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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
The Hallwood Group Incorporated
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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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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THE HALLWOOD GROUP INCORPORATED
NOTICE OF ANNUAL MEETING
To the Stockholders of The Hallwood Group Incorporated:
The Annual Meeting of Stockholders of The Hallwood Group Incorporated (the
"Company") will be held as follows:
PLACE: The Four Seasons Hotel
21 Avenue Road
Toronto, Ontario, Canada
TIME: Wednesday, May 6, 1998 at 1:00 p.m. (local time)
(Toronto, Ontario, Canada)
PURPOSES: 1. To elect two directors to hold office for three years
and until their successors are elected and qualified;
and
2. To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on Friday, March 20,
1998, will be entitled to notice of and to vote at the Annual Meeting.
April 10, 1998
By order of the Board of Directors
MELVIN J. MELLE
Secretary
YOU ARE URGED TO VOTE UPON THE MATTERS PRESENTED AND TO COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IT IS
IMPORTANT FOR YOU TO BE REPRESENTED AT THE MEETING. THE EXECUTION OF YOUR PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ARE PRESENT AT THE MEETING.
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THE HALLWOOD GROUP INCORPORATED
3710 RAWLINS, SUITE 1500
DALLAS, TEXAS 75219
---------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1998
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Hallwood Group Incorporated (the
"Company") for use at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Wednesday, May 6, 1998 at 1:00 p.m. (local time) Toronto, Ontario,
Canada, at The Four Seasons Hotel, 21 Avenue Road, Toronto, Ontario, Canada M54
261, and any adjournment thereof. This Proxy Statement and the form of proxy to
be utilized at the Annual Meeting are to be mailed or delivered to the
stockholders of the Company on or about April 10, 1998.
MATTERS TO BE CONSIDERED
The Annual Meeting has been called (i) to elect two directors to hold
office for three years, and (ii) to transact such other business as may properly
come before the meeting. See "Election of Directors" and "Other Business."
RECORD DATE AND VOTING
The directors have fixed the close of business on March 20, 1998 as the
record date (the "Record Date") for the determination of stockholders entitled
to vote at the Annual Meeting and any adjournment thereof. As of the Record
Date, there were 1,254,827 shares of common stock, $0.10 par value per share
("Common Stock"), outstanding and entitled to vote at the meeting.
The presence at the Annual Meeting, either in person or by proxy, of the
holders of outstanding shares of Common Stock having a majority of the voting
power of the Company is necessary to constitute a quorum for the transaction of
business. Each holder of record of Common Stock will be entitled to one vote per
share in each matter that is called to vote at the Annual Meeting.
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of the holders of shares of Common Stock having a
majority of the voting power of the Company present in person or represented by
proxy at the Annual Meeting is required to elect directors. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR. The trustees of Alpha
Trust and Epsilon Trust, which own approximately 36.5% and 24.3% of the
outstanding Common Stock, respectively, have informed the Company that all of
the shares of Common Stock beneficially owned by the trusts will be voted for
the nominees for director.
PROXY, SOLICITATION, REVOCATION AND EXPENSES
All proxies that are properly completed, signed and returned prior to the
Annual Meeting will be voted. Any proxy given by a stockholder may be revoked at
any time before it is exercised by (i) filing with the Secretary of the Company
an instrument revoking it, (ii) a duly executed proxy bearing a later date or
(iii) the stockholder attending the Annual Meeting and expressing a desire to
vote his shares of Common Stock in person.
Shares represented by proxies will be voted for or against the election of
the nominee directors named in the proxy in accordance with the specifications
made on the proxy by the stockholder and, if no specification is made, will be
voted in favor of the election of the nominee directors. Abstentions, broker
non-votes and
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proxies directing that the shares are not to be voted will not be counted as a
vote in favor of a matter called for a vote.
The cost of preparing, assembling, printing and mailing this Proxy
Statement and the enclosed proxy form and the cost of soliciting proxies related
to the Annual Meeting will be borne by the Company. The Company will request
banks and brokers to solicit their customers who are beneficial owners of shares
of Common Stock listed of record in names of nominees, and will reimburse such
banks and brokers for the reasonable out-of-pocket expenses of such
solicitation. The original solicitation of proxies by mail may be supplemented
by telephone, telegram and personal solicitation by officers and other regular
employees of the Company and its subsidiaries, but no additional compensation
will be paid to such individuals on account of such activities. In addition, the
Company has retained Morrow & Co., Inc. to assist in the solicitation of
proxies, for which such firm will be paid a fee of $2,500 plus reimbursement of
reasonable out-of-pocket expenses.
ELECTION OF DIRECTORS
Two persons are to be elected to the Board of Directors at the Annual
Meeting and the two remaining directors will continue in office for the terms
specified below. The persons named in the enclosed proxy intend to vote for the
election of the nominees listed below, unless instructions to the contrary are
given therein. The nominees have indicated that they are able and willing to
serve as directors. However, if some unexpected occurrence should require the
substitution of some other person for a nominee, the person voting the proxies
will vote for such nominee as the Company may select.
The following table lists the name and age of the two nominees and of each
of the two directors whose terms of office will continue after the Annual
Meeting, the annual meeting at which their respective terms of office will
expire (assuming, in the case of the nominees, that they are elected) and the
year in which each director was first elected as a director of the Company:
DIRECTOR
NAME AGE TERM EXPIRES SINCE
- ---- --- ------------ --------
NOMINEE DIRECTORS
Charles A. Crocco, Jr.... 59 Third annual meeting following this Annual Meeting 1981
J. Thomas Talbot......... 62 Third annual meeting following this Annual Meeting 1984
CONTINUING DIRECTORS
Brian M. Troup........... 51 First annual meeting following this Annual Meeting 1981
Anthony J. Gumbiner...... 53 Second annual meeting following this Annual Meeting 1981
BUSINESS HISTORY OF NOMINEES AND CONTINUING DIRECTORS
Mr. Crocco has been a shareholder in Crocco & De Maio, P.C., attorneys at
law, and its predecessors, for more than five years and was Chairman of the
Company's Compensation Committee until November 1997. He also has served as a
director of First Banks America, Inc., a bank holding company, since April 1988.
Mr. Talbot is Chairman of the Company's Audit Committee. He has been a
partner of Shaw & Talbot, a commercial real estate investment and development
company, since 1975, and of Pacific Management Group, an asset management firm,
since 1986, and is the owner of The Talbot Company. Mr. Talbot served as
Chairman of the Board and Chief Executive Officer of HAL, Inc., an airline
holding company; and as Chairman of the Board and Chief Executive Officer of
both Hawaiian Airlines, Inc., a commercial airline, and West Maui Airport
between 1989 and July 1991. He was founder and served as Chairman of the Board
of Jet America Airlines between 1980 and 1986. He has served as a director of
Fidelity National Financial, Inc. since December 1990. He has also served as a
director of Koll Real Estate Group since August 1993. In addition, Mr. Talbot
served as a director of Alliance Bancorporation, a bank holding company
("Alliance"), from April 1988 until its liquidation in February 1994, and as
Chairman and Chief Executive Officer of Alliance from August 1992 until its
liquidation.
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Mr. Troup has served as President and Chief Operating Officer of the
Company since April 1986. He has also served as Finance Director of Anglo
Metropolitan Holdings, Plc, a real estate holding company located in the United
Kingdom, since 1979; as a director of Hallwood Holdings S.A. ("HHSA"), a
corporation engaged in the real estate business since March 1984; as a director
of the general partner of Hallwood Energy Partners ("HEP") since 1984; as a
director of Hallwood Realty Corporation ("Hallwood Realty"), which is a wholly-
owned subsidiary of the Company and serves as the general partner of Hallwood
Realty Partners, L.P. ("HRP"), since 1990; and as a director of Hallwood
Consolidated Resources Corporation ("HCRC") since 1992. He is an associate of
the Institute of Bankers in Scotland and a member of the Society of Investment
Analysts in the United Kingdom. Mr. Troup also served as a director of Alliance
from February 1988 until its liquidation.
Mr. Gumbiner has served as Chairman of the Board of Directors of the
Company since 1981 and Chief Executive Officer of the Company since 1984. He has
also served as Chairman of the Board of Directors and Chief Executive Officer of
the general partner of HEP since 1984 and February 1987, respectively; as a
director of HHSA since March 1984; as a director of Hallwood Realty since
November 1990 and as a director of HCRC since 1992. Mr. Gumbiner is also a
solicitor of the Supreme Court of Judicature of England.
Except as set forth above, neither the nominees nor the continuing
directors hold a directorship in any company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or subject to the requirements of Section 15 (d)
of the Exchange Act or any company registered as an investment company under the
Investment Company Act of 1940, as amended.
No family relationships exist between the nominees, the directors and the
executive officers.
COMMITTEES AND MEETINGS OF THE BOARD
Messrs. Talbot (Chairman) and Crocco served as members of the Audit
Committee during the year ended December 31, 1997. The Audit Committee met two
times during this period and was charged with the responsibility of reviewing
the annual audit report and the Company's accounting practices and procedures
and recommending to the Board of Directors the firm of independent public
accountants to be engaged for the ensuing year. The number of individuals
comprising the Audit Committee was reduced from three to two in November 1997.
Mr. Crocco served as a Chairman of the Compensation Committee during the
year ended December 31, 1997. The Compensation Committee met two times during
this period and was charged with the responsibility of the formulation and
implementation of the Company's compensation policy. For additional information
relating to amounts paid under certain consulting agreements, see "Certain
Relationships and Related Transactions -- Consulting and Management Agreements."
The Compensation Committee was eliminated in November 1997.
The Board of Directors does not have a standing nominating committee.
During the year ended December 31, 1997, the Board of Directors held six
meetings. Each director attended at least 75% of (i) the total number of
meetings held by the Board of Directors and (ii) the total number of meetings
held by all committees of the Board of Directors on which he served.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the close of business on the Record
Date, information as to the beneficial ownership of shares of Common Stock (i)
for any person or "group" (as that term is used in Section 13(d)(3) of the
Exchange Act) who, or which the Company knows, owns beneficially more than 5% of
the outstanding shares of Common Stock as of the close of business on the Record
Date, (ii) for each director and nominee for director and (iii) for all
directors and executive officers as a group.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(1)
- ------------------------ ------------ -----------
Alpha Trust................................................. 457,791(2) 36.5%
c/o Radcliffes Trustee Company SA 9 Rue, Charles Humbert
1205 Geneva, Switzerland
Epsilon Trust............................................... 305,196(3) 24.3%
c/o Radcliffes Trustee Company SA 9 Rue, Charles Humbert
1205 Geneva, Switzerland
Heartland Advisors, Inc..................................... 87,500(4) 7.0%
790 North Milwaukee Street Milwaukee, WI 53202
Charles A. Crocco, Jr....................................... 10,550(5) *
Anthony J. Gumbiner......................................... 55,800(6) 4.3%
William L. Guzzetti......................................... --(7) --
Melvin J. Melle............................................. 6,000(8) *
J. Thomas Talbot............................................ 10,000(9) *
Brian M. Troup.............................................. 37,200(10) 2.9%
All directors and executive officers as a group (6
persons).................................................. 119,550 8.7%
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* Less than 1%
(1) Assumes, for each person or group listed, the exercise of all stock options
held by such person or group that are exercisable within 60 days, in
accordance with Rule 13d-3(d)(1)(i) of the Exchange Act, but the exercise
of none of the convertible securities owned by any other holder of options.
(2) Mr. Gumbiner has the power to designate and replace the trustees of the
Alpha Trust. Mr. Gumbiner and his family are among the discretionary
beneficiaries of this Trust.
(3) Mr. Gumbiner has the power to designate and replace the trustees of the
Epsilon Trust. Mr. Troup and his family are among the discretionary
beneficiaries of this Trust.
(4) Based on the Schedule 13G filed by Heartland Advisors, Inc. ("Heartland")
on January 27, 1998, as amended by subsequent correspondence with the
Company. All of the shares are held in investment advisory accounts of
Heartland. As a result, various persons have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, the shares. No individual investment advisory account holds in
excess of 4.75% of the Company's common stock.
(5) Includes currently exercisable options to purchase 10,000 shares of Common
Stock.
(6) Includes currently exercisable options to purchase 55,800 shares of Common
Stock. Excludes 457,791 shares of Common Stock held by Alpha Trust. In
addition, Mr. Gumbiner holds currently exercisable options to purchase
127,500 units of HEP, currently exercisable options to purchase 59,600
shares of HCRC, and currently exercisable options to purchase 25,800 units
of HRP.
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(7) In addition, Mr. Guzzetti owns 100 units of HEP and 400 units of HRP,
currently exercisable options to purchase 63,750 units of HEP, currently
exercisable options to purchase 31,800 shares of HCRC, and currently
exercisable options to purchase 15,000 units of HRP.
(8) Includes currently exercisable options to purchase 6,000 shares of Common
Stock.
(9) Includes currently exercisable options to purchase 10,000 shares of Common
Stock.
(10) Includes currently exercisable options to purchase 37,200 shares of Common
Stock. Excludes 305,196 shares of Common Stock held by Epsilon Trust. In
addition, Mr. Troup holds currently exercisable options to purchase 85,000
units of HEP, currently exercisable options to purchase 42,400 shares of
HCRC, and currently exercisable options to purchase 17,200 units of HRP.
EXECUTIVE COMPENSATION
The total compensation paid for each of the year ended July 31, 1995, the
five-month period ended December 31, 1995, the years ended December 31, 1996 and
December 31, 1997 to the Chief Executive Officer, and the other executive
officers who received cash compensation in excess of $100,000 for 1997
(collectively, the "Named Executive Officers"), is set forth in the following
Summary Compensation Table.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------------------
------------------------------------- OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION UNDERLYING LTIP COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(5) OPTIONS/SARS(#) PAYOUTS ($)(8)
------------------ ------ --------- -------- ------------ --------------- ------- ------------
Anthony J. Gumbiner..... 1997 0(2) 0 0 (6) (7) 6,200
Chairman and Chief 1996 625,000(1)(2) 0 0 (6) 0 6,200
Executive Officer 1995(9) 250,167(1)(2) 0 0 0 0 0
1995 550,000(1)(2) 50,000 0 (6) 0 6,200
Brian M. Troup.......... 1997 0(2) 0 0 (6) (7) 27,633(10)
President and Chief 1996 100,000(2) 0 0 (6) 0 74,470(10)
Operating Officer 1995(9) 41,667(2) 0 0 0 0 0
1995 100,000(2) 50,000 0 (6) 0 3,800
William L. Guzzetti..... 1997 412,745(3) 158,870(4) 0 0 42,854 4,750
Executive Vice 1996 412,745(3) 150,000(4) 0 0 33,170 4,500
President 1995(9) 179,271(3) 62,500(4) 0 0 6,276 1,000
1995 412,745(3) 100,000(4) 0 (6) 15,753 4,620
Melvin J. Melle......... 1997 208,333 0 2,940 4,500 0 13,936
Vice President, Chief 1996 208,333 0 2,940 0 0 9,025
Financial Officer and 1995(9) 91,667 0 0 0 0 8,556
Secretary 1995 208,333 0 2,941 1,500 0 14,300
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(1) Consists of $375,000 paid by the Company and $250,000 paid by Hallwood
Petroleum, Inc. ("HPI") in 1996; the proration of these amounts for the
five months ended December 31, 1995; $300,000 by the Company and $250,000
by HPI in fiscal 1995.
(2) In addition to the compensation paid to Messrs. Gumbiner and Troup, the
Company paid Hallwood Securities Limited ("HSL") or HSC Financial
Corporation ("HSC"), entities with which Messrs. Gumbiner and Troup are
associated, consulting fees of $825,000 for 1997, $350,000 for 1996,
$145,833 for the five months ended December 31, 1995, and $350,000 for the
year ended July 31, 1995, primarily in connection with those entities'
activities on behalf of the Company's subsidiaries. The Company also
received from the Hallwood Energy entities consulting fees of $300,000 for
fiscal 1995 and 1996, and $550,000 for fiscal 1997, which the Company paid
to HSL or HSC to provide the associated consulting services to the Hallwood
Energy entities. See "Certain Relationships and Related Transactions." In
March 1997, the Company paid HSC a bonus of $100,000 and the Company's
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Hallwood Commercial Real Estate, Inc. ("HCRE") subsidiary paid a bonus of
$139,000 with respect to its activities on behalf of the Company outside
the United States. In March 1998, the board of directors awarded bonuses to
HSC in the amount of $500,000 from the Company and $322,539 from its HCRE
subsidiary, both of which were accrued and payable as of December 31, 1997.
In addition, the Company received from ShowBiz Pizza Time, Inc.
("ShowBiz"), a consulting fee of $31,250, which the Company paid to HSC to
provide associated consulting services to ShowBiz. The Company owned 13% of
the Common Stock of ShowBiz until March 1997.
(3) Consists of $204,294 paid by HEP and affiliates and $208,333 paid by
Hallwood Realty in the year ended December 31, 1997; $204,294 paid by HEP
and affiliates and $208,333 paid by Hallwood Realty in the year ending
December 31, 1996; $85,170 paid by HEP and affiliates and $91,666 paid by
Hallwood Realty, for the five months ended December 31, 1995 and $204,412
paid by HEP in the fiscal year ended July 31, 1995.
(4) Consists of $143,870 paid by HEP and affiliates, $7,500 by Hallwood Realty
and $7,500 by HCRE in 1997; $131,500 paid by HEP and affiliates, $9,250 by
Hallwood Realty and $9,250 by HCRE in 1996; $62,500 paid by HEP and
affiliates with respect to the five months ended December 31, 1995; and
$85,000 paid by HEP and affiliates and $15,000 paid by Hallwood Realty in
fiscal 1995.
(5) Represents reimbursements to compensate for the income tax effect of
payment for life and/or disability insurance.
(6) Consists of the following options granted during 1995, 1996 and 1997. The
HCRC options have been adjusted for stock splits.
SECURITIES UNDERLYING
NAME COMPANY OPTIONS/SARS(#)
- ---- ------- ---------------------
Anthony J. Gumbiner..................... HWG 55,800
HRP 25,800
HEP 127,500
HCRC 95,400
Brian M. Troup.......................... HWG 37,200
HRP 17,200
HEP 85,000
HCRC 63,600
William L. Guzzetti..................... HRP 15,000
HEP 63,750
HCRC 47,700
(7) Pursuant to the HPI Incentive Plan, LTIP payouts were made to HSC, with
which Messrs. Gumbiner and Troup are associated, in the amount of $54,750
in the year ended December 31, 1997, $9,943 in the year ended December 31,
1996, $0 for the five months ended December 31, 1995, and $0 in the fiscal
year ended July 31, 1995.
(8) Consists of the following items of compensation:
COMPANY OR SUBSIDIARY
CONTRIBUTIONS TO TAX FAVORED
SAVINGS PLANS OR IN LIEU THEREOF
PAYMENT UNDER THE HALLWOOD PREMIUM PAYMENTS FOR
SPECIAL BONUS AGREEMENT($) TERM LIFE INSURANCE($)
---------------------------------- ----------------------------------
NAME 1997 1996 1995(9) 1995 1997 1996 1995(9) 1995
- ---- ----- ----- ------- ----- ----- ----- ------- -----
Mr. Gumbiner................ 0 0 0 0 6,200 6,200 0 6,200
Mr. Troup................... 0 0 0 0 3,800 3,800 0 3,800
Mr. Guzzetti................ 4,750 4,500 1,000 4,620 0 0 0 0
Mr. Melle................... 8,256 3,345 8,556 8,620 5,680 5,680 0 5,680
(9) During 1995, the Company changed its fiscal year end from July 31 to
December 31. This information is for the five months ended December 31,
1995.
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(10) During 1996, the Board approved reimbursement to Mr. Troup of medical
expenses not covered by the Company's group medical insurance contract in
the amount of $70,670 in 1996 and $23,832 in 1997, which is included in
"All Other Compensation."
The following table discloses certain information for each of the Named
Executive Officers who have been granted options to purchase securities of the
Company or its subsidiaries in the last fiscal year:
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS/SARS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM
OPTIONS/SARS IN FISCAL PRICE EXPIRATION --------------------
NAME ENTITY GRANTED(#) YEAR(%) ($/SH) DATE 5%($) 10%($)
- ---- ------ ------------ ------------ -------- ---------- ------- ---------
Anthony J. Gumbiner..... HWG(1) 27,900 36 26.06 9/4/2007 401,345 986,639
HCRC 47,700 30 20.33 6/17/2007 609,865 1,545,517
Brian M. Troup.......... HWG(1) 18,600 24 26.06 9/4/2007 267,563 657,760
HCRC 31,800 20 20.33 6/17/2007 406,577 1,030,345
William L. Guzzetti..... HCRC 23,850 15 20.33 6/17/2007 304,932 772,759
Melvin J. Melle......... HWG(1) 1,500 2 22.50 2/23/2007 18,630 45,799
HWG(1) 3,000 3 26.06 9/4/2007 43,155 106,090
- ---------------
(1) Options to purchase shares of Common Stock of the Company.
The following table discloses for each of the Named Executive Officers who
have been granted options to purchase securities of the Company or its
subsidiaries, the number of such options held by each of the Named Executive
Officers and the potential realizable values for their options at December 31,
1997. None of the Named Executive Officers exercised any options during the year
ended December 31, 1997, and the Company has not granted SARs.
AGGREGATED OPTION/SAR EXERCISES
AND OPTION/SAR VALUES AT DECEMBER 31, 1997
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, 1997(#) DECEMBER 31, 1997($)
---------------------------- ----------------------------
NAME ENTITY EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------ ----------- ------------- ----------- -------------
Anthony J. Gumbiner............. HWG 55,800 0 1,023,651 0
HRP 25,800 0 919,125 0
HEP 127,500 0 334,668 0
HCRC 63,600 31,800 805,494 76,956
Brian M. Troup.................. HWG 37,200 0 682,434 0
HRP 17,200 0 612,750 0
HEP 85,000 0 223,125 0
HCRC 42,400 21,200 536,996 51,304
William L. Guzzetti............. HRP 15,000 0 534,375 0
HEP 63,750 0 167,344 0
HCRC 31,800 15,900 402,747 38,478
Melvin J. Melle................. HWG 6,000 0 94,320 0
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The following table discloses each of the Named Executive Officers who
received long-term incentive plan awards during the year ended December 31, 1997
and the estimated future payouts of the awards.
LONG TERM INCENTIVE PLANS -- AWARDS IN YEAR ENDED DECEMBER 31, 1997
ESTIMATED FUTURE
NUMBER OF UNITS PERFORMANCE OR OTHER PAYOUTS UNDER NON-STOCK
NAME (#) PERIOD UNTIL PAYOUT PRICE-BASED PLANS($)(1)
- ---- --------------- -------------------- -----------------------
Anthony J. Gumbiner(2).............. -- -- $ --
Brian M. Troup (2).................. -- -- --
William L. Guzzetti................. 0.0820 2002 23,266
- ---------------
(1) These amounts represent awards under the HPI 1997 Incentive Plan. There are
no minimum, maximum or target amounts payable under the plan. Payments under
the awards will be equal to the indicated percentage of net cash flow from
certain wells for the first five years after an award and, in the sixth
year, the indicated percentage of 80% of the remaining net present value of
estimated future production from the wells. The amounts shown above are
estimates based on estimated reserve quantities and future prices. Because
of the uncertainties inherent in estimating quantities of reserves and
prices, it is not possible to predict cash flow or remaining net present
value of estimated future production with any degree of certainty.
(2) In addition, an award was granted to HSC, with which Messrs. Gumbiner and
Troup are associated, with respect to 0.4200 units, having a payout period
ending in 2002 and an estimated future payout of $119,165.
COMPENSATION OF DIRECTORS
For the fiscal year ended December 31, 1997, Messrs. Crocco and Talbot
received director fees of $27,500 and are entitled to receive $500 for each day
spent on business of the Company, other than at board meetings. Each director is
also reimbursed for expenses reasonably incurred in connection with the
performance of his duties. Messrs. Crocco, Talbot and Lynch also received
$95,751 each, and Messrs. Gumbiner and Troup also received $174,148 each, as
alternative compensation for surrendering their unexercisable options to
purchase ShowBiz common shares. Additional information regarding consulting
agreements with or services provided by Mr. Gumbiner, through an entity
controlled by him and Mr. Talbot is included in "Certain Relationships and
Related Transactions" and "Compensation Committee Interlocks and Insider
Participation," below.
EMPLOYMENT AGREEMENTS
During the year ended December 31, 1997, the Company had an employment
agreement with Mr. Melle. Mr. Melle's employment agreement provides for payment
of a salary of $200,000 per year plus an annual bonus in an amount as may be
determined by the Board of Directors of the Company. In addition, the employment
agreement provides that the Company will maintain $500,000 of life insurance
benefits on behalf of Mr. Melle and, for the year ended December 31, 1997, the
Company paid premiums in the amount of $5,680 for such life insurance. Mr.
Melle's employment agreement continued under the same terms and conditions until
December 31, 1997, at which time it was automatically extended for one year and
will be automatically extended annually thereafter unless terminated by either
party.
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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee was eliminated by the Board of Directors of the
Company in November 1997. Until that time, the Compensation Committee was
comprised of Messrs. Crocco (Chairman) and Lynch. During the year ended December
31, 1997, the Company retained Crocco & DeMaio, P.C., attorneys at law, of which
Mr. Crocco is a partner, as special counsel on certain legal matters for which
$51,263 was paid (excluding expense reimbursements). Mr. Robert L. Lynch was
Vice Chairman of the Board of Directors of the Company until his death in
November 1997. Under a month-to-month extension of a consulting agreement, Mr.
Lynch received a consulting fee of $90,000 for the year ended December 31, 1997,
and a car allowance of $2,889. He also received compensation for serving as a
director of the Company in the aggregate amount of $12,375, including $9,375 of
standard fees at the rate of $3,125 per quarter, $750 for each of the three
meetings of the Board he attended (other than telephonic meetings, for which no
fee was paid) and $250 for one Audit Committee meeting and the two Compensation
Committee meetings he attended.
In addition, Messrs. Gumbiner, Troup and Guzzetti served on the Boards of
Directors of HRC, HCRC and the general partner of HEP. For each of these
entities, the Board of Directors serves as the Compensation Committee and Mr.
Gumbiner is the Chief Executive Officer and Mr. Guzzetti is the Chief Operating
Officer.
As general partner of HRP, HRC earns an asset management fee and certain
related fees from HRP, which amounted to $465,000 for the year ended December
31, 1997. In addition, HRP reimbursed HRC for $2,316,000 of costs incurred by
HRC on behalf of HRP in 1997. As property manager for HRP, the Company's HCRE
subsidiary received management fees, leasing commissions and certain other fees
from HRP and related parties of $4,310,000 during the year ended December 31,
1997.
Also during 1997, HEP and its affiliates (other than HCRC) reimbursed the
Company for $301,000 of costs incurred by the Company on behalf of HEP and its
affiliates, and HCRC reimbursed the Company for $213,200 of costs incurred by
the Company on behalf of HCRC.
The Company entered into a financial consulting agreement with HPI, dated
as of December 31, 1996, which provides that the Company or its agent shall
provide consulting services to HPI for compensation of $550,000 per year. The
new agreement continues until June 30, 2000 and is automatically renewed for
successive three-year terms, except that either party may terminate the
agreement on not less than 30 days' written notice prior to the expiration of
any three-year term. The Compensation Committee had determined that these
services would be most appropriately provided by HSC, acting as the Company's
agent, through the services of Mr. Gumbiner and Mr. Troup, and that as
consideration for these services the Company would pay to HSC the fee to which
the Company is entitled under the agreement.
Pursuant to an existing agreement, the Company reimburses HSC for
reasonable and necessary expenses in providing office space and administrative
services used by Mr. Gumbiner. For the year ended December 31, 1997, the Company
reimbursed HSC in the amount of $299,000. Of the amounts paid in 1997, $60,000
was paid by the Company, $5,000 was paid by the general partner of HEP, $120,000
was paid by Hallwood Realty, and the remainder by other affiliates of HEP.
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COMPENSATION COMMITTEE
REPORTS ON EXECUTIVE COMPENSATION
GENERAL
The Company is a diversified holding company with several subsidiaries and
associated companies. Of the Named Executive Officers, Messrs. Gumbiner and
Troup are involved in the activities of all of the subsidiaries and associated
companies, but received no cash compensation directly from the Company or any of
the entities it controls; Mr. Melle is involved in the activities of the Company
and of certain subsidiaries and associated companies, but for 1997 received
compensation only from the Company; and Mr. Guzzetti is involved in the
activities of Hallwood Realty, HCRE, HEP and HCRC and their subsidiaries and
controlled entities. Accordingly, the compensation of Mr. Melle is determined
solely by the Company's Compensation Committee. The compensation of Mr. Guzzetti
with respect to his services to Hallwood Realty is determined by the Board of
Directors of Hallwood Realty, the compensation to Mr. Guzzetti for his services
with respect to HCRE was determined by the Company's Compensation Committee and
Mr. Guzzetti's compensation with respect to his services to HEP, HCRC and the
related energy companies is determined by HEP's general partner's and HCRC's
Boards of Directors. In addition, the Compensation Committee of the Company
approved the payments by the Company to HSC with which Messrs. Gumbiner and
Troup are associated.
COMPENSATION BY THE COMPANY
Until November 1997, the members of the Compensation Committee of the
Company's Board of Directors were appointed by the Board of Directors and were
Messrs. Crocco and Lynch. Since November 1997, the Board of Directors as a whole
has served as the Compensation Committee. The Company's Compensation Committee
annually determines the compensation of the Company's executive officers after
discussions with each officer and bases the amount of compensation on the
Committee's determination of the reasonable compensation for that officer. The
members of the Compensation Committee, through their business experience, are
generally aware of prevailing compensation practices and regularly review and
remain informed about the recent financial and operating experience of the
Company. Based on this experience and review, the Compensation Committee
establishes compensation that it believes to be appropriate for each officer.
Substantially all of the executive officers' compensation is paid as salary,
although from time to time the Compensation Committee has awarded substantial
bonuses upon completion of significant acquisitions or other transactions that
provide material benefits to the Company.
Since December 31, 1996, the Company is a party to an agreement with HSC
pursuant to which HSC provides international consulting and advisory services to
the Company and its affiliates for an annual fee of $825,000. The Compensation
Committee also awarded options to certain of its executive officers in 1997,
including Mr. Gumbiner.
The Company also entered into a financial consulting agreement with HPI, an
affiliate of HEP, dated as of December 31, 1996, which provides that the Company
or its agent shall provide consulting services to HPI for compensation of
$550,000 per year. The Compensation Committee determined that these services
would be most appropriately provided by HSC acting as the Company's agent,
through the services of Mr. Gumbiner and Mr. Troup, and that as consideration
for these services the Company would pay to HSC the fee to which the Company is
entitled under the agreement.
HCRE has contracted with Hallwood Realty to manage the properties
controlled by Hallwood Realty. Mr. Guzzetti is the President and is primarily
responsible for the operations of HCRE. HCRE's Executive Incentive Plan
authorizes HCRE to pay annual cash bonuses in an amount up to 10% of HCRE's net
operating income for the prior year. The actual amount to be paid and the
allocation of the total amount to individual employees is recommended by the
Chief Executive Officer of HCRE, Mr. Gumbiner, and approved by the Board of
Directors of HCRE, which consists of Messrs. Gumbiner, Troup and Guzzetti. Any
amount to be paid to an executive officer of the Company is subject to the
approval of the Company's Compensation Committee. Pursuant to the Executive
Incentive Plan, Mr. Gumbiner recommended that a total bonus of $403,039 (10%) of
HCRE's net operating income, as defined, for 1997) be paid to three employees of
HCRE
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and to HSC, including $15,000 to Mr. Guzzetti and $322,539 to HSC. The total
amount of the awards under the Executive Incentive Plan was determined by Mr.
Gumbiner based on his determination that the amount was reasonable in light of
HCRE's net operating income and was allocated to the participants based on Mr.
Gumbiner's judgement of the overall contribution of each participant to HCRE and
the compensation the participant otherwise receives. The Board of Directors of
HCRE and the Company approved the bonuses as recommended by Mr. Gumbiner.
1997 Compensation Committee Members (January 1997 to November 1997):
Charles A. Crocco, Jr.
Robert L. Lynch
1997 Members of the Board of Directors (after November 1997)
Charles A. Crocco, Jr. J. Thomas Talbot
Anthony J. Gumbiner Brian M. Troup
HALLWOOD REALTY COMPENSATION
Compensation of the executive officers of Hallwood Realty is determined by
the entire Board of Directors of Hallwood Realty in consultation with Mr.
Guzzetti, the President of Hallwood Realty. The members of the Compensation
Committee, through their business experience, are generally aware of prevailing
compensation practices and regularly review and remain informed about the recent
financial and operating experience of Hallwood Realty and HRP. With this
experience and review, the Board bases its determination of specific amounts to
be paid to individual executive officers primarily on Mr. Guzzetti's and the
Board's assessments of the individual performance of each officer. Substantially
all the compensation paid by Hallwood Realty to its executive officers consists
of salary, although the Board of Directors may determine to pay bonuses from
time to time based on the Board's determination that Hallwood Realty or HRP have
experienced favorable operating results or completed transactions that benefit
Hallwood Realty or HRP. For 1997, Mr. Guzzetti and the Board of Directors
determined that no change was required in the salaries of the executive officers
from the prior year other than the salary of Mr. Jeffrey Gent, Chief Financial
Officer of Hallwood Realty, who received a raise in salary of approximately ten
percent (10%) effective January 1, 1997. In recognition of the benefits provided
to HRP through the efforts of the executive officers during the year, the Board
of Directors determined that it was appropriate to award bonuses to the
executive officers of Hallwood Realty, including a bonus of $15,000 to Mr.
Guzzetti.
1997 Members of the Board of Directors:
Anthony J. Gumbiner William L. Guzzetti
Alan G. Crisp William F. Forsyth
Brian M. Troup
HEP COMPENSATION
General. HEP has no employees. All management is provided by employees of
HPI pursuant to a management agreement. These employers also provide services to
HEP and several other affiliated entities (collectively, the "Energy
Companies"). Accordingly, the company does not directly pay any compensation but
reimburses HPI for its costs and expenses. Individual compensation is based on
the individual's responsibilities and performance relating to all of the Energy
Companies. Salaries are allocated among the Energy Companies based on a
procedure that takes into account both the amount of time spent on management
and the number of properties owned by each entity. The cash bonus pool is
allocated among the Energy Companies based upon those factors and the entity's
performance relative to all of the Energy Companies. Awards under the long-term
incentive plan (the "Incentive Plan") are allocated based upon the ownership of
the wells included in the plan. Because the compensation paid to HPI employees
is allocated to all of the Energy Companies, it is reviewed and approved by the
Compensation Committee of HEP's general
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partner. The compensation of the Energy Companies' management employees,
including executive officers, is reviewed and approved at least annually.
During 1997, all compensation decisions were made by the Board of Directors
of HEP's general partner, acting as the Compensation Committee. In 1998 the full
Board of Directors of HEP's general partner again acted as the Compensation
Committee in determining cash bonuses paid with respect to 1997 and the salaries
to be paid and other awards made in 1998. In determining 1997 compensation of
key employees, the Energy Companies' compensation levels were compared with
those of comparable companies, as reported by compensation consultants and other
industry surveys. The comparable companies consisted of twelve independent oil
and gas companies selected by consultants to the Energy Companies. For 1997, the
compensation of the Energy Companies' management employees consisted of three
primary components: salary and annual bonus, cash bonus and long-term incentive
plan awards.
Salary. All non-hourly employees' salaries and annual bonuses are
determined annually based on the individual employee's level of responsibility
and comparisons to similar positions in comparable companies. Salaries of
officers and other professional employees are generally set at approximately 69%
to 90% of the average base salaries paid by those comparable companies. When an
employee's position is not standard and cannot be compared to similar positions
in comparable companies, compensation is determined in a discretionary process,
taking into consideration the components and overall responsibility of the
employee's position.
Cash Bonus. The Board determined to award certain management employees,
including executive officers, cash bonuses based on an assessment of a number of
quantitative and qualitative factors. The primary quantitative factors are
performance in reserve replacement, considering overall reserves found and
effectiveness of capital expenditures, in comparison to the historical
performance of independent oil and gas companies as a group, the production of
existing reserves in comparison to budget and the prior year and general and
administrative expenses and operating costs in comparison to budget. Qualitative
factors include judgments regarding the effectiveness of management and
administration. Depending on the Energy Companies' success in these areas, total
salaries and cash bonuses paid to management employees may range from 69% of the
compensation paid to similarly situated employees in comparable companies if the
Energy Companies perform poorly to as high as 500% of the compensation paid by
comparable companies if the Energy Companies perform very well. Based on
comparisons of the Energy Companies' performance with the historical performance
of other independent oil and gas companies as a group as reported by generally
published industry statistics, the Board of HEP's general partner determined
that the Energy Companies had a slightly better than average year in the overall
reserves found and a slightly less than average year in the effectiveness of
capital expenditures. The Board of Directors also concluded that the
effectiveness of management and administration and control of general and
administrative expenses deserved recognition. Therefore, the cash bonuses paid
to management employees as a group were set at levels that would result in their
total annual compensation being less than that paid by comparable companies. The
aggregate cash bonuses are allocated among the key and professional employees
based on the recommendations of senior management and a determination of the
employees' relative contributions to the Energy Companies during the year.
The Long-Term Incentive Plan. The Energy Companies' Incentive Plan is
intended to provide incentive and motivation to the Energy Companies' key
employees, including the executive officers and consultants, to increase the oil
and gas reserves of the Energy Companies and to enhance the Energy Companies'
ability to attract, motivate and retain key employees upon whom, in large
measure, the success of the Energy Companies depends. Under the Incentive Plan,
the Board annually determines the portion of the Energy Companies' collective
interests in the cash flow from certain international projects and wells
drilled, recompleted or enhanced during that year (the "Plan Year"), which will
be allocated to participants in the plan. The portion allocated to participants
in the plan is referred to as the Plan Cash Flow. The Board of Directors then
determines which key employees may participate in the plan for the Plan Year and
allocates the Plan Cash Flow among the participants. Awards under the plan do
not represent any actual ownership interest in the wells. Awards are made in the
Board's discretion.
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Each award under the plan represents the right to receive for five years a
specified share of the Plan Cash Flow attributable to certain domestic wells
drilled, recompleted or enhanced during the Plan Year. In the sixth year after
the award, the participant is paid an amount equal to a specified percentage of
the remaining net present value of estimated future production from the wells
and the award is terminated. Cash Flow from international projects, if any,
allocated to the plan is paid to participants for a ten-year period, with no
buy-out for estimated future production. There are no international projects
allocated to the 1997 Plan. Accordingly, the value of awards under the Incentive
Plan depends primarily on the Energy Companies' success in drilling, completing
and achieving production from new wells each year and from certain recompletions
and enhancements of existing wells. The percentage of the Energy Companies' cash
flow from international projects and domestic wells completed in any Plan Year
to be allocated to the Plan Cash Flow each Plan Year, the percentage of the
remaining net present value of estimated future production from domestic wells
for which the participants will receive payment in the sixth year of an award,
and the amount to be awarded to individual participants is determined by the
Board each year, after taking into consideration the recommendation of the
Energy Companies' executive officers.
The awards for the 1997 Plan Year were made in March 1997. For the 1997
Plan Year, the Board determined that the total Plan Cash Flow would be equal to
2.4% of the cash flow of the domestic wells completed during the Plan Year. The
Board also determined that the participants' interests in eligible domestic
wells for the 1997 Plan Year would be purchased in the sixth year at 80% of the
remaining net present value of the wells completed in the Plan Year. The Board
also determined that the total awards would be allocated among key employees
primarily on the basis of their position with the Energy Companies.
Chief Executive Officer. The Energy Companies engaged in certain
transactions with the Company during 1997. In addition, the Energy Companies had
a consulting agreement with the Company effective January 1, 1997, pursuant to
which the Energy Companies pay the Company a $550,000 annual consulting fee. In
1997, the consulting services were provided by HSC, through Mr. Gumbiner and Mr.
Troup, and the Company paid the annual fee it received to HSC.
1997 Compensation Committee Members:
Anthony J. Gumbiner Rex A. Sebastian
Brian M. Troup William L. Guzzetti
Hans-Peter Holinger
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PERFORMANCE GRAPH
The following performance graph compares the 5-year cumulative return of
the Common Stock with that of the Russell 2000 Index and a peer group of
issuers. The issuers included in the peer group are all publicly traded
companies included in Standard Industrial Classification Code 6512 "Operators of
Nonresidential Buildings," with market capitalization of less than $100,000,000
as of December 31, 1997, which consist of HRP, Milestone Properties, Inc. and
Pacific Gateway Properties, Inc.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG THE HALLWOOD GROUP INCORPORATED, A PEER GROUP
AND THE RUSSELL 2000 INDEX
THE
HALLWOOD
MEASUREMENT PERIOD GROUP
(FISCAL YEAR COVERED) INCORPORATED PEER GROUP RUSSELL 2000
7/92 100 100 100
7/93 110 107 124
7/94 59 133 129
7/95 49 140 161
12/95 38 127 171
12/96 77 163 200
12/97 182 290 244
* $100 invested on July 31, 1992 in stock, index or peer group, including
reinvestment of dividends. Year ended July 31, 1992 through 1995, year ended
December 31, 1995, 1996 and 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CONSULTING AND MANAGEMENT AGREEMENTS
Effective December 31, 1996, the Company entered into an agreement with
HSC, a corporation with which Mr. Gumbiner and Mr. Troup are associated,
pursuant to which HSC agreed to provide international consulting and advisory
services to the Company and its affiliates for an annual fee of $825,000 and
reimbursement for out-of-pocket and other reasonable expenses of HSC. The
Consulting Agreement continues until July 31, 1998 and is automatically extended
for successive one year terms unless notice of termination is provided by either
party no less than thirty-one (31) days prior to the expiration of the end of
its term or an extension thereof.
STANWICK HOLDINGS, INC.
The Company shares common offices, facilities and staff with, and certain
executive officers of the Company also served as executive officers or directors
of, Stanwick Holdings, Inc. ("Stanwick"). The Company pays the common general
and administrative expenses of the two companies and charges Stanwick a fee for
its allocable share of such expenses, which totaled $6,000 for the year ended
December 31, 1997.
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HCRE manages a commercial office building for Stanwick and provided property
management, leasing and construction services, for which HCRE was paid $990,000
for the year ended December 31, 1997.
Stanwick is a subsidiary of HHSA. Messrs. Gumbiner and Troup are directors
of HHSA. Under United States securities laws, HSL, with which Messrs. Gumbiner
and Troup are associated, could be considered to share beneficial ownership of
substantially all of the outstanding shares of HHSA.
AUDITORS
Deloitte & Touche, LLP served as the Company's independent auditors for the
fiscal year ended July 31, 1995, the five months ended December 31, 1995 and the
years ended December 31, 1996 and 1997, and have been selected to serve in that
capacity again for the year ended December 31, 1998. A representative of
Deloitte & Touche, LLP will be available at the Annual Meeting to respond to
appropriate questions and will be given an opportunity to make a statement if
desired.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the next
Annual Meeting of Stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by management must notify
management of the Company in such a manner so that such notice is received by
management by January 7, 1999 and in such form as required under the rules and
regulations promulgated by the Securities and Exchange Commission.
OTHER BUSINESS
The Company is not aware of any other business to be presented at the
Annual Meeting. All shares represented by Company proxies will be voted in favor
of the nominees for director set forth herein unless otherwise indicated on the
form of proxy. If any other matters properly come before the meeting, Company
proxy holders will vote thereon according to their best judgment.
By order of the Board of Directors
MELVIN J. MELLE
Secretary
April 10, 1998
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SKU 2070-PS-98
19
THE HALLWOOD GROUP INCORPORATED
P
R 3710 RAWLINS, SUITE 1500
O DALLAS, TEXAS 75219
X
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony J. Gumbiner and Brian M. Troup,
and each of them, as Proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and vote, as designated below, all of
the shares of the common stock of The Hallwood Group Incorporated (the
"Company"), held of record by the undersigned on March 20, 1998, at the Annual
Meeting of Stockholders to be held on May 6, 1998, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy
will be voted FOR the election of the nominees listed and at the discretion of
the Proxies with respect to any other matter that is properly brought before
the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
20
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
PLEASE MARK IN BLUE OR BLACK INK.
1. Election of Directors 2. In their discretion, the Proxies are authorized to vote upon such other
business as properly may come before the meeting.
NOMINEES: Charles A. Crocco, Jr., J. Thomas Talbot
Charles A. Crocco, Jr. FOR WITHHELD FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ]
J. Thomas Talbot FOR WITHHELD
[ ] [ ] COMPLETE, SIGN AND DATE THE PROXY CARD AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.
MARK HERE FOR
ADDRESS CHANGE [ ]
AND NOTE AT LEFT
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign, or if one signs he should attach evidence of his
authority. When signing as attorney, executor, administrator, agent, trustee
or guardian, please give full title as such. If a corporation, please sign
full corporate name by president or other authorized officer. If a
partnership, please sign full partnership name by authorized person.
Signature: ____________________ Date: __________ Signature: ____________________ Date: __________