<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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-12
</TABLE>
U.S. Restaurant Properties, Inc.
- --------------------------------------------------------------------------------
(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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<PAGE> 2
U.S. RESTAURANT PROPERTIES, INC.
12240 INWOOD ROAD
SUITE 200
DALLAS, TEXAS 75244
(972) 387-1487
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 2000
To the Stockholders of
U.S. Restaurant Properties, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of U.S. Restaurant Properties, Inc., a Maryland corporation (the
"Company"), will be held at Hotel Inter-Continental, 15201 Dallas Parkway,
Dallas, Texas on June 2, 2000, at 10:00 a.m. local time, for the following
purposes:
1. The election of eight directors to hold office for terms
expiring at the next annual meeting of stockholders;
2. To ratify Deloitte & Touche LLP as the Company's independent
auditors; and
3. To transact such other business as may properly come before
the Annual Meeting.
It is desirable that as large a proportion as possible of the stockholders'
interests be represented at the Annual Meeting. Whether or not you plan to be
present at the Annual Meeting, you are requested to sign and return the enclosed
proxy in the envelope provided so that your stock will be represented. The
giving of such proxy will not affect your right to vote in person should you
later decide to attend the Annual Meeting. Please date and sign the enclosed
proxy and return it promptly in the enclosed envelope.
Copies of the Proxy Statement relating to the Annual Meeting and the Annual
Report outlining the Company's operations for the year ended December 31, 1999
accompany this Notice of Annual Meeting of Stockholders.
Only holders of record of the Common Stock of the Company at the close of
business on April 14, 2000 are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof, notwithstanding any transfer of the Common
Stock on the books of the Company after such record date.
By Order of the Board of Directors,
/s/ FRED H. MARGOLIN
FRED H. MARGOLIN
Secretary
Dallas, Texas
April 24, 2000
<PAGE> 3
U.S. RESTAURANT PROPERTIES, INC.
12240 INWOOD ROAD
SUITE 200
DALLAS, TEXAS 75244
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 2000
This Proxy Statement and the accompanying proxy card, Notice of Annual
Meeting of Stockholders and letter to stockholders are first being mailed to
holders (the "Stockholders") of the common stock, par value $.001 per share (the
"Common Stock"), of U.S. Restaurant Properties, Inc., a Maryland corporation
(the "Company"), on or about April 24, 2000, in connection with the solicitation
of proxies on behalf of the Board of Directors of the Company (the "Board of
Directors") to be exercised at the Annual Meeting of Stockholders (the
"Meeting") to be held at Hotel Inter-Continental, 15201 Dallas Parkway, Dallas,
Texas, on Friday, June 2, 2000, at 10:00 a.m.
At the Meeting, the Stockholders will be asked to consider and vote on
the following proposals (collectively, the "Proposals"):
(1) The election of eight directors to hold office for one-year
terms expiring at the 2001 annual meeting of stockholders;
(2) The approval and ratification of the selection of Deloitte &
Touche LLP ("Deloitte & Touche") by the Board of Directors as
independent auditors for the Company for the fiscal year
ending December 31, 2000; and
(3) Such other business as may properly come before the Meeting.
The Board of Directors does not know of any other matter that is to come before
the Meeting. If any other matters are properly presented for consideration,
however, the persons authorized by the enclosed proxy will have discretion to
vote on such matters in accordance with their best judgment.
Only Stockholders of record as of the close of business on April 14,
2000 (the "Record Date") are entitled to notice of and to vote at the Meeting or
any adjournments thereof. As of the close of business on the Record Date, there
were 15,373,103 shares of Common Stock, issued and outstanding and entitled to
vote. The Common Stock constitutes the only class of capital stock of the
Company issued and outstanding entitled to vote at the Meeting. Each Stockholder
of record on the Record Date is entitled to one vote for each share of Common
Stock held. A majority of the outstanding shares of Common Stock, represented in
person or by proxy, will constitute a quorum at the Meeting; however, if a
quorum is not present or represented at the Meeting, the Stockholders entitled
to vote thereat, present in person or represented by proxy, have the power to
adjourn the Meeting from time to time, without notice, other than by
announcement at the Meeting, until a quorum is present or represented. At any
such adjourned
<PAGE> 4
Meeting at which a quorum is present or represented, any business may be
transacted that might have been transacted at the original Meeting.
Each share of Common Stock may be voted to elect up to eight
individuals (the number of directors to be elected) as directors of the Company.
To be elected, each nominee for director must receive a plurality of the votes
cast by the shares of Common Stock entitled to vote at a meeting at which a
quorum is present. It is intended that, unless authorization to vote for one or
more nominees for director is withheld, proxies will be voted FOR the election
of all of the nominees named in this Proxy Statement. Approval of a majority of
the shares of Common Stock represented and voting at the Meeting will be
necessary for the ratification of the Board of Directors' selection of Deloitte
& Touche as independent auditors for the fiscal year ending December 31, 2000.
Votes cast by proxy or in person will be counted by two persons
appointed by the Company to act as inspectors for the Meeting. The election
inspectors will treat shares represented by proxies that reflect abstentions as
shares that are present and entitled to vote for the purpose of determining the
presence of a quorum. For purposes of the Proposals to elect directors, and
ratify Deloitte & Touche, abstentions will not be counted as votes cast and will
have no effect on the result of the vote on such Proposals.
Broker non-votes occur where a broker holding stock in street name
votes the shares on some matters but not others. Brokers are permitted to vote
on routine, non-controversial proposals in instances where they have not
received voting instructions from the beneficial owner of the stock but are not
permitted to vote on non-routine matters. The missing votes on non-routine
matters are deemed to be "broker non-votes." The election inspectors will treat
broker non-votes as shares that are present and entitled to vote for the purpose
of determining the presence of a quorum.
After reviewing the information contained in this Proxy Statement and
in the Annual Report outlining the Company's operations for the fiscal year
ended December 31, 1999 (included with this Proxy Statement), stockholders are
urged to sign the accompanying form of proxy, solicited on behalf of the Board
of Directors, and return it immediately in the envelope provided for that
purpose. Valid proxies will be voted at the Meeting and any adjournment or
adjournments thereof in the manner specified therein. If no directions are given
but proxies are executed in the manner set forth therein, such proxies will be
voted FOR the election of the nominees for director set forth in this Proxy
Statement and FOR the ratification of the selection of Deloitte & Touche as the
Company's independent auditors for the fiscal year ending December 31, 2000. Any
Stockholder returning the accompanying proxy may revoke such proxy at any time
prior to its exercise by providing written notice to the Secretary of the
Company of such revocation, voting in person at the Meeting or executing and
delivering, to the Secretary of the Company, a later-dated proxy.
Each of the directors and executive officers of the Company has
informed the Company that he will vote all of his shares of Common Stock in
favor of all of the Proposals.
2
<PAGE> 5
I. ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors of the
Company shall be as set forth in the Company's Articles of Incorporation, as
amended (the "Articles"), or as may be established by the Board of Directors but
may not be fewer than the number required under the Maryland General Corporation
Law nor more than 15 members. The current Board of Directors consists of seven
members. At the Meeting, the seven current directors, Fred H. Margolin, Gerald
H. Graham, George Mileusnic, Darrel L. Rolph, David K. Rolph, Robert J. Stetson
and Eugene G. Taper and one new director, G. Steven Dawson, are to be elected,
to hold office until the next annual meeting of Stockholders or until their
successors are elected and qualify. Each of the nominees has consented to serve
as a director if elected. If any of the nominees shall become unable or
unwilling to stand for election as a director (an event not now anticipated by
the Board of Directors), proxies will be voted for such substitute as shall be
designated by the Board of Directors. The following table sets forth for each
nominee for election as a director of the Company his age, principal occupation,
position with the Company, if any, and certain other information. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Fred H. Margolin 50 Mr. Margolin has been the Chairman of the Board, January 1997
Secretary, Treasurer, and a director of the Company
since its formation in January 1997 and has been
the President and Chief Executive Officer of the
Company since October, 1999. Since May, 1994, Mr.
Margolin has been the Chairman of the Board of
Directors, Treasurer, Secretary and a director of
QSV Restaurant Properties, Inc. ("QSV"), the former
general partner of U.S. Restaurant Properties
Master L.P. ("USRP"), the predecessor to the
Company, and has been General Manager and Chief
Executive Officer of QSV since October, 1999. In
1977, Mr. Margolin founded Intercon General Agency,
a national general insurance agency specializing in
the development and marketing of insurance products
for financial institutions. Mr. Margolin served as
the Chief Executive Officer of Intercon General
Agency from its inception until its sale to a
public company in 1982 after having developed it
into a national presence.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
Fred H. Margolin In 1989, Mr. Margolin founded and became the January 1997
(continued) President of American Eagle Premium Finance
Company. From 1982 through 1992, Mr. Margolin
developed and then leased or sold shopping centers
having an aggregate cost of approximately
$50,000,000. He was also active in the acquisition
and development of raw land and residential
properties.
George Mileusnic 45 Mr. Mileusnic is a director of the Company and a April 1999
member of the Corporate Governance Committee. Since
May 1998, Mr. Mileusnic has been an independent
business consultant. Prior to May 1998, he was
Executive Vice President-Recreation Division of The
Coleman Company, Inc., from September 1996 to April
1998 and Chief Financial Officer of The Coleman
Company from 1989 to August 1996. Mr. Mileusnic is
a member of the Board of Directors of Funcoland,
Inc., the Board of Trustees of In-Trust Funds and
the Board of Advisors for Screamingly Different
Entertainment.
Gerald H. Graham 62 Dr. Graham is a director of the Company and a January 1997
member of the Compensation Committee. Dr. Graham is
a professor at, and the Dean of, the Barton School
of Business at Wichita State University.
Darrel L. Rolph 62 Mr. Rolph is a director of the Company and a January 1997
member of the Audit Committee. Mr. Rolph is
Chairman of the Board and Secretary of the Mexican
food restaurant chain, Carlos O'Kelly's, and the
President of Sasnak Management Corp., a restaurant
management company, positions he has held for the
past ten years.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
David K. Rolph 51 Mr. Rolph is a director of the Company and a January 1997
member of the Compensation Committee. Mr. Rolph is
the President of Carlos O'Kelly's and the
Vice-President of Sasnak Management Corp., a
restaurant management company, positions he has held
for the past ten years.
Robert J. Stetson 49 Mr. Stetson is a director of the Company. He served January 1997
as the Chief Executive Officer and President of the
Company from its formation in January 1997 until
October 1999. Since May 1994, Mr. Stetson has also
served as President and a director of QSV and,
until October 1999, was also Chief Executive
Officer of QSV. From 1987 until 1992, Mr. Stetson
served as the Chief Financial Officer and later
President-Retail Division of Burger King
Corporation and Chief Financial Officer and later
Chief Executive Officer of Pearle Vision. As Chief
Financial Officer of Burger King Corporation, Mr.
Stetson was responsible for managing more than 950
restaurants that Burger King Corporation leased to
tenants. Prior to 1987, Mr. Stetson served in
several positions with PepsiCo Inc. and its
subsidiaries, including Chief Financial Officer of
Pizza Hut, Inc.
Eugene G. Taper 63 Mr. Taper is a director of the Company and a member January 1997
of the Audit Committee and Corporate Governance
Committee. Mr. Taper has been an independent
business consultant since 1993. Prior to 1993, Mr.
Taper, a certified public accountant, was a partner
of Deloitte & Touche LLP, an international public
accounting firm.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
---- --- -------------------- --------------
<S> <C> <C> <C>
G. Steven Dawson 42 Mr. Dawson is being nominated for director of the N/A
Company. Since 1990, Mr. Dawson has served as
Senior Vice President and Chief Financial Officer
of Camden Property Trust, a public real estate
company which specializes in the acquisition,
development, and management of over 159 apartment
communities throughout the United States, with
major concentrations in Dallas, Houston, Las Vegas
and the Tampa/Orlando areas. Prior to 1990, Mr.
Dawson served in various related capacities with
companies involved in commercial real estate
including land and office building development as
well as the construction and management of
industrial facilities located on airports
throughout the country. He currently serves on the
board of two private companies and various
charitable organizations.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1999, the Board of Directors
held six regular meetings, and five special meetings. Each of the directors
attended at least 75% of all meetings held by the Board of Directors and all
meetings of each committee of the Board of Directors on which such director
served during the fiscal year ended December 31, 1999. The Board of Directors
has an Audit Committee, a Compensation Committee and a Corporate Governance
Committee.
The Audit Committee is an advisory committee whose current members are
Mr. Taper and Mr. Darrel Rolph. The Audit Committee met four times during the
fiscal year ended December 31, 1999. The function of the Audit Committee is to
make recommendations concerning the engagement of independent public
accountants, review with the independent public accountants the plans and
results of the audit engagement, approve professional services provided by the
independent public accountants, review the independence of the independent
public accountants, consider the range of audit and nonaudit fees and review the
adequacy of the Company's internal accounting controls.
The Compensation Committee currently consists of Dr. Graham and Mr.
David Rolph. The Compensation Committee recommends compensation for the
Company's executive officers to the Board of Directors and administers the
Company's Flexible Incentive Plan. The Compensation Committee met two times
during the fiscal year ended December 31, 1999.
6
<PAGE> 9
The Corporate Governance Committee currently consists of Messrs.
Mileusnic, Graham and Taper. This committee assists the Board of Directors in
carrying out its responsibilities by reviewing corporate governance issues. The
Corporate Governance Committee met two times during the fiscal year ended
December 31, 1999.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid a $14,000
annual retainer and each committee chairman gets an additional $1,000 per annum.
Directors who are employees of the Company are not paid any director's fees. The
Company may reimburse all directors for their travel expenses incurred in
connection with attending meetings and their activities on behalf of the
Company. In October, 1999, directors who were not employees of the Company were
each granted stock options to purchase 3,500 shares of stock at $15.50 per
share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Dr. Graham and Mr. David Rolph,
neither of whom is a former or current officer or employee of the Company or any
of its subsidiaries. No executive officer of the Company serves as an officer,
director or member of any entity, an executive officer or director of which is a
member of the Compensation Committee.
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers of the Company serve at the discretion of the
Board of Directors and are chosen annually by the Board of Directors at its
first meeting following the annual meeting of Stockholders. The following table
sets forth the names and ages of the executive officers and directors of the
Company and the positions held with the Company by each individual.
NAME AGE TITLE
---- --- -----
EXECUTIVE OFFICERS
- ------------------
Fred H. Margolin 50 Chairman of the Board, President, Chief
Executive Officer, Secretary and Treasurer
Barbara A. Erhart 44 Chief Financial Officer
OUTSIDE DIRECTORS
Gerald H. Graham 62 Director
George Mileusnic 45 Director
Darrel L. Rolph 62 Director
David K. Rolph 51 Director
Robert J. Stetson 49 Director
Eugene G. Taper 63 Director
G. Steven Dawson 42 Director
7
<PAGE> 10
EXECUTIVE OFFICERS
For a description of the business experience of Mr. Margolin, see
"Election of Directors" above.
Ms. Erhart joined the Company as Chief Financial Officer in March 2000.
From 1995 to February 2000, Ms. Erhart served as Chief Financial Officer of
Billingsley Company, a real estate development company focused in the
acquisition of raw land and development of industrial warehouses, suburban
office parks, and master-planned commercial and multi-family communities as well
as the management of design centers located in Dallas, Houston and Boston and a
multi-service travel company operating on a national basis. From 1989 to 1994,
Ms. Erhart was a Senior Manager with Price Waterhouse and specialized in
acquisitions, banking, restaurants and retail clients as well as providing
support to the bankruptcy and corporate reorganization team. Prior to 1989, Ms.
Erhart served as a senior financial officer with a $4.6 billion thrift and as a
manager with Arthur Andersen & Co. in the Regulated Industry department.
OUTSIDE DIRECTORS
For a description of the business experience of Messrs. Graham,
Mileusnic, Darrel Rolph, David Rolph, Taper and Dawson, see "Election of
Directors" above.
EXECUTIVE COMPENSATION
The Company did not commence operations as a self-managed real estate
investment trust ("REIT") until its conversion effective October 15, 1997, and,
consequently, did not pay any cash compensation to its executive officers for
the year ended December 31, 1996 or prior to the conversion of the Company. The
following table sets forth certain information with respect to annual and
long-term compensation for the period ended December 31, 1999, paid, or accrued
with respect to, each of the Company's executive officers (the "Executive
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------------------- AWARDS
------------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ---------------------- ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Fred H. Margolin(1)... 1999 $250,000 $ 50,000 $ -- 200,000 $ --
Chairman of the 1998 $250,000 $ 50,000 $ -- -- $ --
Board, President, 1997 $ 45,081 $ -- $ -- 245,000 $ --
Chief Executive
Officer, Secretary,
& Treasurer
Robert J. Stetson(2)... 1999 $187,500 $ -- $ -- -- $760,000
Chief Executive 1998 $250,000 $ -- $ -- -- $ --
Officer and President 1997 $ 45,081 $ -- $ -- 245,000 $ --
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
(CONTINUED)
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------------------------- AWARDS
------------
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ---------------------- ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Warren (3) 1999 $98,167 $26,200 $ -- 25,000 $ --
Director of Finance 1998 $85,833 $19,462 $ -- -- $ --
1997 $20,607 $ -- $ -- 10,000 $ --
</TABLE>
- -----------------------------
(1) Mr. Margolin was elected the President and Chief Executive Officer of
the Company in October 1999.
(2) Mr. Stetson resigned as Chief Executive Officer and President of the
Company in October 1999.
(3) Mr. Warren resigned as Director of Finance in March 2000.
OPTION GRANTS
The following table sets forth certain information with respect to the
issuance of options granted to Executive Officers during the fiscal year ended
December 31, 1999 under the Company's Flexible Incentive Plan that the
Stockholders approved in 1997 and amended in 1998:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS PRICE OPTION TERM (2)
OPTIONS GRANTED TO PER EXPIRATION -----------------------------
NAME GRANTED(1) EMPLOYEES SHARE DATE 5% 10%
---- ---------- ---------- -------- ---------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Fred H. Margolin ..... 200,000 53.98% $ 15.50 10/28/06 $156,000 $310,000
Michael D. Warren .... 25,000 6.75% $ 15.50 10/28/06 $ 19,500 $ 38,750
</TABLE>
- -----------------
(1) The options were granted on October 28, 1999, and vest in equal increments
on each of the second and third anniversaries of their date of grant.
(2) "Potential Realizable Value" is disclosed in response to Securities and
Exchange Commission rules, which require such disclosure for illustrative
purposes only, and is based on the difference between the potential market
value of shares issuable (based upon assumed appreciation rates) upon
exercise of such Options and the exercise price of such Options. The values
disclosed are not intended to be, and should not be interpreted by
investors as, representations or projections of future value of the
Company's stock or of the stock price.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the value
of the unexercised options as of December 31, 1999 held by the Executive
Officers. No options were exercised by the Executive Officers during the fiscal
year ended December 31, 1999.
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised in-the-Money
Option/SARs at Fiscal Options/SARs at Fiscal
Year-End Year-End
--------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Fred H. Margolin 122,000 323,000 $0 $0
Robert J. Stetson -- -- -- --
Michael D. Warren 5,000 30,000 $0 $0
</TABLE>
- ------------------
(1) The fair market value on December 31, 1999 of the Common Stock
underlying the options was $14.3125 per share.
(2) In connection with Mr. Stetson's resignation from the Company, his
remaining stock options were cancelled. Please refer to the discussion
included in "Certain Relationships and Related Transactions."
EMPLOYMENT AGREEMENTS
Mr. Margolin entered into an employment agreement (the "Employment
Agreement") with the Company as of October 15, 1997. The Employment Agreement
will expire on the fourth anniversary of the date thereof. Pursuant to the
Employment Agreement, Mr. Margolin serves as Chairman of the Board, Secretary
and Treasurer of the Company and will be paid an annual base salary of $250,000.
The Employment Agreement provides for salary raises at the discretion of the
Board, provided that, prior to December 31, 2000, Mr. Margolin will not receive
cash compensation (i.e., excluding the value of any equity-based compensation,
such as stock options or shares of restricted stock) in excess of $300,000.
Under the terms of the Employment Agreement, if Mr. Margolin's
employment with the Company is terminated by the Company other than for "cause"
(as defined in the Employment Agreement) or by "constructive discharge" (as
defined in the Employment Agreement), he will be entitled to receive an amount
equal to two times the highest annualized rate of his salary prior to the date
of termination. In the event Mr. Margolin's employment is terminated without
cause or by constructive discharge within three years following a "change in
control" (as defined in the Employment Agreement), the Employment Agreement also
provides for the payment of severance compensation in an amount equal to 2.99
times his compensation (which, for this purpose, equal his highest annualized
salary plus his cash bonus for the year immediately prior to such termination).
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE OFFICER COMPENSATION
The following report of the Compensation Committee of the Company's
Board of Directors (the "Compensation Committee") and the performance graph that
appears immediately after such report shall not be deemed to be soliciting
material or filed with the Securities and Exchange Commission (the "SEC') under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended (the "Exchange Act), or incorporated by reference in any document so
filed.
10
<PAGE> 13
GENERAL
The Compensation Committee recommends to the Board of Directors the
compensation of the executive officers of the Company and administers the Plan
and any other employee benefit plans established by the Company. The
Compensation Committee reviews the overall compensation program of the Company
to assure that it is reasonable and, in consideration of all of the facts
including practices of comparably sized real estate investment trusts,
adequately recognizes performance tied to creating stockholder value and meets
overall Company compensation and business objectives. The Compensation
Committee's philosophy for compensating executive officers is that an
incentive-based compensation system tied to the Company's financial performance
and stockholder return will best align the interest of its executive officers
with the objectives of the Company and its stockholders. The Compensation
Committee attempts to promote financial and operational success by attracting,
motivating and assisting in the retention of key employees who demonstrate the
highest levels of ability and talent. The Compensation Committee has determined
that the Company's compensation program should reward performance measured by
the creation of value for stockholders. In accordance with this philosophy, the
Compensation Committee oversees the implementation of the compensation system
designed to meet the Company's financial objectives by making a significant
portion of an executive officer's compensation dependent upon both the Company's
and such executive's performance. The Company's executive compensation program
consists of the following elements: (i) a base salary, which results from an
assessment of each executive's level of responsibility and experience,
individual performance and contributions to the Company; (ii) annual incentives
that are directly related to the performance of the executive's department and
the financial performance of the Company as a whole; and (iii) subject to the
provisions of the Flexible Incentive Plan previously approved by the
Stockholders, grants of stock options designed to motivate individuals to
enhance long-term profitability of the Company and the value of the Common
Stock. The Compensation Committee does not allocate a fixed percentage to each
of these three elements, but works with management to design compensation
structures which will best serve its goals.
BASE SALARY
Mr. Margolin has entered into an employment agreement with the Company,
which employment agreement is described under the caption "Employment
Agreements" contained in this Proxy Statement. Pursuant to the terms of his
employment agreement, Mr. Margolin's base salary is set for the term of the
agreement. Recommendations for compensation of the executive officers, other
than Mr. Margolin, are provided by the Chief Executive Officer after annual
evaluations of individual contributions to the business of the Company are held
with each such executive officer. Factors considered by the Compensation
Committee in setting base salaries include the performance of the Company,
measured by both financial and non-financial objectives, individual
accomplishments, any planned change of responsibility for the forthcoming year,
salaries paid for similar positions within the real estate and REIT industry as
published in industry statistical surveys and proposed base salary relative to
that of other executive officers. The predominating factor is the performance of
the Company. The application of the remaining factors is subjective, with no
particular factor being given more weight than any other.
11
<PAGE> 14
ANNUAL INCENTIVES
Executives are also eligible for annual incentive awards, which awards
are designed to place a significant part of an executive's annual compensation
at risk. The Executive Officers will participate in a bonus incentive program
under which the individual executives are eligible for annual cash bonuses. No
bonuses were paid by the Company to the Executive Officers other than Mr.
Margolin and Mr. Warren for the year ended December 31, 1999. The Compensation
Committee anticipates that future bonuses will be determined on the basis of a
comparison of actual performance against pre-established performance goals, for
the Company and will be, in part, based on the discretion of the Compensation
Committee.
LONG-TERM INCENTIVES
In keeping with the Compensation Committee's philosophy to provide
long-term incentives to executive officers and other key employees, subject to
Stockholder approval of the Plan, stock options are anticipated to be granted to
executive officers and other key employees on a periodic basis. The Committee
establishes the number of options granted based upon REIT industry data and upon
each individual's base salary.
CEO PERFORMANCE EVALUATION
The Compensation Committee recommends to the Board of Directors for its
approval the compensation for all executives, including the Chief Executive
Officer. Mr. Margolin has an employment agreement with the Company that provides
for his base salary to be set at $250,000, subject to annual review by the
Compensation Committee. In 1999, the Company paid Mr. Margolin $250,000 and paid
him a bonus of $50,000.
TAX CONSIDERATIONS
The Compensation Committee is aware of the tax law which makes certain
"non-performance based" compensation to certain executive officers in excess of
$1,000,000 non-deductible to the Company. While none of the Executive Officers
of the Company currently receives performance-based compensation at or near the
$1,000,000 maximum, the Compensation Committee has carefully considered the
impact of these tax provisions and has taken steps which are designed to
minimize its future effect, if any.
Gerald H. Graham
David K. Rolph
12
<PAGE> 15
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total stockholder return on the Common Stock (and the common
units of beneficial interest of U.S. Restaurant Properties Master L.P., the
Company's predecessor, see "Certain Relationship and Related Transactions"),
with the cumulative total return of the S&P 500 Index and the National
Association of Real Estate Investment Trusts ("NAREIT") All Equity REIT Index,
assuming the investment of $100 on December 31, 1994 and the reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX
AND NAREIT EQUITY REIT INDEX
U.S. RESTAURANT PROPERTIES, INC.
[GRAPH]
TOTAL RETURN PERFORMANCE
<TABLE>
<CAPTION>
PERIOD ENDING
-------------------------------------------------------------------------------------
INDEX 12/31/1994 12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
- ----- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
U.S. Restaurant Properties, Inc. 100.00 146.39 222.31 307.18 331.52 214.27
S&P 500 100.00 137.58 169.03 225.44 289.79 350.78
NAREIT All Equity/REIT Index 100.00 115.27 155.92 187.51 154.69 147.54
</TABLE>
13
<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the conversion of the Company from a master limited
partnership to a REIT, QSV withdrew as general partner of each of USRP and US
Restaurant Properties Operating L.P. (the "Operating Partnership") effective as
of October 15, 1997, and USRP Managing was substituted as general partner of
each of USRP and the Operating Partnership. In conjunction with such withdrawal,
QSV (i) converted its interests in (a) its allocable share of income, profits,
losses and distributions of the Operating Partnership as general partner thereof
and (b) fees and disbursements for the acquisition and management of the
Operating Partnership's properties (together, the "Operating Partnership General
Partner Interest") payable to it pursuant to the terms of the partnership
agreement of the Operating Partnership and (ii) converted its general partner
interest in USRP (the "USRP Interest") (together with the conversion of its
interests in the Operating Partnership described above, the "Termination") for
1,148,418 Operating Partnership Units and 126,582 shares of Common Stock,
respectively, and as a result of such conversion will be eligible to receive
additional consideration in the year 2000 (together, the "Acquisition Price").
The Acquisition Price consists of two components: (i) the initial share
consideration (the "Initial Share Consideration") and (ii) the contingent share
consideration (the "Contingent Share Consideration"). The Initial Share
Consideration was paid in the form of 1,148,418 Operating Partnership Units in
exchange for the Operating Partnership General Partner Interest and 126,582
shares of Common Stock (1% of all shares of Common Stock outstanding immediately
following the Merger) issued by the Company at the effective time of the Merger
in exchange for the USRP Interest. The Contingent Share Consideration is equal
to the value of up to 825,000 shares of Common Stock (subject to adjustment in
the event of certain dilutive events), and will consist of Operating Partnership
Units (the "Contingent Shares"). The exact number of Contingent Shares to be
issued will be determined by dividing the amount by which MGP Net Income exceeds
$3,612,500 by $2.83. MGP Net Income is defined as the fees and distributions in
excess of $3,612,500 which would otherwise have been payable to QSV for fiscal
year ended December 31, 2000 pursuant to the Operating Partnership General
Partner Interest and the USRP Interest less $775,000. QSV will not receive any
distributions with respect to the Contingent Shares, or otherwise have any
rights with respect thereto, until they are issued. The Contingent Shares shall
be issued by the Operating Partnership as soon as practicable following the end
of the year 2000, but in no event later than March 31, 2001. The Company
anticipates that all of the Contingent Shares will be issued, and in light of
that, the Company has recorded as of December 31, 1998 and 1999, an expense of
$12,047,000 and income of $239,000, respectively, as the cost of issuance of
Contingent Shares accruable as of that date.
The Acquisition Price was determined through negotiations between
management of QSV, the then managing general partner of USRP, the Company's
predecessor, and a special committee (the "Special Committee") of the board of
directors of the managing general partner, consisting solely of directors who
were neither officers nor stockholders of QSV. The structure of the Acquisition
Price was adopted as a result of the Special Committee's desire to protect the
stockholders of the Company from being diluted by the issuance of the share
consideration. This structure also enabled the Special Committee to establish a
price to be paid for the management contract which was to be terminated and
QSV's interest in USRP. The Special Committee was appointed to address any
potential conflicts of interest.
14
<PAGE> 17
The Special Committee engaged Morgan Keegan & Company, Inc. ("Morgan
Keegan"), an investment banking firm that regularly renders valuations of
businesses and securities in connection with business combinations, as its
financial advisor. The Special Committee and management of QSV conducted
negotiations, with Morgan Keegan's input, from December 30, 1996 to February 5,
1997, when the Special Committee determined to accept the Acquisition Price. The
Special Committee based its determination on the following factors:
1. The Morgan Keegan fairness opinion received at the February 5, 1997
meeting of the Special Committee.
2. The structure of the Acquisition Price, as QSV would receive all or a
portion of the contingent shares if and only if the MGP Net Income for
the year ending December 31, 2000 reached or exceeded certain levels.
As a result, the contingent share portion of the Acquisition Price
provided for a mechanism for the consideration to be paid by the
Company to correlate to the obligations of which the Company was being
relieved.
3. The maximum number of contingent shares that could be issued was
capped.
In addition, as of March 31, 2000 QSV holds options (the "Options") to
purchase 110,000 shares of Common Stock pursuant to an Option Agreement dated
March 24, 1995, by and between USRP and QSV, which Options were assumed by the
Company pursuant to the Merger. All of the Options are fully vested and
exercisable. The Options are exercisable at an exercise price of $10.33 per
share. The Options are not transferable except by operation of law pursuant to a
consolidation, merger, recapitalization or reorganization of QSV.
Robert J. Stetson owns a 30% interest in QSV and is a director of the
Company. Fred H. Margolin owns a 30% interest in QSV and is the Chairman of the
Board of Directors, Chief Executive Officer, President, Secretary and a director
of the Company, David K. Rolph and Darrel L. Rolph, each own a 20% interest in
QSV and are directors of the Company.
In connection with Mr. Stetson's resignation as Chief Executive Officer
and President of the Company, the Company entered into a Settlement Agreement
and Consulting Agreement with Mr. Stetson as of October 6, 1999. Pursuant to the
Consulting Agreement, Mr. Stetson is employed as a consultant to the Company for
a period of one (1) year, ending on October 6, 2000, unless terminated by the
Company pursuant to the terms of that agreement. Pursuant to the terms of the
Settlement Agreement, the Company paid to Mr. Stetson severance compensation in
the amount of $750,000, terminated all of the options previously granted to Mr.
Stetson pursuant to the Company's 1997 Flexible Incentive Plan and agreed to
provide Mr. Stetson one or more loans, up to the aggregate of $800,000, for the
sole purpose of acquiring shares of the Company's common stock from time to time
in the open market.
15
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and the notes thereto set forth certain information
with respect to the beneficial ownership of shares of Common Stock, as of
December 31, 1999, except as noted in the footnotes to such table), by each
person or group within the meaning of Section 13(d)(3) of the Exchange Act who
is known to the management of the Company to be the beneficial owner of more
than five percent of the outstanding Common Stock of the Company:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned Of Class
------------------- ------------------ --------
<S> <C> <C>
QSV Properties, Inc. 1,840,000 (1) 11.02
12240 Inwood Roard
Suite 200
Dallas, Texas 75244
</TABLE>
- --------------------
(1) Includes 1,148,418 OP Units each of which is immediately exchangeable
for one share of Common Stock and 110,000 shares of Common Stock
issuable upon the exercise of an option which is immediately
exercisable.
SECURITY OWNERSHIP OF MANAGEMENT
The following table and the notes thereto set forth certain information with
respect to the beneficial ownership of shares of Common Stock of the Company, as
of December 31, 1999, by each director, each Executive Officer and by all
Executive Officers and directors as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER (1)(2) BENEFICIALLY OWNED OF CLASS
----------------------- ------------------ --------
<S> <C> <C>
Fred H. Margolin.................... 53,846(3) *
Barbara Erhart...................... --
Gerald H. Graham.................... 2,100 *
George Mileusnic.................... --
Darrel L. Rolph..................... 16,000(3) *
David K. Rolph...................... 4,500(3) *
Robert J. Stetson................... 19,650 *
Eugene G. Taper..................... 1,914 *
All Directors and Executive
Officers (8 persons)............ 79,003 *
</TABLE>
- --------------------
* Less than 1%
(1) The business address of the persons named above is c/o U.S. Restaurant
Properties, Inc., 12240 Inwood Road, Suite 200, Dallas, Texas 75244.
(2) Except as otherwise indicated, (i) the persons named in this table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, and (ii) none of the shares shown in
this table or referred to in the footnotes hereto are shares of which the
persons named in this table have the right to acquire beneficial ownership
as specified in Rule 13d-3(d)(1) promulgated under the Exchange Act.
(3) Excludes shares beneficially owned by QSV, of which Messrs. Stetson,
Margolin, Darrel Rolph and David Rolph are the stockholders and directors,
and as to which each such person disclaims beneficial ownership.
16
<PAGE> 19
II. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected, upon the recommendation of the
Audit Committee, Deloitte & Touche LLP as the Company's independent auditors for
the year ending December 31, 2000. Deloitte & Touche LLP has been serving as the
independent auditors of the Company (including its predecessors) since 1985.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2000.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that Company directors,
executive officers and persons who own more than 10% of the Common Stock file
initial reports of ownership and reports of changes in ownership of Common Stock
with the SEC. Officers, directors and stockholders who own more than 10% of the
Common Stock are required by the SEC to furnish the Company with copies of all
Section 16(a) reports they file.
To the Company's knowledge, based solely on the review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, the
Company's officers, directors and 10% stockholders complied with all Section
16(a) filing requirements applicable to them.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP served as the Company's independent accountants
for the fiscal year ended December 31, 1999. A representative of Deloitte &
Touche LLP will be present at the Meeting to answer any appropriate questions
and to make a statement if he desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2001 annual
meeting of stockholders of the Company must be received by the Secretary of the
Company at the Company's principal executive office no later than December 22,
2000, in order to be included in the proxy statement and form of proxy for such
meeting.
EXPENSES OF SOLICITATION
The expense of the solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by the directors, officers and employees of the Company by other means,
including telephone, telecopy or in person. No special compensation will be paid
to directors, officers or employees for the solicitation of proxies. To solicit
proxies, the Company also will request the assistance of banks, brokerage houses
and other custodians, nominees or fiduciaries, and, upon request, will reimburse
such organizations or individuals for their reasonable expenses in forwarding
soliciting materials to their principals and in obtaining authorization for the
execution of proxies. American Stock Transfer & Trust Company ("AST") has been
retained to assist in the solicitation of proxies for a
17
<PAGE> 20
fee not to exceed $3,500, plus reimbursement of out-of-pocket expenses. No
officer or director of the Company has an interest in, or is related to any
principal of, AST.
OTHER MATTERS
The management of the Company is not aware of any other matters to be
presented for action at the Meeting; however, if any such matters are properly
presented for action, it is the intention of the persons named in the enclosed
form of proxy to vote in accordance with their best judgment on such matters.
By Order of the Board of Directors,
/s/ FRED H. MARGOLIN
FRED H. MARGOLIN
Secretary
April 24, 2000
Dallas, Texas
STOCKHOLDERS ARE URGED, REGARDLESS OF THE NUMBER OF SHARES OF COMMON
STOCK OF THE COMPANY OWNED, TO DATE, SIGN AND RETURN THE ENCLOSED PROXY. YOUR
COOPERATION IN GIVING THESE MATTERS YOUR IMMEDIATE ATTENTION AND IN RETURNING
YOUR PROXY PROMPTLY IS APPRECIATED.
<PAGE> 21
U.S. RESTAURANT PROPERTIES, INC. ANNUAL MEETING TO BE HELD ON 06/02/00 AT
10:00 A.M. CDT FOR HOLDERS AS OF 04/14/00
* ISSUER CONFIRMATION COPY - INFO ONLY *
11 1-0001 [THIS FORM IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
PLEASE DO NOT USE IT FOR VOTING PURPOSES.]
CUSIP: CONTROL NO
902971100 [ ]
DIRECTORS
DIRECTORS RECOMMEND: A VOTE FOR ELECTION OF THE FOLLOWING NOMINEES 0010100
1 - 01-GERALD H. GRAHAM, 02-GEORGE MILEUSNIC, 03-DARREL L. ROLPH,
04-DAVID K. ROLPH, 05-ROBERT J. STETSON, 06-EUGENE G. TAPER,
07-G. STEVEN DAWSON, 08-FRED H. MARGOLIN
DIRECTORS
PROPOSAL(S) RECOMMEND
2 - TO RATIFY DELOITTE & TOUCHE LLP AS THE COMPANY'S ------>>>> FOR --->>>
INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER 0010200
31, 2000.
*NOTE* SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF
TELEPHONE VOTE AT 1-800-454-8683 OR
INTERNET VOTE AT WWW.PROXYVOTE.COM
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE o
U.S. RESTAURANT PROPERTIES, INC.
06/02/00 AT 10:00 A.M. CDT
2 ITEM(S) SHARE(S)
DIRECTORS
(MARK "X" FOR ONLY ONE BOX)
1 [ ] FOR ALL NOMINEES
[ ] WITHHOLD ALL NOMINEES
[ ] WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE. WRITE
NUMBER(S) OF NOMINEE(S) BELOW:
USE NUMBER ONLY
---------------------------------------
2 FOR AGAINST ABSTAIN PLEASE INDICATE YOUR PROPOSAL SELECTION BY
[ ] [ ] [ ] FIRMLY PLACING AN "X" IN THE APPROPRIATE [X]
NUMBERED BOX WITH BLUE OR BLACK INK ONLY.
DO NOT USE SEE VOTING INSTRUCTION NO. 1 ON REVERSE
DO NOT USE ACCOUNT NO:
FOR AGAINST ABSTAIN CUSIP: 902971100
DO NOT USE CONTROL NO: [ ]
DO NOT USE CLIENT NO:
DO NOT USE PLACE (X) HERE IF YOU PLAN TO ATTEND [ ]
AND VOTE YOUR SHARES AT THE MEETING
FOR AGAINST ABSTAIN
DO NOT USE
DO NOT USE
DO NOT USE 51 MERCEDES WAY
EDGEWOOD NY 11717
FOR AGAINST ABSTAIN
DO NOT USE
DO NOT USE U.S. RESTAURANT PROPERTIES, INC.
12240 INWOOD ROAD
DO NOT USE SUITE 200
DALLAS, TX 75244
FOR AGAINST ABSTAIN
DO NOT USE
DO NOT USE
DO NOT USE
/ /
------------------------------------------ ---- --
SIGNATURE(S) DATE
<PAGE> 22
Proxy Services
P.O. Box 9072
Farmingdale NY 11735-9579
P.O. Box 9072
WRONG WAY
- -------------------------------------------------------------------------------
Fold and Detach Here Fold and Detach Here
PLEASE ENSURE YOU FOLD THEN DETACH AND RETAIN THIS PORTION OF
THE VOTING INSTRUCTION FORM
VOTING INSTRUCTIONS
TO OUR CLIENTS:
WE HAVE BEEN REQUESTED TO FORWARD TO YOU THE ENCLOSED PROXY MATERIAL RELATIVE
TO SECURITIES HELD BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH
SECURITIES CAN BE VOTED ONLY BY US AS THE HOLDER OF RECORD. WE SHALL BE PLEASED
TO VOTE YOUR SECURITIES IN ACCORDANCE WITH YOUR WISHES. IF YOU WILL EXECUTE
THE FORM AND RETURN IT TO US PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE.
IT IS UNDERSTOOD THAT, IF YOU SIGN WITHOUT OTHERWISE MARKING THE FORM, THE
SECURITIES WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL
MATTERS TO BE CONSIDERED AT THE MEETING.
FOR THIS MEETING, THE EXTENT OF OUR AUTHORITY TO VOTE YOUR SECURITIES IN THE
ABSENCE OF YOUR INSTRUCTIONS CAN BE DETERMINED BY REFERRING TO THE APPLICABLE
VOTING INSTRUCTION NUMBER INDICATED ON THE FACE OF YOUR FORM.
VOTING INSTRUCTION NUMBER 1 -
WE URGE YOU TO SEND IN YOUR INSTRUCTION SO THAT WE MAY VOTE YOUR SECURITIES IN
ACCORDANCE WITH YOUR WISHES HOWEVER, THE RULES OF THE NEW YORK STOCK EXCHANGE
PROVIDE THAT IF INSTRUCTIONS ARE NOT RECEIVED FROM YOU PRIOR TO THE ISSUANCE
OF THE FIRST VOTE, THE PROXY MAY BE GIVEN AT DISCRETION BY THE HOLDER OF RECORD
OF THE SECURITIES (ON THE TENTH DAY, IF THE PROXY MATERIAL WAS MAILED AT LEAST
15 DAYS PRIOR TO THE MEETING DATE; ON THE FIFTEENTH DAY IF PROXY MATERIAL WAS
MAILED 25 DAYS OR MORE PRIOR TO THE MEETING DATE). IF YOU ARE UNABLE TO
COMMUNICATE WITH US BY SUCH DATE, WE WILL NEVERTHELESS FOLLOW YOUR
INSTRUCTIONS, EVEN IF OUR DISCRETIONARY VOTE HAS ALREADY BEEN GIVEN, PROVIDED
YOUR INSTRUCTIONS ARE RECEIVED PRIOR TO THE MEETING DATE.
VOTING INSTRUCTION NUMBER 2 -
WE WISH TO CALL YOUR ATTENTION TO THE FACT THAT, UNDER THE RULES OF THE NEW
YORK STOCK EXCHANGE, WE CANNOT VOTE YOUR SECURITIES ON ONE OR MORE OF THE
MATTERS TO BE ACTED UPON AT THE MEETING WITHOUT YOUR SPECIFIC VOTING
INSTRUCTIONS.
IF WE DO NOT HEAR FROM YOU PRIOR TO THE ISSUANCE OF THE FIRST VOTE, WE MAY VOTE
YOUR SECURITIES IN OUR DISCRETION TO THE EXTENT PERMITTED BY THE RULES OF THE
EXCHANGE (ON THE TENTH DAY, IF THE PROXY MATERIAL WAS MAILED AT LEAST 15 DAYS
PRIOR TO THE MEETING DATE; ON THE FIFTEENTH DAY IF THE PROXY MATERIAL WAS
MAILED 25 DAYS OR MORE PRIOR TO THE MEETING DATE). IF YOU ARE UNABLE TO
COMMUNICATE WITH US BY SUCH DATE, WE WILL NEVERTHELESS FOLLOW YOUR VOTING
INSTRUCTIONS, EVEN IF OUR DISCRETIONARY VOTE HAS ALREADY BEEN GIVEN, PROVIDED
YOUR INSTRUCTIONS ARE RECEIVED PRIOR TO THE MEETING DATE.
VOTING INSTRUCTION NUMBER 3 -
IN ORDER FOR YOUR SECURITIES TO BE REPRESENTED AT THE MEETING, IT WILL BE
NECESSARY FOR US TO HAVE YOUR SPECIFIC VOTING INSTRUCTIONS. PLEASE DATE, SIGN
AND RETURN YOUR VOTING INSTRUCTIONS TO US PROMPTLY IN THE RETURN ENVELOPE
PROVIDED.
VOTING INSTRUCTION NUMBER 4
REMINDER - WE HAVE PREVIOUSLY SENT YOU PROXY SOLICITING MATERIAL PERTAINING TO
THE MEETING OF SHAREHOLDERS OF THE COMPANY INDICATED.
ACCORDING TO OUR LATEST RECORDS, WE HAVE NOT AS YET RECEIVED YOUR VOTING
INSTRUCTION ON THE MATTERS TO BE CONSIDERED AT THIS MEETING AND THE COMPANY HAS
REQUESTED US TO COMMUNICATE WITH YOU IN AN ENDEAVOR TO HAVE YOUR SECURITIES
VOTED.
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SECURITIES CARRIED BY US IN YOUR
ACCOUNT BUT NOT REGISTERED IN YOUR NAME. SUCH SECURITIES CAN BE VOTED ONLY BY
US AS THE HOLDER OF RECORD OF THE SECURITIES. PLEASE DATE, SIGN AND RETURN YOUR
VOTING INSTRUCTIONS TO US PROMPTLY IN THE RETURN ENVELOPE PROVIDED.
- --------------------------------------------------------------------------------
SHOULD YOU WISH TO ATTEND THE MEETING AND VOTE IN PERSON, PLEASE CHECK THE BOX
ON THE FRONT OF THE FORM FOR THIS PURPOSE. A LEGAL PROXY COVERING YOUR
SECURITIES WILL BE ISSUED TO YOU.
