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:
[X] PRELIMINARY PROXY STATEMENT [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS
PERMITTED BY RULE14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
(NAME OF PERSON(s) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
24 FRANK LLOYD WRIGHT DRIVE
LOBBY L, 4TH FLOOR
ANN ARBOR, MICHIGAN 48105
_____________________, 2001
Dear Limited Partner:
This letter is being sent to the limited partners of Captec Franchise
Capital Partners L.P. IV, a Delaware limited partnership, in connection with the
solicitation by the partnership of written consents to:
- transfer the general partner's interest owned by Captec Net
Lease Realty, Inc., a Delaware corporation, to GP4 Asset
Acquisition, LLC, a Michigan limited liability company;
- admit GP4 Asset Acquisition as the general partner of the
partnership; and
- continue the business of the partnership with GP4 Asset
Acquisition as the general partner.
The proposal to which this letter and the enclosed consent relates is
more fully set forth below. This letter and the enclosed consent are first being
furnished on or about __________, 2001, to the limited partners reflected on the
partnership's list of record and beneficial holders of limited partnership units
as of ___________, 2001. The general partner has established ___________, 2001
as the record date for determining the limited partners eligible to act by
written consent with respect to the proposal. Only limited partners of record on
the record date are eligible to consent to the proposal and the enclosed consent
form may be utilized only by such limited partners. We urge you to read this
letter carefully and sign, date and promptly mail the enclosed consent form to
the partnership.
LIMITED PARTNERS ARE BEING ASKED TO CONSENT TO THE PROPOSAL BY SIGNING,
DATING AND PROMPTLY MAILING THE ENCLOSED CONSENT FORM NO LATER THAN
____________, 2001.
THE PROPOSAL
The proposal provides for:
- the transfer to GP4 Asset Acquisition of Captec's general partner's
interest in the partnership and the withdrawal of Captec as
general partner;
- the admission of GP4 Asset Acquisition as general partner; and
- the continuation of the business of the partnership with GP4 Asset
Acquisition as general partner.
GP4 ASSET ACQUISITION
GP4 Asset Acquisition is a wholly-owned subsidiary of CRC Asset
Acquisition, LLC, a Michigan limited liability company. GP4 Asset Acquisition
has been created solely to acquire and own the general partner's interest in the
partnership and to serve as the general partner of the partnership, subject to
the consent of the limited partners.
Patrick L. Beach, Captec's Chairman of the Board of Directors and
President and Chief Executive Officer, is the sole member of CRC Acquisition,
which was created solely to own, directly or through its wholly-owned
subsidiaries, certain assets to be acquired from Captec pursuant to a July 1,
2001 Asset Purchase Agreement. Mr. Beach is also the Chairman of the Board of
Directors, President and Chief Executive Officer of Captec Financial Group, Inc.
and Captec Net Lease Realty Advisors, Inc. and served as a co-general partner of
the partnership from its inception in 1996 until the sale of the general
partner's interest to Captec in 1998. Mr. Beach is a graduate of the University
of Michigan School of Business Administration (B.B.A. 1977).
LIMITED PARTNERSHIP OWNERSHIP AND CONSENT
As of ____, 2001, there were ___ outstanding limited partnership units
eligible to consent to the proposal. Consents from the record owners of at least
__ limited partnership units are required to approve the proposal. Pursuant to
Section 15.1.4 of the partnership agreement, limited partnership units owned by
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Captec and its affiliates are excluded from determining whether a majority vote
has been obtained. As of the record date, neither Captec nor any of its
affiliates owned any limited partnership units.
REASON FOR THE PROPOSAL
MERGER AGREEMENT
The proposed transfer of the general partner's interest to GP4 Asset
Acquisition for which limited partner consent is sought is related to the
proposed merger of Captec with and into Commercial Net Lease Realty, Inc., a
Maryland corporation, pursuant to a July 1, 2001 Agreement and Plan of Merger.
The separate corporate existence of Captec will terminate upon completion of the
merger.
ASSET PURCHASE AGREEMENT
Contemporaneously with the execution of the merger agreement, Captec,
Commercial Net Lease Realty, Mr. Beach, CRC Acquisition and certain wholly-owned
subsidiaries of CRC Acquisition, including GP4 Asset Acquisition, executed the
asset purchase agreement pursuant to which certain non-real estate assets of
Captec will be sold to CRC Acquisition and its subsidiaries following completion
of the merger, subject to limited partner approval. The non-real estate assets
to be sold include the general partner's interest in the partnership. In
consideration of the sale of these assets pursuant to the asset purchase
agreement, CRC Acquisition has agreed to:
- assume liabilities associated with those assets;
- pay to Commercial Net Lease Realty (as successor in interest
following the merger to the rights of Captec under the asset
purchase agreement) $750,000 in cash; and
- execute and deliver a promissory note in favor of Commercial Net
Lease Realty in the principal amount of $6.75 million pursuant
to the terms of a loan agreement between Commercial Net Lease
Realty and CRC Acquisition and certain wholly-owned subsidiaries
of CRC Acquisition, including GP4 Asset Acquisition.
No specific value has been assigned to the general partner's interest in the
partnership.
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EFFECTS OF THE MERGER
In connection with the management of the partnership, Captec does not
have its own administrative and professional infrastructure, but, rather,
contracts for advisory services from Financial Group and Captec Advisors, which
are affiliates of the partnership and Captec that are controlled by Mr. Beach.
Following consummation of the merger, neither Mr. Beach nor any other member of
Captec's management involved in the management of the partnership will be
employed by Commercial Net Lease Realty. The advisory agreement pursuant to
which Financial Group and Captec Advisors provide advisory services to Captec in
connection with the current management of the partnership will be terminated
upon completion of the merger. Section 16.5 of the partnership agreement
provides that Captec may merge into another corporation which shall succeed to
all of its rights and responsibilities as general partner of the partnership
without obtaining the consent of the limited partners. If the merger is
consummated prior to the consent of the limited partners to the proposal,
Commercial Net Lease Realty will become the general partner of the partnership
by operation of the merger, in which event the asset purchase agreement provides
that Commercial Net Lease Realty shall assign to CRC Acquisition or one of its
affiliates all economic benefits of ownership of the general partner's interests
and CRC Acquisition or one of its affiliates shall assume all of Commercial Net
Lease Realty's obligations, responsibilities and duties as general partner under
the partnership agreement. If limited partner consent has not been obtained
within two years of the sale of the other assets pursuant to the asset purchase
agreement, Commercial Net Lease Realty can take back management control of the
partnership. For these reasons, continuity of management of the partnership
following completion of the merger of Captec into Commercial Net Lease Realty
can be assured only through limited partner consent to the proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE GENERAL PARTNER
The Board of Directors of Captec, with Mr. Beach abstaining, has
unanimously determined that the proposed actions are in the best interests of
the limited partners and recommends, as the board of the general partner of the
partnership, that the limited partners:
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- approve the transfer of the general partner's interest to GP4
Asset Acquisition;
- admit GP4 Asset Acquisition as general partner of the
partnership; and
- continue the business of the partnership with GP4 Asset
Acquisition as general partner.
OBLIGATION OF CRC ACQUISITION AND CAPTEC TO SOLICIT CONSENT
CRC Acquisition and Captec each are obligated to use commercially
reasonable best efforts to obtain the consent of the limited partners as well as
the consent of the limited partners of Captec Franchise Capital Partners L.P.
III to transfer the general partner's interest in that partnership to another
wholly-owned subsidiary of CRC Acquisition. Consent of the limited partners to
the proposal is not a condition to closing the asset purchase agreement or the
merger nor is Captec's failure to obtain such consent a breach of the asset
purchase agreement.
FAILURE TO SOLICIT CONSENT
The merger agreement obligates Captec, in its capacity as general
partner of the partnership, to prepare and file with the SEC this consent
solicitation. In the merger agreement, Captec has agreed to recommend, to the
fullest extent permitted by its fiduciary duties as the general partner of the
partnership, that the limited partners consent to and approve the transfer of
Captec's general partner's interest to GP4 Asset Acquisition. Captec also has
agreed to pay Commercial Net Lease Realty a fee of $250,000 if Captec did not so
recommend or if this consent solicitation did not include such a recommendation
or if Captec withdraws, amends or modifies, or proposes or resolves to withdraw,
amend or modify its recommendation, in each case, as a result of Captec's
determination that taking any of such actions is not permitted by Captec's
fiduciary duty as general partner of the partnership.
FAILURE TO OBTAIN CONSENT PRIOR TO MERGER
In the event the necessary consents are not obtained prior to the
completion of the merger, Commercial Net Lease Realty will become the general
partner of the partnership by operation of the merger. Upon closing of the sale
of the other assets pursuant to the asset purchase agreement, Captec's economic
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interest in the partnership will be transferred to CRC Acquisition. If the
consents are not obtained prior to completion of the merger, Mr. Beach has
agreed to pledge 10,000 shares of Commercial Net Lease Realty preferred stock
that he will receive in partial consideration of the exchange of his shares of
Captec common stock pursuant to the merger agreement to secure CRC Acquisition's
obligation to continue to seek approval of the limited partners of each
partnership to the transfer of the respective general partner's interests. Those
shares of Commercial Net Lease Realty preferred stock represent $250,000 in
value based upon a stated value and liquidation preference of $25.00 per share.
One-half of the pledged shares will be released to Mr. Beach at such time as,
with respect to each partnership, limited partner consent has been obtained, the
partnership is dissolved or Commercial Net Lease Realty elects to take control
of the partner's interest, which, as successor in interest to Captec under the
partnership agreement, it shall have the right to do two years after the
effective date of the sale of the other assets pursuant to the asset purchase
agreement, if such consents have not been received at that time. If Commercial
Net Lease Realty does not elect to take control of the partnership interests,
the pledged shares will be returned to Mr. Beach.
EFFECT OF OBTAINING CONSENT PRIOR TO MERGER
If the requisite limited partner consents are obtained, the general
partner's interest currently owned by Captec will be transferred and assigned to
GP4 Asset Acquisition and GP4 Asset Acquisition will be admitted as general
partner of the partnership upon the later to occur of the closing of the merger,
which Captec anticipates will occur in the fourth quarter of 2001, or the date
on which Captec receives the requisite limited partner consents. The merger is
subject to the approval of Captec's stockholders and other conditions of
closing. If the merger is not completed and the merger agreement is terminated
for any reason or if the sale of the general partner's interest to GP4 Asset
Acquisition pursuant to the asset purchase agreement is not completed for any
reason, Captec's general partner's interest will not be transferred to GP4 Asset
Acquisition even if the consent of the limited partners has been obtained.
Subject to the consent of the limited partners, simultaneous with the transfer
of the general partner's interest owned by Captec to GP4 Asset Acquisition, GP4
Asset Acquisition will become the successor general partner of the partnership
and
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the business of the partnership will continue.
THE PARTNERSHIP AGREEMENT
OBLIGATIONS AND RIGHTS UNDER THE PARTNERSHIP AGREEMENT
The agreement of limited partnership of the partnership sets forth the
respective rights, duties and obligations of the general partners and the
limited partners. Section 15.1.2(b) provides that, prior to assigning the
general partner's interest, Captec, as general partner, must obtain the approval
of the limited partners by a vote of limited partners owning a majority of the
limited partnership interests outstanding. Upon withdrawal of Captec as general
partner, the limited partners, by a majority vote, may elect to continue the
business of the partnership and elect a successor general partner pursuant to
section 18.1.1 of the partnership agreement. In determining the existence of a
majority vote, the general partner's interest and/or units owned by Captec and
its affiliates (as defined in the partnership agreement) are excluded pursuant
to section 15.1.4 of the partnership agreement.
COMPENSATION TO GP4 ASSET ACQUISITION UNDER THE PARTNERSHIP AGREEMENT
Upon approval and assignment of Captec's general partner's interest to
GP4 Asset Acquisition, for its services as the general partner, GP4 Asset
Acquisition will be entitled to receive compensation from the partnership
pursuant to the partnership agreement. This compensation (which in many cases is
subordinated to certain distributions to the limited partners) includes real
property and equipment acquisition fees, a property management fee based on the
gross rental revenue of the partnership, reimbursement of expenses and specified
percentages of the net proceeds from the sale, refinancing or liquidation of
property or equipment. Based upon its 1.0% general partner's interest in the
partnership, pursuant to the partnership agreement, GP4 Asset Acquisition also
will receive 1.0% of all cash distributions made by the partnership, the amount
and timing of which distributions will be determined by GP4 Asset Acquisition as
the general partner. The compensation to be received by GP4 Asset Acquisition
will be identical to the compensation that Captec currently receives for serving
as general partner of the partnership.
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THE CONSENT
GENERAL
As of _________________, 2001, the partnership had _________ limited
partnership units outstanding. No limited partnership units are owned by Captec
or any affiliates and no single person or entity owns more than 5.0% of the
limited partnership units. Written consents from the record owners of at least
_____ limited partnership units are required to approve the proposal. At such
time as the partnership receives valid and unrevoked written consents from
limited partners owning at least a majority of the limited partnership units
outstanding, the consent of the limited partners will be deemed to have been
obtained, the consent process will be closed and the transfer of the general
partner's interest will take effect upon the closing of the asset purchase
agreement following, and contingent upon, the closing of the merger, or, if
later, the date on which the requisite limited partner consents have been
received.
VOTING; RECORD DATE
Each limited partnership unit entitles the limited partner to one vote
with respect to the written consent solicited hereby. Only limited partners of
record on the record date may consent to the proposal. If your units are held in
the name of a brokerage firm, bank, nominee or other institution, only such
institution can sign a written consent with respect to your units and can do so
only at your direction. Accordingly, if your units are so held, please contact
your account representative and give instructions to have the enclosed consent
executed with respect to your units. Notwithstanding the foregoing, with respect
to any units owned by an IRA or other account of which you are the beneficiary
and of which MAVRICC Management Services, Inc. (MAVRICC) is the servicer (which
units would be held in the name of the bank or other institution which is the
custodian or trustee of the account), MAVRICC will obtain written instructions
from such custodian or trustee confirming your instructions as expressed in your
consent with respect to the voting of your units in connection with the proposal
and directing and authorizing the partnership to vote your units as indicated by
you on the consent you return to the partnership.
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Because approval of the proposal requires the affirmative consent of
limited partners owning of record at least a majority of the limited partnership
units outstanding, abstentions and broker non-votes, which are consents from
brokers or nominees indicating that such persons have not received instructions
from beneficial owners or other persons entitled to give consents with respect
to limited partnership units as to matters for which the brokers or nominees do
not have discretionary power, will have the effect of votes against the
proposal. Captec, as general partner of the partnership, recommends that limited
partners consent to the proposal.
CLOSE OF CONSENT SOLICITATION
It is the present intention of the partnership to close this consent
solicitation as of the date on which valid and unrevoked written consents of
limited partners owning at least a majority of the limited partnership units
outstanding have been received by the partnership. The partnership is seeking,
if possible, to close this consent solicitation on or about ________________,
2001, although, if necessary, the partnership may continue to solicit consents
after that time.
REVOCABILITY OF CONSENT
A consent signed, dated and mailed by a limited partner subsequently
may be revoked by written notice of revocation to the partnership at any time
prior to the closing of the consent solicitation. A revocation may be in any
written form validly signed by the record holder provided it clearly states that
such holder's consent previously given is no longer effective. To prevent
confusion, the revocation must be dated. To be effective, a written revocation
of a previously executed and delivered consent must be delivered prior to the
time that the requisite number of executed, unrevoked consents have been
received by the partnership as set forth above. Any revocation may be delivered
to Captec Franchise Capital Partners L.P. IV at 24 Frank Lloyd Wright Drive,
Lobby L, 4th Floor, Ann Arbor, Michigan 48105.
RESULT OF CONSENT
If the requisite consents are obtained, subject to, and
contemporaneously with, the closing of the asset purchase agreement, which is
conditioned upon the closing of the merger,
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- Captec's general partner's interest will be transferred and
assigned to GP4 Asset Acquisition, and, simultaneously with such
transfer;
- GP4 Asset Acquisition will be admitted as the successor general
partner of the partnership;
- the partnership agreement will be amended accordingly; and
- the business of the partnership will continue.
Such amendment will reflect
- the transfer of Captec's general partner's interest to GP4 Asset
Acquisition;
- the withdrawal of Captec from the partnership; and
- the admission of GP4 Asset Acquisition as a successor general
partner with respect to the transferred general partner's
interest.
The amendment will be executed by GP4 Asset Acquisition and by Commercial Net
Lease Realty as successor in interest to Captec following the merger as general
partner on their own behalves and as attorney-in-fact for the limited partners
in accordance with section 19.1 of the partnership agreement.
EXPENSES OF SOLICITATION
The expenses of this consent solicitation will be paid by Captec.
Captec will pay Georgeson Shareholder Communications, Inc. a fee of $5,000 plus
reimbursement of out-of-pocket expenses for its services in soliciting consents.
In addition to solicitation by mail, directors, officers and employees of Captec
may solicit consents by telephone, facsimile, or otherwise. Directors, officers
and employees of Captec will not be additionally compensated for any such
solicitation, but may be reimbursed for out-of-pocket expenses incurred.
Brokerage firms, fiduciaries and other custodians that forward soliciting
material to limited partners will be reimbursed for their reasonable expenses
incurred in forwarding such material.
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RECOMMENDATION
CAPTEC, AS THE GENERAL PARTNER OF THE PARTNERSHIP, RECOMMENDS THAT YOU CONSENT
TO THE TRANSFER OF THE GENERAL PARTNER'S INTEREST FROM CAPTEC TO GP4
ACQUISITION AND THE CONTINUATION OF THE BUSINESS OF THE
PARTNERSHIP WITH GP4 ACQUISITION AS GENERAL PARTNER.
YOUR CONSENT IS IMPORTANT. TO GIVE YOUR CONSENT PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED CONSENT AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
If you would like additional copies of this correspondence or have
questions about the proposal, you should contact:
GEORGESON SHAREHOLDER COMMUNICATIONS, INC.
17 STATE STREET
10TH FLOOR
NEW YORK, NEW YORK 10004
800-223-2064
The merger agreement is an appendix to a proxy statement-prospectus
included in a registration statement on Form S-4 filed by Commercial Net Lease
Realty with the United States Securities and Exchange Commission on October 11,
2001. The asset purchase agreement is filed as an exhibit to this registration
statement. This information may be inspected and copied at public reference
facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the SEC's Regional Office at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
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60661. Copies may be obtained at prescribed rates from the Public Reference
Section of the SEC at its principal office in Washington, D.C. The SEC also
maintains an Internet web site on which information electronically filed with
the SEC may be obtained. The address of the SEC's web site is
http://www.sec.gov.
Sincerely,
CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
By: Captec Net Lease Realty, Inc.
General Partner
By: _______________________________________
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
CONSENT
The undersigned, a limited partner of Captec Franchise Capital Partners
L.P. IV, a Delaware limited partnership, does hereby vote, with respect to all
units owned by the undersigned, as follows:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
APPROVAL of the proposal more particularly described in the letter
accompanying this consent, dated ___________, 2001, receipt of which is hereby
acknowledged, to
- transfer the units owned by Captec Net Lease Realty, Inc., a
Delaware corporation, as general partner of the partnership, to
GP4 Asset Acquisition, LLC, a Michigan limited liability
company;
- admit GP4 Asset Acquisition as general partner of the
partnership and effective simultaneously with such transfer; and
- continue the business of the partnership with GP4 Asset
Acquisition as general partner of the partnership.
THIS CONSENT IS SOLICITED BY CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV.
WHEN THIS CONSENT FORM IS PROPERLY EXECUTED, THE UNITS REPRESENTED HEREBY WILL
BE VOTED AS SPECIFIED. IF A PROPERLY EXECUTED CONSENT FORM IS RETURNED WITHOUT
ANY VOTE BEING SPECIFIED, THE UNITS REPRESENTED HEREBY WILL BE DEEMED TO HAVE
CONSENTED TO THE PROPOSAL.
Dated:___________________________________________
Signature:_______________________________________
Signature:_______________________________________
(if held jointly)
Title:___________________________________________
Please sign exactly as name appears on the envelope in which this
material is delivered. When units are held by joint tenants, each joint tenant
should sign. When signing as an attorney, as executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONSENT FORM PROMPTLY USING
THE ENCLOSED PREPAID ENVELOPE TO:
___________________________________________________________. If you have any
questions, please call Georgeson Shareholder Communications, Inc. at (800)
223-2064 (toll-free) or (212) 440-9800 if outside the U.S.