UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
¨ 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
Materials Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
HMG/COURTLAND
PROPERTIES, INC.
______________________________
(Exact
Name of Registrant as Specified in its Charter)
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
(1) Title of each class of securities to
which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which
transaction applies:
________________________________________________________________________________
(3) Per unit 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):
________________________________________________________________________________
(4) Proposed maximum aggregate value of
transaction:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
¨ Fee
paid previously with preliminary materials.
¨ Check
box if any part of the fee is offset as provided by Exchange Act Tule 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
________________________________________________________________________________
(2) Form, Schedule or Registration
Statement No.:
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________________________________________________________________________________
(4) Date Filed:
________________________________________________________________________________
HMG/COURTLAND
PROPERTIES, INC.
1870
South Bayshore Drive
Coconut
Grove, Florida 33133
(305)
854-6803
NOTICE
OF
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD AUGUST 13, 2009
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TO
THE SHAREHOLDERS:
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July
17, 2009
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The
annual meeting of shareholders of HMG/Courtland Properties, Inc. (the "Company")
will be held at 10:30 A.M., on Thursday, August 13, 2009, at the Grove Isle Club
and Resort, 4 Grove Isle Drive, Coconut Grove, Florida for the following
purposes:
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I.
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To
elect a Board of Directors;
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II.
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To
act upon the renewal of the Advisory Agreement between the Company and HMG
Advisory Corp.; and
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III.
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To
transact such other business as may properly come before the
meeting.
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The
record date for determining shareholders entitled to notice of and to vote at
the annual meeting is July 17, 2009.
Enclosed
is a copy of the Company's Annual Report to Shareholders (Form 10-K) for the
fiscal year ended December 31, 2008.
It is
important, whether or not you plan to attend the meeting in person, that you
fill in, sign and date the accompanying proxy and return it promptly in the
postage prepaid envelope which is enclosed for your convenience. The signing and
mailing of the proxy will not affect your right to vote your shares in person if
you attend the meeting and desire to do so.
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By
Order of the Board of Directors
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|
|
|
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/s/
Larry Rothstein |
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Larry
Rothstein
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President
and Secretary
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING
TO BE HELD ON AUGUST 13, 2009.
Copies
of this Proxy Statement, Form of Proxy and our Annual Report to Shareholders are
available at the home page of our website, www.hmgcourtland.com.
PROXY
STATEMENT
OF
HMG/COURTLAND
PROPERTIES, INC.
The
accompanying proxy is solicited by the Board of Directors for use at the annual
meeting of shareholders and is being mailed with this Proxy Statement to all
shareholders on or about July 20, 2009. If a proxy card is properly
signed and is not revoked by the shareholder, the shares of common stock of the
Company (the "Shares") represented thereby will be voted at the meeting in
accordance with the instructions, if any, of the shareholder. If no
instructions are given, they will be voted for the election of directors
nominated by the Board of Directors and for approval of the renewal of the
advisory agreement (the "Advisory Agreement") between the Company and HMG
Advisory Corp. (the "Adviser"). Any shareholder may revoke his proxy
at any time before it is voted by giving written notice of revocation to the
Secretary of the Company.
Holders
of Shares of record at the close of business on July 17, 2009 are entitled to
notice of and to vote at the meeting. On that date, there were 1,021,383 Shares
outstanding. Each Share is entitled to one vote on all business of the
meeting. The holders of a majority of the outstanding Shares, present
in person or represented by proxy, will constitute a quorum at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved. As
of July 17, 2009, Transco Realty Trust ("Transco"), 1870 South Bayshore Drive,
Coconut Grove, Florida 33133, was the beneficial owner of 477,300 Shares, or 47%
of the outstanding Shares, and Emanuel Metz, CIBC Oppenheimer Corp., One World
Financial Center, 200 Liberty Street, New York, New York 10281, was the
beneficial owner of 59,500 Shares, or 6% of the outstanding
Shares. Beneficial ownership is based on sole voting and investment
power.
The
Company has been advised by its officers and nominees for directors, and their
affiliated shareholders, Transco, HMG Advisory Corp and subsidiaries (“HMGA”)
and T.G.I.F. Texas, Inc. ("T.G.I.F.") that they intend to vote for the election
of each of the nominees and for the approval of the Advisory
Agreement. Such shareholders own in the aggregate 596,430 shares, or
58% of the outstanding Shares. As a result, each of the nominees is
expected to be elected as a director and the Advisory Agreement is expected to
be approved. As noted below, certain directors of the Company are
affiliated with principal shareholders of the Company and are principal
shareholders, directors and officers of the Adviser. See "Election of
Directors" below for information concerning holders who may be deemed to own
beneficially more than 5% of the outstanding Shares.
ELECTION
OF DIRECTORS
The
entire Board of Directors will be elected at the annual meeting of shareholders
to serve until the next annual meeting of shareholders and until the election
and qualification of their successors. In the event any nominee
should not continue to be available for election, proxies may be voted for the
election of a substitute nominee or the Board of Directors may elect to reduce
the number of directors. The Board of Directors has no reason to
anticipate that any nominee will not be available for election. All of the
nominees have been elected previously by the shareholders.
An
affirmative vote by the holders of a majority of the Shares
present-in-person-or-by proxy at the Annual Meeting of Shareholders is required
for the election of each director.
Set forth
below is certain information about each current director, each nominee for
director and the Shares held by all directors and executive
officers.
Shares
Held as of July 17, 2009
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Name,
Age, Year First Became a Director or Officer of the
Company
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Principal
Occupation or Employment During the Past Five Years Other than with the
Company and Other Information
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Shares
Owned by the Nominee or Members of His Family1
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Additional
Shares in which the Nominee has, or Participates in, the Voting or
Investment Power2
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Total
Shares and Percent of Class6
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Maurice
Wiener
67-1974
Chairman of the Board of Directors, and Chief Executive
Officer
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Chairman
of the Board and Chief Executive Officer of the Adviser; Executive
Trustee, Transco Realty Trust; Director, T.G.I.F. Texas, Inc.; Chairman of
the Board and Chief Executive Officer of Adviser.
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51,1004
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541,8303
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592,930
53%
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Larry
Rothstein 56-1983 Director, President, Treasurer and
Secretary
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Director,
President, Treasurer and Secretary of Adviser; Trustee and Vice-President
of Transco; Director, President, and Secretary of Adviser; Vice-President
of T.G.I.F. Texas, Inc.
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47,9004
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541,8303
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589,730
52%
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| |
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|
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Walter
G. Arader
90-1977
Director
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President,
Walter Arader and Associates, inc. (financial and management
consultants).
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15,4004
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0
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15,400
1%
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Clinton
Stuntebeck
70-2004
Director
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Partner
Emeritus, Schnader Harrison Segal & Lewis, LLP (2004); Chairman,
Concordia Holdings, Ltd. (investment and business consulting) Senior
Partner, Schnader Harrison Segal & Lewis, LLP.
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5,0004
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0
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5,000
*
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| |
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Harvey
Comita 79-1992 Director
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Business
Consultant; Trustee, Transco Realty Trust.
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10,0004
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477,3005
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487,300
43%
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| |
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All
Directors and Executive Officers as a Group
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156,7004
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541,8303
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698,530
62%
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____________________________
* Less
than one percent
(1) Unless
otherwise indicated, beneficial ownership is based on sole voting and investment
power with respect to the Shares.
(2) Shares
listed in this column represent Shares held by entities with which the directors
or officers are associated. The directors, officers and members of
their families have no ownership rights in the Shares listed in this column. See
note 3 below.
(3) This
number includes the number of Shares held by Transco (477,300 Shares), HMGA
(54,530 shares) and T.G.I.F. Texas, Inc. ("T.G.I.F.") (10,000 shares). Several
of the directors of the Company are directors, trustees, officers or
shareholders of Transco, CGI and T.G.I.F.
(4) This
number includes Shares subject to options granted under the 2000 Stock Option
Plan as follows: Mr. Wiener, 40,500; Mr. Rothstein, 29,900; 5,000 each to Mr.
Arader, Mr. Comita and Mr. Stuntebeck; and 16,700 to two
officers. Reference is made to "Compensation of Directors and
Executive Officers and Other Transactions" for further information about the
2000 Stock Option Plan.
(5) This
number represents the number of Shares held by Transco, of which Mr. Comita is a
trustee.
(6) This
percentage assumes the exercise of all outstanding options.
For
information concerning relationships of certain directors and officers of the
Company to the Adviser, see "Approval of Renewal of the Advisory
Agreement."
As a
result of these relationships, the persons named above may be deemed to share
investment power and voting power of Shares held by each firm with which they
are associated in conjunction with a number of other persons, including in
several cases, persons who are neither directors nor officers of the
Company.
Meetings
of the Board of Directors
The Board
of Directors held four meetings during 2008. During this period all
of the directors of the Company attended at least 75% of the total number of
meetings of the Board and any committee of which they were a
member. The Board of Directors encourages director attendance at the
Annual Meeting of the Shareholders. All of the members of the Board
of Directors attended the 2008 Annual Meeting of the Shareholders.
Committees
of the Board of Directors
The Board
of Directors has an Audit Committee and a Stock Option Committee. The
Company does not have a Compensation Committee. Messrs. Arader and Comita serve
as members of the Audit Committee. The Audit Committee met seven
times during 2008.
Messrs.
Arader and Comita serve as members of the Stock Option Committee. The
committee is authorized to grant options to officers and key employees of the
Company. The Stock Option Committee did not meet during
2008.
Nominating
Committee
The Board
of Directors does not have a standing Nominating Committee due to the size of
the Board; however, the Company's three independent directors review and make
recommendations to the Board regarding the size and composition of the Board,
consider and recruit candidates for director nominees based upon recommendations
from current outside directors, members of management, outside consultants or
search firms, and shareholders; recommends on an annual basis a slate of
director nominees for approval by the Board and the shareholders and reviews our
committee structure and membership. The independent directors are
Messrs. Arader, Comita and Stuntebeck.
All three
independent directors are "independent" directors as defined by the current NYSE
Alternext US LLC Company Guide. The Company does not have a
Nominating Committee charter.
In
evaluating and determining whether to recommend a person as a candidate for
election as a director, the three independent directors' criteria reflects the
requirements of the NYSE Alternext US LLC Company Guide rules with respect to
independence and the following factors: the needs of the Company with respect to
the particular talents and experience of its directors, personal and
professional integrity of the candidate, level of education and/or business
experience, broad-based business acumen, the level of understanding of the
Company's business and the income-producing commercial properties industry,
strategic thinking and a willingness to share ideas, and diversity of
experiences, expertise and background. These directors will use these
and other criteria that they deem appropriate to evaluate potential nominees and
will not evaluate proposed nominees differently depending upon who has made the
recommendation.
The three
independent directors will consider proposed nominees whose names are submitted
to them by shareholders. They have not adopted a formal process for that
consideration because they believe that this informal consideration process will
be adequate. The three independent directors intend to review
periodically whether a more formal policy should be adopted.
Any
shareholder who desires to recommend a nominee for director must submit a
letter, addressed to Secretary, HMG/Courtland Properties, Inc., 1870 South
Bayshore Drive, Coconut Grove, Florida 33133, and which is clearly identified as
a "Director Nominee Recommendation." All recommendation letters must
identify the author as a shareholder and provide a brief summary of the
candidate's qualifications, as well as contact information for both the
candidate and the shareholder. Shareholders who wish to make a
recommendation for a nominee to be elected at the Company's 2010 Annual Meeting
must submit their recommendation by March 4, 2010, to allow for meaningful
consideration and evaluation of the nominees by the three independent
directors.
REPORT
OF THE AUDIT COMMITTEE
The
primary purpose of the Audit Committee is to assist the Board of Directors in
monitoring the integrity of our financial statements, our independent auditor's
qualifications and independence, the performance of our independent auditors,
and our compliance with legal and regulatory requirements. The Audit
Committee was established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Board of Directors has determined that each member of the Audit Committee,
Messrs. Arader and Comita, is (1) an "audit committee financial expert," as that
term is defined in Item 407(d)(5)(i) of Regulation S-K of the Exchange Act, and
(2) "independent" as defined by the NYSE Alternext US LLC Company Guide and
Section 10A(m)(3) of the Exchange Act. The committee operates
pursuant to a charter that was last amended by the Board on June 16,
2003.
Management
is responsible for the preparation, presentation and integrity of the Company's
financial statements, accounting and financial reporting principles and internal
controls and procedures designed to assure compliance with accounting standards
and applicable laws and regulations. The independent auditors for the
Company's 2008 fiscal year, Berenfeld, Spritzer, Schecter & Sheer ("BSSS"),
were responsible for performing an independent audit of the consolidated
financial statements in accordance with generally accepted auditing
standards.
In
performing its oversight role, the Audit Committee has, among other things
covered in its charter, reviewed and discussed the audited financial statements
with management and the independent auditors. The committee has also
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as
currently in effect. The committee has received the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No.1, Independence Discussions with Audit
Committees, as currently in effect. The committee has also
considered whether the provision of non-audit services by the independent
auditors is compatible with maintaining the auditors' independence and has
discussed with the auditors the auditors' independence.
Based on
the reviews, reports and discussions described in this Report, and subject to
the limitations on the role and responsibilities of the committee referred to in
this Report and in the charter, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Annual Report
on Form 10-K for the fiscal year ended December 31, 2008.
The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not necessarily experts in the fields of
accounting or auditing, nor with respect to auditor
independence. Members of the committee rely without independent
verification on the information provided to them and on the representations made
by management and the independent auditors. Accordingly, the Audit
Committee's oversight does not provide an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or appropriate internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations,
efforts and discussions referred to above do not assure that the audit of the
Company's financial statements has been carried out in
accordance
with generally accepted auditing standards, that the financial statements are
presented in accordance with generally accepted accounting principles or that
BSSS is in fact "independent."
|
|
Members
of the Audit Committee:
|
|
|
Walter
G. Arader
|
|
|
Harvey
Comita
|
INDEPENDENT
PUBLIC ACCOUNTANTS
BSSS
serves as our independent accountants. In performing its oversight role, the
Audit Committee reviewed whether to retain BSSS as our independent accounting
firm for the 2009 fiscal year as part of its regular process of recommending an
independent auditor to the Board of Directors. The committee has
recommended to the Board of Directors the selection of BSSS as the Company's
independent auditors for 2009, and the Board of Directors has concurred in its
recommendation. A representative of BSSS is not expected to be
present at the Annual Meeting. The Audit Committee pre-approved all
services rendered to the Company by its independent accountants.
The
aggregate fees billed by the Company's accounting firm for the years ended
December 31, 2008 and December 31, 2007 are as follows:
Fees of
Accountants
|
|
Aggregate Amount Billed
|
Share of Total
|
|
|
December 31, 2008
|
December 31, 2007
|
December 31, 2008
|
December 31, 2007
|
|
Audit
Fees, including review of quarterly financial statements
|
$101,000
|
$103,000
|
82%
|
80%
|
|
|
|
|
|
|
|
Tax
Fees (consists of fees related to tax compliance and
planning)
|
22,000
|
26,000
|
18%
|
20%
|
|
Total
Fees
|
$123,000
|
$129,000
|
100%
|
100%
|
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Executive
officers receive no cash compensation from the Company in their capacity as
executive officers. Executive officers are eligible to receive stock options
pursuant to the 2000 Stock Option Plan.
Compensation
of Directors. The following table summarizes director's
compensation for the year ended December 31, 2008:
|
Director
|
|
Annual
Fee
|
|
|
Board
Meeting Fee
|
|
|
Committee
Meeting
Fee
|
|
|
Total
Compensation
|
|
|
Maurice
Wiener
|
|
$ |
17,000 |
|
|
$ |
2,250 |
|
|
$ |
- |
|
|
$ |
19,500 |
|
|
Larry
Rothstein
|
|
|
17,000 |
|
|
|
2,250 |
|
|
|
5,250 |
|
|
|
24,500 |
|
|
Walter
Arader
|
|
|
12,000 |
|
|
|
1,500 |
|
|
|
4,500 |
|
|
|
18,000 |
|
|
Harvey
Comita
|
|
|
12,000 |
|
|
|
2,250 |
|
|
|
5,250 |
|
|
|
19,500 |
|
|
Clinton
Stuntebeck
|
|
|
12,000 |
|
|
|
2,250 |
|
|
|
5,250 |
|
|
|
19,500 |
|
|
Totals
|
|
$ |
70,000 |
|
|
$ |
10,500 |
|
|
$ |
20,250 |
|
|
$ |
100,750 |
|
Annual
director's fees are paid at the beginning of each quarter and board and
committee meeting fees are paid for each meeting a director
attends. Effective April 1, 2007, the annual fee for directors was
increased from $8,000 per year to $12,000 per year and all meeting fees were
increased from $500 per meeting to $750 per meeting.
Outstanding Equity Awards to
Executive Officers.
The
following table summarizes all outstanding equity awards to the Company's
executive officers as of December 31, 2008. These options are all
exercisable and there are no unearned options outstanding.
|
Executive
Officer
|
Number
of Options
|
Exercise
Price
|
Expiration
Date
|
|
Maurice
Wiener
|
28,500
|
$8.33
per share
|
June
25, 2011
|
|
Maurice
Wiener
|
12,000
|
$12.25
per share
|
June
25, 2011
|
|
Larry
Rothstein
|
24,900
|
$7.57
per share
|
June
25, 2011
|
|
Larry
Rothstein
|
5,000
|
$12.10
per share
|
June
25, 2011
|
Stock
Options. In November 2000, the Company's Board of Directors
authorized the 2000 Stock Option Plan (the "Plan"), which was approved by the
shareholders in June 2001. The Plan, which permits the grant of
qualified and non-qualified options expires in 2010, and is intended to provide
incentives to the directors and employees (the "employees") of the Company, as
well as to enable the Company to obtain and retain the services of such
employees. The Plan is administered by a Stock Option Committee (the
"Committee") appointed by the Board of Directors. The Committee
selects those key officers and employees of the Company to whom options for
shares of common stock of the Company shall be granted. The Committee
determines the purchase price of shares deliverable upon exercise of an option;
such price may not, however, be less than 100% of the fair market value of a
share on the date the option is granted. Payment of the purchase
price may be made in cash, Company stock, or by delivery of a promissory note,
except that the par value of the stock must be paid in cash or Company stock.
Shares purchased by delivery of a note must be pledged to the
Company. Shares subject to an option may be purchased by the optionee
within ten years from the date of the grant of the option. However,
options automatically terminate if the optionee's employment with the Company
terminates other than by reason of death, disability or
retirement. Further, if, within
one year
following exercise of any option, an optionee terminates his employment other
than by reason of death, disability or retirement, the shares acquired upon
exercise of such option must be sold to the Company at a price equal to the
lesser of the purchase price of the shares or their fair market
value.
On June
25, 2001, options were granted to all officers and directors to purchase an
aggregate of 86,000 common shares at no less than 100% of the fair market value
at the date of grant. The average exercise price of the options
granted in 2001 is $7.84 per share. The Company's stock price on the
date of grant was $7.57 per share.
There
were no options granted or exercised in 2008 and 2007.
Section 16(a) Beneficial Ownership
Reporting Compliance. Section 16(a) of the Exchange Act requires the
Company's directors and executive officers to file with the Securities and
Exchange Commission initial reports of beneficial ownership and reports of
change in beneficial ownership of the Company's Shares. Such officers
and directors are required by SEC regulations to furnish to the Company copies
of all Section 16(a) reports that they file. Based solely on a review
of the copies of such forms furnished to the Company, or written representations
that no other reports were required, the Company believes that during 2008, its
officers and directors complied with all applicable Section 16(a) filing
requirements.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
following discussion describes the organizational structure of the Company's
subsidiaries and affiliates.
Transco Realty Trust
("Transco")
Transco
is a 47% shareholder of the Company. Mr. Wiener is the executive
trustee and an officer of Transco and owns approximately 27% of Transco's
stock. Mr. Rothstein serves as a trustee and an officer of
Transco. Mr. Comita serves as a trustee of Transco.
HMG Advisory Corp. (the
"Adviser") and Subsidiaries
The
day-to-day operations of the Company are handled by the Adviser. Reference is
made to "Approval of Advisory Agreement" below for further information about the
duties and remuneration of the Adviser. The Adviser is majority-owned
by Maurice Wiener, its Chairman and CEO.
Courtland Investments, Inc.
("CII")
The
Company holds a 95% non-voting interest and Masscap Investment Company
("Masscap") holds a 5% voting interest in CII. In May 1998, the
Company and Masscap entered into a written agreement in order to confirm and
clarify the terms of their previous continuing arrangement with regard to the
ongoing operations of CII, all of which provide the Company with complete
authority over all decision making relating to the business, operation, and
financing of CII consistent with the Company's status as a real estate
investment trust.
CII and
its wholly-owned subsidiary own 100% of Grove Isle Club, Inc., Grove Isle Yacht
Club Associates, Grove Isle Marina, Inc., CII Spa, LLC, Courtland Bayshore
Rawbar, LLC and it also owns 15% of Grove Isle Associates, Ltd., (the Company
owns the other 85%).
T.G.I.F. Texas, Inc.
(“T.G.I.F.”)
CII owns
approximately 49% of the outstanding shares of T.G.I.F. Mr. Wiener is
a director and Chairman of T.G.I.F. and owns, directly and indirectly,
approximately 18% of the outstanding shares of T.G.I.F. T.G.I.F. also
owns 10,000 shares of HMG.
The
following discussion describes all material transactions, receivables and
payables involving related parties. The Company believes that all of
the transactions described below were on terms as favorable to the Company as
comparable transactions with unaffiliated third parties.
The
Adviser.
As of
December 31, 2008 and 2007, the Adviser owed the Company approximately $288,000
and $317,000, respectively. Amounts due from the Adviser bear
interest at the prime rate plus 1% payable monthly, with principal due on
demand. In December 2007, the Adviser made a principal payment of
$40,000 on amounts due to the Company.
The
Adviser leases its executive offices from CII pursuant to a lease agreement.
This lease agreement is at the going market rate for similar property and calls
for base rent of $48,000 per year payable in equal monthly
installments. Additionally, the Adviser is responsible for all
utilities, maintenance, and security expenses relating to the leased
premises. The lease term is five years expiring in November
2009.
In August
2004, HMG Advisory Bayshore, Inc. ("HMGABS") (a wholly owned subsidiary of the
Adviser) was formed for the purposes of overseeing the Monty's restaurant
operations acquired in August 2004. HMGABS receives a management fee
$25,000 per year from Bayshore Rawbar, LLC. For the years ended
December 31, 2008 and 2007, HMGBS earned approximately $25,000 in such
management fees. HMGABS is owed approximately $108,000 from Bayshore
Rawbar, LLC for such fees as of December 31, 2008.
South Bayshore Associates
("SBA").
SBA is a
joint venture in which Transco and the Company hold interests of 25% and 75%,
respectively. The sole major asset of SBA is a demand note from
Transco, bearing interest at the prime rate, with an outstanding balance of
approximately $300,000 in principal and interest as of December 31, 2008 and
2007.
The
Company also holds a demand note from SBA bearing interest at the prime rate
plus 1% with an outstanding balance as of December 31, 2008 and 2007, of
approximately $1,106,000 and $1,081,000, in principal and accrued interest,
respectively. Interest payments of $15,000 and $24,000 were made in
2008 and 2007, respectively. Accrued and unpaid interest is not added
to the principal. Because the Company consolidates SBA, the note
payable and related interest income is eliminated in consolidation.
CII.
The
Company holds a demand note due from its 95%-owned consolidated subsidiary, CII,
bearing interest at the prime rate plus 1% with an outstanding balance of
$2,563,000 and $3,975,000 as of December 31, 2008 and 2007,
respectively. During 2008 there was $210,000 in advances from the
Company to CII. During 2007 there were no advances from the Company
to CII. Repayments from CII to the Company during 2008 and 2007, were
$1.6 million and $1.2 million, respectively. Accrued and unpaid interest is
capitalized and included in advances. Because CII is a consolidated
subsidiary of the Company, the note payable and related interest is eliminated
in consolidation.
In 1986,
CII acquired from the Company the rights to develop the marina at Grove Isle for
a promissory note of $620,000 payable at an annual rate equal to the prime
rate. The principal is due on demand. Interest payments
are due annually in January. Because the Company consolidates CII,
the note payable and related interest income is eliminated in
consolidation.
In April
2007, Courtland Houston, Inc. (“CHI”) was formed. CHI is 80% owned by
CII and 20% owned by Bernard Lerner, its sole employee. CHI was
formed with a $140,000 investment by CII and engages in commercial leasing
activities in Texas and earns commission revenues. Mr. Bernard Lerner
is a cousin of the Company's Chairman and CEO Mr. Maurice Wiener. For
the years ended December 31, 2008 and 2007, Mr. Lerner was paid a salary of
$85,000. For the years ended December 31, 2008 and 2007, CHI earned
commission revenue of approximately $168,000 and $17,000,
respectively.
T.G.I.F.
As of
December 31, 2008 and 2007, CII owed approximately $3,661,000 to T.G.I.F. All
advances between CII and T.G.I.F. are due on demand and bear interest at the
prime rate plus 1%. All interest due has been paid. As of December
31, 2008 and 2007, T.G.I.F. had amounts due from Mr. Wiener of approximately
$707,000. These amounts are due on demand and bear interest at the
prime rate. All interest due has been paid. Mr. Wiener received
consulting and director's fees from T.G.I.F of approximately $37,000 and $52,000
for the years ended December 31, 2008 and 2007, respectively. Also,
T.G.I.F. owns 10,000 shares of the Company which were purchased in 1996 at the
market value. In December 2008 and 2007, T.G.I.F. declared and paid a
cash dividend of $.08 and $.05 per share, respectively. CII’s portion
of this dividend was approximately $224,000 and $140,000,
respectively.
APPROVAL
OF RENEWAL
OF
THE ADVISORY AGREEMENT
The Advisory
Agreement. At the 2008 Annual Meeting of Shareholders, the
advisory agreement (the "Advisory Agreement") between the Company and HMG
Advisory Corp. (the "Adviser") was renewed for a one-year term expiring on
December 31, 2009. On August 14, 2008, the shareholders approved the
renewal of the Advisory Agreement between the Company and the Adviser for a term
commencing January 1, 2009, and expiring December 31, 2009. An
amendment to the Advisory Agreement in 2008, which was previously approved by
the
Company’s
shareholders, increased the Advisor’s regular compensation to $85,000 per month,
or $1,020,000 per year from the $75,000 per month, or $900,000 per year in
2007.
Under the
terms of the Advisory Agreement, the renewal must be approved by the holders of
a majority of the Shares. If the shareholders approve the Advisory
Agreement, it will be renewed for a one-year term.
The
Adviser is majority owned by Mr. Wiener with the remaining shares owned by
certain officers, including Mr. Rothstein. The officers and directors
of the Adviser are as follows: Maurice Wiener, Chairman of the Board and Chief
Executive officer; Larry Rothstein, President, Treasurer, Secretary and
Director; and Carlos Camarotti, Vice President Finance and Assistant
Secretary.
The
following description of the Advisory Agreement contains a summary of its
material terms.
General
Provisions. The Advisory Agreement is not assignable without
the consent of the unaffiliated directors of the Company and the
Adviser. The Advisory Agreement provides that officers, directors,
employees and agents of the Adviser or of its affiliates may serve as directors,
officers or agents of the Company.
Duties of
Adviser. The Adviser in performing its duties under the
Advisory Agreement is at all times subject to the supervision of the directors
of the Company and has only such authority as the directors delegate to it as
their agent. The Adviser counsels and presents to the Company
investments consistent with the objectives of the Company and performs such
research and investigation as the directors may request in connection with the
policy decisions as to the type and nature of investments to be made by the
Company. Such functions include evaluation of the desirability of
acquisition, retention and disposition of specific Company assets. The Adviser
also is responsible for the day-to-day investment operations of the Company and
conducts relations with mortgage loan brokers, originators and servicers, and
determines whether investments offered to the Company meet the requirements of
the Company. The Adviser provides executive and administrative personnel, office
space and services required in rendering such services to the
Company. To the extent required to perform its duties under the
Agreement, the Adviser may deposit into and disburse from bank accounts opened
in its own name any money on behalf of the Company under such terms and
conditions as the Company may approve.
Allocation
of Expenses. Under the Advisory Agreement, the Adviser pays: all salary
and employment expenses of its own personnel and of the officers and employees
of the Company who are affiliates of the Adviser; all of the administrative,
rent and other office expenses (except those relating to a separate office, if
any, maintained by the Company) relating to its services as Adviser;
and travel (to the extent not paid by any party other than the Company or the
Adviser) and advertising expenses incurred in seeking investments for the
Company.
The
Company is required to pay all expenses of the Company not assumed by the
Adviser, including, without limitation, the following: (a) the cost of borrowed
money; (b) taxes on income, real property and all other taxes applicable to the
Company; (c) legal, accounting, underwriting, brokerage, transfer agent's,
registrar's, indenture trustee's, listing, registration and
other
fees, printing, engraving, and other expenses and taxes incurred in connection
with the issuance, distribution, transfer, registration and stock exchange
listing of the Company's securities; (d) fees and expenses of advisors and
independent contractors, consultants, managers and other agents employed
directly by the Company; (e) expenses connected with the acquisition,
disposition or ownership of mortgages or real property or other investment
assets, including, to the extent not paid by any party other than the Company or
the Adviser, but not limited to, costs of foreclosure, costs of appraisal, legal
fees and other expenses for professional services, maintenance, repairs and
improvement of property, and brokerage and sales commissions, and expenses of
maintaining and managing real property equity interests; (f) the expenses of
organizing or terminating the Company; (g) all insurance costs (including the
cost of directors' liability insurance) incurred in connection with the
protection of the Company's property as required by the directors; (h) expenses
connected with payment of dividends or interest or distributions in cash or any
other form made or caused to be made by the directors to holders of securities
of the Company, including a dividend reinvestment plan, if any; (i) all expenses
connected with communications to holders of securities of the Company and the
other bookkeeping and clerical work necessary in maintaining relations with
holders of securities, including the cost of printing and mailing checks,
certificates for securities and proxy solicitation materials and reports to
holders of the Company's securities; (j) to the extent not paid by borrowers
from the Company, the expenses of administering, processing and servicing
mortgage, development, construction and other loans; (k) the cost of any
accounting, statistical, or bookkeeping equipment necessary for the maintenance
of the books and records of the Company; (1) general legal, accounting and
auditing fees and expenses; (m) salaries and other employment expenses of the
personnel employed by the Company who are not affiliates of the Adviser, fees
and expenses incurred by the directors, officers and employees in attending
directors' meetings, and fees and travel and other expenses incurred by the
directors and officers and employees of the Company who are not affiliates of
the Adviser. Expenses relating to the grant of options to all
directors, officers and key employees of the Company under a plan approved by
the shareholders of the Company are borne by the Company.
Remuneration of the Adviser.
For services rendered under the Advisory Agreement that was in effect during
2008, the Adviser was entitled to receive as regular compensation a monthly fee
equal to the sum of (a) $85,000 (equivalent to $1,020,000 per year) and (b) 20%
of the amount of any unrefunded commitment fees received by the Company with
respect to mortgage loans and other commitments which the Company was not
required to fund and which expired within the next preceding calendar
month. For the years ended December 31, 2008 and 2007, the Company
and its subsidiaries incurred Adviser Fees of approximately $1,076,000 and
$989,000, respectively, of which $1,020,000 and $900,000 represented regular
compensation for 2008 and 2007, respectively, and approximately $56,000 and
$89,000 represented incentive compensation for 2008 and 2007,
respectively. The Adviser continues to receive the incentive
compensation outlined below.
The
Advisory Agreement also provides that the Adviser shall receive incentive
compensation for compensation for each fiscal year of the Company equal to the
sum of (a) 10% of the realized capital gains (net of accumulated net realized
capital losses) and extraordinary nonrecurring items of income of the Company
for such year, and (b) 10% of the amount, if any, by which Net Profits of the
Company exceed 8% per annum of the Average Net Worth of the
Company. "Net Profits" is defined as the gross earned income of the
Company for such period
(exclusive
of gains and losses from the disposition of assets), minus all expenses other
than non-cash charges for depreciation, depletion and amortization and the
incentive compensation payable to the Adviser, and minus all amounts expended
for mortgage amortization on long-term mortgage indebtedness, excluding
extraordinary and balloon payments. "Average Net Worth" is defined as
the average of the amount in the shareholders' equity accounts on the books of
the Company, plus the accumulated non-cash reserves for depreciation, depletion
and amortization shown on the books of the Company, determined at the close of
the last day of each month for the computation period.
If and to
the extent that the Company requests the Adviser, or any of its directors,
officers, or employees, to render services for the Company, other than those
required to be rendered by the Adviser under the Advisory Agreement, such
additional services are to be compensated separately on terms to be agreed upon
between such party and the Company from time to time, which terms must be fair
and reasonable and at least as favorable to the Company as similar arrangements
for comparable transactions of which the Company is aware with organizations
unaffiliated with the Adviser. The Adviser received $44,000 in 2008
and $41,000 in 2007 for managing certain of the Company's
affiliates. Included in fees for 2008 and 2007 was approximately
$25,000 of management fees earned relating to management of the Monty’s
restaurant operations.
Set forth
below is the aggregate compensation paid to the Adviser during the two fiscal
years ended December 31, 2008 and 2007.
|
Form of Compensation
|
|
Amount
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Regular
Compensation
|
|
$ |
1,020,000 |
|
|
$ |
900,000 |
|
|
20%
of Unrefunded Commitment Fees
|
|
|
-0- |
|
|
|
-0- |
|
|
Incentive
Compensation
|
|
|
56,000 |
|
|
|
89,000 |
|
|
Management
Fees
|
|
|
44,000 |
|
|
|
41,000 |
|
|
Total
|
|
$ |
1,120,000 |
|
|
$ |
1,030,000 |
|
Brokerage Fees Paid the
Adviser. Under the Advisory Agreement, the Adviser and its
affiliates are prohibited from receiving from the Company any brokerage or
similar fees for the placement of mortgages or other investments with the
Company. However, the Adviser and its affiliates can receive normal brokerage
commissions from borrowers in connection with transactions involving the
Company, provided that such commissions are fully disclosed to all directors of
the Company and the directors approve of the transaction and that such
commissions (which to the extent paid by the borrower and retained by the
Adviser or its affiliates may reduce the yield to the Company) are fair and
reasonable and in accord with the prevailing rates in the locality in which the
transaction is consummated for the type of conditions, receive normal brokerage
commissions from sellers, buyers, lessees and other parties with whom the
Company engages in transactions.
Management of the
Adviser. Set forth below are the names, offices with the
Adviser and principal occupations of the current executive officers and
directors of the Adviser.
|
Name
and Offices
with the Adviser
|
Principal Occupation
|
|
Maurice
Wiener
Chairman of the Board
of
Directors and Chief Executive
Officer
|
See
"Election of Directors."
|
| |
|
|
Larry
Rothstein
President, Treasurer,
Secretary
and Director
|
See
"Election of Directors."
|
| |
|
|
Carlos
Camarotti
Vice President-Finance
and
Assistant
Secretary
|
Vice
President and Assistant
Secretary
of the Adviser
|
The
Directors recommend that the shareholders approve the renewal of the Advisory
Agreement. An affirmative vote by the holders of a majority of the Shares
present in person or by proxy at the Annual Meeting of Shareholders is required
for approval of the Advisory Agreement.
SOLICITATION
OF PROXIES
The cost
of soliciting proxies will be borne by the Company. In addition to the use of
the mails, proxies may be solicited by directors, officers and employees of the
Company personally, by telephone or by telegraph.
OTHER
BUSINESS
The Board
of Directors is not aware of any business other than those items referred to
above to be presented for action at the meeting. However, should any other
matters requiring a vote of the shareholders arise, the agents named in the
accompanying proxy will vote in accordance with their own best
judgment.
PROPOSALS
FOR NEXT YEAR'S MEETING
Shareholder
proposals intended to be presented in the Company's proxy materials for the next
Annual Meeting of Shareholders must be received by March 4, 2010, and must
satisfy the requirements of the proxy rules promulgated by the Securities and
Exchange Commission. A shareholder who wishes to make a proposal at the next
Annual Meeting of Shareholders without including the proposal in the Company's
proxy statement must notify the Company by May 17, 2010. If a
shareholder fails to give notice by this date, then the persons named as proxies
in the proxies the Company solicits for the next Annual Meeting of Shareholders
will have discretionary authority to vote on the proposal.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
Shareholders
may communicate with the Board of Directors by sending correspondence, in care
of the Company's Secretary, HMG/Courtland Properties, Inc., 1870 South Bayshore
Drive, Coconut Grove, Florida 33131, with an instruction to forward the
communication to the
particular
director. The Company's Secretary will promptly forward all such shareholder
communications to that director.
HOUSEHOLDING
INFORMATION
The
Commission adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements and annual
reports with respect to two or more shareholders sharing the same address by
delivering a single proxy statement and annual report addressed to those
shareholders. This process, which is commonly referred to as
"householding," potentially means extra convenience for shareholders and cost
savings for companies.
The
Company and a number of brokers with accountholders who are shareholders of the
Company will be "householding" the Company's proxy materials and annual
report. As indicated in the notice previously provided by the Company
and these brokers to the Company's shareholders, a single proxy statement and
annual report will be delivered to multiple shareholders sharing an address
unless contrary instructions have been received from an affected
shareholder. Once you have received notice from the Company or your
broker that it or they will be "householding" communications to your address,
"householding" will continue until you are notified otherwise or until you
revoke your consent. If, at any time, you no longer wish to participate in
"householding" and would prefer to receive a separate proxy statement or annual
report, please contact the Company at the address or telephone number appearing
on the first page of this proxy statement, directing your request to the
attention of the Secretary, or notify your broker.
Shareholders
who currently receive multiple copies of the proxy statement or annual report at
their address and would like to request "householding" of their communications
should contact the Company at the address appearing on the first page of this
proxy statement, directing the request to the attention of the Secretary, or
should contact their broker.
A
copy of the Annual Report on Form 10-K for the year ended December 31, 2008
including financial statements and schedules thereto, filed with the Securities
and Exchange Commission, may be obtained by shareholders without charge upon
written request to: Secretary, HMG/Courtland Properties, Inc., 1870 South
Bayshore Drive,
Coconut
Grove, Florida 33133
YOU
CAN SAVE YOUR COMPANY ADDITIONAL EXPENSE BY SIGNING AND
RETURNING
YOUR PROXY AS PROMPTLY AS POSSIBLE
ANNUAL
MEETING OF SHAREHOLDERS OF
HMG/COURTLAND
PROPERTIES, INC.
August
13, 2009
NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIAL:
The
Notice of Meeting, Proxy Statement, Proxy Card
are
available at www.hmgcourtland.com
Please
sign, date and mail
your
proxy card in the
envelope
provided as soon
as
possible.
Please
detach along perforated line and mail in the envelope provided.
|
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK
INK AS SHOWN HERE [x]
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FOR
|
AGAINST
|
ABSTAIN
|
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1.
Election of Directors:
|
2.
|
Approval
of renewal of the Advisory Agreement between Company and HMG Advisory
Corp.
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[
]
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[
]
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[
]
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NOMINEES:
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[
] FOR ALL NOMINEES
[
] WITHHOLD AUTHORITY FOR ALL NOMINEES
[
] FOR ALL EXCEPT (See
instructions below)
|
O M. Wiener
O L. Rothstein
O W. Arader
O C. Stuntebeck
O H. Comita
|
3.
|
In
their discretion, upon such other matters as may properly come before the
meeting or any adjournment thereof, all in accordance with the Company's
Proxy Statement, receipt of which is hereby
acknowledged.
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This
proxy when properly executed will be voted in accordance with the above
instructions. In the absence of such specifications this proxy will be
voted FOR Proposals 1 and 2.
|
|
INSTRUCTION: To
withhold authority to vote for any individual nominee(s), mark “FOR ALL
EXCEPT”
and
fill in the circle next to each nominee you wish to withhold, as shown
here: [x]
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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[
]
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Signature
of Shareholder
|
|
Date:
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Signature
of Shareholder
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Date:
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Note: Please sign exactly as your name
or names appear on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer
is a partnership, please sign in partnership name by authorized
person.