UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under ss. 240.14a-12
HMG/COURTLAND PROPERTIES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] 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>
HMG/COURTLAND PROPERTIES, INC.
1870 South Bayshore Drive
Coconut Grove, Florida 33133
------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 4, 2000
------------------------------
June 30, 2000
TO THE SHAREHOLDERS:
The annual meeting of shareholders of HMG/Courtland Properties, Inc. (the
"Company") will be held at 10:30 A.M., on Friday, August 4, 2000 at the Grove
Isle Club and Resort, 4 Grove Isle Drive, Coconut Grove, Florida for the
following purposes:
1. To elect a Board of Directors;
2. To act upon the approval of the renewal of the advisory agreement
between the Company and HMG Advisory Corp.; and
3. To transact such other business as may properly come before the
meeting.
The record date for determining shareholders entitled to notice of and to
vote at the annual meeting is June 16, 2000.
Enclosed is a copy of the Company's Annual Report for the fiscal year ended
December 31, 1999.
It is important, whether or not you plan to attend the meeting in person,
that you fill in, sign and date the accompanying proxy and return it promptly in
the postage prepaid envelope which is enclosed for your convenience. The signing
and mailing of the proxy will not affect your right to vote your shares in
person if you attend the meeting and desire to do so.
By Order of the Board of Directors
Lawrence I. Rothstein
Secretary
<PAGE>
PROXY STATEMENT
of
HMG/COURTLAND PROPERTIES, INC.
The accompanying proxy is solicited by the Board of Directors for use at
the annual meeting of shareholders and is being mailed with this Proxy Statement
to all shareholders on June 30, 2000. If a proxy card is properly signed and is
not revoked by the shareholder, the shares of common stock of the Company (the
"Shares") represented thereby will be voted at the meeting in accordance with
the instructions, if any, of the shareholder. If no instructions are given, they
will be voted for the election of Directors nominated by the Board of Directors
and for approval of the renewal of the advisory agreement (the "Advisory
Agreement") between the Company and HMG Advisory Corp. (the "Advisor"). Any
shareholder may revoke his proxy at any time before it is voted by giving
written notice of revocation to the Secretary of the Company.
Holders of Shares of record at the close of business on June 16, 2000 are
entitled to notice of and to vote at the meeting. On that date, there were
1,019,135 Shares outstanding. Each Share is entitled to one vote on all business
of the meeting. The holders of a majority of the outstanding Shares, present in
person or represented by proxy, will constitute a quorum at the meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions are
counted in tabulations of the votes cast on proposals presented to stockholders,
whereas broker non-votes are not counted for purposes of determining whether a
proposal has been approved. As of June 16, 2000, Transco Realty Trust
("Transco"), 1870 South Bayshore Drive, Coconut Grove, Florida 33133, was the
beneficial owner of 477,300 Shares, or 47% of the outstanding Shares. As of June
16, 2000, Emanuel Metz, CIBC Oppenheimer Corp., One World Financial Center, 200
Liberty Street, New York, New York 10281, was the beneficial owner of 59,500
Shares, or 6% of the outstanding Shares. Beneficial ownership is based on sole
voting and investment power.
The Company has been advised by its officers and nominees for directors,
and their affiliated shareholders, Transco, Courtland Group, Inc. ("CGI") and
T.G.I.F. Texas, Inc. ("T.G.I.F."). that they intend to vote for the election of
each of the nominees and for the approval of the Advisory Agreement. Such
shareholders own in the aggregate 567,030 shares, or 56% of the outstanding
Shares. As a result, each of the nominees is expected to be elected as a
Director and the Advisory Agreement is expected to be approved. As noted below,
certain Directors of the Company are affiliated with principal shareholders of
the Company and are principal shareholders, directors and officers of the
Advisor. See "Election of Directors" below for information concerning holders
who may be deemed to own beneficially more than 5% of the outstanding shares.
<PAGE>
ELECTION OF DIRECTORS
The entire Board of Directors will be elected at the annual meeting of
shareholders to serve until the next annual meeting of shareholders and until
the election and qualification of their successors. In the event any nominee
should not continue to be available for election, proxies may be voted for the
election of a substitute nominee or the Board of Directors may elect to reduce
the number of Directors. The Board of Directors has no reason to anticipate that
any nominee will not be available for election. All of the nominees have been
elected previously by the shareholders.
An affirmative vote by the holders of a majority of the Shares present in
person or by proxy at the Annual Meeting of Shareholders is required for the
election of each Director.
Set forth in the table below is certain information about each current
Director, each nominee for Director and the Shares held by all Directors and
executive officers as a group.
<TABLE>
<CAPTION>
Shares Held as of June 16, 2000(1)
--------------------------------------------
Principal Occupation or Shares Owned Additional Shares in
Name, Age, Year First Employment During the by the which the Nominee
Became a Director or Past Five Years Other Nominee or has, or Participates
Officer of the Company than with the Company Members of in, the Voting or Total Shares and
and Other Information His Family(1) Investment Power(2) Percent of Class
----------------------------- ----------------------------- ------------------ ------------------------- ---------------------
<S> <C> <C> <C> <C>
Maurice Wiener Chairman of the Board 35,100(4) 541,830(3) 576,930
58-1974 and Chief Executive 53%
Chairman of the Board Officer of the Advisor;
of Directors, and Chief Executive Trustee,
Executive Officer Transco Realty Trust;
Director, T.G.I.F. Texas,
Inc.; Chairman of the
Board and Chief
Executive Officer of CGI
Lawrence I. Rothstein Director, President, 25,000(4) 541,830(3) 566,830
47-1983 Treasurer and Secretary 52%
Director, President, of Advisor; Trustee and
Treasurer and Secretary Vice-President of
Transco; Director,
President, and Secretary
of CGI; Vice-President of
T.G.I.F. Texas, Inc.
2
<PAGE>
Shares Held as of June 16, 2000(1)
--------------------------------------------
Principal Occupation or Shares Owned Additional Shares in
Name, Age, Year First Employment During the by the which the Nominee
Became a Director or Past Five Years Other Nominee or has, or Participates
Officer of the Company than with the Company Members of in, the Voting or Total Shares and
and Other Information His Family(1) Investment Power(2) Percent of Class
----------------------------- ----------------------------- ------------------ ------------------------- ---------------------
Walter G. Arader President, Arader, Herzig 13,000(4) 0 13,000
80-1977 and Associates, Inc. 1%
Director (financial and
management consultants);
Director, Unitel Video,
Inc.; Former Secretary of
Commerce,
Commonwealth of
Pennsylvania
John B. Bailey Real estate consultant; 7,100(4) 0 7,100
73-1971 Retired CEO, Landauer *
Director Associates, Inc. (real
estate consultants)
(1977-1988)
Harvey Comita Business Consultant; 5,000(4) 477,300(5) 482,300
70-1992 Trustee, Transco Realty 44%
Director Trust; President and
Director of Pan-Optics,
Inc. (1971-1991);
Director of Mediq,
Incorporated (1981-1991)
All 5 Directors and 95,200(4) 541,830(3) 637,030
Executive Officers as a 58%
Group
<FN>
---------------------------
* Less than one percent
(1) Unless otherwise indicated, beneficial ownership is based on sole voting
and investment power with respect to the Shares.
(2) Shares listed in this column represent Shares held by entities with which
the Directors or officers are associated. The Directors, officers and
members of their families have no ownership rights in the Shares listed in
this column. See note 3 below.
(3) This number includes the number of Shares held by Transco (477,300 Shares),
CGI (54,530 shares) and T.G.I.F. Texas, Inc. ("T.G.I.F.") (10,000 shares).
Several of the Directors of the Company are directors, trustees, officers
or shareholders of Transco, CGI and T.G.I.F.
3
<PAGE>
Mr. Wiener is the executive trustee of Transco and holds 37% of its stock.
Mr. Wiener is also director and officer of CGI which owns 32% of Transco's
stock. Mr. Wiener is Chairman of the Board, Chief Executive Officer and a
40% shareholder of CGI. Mr. Wiener is a director and 18% shareholder of
TGIF. Mr. Wiener is the cousin of Bernard Lerner, Vice President of the
Company and Vice President of the Advisor.
For information concerning relationships of certain directors and officers
of the Company to the Advisor, see "Approval of Advisory Agreement."
As a result of these relationships, the persons named above may be deemed
to share investment power and voting power of Shares held by each firm with
which they are associated in conjunction with a number of other persons,
including in several cases persons who are neither directors nor officers
of the Company.
(4) This number includes options granted under the 1990 Stock Option Plan, none
of which have been exercised. These options have been granted to Mr.
Wiener, 30,000; Mr. Rothstein, 15,000; 5,000 each to Mr. Arader, Mr.
Bailey, and Mr. Comita; and a total of 10,000 to two officers who are not
directors. Reference is made to "Compensation of Directors and Executive
Officers and Other Transactions" for further information about the 1990
Stock Option Plan.
(5) This number represents the number of shares held by Transco, of which Mr.
Comita is a Trustee.
</FN>
</TABLE>
Meetings of the Board of Directors
The Board of Directors held three meetings during 1999. During this period
all of the Directors of the Company attended at least 75% of the total number of
meetings of the Board and any Committee of which they were a member.
Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Stock Option Committee.
The Company does not have a Compensation Committee or a Nominating Committee.
Messrs. Comita and Arader were appointed to the Audit Committee by the
Board of Directors. The primary responsibilities of the Audit Committee are to
review the annual financial statements of the Company and to examine and
consider such other matters in relation to the internal and external audit of
the Company's accounts and in relation to the financial affairs of the Company
and its accounts as the Committee may, in its discretion, determine to be
desirable. The Audit Committee met three times during 1999.
Messrs. Arader and Bailey serve as members of the Stock Option Committee.
The Committee is authorized to grant options to officers and key employees of
the Company. The Stock Option Committee did not meet during 1999.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive officers receive no cash compensation from the Company in their
capacity as executive officers. Executive officers are eligible to receive stock
options pursuant to the 1990 Stock Option Plan.
4
<PAGE>
Compensation of Directors. Each Director receives an annual fee of $5,000,
plus expenses and $500 for each meeting attended of the Board of Directors.
Grant of Options. During 1999, the Stock Option Committee, under the 1990
Stock Option Plan, did not grant any options.
<TABLE>
<CAPTION>
December 31, 1999 Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options as of
Options as of December 31, 1999 December 31, 1999 (1)
Name Exercisable/Unexercisable Exercisable/Unexercisable
------------------------------------- ----------------------------------------- ----------------------------------
<S> <C> <C>
Maurice Wiener 30,000/0 $0/0
Chief Executive Officer
Lawrence I. Rothstein 15,000/0 $0/0
Director, President
Walter G. Arader 5,000/0 $0/0
Director
John B. Bailey 5,000/0 $0/0
Director
Harvey Comita 5,000/0 $3,750/0
Director
<FN>
(1) This value is based on the December 31, 1999 closing price for the
Company's Shares on the American Stock Exchange of $43/4or $4.75, per
Share.
</FN>
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934, as amended, requires the Company's
directors and executive officers to file with the Securities and Exchange
Commission initial reports of beneficial ownership and reports of change in
beneficial ownership of the Company's Shares. Such officers and directors are
required by SEC regulations to furnish to the Company copies of all Section
16(a) reports that they file. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, all executive officers and
directors of the Company complied with the Section 16(a) filing requirements for
the fiscal year ended December 31, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following discussion describes the organizational structure of the
Company's subsidiaries and affiliates.
5
<PAGE>
Transco Realty Trust ("Transco").
--------------------------------
Transco is a publicly-held 47% shareholder of the Company. Mr. Wiener is
the executive trustee and an officer of Transco and holds approximately 37% of
Transco's stock. Mr. Rothstein serves as a trustee and an officer of Transco.
Mr. Comita serves as a trustee of Transco.
Courtland Group, Inc. ("CGI").
------------------------------
CGI served as the Company's investment advisor until January 1, 1998 and
owns approximately 32% of Transco's stock and approximately 5% of the Company's
common stock. Mr. Wiener is Chairman of the Board and a 40% shareholder of CGI.
Mr. Rothstein serves as Director and President of CGI. CGI served as the
Company's investment advisor until December 31, 1997.
HMG Advisory Corp. (the "Advisor").
----------------------------------
The Advisor is majority-owned by Maurice Wiener, its Chairman and CEO. As
of December 31, 1999 and 1998 the Advisor owed the Company approximately
$157,000 and $11,000, respectively. Such sum bears interest at the prime rate
plus 1% and is due on demand.
Effective December 1, 1999, the Advisor began leasing it's executive
offices from CII pursuant to a lease agreement. This lease agreement is at the
going market rate for similar property and calls for base rent of $48,000 per
year payable in equal monthly installments. Additionally, the Advisor is
responsible for all property insurance, utilities, maintenance and security
expenses relating to the leased premises. The lease term is five years.
Courtland Investments, Inc. ("CII").
-----------------------------------
The Company owns a 95% non-voting interest in CII. The other 5% (which
represents 100% of the voting stock) is owned by a wholly-owned subsidiary of
Transco. In May 1998, the Company and the Transco subsidiary entered into a
written agreement in order to confirm and clarify the terms of their previous
continuing arrangement with regard to the ongoing operations of CII, all of
which provide the Company with complete authority over all decision making
relating to the business, operation, and financing of CII consistent with its
status as a real estate investment trust.
CII and its wholly-owned subsidiary own 100% of Grove Isle Club, Inc.,
Grove Isle Yacht Club Associates and Grove Isle Marina, Inc. CII also owns 15%
of Grove Isle Associates, Ltd., and the other 85% is owned by the Company.
HMG-Fieber Associates ("Fieber").
--------------------------------
The Company also owns a 70% interest in Fieber and the other 30% is owned
by NAF Associates ("NAF"). See "Inquiry and Litigation Relating to HMG-Fieber
Associates and HMG- Fieber Wallingford Associates."
6
<PAGE>
The following discussion describes all material transactions, receivables
and payables involving related parties. Except for the issues raised in the
litigation described below, all of the transactions described below were on
terms as favorable to the Company as comparable transactions with unaffiliated
third parties. Reference is made to the description below concerning the
litigation involving two former directors of the Company and their interests in
Fieber and HMG-Fieber Wallingford Associates.
The Advisor.
-----------
The day-to-day operations of the Company are handled by the Advisor.
Reference is made to "Approval of Advisory Agreement" below for further
information about the duties and remuneration of the Advisor.
CGI.
----
As of December 31, 1999 and 1998, CGI owed the Company $233,000 and
$205,000, respectively. Such sums bear interest at the prime rate plus 1% and
are due on demand.
CII - T.G.I.F. Texas, Inc.
-------------------------
CII owns approximately 49% of the outstanding shares of T.G.I.F. Texas,
Inc. ("T.G.I.F."). Mr. Wiener is a director and officer of T.G.I.F and owns,
directly and indirectly, approximately 18% of the outstanding shares of T.G.I.F.
As of December 31, 1999 and 1998, T.G.I.F. had amounts due from Mr. Weiner in
the amount of approximately $520,000 and $388,000, respectively. These amounts
are due on demand and bear interest at the prime rate. Also, T.G.I.F. owns
10,000 shares of the Company. The Advisor receives a management fee of $18,000
per year from T.G.I.F.
As of December 31, 1999 and 1998, CII owed approximately of $3.4 million
and $3.2 million, respectively to T.G.I.F. All advances between CII and T.G.I.F.
are due on demand and bear interest at the prime rate plus 1%.
CII- Grove Isle.
---------------
In 1986, CII acquired from the Company the rights to develop the marina at
Grove Isle for a promissory note of $620,000 payable in 10 years at an annual
interest rate equal to the prime rate. The principal matures on January 2, 2001.
Interest payments are due each January 2. Because the Company consolidates CII,
the note payable and related interest income are eliminated in consolidation.
Transco - South Bayshore Associates ("SBA").
-------------------------------------------
SBA is a joint venture in which Transco and the Company hold interests of
25% and 75%, respectively. The major asset of SBA is a demand note from Transco,
bearing interest at the prime rate, with an outstanding balance of approximately
$444,000 in principal and interest as of December 31, 1999 compared to a balance
of $475,000 as of December 31, 1998.
7
<PAGE>
The Company holds a demand note from SBA bearing interest at the prime rate
plus 1% with an outstanding balance as of December 31, 1999 of approximately
$1,000,000, in principal and accrued interest, compared to a balance of
$994,000, in principal and accrued interest, as of December 31, 1998. No
payments were made in 1999 and 1998, and accrued and unpaid interest was not
capitalized. Because the Company consolidates SBA, the note payable and related
interest income are eliminated in consolidation.
Inquiry and Litigation Relating to HMG-Fieber Associates and HMG-Fieber
-----------------------------------------------------------------------
Wallingford Associates.
-----------------------
The Company has made certain claims and taken certain other actions against
Lee Gray, a former officer and Director of the Company, Norman A. Fieber, a
former Director of the Company, and certain related parties. The Company's
claims and actions arose from the failure of Messrs. Gray and Fieber to disclose
Mr. Gray's and Mr. Gray's sister's interest in the Company's HMG-Fieber
Wallingford Associates and HMG-Fieber Associates joint ventures (the "Joint
Ventures") and the inquiry into Messrs. Gray's and Fieber's failure to disclose
Mr. Gray's and Mr. Gray's sister's interest in HMG-Fieber Associates by a
Special Committee appointed by the Board of Directors. A summary of the
resulting litigation follows.
HMG Courtland Properties, Inc. v. Lee Gray et al.
-------------------------------------------------
On July 2, 1997, the Company filed suit in the Court of Chancery of the
State of Delaware in and for New Castle County against Lee Gray (individually
and as a partner in Martine Avenue Associates); Norman A. Fieber (individually
and as a partner in NAF Associates); Betsy Gray Saffell (Lee Gray's sister)
(individually and as a partner in Martine Avenue Associates); Martine Avenue
Associates, a New York general partnership in which Mr. Gray and Mrs. Saffell
are the general partners ("Martine"); NAF Associates, a Connecticut general
partnership in which Mr. Fieber and Martine are general partners and the
Company's joint venture partner in HMG-Fieber Associates ("NAF"); and The Jim
Fieber Trust, a trust for The Fieber Group (beneficiaries include Mr. Fieber and
Martine) and the Company's joint venture partner in HMG-Fieber Wallingford
Associates (the "Trust"). James A. Fieber, son of Norman A. Fieber, serves as a
trustee of the Trust. NAF and the Trust were dismissed from the case because the
Delaware court determined that it did not have personal jurisdiction over those
two entities.
On July 12, the Delaware Court of Chancery found that Norman Fieber and Lee
Gray breached their fiduciary duties of loyalty and care and defrauded the
Company. On August 31, 1999 the court issued a final order and judgment. The
monetary award to the Company was $4,538,294 of which Mr. Lee Gray, Mrs. Betsy
Gray Saffell and Mr. Norman Fieber are jointly and severally liable for
$3,340,776. Mr. Lee Gray is also liable for the balance of the award in the
amount of $1,197,518. The total amount of the award has been collected (plus
post judgment interest of approximately $79,000). Approximately $200,000 was
paid to Transco pursuant to a sharing agreement with the Company and is
reflected as a reduction to income from litigation.
8
<PAGE>
The HMG-Fieber joint venture has been restructured in view of the
divestiture of Lee Gray's interest and the limitations on the ongoing
participation of Norm Fieber pursuant to the Order of the Court. HMG's interest
in the joint venture was increased from 65% to approximately 70% and HMG is
managing representative of the venture.
Lee Gray v. HMG/Courtland Properties, Inc. et al (the "Florida Litigation").
---------------------------------------------------------------------------
On January 7, 2000, this lawsuit was withdrawn against the Company and its
officers and directors. The following summarizes the lawsuit.
On May 22, 1997, Lee Gray, a former director and officer and a shareholder
of the Company and a former officer and director and a shareholder of Courtland
Group, Inc. ("CGI"), which served as the Company's advisor pursuant to an
advisory agreement which expired December 31, 1997, filed suit in the Circuit
Court of the 11th Judicial Circuit in and for Dade County, Florida against the
following defendants: (i) the Company; (ii) all of the directors and certain of
the officers of the Company and of CGI; (iii) CGI; and (iv) HMG Advisory Corp.,
a Delaware corporation that has served as the Company's advisor since January 1,
1998.
In his lawsuit, Mr. Gray, individually and derivatively as a shareholder of
CGI, alleged, among other things, that his removal as an officer of the Company,
his failure to be nominated for reelection as Director of the Company, his
subsequent removal as an officer and director of CGI and the Board of Directors'
decision not to renew the Company's former advisory agreement with CGI, were the
product of a conspiracy involving certain officers and Directors of the Company
and of CGI who wanted to force Mr. Gray out of the Company and CGI, and to
terminate the Company's advisory agreement with CGI, for their own financial
gain. Mr. Gray also alleged that he was libeled in the discussion of the inquiry
and the results thereof in certain documents, including documents filed with the
Securities and Exchange Commission. Mr. Gray sought money damages, punitive
damages, and temporary and permanent injunctive relief.
On July 10, 1997, the Company filed a motion to dismiss the portion of the
lawsuit directed against it and its directors. The motion to dismiss was granted
on November 18, 1997. On December 1, 1997, Mr. Gray filed an amended complaint
that sought to reinstate the libel claim against the Company. The Company moved
to dismiss the amended complaint and the motion was denied. The parties then
agreed to stay this suit pending the outcome of the Delaware litigation
described above.
APPROVAL OF ADVISORY AGREEMENT
The Advisory Agreement. At the 1997 annual meeting of shareholders, the
advisory agreement (the "Advisory Agreement") between the Company and HMG
Advisory Corp. (the "Advisor") was approved for a one-year term expiring on
December 31, 1998. On April 7, 1998, the Board of Directors approved the renewal
of the Advisory Agreement between the Company and the Advisor for a term
commencing January 1, 1999 and expiring December 31, 1999. The Advisory
Agreement was approved by a majority of the shareholders of the Company at the
1998 Annual Meeting of Shareholders.
9
<PAGE>
The Advisor is majority owned by Mr. Wiener with the remaining shares owned
by certain officers, including Mr. Rothstein. The officers and directors of the
Advisor are as follows: Maurice Wiener, Chairman of the Board and Chief
Executive officer; Lawrence I. Rothstein, President, Treasurer, Secretary and
Director; Carlos Camarotti, Vice President - Finance and Assistant Secretary;
and Bernard Lerner, Vice President. On March 17, 2000, the Board of Directors
approved the renewal of the Advisory Agreement. Under the terms of the Advisory
Agreement, the renewal must be approved by the holders of a majority of the
Shares. If the holders of a majority of the Shares approve the renewal of the
Advisory Agreement, the Advisory Agreement will be renewed for a one-year term
commencing on January 1, 2001 through December 31, 2001.
The following description of the Advisory Agreement contains a summary of
its material terms.
General Provisions. The Advisory Agreement is not assignable without the
consent of the unaffiliated Directors of the Company and the Advisor. The
Advisory Agreement provides that officers, directors, employees and agents of
the Advisor or of its affiliates may serve as Directors, officers or agents of
the Company.
Duties of Advisor. The Advisor in performing its duties under the Advisory
Agreement is at all times subject to the supervision of the Directors of the
Company and has only such authority as the Directors delegate to it as their
agent. The Advisor counsels and presents to the Company investments consistent
with the objectives of the Company and performs such research and investigation
as the Directors may request in connection with the policy decisions as to the
type and nature of investments to be made by the Company. Such functions include
evaluation of the desirability of acquisition, retention and disposition of
specific Company assets. The Advisor also is responsible for the day-to-day
investment operations of the Company and conducts relations with mortgage loan
brokers, originators and servicers, and determines whether investments offered
to the Company meet the requirements of the Company. The Advisor provides
executive and administrative personnel, office space and services required in
rendering such services to the Company. To the extent required to perform its
duties under the Agreement, the Advisor may deposit into and disburse from bank
accounts opened in its own name any money on behalf of the Company under such
terms and conditions as the Company may approve.
Allocation of Expenses. Under the Advisory Agreement, the Advisor pays: all
salary and employment expenses of its own personnel and of the officers and
employees of the Company who are affiliates of the Advisor; all of the
administrative, rent and other office expenses (except those relating to a
separate office, if any, maintained by the Company) relating to its services as
Advisor; and travel (to the extent not paid by any party other than the Company
or the Advisor) and advertising expenses incurred in seeking investments for the
Company.
The Company is required to pay all expenses of the Company not assumed by
the Advisor, including, without limitation, the following: (a) the cost of
borrowed money; (b) taxes on income, real property and all other taxes
applicable to the Company; (c) legal, accounting, underwriting, brokerage,
transfer agent's, registrar's, indenture trustee's, listing, registration and
other fees, printing, engraving, and other expenses and taxes incurred in
connection with the issuance, distribution, transfer, registration and stock
exchange listing of the Company's securities; (d) fees and expenses
10
<PAGE>
of advisors and independent contractors, consultants, managers and other agents
employed directly by the Company; (e) expenses connected with the acquisition,
disposition or ownership of mortgages or real property or other investment
assets, including, to the extent not paid by any party other than the Company or
the Advisor, but not limited to, costs of foreclosure, costs of appraisal, legal
fees and other expenses for professional services, maintenance, repairs and
improvement of property, and brokerage and sales commissions, and expenses of
maintaining and managing real property equity interests; (f) the expenses of
organizing or terminating the Company; (g) all insurance costs (including the
cost of Directors' liability insurance) incurred in connection with the
protection of the Company's property as required by the Directors; (h) expenses
connected with payment of dividends or interest or distributions in cash or any
other form made or caused to be made by the Directors to holders of securities
of the Company, including a dividend reinvestment plan, if any; (i) all expenses
connected with communications to holders of securities of the Company and the
other bookkeeping and clerical work necessary in maintaining relations with
holders of securities, including the cost of printing and mailing checks,
certificates for securities and proxy solicitation materials and reports to
holders of the Company's securities; (j) to the extent not paid by borrowers
from the Company, the expenses of administering, processing and servicing
mortgage, development, construction and other loans; (k) the cost of any
accounting, statistical, or bookkeeping equipment necessary for the maintenance
of the books and records of the Company; (l) general legal, accounting and
auditing fees and expenses; (m) salaries and other employment expenses of the
personnel employed by the Company who are not affiliates of the Advisor, fees
and expenses incurred by the Directors, officers and employees in attending
Directors' meetings, and fees and travel and other expenses incurred by the
Directors and officers and employees of the Company who are not affiliates of
the Advisor.
Expenses relating to the grant of options to all officers and employees of
the Company under a plan approved by the shareholders of the Company are borne
by the Company.
Remuneration of the Advisor. For services rendered under the current
advisory agreement, the Advisor is entitled to receive as regular compensation a
monthly fee equal to the sum of (a) $55,000 (equivalent to $660,000 per year)
and (b) 20% of the amount of any unrefunded commitment fees received by the
Company with respect to mortgage loans and other commitments which the Company
was not required to fund and which expired within the next preceding calendar
month. In 1998 and 1999, the Advisor's annual regular compensation amounted to
$660,000.
The Advisory Agreement also provides that the Advisor shall receive
incentive compensation for each fiscal year of the Company equal to the sum of
(a) 10% of the realized capital gains (net of accumulated net realized capital
losses) and extraordinary non-recurring items of income of the Company for such
year, and (b) 10% of the amount, if any, by which Net Profits of the Company
exceed 8% per annum of the Average Net Worth of the Company. "Net Profits" is
defined as the gross earned income of the Company for such period (exclusive of
gains and losses from the disposition of assets), minus all expenses other than
non-cash charges for depreciation, depletion and amortization and the incentive
compensation payable to the Advisor, and minus all amounts expended for mortgage
amortization on long-term mortgage indebtedness, excluding extraordinary and
balloon payments. "Average Net Worth" is defined as the average of the amount in
the shareholders' equity accounts on the books of the Company, plus the
accumulated non-cash reserves for depreciation, depletion and amortization shown
on the books of the Company, determined at the close of the last day of each
month for the computation period.
11
<PAGE>
If and to the extent that the Company requests the Advisor, or any of its
directors, officers, or employees, to render services for the Company, other
than those required to be rendered by the Advisor under the Agreement, such
additional services are to be compensated separately on terms to be agreed upon
between such party and the Company from time to time, which terms must be fair
and reasonable and at least as favorable to the Company as similar arrangements
for comparable transactions of which the Company is aware with organizations
unaffiliated with the Advisor. CGI received incentive fees of $80,000 in 1998.
The Advisor received $30,000 in 1998 and 1999 for managing certain of the
Company's affiliates.
Set forth below is the aggregate compensation paid to the Advisor during
the two fiscal years ended December 31, 1998 and 1999:
<TABLE>
<CAPTION>
Form of Compensation Amount
---------------------- -----------------------------------
1998 1999
----------- ----------
<S> <C> <C>
Regular Compensation......................................... $ 660,000 $ 660,000
20% of Unrefunded Commitment Fees............................ -0- -0-
Incentive.................................................... 212,000 365,000
Management Fees.............................................. 30,000 30,000
----------- ----------
Total........................................................ $ 902,000 $1,055,000
=========== ==========
</TABLE>
Brokerage Fees Paid the Advisor. Under the Advisory Agreement, the Advisor
and its affiliates are prohibited from receiving from the Company any brokerage
or similar fees for the placement of mortgages or other investments with the
Company. However, the Advisor and its affiliates can receive normal brokerage
commissions from borrowers in connection with transactions involving the
Company, provided that such commissions are fully disclosed to all Directors of
the Company and the Directors approve of the transaction and that such
commissions (which to the extent paid by the borrower and retained by the
Advisor or its affiliates may reduce the yield to the Company) are fair and
reasonable and in accord with the prevailing rates in the locality in which the
transaction is consummated for the type of transaction involved. The Advisor and
its affiliates may, subject to the same terms and conditions, receive normal
brokerage commissions from sellers, buyers, lessees and other parties with whom
the Company engages in transactions.
12
<PAGE>
Management of the Advisor
Set forth below are the names, offices with the Advisor and principal
occupations of the current executive officers and directors of the Advisor.
<TABLE>
<CAPTION>
Names and Offices
with the Advisor Principal Occupation
---------------- --------------------
<S> <C>
Maurice Wiener.......................................See "Election of Directors."
Chairman of the Board of
Directors and Chief
Executive Officer
Lawrence I. Rothstein................................See "Election of Directors."
President, Treasurer, Secretary
and Director
Bernard Lerner.......................................Vice President of the Company.
Vice President
Carlos Camarotti.....................................Vice President and Assistant Secretary of the
Vice President-Finance and Company.
Assistant Secretary
</TABLE>
The Directors recommend that the shareholders approve the Agreement. An
affirmative vote by the holders of a majority of the Shares present in person or
by proxy at the Annual Meeting of Shareholders is required for approval of the
Agreement.
INDEPENDENT ACCOUNTANTS
The Company has engaged BDO Seidman, LLP ("BDO"), its independent
accountant for the fiscal year ended December 31, 1999, as its independent
accountant for the fiscal year ending December 31, 2000.
Representatives of BDO are not expected to be present at the meeting.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
the use of the mails, proxies may be solicited by Directors, officers and
employees of the Company personally, by telephone or by telegraph.
13
<PAGE>
OTHER BUSINESS
The Board of Directors is not aware of any business other than those items
referred to above to be presented for action at the meeting. However, should any
other matters requiring a vote of the shareholders arise, the agents named in
the accompanying proxy will vote in accordance with their own best judgment.
In order for proposals of shareholders to be considered for inclusion in
the proxy materials for presentation at the 2000 annual meeting of shareholders,
such proposals must be received by the Company no later than April 1, 2001.
----------------------
A copy of the Annual Report on Form 10-KSB for the year ended December 31,
1999, including financial statements and schedules thereto, filed with the
Securities and Exchange Commission, may be obtained by shareholders without
charge upon written request to: Secretary, HMG/Courtland Properties, Inc., 1870
South Bayshore Drive, Coconut Grove, Florida 33133.
----------------------
YOU CAN SAVE YOUR COMPANY ADDITIONAL EXPENSE BY SIGNING
AND RETURNING YOUR PROXY AS PROMPTLY AS POSSIBLE
14
<PAGE>
HMG/COURTLAND PROPERTIES, INC.
Proxy
Solicited on Behalf of the Board of Directors
The undersigned shareholder of HMG/COURTLAND PROPERTIES, INC. ("Company")
hereby appoints MAURICE WIENER as attorney and proxy to vote as designated on
the reverse all shares of Common Stock which the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at Grove Isle
Club and Resort, 4 Grove Isle Drive, Coconut Grove, Florida on Friday, August 4,
2000 at 10:30 a.m. and at any adjournment or adjournments thereof.
(Continued and to be signed on reverse side)
<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
HMG/COURTLAND PROPERTIES, INC.
August 4, 2000
| Please Detach and Mail in the Envelope Provided |
V V
A[X] Please mark your
votes as in this
example.
1. Election of FOR WITHHELD 2. Proposal to approve renewal of
Directors [__] [__] the Advisory Agreement between
Nominees: M. Wiener the Company and HMG Advisory
L. Rothstein Corp. FOR AGAINST ABSTAIN
W. Arader [__] [__] [__]
J. Bailey
H. Comita 3. In their discretion, upon such
FOR, except vote withheld from the following other matters as may properly
nominee(s): come before the meeting or any
____________________________________________ adjournment thereof, all in
accordance with the Company's
Proxy Statement, receipt of
which is hereby acknowledged.
This proxy when properly executed will be voted in accordance
with the above instructions. In the absence of such
specifications this proxy will be voted FOR Proposals 1 and 2.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S)___________________________________________ DATE __________
(Please sign exactly as your name appears hereon. Persons signing as executors,
trustees, guardians, etc., please so indicate when signing.)
