DIVERSIFIED REALTY, INC.
110 Second Street South
P. O. Box 2249
Great Falls, Montana 59405
(406) 727-2600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 25, 1997
To the Shareholders of Diversified Realty, Inc.:
The annual meeting of Shareholders of Diversified Realty, Inc. will be held
at the offices of the Company, 110 Second Street South, Great Falls, Montana,
on Tuesday, November 25, 1997, at 9:00 a.m., for the following purposes:
1. To elect three directors to hold office until the next annual meeting of
shareholders or until their successors are duly elected and qualified.
2. To consider and vote upon a proposal to adopt Restated Articles of
Incorporation of the Company to change the Company's term of existence,
to change the capital structure of the Company and to modernize the
Company's charter, all as more fully set forth in the accompanying proxy
statement.
3. To consider and vote upon a proposal to authorize the Board of Directors
of the Company to select an Independent Certified Public Accounting firm
to audit the Company's financial statements for 1997.
4. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
The Company has fixed the close of business on October 31, 1997, as the
record date for the determination of shareholders entitled to notice of and
to vote at the meeting or adjournments thereof, and only shareholders of
record at such time will be entitled to voting rights.
DIVERSIFIED REALTY, INC.
Kathleen King,
Assistant Secretary-Treasurer
Great Falls, Montana
November 14, 1997
DIVERSIFIED REALTY, INC.
110 Second Street South
P. O. Box 2249
Great Falls, Montana 59405
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 259, 1997
Approximate date proxy material sent to shareholders: November 14, 1997
SOLICITATION AND REVOCATION OF PROXY
This proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the management of Diversified Realty, Inc.
(the "Company" or "DRI") for its use at the annual meeting of shareholders
to be held on Tuesday, November 25, 1997, at 9:00 a.m., in Great Falls,
Montana.
Any shareholder signing and returning a proxy in the form enclosed with this
statement may revoke such proxy by written notice to the Company or by
attending the meeting and voting in person.
Shareholders will be entitled to cast one vote for each share of common stock
held by them of record at the close of business on the record date on any
matter that may be presented at the meeting for consideration and action by
the shareholders, except that shareholders will have cumulative voting rights
with respect to the election of directors. Cumulative voting entitles each
shareholder to cast for one nominee a total number of votes equal to the
number of shares the shareholder held of record at the close of business on
the record date multiplied by the number of directors to be elected, or to
distribute that total number of votes among as many nominees as the
shareholder chooses. Directors are elected by a plurality of the votes cast
at a meeting at which a majority of the shares entitled to vote are present
in person or by proxy. Where proxies are marked "withhold authority", these
shares are included in the determination of the number of shares present and
voting. Broker non-votes are not counted in the determination of the number
of shares present and voting. You may withhold your vote from any nominee(s)
for Director by striking a line through the nominee's name(s) on the proxy
form. If you return a signed proxy form that does not indicate your voting
preferences, your shares will be voted for the election of the nominated
Directors; for the proposal to adopt Restated Articles of Incorporation; and,
for the proposal authorizing the Board of Directors to select an Independent
Certified Public Accounting firm to audit the Company's financial statements
for 1997.
The record date for the determination of shareholders entitled to voting
rights at the meeting is the close of business on October 31, 1997. The
annual report to shareholders for the year ended December 31, 1996 has
previously been mailed to shareholders.
Expenses in connection with this proxy statement including postage, printing
and handling, will be paid by the Company. Solicitation may be made of some
stockholders by certain directors, officers and employees of the Company in
person or by telephone or telegraph. Employees, directors and officers of the
Company who may participate in the solicitation of proxies will be reimbursed
for out-of-pocket expenses and may receive remuneration for time spent. The
Company expects that the amount of remuneration, if any, to be paid to those
who solicit proxies will not exceed the total sum of $250.00
VOTING SECURITIES, OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the close of business on October 31, 1997, 1,872,895 shares of Common
Stock, no par value, were outstanding and are entitled to vote at this
meeting.
The Company's common stock is not traded on any securities exchange. To the
Company's knowledge, neither bid nor asked quotations for the Company's
common stock have appeared in any established quotation system during the
past several years, nor are such quotations reported in any newspapers,
nor are records kept of any quotations by the National Quotation Bureau, Inc.
No public market exists for the Company's common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information concerning persons who are known by
the Company to own beneficially more than 5% of the Company's voting shares
on October 31, 1997.
Amount and
Nature of
Name and Address of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
No Par Value M Corp 1,572,707(1) 83.9%
Common Stock 110 Second Street South
Great Falls, Montana
(1)S. M. McCann and M. A. Arneson and other members of the Anne Marie and
Paul J. McCann family own, directly or indirectly, a majority of the
outstanding stock of M Corp which owns 1,572,707 shares (83.9%) of the
outstanding stock of Diversified Realty, Inc. Members of the Anne Marie
and Paul J. McCann family personally own a total of 3,033 shares (.2%) of the
Company's outstanding stock. Neither Anne Marie McCann nor Paul J. McCann
own any shares of stock in the Company. Anne Marie McCann and Paul J. McCann
each disclaim beneficial ownership of any shares of stock of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of October 31, 1997, information concerning
the beneficial ownership of the Company's common stock by each director,
nominee for director and each executive officer named in the Company's
Summary Compensation Table and by all directors and executive officers of the
Company as a group. Except as otherwise noted, each beneficial owner listed
has sole investment and voting power with respect to the common stock
indicated.
Name of Individual or Amount and Nature Percent
Number of Persons In Group of Beneficial Ownership of Class
Charles E. Reed 20 Direct *
M. A. Arneson -- --
S. M. McCann -- --
All Directors and Executive
Officers as a Group (3 Persons) 20(1) *
(1) See note (1) under Security Ownership of Certain Beneficial Owners
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on the previous page.
*Less than 1 percent.
Based solely on its review of reports of persons subject to Section 16(a) of
the Securities and Exchange Act, the Company believes that required reports
were filed in a timely manner disclosing transactions involving the
Company's common stock.
CHANGES IN CONTROL
The Company knows of no contractual arrangements which may at a subsequent
date result in a change in control of the Company.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS
Three present directors of the Company are management's nominees for election
as directors of the Company to constitute the entire Board of Directors to
hold office until the next annual meeting of shareholders or until their
successors are duly elected and qualified.
It is the intention of the persons named in the accompanying proxy to vote
for the election of the nominees named below unless directed otherwise. It is
expected that if these nominees should decline or be unable to serve, the
proxy will be voted to fill any vacancies so arising in accordance with the
discretionary authority of the persons named in the proxy.
Unless otherwise indicated all of the nominees for directors have occupied
their present position for more than five years. The following schedule sets
forth certain information concerning the nominees.
Name Age Principal Occupation
M. A. Arneson 42 Investor,
President Billings, Montana
Charles E. Reed 80 President, Continental Realty
Vice President Butte, Montana
S. M. McCann 34 Attorney at Law; Director of GNI,
Inc. (parent company of M Corp);
Director of M Corp, and UAC, Inc.;
San Luis Obispo, California
REMUNERATION OF DIRECTORS AND OFFICERS
The Company has not adopted a formal plan for the compensation of directors.
During 1996 the Company paid a total of $250 for directors fees.
EXECUTIVE COMPENSATION
Summary Compensation Table. The table on the following page lists the cash
compensation paid by the Company to the Company's President for 1996, 1995
and 1994. No officer or director of the Company received total cash
compensation in excess of $100,000 for 1996, 1995 or 1994.
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Name of Individual Calendar Total Cash
and Position Year Compensation
M. A. Arneson 1996 $ -
President, Director
L. H. LaValley 1996 $ -
President, Director 1995 $ -
1994 $250
The Company does not have any stock appreciation rights plans, stock option
plans or long-term incentive plans and there was no other material
compensation paid during 1996, 1995 or 1994.
PROPOSAL TO ADOPT RESTATED ARTICLES OF INCORPORATION
Management has proposed adopting Restated Articles of Incorporation to
modernize the Company's Articles of Incorporation and to bring them up to
date in conformance with the Montana Business Corporation Act. If the
proposal is approved, the Restated Articles of Incorporation of the Company
will include revisions to the Company's existing Articles of Incorporation
to revise the capitalization of the Company, revise the Company's stated
purpose, revise the limitation of directors liability, extend the Company's
term of existence and eliminate certain existing articles which are no longer
required or necessary.
The Company is currently authorized to issue 5,000,000 shares of no par
value, nonassessable capital stock. If the proposal is approved, the number
of shares of capital stock the Company will be authorized to issue will be
increased to 11,000,000 shares and the par value of the Company's common
stock will be changed from no par value to Ten Cents ($.10) per share. If the
proposal is approved, each share of the Company's currently issued no par
value capital stock will be exchanged for one share of $.10 par value capital
stock. The increase in the number of shares the Company will be authorized to
issue will provide the Company with flexibility and the ability, if necessary
or desirable, to issue additional shares of capital stock in the future.
If the proposal is approved, the Company's stated purpose will be modernized
and shortened. The Company's current stated purpose as contained in the
Company's Articles of Incorporation, is quite lengthy and detailed and not
required. If the proposal is approved, the Company's stated purpose will be
to engage in any lawful purpose.
The Company's current Articles of Incorporation contain an article limiting
the liability of directors in certain circumstances. If the proposal is
approved, the Company's Restated Articles of Incorporation will contain an
article limiting the liability of directors to the extent currently allowed
under the Montana Business Corporation Act.
The Company was originally incorporated in December, 1957 with a stated term
of existence of forty (40) years, which term of existence expires on December
23, 1997. If the proposal is approved, the Company's stated term of existence
will be changed to a perpetual existence.
The Company's current Articles of Incorporation include separate articles for
the number of directors, for stock subscriptions upon organization of the
Company and for allowing certain Board of Director authority in addition to
that allowed under the Montana Business Corporation Act. These particular
articles are no longer required and, if the proposal is approved, they will
not be included in the Company's
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Restated Articles of Incorporation.
A copy of the proposed Restated Articles of Incorporation of the Company is
attached as Exhibit A.
The affirmative vote of a majority of the shares of capital stock of the
Company outstanding and entitled to vote at the meeting will be required for
adoption of the proposal.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
An independent certified public accounting firm has not yet been selected to
audit the Company's financial statements for 1997. To allow the Board of
Directors flexibility, the Board of Directors requests shareholder approval
authorizing the Board of Directors to select an independent certified public
accounting firm to audit the Company's financial statements for 1997.
The Board of Directors can select an independent accounting firm without
shareholder approval, however, the Board has requested shareholder approval
as a matter of courtesy to shareholders. In the event of a negative vote by
the shareholders on the matter, the Board will select an independent
accounting firm to audit the Company's financial statements for 1997 and may
subsequently request ratification of the selection by the shareholders.
Dwyer & Keith, CPAs, P.C., served as the Company's independent auditors for
1996. A representative of Dwyer & Keith, CPAs, P.C. is not expected to attend
the shareholders meeting. If a representative of Dwyer & Keith, CPAs, P.C. is
at the meeting, he will be welcome to make whatever statement he desires on
behalf of his firm and he will be available to respond to appropriate
questions addressed to him. No substantial services other than auditing have
been provided by Dwyer & Keith, CPAs, P.C., or any other public accountant.
The firm of Dwyer & Keith, CPAs, P.C. has not resigned or declined to stand
for re-election nor has that firm been dismissed by the Board of Directors as
the Company's independent certified public accountants. There have been no
material disagreements between the Company and Dwyer & Keith, CPAs, P.C. on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. The reports of Dwyer & Keith,
CPAs, P.C. on the Company's financial statements for the past two years have
been unqualified.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
It is anticipated that the 1998 annual meeting of shareholders will be held
in July, 1998. Stockholder proposals intended for presentation at the meeting
must be received by the Company for inclusion in its proxy statement and form
of proxy relating to the meeting no later than April 15, 1998.
OTHER INFORMATION
The Company has only one committee, the executive committee. The Board of
Directors has not appointed an audit committee, compensation committee or a
nominating committee.
The executive committee consists of two directors. The executive committee
meets on call and has authority to act on most matters during
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the intervals between Board meetings.
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. Members of
the Board are kept informed of the Company's business by reports and
documents sent to them as well as by operating and financial reports
submitted to them at Board meetings.
Meetings of the Board of Directors are held as needed, and there is also an
organizational meeting following the conclusion of the shareholders meeting.
The Board held two meetings in 1996 attended by two-thirds of all directors.
The Company will furnish, without charge, to any record holder or beneficial
owner of its Common Stock on such record date, upon receipt of a written
request, a copy of its Annual Report to the Securities and Exchange
Commission on Form 10-KSB. Written requests should be directed to Diversified
Realty, Inc., to the attention of the Corporate Secretary at P. O. Box 2249,
Great Falls, Montana 59403-2249.
MANNER IN WHICH PROXIES WILL BE VOTED
All properly executed proxies received by management will be voted. In the
absence of contrary direction, management proposes to vote the proxies for
the election of each of the above nominees to the Board of Directors, each to
hold office until the next annual meeting of shareholders or until his
successor is duly elected and qualified; for the adoption of Restated
Articles of Incorporation; and, for the proposal authorizing the Board of
Directors to select an independent certified public accounting firm to audit
the Company's financial statements for 1997.
Management knows of no other business to be presented for action at the
meeting other than the matters stated above. If any other matters should
properly come before the meeting, it is intended that the proxy agents named
in the proxy will vote thereon in accordance with their best judgment.
Whether or not you expect to be present at the meeting, you are urged to
execute and return the enclosed form of proxy.
By Order of the Board of Directors,
Kathleen King,
Secretary-Treasurer
November 14, 1997
Great Falls, Montana
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EXHIBIT A
RESTATED ARTICLES OF INCORPORATION
OF
DIVERSIFIED REALTY, INC.
Pursuant to the provisions of the Montana Business Corporation Act, the
undersigned Corporation adopts the following Restated Articles of
Incorporation:
ARTICLE I
Name. The name of this corporation shall be : Diversified Realty, Inc.
ARTICLE II
Corporate Purpose. The purpose of this corporation is to engage in any
lawful business.
ARTICLE III
Capital Stock. The aggregate number of shares which this Corporation shall
have authority to issue shall be ELEVEN MILLION (11,000,000) shares, which
shall be represented by ELEVEN MILLION (11,000,000) shares of capital stock
of TEN CENTS ($.10) par value, and which shall be nonassessable.
ARTICLE IV
Limitation of Directors Liability. No director of this corporation shall be
liable to the corporation or its shareholders for monetary damages for any
action taken, or for the failure to take any action, as a director, except
for (a) the amount of financial benefit received by a director to which the
director is not entitled, (b) an intentional infliction of harm on the
corporation or its shareholders, (c) an unlawful distribution to
shareholders, or (d) an intentional violation of criminal law.
ARTICLE V
Registered Agent and Office. The address of the registered office and the
address of the principal place of business of the Corporation on the date
hereof is 110 Second Street South, P. O. Box 2249, Great Falls, Montana
59403, and the name of the initial registered agent at that office is Jerry
K. Mohland.
ARTICLE VI
Corporate Duration. This Corporation shall have a perpetual existence.
The foregoing RESTATED ARTICLES OF INCORPORATION of Diversified Realty, Inc.
supersede the existing Articles of Incorporation of Diversified Realty, Inc.
and any and all amendments thereto.
IN WITNESS WHEREOF, Diversified Realty, Inc. has caused its
corporate name to be subscribed and corporate seal to be affixed by its
proper officers thereunto duly authorized and the President and Secretary-
Treasurer, respectively, have hereunto affixed their hands this ___ day of
December, 1997.
Diversified Realty, Inc.
By:___________________________
M. A. Arneson, President
(SEAL)
By:___________________________
Kathleen King,
Secretary-Treasurer
THIS PROXY SOLICITED BY MANAGEMENT
DIVERSIFIED REALTY, INC.
The undersigned hereby appoints Charles E. Reed, Kathleen King, and M. A.
Arneson and each of them, with full power of substitution, to represent the
undersigned and to vote all stock registered in the name of the undersigned
at the annual meeting of shareholders of Diversified Realty, Inc. to
be held at 110 Second Street South, Great Falls, Montana, on Tuesday,
November 25, 1997, at 9:00 a.m., and at any adjournments thereof, on the
proposals listed below and as more particularly described in the Company's
proxy statement and in their discretion upon such other matters as may
properly come before the meeting. All powers of said proxies or substitutes
shall be exercised by a majority of them, or if only one shall act, then by
that one.
Management recommends a vote FOR the following proposals:
1.Election of the three directors listed below as proposed in the
accompanying proxy statement.
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked_to the for all_nominees listed
contrary below) |_| below |_|
Instruction: To withhold authority to vote for any individual
nominee strike a line through the nominee's name in the list below.
M. A. Arneson, S. M. McCann, Charles E. Reed
2. To adopt Restated Articles of Incorporation of the Company to change the
Company's term of existence, to change the capital structure of the
Company and to modernize the Company's charter all as more fully set
forth in the accompanying proxy statement.
_ _ _
FOR |_| AGAINST |_| ABSTAIN |_|
3. To authorize the Board of Directors to select an Independent Certified
Public Accounting firm to audit the Company's financial statements for
1997.
_ _ _
FOR |_| AGAINST |_| ABSTAIN |_|
4. To transact such other business as may properly come before the meeting
or any adjournment of the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN BY THE UNDERSIGNED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR ITEMS 1, 2 AND 3 LISTED ABOVE.
DATED ____________________, 1997
________________________________
Signature of Shareholder
________________________________
Signature of Shareholder
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN THIS PROXY