SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 1)
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CAPITAL TITLE GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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CAPITAL TITLE GROUP, INC.
14555 North Scottsdale Road, Suite 320
Scottsdale Arizona 85254
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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1999
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To Our Stockholders:
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of
Capital Title Group, Inc. (the "Company") will be held at 2:00 p.m., M.S.T., on
Tuesday, May 4, 1999, at the offices of The Miller Group, 4909 East McDowell
Road, Phoenix, Arizona 85008 for the following purposes:
1. To elect three directors to serve for three-year terms;
2. To ratify the selection of Ernst & Young, LLP as independent
auditors for the Company for the fiscal year ending December 31,
1999;
3. To approve an increase in the number of shares of Common Stock
authorized for issuance under the Company's 1996 Stock Option
Plan to 3,900,000;
4. To approve an increase in the number of shares of Common Stock
authorized for issuance under the Company's Non-Employee
Directors Stock Option Plan to 600,000; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof. Management is
presently aware of no other business to come before the meeting.
The Board of Directors has fixed the close of business on Monday, March
1, 1999 as the record date for the determination of Stockholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournments thereof
(the "Record Date").
All stockholders are cordially invited to attend the Meeting in person.
To assure your representation at the Meeting, however, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Meeting may vote in person even if he or she previously has returned a
proxy.
DALE A. HEAD
SECRETARY
Scottsdale, Arizona
March 22, 1999
<PAGE>
CAPITAL TITLE GROUP, INC.
14555 North Scottsdale Road, Suite 320
Scottsdale, Arizona 85254
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PROXY STATEMENT
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IMPORTANT: IT IS IMPORTANT THAT YOUR SHAREHOLDINGS BE REPRESENTED AT THIS
MEETING. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
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VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of Capital Title Group, Inc.,
a Delaware corporation (the "Company"), by the Company's board of directors (the
"Board of Directors") for use at the Annual Meeting of Stockholders to be held
at 2:00 p.m. on Tuesday, May 4, 1999 (the "Meeting"), or at any adjournment
thereof, for the purposes set forth in this Proxy Statement and in the
accompanying Notice of Annual Meeting of Stockholders. The Meeting will be held
at the offices of The Miller Group, 4909 East McDowell Road, Phoenix, Arizona
85008.
These proxy solicitation materials were mailed on or about March 26,
1999 to all stockholders entitled to vote at the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
Stockholders of record at the close of business on March 1, 1999 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, there were issued and outstanding 16,671,070 shares of the
Company's Common Stock, $.001 par value (the "Common Stock").
The presence, in person or by proxy, of the holders of a majority of
the total number of shares of Common Stock outstanding constitutes a quorum for
the transaction of business at the Meeting. Each Stockholder voting at the
Meeting, either in person or by proxy, may cast one vote per share of Common
Stock held on all matters to be voted on at the Meeting. The affirmative vote of
a majority of the outstanding shares of Common Stock of the Company present in
person or represented by proxy at the Meeting and entitled to vote (assuming
that a quorum is present) is required for (i) the election of directors; (ii)
for the ratification of the appointment of Ernst & Young LLP as the independent
auditors of the Company for the year ending December 31, 1999 (iii) for the
ratification to increase the number of shares of Common Stock authorized for
issuance under the Company's 1996 Stock Option Plan to 3,900,000; and (iv) for
the ratification to increase the number of shares of Common Stock authorized for
issuance under the Company's Non-Employee Directors Stock Option Plan to
600,000.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting and will determine whether a
quorum is present. The election inspectors will treat abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the stockholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
<PAGE>
VOTING OF PROXIES
When a proxy is properly executed and returned, the shares it
represents will be voted at the Meeting as directed. If no specification is
indicated, the shares will be voted (i) "for" the election of directors; (ii)
"for" the ratification of the appointment of Ernst & Young LLP as the
independent auditors of the Company for the year ending December 31, 1999 (iii)
"for" the ratification to increase the number of shares of Common Stock
authorized for issuance under the Company's 1996 Stock Option Plan to 3,900,000;
(iv) "for" the ratification to increase the number of shares of Common Stock
authorized for issuance under the Company's Non-Employee Directors Stock Option
Plan to 600,000; and (v) with respect to any other matters that may come before
the meeting, as recommended by the Board of Directors or, if not such
recommendation is given, in their own discretion.
REVOCABILITY OF PROXIES
Any person giving a proxy may revoke the proxy at any time before its
use by delivering to the Company written notice of revocation or a duly executed
proxy bearing a later date or by attending the Meeting and voting in person.
SOLICITATION
The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Solicitation will be primarily
by mailing this Proxy Statement to all shareholders entitled to vote at the
meeting. The Company may reimburse brokers, banks and others holding shares in
their names for others for the cost of forwarding proxy materials and obtaining
proxies from beneficial owners. Proxies also may be solicited by certain of the
Company's directors and officers, personally or by telephone or facsimile,
without additional compensation.
ANNUAL REPORT AND OTHER MATTERS
The 1998 Annual Report to Stockholders, which was mailed to
stockholders with or preceding this Proxy Statement, contains financial and
other information about the activities of the Company, but is not incorporated
into this Proxy Statement and is not to be considered a part of these proxy
soliciting materials. The information contained in the "Compensation Committee's
Report on Executive Compensation" below and "Performance Graph" below shall not
be deemed "filed" with the Securities and Exchange Commission (the "SEC") or
subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Company will provide upon written request, without charge to each
stockholder of record as of the Record Date, a copy of the Company's annual
report on Form 10-KSB for the year ended December 31, 1998 as filed with the
SEC. Any exhibits listed in the Form 10-KSB report also will be furnished upon
request at the actual expense incurred by the Company in furnishing such
exhibit. Any such request should be directed to the Company's Secretary at the
Company's executive offices at 14555 North Scottsdale Road, Suite 320,
Scottsdale, Arizona, 85254.
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INFORMATION CONCERNING DIRECTORS AND CORPORATE OFFICERS
The names, ages, and certain information concerning the Company's
current directors and corporate officers are set forth below.
NAME AGE POSITION
---- --- --------
Donald R. Head 60 Chairman of the Board; Chief Executive Officer
Andrew A. Johns 61 President; Director
Milton M. Ferrantelli 50 Executive Vice President
Dale A. Head 63 Executive Vice President; Secretary
Mark C. Walker 38 Vice President; Chief Financial Officer;
Treasurer
Michael J. Benjamin 37 Vice President; Corporate Controller
Deborah L. Campbell 41 Vice President
Richard A. Alexander 53 Director
Jeffrey P. Anderson 48 Director
David C. Dewar 36 Director
Theo F. Lamb 56 Director
Robert B. Liverant 69 Director
Stephen A McConnell 46 Director
Ben T. Morris 52 Director
DONALD R. HEAD is a co-founder of the Company's wholly-owned operating
subsidiary, Capital Title Agency, Inc. ("Capital Title") and has served as its
Chairman of the Board since its inception in 1981. Mr. Head is also the Chairman
of the Board and Chief Executive Officer of the Company. Mr. Head co-founded
Centurian Development and Investments, Inc., a custom designer and builder of
residential homes, and is also a partner in America West Capital One LLC, a
residential real estate developer in Yavapai County, Arizona. Mr. Head has
previously served as a board member for both U.S. and Canadian public companies.
He graduated from Arizona State University with a BA in Business and holds a law
degree from the University of Arizona.
ANDREW A. JOHNS joined Capital Title in April 1996 as Vice President in
charge of Special Projects and shortly thereafter was named President. Mr. Johns
has been a Director of Capital Title since March 1996 and a Director of the
Company since May 1996. He is also the President of the Company. Mr. Johns has
more than 28 years of experience in the title insurance industry. From 1994 to
1996, Mr. Johns was Executive Vice President of Nations Title Insurance of
Arizona, Inc. Prior thereto, Mr. Johns served in a senior management position
with United Title Company. Prior to his employment with United Title Company,
Mr. Johns was employed by Stewart Title of California for nine years, holding
several executive positions including President. He began his career with First
American Title Insurance Company in California. Mr. Johns is a graduate of
Compton College.
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MILTON M. FERRANTELLI joined Capital Title in November 1997 as a Vice
President and as Assistant to the Chairman of Capital Title's Maricopa County,
Arizona operations. In February 1998, Mr. Ferrantelli was appointed Executive
Vice President of the Company and President of the Company's Arizona title and
escrow operations. Prior to joining the Company, Mr. Ferrantelli purchased
United Title Insurance Agency in 1986 with two active partners and served as its
President and Chief Executive Officer, prior to its acquisition by Norwest
Financial in 1994. Mr. Ferrantelli has over twenty years of experience in the
title and escrow industry in the Arizona marketplace. He holds a BA from Arizona
State University and has completed post-graduate work.
DALE A. HEAD joined Capital Title Group, Inc. as Executive Vice
President and General Counsel in October 1998. He has served as General Counsel
for Capital Title Agency, a wholly owned subsidiary of Capital Title Group,
Inc., since 1982. Mr. Head has over thirty five years legal expertise that
includes general civil practice in state and federal courts, commercial and real
estate, and corporate and business litigation in the state of Arizona. He has
successfully represented and litigated cases for various financial institutions,
title and insurance companies including Chicago Title Insurance Company, Arizona
Title Insurance & Trust Company (now First American Title Insurance Company),
Lawyers Title Corporation, California Federal Savings Bank, Northwest Mortgage
(formerly Banco) and Transamerica Finance Corporation. Mr. Head completed his
undergraduate education at Arizona State University and received his L.L.B.
Degree from the University of Arizona. He is currently a member of the Arizona
State Bar.
MARK C. WALKER has served as Vice President and Chief Financial Officer
of the Company since March 1998. Prior thereto, Mr. Walker had served as Vice
President and Chief Financial Officer of Main Street and Main Incorporated, a
publicly traded company, since February 1993. From July 1988 to February 1993,
Mr. Walker was Controller of the OEM Division of Executone Information Systems,
Inc. He is a graduate of the University of Northern Iowa and is a Certified
Public Accountant.
MICHAEL J. BENJAMIN joined Capital Title in November 1996 as a Vice
President and serves as the Corporate Controller. Prior to joining the Company,
Mr. Benjamin was employed by Semple & Cooper, PLC. Mr. Benjamin was an Audit
Manager with Semple & Cooper, PLC from 1995 to 1996. He is a graduate of Florida
Atlantic University with a BA in Accounting and is a Certified Public
Accountant.
DEBORAH L. CAMPBELL is a Vice President of Capital Title. Ms. Campbell
has been employed by Capital Title for more than 14 years, most recently as
Director of Human Resources and has held various positions, including serving as
a trust officer and overseeing all compliance regulations. Ms. Campbell is an
active member of the Arizona Trustee Association and Land Title Association of
Arizona.
RICHARD A. ALEXANDER joined the Company as Director in January 1999.
Since September 1996, he has served as President, Sales and Marketing, of GE
Capital Residential Connections Corporation, a unit of GE Capital Mortgage
Corporation, which is a part of GE Capital, a diversified financial service
company with assets of more than $250 billion. Prior thereto, Mr. Alexander was
President and General Manager of United General Information Services, and
Executive Vice President of United General Financial Services, Inc. He
previously served as Division President for TRW's Real Estate Loan Services
Division taking the start-up company to over $200 million in revenue in five
years. He also served as President and Chief Executive Officer of TRW Title
Insurance where he structured the acquisition of three title insurance
underwriting companies growing revenue from $40 million to over $320 million.
JEFFREY P. ANDERSON has been a Director of the Company since December
1997. Mr. Anderson is a consultant focusing on banking and finance. From 1997
until 1998 he was Senior Vice President of Pacific Century Financial
Corporation. From 1992 until 1996, Mr. Anderson was Executive Vice President,
Southwest Region, for First Interstate Bank in Phoenix, Arizona. He also served
concurrently as Chairman of the Board of First Interstate Bank of Colorado. From
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1986 until 1992, Mr. Anderson was employed by Security Pacific Corporation,
serving as Senior Vice President. Mr. Anderson holds a BS degree in Finance and
Management from the University of Southern California and an MBA from California
State University, Long Beach.
DAVID C. DEWAR has been a Director of Capital Title Group since August
1997. Mr. Dewar is the President and Chief Executive Officer of Magellan
Corporations, a fully integrated real estate organization that provides
comprehensive investment management services. Mr. Dewar is a graduate of Ryerson
University in Toronto, Canada, where he received a Bachelor of Technology degree
in Architecture and Project Management and a diploma in Economics.
THEO F. LAMB is a co-founder of Capital Title Agency, Inc. and has
served as a Director of Capital Title since its inception in 1981. Mr. Lamb has
been a Director of the Company since May 1996. He is the owner of Lamb
Chevrolet, Inc. in Prescott, Arizona, a retail car dealership for Cadillac,
Oldsmobile, Chevrolet, Subaru and Nissan automobiles. He has served as a member
of the Chevrolet and Subaru National Dealer Counsels and was elected to the
Regional Dealer Counsels for Oldsmobile and Cadillac. He was the managing
partner in several land and commercial property developments in the Prescott
area. Mr. Lamb is a graduate of Southern Methodist University holding a BS
degree in Business.
ROBERT B. LIVERANT has been a Director of the Company since May 1996.
Mr. Liverant is a retired Chartered Accountant who was a Senior Partner in the
Firm of Liverant Yip and Co. in British Columbia for 20 years, specializing in
audits of public companies. Mr. Liverant was also a partner in the firm of
Smythe Ratcliffe and Associates and a member of the firm of Pannell Kerr
Forester, an international accounting firm. Mr. Liverant has several real estate
investments, including holdings in Saturna Beach Estates LTD, an 80-acre
recreation and vineyard development in British Columbia, for which he also
serves as a director. He has served as a director of more than 15 Canadian
public companies. Mr. Liverant holds a BA degree with an economics major from
the University of British Columbia. He now resides in Scottsdale, Arizona.
STEPHEN A MCCONNELL has been a Director of the Company since September
1996. He is the President of Solano Ventures, a firm involved in private capital
investments. He is currently Chairman of G-L Industries, LLC, a Salt Lake
city-based manufacturer of wood glu-lam beams used in the construction industry.
He has served, between 1991 and 1997, as Chairman of the Board and majority
stockholder in Mallco Lumber & Building Materials, Inc., a wholesale distributor
of construction lumber and doors. From 1991 to 1995, Mr. McConnell was President
of Belt Perry Associates, Inc., a property tax appeal firm. He was President and
Chief Executive Officer of N-W Group, Inc., a publicly held corporation, from
1985 through 1991. Mr. McConnell presently serves on the boards of Pilgrim
America Capital Corp., Vodavi Technologies, Inc., Mobile Mini, Inc. and JDA
Software Group, Inc. Mr. McConnell holds a BA from Harvard College and an MBA
from Harvard Business School.
BEN T. MORRIS has been a director of the Company since May 1998. He is
Co-founder, President and a Director of Sanders Morris Mundy, a financial
services firm based in Houston, Texas. He is also a director of American Equity
Investment Life Holding Company and L-D Communications, Inc. Mr. Morris served
as Chief Operating Officer of Tatham Corporation from 1980 until 1984. Prior
thereto, he was employed by Mid American Oil Company from 1973 until 1980,
serving as Chief Financial Officer until 1979 and as President in 1979 and 1980.
Mr. Morris presently serves on the board of American Equity Life Insurance
Company. Mr. Morris has a BBA from the University of North Texas.
There are no family relationships among any of the Directors.
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MEETINGS OF THE BOARD OF DIRECTORS. During the year ended December 31,
1998, the Board of Directors of the Company met on four occasions. Each of the
Directors, with the exception of Mr. Alexander who joined the Board of Directors
on January 6, 1999, attended 75% or more of the meetings of the Board of
Directors and of the meetings held by such committees of the Board on which he
served.
AUDIT COMMITTEE. The Audit Committee, which has adopted a formal
written charter, makes recommendations to the Board concerning the selection of
outside auditors, reviews the financial statements of the Company and considers
such other matters in relation to the internal controls and external audit of
the financial affairs of the Company as may be necessary or appropriate in order
to facilitate accurate and timely financial reporting. The Audit Committee,
comprised of Stephen A McConnell, Jeffrey P. Anderson and Robert B. Liverant,
held two meetings in 1998 and believes it satisfied its responsibilities during
the past year in compliance with its charter.
COMPENSATION COMMITTEE. The Compensation Committee, which was formed on
April 8, 1997, reviews all aspects of compensation of executive officers of the
Company and makes recommendations on such matters to the full Board of
Directors. The Compensation Committee, comprised of Theo F. Lamb, David C. Dewar
and Ben T. Morris held no meetings during 1998.
All current committee members are expected to be nominated for
re-election at a Board meeting to be held following the Annual Meeting of
Shareholders.
COMPENSATION OF DIRECTORS
Effective as of March 1998, non-employee directors began receiving a
fee of $500 per month. In addition, non-employee directors are entitled to
receive regular stock option grants under the Directors Plan and to receive
reimbursement for reasonable expenses incurred in attending board meetings.
Effective as of March 1999, non-employee directors will receive a fee of $1,000
per month.
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EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the Company's
Chief Executive Officer and the Company's other most highly compensated
executive officers (the "Named Executive Officers") who received salary and
bonus in excess of $100,000 for services rendered to the Company during the
years ended December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation(1)
------------------ ---- ------ ----- ------------ ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald R. Head, 1998 $191,538 $76,807 $0 $0 0 $0 $10,400
Chairman of the Board and 1997 121,240 0 0 0 0 0 0
Chief Executive Officer 1996 64,000 0 0 0 0 0 0
Andrew A. Johns, President 1998 129,750 43,996 0 0 0 0 10,319
Milton M. Ferrantelli,
Executive Vice President 1998 131,000 47,999 0 0 0 0 5,200
</TABLE>
(1) Includes car allowance and the Company's contribution to the 401(K) plan.
The following table sets forth information concerning individual grants
of stock options made to the Named Executive Officers during the last fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR
Percent of Total Options
Options Granted to Employees Exercise Expiration
Name Granted (#) in Fiscal Year Price ($/sh) Date
---- ----------- -------------- ------------ ----
Donald R. Head -0- -0- $0.00 N/A
Andrew A. Johns -0- -0- $0.00 N/A
Milton M. Ferrantelli -0- -0- $0.00 N/A
AMENDMENT OR REPRICING OF OPTIONS
During the 1998 fiscal year, the Company did not amend or reprice any
of its stock options held by executive officers of the Company.
The following table sets forth certain information concerning each
exercise of stock options during the year ended December 31, 1998 by the Named
Executive Officers and the aggregated fiscal year-end value of the unexercised
options of such Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Value of Unexercised
Shares Value Number of Unexercised Options In-the-Money
Acquired Realized Upon at Fiscal Year End (#) Options at Fiscal Year End($)(1)
Name on Exercise(#) Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Head -0- -0- 75,000 75,000 $178,125 $178,125
Andrew A. Johns -0- -0- 62,500 62,500 $148,438 $148,438
Milton M. Ferrantelli -0- -0- -0- 125,000 -0- $271,950
</TABLE>
(1) Based on the bid price of the Common Stock of $3.375 per share as reported
on the Nasdaq SmallCap Market on December 31, 1998.
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STOCK OPTION PLANS
1996 STOCK OPTION PLAN
The Company's 1996 Stock Option Plan (the "1996 Plan") currently
authorizes the Board to grant options to employees of the Company to purchase up
to an aggregate of 2,400,000 shares of Common Stock. As described elsewhere in
this Proxy Statement, the Company has proposed an amendment to the 1996 Plan to
increase the number of shares issuable under such plan to 3,900,000. Officers
and other employees of the Company who, in the opinion of the Board of
Directors, are responsible for the continued growth and development and the
financial success of the Company are eligible to be granted options under the
1996 Plan. Options may be non-qualified options, incentive stock options, or any
combination of the foregoing. In general, options granted under the 1996 Plan
are not transferable and expire five years after the date of grant. The per
share exercise price of an incentive stock option granted under the 1996 Plan
may not be less than the fair market value of the Common Stock on the date of
grant. Incentive stock options granted to persons who have voting control over
10% or more of the Company's capital stock are granted with an exercise price of
at least 110% of the fair market value of the underlying shares on the date of
grant. No option may be granted after May 23, 2006.
The 1996 Plan provides the Board of Directors with the discretion to
determine when options granted thereunder will become exercisable. Unless
otherwise provided, 50% of the options granted may be exercised after two years
from the date of grant and the remaining 50% of the options may be exercised
after three years from the date of grant at any time prior to expiration, so
long as the optionee remains employed by the Company. No option granted under
the 1996 Plan is transferable by the optionee other than by will or the laws of
descent and distribution, and each option is exercisable during the lifetime of
the optionee only by the optionee.
As of March 1, 1999, the Board has authorized the grant under the 1996
Plan of options to purchase 2,617,500 shares of Common Stock, with exercise
prices ranging from $1.00 to $3.50 per share.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company also has a Non-Employee Directors Stock Option Plan (the
"Directors Plan"), under which only non-employee directors are eligible to
receive options. Options to purchase up to 370,000 shares are authorized for
issuance under the Directors Plan. As described elsewhere in this Proxy
Statement, the Company has proposed an amendment to the Directors Plan to
increase the number of shares issuable under such plan to 600,000. As of March
1, 1999, options to purchase 406,000 shares of Common Stock have been granted
under the Directors Plan at exercise prices ranging from $1.00 to $4.00 per
share. All options granted under the Directors Plan will be subject to the same
vesting schedule applicable to options granted under the 1996 Plan. All options
granted or to be granted under the Directors Plan are non-qualified stock
options.
Each non-employee director who joins the Board of Directors will
receive options to acquire 15,000 shares of the Company's Common Stock. In
addition to the foregoing option grants, each year, every non-employee director
automatically receives options to acquire 10,000 shares of the Company's Common
Stock on the third business day following the date the Company publicly
announces its annual financial results; provided that such director has attended
at least 75% of the meetings of the Board of Directors and of the Board
Committees of which such director is a member in the preceding fiscal year. The
exercise price of all options granted under the Directors Plan is the fair
market value of the Company's Common Stock on the date of grant.
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No option granted under the Directors Plan is transferable by the
optionee other than by will or the laws of descent and distribution, and each
option is exercisable during the lifetime of the optionee only by the optionee.
EMPLOYMENT AGREEMENTS
DONALD R. HEAD. On June 1, 1996, Donald R. Head entered into an
Employment Agreement with the Company, which provides for his services as
Chairman of the Board and Chief Executive Officer (as subsequently amended and
in effect on the date hereof, the "Head Agreement"). The Head Agreement is for a
five-year term with an amended commencement date of April 1, 1998. The Agreement
is extended one additional year on the first anniversary after the commencement
date, and on each succeeding anniversary thereafter, subject to cancellation of
any further extensions on 60-day notices given prior to the next applicable
anniversary date. The Head Agreement may be terminated by the Company for cause,
including upon (i) conviction of a willful or intentional crime, (ii) absence
from work for more than 180 consecutive days and (iii) the material failure by
Mr. Head to perform his duties.
The Head Agreement currently provides for annual base salary of
$200,000, plus an annual bonus equal to 4% of the Company's audited pretax net
profits on all Company operations and reflecting certain adjustments, calculated
according to generally accepted accounting principles applicable to title
insurance agencies consistently applied but without giving effect to certain
employee bonus payments; provided, that the bonus amount shall not exceed 200%
of base salary as in effect on the date hereof. Such bonus shall be determined
and paid within three months following the end of each fiscal year. In addition,
the Head Agreement provides for a car allowance of $800 per month.
The Head Agreement provides that if Mr. Head's employment is terminated
without cause and for reasons other than death or disability or if Mr. Head
resigns for any reason during a two-year period following a Change-in-Control
(as defined in the Head Agreement) of the Company, the Company will pay Mr. Head
severance compensation in an amount equal to 300% of his annual base salary at
such time.
ANDREW A. JOHNS. On June 1, 1996, Andrew A. Johns entered into an
Employment Agreement with the Company, which provides for his services as
President (as subsequently amended and in effect on the date hereof, the "Johns
Agreement"). The Johns Agreement is for a five-year term with an amended
commencement date of April 1, 1998. The Agreement is extended one additional
year on the first anniversary after the commencement date, and on each
succeeding anniversary thereafter, subject to cancellation of any further
extensions on 60-day notices given prior to the next applicable anniversary
date. The Johns Agreement may be terminated by the Company for cause, including
upon (i) conviction of a willful or intentional crime, (ii) absence from work
for more than 180 consecutive days and (iii) the material failure by Mr. Johns
to perform his duties.
The Johns Agreement currently provides for annual base salary of
$135,000, plus an annual bonus equal to 2% of the Company's audited pretax net
profits on all Company operations and reflecting certain adjustments, calculated
according to generally accepted accounting principles applicable to title
insurance agencies consistently applied but without giving effect to certain
employee bonus payments; provided, that the bonus amount shall not exceed 200%
of base salary as in effect on the date hereof. Such bonus shall be determined
and paid within three months following the end of each fiscal year. In addition,
the Johns Agreement provides for a car allowance of $800 per month.
The Johns Agreement provides that if Mr. Johns' employment is
terminated without cause and for reasons other than death or disability or if
Mr. Johns resigns for any reason during a two-year period following a
Change-in-Control (as defined in the Johns Agreement) of the Company, the
Company will pay Mr. Johns severance compensation in an amount equal to 300% of
his annual base salary at such time.
9
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MILTON M. FERRANTELLI. On June 17, 1997, Milton M. Ferrantelli entered
into an Employment Agreement (the "Ferrantelli Agreement") with the Company. The
Ferrantelli Agreement was based on certain conditions which were met on November
10, 1997, the effective date of the Ferrantelli Agreement, which provides for
his services as Assistant to the Chairman of Capital Title Agency's Maricopa
County operations. The term of the Ferrantelli Agreement is three years, and
compensation thereunder is $132,000 per year plus additional compensation,
subject to various limits, equal to (i) three and one-third percent of the
Company's pretax income on operations in Maricopa County, Arizona, plus (ii)
five percent of Company's pretax income on operations in each other Arizona
county (not to exceed $10,000 for any such other county).
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE BY REFERENCE THIS
INFORMATION STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE
PERFORMANCE GRAPH WHICH FOLLOWS SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION PHILOSOPHY
Decisions on compensation of the Company's executive officers are made
by the Board of Directors. In April 1997, the Board of Directors formed a
Compensation Committee; however, the Compensation Committee held no meetings
prior to December 31, 1998. Accordingly, through the end of 1998 the Board of
Directors remained responsible for setting and administering the policies which
govern both annual compensation and stock ownership programs. In general, the
compensation policies and practices of the Board of Directors are based upon the
following subjective principles:
- - Compensation programs should reflect and promote the Company's goals and
reward individuals for contributions to the Company's success in achieving
its goals.
- - Compensation should be related to the value created for the Company's
stockholders.
- - Compensation programs should integrate both the long- and short-term
strategies of the Company.
- - Compensation programs should provide incentive for excellence in individual
performance and promote teamwork among the Company's management.
- - Compensation programs should be designed to attract and retain executives
critical to the success of the Company.
- - Stock ownership by management and stock-based compensation plans are
beneficial in aligning management's and the stockholders' interest in the
enhancement of stockholder value.
Total compensation for each member of senior management is set at
levels which the Board of Directors believes are competitive in relation to
companies of similar type and size; however, no independent investigation of
such levels has been conducted by the Board of Directors. The components of
executive compensation include base salary, equity participation in the Company
in the form of options to purchase common stock, and a bonus program.
Compensation for executive officers of the Company is usually set by the Board
of Directors prior to the beginning of each fiscal year. Due to the level of
compensation received by the executive officers of the Company, the Board of
Directors has not yet deemed it necessary to adopt a policy regarding the one
million dollar cap on deductibility of certain executive compensation under
Section 162(m) of the Internal Revenue Code.
10
<PAGE>
BASE SALARY
The Board of Directors establishes base salaries for the Company's
executive officers at levels considered appropriate in light of the duties and
scope of responsibilities of each officer's position. In this regard, the Board
considers the compensation practices and corporate financial performance of
similarly situated companies. In evaluating base salary levels, the Board of
Directors takes into account a number of factors, including (but not limited to)
management's efforts to improve levels of sales and profitability and to expand
the Company's markets. The Board also takes into account management's consistent
commitment to the long-term success of the Company through the development of
new operations and through implementing strategic business acquisition
opportunities.
Based upon its evaluation of these factors, the Board of Directors
believes that senior management is dedicated to achieving long-term financial
improvements, and that the compensation policies, plans and programs
administered by the Board contribute to management's commitment. The Board of
Directors attempts to assimilate all of the foregoing factors when it renders
its compensation decisions; however, the Board recognizes that its decisions are
primarily subjective in nature due to the subjective nature of the criteria. The
Board of Directors does not assign any specified weight to the criteria it
considers.
Base salary recommendations are fixed at levels which the Board
believes is paid to management with comparable qualifications, experience and
responsibilities at other corporations of similar size engaged in businesses
similar to that of Company; however, the Board of Directors has conducted no
formal investigation of compensation level at other companies.
STOCK OPTIONS
The Board of Directors administers the Company's 1996 Stock Option Plan
(the "1996 Plan") and through a management committee comprised of Mr. Head and
Mr. Johns determines those employees of the Company who are eligible to
participate in the 1996 Plan. The exercise price of options granted under the
1996 Plan is never less than the fair market value of the Company's Common Stock
on the day of grant. The number of options granted by the Board of Directors
under the 1996 Plan are based upon the Board's evaluation of the same factors
described above under "Base Salary." The Board of Directors also takes into
account the relative scope of accountability and the anticipated performance
requirements and contributions of each participating employee, as well as each
participating employee's current equity participation in the Company. During the
fiscal year ending December 31, 1998, options to purchase up to 1,104,600 shares
of common stock pursuant to the 1996 Plan were granted to various officers and
employees of the Company and its subsidiaries.
11
<PAGE>
BONUS COMPENSATION
Certain officers have employment agreements with the Company that
provide for the payment of bonus compensation in amounts determined based on
Company profitability. The Board of Directors also makes discretionary bonus
payments to officers and employees. Determinations of the Board of Directors
with regard to the award of discretionary bonus compensation are generally based
upon the Board's evaluation of the same factors described above under "Base
Salary" and other subjective criteria.
CHIEF EXECUTIVE OFFICER
Mr. Head has served as Chairman of the Board and Chief Executive
Officer of the Company since its inception. As Chief Executive Officer, Mr. Head
receives a base salary and is eligible to receive stock options under the 1996
Plan and is eligible to receive bonus compensation pursuant to a formula set
forth in the Head Agreement described above. The Board's evaluation process with
respect to the Chief Executive Officer's compensation is comprised of the same
components that are utilized by the Board in evaluating the compensation of
other members of senior management.
Submitted by the Capital Title
Group, Inc. Board of Directors
Donald R. Head
Andrew A. Johns
Richard A. Alexander
Jeffrey P. Anderson
David C. Dewar
Theo F. Lamb
Robert B. Liverant
Stephen A McConnell
Ben T. Morris
12
<PAGE>
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the cumulative total return
of the Company's Common Stock with the cumulative total return of the Nasdaq
Stock Market Index (U.S.) and a peer group of companies engaged in the title
insurance industry (SIC codes 6360 - 6369) for the period from May 15, 1997
through December 31, 1998 (including the reinvestment of dividends, if any). The
following graph assumes a $100 investment on May 15, 1997. Price data for the
Company's Common Stock is based on the closing bid price for the relevant
measurement dates as reported by the Nasdaq Small Cap Market for 1998 and prior
to that by the OTC Bulletin Board (which quotations represent prices between
dealers and do not include retail markup, markdown or commissions and may not
reflect actual transactions). The performance graph below shall not be deemed
incorporated by reference by any general statement incorporating this Proxy
Statement by reference into any filing under, and shall not otherwise be deemed
filed under, either the Securities Act of 1933 or the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference.
5/15/97 12/31/97 12/31/98
------- -------- --------
Capital Title Group, Inc. $100 $ 52 $112
Nasdaq Stock Market - U.S. Companies $100 $118 $165
Peer Group: SIC Codes 6360 - 6369 (Title Insurance) $100 $161 $130
13
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth, as of March 15, 1999, the beneficial
ownership of shares of Common Stock of the Company by (i) each person known by
the Company to beneficially own more than 5% of the Company's Common Stock, (ii)
each Director, (iii) each Named Executive Officer and (iv) all Directors and
executive officers of the Company as a group. This information was determined in
accordance with Rule 13 (d)-3 under the Securities Exchange Act of 1934, as
amended, and is based upon the information furnished by the persons listed
below. Except as otherwise indicated, each shareholder listed possesses sole
voting and investment power with respect to the shares indicated as being
beneficially owned.
Number of Shares Percent of
Name and Address (1) Beneficially Held Ownership (2)
-------------------- ----------------- -------------
Donald R. Head (3) 2,436,345(4)(5)(6)(7) 14.5%
Andrew A. Johns 815,035(8) 4.9%
Milton M. Ferrantelli -- 0.0%
Richard A. Alexander 100,000(7) 0.6%
Jeffrey P. Anderson 42,500(9)(10) 0.3%
David C. Dewar 60,000 0.4%
Theo F. Lamb 2,241,223(9)(10) 13.4%
Robert B. Liverant 112,500(9) 0.7%
Stephen A McConnell 99,537(9) 0.6%
Ben T. Morris 42,037 0.3%
All directors and executive officers
as a group (10 persons) 5,849,177 34.7%
(1) Mailing Address of each beneficial owner is c/o Capital Title Group, Inc.,
14555 North Scottsdale Road, Suite 320, Scottsdale, Arizona 85254.
(2) The percentages shown include the shares of Common Stock actually owned as
of March 15, 1998 and the shares of Common Stock that the person or group
had the right to acquire within 60 days of such date. In calculating the
percentage of ownership, all shares of Common Stock that the identified
person or group had the right to acquire within 60 days of March 15, 1999
upon the exercise of options or warrants are deemed to be outstanding for
the purpose of computing the percentage of the shares of Common Stock owned
by such person or group, but are not deemed to be outstanding for the
purpose of computing the percentage of the shares of Common Stock owned by
any other person.
(3) Shares beneficially held in The Head Revocable Trust Dated April 1, 1975.
(4) Includes 301,895 and 300,245 shares of Common Stock which Mr. Head has
options to purchase from The William and Dorothy Eichbaum Trust dated
November 19, 1986 and from John N. Redfield, Jr. and Linda N. Redfield,
respectively, at any time prior to May 23, 1999, for $.52 per share.
(5) On June 26, 1998 Mr. Head granted an option to Mr. Dale A. Head to purchase
100,000 shares of Common Stock at $3.00 per share. This option is
exercisable at 50% two years from the date of grant with the remaining 50%
exercisable after three years from the date of grant. The shares underlying
this option are still held by Mr. Head and accordingly have been included
in computing his percentage of ownership.
(6) Includes options to purchase 75,000 shares of Common Stock, for $1.00 per
share.
(7) On January 6, 1999 Mr. Head granted an option to Mr. Richard A. Alexander
to purchase 100,000 shares of Common Stock at $3.00 per share expiring
three years from the date of grant. The shares underlying this option have
been included for both Mr. Head and Mr. Alexander in computing their
percentage of ownership, but was only included once in computing the
percentage ownership of all directors and officers as a group.
(8) Includes options to purchase 62,500 shares of Common Stock, for $1.00 per
share.
(9) Includes options to purchase 12,500 shares of Common Stock, for $1.00 per
share.
(10) Includes warrants to purchase 10,000 shares of Common Stock, for $2.50 per
share.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal years 1998, 1997 and 1996, the Company paid $55,866,
$41,260 and $43,319, respectively, to Dale A. Head for legal services performed
by his firm. Dale A. Head is Donald R. Head's brother. In September, 1996, the
Company granted an option to Dale A. Head to acquire 20,000 shares of Common
Stock of the Company at an exercise price of $1.00 per share. The options
granted to Dale A. Head will be subject to the same vesting schedule applicable
to options granted under the 1996 Employee Stock Option Plan and are
non-qualified stock options. Mr. Head has discontinued his private law practice
and has served as the Company's Executive Vice President, Corporate General
Counsel and Secretary since October 1998.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than 10% 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 ("SEC"). Executive officers, directors and greater than 10%
stockholders are also required to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons, the
Company believes that all filing requirements applicable to its executive
officers, directors, and greater than ten-percent beneficial owners were
complied with during the fiscal year ending December 31, 1998.
PROPOSAL NUMBER ONE:
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members and is
divided into three classes, with the terms of three directors ("Class 2
Directors") expiring at the Annual Meeting, the terms of three directors ("Class
3 Directors") expiring at the 2000 annual meeting of stockholders and the terms
of three directors ("Class 1 Directors") expiring at the 2001 annual meeting of
stockholders. Each class of directors up for election each year will be elected
for a three-year term. Accordingly, the terms of one class of directors, or
approximately one-third of the Company's directors, expires each year.
David C. Dewar, Andrew A. Johns and Ben T. Morris have been nominated
for election as Class 2 Directors. If elected, their terms will expire at the
2002 annual meeting of stockholders. Biographical information regarding each of
these nominees is set forth elsewhere in this Proxy Statement.
If any nominee should become unavailable for any reason, which the
Board of Directors does not anticipate, the proxy will be voted for any
substitute nominee or nominees who may be selected by the Board of Directors
prior to or at the Annual Meeting, or, if no substitute is selected by the Board
of Directors prior to or at the Annual Meeting, for a motion to reduce the
present membership of the Board to the number of nominees available and to
create an additional vacancy to be filled by the Board of Directors.
The election of the director nominees will require the affirmative vote
of a plurality of the votes cast by the stockholders present at the meeting and
entitled to vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR ELECTION OF EACH OF THE FOREGOING NOMINEES.
PROPOSAL NUMBER TWO:
RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
The Company has appointed Ernst & Young LLP ("E&Y") as its independent
auditors and principal accountants for the fiscal year ending December 31, 1999.
E&Y served as the Company's independent auditors and principal accountants for
the fiscal year ending December 31, 1997 and 1998.
15
<PAGE>
The affirmative vote of a majority of the shares of Common Stock
present or represented by valid proxy and entitled to vote at the Annual Meeting
will be required to ratify the selection of E&Y as the Company's independent
auditors and principal accountants for the fiscal year ending December 31, 1999.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF E&Y AS INDEPENDENT AUDITORS.
PROPOSAL NUMBER THREE
AMENDMENT OF 1996 STOCK OPTION PLAN
The Company's 1996 Stock Option Plan (the "1996 Plan") currently
authorizes the Board to grant options to employees of the Company to purchase up
to an aggregate of 2,400,000 shares of Common Stock. The Board of Directors has
determined that the 1996 Plan should be amended to increase the number of shares
of Common Stock issuable pursuant to the 1996 Plan to 3,900,000 shares. The
purpose of increasing the number of shares available for issuance under the 1996
Plan is to ensure that the Company will continue to be able to grant stock
options as incentives to those individuals upon whose efforts the Company relies
for the continued success, development and growth of its business.
Accordingly, the Board of Directors proposes to amend Section 3 of the
1996 Plan in its entirety to read as follows:
"COMMON STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of shares which
may be optioned and sold under the Plan is Three Million Nine Hundred
Thousand (3,900,000) Shares of Common Stock. The Shares may be
authorized, but unissued, or previously issued Shares acquired or to
be acquired by the Company and held in treasury.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares covered
by such Option shall, unless the Plan shall have been terminated, be
available for future grants of Options."
This amendment to the 1996 Plan has been approved by the Board of
Directors and will be voted upon at the Annual Meeting. The affirmative vote of
a majority of the shares of Common Stock present or represented by valid proxy
and entitled to vote at the Annual Meeting will be required to approve this
amendment to the 1996 Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL OF THIS AMENDMENT TO THE 1996 PLAN.
PROPOSAL NUMBER FOUR:
AMENDMENT OF NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company's Non-Employee Directors Stock Option Plan (the "Directors
Plan") currently authorizes the Board to grant options to non-employee directors
of the Company to purchase up to an aggregate of 370,000 shares of Common Stock.
The Board of Directors has determined that the Directors Plan should be amended
to increase the number of shares of Common Stock issuable pursuant to the
Directors Plan to 600,000 shares. The purpose of increasing the number of shares
available for issuance under the Directors Plan is to ensure that the Company
will continue to be able to grant stock options as incentives to attract and
retain those individuals whose service as non-employee members of the Board of
Directors will contribute to the continued success, development and growth of
the Company's business.
16
<PAGE>
Accordingly, the Board of Directors proposes to amend Section 3 of the
Directors Plan in its entirety to read as follows:
"COMMON STOCK SUBJECT TO THE PLAN. Subject to increases and
adjustments pursuant to Section 9 of the Plan, the number of shares
reserved and available for distribution under the Plan shall be Six
Hundred Thousand (600,000). If an Option shall expire or become
unexercisable for any reason without having been exercised in full,
the unpurchased Shares covered by the Option shall, unless the Plan
shall have been terminated, be available for future grants of
Options."
This amendment to the Directors Plan has been approved by the Board of
Directors and will be voted upon at the Annual Meeting. The affirmative vote of
a majority of the shares of Common Stock present or represented by valid proxy
and entitled to vote at the Annual Meeting will be required to approve this
amendment to the Directors Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR APPROVAL OF THIS AMENDMENT TO THE DIRECTORS PLAN.
STOCKHOLDER PROPOSALS
Any stockholder proposals intended to be presented at the Company's
next annual meeting of stockholders must be received by the Company no later
than December 10, 1999, to be evaluated by the Board for inclusion in the
information or proxy statement for that meeting.
OTHER MATTERS
The Annual Meeting is being held for the purposes set forth in the
Notice that accompanies this Proxy Statement. The Board of Directors is not
presently aware of any business to be transacted at the Annual Meeting other
than as set forth in such Notice. However, if other matters properly come before
the meeting, the persons named in the accompanying proxy intend to vote as
recommended by the Board of Directors or, if no such recommendation is given, in
accordance with their own discretion.
1998 ANNUAL REPORT ON FORM 10-KSB
The Company files annual reports on Form 10-KSB with the SEC. A copy of
the annual report for the fiscal year ended December 31, 1998 may be obtained,
free of charge, upon written request by any stockholder to Capital Title Group,
Inc., 14555 North Scottsdale Road, Suite 320, Scottsdale, Arizona 85254,
Attention: Stockholder Relations.
BY ORDER OF THE BOARD OF DIRECTORS
DONALD R. HEAD
CHAIRMAN OF THE BOARD
March 22, 1999
17
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CAPITAL TITLE GROUP, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of CAPITAL TITLE GROUP, INC., a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement of the Company, each dated March 22,
1999, and hereby appoints Donald R. Head and Mark C. Walker, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1999 Annual Meeting of Stockholders of the Company, to be held on Tuesday, May
4, 1999, at 2:00 p.m., local time, at the offices of The Miller Group, 4909 East
McDowell Road, Phoenix, Arizona and at any adjournment or adjournments thereof,
and to vote all shares of Common Stock that the undersigned would be entitled to
vote if then and there personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below (except as indicated)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below:
If you wish to withhold authority to vote for any individual nominees,
strike a line through that nominee's name in the list below:
David C. Dewar, Andrew A. Johns, Ben T. Morris
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG, L.L.P. AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER THE COMPANY'S 1996 STOCK OPTION PLAN TO 3,900,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER THE COMPANY'S NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN TO
600,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such matter or matters that may properly come before the meeting
or any adjournment or adjournments thereof.
(Continued and to be signed on reverse side)
<PAGE>
(Continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG, LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY; FOR THE INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER THE COMPANY'S 1996 STOCK OPTION PLAN TO 3,900,000; FOR THE
INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER
THE COMPANY'S NON-EMPLOYEE DIRECTORS STOCK OPTION PLANTO 600,000; AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
A majority of such attorneys or substitutes as shall be present and shall
act at said meeting or any adjournment or adjournments thereof (or if only one
shall be present and act, then that one) shall have and may exercise all of the
powers of said attorney-in-fact hereunder.
(This Proxy should be dated, signed by
the stockholder(s) exactly as his or her
name appears heron, and returned
promptly in the enclosed envelope.
Persons signing in a fiduciary capacity
should so indicate. If shares are held
by joint tenants or as community
property, both stockholders should
sign.)
Dated: , 1999
--------------------------
----------------------------------------
(Signature)
----------------------------------------
(Signature if jointly held)
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
