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. )
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
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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
TIS Mortgage Investment Company
655 Montgomery Street, Suite 800
San Francisco, California 94111
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
of TIS Mortgage Investment Company. The annual meeting will be held at the
offices of Heller Ehrman White & McAuliffe located at 333 Bush Street, 31st
Floor, San Francisco, California, on Friday, January 26, 2001, at 10:00 a.m.,
local time. At the annual meeting, we will elect two directors.
Enclosed is our notice of annual meeting, proxy statement and form of
proxy relating to the annual meeting.
Your vote is very important regardless of how many shares you own.
Approval of all proposals, other than the election of directors, requires the
affirmative vote of holders of a majority of the outstanding shares of Common
Stock entitled to be voted on the proposal. Abstentions and broker non-votes
will have the same effect as votes against the proposal. In order to ensure that
your shares will be represented at the annual meeting, whether or not you are
able to attend in person, please promptly compete the enclosed proxy card and
return it in the postage-prepaid envelope provided.
Sincerely,
Douglas B. Fletcher
Chairman of the Board
San Francisco, California
January 3, 2001
<PAGE>
TIS Mortgage Investment Company
655 Montgomery Street, Suite 800
San Francisco, California 94111
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 26, 2001
----------------------------------------------
To Our Stockholders:
An annual meeting of stockholders of TIS Mortgage Investment Company, a
Maryland corporation (the "Company"), will be held at the offices of Heller
Ehrman White & McAuliffe located at 333 Bush Street, 31st Floor, San Francisco,
California, on Friday, January 26, 2001, at 10:00 a.m., local time, for the
following purposes:
1. To elect two directors to serve for a term of three years and until
their successors have been elected and qualified; and
2. To transact such other business as may properly come before the
annual meeting or any adjournments or postponements of the meeting.
A form of proxy and a proxy statement containing more detailed
information about the matters to be considered at the annual meeting accompany
this notice. Only stockholders of record at the close of business on December
14, 2000, the record date, are entitled to notice of and to vote at the annual
meeting.
Whether or not you intend to attend the annual meeting, to assure your
representation, you are urged to complete and return the enclosed proxy card as
promptly as possible in the postage- prepaid envelope enclosed for that purpose.
Any stockholder attending the annual meeting may vote in person even if he or
she has previously returned a proxy.
By Order of the Board of Directors
John E. Castello
Executive Vice President, Chief
Financial Officer and Secretary
San Francisco, California
January 3, 2001
<PAGE>
TIS Mortgage Investment Company
655 Montgomery Street, Suite 800
San Francisco, California 94111
(415) 393-8000
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PROXY STATEMENT
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GENERAL
This proxy statement is being furnished in connection with the
solicitation by the Board of Directors of TIS Mortgage Investment Company, a
Maryland corporation (the "Company"), of proxies for use at the annual meeting
of stockholders, and any and all adjournments or postponements of the meeting,
to be held at the offices of Heller Ehrman White & McAuliffe located at 333 Bush
Street, 31st Floor, San Francisco, California, on Friday, January 26, 2001, at
10:00 a.m., local time. This proxy statement and the accompanying form of proxy
are first being mailed to the stockholders on or about January 3, 2001.
Record Date
Only stockholders of record at the close of business on the record
date, December 14, 2000, are entitled to notice of and to vote at the meeting.
On the record date, there were issued and outstanding 8,893,250 shares of the
Company's common stock, par value $.001 per share (the "Common Stock").
Voting
The presence, in person or by proxy, of stockholders entitled to cast
at least a majority of all the votes entitled to be cast at the meeting
constitutes a quorum for the transaction of business at the meeting. If a proxy
is properly signed and returned, the shares represented by the proxy will be
voted at the meeting in accordance with the instructions on the proxy. However,
if no instructions are specified, such shares will be voted FOR each nominee for
director. 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 has one vote for each share held of record on the
record date. In the election of directors, each stockholder may, either in
person or by proxy, cast one vote for each share of Common Stock held of record
on the record date for each of two nominees for director. The two nominees
receiving the highest number of votes cast at the meeting will be elected.
Cumulative voting is not permitted. Abstentions and broker non-votes will have
no effect on the result of the vote for the election of directors. The term
"broker non-votes" refers to shares held by a broker or other nominee in street
name that are present by proxy but are not voted on a matter pursuant to rules
prohibiting brokers from voting on non-routine matters without instructions from
the beneficial owner of the shares. The election of directors is generally
considered a routine matter on which brokers may vote without instructions from
beneficial owners. Broker non-votes are counted as present for quorum purposes.
<PAGE>
Generally, stockholder approval of a matter other than the election of
directors requires the affirmative vote of a majority of the shares present in
person or represented by proxy and entitled to vote on that matter, unless a
statute or the Company's Charter or Bylaws require the vote of a majority or
more than a majority of all the outstanding shares for approval of a particular
matter. In determining the number of affirmative votes necessary to approve a
matter that requires the affirmative vote of a majority of the shares present in
person or represented by proxy and entitled to vote on that matter, broker
non-votes are not counted as entitled to vote, but are counted as present for
quorum purposes. Abstentions on matter will have the same effect as "no" votes.
Revocability of Proxies
A stockholder may revoke a proxy at any time before it is exercised by
delivering to the Secretary of the Company a written revocation or a duly signed
proxy bearing a later date than the revoked proxy. A proxy may also be revoked
by attending the meeting and electing to vote in person. However, mere
attendance at the meeting will not revoke a proxy.
Solicitation
The Company will pay for printing and mailing the proxy materials. In
addition to the solicitation of proxies by mail, directors, officers and other
employees of the Company may solicit proxies by personal interview, telephone or
fax. Those persons will not receive any additional compensation for soliciting
proxies. The Company will furnish copies of the proxy materials to brokerage
firms, 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 the proxy materials to beneficial owners. The
Company has retained MacKenzie Partners, Inc., at an estimated cost of $10,000,
plus reimbursement of expenses, to assist in the solicitation of proxies from
brokers, nominees, institutions and individuals.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information about the ownership of shares
of Common Stock as of December 14, 2000, by (i) each person known to the Company
to beneficially own more than five percent of the outstanding Common Stock, (ii)
each director and nominee for director, (iii) each individual named in the
summary compensation table below and (iv) all directors and executive officers
as a group. Except as otherwise indicated, each stockholder has sole voting and
investment power with respect to the shares beneficially owned, subject to
community property rights where applicable.
<TABLE>
<CAPTION>
Name Number of Shares Percent of Class
---- ---------------- ----------------
<S> <C> <C>
Pacific Securitization, Inc. }
Lorraine O. Legg } 1,613,070 (1) 18.1%
Patricia M. Howe }
John V. Winfield }
The Intergroup Corporation } 774,200 (2) 8.7%
Santa Fe Corporation }
Anthony H. Barash 8,000 (3) *
Douglas B. Fletcher 16,600 (4) *
Patricia M. Howe 155,820 (5) 1.7%
Robert W. Ledoux 10,050 (6) *
Lorraine O. Legg 206,700 (7) 2.3%
J. David Schemel 1,000 (8) *
John E. Castello 76,000 (9) *
All directors and executive officers as 2,087,240 (10) 22.7%
a group (7 persons)
</TABLE>
---------
*Less than 1%.
(1) Represents shares held of record by Pacific Securitization, Inc.
("Pacific"), a wholly-owned subsidiary of E & L Associates, Inc.
("E&L"), which is in turn a wholly-owned subsidiary of Corporate
Capital Investment Advisors ("CCIA"). CCIA is principally owned by
Lorraine O. Legg, the President, Chief Executive Officer and a director
of the Company, and Patricia M. Howe, a director of the Company. The
business address of Pacific is 615 S.W. Burlingame Terrace, Portland,
Oregon 97201 and the business address of E&L, CCIA, Ms. Legg and Ms.
Howe is 655 Montgomery Street, Suite 800, San Francisco, California
94111. See also notes (4) and (6) below. Includes 65,000 shares that
are subject to purchase by J. David Schemel pursuant to an option
granted by Pacific to Mr. Schemel.
(2) All information with respect to Mr. Winfield, The Intergroup
Corporation ("Intergroup") and Santa Fe Corporation ("Santa Fe") is
based solely on a Schedule 13D dated July 31, 1997, as amended by an
Amendment No. 2 to Schedule 13D dated February 27, 1999, filed by them
with the Securities and Exchange Commission (the "SEC"). Mr. Winfield
has sole voting and dispositive power with respect to 193,000 shares
owned by him directly. As the Chairman, President, Chief Executive
Officer and controlling shareholder of Intergroup, Mr. Winfield shares
voting and dispositive power with Intergroup with respect to 471,100
shares owned by Intergroup directly. As the Chairman, President and
Chief Executive Officer of Santa Fe, he shares voting and dispositive
power with Santa Fe with respect to 110,100 shares owned by Santa Fe
directly. The business address of Mr. Winfield and Intergroup is 2121
Avenue of the Stars, Suite 2020,
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<PAGE>
Los Angeles, California 90067. The business address of Santa Fe is 2251
San Diego Avenue, Suite A-151, San Diego, California 92110.
(3) Includes 1,000 shares issuable under options exercisable within 60 days
of the date of this proxy statement.
(4) Includes 4,000 shares issuable under options exercisable within 60 days
of the date of this proxy statement.
(5) Includes 50,000 shares held through an individual retirement account
and 102,000 shares issuable under options exercisable within 60 days of
the date of this proxy statement. Does not include 1,613,070 shares
held of record by Pacific (see note (1) above). Ms. Howe shares voting
and dispositive power with respect to the 1,613,070 shares held by
Pacific directly. Ms. Howe has sole voting and dispositive power over
all other shares held by her.
(6) 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, and 4,000 shares issuable under options exercisable
within 60 days of the date of this proxy statement.
(7) Includes 56,600 shares held through certain trusts or an individual
retirement account, and 150,000 shares issuable under options
exercisable within 60 days of the date of this proxy statement. Does
not include 1,613,070 shares held of record by Pacific (see note (1)
above). Ms. Legg shares voting and dispositive power with respect to
the 1,613,070 shares held by Pacific directly. Ms. Legg has sole voting
and dispositive power over all other shares held by her.
(8) Includes 1,000 shares issuable under options exercisable within 60 days
of the date of this proxy statement.
(9) 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, 4,000 shares held in custody for Mr. Castello's
two sons, as to which Mr. Castello shares voting and investment power,
and 50,000 shares issuable under options exercisable within 60 days of
the date of this proxy statement.
(10) Includes 1,613,070 shares held of record by Pacific (see notes (1), (4)
and (6) above) and 312,000 shares issuable under options exercisable
within 60 days of the date of this proxy statement.
4
<PAGE>
ELECTION OF DIRECTORS
Nominees and Directors
Two directors, of the six directors currently constituting the Board of
Directors, are to be elected at the Annual Meeting and to hold office until the
2003 Annual Meeting and until their successors are elected and qualified. The
Company's Board of Directors is divided into three classes. At each Annual
Meeting a different class of directors will be elected to a three-year term. The
Annual Meeting represents the Company's year 2000 Annual Meeting which was
delayed. The persons to be elected are those whose terms would have expired
at the 2000 Annual Meeting. The Company expects to hold its 2001 in June 2001.
The Board of Directors has nominated and recommends the election of
Patricia M. Howe and Robert W. Ledoux, who are now members of the Board of
Directors and whose current term of office is expiring. In the election of
directors, the proxy holders intend to vote for the election of Ms. Howe and Mr.
Ledoux. It is not anticipated that the nominees will decline or be unable to
serve as directors. If, however, that should occur, the proxy holders will vote
the proxies in their discretion for any nominee designated to fill the vacancy
by the current Board of Directors.
Information about the nominees, the other directors and the executive
officers of the company is provided below. Except as otherwise noted, the
directors have had the occupations indicated for at least the past five years.
Name Director Since Current Term Expires
------------------- -------------- --------------------
Patricia M. Howe 1988 2000
Robert W. Ledoux 1988 2000
Douglas B. Fletcher 1988 2001
J. David Schemel 1999 2001
Anthony H. Barash 1999 2002
Lorraine O. Legg 1988 2002
Patricia M. Howe, 72, Chairman of the Company from 1988 to 1997.
Chairman, Pacific Securitization Inc. (asset securitization); Chairman, Chief
Financial Officer and a Director, Corporate Capital Investment Advisors (holding
company); Chairman, TIS Asset Management since 1991; and Chairman, TIS Financial
Services, Inc. (financial products) since 1984.
Robert W. Ledoux, 59, Private venture capital investor and consultant to
Bryan & Edwards (private venture capital) since 1998; Associate, Bryan & Edwards
from 1984 to 1998; for the prior 11 years, Vice President, BA Investment
Management Co. (wholly-owned subsidiary of Bank of America); and Chartered
Financial Analyst.
Douglas B. Fletcher, 75, Chairman of the Company since 1997. Chairman
and Chief Executive Officer, Fletcher Capital Advisors Incorporated (investment
advisor); Partner, Newport Partners (privately-owned venture capital firm); Vice
Chairman and Director, 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); former Allied Member, New York Stock Exchange; and Chartered
Financial Analyst.
5
<PAGE>
J. David Schemel, 45, Managing Member, Vista Marin, LLC (owner and
manager of an office building in Redwood City, California) since 1998; Managing
Member, DSDI, LLC (owner of apartment buildings in San Francisco and on the San
Francisco Peninsula) since 1994; Managing Member, Oxford Associates, LLC
(residential home developer) since 1996; and from 1988 to 1994, Vice President,
TRI Commercial Real Estate, for which he managed various workout transactions.
Anthony H. Barash, 57, Senior Vice President, Corporate Affairs, and
General Counsel, Bowater Incorporated (paper and forest products company) since
April 1996; and Partner in the Los Angeles office, Seyfarth, Shaw, Fairweather &
Geraldson (a national law firm), where he was a member of the firm's Business
Law and Real Estate Group, from May 1993 to April 1996.
Lorraine O. Legg, 61, President and Chief Executive Officer of the
Company since 1988; and Director of the Company from 1988 to May 1997 and since
September 1997. President, Chief Executive Officer and a Director, Pacific
Securitization, Inc.; President, Chief Executive Officer and a Director of
Corporate Capital Investment Advisors; President, Chief Executive Officer and
Director, TIS Asset Management since 1991; President, Chief Executive Officer
and a Director, TIS Financial Services, Inc. since 1984; Director (since 1993)
and President and Chief Executive Officer (from December 1995 to June 1998),
Meridian Point Realty Trust VIII Co.; and Director (from 1993 to September 1998)
and President and Chief Executive Officer (from February 1996 to September
1998), Meridian Point Realty Trust `83. Director, Downtown Association of San
Francisco; Chairman, Planned Giving Foundation; and Director, Concentrex, Inc
from March 1995 to August 2000.
John E. Castello, 56, 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. since 1984; Director and Senior Vice
President, TIS Asset Management since 1991; Senior Vice President and Chief
Financial Officer of Meridian Point Realty Trust `83 from February 1996 to
September 1998; Senior Vice President and Chief Financial Officer of Meridian
Point Realty Trust VIII Co. from December 1995 to June 1998; and Assistant
Secretary, INVG Mortgage Securities Corp. from 1992 to 1996.
The Bylaws provide that during such time as the Company qualifies or
seeks to qualify as a REIT, except in the case of a vacancy, a majority of the
Board of Directors shall be composed of persons who are not affiliates of any
third-party manager, if any, responsible for directing and performing the
day-to-day business affairs of the Company or of any affiliate of such
third-party manager, and who are not employed by, or receiving any compensation
(except for serving as a director) from, the Company ("Unaffiliated Directors").
The Company does not currently have a third-party manager.
Committees and Attendance at Meetings
The Company has an Audit Committee comprising Messrs. Ledoux, Barash
and Schemel. The Audit 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 Board of Directors has adopted an Audit Committee
Charter, a copy of which is attached to this Proxy Statement as Appendix A. Each
member of the Audit Committee is independent according to the definition of
"independence" in Rule 4200(a)(15) of the National Association of Securities
Dealers' listing standards. The Audit Committee met one time during 1999.
The Board of Directors has a Compensation Committee comprising Messrs.
Fletcher, Barash and Ledoux. The Compensation Committee adopts and administers
compensation plans for executive
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<PAGE>
officers of the Company and others, including the Company's 1995 Stock Option
Plan. The Compensation Committee did not met in 1999.
The Board of Directors met eleven times in 1999. Each director attended
more than 75% of the total of all meetings of the Board of Directors, and any
committees on which he or she served.
Compensation of Directors
The Company pays an annual fee of $12,000 to each non-employee director
and a fee of $300 for each Board meeting and each Board committee meeting
attended by each such director (except meetings by conference telephone). The
Company reimburses directors for costs and expenses incurred in attending such
meetings.
Under the Company's 1995 Stock Option Plan, each Unaffiliated Director
in office at the close of each annual meeting is granted an option to purchase
1,000 shares of Common Stock as of the tenth business day immediately following
each such annual meeting of stockholders. Such options are exercisable on the
date of grant, and remain exercisable for ten years from the grant date, unless
the Unaffiliated Director's services to the Company terminate at an earlier
date. The exercise price per share is equal to 110% of the fair market value of
the Company's Common Stock on the date the option is granted, except that the
exercise price is reduced by the amount of any dividends declared after the date
of grant to purchase such shares. In no event, however, is the exercise price
per share to be less than 50% of the fair market value of the Company's Common
Stock on the date of grant.
Compensation of Executive Officers
The following table sets forth information regarding compensation paid
or payable by the Company to the Company's executive officers for the years
indicated below.
SUMMARY COMPENSATION TABLE
Name and Principal Position Year Annual Compensation
--------------------------- ---- -------------------
Lorraine O. Legg 1999 $95,000
President and Chief Executive Officer 1998 95,000
1997 95,000
John E. Castello 1999 $80,000
Executive Vice President and Principal 1998 80,000
Financial Officer 1997 80,000
Stock Options. The following table sets forth information regarding
options held by the Company's executive officers at December 31, 1999. The
Company did not grant any options to its executive officers in 1999.
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<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at Fiscal Year-End(#)(1) at Fiscal Year-End ($)(2)
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C>
Lorraine O. Legg 150,000/0 $0/$0
John E. Castello 50,000/0 $0/$0
</TABLE>
---------------
(1) All such options were granted in 1995, have a per share exercise price of
$2.23 and expire in 2005 (subject to earlier termination in the event of
termination of employment, disability or death).
(2) The per share exercise price of such options exceeded the $0.5625 closing
price of the Common Stock on December 31, 1999, and no options were
"in-the-money."
Employment Agreements. The Company has employment agreements with Ms.
Legg and Mr. Castello. Ms. Legg's agreement provides for an initial term through
July 1, 1999, and Mr. Castello's agreement provides for an initial term through
July 1, 1998. Both agreements have evergreen renewal provisions that
automatically extend the term of the agreements for one year, unless either
party provides prior written notice to terminate during the periods provided by
the agreement. The agreements provide: (i) annual base salaries of $95,000 for
Ms. Legg and $80,000 for Mr. Castello; (ii) annual incentive performance bonuses
determined at the discretion of the Board of Directors; (iii) certain fringe
benefits; (iv) payment of 50% of the cost of certain medical and disability
insurance and (v) two weeks paid vacation per calendar year for the first four
years of service (three weeks per calendar year thereafter).
Each agreement provides for the officer to receive his or her accrued
base salary to the date of termination by reason of death or disability (as
defined in the agreements). Each agreement also provides for the officer to
receive his or her base salary, incentive bonus and fringe benefits that are
accrued and unpaid up to the date of termination for "cause" (as defined in the
agreements) or if the officer terminates the agreement without "good reason" (as
defined in the agreements). If the officer is terminated other than for cause,
or he or she quits for good reason (which includes a change of control), he or
she will receive: (i) any unpaid portion of his or her base salary and incentive
bonus accrued and unpaid through the termination date; (ii) a severance payment
in the amount of 299% of the higher of the officer's combined base salary and
actual incentive bonus for the preceding fiscal year and the average of the
officer's combined base salary and incentive bonus for the three preceding
years, provided that the total severance payment is not less than $283,100 for
Ms. Legg and $239,000 for Mr. Castello; (iii) immediate vesting of all stock
options held by the officer and (iv) continuation of all fringe benefits until
the earlier of the officer's securing full-time employment or completion of the
term of the agreement remaining at the time of termination. Each agreement
provides that during the term of the agreement, and for one year after
termination of the employment relationship by the Company without cause or by
the officer for good reason, the officer will not be affiliated with a
"Competing REIT" (as defined in the agreements).
Certain Relationships and Related Transactions
TIS Financial Services, Inc. The Company has a Facilities and Expense
Sharing Agreement (the "Sharing Agreement") with TIS Financial Services, Inc.
(the "Former Manager"). The Sharing Agreement provides for the prorata sharing
of office space, office equipment and the expenses of certain administrative and
other personnel and ancillary services. The prorata sharing is determined based
upon
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<PAGE>
the relative benefit received by each party in accordance with the amount of
space used or the relative amount of time each such resource is used, or such
other allocation method as may be reasonable and agreed to by the parties. The
Sharing Agreement continues in effect until terminated by one of the parties on
30 days' prior written notice or until the parties no longer share office space.
The Company paid the Former Manager $48,000 under the Sharing Agreement in 1999.
In April 1999, the Company entered into a financing agreement with the
Former Manager, whereby the Former Manager extended a revolving line of credit
of $1 million to the Company. This revolving line of credit is to provide
working capital to the Company. It is for a term of one year and has been
extended to January 31, 2001. It is at the annual rate of prime plus one and
one-half percent. Credit support to the Former Manager includes guarantee loans
by a bank supported by guarantees from employees of the Former Manager. Payment
of the line of credit can be accelerated on certain events, including a change
in control of the Company in which certain executive officers of the Company are
removed or in which a majority of the Board is changed.
The executive officers of the Former Manager include the following
persons, who also serve as directors and/or executive officers of the Company:
Patricia M. Howe, Chairman of the Board of the Former Manager; Lorraine O. Legg,
President and Chief Executive Officer of the Former Manager; and John E.
Castello, Senior Vice President of the Former Manager. Ms. Howe and Ms. Legg
each own 38.125% of the outstanding stock of CCIA, the parent of the Former
Manager and the indirect parent of Pacific. Management believes that the terms
and conditions of the transactions with the Former Manager described above are
at least as favorable to the Company as those that could be obtained from
unaffiliated third parties.
Pacific Securitization, Inc. On February 2, 1999, the Company acquired
all the shares of Novato Markets, Inc. ("Novato") from Pacific Securitization,
Inc. ("Pacific"), in exchange for 1,613,070 shares of Common Stock (or
approximately 18.1% of its then outstanding shares). Through a wholly-owned
subsidiary, Novato owns a shopping center located in Rohnert Park, California,
named Mountain Shadows Plaza, and a shopping center subject to a ground lease in
Petaluma, California, named Midtown Center. The shopping centers have combined
commercial and retail space totaling approximately 80,000 square feet. Pacific
is indirectly principally owned by Ms. Legg, the President and Chief Executive
Officer and a director of the Company, and Ms. Howe, a director of the Company.
The Company's acquisition of Novato by virtue of the share exchange was approved
by the Company's Board of Directors and, specifically, by directors with no
financial interest in or other relationship to Pacific or its owners.
The Company determined the fair value of the underlying assets acquired
in the share exchange to be $8,527,000, on the basis of appraisals of the assets
by independent appraisers. The net asset value of $2,443,000 was then determined
by reducing the fair value of $8,527,000 by the $5,984,000 in mortgage debt
assumed and the $100,000 in current liabilities on or related to the assets. In
accordance with generally accepted accounting principles, the assets and
liabilities acquired in the share exchange were recorded at their respective
fair values, and the shares of Common Stock issued to Pacific were recorded at
the net asset value of $2,443,000 (or approximately $1.51 per share). The
closing price of the Common Stock as reported in the over-the-counter market for
February 1, 1999 (the Pacific Exchange reported no trades in the Common Stock
for February 1 or 2, 1999 and the over-the-counter market reported no trades in
the Common Stock for February 2, 1999), was $0.8125 per share.
The shares of Common Stock were issued to Pacific under an exemption to
the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, the shares are "restricted securities," as
defined in Rule 144 adopted under the Securities Act, and are not freely
transferable. The Company granted Pacific one-time demand registration rights
with respect to the shares
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<PAGE>
for the period beginning June 30, 1999 and ending February 2, 2001. It also
granted Pacific piggy-back registration rights exercisable if the Company files
a registration statement under the Securities Act in connection with the
proposed offer and sale for cash of shares of Common Stock by it or by any of
its other stockholders.
Before the closing of the share exchange, Novato caused its
wholly-owned subsidiary to transfer to Pacific all its rights under a lease,
with option to purchase, with Ignacio Properties, LLC, relating to the Ignacio
Center in Novato, California (the "Ignacio Property"), and Pacific agreed to
assume all the obligations of the subsidiary under the lease and option. The
Company, Novato, Novato's wholly-owned subsidiary and Pacific then entered into
an agreement whereby the parties clarified their respective rights and
obligations relating to the Ignacio Property and the Company's rights to an
escrow established when Pacific originally acquired Novato. Mr. Barash controls
Ignacio Properties LLC and subsequent to this transaction became a director of
the Company.
Management believes that the terms and conditions of the Pacific
transaction described above are more favorable to the Company than those that
could be obtained from unaffiliated third parties. Additional information
concerning the Pacific transaction is contained in the Company's Current Report
on Form 8-K dated February 2, 1999, as amended by an Amendment No. 1 on Form
8-K/A filed on April 5, 1999 and an Amendment No. 2 on Form 8-K/A filed on June
1, 1999. Copies of these filings may be obtained from the Company in the same
manner as copies of the Company's Annual Report on Form 10-K may be obtained.
See "Additional Information - Annual Report" below.
During 2000, Pacific made unsecured loans totaling $146,000 to the
Company. The loans, which are represented by a promissory note, bear interest at
an annual rate of 11% and are payable on demand. Management believes that the
terms of the loans are more favorable to the Company than those that could be
obtained from unaffiliated third parties.
Turkey Vulture Fund XIII, Ltd., Third Capital LLC and Messrs. Osborne,
Jarratt and Lewis. On February 2, 1999, the Company repurchased 793,700 shares
of its Common Stock from Turkey Vulture Fund XIII, Ltd. ("TVF") for $1,984,250,
20,000 shares of its Common Stock from Mr. Jarratt for $40,000 and 12,000 shares
of its Common Stock from Mr. Lewis for $24,000, pursuant to an agreement among
the Company, TVF, Third Capital, LLC ("Third Capital") and Messrs. Osborne,
Jarratt and Lewis. The closing price of the Common Stock as reported in the
over-the-counter market for February 1, 1999 (the Pacific Exchange reported no
trades in the Common Stock for February 1 or 2, 1999 and the over-the-counter
market reported no trades in the Common Stock for February 2, 1999), was $0.8125
per share. Based upon such per share closing price, TVF received a premium of
$1,339,369, Mr. Jarratt received a premium of $23,750 and Mr. Lewis received a
premium of $14,250 for their shares.
TVF, Third Capital and Messrs. Osborne, Jarratt and Lewis agreed that,
for a period of seven years, they will not directly or indirectly, among other
things, (i) effect or participate in or in any way assist any other person in
effecting or participating in (a) any acquisition of securities or rights to
acquire securities or assets of the Company or its subsidiaries, (b) any tender
or exchange offer, merger or other business combination involving the Company or
its subsidiaries, (c) any liquidation or other extraordinary transaction with
respect to the Company or its subsidiaries or (d) any solicitation of proxies or
consents to vote any voting securities of the Company; (ii) form or in any way
participate in a "group" with respect to the Company; (iii) otherwise act, alone
or in concert with others, to seek to control or influence the management, Board
of Directors or policies of the Company or its subsidiaries; (iv) take any
action to compel the holding of an annual or special meeting of stockholders or
(v) enter into any discussions or arrangements with any person relating to the
foregoing.
10
<PAGE>
The parties also agreed to a mutual general release of all claims
arising out of or relating to the business or affairs of the Company or the
ownership of its stock. Messrs. Osborne, Jarratt and Lewis resigned from the
Company's Board of Directors, effective February 2, 1999. This share repurchase
was approved by the Company's Board of Directors and, specifically, by directors
with no financial interest in the transaction or the Pacific transaction.
John E. Castello. During 2000, Mr. Castello arranged for his account in
the Company's 401(k) Plan to make unsecured loans totaling $75,000 to the
Company. The loans, which are represented by a promissory note, bear interest at
an annual rate of 11% and are payable on demand. Management believes that the
terms of the loans are more favorable to the Company than those that could be
obtained from unaffiliated third parties.
ADDITIONAL INFORMATION
Independent Auditors
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, 2000. 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.
Audit Committee Report
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the year ended December 31, 1999 with management of the
Company and has discussed with Arthur Andersen LLP the matters required to be
discussed by SAS 61. The Audit Committee has received the written disclosures
required by Independence Standards Board Standard No. 1 and has discussed with
Arthur Andersen LLP its independence. Based on the review and discussions
described above, the Audit Committee recommended to the Board of Directors that
the Company's audited financial statements for the year ended December 31, 1999
be included in the Company's annual report on Form 10-K for the year ended
December 31, 1999.
Members of the Audit Committee
Robert W. Ledoux
Anthony H. Barash
J. David Schemel
Other Matters
As of the date of this proxy statement, the Board of Directors knows of
no matters to be brought before the meeting other than the proposals listed in
the attached notice for the meeting. Nevertheless, if any other matter properly
comes before the meeting, it is the intention of the persons named as proxies to
vote the shares they represent in their discretion. Discretionary authority for
them to do so is contained in the enclosed form of proxy.
11
<PAGE>
Nomination of Directors and Submission of Stockholder Proposals
Any stockholder who intends to nominate persons for election as
directors at an annual meeting must give timely written notice to the Secretary
of the Company setting forth (a) the detailed information specifically required
by the Company's Bylaws as to each nominee whom the stockholder proposes to
nominate for election or reelection as a director, including (i) the name, age,
business address and residence address of the nominee, (ii) the principal
occupation or employment of the nominee, (iii) the class and number of shares of
capital stock of the Company, which are owned beneficially or of record by the
nominee and (iv) any other information concerning the nominee that would be
required to be disclosed under the federal securities laws and regulations in a
proxy statement or other filing in connection with a solicitation of proxies for
the election of the nominee; and (b) the detailed information specifically
required by the Company's Bylaws as to the stockholder giving the notice,
including (i) the stockholder's name and record address (ii) the class and
number of shares of capital stock of the Company that are owned beneficially or
of record by the stockholder, (iii) a description of all arrangements and
understandings with each proposed nominee and others, (iv) a representation that
the stockholder intends to appear in person or by proxy at the annual meeting to
nominate the nominees named in the notice and (v) other information about the
stockholder that would be required to be disclosed under the federal securities
laws and regulations in a proxy statement or other filing in connection with a
solicitation of proxies for election of directors. The notice must include a
written consent of each such nominee to serve as a director of the Company, if
elected. Any stockholder who intends to propose any business at an annual
meeting must give timely written notice to the Secretary of the Company setting
forth the detailed information specifically required by the Company's Bylaws as
to each matter the stockholder proposes to bring before the meeting, including
(i) a brief description of the business to be brought before the annual meeting
and the reasons for conducting the business at the annual meeting, (ii) the name
and record address of the stockholder giving the notice, (iii) the class and
number of shares of capital stock of the Company that are owned beneficially or
of record by the stockholder, (iv) a description of all arrangements and
understandings with other persons regarding the business to be proposed and (iv)
a representation that the stockholder intends to appear in person or by proxy at
the annual meeting to propose the business. A stockholder that intends to
nominate directors or propose business at a meeting must be a stockholder of
record as of the date of the giving of the notice and as of the record date for
the annual meeting. Either of the notices described above will be timely if it
is delivered to or mailed and received at the Company's executive offices not
less than 60 days nor more than 90 days prior to the date of the annual meeting.
However, if less than 70 days' notice or prior public disclosure of the date of
the annual meeting is given or made, the notice from the stockholder, to be
timely, must be received by the Secretary not later than the close of business
on the 10th day following the earlier of the day on which the notice of the date
of the annual meeting was mailed or the day on which the public disclosure was
made.
Separate and apart from the required notice described in the preceding
paragraph, rules promulgated by the SEC under the Exchange Act entitle a
stockholder in certain instances to require the Company to include that
stockholder's proposal (but not that stockholder's nominees for director) in the
Company's proxy materials for an annual meeting of stockholders. Any stockholder
who wishes to present a proposal for inclusion in the Company's proxy
solicitation materials for its 2001 annual meeting expected to be held in June
2001 must set forth the proposal in writing, file it with the Company's
Secretary at the Company's principal executive office within a reasonable time
before the Company begins to print and mail its proxy materials for the 2001
annual meeting and meet the other requirements for inclusion contained in the
SEC's rules.
12
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of the Common Stock, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the SEC and the principal exchange
on which the Common Stock is listed and to furnish the Company with copies of
all such forms. Based solely on the Company's review of the copies of such forms
it has received, the Company believes that, during 1999, all Section 16(a)
filings were filed on a timely basis.
Annual Report
The Company's annual report to stockholders for 1999, which is being
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. The Company, upon request, will furnish to record and
beneficial holders of Common Stock, free of charge, a copy of its annual report
on Form 10-K (including financial statements and schedules but without exhibits)
for 1999. 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 Company's Secretary at the address of the Company set forth on page 1 of
this proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
John E. Castello,
Executive Vice President, Chief
Financial Officer and Secretary
San Francisco, California
January 3, 2001
13
<PAGE>
APPENDIX A
CHARTER
of
AUDIT COMMITTEE
of the
BOARD OF DIRECTORS
of
TIS MORTGAGE INVESTMENT COMPANY
Purposes
The purposes of the TIS Mortgage Investment Company's audit committee are:
o to monitor the integrity of the financial statements of the company
o to recommend independent auditors to the company's board of directors and,
where appropriate, to recommend the replacement of the independent auditors
o to monitor the independence of the auditors and
o to evaluate the performance of the independent auditors.
Composition
The audit committee shall be composed of three members of the company's board of
directors selected by the board. Each member of the committee shall meet the
requirements of NASDAQ applicable to the company. Unless the board of directors
designates a chair for the audit committee, the committee may appoint a chair by
majority vote.
Responsibilities
The audit committee's responsibilities are:
o to recommend to the board of directors the selection of the independent
auditors, who shall ultimately be accountable to the audit committee
and the board of directors
o to evaluate the written disclosures and letter the independent auditors
submit to the audit committee regarding the auditors' independence in
accordance with Independence Standards Board Standard No.1
<PAGE>
o to discuss such communications with the auditors and, if determined by the
audit committee in response to such communications, to recommend that the
board of directors take appropriate action to oversee the independence of
the auditors
o to discuss with the independent auditors the matters required to be
discussed by SAS 61, as it may be modified or supplemented
o to meet with management and the independent auditors to review and discuss
the annual financial statements and the report of the independent auditors
on the annual financial statements and, to the extent the independent
auditors or management brings any such matters to the committee's
attention, to discuss significant issues encountered in the course of the
audit, including any restrictions on the scope of activities, access to
required information or the adequacy of internal controls
o to review the management letter delivered by the independent auditors in
connection with the audit
o if so determined by the audit committee, to recommend to the board of
directors that the annual financial statements be included in the company's
annual report
o to meet quarterly with management and the independent auditors to review
and discuss the quarterly financial statements, provided that this
responsibility may be delegated to the chair of the audit committee
o to meet at least once each year in separate executive sessions with
management and the independent auditors to discuss any matters that the
audit committee or either of these groups believes could significantly
affect the financial statements and should be discussed privately
o to have such meetings with management as the audit committee deems
appropriate to discuss any significant financial risk exposures facing the
company, and steps management has taken to monitor and control such
exposures
o to review any significant changes to the company's accounting principles
and practices proposed by the independent auditors or management
o to evaluate the performance of the independent auditors and, if so
determined by the audit committee, to recommend replacement of the
independent auditors and
o to prepare the report required by the rules of the Securities and
Exchange Commission to be included in the company's annual proxy statement.
Notwithstanding this charter, it is not the responsibility of the audit
committee to plan or conduct audits, or to determine whether the company's
financial statements are complete and accurate or in accordance with generally
accepted accounting principles. It also is not the responsibility of the audit
committee to conduct inquiries, to resolve disagreements, if any, between
management and the independent auditors, or to assure compliance with laws.
A-2
<PAGE>
TIS MORTGAGE INVESTMENT COMPANY
PROXY FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 26, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of TIS Mortgage Investment Company, a
Maryland corporation (the "Company") hereby appoints Douglas B. Fletcher,
Lorraine O. Legg and John E. Castello, or any one or more of them, each with
full power of substitution, as Proxies, to represent the undersigned and vote as
directed on the reverse hereof the undersigned's shares of common stock of the
Company at the Company's annual meeting of stockholders to be held at the
offices of Heller Ehrman White & McAuliffe located at 333 Bush Street, 31st
Floor, San Francisco, California on Friday January 26, 2001, at 10:00 a.m.,
local time, and at any and all adjournments or postponements thereof.
This proxy, when properly signed, will be voted in the manner directed by
the undersigned stockholder on the reverse hereof. If no direction is given,
this proxy will be voted FOR the election of the nominees for director listed on
the reverse hereof. This proxy revokes all prior proxies given by the
undersigned.
(Continued and to be signed and dated on the other side.)
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FOLD AND DETACH HERE
<PAGE>
The Board of Directors recommends a vote FOR each Please mark
of the nominees for director listed below. your votes /X/
as in this
example
(1) ELECTION OF DIRECTORS.
Nominees Class
WITHHOLD -------- -----
FOR all nominees AUTHORITY Patricia M. Howe 2000
listed at right to vote for
(except as all nominees Robert W. Ledoux 2000
indicated to the listed at right
contrary below) (INSTRUCTION: To withhold authority
/ / / / to vote for any individual nominee,
write that nominee's name on the
space below.)
-----------------------------------
(2) OTHER BUSINESS. In their discretion, the Proxies are authorized to vote
for the election of such substitute nominee(s) for director as the Board of
Directors shall select if any nominee(s) named above become(s) unable to
serve and upon such other business as may properly come before the annual
meeting and any and all adjournments or postponements thereof, including,
among other things, a motion to adjourn the annual meeting to another time
or place for, among other things, the purpose of soliciting additional
proxies.
Please date this proxy and sign exactly
as your name(s) appears hereon. When
signing as attorney, executor,
administrator, trustee, guardian or
other representative, give your full
title as such. If a corporation, sign
the full corporate name by an
authorized officer, stating his or her
title. If a partnership, sign in
partnership name by an authorized
person.
Dated: , 200_
-------------------------
-------------------------------------
Signature
-------------------------------------
Title
-------------------------------------
Signature if held jointly
-------------------------------------
Title
PLEASE VOTE, SIGN, DATE AND RETURN THIS
PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PREPAID ENVELOPE PROVIDED.
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FOLD AND DETACH HERE
