<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Rock Financial Corporation
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
ROCK FINANCIAL CORPORATION
30600 TELEGRAPH ROAD, FOURTH FLOOR
BINGHAM FARMS, MICHIGAN 48025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 1999
To the Shareholders of Rock Financial Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Rock
Financial Corporation will be held at the Company's National Support Center,
30600 Telegraph Road, Fourth Floor, Bingham Farms, Michigan 48025, at 10:00 a.m.
Eastern Daylight Time on Tuesday, May 25, 1999 for the following purposes:
1. To select two directors, each to serve until the 2002
Annual Meeting of Shareholders and until his successor is elected and
qualified.
2. To transact such other business as may properly come before
the meeting and any adjournment thereof.
Only shareholders of record on March 29, 1999 will be entitled to
notice of, and to vote at, the meeting or any adjournment thereof.
All shareholders are cordially invited to attend the meeting. Whether
or not you expect to attend the meeting, please complete, date and sign the
enclosed proxy and return it as promptly as possible to ensure your
representation at the meeting. A return postage-prepaid envelope is enclosed for
that purpose. If you return the proxy, you may withdraw your proxy and vote your
shares in person if you attend the meeting.
Your attention is called to the attached Proxy Statement and the
accompanying proxy. A copy of the Annual Report of the Company for the year
ended December 31, 1998 accompanies this notice.
By order of the Board of Directors
Daniel Gilbert
President and Chief Executive Officer
Bingham Farms, Michigan
April 20, 1999
<PAGE> 3
ROCK FINANCIAL CORPORATION
30600 TELEGRAPH ROAD, FOURTH FLOOR
BINGHAM FARMS, MICHIGAN 48025
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Rock Financial Corporation (the
"Company") for use at the 1999 Annual Meeting of Shareholders to be held at the
Company's National Support Center, 30600 Telegraph Road, Fourth Floor, Bingham
Farms, Michigan 48025, at 10:00 a.m. Eastern Daylight Time on Tuesday, May 25,
1999, and at any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. The mailing of this Proxy
Statement and accompanying proxy will take place on or about April 20, 1999.
Solicitation
The Company will bear the entire cost of solicitation of proxies in the
enclosed form, including the preparation, assembly, printing and mailing of this
Proxy Statement, the accompanying proxy and any additional information furnished
to shareholders. The solicitation of proxies by mail may be supplemented by
telephone, telegraph or personal solicitation by directors, officers or other
regular employees of the Company; no additional compensation will be paid to
directors, officers or other regular employees for such services. Brokers,
nominees and other similar record holders will be requested to forward
soliciting material and will be reimbursed by the Company upon request for their
out-of-pocket expenses.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Voting Rights and Outstanding Shares
Only shareholders of record at the close of business on March 29, 1999
will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournment of the meeting. As of the close of business on March 29, 1999, the
Company had 14,001,770 outstanding Common Shares, $0.01 par value ("Common
Shares"), the only class of stock outstanding and entitled to vote.
Each Common Share is entitled to one vote on each matter submitted for
a vote at the meeting. The presence, in person or by proxy, of the holders of
record of a majority of the outstanding Common Shares entitled to vote, or
7,000,886 shares, is necessary to constitute a quorum for the transaction of
business at the meeting or any adjournment thereof.
1
<PAGE> 4
Revocability of Proxies
A shareholder giving a proxy may revoke it at any time before it is
voted by giving written notice of such revocation to the Secretary of the
Company or by executing and delivering to the Secretary a later dated proxy.
Attendance at the meeting by a shareholder who has given a proxy will not have
the effect of revoking it unless such shareholder gives such written notice of
revocation to the Secretary before the proxy is voted. Any written notice
revoking a proxy, and any later dated proxy, should be sent to Rock Financial
Corporation, 30600 Telegraph Road, Fourth Floor, Bingham Farms, Michigan 48025,
Attention: Secretary.
Valid proxies in the enclosed form which are returned in time for the
meeting and executed and dated in accordance with the instructions on the proxy
will be voted as specified in the Proxy. If no specification is made, the
proxies will be voted FOR the election as directors of the nominees listed
below.
Principal Holders of the Company's Voting Securities
As of March 29, 1999, the only persons known to the Company to be the
beneficial owners of more than 5% of the Company's outstanding Common Shares,
its only outstanding class of voting shares, were as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OUTSTANDING SHARES (1)
- ------------------------------------ --------------------------- ---------------------------
<S> <C> <C>
Daniel B. Gilbert........................... 10,394,169 (2) 74.2%
30600 Telegraph Road, Fourth Floor
Bingham Farms, Michigan 48025
Gary L. Gilbert............................. 2,107,298 (2) 15.1%
640 N. LaSalle St., Suite 330
Chicago, Illinois 60610
Lindsay Gross............................... 877,601 (2) 6.3%
30600 Telegraph Road, Fourth Floor
Bingham Farms, Michigan 48025
Steven M. Stone............................. 737,184 (2) 5.0%
26010 Hersheyvale
Franklin, Michigan 48025
</TABLE>
- ---------------------------
(1) Based on 14,001,770 Common Shares outstanding as of March 29, 1999.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally
includes voting or investment power with respect to securities. Except
as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all Common
Shares beneficially owned.
(2) Pursuant to a Shareholders Agreement, dated as of May 6, 1998, among
Rock Financial Corporation, Daniel B. Gilbert, Gary L. Gilbert, Lindsay
Gross, Steven M. Stone, Ross Niskar and Adam Schoener, each of the
shareholder parties to the agreement (other than Daniel Gilbert) has
given Daniel Gilbert all voting power over all shares currently owned
or later acquired by them until May 6, 2008. The Shareholders
Agreement, does not restrict transfer of these shares and the shares
will not be subject to the Shareholders
2
<PAGE> 5
Agreement if they are transferred to a third party in a public offering
or pursuant to Rule 144 under the Securities Act of 1933. As of March
29, 1999, the following persons owned the following shares:
Name Shares
---- ------
Daniel B. Gilbert 7,158,000
Gary L. Gilbert 2,107,298
Lindsay Gross 877,601
Steven M. Stone 737,184 *
Ross Niskar 291,615 *
Adam Schoener 267,715 *
*718,684, 290,615 and 263,715 of the shares shown as beneficially owned
by Steven M. Stone, Ross Niskar and Adam Schoener, respectively, are
shares that they may acquire within 60 days of March 29, 1999 upon
exercise of options granted to them by Rock Financial Corporation. If
and when such options are exercised, the shares received will be
subject to the voting agreement, unless they are sold to a third party
in a public offering or pursuant to Rule 144. Daniel Gilbert does not
control the exercise of these options or the disposition of the
underlying shares. On February 5, 1999, Steven Stone exercised options
to purchase 230,770 Common Shares and sold such shares to David
Katzman, a director of the Company and Daniel Gilbert's and Gary
Gilbert's first cousin. These shares are still subject to the voting
agreement.
I. ELECTION OF DIRECTORS
The Board of Directors proposes that the two persons named below as
nominees for election as directors for a three-year term be elected as directors
of the Company to hold office until the Annual Meeting of Shareholders to be
held in 2002, and until his successor is elected and qualified. Gary L. Gilbert
was elected as a director in March 1987, and Robert V. Schechter was elected as
a director in April 1998. If a quorum is present, the two nominees receiving the
greatest number of votes cast at the meeting or its adjournment shall be
elected. Withheld votes and broker non-votes will not be deemed votes cast in
determining which nominees receive the greatest number of votes cast, but will
be counted for purposes of determining whether a quorum is present. The persons
named in the accompanying proxy intend to vote all valid proxies received by
them FOR the election of the nominees listed below unless the giver of the proxy
withholds authority to vote for such nominees. The nominees listed below have
consented to serve if elected. If any nominee is unable or declines to serve,
which is not expected, it is intended that the proxies be voted in accordance
with the best judgment of the proxy holders for another qualified person.
The following information is furnished as of March 29, 1999 with
respect to the nominees for election as directors, with respect to each person
whose term of office as a director will continue after the meeting, with respect
to each executive officer of the Company named in the Summary Compensation Table
below, and with respect to all directors and executive officers as a group:
3
<PAGE> 6
<TABLE>
<CAPTION>
AMOUNT AND PERCENTAGE
NATURE OF OF
POSITION AND OFFICES WITH COMMON SHARES COMMON TERM
DIRECTOR THE COMPANY AND OTHER BENEFICIALLY SHARES TO
NAME SINCE AGE PRINCIPAL OCCUPATION OWNED OWNED(1) EXPIRE
---- ----- --- -------------------- ----- -------- ------
NOMINEES FOR ELECTION AS DIRECTORS FOR A THREE-YEAR TERM
<S> <C> <C> <C> <C> <C>
Gary L. Gilbert......... 3/87 34 Director of the Company 2,107,298 (2) 15.1% 2002
and President and Chief
Executive Officer of Option
Home Lending, Inc.
Robert V. Schechter..... 4/98 61 Director of the Company, 17,000 (3) * 2002
President and sole shareholder of
Benefit Programs, Inc.
DIRECTORS CONTINUING IN OFFICE
David Katzman........... 4/98 39 Director of the Company 289,270 (4) 2.1% 2000
and President of National
Blinds & Wallpaper, Inc., a
Subsidiary of The Home Depot
Daniel Gilbert.......... 6/85 37 Chairman of the Board, 10,394,169 (2) 74.2% 2001
President and Chief
Executive Officer of the
Company
David A. Brandon........ 4/98 46 Director of the Company 12,000 (5) * 2001
and Chief Executive Officer
and Chairman of the Board
of Domino's Pizza, Inc.
</TABLE>
OTHER EXECUTIVE OFFICERS
<TABLE>
<S> <C> <C>
David Carroll.......................................................... 23,400 (6) *
Lindsay Gross.......................................................... 877,601 (2) 6.3%
Frank E. Plenskofski................................................... 24,000 (7) *
Steven M. Stone........................................................ 737,184 (2) 5.0%
All directors and executive officers as a group (8 persons)............ 10,529,069 (8) 74.9%
</TABLE>
- ------------------------
* Less than 1%
(1) Based on 14,001,770 Common Shares outstanding as of March 29, 1999.
(2) Pursuant to a Shareholders Agreement, dated as of May 6, 1998, among
Rock Financial Corporation, Daniel B. Gilbert, Gary L. Gilbert, Lindsay
Gross, Steven M. Stone, Ross Niskar and Adam Schoener, each of the
shareholder parties to the agreement (other than Daniel Gilbert) has
given Daniel Gilbert all voting power over all shares currently owned
or later acquired by them until May 6, 2008. The Shareholders
Agreement, does not restrict transfer of these shares and the shares
will not be subject to the Shareholders Agreement if they are
transferred to a third party in a public offering or pursuant to Rule
144 under the Securities Act of 1933. As of March 29, 1999, the
following persons owned the following shares:
4
<PAGE> 7
Name Shares
---- ------
Daniel B. Gilbert 7,158,000
Gary L. Gilbert 2,107,298
Lindsay Gross 877,601
Steven M. Stone 737,184 *
Ross Niskar 291,615 *
Adam Schoener 267,715 *
*718,684, 290,615 and 263,715 of the shares shown as beneficially owned
by Steven M. Stone, Ross Niskar and Adam Schoener, respectively, are
shares that they may acquire within 60 days of March 29, 1999 upon
exercise of options granted to them by Rock Financial Corporation. If
and when such options are exercised, the shares received will be
subject to the voting agreement, unless they are sold to a third party
in a public offering or pursuant to Rule 144. Daniel Gilbert does not
control the exercise of these options or the disposition of the
underlying shares. On February 5, 1999, Steven Stone exercised options
to purchase 230,770 Common Shares and sold such shares to David
Katzman, a director of the Company and Daniel Gilbert's and Gary
Gilbert's first cousin. These shares are still subject to the voting
agreement.
(3) Includes 7,000 Common Shares that Mr. Schechter has the right to
acquire within 60 days of March 29, 1999.
(4) Includes 7,000 Common Shares that Mr. Katzman has the right to acquire
within 60 days of March 29, 1999.
(5) Includes 7,000 Common Shares that Mr. Brandon has the right to acquire
within 60 days of March 29, 1999.
(6) Includes 22,000 Common Shares that Mr. Carroll has the right to acquire
within 60 days of March 29, 1999.
(7) Includes 22,000 Common Shares that Mr. Plenskofski has the right to
acquire within 60 days of March 29, 1999.
(8) Includes 65,000 Common Shares that all executive officers and directors
as a group have the right to acquire within 60 days of March 29, 1999.
BIOGRAPHICAL INFORMATION
The following is a brief account of the business experience during the
past five years of each nominee for the Board of Directors of the Company and of
each director whose term of office will continue after the meeting:
Gary L. Gilbert. Mr. Gilbert has served as the President and Chief
Executive Officer of Option Home Lending, Inc., a company he founded, since
February 1997. From December 1992 until January 1997 he served as the Company's
Executive Vice President. From March 1987 until December 1992 he served as the
Company's Vice President. Gary L. Gilbert was an employee of the Company from
June 1985 until March 1987. Mr. Gilbert has been a director of the Company since
March 1987. Gary L. Gilbert and Daniel Gilbert are brothers. Gary L. Gilbert and
David Katzman are first cousins. Daniel Gilbert agreed pursuant to a Stock
Purchase Agreement to vote his Common Shares to elect Gary L. Gilbert as a
Director of the Company until May 6, 1998.
Robert V. Schechter. Mr. Schechter has been President and the sole
shareholder of Benefit Programs, Inc., an insurance agency, since it was founded
in 1971. He has been a Director of the Company since April 1998.
5
<PAGE> 8
David Katzman. Mr. Katzman has served as President of National Blinds &
Wallpaper, Inc., a subsidiary of The Home Depot, a home building supplies
retailer, since November 1997. From October 1987 until November 1997 he served
as President of Deekay Enterprises, Inc., a home building supplies retailer. He
has served as a Director of the Company since April 1998. David Katzman is a
first cousin of Daniel Gilbert and of Gary L. Gilbert.
Daniel Gilbert. Mr. Gilbert founded the Company in June 1985 and has
served as its Chief Executive Officer since its inception in June 1985 and as
its Chairman of the Board since December 1992. Since December 9, 1998 he has
served, and from February 1986 until February 1998 he served, as the Company's
President. Mr. Gilbert has been a director of the Company since its inception in
June 1985. Gary L. Gilbert and Daniel Gilbert are brothers. David Katzman and
Daniel Gilbert are first cousins.
David A. Brandon. Mr. Brandon has served as Chief Executive Officer and
Chairman of the Board of Domino's Pizza, Inc., a pizza retailer and franchiser,
since March 1999. From October 1991 until June 1998 he served as Chief Executive
Officer and President of Valassis Communications, Inc., a publisher of
advertising inserts. He also served as Chairman of the Board of Directors of
Valassis Communications, Inc. from July 1997 until December 1998. He served as
Executive Vice President and Chief Operating Officer of Valassis Inserts, Inc.
from 1986 through July 1989 and President and Chief Executive Officer of
Valassis Inserts from July 1989 until its merger into Valassis Communications,
Inc. He has served as a director of the Company since April 1998.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the year ended December 31, 1998, the Board of Directors held
seven meetings and took action by written consent on fifteen occasions.
Audit Committee
The Board of Directors has an Audit Committee which consists of two
directors. David A. Brandon and David Katzman are the current members of this
committee. The Audit Committee (i) recommends to the Board the conditions,
compensation and term of appointment of independent certified public accountants
for the audit of the Company's financial statements, (ii) reviews examination
reports of the Company prepared by regulatory authorities, and (iii) provides
the Board with such assistance as is necessary with respect to the Company's
corporate and reporting practices. The Audit Committee may also from time to
time confer with the auditors to exchange views relating to the scope and
results of the audit. During the year ended December 31, 1998, the Audit
Committee did not hold any meetings.
Compensation Committee
The Board of Directors has a Compensation Committee which consists of
two directors. David A. Brandon and David Katzman are the current members of
this committee. The Compensation Committee makes recommendations to the Board of
Directors with respect to compensation arrangements and plans for senior
management, officers and directors of the
6
<PAGE> 9
Company and administers the Company's 1996 Stock Option Plan. During the year
ended December 31, 1998, the Compensation Committee held four meetings and acted
by written consent on two occasions.
The Company does not have a nominating committee.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for each of the years ended
December 31, 1998, 1997 and 1996 concerning compensation of (i) all individuals
serving as the Company's Chief Executive Officer during the year ended December
31, 1998, (ii) the Company's four most highly-compensated other executive
officers who were serving as executive officers of the Company as of December
31, 1998 and whose total annual salary and bonus exceeded $100,000 in 1998, and
(iii) one additional individual who was among the Company's four most highly
compensated executive officers other than the Chief Executive Officer, but was
not serving as an executive officer at the end of 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------
ANNUAL COMPENSATION SECURITIES ALL OTHER
NAME AND ------------------- UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($) (1)
------------------ ---- --------- -------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Daniel Gilbert,................. 1998 225,000 0 0 2,000
Chairman of the Board, 1997 225,000 620,000 0 1,900
President and Chief 1996 150,000 1,245,000 0 1,385
Executive Officer
Frank E. Plenskofski,........... 1998 135,000 75,000 50,000 1,252
Chief Financial Officer (2) 1997 120,000 40,000 50,000 62,877
1996 86,796 30,000 0 11,000
David Carroll,.................. 1998 140,000 60,000 10,000 1,023
Chief Operations Officer 1997 130,000 40,000 50,000 1,900
1996 120,000 30,000 0 1,125
Lindsay Gross,.................. 1998 125,000 0 0 672
Executive Vice President... 1997 175,000 167,030 0 1,900
1996 180,000 69,000 0 286
Steven M. Stone,................ 1998 147,692 0 292,500 (3) 113,386
Former President (1)....... 1997 160,000 540,000 (3) 0 849
1996 125,000 578,000 1,001,454 0
</TABLE>
(1) Includes $2,000, $1,252, $1,023, $672 and $886 contributed by the
Company to Messrs. Gilbert, Plenskofski, Carroll, Gross and Stone,
respectively, pursuant to the matching contribution provisions of the
Company's 401(k) Savings Plan for the year ended December 31, 1998.
Also includes, $112,500 in
7
<PAGE> 10
severance benefits paid or payable to Mr. Stone in connection with his
resignation as an officer and as a director of the Company effective
December 9, 1998.
(2) Mr. Plenskofski became an executive officer of the Company in December
1996.
(3) In connection with an amendment to his employment agreement, effective
as of May 6, 1998, the closing date of the Company's initial public
offering, the Company granted Mr. Stone an immediately exercisable
option to purchase 292,500 Common Shares with an exercise price of
$10.00 per share. See "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements."
Compensation of Directors
The Company pays each director who is not an officer, employee or 10%
shareholder of the Company ("Outside Directors") a fee of $1,000 for each Board
meeting attended in person, $750 for each telephonic Board meeting attended, and
$500 for each Board committee meeting attended on a date other than the date of
a Board meeting. The Company also reimburses Outside Directors for their
reasonable expenses of attending Board and Board committee meetings. In
addition, on May 6, 1998, the Company granted options to purchase 15,000 Common
Shares to each of its three Outside Directors, exercisable at $10.00 a share.
Option Grants Table
The following table sets forth information concerning individual grants
of stock options made during the year ended December 31, 1998 to each of the
executive officers of the Company named in the Summary Compensation Table above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL
NUMBER OF OPTIONS RATES OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ---------------
NAME GRANTED (#) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Daniel Gilbert............. 0 0.0 N/A N/A N/A N/A
Frank E. Plenskofski....... 10,000 (1) 1.1 $10.00 5/6/08 62,889 159,374
40,000 (2) 4.4 $6.3125 12/9/08 158,796 402,420
David Carroll.............. 10,000 (1) 1.1 $10.00 5/6/08 62,889 159,374
Lindsay Gross.............. 0 0.0 N/A N/A N/A N/A
Steven M. Stone............ 292,500 (3) 32.1 $10.00 5/6/08 1,839,517 4,661,697
</TABLE>
(1) These options are exercisable in one-fifth cumulative annual
installments beginning May 6, 1999.
8
<PAGE> 11
(2) These options are exercisable in one-third cumulative annual
installments beginning December 9, 1999. This option and Mr.
Plenskofski's other options continue to be exercisable for up to 18
months after the Company terminates his employment without cause.
(3) These options are 100% exercisable immediately. These options were
granted in connection with an amendment to Mr. Stone's employment
agreement, effective as of May 6, 1998. This option, and another option
previously granted to Mr. Stone continues to be exercisable for three
years after the December 9, 1998 termination of Mr. Stone's employment.
See "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
With respect to each of the options described above, if, upon exercise
of these options the Company must pay any amount for income tax withholding, in
the Compensation Committee's or the Board of Directors' sole discretion, either
the optionee will pay such amount to the Company or the number of Common Shares
delivered by the Company to the optionee will be appropriately reduced to
reimburse the Company for such payment. The Compensation Committee or the Board
may also permit the optionee to choose to have such shares withheld or to tender
Common Shares the optionee already owns. The Compensation Committee or the Board
may also make such other arrangements with respect to income tax withholding as
it shall determine. In addition, each of the options described above contains
provisions requiring forfeiture of the gain realized upon exercise of the option
if the employee leaves the Company within one year after exercise or engages in
certain activities inimical, contrary or harmful to the interests of the
Company.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1998 by each of the executive
officers named in the Summary Compensation Table above and the value of
unexercised options held by such persons as of December 31, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FY-END (#) FY-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Daniel Gilbert............. -0- -0- 0/0 0/0
Frank E. Plenskofski....... -0- -0- 20,000/80,000 166,400/547,100
David Carroll.............. -0- -0- 20,000/40,000 166,400/279,600
Lindsay Gross.............. -0- -0- 0/0 0/0
Steven M. Stone............214,500 990,990 1,079,454/0 7,424,957/0
</TABLE>
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Daniel Gilbert. As of April 10, 1998, the Company entered into a letter
agreement with Daniel Gilbert. Pursuant to the letter agreement, Daniel Gilbert
agreed that his bonus with
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<PAGE> 12
respect to 1998 from the Company would not exceed $300,000. The letter agreement
also provides that Daniel Gilbert will not compete with the Company in the
business of originating loans in the states in which the Company is active until
the earliest of (i) one year after his termination of employment by the Company
for cause, (ii) one year after termination of employment by Daniel Gilbert
without good reason, except as a result of his death or disability, and (iii)
the date of termination of his employment for any other reason.
Frank E. Plenskofski. As of December 9, 1998, the Company entered into
a letter agreement with Frank E. Plenskofski concerning his employment with the
Company through December 31, 2000. Pursuant to the letter agreement, Mr.
Plenskofski's base salary for 1999 will be not less than $200,000, and for 2000,
not less than $220,000, and he will continue to receive the fringe benefits
provided to other executives of the Company. Mr. Plenskofski is entitled to a
bonus for 1998 of $75,000, and as long as the Company's pro forma,
fully-diluted, net income per share continues to grow (after excluding any
substantial effects of acquisitions of other businesses), his bonuses for 1999
and 2000 will be at least as much as his bonus for the previous year, if he is
employed on the last day of such year. The agreement also provides for the grant
to Mr. Plenskofski of an option to purchase 40,000 Common Shares, which was
granted to him on December 9, 1998.
If the Company terminates Mr. Plenskofski's employment, before January
1, 2001, other than for cause or his death or disability, his salary will
continue through December 31, 2000 (unless he dies or becomes disabled before
that date). In addition, if Daniel Gilbert is not President of the Company at
any time before December 31, 2000, Mr. Plenskofski may resign within 10 days
after he knows there is another President, and if he resigns, (i) his
non-compete obligations will not apply, except with respect to competition
through a Michigan-based mortgage lender, and (ii) he will receive 25% of his
annual salary as an exclusive severance benefit. The agreement also provides
that Mr. Plenskofski (i) must keep the Company's confidential information
confidential, (ii) may not compete with the business of the Company through
December 31, 2000, and (iii) will not solicit or hire Company employees for a
period ending 18 months after the termination of his employment.
Steven M. Stone. As of June 27, 1994, the Company entered into an
employment agreement with Steven M. Stone, which agreement was amended as of
December 28, 1996 and as of February 18, 1998, and was terminated in most
respects pursuant to a Severance Agreement and Release, dated as of November 20,
1998. Pursuant to the employment agreement, Mr. Stone was employed as President
of the Company and he was entitled to a salary, a discretionary bonus and fringe
benefits determined by the Company's Chief Executive Officer. The employment
agreement also provided for the payment of special bonuses in the amounts of
$540,000 by December 31, 1996, $180,000 by July 1, 1997 and $360,000 by December
31, 1997, the grant of a stock option on December 28, 1996 to purchase 1,001,454
Common Shares at $4.68 per share, and the grant of a stock option on May 6, 1998
to purchase 292,500 Common Shares at $10.00 per share (the "New Option").
Before the February 18, 1998 amendment, Mr. Stone had the right under
the agreement to receive a "Distribution Bonus." In exchange for cancellation of
Mr. Stone's right to receive the Distribution Bonus, the Company (i) agreed to
permit Mr. Stone to be one of the selling shareholders in the initial public
offering, and (ii) agreed to grant to Mr. Stone the New Option.
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<PAGE> 13
Pursuant to the employment agreement, Mr. Stone agreed not to compete with the
Company during his employment and during specified periods following the
termination of his employment, with some exceptions in the event of a Change in
Ownership of the Company (as defined in the agreement).
Pursuant to the severance agreement, (i) effective November 20, 1998,
Mr. Stone resigned from all of his positions with the Company, (ii) the Company
agreed to pay Mr. Stone $112,500, (iii) the Company agreed that Mr. Stone's
stock options would continue to be exercisable until November 20, 2001, subject
to the terms of such options, and (iv) the Company agreed to provide Mr. Stone
with health insurance coverage at its expense through November 19, 1999 and
COBRA rights for an additional 18 months, at Mr. Stone's expense. Also pursuant
to the severance agreement, Mr. Stone's employment agreement was terminated,
except for specified non-compete provisions, which continue through November 19,
2001. However, beginning November 20, 1999, Mr. Stone may operate a mortgage
company subject to specified restrictions regarding owners of the entity and
employees of the entity. The Company and Mr. Stone also agreed to a mutual
release.
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 1998, until April 10, 1998, the
Company's Board of Directors did not have a Compensation Committee or any other
committee performing similar functions. Decisions concerning executive
compensation for 1998, until April 10, 1998, were made by the Board of
Directors, including Daniel Gilbert, Steven M. Stone, David Carroll (until he
resigned as a director on February 11, 1998), Lindsay Gross (until he resigned
as a director on February 11, 1998) and Gary L. Gilbert. All of such directors
were, and (except for Steven M. Stone, who resigned as an officer and a director
effective November 20, 1998, and Gary L. Gilbert, who resigned as an officer
effective January 17, 1997) continue to be, officers and employees of the
Company. Beginning April 10, 1998 David A. Brandon and David Katzman served as
the members of the Company's Compensation Committee. None of the members of the
Company's Compensation Committee was, during the year ended December 31, 1998,
an officer or employee of the Company, or a former officer of the Company. None
of the executive officers of the Company currently serves on the compensation
committee of another entity or any other committee of the board of directors of
another entity performing similar functions. The directors of the Company have
the relationships with the Company described below:
Indebtedness of Daniel Gilbert, Gary Gilbert and Lindsay Gross. From
time to time, the Company made loans to Daniel Gilbert for personal purposes.
The interest charged on such loans was 3% per year. For the year ended December
31, 1998, the largest amount of such loans outstanding was $1,627,000. Daniel
Gilbert repaid these loans in full on May 6, 1998 from his share of the
Company's distribution in May 1998 to shareholders before the initial public
offering. That distribution was based on the Company's estimated taxable income
for 1998 allocable to the period during which the Company was an S corporation.
Because the Company's estimated actual taxable income allocable to the
S corporation period was less than the estimate, each of the shareholders
receiving the distribution is required to promptly remit the difference to the
Company pursuant to the Tax Indemnification Agreement among them and the Company
dated May 6, 1998. This indebtedness does not bear interest.
11
<PAGE> 14
The shareholders receiving the distribution were Daniel Gilbert, Gary Gilbert, a
director of the Company, and Lindsay Gross, the Company's Executive Vice
President. The amounts estimated as of December 31, 1998 that each is required
to repay the Company are as follows: Daniel Gilbert--$575,645, Gary
Gilbert--$169,445, and Lindsay Gross--$70,607.
In addition, in December 1998, the Company sold to Gary Gilbert and
Lindsay Gross whole life insurance policies, which were owned by the Company.
The $124,990 purchase price to Gary Gilbert and the $53,685.52 purchase price to
Lindsay Gross for these policies represented its cash surrender values on the
date of sale. The Company loaned the purchase price to each of Mr. Gilbert and
Mr. Gross. The loan does not bear interest and is payable on demand.
Transactions with Title Source, Inc. Title Source, Inc. is a title
insurance agency owned 51.6% by Daniel Gilbert, 10.13% by Steven M. Stone, 9.60%
by Gary L. Gilbert, 6.00% by Lindsay Gross, and 3.60% by David Carroll. Title
Source, Inc. was formed to acquire the assets of an existing title insurance
agency, which acquisition occurred as of October 1, 1997. The Company recommends
Title Source, Inc. for some of the title insurance policies required in
connection with its mortgage loans. For the year ended December 31, 1998, Title
Source, Inc. was paid $965,349 in fees for its closing services in connection
with the Company's loans. In addition, customers of the Company paid $2,485,062
in premiums for title insurance placed through Title Source, Inc. in connection
with loans closed by the Company. The Company cannot predict with certainty the
amount of business proposed to be done with Title Source, Inc. in 1999.
Severance Arrangements with Gary L. Gilbert. Gary L. Gilbert resigned
as an officer of the Company effective January 17, 1997 and has started a
consumer finance business operating in the Chicago, Illinois area. Daniel
Gilbert agreed pursuant to the Stock Purchase Agreement to vote his Common
Shares to elect Gary L. Gilbert as a Director of the Company until May 6, 1998.
Board Compensation Committee Report on Executive Compensation
General. The Compensation Committee's overall compensation policy
applicable to the Company's executive officers is to provide a compensation
package that is intended to attract and retain qualified executives for the
Company and to provide them with incentives to achieve Company goals and
increase shareholder value. The Compensation Committee implements this policy
through salaries, bonuses, stock options, a 401(k) plan, and, in some cases,
employment agreements.
Salaries. The Compensation Committee's policy is to provide salaries
(i) that are approximately at the median of the salaries paid to similar
executive officers in similar companies, adjusted in the Committee's subjective
judgment to reflect differences in duties of the officers and differences in the
size of the companies, in order to attract and retain qualified executives and
(ii) that compensate individual employees for their individual contributions and
performance. The Compensation Committee determines comparable salaries paid by
other companies similar to the Company through its subjective evaluation of its
members' knowledge of salaries paid by other companies (including some companies
included in the industry index
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<PAGE> 15
used by the Company in its performance graph below), salary requests of
individuals interviewed by the Company for open positions and recommendations of
management. Salaries for 1998 were determined based on a subjective evaluation
by the Board of Directors of the factors described above, without giving any
specific priority or weighting to any of the factors.
Bonuses. The Compensation Committee's policy is to recommend bonuses
that compensate executive officers for achieving Company goals and for
individual performance or achievements, all as determined in the Committee's
subjective judgment after receiving management's recommendations. The bonuses
recommended for 1998 were primarily the result of the Company's record sales and
profitability.
Stock Options. The Compensation Committee's policy is to award stock
options to directors, officers and key employees of the Company in amounts
reflecting the participant's position and ability to influence the Company's
overall performance, determined based on the Committee's subjective judgment
after reviewing the number of options previously granted to such person, the
number of Common Shares owned by such person, the number of options granted to
persons in similar positions both at the Company and at other companies deemed
comparable to the Company (based on the members' knowledge of options granted by
other companies), the number of options remaining available for grant and
management's recommendations. Options are intended to provide participants with
an increased incentive to make contributions to the long-term performance and
growth of the Company, to join the interests of participants with the interests
of shareholders of the Company and to attract and retain qualified employees.
The Compensation Committee's policy is to grant options with a term of
ten years to provide a long-term incentive and to fix the exercise price of the
options at the fair market value of the underlying shares on the date of grant
or higher. Such options only provide compensation if the price of the underlying
shares increases. In addition, the Committee's policy is to grant options that
vest over a specific period to provide the executive with an incentive to remain
with the Company. Generally, options granted to the Company's executives vest in
five equal annual installments beginning one year after the date of grant. The
Committee's policy is also to provide new executives with options to attract
them to the Company based on negotiations with new executives, management's
recommendations and the Committee's subjective judgment primarily after
reviewing the number of options granted to similar executives of the Company.
Generally, the Compensation Committee reserves the right to pay compensation to
Company executives in amounts it deems appropriate regardless of whether such
compensation is deductible for federal income tax purposes.
401(k) Plan. The Company has adopted a 401(k) plan to provide all
eligible employees a means to accumulate retirement savings. Participants may
defer specified portions of their compensation and the Company (i) matches 20%
of employee contributions in amounts of employee contributions up to 5% of their
compensation, and (ii) may, but is not required to, make additional matching
contributions in amounts not to exceed 15% of employee compensation. The amount
of additional matching contributions is based on the Committee's subjective
judgment of what is appropriate, after reviewing management's recommendation.
The Committee recommended that the Company not make additional matching
contributions to the 401(k) plan for 1998.
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<PAGE> 16
Employment Agreements. The Compensation Committee's policy is to have
an employment agreement with Mr. Plenskofski to provide him a specified minimum
salary, fringe benefits and severance benefits. The Company also had an
employment agreement with Mr. Stone. These agreements are intended to retain the
services of these employees, to permit them to focus their attention on
performing their duties to the Company, rather than on the security of their
employment, to provide them with benefits deemed suitable for their offices and
to provide some protection to the Company from these employees competing against
the Company after termination of their employment. The Committee is exploring
whether to enter into additional employment agreements with executive officers
in 1999.
1998 Compensation Decisions Concerning CEO. The Board determined that
Mr. Gilbert's salary remain at $225,000 for 1998. As described in "Salaries",
the amount of the recommended salary for Mr. Gilbert was based primarily on the
Committee's subjective evaluation of its members' knowledge of salaries paid by
other companies, and the recommendation of Mr. Gilbert. Mr. Gilbert's salary is
believed to be below the median of salaries paid to similar executive officers
in similar companies, based on its subjective evaluation of its members'
knowledge of salaries paid by other companies.
The Committee determined not to recommend a bonus for Mr. Gilbert for
1998, based primarily on Mr. Gilbert's recommendation. In January 1999, the
Committee recommended no options be granted to Mr. Gilbert because of Mr.
Gilbert's recommendation and because the amount of Company Common Shares he
already owns already aligns his interests with the interests of the Company's
shareholders. The Committee also determined not to recommend any additional
matching contribution be made to the 401(k) plan for 1998. The Board of
Directors also approved an employment agreement with Mr. Gilbert during 1998
that primarily limited his bonus in 1998 and provides that Daniel Gilbert will
not compete with the Company in the business of originating loans in the states
in which the Company is active for specified periods.
By the Board of Directors By the Compensation Committee
Daniel Gilbert David A. Brandon
Gary Gilbert David Katzman
Robert V. Schechter
David A. Brandon
David Katzman
Performance Graph
The following line graph compares for the period from May 1, 1998 (the
effective date of the Company's initial public offering) through the year ended
December 31, 1998 (i) the yearly percentage change in the Company's cumulative
total shareholder return (i.e., the cumulative amount of dividends for the
period, assuming dividend reinvestment, plus the change in share price, all
divided by the initial share price, expressed as the resulting value of a $100
investment) on the Company's Common Shares, with (ii) the cumulative total
return of the Nasdaq U.S. Index, and with (iii) the cumulative total return on
the Nasdaq Financial Stocks Index.
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<PAGE> 17
COMPARISON OF CUMULATIVE TOTAL RETURN*
AMONG ROCK FINANCIAL CORPORATION,
NASDAQ U.S. INDEX AND
NASDAQ FINANCIAL STOCKS INDEX**
<TABLE>
<CAPTION>
1998*** 1998
<S> <C> <C>
Rock Financial Corporation....................... 100.00 106.98
Nasdaq U.S. Index................................ 100.00 117.79
Nasdaq Financial Stocks Index.................... 100.00 89.59
</TABLE>
Assumes $100 invested on May 1, 1998 in Rock Financial Corporation Common Shares
(at the $12.25 closing price on The Nasdaq National MarketSM on May 1, 1998),
the Nasdaq U.S. Index, and the Nasdaq Financial Stocks Index.
- --------------------
*Total return assumes reinvestment of dividends.
**Year ended December 31.
***As of May 1, 1998.
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<PAGE> 18
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file. Based solely on review of the copies of such reports
furnished to the Company during or with respect to 1998, or written
representations that no Forms 5 were required, the Company believes that during
the year ended December 31, 1998 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with.
CERTAIN TRANSACTIONS
See "Executive Compensation - Compensation Committee Interlocks and
Insider Participation" for a description of (i) indebtedness of Daniel Gilbert
to the Company, (ii) transactions between the Company and Title Source, Inc., a
company a majority of the shares of which are owned by officers and employees of
the Company, and (iii) a severance arrangement with Gary Gilbert.
Transactions with Rock Insurance Corporation. Rock Insurance
Corporation is a property, casualty and life insurance agency owned 60% by
Robert V. Schechter, a director of the Company since April 1998, and 40% by his
family. For the year ended December 31, 1998, Rock Insurance Corporation
received $140,693 in commissions from homeowners and auto-owners insurance
placed to applicants for the Company's loans. These revenues represented
substantially all of Rock Insurance Corporation's revenues in 1998, and Rock
Insurance Corporation was not profitable in 1998. The Company cannot predict
with certainty the amount of business proposed to be done with Rock Insurance
Corporation in 1999. In addition, Rock Insurance Corporation subleased
approximately 2,000 square feet of space from the Company pursuant to an oral
month-to-month sublease. This lease was terminated by Rock Insurance Corporation
at the end of April 1998. The rent pursuant to such sublease for 1998 was
$3,734.
Transactions with Benefit Programs, Inc. Robert V. Schechter, a
director of the Company, is a life and health insurance agent through Benefit
Programs, Inc. d/b/a Robert Schechter & Associates. Mr. Schechter is the
President and sole shareholder of Benefit Programs, Inc. The Company obtained
life insurance on the lives of Daniel Gilbert, Lindsay Gross and Gary Gilbert
through Benefit Programs, Inc., and Benefit Programs, Inc. received $3,019 in
commissions in connection with such insurance in 1998.
II. OTHER MATTERS
ANNUAL REPORT
A COPY OF THE ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER
31, 1998 ACCOMPANIES THIS PROXY STATEMENT. THE COMPANY FILES AN ANNUAL REPORT ON
FORM 10-K WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY WILL PROVIDE,
WITHOUT
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<PAGE> 19
CHARGE, TO EACH PERSON BEING SOLICITED BY THIS PROXY STATEMENT, UPON THE
WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 (AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, EXCLUDING EXHIBITS FOR WHICH A REASONABLE CHARGE SHALL BE
IMPOSED). ALL SUCH REQUESTS SHOULD BE DIRECTED TO ROCK FINANCIAL CORPORATION,
30600 TELEGRAPH ROAD, FOURTH FLOOR, BINGHAM FARMS, MICHIGAN 48025, ATTENTION:
SECRETARY.
INDEPENDENT ACCOUNTANTS
KPMG LLP are the independent accountants for the Company and have
reported on the Company's financial statements in the Company's 1998 Annual
Report to Shareholders which accompanies this proxy statement. The Company's
independent accountants are appointed by the Board of Directors after receiving
the recommendation of its Audit Committee. The Company will not select its
independent accountants for the year ended December 31, 1999 until later in its
fiscal year.
A representative of KPMG LLP is expected to be present at the Annual
Meeting of Shareholders and will have the opportunity to make a statement at the
meeting if he desires to do so. The representative will also be available to
respond to appropriate questions.
The Company engaged KPMG Peat Marwick LLP (now known as KPMG LLP) as
its independent accountants after it terminated its relationship with Coopers &
Lybrand LLP (now known as PricewaterhouseCoopers LLP) in August 1997. In
connection with its audits for 1996 and 1995 and during the interim period
preceding such termination, there were no disagreements between the Company and
Coopers & Lybrand LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Coopers & Lybrand LLP,
would have caused them to make reference thereto in their report on the
financial statements. No report issued by Coopers & Lybrand LLP with respect to
the Company's financial statements contained any adverse opinion or disclaimer
of opinion, or was qualified or modified as to uncertainty, audit scope or
accounting principles. The decision to change accountants was made by management
of the Company.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
Company's 2000 Annual Meeting of Shareholders must be received by the Company's
Secretary at the Company's offices, 30600 Telegraph Road, Fourth Floor, Bingham
Farms, Michigan 48025, no later than December 22, 1999 to be considered for
inclusion in the Proxy Statement and Proxy relating to that meeting. Such
proposals should be sent by certified mail, return receipt requested.
The Company must receive notice of any proposals of shareholders that
are intended to be presented at the Company's 2000 Annual Meeting of
Shareholders, but that are not intended to be considered for inclusion in the
Company's Proxy Statement and Proxy related to that meeting, no later than March
6, 2000 to be considered timely. Such proposals should be sent by certified
mail, return receipt requested and addressed to Rock Financial Corporation,
30600 Telegraph Road, Fourth Floor, Bingham Farms, Michigan 48025, Attention:
Secretary. If the
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<PAGE> 20
Company does not have notice of the matter by that date, the Company's form of
proxy in connection with that meeting may confer discretionary authority to vote
on that matter, and the persons named in the Company's form of proxy will vote
the shares represented by such proxies in accordance with their best judgment.
OTHER BUSINESS
Neither the Company nor the members of its Board of Directors intend to
bring before the Annual Meeting any matters other than those set forth in the
Notice of Annual Meeting of Shareholders, and they have no present knowledge
that other matters will be presented for action at the Annual Meeting by others.
However, if other matters are properly presented to the meeting, the persons
named in the enclosed Proxy intend to vote the shares represented thereby in
accordance with their best judgment.
By order of the Board of Directors
Daniel Gilbert
President and Chief Executive Officer
Bingham Farms, Michigan
April 20, 1999
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<PAGE> 21
PROXY ROCK FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS, MAY 25, 1999
The undersigned hereby appoints Daniel Gilbert, Frank Plenskofski and Richard
Chyette, and each of them, attorneys and proxies, each with full power of
substitution and resubstitution, in the name, place and stead of the
undersigned, to vote as proxy all the Common Shares, par value $0.01 per share,
of the undersigned in Rock Financial Corporation (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held on May 25, 1999 and at any and all adjournments thereof.
1. ELECTION OF DIRECTORS
<TABLE>
<C> <S>
[ ] FOR ALL THE NOMINEES LISTED BELOW (EXCEPT AS
MARKED TO THE CONTRARY BELOW)
<CAPTION>
<C> <C>
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL OF THE
NOMINEES LISTED BELOW
</TABLE>
NOMINEES: GARY L. GILBERT AND ROBERT V. SCHECHTER.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
2. In their discretion with respect to any other matters that may properly come
before the meeting.
(Continued and to be signed on reverse side.)
<PAGE> 22
THE SHARES REPRESENTED BY THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE HEREIN. THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE ALL OF THE NOMINEES NAMED IN
PROPOSAL 1 IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED OR IF NO INSTRUCTION
IS GIVEN. IF ANY OTHER MATTERS ARE PROPERLY PRESENTED AT THE MEETING FOR ACTION
TO BE TAKEN THEREON, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON SUCH
MATTERS BY THE PERSONS NAMED AS PROXIES HEREIN IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
Date: 1999
-------------------,
- --------------------------------- -----------------------------------
Signature Signature
(IMPORTANT: PLEASE SIGN NAME EXACTLY AS IT APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, ATTORNEYS, GUARDIANS, TRUSTEES, ETC. SHOULD SO INDICATE WHEN
SIGNING, GIVING FULL TITLE AS SUCH. IF SIGNER IS A CORPORATION, EXECUTE IN FULL
CORPORATE NAME BY AUTHORIZED OFFICER. IF SHARES ARE HELD IN THE NAME OF TWO OR
MORE PERSONS, ALL SHOULD SIGN.)
