SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For use of Commission only (as permitted by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a.12
Carolina Fincorp, Inc.
(Name of Registrant as Specified In its Chapter)
Patrick Molamphy, Carroll M. Edwards, Patrick Perrotta,
Thomas McInnis and Hilton D. Haines
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock
2) Aggregate number of securities to which transaction applies:
Not Applicable
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):
Not Applicable
4) Proposed maximum aggregate value of transaction: Not Applicable
5) Total fee paid: Not Applicable
[ ] 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 the filing.
1) Amount Previously Paid: $0
2) Form, Schedule or Registration Statement No.: Not Applicable
3) Filing Party: Not Applicable
4) Date Filed: Not Applicable
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PROXY STATEMENT OF THE CAROLINA FINCORP
COMMITTEE TO ENHANCE SHAREHOLDER VALUE.
ANNUAL MEETING OF SHAREHOLDERS OF
CAROLINA FINCORP, INC.
NOVEMBER 17, 1999
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PLEASE SIGN, DATE AND RETURN THE ENCLOSED GREEN PROXY CARD
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This Proxy Statement and Green Proxy Card are being furnished to the holders of
shares of the common stock (the "shareholders"), of Carolina Fincorp, Inc., (the
"Company") a North Carolina corporation, in connection with the solicitation of
proxies (the "Proxy Solicitation") by the Committee to Enhance Shareholder Value
and a group of concerned shareholders (the "Committee"). The Annual Meeting of
Shareholders is to be held on November 17, 1999 at 1:00 p.m. Eastern Time, at
the Calvin Little Room, Thomas H. Leath Memorial Library, 412 E. Franklin
Street, Rockingham, North Carolina (the "Annual Meeting"). The principal
executive offices of the Company are located at 115 South Lawrence Street,
Rockingham, North Carolina 28379. This Proxy Statement and the accompanying
Green Proxy Card were first mailed to Stockholders on or about October 18, 1999.
At the Annual Meeting, the Company will be seeking (i) the election of eight
Directors for a term of one year or until their successors have been elected and
qualified, and (ii) ratification of the appointment of Dixon, Odom PLLC as the
Company's independent auditor, as well as the independent auditor for Richmond
Savings Bank, Inc., SSB (the "Bank") for the fiscal year ending June 30, 2000.
The Committee is soliciting your proxy in support of the election of David
Foote, Jeff Edwards, Patrick Molamphy, and Thomas McInnis (collectively
"Committee Nominees") to the Company's Board of Directors. In addition, the
Committee is seeking authority to vote for each of the eight director positions
at the Annual Meeting. In that respect, the proxyholders will vote for four of
the Company's nominees, John T. Page, Jr., Russell E. Bennett, Jr., Joe
McLaurin, and W. Jesse Spencer and will not vote for J. Stanley Vetter,
E. E. Vuncannon, Jr., Buena Vista Coggin, and R. Larry Campbell. There is no
assurance that the Company's nominees will serve, if elected, with any of the
Committee's nominees. The Committee members own approximately 102,800 shares
(5.48%) of the Company's outstanding Common Stock and are soliciting the votes
of other stockholders to elect our nominee's at this year's Annual Meeting.
THE COMMITTEE RECOMMENDS THAT YOU VOTE YOUR SHARES IN FAVOR OF THE COMMITTEES
NOMINEES. PLEASE VOTE THE GREEN PROXY CARD.
The Committee consists of Carroll M. Edwards, Patrick Molamphy, Patrick
Perrotta, Thomas McInnis, and Hilton Haines. See Appendix A for information
regarding the Committee Members and the amount of shares of common stock of the
Company owned by them. See Appendix B for a list of the transactions in the
shares of the Company's common stock by each of the Committee Members for the
last two years. Committee Nominee Mr. Foote is not a member of the Committee,
but has agreed to serve on the Board, if elected. Mr. Foote has extensive
experience in the banking business, and has experience merging converted thrifts
with
<PAGE>
operating commercial banks. The Committee feels Mr. Foote's experience to be a
valuable trait to the shareholders if elected.
The goal of the Committee is to enhance shareholder value and it is the opinion
of the Committee that one of the best ways to accomplish this goal is through
the representation of new shareholders on the Board of Directors. THROUGH
REPRESENTATION ON THE BOARD OF DIRECTORS, THE COMMITTEE NOMINEES WILL ATTEMPT TO
FORCE A SALE OR MERGER OF THE COMPANY. IF A SALE OF THE COMPANY WOULD NOT RESULT
IN A SATISFACTORY PRICE, OR A MERGER WITH AN ACCEPTABLE FINANCIAL INSTITUTION
COULD NOT BE FOUND, THEN THE COMMITTEE WOULD SEEK TO IMPROVE EARNINGS OF THE
COMPANY through elimination of the planned expansion into Pinehurst, NC,
elimination of bonus plans for management that are not linked to performance of
the Company, and expansion into the profitable Commercial Lending arena.
The Committee has determined to vote for those nominees by the Company that the
Committee believes will be able to work together for the benefit of all
shareholders. However, if the Committee Nominees and four of the nominees by the
Company are elected, there can be no assurance that a split or dead locked board
of directors could result. This result would adversely affect the operations of
the Company and may lead to judicial or regulatory resolution of control of the
Company.
The Company has been notified of the Committee's intention to solicit proxies on
its own behalf by the filing of this Proxy Statement, the filing of Schedule
13D, and by certified mail to the Company in correspondence dated May 17th, 1999
and September 20th, 1999. The Company was also notified of the Committee
Nominees by certified mail dated September 29, 1999.
Please refer to the Company's proxy statement, which has been sent to each of
you, for a full description of the securities ownership of the Company, the
share vote required to ratify each proposal, information about the Company's
officers and director nominees, including compensation, information about the
ratification of the appointment of Dixon Odom, PLLC as independent auditors and
the date by which shareholders must submit proposals for inclusion in the next
Annual Meeting
Holders of record of shares of Common Stock of the Annual Meeting Record Date,
the close of business on September 24, 1999, are urged to submit a proxy even if
such shares have been sold after that date. The number of Shares of Common Stock
outstanding as of the Annual Meeting Record Date is 1,871,545. Each share of
common Stock is entitled to one vote at the Annual Meeting.
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YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU HOLD. IF YOUR
SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, BANK, OR NOMINEE, ONLY THEY CAN
VOTE YOUR SHARES AND ONLY UPON RECEIPT OF YOUR SPECIFIC INSTRUCTIONS.
ACCORDINGLY, PLEASE RETURN THE GREEN PROXY CARD IN THE ENVELOPE PROVIDED BY YOUR
BANK OR BROKER, OR CONTACT THE PERSON RESPONSIBLE FOR YOR ACCOUNT AND GIVE
INSTRUCTIONS FOR SUCH SHARES TO BE VOTED FOR THE COMMITTEE NOMINEES.
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If your shares are registered in more than one name, the GREEN proxy card should
be signed by all such persons to ensure that all shares are voted for the
Committee's Nominees.
BY SIGNING, DATING AND MAILING THE ENCLOSED GREEN PROXY CARD, YOU WILL REVOKE
ANY PREVIOUSLY DATED PROXY. ONLY YOUR LATEST DATED PROXY WILL COUNT AT THE
MEETING.
<PAGE>
THIS SOLICITATION IS BEING MADE BY THE COMMITTEE, NOT ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
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QUESTIONS AND ASSITANCE. If you have not received a Green Proxy Card or have any
questions or need assistance voting, please call:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLL FREE: 1-800-755-5001
COLLECT: (212) 843-8500
ATTENTION: Rick Grubaugh
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PLEASE REMEMBER TO DATE YOUR PROXY CARD, AS ONLY YOUR LATEST DATED PROXY WILL
COUNT AT THE ANNUAL MEETING. IF YOU HAVE ANY DOUBTS AS TO WHETHER YOUR PROXY
WILL BE RECEIVED IN TIME TO BE CAST AT THE ANNUAL MEETING, PLEASE CALL BEACON
HILL PARTNERS AT THE ABOVE TELEPHONE NUMBERS.
If you have any general questions about the solicitation, please call Pat
Molamphy at 1-800-603-3074.
<PAGE>
REASONS FOR THE SOLICITATION
The Committee believes its fellow shareholders have the same goal: maximize the
value of the Company's stock. The Committee believes that this goal can be
accomplished most effectively by the sale or merger of the Company. The
Committee is disappointed with the financial performance of the Company, and
confident that the Board of Directors, as presently constituted, cannot maximize
the value of our Company.
ISSUE 1, RETURN ON EQUITY
Pages two and three of the 1999 Annual Report provided to shareholders by the
Company reveal the true picture of our Company. The 1995 Return on Equity of
9.3% should be compared to the 1999 Return on Equity of 5.94%. Not what
shareholders wish to see, returns going in the wrong direction. The FDIC Website
calculated the December 31, 1998 average Return on Equity for all North Carolina
institutions at 14.97%. The paltry returns on equity is reason number one why
the committee feels there should be fresh faces and new ideas on the Board of
Directors.
ISSUE 2, RETURN ON ASSETS
Pages two and three of the 1999 Annual Report provided to Shareholders by the
Company reveal another aspect of our Company. 1999 Return on Assets was 0.81%,
compared to the prior year Return on Assets of 0.93%. Again, using the FDIC
Website, the December 31, 1998 North Carolina average Return on Assets was
1.28%. Again, a key measure of performance of the Company is going in the wrong
direction.
ISSUE 3, DIRECTOR AND MANAGEMENT COMPENSATION
The Committee urges the Shareholders to closely exam the proxy material provided
by the Company, in particular the directors' compensation, and the compensation
of the chief executive officer. It is the opinion of the Committee that
management compensation is exorbitant, and would ask Shareholders to review the
terms of the total compensation for 1998, as well as the options granted in
1999.
ISSUE 4, EXPANSION INTO PINEHURST, NC
The Committee believes that the planned expansion into Pinehurst, NC is not in
the best interests of Shareholders. A new full service branch in an already
crowded market could be a drag on earnings for the next few years. Our Company
does not have the products or services to adequately compete in this market.
Management should concentrate on making the branch in Southern Pines, North
Carolina more profitable.
ISSUE 5, LACK OF COMMERCIAL LENDING STAFF
In the opinion of the Committee, one of the main reasons the Company's
fundamentals have lagged the FDIC average for all institutions in North Carolina
is that management has failed to execute an aggressive commercial lending
strategy. The Company's failure of the Board of Directors to hold management
accountable in the commercial arena is another reason the Corporation needs new
faces on the Board of Directors.
The Committee believes that the Shareholders cannot reasonably expect the
Company to achieve the operating results of other well run banks, as measured by
the FDIC averages of Return on
<PAGE>
Equity and Return on Assets, if it remains on its current financial performance.
For this reason we urge Shareholders to VOTE THE GREEN PROXY CARD. A VOTE FOR
THE COMMITTEE IS A VOTE TO START THE PROCESS TO SELL OR MERGE THE COMPANY.
NOMINEES OF THE COMMITTEE FOR THE BOARD OF DIRECTORS OF THE COMPANY
The Committee is proposing the election of the Committee Nominees,
namely, Messrs. Foote, Edwards, McInnis and Molamphy, to the Board of Directors.
The Committee does not expect that the Committee Nominees, who have expressed
their willingness to serve on the Board of Directors of the Company, will be
unable to stand for election. In the event that a vacancy in the Committee's
slate should occur unexpectedly, the shares of common stock represented by the
enclosed Green Proxy Card will be voted for a substitute candidate selected by
the Committee.
If you wish to vote for the Committee Nominees, you must submit the
enclosed Green Proxy Card and must NOT submit the Company's proxy card. By
voting on the Committee's Green Proxy Card, you will be voting for the Committee
Nominees and for four of the Company Nominees John T. Page, Jr., Russell E.
Bennett, Jr., Joe McLaurin and W. Jesse Spencer, but not for Stanley J. Vetter,
E. E. Vuncannon, Jr., Buena Vista Coggin, and R. Larry Campbell, unless
alternative instructions are indicated on the Green Proxy Card.
The following information concerning age, principal occupation,
business experience and directorships during the last five years has been
furnished to the Committee by the Committee Nominees:
DAVID FOOTE, 59, 118 Steeplechase Way, Southern Pines, North Carolina
28387, retired in 1996 from CFX Corporation, the holding company of Cheshire
County Savings Bank. At Cheshire, Mr. Foote was Senior Vice President and Senior
Lending Officer. After converting the thrift, David was appointed President and
Chief Executive Officer of Monadnock Bank, which was wholly owned by CFX
Corporation. In 1994, David merged Monadnock Bank back to the parent, CFX, and
became Senior Vice President, whose duties included Mergers and Acquisitions.
JEFF EDWARDS, 39, P. O. Box 219, Marshville, North Carolina 28103, is
President of Edwards Wood Products, Marshville, North Carolina. Mr. Edwards
oversees daily operations of the largest manufacturing operation of wood pallets
in the United States. With over three hundred employees, Edwards Wood Products
is one of North Carolina's business success stories. Carroll M. Edwards, father
of Jeff, is CEO of Edwards Wood Products, and is one of the Company's largest
individual stockholders.
THOMAS MCINNIS 45, P. O. Box 1267, Rockingham, North Carolina, is
managing partner of Iron Horse Auction Co. Inc., a regional auction marketing
organization for real estate and personal property. Mr. McInnis is also
President of Ironhorse Transportation Services, which buys, sells, and
refurbishes railroad equipment and power units, and is also managing partner of
Stanly Richmond & Co. LLC. Mr. McInnis is a Graduate of Certified Auctioneers
Institute, Indiana University, and The Auction Market Institute Accredited
Auctioneer of Real Estate.
PATRICK MOLAMPHY 33, P. O. Box 1324, Rockingham, North Carolina, is the
principal of Molamphy and Associates, which specializes in insurance and
investments, and principal of Pinehurst Hospitality, a North Carolina LLC which
owns the Holiday Inn Convention Center, Southern Pines, NC. Prior to forming his
own firm, Pat has experience in Commercial Lending with Southern National Bank,
<PAGE>
now BB&T, and the former Citizens and Southern National Bank, now Bank of
America. Pat has a Bachelor of Science Degree in Business Administration from
The Citadel.
RATIFICATION OF INDEPENDENT AUDITORS
The Committee has no objections to the ratification of the appointment of Dixon
Odom, PLLC as independent auditors for the Company and the Bank for the Fiscal
Year ending June 30, 2000.
SOLICITATION AND EXPENSES
The Committee may solicit proxies by mail, advertisement, telephone, facsimile,
telegraph, electronic mail, contact through the Committee Web Site at
www.richmondsavingsbank.com, or through personal solicitation. Phone calls may
be made to individual shareholders by the committee and employees of Beacon Hill
Partners, Inc. Pat Molamphy will be principally responsible to solicit proxies
for the Committee and certain employees of Molamphy will perform secretarial
work in connection with the solicitation of the proxies, for which no additional
compensation will be paid. Banks, brokerage houses, and other custodian,
nominees, and fiduciaries will be requested to forward the Committee's
solicitation material to their customers for whom they hold shares and the
Committee will reimburse them for their reasonable out of pocket expenses.
The Committee has retained Beacon Hill Partners, Inc. to assist in the
solicitation of proxies and for related services. The Committee will pay Beacon
Hill Partners, Inc. a fee of up to $30,000, and has agreed to reimburse it for
its reasonable out of pocket expenses. The entire expense of preparing,
assembling, printing and mailing this Proxy Statement, and related materials and
the cost of soliciting proxies will be borne by the Committee. Although no
precise estimate can be made at the present time, the Committee currently
estimates that the total cost of the proxy solicitation, including legal fees,
to be approximately $100,000. The Committee intends to seek reimbursement from
the Company for these costs incurred by the Committee, and does not intend to
submit the question of such reimbursement to a vote of the Shareholders.
<PAGE>
APPENDIX A
NUMBER OF SHARES PERCENT OF
NAME BUSINESS ADDRESS BENEFICIALLY OWNED CLASS
---- ---------------- ------------------ -----
CARROLL M. EDWARDS PO 219 55,000 2.94%
MARSHVILLE, NC 28103
PATRICK MOLAMPHY PO 1324 18,800 1.0%
ROCKINGHAM, NC 28380
PATRICK PERROTTA 3548 DUNLIN SHORE CT. 7,000 0.37%
NORCROSS, GA 30082
THOMAS MCINNIS PO 1267 18,000 0.96%
ROCKINGHAM, NC 28380
HILTON D. HAINES PO 1174 4,000 0.21%
ROCKINGHAM, NC 28380
None of Messrs. Edwards, Molamphy, McInnis, Perrotta, Haines, or Foote during
the last five years, (I) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors); or (ii) was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
<PAGE>
APPENDIX B
Transactions
Set forth below is a list of all transactions in securities of the Company by
the members of the Committee in the period since October 18, 1997.
<TABLE>
<CAPTION>
<S> <C>
Date of Number Purchase (P) or
Name Transaction of Shares Sale (S)
---- ----------- --------- ---------------
Carroll M. Edwards 5/07/99 600 P
Carroll M. Edwards 5/10/99 2,154 P
Carroll M. Edwards 5/11/99 600 P
Carroll M. Edwards 5/13/99 5,246 P
Carroll M. Edwards 5/14/99 5,000 P
Carroll M. Edwards 5/17/99 400 P
Carroll M. Edwards 5/17/99 6,000 P
Carroll M. Edwards 5/18/99 3,000 P
Carroll M. Edwards 5/19/99 5,000 P
Carroll M. Edwards 5/20/99 1,300 P
Carroll M. Edwards 5/25/99 700 P
Carroll M. Edwards 5/27/99 5,000 P
Carroll M. Edwards 6/02/99 5,000 P
Carroll M. Edwards 6/23/99 5,000 P
Carroll M. Edwards 7/06/99 1,000 P
Carroll M. Edwards 7/08/99 3,000 P
Carroll M. Edwards 7/12/99 1,000 P
Carroll M. Edwards 7/14/99 3,200 P
Carroll M. Edwards 7/19/99 1,800 P
Patrick D. Molamphy 3/12/99 5,000 P
Patrick D. Molamphy 3/15/99 2,000 P
Patrick D. Molamphy 4/05/99 100 P
Patrick D. Molamphy 4/07/99 2,000 P
Patrick D. Molamphy 4/08/99 100 P
Patrick D. Molamphy 4/22/99 500 P
Patrick D. Molamphy 6/01/99 1,000
Patrick D. Molamphy 8/24/99 100
Patrick D. Molamphy 8/31/99 1,600
Patrick D. Molamphy 9/20/99 500
Thomas M. McInnis 3/18/99 2,000 P
Thomas M. McInnis 3/31/99 500 P
Thomas M. McInnis 4/13/99 1,100 P
Thomas M. McInnis 4/15/99 200 P
Thomas M. McInnis 4/21/99 700 P
Thomas M. McInnis 6/01/99 1,800
Thomas M. McInnis 7/14/99 700
Thomas M. McInnis 9/07/99 4,400
Thomas M. McInnis 9/22/99 300
Thomas M. McInnis 9/24/99 300
Patrick Perrotta 3/15/99 2,000 P
Patrick Perrotta 3/16/99 2,000 P
Patrick Perrotta 4/12/99 2,000 P
Patrick Perrotta 4/22/99 3,000 P
Patrick Perrotta 8/11/99 500
Patrick Perrotta 8/11/99 500
Patrick Perrotta 8/31/99 100 P
</TABLE>
<PAGE>
APPENDIX C
Revocable Proxy Carolina Fincorp, Inc.
Annual Meeting of Stockholders
November 17, 1999 - 1:00p.m.
This proxy is being solicited on behalf of the Committee to Enhance Shareholder
Value and its' nominee's
The undersigned holder of Common Stock of Carolina Fincorp, Inc. (the
"Company"), revoking all proxies heretofore given, hereby constitutes and
appoints Patrick D. Molamphy, Jeff Edwards, and Thomas McInnis, each with full
power of substitution, attorneys and proxies to appear and vote, as indicated
below, all the shares of Common Stock of the Company held of record by the
undersigned, and with all the powers the undersigned would possess if personally
present, at the 1999 Annual Meeting of Shareholder of Carolina Fincorp, Inc., to
be held at the Calvin Little Room, Thomas H. Leath Memorial Library, 412 East
Franklin Street, Rockingham, North Carolina, on November 17, 1999 at 1:00 P.M.
EST, and at any adjournments or postponements thereof.
1. PROPOSAL TO ELECT THE FOLLOWING FOUR NOMINEES LISTED BELOW AS DIRECTORS OF
THE COMPANY, TO SERVE AS DIRECTORS UNTIL THE 2000 ANNUAL MEETING OF
STOCKHOLDERS OR UNTIL TEIR SUCESSORS ARE DULY ELECTED AND QUALIFIED.
FOR NOMINESS LISTED [ ] WITHHOLD AUTHORITY TO VOTE FOR ALL [ ]
(EXCEPT AS MARKED TO THE NOMINEES LISTED BELOW
CONTRARY BELOW)
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below:
NOMINEES: Patrick Molamphy, Jeff Edwards, Thomas McInnis, David Foote.
2. COMPANY NOMINEES
The Committee to Enhance Shareholder Value intends to use this proxy to
vote for persons who have been nominated by the Carolina Fincorp, Inc. to
serve as directors as listed below. You may withhold authority to vote for
one or more additional company nominees, by striking through the
name of the nominee(s) below. You should refer to the proxy statement and
form of proxy distributed by the company for the names, background,
qualifications, and other information concerning the company's nominees.
John T. Page, Jr., Russell E. Bennett, Jr., Joe McLaurin, W. Jesse Spencer
There is no assurance that any of company's nominees will serve as
directors if any of the Committee's nominees are elected to the board.
Company nominee with respect to who the Committee to Enhance Shareholder
Value is NOT seeking authority to vote for and WILL NOT exercise any such
authority:
J. Stanley Vetter, E. E. Vuncannon, Jr., Buena Vista Coggin,
R. Larry Campbell
3. The proxies are authorized to vote in their discretion upon such other
matters as may properly come before the meeting or any postponements or
adjournments thereof.
PLEASE BE SURE TO SIGN AND DATE THIS PROXYIN THE BOX BELOW.
____________________________________________ DATE __________________
STOCKHOLDER SIGN ABOVE CO-HOLDER IF ANY
Signature(s) should conform to names as registered. For jointly owned
shares, each owner should sign. When signing as attorney, executor,
administrator, trustee, guardian, or officer of a corporation, please give
full title.
<PAGE>
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY CARD TODAY. PLEASE ACT
PROMPTLY USING THE ENCLOSED ENVELOPE.
