines to serve as a director at the time of the 1997 Annual Meeting of
Stockholders, 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. The term of office
of each person elected as a director will continue until the next Annual Meeting
of Stockholders or until the director's successor has been elected.
NOMINEES TO BOARD OF DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION SINCE AGE
- ------------------------------------------------------------------------------------------------------------------ -------- ---
<S> <C> <C> <C>
John W.A. Buyers......................................... Chairman of the Board of C. Brewer Homes, Inc.; Chairman 1992 69
and Chief Executive Officer of C. Brewer and Company,
Limited and Chairman and President of Buyco, Inc.
Seth A. Bakes............................................ President and Chief Executive Officer of C. Brewer Homes, 1997 44
Inc.
Clinton R. Churchill..................................... Trustee for the Estate of James Campbell 1993 53
David A. Heenan.......................................... Trustee for the Estate of James Campbell 1993 57
Paul C.T. Loo............................................ Senior Vice President--Dean Witter Reynolds, Inc. 1997 66
Kent T. Lucien........................................... Executive Vice President and Chief Financial Officer of 1989 43
C. Brewer and Company, Limited
</TABLE>
John W.A. Buyers has been Chairman of the Board of the Company since May
1992. Mr. Buyers was appointed President and Chief Executive Officer of C.
Brewer and Company, Limited ("CBCL") in 1975, and was the Chairman, President
and Chief Executive Officer of CBCL from 1982 to 1993. Mr. Buyers has been the
Chairman and President of Buyco, Inc. ("Buyco"), the parent company of CBCL,
since 1986. Mr. Buyers is a director of First Hawaiian Bank, Mauna Loa
Resources, Inc. and John B. San Filippo & Sons, Inc., a commercial nut company.
Seth A. Bakes has been President and Chief Executive Officer and a Director
of the Company since January 1997. From August 1995 to January 1997, he was
Managing Director of Del Amo Financial Center. From March 1986 to August 1995,
he was Vice President-Finance and then a Development Partner with Winger
Development Company, a California real estate developer. Mr. Bakes has a masters
degree in Business Administration from the Amos Tuck School of Business
Administration at Dartmouth College.
Clinton R. Churchill has been a Trustee for the Estate of James Campbell
since July 1992. From July 1988 through July 1992, Mr. Churchill was the
estate's Chief Executive Officer, and from October 1984 to June 1988, he served
as its Chief Operating Officer. From 1981 to 1984, Mr. Churchill was the
President and Chief Executive Officer of Gaspro, Inc. Mr. Churchill is also a
director of Pacific Century Financial Corporation.
2
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David A. Heenan has been a Trustee for the Estate of James Campbell since
January 1995. From May 1982 to December 1994, Mr. Heenan was Chairman, President
and Chief Executive Officer of Theo. H. Davies & Co., Ltd., the North American
holding company for the Hong Kong-based Jardine Matheson. Mr. Heenan joined
Theo. H. Davies & Co., Ltd. in May 1982. From April 1975 to April 1982, Mr.
Heenan served as vice president for academic affairs at the University of Hawaii
and, before that, as dean of its business school. Mr. Heenan is also a director
of Pacific Century Financial Corporation, Aloha Airlines, Inc. and Pico
Products, Inc.
Paul C.T. Loo has held various positions with Dean Witter Reynolds, Inc.
since 1960 and has been a Senior Vice President since 1985. Mr. Loo has also
been a director of CBCL and Buyco since 1986.
Kent T. Lucien was the Executive Vice President and Chief Financial Officer
of the Company from April 1993 to April 1994. Mr. Lucien has been the Executive
Vice President and Chief Financial Officer of CBCL since June 1991. From January
1989 to May 1991, Mr. Lucien was Senior Vice President and Chief Financial
Officer of CBCL, and from January 1987 to December 1988, he was Vice President,
Chief Financial Officer and Treasurer of CBCL. Mr. Lucien has been the Vice
President of Mauna Loa Resources, Inc. since June 1986.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of 11 meetings during the
fiscal year ended March 31, 1997 (the "1997 fiscal year"). Each director
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board (held during the period for which he served as a director) and (ii)
the total number of meetings held by all committees of the Board on which he
served (during the periods that he served).
The Company has an Audit Committee, a Compensation Committee and a Conflicts
Committee of the Board of Directors. 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 public accountants to review internal control conditions, audit
plans and results, and financial reporting procedures. This Committee, which
currently consists of Kent T. Lucien, Clinton R. Churchill and David A. Heenan,
held one meeting during the 1997 fiscal year.
The Compensation Committee reviews and approves the Company's compensation
arrangements for executive officers and key employees and administers the
Company's 1993 Stock Option/Stock Issuance Plan (the "1993 Plan"). This
Committee, which currently consists of David A. Heenan, John W.A. Buyers and
Clinton R. Churchill, held one meeting during the 1997 fiscal year.
The Conflicts Committee resolves any conflicts of interest that may arise in
connection with the Company's ongoing relationship with Buyco, CBCL and their
affiliates, including the amendment of any of the agreements between the Company
and Buyco, CBCL and their affiliates. Prior to the initial public offering of
the Company's Class A Common Stock in December 1993 (the "Initial Public
Offering"), the Company was a wholly owned subsidiary of CBCL, which is a wholly
owned subsidiary of Buyco. Buyco is the common parent of an affiliated group of
corporations formed in connection with the acquisition of CBCL in 1986. This
Committee, which currently consists of Clinton R. Churchill, David A. Heenan and
Seth A. Bakes, held two meetings during the 1997 fiscal year.
3
<PAGE>
DIRECTOR REMUNERATION
Non-employee members of the Board are each paid an annual retainer fee of
$15,000 and are reimbursed for all reasonable out-of-pocket costs incurred in
connection with their attendance at such meetings. They also receive $500 for
each meeting of the Board attended, $400 for each committee meeting attended on
a day on which no Board meeting is held, and $200 for each committee meeting
attended on the same day on which a Board meeting is held. Pursuant to the
automatic stock option grant program under the 1993 Plan, each individual who
first becomes a non-employee Board member after the effective date of the 1993
Plan is eligible to receive an option grant for 5,000 shares of Class A Common
Stock at an exercise price per share equal to the fair market value on the date
of grant. Each individual who continues to serve as a non-employee Board member
is also eligible to receive a 5,000-share option grant biennially on the date of
every second Annual Meeting of Stockholders since the 1995 Annual Meeting of
Stockholders, provided such individual has served as a non-employee Board member
for at least six months. A non-employee Board member may not receive options to
purchase more than 25,000 shares of Class A Common Stock over his or her period
of Board service.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock as of
June 6, 1997 by: (i) each person who is known to the Company to own beneficially
more than five percent of the outstanding shares of the Company's Class A Common
Stock or Class B Common Stock; (ii) each director; (iii) each officer listed in
the Summary Compensation Table; and (iv) all directors and executive officers as
a group.
<TABLE>
<CAPTION>
COMMON STOCK (1)
---------------------------------------------
CLASS A CLASS B
-------------------- ----------------------
PERCENTAGE PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS(2) SHARES OF CLASS(3)
- ------------------------------------------------------------------------------------ ------- ----------- --------- -----------
<S> <C> <C> <C> <C>
John W.A. Buyers (4)(5)(6).......................................................... 5,000 * 968,827 19.5%
SC Fundamental Inc.,
The SC Fundamental Value Fund, L.P., SC Fundamental Value BVI, Inc., Gary N.
Siegler and Peter M. Collery (7).................................................. 492,600 14.6% -- --
712 Fifth Avenue
New York, NY 10019
Fred H. Brenner and Annette J. Brenner (8).......................................... 292,900 8.7% -- --
514 N. Wynnewood Ave.
Wynnewood, PA 19096
Richard W. Kazmaier Trust (9)....................................................... -- -- 388,379 7.8%
676 Elm Street
Concord, MA 01742
Marvin J. Tilker (10)............................................................... -- -- 372,050 7.5%
415 South St. 14004
Honolulu, HI 96813
Jean E. Rolles Trust UA Feb. 4, 1988 (11)........................................... -- -- 364,543 7.4%
3087 La Pietra Circle
Honolulu, HI 96815
Ing Family Partnership.............................................................. -- -- 361,283 7.3%
130 Merchant Street, Suite 1000
Honolulu, HI 96813
John J. F. Sherrerd (12)............................................................ -- -- 328,768 6.6%
833 Miurfield Road
Bryn Mawr, PA 19010
Clinton R. Churchill (6)............................................................ 14,200 * -- --
David A. Heenan (6) (13)............................................................ 10,800 * -- --
Paul C.T. Loo (6)................................................................... 278 * 189,119 3.8%
Kent T. Lucien (6).................................................................. 10,000 * 112,901 2.0%
Seth A. Bakes....................................................................... -- -- -- --
Edward T. Foley (14)................................................................ 19,792 * -- --
Rodney L. Gilliland (14)............................................................ 11,458 * -- --
B.G. Moynahan (14).................................................................. 302,625 8.3% 54,794 1.1%
All executive officers and directors as a group (10 persons) (15)................... 384,903 10.4% 1,325,641 26.7%
</TABLE>
* Less than 1%
- ------------------------------
(1) Except as indicated in the footnotes to this table, the stockholders named
in the table are known to the Company to have sole voting and investment
power with respect to all shares of Class A Common Stock and Class B Common
Stock shown as beneficially owned by them, subject to community property
laws where applicable.
(2) Based on 3,376,424 shares of the Company's Class A Common Stock outstanding
on June 6, 1997.
(3) Based on 4,959,576 shares of the Company's Class B Common Stock outstanding
on June 6, 1997.
(4) Mr. Buyer's address is 827 Fort Street, Honolulu, HI 96813.
(5) These shares are beneficially owned by the J.W.A. Buyers Revocable Living
Trust dated December 20, 1989.
(6) Includes options exercisable within 60 days of June 6, 1997 to purchase
shares of Class A Common Stock as follows: Buyers-5,000; Churchill-10,000;
Heenan-10,000; Loo-278; and Lucien-10,000. These options were granted
pursuant to the Company's automatic stock option grant program for
non-employee Board members.
(7) Beneficial ownership is based in part on an amended Schedule 13D filed on
or about January 5, 1996, which states: (i) The SC Fundamental Value Fund,
L.P. and its general partner, SC Fundamental, Inc., beneficially own and
share voting and dispositive
5
<PAGE>
power over 322,950 shares of Class A Common Stock; (ii) SC Fundamental Value
BVI, Inc. beneficially owns 167,650 shares of Class A Common Stock which it
purchased as managing general partner of the investment manager of SC
Fundamental Value BVI, Ltd. and shares voting and dispositive power with
respect to such shares; and (iii) Gary N. Siegler and Peter M. Collery is
each a controlling stockholder, executive officer and director of SC
Fundamental Inc. and SC Fundamental Value BVI, Inc. and by virtue of such
status may be deemed to own beneficially such shares.
(8) Beneficial ownership is based on a Schedule 13D filed on or about January
7, 1997, which states; (i) Fred H. Brenner beneficially owns 69,200 shares
of Class A Common Stock; (ii) Annette J. Brenner beneficially owns 223,700
shares of Class A Common Stock; (iii) together, Fred and Annette Brenner, as
husband and wife, beneficially own 292,900 shares of Class A Common Stock;
and (iv) each of them disclaims beneficial ownership of the shares owned by
their spouse.
(9) Includes 27,096 shares beneficially owned by the Richard W. Kazmaier Trust
UA December 8, 1989, 252,898 shares beneficially owned by the Richard W.
Kazmaier 1988 Trust and 108,385 shares beneficially owned by the KSG Trust.
(10) Includes 39,646 shares beneficially owned by the Marvin J. Tilker Trust,
12,379 shares beneficially owned by the Marvin Tilker Irrevocable Trust, and
320,025 shares beneficially owned by the Marvin J. Tilker Revocable Trust.
(11) Includes 1,081 shares beneficially owned by the Jean E. Rolles Trust UA
December 26, 1985 and 1,081 shares beneficially owned by the Jean E. Rolles
Trust UA October 12, 1988.
(12) Includes 81,289 shares beneficially owned by the John J.F. Sherrerd Deed
Trust and 27,457 shares beneficially owned by Kathleen C. Sherrerd.
(13) Includes 800 shares of Class A Common Stock beneficially owned by the Nery
L. Heenan Revocable Living Trust.
(14) Includes options exercisable within 60 days of June 6, 1997 to purchase
shares of Class A Common Stock as follows: Foley-19,792; Gilliland-11,458;
and Moynahan-262,625.
(15) Includes options exercisable within 60 days of June 6, 1997 held by all
executive officers and directors as a group, to purchase an aggregate of
339,903 shares of Class A Common Stock.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned by (i) the Company's Chief Executive Officer, (ii) each of
the two other most highly compensated executive officers of the Company serving
as such as of the end of the last fiscal year whose total annual salary and
bonus exceeded $100,000, and (iii) one former chief executive officer of the
Company, for services rendered in all capacities to the Company for the fiscal
years ended March 31, 1997, March 31, 1996 and March 31, 1995. Such individuals
will be hereafter referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
-----------------------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY (1) BONUS OPTIONS COMPENSATION (2)
- --------------------------------------------------- ----------- ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
1997 $ 47,115 $ -- 50,000 $ 63,877(4)
Seth A. Bakes 1996 -- -- -- --
President and Chief Executive Officer (3)........ 1995 -- -- -- --
Edward T. Foley 1997 120,000 -- 10,000 16,867(5)
Executive Vice President and Chief Financial 1996 115,000 -- -- 4,777
Officer.......................................... 1995 92,138 24,607 25,000 1,306
1997 145,000 47,500 -- 8,850
Rodney L. Gilliland 1996 126,250 -- 25,000 2,175
Senior Vice President, Sales and Marketing....... 1995 33,333 5,000 15,000(6) --
1997 187,500 -- 82,500 172,339(8)
B.G. Moynahan 1996 250,000 -- -- 11,256(9)
President and Chief Executive Officer (7)........ 1995 225,000 71,250 -- 9,100(9)
</TABLE>
- ------------------------------
(1) Includes employee contributions to CBCL's 401(k) Plan and Buyco's 401(k)
Plan in which the Company's employees participated prior to the Initial
Public Offering. The Company's employees continue to participate in CBCL's
401(k) Plan.
(2) The indicated amount for each Name Executive Officer includes contributions
made by the Company to CBCL's 401(k) Plan on behalf of each such officer
which match his or her salary deferral contributions to such plan as
follows:
<TABLE>
<CAPTION>
401(K) PLAN
NAME YEAR CONTRIBUTION
- ---------------------------------------------------------------------- --------- -------------
<S> <C> <C>
Seth A. Bakes......................................................... 1997 $ --
1996 --
1995 --
Edward T. Foley....................................................... 1997 8,638
1996 4,777
1995 1,306
Rodney L. Gilliland................................................... 1997 8,850
1996 2,175
1995 --
B.G. Moynahan......................................................... 1997 9,656
1996 6,656
1995 4,500
</TABLE>
(3) Mr. Bakes became an employee of the Company in January 1997.
7
<PAGE>
(4) Represents relocation expenses paid by the Company.
(5) The indicated amount also is comprised of a retroactive contribution made by
the Company to CBCL's 401(k) Plan on behalf of Mr. Foley.
(6) These options were canceled in connection with the grant of options to Mr.
Gilliland in the 1996 fiscal year.
(7) Mr. Moynahan resigned from the Company in December 1996.
(8) The indicated amount also is comprised of the following in connection with
Mr. Moynahan's resignation from Company: accrued vacation--$57,692; deferred
compensation paid pursuant to the Company's Supplemental Retirement
Plan--$33,607; fees paid in connection with a consultant agreement between
the Company and Mr. Moynahan--$67,384; and life insurance premiums paid by
the Company on behalf of Mr. Moynahan--$4,000.
(9) The indicated amount for Mr. Moynahan also is comprised of $4,600 in life
insurance premiums paid by the Company on behalf of Mr. Moynahan.
STOCK OPTIONS
The following table sets forth information concerning the stock options
granted by the Company during the 1997 fiscal year to the Named Executive
Officers. No stock appreciation rights ("SARs") were granted during the 1997
fiscal year to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERM (4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED (1) FISCAL YEAR (2) PER SHARE(3) DATE 5% 10%
- ----------------------------------- ----------- ----------------- ------------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Seth A. Bakes...................... 50,000 35% $ 2.125 01/26/07 $ 66,820 $ 169,335
Edward T. Foley.................... 10,000 7% 2.0625 01/27/07 12,971 32,871
B.G. Moynahan...................... 82,500 58% 4.50 11/30/97 27,496 57,714
</TABLE>
- ------------------------------
(1) The options granted to Mr. Bakes and Mr. Foley have a maximum term of ten
years, subject to earlier termination in the event of the optionee's
cessation of service with the Company. Twenty-five percent of such option
shares will vest upon the optionee's completion of one year of service
measured from the grant date, and the balance will vest in successive equal
monthly installments over the next thirty-six months thereafter. The option
granted to Mr. Moynahan expires on November 30, 1997. Twenty percent of such
option shares vested on June 14, 1997, and 1,375 option shares vest in
successive equal monthly installments thereafter until the November 30, 1997
expiration date.
The shares subject to these options will immediately vest in the event the
Company is acquired by a merger or asset sale, unless the options are
assumed by the acquiring entity. The Plan Administrator has the
discretionary authority to provide for accelerated vesting of the option
shares following a hostile change in control of the Company, whether by
tender offer for more than 50% of the Company's outstanding voting stock or
change in the majority of the Board effected through one or more proxy
contests.
The Plan Administrator may grant SARs in connection with one or more option
grants made under the Plan. Two types of SARs may be issued: (i) tandem
rights which require the holder to elect between the exercise of the
underlying option for shares of Class A Common Stock and the surrender of
such option for a distribution from the Company, payable in cash or shares
of Common Stock, based upon the appreciated value of the option shares or
(ii) limited rights pursuant to which each outstanding option is canceled
upon a take-over of the Company effected through a hostile tender offer for
more than 50% of the outstanding Class A Common Stock in exchange for a cash
distribution from the Company equal to the tender-offer price of the vested
shares of Class A Common Stock subject to that option less the exercise
price payable for those shares.
(2) The Company granted options to employees to purchase a total of 142,500
shares of Class A Common Stock during the 1997 fiscal year.
(3) The exercise price may be paid in cash, in shares of the Company's Class A
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
8
<PAGE>
finance the option exercise by loaning the optionee sufficient funds to pay
the exercise price for the purchased shares and the federal and state income
and employment tax liability incurred by the optionee in connection with
such exercise. The optionee may be permitted, subject to the approval of the
Plan Administrator, to apply a portion of the shares purchased under the
option (or to deliver existing shares of Class A Common Stock) in
satisfaction of such tax liability. The Plan Administrator also has the
discretionary 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 five percent and ten percent assumed annual rates of compounded stock
price appreciation are mandated by the rules of the Securities and Exchange
Commission. There is no assurance that the actual stock price appreciation
over the ten-year option term will be at those assumed rates or at any other
level. Unless the market price of the Company's Class A Common Stock does in
fact appreciate over the option term, no value will be realized from the
option grants.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to the Named
Executive Officers concerning shares of the Company's Class A Common Stock
subject to exercisable and unexercisable stock options which the Named Executive
Officers held at the end of the 1997 fiscal year. No options or SARs were
exercised by any Named Executive Officer during the 1997 fiscal year. Except to
the extent of any limited stock appreciation rights awarded in connection with
outstanding options, none of the Named Executive Officers held any stock
appreciation rights at the end of that fiscal year.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE- MONEY OPTIONS AT
UNDERLYING UNEXERCISED FISCAL YEAR END LESS
OPTIONS AT FISCAL YEAR-END EXERCISE PRICE (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Seth A. Bakes............................................. -- 50,000 $ -- $ 18,750
Edward T. Foley........................................... 17,708 17,292 -- 4,375
Rodney L. Gilliland....................................... 9,375 15,625 -- --
B.G. Moynahan............................................. 235,125 177,375 -- --
</TABLE>
- ------------------------------
(1) The fair market value of the Company's Class A Common Stock on March 31,
1997 was $2.50.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In January 1995, the Company entered into a letter agreement (as amended)
with Seth A. Bakes, the Company's President and Chief Executive Officer.
Pursuant to the letter agreement, Mr. Bakes is to receive a base salary of
$175,000 for fiscal year 1997, subject to increases based upon certain
performance guidelines. The letter agreement also includes (i) a provision
entitling Mr. Bakes to an option to purchase 50,000 shares of the Company's
Class A Common Stock at an exercise price of $2.125 per share, (ii) the
opportunity to receive further stock option grants in the future based upon
certain price targets for the Company's Class A Common Stock, and (iii) a
severance provision pursuant to which, if Mr. Bakes' employment is terminated
for a reason other than "for cause" or to take a position with another company,
Mr. Bakes will receive six months' salary and certain relocation expenses.
In connection with the resignation in December 1996 of B.G. Moynahan as the
Company's President and Chief Executive Officer, the Company entered into a
Release and Separation Agreement. The Release and Separation Agreement provides
that Mr. Moynahan will be paid a Consulting Fee in accordance with the provision
of a Consultant Agreement in lieu of any severance benefits, and sets forth the
terms and conditions of certain benefits to be retained by Mr. Moynahan. In
addition, the Release and Separation Agreement provides for the mutual release
of claims by both parties other than claims arising out of any breach of the
Release and Separation Agreement.
9
<PAGE>
The Consultant Agreement sets forth the terms and conditions upon which Mr.
Moynahan will serve as a consultant to the Company in an independent contractor
capacity until August 31, 1997. For the duration of the Consultant Agreement,
Mr. Moynahan will receive $20,833.33 per month until a total fee of $173,076.92
has been paid, and if Mr. Moynahan spends more than ten hours providing
consulting services in any one month, he will be paid an hourly rate to be
mutually agreed upon by the Company and Mr. Moynahan. Mr. Moynahan's options to
purchase shares of the Company's Class A Common Stock will continue to vest
until the termination of the Consultant Agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") establishes and administers the Company's executive compensation
program. The Compensation Committee reviews compensation levels of persons
designated as executive officers ("Executive Officers") and key employees by the
Board of Directors and evaluates significant employee benefit programs,
executive management performance and related matters pertaining to Executive
Officers. The Compensation
Committee also administers the 1993 Plan.
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.
OVERALL EXECUTIVE COMPENSATION PHILOSOPHY
The Company's executive compensation programs are designed to allow the
Company to compete for, retain and motivate talented executives necessary for
the Company's success by creating a strong relationship between executive
compensation and the interests of stockholders, as reflected by the Company's
financial performance and long-term stock price appreciation.
The Company's executive compensation philosophy is based on the following
objectives:
ATTRACT AND RETAIN HIGHLY QUALIFIED EXECUTIVE TALENT BY PROVIDING
COMPETITIVE TOTAL COMPENSATION.
The Company relies on publicly-available information, independent
homebuilding industry compensation surveys and the advice of independent
compensation consultants to ensure that this objective is achieved.
MOTIVATE EXECUTIVE OFFICERS TO ACHIEVE HIGHEST LEVELS OF PERFORMANCE BY
PROVIDING A SIGNIFICANT PORTION OF TOTAL COMPENSATION THROUGH ANNUAL
INCENTIVES.
All Executive Officers receive a significant portion of their total
compensation in annual incentives and, as levels of responsibility
increase, a greater proportion of total compensation is
performance-based.
ALIGN EXECUTIVE OFFICERS' INTERESTS WITH THE INTEREST OF STOCKHOLDERS BY
PROVIDING SIGNIFICANT INCENTIVES TO MANAGE THE COMPANY FROM THE
PERSPECTIVE OF AN OWNER.
A significant portion of Executive Officers' total compensation is
provided in the form of stock options which reward long-term Company
performance and create a commonality of interests between executives and
stockholders.
STRIVE FOR FAIRNESS IN THE ADMINISTRATION OF COMPENSATION.
The Company strives to fairly balance compensation for individuals within
the Company as well as between the Company and comparable companies.
The Company's executive compensation program consists of three primary
elements: base salaries, annual incentives and stock options which are described
below. Executive Officers are also eligible to receive other benefits which are
generally available to all full-time employees of the Company.
10
<PAGE>
BASE SALARY
In order to achieve the Company's objective to attract and retain a highly
qualified executive team, the base salaries of Executive Officers are
established at levels which are consistent with the average amounts paid by
competing public and private companies with comparable operations. Each
executive's base salary is then established after considering individual
performance, experience and level of responsibility.
ANNUAL INCENTIVES
The Company's annual executive incentive program, which includes the Chief
Executive Officer, Executive Officers (including Named Executive Officers) and
other key management employees, is intended to motivate and reward participants
for their contribution toward the attainment of the Company's annual performance
targets, typically including pre-tax income, earnings per share, cash flow, and
certain operational and strategic goals which may vary from period to period
such as land use approvals, project financing, corporate financing,
acquisitions/joint ventures and organizational development. The aggregate amount
of the Company's annual incentive pool is based on a percentage of the Company's
pre-tax income. This amount is allocated to program participants based on the
Company's performance and the individual performance and contribution of
participants. Participants in the annual executive incentive program are also
eligible for annual incentives available to all Company employees through the
Company's Performance Improvement Incentive Plan, which provides for awards of
up to a maximum of 15% of the employee's base salary based on the Company's
achievement of targeted performance objectives. The Company did not meet its
performance targets for the 1997 fiscal year. Accordingly, no individual annual
incentives were awarded by the Company in the 1997 fiscal year. However,
pursuant to a prior agreement Rodney L. Gilliland, the Company's Senior Vice
President, Sales and Marketing received a bonus of $47,500 in the 1997 fiscal
year.
STOCK OPTIONS
Executive Officers are eligible to receive periodic grants of stock options
pursuant to the 1993 Plan. In addition, the Company entered into a letter
agreement with Seth A. Bakes, the Company's President and Chief Executive
Officer, pursuant to which Mr. Bakes will automatically receive certain options
to purchase the Company's Class A Common Stock if the Company's stock price
reaches certain pre-determined levels. These stock options closely align the
interests of executives and stockholders as the ultimate value received by
option holders is directly related to increases in the Company's stock price.
The Compensation Committee intends to evaluate additional grants annually
for the Named Executive Officers and other key personnel.
CHIEF EXECUTIVE OFFICER COMPENSATION
In December 1993, prior to the Company's Initial Public Offering, the
Company entered into an employment agreement with B.G. Moynahan, the Company's
former President and Chief Executive Officer, providing for the payment of an
initial base salary of $225,000. The employment agreement had a term of three
years. The Compensation Committee played no role in establishing the terms of
this agreement. Mr. Moynahan resigned from the Company in December 1996.
In January 1997, Seth A. Bakes joined the Company as President and Chief
Executive Officer. Based upon competitive salary information, Mr. Bakes' base
salary for the 1997 fiscal year was set at $175,000.
DEDUCTION LIMIT FOR EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits
federal income tax deductions for compensation paid to the Chief Executive
Officer and the four other most highly compensated
11
<PAGE>
officers of a public company to $1 million per officer in any year, but contains
an exception for performance-based compensation that satisfies certain
conditions.
The 1993 Plan is structured so that any compensation deemed paid to an
executive officer when he exercises an outstanding option under the 1993 Plan
will qualify as compensation which will not be subject to the $1 million
limitation exception to the deduction limit.
While it is unlikely that other compensation payable to any Executive
Officer would exceed the deduction limit in the near future, the Compensation
Committee has not yet considered whether it will seek to qualify compensation
other than options for the performance-based exception or will prohibit the
payment of compensation that would exceed the deduction limit. However, in
approving the amount and form of compensation for Executive Officers, the
Compensation Committee will continue to consider all elements of cost to the
Company of providing that compensation.
Submitted by the Compensation Committee of the Company's Board of Directors:
David A. Heenan, Chairman
John W.A. Buyers
Clinton R. Churchill
12
<PAGE>
PERFORMANCE GRAPH
The following performance graph shows the percentage change in cumulative
total return to a holder of the Company's Class A Common Stock, assuming
dividend reinvestment, compared with the cumulative total return, assuming
dividend reinvestment, of the Standard & Poor's 500 Stock Index and the peer
group indicated below, during the period from December 14, 1993 through March
31, 1997.
COMPARISON OF CUMULATIVE TOTAL RETURN
DECEMBER 14, 1993 TO MARCH 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
C. BREWER HOMES, INC. S&P 500 STOCK INDEX PEER GROUP
<S> <C> <C> <C>
12/31/93 $100.00 $100.00 $100.00
3/31/94 104.17 97.55 89.96
3/31/95 50.00 112.74 64.91
3/31/96 34.89 148.93 82.34
3/31/97 20.83 178.41 80.81
*
PEER GROUP
CENTEX CORP
CONTINENTAL HOMES HOLDING CORP
D R HORTON INC
ENGLE HOMES INC
HOVNANIAN ENTRPRS INC
INCO HOMES CORP
KAUFMAN & BROAD HOME
LENNAR CORP
ORIOLE HOMES CORP
PRESELEY COMPANIES
PULTE CORP
RYLAND GROUP INC
SCHULER HOMES INC
STANDARD PACIFIC CP
SUNDANCE HOMES INC
TOLL BROTHERS INC
UDC HOMES INC
WASH HOMES INC
WEBB (DEL E) CORP
</TABLE>
* $100 invested on 12/14/93 in stock, group or index.
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
John W.A. Buyers was a member of the Compensation Committee of the Board of
Directors of the Company during the last fiscal year. Mr. Buyers is also the
Chairman of the Board of Directors of the Company, as well as the Chairman and
President of Buyco and Chairman and Chief Executive Officer of CBCL. Mr. Buyers
owns greater than ten percent of the outstanding shares of Buyco, of which CBCL
is a wholly owned subsidiary.
RELATIONSHIP WITH C. BREWER AND COMPANY, LIMITED
The Company was initially incorporated in the State of Hawaii in October
1970. (The Company changed its state of incorporation from Hawaii to Delaware in
October 1994.) Prior to the Initial Public Offering in December 1993, the
Company was a wholly owned subsidiary of CBCL, which is a wholly owned
subsidiary of Buyco. Buyco is the common parent of an affiliated group of
corporations formed in connection with the acquisition of CBCL in 1986. Pursuant
to a restructuring and distribution (the "Restructuring"), which was effected
immediately prior to the consummation of the Company's Initial Public Offering,
all of the 5,750,000 outstanding shares of the Class B Common Stock of the
Company were distributed by CBCL to Buyco, which in turn distributed such stock
to its 74 stockholders on the basis of 1.08 shares of Company Class B Common
Stock for each share of Buyco common stock held.
Initially a trading company, in 1876 CBCL's business became principally
focused on the operation of sugar plantations and, over the subsequent years,
CBCL increased its landholdings to support this business. In the late 1970s and
early 1980s, CBCL diversified into other businesses, including the growing,
packaging and marketing of macadamia nut, guava, and coffee products, as well as
the distribution of industrial products and services. CBCL was an independent,
publicly traded company listed on the New York Stock Exchange until 1978, when
it was acquired by International Utilities Corporation. In 1986, a group of
investors led by John W.A. Buyers, CBCL's Chairman and Chief Executive Officer,
formed Buyco, which completed a leveraged buyout of CBCL.
In connection with the Restructuring, the Company and CBCL entered into a
number of agreements for the purpose of defining their ongoing relationship.
These agreements were not the result of negotiations between independent
parties. There can be no assurance that each of such agreements is, or that all
of the agreements taken as a whole are, on terms comparable to those that would
have resulted from negotiations between unaffiliated parties. Additional or
modified agreements, arrangements and transactions may be entered into by the
Company and CBCL and its affiliates. Any such future agreements, arrangements
and transactions will be determined through negotiation among the Company, CBCL
and its affiliates, as the case may be, and it is possible that conflicts of
interest may arise. A committee of the Board of Directors of the Company
comprised of two Outside Directors and one employee-director will resolve such
conflicts of interest.
Set forth below are summaries of certain agreements, arrangements and
transactions among the Company, CBCL and certain of their affiliates. Copies of
such agreements are included as exhibits to the Company's Registration Statement
on Form S-1, and the following discussions with respect to such agreements are
qualified in their entirety by reference to the agreements as filed with the
Securities and Exchange Commission.
INTERCOMPANY AGREEMENT
Management Services. The Intercompany Agreement provides that CBCL will
make available to the Company, at the Company's request, various services to the
Company, including human resources and risk management. The Company will pay
CBCL monthly the fully burdened cost of such services, including where
appropriate, a reasonable allocation of the costs of data processing facilities,
wage and fringe benefit costs, and occupancy and material costs. In addition,
CBCL will be reimbursed for any out-of-pocket expenses incurred in connection
with providing the services, as well as for extraordinary services.
14
<PAGE>
The agreement between the Company and CBCL regarding provision of services
renews automatically for one-year periods unless written notice of termination
by either party is received by the other party not less than 60 days prior to
the end of the applicable term. CBCL makes no representations or warranties with
respect to services provided under the Intercompany Agreement, except that CBCL
agrees to perform such services with the same degree of care, skill and prudence
customarily exercised in its own operations. CBCL will not be liable for any
losses or damages suffered in respect to services performed under the
Intercompany Agreement, other than losses or damages arising from CBCL's
intentional or negligent failure to perform or its negligence in the performance
of such services.
Access to Information. The Intercompany Agreement provides that each of
CBCL and the Company will be granted access to certain records and information
in the possession of the other party. The Intercompany Agreement generally
requires each party to retain all such information in its possession for three
years after the Restructuring occurs (other than tax returns and related
documents, which may be requested to be retained for a longer period), and
thereafter to give the other party prior notice of any planned disposition of
such information.
Insurance. The Intercompany Agreement requires CBCL to provide insurance
coverage to the Company under insurance policies issued to CBCL and CBCL's
self-insurance programs, and requires the Company to pay a premium for such
coverage, subject to renegotiation annually. The insurance includes property
damage, builders' risk, general and automobile liability, workers' compensation,
blanket crime and fiduciary liability. Risks not covered under such policies or
programs will be borne by the Company. Either party may terminate the insurance
coverage, in whole but not in part, upon 120 days' prior written notice. If the
Company terminates the insurance coverage, the Company will nonetheless be
obligated to pay the then current annual premium. If CBCL terminates the
insurance coverage, the Company will receive a pro-rata refund on the premium
paid. The Intercompany Agreement also provides for the allocation of proceeds
under existing insurance policies between CBCL and the Company after the
Restructuring and sets forth procedures for the administration of insured
claims.
Trademark License. Under the Intercompany Agreement, CBCL granted to the
Company in perpetuity (subject to the conditions described below) an exclusive
royalty-free right and license to use the trade name, trademark and service mark
"C. Brewer" as the distinctive portion of the Company's name and in connection
with the development and sale of residential real estate. The Company may
sublicense the trademark and may change the form and manner of the trademark, in
each case subject to the prior written approval of CBCL, which shall not be
unreasonably withheld. As a condition of the trademark license, the Company will
establish and maintain quality control standards, policies and procedures
acceptable to CBCL. The trademark license may be terminated by CBCL only upon an
uncured material breach of the section of the Intercompany Agreement relating to
the trademark license or upon the insolvency or liquidation of the Company.
Taxes. The Intercompany Agreement provides that Buyco, CBCL and their
affiliated companies (other than the Company) will pay all federal and state
income taxes and other taxes accruing to the Buyco affiliated group of
corporations prior to the Restructuring and pay all taxes arising from the
Restructuring (including any taxes resulting from the transfer of assets to CBCL
and its affiliates pursuant to the Restructuring); provided that the Company
will pay all taxes associated with the Company's operations accruing during 1993
and thereafter and certain fees and conveyance taxes arising from the transfer
of assets from the Company to affiliates of CBCL as part of the Restructuring.
ASSET EXCHANGE AGREEMENT AND CONTRIBUTION AGREEMENT
Allocation of Assets and Liabilities. The Company, CBCL and certain of
their subsidiaries entered into an Asset Exchange Agreement (the "Asset Exchange
Agreement") and a Contribution Agreement (the "Contribution Agreement"), which
together provided for the principal corporate transactions required to effect
the Restructuring, including the transfer to the Company of CBCL's inventory of
entitled
15
<PAGE>
land and certain unentitled land at CBCL's historical cost basis, the transfer
by the Company to CBCL of certain unentitled, undeveloped land as well as the
stock of Kilauea Irrigation Co., Inc., and the allocation between the Company
and CBCL of certain liabilities. The Asset Exchange Agreement contains
representations by the parties thereto regarding each company's ownership of the
real property being transferred by it in connection with the Restructuring. The
Contribution Agreement contains representations by CBCL and certain of its
subsidiaries regarding their ownership of the real property being contributed by
them to the Company in connection with the Restructuring.
Subject to certain exceptions, these agreements provide for assumptions and
cross-indemnities designed to allocate financial responsibility for general
corporate liabilities. The liabilities assumed by the Company include (i)
certain liabilities specifically assumed by the Company arising out of or in
connection with the real property transferred by the Company to CBCL and (ii)
certain liabilities arising under the Securities Act of 1933, as amended.
Liabilities assumed by CBCL include liabilities primarily arising out of or in
connection with real property transferred to the Company by CBCL and to CBCL by
the Company in the Restructuring, including environmental liabilities and
liabilities for any deferred or rollback taxes with respect to such property.
Both the Asset Exchange Agreement and the Contribution Agreement include
procedures for notice and payment of indemnification claims and provide that a
party required to indemnify another party for a claim or suit brought by a third
party may elect to assume the defense of such claim. Any indemnification
payments will be adjusted to reflect the receipt of insurance proceeds and the
effect of federal, state and local taxes. In addition, (i) to the extent that
CBCL or any affiliate of CBCL defaults in the making of any indemnification
payments owed to the Company and such default is not cured, the Company may
offset against such defaulted amounts any payments owed by it to CBCL pursuant
to the Option/Right of First Refusal Agreement (as described below) at a rate of
$1.20 for every $1.00 of unpaid indemnification obligation and (ii) to the
extent that the Company defaults in the making of any indemnification payments
owed CBCL or any of its affiliates and such default is not cured, CBCL may
offset against such defaulted amounts any payments owed by it to the Company
pursuant to the Development and Management Services Agreement (as described
below) at a rate of $1.20 for every $1.00 of unpaid indemnification obligation.
Office Sublease. The Asset Exchange Agreement provides that CBCL will
sublease approximately 2,800 square feet of office space to the Company in
Honolulu. The aggregate rental expense for this property was approximately
$150,000 annually. The Company's rental obligations under this sublease
terminated in fiscal year 1997 in connection with the relocation of its
corporate headquarters to the island of Maui.
DEVELOPMENT AND MANAGEMENT SERVICES AGREEMENT
The Company and CBCL entered into a Development and Management Services
Agreement (the "Development and Management Services Agreement") pursuant to
which the Company provides certain land entitlement, development (including
planning and engineering) and management services to CBCL. CBCL pays the Company
on a monthly basis the fully burdened cost of such services plus 30%. In
addition, the Company is reimbursed for the actual cost of any out-of-pocket
expenses incurred in connection with providing the services, as well as for
extraordinary services.
The Development and Management Services Agreement expired in December 1996.
The Company and CBCL have agreed to continue the provisions of this Agreement
through March 31, 1998.
OPTION/RIGHT OF FIRST REFUSAL AGREEMENT
The Company, CBCL and certain of their subsidiaries entered into an
Option/Right of First Refusal Agreement which provides that, among other things,
for 20 years from the date of the Initial Public Offering in December 1993, the
Company will have the option to purchase up to approximately 1,982 acres of
currently unentitled land in the State of Hawaii from CBCL at its fair market
value (less a discount of
16
<PAGE>
3.5% representing customary selling costs avoided by CBCL) at the time of
exercise of the option. The Company will undertake an appraisal of such property
at the time of exercise of the option and will not be required to purchase any
property at a price above such appraisal (less a discount of 3.5% representing
customary selling costs avoided by CBCL). In the event the Company and CBCL are
unable to agree on a fair market value, the fair market value will be determined
by a three-party appraisal procedure set forth in the Option/Right of First
Refusal Agreement.
If, prior to the Company's exercise of the option, CBCL desires to sell such
property, the Company will have a right of first offer and a right of first
refusal prior to the sale of such property to a third party upon the same terms
as those available to a third party. Except pursuant to the Development and
Management Services Agreement, for a period of ten years from the date of the
Initial Public Offering, CBCL will be restricted from developing or causing to
be developed any of its properties for residential use. However, CBCL will
retain the right (i) to subdivide its properties, (ii) subject to the option and
right of first refusal, to sell its properties, and (iii) subject to the option
and right of first refusal, to hold direct and indirect interests in entities
that are engaged in planning or construction of such properties, provided that
neither CBCL nor any of its subsidiaries controls any such entity or is actively
involved in the development of such residential real estate. CBCL has agreed
that for a period of five years from the date of the Initial Public Offering, it
will not, without the consent of the Company's Outside Directors, take any steps
to entitle any property not subject to the option and right of first refusal. If
the Company's Outside Directors consent to such entitlement activities or if
such property is otherwise entitled, such property will then become subject to
the right of first refusal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 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 Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) reports they file. Paul C.T. Loo, who was
appointed as a director of the Company in January 1997 and should have filed a
Form 3 in February 1997, but instead filed such Form 3 in March 1997.
17
<PAGE>
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. served as independent public
accountants for the Company for the fiscal year ended March 31, 1997. 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 Coopers & Lybrand L.L.P. by the Board of Directors as
independent public accountants to audit the accounts and records of the Company
for the fiscal year ending March 31, 1998, and to perform other appropriate
services. In the event that stockholders fail to ratify the selection of Coopers
& Lybrand L.L.P., the Board of Directors would reconsider such selection.
A representative of Coopers & Lybrand L.L.P. 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 C. Brewer Homes, Inc. no later than May 1,
1998. The proposal must be mailed to the Company's principal executive offices,
255 East Waiko Road, Wailuku, Hawaii 96793, Attention: Seth A. Bakes. 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,
/s/ John W.A. Buyers
John W.A. Buyers
CHAIRMAN OF THE BOARD
August 1, 1997
Honolulu, Hawaii
18
<PAGE>
C. BREWER HOMES, INC.
PROXY
1997 ANNUAL MEETING OF STOCKHOLDERS
AUGUST 29, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John W.A. Buyers and Seth A. Bakes, and
each or either of them as Proxies of the undersigned, with full power of
substitution, and hereby authorizes them to represent and to vote, as
designated below, all of the shares of Class A Common Stock and Class B
Common Stock of C. BREWER HOMES, INC. held of record by the undersigned on
June 30, 1997 at the 1997 Annual Meeting of Stockholders of C. Brewer Homes,
Inc. to be held on August 29, 1997, or at any adjournment thereof.
IMPORTANT: PLEASE DATE AND SIGN ON REVERSE SIDE
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PLEASE MARK
/ X / YOUR CHOICES
LIKE THIS
FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed below
1. ELECTION OF
DIRECTORS / / / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
John W.A. Buyers David A. Heenan
Seth A. Bakes Paul C.T. Loo
Clinton R. Churchill Kent T. Lucien
FOR AGAINST ABSTAIN
2. To ratify the selection of Coopers & Lybrand
L.L.P. as independent auditors of the Company. / / / / / /
3. In their discretion, the Proxies are authorized
to vote upon such other matters as may properly / / / / / /
come before the meeting.
I plan to attend the meeting. / /
The Board of Directors recommends a vote FOR
Proposal Nos. 1 and 2. This Proxy, when properly
executed, will be voted as specified above. This
Proxy will be voted FOR Proposal Nos. 1 and 2 if
no specification is made.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND
__ __ __ RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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|
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Signature(s) ____________________________________________ Date ______________
Please sign exactly as your name(s) is (are) shown on the share certificate
to which the Proxy applies. When shares are held by joint tenants, both
should sign. When signing as an attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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