<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[ X ] Preliminary Proxy Statement
[ ]Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Captec Net Lease Realty, 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:_________________________________________
(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: Not Applicable
(2) Form, Schedule or Registration Statement No.: Not Applicable
(3) Filing Party: Not Applicable
(4) Date Filed: Not Applicable
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CAPTEC NET LEASE REALTY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------
We will hold our Annual Meeting of Stockholders at our principal
offices at 24 Frank Lloyd Wright Drive, Lobby L, 4th Floor, Ann Arbor, Michigan
48106-0544 on Wednesday, August 9, 2000 at __________ a.m., eastern time, for
the following purposes:
1. To elect nine directors, each to serve until the next
annual meeting of stockholders and until his successor has
been duly elected and qualified;
2. To transact such other business as may properly come before
the meeting which may include a proposal by a stockholder
which is described in the accompanying proxy statement.
Only stockholders of record at the close of business on June 20, 2000
will be entitled to notice of, and to vote at, the annual meeting or any
postponement or adjournment thereof. You are urged to complete, date and sign
the enclosed white proxy card and return it in the enclosed envelope.
By order of the Board of Directors,
/s/ Edward G. Ptaszek
EDWARD G. PTASZEK
Secretary
Dated: ____________, 2000
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED WHITE PROXY CARD.
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CAPTEC NET LEASE REALTY, INC.
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation
of proxies to be used at the Annual Meeting of Stockholders of Captec Net Lease
Realty, Inc., to be held at the offices of Captec at 24 Frank Lloyd Wright
Drive, Lobby L, 4th Floor Ann Arbor, Michigan 48106-0544 on Wednesday,
August 9, 2000, at _________ a.m., eastern time, and at any adjournment or
postponement thereof. This proxy statement and the accompanying notice and proxy
will first be sent to stockholders by mail on or about ___________, 2000.
Annual Report. A copy of Captec's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, as filed with the United States Securities
and Exchange Commission ("SEC") on March 30, 2000, is enclosed.
Record Date; Shares Entitled to be Voted; Quorum. The Board of
Directors has fixed the close of business on June 20, 2000 as the record date
for determining the holders of shares of common stock who are entitled to notice
of, and to vote at, the annual meeting. As of June 20, 2000, 9,508,108 shares of
common stock were issued and outstanding. The holders of record of common stock
on June 20, 2000 are entitled to one vote per share of common stock. Under
Delaware law, abstentions and "broker non-votes," which are proxies from brokers
or nominees indicating that such persons have not received instructions from the
beneficial owner or other person entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote, will be treated as present for purposes of determining the presence of a
quorum.
Solicitation and Revocation of Proxies. Shares of common stock
represented by properly executed proxies received at or prior to the annual
meeting that have not been revoked will be voted at the annual meeting in
accordance with the instructions indicated on the proxies. Stockholders are
requested to complete, sign, date and promptly return the enclosed proxy card in
the enclosed postage-prepaid envelope to ensure that their shares are voted. If
the enclosed proxy is signed and returned, the shares represented thereby will
be voted in accordance with any specification made therein by the stockholder.
In the absence of any such specification, the shares will be voted to elect each
of the director nominees set forth under "Election of Directors" below, against
the proposal which may be raised at the meeting by a stockholder described under
"Other Matters" below, and in the discretion of management on any other matter
which may properly come before the annual meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Attendance at the annual
meeting will not, without additional action by the stockholder, revoke a proxy.
Proxies may be revoked by:
- Filing with the Secretary of Captec, at or before the taking of
the vote at the annual meeting, a written notice of revocation
dated later than the proxy;
- Executing a later dated proxy relating to the same shares of
common stock and delivering it to the Secretary of Captec,
including by facsimile, before the taking of the vote at the
annual meeting; or
- Attending the annual meeting and voting in person.
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Any written revocation or subsequent proxy should be sent so as to be
delivered to Captec Net Lease Realty, Inc., 24 Frank Lloyd Wright Drive, Lobby
L, 4th Floor, Ann Arbor, Michigan 48106, Attention: Corporate Secretary, or hand
delivered to the Secretary of Captec or his representative at or before the
taking of the vote at the annual meeting.
If the annual meeting is postponed or adjourned, proxies given pursuant
to this solicitation will be utilized at any subsequent reconvening of the
annual meeting, except for any proxies that previously have been revoked or
withdrawn effectively, and not withstanding that proxies may have been
effectively voted on the same or any other matter previously.
This solicitation of proxies is made by and on behalf of the Board of
Directors. Captec will bear the costs of soliciting proxies from its
stockholders. Captec will pay Georgeson Shareholder Communications Inc. a fee of
$20,000 plus reimbursement of out of pocket expenses and $4.50 for each
telephone solicitation for its services in soliciting the return of proxies. In
addition to solicitation by mail, directors, officers and employees of Captec
may solicit proxies by telephone, facsimile transmission, or otherwise.
Directors, officers and employees of Captec will not be additionally compensated
for any such solicitation, but may be reimbursed for out-of-pocket expenses
incurred in connection therewith. Brokerage firms, fiduciaries and other
custodians who forward soliciting material to the beneficial owners of common
stock held of record by them will be reimbursed for their reasonable expenses
incurred in forwarding such materials. As of the date hereof, Captec has
incurred $____in soliciting proxies from stockholders for the annual meeting.
Captec estimates that the total cost of soliciting proxies from stockholders
for the annual meeting will be $________.
Vote Required. Captec's bylaws provide that the holders of the
majority of the outstanding shares of common stock entitled to vote at a
meeting, present, in person or by proxy, constitute a quorum and that the
affirmative vote of a majority of the shares represented and entitled to vote at
a meeting where a quorum is present will decide any question brought before the
meeting unless a greater proportion or number of votes is required by Captec's
certificate of incorporation, bylaws or applicable law. The election of each
director and approval of any other proposal which may come before the annual
meeting will require the affirmative vote of a majority of the shares present at
the annual meeting.
Effect of Abstentions and Broker Non-Votes. For purposes of determining
the election of directors or approval of any proposal to be presented at the
annual meeting, abstentions and broker non-votes will be deemed present for
purposes of constituting a quorum and entitled to vote and will have the same
legal effect as a vote "against" each nominee for the Board of Directors and any
matter presented at the annual meeting.
STOCKHOLDERS WITH QUESTIONS OR REQUESTS FOR ASSISTANCE IN VOTING SHARES
OF COMMON STOCK SHOULD CONTACT:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET
10TH FLOOR
NEW YORK, NY 10004
(800) 223-2064
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ELECTION OF DIRECTORS
Captec's bylaws establish the number of directors at not less than
three nor more than fifteen members. The Board of Directors may increase or
decrease the number of members of the Board of Directors. The Board of Directors
has chosen to establish the number of directors at nine. At the annual meeting,
shares of common stock represented by proxies, unless otherwise specified, will
be voted for the election of the nine nominees named herein, each to serve until
the next annual meeting and until his successor is duly elected and qualified.
The following information is furnished concerning each nominee for
election as a director. If for any reason any of the nominees is not a candidate
when the election occurs (which is not expected), the Board of Directors expects
that proxies will be voted for the election of a substitute nominee designated
by management.
<TABLE>
<CAPTION>
Expiration
of Term
Director for Which
Name Age Principal Occupation Since Nominated
---- --- -------------------- ----- ---------
<S> <C> <C> <C> <C>
Patrick L. Beach 44 Chairman of the Board of Directors, 1997 2001
President and Chief Executive Officer
W. Ross Martin 39 Executive Vice President, Chief 1997 2001
Financial Officer and Treasurer
H. Reid Sherard 52 Senior Vice President - Sales 1997 2001
and Marketing
Richard J. Peters 52 President, R.J. Peters & Company, 1997 2001
L.L.C.
Creed L. Ford, III 47 Chief Executive Officer, Kona 1997 2001
Restaurant Group
William H. Krul, II 51 President, Miller-Valentine 1997 2001
Construction, Inc.
Lee C. Howley 53 President, Howley & Company 1997 2001
Albert T. Adams 49 Partner, Baker & Hostetler LLP 1998 2001
William J. Chadwick 52 Managing Director, Chadwick, Saylor & 1998 2001
Co., Inc.
</TABLE>
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Each of the nominees has engaged in the principal occupation or
activity indicated for at least five years, except as follows.
Mr. Beach also serves as the Chairman of the Board of Directors,
President and Chief Executive Officer of Captec Financial Group, Inc., an
affiliate of Captec. Mr. Martin also serves as the Senior Vice President and
Chief Financial Officer of Captec Financial Group and Mr. Sherard also serves as
the Senior Vice President - Sales and Marketing of Captec Financial Group. See
"Certain Relationships and Related Transactions."
Mr. Beach also serves as the Chief Executive Officer, President and
Chairman of the Board of Directors of Captec Net Lease Realty Advisors, Inc., an
affiliate. Mr. Martin also serves as the Executive Vice President and Chief
Financial Officer and a Director of Captec Net Lease Realty Advisors. Pursuant
to an August 29, 1997 Advisory Agreement, as amended, Captec Advisors, together
with Captec Financial Group, provides Captec with certain investment and
financial advisory services pertaining primarily to the acquisition, development
and leasing of properties. See "Certain Relationships and Related Transactions."
Mr. Peters has been the President of Penske Corporation since January
2000, and the President of R.J. Peters and Company, LLC since July 1997. During
1999, Mr. Peters served as President and Chief Executive Officer of Illitch
Ventures, Inc. Mr. Peters served as the Chief Executive Officer, President and
Director of Penske Motor Sports, Inc. from January 1995 to July 1997. Mr.
Peters is also a director of Penske Corporation and United Auto Group.
From 1976 until 1997 Mr. Ford served in numerous capacities with
Brinker International, most recently as Chief Operating Officer and a director.
Mr. Howley is a Director of Boykin Lodging Company, International Total
Services, Inc. and LESCO, Inc.
Mr. Adams is a Director of American Industrial Property REIT,
Associated Estates Realty Corporation, Boykin Lodging Company, Developers
Diversified Realty Corporation and Dairy Mart Convenience Stores, Inc. Mr. Adams
is, and during the fiscal year ended December 31, 1999 was, a partner of Baker &
Hostetler LLP, which Captec retained in 1999 and intends to retain in 2000 for
various legal matters.
DIRECTOR COMPENSATION
Each independent director is compensated at the rate of $16,000 per
year. Each director also receives $1,000 for personal attendance at each meeting
of the Board of Directors and of any committee or $250 for participation in any
meeting by telephone. Upon completion of Captec's initial public offering in
November 1997, Messrs. Peters, Ford, Krul and Howley each received 10-year
options to purchase 5,000 shares of common stock, exercisable at $18.00 per
share, all of which have vested. Upon election to the Board of Directors, in
October 1998, Messrs. Adams and Chadwick each received 10-year options to
purchase 5,000 shares of common stock, exercisable at $18.00 per share, 2,500 of
which have vested and the remainder of which will vest in October 2000. On
January 14, 1999, Captec granted 10-year options to purchase 5,000 shares of
common stock at $12.97 to each of Mr. Adams, Mr. Chadwick, Mr. Ford, Mr. Howley,
Mr. Krul and Mr. Peters, 2,500 of each of which have vested and 2,500 of each
of which will vest on January 14, 2001.
Directors who are not employees of Captec are eligible to participate
in Captec's Directors' Deferred Compensation Plan. The deferred plan, which is
administered by officers appointed by the Board of Directors who are not
eligible participants, allows directors to defer receipt of the fees payable to
them by Captec for their services as directors. The value of the amounts
credited to a director in the deferred plan increases or decreases based on the
market value of the common stock.
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MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1999, the Board of Directors
held four regular meetings and two special meetings. During 1999, each director
attended at least 75.0% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings of any committee of the
Board of Directors on which such director served. The Board of Directors has
created a Compensation Committee and an Audit Committee, and does not have a
Nominating Committee.
The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibility relating to Captec's financial statements and financial
reporting processes. Since December 1998, the Audit Committee has consisted of
Messrs. Peters, Ford and Adams. The Audit Committee recommends annually to the
Board of Directors the engagement of Captec's independent public accountants,
reviews the plans for, and results of, audit engagements, approves professional
services provided by the independent public accountants, considers the range of
audit and nonaudit fees, and reviews the independent public accountants' letter
of comments and management's responses thereto, the adequacy of Captec's
internal accounting controls, and major accounting or financial reporting
matters. The Audit Committee held _____ meetings in 1999. On June ____, 2000,
[by unanimous written consent,] the Board of Directors adopted a written charter
for the Audit Committee, a copy of which is included as Appendix A to this proxy
statement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since December 1998 the Compensation Committee has consisted of
Messrs. Howley, Krul and Chadwick. None of Messrs. Howley, Krul and Chadwick
have been an officer or employee of Captec or have any financial relationship
with Captec other than disclosed herein.
COMPENSATION COMMITTEE REPORT
Introduction. The Compensation Committee is responsible for determining
the compensation to be paid to Captec's executive officers. The Compensation
Committee also is responsible for making major policy decisions with respect to
health care and other benefit plans and administers the Long-Term Incentive
Plan. The Compensation Committee held one meeting in 1999.
The Compensation Committee seeks (i) to provide competitive
compensation that enables Captec to attract and retain qualified executives and
align their compensation with Captec's overall business strategies, and (ii) to
provide each executive officer with substantial incentive to work for the
success of Captec through stock options, which provide for participation in
Captec's growth and success. To achieve this goal, the Compensation Committee
determines executive compensation with a focus on compensating executive
officers based on their responsibilities and Captec's performance. The primary
components of Captec's executive compensation program are (i) base salaries and
certain other annual compensation, (ii) bonuses, and (iii) common stock options.
Base Salaries and Other Annual Compensation. The base salaries and
certain other compensation for Captec's executive officers in 1999 were
determined based upon the experience of the executives in the industry, together
with comparisons of compensation paid by companies of similar size
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in the real estate investment trust industry. This compensation was determined
after consulting with Captec's financial advisors.
Messrs. Beach and Martin each have executed October 15, 1997 employment
agreements, pursuant to which they received base salaries of $175,000 and
$125,000, respectively, in 1999, health and life insurance and certain other
benefits. The employment agreements also entitle Messrs. Beach and Martin to
options to purchase 400,000 shares and 200,000 shares of common stock,
respectively, for a period of 10 years at a purchase price of $18.00 per share
pursuant to Captec's Long-Term Incentive Plan. See "Executive Compensation -
Employment Agreements." The Compensation Committee believes that these annual
compensation packages are commensurate with the experience and responsibility of
Messrs. Beach and Martin. Ronald Max's, Captec's Chief Investment Officer, base
salary for the fiscal year ended December 31, 1999 was $125,000 and he does not
have an employment agreement. Mr. Sherard is not paid a salary by Captec.
Bonuses. The employment agreements each entitle Mr. Beach and Mr.
Martin to an annual bonus on a sliding scale of 10.0% to 100.0% of annual base
salary contingent and based upon the percentage increase of funds from
operations ("FFO") per share in any calendar year from the prior calendar year.
Bonuses relating to 1999 were paid to Messrs. Beach and Martin in the amounts of
$43,750 and $31,250, respectively.
Stock Options. All of Captec's executive officers are eligible to
receive options to purchase shares of common stock under the Long-Term Incentive
Plan. Captec believes that stock options provide valuable motivation and
long-term incentive to management. Stock option grants reinforce long-term goals
by providing the proper nexus between the interests of management and the
interests of Captec's stockholders. Pursuant to their employment agreements,
Messrs. Beach and Martin have been granted 10-year options under the Long-Term
Incentive Plan to purchase 400,000 and 200,000 shares of common stock,
respectively, at $18.00 per share. Mr. Max has been granted 10-year options to
purchase 50,000 shares of common stock at $18.00 per share. Mr. Sherard has been
granted a 10-year option to purchase 100,000 shares of common stock at $18.00
per share. Options to purchase 266,667, 133,333 and 33,333 shares of common
stock by Messrs. Beach, Martin and Max, respectively, have vested and the
remainder of these options granted to Messrs. Beach, Martin and Max will vest on
November 12, 2000. The number of options granted initially to Messrs. Beach,
Martin and Max was determined through consultation with the managing
underwriters of Captec's initial public offering and based on the expected
contribution of each of them to Captec. Mr. Sherard's option to purchase 33,333
of these shares have vested and the remainder of these options will vest on May
8, 2001. See "Election of Directors - Nominees for Election at the Annual
Meeting - Directors' Compensation" for a description of the stock options
granted to the non-management directors.
On January 14, 1999, Captec granted 10-year options to purchase
Captec's common stock at $12.97 per share as follows: Mr. Beach -- 60,000
shares; Mr. Martin -- 30,000 shares; Mr. Sherard -- 15,000 shares; and Mr. Max
-- 15,000 shares. These options vest ratably on January 14 of each of 2000,
2001 and 2002.
William J. Chadwick
Lee C. Howley
William H. Krul, II
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EXECUTIVE COMPENSATION
The following information is provided for each of Captec's executive
officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------------------------
ANNUAL COMPENSATION(1) AWARDS
---------------------------------------- ----------------------------------------
OTHER RESTRICTED ALL
ANNUAL STOCK STOCK OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (2) ($) (#)(3) ($)
------------------ ------ ----------- ------------ ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Patrick L. Beach........... 1999 $175,000 $43,750 60,000
Chairman, President 1998 $150,000 $60,000
And Chief Executive Officer 1997 $ 11,538 400,000
W. Ross Martin............. 1999 $125,000 $31,250 30,000
Executive Vice President 1998 $100,000 $40,000
And Chief Financial Officer 1997 $ 7,692 200,000
H. Reid Sherard(4)......... 1999 $ -- -- -- -- 15,000 --
Senior Vice President 1998 $ -- -- -- -- 100,000 --
Sales and Marketing
Ronald Max................. 1999 $125,000 $22,000 $ 14,166 15,000
Vice President and Chief 1998 $100,000 -- $ 28,973
Investment Officer 1997 $ 7,692 -- -- -- 50,000 $300
</TABLE>
------------
(1) 1997 amounts reflect compensation paid by Captec from November 18,
1997 (the date of Captec's initial public offering) through December
31, 1997. Captec did not pay any compensation prior to November 18,
1997.
(2) Total perquisites and other personal benefits for each of the
executive officers do not exceed the threshold amounts specified in
the regulations promulgated by the United States Securities and
Exchange Commission.
(3) Granted pursuant to Captec's Long-Term Incentive Plan.
(4) Amounts paid to Mr. Sherard in 1998 reflect compensation paid by
Captec from May 8, 1998 (the date upon which Mr. Sherard was
employed by Captec) through December 31, 1998.
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EMPLOYMENT AGREEMENTS
Messrs. Beach and Martin each have executed October 15, 1997
employment agreements with Captec. Each agreement provides for an initial
three-year term that is automatically extended for an additional year at the end
of each year of the agreement, subject to the right of either party to terminate
the agreement at the end of the then-applicable term by giving written notice of
termination on or before November 30 of any year. Each agreement provides for
the annual base salary, stock options, and bonus, and medical and dental
benefits, vacation and sick leave, life insurance and certain additional
compensation. Mr. Sherard and Mr. Max do not have employment agreements. See
"Compensation Committee Report"
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
FISCAL YEAR-END OPTIONS AT FISCAL
SHARES VALUE (#) YEAR-END ($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
------------ --- ------------- -------------
<S> <C> <C> <C> <C>
Patrick L. Beach......................... -- -- 266,667/193,333 --
W. Ross Martin........................... -- -- 133,333/96,667 --
H. Reid Sherard.......................... -- -- 33,333/81,667 --
Ronald Max............................... -- -- 33,333/31,667 --
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of common stock as of June 1, 2000, by: (a) Captec's
directors (all of whom are also nominees for director); (b) each other person
who is known by Captec to own beneficially more than 5.0% of the outstanding
shares of common stock; (c) each of Captec's executive officers; and (d)
Captec's executive officers and directors as a group. Unless otherwise stated,
the following beneficial owners have sole voting power and sole investment power
for all shares of common stock set forth opposite their names.
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<TABLE>
<CAPTION>
FEBRUARY 1, 2000
----------------------------------
SHARES BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(1) OF CLASS
---------------- ------------------- ----------
<S> <C> <C>
Patrick L. Beach(2)............................................................ 872,456 8.9%
W. Ross Martin(3).............................................................. 385,295 4.0%
H. Reid Sherard(4)............................................................. 71,639 *
Ronald Max(5).................................................................. 38,334 *
Richard J. Peters(6)........................................................... 13,800 *
Creed L. Ford, III(6).......................................................... 8,500 *
William H. Krul, II(6)......................................................... 8,500 *
Lee C. Howley(6)............................................................... 20,500 *
Albert T. Adams(6)............................................................. 10,000 *
William J. Chadwick(6)......................................................... 45,000 *
The Public Institution For Social Security..................................... 527,778 5.2%
Boston Partners Asset Management L.P.(7)....................................... 480,000 5.0%
Salomon Smith Barney Holdings, Inc.(8)......................................... 983,850 9.7%
Marsh & McLennan Companies, Inc.(9)............................................ 496,374 5.2%
All officers and directors as a group.......................................... 1,474,024 14.7%
</TABLE>
------------
* Less than 1.0%
(1) Excludes shares of common stock subject to options not exercisable within 60
days.
(2) Includes options exercisable within 60 days to purchase 286,667 shares of
common stock and 99,273 shares of common stock owned by Family Realty, Inc.
Mr. Beach owns all of the voting stock and an economic interest of one-half
of one percent (0.5%) in Family Realty.
(3) Includes options exercisable within 60 days to purchase 143,334 shares of
common stock.
(4) Includes options exercisable within 60 days to purchase 38,333 shares of
common stock.
(5) Includes options exercisable within 60 days to purchase 38,334 shares of
common stock.
(6) Includes options exercisable within 60 days to purchase 7,500 shares of
common stock.
(7) According to a Schedule 13G, dated February 9, 1998, filed with the SEC by
Boston Partners Asset Management, L.P. ("BPAM"), BPAM, an investment
advisory firm, beneficially owns 480,000 shares of common stock. BPAM
disclosed in its Schedule 13G that (a) it has shared dispositive and voting
power for all 480,000 shares of the common stock with Boston Partners, Inc.,
the sole general partner of BPAM and Desmond John Heathwood, the principal
stockholder of Boston Partners; and (b) each of BPAM, Boston Partners and
Mr. Heathwood may be deemed to own beneficially all 480,000 shares
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<PAGE> 12
of common stock. BPAM also disclosed in its Schedule 13G that it holds all
480,000 shares of the common stock under management for its clients, none of
whom owns more than 5.0% of the common stock according to the Schedule 13G.
(8) According to a Schedule 13G/A dated May 10, 1999, filed with the SEC by
Salomon Smith Barney Holdings, Inc., a holding company ("SSB Holdings"), its
wholly-owned subsidiaries Salomon Brothers Holding Company, Inc. ("SBHC")
and SSBC Fund Management, Inc., formerly Mutual Management Corp. ("SSBC"),
Salomon Brothers Asset Management, Inc., a wholly-owned subsidiary of SBHC
("SBAM"), and Citigroup Inc., the sole stockholder of SSB Holdings
("Citigroup"), and a Schedule 13G/A dated September 9, 1999, filed with the
SEC by Citigroup, these reporting companies in the aggregate beneficially
own shares of common stock as follows: (a) SSB Holdings -- 983,850 shares,
shared voting and dispositive power -- 983,850 shares; (b) SBHC -- 503,850
shares, shared voting and dispositive power -- 503,850 shares; (c) SSBC --
480,000 shares, shared voting and dispositive power -- 480,000 shares; (d)
SBAM -- 480,000 shares, shared voting and dispositive power -- 480,000
shares; (e) Citigroup -- 300,650 shares, shared voting and dispositive power
-- 300,650 shares.
(9) According to a Schedule 13G/A dated February 4, 1999, filed with the SEC by
Marsh & McLennan Companies, Inc. a holding company, its wholly-owned
subsidiary Putnam Investments, Inc. ("PII") and PII's wholly-owned
subsidiaries The Putnam Advisory Company, Inc. ("PACI") and Putnam
Investment Management, Inc. ("PIMI") and the Putnam Capital Appreciation
Fund ("PCAF") in the aggregate beneficially own shares of common stock as
follows: (a) PII -- 496,374 shares, shared voting power -- 10,674 shares,
shared dispositive power -- 496,374 shares; (b) PIMI -- 485,700 shares,
shared dispositive power -- 485,700 shares; (c) PAC 10,674 shares, shared
voting and dispositive power -- 10,674 shares; and (d) PCAF -- 485,700
shares, shared dispositive power -- 485,700 shares.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in the common stock with the cumulative total return of
a hypothetical investment in each of the National Association of Real Estate
Investment Trusts ("NAREIT") Equity Index and the S&P 500 Index based on the
respective market price of each such investment from October 31, 1997 through
December 31, 1999, assuming in each case an initial investment of $100 on
October 31, 1997, and reinvestment of dividends.
12
<PAGE> 13
[LINE GRAPH]
<TABLE>
<CAPTION>
10/31/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
-------- -------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CRRR 100.00 95.49 96.21 87.64 93.07 76.53 79.03 84.91 64.84 50.14
S&P 500 100.00 106.43 121.27 125.28 112.82 136.84 143.65 153.78 144.17 165.62
NAREIT 100.00 104.57 104.09 99.31 88.86 86.27 82.11 90.39 83.12 82.29
Equity
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Kona Restaurant Group, of which Mr. Ford is the Chief Executive
Officer, is a lessee of five properties from Captec on which it operates Johnny
Carino's Italian Kitchen and Kona Steakhouse restaurants. Rent payments to
Captec from these properties were approximately $877,000 in 1999 and are
anticipated to be approximately $986,000 in 2000.
Pursuant to an August 29, 1997 Advisory Agreement, Captec pays to
Captec Advisors a management fee in an amount equal to the lesser of (i) 0.6%
per annum of the aggregate capitalized cost (excluding accumulated
depreciation) of all assets in Captec's portfolio, or (ii) 5.0% of Captec's
revenues. Under the advisory agreement, Captec may pay Captec Advisors an
incentive fee equal to 15.0% of the amount by which any increase in annual FFO
per share exceeds a 7.0% annual increase in FFO per share multiplied by the
weighted average number of shares of common stock outstanding. Captec is also
subject to cost reimbursements to Captec Advisors in an amount equal to all
costs incurred in the acquisition of properties. The sum of the incentive fee
and the cost reimbursement (the "acquisition fee") will not exceed 3.0% of the
acquisition cost of properties identified by Captec Advisors and acquired
during the term of the advisory agreement. In December 1998, the advisory
agreement was amended retroactive to January 1, 1998 to reduce the management
fee to Captec Advisors by the amount of acquisition fees paid directly to
Captec Advisors as a result of acquisitions made by Captec Franchise Capital
Partners L.P. III and Captec Franchise Capital Partners L.P. IV, each of which
is a limited partnership of which Captec is the general partner. During 1999,
the reduction in the
13
<PAGE> 14
management fees as a result of the amendment to the advisory agreement equaled
the amount Captec incurred to Captec Advisors thereby resulting in a net
management fee of $0. During 1999, Captec incurred approximately $104,000 in
acquisition fees to Captec Advisors. The amount to be paid under the advisory
agreement in 2000 will vary based upon numerous circumstances, some of which are
beyond Captec's control, and the actual amount paid pursuant to the advisory
agreement in 2000 may vary materially from the amount paid in 1999. Messrs.
Beach, Martin and Sherard are principal stockholders, directors and/or officers
of Captec Advisors.
Captec Financial Group was indebted to Captec in the principal amount
of $9,719,798 as of December 31, 1999 pursuant to a master revolving note
collateralized in part by a senior interest in a portfolio of loans under an
assignment of contracts with Captec Financial Group and in part by a subordinate
interest in a portfolio of loans owned by Captec Financial Group Funding
Corporation, a wholly-owned subsidiary of Captec Financial Group, under an
assignment of contracts with Captec Financial Group. The master note bears
interest at an annual rate of 10.0% and is payable on demand. The outstanding
principal balance of this master note at the time of Captec's initial public
offering in November 1997 was approximately $21,247,000.
Captec Financial Group was indebted to Captec in the principal amount
of $1,658,476 as of December 31, 1999, pursuant to a promissory note
collateralized by a subordinate class certificate issued by an affiliate which
bears interest at an annual rate of 15.70% and is payable on demand. The
outstanding principal balance of this note at the time of Captec's initial
public offering was $1,919,000.
Mr. Beach and Captec are each stockholders of Family Realty, Inc. and
Family Realty II, Inc., affiliates of Captec formed to invest in net-leased
entertainment-based retail properties. Mr. Beach owns all of the voting stock
and an economic interest of one-half of one percent (0.5%), and Captec owns
60.0% of the non-voting common stock of each of Family Realty and Family Realty
II. Pursuant to an agreement between Captec and Family Realty, beginning in
1999, Captec receives a quarterly asset management fee from Family Realty which
totaled $491,830 in 1999. The amount to be received by Captec from Family Realty
in 2000 will vary based upon numerous circumstances, some of which are beyond
Captec's control, and the amount received in 2000 may vary materially from the
amount received in 1999.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any stockholder proposal intended to be presented at Captec's 2001
Annual Meeting of Stockholders must be received by Captec at 24 Frank Lloyd
Wright Drive, Lobby L, 4th Floor, Ann Arbor, MI 48106-0544, on or before
_____________, 2001 for inclusion in Captec's proxy statement and form of proxy
relating to the 2001 Annual Meeting of Stockholders. For stockholder proposals
which are not submitted in accordance with Rule 14a-8 (such as a proposal to be
submitted at the next annual meeting of stockholders, but not submitted for
inclusion in Captec's proxy statement), and of which Captec has not received
reasonable advance notice, Captec's designated proxies may exercise their
discretionary voting authority without any discussion of any proposal in
Captec's proxy materials for any proposals which are received by Captec after
____________, 2001.
14
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Captec's directors, executive officers and owners of
more than 10.0% of Captec's common stock to file with the Commission initial
reports of ownership and reports of changes in ownership of common stock and
other equity securities of Captec. Executive officers, directors and owners of
more than 10.0% of the common stock are required by Commission regulations to
furnish Captec with copies of all forms they file pursuant to Section 16(a).
To Captec's knowledge, based solely on its review of the copies of such
reports furnished to Captec and written representations that no other reports
were required during the fiscal year ended December 31, 1999, its executive
officers, directors and greater than 10.0% beneficial owners complied with all
applicable Section 16(a) filing requirements except that Messrs. Beach, Martin,
Sherard, Peters, Howley, Krul, Chadwick and Adams each failed to file a Form 4
with respect to the grant to them of certain options on January 14, 1999 and
which are described in the Proxy Statement. See "Directors Compensation" and
"Compensation Committee Report."
OTHER MATTERS
Captec has selected PricewaterhouseCoopers LLP as its independent
accountants for the current fiscal year. Representatives of
PricewaterhouseCoopers LLP which served as Captec's independent public
accountants during the fiscal year ended December 31, 1999 are expected to be
present at the annual meeting, will have the opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
If the enclosed proxy is executed and returned to Captec, the persons
named in it will vote the shares of common stock represented by that proxy at
the annual meeting. The form of proxy permits specification of a vote for the
election of directors as set forth under "Election of Directors," the
withholding of authority to vote in the election of directors, or the
withholding of authority to vote for one or more specified nominees.
When a choice has been specified in the proxy, the shares represented
will be voted in accordance with that specification. If no specification is
made, those shares will be voted at the annual meeting to elect directors as set
forth under "Election of Directors" and against the stockholder proposal
described below if it is properly brought before the meeting. Under Delaware
law, broker non-votes and abstaining votes will not be counted in favor of or
against any nominee. The nine director nominees receiving the greatest number of
affirmative votes will be elected directors. If any other matter properly comes
before the annual meeting, the persons named in the proxy will vote thereon in
accordance with their judgment.
Management does not know of any other matter that will be presented
for action at the annual meeting except that a stockholder has informed Captec
that, at the annual meeting, it intends to propose that the Board of Directors
authorize an independent investigation of the circumstances leading to the
proposed restructuring of Captec. In support of this proposal this stockholder
states in preliminary proxy material filed with the SEC that an investigation
is "desirable" because of allegations by "a number of [unidentified]
shareholders of self-dealing by management and two lawsuits."
As many of our stockholders are aware, in December 1999, Captec
announced a restructuring plan of merger under which, subject to approval by
Captec's non-affiliated stockholders, Captec would have merged with Captec
Financial Group and Captec Advisors. The factors and circumstances leading to
the proposed restructuring plan are described by Captec in a December 20, 1999
press release and in a publicly available 265-page preliminary proxy statement
filed with the SEC on April 19, 2000. This public filing can be obtained by
shareholders through the SEC's EDGAR database at www.sec.gov. Adoption of the
restructuring plan would have required the vote of a majority Captec's
outstanding shares of common stock owned by non-affiliated stockholders. As
described in specific detail in the press release and preliminary proxy
statement, the restructuring plan was developed in response to ongoing
15
<PAGE> 16
market conditions which are unfavorable toward REITS. As is customary in all
such proposed transactions between a public company and its affiliates, a
special committee of Captec's Board of Directors considered the proposed
restructuring plan. The Special Committee consisted of all non-management
directors of Captec, none of whom would have received any of the consideration
to be paid by Captec for the merger. The Special Committee, based upon its
extensive investigation and in the exercise of its business judgment, approved
the restructuring plan subject to the express condition in the merger agreement
that it be approved by Captec's non-affiliated stockholders. Subsequently, after
months of further consideration of the restructuring plan, which included
consideration of the views of both Captec's major institutional stockholders and
many smaller, individual stockholders, the Special Committee concluded that the
restructuring plan did not enjoy broad-based support and voted to terminate the
restructuring plan.
Your Board of Directors has considered the stockholder's proposal and
believes that such an investigation would serve no useful purpose and would
result in an unproductive use of substantial corporate funds. The proposing
stockholder also has informed Captec of its intention to solicit proxies for
election of an alternate slate of directors and the Board of Directors believes
that the proposal is being made only to gain support for this stockholder's
alternate slate of directors. The stockholder's proposal which, if approved,
would have the effect only of a recommendation to the Board of Directors in any
event, is vague with respect to the scope and nature of the proposed
investigation and fails to offer a supporting statement to explain the benefits
of conducting such an investigation, other than to state its belief that such an
investigation would be "desirable". The restructuring plan has been terminated
and all that occurred is that the Special Committee, in the exercise of its
business judgment and fulfillment of its fiduciary duty to stockholders,
investigated and approved the restructuring plan subject to non-affiliated
stockholder approval and subsequently voted to terminate the restructuring plan
upon concluding it did not have broad-based stockholder support. Under these
circumstances, the Board of Directors believes an internal investigation cannot
serve any useful purpose and will result only in a significant expenditure of
corporate funds. As noted above, an extensive discussion of the factors
considered by the Special Committee in its deliberations of the restructuring
plan is contained in Captec's preliminary proxy statement, which is a matter of
public record. The stockholder also notes that there are currently pending two
lawsuits filed by stockholders of Captec. The primary relief sought in both of
those actions is to prohibit the merger, which now has been withdrawn. Captec
intends to defend against each of these actions. Captec strongly believes it
is inadvisable to conduct an open-ended investigation of the type recommended by
the stockholder while these cases are pending.
Therefore, the Board of Directors recommends that you vote AGAINST
Proposal Two using the WHITE proxy card.
By order of the Board of Directors,
EDWARD G. PTASZEK
Secretary
Dated: ______________, 2000
16
<PAGE> 17
APPENDIX A
CAPTEC NET LEASE REALTY, INC.
AUDIT COMMITTEE CHARTER
I. STATEMENT OF POLICY
The Audit Committee ("Audit Committee" or "Committee")
is appointed by the Board of Directors of Captec Net
Lease Realty, Inc. (the "Company") to provide
assistance to the Board of Directors in fulfilling its
oversight responsibility relating to the Company's
financial statements and the financial reporting
processes; the systems of internal accounting and
financial controls; the annual independent audit of
the Company's financial statements; any
financially-related legal compliance or ethics programs as
established and assigned to the Audit Committee by the
Board; and any other areas specified by the Board of
potential significant financial risk to the Company. In
so doing, it is the responsibility of the Audit
Committee to maintain free and open means of
communication among the Directors, the independent
auditors and the senior and financial management of
the Company.
II. AUDIT COMMITTEE DUTIES, RESPONSIBILITIES AND PROCESSES
The following shall be the principal duties,
responsibilities and recurring processes of the Audit
Committee in carrying out its oversight role. The
processes are set forth as a guide with the
understanding that the Committee may supplement them
as appropriate. As part of the oversight
responsibility, the Committee shall:
A. Meeting Frequency
1. Meet semi-annually or more frequently as
circumstances dictate. The Chairman of the
Audit Committee shall select the meeting
dates after consultations with the other
members of the Committee.
2. Be presented in advance of each meeting with
an agenda for such meeting as prepared or
approved by the Chairman of the Committee.
B. Financial Reporting Process and Internal Control
1. Review with management and the independent
auditors the audited financial statements to
be included in the Company's annual report
on Form 10-K to determine that the
independent auditors are satisfied with the
disclosure and content of the financial
statements to be presented to the
shareholders. Any changes in accounting
principles should be reviewed. Significant
findings, difficulties encountered during
the course of audit
<PAGE> 18
work and any changes in the planned scope should
also be discussed with the independent auditors.
2. Review with the independent auditors the matters
required to be communicated to audit committees in
accordance with AICPA Statement on Auditing
Standards (SAS) No. 61 regarding the annual audit.
3. Discuss quarterly unaudited financial statements
with management and the independent auditors;
discuss with the independent auditors the results of
their review performed in accordance with SAS No. 71
for unaudited financial statements prior to the
Company's filing of its Form 10-Q with the
Securities and Exchange Commission. The Chairman of
the Audit Committee may represent the entire
committee for purposes of this discussion.
4. Review audit findings, including any significant
suggestions for improvements provided to management
by the independent auditors, and obtain management's
response to the suggestions from the independent
auditors.
5. Review the Company's accounting and financial
controls with the independent auditors and the
Company's financial officers, including obtaining of
adequate assurance from the independent auditors of
the adequacy of the Company's accounting and
financial controls.
6. Meet periodically with the independent auditor and
management in separate executive sessions to discuss
any matters that the Audit Committee or these
persons believe should be discussed privately with
the Committee.
7. Perform such other oversight functions as requested by
the Board of Directors.
C. Auditing Functions
1. Since the independent auditor is ultimately
accountable to the Board of Directors and the Audit
Committee, as representatives of the shareholders,
the Audit Committee and the Board of Directors shall
have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace
the independent auditor (or nominate the independent
auditor to be proposed for shareholder approval in
any proxy statement).
2. Approve the arrangements, scope and cost of any
significant non-audit engagement by the independent
auditor for the Company; receive from the
independent auditor a formal written statement
annually stating
<PAGE> 19
(a.) the Director is employed by the Company
or any of its subsidiaries or was so
employed within the past three years;
(b.) the Director has accepted compensation
from the Company or any of its
affiliates in excess of $60,000 during
the previous fiscal year, other than
compensation for board service, benefits
under a tax-qualified retirement plan or
non-discretionary compensation;
(c.) the Director is a member of the
immediate family of an individual who
is, or has been in any of the past three
years, employed by the Company or any of
its affiliates as an executive officer;
immediate family includes a person's
spouse, parents, children, siblings,
mother-in-law, father-in-law,
brother-in-law, sister-in-law, daughter-in-law,
son-in-law and anyone who resides in the
person's home;
(d.) the Director is a partner in, or a
controlling shareholder or an executive
officer of, any for-profit organization
to which the Company made, or from which
the Company received, payments (other
than those arising solely from
investments in the Corporation's
securities) that exceed the greater of:
(I) 5% of the Company's or the business
organization's consolidated gross
revenues, or (ii) $200,000 in any of the
past three years; or
(e.) the Director is employed as an executive
of another entity and any of the
Company's executives serve on that
entity's compensation committee.
The Board may appoint one director who fails
the independence test so long as that
director is not a current employee or an
immediate family member of an employee and
the Board, "under exceptional and limited
circumstances, determines that membership on
the Committee by the individual is required
by the best interests of the shareholders,
and the Board discloses in the next annual
proxy statement subsequent to such
determination, the nature of the relationship
and the reasons for that determination.
3. All members of the Committee will be able to
read and understand fundamental financial
statements, including a balance sheet, income
statement and cash flow statement or will
become able to do so within a reasonable time
following appointment to the Audit Committee.
4. At least one member of the Committee will
have past employment experience in finance or
accounting, requisite professional
certification in
<PAGE> 20
accounting or any other comparable experience
or background which results in that member's
financial sophistication, including being or
having been a chief executive officer, chief
financial officer of other senior officer
with financial oversight responsibilities.
B. All Directors shall be invited to all Audit
Committee meetings.
C. The Chairman of the Audit Committee shall update
the Board of Directors on the activities of the
Audit Committee regularly. Minutes of any Audit
Committee meeting shall be provided to all
Directors at the following Board of Directors
meeting, at which time the Chairman of the Audit
Committee will provide additional comments as
appropriate.
D. The Audit Committee shall review and approve the
report required by the Securities and Exchange
Commission to be included in the Company's annual
proxy statement.
E. The Audit Committee shall review and reassess the
adequacy of the Audit Committee Charter on an
annual basis and any changes thereto shall be
submitted to the Board of Directors for approval.
F. The Company shall have the Charter published at
least every third year in the Company's proxy
statement in accordance with the Securities and
Exchange Commission regulations.
G. In accordance with the applicable Nasdaq
Marketplace Rules, the Company must provide the
Nasdaq Stock Market written confirmation regarding
compliance with Nasdaq's Audit Committee Structure
and composition requirements, including
1. The determination made by the Board of
Directors regarding Audit Committee member
independence.
2. The financial literacy of Audit Committee
members.
3. The determination that at least one Audit
Committee member has accounting or financial
management expertise.
4. The review and reassessment of the adequacy
of this Charter on an annual basis.
<PAGE> 21
CAPTEC NET LEASE REALTY, INC.
The Annual Meeting of the Stockholders of Captec Net Lease Realty, Inc.
will be held on Wednesday, August 9, 2000, at _____ a.m., eastern time, at
Captec's principal offices at 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan
48106-0544.
- Tear at Perforation -
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C> <C> <C> <C> <C>
Nominees: Patrick L. Beach W. Ross Martin H. Reid Sherard Richard J. Peters Creed L. Ford, III
William H. Krul, II Lee C. Howley Albert T. Adams William J. Chadwick
</TABLE>
[ ] FOR all nominees [ ] WITHHELD as to all nominees
[ ] FOR, except vote withheld from the following nominee(s):
-----------------------------------------------------------------------
2. RECOMMENDATION THAT THE BOARD OF DIRECTORS AUTHORIZE AN INDEPENDENT
INVESTIGATION OF THE CIRCUMSTANCES LEADING TO THE PROPOSED (AND
SUBSEQUENTLY ABANDONED) RESTRUCTURING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Stockholders of Captec Net Lease Realty, Inc. called for Wednesday, August 9,
2000, and a Proxy Statement for the Meeting prior the signing of this proxy.
Dated: , 2000
-----------------------------------------
---------------------------------------------------
---------------------------------------------------
Please sign exactly as your name(s) appears(s) on this
proxy. When signing in a representative capacity,
please give title.
<PAGE> 22
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.
CAPTEC NET LEASE REALTY, INC.
24 Frank Lloyd Wright Drive
Ann Arbor, Michigan 48106-0544
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CAPTEC NET LEASE
REALTY, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
AUGUST 9, 2000 AND ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
The undersigned, being a stockholder of CAPTEC NET LEASE REALTY, INC.
("Captec"), hereby authorizes ____________, ____________ and _______________,
and each of them, with the full power of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of Captec to be held at
Captec's principal offices at 24 Frank Lloyd Wright Drive, Ann Arbor, Michigan
48106-0544 on August 9, 2000 at ______ a.m., eastern time, and at any
adjournment thereof, and at the meeting to act, with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as
appears on the reverse side of this proxy.
In their discretion, the proxies are authorized to vote with respect to
matters incident to the conduct of the meeting and upon such other matters as
may properly come before the meeting. This proxy may be revoked at any time
before it is exercised.
Shares of the Captec common stock of Captec will be voted as specified. If
no specification is made, shares will be voted FOR the nominees for director
named on the reverse side, AGAINST proposal two and IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES as to any other matter which may properly come before
the Meeting.
(CONTINUED ON OTHER SIDE)
