SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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 Section 240.14a-11(C) or
Section 240.14a-12
Home Properties of New York, 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
$125 per Exchange Act Rules O-11c(1)(ii), 14a-6(I)(1), 14a-
6(I)(2)or Item 22(a)(2) of Schedule 14A Fee computed on table below per
Exchange AcT Rules 14a-6(I) (4) and O-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------
2) Aggregate Number of securities to which transaction applies:
-----------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule O-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined:
-----------------------------------------------------------------
3) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
4) Total fee paid:
-----------------------------------------------------------------
Fee paid previously by written preliminary materials.
Check box if any part of the fee is offset as provided by Exchange
Act Rule O-11(a)(2) and identify the filing for which the offsetting
Fee was paid previously. Identify the previous filing by
Registration statement number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
March 26, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Home Properties of New York, Inc. The Annual Meeting will
be held on Tuesday, May 4, 1999 at 2:00 p.m. at The Strong Museum, One
Manhattan Square, Rochester, New York 14607.
A Notice of Annual Meeting and a Proxy Statement are enclosed.
They describe the matters to be acted upon at the Annual Meeting. Your vote
on these matters is very important. Please sign, date and return the
enclosed proxy card in the envelope provided. This will insure that your
shares are represented at the meeting, whether or not you plan to attend in
person.
We look forward to seeing you at the meeting.
/s/ Norman P. Leenhouts
Norman P. Leenhouts
CHAIRMAN AND CO-CHIEF
EXECUTIVE OFFICER
/s/ Nelson B. Leenhouts
Nelson B. Leenhouts
PRESIDENT AND CO-CHIEF
EXECUTIVE OFFICER
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
_______________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1999
_______________________________________
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders of
Home Properties of New York, Inc. (the "Company") will be held on Tuesday,
May 4, 1999 at 2:00 p.m. at The Strong Museum, One Manhattan Square, Rochester,
New York 14607 for the following purposes:
1. To elect eleven directors of the Company to serve until the
2000 Annual Meeting of Stockholders and until their respective
successors are elected;
2. To ratify the Board of Director's appointment of
PricewaterhouseCoopers LLC as the Company's independent auditors for
1999;
3. To consider the approval of an amendment to the Company's
Articles of Incorporation to increase the number of authorized shares of
Common Stock, par value $.01 per share, to an aggregate of 80,000,000
shares;
4. To consider the approval, pursuant to the rules of the New York
State Stock Exchange, of the issuance of up to 15,000,000 additional
shares of the Company's Common Stock, or securities convertible into
Common Stock, from time to time in one or more privately negotiated
transactions or public offerings, including to current and future
holders of in excess of five percent of the shares outstanding; and
5. To consider and act upon any other matters that are properly
brought before the Annual Meeting and at any adjournments or
postponements thereof.
The Board of Directors set the close of business on March 17, 1999 as
the record date. Only stockholders whose names appear on the stock register of
the Company at the close of business on the record date will be entitled to
notice of and to vote at the Annual Meeting and at any adjournments or
postponements. (If you hold your stock in the name of a brokerage firm, bank or
other nominee, only that entity can vote your shares. Please give instructions
for your shares to be voted to the person responsible for your account.)
Please complete and sign the enclosed proxy card. The proxy
represented by this card is solicited by the Board of Directors of the Company.
Please mail the card promptly in the enclosed postage-prepaid envelope. You
may change the votes on any proxy by sending a written notice to Ann M.
McCormick, Secretary of the Company at 850 Clinton Square, Rochester, New York
14604 before the Annual Meeting, by sending a different proxy card with a later
date before the Annual Meeting or by voting in person by ballot at the Annual
Meeting. Stockholders of record who attend the Annual Meeting may vote in
person, even if they have previously delivered a signed proxy.
Rochester, New York By Order of the Board of Directors
March 26, 1999
/s/ Ann M. McCormick
Ann M. McCormick
Secretary
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD.
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
_______________________________________
PROXY STATEMENT
_______________________________________
FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 4, 1999
March 26, 1999
This Proxy Statement is delivered to you in connection with the
solicitation of proxies by the Board of Directors of Home Properties of New
York, Inc. (the "Company") for use at the 1999 Annual Meeting of Stockholders
of the Company, (the "Annual Meeting"). The Annual Meeting will be held on
Tuesday, May 4, 1999 at 2:00 p.m. at The Strong Museum, One Manhattan Square,
Rochester, New York 14607.
This Proxy Statement is first being sent to stockholders on or about
March 26, 1999. The Board of Directors set the close of business on March 17,
1999 as the record date (the "Record Date") for determining which stockholders
are entitled to notice of and to vote at the Annual Meeting (including any
adjournments or postponements). Only holders of the Company's Common Stock
("Common Stock") whose names appear on the stock registers of the Company at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 18,108,175
shares of Common Stock outstanding and entitled to vote at the Annual Meeting.
Stockholders are entitled to one vote for each share of Common Stock they
hold.
Please complete, sign, date and promptly return the accompanying Proxy
Card. An envelope with prepaid postage is enclosed. The persons named on the
Proxy Card will vote the shares of Common Stock as directed on properly
executed cards if they are received before the vote at the Annual Meeting and
not revoked. If a proxy is submitted without any instructions, the proxy will
be voted FOR Proposal 1 for the election of the eleven nominees for directors
of the Company named in this Proxy Statement; FOR Proposal 2 to ratify the
appointment of PricewaterhouseCoopers LLP as independent auditors; FOR Proposal
3 regarding the amendment to the Articles of Incorporation; and FOR Proposal 4
regarding the authorization of the issuance of an additional 15,000,000 shares
of Common Stock from time to time in one or more privately negotiated
transactions or public offerings. The Company does not expect any matters
which are not described in this Proxy Statement to be presented at the Annual
Meeting. If other matters are presented, proxies will be voted in accordance
with the discretion of the proxy holders.
For the Company to be able to act on the listed matters at the Annual
Meeting, at least a majority of the total number of outstanding shares of
Common Stock entitled to vote must be present, either in person or by proxy.
Under Maryland law, if a stockholder abstains on a vote, the abstention does
not constitute a vote "for" or "against" a matter. Thus, abstentions are
disregarded in determining the "votes cast". With respect to certain matters,
including Proposals 1 and 2, brokers and certain other nominees are entitled to
vote in their discretion if the beneficial owner or person entitled to vote
does not give the broker or nominee instructions on how to vote. If, however,
the brokers or nominees do not receive instructions from the beneficial owner
or other person entitled to vote such shares on Proposal 3 regarding the
amendment to the Articles of Incorporation or Proposal 4 regarding the issuance
of up to 15,000,000 shares of Common Stock in private placements or public
offerings, they may not vote on those proposals and their "non-votes" will be
treated like abstentions. Under the rules of the New York Stock Exchange,
Proposals 3 and 4 must be approved by a majority of the votes cast so long as
the total of votes cast on the proposal is more than 50% of the total number of
shares entitled to vote.
<PAGE>
A stockholder of record who submits a proxy may revoke it at any time
before the vote at the Annual Meeting: (i) by giving a written revocation to
Ann M. McCormick, the Secretary of the Company, at 850 Clinton Square,
Rochester, New York 14604; (ii) by filing another properly executed proxy with
a later date; or (iii) by attending the Annual Meeting in person and voting by
ballot. Any stockholder of record as of the Record Date who attends the Annual
Meeting may vote in person even if they have previously sent in a proxy card.
If a stockholder attends the Annual Meeting but does not complete a ballot
their shares of Common Stock will be voted in accordance with their previously
given proxy.
The Company is mailing its 1998 Annual Report to Stockholders and its
Form 10-K which includes its financial statements for the fiscal year ended
December 31, 1998 at the same time this Proxy Statement is being mailed to
stockholders.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven individuals will be elected to serve as
directors until the 2000 Annual Meeting and until their successors are elected.
The Board of Directors has nominated Norman P. Leenhouts, Nelson B. Leenhouts,
Richard J. Crossed, Amy L. Tait, Burton S. August, Sr., William Balderston,
III, Alan L. Gosule, Leonard F. Helbig, III, Roger W. Kober, Clifford W. Smith,
Jr., and Paul L. Smith to serve as directors (the "Nominees"). Each of the
Nominees is currently serving as a director of the Company. The Board of
Directors anticipates that each of the Nominees will serve as a director if
elected. If any person nominated by the Board of Directors is unable to accept
election, the proxies will be voted for the election of another person
recommended by the Board of Directors.
The favorable vote of the holders of a majority of the shares of Common
Stock cast at the Annual Meeting is required for the election of the nominees
as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING NOMINEES FOR DIRECTOR
Brief biographical descriptions of the Nominees follow. The information
was furnished to the Company by the Nominees. The information is up to date
through March 17, 1999.
Norman P. Leenhouts, 63, has served as Chairman of the Board of
Directors, Co-Chief Executive Officer and a director of the Company since its
inception in 1993. He has also served as Chairman of the Board of Home
Properties Management, Inc. ("HP Management") and as a director of Conifer
Realty Corporation ("Conifer Realty") since their formation. Norman Leenhouts
is a co-owner, together with Nelson Leenhouts, of Home Leasing Corporation, the
Company's predecessor ("Home Leasing"), and served as Chairman of Home Leasing
since 1971. He is a director of Hauser Corporation and Rochester Downtown
Development Corporation. He is a graduate of the University of Rochester and
is a certified public accountant. He is the twin brother of Nelson Leenhouts.
Nelson B. Leenhouts, 63, has served as President, Co-Chief Executive
Officer and a director of the Company since its inception in 1993. He has also
served as President and Chief Executive Officer of HP Management and as a
director of Conifer Realty since their formation. He is also a Vice President
of Conifer Realty. Nelson Leenhouts was the founder, and a co-owner, together
with Norman Leenhouts, of Home Leasing, and served as President of Home Leasing
since 1967. He is a director of Hauser Corporation. Nelson Leenhouts is a
graduate of the University of Rochester. He is the twin brother of Norman
Leenhouts.
Richard J. Crossed, 59, has served as Executive Vice President and a
director of the Company and as a director, President and Chief Executive
Officer of Conifer Realty since January 1, 1996. He is also Executive Vice
President of HP Management. He served as President and Chief Executive Officer
of Conifer Development, Inc. and C.O.F., Inc. (formerly Conifer Realty, Inc.)
(collectively, "Conifer") from 1985. Before becoming President of Conifer, he
served as Director of Development for Conifer. Mr. Crossed is a director of
the St. Joseph's Villa and is active in many housing organizations. He has
served on the New York State Housing Turnkey Task Force and New York State Low-
Income Housing Tax Credit Task Force. Mr. Crossed is a graduate of Bellarmine
College.
-2-
<PAGE>
Amy L. Tait, 40, has served as Executive Vice President and a director of
the Company since its inception in 1993. She has also served as a director of
HP Management since its formation. Mrs. Tait joined Home Leasing in 1983 and
has had several positions, including Senior and Executive Vice President and
Chief Operating Officer. She currently serves on the M & T Bank Advisory Board
and the boards of the United Way of Rochester and Geva Theatre. Mrs. Tait is a
graduate of Princeton University and holds a Masters Degree in Business
Administration from the William E. Simon Graduate School of Business
Administration of the University of Rochester. She is the daughter of Norman
Leenhouts.
Burton S. August, Sr., 83, has been a director of the Company since
August, 1994. Mr. August is currently a director of Monro Muffler Brake, Inc.,
a publicly traded company where Mr. August served as Vice President from 1969
until he retired in 1980. Mr. August is also a trustee emeritus of Rochester
Institute of Technology, a trustee of Strong Museum and a trustee of the
Otetiana Council Boy Scouts of America.
William Balderston, III, 71, has been a director of the Company since
August, 1994. From 1991 to the end of 1992, he was an Executive Vice President
of The Chase Manhattan Bank, N.A. From 1986 to 1991, he was President and
Chief Executive Officer of Chase Lincoln First Bank, N.A., which was merged
into The Chase Manhattan Bank, N.A. He is a director of Bausch & Lomb
Incorporated and Rochester Gas and Electric Corporation, as well as a Trustee
of the University of Rochester. Mr. Balderston is a graduate of Dartmouth
College.
Alan L. Gosule, 58, has been a director of the Company since December,
1996. Mr. Gosule has been a partner in the law firm of Roger & Wells LLP, New
York, New York, since August, 1991 and prior to that time was a partner in the
law firm of Gaston & Snow. He serves as Chairman of the Rogers & Wells LLP Tax
Department and Real Estate Securities practice group. Mr. Gosule is a
graduate of Boston University and its Law School and received a LL.M. from
Georgetown University. Mr. Gosule also serves on the Boards of Directors of
15 funds of the Northstar Mutual Funds, the Simpson Housing Limited
Partnership, F.L. Putnam Investment Management Company and CORE Cap, Inc.
Rogers & Wells LLP acted as counsel to Coopers & Lybrand LLP in its capacity as
advisor to the State Treasurer of the State of Michigan in connection with its
investment of retirement funds in Home Properties of New York, L.P. (the
"Operating Partnership") and Mr. Gosule was the nominee of the State Treasurer
under the terms of the investment agreements relating to that transaction.
Leonard F. Helbig, III, 53, has been a director of the Company since
August, 1994. Mr. Helbig has served as Executive Managing Director of the
Asset Services and Financial Services Groups and a Director of Cushman &
Wakefield since 1984. He joined Cushman & Wakefield in 1980 and is also a
member of that firm's Executive and National Management Committees. Mr. Helbig
is a member of the Urban Land Institute, the Pension Real Estate Association
and the International Council of Shopping Centers. Mr. Helbig is a graduate of
LaSalle University and holds the MAI designation of the American Institute of
Real Estate Appraisers.
Roger W. Kober, 65, has been a director of the Company since August,
1994. Mr. Kober is currently a director of Rochester Gas and Electric
Corporation where he was employed from 1965 until his retirement on January 1,
1998. From March, 1996 until January 1, 1998, Mr. Kober served as Chairman and
Chief Executive Officer of Rochester Gas and Electric Corporation. He is also
a member of the Board of Trustees of Rochester Institute of Technology. Mr.
Kober is a graduate of Clarkson College and holds a Masters Degree in
Engineering from Rochester Institute of Technology.
Clifford W. Smith, Jr., 52, has been a director of the Company since
August, 1994. Mr. Smith has been the Clarey Professor of Finance of the
William E. Simon Graduate School of Business Administration of the University
of Rochester since 1988. He has written numerous books, monographs, articles
and papers on a variety of financial, capital markets, risk management and
accounting topics and has held a variety of editorial positions on a number of
journals. Mr. Smith is a graduate of Emory University and holds a Doctor of
Economics from the University of North Carolina at Chapel Hill.
Paul L. Smith, 63, has been a director of the Company since August, 1994.
Mr. Smith was a director, Senior Vice President and the Chief Financial Officer
of the Eastman Kodak Company from 1983 until he retired in 1993. He is
currently a director of Canandaigua Brands, Inc. and Performance Technologies,
Incorporated. He is also a member of the Board of Trustees of the George
Eastman House, Geva Theatre and Ohio Wesleyan University. Mr. Smith is a
graduate of Ohio Wesleyan University and holds an MBA Degree in finance from
Northwestern University.
-3-
<PAGE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
BOARD OF DIRECTORS. The Company is managed by a Board of Directors
composed of eleven members, a majority of whom are independent of the Company's
management (the "Independent Directors"). The Board of Directors met five
times in 1998. Each of the directors attended at least 75% of the meetings of
the Board of Directors and any committees of which the director served during
1998. All but one of the directors attended 100% of the meetings.
AUDIT COMMITTEE. Paul Smith, Roger Kober, Alan Gosule and Leonard Helbig
form the Audit Committee of the Board of Directors. The Audit Committee
recommends the engagement of independent public accountants, reviews the scope
of the audit engagement and any other services, reviews the independent public
accountants' letter of comments and management's responses to those comments,
approves other professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
reviews any major accounting changes made or contemplated and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee
consists solely of Independent Directors. It met twice during 1998.
MANAGEMENT COMMITTEE. Burton August, William Balderston, Alan Gosule and
Clifford Smith form the Management Committee of the Board of Directors. The
Management Committee was formerly known as the Compensation Committee and
performs the traditional functions of a compensation committee, including
establishing remuneration levels for officers of the Company, reviewing
significant employee benefit programs and establishing and administering
executive compensation programs, including bonus plans, stock option and other
equity-based programs, deferred compensation plans and any other cash or stock
incentive programs. The Management Committee consists solely of Independent
Directors and met four times during 1998.
The Board of Directors does not have a standing nominating committee.
The entire Board of Directors considers Board composition and nominees,
performing the function of a nominating committee.
COMPENSATION OF DIRECTORS
In 1998, the Company paid its Independent Directors annual compensation
of $10,000 and $1,000 per day for attendance (in person or by telephone) at
Board meetings. Pursuant to the Director's Stock Grant Plan approved by the
stockholders at the 1998 Annual Meeting of Stockholders, in lieu of an increase
in cash compensation, the Independent Directors were also issued 150 shares of
the Company's Common Stock. Directors of the Company who are employees of the
Company do not receive any compensation for their services as directors. All
directors are reimbursed for their expenses incurred in attending directors'
meetings. Pursuant to the Company's Stock Benefit Plan, each Independent
Director was granted options to purchase 3,500 shares of Common Stock
immediately following the annual meeting of stockholders in 1997 and 1998 and
will be granted options to purchase 3,500 shares immediately following the
annual meeting of stockholders in 1999. The options have an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant.
For 1999, the Board authorized the issuance of 250 shares of the
Company's Common Stock to each Independent Director under the Director's Stock
Grant Plan and resolved that the cash compensation should remain at $10,000.
-4-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid during 1996,
1997 and 1998 to the Company's two Co-Chief Executive Officers and the other
four most highly compensated executive officers (collectively the "Named
Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Awards
ANNUAL COMPENSATION Shares Underlying
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- --------------------------- ---- ------ ----- -----------------
<S> <C> <C> <C> <C>
Norman P. Leenhouts
Chairman and Co-Chief Executive Officer 1996 $145,200 $59,702 7,338 sh.(1)
1997 159,720 143,109 15,000 sh.(2)
1998 196,237 156,989 15,000 sh.(3)
Nelson B. Leenhouts
President and Co-Chief Executive Officer 1996 $145,200 $59,702 7,338 sh.(1)
1997 159,720 143,109 15,000 sh.(2)
1998 196,237 156,989 15,000 sh.(3)
Richard J. Crossed
Executive Vice President 1996 $145,200 $59,702 95,338 sh.(4)
1997 159,720 143,109 15,000 sh.(2)
1998 196,237 156,989 15,000 sh.(3)
Amy L. Tait
Executive Vice President 1996 $103,000 $42,351 5,206 sh.(1)
1997 110,725 99,210 10,000 sh.(2)
1998 131,931 105,545 10,000 sh.(3)
David P. Gardner
Vice President, Treasurer and Chief
Financial Officer 1996 $86,000 $18,564 2,174 sh.(1)
1997 91,000 40,768 5,000 sh.(2)
1998 110,417 44,168 5,000 sh.(3)
Ann M. McCormick, Esq.
Vice President, General Counsel and 1996 $84,000 $18,996 2,123 sh.(1)
Secretary 1997 90,000 42,336 5,000 sh.(2)
1998 110,417 44,168 5,000 sh.(3)
</TABLE>
(1) These options were granted under the Company's Stock Benefit Plan in
connection with the purchase of the Company's common stock under the
Director, Officer and Employee Stock Purchase and Loan Program described
below. The options are exercisable for ten years at $20.50 per share and
vest over five years.
(2) These options were granted under the Company's Stock Benefit Plan and are
exercisable for ten years at $26.50 per share and vest over five years.
(3) These options were granted under the Company's Stock Benefit Plan and are
exercisable for ten years at $25.1250 per shares and vest over five years.
(4) Includes 7,338 options granted as described in footnote (1) above and
88,000 options granted as of January 1, 1996 in connection with the
acquisition of the assets of Conifer. The 88,000 options were immediately
exercisable at an option price of $19.00 per share.
-5-
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1998
The following table sets forth certain information relating to the
options granted with respect to fiscal year ended December 31, 1998. The
columns labeled "Potential Realizable Value" are based on hypothetical 5% and
10% growth assumptions in accordance with the rules of the Securities and
Exchange Commission. The Company cannot predict the actual growth rate of the
Common Stock.
OPTION GRANTS IN LAST FISCAL YEAR*
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
Percent of Potential
Total Options Realizable Value
Number of Granted to at Assumed Annual
Shares Employees in Rates of Stock
Underlying Fiscal Exercise or Price Appreciation
Options YEAR Base Price Expiration FOR OPTION TERM
NAME Granted ($/SH) DATE 5% 10%
- ------------------ --------- ----------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Norman P. Leenhouts 15,000 7.8% $25.125 8/4/2008 $237,015 $600,642
Nelson B. Leenhouts 15,000 7.8% $25.125 8/4/2008 $237,015 $600,642
Richard J. Crossed 15,000 7.8% $25.125 8/4/2008 $237,015 $600,642
Amy L. Tait 10,000 5.2% $25.125 8/4/2008 $158,010 $400,428
David P. Gardner 5,000 2.6% $25.125 8/4/2008 $ 79,005 $200,214
Ann M. McCormick 5,000 2.6% $25.125 8/4/2008 $ 79,005 $200,214
</TABLE>
____________
* Stock appreciation rights were not granted in 1998
-6-
<PAGE>
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth the value of options held at the end of 1998
by the Company's Named Executives.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES{(1)}
<TABLE>
<CAPTION>
Number of Number of Shares Value of Unexercised in-
Shares Underlying Unexercised the-Money Options at
FISCAL YEAR-END (2)
Acquired on Value OPTIONS AT FISCAL YEAR-END ------------------------
NAME EXERCISE REALIZED ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Norman P. Leenhouts 40,000 $245,000 53,935 sh. 31,403 sh. $339,409 $ 32,491
Nelson B. Leenhouts 40,000 $245,000 53,935 sh. 31,403 sh. $339,409 $ 32,491
Richard J. Crossed 88,000 $344,000 5,935 sh. 31,403 sh. $ 15,409 $ 32,491
Amy L. Tait 15,000 $105,000 59,482 sh. 38,724 sh. $384,881 $141,451
David P. Gardner 4,940 $ 30,258 8,930 sh. 13,304 sh. $ 52,223 $ 30,221
Ann M. McCormick 3,250 $ 19,906 10,599 sh. 13,274 sh. $ 63,520 $ 30,064
</TABLE>
(1) Stock appreciation rights were not granted in 1998.
(2) Based on the closing price of the Common Stock on the NYSE on December 31,
1998 of $25.7500 less the per Share exercise price of the options.
EMPLOYMENT AGREEMENTS
Norman and Nelson Leenhouts entered into employment agreements with the
Company prior to its initial public offering providing for an initial term of
five years commencing August 4, 1994 (the "Employment Agreements"). The
agreements provide for the employment of Norman Leenhouts as Chairman of the
Board and Co-Chief Executive Officer of the Company and Nelson Leenhouts as
President and Co-Chief Executive Officer of the Company and President and Chief
Executive Officer of HP Management. The Employment Agreements provided for
initial base salaries of $120,000, which were to automatically increase by 10%
each year starting January 1, 1995. In addition, the Employment Agreements also
provide certain benefits if employment is terminated by the Company or not
renewed without cause, or terminated by the executive for good reason at any
time. The Employment Agreements also entitled the Leenhoutses to receive
incentive compensation pursuant to a specific formula. Pursuant to their
respective Employment Agreements with the Company, Norman and Nelson Leenhouts
are each subject to a covenant not to compete with the Company during the term
of his employment and, if either is terminated by the Company for cause or
resigns without good reason, for two years thereafter. The covenants prohibit
Norman and Nelson Leenhouts from participating in the management, operation or
control of any multifamily residential business which is competitive with the
business of the Company, except that they, individually and through Home
Leasing and its affiliates, may continue to own and develop the properties
managed by HP Management. The Leenhoutses have also agreed that any commercial
property which may be developed by them will be managed by HP Management
subject to the approval of the outside members of the Board of Directors.
Richard Crossed also entered into an Employment Agreement with the
Company, effective January 1, 1996. The terms of that agreement were
substantially the same as the Employment Agreements entered into by Norman and
Nelson Leenhouts as described above. The initial term is for five years and
identical termination provisions are provided. In his Employment Agreement,
Mr. Crossed has agreed not to compete with the Company during the term of his
employment and, if he is terminated by the Company for cause or resigns without
good reason, for three years thereafter.
The Employment Agreements have been amended. In August of 1998 the base
salaries for Norman and Nelson Leenhouts and Richard Crossed were increased to
$225,000. This compares to the $175,682 that would have otherwise
-7-
<PAGE>
been payable under their Employment Agreements. The reasons for the increase
are described in the Management Committee's Report on Executive Compensation
which appears below. Previously, the Employment Agreements had been amended
to provide that the executives will receive incentive compensation pursuant
to the Company's Incentive Compensation Plan as it may be revised by the
Management Committee from time to time, rather than as originally provided
in their Employment Agreements. For all applicable years, the formula
contained in their Employment Agreements would have resulted in higher bonuses.
In addition, for 1998, even with the increase in base salaries described above,
total compensation would have been greater if the Employment Agreements had not
been modified. Finally, the Employment Agreements have been amended to provide
for severance benefits under the Company's Executive Retention Plan as
described below in the event of a change of control and a subsequent
termination of employment rather than as described in the Employment Agreements.
The benefits that would be payable under the Executive Retention Plan are
approximately the same as those that would have been paid under the Employment
Agreements, except that under the Executive Retention Plan the executives
would also receive a "gross up" in the amount of any excise tax that is
payable.
INCENTIVE COMPENSATION PLAN
The Company's incentive compensation plan (the "Incentive Plan") was
amended for 1998 to provide that eligible officers and key employees may earn a
cash bonus based on increases in the Company's Funds from Operations ("FFO")
per share/unit (computed based on the basic shares/units outstanding). The
Incentive Plan provides for bonus units to be awarded for each percent of per
share/unit FFO growth in excess of a 5% floor. For example, if per share/unit
FFO growth is 13.2%, 8.2 bonus units are awarded.
A factor is applied to each eligible participant's salary, ranging from
1% to 10%, which is multiplied by the resulting bonus units, to determine the
split of the bonus pool. The factor applied to the salaries of Norman and
Nelson Leenhouts, Richard Crossed and Amy Tait is 10%. The factor applied to
the salaries of David Gardner and Ann McCormick is 5%. For 1999, the factor
applied to Mr. Gardner's and Mrs. McCormick's salary has been increased to 6%.
Incentive Plan participants in the 1% and 2% bonus categories are limited
to bonuses equal to ten times (10 bonus units) bonus category amounts. There
is no limit for participants in the 3% bonus category or above, except there is
a deferral component when bonus units are in excess of a ceiling. The ceiling
established is as follows:
Bonus
YEAR UNIT CEILING
1 8
2 7
3 6
2001 and beyond 5
The deferred amount plus interest at 6% will be paid out at the rate of
50% in each of the following two years, provided the Company achieves the 5%
floor in per share/unit growth each year.
DIRECTOR, OFFICER AND EMPLOYEE STOCK PURCHASE AND LOAN PROGRAM
In August 1996, the Board of Directors approved a Director, Officer and
Employee Stock Purchase and Loan Program (the "Stock Purchase Program").
Pursuant to the Stock Purchase Program, each officer and director of the
Company was eligible to receive loans for the purchase of Common Stock under
the Company's Dividend Reinvestment, Stock Purchase, Resident Stock Purchase
and Employee Stock Purchase Plan ("DRIP") and receive options to purchase
Common Stock under the Company's Stock Benefit Plan. The 1996 phase of the
Stock Purchase Program provided for loans up to a formula amount for each
officer based on salary and bonus category and up to $60,000 for each
independent director. The Company loaned approximately 50% of the purchase
price and arranged loans from a commercial bank, guaranteed by the Company, for
the balance. The 1996 phase of the Stock Purchase Program also provided for the
issuance of stock options to purchase .25 shares of Common Stock at the fair
market value on the date of issuance ($20.50) for each share of Common Stock
purchased. With respect to the 1996 phase of the Stock Purchase Program,
eighteen officers purchased 190,345 shares of Common Stock and received 47,592
options to purchase Common Stock at an exercise price of $20.50 vesting over
five years. The six independent directors purchased an aggregate of 18,198
shares of Common Stock and received options to purchase 4,554 shares of Common
Stock for $20.50 per share vesting over five years. The Company loaned the
-8-
<PAGE>
directors and officers an aggregate of $2,063,469 maturing on August 31, 2016
with simple interest at 7%. The Company also guaranteed bank loans totaling
$2,033,180 repayable from the quarterly dividends on the stock and the proceeds
of any sale of the stock and agreed to pay the commercial lender an interest
rate differential equal to .94% per annum of the outstanding loans in order to
bring the interest rate on the commercial portion of the loan to 7%. The
Company guarantee has subsequently been returned by the commercial lender and
is no longer in effect.
In October, 1997, the Board of Directors approved an additional loan
pursuant to the Stock Purchase Program. The 1997 loans were made on
substantially the same basis as the 1996 loans with the Company loaning
approximately 50% of the purchase price and arranging loans from a commercial
bank for the balance. The primary difference was that: (i) no Company
guarantee was provided to the commercial lender; (ii) no options were issued in
connection with the 1997 phase of the Stock Purchase Program; and (iii)
interest on the Company loans is to be paid currently from one-half of the
dividends on the stock rather than accruing as was the case with the 1996 phase
of the Stock Purchase Program. The Company agreed to pay the commercial lender
an interest rate differential payment on each loan equal to .84% per annum of
the outstanding balance in order to bring the interest rate on the commercial
portion of the loan down to 6.7%, the dividend yield on the Company's common
stock on the date that the loan was closed. The interest rate on the Company
portion of the loan was also 6.7%. With respect to the 1997 portion of the
Stock Purchase Program, 21 officers purchased 157,302 shares of Common Stock
and five of the Independent Directors purchased 12,380 shares in the aggregate.
The Company loaned the directors, officers and employees an aggregate of
$2,262,283 maturing on the earlier of the maturity of the 1996 phase of the
Stock Purchase Program or November 30, 2017.
In August, 1998, the Board of Directors authorized an additional loan
pursuant to the Stock Purchase Program as that Program was approved at the 1998
Annual Meeting of Stockholders. Pursuant to the approved Program, the Company
loaned approximately 50% of the purchase price to the Independent Directors and
arranged loans from a commercial bank for the balance. The Company loaned the
other participating employee directors and officers 100% of the purchase price.
With respect to the 1998 portion of the Stock Purchase Program, 30 officers
purchased 213,351 shares of Common Stock and six of the Independent Directors
purchased 24,288 shares in the aggregate. The Company loaned the directors,
officers and employees an aggregate of $5,444,085 at an interest rate of 7.13%.
The loans mature on the earlier of the maturity of the 1996 and 1997 phases of
the Stock Purchase Program or August 31, 2018.
DEFERRED BONUS PLAN
In 1998, the Management Committee recommended and the Board of Directors
adopted a Deferred Bonus Plan for key employees. Under the Plan, eligible
employees can elect to defer up to 50% of their bonus under the Incentive
Compensation Plan for three, five or ten years. The Company contributes 10% of
the deferred amount, which amount vests after three years. A "phantom" stock
account is established for both amounts. Each deferral and Company
contribution is reflected by crediting those accounts with the number of shares
of the Company's Common Stock that could be purchased with the amounts deferred
and contributed at the Common Stock's fair market value. The equivalent of
dividends on those shares is also credited to the accounts at the time
dividends are paid on the Company's Common Stock. Under the Deferred Bonus
Plan, Nelson and Norman Leenhouts each deferred $39,247.25 of their 1998 bonus;
Richard Crossed deferred $54,946.15; and David Gardner and Ann McCormick each
deferred $8,833.60.
EXECUTIVE RETENTION PLAN
At its meeting held in February 1999, the Board of Directors, upon the
recommendation of the Management Committee, approved the Executive Retention
Plan. This Plan provides for severance benefits and other compensation to be
received by certain employees, including the executive officers, in the event
of a change of control of the Company and a subsequent termination of their
employment without cause or voluntarily with good cause. Under this Plan, the
executive officers, in the event of a termination covered by the Plan, would
receive a lump sum payment equal to two times their current base salary, two
times their last paid bonus under the Incentive Compensation Plan plus a
"gross-up" amount necessary to pay any excise tax due on the payment. In
addition, all accrued or deferred bonuses under the Incentive Compensation Plan
would be paid and all stock options granted under the Stock Benefit Plan would
vest.
-9-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative return on
the Company's Common Stock since its initial public offering in August 1994
through December 31, 1998 to the cumulative return of the NAREIT All Equity
REIT Index and the Standard and Poor's 500 Index for the same period. The
total return assumes that dividends were reinvested quarterly and is based on a
$100 investment on August 1, 1994. Stockholders should note that past
performance does not predict future results.
[GRAPH INSERTED HERE]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
8/4/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
Company Common Stock $100 $104.65 $100.25 $143.32 $186.55 $190.11
NAREIT All Equity REIT Index 100 98.45 113.49 153.51 184.60 152.30
S&P 500 Index 100 101.53 139.54 171.58 228.84 294.25
</TABLE>
-10-
<PAGE>
MANAGEMENT COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Management Committee of the Board of Directors establishes
performance criteria, reviews and administers compensation and benefits for
executive officers of the Company and broad-based compensation plans for the
other officers and employees generally. This Committee consists only of
Independent Directors. In establishing the Company's compensation program, the
Management Committee's goal is to: (1) attract and retain highly capable
employees; (2) motivate those employees to reach the Company's operating and
financial goals; (3) encourage ownership of the Company's stock and link
compensation to the performance of the Company in order to more closely align
the interests of executives and other employees with those of its stockholders.
To achieve these ends, the Company's executive compensation package consists of
three components: base salary, annual incentive compensation under the
Incentive Plan, and awards under the Company's Stock Benefit Plan.
It is the Committee's policy that executive compensation should be
deductible to the Company for federal income tax purposes. The Committee will
annually consider compensation decisions in light of the limit on deductibility
under Section 162(m) of the Internal Revenue Code and related regulations.
SALARY. The Management Committee believes that, in order to attract and
retain highly qualified executives, it is necessary to provide market
competitive compensation. To determine whether the compensation of its senior
executives was market competitive, the Company retained William M. Mercer,
Inc. to perform a comparative analysis. Mercer compared the compensation of
the Company's executives to a peer group of national REITs in the residential
property sector. The comparison demonstrated to the Management Committee that
the cash compensation levels of the Company's senior executives were below the
competitive range, especially in light of those executive's current
responsibilities and relative value to Home Properties.
In August of 1998, the Committee therefore recommended to the Board that
the base salaries of the senior executives be increased to make them more
market competitive. With respect to Norman and Nelson Leenhouts and Richard
Crossed this required an amendment to their existing Employment Agreements
which provided for a set base salary with 10% annual increases. The Committee
determined that this variance from the terms of the Employment Agreements was
appropriate in light of the results of the Mercer analysis, the faster than
anticipated growth pace of the Company resulting in increased responsibilities
and the agreement of the executives to receive their incentive pay under the
Company's Incentive Plan rather than as provided under the Employment
Agreements. The recommendation of the Committee with respect to base salary
increases was approved by the Board of Directors retroactive to August 1, 1998.
The Committee subsequently reviewed proposed salaries for 1999 in light
of the prior increase, the comparative analysis and individual responsibilities
and performances. It approved an increase in 1999 base salary of less than
2.5% for each of the executive officers.
The Committee expects to make an annual review of base salaries of the
executive officers and key officers of the Company.
INCENTIVE COMPENSATION. The Incentive Plan provides for cash bonuses
based on increases in the Company's Funds From Operations. The Incentive Plan,
originally adopted in 1994, has been amended in each subsequent year. The
Employment Agreements for the Leenhoutses have been amended to provide that
they will receive their incentive compensation pursuant to the Incentive Plan
rather than as originally provided in their Employment Agreements. For 1998,
the formula contained in their Employment Agreements would have resulted in
higher bonuses. The Management Committee determined that the two Co-Chief
Executive Officers were entitled to have the maximum factor of 10% applied to
their salaries for purposes of determining their share of the bonus pool.
While under the Employment Agreements all of the bonus was nondiscretionary,
under the Incentive Plan, one-half of the Co-Chief Executive Officers' bonus is
nondiscretionary and one-half is payable at the discretion of the Committee.
The Committee expects to regularly review the Plan to assure its
appropriateness.
STOCK COMPENSATION. Initial awards of stock options under the Company's
Stock Benefit Plan were made at the time of the Company's initial public
offering. All of the initial stock options expire in ten years and were
granted with an exercise price of $19.00, the initial public offering price of
the Company's Common Stock. Norman and Nelson Leenhouts were each granted
immediately exercisable options to purchase 88,000 shares of Common Stock.
-11-
<PAGE>
Effective January 1, 1996, Richard Crossed was also granted immediately
exercisable options to purchase 88,000 shares of common stock at an exercise
price of $19.00 per share. Amy Tait was initially awarded options to purchase
88,000 shares of Common Stock and David Gardner and Ann McCormick were each
initially awarded options to purchase 15,000 shares of Common Stock. These
three awards, as well as the awards to other employees, vest 20% per year.
In addition, as of October 28, 1997, each of the Named Executives
received additional options which vest 20% per year and expire in ten years.
Each of the Co-Chief Executive Officers and Mr. Crossed received 15,000
additional options; Amy L. Tait received 10,000 additional options; and each of
David Gardner and Ann McCormick received 5,000 additional options. The option
price was $26.50 per share, which was the closing price on the New York Stock
Exchange for a share of the Company's Common Stock on the grant date.
The Management Committee reviewed the number of options granted to the
Co-Chief Executive Officers and other executive officers in light of the other
elements of their compensation and their overall equity interest in the
Company's business, principally through ownership of units of limited
partnership interest in the Operating Partnership and determined to encourage
officers to acquire additional Common Stock and options.
The Management Committee therefore recommended and the Board of Directors
approved an additional phase of the Stock Purchase Program. In August, 1998
and pursuant to the Stock Purchase Program, each of the Named Executives
purchased the maximum number of shares available to them with the provided
loans: each of the Co-Chief Executive Officers and Mr. Crossed purchased
29,148 shares of Common Stock; Amy Tait purchased 19,747 shares of Common
Stock; and each of David Gardner and Ann McCormick purchased 8,295 shares of
Common Stock. The purchase price for the Common Stock so purchased was 97% of
the "Market Price" of the Common Stock. For purposes of the Stock Purchase
Program, "Market Price" is the average of the high and low prices on the New
York Stock Exchange for the five trading days preceding the date of the
purchase, which is the same basis as provided in the Company's DRIP.
In addition, the Management Committee recommended and the Board of
Directors approved the issuance of 192,600 additional options to purchase
Common Stock to certain officers and employees of the Company at the option
price of $25.1250 per share, which was the closing price on the New York Stock
Exchange for a share of the Company's Common Stock on August 4, 1998, the date
of the grant. As of August 4, 1998, each of the Named Executives received
additional options which vest 20% per year and expire in ten years. Each of
the Co-Chief Executive Officers and Mr. Crossed received 15,000 additional
options; Amy Tait received 10,000 additional options; and each of David Gardner
and Ann McCormick received 5,000 additional options.
The Management Committee believes that such ownership ties the interests
of senior executives closely with those of stockholders to provide them greater
incentive to manage the Company to increase stockholder returns.
OTHER ACTIONS. In 1998, the Management Committee recommended and the
Board of Directors adopted a Deferred Bonus Plan for key employees. This Plan
is described earlier in this Executive Compensation Section of this Proxy
Statement. The Deferred Bonus Plan was proposed by the Management Committee
and approved by the Board of Directors as a means to assist key employees with
their individual tax and financial planning and to permit the Company to remain
competitive in attracting, retaining, motivating and rewarding key employees
who can directly influence the Company's operating results.
At its meeting held in February 1999, the Board of Directors, upon the
recommendation of the Management Committee, approved the Executive Retention
Plan. This Plan provides for severance benefits and other compensation to be
received by certain employees, including the executive officers, in the event
of a change in control of the Company and a subsequent termination of their
employment without cause or voluntarily with good cause. This Plan is
described earlier in this Executive Compensation Section of this Proxy
Statement. This Plan was determined by the Committee and the Board to be
necessary to attract and retain key employees and, in the case of a potential
change of control, to correctly align the interests of key employees with those
of stockholders.
Respectfully submitted,
The Management Committee
Burton S. August, Sr.
William Balderston, III
Alan L. Gosule
Clifford W. Smith, Jr.
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<PAGE>
MANAGEMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the fiscal year 1998, the Management Committee was comprised of
Burton S. August, Sr., William Balderston, III, Alan L. Gosule and Clifford W.
Smith, Jr. None of them have ever been an officer of the Company or any of its
subsidiaries. Each of the Management Committee members as well as each of the
other Independent Directors (with the exception of Mr. Gosule) participated in
the Company's Stock Purchase Program on August 13, 1998 and purchased 4,148
shares of Common Stock through the Company's DRIP for $24.1106 per share (3%
below the five-day average market value as provided in that plan). The
purchases were financed 50% by a loan from the Company bearing interest at
7.13% and due on the earlier of the maturity of the 1996 or 1997 notes under
the Stock Purchase Program or August 31, 2018. The remainder of the purchase
was financed by a loan from a commercial bank, which was arranged by the
Company and bears interest at 7.18%.
STOCK BENEFIT PLAN
GENERAL
The Company adopted its 1994 Stock Benefit Plan (the "Stock Benefit
Plan") for the purpose of providing persons responsible for the future success
of the Company, including directors, officers, regional managers and on-site
property managers, with increased motivation and incentives to exert their best
efforts on behalf of the Company by enlarging their personal stake in its
success. The number of employees participating in the Stock Benefit Plan is
approximately 300. The Stock Benefit Plan limits the number of shares of
Common Stock issuable pursuant to the Plan to 1,100,000 shares, of which
options to purchase 954,047 shares have, to date, been granted to employees and
107,554 have been granted to directors. Of the options granted, 646,806 issued
to employees and 86,554 issued to the Independent Directors were outstanding as
of March 17, 1999. Each Independent Director who continues to serve will
receive awards of 3,500 options exercisable for five years at the fair market
value on the date of grant after the annual meeting of shareholders in 1999.
The 3,500 options granted to each of the non-employee directors following the
1997 and 1998 annual meetings have an exercise price of $22.75 and $27.0625 per
share, respectively. The number of shares reserved under the Stock Benefit
Plan is subject to adjustment upon certain recapitalizations and other
corporate transactions. The following summary of the Stock Benefit Plan is
qualified in its entirety by reference to the full text of the Stock Benefit
Plan, copies of which may be obtained from the Secretary of the Company.
The Board of Directors may amend, suspend or discontinue the Stock
Benefit Plan at any time except that certain amendments, under applicable laws
or rules of governmental entities or regulations of the New York Stock Exchange
or similar bodies, must be approved by the holders of a majority of the issued
and outstanding shares of capital stock of the Company entitled to vote. The
Stock Benefit Plan may not be amended to adversely affect awards outstanding
prior to the amendment. The Board of Directors anticipates amending the Stock
Benefit Plan in the future to provide for the issuance of additional options to
purchase shares. This amendment does not require stockholder approval because
the Stock Benefit Plan, under New York Stock Exchange rules, is "broadly
based."
EMPLOYEE AWARDS
The Stock Benefit Plan provides for the grant of "incentive stock
options" within the meaning of Section 422 of the Code, non-statutory stock
options, stock appreciation rights and restricted stock awards to employees of
the Company. The Stock Benefit Plan is administered by the Management
Committee of the Board of Directors, none of the members of which will
participate in employee awards under the Stock Benefit Plan. The Management
Committee determines the persons to be granted options, the number of shares
subject to each option, whether or not such option is a non-statutory or
incentive stock option, the exercise price and exercise schedule, the manner in
which payment may be made and whether such persons will have the right to
receive cash or shares in lieu of exercising their options. The exercise price
may not be less than 100% of the fair market value of the Company's Common
Stock on the date of grant. The Management Committee may grant an option
holder the right to elect to receive cash or shares in an amount equal to the
excess of the fair market value of the shares subject to an incentive or non-
statutory option over the exercise price for such shares, which right can be
exercised instead of (but not in addition to) its related incentive or non-
statutory option (a stock appreciation right). There is no limit on the number
of non-statutory options that may be granted to any one individual under the
Stock Benefit Plan, provided that the grant of the options may not cause the
Company to fail to qualify as a REIT for federal income tax purposes. An
optionee may, with the consent of the Management Committee, elect to pay for
the shares to be received upon exercise of his or her options in cash, shares
(including shares issuable upon exercise of an option) or any combination
thereof. Options may not be exercisable for more than a ten-year period.
-13-
<PAGE>
Options held by officers of the Company generally terminate three months after
the optionee's termination of employment from the Company for any reason other
than death or disability, and are not transferable by the optionee other than
by will or the laws of descent and distribution.
Awards of restricted stock will consist of shares of Common Stock which
may be subject to forfeiture and restrictions on transfer as determined by the
Management Committee. In general, a participant who has been granted
restricted stock will have the benefits of ownership in respect of such shares,
including the right to vote such shares and to receive dividends and other
distributions thereon from the date of grant, subject to the restrictions
imposed in the grant or as set forth in the Stock Benefit Plan.
DIRECTOR'S OPTIONS
Under the Stock Benefit Plan, the initial Independent Directors of the
Company were granted a non-statutory option to purchase 3,000 shares in
connection with their initial election to the Board and received grants of
options to purchase 3,000 shares immediately following the stockholders'
meetings in 1995 and 1996. The exercise price for each option grant is 100% of
the fair market value of the Company's Common Stock on the date of grant. Each
director's option has a five-year term. Pursuant to changes to the Stock
Benefit Plan approved by the stockholders at the 1997 Annual Meeting, the Board
approved additional awards to each Independent Director of options to purchase
3,500 shares of Common Stock immediately following the annual meeting of
stockholders in each of 1997, 1998 and 1999 at an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant. (The
exercise price for the options granted in 1997 is $22.75 per share and the
exercise price for the options granted in 1998 was $27.0625 per share.) In
addition, the Independent Directors (other than Mr. Gosule) were each issued
options to purchase 759 shares of Common Stock at $20.50 on August 12, 1996 in
connection with their purchases of Common Stock under the Stock Purchase
Program.
-14-
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 17, 1999 regarding
the beneficial ownership of shares of Common Stock by (i) directors, nominees
and Named Executives of Home Properties, and (ii) directors, Nominees and
executive officers of Home Properties as a group, and (iii) each person known
by the Company to be the beneficial owner of more than a 5% interest in the
Company. The table also includes information relating to the number and
percentage of shares of Common Stock and partnership units of the Operating
Partnership ("Units") beneficially owned by the persons included in (i) and
(ii) above (such Units are exchangeable into shares, or cash at the election of
the Independent Directors of the Company). In preparing this table, the
Company has relied on information supplied by its officers, directors, Nominees
and certain stockholders, and upon information contained in filings with the
SEC.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of Number of Shares/ Percentage of
OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES(2) UNITS OWNED SHARES/UNITS(5)
<S> <C> <C> <C> <C>
Norman P. Leenhouts 175,110(1) * 444,270(1)(4) 2.41%
Nelson B. Leenhouts 170,798(3) * 439,710(3)(4) 2.38 %
Richard J. Crossed 180,080(6) * 432,044 (6) 2.34 %
Amy L. Tait 140,208(7) * 154,021(7) *
Burton S. August, Sr. 41,461(8) * 45,707(8) *
William Balderston, III 28,033(9) * 28,033(9) *
Alan L. Gosule 7,623(10) * 7,623(10) *
Leonard Helbig, III 28,868(11) * 28,868(11) *
Roger W. Kober 27,477(9) * 27,477(9) *
Clifford W. Smith, Jr. 32,394(12) * 32,394(12) *
Paul L. Smith 18,426(13) * 18,426(13) *
David P. Gardner 38,038 (14) * 41,544 (14) *
Ann M. McCormick 37,739 (15) * 40,041 (15) *
All executive officers
and directors
As a group (13 persons) 926,255(16) 5.05%(17) 1,740,158 (16)(18) 9.09% (18)
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Name and Address Number of Shares Outstanding Shares
OF BENEFICIAL OWNER BENEFICIALLY OWNED AS OF DECEMBER 31, 1998
<S> <C> <C>
Capital Growth Management Limited Partnership 1,067,000(19) 6.05%
One International Place
Boston, MA 02110
Palisade Capital Management L.L.C. 950,700(20) 5.39%
1 Bridge Plaza, Suite 695
Fort Lee, NJ 07024
FMR Corp. 1,456,587 (21) 8.26%
82 Devonshire St.
Boston, MA 02109
Public Employees Retirement System of Ohio 1,201,400 (22) 6.81%
277 East Town Street
Columbus, OH 43215
PaineWebber Group Inc. 884,018 (23) 5.00%
1285 Avenue of the Americas
New York, NY 10019
State Treasurer, State of Michigan 3,356,191 (24) 17.39%
Bureau of Investments
Department of Treasury
Treasury Building, Box 15128
Lansing, MI 48901
</TABLE>
__________
* Less than 1%
(1) Includes 5,935 shares which may be acquired upon the exercise of currently
exercisable options, 1,752 shares owned by Mr. Leenhouts' spouse as to
which he disclaims beneficial ownership and 1,558 shares of common stock
issuable pursuant to the Company's Deferred Bonus Plan.
(2) Assumes that all options included with respect to the person have been
exercised. The total number of shares outstanding used in calculating the
percentage assumes that none of the options held by any other person have
been exercised.
(3) Includes 53,935 shares which may be acquired upon the exercise of currently
exercisable options and 1,558 shares of common stock issuable pursuant to
the Company's Deferred Bonus Plan.
(4) Includes Units owned by Home Leasing and Leenhouts Ventures. Norman
Leenhouts and Nelson Leenhouts are each directors, officers and 50%
stockholders of Home Leasing and each owns 50% of Leenhouts Ventures.
Includes 50,000 Units owned by the respective spouses of each of Norman and
Nelson Leenhouts as to which they disclaim beneficial ownership.
(5) Assumes that all options included with respect to the person have been
exercised and all Units included with respect to the person have been
exchanged for shares of Common Stock. The total number of shares
outstanding used in calculating the percentage assumes that none of the
options held by any other person have been exercised and that none of the
Units held by any other person have been exchanged for shares.
(6) Includes 5,935 shares which may be acquired upon the exercise of currently
exercisable options and 2,181 shares of common stock issuable pursuant to
the Company's Deferred Bonus Plan. Also includes Mr. Crossed's
proportionate share of Units owned by Conifer and its affiliates.
(7) Includes 59,482 shares which may be acquired upon the exercise of currently
exercisable options. Also includes 8,543 shares and 70 Units owned by
Mrs. Tait's spouse as to which she disclaims beneficial ownership. Mrs.
Tait shares voting and dispositive power with respect to 2,548 Units with
her spouse.
(8) Includes 16,304 shares which may be acquired upon the exercise of currently
exercisable options, and 9,100 shares held in a trust of which Mr. August
is the lifetime beneficiary.
(9) Includes 16,304 shares which may be acquired upon the exercise of currently
exercisable options.
(10) Includes 7,000 shares which may be acquired upon the exercise of currently
exercisable options.
(11) Includes 13,304 shares which may be acquired upon the exercise of currently
exercisable options.
(12) Includes 7,304 shares which may be acquired upon the exercise of currently
exercisable options. Also includes 1,400 shares owned by Mr. Smith's
spouse as custodian for their minor children and 700 shares held in a trust
for the benefit of one of Mr. Smith's minor children.
(13) Includes 7,304 shares which may be acquired upon the exercise of currently
exercisable options.
(14) Includes 8,930 shares which may be acquired upon the exercise of currently
exercisable options and 351 shares of common stock issuable pursuant to the
Company's Deferred Bonus Plan.
(15) Includes 10,599 shares which may be acquired upon the exercise of currently
exercisable options and 351 shares of common stock issuable pursuant to the
Company's Deferred Bonus Plan. Mrs. McCormick shares voting and
dispositive power with respect to 565 Units with her spouse.
(16) Includes 228,640 shares which may be acquired upon the exercise of
immediately exercisable options.
(17) Assumes that all exercisable options included with respect to all listed
persons have been exercised.
(18) Assumes that all exercisable options included with respect to all listed
persons have been exercised and all Units included with respect to all
listed persons have been exchanged for shares of Common Stock.
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<PAGE>
(19) Based on a report on Schedule 13G, dated February 8, 1999, reflecting that
Capital Growth Management Limited Partnership has shared dispositive and
sole voting power with respect to shares held in client accounts, as to
which Capital Growth disclaims beneficial ownership.
(20) Based on a report in Schedule 13G, dated January 22, 1999, reflecting that
Palisade Capital Management, L.L.C. holds the shares on behalf of clients
in accounts over which Palisade has sole voting and dispositive power.
(21) Based on a report on Schedule 13G, dated February 1, 1999, filed jointly on
behalf of FMR Corp., Fidelity Management and Research Company, Edward C.
Johnson 3d and Abigail P. Johnson reflecting that FMR Corp. has shared
voting and dispositive power with respect to all of such shares and
sole voting power with respect to 642,400 of such shares.
(22) Based on a report on Schedule 13G, dated February 12, 1999, reflecting that
the Public Employees Retirement System of Ohio has sole voting and
dispositive power with respect to the shares.
(23) Based on a report on Schedule 13G dated February 12, 1999, reflecting that
PaineWebber Group Inc. has sole voting power with respect to 879,662 shares
and shared dispositive power with respect to all of the shares.
(24) Based on a report on Form 13D, dated January 21, 1999, reflecting that the
State Treasurer, State of Michigan and the individual members of the
Michigan Department of Treasury's Bureau of Investments, which manages the
investments for four state-sponsored retirement systems: Public School
Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System and Judges' Retirement System acquired a Class A
Limited Partnership Interest in the Operating Partnership which is
convertible, at the option of the State of Michigan, into 1,666,667 shares
of common stock, subject to adjustment, over which the State Treasurer
would have sole voting and dispositive power. Additionally said parties
are the beneficial owners of 1,689,524 shares of the Common Stock of the
Company.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% stockholders are required to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were satisfied.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Directors and executive officers of the Company received loans from the
Company for some portion of the purchase price of shares of Common Stock
purchased by them in connection with the Stock Purchase Program described
above. As of March 17, 1999, the indebtedness to the Company of each of the
Named Executives is: each of Messrs. Leenhouts and Crossed - $1,355,716, Mrs.
Tait - $934,486, Mr. Gardner - $389,892 and Mrs. McCormick - $386,501.
Home Leasing, in consideration of a portion of the Units and cash received
by it in connection with the formation of the Company, assigned to HP
Management certain management contracts between it and certain entities of
which it is a general partner. As a general partner of those entities, Home
Leasing Corporation (and, indirectly, Norman and Nelson Leenhouts) has an
ongoing interest in such management contracts. In addition, Conifer assigned
to the Company and its affiliates certain management contracts between Conifer
and entities in which it is the general partner. As a general partner, Conifer
(and indirectly, Richard Crossed) has an ongoing interest in such management
contracts.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the accounting firm of PricewaterhouseCoopers LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1999. PricewaterhouseCoopers LLP (and its predecessor, Coopers & Lybrand,
L.L.P.) has served as the Company's independent auditors since its commencement
of operations and is considered by the management of the Company to be well
qualified. A representative of PricewaterhouseCoopers LLP will be present at
the Annual Meeting, will be given the opportunity to make a statement if he so
desires and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE 1999 FISCAL YEAR.
PROPOSAL 3
APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
The Company's Amended and Restated Articles of Incorporation (the
"Articles") currently authorizes the issuance of an aggregate of 50,000,000
shares of Common Stock, par value $.01 per share and 10,000,000 shares of
Excess Stock, par value $.01 per share and 10,000,000 shares of Preferred
Stock, $.01 per share. On February 2, 1999, the Board of Directors approved
and adopted, subject to the approval and adoption by the stockholders, a
Certificate of Amendment to the Articles (the "Amendment") which increases the
number of authorized shares of Common Stock to an aggregate 80,000,000 and the
aggregate number of authorized shares to 100,000,000. No other change to the
Articles of Incorporation would result from the Amendment.
If approved and adopted by the stockholders at the Annual Meeting, the
Amendment will become effective upon the filing thereof by the Maryland
Department of State. A filing is expected to occur within 30 days following
the Annual Meeting.
The Board of Directors has considered in the past and will continue to
consider various means of broadening the ownership of the Common Stock and
enhancing its marketability. The Board has also considered and will continue
to consider the possibility of acquiring properties through the issuance of
Common Stock, and the advisability of increasing stock ownership and meeting
part of the Company's future capital requirements through additional public
offerings of Common Stock. The Company also expects to continue to acquire
some properties through issuance of limited partner units and to respond to
requests for liquidity of these units by issuing shares of Common Stock in
exchange. Any such future action is, of course, subject to the Company's
earnings and financial condition as well as market conditions and other factors
that the Board deems relevant. Finally the Board believes that stock-based
executive and director compensation provides incentives to management that are
in the best interest of the stockholders.
The Company currently has outstanding 18,108,175 shares of Common Stock. No
shares of Excess Stock are currently outstanding and no shares of Preferred
Stock are currently outstanding. In addition, approximately 13,000,000 shares
of Common Stock are currently reserved for issuance under outstanding option
awards, conversion of outstanding Units, the Directors' Stock Grant Plan, the
Director, Officer and Employee Stock Purchase and Loan Plan and the Company's
DRIP. In addition, the Company continues to have available $333,655,941 in
securities under an existing registration statement (assuming a closing price
for the Company's Common Stock on the New York Stock Exchange of $25.00 per
share, this would amount to approximately 13,289,000 shares of Common Stock).
All of that amount may be issuable in Common Stock. Accordingly, unless this
Proposal 3 is adopted, approximately 5,600,000 shares of Common Stock will be
available for issuance for other purposes. In addition, if Proposal 4 (as
described below) is approved by the stockholders, an additional 15,000,000
shares of Common Stock will be reserved for issuance from time to time in one
or more privately negotiated transactions or public offerings.
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Aside from management's ongoing evaluation of acquisition possibilities and
the Board's belief in the efficacy of stock-based executive compensation, the
Board has no present plans, agreements or understandings, pending or under
discussion for the issuance of any shares of Common Stock except for the shares
reserved for issuance as described above. However, the Board of Directors
considers that in the prudent operation of the Company, it is desirable to have
sufficient authorized but unissued shares of Common Stock available to allow
the Company to take prompt advantage of the market or other conditions in
connection with possible financings or acquisitions, for stock dividends or
distributions, for grants of options and other stock rights, and for other
proper corporate purposes deemed necessary or advisable by the Board of
Directors. The Board of Directors also believes that the availability of
additional shares of Common Stock for such purposes without delay or the
necessity for a special meeting of stockholders (except as may be required by
applicable law or regulatory authorities or by the rules of any stock exchange
on which the Company's stock is listed) will be beneficial to the Company by
providing it with the flexibility required to consider and respond to future
business opportunities and needs as they arise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK TO AN AGGREGATE, 80,000,000, PAR VALUE $.01 PER SHARE.
PROPOSAL 4
APPROVAL OF THE ISSUANCE OF UP TO 15,000,000 SHARES OF THE COMPANY'S COMMON
STOCK, OR SECURITIES CONVERTIBLE INTO COMMON STOCK, FROM TIME TO TIME IN ONE
OR MORE PRIVATELY NEGOTIATED TRANSACTIONS OR PUBLIC OFFERINGS INCLUDING TO
CURRENT AND FUTURE HOLDERS OF IN EXCESS OF FIVE PERCENT OF THE SHARES
OUTSTANDING
The Board of Directors of the Company has approved the issuance of up
to 15,000,000 shares of Common Stock, or securities convertible into Common
Stock, in one or more private placements or public offerings, including the
issuance of Common Stock, or securities convertible into Common Stock, to
current and future holders of in excess of five percent of the shares
outstanding (a "Substantial Security Holder") upon such terms and conditions as
may be approved from time to time by the Board of Directors. New York Stock
Exchange rules require that when more than 20% of the number of shares
outstanding are to be issued in a private placement or series of related
transactions, stockholder approval of the issuance is required prior to listing
such shares on the Exchange. The New York Stock Exchange rules also require
shareholder approval for the sale to a Substantial Security Holder of more than
one percent of the shares outstanding, except that the limit is five percent if
the price of the shares sold is at least as great as each of the book and
market value of the Common Stock. In this Proposal 4, approval is sought for
the issuance of up to 15,000,000 shares of Common Stock, or securities
convertible into Common Stock, in one or more private placements or public
offerings that may include the sale of Common Stock to Substantial Security
Holders at a price less than the book and market value of the shares.
Substantial Security Holders to whom shares could be sold do not include any
directors or officers of the Company or their affiliates.
If Proposal 3 as described above is approved, the Company will have
sufficient authorized and unissued shares for these purposes under its articles
of incorporation. If this Proposal 4 and Proposal 3 are not approved by a
sufficient vote of the stockholders, the Company may limit the number of shares
which it issues and seeks to list on the Exchange to a number which falls below
the Exchange's threshold.
At the 1995 and 1997 Annual Meeting of Stockholders, the shareholders
approved the issuance of 2,630,000 shares and 5,000,000 shares of Common Stock,
respectively, in one or more privately negotiated transactions or public
offerings. Of those approved shares, 6,131,104 have already been sold in
private transactions. Of the issued shares, over 3.3 million were issued in
the form of units in the Operating Partnership and shares of Common Stock to
the State Treasurer of the State of Michigan in connection with their
investment of retirement funds. The remainder was sold in a variety of block
sales and unit investment trust offerings. Management believes that these
private issuances are an efficient and economical method of raising capital.
The Company has no current arrangements for the sale of the additional
units in the Operating Partnership or shares of Common Stock for which approval
is sought in Proposal 4, but management believes that it may have the
opportunity during the next year to sell shares to one or more investors in one
or a series of privately negotiated transactions or in a combination of
privately negotiated transactions and public offerings or to issue units in the
Operating Partnership for cash or in exchange for one or more multifamily
properties which will be convertible at the option of the holder or the
Company. This may include issuance of shares or units in the Operating
Partnership to one or more Substantial Security Holders. Shares might be sold
through underwriters or dealers, directly to one or more investors, or through
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<PAGE>
agents. In order to provide investors with flexibility and avoid price
discounts for lack of marketability, the Company desires to register and list
on the Exchange any additional shares that it issues.
The net proceeds of any sale of shares of Common Stock for cash would
be added to the Company's general funds to be used for general corporate
purposes, including financing of possible future acquisitions of multifamily
properties or of equity in other entities that own portfolios of multifamily
properties, capital expenditures, working capital, or repayment of short and
long-term indebtedness. Funds not required immediately would be invested in
short term marketable securities. The Company cannot predict the price at
which such shares may be priced in connection with the issuance of Operating
Partnership units for multifamily properties or the price at which shares
issued for cash may be sold, but in each case the terms of the issuance would
be approved by the Board of Directors of the Company prior to the issuance.
The affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting in person or by proxy is required for the
approval of the proposed issuance of additional shares of Common Stock provided
that the total vote cast on the proposal represents over 50% of all votes
entitled to be cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
THE ISSUANCE OF UP TO 15,000,000 SHARES OF THE COMPANY'S COMMON STOCK , OR
SECURITIES CONVERTIBLE INTO COMMON STOCK, FROM TIME TO TIME IN ONE OR MORE
PRIVATELY NEGOTIATED TRANSACTIONS OR PUBLIC OFFERINGS, INCLUDING TO SUBSTANTIAL
SECURITY HOLDERS.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
A stockholder proposal submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, for inclusion in the Company's proxy
statement and form of proxy for the 2000 annual meeting of stockholders must be
received by the Company by November 24, 1999 Such a proposal must comply with
the requirements as to form and substance established by the Securities and
Exchange Commission for such a proposal to be included in the proxy statement
and form of proxy, and the proponent or a representative of the proponent must
attend the Annual Meeting to present the proposal.
INCORPORATION BY REFERENCE
The Company's financial statements for the years ended December 31, 1998 and
1997, the supplemental financial information and management's discussion and
analysis of financial condition and results of operations contained in the
Company's Annual Report on Form 10-K (File No. 1-13136) filed with the
Securities and Exchange Commission are incorporated herein by reference.
Copies may be obtained from Rebecca Fountain, Home Properties of New York, Inc.
850 Clinton Square, Rochester, New York 14604 or from the Securities and
Exchange Commission over the Internet at its Web site (http:\\www.sec.gov).
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.
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<PAGE>
PROXY CARD:
HOME PROPERTIES OF NEW YORK, INC.
REVOCABLE PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS MAY 4, 1999
The undersigned hereby appoints Norman P. Leenhouts and Nelson B.
Leenhouts or each of them, as Proxies with full power of substitution to
represent the undersigned and to vote all Common Stock of Home Properties of
New York, Inc. which the undersigned would be entitled to vote at the 1999
Annual Meeting of Stockholders of the Company to be held on May 4, 1999 and any
adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
PROPOSAL ONE - To elect the following persons as directors to serve until
the next annual meeting of stockholders and until their successors have been
elected and have qualified.
FOR WITHHOLD
all nominees AUTHORITY
listed (except to vote for
as marked all nominees
to the contrary) listed
NOMINEES: Norman P. Leenhouts Amy L. Tait Leonard F. Helbig, III
Nelson B. Leenhouts Burton S. August, Sr. Roger W. Kober
Richard J. Crossed William Balderston, III Clifford W. Smith, Jr.
Alan L. Gosule Paul L. Smith
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
PROPOSAL TWO - To ratify the appointment of
PricewaterhouseCoopers LLP as independent auditors for 1999.
PROPOSAL THREE - To approve the amendment to the
Articles of Incorporation to increase the authorized shares
of Common Stock, par value $.01 per share, to an
aggregate of 80,000,000 shares.
PROPOSAL FOUR - To approve the issuance of up to
15,000,000 additional shares of Common Stock or
securities convertible to Common Stock from time to time
in one or more privately negotiated transactions or
public offerings, including to current and future holders
of in excess of 5% of the shares outstanding.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
THEREON. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF,
INCLUDING THE ELECTION OF A PERSON DESIGNATED BY THE BOARD OF DIRECTORS AS A
DIRECTOR IN THE PLACE OF A NOMINEE WHO IS UNABLE TO SERVE.
Please mark, sign, date and return this proxy card using the enclosed envelope.
Mark here for address
change:_____________________________________________________________
Signature:
----------------------------------------------
Signature if held jointly:
------------------------------
Dated ___________, 1999
NOTE: (Please sign above exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.)
</TABLE>
