SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a.12
Dominion Homes, Inc.
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
<PAGE>
(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:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
DOMINION HOMES, INC.
5501 Frantz Road
P. O. Box 7166
Dublin, Ohio 43017-0766
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 28, 1999
Notice is hereby given that the 1999 Annual Meeting of Shareholders
("Annual Meeting") of Dominion Homes, Inc. (the "Company") will be held at the
Company's Lumber Division, 1850 Denune Avenue, Columbus, Ohio, on Wednesday,
April 28, 1999, at 10:00 a.m. local time, for the following purposes:
1. The election as Directors of the nominees named on the
accompanying Proxy;
2. The ratification of the selection of PricewaterhouseCoopers LLP as
independent public accountants for the Company in 1999.
A map providing directions to the Annual Meeting is set forth on the outside
back cover of the Proxy Statement.
The Board of Directors has fixed the close of business on March 25, 1999,
as the record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting and at any adjournments or postponements
thereof.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, you may ensure your representation by
completing, signing, dating and promptly returning the enclosed proxy card. A
return envelope, which requires no postage if mailed in the United States, has
been provided for your use. If you attend the Annual Meeting and inform the
Secretary of the Company in writing that you wish to vote your shares in person,
your proxy will not be used.
If your shares are held of record by a broker, bank or other nominee and
you wish to attend the Annual Meeting, you must obtain a letter from the broker,
bank or other nominee confirming your beneficial ownership of the shares and
bring it to the Annual Meeting. In order to vote your shares at the Annual
Meeting, you must obtain from the record holder a proxy issued in your name.
Regardless of how many shares you own, your vote is very important.
Please SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By Order of the Board of Directors
/s/ Robert A. Meyer, Jr.
------------------------
Robert A. Meyer, Jr.
Secretary
Dublin, Ohio
March 31, 1999
<PAGE>
DOMINION HOMES, INC.
5501 Frantz Road
P. O. Box 7166
Dublin, Ohio 43017-0766
(614) 761-6000
March 31, 1999
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying Proxy and Notice of Annual
Meeting of Shareholders are furnished to holders of common shares, without par
value (the "Common Shares"), of Dominion Homes, Inc. (the "Company") in
connection with the solicitation by its Board of Directors (the "Board") of
proxies to be used at the 1999 Annual Meeting of Shareholders of the Company
(the "Annual Meeting") to be held on Wednesday, April 28, 1999, at 10:00 a.m.,
local time, and at any postponements or adjournments thereof. The Annual Meeting
will be held at the Company's Lumber Division, 1850 Denune Avenue, Columbus,
Ohio. A map providing directions to the Annual Meeting is set forth on the
outside back cover of this Proxy Statement. Only those shareholders of the
Company of record at the close of business on March 25, 1999, will be entitled
to receive notice of, and to vote at, the Annual Meeting. Copies of this Proxy
Statement and the accompanying Proxy and Notice of Annual Meeting of
Shareholders are first being mailed to shareholders on or about March 31, 1999.
All Common Shares represented by each properly executed Proxy received by
the Board pursuant to this solicitation will be voted in accordance with the
shareholder's directions specified on the Proxy. Except as described below with
respect to broker non-votes, if no directions have been specified on a Proxy,
the Common Shares represented by the Proxy will be voted in accordance with the
Board's recommendations, which are as follows:
"FOR" the election as Directors of the nominees named on the accompanying
Proxy;
"FOR" the ratification of the selection of PricewaterhouseCoopers LLP as
independent public accountants for the Company in 1999.
Management knows of no other matters that may properly be brought, or
which are likely to be brought, before the Annual Meeting. However, if any other
matters are properly brought before the Annual Meeting, the persons named as
proxies in the accompanying Proxy or their substitutes will vote in accordance
with their best judgment on such matters.
Without affecting any vote previously taken, a shareholder signing and
returning a Proxy has the power to revoke it at any time prior to its exercise
by giving notice to the Company in a writing mailed to Robert A. Meyer, Jr.,
Secretary of the Company, at the Company's executive offices at 5501 Frantz
Road, P. O. Box 7166, Dublin, Ohio
<PAGE>
43017-0766, by executing a subsequent Proxy, or by attending the Annual Meeting
and giving notice of such revocation in person to the inspector of elections at
the Annual Meeting. Attendance at the Annual Meeting will not, in and of itself,
constitute revocation of a Proxy.
The presence, in person or by proxy, of the holders of a majority of the
Common Shares issued and outstanding on March 25, 1999, is necessary to
constitute a quorum at the Annual Meeting. As of March 25, 1999, the Company had
6,290,104 Common Shares issued and outstanding.
Under Ohio law and the Company's Amended and Restated Code of Regulations
(the "Regulations"), each shareholder is entitled to one vote for each Common
Share held. Common Shares represented by signed proxies that are returned to the
Company will be counted toward the quorum in all matters even though they are
marked as "Abstain," "Against" or "Withhold Authority" on one or more or all
matters or they are not marked at all. Broker/dealers who hold their customers'
Common Shares in street name may, under the applicable rules of the
self-regulatory organizations of which the broker/dealers are members, sign and
submit proxies for such Common Shares and may vote such Common Shares on routine
matters which, under such rules, typically include the election of directors and
the ratification of the selection of independent public accountants, but
broker/dealers may not vote such Common Shares on other matters without specific
instructions from the customers who own such Common Shares. Proxies signed and
submitted by broker/dealers which have not been voted on certain matters as
described in the previous sentence are referred to as broker non-votes. Such
proxies also count toward the establishment of a quorum. The effect of an
abstention or broker non-vote on each of the matters to be voted upon at the
meeting is the same as a "no" vote.
All costs of solicitation of the Proxies will be borne by the Company.
Solicitation will be made by mail. Proxies may be further solicited at no
additional compensation by officers, directors, or employees of the Company by
telephone, written communication or in person. Upon request, the Company will
reimburse banks, brokerage firms, and other custodians, nominees, and
fiduciaries for expenses reasonably incurred by them in sending proxy materials
to the beneficial owners of Common Shares of the Company. No solicitation will
be made by specially engaged employees or other paid solicitors.
-2-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth, as of March 19, 1999, certain information
with respect to persons known to the Company to be the beneficial owners of more
than five percent (5%) of the outstanding Common Shares.
<TABLE>
<CAPTION>
Number of Common Shares Beneficially Owned
Name and Address of Sole Voting and Shared Voting and Shared Investment Percent
Beneficial Owner Investment Power Investment Power Power Only Total of Class(1)
- -------------------- ---------------- ----------------- ----------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Donald A. Borror(2) 30,000 4,082,000(3) 47,500(4) 4,159,500 66.1%
Douglas G. Borror(2) 40,000 4,082,000(3) 47,500(4) 4,169,500 66.3%
David S. Borror(2) 15,000 4,082,000(3) 7,148(4) 4,104,148 65.2%
Terry E. George(2) 23,000(5) 4,082,000(3) -- 4,105,000 65.1%
BRC Properties Inc. 4,082,000(3) -- -- 4,082,000 64.9%
3970 Brelsford Lane
Dublin, OH 43017
BRC Properties Inc., -- 4,082,000(3)(6) -- 4,082,000 64.9%
Donald A. Borror,
Douglas G. Borror,
David S. Borror and
Terry E. George, as
a group
FMR Corp. 542,500(7) -- -- 542,500 8.62%
82 Devonshire Street
Boston, MA 02109
</TABLE>
(1) Percent of Class is based upon the sum of 6,290,104 Common Shares
outstanding as of March 19, 1999, and the number of Common Shares as to
which the person has the right to acquire beneficial ownership upon the
exercise of options exercisable within sixty (60) days of March 19, 1999.
(2) These individuals may be contacted at the address of the Company, 5501
Frantz Road, P. O. Box 7166, Dublin, Ohio 43017-0766. [Footnotes continued
on next page]
-3-
<PAGE>
[Footnotes continued from page 3]
(3) Information is based on a Schedule 13D filed with the Securities and
Exchange Commission on November 18, 1998. By virtue of their ownership and
control of BRC Properties Inc., formerly known as Borror Realty Company
("BRC"), each of Donald A. Borror, Douglas G. Borror, David S. Borror and
Terry E. George may be deemed to beneficially own the Common Shares owned by
BRC, but each has disclaimed beneficial ownership of the Common Shares owned
by BRC. See "Certain Relationships and Certain Transactions- Description and
Ownership of BRC."
(4) Consists of Common Shares held by KeyTrust Company of Ohio, N.A., as trustee
of the Dominion Homes, Inc. Retirement Plan and Trust (the "Retirement Plan
and Trust"), which Common Shares are voted by the trustee.
(5) Includes 16,000 Common Shares which can be acquired upon the exercise of
options which are exercisable within sixty (60) days of March 19, 1999.
(6) In computing the aggregate number of Common Shares held by the group, the
same Common Shares were not counted more than once.
(7) Information is based on a Schedule 13G filed with the Securities and
Exchange Commission on February 12, 1999.
-4-
<PAGE>
Management
The following table sets forth, as of March 19, 1999, certain
information with respect to the number of Common Shares beneficially owned by
each director (including nominees) and executive officer of the Company and by
all directors (including nominees) and executive officers of the Company as a
group:
Number of Common Shares Beneficially Owned
<TABLE>
<CAPTION>
Name and Address of Sole Voting and Shared Voting and Shared Investment Percent
Beneficial Owner Investment Power Investment Power Power Only Total of Class(1)
- -------------------- ---------------- ----------------- ----------------- --------- -----------
<S> <C> <C> <C> <C> <C>
Donald A. Borror(2) 30,000 4,082,000(3) 47,500(4) 4,159,500 66.1%
Douglas G. Borror(2) 40,000 4,082,000(3) 47,500(4) 4,169,500 66.3%
David S. Borror(2) 15,000 4,082,000(3) 7,148(4) 4,104,148 65.2%
Terry E. George(2) 23,500(5) 4,082,000(3) -- 4,105,000 65.1%
C. Ronald Tilley 8,500(5) -- -- 8,500 *
900 Gatehouse Lane
Worthington, OH 43235
Gerald E. Mayo 17,000(5) -- -- 17,000 *
51 Brams Point Road
Hilton Head, SC 29926
Pete A. Klisares 10,500(5) -- -- 10,500 *
919 Old Henderson Road
Columbus, OH 43220
Richard R. Buechler(2) 48,000(5) -- 13,373(4) 61,373 *
Jon M. Donnell(2) 129,784(5)(6 -- -- 129,784 2.1%
Robert A. Meyer, Jr.(2) 34,550(5) -- 5,005(4) 39,555 *
Peter J. O'Hanlon(2) 5,000(7) -- -- 5,000 *
All directors and 361,834 4,082,000(3) 120,526(4) 4,564,360 70.8%
executive officers as
a group (11 persons)(8)
</TABLE>
* Represents less than 1% of class.
(1) Percent of class is based upon the sum of 6,290,104 Common Shares
outstanding as of March 19, 1999, and the number of Common Shares as to
which the person (or members of the group) has the right to acquire
beneficial ownership upon the exercise of options exercisable within sixty
(60) days of March 19, 1999.
(2) These individuals may be contacted at the address of the Company, 5501
Frantz Road, P. O. Box 7166, Dublin, Ohio 43017-0766.
(3) Information is based on a Schedule 13D filed with the Securities and
Exchange Commission on November 18, 1998. By virtue of their ownership and
control of BRC, each of Donald A. Borror, Douglas G. Borror, David S. Borror
and Terry E. George may be deemed to beneficially own the Common Shares
owned by BRC, but each has disclaimed beneficial ownership of the Common
Shares owned by BRC. See "Certain Relationships and Certain
Transactions-Description and Ownership of BRC."
[Footnotes continued on next page]
-5-
<PAGE>
BOARD OF DIRECTORS AND MANAGEMENT
Number and Term of Directors
The Company's Regulations provide for seven (7) directors and divide the
Board into two classes, with regular two-year staggered terms. Class I consists
of three (3) directors with terms expiring at the Annual Meeting. Class II
consists of four (4) directors with terms expiring in 2000.
Nomination of Directors
In accordance with Section 2.03 of the Company's Regulations, a nominee
for election as a director at an annual meeting may be proposed only by the
directors or by a shareholder entitled to vote for the election of directors if
such shareholder shall have proposed such nominee in a written notice. Each
written notice of a proposed nominee must set forth (1) the name, age, business
or residence address of each nominee proposed in such notice; (2) the principal
occupation or employment of each such nominee for the past five years; and (3)
the number of shares of each series and class of the Company owned beneficially
and/or of record by each such nominee and the length of time any such shares
have been owned. The written notice of a proposed nominee must be delivered or
mailed by first class United States mail, postage prepaid, to the Secretary of
the Company at its principal office and received by the Secretary of the Company
on or before the later of (i) February 1, immediately preceding such annual
meeting or (ii) the sixtieth (60th) day prior to the first anniversary of the
most recent annual meeting of shareholders of the Company held for the election
of directors, provided, however, that if the annual meeting for the election of
directors in any year is not held on or before the thirty-first (31st) day next
following such anniversary, then the written notice must be received by the
Secretary within a reasonable time prior to the date of such annual meeting.
The Company has not received any proposals for director nominations from
any shareholder with respect to the Annual Meeting.
[Footnotes continued from page 5]
(4) Consists of Common Shares held by KeyTrust Company of Ohio, N.A., as trustee
of the Retirement Plan and Trust, which Common Shares are voted by the
trustee.
(5) Includes, in the case of Messrs. Donnell, George, Mayo, Klisares, Tilley,
Buechler and Meyer, 40,000, 16,000, 10,000, 10,000, 7,500, 42,000, and
28,500 Common Shares, respectively, which can be acquired upon the exercise
of options which are exercisable within sixty (60) days of March 19, 1999.
(6) Includes 44,000 restricted Common Shares which are subject to forfeiture if
Mr. Donnell's employment with the Company is terminated prior to August 1,
2002. The restrictions will lapse as to 11,000 Common Shares on August 1,
1999, August 1, 2000, August 1, 2001, and August 1, 2002, respectively.
(7) Consists of 5,000 restricted Common Shares which are subject to forfeiture
if Mr. O'Hanlon's employment with the Company is terminated prior to June 1,
2000. The restrictions will lapse as to 2,500 Common Shares on June 1,1999,
and June 1, 2000, respectively.
(8) In computing the aggregate number of Common Shares held by the group, the
same Common Shares were not counted more than once.
-6-
<PAGE>
Proposal to Elect Class I Directors
The Board proposes the election of the following persons as Class I
Directors to terms which will expire at the 2001 Annual Meeting of
Shareholders:
<TABLE>
<CAPTION>
Director
Name Age Since
- ----------------------------------------------------
<S> <C> <C>
Douglas G. Borror 43 1984
C. Ronald Tilley 63 1996
Jon M. Donnell 39 1997
</TABLE>
All of the nominees are presently members of the Board. All of the
nominees have stated their willingness to serve and no reason is presently known
why any of the nominees would be unable to serve as a director. It is the
intention of the persons named as proxies in the accompanying Proxy to vote for
the election of the three (3) nominees named above unless the shareholders
otherwise direct on the Proxy. If any nominee is unable to stand for election,
each Proxy will be voted for such substitute as the Board recommends.
Recommendation and Vote
Class I Directors will be elected by a plurality of the votes entitled to
be cast and present at the Annual Meeting, in person or by properly executed
proxy. Shareholders do not have cumulative voting rights in the election of
directors. Proxies cannot be voted for more than three (3) directors.
The Board of Directors recommends that the shareholders vote "FOR" the
election of its nominees for Class I Directors.
Continuing Class II Directors
The following Class II Directors will continue after the Annual Meeting
to serve as directors for a term that will expire at the 2000 Annual Meeting of
Shareholders:
<TABLE>
<CAPTION>
Director
Name Age Since
- ----------------------------------------------------
<S> <C> <C>
Donald A. Borror 69 1978
David S. Borror 41 1985
Pete A. Klisares 63 1994
Gerald E. Mayo 66 1994
</TABLE>
-7-
<PAGE>
Executive Officers and Certain Other Key Employees
The Company's executive officers and certain other key employees of the
Company are listed below.
<TABLE>
<CAPTION>
Name Age Position(s) Held
- --------------------------------------------------------------------------------------------------
Executive Officers
<S> <C> <C>
Donald A. Borror 69 Chairman of the Board
Douglas G. Borror 43 President and Chief Executive Officer
Jon M. Donnell 39 Chief Operating Officer
David S. Borror 41 Executive Vice President
Richard R. Buechler 45 Executive Vice President and General Manager-Homes
Division
Terry E. George 55 Senior Vice President and Treasurer
Robert A. Meyer, Jr. 45 Senior Vice President, General Counsel and Secretary
Peter J. O'Hanlon 40 Chief Financial Officer
Certain Other Key Employees
Denis G. Connor 44 Senior Vice President-Administration
Jack L. Mautino 35 Senior Vice President and General Manager-Louisville
Division
Lori M. Steiner 39 Senior Vice President--Strategy and Communications
Randolph B. Robert, Jr. 47 Vice President-Land Development
Kenneth C. Baker 51 Vice President-Information Systems
Karl E. Billisits 33 Vice President-Engineering and Development
</TABLE>
At its January 26, 1999, meeting, the Company's Board of Directors
unanimously approved three changes in the positions of the Company's senior
executive officers. Effective July 15, 1999, the date on which Donald Borror
will be 70 years of age, Donald Borror will assume the position of Chairman
Emeritus, Douglas Borror will assume the positions of Chairman and Chief
Executive Officer, and Jon Donnell will assume the positions of President and
Chief Operating Officer.
-8-
<PAGE>
Background and Experience of Directors, Officers and Certain Key Employees
The references to the Company in the following biographies for periods of
time prior to March 9, 1994, refer to the homebuilding divisions of BRC which
were transferred to the Company in connection with the Company's initial public
offering of its Common Shares. See "Certain Relationships and Certain
Transactions--Description and Ownership of BRC."
Donald A. Borror has served on the Company's Board of Directors and as
the Chairman of the Board of Directors since 1978. He served as President of the
Company from 1977 to March 1987. Mr. Borror has been involved in the
homebuilding business since 1952 and founded the Company's homebuilding business
in 1976. He has a Bachelor of Arts degree from The Ohio State University and a
Juris Doctor degree from The Ohio State University College of Law.
Douglas G. Borror has served on the Company's Board of Directors since
January 1984, as its President since March 1987, and as its Chief Executive
Officer since September 1992. He also served as Chief Operating Officer of the
Company from September 1992 through September 1996. Mr. Borror served as
Executive Vice President of the Company from July 1985 to March 1987 and as
General Manager of BRC's multifamily housing division from July 1979 to March
1987. Mr. Borror also serves on the Boards of Directors of Columbia Gas of Ohio,
Inc. and The Huntington National Bank. Mr. Borror has a Bachelor of Arts degree
from The Ohio State University.
David S. Borror has served on the Company's Board of Directors since 1985
and as its Executive Vice President since January 1988. He served as Vice
President of the Company from July 1985 until January 1988 and as its General
Counsel from January 1988 to December 1993. From 1982 to 1987, Mr. Borror also
was engaged in the private practice of law in the Columbus, Ohio office of
Porter, Wright, Morris & Arthur. He has a Bachelor of Arts degree from The Ohio
State University and a Juris Doctor degree from The Ohio State University
College of Law.
Jon M. Donnell has served on the Company's Board of Directors since May
1997, as Chief Operating Officer of the Company since September 1996 and as
Chief Financial Officer of the Company from August 1995 through June 1998. Mr.
Donnell served as Treasurer of the Company from August 1995 through December
1995, and as Executive Vice President from January 1996 through August 1996.
From August 1995 through December 1996, he also served as Senior Vice President
of the Company. Mr. Donnell is a member of the Board of Directors of Healthstar,
Inc., a Phoenix-based preferred provider organization. Prior to joining the
Company, Mr. Donnell spent 11 years with the Del Webb Corporation, a national
real estate development and homebuilding company, most recently as Vice
President and Associate General Manager of Webb's Sun City Hilton Head
community. He is a Certified Public Accountant, and holds a Bachelor of Science
degree from the University of Arizona.
Pete A. Klisares has served on the Company's Board of Directors since
1994. He has served as President and Chief Operating Officer of Karrington
Communities, Inc., a Columbus, Ohio-based company which constructs and operates
assisted living facilities since August 1997. From August 1993 through December
1997, he served as Executive Vice President of Worthington Industries, Inc., a
Columbus-based steel company. He is a member of the Board of Directors of
Worthington Industries, Inc., The Huntington National Bank, MPWG, and Karrington
Health, Inc. Mr. Klisares has a Bachelor of Science degree in Economics and a
Masters Degree in Labor and Management from the University of Iowa.
-9-
<PAGE>
Gerald E. Mayo has served on the Company's Board of Directors since 1994.
Until his retirement in October 1997, he was a member of the Boards of Directors
and the Chairman of the Midland Life Insurance Company, a Columbus, Ohio-based
life insurance company, and Midland Financial Services, Inc., positions which he
held for more than five years. He also serves on the Boards of Directors of
McKesson/HBOC, Columbia Gas Systems, Inc. and Columbia Gas of Ohio, Inc. Mr.
Mayo has a Bachelor of Arts degree from Boston University.
C. Ronald Tilley has served on the Company's Board of Directors since
January 1996. In March 1996, he retired as Chief Executive Officer and Chairman
of the Board of Directors of Columbia Gas Distribution Companies, an Ohio-based
natural gas company, positions which he held for more than five years. Mr.
Tilley has a Bachelor of Science degree from Concord College.
Richard R. Buechler has served as Executive Vice President of the Company
since January 1996, and as General Manager of the Company's Homes Division since
October 1995. He served as Senior Vice President of the Company from January
1995 through December 1995 and General Manager of the Company's Dominion Homes
Division from January 1995 until October 1995. Mr. Buechler served as General
Manager of the Company's Special Projects Division from July 1994 until December
1994, as Sales Manager of the Company's Dominion Homes Division from January
1992 until June 1994, as Sales Manager of the Company's Tradition Homes Division
from April 1990 until December 1991, and as a Sales Representative for the
Company from May 1985 until April 1990.
Terry E. George has served as Senior Vice President of the Company since
November 1993 and as Treasurer of the Company since January 1996. He served on
the Board of Directors of the Company from 1985 through May 1997, as Controller
of the Company from August 1995 to January 1996, and as Operations Manager of
the Company from October 1991 through August 1995. Mr. George has also served as
Vice President of BRC since December 1996. He served as the General Manager of
BRC's multifamily housing division from August 1985 to October 1987 and as a
Vice President of BRC from October 1987 to November 1993. Mr. George also serves
on the Board of Directors of First Community Bank. He has a Bachelor of Science
Degree from The Ohio State University and is a Certified Public Accountant in
the State of Ohio.
Robert A. Meyer, Jr. has served as Senior Vice President of the Company
since January 1996 and as General Counsel and Secretary of the Company since
December 1993. He served as Vice President of the Company from December 1993
through December 1995. Prior to joining the Company, Mr. Meyer was engaged in
the private practice of law in the Columbus, Ohio office of Porter, Wright,
Morris & Arthur from November 1978 to December 1993. He has a Bachelor of
Science degree from Indiana University and a Juris Doctor degree from The Ohio
State University College of Law.
Peter J. O'Hanlon has served as the Company's Chief Financial Officer
since June 1998. Prior to joining the Company, Mr. O'Hanlon was Controller of
Gables Residential Trust, an Atlanta-based real estate investment trust, from
1993 through May 1998, and Chief Financial Officer of Wilson Company, an
Atlanta-based privately held holding company from 1987 through 1992. He is a
Certified Public Accountant, and holds a Bachelor of Arts degree from Emory
University and a Masters Degree in Business Administration from Northwestern
University.
Denis G. Connor has served as Senior Vice President, Administration,
since joining the Company in January, 1998. Prior to joining the Company, Mr.
Connor managed Alliance Title Agency, Ltd., from its formation in April 1997, to
December 1997, and was employed by Chicago Title Agency of Central Ohio, Inc.,
from February 1989 to April 1997. He has a Bachelor of Arts degree from Miami
University.
-10-
<PAGE>
Jack L. Mautino has served as Senior Vice President and General Manager
of the Company's Louisville, Kentucky Division since August 1998. He served as
Senior Vice President of Sales from May 1998 through August 1998, and as Vice
President of Sales from October 1995 through August 1998. He served as Sales
Manager for the Company's Dominion Homes Division from January 1995 through
December 1995, as Sales Manager of the Company's Tradition Homes Division from
December 1991 to December 1994, and as Sales Representative for the Company from
July 1990 to December 1991. Prior to joining the Company, Mr. Mautino was
employed by Ryland Homes. He holds a Bachelor of Science degree from Duquesne
University.
Lori M. Steiner has served as Senior Vice President of Strategy and
Communications since January, 1999. She served as the Company's Senior Vice
President of Marketing from May 1998 through December 1998, and as the Company's
Vice President of Marketing from January 1995 through May 1998. She served as
the Company's Marketing Director from September 1990 through January 1995. Ms.
Steiner served as an account manager for Brooks Young Communications, a
Columbus-based regional advertising company, from March 1989 to September 1990,
and as an account supervisor for Shelly Berman Communicators, a Columbus-based
marketing, advertising and public relations firm, from June 1982 to March 1989.
She has a Bachelor of Arts degree from Wittenberg University.
Kenneth C. Baker has served as the Company's Vice President of
Information Systems since May 1998. From April 1997, through May 1998, he served
as Director of Information Systems, and from October 1994 through April 1997, he
served as Manager of Information Systems. Prior to joining the Company, Mr.
Baker was employed as Manager of Information Systems with Mid-Ohio Chemical
Company from 1988 through 1994, and in the same position with Colso Products,
Inc. from 1978 through 1988. Mr. Baker holds an Associates Degree in Information
Systems from Automation Institute of Ohio.
Karl E. Billisits has served as the Company's Vice President of
Engineering and Development since January 1999. He served as Vice President of
Engineering from May 1998 through January 1999, as Director of Engineering from
April 1997 through May 1998, and as Engineer from April 1994 through April 1997.
Prior to joining the Company in 1994, Mr. Billisits was employed as a consulting
engineer with Bauer, Davidson & Merchant, a Columbus-based consulting
engineering firm. Mr. Billisits holds a Bachelor of Science degree in Civil
Engineering from The Ohio State University, and is a Registered Professional
Engineer in the States of Ohio, Kentucky and Michigan.
Randolph B. Robert, Jr. has served as the Company's General Manager of
Land Development since January 1987 and as a Vice President since November 1993.
He was the Construction Manager for BRC's multifamily housing division from
December 1979 to December 1986. Mr. Robert has a Bachelor of Science Degree from
The University of Arizona.
Family Relationships
Douglas G. Borror, a director and the President and Chief Executive
Officer of the Company, and David S. Borror, a director and Executive Vice
President of the Company, are brothers. Donald A. Borror, a director and
Chairman of the Board of the Company, is the father of Douglas G. Borror and
David S. Borror. There are no other family relationships among the executive
officers and/or directors of the Company.
-11-
<PAGE>
Agreement with Respect to the Election of Directors
BRC, the holder of approximately 64.9% of the issued and outstanding
Common Shares, has agreed in a Close Corporation Agreement with its shareholders
to use its best efforts to elect David S. Borror as a director of the Company
for so long as certain contingencies are satisfied and for so long as BRC has
the ability to elect at least two (2) directors of the Company. See "Certain
Relationships and Certain Transactions--Description and Ownership of BRC."
Meetings and Committees of the Board
The Board of Directors meets immediately following the adjournment of
each annual meeting of shareholders at which directors are elected, and holds
such other meetings as may be called from time to time by the Chairman of the
Board, the President or any two directors. The Board of Directors of the Company
held four meetings during the fiscal year ended December 31, 1998. Each director
attended at least 75% of the aggregate of the number of Board of Directors
meetings and meetings of all committees on which he served during the year.
The Company has a Compensation Committee, an Executive Committee, an
Audit Committee and an Affiliated Transactions Review Committee. The members of
the Compensation Committee during 1998 were Pete A. Klisares, Gerald E. Mayo,
and C. Ronald Tilley. The Compensation Committee, which determines the
compensation of the Company's executive officers, held three meetings during
1998. The members of the Executive Committee during 1998 were Donald A. Borror,
Pete A. Klisares and Douglas G. Borror. The Executive Committee, which is
authorized to act for the Board between regularly scheduled meetings of the
Board, held two meetings during 1998. The members of the Audit Committee during
1998 were Pete A. Klisares, Gerald E. Mayo, and C. Ronald Tilley. The Audit
Committee, which reviews accounting and auditing matters, held one meeting
during 1998. The members of the Affiliated Transactions Review Committee during
1998 were Pete A. Klisares, Gerald E. Mayo, and C. Ronald Tilley. The Affiliated
Transactions Review Committee, which was formed as a standing committee by the
Board of Directors on October 29, 1997, to review and authorize material
transactions between the Company and its affiliates or related parties, held one
meeting during 1998. The Company does not have a standing nominating committee
or other committee performing a similar function.
-12-
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth, for the three fiscal years ended December
31, 1998, cash and non-cash compensation paid by the Company to the Chief
Executive Officer and to each of the other four most highly compensated
executive officers of the Company who served as such during 1998 (collectively,
the "Named Executive Officers") for services rendered to the Company in all
capacities by such persons:
<TABLE>
<CAPTION>
Summary Compensation Table
-----------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation -------------------------
------------------------------------------ Restricted Common Shares
Other Annual Stock Underlying All Other
Name and Salary(1) Bonus(1) Compensation(2) Awards Options/ Compensation(3)
Principal Position Year ($) ($) ($) ($) SARs (#) ($)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Donald A. Borror 1998 $250,000 $260,000 -- -- $ 3,200
Chmn. of the Board 1997 240,000 260,000 -- -- 3,200
1996 240,000 200,000 -- -- 3,000
Douglas G. Borror 1998 $400,000 $550,000 -- -- $ 8,200
President and CEO 1997 360,000 500,000 -- -- 8,075
1996 360,000 300,000 -- -- 7,750
Jon M. Donnell 1998 $240,000 $400,000 -- $143,688(4) 24,000(5) $ 8,200
COO 1997 189,231 300,000 -- 126,500(4) 20,000 54,375(6)
1996 159,230 175,000 -- 93,332(4) 40,000 60,450(7)
David S. Borror 1998 $192,385(8) $200,000 -- -- $ 8,200
Exec. V.P. 1997 175,000 150,000 -- -- 5,575
1996 175,000 100,000 -- -- 7,750
Richard R. Buechler 1998 $174,288(9) $160,000 -- -- $ 8,200
Exec. V.P. 1997 165,000 150,000 -- 10,000 8,075
1996 150,000 150,000 -- 40,000 7,750
</TABLE>
(1) Includes amounts deferred by the Named Executive Officer pursuant to the
Executive Deferred Compensation Plan.
(2) Perquisites and other personal benefits did not exceed applicable
thresholds.
(3) All Other Compensation consists of amounts contributed by the Company to the
accounts of the Named Executive Officers in the Retirement Plan and Trust
and in the Executive Deferred Compensation Plan.
(4) At December 31, 1998, Mr. Donnell held 44,000 restricted Common Shares with
an aggregate value of $484,000. Of such restricted Common Shares, 11,000
will vest on each of August 1, 1999, 2000, 2001 and 2002. Prior to the
vesting of 11,000 restricted shares on August 1, 1998, Mr. Donnell elected,
pursuant to the terms of the Company's Incentive Stock Plan, not to receive
5,549 of the restricted Common Shares in order to satisfy income tax
obligations related to such vesting. It is a prerequisite to the vesting of
any restricted Common Shares that Mr. Donnell be employed with the Company
as of the vesting date. The Company does not presently pay dividends.
However, if
[Footnotes continued on next page]
-13-
<PAGE>
Employment Agreements
The Company has Employment Agreements with Jon M. Donnell, Chief
Operating Officer, with Richard R. Buechler, Executive Vice President and
General Manager of the Company's Homes Division, with Robert A. Meyer, Jr.,
Senior Vice President, General Counsel and Secretary, and with Peter J.
O'Hanlon, Chief Financial Officer. The Employment Agreements with Messrs.
Donnell, Buechler and Meyer are each dated May 17, 1996, and effective as of
January 1, 1996. The Employment Agreement with Mr. Donnell was amended on
November 6, 1996, to reflect an expansion of Mr. Donnell's responsibilities. The
Employment Agreement with Mr. O'Hanlon is dated June 1, 1998. The Agreements are
for terms of three years, and provide for renewal annually for three-year terms
unless the Company provides notice of its intention not to renew the Agreement.
No such notice by the Company has been provided to Mr. Donnell, Mr. Buechler,
Mr. Meyer, or Mr. O'Hanlon. Each Agreement provides for lump sum payments if
employment is terminated by the Company without cause or by Mr. Donnell, Mr.
Buechler, Mr. Meyer, or Mr. O'Hanlon with good reason, and includes
non-competition covenants effective for one year after termination. The
Agreements also include provisions that become effective upon a "change in
control" of the Company. Under the Agreements, a change in control is defined as
an event which results in either BRC failing to own at least 30% of the combined
voting power of the outstanding voting securities of the Company, or both Donald
Borror and Douglas Borror ceasing to be directors and officers of the Company.
Upon a change in control, all employee benefit rights, including stock options,
vest. In addition, if within two years of a change in control, the employment of
Mr. Donnell, Mr. Buechler, Mr. Meyer, or Mr. O'Hanlon is terminated without
cause, or if Mr. Donnell, Mr. Buechler, Mr. Meyer or Mr. O'Hanlon terminates his
employment with good reason, he would be entitled to certain benefits, including
a lump sum payment equivalent to two years' salary, the payments he would have
been entitled to had the Company terminated his employment without cause and
without a change in control, and certain outplacement services.
[Footnotes continued from page 13]
dividends are paid in the future, Mr. Donnell would be entitled to receive
dividends as to both his vested and unvested restricted Common Shares.
(5) Share total does not include a nonqualified option to purchase 100,000
Common Shares of the Company which was granted to Mr. Donnell by BRC on
November 13, 1998. The option is exercisable commencing June 30, 2006, and
ending June 30, 2013 (the "Vesting Period"), provided (i) Mr. Donnell is
then employed by the Company; and (ii) the Company shall have achieved $100
million of shareholders equity, excluding the proceeds of equity offerings,
as of the end of a fiscal quarter during the Vesting Period. The option is
subject to earlier vesting upon a "Change in Control" of the Company, Mr.
Donnell's termination "Without Cause," or his resignation with "Good
Reason," such terms having the same definitions as in the Employment
Agreement between Mr. Donnell and the Company.
(6) Includes reimbursement of payments by Mr. Donnell for initiation fee for
membership in a country club pursuant to an understanding between Mr.
Donnell and the Company at the time Mr. Donnell was employed by the Company.
(7) All Other Compensation for Mr. Donnell in 1996 includes a payment related to
Mr. Donnell's housing, which was committed to by the Company as part of its
offer of employment to him.
(8) Mr. Borror was paid base salary at an annual rate of $175,000.00 from
January 1 through April 30, 1998. His base salary was increased to
$200,000.00 per year effective May 1, 1998. The reported base salary is the
amount actually paid to Mr. Borror in 1998.
(9) Mr. Buechler was paid base salary at an annual rate of $165,000.00 from
January 1 through April 30, 1998. His base salary was increased to
$180,000.00 per year effective May 1, 1998. The reported base salary is the
amount actually paid to Mr. Buechler in 1998.
-14-
<PAGE>
Incentive Stock Plan
The following table sets forth information concerning individual grants
of stock options to the only Named Executive Officer who received a grant of
stock options under the Dominion Homes, Inc. Incentive Stock Plan (the
"Incentive Stock Plan") during 1998. No SARs were granted during 1998.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------
Number of % of Total Potential Realizable Value at
Common Shares Options/ Assumed Annual Rates of
Underlying SARs Granted Common Share Price Appreciation
Options/ to Employees Exercise for Option Term(1)
SARs in Fiscal Price Expiration ----------------------------------
Name Granted (#) Year (%) ($/Share) Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jon M. Donnell 24,000(2) 22.6% $14.50 7/1/08 $218,900 $554,600
</TABLE>
(1) The Potential Realizable Value of the grants equals the product of: (a) the
difference between (i) the product of the per-share market price at the time
of the grant and the sum of 1 plus the adjusted Common Share price
appreciation rate (the assumed rate of appreciation compounded annually over
the term of the option); and (ii) the per-share exercise price of the
option; and (b) the number of Common Shares underlying the grant at fiscal
year end. These Potential Realizable Values represent only certain assumed
rates of appreciation that may not be achieved. Actual realized values, if
any, on option exercises will be dependent on the actual appreciation of the
Common Shares over the term of the options.
(2) The exercise price of these options was the fair market value of the Common
Shares on the date of grant. These options become exercisable in two equal
installments of 12,000 Common Shares on July 1, 2001, and July 1, 2002,
respectively, subject to the continued employment of Mr. Donnell and further
subject to acceleration of the exercisability of such options in the event
of a "change of control."
The following table sets forth information, as of December 31, 1998,
concerning the number of Common Shares underlying unexercised options and the
value of the unexercised options held by those Named Executive Officers who held
options on such date. No Named Executive Officer exercised any options during
1998.
-15-
<PAGE>
Aggregated Option/SAR Exercises in
Last Fiscal Year and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Common Shares Value of Unexercised
Underlying Unexercised In-The-Money
Options/SARs at Options/SARs at
Fiscal-Year-End (#) Fiscal-Year-End ($)(1)
------------------------------ ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jon M. Donnell 40,000 60,000 $296,500 $281,000
Richard R. Buechler 42,000 28,000 $302,500 $200,000
</TABLE>
(1) The Value of Unexercised In-The-Money Options equals the difference between
the aggregate fair market value at December 31, 1998, of the Common Shares
underlying the options and the aggregate exercise price of the options.
Director Compensation
Directors who are not employees of the Company receive fees of $2,500
per quarter and $1,000 per Board meeting and $500 per committee meeting
attended. Directors may defer the receipt of those fees and receive Company-
matching contributions with respect to those deferred fees through participation
in the Executive Deferred Compensation Plan. Additionally, under the Incentive
Stock Plan, each director who is not, and has never been, an employee of, or
paid advisor or consultant to, the Company will receive, on the first business
day after each annual meeting of shareholders, provided that the director
continues to serve on the Board on such date, a grant of a non-qualified stock
option to purchase 2,500 Common Shares at an exercise price equal to the fair
market value of the Common Shares on the date of grant. A director option is
exercisable from the date of grant until the earlier of (i) the tenth
anniversary of the date of grant or (ii) generally three months (one year in the
case of a director who becomes disabled or dies) after the date the director
ceases to be a director. The Company does not pay any separate remuneration to
employees of the Company who serve as directors. Messrs. Klisares, Mayo and
Tilley were the directors who were not employees of the Company in 1998.
Executive Deferred Compensation Plan
The Executive Deferred Compensation Plan permits executive officers and
directors to elect to defer a portion of their annual compensation (20% of total
base and bonus for employees and 100% of directors' fees). The Executive
Deferred Compensation Plan also provides for a matching contribution by the
Company for each participant equal to 25% of the amount deferred, but not to
exceed $2,500 in any year. The Company's matching contribution vests in 20%
increments over a five-year period. The contribution and match amounts are used
by the trustee of a rabbi trust to acquire Common Shares of the Company in the
open market. These Common Shares are held and voted by the trustee pursuant to
the rabbi trust agreement.
The following table sets forth information concerning the aggregate
deferral contributions by participating directors and executive officers and
corresponding aggregate Company-matching contributions through December 31,
1998, expressed as the number of Common Shares held by the trustee as of such
date, with respect to each director and executive officer participating in the
Plan.
-16-
<PAGE>
<TABLE>
<CAPTION>
Deferral Vested Company- Unvested Company-
Contributions Matching Matching
Payable as Common Contributions Payable Contributions Payable
Shares as Common Shares as Common Shares Total
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Douglas G. Borror 9,437 1,138 1,193 11,768
David S. Borror 8,461 1,089 999 10,549
Pete A. Klisares 13,661 738 1,094 15,493
C. Ronald Tilley 7,155 277 785 8,217
Terry E. George 4,249 277 785 5,311
Jon M. Donnell 4,249 277 785 5,311
Richard R. Buechler 9,551 1,138 1,194 11,883
Robert A. Meyer, Jr. 9,551 1,138 1,194 11,883
Peter J. O'Hanlon 987 -0- 246 1,233
</TABLE>
-17-
<PAGE>
Report of Compensation Committee
on Executive Compensation
and Share Price Performance Graph
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
"Report of Compensation Committee on Executive Compensation" and the information
under "Share Price Performance Graph" shall not be incorporated by reference
into any such filings.
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Company has vested in the Compensation Committee ("Committee") of
the Board of Directors the authority to determine and administer the
compensation program for the Company's executive officers and other key
employees. The Committee is composed of the Company's three outside, independent
directors: Pete A. Klisares, Gerald E. Mayo and C. Ronald Tilley. Mr. Klisares
chairs the Compensation Committee.
Compensation Philosophy
The Company's executive compensation philosophy seeks to promote the
following key objectives:
o Align the interests of executive officers and other key employees
with the interests of shareholders by linking a significant
percentage of their total compensation to Company financial
performance.
o Reward individual contribution and achievement.
o Allow the Company to continue to attract and retain outstanding
executive officers and other key employees and to compete with
industry competitors and other businesses for executive talent.
Implementation of this philosophy is an ongoing process, and the Committee
expects to continue to refine the Company's executive compensation program
during 1999.
There are two primary components to the Company's executive compensation
program: annual cash compensation and long-term incentive compensation. Annual
cash compensation consists of a base salary and an incentive bonus. Long-term
incentive compensation consists of stock options and other awards under the
Incentive Stock Plan. The Company's executive compensation program also allows
executives to defer a portion of their compensation, and to augment the deferred
amounts by Company matches, through their optional participation in the
Executive Deferred Compensation Plan.
Annual Cash Compensation
General. It is the Company's objective to achieve continuous revenue and
earnings growth with a long-term objective of outperforming the homebuilding
industry in revenue growth and profitability. The Committee believes that, in
order to achieve this objective, the Company must be able to attract and retain
exceptional executive talent.
-18-
<PAGE>
Accordingly, the Committee's intent is that the total cash compensation received
by the Company's executive officers would place them in the upper range of the
total cash compensation received by the executive officers of homebuilding
companies in general. In determining compensation for the Company's executive
officers, the Committee annually reviews a nationally-compiled database of
compensation by other homebuilding companies for various executive positions,
including data specific to public homebuilding companies, homebuilding companies
of a size comparable to the Company, and homebuilding companies operating in the
Midwest. The Committee also considers the value of the Company's Common Shares
as compared with the value of homebuilding stocks in the market generally.
Base Salary. The Committee recognizes that the homebuilding business is
cyclical and that the Company's financial performance depends, in large part, on
whether the homebuilding business is in a favorable or unfavorable cycle. The
Committee's intent is to set the base salaries of the Company's executive
officers at levels sufficient to attract and retain executive talent in all
business cycles.
In setting the base salary of an executive officer, the Committee
subjectively analyzes the executive's responsibilities, performance and value to
the Company, but gives no fixed weighting to any of such factors. The Committee
also considers market salary ranges for comparable positions. The Committee
reviews annually the base salary of each executive officer and makes adjustments
as warranted.
Incentive Bonus. The Committee believes that a significant portion of
the total compensation of the Company's executive officers should consist of
variable, performance-based components, such as awards of incentive bonuses and
grants of stock options, which the Committee can adjust to reflect changes in
Company and individual performance. These compensation components are intended
to reinforce the Company's commitment to increasing Company profitability and
shareholder value.
The Committee takes into account various quantitative measures and
qualitative indicators of Company and individual performance in determining the
level of incentive bonuses to be awarded to the Company's executive officers.
Although the Committee tends to give more weight to quantitative measures of
Company financial performance, it does not apply any specific formula. In making
such compensation decisions, the Committee recognizes and takes into account
that the homebuilding business is cyclical and that Company financial
performance can be greatly affected by factors, such as interest rates and
weather, that are beyond the control of the Company's executive officers. The
Committee considers such quantitative Company financial performance measures as
revenue growth, profitability, earnings per share and return on shareholders'
equity in determining the level of incentive bonuses. The Committee also
considers the Company's performance with respect to its customer satisfaction
ratings as a factor in determining incentive bonuses for all executive officers.
The Committee also understands the importance of individual
contributions and achievements that may be difficult to quantify and,
accordingly, recognizes qualitative indicators such as successful supervision of
major corporate projects, demonstrated leadership and the ability to respond to
difficult business cycles.
Long-Term Incentive Compensation
Stock Options. On June 1, 1998, the Committee granted incentive stock
options covering an aggregate of 10,000 Common Shares to Peter J. O'Hanlon, as
part of the overall compensation package offered to Mr. O'Hanlon as the
Company's new Chief Financial Officer. The options were granted at an exercise
price of $12.69, which was the fair
-19-
<PAGE>
market value of the Common Shares on the date of the grant. The options vest in
20% increments on each of the first five anniversaries of the grant, subject to
acceleration of vesting in the event of a "change in control."
On July 1, 1998, the Committee granted incentive stock options covering
an aggregate of 96,000 Common Shares to 20 employees of the Company, including
one executive officer, Jon M. Donnell. The options were granted at an exercise
price of $14.50 per share, which was the fair market value of the Common Shares
on the date of grant. The options for all employees who were awarded options
except Mr. Donnell vest in 20% increments on each of the first five
anniversaries of the date of grant, subject to acceleration of vesting in the
event of a "change in control." The options granted to Mr. Donnell vest in 50%
increments on July 1, 2001, and July 1, 2002, respectively. The Committee
established the vesting schedule for the options awarded to Mr. Donnell in order
to, when combined with other options held by Mr. Donnell, result in a more even
overall vesting schedule. The Committee determined that the options would be
useful in providing a meaningful incentive to the Company's employees to
increase shareholder value. The Committee also believes that vesting schedules
using mid-year vesting dates, when combined with the Company's award of
incentive bonuses which usually occurs at year-end, provides a combination of
incentives that better motivate and retain employees on a year-round basis.
The Committee intends on a periodic basis to make grants under the
Incentive Stock Plan to the Company's executive officers and other key
employees. In making such grants, the Committee will consider the subjective
factors identified above, as well as the number of options granted in prior
years.
Restricted Stock Grants. On August 1, 1998, the Committee awarded to Jon
M. Donnell 11,000 restricted Common Shares. Mr. Donnell had also been granted,
on August 1, 1995, November 6, 1996, and August 1, 1997, 20,000, 21,333 and
23,000 restricted Common Shares, respectively. The restrictions provide for
forfeiture if Mr. Donnell's employment with the Company is terminated prior to
August 1, 2002. The restrictions lapsed as to 10,000 Common Shares on August 2,
1995, 3,333 Common Shares on August 1, 1996, 7,000 Common Shares on August 1,
1997, and 11,000 Common Shares on August 1, 1998. Prior to the vesting of 11,000
restricted shares on August 1, 1998, Mr. Donnell elected, pursuant to the terms
of the Company's Incentive Stock Plan, not to receive 5,549 of the restricted
Common Shares in order to satisfy income tax obligations related to the vesting
of shares. The restrictions will lapse as to 11,000 Common Shares each at August
1, 1999, August 1, 2000, August 1, 2001, and August 1, 2002, respectively,
provided that Mr. Donnell is then employed by the Company, and subject to
acceleration of the lapse of restrictions in the event of a "change in control."
The Committee believes this grant provides a further incentive to Mr. Donnell to
continue to effect improvement in the Company's performance.
Chief Executive Officer Compensation
In accordance with the executive compensation philosophy and program
described above, and primarily in recognition of the Company's improved
financial performance during 1998, the Committee awarded Douglas G. Borror a
cash incentive bonus of $550,000 in 1998. Mr. Borror received an annual base
salary in 1998 of $400,000. Mr. Borror did not receive an award of stock options
in 1998.
Tax Aspects
Section 162(m) of the Internal Revenue Code of 1986, as amended,
prohibits the deduction by a publicly-held corporation of compensation paid to a
"covered employee" in excess of $1.0 million per year, subject to certain
exceptions. Generally, the Company's covered employees are those executive
officers listed under the Summary
-20-
<PAGE>
Compensation Table set forth above. None of the Company's executive officers
received more than $1.0 million of compensation from the Company in 1998 and,
accordingly, Section 162(m) did not limit the deductibility of compensation
expenses in 1998. The Committee does not believe that Section 162(m) will limit
the deductibility of the executive compensation that the Company will pay in
1999. As indicated above, Section 162(m) provides exceptions to the $1.0 million
limitation on the deductibility of executive compensation. The Committee has not
attempted to revise the Company's executive compensation program to satisfy the
conditions to these exceptions but may in the future consider doing so if
compensation paid by the Company would not otherwise be deductible under Section
162(m).
Members of the Compensation Committee
Pete A. Klisares Gerald E. Mayo
C. Ronald Tilley
-21-
<PAGE>
SHARE PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Common Shares from March 9, 1994 (the date the Company became a public
company), until December 31, 1998, with the cumulative total return of (a) the
NASDAQ-OTC Index Composite and (b) the Standard and Poor's Homebuilding Index.
Data for the referenced indices are reported on a month-end basis, and the graph
below sets forth values for both indices reported as of March 31, 1994. The
graph assumes the investment of $100 in the Common Shares, the NASDAQ-OTC Index
Composite and the Standard and Poor's Homebuilding Index. The initial public
offering price of the Common Shares was $11.50 per share.
Dominion Homes, Inc.
Closing Price Index
<TABLE>
<CAPTION>
Nasdaq S&P Homebuilding DHOM
<S> <C> <C> <C>
March 9, 1994 100.0 100.0 100.0
December 31, 1994 101.1 73.3 43.5
December 31, 1995 141.5 103.5 28.3
December 31, 1994 173.7 93.1 38.0
December 31, 1994 212.6 147.1 104.3
December 31, 1994 294.9 177.9 95.7
</TABLE>
-22-
<PAGE>
CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS
Description and Ownership of BRC
BRC, which owns approximately 64.9% of the Company's outstanding Common
Shares, is in the business of owning and managing multifamily housing and
commercial real estate. Donald A. Borror, Douglas G. Borror, and David S.
Borror, who are directors and executive officers of the Company, and Terry E.
George, who is an executive officer of the Company, also are directors of BRC.
Mr. George also serves as a Vice President of BRC.
BRC has issued and outstanding 105,065 voting common shares and 273,195
nonvoting common shares, all of which are beneficially owned by members of the
Borror family, or trusts for their benefit, and by Terry George. BRC holds
42,000 nonvoting shares of BRC as treasury shares. Through their ownership and
control of BRC, such persons are in a position to control the Company. See
"Security Ownership of Certain Beneficial Owners and Management."
On November 13, 1998, the Amended and Restated Borror Corporation Stock
Trust, a revocable trust established by Donald Borror pursuant to a trust
agreement dated January 4, 1994 (the "Stock Trust"), gifted 4,410 voting shares
of BRC to each of Douglas Borror and David Borror and gifted 4,520 nonvoting
shares of BRC to Douglas Borror, 10,580 nonvoting shares of BRC to David Borror
and 18,080 nonvoting shares of BRC to the 1987 Irrevocable Subchapter S Trust,
an irrevocable trust established by Donald Borror pursuant to a trust agreement
dated June 26, 1987 (the "Irrevocable Trust"). As of such date, BRC also
redeemed 42,000 nonvoting shares of BRC held by the Stock Trust. The gifts and
redemption were effected as part of Donald Borror's estate planning and to help
ensure an orderly succession of ownership of BRC at the time of Donald Borror's
death.
The Stock Trust owns 43,180 voting common shares of BRC, representing
41.10% of the issued and outstanding voting common shares of BRC, and does not
own any of the nonvoting common shares of BRC. The Stock Trust will expire upon
the ten year anniversary of Donald Borror's death or upon the death of Joanne
Borror (Donald Borror's wife), whichever is later. Joanne Borror is the
beneficiary of the Stock Trust until her death (unless she predeceases Donald
Borror) and each of Donald and Joanne Borror's children (Douglas and David
Borror and Donna Myers) are one-third remainder beneficiaries of the Stock
Trust. Donald Borror and Douglas Borror are the joint trustees of the Stock
Trust until the death or incapacity of either of them, whereupon the other of
them will become sole trustee.
Douglas Borror owns 37,275 voting common shares of BRC, representing
35.48% of the issued and outstanding voting common shares of BRC, and 112,875
nonvoting common shares of BRC, representing 41.32% of the issued and
outstanding non-voting common shares of BRC.
David Borror owns 19,610 voting common shares of BRC, representing
18.66% of the issued and outstanding voting common shares of BRC, and 76,180
nonvoting common shares of BRC, representing 27.88% of the issued and
outstanding non-voting common shares of BRC.
The Irrevocable Trust owns 68,080 nonvoting common shares of BRC,
representing 24.92% of the issued and outstanding nonvoting common shares of
BRC. David Borror is the trustee of the Irrevocable Trust and Donna Myers
(Donald and Joanne Borror's daughter and Douglas and David Borror's sister) is
the sole beneficiary of the Irrevocable Trust. The Irrevocable Trust expires
upon the death of Donald Borror.
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Terry George owns 5,000 voting common shares of BRC, representing 4.76%
of the issued and outstanding voting common shares of BRC, and 16,060 non-voting
common shares of BRC, representing 5.88% of the issued and outstanding
non-voting common shares of BRC.
BRC and the shareholders of BRC are parties to a Close Corporation
Agreement dated January 4, 1994 ("BRC Agreement"). The BRC Agreement contains
certain provisions related to BRC's status as an S Corporation (including
mandatory distributions to BRC shareholders equal to the product of the maximum
marginal individual income tax rate and the shareholder's pro rata share of the
taxable income attributable to BRC). The BRC Agreement provides that all of the
voting power of the BRC shares is to be exercised by a majority of the directors
of BRC, all of whom will be elected by Donald Borror and Douglas Borror jointly
until the death or incapacity of either of them and, thereafter, by the other of
them solely. Under the provisions of the BRC Agreement, David Borror is required
to be elected as a director of BRC as long as he continues to hold at least 10%
of the shares of BRC, absent his removal for "cause" (as defined therein). In
such circumstances and as long as BRC has the ability to elect at least two
directors of the Company, BRC also is required to use its best efforts to elect
David Borror as a director of the Company. The BRC Agreement generally restricts
the transfer of shares of BRC to persons other than members of the Borror family
unless certain procedures are followed. BRC is required to repurchase all of
Terry George's shares in the event of his death or incapacity and has the right
to purchase Terry George's shares at any time. BRC also is required to purchase
a certain number of shares from the estates of Borror family members. Subject to
certain conditions, Borror family members have the right to require BRC to
repurchase shares from them. In certain instances, the obligation of BRC to
repurchase shares may be assumed by Borror family shareholders.
Transactions with BRC
The Company and BRC entered into a Corporate Exchange and Subscription
Agreement, dated January 20, 1994, pursuant to which the Company acquired
substantially all of the assets and assumed substantially all of the liabilities
of the homebuilding divisions of BRC in exchange for the issuance of 3,882,000
of the Company's Common Shares to BRC. On August 5, 1997, BRC purchased an
additional 200,000 Common Shares of Dominion Homes, Inc., bringing the total
number of Common Shares owned by BRC to 4,082,000 or 64.9% of the issued and
outstanding shares of the Company.
On October 29, 1997, the Board of Directors of the Company established
the Affiliated Transactions Review Committee for the purpose of reviewing any
material transactions with affiliates or related parties of the Company,
including BRC, for consistency with the Company's policies concerning affiliated
transactions. The Affiliated Transactions Review Committee consists of the
Company's three outside, independent directors: Pete A. Klisares, Gerald E. Mayo
and C. Ronald Tilley. The Committee is chaired by Mr. Klisares. Prior to the
establishment of the Affiliated Transactions Review Committee, the functions of
the Affiliated Transactions Review Committee were performed by the Audit
Committee of the Board of Directors.
During 1997, the Affiliated Transactions Review Committee reviewed and
approved the sale by the Company to BRC of the Company's corporate office
building and the contemporaneous execution by the Company of a long-term lease
with BRC for the corporate office building. The sale was closed and the lease
was executed on December 29, 1997. The purpose of the transaction from the
Company's perspective was to create additional liquidity with which to invest in
assets associated with the homebuilding process and to allow the Company to
reduce its financing costs. The office building was sold at a price of
$3,950,000, less a credit of up to $200,000 for roof repairs and sidewalk
improvements, together with parking expansion. In 1998, such work was completed
at a cost of approximately $179,000, and
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approximately $21,000, representing the balance of the $200,000 credit, was paid
to the Company. The lease is for a term of twelve years at a rental rate of
$12.00 per square foot on a total net basis with two options to renew for
periods of five years each at then-current market rates. Both the sale price and
rental rates were established by an MAI appraisal commissioned by the Committee,
and confirmed in a review for the Committee by a second MAI appraiser.
At its December 11, 1998, meeting, the Affiliated Transactions Review
Committee reviewed and approved the renewal of the lease agreement for the
Company's Columbus, Ohio decorating center in a shopping center owned by BRC.
The renewal is effective January 1, 1999, and is for a term of five years. The
rental rate is $10.00 per square foot in 1999, $10.50 per square foot in 2000,
and $11.00 per square foot in each of the last three years. The rental rates
were confirmed by an MAI appraisal commissioned by the Committee to be
consistent with comparable rental rates in the area and, in the first two years,
slightly below market rates. The decorating center lease covers 4,200 square
feet in the shopping center owned by BRC.
The Company and BRC were parties to various lease agreements in 1998
pursuant to which the Company leased space in a shopping center owned by BRC. As
of January 1, 1998, the Company leased 5,550 square feet in the shopping center
for its decorating center and architectural department. The Company leased such
space from BRC at $9.50 per square foot plus a proportionate share of common
area maintenance charges, taxes and insurance, and on substantially the same
terms as the leases that BRC has with its other tenants in the shopping center.
The lease for the architectural department was terminated as of August 1, 1998,
with the relocation of the Company's architectural department to the Company's
corporate office building. The lease for the decorating center was renewed
effective January 1, 1999, as discussed in the immediately preceding paragraph.
The Company paid to BRC an aggregate of $62,000.00 under the leases for space in
the shopping center during 1998. The Company believes that the terms of these
leases were no less favorable to the Company than those reasonably available
from unrelated third parties for comparable space.
The Company and BRC were parties in 1998 to a Land Option Agreement
dated January 20, 1994 ("Land Option Agreement"). Pursuant to the provisions of
the Land Option Agreement, the Company acquired from BRC irrevocable options to
purchase from BRC finished single family lots in certain communities which BRC
and other homebuilders have developed under various joint venture agreements.
The purchase price to be paid by the Company to BRC for such lots under the Land
Option Agreement is the lesser of (i) BRC's adjusted tax basis in such lots plus
$500 per lot or (ii) their fair market value, as determined by an independent
MAI appraiser jointly selected by BRC and the Company, at the time of their
purchase from BRC. The cost of all such appraisals is borne by the Company.
Pursuant to the Land Option Agreement, during 1998 the Company purchased 61 lots
from BRC for an aggregate purchase price of $1.3 million. The 61 lots purchased
in 1998 represented all of the remaining lots for which the Company had acquired
options under the Land Option Agreement, and the Land Option Agreement
terminated in December 1998.
The Company and BRC were parties to a Model Homes Lease Agreement dated
January 20, 1994 ("Model Homes Agreement"). Pursuant to the provisions of the
Model Homes Agreement, the Company leased from BRC model homes owned by BRC. The
leases were on a triple net basis at $8.00 per square foot. The Company used
each such model home as the Company's on-site sales office in the community in
which the model home was located until the Company completed its sale of homes
in that community. BRC sold each model home upon the termination of its lease.
The Company did not receive any of the proceeds from the sales of such model
homes owned by BRC, except that the Company received, at the time of sale, 50%
of its unamortized costs of improvements to the model homes. At January 1, 1998,
the Model Homes Agreement had been terminated as to all but 1 of the 31 model
homes that were originally the subject of the Model Homes Agreement, and that
model home was sold to a third party, and the Model Homes
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Agreement terminated, in March, 1998. During 1998, the Company paid to BRC an
aggregate of $3,000.00 for the lease of the model home.
Occasionally, employees of the Company provide limited administrative
services to BRC, for which the Company receives fees. The Company received
aggregate fees of $25,000.00 for such administrative services in 1998.
The Company provides accounting and management services to certain joint
ventures in which one of the partners in the joint ventures is BRC. The fees
received by the Company for such services are the amounts provided for such
services under the relevant joint venture agreements. The Company received
aggregate fees of $97,000.00 from such joint ventures in 1998.
The Company and BRC are parties to a Shareholder Agreement (the
"Shareholder Agreement"), dated January 20, 1994, pursuant to which BRC has the
right, from time to time, to demand that the Company register for sale Common
Shares owned by BRC. Each request by BRC for a demand registration must cover at
least 10% of the Common Shares owned by BRC and at least 5% of the Company's
then outstanding Common Shares. Without the Company's consent (exercised by a
majority of its independent directors), the Company is not obligated to cause a
demand registration to be effected within 18 months after the consummation of a
prior demand registration. BRC and the Company will each pay one-half of the
expenses of each demand registration. BRC also will have incidental, or
piggy-back, registration rights if the Company proposes to register any of its
equity securities (other than registrations involving employee benefit plans)
for its own account or for the account of any other shareholder. BRC will pay
all of its own legal expenses and the first $25,000 of the other expenses of a
piggy-back registration and the Company will pay the remaining expenses of a
piggy-back registration. Both the demand and piggy-back registration rights will
be subject to customary underwriting and holdback provisions and will expire on
March 9, 2004.
Transactions with Printing Plus, Inc.
Donald A. Borror, Chairman of the Board of the Company, together with
Richard Myers, own Printing Plus, Inc., a printing company which has provided
printing services to the Company. Mr. Myers, who also operates Printing Plus,
Inc., is the husband of Donna Borror Myers, who is Donald A. Borror's daughter
and Douglas G. and David S. Borror's sister. In 1998, the Company paid
$225,000.00 to Printing Plus, Inc. for printing services, which amount
represented approximately 75% of the total amount paid by the Company for
printing services in 1998. Of this amount, $80,000.00, or 35%, was pursuant to
contracts that had been competitively bid. The remaining printing jobs awarded
by the Company to Printing Plus, Inc. in 1998 tended to be smaller jobs with
tight delivery schedules. The average amount paid to Printing Plus for unbid
jobs in 1998 was $400.00, and the largest such single amount paid for an unbid
job in 1998 was $10,000.00. The Company believes that the prices charged by
Printing Plus, Inc. for smaller projects that were not subject to a competitive
bidding process were based on the standard rates of Printing Plus, Inc. A key
factor in the Company's decision to award many of the printing jobs to Printing
Plus, Inc. was its reliability in meeting the Company's delivery schedule. The
transactions between the Company and Printing Plus, Inc. were not reviewed or
approved by the Affiliated Transactions Review Committee or the Audit Committee
of the Board of Directors.
SELECTION OF AUDITORS
The Board of Directors of the Company has selected
PricewaterhouseCoopers LLP, certified public accountants, as independent
auditors for the Company for the year ending December 31, 1999.
PricewaterhouseCoopers LLP and its predecessors have audited the books of the
Company and its predecessors since 1964. Management expects that a
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representative of PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will have the opportunity to make a statement if he or she so desires
and will be available to respond to appropriate questions.
Recommendation and Vote
Ratification of the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for 1999 will require the affirmative vote of a
majority of the Common Shares issued and outstanding as of the record date.
The Board of Directors recommends that shareholders vote "FOR"
ratification of the selection of PricewaterhouseCoopers LLP as the Company's
independent auditors for 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the Company is required to report in
this Proxy Statement any known failures during the 1998 fiscal year by executive
officers, directors or 10% shareholders to file on a timely basis a Form 3, 4 or
5, relating to the beneficial ownership of the Common Shares. To the best of the
Company's knowledge after a review of such filings, all such required forms were
filed on a timely basis, with the exception of one Form 3 covering restricted
shares and incentive options issued to Peter J. O'Hanlon on June 1, 1998, which
Form was filed on June 20, 1998.
PROPOSALS BY SHAREHOLDERS FOR 2000 MEETING
In order to be eligible to submit a proposal to be included in next
year's Proxy Statement and acted upon at the annual meeting of the shareholders
of the Company to be held in 2000 (the "2000 Annual Meeting"), a shareholder
must have continuously held at least $2,000 in market value, or 1% of the issued
and outstanding Common Shares, for at least one year by the date on which the
proposal is submitted. In addition, the shareholder must continue to hold the
requisite number of Common Shares through the date of the 2000 Annual Meeting.
Any such proposal must be received by the Company prior to the close of business
on December 2, 1999. Each proposal submitted should be accompanied by the name
and address of the shareholder submitting the proposal and a statement that the
shareholder intends to continue to hold the requisite number of Common Shares
through the date of the 2000 Annual Meeting. If the proponent is not a
shareholder of record, proof of beneficial ownership of the requisite number of
Common Shares also should be submitted. The proponent should also state his or
her intention to appear in person or by a qualified representative at the 2000
Annual Meeting to present the proposal. The proxy rules of the Securities and
Exchange Commission govern the content and form of shareholder proposals. All
proposals must be a proper subject for action at the 2000 Annual Meeting.
The Company will not be required to include in its Proxy Statement for
the 2000 Annual Meeting any proposal submitted outside of the procedures set
forth in the immediately preceding paragraph. The Company also may confer on the
proxies' discretionary authority to vote on any such proposal, if it does not
receive notice of such proposal by February 15, 2000.
The procedures for shareholders to make nominations for Class II
Directors to be elected at the Annual Meeting of Shareholders of the Company to
be held in 2000 are set forth above under "Board of Directors and Management --
Nomination of Directors."
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ADDITIONAL INFORMATION
Upon the written request of a person who was the beneficial owner of
Common Shares as of March 25, 1999 (the record date for notice and the right to
vote at the Annual Meeting), the Company will provide (without charge and upon
written request) a copy of the Company's Annual Report on Form 10-K, excluding
exhibits, for the fiscal year ended December 31, 1998. The written request for
an Annual Report should be directed to Investor Relations Department, Dominion
Homes, Inc., 5501 Frantz Road, P. O. Box 7166, Dublin, Ohio 43017-0766. The
written request must include a statement that, as of March 25, 1999, the person
was a beneficial owner of Common Shares.
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[GRAPHIC--OF MAP]
Directions to Dominion Homes Lumber Division:
From I-71, take Exit #113 (Weber Rd.). Travel east on Weber to the intersection
of Westerville Road (3C Highway). Turn right on Westerville Road and make
immediate left on Denune Avenue. Dominion Homes Lumber Division is approximately
1/2 block on the left (1850 Dunune Avenue.).
<PAGE>
REVOCABLE PROXY
DOMINION HOMES, INC.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1999
This Proxy is solicited on behalf of the Board of Directors
The undersigned holder(s) of common shares, no par value ("Common
Shares") of Dominion Homes, Inc. ("Company") hereby constitute(s) and appoint(s)
David S. Borror and Terry E. George, or either of them, the Proxy or Proxies of
the undersigned, with full power of substitution, to attend the Annual Meeting
of Shareholders ("Annual Meeting") of the Company to be held on April 28, 1999,
at the Company's Lumber Division, 1850 Denune Avenue, Columbus, Ohio, at 10:00
a. m., local time, and any adjournment or adjournments thereof, and to vote all
of the Common Shares which the undersigned is entitled to vote at such Annual
Meeting or at any adjournments thereof:
1. The election as directors of the Company the nominees listed below (except
as marked to the contrary below):
Douglas G. Borror Jon M. Donnell C. Ronald Tilley
[ ] For [ ] Withhold [ ] Except
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
[ ] For [ ] Against [ ] Abstain
2. The ratification of the selection of PricewaterhouseCoopers LLP as
independent public accountants for the Company in 1999.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any postponements
or adjournments thereof.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED OR NOT VOTED AS SPECIFIED. WHERE NO CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
LISTED IN ITEM NO. 1 AS DIRECTORS OF THE COMPANY, "FOR" RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE COMPANY IN 1999, AND, IN THE DISCRETION OF THE PROXY OR PROXIES, ON ANY
OTHER BUSINESS PROPERLY BROUGHT BEFORE THE MEETING OR ANY POSTPONEMENT(S) OR
ADJOURNMENT(S) THEREOF.
<PAGE>
Please be sure to sign and date
this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
DOMINION HOMES, INC.
All proxies previously given by the undersigned are hereby revoked. The
undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement for the April 28, 1999, Annual Meeting.
Please sign exactly as your name appears hereon. Executors, administrators,
trustees, guardians, attorneys and agents should give their full titles. If
shareholder is a corporation, sign in full corporate name by authorized officer.
If shares are registered in two names, both shareholders should sign. (Please
note any change of address on this proxy.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF DOMINION HOMES, INC. PLEASE FILL IN, DATE, SIGN AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
