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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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-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, if other than the Registrant)
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TIS MORTGAGE INVESTMENT COMPANY
NEWS RELEASE
FOR RELEASE: Immediately
DATE: May 18, 1999
CONTACT: John E. Castello
(415) 393-8000
TIS MORTGAGE INVESTMENT COMPANY SEEKS TO ENJOIN INSURGENTS FROM SOLICITING
PROXIES FOR INVALIDLY NOMINATED CANDIDATES
SAN FRANCISCO, May 18, 1999 - TIS Mortgage Investment Company (Pacific Exchange:
TISM) today announced that it had filed suit to enjoin an insurgent group from
soliciting proxies to vote at the Company's June 11 annual meeting for
candidates for director who were not and cannot be validly nominated under the
procedures established by the Company's bylaws and to declare such nominations
defective. The Company had previously received a notice of intent to nominate a
slate of six directors at its annual meeting. The Board of Directors currently
consists of six members, all of whom are to be elected at the 1999 annual
meeting.
The notice was given by Frederick G. Tobin, who purported to nominate himself
and five other candidates. After reviewing its stockholder records, the Company
promptly notified Tobin that he was not eligible to nominate persons for
election as directors because he was not a stockholder of record on the April
19, 1999 record date for the annual meeting as required by the Company's bylaws.
Nevertheless, Mr. Tobin's group proceeded to file preliminary proxy materials
with the Securities and Exchange Commission, signaling the group's intention to
solicit proxies to vote for its invalidly nominated candidates.
The Company filed the suit in federal court in Rhode Island against Rhode Island
residents, Tobin and John M. Finn, who is one of Tobin's purported nominees.
The Company took this action in an effort to avoid the confusion that would be
caused by the Tobin group's solicitation for candidates who cannot be validly
and legally nominated and to avoid the substantial expense and disruption to the
Company's business and operations that a proxy contest would entail. "There is
no legitimate reason that the Company and its stockholders should suffer the
harm that would result from the proxy contest that the Tobin group proposes to
wage," said Lorraine O. Legg, President and Chief Executive Officer of the
Company. "The Tobin group will put the Company to
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great expense and significantly disrupt its operations if they are permitted to
flout valid and reasonable corporate procedures and proceed with a bogus
solicitation," she added.
Regardless of the outcome of the litigation, the Company's Board of Directors
has decided to oppose election of the nominees proposed by Tobin. The Board is
convinced that the election of new directors nominated by Mr. Tobin would run
directly counter to the best interests of the Company's stockholders. The Board
is intimately familiar with the Company and the real estate industry. It is
fully committed to returning the Company to profitability by changing its core
business from investment in mortgage instruments to investment in a variety of
real properties, such as multi-family, shopping centers and development
projects. In March 1999, the Board embarked on a plan to impose limitations on
major changes in the Company's share ownership to preserve the Company's net
operating loss carryforward and to authorize the Board of Directors to terminate
the Company's status as a real estate investment trust for tax purposes at such
time as that would be to the Company's advantage. The Board also plans to change
the Company's name to reflect the new business focus. The proposals to implement
this plan were included in preliminary proxy materials filed last month with the
SEC. While the Board still believes that these proposals are important to the
future of the Company, it has withdrawn them for now in the interests of holding
a timely stockholders meeting and resolving any uncertainty over the composition
of the Board of Directors.
The Company will be filing shortly with the Securities and Exchange Commission
amended preliminary proxy materials for the 1999 annual meeting. The Board has
set June 11, 1999 as the date for the annual meeting, and the record date, as
previously notified by the Company's proxy distribution agent to the brokerage
community, was April 19, 1999.
In the absence of an order by the court to the contrary, the Company expects the
chairman of the meeting to rule Tobin's nominations out of order if Tobin
attempts to nominate his candidates at the annual meeting. Cumulative voting in
the election of directors is not permitted.
Certain Information Concerning Participants
The following individuals, all of whom are directors (and nominees for director)
and/or executive officers of TIS Mortgage Investment Company, may be deemed
participants in the solicitation of proxies on behalf of the Company's Board of
Directors: Lorraine O. Legg (President and Chief Executive Officer of the
Company); Patricia M. Howe (Chairman, Corporate Capital Investment Advisors and
subsidiaries); Robert W. Ledoux (General Partner, Venture Growth Associates);
Douglas B. Fletcher (Chairman of the Company, and Chairman and Chief Executive
Officer, Fletcher Capital Advisors Incorporated); J. David Schemel (Managing
Member, Vista Marin, LLC, Oxford
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Associates, LLC and DSDI, LLC); Anthony H. Barash (Senior Vice President and
General Counsel, Bowater Incorporated); and John E. Castello (Executive Vice
President and Chief Financial Officer of the Company).
Pacific Securitization, Inc., which is indirectly principally owned by Ms. Legg
and Ms. Howe, owns beneficially and of record 1,613,070 shares of the Company's
common stock, or 18.1% of its outstanding shares; Ms. Legg also beneficially
owns 206,700 shares of the Company's common stock (including 150,000 shares
issuable under stock options exercisable within 60 days of April 19, 1999); and
Ms. Howe also beneficially owns 154,820 shares of the Company's common stock
(including 101,000 shares issuable under options exercisable within 60 days of
April 19, 1999). None of the other directors or executive officers beneficially
owns more than 1% of the Company's common stock. The preceding share numbers
are as of April 19, 1999.
Ms. Legg and Mr. Castello are parties to employment agreements with the Company
with evergreen renewal provisions that automatically extend the terms for one
year periods, subject to earlier termination. Each agreement provides for
severance payments, vesting of options and the continuation of fringe benefits
in the event the officer is terminated other than for cause or the officer
terminates employment for good reason (which includes a change of control).
TIS Financial Services, Inc. ("TIS Financial"), which is controlled indirectly
by Ms. Legg and Ms. Howe, is a party to an agreement with the Company for the
sharing of office space, office equipment and the expenses of certain
administrative and other personnel and ancillary services. It also extended to
the Company in April 1999 a one-year $1 million revolving line of credit for
operations. The line of credit is secured by the Company's residual interest in
a pool of mortgage backed certificates guaranteed by the Government National
Mortgage Association. Payment of the line of credit can be accelerated on
certain events, including a change of control of the Company in which certain
executive officers of the Company are removed or in which a majority of the
Board is changed. DSDI, LLC, which is controlled by Mr. Schemel, is committed
to TIS Financial for $625,000 on the same terms as the revolving line of credit.
Forward-Looking Statements
This news release contains forward-looking statements that involve risks and
uncertainties, including the results from investments of the Company and the
outcome of the contested election of directors at the Company's 1999 annual
meeting of stockholders. Other risks and uncertainties associated with the
Company's business and prospects are identified in the Company's filings with
the Securities and Exchange Commission. The Company does not undertake to
revise these forward-looking statements to reflect events or circumstances
occurring in the future.
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The Company is a San Francisco-based real estate investment trust that owns and
operates apartment communities and shopping centers located in California's
Central Valley and invests in mortgage related assets.
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