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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
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
Transcontinental Realty Investors, Inc.
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(Name of Registrant as Specified In Its Charter)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS
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CONTROL NUMBER.
SEC 1913 (11-01)
TRANSCONTINENTAL REALTY INVESTORS, INC.
DALLAS, TEXAS 75234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 2003
Dear Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of Transcontinental Realty Investors, Inc. to be held on Tuesday, June 10, 2003,
at 11:00 a.m., at 1800 Valley View Lane, Suite 300, Dallas, Texas.
This year you will be asked to vote in favor of one proposal for the
election of four directors. The proposal is more fully explained in the attached
proxy statement, which we encourage you to read.
Whether you plan to attend or not, please sign, date and return the
enclosed proxy card in the envelope provided or vote by telephone or through the
designated internet site. Thank you for your cooperation.
Dated: April 30, 2003
/s/ Robert A. Waldman
Robert A. Waldman
Senior Vice President, General
Counsel and Corporate Secretary
TRANSCONTINENTAL REALTY INVESTORS, INC.
PROXY STATEMENT
DATE: Tuesday, June 10, 2003
TIME: 11:00 a.m. (Central time)
PLACE: 1800 Valley View Lane, Suite 300, Dallas, Texas
AGENDA: One proposal, numbered as Item 1 on the proxy
card, for the election of four nominees as
directors of Transcontinental Realty Investors,
Inc. ("TCI").
WHO CAN VOTE: All holders of record of our common stock at
the close of business on April 24, 2003, are
entitled to vote. Holders of the common stock
are entitled to one vote per share at the
Annual Meeting. The common stock is the only
class of our securities entitled to vote at the
Annual Meeting.
PROXIES SOLICITED BY: Your vote and proxy is being solicited by our
Board of Directors for use at the Annual
Meeting. This Proxy Statement and enclosed
proxy card is sent on behalf of our Board of
Directors to all stockholders beginning on
April 30, 2003. By completing, signing and
returning your proxy card, you will authorize
the persons named on the proxy card to vote
your shares according to your instructions.
PROXIES: If you do not indicate how you wish to vote for
one or more of the nominees for director, the
persons named on the proxy card will vote FOR
election of all the nominees for director
(Proposal 1). If you "withhold" your vote for
any of the nominees, this will be counted as a
vote AGAINST that nominee.
REVOKING YOUR PROXY: You can revoke your proxy by:
- writing to the Corporate Secretary (at 1800
Valley View Lane, Suite 300, Dallas, Texas
75234) before the Annual Meeting;
- voting again via mail; or
- casting your vote in person at the Annual
Meeting. Your last vote will be the vote that
is counted.
QUORUM: As of April 24, 2003, there were 8,072,594
shares of common stock issued and outstanding.
The holders of the common stock have the right
to cast one vote for each share held by them.
The presence, in person or by proxy, of
stockholders entitled to cast at least
4,036,298 votes constitutes a quorum for
adopting the proposals at the Annual Meeting.
If you have properly signed and returned your
proxy card by mail, you will be considered part
of the quorum, and the persons named on the
proxy card will vote your shares as you have
instructed. If a broker holding your shares in
"street" name indicates to us on a proxy card
that the broker lacks discretionary authority
to vote your shares, we will not consider your
shares as present or entitled to vote for any
purpose.
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VOTES OF MANAGEMENT AND
AFFILIATES: As of April 24, 2003, management and affiliates
held 6,400,949 shares representing
approximately 79.3% of the shares outstanding.
Management intends to vote such shares for each
proposal in accordance with the recommendation
of the Board of Directors.
MULTIPLE PROXY CARDS: If you receive multiple proxy cards, this
indicates that your shares are held in more
than one account, such as two brokerage
accounts, and are registered in different
names. You should vote each of the proxy cards
to ensure that all of your shares are voted.
COSTS OF PROXY SOLICITATION: Some of our directors, officers and employees
may solicit proxies personally, without any
additional compensation, by telephone or mail.
Proxy materials also will be furnished without
cost to brokers and other nominees to forward
to the beneficial owners of shares held in
their names.
QUESTIONS: You may call our Investor Relations Department
at (469) 522-4245 if you have any questions.
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
ITEM NO. 1 ON THE PROXY CARD
Four directors are to be elected at the Annual Meeting. Each director
elected will hold office until the 2004 Annual Meeting. All of the nominees for
director are now serving as directors. The nominees for election as director
are:
DIRECTOR
NAME AGE SINCE
---- --- --------
Henry A. Butler............................................. 52 2001
Earl D. Cecil............................................... 73 2002
Ted P. Stokely.............................................. 69 1990
Martin L. White............................................. 63 1995
The persons named on the proxy card will vote for all of the nominees for
director listed unless you withhold authority to vote for one or more of the
nominees. The nominees receiving a plurality of votes cast at the Annual Meeting
will be elected as directors. Abstentions and broker non-votes will not be
treated as a vote for or against any particular nominee and will not affect the
outcome of the election of directors. Cumulative voting for the election of
directors is not permitted.
All of our nominees have consented to serve as directors. Our Board of
Directors has no reason to believe that any of the nominees will be unable to
act as a director. However, if any director is unable to stand for re-election,
the Board will designate a substitute. If a substitute nominee is named, the
persons named on the proxy card will vote for the election of the substitute
nominee.
DIRECTOR BIOGRAPHIES
The nominees for directors are listed below, together with their terms of
service, all positions and offices with TCI or TCI's advisor, Basic Capital
Management, Inc. ("BCM"), other principal occupations, business experience and
directorships with other companies during the last five years or more. The
designation "Affiliated", when used below with respect to a director, means that
the director is an officer, director or employee of the Advisor or an officer of
TCI. The designation "Independent", when used below with respect to a director,
means the director is neither an officer of TCI nor a director, officer or
employee of the Advisor,
2
although TCI may have certain business or professional relationships with such
director as discussed below under "Certain Business Relationships and Related
Transactions".
NAME, PRINCIPAL OCCUPATIONS, BUSINESS EXPERIENCE AND DIRECTORSHIPS
HENRY A. BUTLER Director (Affiliated)
(since December 2001).
Broker -- Land Sales (since 1992) of BCM; Owner/Operator (1989 to 1991) of Butler Interests,
Inc.; and Director (since December 2001) of Income Opportunity Realty Investors, Inc. ("IORI").
EARL D. CECIL Director (Independent)
(since March 2002).
Financial and business consultant (since January 1994); Division Vice President (February 1987 to
December 1993) of James Mitchell & Company, a financial services marketing organization; Director
(since November 2001) of American Realty Investors, Inc. ("ARI"); and Director (since March 2002)
of IORI.
TED P. STOKELY Director (Independent) (since April 1990) and Chairman of
the Board (since January 1995).
General Manager (since January 1995) of ECF Senior Housing Corporation, a nonprofit corporation;
General Manager (since January 1993) of Housing Assistance Foundation, Inc., a nonprofit
corporation; Part-time unpaid consultant (since January 1993) of Eldercare Housing Foundation, a
nonprofit corporation; General Manager (since April 2002) of Unified Housing Foundation, Inc., a
nonprofit corporation; Director and Chairman of the Board (since November 2002) of ARI; and
Director (since April 1990) and Chairman of the Board (since January 1995) of IORI.
MARTIN L. WHITE Director (Independent)
(since January 1995).
Chief Executive Officer (since 1995) of Builders Emporium, Inc.; Chairman and Chief Executive
Officer (since 1993) of North American Trading Company, Ltd.; President and Chief Operating
Officer (since 1992) of Community Based Developers, Inc.; and Director (since January 1995) of
IORI.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES NAMED ABOVE.
BOARD MEETINGS AND COMMITTEES
TCI's Board of Directors held 18 meetings during 2002. For such year, no
incumbent Director attended fewer than 75 percent of the aggregate of (1) the
total number of meetings held by the Board during the period for which he had
been a Director and (2) the total number of meetings held by all committees of
the Board on which he served during the periods that he served.
The Board of Directors has an Audit Committee, the function of which is to
review TCI's operating and accounting procedures. The Board of Directors does
not have Nominating or Compensation Committees.
AUDIT COMMITTEE
The Audit Committee meets periodically with the independent auditors and
(1) reviews annual financial statements and the independent auditors' work and
report thereon, (2) reviews the independent auditors' report on internal
controls and related matters, (3) selects and recommends to the Board of
Directors the appointment of the independent auditors, (4) reviews the letter of
engagement and statement of fees which pertain to the scope of the annual audit
and certain special audit and non-audit work which may be required or suggested
by the independent auditors, (5) receives and reviews information pertaining to
internal audits, (6) directs and supervises special investigations and (7)
performs any other functions deemed appropriate by the Board of Directors.
Members of the Audit Committee are Messrs. Stokely, Cecil and White, each an
independent director (as defined in Sections 303.01(B)(2)(a) and (3) of the New
York Stock Exchange Listed Company Manual.) The Board of Directors has adopted a
written charter for the Audit Committee. The Audit Committee met four times
during 2002.
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AUDIT COMMITTEE REPORT
The Audit Committee oversees TCI's financial reporting process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The independent auditors are responsible for expressing an opinion on the
conformity of the audited financial statements with generally accepted
accounting principles. The Committee reviewed, with the independent auditors,
the auditors judgments as to the quality, not just the acceptability, of TCI's
accounting principles and such other matters as are required to be discussed
with the Committee under generally accepted auditing standards. In addition, the
Committee has discussed with the independent auditors the auditors' independence
from management and TCI, including the matters in the written disclosures
required by the Independence Standards Board.
The Committee discussed with TCI's independent auditors the overall scope
and plans for their audit. The Committee meets with the independent auditors,
with and without management present, to discuss the results of their
examinations, their evaluations of TCI's internal controls, and the overall
quality of its' financial reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2002, for filing with the Securities and Exchange
Commission. The Committee also recommended, subject to Board approval, the
selection of TCI's independent auditors.
AUDIT COMMITTEE
Ted P. Stokely
Earl D. Cecil
Martin L. White
Dated: April 24, 2003
OLIVE LITIGATION
In February 1990, TCI, together with Continental Mortgage and Equity Trust
("CMET"), IORI and National Income Realty Trust ("NIRT"), three real estate
entities with, at the time, the same officers, directors or trustees and advisor
as TCI, entered into a settlement (the "Settlement") of a class and derivative
action entitled Olive et al. v. National Income Realty Trust et al. (the "Olive
Litigation") relating to the operation and management of each of the entities.
On April 23, 1990, the Court granted final approval of the terms of the
Settlement. The Settlement was modified in 1994 (the "Modification").
On January 27, 1997, the parties entered into an Amendment to the
Modification, effective January 9, 1997 (the "First Amendment"). The First
Amendment provided for the settlement of additional matters raised by
plaintiffs' counsel in 1996. The Court issued an order approving the First
Amendment on July 3, 1997.
The First Amendment provided that TCI's Board retain a
management/compensation consultant or consultants to evaluate the fairness of
the BCM advisory contract and any contract of its affiliates with TCI, CMET and
IORI, including, but not limited to, the fairness to TCI, CMET and IORI of such
contracts relative to other means of administration. In 1998, the Board engaged
a management/compensation consultant to perform the evaluation which was
completed in September 1998.
4
In 1999, plaintiffs' counsel asserted that the Board did not comply with
the provision requiring such engagement and requested that the Court exercise
its retained jurisdiction to determine whether there was a breach of this
provision of the First Amendment. In January 2000, after the merger of CMET with
TCI, the Board engaged another management/compensation consultant to perform the
required evaluation again. This evaluation was completed in April 2000 and was
provided to plaintiffs' counsel. The Board believed that any alleged breach of
the First Amendment had been fully remedied by the Board's engagement of the
second consultant. Although several status conferences have been held on this
matter, there has been no Court order resolving whether there was any breach of
the First Amendment.
In June 2000, plaintiffs' counsel asserted that the loans made by TCI to
BCM and American Realty Trust, Inc. breached the provisions of the Modification.
The Board believed that the provisions of the Settlement, the Modification and
the First Amendment terminated on April 28, 1999. However, in September 2000,
the Court ruled that certain provisions of the Modification continued to be
effective after the termination date. This ruling was appealed to the United
States Court of Appeals for the Ninth Circuit by TCI and IORI.
On October 23, 2001, TCI, IORI and ARI jointly announced a preliminary
agreement with the plaintiff's legal counsel for complete settlement of all
disputes in the lawsuit. In February 2002, the court granted final approval for
the proposed settlement (the "Second Amendment"). Under the Second Amendment,
the appeal has been dismissed and ARI agreed to either (1) acquire all of the
outstanding common shares of IORI and TCI not currently owned by ARI for a cash
payment or shares of ARI Preferred Stock or (2) make tender offers for all of
the outstanding common shares of IORI and TCI not currently owned by ARI. On
November 15, 2002, ARI commenced the tender offers for the IORI and TCI shares.
The tender offers were completed on March 18, 2003. ARI paid $19.00 cash per
IORI share and $17.50 cash per TCI share for the stock tendered by
non-affiliated stockholders. ARI acquired 265,036 IORI shares and 1,213,226 TCI
shares. The completion of the tender offers fulfills the obligations under the
Second Amendment and the Olive Litigation has been dismissed with prejudice.
EXECUTIVE OFFICERS
The following persons currently serve as executive officers of TCI: Mark W.
Branigan, Executive Vice President -- Residential; Louis J. Corna, Executive
Vice President -- Tax; and Ronald E. Kimbrough, Acting Principal Executive
Officer, Executive Vice President and Chief Financial Officer. Their positions
with TCI are not subject to a vote of stockholders. The age, terms of service,
all positions and offices with TCI or BCM, other principal occupations, business
experience and directorships with other companies during the last five years or
more of each executive officer are set forth below.
AGE
---
MARK W. BRANIGAN Executive Vice President -- Residential (since June 2001), 48
Executive Vice President and Chief Financial Officer
(August 2000 to June 2001), Vice President -- Director of
Construction (August 1999 to August 2000) and Executive
Vice President -- Residential Asset Management (January
1992 to October 1997).
Executive Vice President -- Residential (since June 2001), Executive Vice President and Chief
Financial Officer (August 2000 to June 2001), Vice President -- Director of Construction
(August 1999 to August 2000) and Executive Vice President -- Residential Asset Management
(January 1992 to October 1997) of BCM, IORI and American Realty Trust, Inc. ("ART"); Executive
Vice President -- Residential (since June 2001), Executive Vice President and Chief Financial
Officer (August 2000 to June 2001) and Director (September 2000 to June 2001) of ARI; and real
estate consultant (November 1997 to July 1999).
5
AGE
---
LOUIS J. CORNA Executive Vice President -- Tax (since October 2001), 55
Executive Vice President and Chief Financial Officer (June
2001 to October 2001) and Senior Vice President -- Tax
(December 2001 to June 2001).
Executive Vice President -- Tax (since October 2001), Executive Vice President and Chief
Financial Officer (June 2001 to October 2001), and Senior Vice President -- Tax (December 2000
to June 2001) of BCM, ARI and IORI; Private Attorney (January 2000 to December 2000); Vice
President -- Taxes and Assistant Treasurer (March 1998 to January 2000) of IMC Global, Inc.;
and Vice President -- Taxes (July 1991 to February 1998) of Whitman Corporation.
RONALD E. KIMBROUGH Acting Principal Executive Officer, Executive Vice 50
President and Chief Financial Officer (since January
2002).
Acting Principal Executive Officer, Executive Vice President and Chief Financial Officer
(since January 2002) of BCM, ARI and IORI; Controller (from September 2000 to January 2002) of
BCM; Vice President and Treasurer (from January 1998 to September 2000) of Syntek West, Inc.
and One Realco Corporation; and Consultant (1997).
OFFICERS
Although not an executive officer of TCI, Robert A. Waldman currently
serves as Senior Vice President, Secretary and General Counsel. His position
with TCI is not subject to a vote of stockholders. His age, term of service, all
positions and offices with TCI or BCM, other principal occupations, business
experience and directorships with other companies during the last five years or
more is set forth below.
AGE
---
ROBERT A. WALDMAN Senior Vice President and General Counsel (since January 50
1995), Vice President(December 1990 to January 1995) and
Secretary (December 1993 to February 1997 and since June
1999).
Senior Vice President and General Counsel (since January 1995), Vice President (December 1990
to January 1995) and Secretary (December 1993 to February 1997 and since June 1999) of IORI;
Senior Vice President and General Counsel (since January 1995), Vice President (January 1993
to January 1995) and Secretary (since December 1989) of ART; Senior Vice President and General
Counsel (since November 1994), Vice President and Corporate Counsel (November 1989 to November
1994) and Secretary (since November 1989) of BCM; and Senior Vice President, Secretary and
General Counsel (since August 2000) of ARI.
In addition to the foregoing officers, TCI has several vice presidents and
assistant secretaries who are not listed herein.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, TCI's Directors, executive
officers, and any persons holding more than 10 percent of TCI Common Stock are
required to report their ownership of TCI's shares and any changes in that
ownership to the Securities and Exchange Commission (the "Commission"). Specific
due dates for these reports have been established and TCI is required to report
any failure to file by these dates during 2002. All of these filing requirements
were satisfied by its Directors and executive officers and 10 percent holders.
In making these statements, TCI has relied on the written representations of its
incumbent Directors and executive officers and its 10 percent holders and copies
of the reports that they have filed with the Commission.
THE ADVISOR
Although the Board of Directors is directly responsible for managing the
affairs of TCI and for setting the policies which guide it, the day-to-day
operations are performed by BCM under the supervision of the Board. The duties
of BCM include, among other things, locating, investigating, evaluating and
recommending real
6
estate and mortgage note investment and sales opportunities and financing and
refinancing sources. BCM also serves as a consultant to the Board in connection
with the business plan and investment decisions made by the Board.
BCM has served as TCI's advisor since March 1989. BCM is a company of which
Messrs. Branigan, Corna and Kimbrough serve as executive officers. BCM is owned
by a trust for the children of Gene E. Phillips. Mr. Phillips is not an officer
or director of BCM, but serves as a representative of the trust, is involved in
daily consultation with the officers of BCM and has significant influence over
the conduct of BCM's business, including the rendering of advisory services and
the making of investment decisions for itself and TCI.
Under the Advisory Agreement, BCM is required to formulate and submit
annually for Board approval a budget and business plan containing a 12 month
forecast of operations and cash flow, a general plan for asset sales or
purchases, lending, foreclosure and borrowing activity, and other investments,
and BCM is required to report quarterly to the Board on TCI's performance
against the business plan. In addition, all transactions require prior Board
approval unless they are explicitly provided for in the approved business plan
or are made pursuant to authority expressly delegated to BCM by the Board.
The Advisory Agreement also requires prior Board approval for the retention
of all consultants and third party professionals, other than legal counsel. The
Advisory Agreement provides that BCM shall be deemed to be in a fiduciary
relationship to the stockholders; contains a broad standard governing BCM's
liability for losses by TCI; and contains guidelines for BCM's allocation of
investment opportunities as among itself, TCI and other entities it advises.
The Advisory Agreement provides for BCM to be responsible for the
day-to-day operations of TCI and to receive an advisory fee comprised of a gross
asset fee of .0625 percent per month (.75 percent per annum) of the average of
the gross asset value (total assets less allowance for amortization,
depreciation or depletion and valuation reserves) and an annual net income fee
equal to 7.5 percent per annum of TCI's net income.
The Advisory Agreement also provides for BCM to receive an annual incentive
sales fee equal to 10 percent of the amount, if any, by which the aggregate
sales consideration for all real estate sold by TCI during such fiscal year
exceeds the sum of: (1) the cost of each such property as originally recorded in
TCI's books for tax purposes (without deduction for depreciation, amortization
or reserve for losses), (2) capital improvements made to such assets during the
period owned by TCI and (3) all closing costs, (including real estate
commissions) incurred in the sale of such real estate provided. However, no
incentive fee shall be paid unless (a) such real estate sold in such fiscal
year, in the aggregate, has produced an 8 percent simple annual return on the
net investment including capital improvements, calculated over the holding
period before depreciation and inclusive of operating income and sales
consideration and (b) the aggregate net operating income from all real estate
owned for each of the prior and current fiscal years shall be at least 5 percent
higher in the current fiscal year than in the prior fiscal year.
Additionally, under the Advisory Agreement, BCM or an affiliate of BCM is
to receive an acquisition commission for supervising the acquisition, purchase
or long-term lease of real estate equal to the lesser of (1) up to 1 percent of
the cost of acquisition, inclusive of commissions, if any, paid to nonaffiliated
brokers or (2) the compensation customarily charged in arm's-length transactions
by others rendering similar property acquisition services as an ongoing public
activity in the same geographical location and for comparable property; provided
that the aggregate purchase price of each property (including acquisition
commissions and all real estate brokerage fees) may not exceed such property's
appraised value at acquisition.
The Advisory Agreement requires BCM or any affiliate of BCM to pay TCI
one-half of any compensation received from third parties with respect to the
origination, placement or brokerage of any loan made by TCI. However, the
compensation retained by BCM or any affiliate of BCM shall not exceed the lesser
of (1) 2 percent of the amount of the loan committed or (2) a loan brokerage and
commitment fee which is reasonable and fair under the circumstances.
The Advisory Agreement also provides that BCM or an affiliate of BCM is to
receive a mortgage or loan acquisition fee with respect to the acquisition or
purchase of any existing mortgage loan by TCI equal to the
7
lesser of (1) 1 percent of the amount of the loan purchased or (2) a loan
brokerage or commitment fee which is reasonable and fair under the
circumstances. Such fee will not be paid in connection with the origination or
funding of any mortgage loan by TCI.
Under the Advisory Agreement, BCM or an affiliate of BCM is also to receive
a mortgage brokerage and equity refinancing fee for obtaining loans or
refinancing on properties equal to the lesser of (1) 1 percent of the amount of
the loan or the amount refinanced or (2) a brokerage or refinancing fee which is
reasonable and fair under the circumstances, provided that no such fee shall be
paid on loans from BCM or an affiliate of BCM without the approval of TCI's
Board of Directors. No fee shall be paid on loan extensions.
Under the Advisory Agreement, BCM receives reimbursement of certain
expenses incurred by it in the performance of advisory services.
Under the Advisory Agreement, all or a portion of the annual advisory fee
must be refunded by the Advisor if the operating expenses of TCI (as defined in
the Advisory Agreement) exceed certain limits specified in the Advisory
Agreement based on the book value, net asset value and net income of TCI during
the fiscal year. BCM was required to refund $1.4 million of the 2002 advisory
fee under this provision.
Additionally, if management were to request that BCM render services to TCI
other than those required by the Advisory Agreement, BCM or an affiliate of BCM
is separately compensated for such additional services on terms to be agreed
upon from time to time. TCI has hired Triad Realty Services, Ltd. ("Triad"), an
affiliate of BCM, to perform property management for TCI's properties. Also, TCI
has engaged, on a non-exclusive basis, Regis Realty I, LLC. ("Regis"), a related
party, to perform brokerage services for TCI. BCM may only assign the Advisory
Agreement with the prior consent of TCI.
The directors and principal officers of BCM are set forth below.
Mickey N. Phillips:.................. Director
Ryan T. Phillips:.................... Director
Mark W. Branigan:.................... Executive Vice President -- Residential
Louis J. Corna:...................... Executive Vice President -- Tax
Ronald E. Kimbrough:................. Acting Principal Executive Officer, Executive Vice
President and Chief Financial Officer
Dan S. Allred:....................... Senior Vice President -- Land Development
Michael A. Bogel:.................... Senior Vice President -- Project Manager
Robert A. Waldman:................... Senior Vice President, Secretary and General Counsel
Mickey N. Phillips is Gene E. Phillips' brother, and Ryan T. Phillips is
Gene E. Phillips' son. Gene E. Phillips serves as a representative of the trust
established for the benefit of his children, which indirectly owns BCM and, in
such capacity, has substantial contact with the management of BCM and input with
respect to its performance of advisory services for TCI.
PROPERTY MANAGEMENT
Affiliates of BCM have provided property management services. Currently,
Triad provides such property management services for a fee of 5 percent or less
of the monthly gross rents collected on the residential properties under its
management and 3 percent or less of the monthly gross rents collected on the
commercial properties under its management. Triad subcontracts with other
entities for the provision of the property-level management services to TCI at
various rates. The general partner of Triad is BCM. Triad subcontracts the
property-level management and leasing of 45 of TCI's commercial properties and
its five hotels to Regis, a related party. Regis is entitled to receive property
and construction management fees and leasing commissions in accordance with the
terms of its property-level management agreement with Triad.
8
REAL ESTATE BROKERAGE
Regis also provides services to TCI on a non-exclusive basis. Regis is
entitled to receive a real estate commission for property purchases and sales in
accordance with the following sliding scale of total fees to be paid: (1)
maximum fee of 4.5 percent on the first $2.0 million of any purchase or sale
transaction of which no more than 3.5 percent would be paid to Regis or
affiliates; (2) maximum fee of 3.5 percent on transaction amounts between $2.0
million to $5.0 million of which no more than 3 percent would be paid to Regis
or affiliates; (3) maximum fee of 2.5 percent on transaction amounts between
$5.0 million to $10.0 million of which no more than 2 percent would be paid to
Regis or affiliates; and (4) maximum fee of 2 percent on transaction amounts in
excess of $10.0 million of which no more than 1.5 percent would be paid to Regis
or affiliates.
EXECUTIVE COMPENSATION
TCI has no employees, payroll or benefit plans and pays no compensation to
its executive officers. The executive officers of TCI, who are also officers or
employees of BCM, TCI's advisor, are compensated by BCM. Such executive officers
perform a variety of services for BCM and the amount of their compensation is
determined solely by BCM. BCM does not allocate the cash compensation of its
officers among the various entities for which it serves as advisor.
The only remuneration paid by TCI is to the Directors who are not officers
or directors of BCM or its affiliated companies. The Independent Directors (1)
review the business plan of TCI to determine that it is in the best interest of
stockholders, (2) review the advisory contract, (3) supervise the performance of
the advisor and review the reasonableness of the compensation to the advisor in
terms of the nature and quality of services performed, (4) review the
reasonableness of the total fees and expenses of TCI and (5) select, when
necessary, a qualified independent real estate appraiser to appraise properties
acquired.
Each Independent Director receives compensation in the amount of $30,000
per year, plus reimbursement for expenses. The Chairman of the Board receives an
additional fee of $3,000 per year. In addition, each Independent Director
receives an additional fee of $1,000 per day for any special services rendered
by him to TCI outside of his ordinary duties as Director, plus reimbursement of
expenses. Each Independent Director that serves as a member of the Audit
Committee receives $250 for each Audit Committee meeting attended.
During 2002, $91,113 was paid to the Independent Directors in total
Directors' fees for all services, including the annual fee for service, during
the period January 1, 2002, through December 31, 2002, and 2002 special service
fees as follows: Earl D. Cecil, $25,113; Ted P. Stokely, $34,000; and Martin L.
White, $32,000.
DIRECTORS STOCK OPTION PLAN
TCI has established a Director's Stock Option Plan ("Director's Plan") for
the purpose of attracting and retaining Directors who are not officers or
employees of TCI or BCM. The Director's Plan provides for the grant of options
that are exercisable at fair market value of TCI's Common Stock on the date of
grant. The Director's Plan was approved by stockholders at their annual meeting
on October 10, 2000, following which each then-serving Independent Director was
granted options to purchase 5,000 shares of Common Stock of TCI. On January 1 of
each year, each Independent Director will receive options to purchase 5,000
shares of Common Stock. The options are immediately exercisable and expire on
the earlier of the first anniversary of the date on which a Director ceases to
be a Director or 10 years from the date of grant.
As of March 1, 2003, TCI had 110,000 shares of Common Stock reserved for
issuance under the Director's Stock Option Plan of which options for 15,000
shares were outstanding. See "Security Ownership of Management" herein for
information on the options held by Directors.
2000 STOCK OPTION PLAN
TCI has established the 2000 Stock Option Plan ("2000 Plan") as an
incentive for and as a means of encouraging ownership of TCI Common Stock by the
officers of TCI and employees of BCM or its affiliates. The 2000 Plan is
administered by the Stock Option Committee, which currently consists of three
Independent
9
Directors. The exercise price per share of an option will not be less than 100
percent of the fair market value per share on the date of grant. TCI receives no
consideration for the grant of an option.
As of March 1, 2003, TCI had 300,000 shares of Common Stock reserved for
issuance under the 2000 Plan. However, no options had been granted at that time.
PERFORMANCE GRAPH
The following performance graph compares the cumulative total stockholder
return on TCI's shares of Common Stock with the Dow Jones US Total Market Index
("DJ Total Market Index") and the Dow Jones Real Estate Investment Index ("DJ
Real Estate Index"). The comparison assumes that $100 was invested on December
31, 1997, in shares of TCI Common Stock and in each of the indices and further
assumes the reinvestment of all distributions. Past performance is not
necessarily an indicator of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(PERFORMANCE GRAPH)
1997 1998 1999 2000 2001 2002
------ ------ ------ ------ ------ ------
TCI.................................. 100.00 83.00 85.88 63.28 114.44 125.77
DJ Total Market Index................ 100.00 124.90 153.28 139.07 122.50 95.45
DJ Real Estate Index................. 100.00 78.88 74.69 95.24 106.49 110.35
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners. The following table sets
forth the ownership of TCI Common Stock, both beneficially and of record, both
individually and in the aggregate, for those persons or
10
entities known by TCI to be beneficial owners of more than 5 percent of the
outstanding shares of Common Stock as of the close of business on April 24,
2003.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
------------------------------------ ---------- ----------
American Realty Investors, Inc. ............................ 5,207,526(2) 64.5%
1800 Valley View Lane
Suite 300
Dallas, Texas 75234
EQK Holdings, Inc.(3)....................................... 3,994,300 49.7%
1800 Valley View Lane
Suite 300
Dallas, Texas 75234
Transcontinental Realty..................................... 1,213,226 15.0%
Acquisition Corporation(4)
1800 Valley View Lane
Suite 300
Dallas, Texas 75234
Basic Capital Management, Inc.(5)........................... 1,166,947 14.5%
1800 Valley View Lane
Suite 300
Dallas, Texas 75234
---------------
(1) Percentage is based upon 8,072,594 shares of Common Stock outstanding at
April 24, 2003.
(2) Includes 3,994,300 shares owned by EQK Holdings, Inc. ("EQK") and 1,213,226
shares owned by Transcontinental Realty Acquisition Corporation ("TRAC").
(3) EQK is a wholly-owned subsidiary of ARI.
(4) TRAC is a wholly-owned subsidiary of ARI.
(5) BCM serves as the contractual advisor to ARI, IORI and TCI.
Security Ownership of Management. The following table sets forth the
ownership of TCI Common Stock, both beneficially and of record, both
individually and in the aggregate for the Directors and executive officers of
TCI as of the close of business on April 24, 2003.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
------------------------ ----------------- ----------
Mark W. Branigan............................................ 6,400,949(2)(3) 79.3%
Henry A. Butler............................................. -- --
Earl D. Cecil............................................... 5,207,526(4)(5) 64.5%
Louis J. Corna.............................................. 6,400,949(2)(3) 79.3%
Ronald E. Kimbrough......................................... 6,400,949(2)(3) 79.3%
Ted P. Stokely.............................................. 5,207,526(4)(6) 64.5%
Martin L. White............................................. 5,000(7) *
All Directors and Executive Officers as a group (7
individuals).............................................. 6,415,949(2)(3) 79.3%
(4)(5)
(6)(7)
---------------
* Less than 1%
(1) Percentage is based upon 8,072,594 shares of common stock outstanding at
April 24, 2003.
11
(2) Includes 26,475 shares owned by Syntek Asset Management, L.P. and 1,166,947
shares owned by BCM. Each of the executive officers of TCI may be deemed to
be beneficial owners of such shares by virtue of their positions as
executive officers of BCM. The executive officers of TCI disclaim such
beneficial ownership.
(3) Includes 3,994,301 shares owned by EQK and 1,213,226 shares owned by TRAC.
Each of the executive officers of ARI may be deemed to be beneficial owners
of such shares by virtue of their positions as executive officers for BCM.
The executive officers of TCI disclaim such beneficial ownership.
(4) Includes 3,994,301 shares owned by EQK and 1,213,226 shares owned by TRAC.
Messrs. Cecil and Stokely may be deemed to be beneficial owners of such
shares by virtue of their position as directors of ARI. Messrs. Cecil and
Stokely disclaim such beneficial ownership.
(5) Include 5,000 shares which may be acquired by Mr. Cecil pursuant to the
Director Stock Option Plan.
(6) Includes 5,000 shares which may be acquired by Mr. Stokely pursuant to the
Director Stock Option Plan.
(7) Includes 5,000 shares which may be acquired by Mr. White pursuant to the
Director Stock Option Plan.
The Board of Directors has approved the repurchase of a total of 1.4
million shares of TCI's Common Stock. Through December 31, 2002, a total of
409,765 shares had been repurchased at a cost of $3.3 million. No shares were
repurchased in 2002. In September 2001, the Board approved a private block
purchase of 593,200 shares of Common Stock for a total cost of $9.5 million.
CERTAIN BUSINESS RELATIONSHIPS
In February 1989, the Board of Directors voted to retain BCM as TCI's
advisor. BCM is a corporation of which Messrs. Branigan, Corna and Kimbrough
serve as executive officers. BCM is indirectly owned by a trust for the children
of Gene E. Phillips. Mr. Phillips is not an officer or director of BCM, but
serves as a representative of the trust, is involved in daily consultation with
the offices of BCM and has significant influence over the conduct of BCM's
business including the rendering of advisory services and the making of
investment decisions for itself and for TCI.
Since February 1991, affiliates of BCM have provided property management
services to TCI. Currently, Triad provides such property management services.
The general partner of Triad is BCM. Triad subcontracts the property-level
management and leasing of 45 of TCI's commercial properties and its five hotels
to Regis, a related party.
Regis also provides real estate brokerage services for TCI, on a
non-exclusive basis, and receives brokerage commissions in accordance with the
brokerage agreement.
The Directors and officers of TCI also serve as directors and officers of
IORI. The Directors owe fiduciary duties to IORI, as well as to TCI under
applicable law. IORI has the same relationship with BCM as TCI. As of April 24,
2003, TCI owned approximately 24.0 percent of the outstanding common shares of
IORI. BCM serves as advisor to ARI. Messrs. Cecil and Stokely serve also as
directors of ARI. In addition, Messrs. Branigan, Corna and Kimbrough are
executive officers of ARI.
RELATED PARTY TRANSACTIONS
Historically, TCI has engaged in and may continue to engage in business
transactions, including real estate partnerships, with related parties.
Management believes that all of the related party transactions represented the
best investments available at the time and were at least as advantageous to TCI
as could have been obtained from unrelated third parties.
In 2002, TCI received $68,000 in rent from BCM for BCM's lease at Addison
Hangar. BCM owns a corporate jet that is housed at the hangar and TCI has
available space at the hangar.
In January 2002, TCI purchased 100% of the outstanding common shares of ART
Two Hickory Corporation from ARI for $4.4 million. The purchase price was
determined based upon the market value of the property exchanged, using a market
rate multiple of net operating income ("cap rate") of 7.0%. The
12
business purpose of the transaction was for TCI to make an equity investment in
Two Hickory anticipating a profitable return.
In February 2002, TCI sold a $2.0 million senior participation interest in
a loan to IORI. Management determined that TCI could benefit from the increase
in cash and decrease its notes receivable outstanding portfolio.
In March 2002, TCI paid cash of $600,000 and received from ARI two parcels
of land, a 24.5 acre tract of Rasor land, a 16.98 acre tract of Lakeshore Villas
land, and the 45,623 sq. ft. Oaktree Village Shopping Center in exchange for the
80,278 sq. ft. Plaza on Bachman Creek Shopping Center. The exchange value prices
for the shopping centers were determined based on a cap rate of 10.5% and the
value for the Rasor and Lakeshore Villas land was determined on appraised rates
of $3.36 and $1.29 per square foot, respectively. The business purpose of the
transaction was for TCI to construct apartments on the Rasor and Lakeshore
Villas land and to give ample value for the property TCI exchanged, the Oaktree
Shopping Center was added to the transaction.
In April 2002, TCI purchased 100% of the following entities from ARI:
Garden Confederate Point, L.P., Garden Foxwood, L.P., Garden Woodsong, L.P. and
ART One Hickory Corporation for $10.0 million. The purchase price for these
entities was determined based on a cap rate of 8.41% for the partnerships and
7.0% for ART One Hickory Corporation. The business purpose of the transaction
was for TCI to make an equity investment in the entities anticipating a
profitable return.
In June 2002, TCI purchase Centura Tower, Ltd. partnership, which owns the
Centura Tower Office Building from ARI for $50.0 million. The purchase price for
the Centura Tower was determined based on appraised value and replacement cost.
The business purpose of the transaction was for TCI to acquire a Class A office
building with significant upside potential anticipating a profitable return.
Also in June 2002, TCI purchased five parcels of unimproved land from ARI:
the Hollywood Casino, Marine Creek, Mason Park, Nashville and Palm Desert land
parcels. The purchase price of the Hollywood Casino land was determined based on
an appraised rate of $9.10 per square foot. The business purpose of the
transaction was for TCI to consolidate its holdings within the Mercer Crossing
development. The purchase price for the Marine Creek, Mason Park, Nashville and
Palm Desert land parcels was determined based on appraised rates of $2.00,
$3.56, $4.00 and $1.48 per square foot, respectively. The business purpose of
the transaction was for TCI to develop apartments on these four tracts of land.
In October 2002, a short term working capital loan to BCM for a total of
$4.0 million was assumed by TCI. The loan is secured on the Red Cross land,
requires quarterly payments and was due in October 2002.
In December 2002, TCI purchased the NLP/CH, Ltd. partnership, which owns
the Centura land parcel, from ARI. The purchase price was determined based on an
appraised rate of $34.89 per share foot. The business purpose of the transaction
was for TCI to construct apartments on the land.
At December 31, 2002, TCI owned 746,972 shares of ARI common stock which
were primarily purchased in open market transactions in 1990 and 1991 at a total
cost of $1.6 million. The officers of TCI also serve as officers of ARI. BCM
also serves as advisor to ARI and at April 24, 2003, ARI owned approximately
64.5% of TCI's outstanding Common Stock. At December 31, 2002, the market value
of the ARI common shares owned by TCI was $6.0 million.
In February 2003, a short term working capital loan to BCM for a total of
$2.5 million was assumed by TCI. The loan is secured by the Stone Oak Apartments
in San Antonio, Texas, and requires all principal and interest due and payable
on April 28, 2003.
TCI is a partner with IORI in Nakash Income Associates. TCI owns 345,728
shares of IORI's Common Stock, an approximate 24.0% interest. At December 31,
2002, the market value of the IORI common shares was $6.5 million.
In 2002, TCI paid BCM, its affiliates and related parties $5.9 million in
advisory, incentive and net income fees, $753,000 in mortgage brokerage and
equity refinancing fees, $58,000 in property acquisition fees,
13
$3.0 million in real estate brokerage commissions and $8.2 million in property
and construction management fees and leasing commissions, net of property
management fees paid to subcontractors, other than affiliates of BCM. In
addition, as provided in the Advisory Agreement, BCM received cost
reimbursements of $2.0 million.
In addition, from time-to-time, TCI and its affiliates have made advances
to each other, which generally have not had specific repayment terms and have
been reflected in TCI's financial statements as other assets or other
liabilities. At December 31, 2002, TCI had receivables of $6.6 million, $1.8
million and $6.0 million from BCM, GS Realty, and ARI respectively. Also at
December 31, 2002, TCI owed $649,000, $374,000 and $5.3 million to GS Realty,
BCM and IORI, respectively. In January 2003, TCI paid the $649,000 due to GS
Realty and in March 2003, TCI paid the $374,000 to BCM.
Restrictions on Related Party Transactions. Article FOURTEENTH of TCI's
Articles of Incorporation provides that TCI shall not, directly or indirectly,
contract or engage in any transaction with (1) any director, officer or employee
of TCI, (2) any director, officer or employee of the advisor, (3) the advisor or
(4) any affiliate or associate (as such terms are defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended) of any of the aforementioned
persons, unless (a) the material facts as to the relationship among or financial
interest of the relevant individuals or persons and as to the contract or
transaction are disclosed to or are known by the Board of Directors or the
appropriate committee thereof and (b) the Board of Directors or committee
thereof determines that such contract or transaction is fair to TCI and
simultaneously authorizes or ratifies such contract or transaction by the
affirmative vote of a majority of independent directors of TCI entitled to vote
thereon.
Article FOURTEENTH defines an "independent director" as one who is neither
an officer or employee of TCI nor a director, officer or employee of TCI's
advisor, BCM.
SELECTION OF AUDITORS FOR 2003
The Board of Directors has selected BDO Seidman, LLP as the auditors for
TCI for the 2003 fiscal year. TCI's auditors for the 2002 fiscal year were BDO
Seidman, LLP. A representative of BDO Seidman is expected to attend the annual
meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
AUDIT FEES
Fees paid to BDO Seidman, LLP, for the last audit of annual financial
statements and reviews of financial statements included in TCI's Forms 10-Q
during 2002 were $225,744.
ALL OTHER FEES
All other fees paid to BDO Seidman, LLP, were $96,515 and related primarily
to tax preparation services. The Audit Committee has considered whether the
provision of these services is compatible with maintaining BDO Seidman, LLP's
independence.
OTHER MATTERS
Management knows of no other matters that may properly be, or that are
likely to be, brought before the meeting. However, if any other matters are
properly brought before the meeting, the persons named in the enclosed proxy or
their substitutes will vote in accordance with their best judgment on such
matters.
FINANCIAL STATEMENTS
The audited financial statements of TCI, in comparative form for the years
ended December 31, 2002, 2001 and 2000, are contained in the 2002 Annual Report
to Stockholders. However, such report and the financial statements contained
therein are not to be considered part of this solicitation.
14
SOLICITATION OF PROXIES
THIS PROXY STATEMENT IS FURNISHED TO STOCKHOLDERS TO SOLICIT PROXIES ON
BEHALF OF THE DIRECTORS OF TCI. The cost of soliciting proxies will be borne by
TCI. Directors and officers of TCI may, without additional compensation, solicit
by mail, in person or by telecommunication. In addition, TCI has retained
Georgeson Shareholder Communications, Inc. ("GSC") to assist in the solicitation
of proxies. An agreement with GSC provides that it will distribute materials
relating to the solicitation of proxies, contact stockholders to confirm receipt
of materials and answer questions relating thereto. GSC is to be paid a base fee
of $7,500 plus out-of-pocket expenses and is to be indemnified against certain
liability incurred as a result of the provision of such services.
PROPOSALS BY STOCKHOLDERS
Stockholder proposals for our Annual Meeting to be held in 2004 must be
received by us by December 29, 2003, and must otherwise comply with the rules
promulgated by the Securities and Exchange Commission to be considered for
inclusion in our proxy statement for that year. Any stockholder proposal,
whether or not to be included in our proxy materials, must be sent to our
Corporate Secretary at 1800 Valley View Lane, Suite 300, Dallas, Texas 75234.
---------------------
COPIES OF TCI'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002, TO
THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K ARE AVAILABLE TO
STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO TRANSCONTINENTAL REALTY
INVESTORS, INC., 1800 VALLEY VIEW LANE, SUITE 300, DALLAS, TEXAS 75234,
ATTENTION: DIRECTOR OF INVESTOR RELATIONS.
By Order of the Board of Directors
/s/ Ronald E. Kimbrough
Ronald E. Kimbrough
Acting Principal Executive Officer,
Executive Vice President and
Chief Financial Officer
THE BOARD OF DIRECTORS OF TCI RECOMMENDS THAT YOU VOTE FOR THE FOUR NOMINEES ON
THE ENCLOSED PROXY. REGARDLESS OF HOW YOU WISH TO VOTE YOUR SHARES, YOUR BOARD
OF DIRECTORS URGES YOU TO PROMPTLY SIGN, DATE AND MAIL THE ENCLOSED PROXY OR
VOTE BY TELEPHONE OR THROUGH THE DESIGNATED INTERNET SITE.
15
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRANSCONTINENTAL REALTY INVESTORS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 2003
The undersigned hereby appoints RONALD E. KIMBROUGH and ROBERT A. WALDMAN,
and each of them, Proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to be at the Annual Meeting of
Stockholders of TRANSCONTINENTAL REALTY INVESTORS, INC., to be held on Tuesday,
June 10, 2003 at 11:00 a.m., or at any adjournments thereof, according to the
number of votes that the undersigned would be entitled to vote if personally
present, upon the following matters:
(CONTINUED AND TO BE SIGNED AND DATED ON THE OTHER SIDE)
14475
ANNUAL MEETING OF STOCKHOLDERS OF
TRANSCONTINENTAL REALTY INVESTORS, INC.
JUNE 10, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach and mail in the envelope provided. -
-----------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF TRANSCONTINENTAL REALTY INVESTORS, INC. RECOMMENDS A VOTE FOR THE FOUR NOMINEES.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
-----------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: 2. OTHER BUSINESS: I AUTHORIZE the aforementioned [ ] [ ] [ ]
proxies in their discretion to vote upon such other
NOMINEES: business as may properly come before the Annual
[ ]FOR ALL NOMINEES [ ] Ted P. Stokely Meeting and any adjournments thereof.
[ ] Henry A. Butler
[ ]WITHHOLD AUTORITY [ ] Earl D. Cecil WHEN A PROXY CARD IS PROPERLY EXECUTED AND
FOR ALL NOMINEES [ ] Martin L. White RETURNED, THE SHARES REPRESENTED THEREBY
WILL BE VOTED IN FAVOR OF THE ELECTION FOR
[ ]FOR ALL EXCEPT EACH OF THE NOMINEES, UNLESS AUTHORITY TO
(See instructions below) VOTE FOR ANY SUCH NOMINEE IS SPECIFICALLY
WITHHELD. THERE WILL BE NO CUMULATIVE VOTING
FOR THE ELECTION OF DIRECTORS. IF ANY
NOMINEE IS UNABLE TO SERVE OR WILL NOT SERVE
(AN EVENT WHICH IS NOT ANTICIPATED), THEN
THE PERSON ACTING PURSUANT TO THE AUTHORITY
GRANTED UNDER THE PROXY WILL CAST VOTES FOR
THE REMAINING NOMINEES AND, UNLESS THE BOARD
OF DIRECTORS TAKES ACTION TO REDUCE THE
NUMBER OF DIRECTORS, FOR SUCH OTHER
PERSONS(S) AS HE OR SHE MAY SELECT IN PLACE
OF SUCH NOMINEES.
YOUR PROXY IS IMPORTANT. PLEASE INDICATE
INSTRUCTION: To withhold authority to vote for YOUR SUPPORT FOR THE BOARD OF DIRECTORS BY
any individual nominee(s), mark MARKING THE BOXES FOR ELECTION OF THE FOUR
"FOR ALL EXCEPT" and fill in the DIRECTORS. PLEASE SIGN, DATE AND MAIL THIS
circle next to each nominee you CARD TODAY IN THE ENCLOSED ENVELOPE. IF NOT
wish to withhold, as shown here: [X] OTHERWISE MARKED ABOVE, YOUR PROXY WILL BE
VOTED FOR THE ELECTION OF THE FOUR NOMINEES.
THIS PROXY REVOKES ALL PREVIOUS PROXIES.
To change the address on your account,
please check the box at right and indicate
your new address in the address space above. [ ]
Please note that changes to the registered
name(s) on the account may not be submitted
via this method.
Signature of Stockholder Date: Signature of Stockholder Date:
------------------------ -------- ----------------------- --------
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.