<PAGE> 1
As filed with the Securities and Exchange Commission on March __, 2000
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 Material Pursuant to Section 240.14a-11(c) or 240.14a-12
SILVERLEAF RESORTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(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
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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
LOGO
SILVERLEAF RESORTS, INC.
1221 RIVER BEND DRIVE
SUITE 120
DALLAS, TEXAS 75247
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
The 2000 Annual Meeting of Shareholders of Silverleaf Resorts, Inc. (the
"Company") will be held in the Oak Lawn Room at The Melrose Hotel at 3015 Oak
Lawn Avenue, Dallas, Texas 75219 on Tuesday, May 9, 2000, at 9:00 a.m. to:
1. elect two Class III Directors of the Company to serve until the Annual
Meeting of Shareholders in 2003 and until their successors are elected
and qualified;
2. ratify the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the year ending December 31, 2000;
and
3. transact such other business as may properly be brought before the
2000 Annual Meeting or any adjournments or postponements thereof.
The Board of Directors has nominated two individuals for election to serve
as the Class III Directors. The Board of Directors recommends that you vote FOR
these nominees and FOR ratification of the appointment of the independent public
accountants.
Only shareholders of record at the close of business on March 13, 2000 are
entitled to notice of and to vote at the 2000 Annual Meeting or any adjournments
or postponements thereof. A complete list of shareholders entitled to vote at
the 2000 Annual Meeting will be maintained in the Company's offices at 1221
River Bend Drive, Suite 120, Dallas, Texas for ten days prior to the meeting.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE 2000 ANNUAL MEETING.
YOU ARE REQUESTED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, TO COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
IF YOU ATTEND THE MEETING IN PERSON, YOU MAY REVOKE THE PROXY AND VOTE THE
SHARES.
By Order of the Board of Directors,
SANDRA G. CEARLEY
Secretary
Dallas, Texas
March 31, 2000
<PAGE> 3
SILVERLEAF RESORTS, INC.
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Silverleaf Resorts, Inc. ("Silverleaf" or
the "Company") for use at the Annual Meeting of Shareholders to be held at 9:00
a.m., on Tuesday, May 9, 2000, in the Oak Lawn Room at The Melrose Hotel at 3015
Oak Lawn Avenue, Dallas, Texas 75219 or at any adjournment or postponement
thereof, (the "2000 Annual Meeting").
The Company's principal executive offices are located at 1221 River Bend
Drive, Suite 120, Dallas, Texas 75247. A copy of the Company's 1999 Annual
Report to Shareholders and this Proxy Statement and accompanying proxy card will
be first mailed to shareholders on or about March 31, 2000.
VOTING PROCEDURES
A proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to sign, date and return the proxy card in the accompanying
envelope, which is postage prepaid if mailed in the United States.
Concerning the election of the Class III directors, you may: (a) vote for
each of the director nominees; or (b) withhold authority to vote for either or
both nominees according to the way you mark your proxy card. Concerning the
ratification of Deloitte & Touche LLP as the Company's independent public
accountants, by checking the appropriate box you may: (a) vote "For" the item;
(b) vote "Against" the item; or (c) "Abstain" from voting on the item. With
respect to the election of directors, cumulative voting is not permitted.
Shareholders may vote by either completing and returning the enclosed proxy
card prior to the 2000 Annual Meeting, voting in person at the 2000 Annual
Meeting or submitting a signed proxy card at the 2000 Annual Meeting.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
You may revoke your proxy at any time before it is actually voted at the
2000 Annual Meeting by delivering written notice of revocation to the Secretary
of the Company at 1221 River Bend Drive, Suite 120, Dallas, Texas 75247; by
submitting a later dated proxy; or by attending the 2000 Annual Meeting and
voting in person. Attendance at the 2000 Annual Meeting will not, by itself,
constitute revocation of the proxy. You may also be represented by another
person present at the 2000 Annual Meeting by executing a form of proxy
designating such person to act on your behalf.
Each unrevoked proxy card properly signed and received prior to the close
of the 2000 Annual Meeting will be voted as indicated. Unless otherwise
specified on the proxy, the shares represented by a signed proxy card will be
voted FOR items 1 and 2 on the proxy card and will be voted in the discretion of
the persons named as proxies on any other business that may properly come before
the 2000 Annual Meeting.
If a proxy card indicates an abstention or a broker non-vote on a
particular matter, then the shares represented by such proxy will be counted for
quorum purposes, but will not be counted as a vote "For" or "Against" any
proposal. Therefore, if a quorum is present, an abstention or a broker non-vote
will have no effect on the outcome of the voting.
The presence at the 2000 Annual Meeting, in person or by proxy, of a
majority of the shares of the Company's Common Stock ("Common Stock") issued and
outstanding on March 13, 2000, will constitute a quorum.
Votes cast at the 2000 Annual Meeting will be tabulated by the persons
appointed by the Company to act as inspectors of election for the 2000 Annual
Meeting.
The expense, if any, of soliciting proxies and the cost of preparing,
assembling and mailing material in connection with the solicitation of proxies
will be paid by the Company. In addition to the use of mails, certain directors,
officers or employees of the Company and its subsidiaries, who receive no
compensation for their services other than their regular salaries, may solicit
and tabulate proxies. The Company may request banks, brokers and other
custodians, nominees and fiduciaries to forward copies of the proxy materials to
their principals and to request authority for the execution of proxies. The
Company may reimburse such persons for their expenses incurred in doing so.
<PAGE> 4
SHARES ENTITLED TO VOTE AND REQUIRED VOTE
Shareholders of record at the close of business on March 13, 2000 are
entitled to vote at the 2000 Annual Meeting. At that date, 12,889,417 shares of
Common Stock were outstanding. A majority of the votes cast at a meeting of
Shareholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any matter which may properly come before the
2000 Annual Meeting. Each share of Common Stock is entitled to one vote.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Set forth in the following table is the beneficial ownership of the
Company's Common Stock as of March 13, 2000 by (i) those persons known to the
Company to be the beneficial owners of more than five percent of the outstanding
shares, (ii) each current director and the five executive officers of the
Company named under the table titled "Executive Compensation" and (iii) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME OF BENEFICIAL OWNER(a) POSITION OWNED CLASS(b)
------------------------------------ ----------------------- ------------- --------
<S> <C> <C> <C>
Robert E. Mead(c)................... Chairman of the Board 7,250,100 56.23%
and Chief Executive
Officer
Sharon K. Brayfield(c)(d)........... President and Director 117,667 *
David T. O'Connor(c)(e)............. Executive Vice 125,000 *
President -- Sales
James J. Oestreich(c)(f)............ Vice President--Marketing 56,250 *
Allen L. Hudson(c)(g)............... Vice President-- 11,250 *
Architecture and
Engineering Services
Stuart Marshall Bloch(h)(i)......... Director 60,000 *
James B. Francis, Jr.(i)(j)......... Director 42,000 *
Michael A. Jenkins(i)(k)............ Director 41,000 *
All Directors and Executive Officers
as a Group (17 persons)..................................... 7,845,627 58.67%
Dimensional Fund Advisors(l)................................ 944,900 7.33%
</TABLE>
- ----------
* Less than 1%.
(a) Except as otherwise indicated, each beneficial owner has the sole power to
vote and to dispose of all shares of Common Stock owned by such beneficial
owner.
(b) Pursuant to the rules of the Securities and Exchange Commission, in
calculating percentage ownership, each person is deemed to beneficially own
the shares subject to options exercisable within sixty days, but shares
subject to options owned by others (even if exercisable within sixty days)
are not deemed to be outstanding shares. In calculating the percentage
ownership of the directors and officers as a group, the shares subject to
options exercisable by directors and officers within sixty days are
included within the number of shares beneficially owned.
(c) The address of such person is 1221 River Bend Drive, Suite 120, Dallas,
Texas 75247.
(d) Includes options to purchase 31,150 shares of stock which options are
either currently exercisable or which will become exercisable within sixty
days from the date hereof.
(e) Includes options to purchase 125,000 shares of stock which options are
either currently exercisable or which will become exercisable within sixty
days from the date hereof.
(f) Includes options to purchase 56,250 shares which options are either
currently exercisable or which will become exercisable within sixty days
from the date hereof.
(g) Includes options to purchase 11,250 shares which options are exercisable
within sixty days from the date hereof.
(h) The address of such person is 1300 N Street N.W., Washington, D.C. 20005.
(i) Includes options to purchase 40,000 shares which options are currently
exercisable or which will become exercisable within sixty days from the
date hereof. Messrs. Bloch, Francis and Jenkins were each granted options
to purchase 40,000 shares of Common Stock as directors' fees upon becoming
a member of the Board of Directors in 1997. Such options vest over a term
of three years, with the vesting of the final one-third (13,333 shares
each) to occur in May 2000. In December 1999, each director was granted
additional options to purchase 20,000 shares. Because the options granted
in 1999 will not commence vesting until November 2000, the shares are not
included in the total number of shares deemed to be beneficially owned by
each director.
(j) The address of such person is 2911 Turtle Creek Boulevard, Suite 925,
Dallas, Texas 75219.
(k) The address of such person is 2151 Fort Worth Avenue, Dallas, Texas
75211-1812.
3
<PAGE> 6
(l) Dimensional Fund Advisors, Inc. ("Dimensional") furnishes investment advice
to four investment companies and serves as investment manager to certain
other commingled group trusts and separate accounts (the "Funds"). The
shares described are owned by the Funds. In its role as investment adviser
or manager to the Funds, Dimensional possesses voting and/or investment
power over the shares described, but disclaims beneficial ownership of such
securities. The address for Dimensional is 1299 Ocean Avenue, 11th Floor,
Santa Monica, California 90401. This information is based upon information
provided by Dimensional on Schedule 13G dated February 4, 2000.
COMPLIANCE WITH SECTION 16(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities
("Insiders"), to file with the Commission initial reports of ownership and
reports of changes in ownership of Common Stock. Insiders are required by the
Commission's regulations to furnish to the Company copies of all Section 16(a)
reports filed by such persons.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations from the
Insiders, all Insiders complied with all applicable Section 16(a) filing
requirements.
4
<PAGE> 7
PROPOSAL 1
ELECTION OF CLASS III DIRECTORS
GENERAL INFORMATION -- ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation, as amended (the
"Articles"), the Bylaws, as amended (the "Bylaws"), and resolutions adopted by
the Company's Board of Directors, the Company currently has five directors. The
Company's Articles provide for its Board of Directors to be divided into three
classes and one class of directors will be elected each year for a three-year
term. Mr. Bloch has been classified as a Class I Director of the Company and was
re-elected at the 1998 Annual Meeting to serve until the annual meeting of
shareholders in 2001. Ms. Brayfield and Mr. Jenkins have been classified as
Class II Directors of the Company and were re-elected at the 1999 Annual Meeting
to serve until the annual meeting of shareholders in 2002. Messrs. Mead and
Francis have been classified as Class III Directors and their initial terms will
expire at the 2000 Annual Meeting. Directors elected at each annual meeting will
serve until his or her respective successor shall have been elected or
appointed.
Messrs. Mead and Francis have been nominated by the Board of Directors for
election to serve as the Class III Directors. Mr. Mead has served as a Director
since the Company's inception in 1989 and as Chief Executive Officer of the
Company since 1990. Mr. Francis has served as a director of the Company since
July 1997. For a description of the background and qualifications of Messrs.
Mead and Francis see "Directors and Executive Officers."
In the absence of instructions to the contrary, votes will be cast FOR the
election of Messrs. Mead and Francis as Class III Directors pursuant to the
proxies solicited hereby. In the event either is unable or declines to serve as
a Class III Director at the time of the 2000 Annual Meeting, the proxy will be
voted for any substitute nominee selected by the current Board of Directors.
Management has no reason to believe, at this time, that either Mr. Mead or Mr.
Francis will be unable or will decline to serve if elected. Each nominee has
informed the Company that he will serve if elected.
DIRECTOR COMPENSATION
In June 1997, the Company granted to each Independent Director (Messrs.
Bloch, Francis, and Jenkins), as directors' fees, options to purchase 40,000
shares of Common Stock at $16.00 per share. Such options vest in three equal
portions over a term of three years, with the first vesting date occurring in
May 1998, the second in May 1999, and the third in May 2000. The options expire
in June 2007. During 1999, each Independent Director was granted additional
options to purchase 20,000 shares at $7.3125 per share. Such options vest in
three equal portions over a term of three years, commencing in November 2000. In
addition to such option grants, in May 1999, the Board of Directors approved a
proposal whereby each of the Independent Directors is to receive an annual fee
of $15,000, payable quarterly, plus $2,000 for each meeting of the Board of
Directors attended either in person or telephonically. Each of the Independent
Directors who serves on one or more committees of the Board of Directors
receives an additional annual fee of $5,000, also payable quarterly, for serving
on one committee of the Board of Directors, plus an additional annual fee of
$2,500 for each additional committee membership. The Independent Directors are
reimbursed for expenses incurred in attending meetings of the Board of
Directors. Officers of the Company who are directors are not paid any directors'
fees but are reimbursed for expenses of attending meetings of the Board of
Directors.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
Board of Directors. The Board of Directors met five times during the year
ended December 31, 1999, and took action by unanimous written consent once. The
Audit Committee met five times in 1999. The Executive Committee met once during
1999 and took action by unanimous written consent on 56 different times. The
Compensation Committee met once during 1999 and took action by unanimous written
consent once. During 1999, all members of the Board of Directors attended at
least seventy-five percent of the Board meetings.
Executive Committee. The Board of Directors has established an executive
committee (the "Executive Committee"), which is authorized in the intervals
between meetings of the Board of Directors to perform all of the rights and
duties of the Board of Directors, except the power to declare dividends or
distributions on stock, approve any merger or share exchange which does not
require shareholder approval, amend the Bylaws, issue stock other than as
permitted by statute, recommend to the shareholders any action that requires
shareholder approval, or exercise rights delegated to the Audit Committee or
Compensation Committee. The current members of the Executive Committee are Ms.
Brayfield and Messrs. Mead and Francis.
Audit Committee. The Board of Directors has established an audit committee
(the "Audit Committee"), which consists of two or more directors who meet the
independence requirements imposed by the New York Stock Exchange's Audit
Committee Policy. The Audit Committee makes recommendations concerning the
engagement of independent public accountants, reviews the plans and
5
<PAGE> 8
results of the audit engagement, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants and the adequacy of the Company's internal accounting
controls, considers the range of audit and non-audit fees, and reviews the
Company's periodic reports to the Securities and Exchange Commission. The
current members of the Audit Committee are Messrs. Bloch, Francis and Jenkins.
Compensation Committee. The Board of Directors has established a
compensation committee (the "Compensation Committee"), which consists of two
directors who are non-employee directors within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934 (an "Independent Director") to determine
compensation for the Company's senior executive officers and to administer the
Company's 1997 Stock Option Plan. The current members of the Compensation
Committee are Messrs. Francis and Jenkins. For the period ending December 31,
1999, the Compensation Committee made all decisions regarding executive
compensation and administration of the 1997 Stock Option Plan. See "Executive
Compensation -- Report of Compensation Committee."
The Board of Directors of the Company does not have a nominating committee
or any other committee except as set forth above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CLASS III DIRECTORS
NOMINATED IN PROPOSAL 1.
PROPOSAL 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
GENERAL
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Deloitte & Touche LLP as the Company's independent public accountants
for the year ending December 31, 2000. A representative of Deloitte & Touche LLP
will be present at the 2000 Annual Meeting and will be given an opportunity to
make a statement and answer questions. This appointment is being submitted for
ratification at the 2000 Annual Meeting. If the appointment is not ratified, the
appointment will be reconsidered by the Board of Directors, although the Board
of Directors will not be required to appoint different independent auditors for
the Company. Reconsideration by the Board of Directors could result in a delay
of the appointment of independent auditors due to the difficulty and expense of
the selection process.
In the absence of instructions to the contrary, votes will be cast FOR
the ratification of Deloitte & Touche LLP as the Company's independent public
accountants for the year ending December 31, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2000 AS DESCRIBED IN PROPOSAL 2.
6
<PAGE> 9
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each person
who is a director or executive officer of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------- ---- ------------------------------
<S> <C> <C>
Robert E. Mead................... 53 Chairman of the Board and Chief
Executive Officer
Sharon K. Brayfield.............. 39 Director and President
David T. O'Connor................ 58 Executive Vice President -- Sales
Thomas C. Franks................. 46 Executive Vice President --
Corporate Affairs; President of
Silverleaf Resort
Acquisitions, Inc.
Harry J. White, Jr............... 45 Chief Financial Officer,
Treasurer
Larry H. Fritz................... 47 Vice President -- Marketing
Ioannis N. Gioldasis............. 49 Vice President -- Promotions
Allen L. Hudson.................. 53 Vice President -- Architecture
and Engineering Services
Michael L. Jones ................ 33 Vice President -- Information
Services
Edward L. Lahart................. 35 Vice President -- Corporate
Operations
Robert G. Levy................... 51 Vice President -- Resort
Operations
David McPherson.................. 37 Vice President -- Finance
James J. Oestreich............... 59 Vice President -- Marketing
Development
Sandra G. Cearley................ 38 Secretary
Stuart Marshall Bloch............ 57 Director
James B. Francis, Jr............. 52 Director
Michael A. Jenkins............... 57 Director
</TABLE>
Robert E. Mead founded the Company, has served as its Chairman of the Board
since its inception, and has served as its Chief Executive Officer since May
1990. Mr. Mead began his career in hotel and motel management and also operated
his own construction company. Mr. Mead currently serves as a Trustee member of
the American Resort Developers Association ("ARDA") and has over 20 years of
experience in the timeshare industry, with special expertise in the areas of
consumer finance, hospitality management and real estate development.
Sharon K. Brayfield has served as the President of the Company since 1992
and manages all of the Company's day to day activities. Ms. Brayfield began her
career with an affiliated company in 1982 as the Public Relations Director of
Ozark Mountain Resort. In 1989, she was promoted to Executive Vice President of
Resort Operations for an affiliated company and in 1991 was named Chief
Operations Officer of the Company.
David T. O'Connor has over 20 years of experience in real estate and
timeshare sales and has worked periodically with Mr. Mead over the past 15
years. Mr. O'Connor has served as the Company's Executive Vice President --
Sales for the past three years and as Vice President -- Sales since 1991. In
such capacities he directed all field sales, including the design and
preparation of all training materials, incentive programs, and follow-up sales
procedures.
Thomas C. Franks was hired in August 1997 as President of a newly-formed,
wholly-owned subsidiary of the Company, Silverleaf Resort Acquisitions, Inc. In
February 1998, Mr. Franks was named as Vice President -- Investor Relations and
Governmental Affairs for the Company, and in October 1998 he was named Executive
Vice President--Corporate Affairs. Mr. Franks has more than 17 years of
experience in the timeshare industry and is responsible for acquisitions and
industry and governmental relations. Mr. Franks served as the President of ARDA
from February 1991 through July 1997.
Harry J. White, Jr. joined the Company in June 1998 as Chief Financial
Officer and Treasurer and has responsibility for all accounting, financial
reporting and taxation issues. From January 1995, Mr. White served as Vice
President and Chief Financial Officer of Thousand Trails, Inc. Prior to that
time he was a senior manager with Deloitte & Touche LLP.
Larry H. Fritz has been employed by the Company (or an affiliated company)
periodically over the past ten years and has served in various marketing
management positions. Since 1991, Mr. Fritz has served as the Company's chief
marketing officer, with responsibility for daily marketing operations, and
currently serves as the Company's Vice President -- Marketing.
Ioannis N. Gioldasis has been with the Company since May 1993 and currently
serves as Vice President -- Promotions. Mr. Gioldasis is responsible for the
design and implementation of marketing strategies and promotional concepts for
lead generation in Texas and other markets. Prior to joining the Company, Mr.
Gioldasis was a national field director for Resort Property Consultants, Inc.
7
<PAGE> 10
Allen L. Hudson joined the Company on June 1, 1998 as Vice President -
Architecture and Engineering Services. Prior to joining the Company, Mr. Hudson
was President and Chief Operating Officer of an architectural firm which
provided consultant design and project management services to the Company from
1995 until June 1998. See "Certain Relationships and Related Transactions."
Michael L. Jones was elected Vice President--Information Services in May
1999. Prior to that time, Mr. Jones served in various positions with the
Company, including Network Manager, Payroll Manager and Director of Information
Services.
Edward L. Lahart has served as Vice President - Corporate Operations since
June 1998. Prior to that time, Mr. Lahart had served in various capacities in
the Credit and Collections Department since 1989.
Robert G. Levy was appointed Vice President -- Resort Operations in March
1997 and administers the Company's Management Agreement with the Silverleaf
Club. Since 1990, Mr. Levy has held a variety of managerial positions with the
Silverleaf Club including Project Manager, General Manager, Texas Regional
Manager, and Director of Operations. Prior thereto, Mr. Levy spent 18 years in
hotel, motel, and resort management, and was associated with the Sheraton,
Ramada Inn, and Holiday Inn hotel chains.
David D. McPherson was elected Vice President--Finance in May 1999. Prior
to that time, Mr. McPherson served as Director of Audit of the Company from July
1998 to May 1999 and as Director of Finance from May 1997 to July 1998. Before
joining the Company, Mr. McPherson served as Chief Financial Officer of Neutral
Posture Ergonomics, Inc. from May 1996 to April 1997 and as a Senior Auditor of
Deloitte & Touche, LLP from September 1992 until May 1996.
James J. Oestreich joined the Company in February 1998 as Vice President --
Marketing Development. From January 1991 to August 1995, Mr. Oestreich served as
Vice President of Sales and Marketing for Casablanca Express, Inc. From August
1995 until joining the Company in 1998, Mr. Oestreich served as President of
Bull's Eye Marketing, Inc., a provider of marketing services to the resort and
direct sales industries. See "Certain Relationships and Related Transactions."
Sandra G. Cearley has served as Secretary of the Company since its
inception. Ms. Cearley maintains corporate minute books, oversees regulatory
filings, and coordinates legal matters with the Company's attorneys.
Stuart Marshall Bloch was elected as a Director of the Company in July
1997. Since 1972, Mr. Bloch has been a partner in the law firm of Ingersoll &
Bloch, in Washington, D.C. Ingersoll & Bloch has served as general counsel to
ARDA since 1972. Mr. Bloch is also currently serving as counsel to the law firm
of Holland & Knight, LLC. Mr. Bloch is the founding director and a past
president of the International Foundation for Timesharing. Mr. Bloch has
authored numerous articles dealing with real estate law and the timeshare
industry.
James B. Francis, Jr. was elected as a Director of the Company in July
1997. During 1996, Mr. Francis' company, Francis Enterprises, Inc., served as a
consultant to the Company in connection with governmental and public affairs.
From 1980 to 1996, Mr. Francis was a partner in the firm of Bright & Co., which
managed various business investments, including the Dallas Cowboys Football
Club. Mr. Francis also serves as a director of Flashnet Communications, Inc., an
internet access provider.
Michael A. Jenkins was elected as a Director of the Company in July 1997.
In 1971, Mr. Jenkins founded and became the President of Leisure and Recreation
Concepts, Inc., which has planned and designed over 850 theme parks, resorts,
retail areas, and major attractions worldwide. Mr. Jenkins has more than 35
years in the leisure industry and serves on the Board of Directors of Leisure
and Recreation Concepts, Inc. Mr. Jenkins also serves as President of the Dallas
Summer Musicals, Inc. and the Broadway Contemporary Series.
8
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual base salary and other annual
compensation earned in 1997, 1998 and 1999 by the Company's Chief Executive
Officer and each of the other four most highly compensated executive officers
whose cash compensation (salary and bonus) exceeded $100,000 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION ($) COMPENSATION
------------------------------------------- ------------
SECURITIES
OTHER UNDERLYING
NAME AND PRINCIPAL ANNUAL OPTIONS/SARS
POSITION YEAR SALARY (a) BONUS COMPENSATION (b) (#)
- ------------------------- ---- ------------ ------------ ---------------- -------------
<S> <C> <C> <C> <C> <C>
Robert E. Mead, ............ 1997 $ 500,000 -- -- --
Chief Executive Officer 1998 $ 500,015 -- -- --
1999 $ 500,011
Sharon K. Brayfield, ....... 1997 $ 133,101 -- $ 298,761 --
President 1998 $ 267,503 $ 29,903 $ 343,803 125,000
1999 $ 435,004 $ 38,321 $ 107,806 25,000
David T. O'Connor, ......... 1997 -- -- $ 726,310(c) 200,000
Executive Vice 1998 -- $ 209,216 $ 1,478,862(c) 100,000
President Sales 1999 -- $ 80,259 $ 1,272,648 50,000
James J. Oestreich, (d) .... 1997 -- -- -- --
Vice President- 1998 $ 284,149 $ 94,782 -- 125,000
Marketing Development 1999 $ 442,832 $ 31,119 -- 25,000
Allen L. Hudson, (e) ....... 1997 -- -- -- --
Vice President- 1998 $ 204,326 -- $ 100,000(f) 25,000
Architecture and 1999 $ 350,000 -- $ 100,000(f) 5,000
Engineering Services
</TABLE>
- ----------
(a) The amounts shown are before elective contributions by the Named
Executive Officers in the form of salary reductions under the Company's
Section 125 Flexible Benefit Plan. Such plan is available to all
employees, including the Named Executive Officers.
(b) Except as otherwise noted, these amounts represent additional
compensation based on sales of Vacation Intervals and other sales related
criteria. See "Executive Compensation -- Employment and Noncompetition
Agreements" for a discussion of other annual compensation.
(c) A portion of this amount was paid as sales commissions to Recreational
Consultants, Inc., a corporation of which Mr. O'Connor is the principal.
See "Certain Relationships and Related Transactions."
(d) Mr. Oestreich was not employed by the Company in 1997; therefore, no
information is provided for that year.
(e) Mr. Hudson was not an employee of the Company during 1997; however, Mr.
Hudson's architectural firm, Hudson & Company, Inc., did provide services
to the Company during 1997 as an independent contractor. During 1997, the
Company paid Mr. Hudson's firm $401,000 for providing such services.
Between January 1998 and June 1998, when Mr. Hudson became a full time
employee of the Company, Mr. Hudson's firm received an additional
$246,000 for architectural services rendered to the Company during 1998.
See "Certain Relationships and Related Transactions." During 1997, Mr.
Hudson was also granted non-qualified options to purchase 10,000 shares
of the Company's stock under the 1997 Stock Option Plan.
(f) Mr. Hudson was paid $100,000 in 1998 and in 1999 under his employment
contract with the Company for the exclusivity of his services. See
"Executive Compensation - Employment and Noncompetition Agreements" and
"Certain Relationships and Related Transactions."
Employment and Noncompetition Agreements
Effective January 1, 1997, Mr. Mead entered into a three year employment
agreement with the Company which provided for an annual base salary of $500,000,
use of a company vehicle, and other fringe benefits such as health insurance,
vacation, and sick leave as determined by the Board of Directors of the Company
from time to time. The agreement terminated on December 31, 1999.
Effective January 1, 1997, Ms. Brayfield entered into a three-year
employment agreement with the Company which was amended on July 31, 1998. The
amended agreement provided for an annual base salary of $435,000 plus an
incentive bonus equal to .125% of the Company's net sales from Vacation
Intervals, plus the use of a company vehicle, and other fringe benefits such as
health insurance, vacation, and sick leave as determined by the Board of
Directors of the Company from time to time. The employment agreement terminated
on December 31, 1999.
9
<PAGE> 12
Effective May 12, 1997, Mr. O'Connor entered into an employment agreement
with the Company which was amended in August 1998. Pursuant to the amended
agreement, Mr. O'Connor received commissions equal to 1.0% of the Company's net
sales from Vacation Intervals generated by in-house sales efforts and 0.6% of
the Company's net sales from Vacation Sales generated by the Company's outside
sales force. Mr. O'Connor also received additional commissions based on weekly
sales of upgrades and revenue per guest, the use of a company vehicle and other
fringe benefits such as health insurance, vacation, and sick leave as determined
by the Board of Directors of the Company from time to time. The agreement
expired on December 31, 1999.
In January 1998, Mr. Oestreich entered into an employment agreement with
the Company which was amended in June and September 1998. See "Certain
Relationships and Related Transactions." The amended agreement provides for an
annual base salary of $350,000 plus bonus compensation equal to 0.1% for
contracts attributable to tours under the Company's mini-vacation program and
0.2% for contracts attributable to the Company's discovery program. The
agreement also provides for use of a company vehicle and other fringe benefits
such as health insurance, vacations and sick leave as determined by the Board of
Directors of the Company from time to time.
In January 1998, Mr. Hudson entered into an employment agreement with the
Company, pursuant to which he became an Executive Officer of the Company in May
1998. The agreement provides for Mr. Hudson's employment as Vice President of
Architecture and Engineering Services for a term of four years for an annual
base salary of $350,000, use of a company vehicle, and other fringe benefits
such as health insurance, vacations and sick leave as determined by the Board of
Directors of the Company from time to time. Mr. Hudson will also receive
$500,000 to be paid over a three year period as compensation for and in
consideration of the exclusivity of his services. The Company paid $200,000 of
this amount in 1998 and purchased his condominium in Branson, Missouri for a
purchase price of $108,000. See "Certain Relationships and Related
Transactions."
In July 1997, Thomas C. Franks entered into an employment agreement with
the Company which provided for an annual base salary of $325,000, use of a
company vehicle, and other fringe benefits such as health insurance, vacation,
and sick leave as determined by the Board of Directors of the Company from time
to time. During 1998, Mr. Franks' salary was increased to $350,000. Either party
may terminate the agreement upon 30 days notice to the other; however, if the
Company terminates Mr. Franks for other than "good cause," the Company shall be
obligated to make a severance payment to him in an amount equal to his annual
base salary. In connection with Mr. Franks employment, in August 1997, the
Company purchased a house for $531,000 and leased the house to Mr. Franks for 13
months at a rental equal to (i) the Company's interest on a $418,000 mortgage
loan incurred in connection with the purchase, plus (ii) insurance and taxes,
which amount was approximately $3,124 per month. Mr. Franks exercised his option
to purchase the house at the end of the 13-month term for $531,000, plus 8% per
annum on the Company's down payment for the house ($113,000) which the Company
financed at a rate of eight percent per annum. See "Certain Relationships and
Related Transactions."
In June 1998, Harry J. White, Jr. entered into an employment agreement with
the Company pursuant to which Mr. White will be employed as the Chief Financial
Officer of the Company. The agreement provides for an annual base salary of
$200,000, use of a Company vehicle, and other fringe benefits such as health
insurance, paid vacation and sick leave and other benefits as determined by the
Board of Directors of the Company from time to time. The agreement may be
terminated by either party with thirty days notice. In the event that Mr.
White's employment is terminated without good cause, the Company is obligated to
pay him an amount equal to six months of his annual base salary.
Each of the employment agreements discussed above provides that such
persons will not (i) influence any employee or independent contractor to
terminate its relationship with the Company, or (ii) disclose any confidential
information of the Company for a period of one year following termination of the
agreement.
EMPLOYEE BENEFIT PLANS
1997 Stock Option Plan
The Company adopted the 1997 Stock Option Plan (the "Plan") in May 1997 to
attract and retain directors, officers, and key employees of the Company. The
Plan was amended by the Company's shareholders at the 1998 Annual Meeting of
Shareholders to increase the number of options which may be granted under the
Plan to 1,600,000 and to modify the number of outside directors who, as members
of the Compensation Committee, may administer the Plan. The following is a
summary of the provisions of the Plan. This summary does not purport to be a
complete statement of the provisions of the Plan and is qualified in its
entirety by the full text of the Plan.
The purpose of the Plan is to afford certain of the Company's directors,
officers and key employees and the directors, officers and key employees of any
subsidiary corporation or parent corporation of the Company who are responsible
for the continued growth of
10
<PAGE> 13
the Company, an opportunity to acquire a proprietary interest in the Company,
and thus to create in such directors, officers and key employees an increased
interest in and a greater concern for the welfare of the Company. The Company,
by means of the Plan, seeks to retain the services of persons now holding key
positions and to secure the services of persons capable of filling such
positions. The Plan provides for the award to directors, officers, and key
employees of nonqualified stock options and provides for the grant to salaried
key employees of options intended to qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). The
Company has filed a Registration Statement to register such shares.
Nonqualified stock options provide for the right to purchase common stock
at a specified price which may be less than fair market value on the date of
grant (but not less than par value). "Fair market value" per share shall be
deemed to be the average of the high and low quotations at which the Company's
shares of common stock are sold on a national securities exchange, or if not
sold on a national securities exchange, the closing bid and asked quotations in
the over-the-counter market for the Company's shares on such date. If no public
market exists for the Company's shares on any date on which the fair market
value per share is to be determined, the Compensation Committee shall, in its
sole discretion and best, good faith judgment, determine the fair market value
of a share. Nonqualified stock options may be granted for any term and upon such
conditions determined by the Compensation Committee.
Incentive stock options are designed to comply with the provisions of the
Code and are subject to restrictions contained therein, including exercise
prices equal to at least 100% of fair market value of common stock on the grant
date and a ten year restriction on their term; however, incentive stock options
granted to any person owning more than 10% of the voting power of the stock of
the Company shall have exercise prices equal to at least 110% of the fair market
value of the common stock on the grant date and shall not be exercisable after
five years from the date the option is granted. Except as otherwise provided
under the Code, to the extent that the aggregate fair market value of Shares
with respect to which Incentive Options are exercisable for the first time by an
employee during any calendar year exceeds $100,000, such Incentive Options shall
be treated as Non-Qualified Options.
The Plan may either be administered by the Compensation Committee or the
Board of Directors which selects the individuals to whom options are to be
granted and determines the number of shares granted to each optionee. For the
period ending December 31, 1999, the Compensation Committee and the Board of
Directors made all decisions concerning administration of the Plan. See
"Executive Compensation -- Report of Compensation Committee."
An optionee may exercise all or any portion of an option that is
exercisable by providing written notice of such exercise to the Corporate
Secretary of the Company at the principal business office of the Company,
specifying the number of shares to be purchased and specifying a business day
not more than fifteen days from the date such notice is given, for the payment
of the purchase price in cash or by certified check. Options are not
transferable by the optionee other than by will or the laws of descent and
distribution, and an option may be exercised only by the optionee.
The following are the federal tax rules generally applicable to options
granted under the Plan. The grant of a stock option will not be a taxable event
for the participant nor a tax deduction for the Company. The participant will
have no taxable income upon exercising an incentive stock option within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended (except
that the alternative minimum tax may apply). Upon exercising a stock option that
is not an incentive option, the participant must recognize ordinary income in an
amount equal to the difference between the exercise price and the fair market
value of the stock on the exercise date and the Company receives a tax deduction
equal to the amount of ordinary income recognized by the participant. The tax
treatment upon disposition of shares of the Company's Common Stock acquired
under the Plan through the exercise of a stock option will depend on how long
such shares have been held, and on whether or not such shares were acquired by
exercising an incentive stock option.
An option shall terminate upon termination of the directorship, office or
employment of an optionee with the Company or its subsidiary, except that if an
optionee dies while serving as a director or officer or while in the employ of
the Company or one of its subsidiaries, the optionee's estate may exercise the
unexercised portion of the option. If the directorship, office or employment of
an optionee is terminated by reason of the optionee's retirement, disability, or
dismissal other than "for cause" while such optionee is entitled to exercise all
or any portion of an option, the optionee shall have the right to exercise the
option, to the extent not theretofore exercised, at any time up to and including
(i) three months after the date of such termination of directorship, office or
employment in the case of termination by reason of retirement or dismissal other
than for cause and (ii) one year after the date of termination of directorship,
office, or employment in the case of termination by reason of disability. If an
optionee voluntarily terminates his directorship, office or employment, or is
discharged for cause, any option granted shall, unless otherwise specified by
the Compensation Committee pursuant to the terms and condition of the grant of
the option, forthwith terminate with respect to any unexercised portion thereof.
All terminated options shall be returned to the Plan and shall be available for
future grants to other optionees.
The Plan will terminate on May 15, 2007 (the "Termination Date"), the tenth
anniversary of the day the Plan was adopted by the Board of Directors of the
Company and approved by its shareholders. Any options granted prior to the
Termination Date and which remain unexercised may extend beyond that date in
accordance with the terms of the grant thereof.
11
<PAGE> 14
Under the Plan, the Board of Directors of the Company reserves the right to
exercise the powers and functions of the Compensation Committee. Also, the Board
of Directors reserves the right to amend the Plan at any time; however, the
Board of Directors may not, without the approval of the shareholders of the
Company (i) increase the total number of shares reserved for options under the
Plan (other than for certain changes in the capital structure of the Company),
(ii) reduce the required exercise price of any incentive stock options, or (iii)
modify the provisions of the Plan regarding eligibility.
OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1999
The following table contains information concerning the grant of stock
options under the Plan made during the year ended December 31, 1999 to the Named
Executive Officers. The table also lists potential realizable values of such
options on the basis of assumed annual compounded stock appreciation rates of 5%
and 10% over the life of the options which are set for a maximum of ten years.
No options were exercised during 1999 by any of the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
--------------------------------------- REALIZABLE VALUE
AT ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL RATE OF SHARE
SECURITIES OPTIONS GRANTED EXERCISE PRICE APPRECIATION
UNDERLYING TO OR BASE (IN THOUSANDS OF DOLLARS)(b)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED(a) FISCAL YEAR SHARE DATE 5% 10%
- ------------------------- ---------- ---------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Mead .......... -- -- -- -- -- --
Sharon K. Brayfield ..... 25,000 8.7% $ 7.3125 11/19/09 $ 298 $ 474
David T. O'Connor ....... 50,000 17.3% $ 7.3125 11/19/09 $ 596 $ 948
James C. Oestreich ...... 25,000 8.7% $ 7.3215 11/19/09 $ 298 $ 474
Allen L. Hudson ......... 5,000 1.7% $ 7.3125 11/19/09 $ 6 $ 95
</TABLE>
- ----------
(a) These options will vest in four equal increments on the first, second,
third and fourth anniversaries of the date of the grant.
(b) The potential realizable value (in thousands of dollars) is reported
net of the option price, but before income taxes associated with
exercise. These amounts represent assumed annual compounded rates of
appreciation at 5% and 10% only from the date of grant to the
expiration date of the option. The rates of appreciation shown in this
table are required by the Securities and Exchange Commission and are
not intended to forecast or be indicative of possible future
performance of the Common Stock.
Options/SARs Exercises and Year-End Value Table.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS/SARS AT MONEY OPTIONS/SARS AT FISCAL
ACQUIRED ON FISCAL YEAR-END(#)(a) YEAR-END($)(a)
EXERCISE VALUE ------------------------------- -------------------------------
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Mead ........ -- -- -- -- -- --
Sharon K. Brayfield ... -- -- 31,150 118,850 -- --
David T. O'Connor ..... -- -- 125,000 225,000 -- --
James J. Oestreich .... -- -- 62,500 93,750 -- --
Allen L. Hudson ....... -- -- 11,250 28,750 -- --
</TABLE>
- ----------
(a) The Unexercised Options of the Named Executive Officers were not
in-the-money at fiscal year end; therefore, the options had no value
as of December 31, 1999.
Section 162(m) Limitation. In general, under Section 162(m) of the Code,
income tax deductions of publicly-held corporations may be limited to the extent
total compensation (including base salary, annual bonus, stock option exercises
and non-qualified benefits paid) for certain executive officers exceeds $1
million (less the amount of any "excess parachute payments" as defined in
Section 280G of the Code) in any one year. However, under Section 162(m), the
deduction limit does not apply to certain "performance-based compensation"
established by an independent compensation committee which is adequately
disclosed to, and approved by, the shareholders.
12
<PAGE> 15
Discretionary Performance Awards. Performance awards, including bonuses,
may be granted by the Compensation Committee on an individual or group basis.
Generally, these awards will be based upon specific agreements or performance
criteria and will be paid in cash.
401(k) Plan. Effective January 1, 1999, the Company established the
Silverleaf Resorts, Inc. 401(k) Plan (the "401(k) Plan"), a qualified defined
contribution retirement plan covering employees 21 years of age or older who
have completed one year of service. The Plan allows eligible employees to defer
receipt of up to 15% of their compensation and contribute such amounts to
various investment funds. The employee contributions vest immediately. Other
than normal costs of administration, the Company has no obligation to make any
payments under the 401(k) Plan.
REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Interlocks and Insider Participation
The Board of Directors formed the Compensation Committee in July 1997
following the completion of the Company's initial offering of stock (the
"Initial Public Offering") in June 1997. Prior to the Initial Public Offering,
Mr. Mead and Ms. Brayfield constituted the entire Board of Directors of the
Company, and they approved all executive compensation agreements until the Board
was enlarged to add three outside directors in July 1997 following the Initial
Public Offering. There are no "interlocks" (as defined by the rules of the
Commission) with respect to any members of the Compensation Committee. During
1999, the Compensation Committee consisted of two members, Messrs. Francis and
Jenkins, who are non-employee, independent directors. For the period ending
December 31, 1999, all decisions concerning executive compensation and
administration of the Company's 1997 Stock Option Plan were made by the
Compensation Committee. Additionally, the Committee also reviews and makes
recommendations to the Board of Directors for the approval of all material
employee benefit plans, benefit and compensation structures for directors, and
oversees the criteria for performance based compensation. In acting upon these
matters, the Committee considers, among other information, recommendations from
the Chief Executive Officer and the President of the Company. The Board of
Directors has final approval authority over all matters considered by the
Committee other than the administration of and the issuance of stock option
grants under the Company's 1997 Stock Option Plan.
Report of Compensation Committee
Incorporation by Reference. The report of the Compensation Committee shall
not be deemed incorporated by reference by a general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
(the "Securities Act") or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
General Compensation Policies
The Company's compensation program for executive officers is designed to
attract, motivate, and retain qualified individuals having the skills,
experience, and leadership necessary to manage the Company's present and future
business in a manner consistent with the interests of the shareholders.
Accordingly, the Company strives to provide compensation opportunities,
including current compensation and short and long-term incentive awards, that
are externally competitive and internally equitable. Because of the Company's
recent and anticipated growth in sales and its need to attract executives having
the skills necessary to build and manage a large business organization, the
Company attempts to establish compensation opportunities at levels that are
competitive not only with those of other companies of the same size in the
Company's industry, but also with those of larger companies in the same and
related industries with whom the Company believes it must compete for executive
talent. The Company strives to establish short and long-term compensation
opportunities that create compatibility between the interests of the Company's
executives and the interests of the Company's shareholders.
Executive Compensation Components
The Company's compensation program for its executive officers consists of
three principal components: (i) a base annual salary; (ii) a performance-based
annual cash bonus; and (iii) stock options. The Company believes that the cash
bonus and stock option components of the Company's executive compensation
provide short and long-term incentives that align the interests of the Company's
executive officers with the interests of its shareholders.
The Committee strives to set base salaries and bonus compensation at levels
necessary to attract and retain executive officers with skill and experience
needed by the Company in light of its current and anticipated business
activities. For the most recent fiscal year, the base salary and maximum cash
bonus opportunity for each of the Company's executive officers (including the
Named Executive Officers) were documented in an employment agreement that was
negotiated with each executive. See "Executive Officers -
13
<PAGE> 16
Employment Agreements." The employment agreements for the Named Executive
Officers except Mr. Oestreich and Mr. Hudson were originally negotiated before
the completion of the Company's Initial Public Offering and the formation of the
Committee, based upon management's discussion with the Company's underwriters
and its historic compensation policies. Each executive employment agreement
generally provides for a minimum annual salary.
Factors considered during 1999 in setting compensation were primarily
subjective, such as the perceptions of the individual's performance, any planned
change in functional responsibility, and other factors which evidenced
contributions to the Company's long-term sales growth and profit objectives.
While the rapid growth in the Company's sales of vacation ownership intervals
was taken into consideration, a mix of objective factors, such as comparisons
with an identified industry peer group were not considered in setting executive
officer compensation.
At the beginning of 1998, Ms. Brayfield and Mr. O'Connor had written
employment agreements with the Company which were entered into prior to the
Initial Public Offering and had three year terms. At the time of the Initial
Public Offering, the Compensation Committee's and the Board's preference was to
emphasize, where appropriate, performance based incentive compensation over base
salary. The Compensation Committee and the Board of Directors believe that these
contractual incentive compensation arrangements, which are measured by strategic
elements of the Company's marketing and sales performance, benefit the Company
and are consistent with the Compensation Committee's and the Board's preference
to emphasize performance based incentive compensation over base salary for
certain key employees. While the Compensation Committee continues to prefer
performance based compensation, during 1998, it recognized that the significant
growth in the Company's revenues due to increased sales of Vacation Intervals
required adjustments to the compensation plans of Ms. Brayfield and Mr.
O'Connor. In May and August 1998, the employment agreements with Ms. Brayfield
and Mr. O'Connor were modified to reduce the percentage of performance based
incentive while continuing to provide fair and adequate compensation to each
officer. The agreements with Ms. Brayfield and Mr. O'Connor expired on December
31, 1999. The Company will continue to compensate each officer in accordance
with the salary structure in place at the time that his or her employment
agreement terminated.
During 1999, Ms. Brayfield was paid an annual base salary of $435,000, plus
incentive-based compensation equal to 0.125% of the Company's net sales of
vacation intervals, determined on a weekly basis. Ms. Brayfield was also awarded
options to purchase 25,000 shares of common stock at an exercise price of
$7.3125 per share. The options will vest over a four-year period.
During 1999, Mr. O'Connor received no base salary but was compensated
solely upon incentive-based formulas related to the Company's sales revenues.
Mr. O'Connor received compensation equal to 1.0% of sales generated through the
Company's internal sales efforts and 0.6% of the Company's net sales generated
by the Company's outside sales force. During 1999, Mr. O'Connor was awarded
options to purchase 50,000 shares of common stock at an exercise price of
$7.3125 per share. The options will vest over a four-year period.
Mr. Oestreich's compensation plan was negotiated as a part of the Company's
purchase of a corporation owned by him. In 1998, the Company completed the
purchase of Bull's Eye Marketing, Inc., a California corporation, and hired Mr.
Oestreich to serve as Vice President - Marketing Development. His original
employment agreement provided for an annual base salary of $300,000, plus
certain incentive based compensation. Effective January 1, 1999, the agreement
was amended to provide for incentive based compensation equal to 0.075% of all
sales attributable to the Company's outside sales force in lieu of the
percentages on the mini-vacation and discovery programs. This modification was
made solely to more accurately tie Mr. Oestreich's compensation to the sales
programs under his direction. During 1999, Mr. Oestreich was awarded options to
purchase 25,000 shares of common stock at an exercise price of $7.3125 per
share. The options will vest over a four-year period.
Mr. Hudson was hired by the Company in 1998 to serve as Vice-President -
Architecture and Engineering; however, Mr. Hudson had provided similar services
to the Company as an outside consultant since 1995. The term of his employment
contract is four years. In setting Mr. Hudson's compensation, consideration was
given to a number of factors, including the value to the Company of having Mr.
Hudson in-house on a full-time basis to supervise the rapid growth of the
Company's development and construction programs. Among other things, Mr. Hudson
agreed to give up his existing architectural and engineering consulting
practice, relocate to the Company's headquarters, and devote his exclusive
professional services to the Company. In return, Mr. Hudson receives an annual
salary of $350,000 from the Company. Mr. Hudson received additional compensation
for the exclusivity of his services equal to $200,000 in 1998 and $100,000 in
1999. Mr. Hudson will receive $100,000 for the exclusivity of his services
during 2000. See "Certain Relationships and Related Transactions." During 1999,
Mr. Hudson was awarded options to purchase 5,000 shares of common stock at an
exercise price of $7.3125 per share. The options will vest over a four-year
period.
Because there were no formal compensation policies for laterally hired
executives in place during 1999, the Compensation Committee determined the
compensation levels of newly hired executive officers based generally on their
qualifications and prior experience and their perceived value to the Company.
14
<PAGE> 17
In addition to the incentive compensation formulas used to remunerate
certain key executive officers, all executive officers are eligible for
consideration for discretionary bonuses. These bonuses are optional and based
solely on performance of the individual and his or her contribution towards
achieving corporate objectives.
The Company established the Plan to enable executive officers, other key
employees, Independent Directors and others to participate in the ownership of
the Company. The Plan is designed to attract, maintain, and provide incentives
to participants. As of March 13, 2000, options for 1,479,500 shares were
outstanding. These options were granted to individuals based primarily upon the
desirability of providing additional incentives to work to increase share value
and the potential for the individuals' contributions to affect the Company's
performance. For the year ended December 31, 1999, Ms. Brayfield and Mr.
Oestreich were each granted 25,000 options, Mr. O'Connor was granted 50,000
options, and Mr. Hudson was granted 5,000 options. Mr. Mead was not awarded any
options.
A final component of total compensation for executive officers is Company
benefits and perquisites generally consisting of the furnishing of company
vehicles for all of the named Executive Officers and customary group life and
health benefits.
Compensation of the CEO during 1999. Mr. Mead's base salary of $500,000 per
year was not modified in 1999. This amount was established in May 1997, prior to
the Company's initial public offering of stock. Mr. Mead received no
incentive-based compensation during 1999, and none was provided for in his
employment agreement which terminated on December 31, 1999.
During 1999, the Company's total revenues increased from approximately $160
million for the year ended December 31, 1998 to approximately $230 million for
the year ended December 31, 1999 an increase of approximately 43.5%. During the
same period, net income increased from approximately $18.3 million to $19.3
million, an increase of approximately 4.9%. Under the terms of Mr. Mead's
employment agreement, he is entitled to certain other fringe benefits which may
be determined by the Board of Directors. While the Company's operating results
for the period ending December 31, 1999 improved over those for the period
ending December 31, 1998, Mr. Mead was not awarded any options nor granted a
bonus for his 1999 performance as CEO of the Company.
Section 162(m) of the Internal Revenue Code generally limits the corporate
income tax deduction for compensation paid to the Named Executive Officers that
is in excess of $1 million unless such compensation is "performance based
compensation" or qualifies under other exceptions. The compensation earned by
the Named Executive Officers was not exempt from the Section 162(m) limitation,
and as a result, approximately $253,000 of the compensation earned by Mr.
O'Connor during 1999 will be nondeductible. The Committee may from time to time
authorize other awards that will give rise to a loss of deduction under Section
162(m) should it determine that the payment of such compensation is in the best
interests of the Company.
By the Compensation Committee,
James B. Francis, Jr.
Michael A. Jenkins
STOCK PERFORMANCE GRAPH
The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and it shall not otherwise be deemed filed under such Acts.
Set forth below is a line graph comparing the total cumulative return of
the Company's Common Stock since initiation of trading of the Company's Common
Stock on June 6, 1997 to (a) the S&P 500 Index, a broad equity market index and
(b) the Russell 2000 Index, an index that measures the performance of stocks
with small to medium-small market capitalization. The comparisons in this table
are required by the Securities and Exchange Commission and are not intended to
forecast or be indicative of possible future performance of the Common Stock.
The Company has chosen the Russell 2000 Index as an index of issuers with
similar market capitalization because the Company does not believe it can
reasonably identify a peer group or applicable published industry or
line-of-business index. Only a few other publicly held companies engage in the
Company's line of business -- the sale of vacation ownership intervals.
Prominent among this limited group are The Walt Disney Company, Hilton Hotels
Corporation and Marriott International Inc. which are (i) diversified, with far
less than 50% of their respective revenues attributable to vacation ownership
interval sales, and (ii) substantially larger than the Company in terms of
revenue, assets and market capitalization. There are a few other public
companies engaged principally in the Company's line of business, including
Sunterra Corporation, Fairfield Communities, Inc. and other companies that
became public during 1996 or 1997. Because all of these companies (except
Fairfield) have a very recent status as public companies, the Company concluded
that there was not a sufficient body of reliable market data for the Company to
use as a comparison peer group. Because of the foregoing factors, the Company
elected to compare the performance of its stock to the S&P Index and the Russell
2000 Index.
15
<PAGE> 18
The graph assumes $100 was invested at the Initial Public Offering price of
$16.00 per share on June 6, 1997 (the date of initiation of trading of the
Company's Common Stock) in stock of the Company, the S&P 500 and the Russell
2000 and assumes dividends are reinvested.
COMPARISON OF QUARTERLY CUMULATIVE TOTAL RETURN OF COMPANY COMMON STOCK WITH THE
S&P 500 INDEX AND THE RUSSELL 2000 INDEX.
<TABLE>
<CAPTION>
SILVERLEAF
MEASUREMENT PERIOD RESORTS INC.
(FISCAL YEAR COVERED) ("SVR") S&P 500 RUSSELL 2000
<S> <C> <C> <C>
06/06/97 100 100 100
06/30/97 96 104 104
09/30/97 143 112 120
12/31/97 153 116 116
03/31/98 150 132 127
06/30/98 95 136 124
09/30/98 63 122 99
12/31/98 58 149 115
03/31/99 50 156 106
06/30/99 40 167 124
09/30/99 39 157 114
12/31/99 45 180 116
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1997, Mr. Mead entered into a lease agreement with the Company
which granted him the exclusive right to use approximately 500 acres adjoining
one of the Company's resort properties for hunting purposes. This land is
subject to deed restrictions which prohibit the construction of new units, and
most of this land is located in a flood plain. The land will remain available to
Silverleaf Owners for hiking and nature trails. In exchange for these lease
rights, Mr. Mead agreed to pay the annual property taxes on this land which are
estimated at approximately $5,000. This lease agreement has a ten-year term and
may be renewed by Mr. Mead for four additional ten-year terms.
In connection with the Initial Public Offering in June 1997, the Company
entered into a Registration Rights Agreement with Mr. Mead with respect to
7,625,000 of his shares of Common Stock.
Mr. Bloch serves as counsel to the law firm of Holland & Knight, LLC. The
Company has retained the services of Holland & Knight for limited purposes.
In August 1997, subject to the employment agreement with Mr. Franks, the
Company purchased a house for $531,000 and leased the house, with an option to
purchase, to Mr. Franks for 13 months at a rental rate equal to the Company's
expense for interest, insurance and taxes which was approximately $3,000 per
month. In September 1998, Mr. Franks exercised his option to purchase the house
at the end of the lease for $531,000. The Company holds a second lien on the
house for approximately $44,000, which is still owed to the Company by Mr.
Franks at 8% per annum.
Pursuant to the terms of Mr. Hudson's employment agreement, the Company
paid Mr. Hudson $100,000 in consideration of the exclusivity of his services
during 1999.
For information concerning employment agreements with certain officers see
"Employment and Noncompetition Agreements."
16
<PAGE> 19
AUDIT COMMITTEE REPORT
In May 1999, the Board of Directors adopted the Audit Committee Charter
(the "Charter"), attached hereto as "Annex A," to make certain that the Audit
Committee of the Board of Directors is composed of independent members who have
sufficient training and expertise in financial reporting and management to
ensure that the Company implements sound accounting policies and procedures. The
Charter also promotes the free exchange of information among the Board, the
Company's independent auditor and its internal auditor. The Audit Committee
shall consist of a minimum of two independent directors. Members shall be
characterized as "independent directors" in accordance with the New York Stock
Exchange rules if they are free from any relationship that, in the opinion of
the Board of Directors, would interfere with the exercise of independent
judgment as a committee member. Additionally, the members of the Audit Committee
should have a working familiarity with basic finance and accounting practices, a
background in accounting or a related financial expertise in finance or
accounting, or any other comparable experience or background which results in
the member's financial sophistication and ability to fulfill financial oversight
responsibilities.
In furtherance of the Audit Committee's responsibilities as set forth in
the Charter, in May 1999, the Audit Committee met with members of management of
the Company and representatives of Deloitte & Touche, LLP, the Company's
independent certified public accountants, to discuss the overall scope and cost
of the audit of the Company's financial statements for the year ended December
31, 1999. The Audit Committee also met with members of management of the Company
and Deloitte & Touche in February 2000 to review the results of the 1999 audit.
The Committee discussed with Deloitte & Touche, the matters required to be
discussed by Statements on Auditing Standards No. 61, including information
regarding that firm's independence as required by Independence Standards Board
Standard No. 1.
Based upon the Audit Committee's discussions with management and Deloitte &
Touche, the Audit Committee recommended to the Board of Directors that the
audited financial statements for 1999 be included in the Company's Annual Report
to the SEC on Form 10-K.
By the Audit Committee,
Stuart Marshall Bloch
James B. Francis, Jr.
Michael A. Jenkins
17
<PAGE> 20
OTHER MATTERS AT MEETING
The Board of Directors does not know of any matters to be presented at the
2000 Annual Meeting other than those mentioned in this Proxy Statement. If any
other matters are properly brought before the 2000 Annual Meeting, it is
intended that the proxies will be voted in accordance with the best judgment of
the person or persons voting such proxies.
UNDERTAKING TO PROVIDE COPY OF FORM 10-K
THE ANNUAL REPORT FOR THE COMPANY FOR 1999 AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS, BUT EXCLUDING
EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY WRITTEN REQUEST TO THE CORPORATE
SECRETARY OF THE COMPANY. ALL SUCH REQUESTS SHOULD BE DIRECTED TO SANDRA G.
CEARLEY, SECRETARY, SILVERLEAF RESORTS, INC., 1221 RIVER BEND DRIVE, SUITE 120,
DALLAS, TEXAS 75247.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder who meets the requirements of the proxy rules under the
Exchange Act may submit to the Board of Directors proposals to be considered for
submission to the shareholders at the 2001 Annual Meeting of Shareholders. Any
such proposal must comply with the requirements of Rule 14a-8 under the Exchange
Act and be submitted in writing by notice delivered or mailed by first-class
United States mail, postage prepaid, to the Corporate Secretary, Silverleaf
Resorts, Inc., 1221 River Bend Drive, Suite 120, Dallas, Texas 75247 and must be
received no later than December 31, 2000. The chairman of the meeting may refuse
to acknowledge the introduction of any shareholder proposal not made in
compliance with the foregoing procedures.
By Order of the Board of Directors,
SANDRA G. CEARLEY
Secretary
Dallas, Texas
March 31, 2000
18
<PAGE> 21
ANNEX A
SILVERLEAF RESORTS, INC.
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER
ARTICLE I
ORGANIZATION
1.1 The Board of Directors shall establish an Audit Committee composed of
independent members of the Board of Directors who have sufficient training and
expertise in financial reporting and management to ensure that the Company has
implemented sound accounting policies and procedures. The Audit Committee shall
also promote the free exchange of information among the Board, the Company's
independent auditor and its internal auditor.
1.2 The Audit Committee shall consist of a minimum of three independent
directors. Members shall be characterized as "independent directors" if they are
"free from any relationship that, in the opinion of the Board of Directors,
would interfere with the exercise of independent judgment as a committee
member." See NYSE Listed Company Manual, Section 303.00. Directors who are
affiliates of the Company, or officers or employees of the Company or any of its
subsidiaries, are not considered independent. Former officers of the Company or
any of its subsidiaries may be qualified to serve as members of the Audit
Committee despite continued pension or deferred compensation from the Company
if, in the opinion of the Board of Directors, such person will exercise
independent judgment and will materially assist the function of the committee.
Former officers may not comprise the majority of the Audit Committee.
1.3 The members of the Audit Committee should have a working familiarity
with basic finance and accounting practices, a background in accounting or a
related financial expertise in finance or accounting, or any other comparable
experience or background which results in the individual's financial
sophistication and ability to fulfill financial oversight responsibilities.
ARTICLE II
STATEMENT OF POLICY
2.1 The function of the Audit Committee shall be to assist the Board of
Directors in fulfilling its responsibilities to shareholders. The primary duties
and responsibilities of the Audit Committee are to:
A. Serve as an independent and objective body to monitor the Company's
financial reporting process and internal controls system.
B. Review and appraise the audit efforts of the Company's independent
accountants and internal auditing department.
C. Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
ARTICLE III
RESPONSIBILITIES
3.1 In fulfilling its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the Board of Directors and shareholders
that the corporate accounting and reporting practices of the Company are in
accordance with all requirements and are of the highest quality.
3.2 In carrying out these responsibilities, the Audit Committee will be
responsible for the following:
A. CONTINUOUS ACTIVITIES--GENERAL
1. Provide an open avenue of communication between the independent
auditor, internal auditor, and the Board of Directors.
2. Meet four times per year or more frequently as circumstances
require. The Committee may ask members of management or others to
attend meetings and provide pertinent information as necessary.
3. Confirm and assure the independence of the independent auditor
and the objectivity of the internal auditor.
A-1
<PAGE> 22
4. Review with the independent auditor and the internal auditor, the
coordination of audit efforts to assure completeness of coverage,
reduction of redundant efforts, and the effective use of audit
resources.
5. Inquire of management, the independent auditor, and the internal
auditor about significant risks or exposures and assess the steps
management has to take to minimize such risk to the Company.
6. Consider and review with the independent auditor and the internal
auditor:
(a) The adequacy of the Company's internal controls.
(b) Related findings and recommendations of the independent
auditor and internal auditor together with management's
responses.
7. Consider and review with management, the internal auditor and
independent auditor:
(a) Significant findings during the year, including the status
of previous audit recommendations.
(b) Any difficulties encountered in the course of audit work
including any restrictions on the scope of activities or
access to required information.
(c) Any changes required in the planned scope of the internal
audit plan.
8. Meet periodically with the independent auditor, the internal
auditor and management to discuss any matters that these groups
believe should be discussed with the Audit Committee.
9. Report periodically to the Board of Directors on significant
results of the foregoing activities.
10. Instruct the independent auditor that the Board of Directors, as
the shareholders' representative, is the auditor's client.
B. CONTINUOUS ACTIVITIES--RE: REPORTING SPECIFIC POLICIES
1. Advise management and the independent auditor they are expected
to provide a timely analysis of significant current financial
reporting issues and practices.
2. Provide that management and the independent auditor discuss with
the Audit Committee their qualitative judgements about the
appropriateness, not just the acceptability, of accounting
principles and financial disclosure practices used or proposed to
be adopted by the Company and, particularly, about the degree of
aggressiveness or conservatism of its accounting principles and
underlying estimates.
3. Inquire as to the auditor's independent qualitative judgments
about the appropriateness, not just the acceptability, of the
accounting principles and the clarity of the financial disclosure
practices used or proposed to be adopted by the Company.
4. Inquire as to the auditor's views about whether management's
choices of accounting are conservative, moderate, or aggressive
from the perspective of income, asset, and liability recognition,
and whether those principles are common practices or are minority
practices.
5. Determine, as regards to new transactions or events, the
auditor's reasoning of the appropriateness of the accounting
principles and disclosure practices adopted by management.
6. Assure that the auditor's reasoning is described in determining
the appropriateness of charges in accounting principles and
disclosure practices.
7. Inquire as to the auditor's views about how the Company's choices
of accounting principles and disclosure practices may affect the
shareholders.
A-2
<PAGE> 23
C. SCHEDULED ACTIVITIES
1. Recommend the selection of the independent auditor for approval
by the Board of Directors and ratification by the shareholders,
approve the compensation of the independent auditor, and review
and approve the discharge of the independent auditor.
2. Consider, in consultation with the independent auditor, the
internal auditor, and management, the audit scope and plan of the
independent auditor and the internal auditor.
3. Review with management and the independent auditor the results of
annual audits and related comments including:
(a) The independent auditor's audit of the Company's financial
statements, accompanying footnotes and its report thereon.
(b) Any significant changes required in the independent
auditor's audit plans.
(c) Any difficulties or disputes with management encountered
during the course of the audit.
(d) Other matters related to the conduct of the audit which are
to be communicated to the Audit Committee under Generally
Accepted Auditing Standards.
4. Review the reports filed by the Company with the Securities and
Exchange Commission.
5. Arrange for the independent auditor to be available to the full
Board of Directors at least annually to help provide a basis for
the board to recommend to the shareholders the appointment of the
auditor.
6. Assure that the auditor's reasoning is described in accepting or
questioning significant estimates by management.
7. Review and update, if appropriate, the Audit Committee's Charter
annually.
D. "WHEN NECESSARY" ACTIVITIES
1. Review and approve requests for any management consulting
engagement to be performed by the Company's independent auditor
and be advised of any other study undertaken at the request of
management that is beyond the scope of the audit engagement
letter.
2. Review periodically with general counsel legal and regulatory
matters that may have a material impact on the Company's
financial statements, compliance policies and programs.
3. Conduct or authorize investigations into any matters within the
Audit Committee's scope of responsibilities. The Audit Committee
shall be empowered to retain independent counsel and other
professionals to assist in the conduct of any investigation.
Amended and Restated by the Audit Committee effective as of February 22,
2000.
/s/ Stuart Marshall Bloch
-------------------------------------------
Stuart Marshall Bloch
/s/ James B. Francis, Jr.
-------------------------------------------
James B. Francis, Jr.
/s/ Michael A. Jenkins
-------------------------------------------
Michael A. Jenkins
As Approved by the Board of Directors effective as of February 22, 2000.
/s/ Sandra G. Cearley
-------------------------------------------
Sandra G. Cearley, Secretary
A-3
<PAGE> 24
SILVERLEAF RESORTS, INC.
PROXY FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Silverleaf Resorts, Inc., a Texas
corporation, hereby acknowledges receipt of the Notice of 2000 Annual Meeting of
Shareholders and Proxy Statement and hereby appoints Sharon K. Brayfield and
Stuart Marshall Bloch as proxies, each with the power to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all the shares of the Common Stock of Silverleaf Resorts,
Inc. held of record by the undersigned on March 13, 2000 at the 2000 Annual
Meeting of Shareholders to be held May 9, 2000 or at any adjournment or
postponement thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR Proposals 1 and 2 and in accordance with the recommendations of the
Board of Directors on any other matters that may properly come before the
meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
o FOLD AND DETACH HERE o
<PAGE> 25
<TABLE>
<CAPTION>
PLEASE MARK
YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE
<S> <C> <C>
1. ELECTION OF CLASS III DIRECTORS NOMINEES: ROBERT E. MEAD, JAMES B. FRANCIS, JR. 2. RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE
INDEPENDENT ACCOUNTANTS OF THE
CORPORATION.
FOR THE NOMINEES WITHHOLD ------------------------------------------------- FOR AGAINST ABSTAIN
LISTED TO THE RIGHT AUTHORITY For all nominees except as noted above [ ] [ ] [ ]
to vote for the
nominees listed
to the right
[ ] [ ]
3. THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature Signature Date
-------------------------------- ------------------------------------------ ---------------------------
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, as
executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
</TABLE>
o FOLD AND DETACH HERE o
