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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 [ ]
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 Rule 14a-11(c) or Rule 14a-12
The Hallwood Group Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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
Dear Hallwood Group Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend
the Annual Meeting of Stockholders of The Hallwood Group Incorporated ("Hallwood
Group"). The annual meeting will be held on Wednesday, May 5, 1999 at 1:00 p.m.
(Toronto, Ontario, Canada) at The Four Seasons Hotel, 21 Avenue Road, Toronto,
Ontario, Canada.
At the annual meeting we will:
1. Elect one director to hold office for three years; and
2. Transact any other business properly presented at the meeting.
Only stockholders of record at the close of business on Friday, March 19,
1999, are entitled to notice of and to vote at the annual meeting.
April 12, 1999
By order of the Board of Directors
MELVIN J. MELLE
Secretary
YOUR BOARD OF DIRECTORS URGES YOU TO VOTE UPON THE MATTERS PRESENTED. IF
YOU ARE UNABLE TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IT IS IMPORTANT FOR YOU TO
BE REPRESENTED AT THE MEETING. EXECUTING 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 5, 1999
---------------------
This proxy statement and the accompanying proxy are first being mailed on
or about April 12, 1999. The accompanying proxy is solicited by the board of
directors of Hallwood Group.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
1. Q: WHO IS ENTITLED TO VOTE?
A: Stockholders of record at the close of business on Friday, March 19,
1999 (the record date) are entitled to vote at the annual meeting.
2. Q: WHAT MAY I VOTE ON?
A: You may vote on:
(1) The election of one nominee to serve on the board of directors for
three years; and
(2) Any other business properly presented at the meeting.
3. Q: HOW DO I VOTE?
A: Sign and date each proxy card you receive and return it in the prepaid
envelope. If you return your signed proxy card but do not mark the boxes
showing how you wish to vote, your shares will be voted FOR the election
of our nominee. Abstentions, broker non-votes and proxies directing that
the shares are not to be voted will not be counted as a vote in favor of
the nominee.
4. Q: HOW CAN I REVOKE MY PROXY?
A: You have the right to revoke your proxy at any time before the meeting
by:
(1) notifying our corporate secretary;
(2) voting in person; or
(3) returning a later-dated proxy card.
Attending the meeting is not sufficient to revoke your proxy unless you
notify Hallwood Group's secretary in writing prior to the voting of your
proxy.
5. Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSAL?
A: Your board of directors recommends that you vote FOR the nominee for
director.
6. Q: HOW MANY SHARES CAN VOTE AT THE ANNUAL MEETING?
A: As of the record date, there were 1,254,751 shares of common stock
outstanding and entitled to vote at the annual meeting. You are entitled
to one vote for each share of common stock you hold.
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7. Q: WHAT IS A "QUORUM"?
A: A "quorum" is a majority of the outstanding shares. A quorum may be
present at the meeting or represented by proxy. There must be a quorum
for the meeting to be valid. If you submit a properly executed proxy
card, even if you abstain from voting, then you will be considered part
of the quorum.
8. Q: HOW MANY VOTES DO YOU NEED TO ELECT THE NOMINEE?
A: The affirmative vote of the holders of a majority of common stock,
voting in person or represented by proxy at the annual meeting is
necessary to elect the director. The trustees of Alpha Trust, which
holds 36.5% of the common stock, and the Epsilon Trust, which holds
24.3% of the common stock have told us that all of the common stock
beneficially owned by those trusts, or approximately 60.8% of the
outstanding common stock will be voted for the nominee.
SOLICITATION OF PROXIES
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 Hallwood Group. Hallwood Group 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 those banks and brokers for the reasonable out-of-pocket expenses of
the solicitation. The original solicitation of proxies by mail may be
supplemented by telephone, telegram and personal solicitation by officers and
other regular employees of Hallwood Group and its subsidiaries, but no
additional compensation will be paid to such individuals on account of such
activities. In addition, Hallwood Group 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. We estimate that
the total costs of the proxy solicitation will be approximately $4,000.
ELECTION OF DIRECTOR
Hallwood Group's board of directors (the "Board") is divided into three
classes serving staggered three-year terms. At the annual meeting, you will
elect one person to the Board. The three remaining directors will continue in
office for the terms indicated below.
The individual named on the enclosed proxy card intends to vote for the
election of the nominee listed below, unless you direct him to withhold your
vote. The nominee has indicated that he is able and willing to serve as
director. However, if for some reason the nominee is unable to stand for
election, the individual named as proxy may substitute some other person for the
nominee and may vote for that nominee. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE ELECTION OF THE INDIVIDUAL NOMINATED FOR ELECTION AS
A DIRECTOR.
Below are the names and ages of the nominee and of each of the three
directors whose terms of office will continue after the annual meeting, the year
in which each director was first elected as a director of Hallwood Group, their
principal occupations for at least the past five years, and other directorships
they hold.
NOMINEE FOR ELECTION FOR A THREE-YEAR TERM ENDING WITH THE 2002 ANNUAL MEETING
- - Brian M. Troup Mr. Troup, age 52, has served as a director
since 1981 and as President and Chief Operating
Officer of Hallwood Group since April 1986; as a
director of the general partner of Hallwood
Energy Partners, L.P. ("Hallwood Energy") since
1984. Since 1990, he has served as a director of
Hallwood Realty, LLC ("Hallwood Realty"), and
its predecessor entity, Hallwood Realty
Corporation, which is a wholly-owned subsidiary
of Hallwood Group and serves as the general
partner of Hallwood Realty Partners, L.P.
("Hallwood Realty Partners"). He has served as a
director of Hallwood Consolidated Resources
Corporation ("Hallwood Consolidated Resources")
since
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1992. He has served as a director of Hallwood
Holdings, S.A. ("HHSA") since March 1984. He is
an associate of the Institute of Bankers in
Scotland and a member of the Society of
Investment Analysts in the United Kingdom.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
- - Charles A. Crocco, Jr. Mr. Crocco, age 60, has served as a director
since 1981. He was a shareholder in, and then Of
Counsel to, Crocco & De Maio, P.C., attorneys at
law, and its predecessors, for more than five
years. As of January 1, 1999, Crocco & De Maio
combined its practice with Jackson & Nash, LLP
where Mr. Crocco is now Of Counsel. He also has
served as a director of First Banks America,
Inc., a bank holding company, since April 1988.
- - J. Thomas Talbot Mr. Talbot, age 63, has served as a director
since 1981 and is Chairman of Hallwood Group'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
California Coastal Communities, Inc. (formerly
Koll Real Estate Group) since August 1993.
DIRECTOR CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
- - Anthony J. Gumbiner Mr. Gumbiner, age 54, has served as a director
and Chairman of the Board since 1981 and Chief
Executive Officer of Hallwood Group since 1984.
He has also served as Chairman of the Board of
Directors and Chief Executive Officer of the
general partner of Hallwood Energy 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 Hallwood Consolidated Resources
since 1992. Mr. Gumbiner is also a solicitor of
the Supreme Court of Judicature of England.
Except as indicated above, neither the nominee nor the continuing directors
hold a directorship in any company with a class of securities registered under
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 nominee, the directors and the
executive officers.
COMMITTEES AND MEETINGS OF THE BOARD
Messrs. Talbot (Chairman) and Crocco served as members of Hallwood Group's
Audit Committee during the year ended December 31, 1998. The Audit Committee met
two times during this period and was charged with the responsibility of
reviewing the annual audit report and Hallwood Group's accounting
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practices and procedures, and recommending to the Board the firm of independent
public accountants to be engaged for the following year.
The Board does not have a standing nominating committee or compensation
committee.
During the year ended December 31, 1998, the Board held six meetings. Each
director attended at least 75% of (1) the total number of meetings held by the
Board and (2) the total number of meetings held by all committees of the Board
on which he served.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial ownership
of shares of Hallwood Group's common stock (1) for any person or "group" (as
that term is used in Section 13(d)(3) of the Exchange Act) who, or which
Hallwood Group knows, owns beneficially more than 5% of the outstanding shares
of common stock as of the close of business on the record date, (2) for each
director and the nominee for director and (3) 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..................................... 89,600(4) 7.1%
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%
- ---------------
* 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 the Alpha 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 the Epsilon Trust.
(4) Based upon the Schedule 13G filed by Heartland Advisors, Inc. on January
21, 1999. The shares of common stock are held in investment advisory
accounts of Heartland Advisors, Inc. Consequently, 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 common stock. No individual investment
account is known to have an interest relating to more than 5% of the common
stock of Hallwood Group.
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(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 Class A units and 17,294 Class C units of Hallwood Energy,
currently exercisable options to purchase 75,500 shares of Hallwood
Consolidated Resources, and currently exercisable options to purchase
25,800 units of Hallwood Realty Partners.
(7) Mr. Guzzetti owns 100 units of Hallwood Energy and 100 units of Hallwood
Realty Partners, currently exercisable options to purchase 63,750 Class A
units and 8,294 Class C Units of Hallwood Energy, currently exercisable
options to purchase 39,750 shares of Hallwood Consolidated Resources, and
currently exercisable options to purchase 15,000 units of Hallwood Realty
Partners.
(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
Class A units and 11,294 Class C units of Hallwood Energy, currently
exercisable options to purchase 53,000 shares of Hallwood Consolidated
Resources, and currently exercisable options to purchase 17,200 units of
Hallwood Realty Partners.
EXECUTIVE COMPENSATION
The total compensation paid for each of the years ended December 31, 1998,
December 31, 1997 and December 31, 1996 to the Chief Executive Officer, and the
other executive officers who received cash compensation in excess of $100,000
for 1998 (collectively, the "Named Executive Officers"), is set forth in the
following Summary Compensation Table.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
--------------------
ANNUAL COMPENSATION SECURITIES
---------------------------------- OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL CALENDAR COMPENSATION OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(5) SARS(#) ($) ($)(8)
------------------ -------- --------- -------- ------------ ---------- ------- ------------
Anthony J. Gumbiner... 1998 0(2) 0 0 (6) (7) 6,200
Chairman and Chief 1997 0(2) 0 0 (6) (7) 6,200
Executive Officer 1996 625,000(1)(2) 0 0 (6) 0 6,200
Brian M. Troup........ 1998 0(2) 0 0 (6) (7) 3,800
President and Chief 1997 0(2) 0 0 (6) (7) 27,633(9)
Operating Officer 1996 100,000(2) 0 0 (6) 0 74,470(9)
William L. Guzzetti... 1998 413,262(3) 182,800(4) 0 0 30,523 4,800
Executive Vice 1997 412,745(3) 158,870(4) 0 0 42,854 4,750
President 1996 412,745(3) 150,000(4) 0 0 33,170 4,500
Melvin J. Melle....... 1998 208,333 0 2,940 0 0 13,893
Vice President,
Chief 1997 208,333 0 2,940 4,500 0 13,936
Financial Officer 1996 208,333 0 2,940 0 0 9,025
and Secretary
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(1) Consists of $375,000 paid by Hallwood Group and $250,000 paid by Hallwood
Petroleum, Inc. ("HPI").
(2) In addition to the compensation paid to Messrs. Gumbiner and Troup, Hallwood
Group paid HSC Financial Corporation ("HSC Financial"), an entity with which
Messrs. Gumbiner and Troup are associated, consulting fees of $825,000 each
year for 1998 and 1997 and $350,000 for 1996, primarily in connection with
HSC Financial's activities on behalf of Hallwood Group's subsidiaries.
Hallwood Group also received from Hallwood Group's energy entities
consulting fees of $550,000 for 1998 and 1997 and $300,000 for 1996, which
Hallwood Group paid to HSC Financial to provide the associated consulting
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services to Hallwood Group's energy entities. See "Certain Relationships and
Related Transactions." In March 1998, the Board approved bonuses to HSC
Financial in the amount of $500,000 from Hallwood Group and $322,539 from
its Hallwood Commercial Real Estate, Inc. ("HCRE") subsidiary, both of which
were accrued and payable as of December 31, 1997, and were paid during 1998.
In March 1997, Hallwood Group paid HSC Financial a bonus of $100,000 and
HCRE paid a bonus of $139,000 with respect to its activities on behalf of
Hallwood Group outside of the United States. In addition, in 1997 Hallwood
Group received from ShowBiz Pizza Time, Inc. ("ShowBiz"), a consulting fee
of $31,250, which Hallwood Group paid to HSC Financial to provide associated
consulting services to ShowBiz. Hallwood Group owned 13% of the common stock
of ShowBiz until March 1997.
(3) Consists of $204,811 paid by Hallwood Energy and affiliates for 1998 and
$204,294 each of 1997 and 1996, and $208,333 paid by Hallwood Realty for
each of 1998, 1997, and 1996.
(4) Consists of $162,800 paid by Hallwood Energy and affiliates and $20,000 by
Hallwood Realty for 1998; $143,870 paid by Hallwood Energy and affiliates,
$7,500 by Hallwood Realty and $7,500 by HCRE for 1997; $131,500 paid by
Hallwood Energy and affiliates, $9,250 by Hallwood Realty and $9,250 by HCRE
for 1996.
(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 calendar years ended 1998,
1997, and 1996. "HWG" refers to Hallwood Group, "HRP" to Hallwood Realty
Partners, "HEP" to Hallwood Energy and "HCRC" to Hallwood Consolidated
Resources.
YEAR SECURITIES UNDERLYING
NAME COMPANY GRANTED OPTIONS/SARS (#)
- ---- ------- ------- ---------------------
Anthony J. Gumbiner...................... HWG 1997 27,900
HWG 1996 27,900
HEP 1998 34,588
HCRC 1997 47,700
Brian M. Troup........................... HWG 1997 18,600
HWG 1996 18,600
HEP 1998 22,588
HCRC 1997 31,800
William L. Guzzetti...................... HEP 1998 16,588
HCRC 1997 23,850
(7) Pursuant to the Hallwood Petroleum Long-Term Incentive Plan ("LTIP"),
payouts were made to HSC Financial in the amount of $67,977 for 1998,
$54,750 for 1997 and, $9,943 for 1996.
(8) Consists of the following items of compensation:
COMPANY OR SUBSIDIARY
CONTRIBUTIONS TO TAX
FAVORED SAVINGS PLANS OR
IN LIEU THEREOF PAYMENT
UNDER THE HALLWOOD PREMIUM PAYMENTS FOR
SPECIAL BONUS AGREEMENT TERM LIFE INSURANCE
($) ($)
------------------------ ---------------------
NAME 1998 1997 1996 1998 1997 1996
- ---- ------ ------ ------ ----- ----- -----
Anthony J. Gumbiner............. 0 0 0 6,200 6,200 6,200
Brian M. Troup.................. 0 0 0 3,800 3,800 3,800
William L. Guzzetti............. 4,800 4,750 4,500 0 0 0
Melvin J. Melle................. 8,213 8,256 3,345 5,680 5,680 5,680
(9) The Board approved reimbursement to Mr. Troup of medical expenses not
covered by Hallwood Group's group medical insurance contract in the amount
of $23,832 in 1997 and $70,670 in 1996, which is included in "All Other
Compensation."
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OPTIONS/SAR GRANTS IN LAST CALENDAR YEAR
The following table sets forth the options to purchase Class C units of
Hallwood Energy granted to the following Named Executive Officers during 1998.
No options granted to the Named Executive Officers were exercised in 1998.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS UNIT PRICE
-------------------------- APPRECIATION FOR
NUMBER OF % OF TOTAL OPTION TERM($) (2)
SECURITIES OPTIONS/SARS EXERCISE OR -----------------------
UNDERLYING GRANTED TO BASE PRICE 5% 10%
OPTIONS/ SARS EMPLOYEES IN PER SHARE EXPIRATION $16.29 $25.94
NAME GRANTED (#) (1) FISCAL YEAR ($) DATE UNIT PRICE UNIT PRICE
- ---- --------------- ------------ ----------- ---------- ---------- ----------
Anthony J. Gumbiner.... 34,588 29 10.00 05/05/08 217,522 551,244
Brian M. Troup......... 22,588 19 10.00 05/05/08 142,078 360,052
William L. Guzzetti.... 16,588 14 10.00 05/05/08 104,321 264,370
- ---------------
(1) Options have a ten-year term and vest cumulatively at the rate of 1/2 on the
grant date and 1/2 on the first anniversary of the grant date. All options
vest immediately in the event of certain changes in control of Hallwood
Energy.
(2) Securities and Exchange Commission Rules require calculation of potential
realizable value assuming that the market price of the Class C units
appreciates in value at 5% and 10% annualized rates. At a 5% annualized rate
of appreciation, the Class C units price would be $16.29 at the end of ten
years. At a 10% annualized rate of appreciation, the Class C unit price
would be $25.94 at the end of ten years. No gain to an executive officer is
possible without an appreciation in Class C unit value, which will benefit
all holders of Class C units. The actual value an executive officer may
receive depends on market prices for the Class C units, and there can be no
assurance that the amounts reflected will actually be realized.
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AGGREGATED OPTION/SAR EXERCISES
AND OPTION/SAR VALUES AT DECEMBER 31, 1998
The following table discloses for each of the Named Executive Officers who
have been granted options to purchase securities of Hallwood Group or its
affiliates, the number of options held by each of the Named Executive Officers
and the potential realizable values of their options at December 31, 1998. None
of the Named Executive Officers exercised any options during the year ended
December 31, 1998, and Hallwood Group has not granted SARs.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES DECEMBER 31, 1998 (#) DECEMBER 31, 1998 ($)
ACQUIRED ---------------------- ---------------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME ENTITY EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------ ------------ ------------ ---------------------- ---------------------
Anthony J. HWG 55,800 / 0 202,275 / 0
Gumbiner...........
HRP 25,800 / 0 1,228,725 / 0
HEP 144,794 / 17,294 0 / 0
HCRC 4,000 33,280 75,500 / 15,900 189,221 / 0
Brian M. Troup....... HWG 37,200 / 0 134,850 / 0
HRP 17,200 / 0 819,150 / 0
HEP 96,294 / 11,294 0 / 0
HCRC 53,000 / 10,600 137,694 / 0
William L. HRP 15,000 / 0 714,375 / 0
Guzzetti...........
HEP 72,044 / 8,294 0 / 0
HCRC 39,750 / 7,950 103,271 / 0
Melvin J. Melle...... HWG 6,000 / 0 11,250 / 0
LONG TERM INCENTIVE PLANS -- AWARDS IN YEAR ENDED DECEMBER 31, 1998
The following table discloses each of the Named Executive Officers who
received long-term incentive plan awards during the year ended December 31, 1998
and the estimated future payouts of the awards.
PERFORMANCE OR ESTIMATED FUTURE
NUMBER OF OTHER PERIOD PAYOUTS UNDER NON-STOCK
NAME UNITS (#) UNTIL PAYOUT PRICE-BASED PLANS ($)(1)
- ---- --------- -------------- ------------------------
Anthony J. Gumbiner(2)................. -- -- --
Brian M. Troup(2)...................... -- -- --
William L. Guzzetti.................... 0.0727 2003 18,176
- ---------------
(1) This amount represents an award under the HPI 1998 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 Financial with respect to .3818
units, having a payout period ending in 2003 and an estimated future payout
of $95,453.
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COMPENSATION OF DIRECTORS
For the year ended December 31, 1998, Messrs. Crocco and Talbot received
director fees of $27,500 and are entitled to receive $500 for each day spent on
business of Hallwood Group, other than at Board meetings. Each director is also
reimbursed for expenses reasonably incurred in connection with the performance
of his duties. Additional information regarding consulting agreements with or
services provided by Messrs. Gumbiner and Troup, through HSC Financial, is
included in "Certain Relationships and Related Transactions" and "Compensation
Committee Interlocks and Insider Participation," below.
EMPLOYMENT AGREEMENT
During the year ended December 31, 1998, Hallwood Group had an employment
agreement with Mr. Melle. The 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. In addition, the employment agreement provides that
Hallwood Group will maintain $500,000 of life insurance benefits on behalf of
Mr. Melle and, for the year ended December 31, 1998, Hallwood Group paid
premiums in the amount of $5,680 for this life insurance. The employment
agreement continued under the same terms and conditions until December 31, 1998,
at which time it was automatically extended for one year and will be
automatically extended annually thereafter unless terminated by either party.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Since November 1997 the Board as a whole has performed the functions of the
Compensation Committee. References to Hallwood Group's Compensation Committee in
this proxy statement refer to the Board, acting in its capacity as the
Compensation Committee.
Messrs. Gumbiner, Troup and Guzzetti served on the Boards of Directors of
Hallwood Realty, Hallwood Consolidated Resources and the general partner of
Hallwood Energy. 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 Hallwood Realty Partners, Hallwood Realty earns an
asset management fee and certain related fees from Hallwood Realty Partners,
which amounted to $495,000 for the year ended December 31, 1998. In addition,
Hallwood Realty Partners reimbursed Hallwood Realty for $2,316,000 of costs
incurred by Hallwood Realty on behalf of Hallwood Realty Partners in 1998. As
property manager for Hallwood Realty Partners, Hallwood Group's HCRE subsidiary
received management fees, leasing commissions and certain other fees from
Hallwood Realty Partners and related parties of $3,881,000 during the year ended
December 31, 1998.
Hallwood Energy and its affiliates reimbursed Hallwood Group for $317,000
of costs incurred by Hallwood Group on behalf of Hallwood Energy and its
affiliates and Hallwood Consolidated Resources reimbursed Hallwood Group for
$246,000 of costs incurred by Hallwood Group on behalf of Hallwood Consolidated
Resources during the year ended December 31, 1998.
Hallwood Group entered into a financial consulting agreement with HPI,
dated as of December 31, 1996, which provides that Hallwood Group or its agent
will provide consulting services to HPI for compensation of $550,000 per year.
The 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 former Compensation Committee had determined that these
services would be most appropriately provided by HSC Financial, acting as
Hallwood Group's agent, through the services of Messrs. Gumbiner and Troup, and
that as consideration for these services, Hallwood Group would pay to HSC
Financial the fee to which Hallwood Group is entitled under the agreement.
Since December 31, 1996, Hallwood Group has been a party to an agreement
with HSC Financial pursuant to which HSC Financial provides international
consulting and advisory services to Hallwood Group
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and its affiliates for an annual fee of $825,000. According to this agreement,
Hallwood Group reimburses HSC Financial for reasonable and necessary expenses in
providing office space and administrative services used by Mr. Gumbiner. For the
year ended December 31, 1998, Hallwood Group reimbursed HSC Financial in the
amount of $325,000. Of the amounts paid in 1998, $65,000 was paid by Hallwood
Group, $130,000 was paid by the general partner of Hallwood Energy and its
affiliates, and $130,000 was paid by Hallwood Realty.
During the year ended December 31, 1998, Hallwood Group retained Crocco &
DeMaio, P.C., attorneys at law, of which Mr. Crocco was a partner, as special
counsel to Hallwood Group on certain legal matters for which $30,105 was paid
(excluding expense reimbursements). In addition, in 1998, Hallwood Consolidated
Resources paid Mr. Crocco $3,226 as special counsel to Hallwood Consolidated
Resources on certain legal matters.
COMPENSATION COMMITTEE
REPORTS ON EXECUTIVE COMPENSATION
GENERAL
Hallwood Group is a diversified holding company with several subsidiaries
and affiliated companies. Of the Named Executive Officers, Messrs. Gumbiner and
Troup are involved in the activities of all of the subsidiaries and affiliated
companies, but for 1998 received no cash compensation directly from Hallwood
Group or any of the entities it controls. Mr. Melle is involved in the
activities of Hallwood Group and of certain subsidiaries and affiliated
companies, but for 1998 received compensation only from Hallwood Group.
Accordingly, the compensation of Mr. Melle is determined solely by Hallwood
Group's Compensation Committee. Mr. Guzzetti is involved in the activities of
Hallwood Realty, HCRE, Hallwood Energy and Hallwood Consolidated Resources and
their subsidiaries and controlled entities. 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 is determined by Hallwood Group's Compensation Committee
and Mr. Guzzetti's compensation with respect to his services to Hallwood Energy,
Hallwood Consolidated Resources and the related energy companies is determined
by the Boards of Directors of Hallwood Energy's general partner and Hallwood
Consolidated Resources.
COMPENSATION BY THE COMPANY
Hallwood Group's Board, acting in its capacity as the Compensation
Committee, annually determines the compensation of Hallwood Group's executive
officers after discussions with each officer and bases the amount of
compensation on Hallwood Group's Compensation Committee's determination of the
reasonable compensation for that officer. The members of Hallwood Group's
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 Group. Based on
this experience and review, Hallwood Group's 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 Hallwood Group's Compensation Committee has awarded substantial
bonuses upon completion of significant acquisitions or other transactions that
provide material benefits to Hallwood Group.
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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. No bonuses were awarded pursuant to the
Executive Incentive Plan for 1998. The actual amount to be paid and the
allocation of the total amount to individual employees is recommended by Mr.
Gumbiner, the Chief Executive Officer of HCRE, and is 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 Hallwood Group is subject to the
approval of the Board.
1998 Members of the Board
Charles A. Crocco, Jr.
Anthony J. Gumbiner
J. Thomas Talbot
Brian M. Troup
COMPENSATION BY HALLWOOD REALTY
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 Hallwood Realty's
Board of Directors, 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 Hallwood
Realty Partners. With this experience and review, Hallwood Realty's Board of
Directors bases its determination of specific amounts to be paid to individual
executive officers primarily on Mr. Guzzetti's and the Hallwood Realty's Board
of Directors' assessments of the individual performance of each officer.
Substantially all the compensation paid by Hallwood Realty to its executive
officers consists of salary, although Hallwood Realty's Board of Directors may
determine to pay bonuses from time to time based on their determination that
Hallwood Realty or Hallwood Realty Partners have experienced favorable operating
results or completed transactions that benefit Hallwood Realty or Hallwood
Realty Partners. For 1998, Mr. Guzzetti and Hallwood Realty's Board of Directors
determined that no change was required in the salaries of the executive officers
from the prior year. In recognition of the benefits provided to Hallwood Realty
Partners through the efforts of the executive officers during the year, Hallwood
Realty's Board of Directors determined that it was appropriate to award bonuses
to the executive officers of Hallwood Realty, including a bonus of $20,000 to
Mr. Guzzetti.
1998 Members of the Hallwood Realty Board of Directors:
Anthony J. Gumbiner William L. Guzzetti
Alan G. Crisp William F. Forsyth
Brian M. Troup
COMPENSATION BY HALLWOOD ENERGY
General. The oil and gas activities of the Company are conducted by
Hallwood Energy, Hallwood Consolidated Resources and the entities they control
(collectively, the "Energy Companies"). Management for all the Energy Companies
is provided by employees of HPI, a subsidiary of Hallwood Energy, which provides
services to all of the Energy Companies. Accordingly, the various Energy
Companies do not directly pay any compensation but reimburse 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 each entity's performance relative to all of the
Energy Companies. Awards under the long-term incentive plans 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 both the Board of Directors of the general partner (the
"General Partner") of Hallwood
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Energy and Hallwood Consolidated Resources' Board of Directors. The compensation
of the Energy Companies' management employees, other than executive officers, is
reviewed and approved at least annually. Compensation for executive officers is
reviewed periodically, typically every three to four years.
During 1998, salaries were reviewed and awards under the long-term
incentive plan were made by the full Board of Directors of both the General
Partner and Hallwood Consolidated Resources, in each case acting as the
Compensation Committee. In February of 1999, the Executive Committees of both
the General Partner and Hallwood Consolidated Resources determined the cash
bonuses to be paid with respect to 1998, and these bonuses were ratified by the
full Board of Directors of the General Partner and Hallwood Consolidated
Resources in March of 1999. In determining the compensation of key employees,
the Energy Companies' use industry surveys to determine the total compensation
paid by comparable companies to comparable key employees. The total compensation
data is used to determine the amount of bonus that is paid based on the Board's
characterization of the Energy Companies' performance for the year. For 1998,
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 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 64% to 90%
of the average 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 Boards of Directors determined to award certain non-hourly
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 resources 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 64% 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 Executive Committees
and the Boards of Directors determined that the Energy Companies had an average
year in the overall reserves found and a less than average year in the
effectiveness of capital expenditures. The Executive Committees and the Boards
of Directors also concluded that the impact of certain transactions during the
year and the success of management in implementing various administrative and
financial objectives 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 somewhat 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' long-term 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 long-term incentive plan, the Boards of Directors annually
determine the portion of the Energy Companies' collective interests in the cash
flow from certain domestic wells drilled, recompleted or enhanced during that
year (the "Plan Year"), which will be allocated to participants in the plan. The
portion allocated
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to participants in the plan is referred to as the "Plan Cash Flow." The Boards
of Directors then determine 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 Boards of Directors' discretion.
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 domestic
wells and the award is terminated. Plan 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 1998 Plan. Accordingly, the value of awards under the
long-term 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 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 Boards of Directors each year, after taking into consideration
the recommendation of the Energy Companies' executive officers.
The awards for the 1998 Plan Year were made in January 1998. For the 1998
Plan Year, the Boards of Directors determined that the total Plan Cash Flow
would be equal to 2.75% of the cash flow of the domestic wells completed during
the Plan Year. The Boards of Directors also determined that the participants'
interests in eligible domestic wells for the 1998 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 Boards of Directors also determined that the
total awards would be allocated among key employees primarily on the basis of
salary and, to a lesser extent, on the basis of contribution to the Energy
Companies' drilling activity.
Chief Executive Officer. The Energy Companies had a consulting agreement
with Hallwood Group effective December 31, 1996, pursuant to which the Energy
Companies pay Hallwood Group a $550,000 annual consulting fee. In 1998, the
consulting services were provided by HSC Financial, through Messrs. Gumbiner and
Troup, and Hallwood Group paid the annual fee it received to HSC Financial.
1998 Members of the General Partner's Board of Directors:
Anthony J. Gumbiner Rex A. Sebastian
Brian M. Troup William L. Guzzetti
Hans-Peter Holinger
1998 Members of Hallwood Consolidated Resources Board of Directors
Anthony J. Gumbiner Bill M. Van Meter
Brian M. Troup John R. Isaac
Hamilton P. Schrauff Dr. Jerry A. Lubliner
William L. Guzzetti
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PERFORMANCE GRAPH
The following performance graph compares the 5-year cumulative return of
Hallwood Group's 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, 1998, which consist of Hallwood Realty Partners, Milestone
Properties, Inc. and Pacific Gateway Properties, Inc.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG THE HALLWOOD GROUP INCORPORATED,
THE RUSSELL 2000 INDEX AND A PEER GROUP
PERFORMANCE GRAPH
THE
MEASUREMENT PERIOD HALLWOOD
(FISCAL YEAR COVERED) GROUP INC. PEER GROUP RUSSELL 2000
12/93 100 100 100
12/94 37 104 98
12/95 38 107 126
12/96 77 138 147
12/97 182 247 180
12/98 91 314 179
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* $100 invested on December 31, 1993 in stock, index or peer group, including
reinvestment of dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CONSULTING AND MANAGEMENT AGREEMENTS
Effective December 31, 1996, Hallwood Group entered into an agreement with
HSC Financial pursuant to which HSC Financial agreed to provide international
consulting and advisory services to Hallwood Group and its affiliates for an
annual fee of $825,000 and reimbursement for out-of-pocket and other reasonable
expenses of HSC Financial. The consulting agreement continued until July 31,
1998, at which time it was automatically extended for one year and will be
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.
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STANWICK HOLDINGS, INC.
Hallwood Group shares offices, facilities and staff with, and certain
executive officers of Hallwood Group also served as executive officers or
directors of, Stanwick Holdings, Inc. ("Stanwick"). Hallwood Group 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 $25,000
for the year ended December 31, 1998. HCRE managed a commercial office building
for Stanwick and provided property management, leasing and construction
services, which totaled $4,482 for the year ended December 31, 1998. HCRE no
longer provides such services.
Stanwick is a subsidiary of HHSA. Messrs. Gumbiner and Troup are directors
of HHSA. Under United States securities laws, HSC Financial could be considered
to share beneficial ownership of substantially all of the outstanding shares of
HHSA.
AUDITORS
Deloitte & Touche LLP served as Hallwood Group's independent auditors for
the years ended December 31, 1996, 1997 and 1998 and have been selected to serve
in that capacity again for the year ended December 31, 1999. 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.
STOCKHOLDER PROPOSALS
If a stockholder intends to present a proposal for action at the 2000
Annual Meeting and wishes to have such proposal considered for inclusion in
Hallwood Group's proxy materials in reliance on Rule 14a-8 under the Exchange
Act, the proposal must be submitted in writing to the Secretary of Hallwood
Group at 3710 Rawlins, Suite 1500, Dallas, Texas 75219 by December 14, 2000.
Such proposals must also meet the other requirements of the rules of the SEC
relating to stockholder proposals.
Hallwood Group's bylaws establish an advance notice procedure with regard
to certain matters, including stockholder proposals and nominations of
individuals for election to the board of directors. In general, notice of a
stockholder proposal or a director nomination for an annual meeting must be
received by Hallwood Group ninety days or more before the date of the annual
meeting and must contain specified information and conform to certain
requirements, as set forth in the bylaws.
If you wish to submit a proposal at the annual meeting, other than through
inclusion in the proxy statement, you must notify Hallwood Group no later than
February 3, 2000. If you do not notify Hallwood Group of your proposal by that
date, Hallwood Group will exercise its discretionary voting power on that
proposal.
In addition, if you submit a proposal outside of Rule 14a-8 for the 2000
annual meeting, and the proposal fails to comply with the advance notice
procedure prescribed by the bylaws, then Hallwood Group's proxy may confer
discretionary authority on the persons being appointed as proxies on behalf of
management to vote on the proposal.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended requires
Hallwood Group's officers and directors, and persons who own more than 10% of a
registered class of Hallwood Group's securities, to file reports of ownership
and changes of ownership with the SEC and the New York Stock Exchange. Officers,
directors and 10% stockholders of Hallwood Group are required by SEC regulation
to furnish Hallwood Group with copies of all Section 16(a) forms filed by them.
Based solely on review of copies of the forms received, Hallwood Group
believes that, during the last fiscal year, all filing requirements under
Section 16(a) applicable to its officers, directors and 10% stockholders were
timely.
OTHER BUSINESS
Hallwood Group is not aware of any other business to be presented at the
annual meeting. All shares represented by proxies will be voted in favor of the
nominee for director set forth in this proxy statement unless otherwise
indicated on the form of proxy. If any other matters properly come before the
meeting, Hallwood Group's proxy holder will vote thereon according to his best
judgment.
By order of the Board of Directors
/s/ MELVIN J. MELLE
------------------------------------
Melvin J. Melle
Secretary
April 12, 1999
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PROXY
THE HALLWOOD GROUP INCORPORATED
3710 RAWLINS, SUITE 1500
DALLAS, TEXAS 75219
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Anthony J. Gumbiner as Proxy, with the
power to appoint his substitute, and hereby authorizes him to represent and
vote, as designated below, all of the shares of common stock of The Hallwood
Group Incorporated (the "Company"), held of record by the undersigned on March
19, 1999, at the Annual Meeting of Stockholders to be held on May 5, 1999, 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 nominee listed and at the discretion of
the Proxy with respect to any other matter that is properly brought before the
meeting.
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SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
PLEASE USE BLUE OR BLACK INK.
1. Election of Director.
NOMINEE: Brian M. Troup
FOR WITHHELD
[ ] [ ]
2. In his discretion, the Proxy is authorized
to vote upon such other business as may
properly come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
COMPLETE, SIGN AND DATE THE PROXY CARD AND RETURN PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign, or if one signs he/she should attach evidence of
his/her 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 , 1999 Signature: Date , 1999
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