SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
TIS Mortgage Investment Company
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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:_/
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4) Proposed maximum aggregate value of transaction:
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_/ Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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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<PAGE>
TIS MORTGAGE INVESTMENT COMPANY
655 MONTGOMERY STREET, SUITE 800
SAN FRANCISCO, CALIFORNIA 94111
(415) 393-8000
Notice of Annual Meeting of Stockholders
To Be Held on June 7, 1995
To Our Stockholders:
The 1995 Annual Meeting of Stockholders of TIS Mortgage Investment Company
will be held at The Holiday Inn, 750 Kearny Street, San Francisco,
California on Wednesday, June 7, 1995, at 9:00 a.m., Pacific time, to
consider and act upon the following matters:
1. To elect two (2) Class III directors to serve for three years.
2. To vote on a proposal to approve the Company's 1995 Stock Option
Plan.
3. To vote on a proposal to approve possible compensation of the
Manager in the form of stock.
4. To vote on a proposal to ratify the appointment of Arthur
Andersen LLP as the independent accountants of the Company for
the fiscal year ending December 31, 1995.
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 31, 1995, the
record date, will be entitled to vote at the meeting.
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 card 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 has previously
returned a proxy.
W. Bruce McConnel, III
Secretary
April 20, 1995
The Proxy Statement for the Annual Meeting follows this page. The Annual
Report of the Company to its stockholders for the calendar year ended
December 31, 1994 accompanies this Proxy Statement.
<PAGE>
TIS MORTGAGE INVESTMENT COMPANY
655 MONTGOMERY STREET, SUITE 800
SAN FRANCISCO, CALIFORNIA 94111
PROXY STATEMENT
General
This Proxy Statement, which is being sent to stockholders on or about
April 20, 1995, is furnished in connection with the solicitation by TIS
Mortgage Investment Company, a Maryland corporation (the "Company"), of
proxies for use at the Annual Meeting of Stockholders of the Company (the
"Meeting") to be held at The Holiday Inn in San Francisco, California on
Wednesday, June 7, 1995, at 9:00 a.m., Pacific time, and any adjournments
thereof.
Record Date
Stockholders of record at the close of business on March 31, 1995 (the
"Record Date") are entitled to vote at the Meeting. On the Record Date,
there were issued and outstanding 8,105,880 shares of the Company's Common
Stock, $.001 par value (the "Common Stock").
Revocability of Proxies
A proxy may be revoked in writing at any time before it is exercised
by filing with the Secretary of the Company an instrument of revocation or
a duly executed proxy bearing a later date. A proxy may also be revoked by
attending the meeting and electing to vote in person, but mere attendance
at the meeting will not revoke a proxy.
Solicitation
The expense of printing and mailing proxy materials will be borne by
the Company. In addition to the solicitation of proxies by mail,
solicitation may be made by certain directors, officers and other employees
of the Company by personal interview, telephone or telefax. No additional
compensation will be paid for such solicitation. Copies of proxy materials
will be furnished to brokerage houses, fiduciaries and custodians to
forward to beneficial owners of Common Stock held in their names. The
Company will reimburse such persons for their reasonable expenses in
forwarding proxy materials to such beneficial owners.
Voting
The presence, in person or by proxy, of the holders of a majority of
the total shares of Common Stock outstanding constitutes a quorum for the
transaction of business at the meeting. If a proxy is properly executed
and returned, the shares represented thereby will be voted at the Meeting
in accordance with the instructions thereon. However, if no instructions
are specified, such shares will be voted for each nominee for director, and
for each other proposal described in this Proxy Statement. If a proxy is
accompanied by instructions to withhold authority, or is marked with an
abstention, the shares represented thereby will be considered to be present
at the Meeting for purposes of determining the existence of a quorum for
the transaction of business.
Each stockholder voting at the meeting in person or by proxy may cast
one vote per share of Common Stock held for each nominee for director. In
the election of directors, the two nominees receiving the highest number of
votes cast at the meeting will be elected. The withholding of voting
authority with respect to the election of directors will have no legal
effect on the election of directors. Cumulative voting in the election of
directors is not permitted. On all other matters, one vote may be cast for
each share of Common Stock held. Approval of all proposals other than the
election of directors requires approval by a majority of votes cast on the
proposal, provided in the case of proposal 2 (to approve the Company's 1995
Stock Option Plan) and proposal 3 (to approve possible compensation of the
Manager in the form of stock) that the total vote cast on the proposal
represents more than 50% of the outstanding shares of Common Stock of the
Company. Abstentions do not constitute a vote "for" or "against" a matter
and will be disregarded in determining the "votes cast" on an issue.
Accordingly, abstentions will not be counted toward the requirement that
the total vote cast on proposals 2 and 3 represent more than 50% of the
outstanding shares of Common Stock of the Company. Otherwise, abstentions
will have no legal effect. Broker "non-votes" (i.e., proxies from brokers
or nominees indicating that such persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated the same as abstentions.
Beneficial Ownership
As of March 31, 1995, to the Company's knowledge, no person owned
beneficially more than 5% of the Company's Common Stock.
Annual Report
The Company's 1994 Annual Report to Stockholders, which was mailed to
stockholders with 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
solicitation materials.
I. ELECTION OF DIRECTORS
The Company's Articles of Incorporation and By-Laws provide that the
Board of Directors shall be divided into three classes as nearly equal in
number as possible. There are currently eight directors. Class III which
comes up for election at the Meeting consists of two directors. The Board
of Directors has nominated, and recommends the election of, the following
two persons to continue as members of this Class and to serve as directors
of the Company until the 1998 Annual Meeting or until their successors are
elected and have qualified:
John D. Boyce
Douglas B. Fletcher
Both of the nominees are presently serving as directors of the
Company. Although the Board of Directors has no reason to believe that
either of them will be unable to serve, if such should occur, proxies will
be voted (unless marked to the contrary) for such person or persons as
shall be recommended by the Board of Directors, unless the Board of
Directors decides to reduce the number of directors.
The Company has an agreement (the "Management Agreement") with TIS
Financial Services, Inc. (the "Manager") which provides that the Manager
shall be responsible for the day-to-day operations of the Company. The
Manager is a Delaware corporation, 75% of the common stock of which is held
by Corporate Capital Investment Advisors, a California corporation. The By-
Laws of the Company provide that a majority of the members of the Board of
Directors, and any committee thereof, must be "Unaffiliated Directors",
i.e. persons who (i) are not "Affiliates" of the Manager, as that term is
defined in the By-Laws or Affiliates of persons who are Affiliates of the
Manager, and (ii) are not employed by, or receiving any compensation
(except for serving as a director) from, the Company.
Beneficial Ownership
The following table sets forth, as of April 20, 1995, certain
information with respect to each nominee for election as a director, each
director whose term of office will continue after the Annual Meeting, each
executive officer, and all nominees, continuing directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
Present Common Shares
Director Term Beneficially Percent of
Name Since Expires Owned * Common Stock
- - --------------------------- -------- ------- ------------- ------------
<S> <C> <C> <C> <C>
John D. Boyce 1988 1995 6,000 ***
Robert H. Edelstein 1988 1997 1,000 ***
Patricia M. Howe (1) 1988 1996 50,000 ***
Douglas B. Fletcher (2) 1988 1995 5,100 ***
Robert W. Ledoux 1988 1996 3,550 (3) ***
Lorraine O. Legg (1) 1988 1997 36,000 (4) ***
Harvie M. Merrill 1988 1996 3,000 (5) ***
Will M. Storey 1988 1997 25,000 ***
John E. Castello (1) ** ** 9,800 (6) ***
W. Bruce McConnel, III (7) ** ** -- --
All directors and executive 139,450 1.72%
officers as a group
(10 persons)
<FN>
* Unless otherwise indicated, the beneficial owner has sole voting and investment
power.
** Not a director
*** Less than 1%
(1) Affiliated with the Manager.
(2) Mr. Fletcher is a partner of a partnership that indirectly owns stock in the
Manager.
(3) Includes 500 shares held in an individual retirement account for the benefit of
Mr. Ledoux's wife as to which Mr. Ledoux shares voting and investment power.
(4) Includes 100 shares as to which Ms. Legg shares voting and investment power.
(5) Includes 2,000 shares held jointly by Mr. Merrill's wife and mother-in-law as to
which Mr. Merrill shares voting and investment power.
(6) Includes 2,300 shares held in an individual retirement account for the benefit
of Mr. Castello's wife, as to which Mr. Castello shares voting and investment
power.
(7) Drinker Biddle & Reath, of which Mr. McConnel and Henry S. Hilles, Jr., the
Assistant Secretary of the Company, are partners, receives legal fees as counsel
to the Company.
</TABLE>
<PAGE>
Biographical Information
Biographical information with respect to the two nominees for
election, as well as for each continuing director and each executive
officer of the Company, furnished in part by each such person, appears on
the following pages. Except as otherwise noted, the named individuals have
had the occupations indicated (other than directorships) for at least 5
years. Officers of the Company are elected annually to serve for one-year
terms or until their successors are elected and have qualified.
John D. Boyce, 68, Retired. From 1975 to September 1993, Vice
President Financial Affairs, University of San Diego, in which capacity he
was responsible for investments, controllership, administration,
facilities, construction and communications; from 1970 to 1979, owner and
operator of North County Cable TV, Incorporated, serving San Diego County;
from 1966 to 1975, Partner, Lomas Santa Fe Development Company and Lomas
Santa Fe Realty (over one thousand single family homes and condominiums,
shopping centers, and country club and office buildings); Founder of Rancho
Santa Fe Thrift & Loan Association, San Diego, California.
Robert H. Edelstein, 51, Real Estate Development Professor and Co-
Chairman, Center for Real Estate, Haas School of Business, University of
California at Berkeley; from 1982 to 1985, Professor of Finance and Co-
Director, Real Estate Center, The Wharton School, The University of
Pennsylvania.
Patricia M. Howe, 66, Chairman of the Company (since 1988); Chairman
and Chief Executive Officer, Capitalcorp, Inc.; Chairman, Capitalcorp Asset
Management; Chairman, Pacific Securities, Inc.; Chairman, United Securities
Financial Corporation of Illinois; Chairman, Chief Financial Officer and
Managing Director, Corporate Capital Investment Advisors; Chairman, TIS
Asset Management (since 1991); Chairman, TIS Financial Services, Inc.
(formerly Thrift Investment Services) (financial products); Director, TIS
Mortgage Acceptance Corporation (subsidiary of the Company).
Douglas B. Fletcher, 69, Chairman and Chief Executive Officer,
Fletcher Capital Advisors Incorporated (investment advisor); Partner,
Newport Partners (privately-owned venture capital firm); Vice Chairman, The
Pacific Horizon Group of mutual funds managed by Bank of America; from 1962
to 1982, Chairman and Chief Executive Officer of Angeles Corporation
(AMEX), with over $2 billion of securities and approximately $400 million
of real estate assets under management; former Allied Member, New York
Stock Exchange; Chartered Financial Analyst.
Robert W. Ledoux, 54, Associate, Bryan & Edwards (private venture
capital) since 1984; for the prior 11 years, Vice President, BA Investment
Management Co. (wholly-owned subsidiary of Bank of America).
Lorraine O. Legg, 55, President and Chief Executive Officer of the
Company (since 1988); President and Director, Capitalcorp, Inc.; President
and Director, Pacific Securities, Inc.; President, Chief Executive Officer
and Managing Director, Corporate Capital Investment Advisors; President,
TIS Asset Management (since 1991); President and Chief Executive Officer,
TIS Financial Services, Inc. (financial products); Director, Meridian Point
Realty Trust '83; Director, Meridian Point Realty Trust #VI Co.; Director,
Meridian Point Realty Trust #VIII Co.; Director, Downtown Association of
San Francisco; Director, Children's Garden of California; Director, Planned
Giving Foundation; Director, Thermaltech Development, Inc.; Director, CFI
ProServices, Inc.
Harvie M. Merrill, 74, Private Investor. Until 1988, Chairman and
Chief Executive Officer, Hexcel Corporation (a manufacturer of lightweight
composite aircraft materials); until 1990, Director, Fibreboard Corporation
(a lumber, plywood and fiberglass insulation manufacturing corporation).
Will M. Storey, 63, Executive Vice President, Chief Financial Officer
and Director, American President Companies, Ltd. (holding company)(since
1991); Director, Manville Corporation (since 1989); Director, Albertsons
Inc. (since 1992)(supermarkets); Director, Riverwood International Corp.
(since 1992); from 1982 to 1988, Vice Chairman, Executive Vice President
and Chief Financial Officer of Federated Department Stores Inc. in which
capacity he was responsible for research, finance and planning of all real
estate activities; prior to 1982, Vice President and Chief Financial
Officer, Boise Cascade Corporation.
John E. Castello, 50, Executive Vice President and Chief Financial
Officer of the Company (since 1988) and its Treasurer (since June, 1993);
Senior Vice President, TIS Financial Services, Inc. (formerly Thrift
Investment Services) (financial products); Director, TIS Mortgage
Acceptance Corporation (subsidiary of the Company); Director and Senior
Vice President, TIS Asset Management (since 1991); Assistant Secretary,
INVG Mortgage Securities Corp. (since 1992).
W. Bruce McConnel, III, 52, Secretary of the Company (since 1988);
Partner, Drinker Biddle & Reath (law firm).
Information Concerning Meetings and Certain Committees
The Board of Directors held six meetings during 1994. The Company has
a standing Audit Committee consisting of Messrs. Boyce, Edelstein, Ledoux,
Merrill, and Storey. This Committee makes recommendations to the Board of
Directors concerning the engagement, retention and discharge of independent
auditors, reviews with the Company's independent auditors the plans and
results of the auditing engagement and the adequacy of the Company's system
of internal accounting controls, and directs any investigations into
matters within the scope of the foregoing duties. The Audit Committee met
once during 1994. The Company does not have standing nominating or
compensation committees or any other such committee which performs similar
functions.
During 1994, all directors attended at least 75% of the total number
of meetings of the Board of Directors.
Compensation of Directors
The Company pays an annual director's fee of $12,000 to each director
who is not an Affiliate of the Manager and a fee of $300 for each meeting
of the Board of Directors attended by each such director (except meetings
by conference telephone) and of each committee of the Board of Directors.
The Company reimburses directors for costs and expenses incurred in
attending such meetings.
<PAGE>
II. PROPOSAL TO APPROVE THE COMPANY'S 1995 STOCK OPTION PLAN
BACKGROUND
The Board of Directors proposes and recommends that stockholders
approve the Company's 1995 Stock Option Plan (the "1995 Plan"), which
provides for the granting of non-qualified stock options ("options") to
officers and Unaffiliated Directors of the Company.
On April 13, 1995, the Board of Directors adopted the 1995 Plan, the
purpose of which is to assist the Company in attracting and retaining
capable officers and Unaffiliated Directors, and to provide an inducement
to such individuals, through share ownership in the Company, to promote the
best interests of the Company.
DESCRIPTION OF THE 1995 PLAN
The following is a summary of certain of the terms of the 1995 Plan.
Such summary is qualified in its entirety by reference to the 1995 Plan, a
copy of which is attached as Exhibit A to this Proxy Statement.
Stock Subject to the 1995 Plan. Under the Plan, options may be
granted to purchase up to an aggregate of 400,000 shares of Common Stock of
the Company, subject to adjustments to reflect any stock splits, stock
dividends, share combinations or similar changes in the capital of the
Company. No officer or Unaffiliated Director may be granted options under
the 1995 Plan to purchase more than 150,000 Common Shares. Common stock
issuable under the 1995 Plan may be authorized but unissued shares or
reacquired shares, and the Company may purchase shares for this purpose.
The market value of the shares of Common Stock reserved for issuance under
the 1995 Plan at April 19, 1995 was $2.00 per share (based upon the last
sale price on that day).
Administration. If approved, the 1995 Plan will be administered by
the Company's Stock Plans Committee (the "Committee") consisting of not
less than two Unaffiliated Directors appointed by the Company's Board of
Directors. The Committee members will have full authority, subject to the
terms of the 1995 Plan, to select officers of the Company to receive
options, to determine the terms and conditions of such options, and
generally to administer the 1995 Plan. The Committee may select optionees
from eight officers.
The 1995 Plan contains a formula that will grant options to the
Company's Unaffiliated Directors; the Committee will have no discretion
with respect to the amount, price or timing of options granted pursuant to
that formula. There are currently six Unaffiliated Directors who will be
eligible to receive options.
Duration and Amendment of 1995 Plan. Except to the extent limited by
the 1995 Plan, and rules promulgated under Section 16 of the Securities
Exchange Act of 1934 (the "Exchange Act"), the Board of Directors of the
Company will have the power, without the consent of the shareholders, to
discontinue, amend or revise the terms of the 1995 Plan. The 1995 Plan
will terminate at midnight on April 12, 2005 unless earlier discontinued by
the Board of Directors; no options may be granted after such termination,
but options outstanding at the time of termination will remain exercisable
in accordance with their terms.
Terms and Conditions of Options
(a) Options Granted to Officers. Options may be granted to officers
for terms of not more than ten years, and are exercisable in such
installments as the Committee may determine. The Committee may accelerate
the exercise date of an option granted to an officer in the event of the
termination of the officer's employment, disability or death, or in the
event of certain corporate transactions (see "Adjustments upon Mergers and
Other Events").
(b) Options Granted to Unaffiliated Directors. Beginning with the
1995 Annual Meeting, an Unaffiliated Director in office at the close of
each Annual Meeting will be granted an option to purchase 1,000 shares of
Common Stock on the tenth business day immediately following each such
Annual Meeting of shareholders. Therefore, if the 1995 Plan is approved
and the nominees are reelected, a total of six options to purchase 6,000
shares of Common Stock will be granted to the six individuals who are
currently Unaffiliated Directors at the close of the 1995 Annual Meeting of
shareholders.
Options granted to an Unaffiliated Director are exercisable on the
date of grant, and remain exercisable for ten years from the date of grant,
unless the Unaffiliated Director's services for the Company are terminated
at an earlier date.
(c) Terms and Conditions Applicable to All Options. The exercise
price an officer must pay to receive a share of Common Stock under an
option is equal to 100% of the fair market value (as defined in the Plan)
of the optioned share on the date the option is granted, whereas the
exercise price an Unaffiliated Director must pay is equal to 110% of the
fair market value (as defined in the Plan) of the optioned share on the
date the option is granted, provided that the exercise price will be
reduced in each case by the aggregate amount of cash dividends declared
after the date the optionee is eligible to purchase such share. In no
event, however, will the exercise price be less than 50% of the fair market
value of the optioned share on the date the option is granted.
An option held by an optionee whose services for the Company are
terminated (for any reason, including death or disability) prior to the
expiration date of such option, will remain exercisable by the former
officer or Unaffiliated Director, or his or her personal representative,
for such periods following the termination as provided in the 1995 Plan and
the applicable option agreement.
Upon exercise of an option, the exercise price must be paid in cash.
Stock Option Agreements. The 1995 Plan also requires that optionees
enter into stock option agreements with the Company which incorporate the
terms of the options and such other terms, conditions and restrictions, not
inconsistent with the 1995 Plan and applicable law, as the Committee may
determine.
Adjustments upon Mergers and Other Events. In the event of a merger,
consolidation or certain other corporate transactions, options will be
assumed by the surviving or successor corporation, if any. However, the
1995 Plan also authorizes the Committee to terminate options (other than
options granted to Unaffiliated Directors) in the event of such a corporate
transaction, provided that any then exercisable option may be exercised
within seven days of notice of termination by the optionee. Further, the
exercise date of any options to be so terminated may be accelerated by the
Committee.
FEDERAL INCOME TAX CONSEQUENCES
Based on the advice of counsel, the Company believes that the normal
operation of the 1995 Plan should generally have, under the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations and
rulings thereunder, all as in effect on April 1, 1995, the following
principal Federal income tax consequences for each optionee and the
Company:
(i) The optionee will not recognize taxable income and the Company
will not be entitled to a deduction upon the grant of an option.
(ii) The optionee generally will recognize ordinary income at the
time of the exercise of the option, in an amount equal to the excess of the
fair market value of the shares at the time of such exercise over the
exercise price. One exception to this general rule is that if the sale at
a profit of the shares acquired on exercise of the option could subject the
optionee to liability under Section 16(b) of the Exchange Act, the
optionee's rights in such shares will be deemed nontransferable and subject
to a substantial risk of forfeiture under Section 83(c)(3) of the Code.
These short-swing profit restrictions of Section 16(b) will generally lapse
six months after the date the option is granted. In such case, unless the
optionee makes an election under Section 83(b) of the Code, within thirty
days of the date of exercise of the option, to include the excess in his
income on the exercise date, the optionee will generally recognize ordinary
income on the date the restrictions lapse (that is, generally six months
after the date of grant) in an amount equal to the excess of the fair
market value of the shares on such date over the exercise price.
(iii) The Company will be entitled to a deduction to the extent of
the ordinary income recognized by the optionee in accordance with the rules
of Section 83 of the Code and the regulations thereunder.
(iv) Gain or loss recognized by the optionee upon a subsequent
disposition of such shares will be long-term or short-term capital gain or
loss, if such shares are otherwise capital assets in the hands of the
optionee. Any net capital gain (i.e., the excess of net long-term capital
gain for the taxable year over net short-term capital losses for such
taxable year) will be taxed as ordinary income, but not in excess of a
maximum rate of 28%. Any such loss will be treated as a capital loss and
thus can only be used to offset up to $3,000 per year ($1,500 in the case
of a married individual filing separately) of ordinary income.
The comments set forth in the above paragraphs are only a summary of
certain of the Federal income tax consequences relating to the 1995 Plan as
in effect on April 1, 1995. No consideration has been given to the effects
of state, local and other laws (tax or other) on the 1995 Plan or the
optionee.
APPROVAL BY STOCKHOLDERS
The Board of Directors believes that the proposal to approve the 1995
Plan is in the best interests of the Company and its stockholders and
unanimously recommends a vote FOR approval of the 1995 Plan.
Stockholder approval of the 1995 Plan will afford the officers and
Unaffiliated Directors subject to Section 16(b) of the Exchange Act an
exemption from the provisions thereof with respect to options awarded under
the Plan. Section 16(b) off the Exchange Act provides generally that
"profits" realized by such persons through the purchase and sale, or sale
and purchase, of shares of Common Stock within any six-month period are
recoverable by the Company. Rule 16(b) provides an exemption for the
acquisition or expiration of options granted under a plan which has been
approved by stockholders and meets certain other criteria which the Company
believes are met by the 1995 Plan.
If the 1995 Plan is not approved by stockholders, it will not take
effect.
<PAGE>
III. PROPOSAL TO APPROVE POSSIBLE COMPENSATION OF THE MANAGER IN THE FORM
OF STOCK
As described below under "Management Agreement," the Company's
Management Agreement with the Manager provides for base and incentive
management fees that are payable in cash. The Manger's rate of
compensation was established in 1988 in light of the nature of the assets
that the Company expected to, and did, acquire after its initial public
offering. These assets consisted principally of residual interests in
collateralized mortgage obligations and other mortgage-backed instruments.
The Company has now determined that a substantial portion of its
future investments will consist of direct fee ownership of real estate,
including multi-family residential properties. As described below under
"Management Agreement," a committee of the Board of Directors composed of
Unaffiliated Directors (the "Board Committee") has begun a review of the
compensation of the Manager in light of the Company's ongoing acquisition
of multi-family residential properties. Typically, the compensation of
managers of real estate investment companies varies depending on the nature
of the assets owned by the company, among other things.
The Management Agreement is renewable annually, and its current term
extends through June 30, 1995. The Board of Directors expects to consider
the renewal of the Management Agreement prior to its expiration, and at
that time expects to consider a recommendation from the Board Committee as
to whether the management fee should be revised. Neither the Board
Committee nor the Board of Directors has reached any conclusions as to
whether the fee should be revised as of the date of this proxy statement.
The Board Committee has advised the Board of Directors that it may
wish to recommend to the Board of Directors that a portion of the
compensation of the Manager be payable in the form of shares of Common
Stock of the Company under certain circumstances. In light of the
affiliations between the Manager and certain directors and the principal
officers of the Company, the Board of Directors requests stockholder
approval of the possible issuance of Common Stock of the Company to the
Manager as part of its compensation under the Management Agreement, in the
event that the Management Agreement is revised to so provide.
The Board of Directors believes that this proposal is in the best
interests of the Company and its stockholders and unanimously recommends a
vote FOR approval of this proposal. The Board wishes to continue to
provide incentives to the Manager, and believes that the possible issuance
of Common Stock to the Manager in lieu of cash compensation should serve
this objective. In addition, such issuance of Common Stock would permit
the Company to invest the cash that would otherwise be paid to the Manager
in additional assets. If the proposal is approved, there will be no
further vote of stockholders prior to any issuance of Common Stock to the
Manager.
<PAGE>
IV. RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to audit the Company's consolidated financial
statements for the fiscal year ending December 31, 1995. The stockholders
will be asked to ratify this appointment. In the event of a negative vote
on such ratification, the Board of Directors will reconsider its selection.
Arthur Andersen LLP has served as the Company's independent public
accountants since the first fiscal period ended December 31, 1988.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will have the opportunity to respond to appropriate questions
and to make a statement if they desire.
V. OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any matters properly come before the meeting, it is the intention of the
persons named on the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
VI. MANAGEMENT AGREEMENT
The Manager advises the Company on various aspects of its business and
manages its operations in accordance with investment criteria established
by the Company's Board of Directors. The executive officers of the
Manager, all of whom serve as directors and/or officers of the Company, are
as follows: Patricia M. Howe, Chairman of the Board; Lorraine O. Legg,
President and Chief Executive Officer; and John E. Castello, Senior Vice
President. Ms. Howe and Ms. Legg each own 38.125% of the outstanding stock
of the parent of the Manager. For performing these services, the Manager
receives (i) a base management fee payable quarterly, in an amount equal to
3/8 of 1% per annum of the Company's average invested assets and (ii) an
incentive management fee, payable quarterly, in an amount equal to 25% of
the amount by which the Company's annualized return on equity exceeds the
ten-year U.S. Treasury Rate plus 1%. Management fees of $121,000 were
earned in 1994.
The Company reimburses the Manager for certain expenses incurred by
the Manager on the Company's behalf, including rent, telephone, utilities,
office furniture, equipment and machinery, computers, and computers
services, as well as expenses relating to accounting, bookkeeping and
related administrative functions (including the employment expenses of any
persons performing these functions), and fees and expenses of agents
employed directly by the Company or by the Manager at the Company's
expense. Reimbursable expenses paid by the Company to the Manager totaled
$514,922 for 1994. This amount included $144,500 paid by the Company as
reimbursement of 85% of the salary of John E. Castello, the Executive Vice
President, Treasurer and Chief Financial Officer of the Company. The
Company expects to pay similar amounts to the Manager in 1995.
Unless waived by the Unaffiliated Directors, the Management Agreement
provides that the Manager shall reimburse the Company up to the amount of
the base management fee to the extent that certain of the Company's
expenses exceed the greater of 2% of the average invested assets of the
Company or 25% of the Company's net income for the year ("Excess
Expenses"). The Company experienced Excess Expenses in 1993 and 1994, and
the Unaffiliated Directors waived the reimbursements that would otherwise
have been required by the Management Agreement.
Except as set forth above, the Manager is required to pay employment
expenses of its personnel, rent, telephone, utilities, other office
expenses, certain travel and miscellaneous administrative expenses of the
Manager and, if the Manager or an affiliate of the Manager serves as bond
administrator for a series of structured securities issued by or on behalf
of the Company, all expenses incurred by the Manager in performing
administrative services in connection with the issuance and administration
of such series of such structured securities.
If the Company participates in programs operated by the Manager for
the pricing and acquisition of mortgage loans, the Company will pay the
manager a fixed expenses allowance in an amount which shall be determined
by the Unaffiliated Directors, and which shall be subject to adjustment
every six months upon approval by the Unaffiliated Directors. The amount
of such allowance would not be subject to the expense limitation described
above.
The Company has a bonus program pursuant to which employees of the
Manager or of the Company who devote at least 50% of their time solely to
business of the Company and who were employed during the full calendar year
are eligible to participate. The total amount of bonuses for a calendar
year is equal to 3.5% of the dollar amount, if any, by which the Company's
annualized return on equity exceeded the ten-year U.S. Treasury rate plus
1%. Bonuses are payable after the end of the year. No bonuses were earned
in 1994. This program is subject to annual review by the Board of
Directors.
In order to compensate the Manager for certain administrative
functions that the Manager will perform with respect to certain Residual
Interests purchased by the Company for which neither the Manager nor an
Affiliate acts as bond administrator, the Company pays the Manager a fee
equal to $10,000 for each year or fraction thereof that the Company holds
such Residual Interest. A total of $100,000 of these Residual Interest
administration fees were paid to the Manager in 1994. The Company will
also pay the Manager certain bond issuance and administration fees when it
acts in the capacity of bond administrator in connection with the issuance
and administration of Structured Securities issued by or on behalf of the
Company. Such fees are comparable to those that the Company would pay
unrelated entities.
Directors and executive officers of the Company are required to devote
only so much of their time to the Company's affairs as is necessary or
required for the effective conduct and operation of the Company's business.
Because the Management Agreement provides that the Manager will assume
principal responsibility for managing the affairs of the Company, the
officers of the Company, in their capacities as such, are not expected to
devote substantial portions of their time to the affairs of the Company.
However, in their capacities as officers or employees of the Manager, or of
the general partner of the Manager, they will devote such portion of their
time to the affairs of the Company as is required for the performance of
the duties of the Manager under the Management Agreement.
In June 1994 the Board of Directors renewed the Management Agreement
through June 30, 1995. It is thereafter renewable annually upon the
affirmative vote of a majority of the Unaffiliated Directors. In March
1995 the Board of Directors authorized a committee composed of four
Unaffiliated Directors to consider proposed revisions to the Management
Agreement in light of the Company's acquisition of multi-family residential
properties and recent waivers by the Unaffiliated Directors of the
requirement in the Management Agreement that the Manager reimburse the
Company for Excess Expenses. The Management Agreement may be terminated at
any time upon 60 days' notice by the vote of a majority of the Unaffiliated
Directors or by the vote of the holders of a majority of the outstanding
shares of Common Stock of the Company.
<PAGE>
VII. ADDITIONAL INFORMATION
Stock Performance Graph
The following chart compares the cumulative total stockholder return
on the Company's common stock during the five years ended December 31, 1994
with a cumulative total return on the Standard & Poor's 500 Stock Index and
an industry index (the "Index") prepared by the National Association of
Real Estate Investment Trusts ("NAREIT"). The Index consists of Mortgage
Real Estate Investment Trusts and includes 29 companies with a total market
capitalization of $2.5 billion as compiled by NAREIT. The comparison
assumes $100 was invested on December 31, 1989 in the Company's common
stock and in each of the foregoing indices and assumes reinvestment of
dividends.
<TABLE>
<CAPTION>
NAREIT
MORTGAGES S&P 500 TIS
--------- --------- ---------
<S> <C> <C> <C>
12/31/89 100.00 100.00 100.00
12/31/90 81.63 96.83 101.67
12/31/91 107.62 126.41 137.15
12/31/92 109.68 136.10 65.60
12/31/93 125.84 149.70 39.27
12/31/94 95.11 151.66 39.72
</TABLE>
Any stockholder wishing to receive a copy of the Index may contact the
Company at its address provided above.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
of the Company's common stock to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required
by SEC regulation to furnish the Company with copies of all Forms 3, 4 and
5 they file. Based solely on the Company's review of the copies of such
forms it has received, the Company believes that all its officers,
directors and greater than ten percent beneficial owners complied with all
filing requirements applicable to them during the reporting period ended
December 31, 1994.
Stockholder Proposals
In order to be eligible for inclusion in the Company's proxy materials
for the 1996 Annual Meeting, stockholders' proposals to take action at such
meeting must comply with applicable Securities and Exchange Commission
Rules and Regulations, must be directed to the Secretary of the Company at
the offices set forth on page 1 of this proxy statement, and must be
received by the Company not later than December 20, 1995.
The Company, upon request, will furnish to record and beneficial
holders of its Common Stock, free of charge, a copy of its Annual Report on
Form 10-K (including financial statements and schedules but without
exhibits) for fiscal 1994. Copies of exhibits to the Form 10-K also will
be furnished upon request and the payment of a reasonable fee. All
requests should be directed to the Secretary of the Company at the offices
of the Company set forth on page 1 of this proxy statement.
W. Bruce McConnel, III
Secretary
April 20, 1995
<PAGE>
<PAGE>
Exhibit A: Proxy Statement, dated April 20, 1995
TIS MORTGAGE INVESTMENT COMPANY
1995 STOCK OPTION PLAN
APRIL 13, 1995
TABLE OF CONTENTS
Page
Section 1. Purpose 2
Section 2. Administration 2
Section 3. Eligibility 3
Section 4. Stock 4
Section 5. Granting of Options 4
Section 6. Terms and Conditions of Options 5
Section 7. Option Agreements - Other Provisions 10
Section 8. Capital Adjustments 10
Section 9. Amendment or Discontinuance of The Plan 11
Section 10. Termination of Plan 12
Section 11. Shareholder Approval 12
Section 12. Miscellaneous 12
Page 1
<PAGE>
TIS MORTGAGE INVESTMENT COMPANY
1995 STOCK OPTION PLAN
SECTION 1
PURPOSE
This TIS MORTGAGE INVESTMENT COMPANY 1995 STOCK OPTION PLAN ("Plan")
is intended to provide a means whereby TIS MORTGAGE INVESTMENT COMPANY
("Company") may, through the grant of non-qualified stock options
("Options") to purchase shares of common stock of the Company ("Common
Shares") to Officers and Unaffiliated Directors (as defined in Section 3),
attract and retain capable Officers and Unaffiliated Directors to promote
the best interests of the Company and its subsidiaries.
For purposes of the Plan, the term "non-qualified stock option" shall
mean an option which, at the time such option is granted, does not qualify
as an incentive stock option under section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and is designated as a non-qualified
stock option in the Option Agreement. The term "subsidiary" shall mean any
corporation, partnership, business entity or trade or business, whether or
not incorporated, in which the Company holds, directly or indirectly,
through one or more subsidiaries, a majority of the voting interests or, in
the case of a partnership, a majority of the general partnership interests.
SECTION 2
ADMINISTRATION
The Plan shall be administered by the Company's Stock Plans Committee
(the "Committee"), which shall consist of not less than two Unaffiliated
Directors of the Company who shall be appointed by, and shall serve at the
pleasure of, the Company's Board of Directors (the "Board"). Each member
of the Committee, while serving as such, shall be deemed to be acting in
his or her capacity as a director of the Company. Except as otherwise
permitted under Section 5(b) of the Plan and section 16(b) of the
Securities Exchange Act of 1934 (the "Exchange Act") and paragraph
(c)(2)(i) of Rule 16b-3 thereunder, no member of the Committee shall be
granted, nor shall have been granted, Options pursuant to the Plan or
equity securities (within the meaning of 17 C.F.R. Section 240.16a-1(d))
pursuant to any other plan of the Company or of any of its affiliates, as
defined in the Exchange Act, at any time during the period commencing with
the date which is one year prior to the date his or her service on the
Committee began and ending on the date which is one day after the date on
which his or her service on the Committee ceased.
Page 2
<PAGE>
The Committee shall have full authority, subject to the terms of
the Plan, to select the Officers to be granted Options under the Plan, to
grant Options on behalf of the Company, and to set the date of grant and
the other terms of such Options.
With respect to the eligibility of Unaffiliated Directors, the
Plan is intended to comply with Rule 16b-3 and its successors promulgated
under the Exchange Act as a "formula award" plan described in Rule 16b-
3(c)(2)(ii), and any provision of this Plan applicable to Unaffiliated
Directors that is to the contrary shall be deemed null and void.
Consequently, the award of Options to Unaffiliated Directors shall be as
set forth in Section 5(b) of the Plan, and the Committee shall not have any
discretionary authority with respect thereto.
The Committee may correct any defect, supply any omission and
reconcile any inconsistency in this Plan and in any Option granted to an
Officer hereunder in the manner and to the extent it shall seem desirable.
The Committee also shall have the authority to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the
proper administration of the Plan, and to amend, modify, or rescind any
such rules and regulations, and to make such determinations, and
interpretations under, or in connection with, the Plan, as it deems
necessary or advisable. All such rules, regulations, determinations, and
interpretations shall be binding and conclusive upon the Company,
individuals granted Options under the Plan, the Company's stockholders, and
upon their respective legal representatives, beneficiaries, successors, and
assigns and upon all other persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
SECTION 3
ELIGIBILITY
The persons eligible to receive Options under the Plan shall be
officers of the Company ("Officers") and directors who are unaffiliated
Directors as defined in the By-Laws of the Company ("Unaffiliated
Directors"). Officer and Unaffiliated Directors who have been granted
Options under the Plan shall be referred to as "Optionees.". More than one
Option may be granted to an Optionee under the Plan.
Page 3
<PAGE>
SECTION 4
STOCK
Options may be granted under the Plan to purchase up to a
maximum of 400,000 Common Shares, par value $.001 per share, subject to
adjustment as hereinafter provided; provided, however, that no Unaffiliated
Director or Officer shall receive Options for more than 150,000 Common
Shares. Shares issuable under the Plan may be authorized but unissued
shares or reacquired shares, and the Company may purchase shares required
for this purpose, from time to time, if it deems such purchase to be
advisable.
If any Option granted under the Plan expires or otherwise
terminates for any reason whatever (including, without limitation, the
Unaffiliated Director's or Officer's surrender thereof) without having been
exercised, the Common Shares subject to the unexercised portion of such
Option shall continue to be available for the granting of Options under the
Plan as fully as if such Common Shares had never been subject to an Option.
SECTION 5
GRANTING OF OPTIONS
(a) OFFICERS. From time to time until the expiration or earlier
suspension or discontinuance of the Plan, the Committee may, on behalf of
the Company, grant to Officers under the Plan such Options as it determines
are warranted. In making any determination as to whether an Officer shall
be granted an Option, the number of Common Shares to be covered by such
Option, the exercise price of the Option, and the other terms of the
Option, the Committee shall take into account the duties of the Officer,
his or her present and potential contributions to the success of the
Company or a related corporation, the tax implications to the Company and
the Officer of any Options granted, and such other factors as the Committee
shall deem relevant in accomplishing the purposes of the Plan. Moreover,
the Committee may provide in the Option Agreement that the Option may be
exercised only if certain conditions, as determined by the Committee, are
fulfilled.
(b) UNAFFILIATED DIRECTORS. On the tenth business day
immediately following the 1995 Annual Meeting of shareholders and each
Annual Meeting thereafter, an Unaffiliated Director in office at the close
of such Annual Meeting shall be automatically granted an Option to purchase
1,000 Common Shares (as adjusted pursuant to Section 8).
Page 4
<PAGE>
SECTION 6
TERMS AND CONDITIONS OF OPTIONS
The Options granted pursuant to the Plan shall include expressly
or by reference the following terms and conditions, as well as such other
provisions not inconsistent with the provisions of this Plan as the
Committee shall deem desirable:
(a) NUMBER OF SHARES. A statement of the number of Common
Shares to which the Option pertains.
(b) PRICE. A statement of the Option price with respect to
any Common Share to which the Option pertains which shall be
determined as follows:
(i) OPTIONS GRANTED TO UNAFFILIATED DIRECTORS.
(A) OPTION PRICE. The Option price with respect to any
Common Share to which any Option granted to an Unaffiliated Director
pertains shall be 110% of the fair market value of such option Common
Share on the date the Option is granted, reduced by the aggregate
amount to cash dividends declared by the Company on a Common Share,
the record date of which is (AA) on or after the date such Option may
be exercised with respect to such Common Share, and (BB) on or before
the date such Option is exercised with respect to such Common Share.
In no event, however, shall the Option price be less than 50% of the
fair market value of the optioned Common Share, or, if greater, the
par value thereof, on the date the Option is granted.
(B) DETERMINATION OF FAIR MARKET VALUE. For purposes of
this Section 6(b)(i) the fair market value of the optioned Common
Shares on the date of grant shall be the average of the closing prices
for the Common Shares on a registered securities exchange on the ten
business days ending with the date of grant.
(ii) OPTIONS GRANTED TO OFFICERS.
(A) OPTION PRICE. The Option price with respect to any
Common Share to which any Option granted to an Officer pertains shall
be 100% of the fair market value of such optioned Common Share on the
date the Option is granted, reduced by the aggregate amount to cash
dividends declared by the Company on a Common Share, the record date
of which is (AA) on or after the date such Option may be exercised
with respect to such Common Share, and (BB) on or before the date such
Option is exercised with respect to such Common Share. In no event,
however, shall the Option price be less than
Page 5
<PAGE>
50% of the fair market value of the optioned Common Share, or, if
greater, the par value thereof, on the date the Option is granted
(B) DETERMINATION OF FAIR MARKET VALUE. For purposes of
this Section 6(b)(ii) the fair market value of the optioned Common
Shares shall be arrived at by a good faith determination of the
Committee and shall be:
(AA) The mean between the highest and lowest quoted
selling price, if there is a market for the Common Shares on a
registered securities exchange or in an over the counter market,
on the date of grant, or
(BB) The weighted average of the means between the
highest and lowest sales on the nearest date before and the
nearest date after the date of grant, if there are no sales on
the date of grant but there are sales on dates within a
reasonable period both before and after the date of grant, or
(CC) The mean between the bid and asked prices, as
reported by the National Quotation Bureau on the date of grant,
if actual sales are not available during a reasonable period
beginning before and ending after the date of grant, or
(DD) If Sections 6(b)(ii)(B)(AA) through (CC) are
inapplicable, such other method of determining fair market value
as shall be authorized by the Code, or the rules and regulations
thereunder, and adopted by the Committee.
Where the fair market value of the optioned Common Shares is
determined under (CC) above, the average of the means between the
highest and lowest sales on the nearest date before and the nearest
date after the date of grant is to be weighted inversely by the
respective numbers of trading days between the selling dates and the
date of grant (i.e., the valuation date), in accordance with Treas.
Reg. Section 20.2031-2(b)(1).
(c) TERM. A statement of the term of the Option, and of any
circumstances which may result in the earlier termination of the
Option. The term of each Option shall be as follows:
(i) OPTIONS GRANTED TO OFFICERS. The term of an Option
granted to an Officer shall be no more than 10 years from the date of
grant subject to any circumstances which may result in an earlier
termination of the Option.
Page 6
<PAGE>
(ii) OPTIONS GRANTED TO UNAFFILIATED DIRECTORS. The term
of an Option granted to an Unaffiliated Director shall be 10 years
from the date of grant, subject to any circumstances which may result
in the earlier termination of the Option.
(d) EXERCISE.
(i) OPTIONS GRANTED TO OFFICERS. Except as otherwise
provided herein, Options granted to an Officer shall only be
exercisable by the Officer granted the Option, in such
installments and on such dates, as the Committee may specify.
Subject to the restrictions of the Plan, the Committee may
accelerate the exercise date of any Option granted to an Officer,
in its discretion, if it deems such acceleration to be desirable.
(ii) OPTIONS GRANTED TO UNAFFILIATED DIRECTORS.
Except as provided in Sections 6(e), 6(i) and 6(j), Options
granted to an Unaffiliated Director shall be immediately
exercisable by the Unaffiliated Director, commencing on the date
of grant.
(iii) GENERAL. Any optioned Common Shares, the right
to the purchase of which has accrued, may be purchased at any
time up to the expiration or termination of the Option.
Exercisable Options may be exercised, in whole or in part, from
time to time by giving written notice of exercise to the Company
at its principal office, specifying the number of Common Shares
to be purchased and accompanied by payment in full of the
aggregate Option price for such Common Shares. Only full shares
shall be issued under the Plan, and any fractional share which
might otherwise be issuable upon exercise of an Option granted
hereunder shall be forfeited.
(iv) MEANS OF PAYMENT. The Option price shall be
payable in cash or its equivalent.
(v) CERTAIN RESTRICTIONS ON OPTION EXERCISES. No
Option may be exercised by a holder if the Company is taxed as a
real estate investment trust under sections 856-860 of the Code
or any successor provisions thereto and the applicable Treasury
Regulations issued thereunder, and such holder would beneficially
own (within the meaning of sections 856860 of the Code or any
successor provisions thereto and the applicable provisions
Treasury Regulations thereunder) more than 9.8% of the Common
Shares then issued and outstanding.
(e) NON-TRANSFERABILITY. No Option shall be assignable or
transferable by the Optionee other than by will or by the laws of
descent and distribution, and during the lifetime of the Optionee, the
Option shall be
Page 7
<PAGE>
exercisable only by him or her or by his or her guardian or legal
representative. If the Optionee is married at the time of exercise
and if the Optionee so requests at the time of exercise, the
certificate or certificates shall be registered in the name of the
Optionee and the Optionee's spouse, jointly, with right of
survivorship.
(f) RIGHTS AS A SHAREHOLDER. An Optionee shall have no
rights as a shareholder with respect to any Common Shares covered by
his or her Option until the issuance of a stock certificate to him or
her for such Common Shares.
(g) LISTING AND REGISTRATION OF SHARES. Each Option shall
be subject to the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or
qualification of the Common Shares covered thereby upon any securities
exchange or under any state or federal law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Option or
the purchase of Common Shares thereunder, or that action by the
Company or by the Optionee should be taken in order to obtain an
exemption from any such requirement, no such Option may be exercised,
in whole or in part, unless and until such listing, registration,
qualification, consent, approval, or action shall have been effected,
obtained, or taken under conditions acceptable to the Committee.
Without limiting the generality of the foregoing, each Optionee or his
or her legal representative or beneficiary may also be required to
give satisfactory assurance that Common Shares purchased upon exercise
of an Option are being purchased for investment and not with a view to
distribution, and certificates representing such Common Shares may be
legended accordingly.
(h) TERMINATION OF SERVICE. If an Optionee's services for
the Company are terminated by either party prior to the expiration
date fixed for his or her Option for any reason other than death or
disability, such Option may be exercised, to the extent of the number
of Common Shares with respect to which the Optionee could have
exercised it on the date of such termination, or, with respect to an
Officer, to any greater or lesser extent determined by the Committee,
by the Optionee at any time prior to the earlier of:
(i) The expiration date specified in such Option;
(ii) With respect to an Officer, an accelerated
termination date determined by the Committee, in its sole
discretion; or
(iii) With respect to an Unaffiliated Director, 12
months after termination of his or her membership on the Board.
Page 8
<PAGE>
(i) EXERCISE UPON DISABILITY OF OPTIONEE. If an Optionee
shall become disabled (within the meaning of section 22(e)(3) of the
Code) during the performance of his or her services for the Company
and, prior to the expiration date fixed for his or her Option, his or
her services are terminated as a consequence of such disability, such
Option may be exercised, to the extent of the number of Common Shares
with respect to which the Optionee could have exercised it on the date
of such termination, or with respect to an Officer, to any greater
extent permitted by the Committee, by the Optionee at any time prior
to the earlier of:
(i) The expiration date specified in such Option;
(ii) With respect to an Officer, an accelerated
termination date determined by the Committee, in its discretion;
or
(iii) With respect to an Unaffiliated Director, 12
months after termination of his or her membership on the Board as
a consequence of such disability.
In the event of the Optionee's legal disability, such Option may be so
exercised by the Optionee's legal representative.
(j) EXERCISE UPON DEATH OF OPTIONEE. If an Optionee shall
die during his or her performance of services for the Company, and
prior to the expiration date fixed for his or her Option, or if an
Optionee whose services are terminated for any reason, shall die
following his or her termination of services but prior to the earliest
of:
(i) The expiration date fixed for his or her Option;
or
(ii) The expiration of the period determined under Sub-
sections (h) or (i) above;
such Option may be exercised, to the extent of the number of Common
Shares with respect to which the Optionee could have exercised it on
the date of his or her death, or, with respect to an Officer, to any
greater extent permitted by the Committee, by the Optionee's estate,
personal representative or beneficiary who acquired the right to
exercise such Option by bequest or inheritance or by reason of the
death of the Optionee, at any time prior to the earlier of:
(A) The expiration date specified in such Option;
(B) With respect to an Officer, an accelerated
termination date determined by the Committee, in its sole
discretion; or
Page 9
<PAGE>
(C) With respect to an Unaffiliated Director, 12
months after the Unaffiliated Director's death.
(k) WITHHOLDING TO SATISFY TAX OBLIGATIONS. The obligation
of the Company to deliver Common Shares upon the exercise of any
Option shall be subject to any applicable federal, state and local tax
withholding requirements.
SECTION 7
OPTION AGREEMENTS - OTHER PROVISIONS
Options granted under the Plan shall be evidenced by written
documents ("Option Agreements") in such form as the Committee shall, from
time to time, approve, which Option Agreements shall contain such
provisions, not inconsistent with the provisions of the Plan for Options
granted pursuant to the Plan as the Committee shall deem advisable, and
which Option Agreements shall specify that the Option is a non-qualified
stock option. Each Optionee shall enter into, and be bound by, such Option
Agreement, as soon as practicable after the grant of an Option.
SECTION 8
CAPITAL ADJUSTMENTS
The number of Common Shares which may be issued under the Plan,
as stated in Section 4 hereof, the number of Common Shares issuable upon
exercise of outstanding Options under the Plan (as well as the Option price
per Common Share under such outstanding Options), shall be adjusted
proportionately to reflect any stock dividend, stock split, share
combination, or similar change in the capitalization of the Company. In
the event any such change in capitalization cannot be reflected in a
straight mathematical adjustment of the number of Common Shares issuable
upon the exercise of outstanding Options (and a straight mathematical
adjustment of the Option price thereof), the Committee shall make such
adjustments as are appropriate to reflect most nearly such straight
mathematical adjustment. Such adjustments shall be made only as necessary
to maintain the proportionate interests of optionees and preserve, without
exceeding, the value of Options.
In the event of a corporate transaction (as that term is
described in section 424(a) of the Code and the Treasury Regulations issued
thereunder as, for example, a merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation), each
outstanding Option shall be assumed by the surviving or successor
corporation; provided, however, that, in the event of a proposed
Page 10
<PAGE>
corporate transaction, the Committee may terminate all or a portion of the
outstanding Options (except for those awarded to an Unaffiliated Director,
which shall be nonterminable) if it determines that such termination is in
the best interests of the Company. If the Committee decides to terminate
outstanding Options, the Committee shall give each Optionee holding an
Option to be terminated not less than seven days' notice prior to any such
termination by reason of such a corporate transaction, and any such Option
which is to be so terminated may be exercised (if and only to the extent
that it is then exercisable) up to, and including the date immediately
preceding such termination. Further, as provided in Section 6(d)(i)
hereof, the Committee, in its sole discretion, may accelerate, in whole or
in part, the date on which any or all Options granted to Officers become
exercisable.
The Committee also may, in its sole discretion, change the terms
of any outstanding Option (except for an Option granted to an Unaffiliated
Director) to reflect any such corporate transaction.
SECTION 9
AMENDMENT OR DISCONTINUANCE OF THE PLAN
(a) GENERAL. The Board, by resolution adopted at a duly
held meeting of the Board or by unanimous written consent of the
Board, from time to time may suspend or discontinue the Plan or amend
it in any respect whatsoever, except that shareholder approval (given
in the manner set forth in Section 9(b) below) shall be required with
respect to any amendment which would:
(i) materially increase the benefits accruing to
Officers and Unaffiliated Directors under the Plan,
(ii) materially increase the number of Common Shares
that may be issued to Officers and Unaffiliated
Directors under the Plan, or
(iii) materially modify the requirements
as to eligibility to participate in the Plan.
Notwithstanding the foregoing, no such suspension,
discontinuance or amendment shall materially impair the rights of any
holder of an outstanding Option without the consent of such holder.
(b) SHAREHOLDER APPROVAL REQUIREMENTS. The approval of
shareholders must be by a majority of the outstanding Common Shares
present, or represented, and entitled to vote at a meeting duly held
in accordance with
Page 11
<PAGE>
the applicable laws of the State of Maryland and must comply with all
applicable provisions of the corporate charter, bylaws, and applicable
laws.
(c) AMENDMENTS AFFECTING UNAFFILIATED DIRECTORS.
Notwithstanding the foregoing, no amendment to any provisions of the
Plan that would affect (I) the amount of Options to be awarded to
Unaffiliated Directors, (ii) the timing of grants to Unaffiliated
Directors, (iii) the exercise price of Options granted to Unaffiliated
Directors, (iv) the term of Options granted to Unaffiliated Directors,
or (v) the time at which Unaffiliated Directors may exercise Options,
shall be made more than once every six months, other than to comport
with the changes in the Code or the rules promulgated thereunder.
SECTION 10
TERMINATION OF PLAN
Unless earlier terminated as provided in the Plan, the Plan and
all authority granted hereunder shall terminate absolutely at 12:00
midnight on April 12, 2005, and no Options hereunder shall be granted
thereafter. Nothing contained in this Section 10, however, shall terminate
or affect the continued existence of rights created under Options issued
hereunder and outstanding on April 12, 2005, which by their terms extend
beyond such date.
SECTION 11
SHAREHOLDER APPROVAL
This Plan shall become effective on April 13, 1995; provided,
however, that if the Plan is not approved by the shareholders in the manner
described in Section 9(b), within (12) months before or after said date,
the Plan and all Options granted hereunder shall be null and void.
SECTION 12
MISCELLANEOUS
(a) GOVERNING LAW. The laws of the State of Maryland shall
govern the operation of, and the rights of Officers and Unaffiliated
Directors under, the Plan, the Option Agreements and any Options
granted thereunder.
Page 12
<PAGE>
(b) RIGHTS. Neither the adoption of the Plan nor any
action of the Board or the Committee shall be deemed to give any
individual any right to be granted an Option, or any other right
hereunder, unless and until the Committee shall have granted such
individual an Option, and then his or her rights shall be only such as
are provided by the Option Agreement.
Any Option under the Plan shall not entitle the holder
thereof to any rights as a shareholder of the Company prior to the
exercise of such Option and the issuance of the Common Shares pursuant
thereto. Further, notwithstanding any provisions of the Plan or the
Option Agreement with an Optionee, the granting of an Option to an
Optionee shall not entitle that Optionee to continue to serve as an
Officer or Unaffiliated Director of the Company or affect the terms
and conditions of such service.
(c) INDEMNIFICATION OF BOARD AND COMMITTEE. Without
limiting any other rights of indemnification which they may have from
the Company and any subsidiary, the members of the Board and the
members of the Committee shall be indemnified by the Company against
all costs and expenses reasonably incurred by them in connection with
any claim, action, suit, or proceeding to which they or any of them
may be a party by reason of any action taken or failure to act under,
or in connection with, the Plan, or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit,
or pro ceeding, except a judgment based upon a finding of willful
misconduct or recklessness on their part. Upon the making or
institution of any such claim, action, suit, or proceeding, the Board
or Committee member shall notify the Company in writing, giving the
Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on
his or her own behalf.
(d) APPLICATION OF FUNDS. The proceeds received by the
Company from the sale of Common Shares pursuant to Options granted
under the Plan shall be used for general corporate purposes. Any cash
received in payment for Common Shares upon exercise of an Option shall
be added to the general funds of the Company and shall be used for its
corporate purposes.
Page 13
<PAGE>
(e) NO OBLIGATION TO EXERCISE OPTION. The granting of an
Option shall impose no obligation upon an Optionee to exercise such
Option.
IN WITNESS WHEREOF, TIS MORTGAGE INVESTMENT COMPANY has caused
these presents to be duly executed, under seal, this 13th day of April,
1995.
ATTEST: TIS MORTGAGE INVESTMENT COMPANY
[SEAL]
/s/ Patrick R. Maguire /s/ Lorraine O. Legg
- - ---------------------- ----------------------
Patrick R. Maguire By: Lorraine O. Legg
Assistant Secretary President and Chief Executive
Officer
Page 14
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TIS MORTGAGE INVESTMENT COMPANY
The undersigned hereby appoints John E. Castello and Lorraine O.
Legg, or either of them, Proxies, with full power of substitution, to
represent and vote, as designated herein, all shares of common stock of
TIS Mortgage Investment Company held of record by the undersigned on
March 31, 1995 at the Annual Meeting of Stockholders to be held at the
Holiday Inn, 750 Kearny Street, San Francisco, California on June 7,
1995, at 9:00 a.m., and at any adjournment thereof. The undersigned
hereby revokes any and all proxies heretofore given with respect to such
meeting.
The Board of Directors recommends a vote FOR Items 1, 2, 3 and 4.
(Continued, and to be marked, dated and signed, on the other side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
1. ELECTION WITHHOLD
OF AUTHORITY
DIRECTORS to vote
FOR All for all NOMINEES: John D. Boyce and Douglas B. Fletcher
nominees nominees
listed to listed to
the right the right (INSTRUCTION: To withhold authority to vote for
(except as any individual nominee, write that nominee's
marked to name in the space provided below.)
the
contrary) ________________________________________________
2. Approve the Company's 1995 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve the possible compensation of the Manager in the form of
stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of Arthur Andersen LLP as the independent certified
public accountants of the corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
Please sign as name appears below. When shares
are held by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee, or guardian, please give
full title as such. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Dated:_____________________________________,
1995
________________________________________________
(Signature)
________________________________________________
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
