ALLSTATE FINANCIAL CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING
NOVEMBER 18, 1997
The undersigned, having received the Notice of Annual Meeting, Proxy
Statement and Annual Report of Allstate Financial Corporation for the year ended
December 31, 1996, hereby appoint(s) Craig Fishman, Eugene Haskin and Leon
Fishman and each of them, with full power of substitution, proxies of the
undersigned to vote as directed below all shares of the undersigned in Allstate
Financial Corporation at the Annual Meeting of Shareholders to be held on
November 18, 1997 and at any adjournments thereof.
1. Election of Directors Withhold Authority
to Vote
For Nominee For Nominee
Craig Fishman ___________ _____________
Eugene Haskin ___________ _____________
Leon Fishman ___________ _____________
James C. Spector ___________ _____________
Alan L. Freeman ___________ _____________
David M. Campbell ___________ _____________
William H. Savage ___________ _____________
Edward A. McNally ___________ _____________
Lawrence Vecker ___________ _____________
Lindsay B. Trittipoe ___________ _____________
2. In their discretion, the proxies are authorized to vote upon matters
not known to the Board of Directors as of the date of the accompanying
proxy statement, and to vote for any nominee of the Board whose
nomination results from the inability of any of the above named nominee
to serve.
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UNLESS OTHERWISE INDICATED IN THE BLANKS PROVIDED, THE PROXIES SHALL
VOTE FOR THE ELECTION OF THE NOMINEES LISTED ABOVE.
(Continued from other side)
Please sign exactly as name appears below.
DATED ____________, 1997
______________________________________
Signature
______________________________________
Signature if held jointly
When shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give full title. 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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
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ALLSTATE FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Allstate Financial Corporation will be
held at the Sheraton National Hotel, 900 South Orme Street, Arlington, Virginia
22204, on November 18, 1997, at 11:00 A.M., for the following purpose:
1. To elect ten Directors for terms which will expire at the
Annual Meeting of Shareholders to be held in 1998.
2. To transact such other business as may properly come before
the meeting.
October 17, 1997
BY ORDER OF THE BOARD OF DIRECTORS
Lawrence M. Winkler
Secretary
____________________________________
PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE.
A proxy card and postage free envelope are enclosed.
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ALLSTATE FINANCIAL CORPORATION October 17, 1997
2700 SOUTH QUINCY STREET
ARLINGTON, VIRGINIA 22206
PROXY STATEMENT
INTRODUCTION
The enclosed proxy is solicited by the Board of Directors of Allstate
Financial Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held at 11:00 A.M., at the Sheraton National Hotel, 900 South
Orme Street, Arlington, Virginia 22204 on November 18, 1997, and at any
adjournment thereof (the "Annual Meeting"). This proxy is first being sent to
shareholders on October 17, 1997.
At the Annual Meeting, shareholders will be asked to consider and vote
upon one proposal: the election of ten directors to serve until the 1998 Annual
Meeting of Shareholders (the "Proposal").
In addition to solicitation by mail, officers, directors and employees
of the Company may solicit proxies by telephone, telegraph or in person. None of
these persons will receive compensation but will be reimbursed for actual
expenses in connection therewith. Expenses in connection with the solicitation
of proxies, including the reasonable expenses of brokers, fiduciaries and other
nominees in forwarding proxy material, will be borne by the Company.
VOTING OF PROXIES
Each holder of the Company's common stock is entitled to vote in person
or by proxy for each share held of record on the record date, October 10, 1997,
on all matters to be voted upon at the Annual Meeting. As of the record date,
the Company had 2,317,919 shares of common stock outstanding, each of which
shares is entitled to one vote.
If a proxy in the accompanying form is properly executed and returned to the
Company in time for the Annual Meeting and is not revoked prior to the time it
is exercised, the shares represented by the proxy will be voted in accordance
with the directions specified therein for the matters listed on the proxy card.
Unless the proxy specifies that authority to vote is withheld, proxies will be
voted FOR the Proposal and otherwise in the discretion of the proxy holders as
to any other matter that may come before the Annual Meeting.
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Abstentions and broker non-votes are counted for purposes of
determining the number of shares represented at the Annual Meeting. Broker
non-votes occur when a broker nominee, holding shares in street name for the
beneficial owner thereof, has not received voting instructions from the
beneficial owner and does not have discretionary authority to vote. The approval
of the Proposal requires the affirmative vote of a majority of the shares of
common stock present in person or represented by proxy and entitled to vote.
Accordingly, abstentions and broker non-votes will have the effect of
withholding authority to vote for the Proposal.
A shareholder who executes the enclosed proxy may revoke it at any time
before it is voted by giving written notice to the Secretary of the Company or
oral notice to the presiding officer at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 10, 1997, the amount of
common stock of the Company beneficially owned: (i) by each person known to the
Company to be the beneficial owner of more than 5% of the aggregate shares of
the Company's outstanding common stock, (ii) each of the named executive
officers in the Summary Compensation Table below, (iii) by each director of the
Company, and (iv) all executive officers and directors as a group.
Common Shares Percent of
Name and Address Beneficially Owned1 Class
Leon Fishman
20191 E. Country Club Dr.
N. Miami Beach, FL 33180 253,750 10.91%
Eugene Haskin
4000 Island Blvd.
N. Miami Beach, FL 37160 242,500 10.45%
Lawrence M. Winkler
1300 Crystal Drive
Arlington, VA 22202 11,717 0.50%
James Spector
10580 SW 77 Terrace
Miami, FL 33173 9,100 0.39%
Peter Matthy
5812 Highland Drive
Chevy Chase, MD 70815 13,667 0.59%
Alan Freeman
20191 E. Country Club Dr.
Aventura, FL 33180 10,000 0.43%
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Common Shares Percent of
Name and Address Beneficially Owned1 Class
Craig Fishman
2687 Hillsman Street
Falls Church, VA 22043 17,300 0.74%
David W. Campbell
6410 Nobel Rock Court
Clifton, VA 22024 13,000 0.56%
William H. Savage
314 Franklin Street
Alexandria, VA 22314 17,000 0.73%
Edward A. McNally
120-41 Prospect Street
Ridgefield, CT 06837 11,000 0.47%
Lawrence Vecker
1600 Parker Avenue
Fort Lee, NJ 07024 7,000 0.30%
Timothy G. Ewing
Value Partners, Ltd.
2200 Ross Avenue
Dallas, TX 75201 661,835 26.57%
Tweedy, Browne Company L.P.
52 Vanderbilt Avenue
New York, NY 10017 165,100 7.12%
Franklin Resources, Inc.
777 Mariners Island Blvd.
San Mateo, CA 94403-7777 132,000 5.69%
Richard A. Brasch
9313 Hamilton Drive
Fairfax, VA 22031 4,177 0.18%
Wade Hotsenpiller
329 Club View Drive
Great Falls, VA 22066 3,300 0.14%
Lindsay B. Trittipoe
Wheat First Securities
901 E. Byrd Street, 3rd Flr
Richmond, VA 23219 71,289 3.08%
For all Executive Officers and
Directors as a group (13 persons) 684,800 26.43%
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the number of
directors shall be ten or such lesser number as the Board of Directors shall
fix. The Board of Directors has fixed that number at ten. There is only one
class of directors and they will all be candidates for election at the Annual
Meeting.
Directors of the Company are elected to serve until the next annual
meeting of the shareholders of the Company and until their respective successors
are elected and qualified.
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Listed below are the nominees who will be candidates for election to
the Board of Directors at the Annual Meeting and the non-nominees who are
executive officers of the Company:
Principal Occupation Director
Name Age And Other Directorships Since
- ---------------- --- ----------------------------- -----------
Craig Fishman 37 President and Chief Executive 1995
Officer (commencing July 1, 1996);
formerly Vice President and Senior
Vice President (April 1991 through
June 30, 1996) and formerly General
Counsel (February 1993 through June
30, 1996) of the Company. President
of Lifetime Options, Inc. a
wholly-owned subsidiary of the
Company (commencing May 1994).
Leon Fishman 66 Vice Chairman (commencing July 1, 1982
1996); formerly President and Chief (excluding
Executive Officer of the Company 1995)
(May 1989 through June 30, 1996).
Eugene Haskin 68 Consultant to the Company 1982
commencing August 1989 and Chairman
of the Board.
James C. Spector 63 Currently Executive Vice President 1989
of Bank Atlantic, Ft. Lauderdale,
FL; Consultant to the Company from
November 1, 1993 to July 5, 1996;
formerly Executive Vice President
of the Company (February 1991
through October 1993).
Alan L. Freeman 56 Currently Managing Partner of 1996
Freeman, Buczyner & Gero (an
accounting firm); Formerly Partner
with Deloitte & Touche (1989-1991).
David W. Campbell 50 Formerly President and Chief 1995
Operating Officer and Director of
Southern Financial Bancorp, Inc.
and Southern Financial Bank in
Warrenton Virginia April 1996 to
June 1997; formerly President and
Chief Executive Officer of
Ameribanc Savings Bank ("ASB") in
Annandale, Virginia (June 1990
through March 1995); prior to that,
Executive Vice President and Chief
Operating Officer of ASB (1984
through June 1990); also, a
director of ASB (1988 through March
1995); served as a Trustee of the
Ameribanc Investors Group from 1992
to March 1995.
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Principal Occupation Director
Name Age And Other Directorships Since
- ---------------- --- ----------------------------- -----------
William H. Savage 65 Since 1990 has been engaged in a 1995
variety of investment ventures in
real estate development and
banking; currently Chairman of
Island Preservation Partnership,
developer of a 1,200 acre private,
oceanfront retreat near Charleston,
S.C.; President of Richards United
Corporation, a real estate
investment company based in
Alexandria, Virginia, and Chairman
of Arbec Orchids Dominicana, S.A.,
Santo Domingo, D.R., which
propagates and cultivates orchid
plants for the U.S. market.
Edward A. McNally 54 Managing Director, Windham 1996
Partners, LLC (commencing August
1996); President, McNally and Co.
(commencing August 1995);
independent management consultant
(commencing April 1991); formerly
Senior Vice President, National
Westminster Bank USA (1983 through
1992).
Lawrence Vecker 68 Currently Executive Vice President 1996
of North American Capital Corp., a
New York based private merchant
bank; formerly, Executive Vice
President of Congress Financial
Corp., a subsidiary of CoreStates
Financial Corp (1974 through 1995).
Lindsay Trittipoe 39 Currently Vice President, Capital --
Markets for Wheat First Butcher
Singer (commencing August 1995);
formerly Vice President Craigie
Incorporated (November 1989 to
August 1995).
Lawrence M. Winkler 61 Secretary/Treasurer and Chief --
Financial Officer of the Company
since 1983; served as a director
from 1983 until November 1996.
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Wade Hotsenpiller 56 Sr. Vice President and Chief --
Operating Officer (commencing
December 19, 1996). Formerly,
President and Director (June 1985
to July 1996) and Chief Operating
Officer (April 1984 to July 1996)
of Washington Federal Savings Bank,
Herndon, VA.
Peter Matthy 51 Joined the Company in April 1996 as --
Executive Vice President and Chief
Operating Officer. Mr. Matthy
remains the Company's Executive
Vice President and has now assumed
the responsibilities of nationwide
Director of Sales and Marketing.
Prior to joining the Company, Mr.
Matthy was employed by IBJ Schroder
Bank & Trust Company for 15 years,
as an Executive Vice President with
responsibilities as Director of
Corporate Banking, a Member of the
Management committee, and Chairman
and Chief Executive Officer of its
leasing subsidiary.
Richard A. Brasch 40 General Counsel of the Company --
since January 1996. He joined the
Company in 1993 as Associate
General Counsel. Prior to joining
the Company, Mr. Brasch was a
partner/shareholder in the law firm
of Stearns Weaver Miller Alhadeff &
Sitterson, P.A. in Miami, FL where
he worked from 1985 to 1993 with a
concentration in representing
financial institutions.
Mr. Leon Fishman is the father of Mr. Craig Fishman, President and
Chief Executive Officer of the Company.
On September 24, 1997, the Board of Directors asked Director Campbell
to serve as the Chairman of the Board (replacing Eugene Haskin) effective at the
meeting of the Board of Directors to be held immediately following the Annual
Meeting. Director Campbell has agreed to serve as Chairman at the Board and a
formal vote to appoint him Chairman will be taken at the November 18, 1997
meeting of the Board of Directors.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors established an Audit Committee in 1989. The
Audit Committee currently consists of Messrs. C. Fishman,
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Campbell, Freeman and Vecker. The committee met five times during the year ended
December 31, 1996. The Audit Committee reviewed the audited results of
operations for 1995, the unaudited results of operations for 1996 and the status
of certain specific accounts.
The Board established a Compensation Committee in 1992. The
Compensation Committee currently consists of Messrs. Haskin, Spector, Savage and
McNally. The Compensation Committee met four times in 1996. The committee
reviewed executive compensation, employment contracts, other related
compensation costs and made recommendations to the Board based on its reviews.
The Board does not have a nominating committee. The functions of this
committee are performed by the Board of Directors.
During 1996 there were nine meetings of the Board of Directors. Each of
the directors of the Company attended at least 75% of the meetings of the Board
of Directors during 1996 and 75% of the meetings of any committees upon which he
serves.
On September 24, 1997, the Board of Directors approved the nomination
of ten individuals to serve on the Board commencing November 18, 1997. Also on
September 24, 1997, the Board of Directors approved the formation of an
Executive Committee to be formally established at the meeting of the Board of
Directors to be held immediately following the Annual Meeting. The members of
the Executive Committee are expected to be Messrs. Campbell, McNally, Savage and
C. Fishman. The Executive Committee's function will be to make recommendations
to the Board regarding strategic initiatives, assist and support management in
implementing those initiatives and monitor management performance in general.
Directors who are not officers of the Company receive a fee of $2,000
per board meeting attended in person, plus reimbursement for their expenses
associated with attending those meetings. Directors who are not officers of the
Company receive a fee of $500 per board or committee meeting attended by
conference telephone call. In addition, commencing August, 1996 and continuing
through December 31, 1997, directors who are not officers of the Company are
granted 1,000 stock options per meeting attended at an exercise price equal to
the greater of (i) $7.00/share and (ii) 110% of the fair market value per share
of the Company's common stock on the date thereof. The options are exercisable
until December 31, 1999. Directors who are officers of the Company receive no
compensation on stock options for serving as directors, but are reimbursed for
out-of-pocket expenses related to attending board or committee meetings.
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EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company for the years ended December 31,
1996, 1995 and 1994 to or on behalf of the Company's Chief Executive Officer and
each of the four most highly compensated executive officers of the Company whose
total compensation exceeded $100,000 for the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
AWARDS -
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Options Compensation(1)
- --------------------------------------------------------------------------------
Craig Fishman 1996 $170,330 $ -0- 30,000 $3,000
President and Chief 1995 $161,177 $ -0- - $3,000
Executive Officer 1994 $126,405 $2,500 - $2,578
Leon Fishman 1996 $295,009 $ -0- - $3,000
Director/Vice Chairman 1995 $377,885 $ -0- - $3,000
1994 $375,000 $ -0- - $3,000
Lawrence M. Winkler 1996 $169,450 $ -0- 20,000 $3,000
Secy/Treasurer & 1995 $154,732 $ -0- - $3,000
Chief Financial 1994 $143,533 $2,500 - $2,889
Officer
Richard Brasch 1996 $109,328 $4,000 12,500 $2,567
General Counsel 1995 $132,023 $3,000 - $2,640
1994 $110,533 $2,500 - $2,211
_________________________________
1) Represents contributions made by the Company to 401(k) plan.
OPTION GRANTS IN LAST FISCAL YEAR
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in or Base Expiration Date
Name Created Fiscal Year Price
- ------------------- ---------- ------------- -------- ---------------
Craig Fishman ..... 30,000 0.258 $ 5.62 6/30/2001
Leon Fishman ...... -- -- --
Lawrence M. Winkler 20,000 17.2 5.62 6/30/2001
Richard A. Brasch . 12,500 10.8 5.62 6/30/2001
AGGREGATE OPTIONS/SARS EXERCISED IN LAST FISCAL YEAR AND F/Y END OPTION/SAR
VALUE
All options granted and reported in this table were made pursuant to
the 1990 Stock Option Plan and have the following material terms:
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Options may be either (i) "incentive stock options" under Section 422
of the Internal Revenue Code of 1986 or (ii) nonqualified stock options; the per
share exercise price of the Common Stock subject to an incentive stock option
may not be less than the fair market value of the Common Stock on the date the
option is granted. The aggregate fair market value (determined as of the date
the option is granted) of the Common Stock that first becomes exercisable by any
employee in any one calendar year pursuant to the exercise of incentive stock
options may not exceed $100,000. No person who owns, directly or indirectly, at
the time of the granting of an incentive stock options to him, 10% or more of
the total combined voting power of all classes of stock of the Company (a "10%
Stockholder") shall be eligible to receive any incentive stock options under the
Plan unless the option price is at least 110% of the fair market value of the
Common Stock subject to the option, determined on the date of the grant.
Incentive stock options granted under the Plan cannot be exercised more
than ten years from the date of grant except that incentive stock options issued
to a 10% Stockholder are limited to five year terms.
The Company is party to employment agreements with four executive
officers of the Company. The following sets forth their principal terms.
The Company is party to an employment agreement with Craig Fishman, the
Company's President and Chief Executive Officer. The agreement provides that Mr.
Fishman's current base salary shall be $210,000 and is subject to annual cost of
living increases, but not less than 5% per annum. Any other increases in his
salary are at the discretion of the Compensation Committee. The agreement
contains confidentiality and non-compete provisions, obligates the Company to
provide Mr. Fishman with the use of an automobile and requires the Company to
include Mr. Fishman in any benefit plans generally made available to employees.
The agreement was originally scheduled to expire by its terms on June 30, 1998
but has been extended to June 30, 1999. If Mr. Fishman dies or his employment is
terminated (other than for cause) during the term of the agreement, the Company
is obligated to pay him an amount equal to the lesser of (x) one year's
compensation and (y) the compensation due for the then remainder of the
agreement (but in no event less than six months compensation).
The Company is party to an employment agreement with Lawrence M.
Winkler, the Company's Secretary/Treasurer and Chief Financial Officer. The
agreement provides that effective July 1, 1996, Mr. Winkler's current base
salary is $160,775 with subsequent salary increases at the discretion of the
Compensation Committee. The agreement contains confidentiality and non-compete
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provisions, obligates the Company to provide Mr. Winkler with the use of an
automobile and requires the Company to include Mr. Winkler in any benefit plans
generally made available to employees. The agreement expires by its terms on
June 30, 1998. If Mr. Winkler dies or his employment is terminated (other than
for cause) during the term of the agreement, the Company is obligated to pay him
an amount equal to the lesser of (x) one year's compensation and (y) the
compensation due for the then remainder of the agreement (but in no event less
than six months compensation).
The Company is currently party to an employment arrangement with Leon
Fishman under which Mr. Fishman is to work Monday through Friday for 13 weeks
during the six months ending December 31, 1997. His base salary is $75,000 and
the Company is obligated to reimburse Mr. Fishman for travel and living expenses
incurred by him in performing Company business. In addition to his base salary,
Mr. Fishman is entitled to incentive-based compensation equal to 2% of the
Company's consolidated total income for the second six months of 1997 (excluding
non-core subsidiaries) in excess of $5,903,000. The agreement obligates the
Company to provide Mr. Fishman with the use of an automobile and requires the
Company to include Mr. Fishman in any benefit plans generally made available to
employees. The agreement expires by its terms on December 31, 1997. Mr. Fishman
is not entitled to a severance benefit upon his death or termination of
employment.
The Company is a party to a limited agreement with Richard A. Brasch,
the Company's General Counsel. The agreement provides that if Mr. Brasch dies or
his employment is terminated (other than for cause) during the term of the
agreement, the Company is obligated to pay him an amount equal to six (6) months
compensation. The agreement expires by its terms on June 30, 1998.
OTHER TRANSACTIONS
Certain members of the immediate families of Eugene Haskin and Leon
Fishman, directly or through trusts, have in the past provided financing to
Lifetime Options through unsecured loans with interest payable monthly at an
annual interest rate of 1% over the prime rate. One percent (1%) over the prime
rate was the same rate paid by Lifetime Options to its unaffiliated bank lender.
Rental payments of $24,000 were received by the Company in 1996, 1995
and 1994, from Leon Fishman, the Company's current Vice Chairman and former
President, for the personal use of a condominium owned by a subsidiary of the
Company.
In connection with the issuance in 1995 of Convertible Subordinated
Notes to Scoggin Capital Management, LP and its
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affiliates ("Scoggin"), Scoggin was given the right to nominate up to two
members of the Company's Board of Directors (depending on their level of
ownership of Company securities). Scoggin currently has the right to nominate
two members of the Company's Board of Directors, but has waived that right for
this Annual Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
its Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission"). Officers, directors and
greater than ten percent stockholders are required by the Commission to furnish
the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no reports on
Form 5 were required for those persons, the Company believes that during 1996
all filing requirements applicable to its officers, directors and greater than
ten percent stockholders were complied with.
OTHER MATTERS
At this date, there are no other matters management intends to present
or has reason to believe others will present to the Annual Meeting. If other
matters now unknown to management come before the Annual Meeting, the enclosed
proxy shall be deemed to confer discretionary authority on the individuals named
to vote the shares represented by such proxy as to any such matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company has selected the firm of Deloitte & Touche LLP to serve as
the independent auditors for the Company for the current fiscal year. That firm
has served in this capacity for the Company since 1988. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting to
respond to appropriate questions and will have an opportunity to make a
statement if they desire to do so.
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STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Proxy Statement relating
to the 1998 Annual Meeting, any proposal by a record holder of common stock must
be received by the Company at its principal offices in Arlington, Virginia on or
before June 1, 1998. A proponent of such a proposal must comply with the proxy
rules under the Securities Exchange Act of 1934, as amended.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
October 17, 1997
BY ORDER OF THE BOARD OF DIRECTORS
Lawrence M. Winkler
Secretary
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