SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant: |X|
Filed by a Party other than the Registrant: | |
Check the appropriate box:
| | Preliminary Proxy Statement
| | Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FirstPlus Financial Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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.
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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 is calculated and state how it was determined):
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| | Fee paid previously by written 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:
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4) Date Filed:
FIRSTPLUS FINANCIAL GROUP, INC.
NOTICE OF
2005 SPECIAL MEETING OF SHAREHOLDERS
& PROXY STATEMENT
LETTER TO SHAREHOLDERS
5100 N. O'Connor Boulevard, 6th Floor
Irving, Texas 75039
October 25, 2005
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
FIRSTPLUS Financial Group, Inc.
The Special Meeting of Shareholders will be held at Peppermill Hotel
Casino, 2707 South Virginia Street, Reno, Nevada 89502, at 10:00 a.m.,
Wednesday, November 16, 2005.
At the Special Meeting, shareholders will be asked to:
o Elect four (4) directors, and
o Transact any other business properly brought up at the meeting.
The record date has been set as October 10, 2005, and holders of FIRSTPLUS
common stock at the close of business on that date may vote at the Special
Meeting.
Our Board of Directors recommends that you vote in favor of each of the
proposals outlined in this Proxy Statement.
A group of shareholders affiliated with the petitioners in the Court
Action described under the heading "Questions and Answers -- Why am I receiving
this special meeting information and proxy?" in the Proxy Statement has
indicated its intention to initiate a proxy solicitation to elect a slate of
four persons selected by them to the Board of Directors. Your Board believes
that this action is NOT in your best interests and urges you not to sign or
return any proxy card that such parties may send you. If you have any questions
or need assistance in voting your shares, please call the firm assisting the
Company in the solicitation of proxies:
Mellon Investor Services
44 Wall Street
7th Floor
New York, New York 10005
Call Toll Free: (888) 509-7937
We cordially invite all shareholders to attend the Special Meeting in
person. However, whether or not you expect to attend the Special Meeting in
person, please mark, date, sign and return the enclosed White Proxy Card as
promptly as possible in the envelope provided to ensure your representation and
the presence of a quorum at the Special Meeting. If you send in your White
Proxy Card and then decide to attend the Special Meeting to vote your shares in
person, you may still do so. Your proxy is revocable in accordance with the
procedures set forth in the Proxy Statement.
Your vote is important and we hope you will be able to attend.
Sincerely,
/s/ Jack (J.D.) Draper
Jack (J.D.) Draper
President and Chief Executive Officer
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 16, 2005
FIRSTPLUS FINANCIAL GROUP, INC.
5100 N. O'Connor Boulevard, 6th Floor
Irving, Texas 75039
SPECIAL MEETING INFORMATION
The Board of Directors of FIRSTPLUS Financial Group, Inc. (the "Company")
is soliciting proxies for its Special Meeting of Shareholders. The Special
Meeting of Shareholders will be held at Peppermill Hotel Casino, 2707 South
Virginia Street, Reno, Nevada 89502, at 10:00 a.m., Wednesday, November 16,
2005. This proxy statement contains important information for you to consider
when deciding how to vote on the matters brought before the meeting. Please
read it carefully.
The Board set October 10, 2005, as the record date for the meeting.
Shareholders who owned Company common stock on that date are entitled to vote
at the meeting, with each share entitled to one vote. There were 45,340,090
shares of Company common stock outstanding on the record date.
Special Meeting materials, which include this proxy statement, a White
Proxy Card or voting instruction form, and the 2004 Annual Report, are being
mailed to shareholders on or about October 25, 2005. The Company's Annual
Report for the year ended December 31, 2004 does not form any part of the
materials for solicitation of proxies.
QUESTIONS AND ANSWERS
Why am I receiving this special meeting information and proxy?
You are receiving this special meeting information, Proxy Statement and
White Proxy Card because you owned shares of common stock in FIRSTPLUS
Financial Group, Inc. as of the record date for the meeting. This proxy
statement describes issues on which you may vote and provides you with other
important information so that you can make informed decisions. This proxy
statement and the accompanying form of proxies are being mailed to record
holders on or about October 25, 2005.
You may own shares of the Company's common stock in several different
ways. If your stock is represented by one or more stock certificates registered
in your name, you are a shareholder of record. If you hold your shares in a
brokerage, trust or similar account, you are a beneficial owner, not a
shareholder of record.
In March 2005, a group of shareholders filed a lawsuit in the District
Court of the State of Nevada, styled Martin. et al. v. FirstPlus Financial
Group. Inc. et al (the "Court Action"), asking the court to compel an election
since Nevada law allows a court to compel an election if a company has not held
an election of directors in more than eighteen months since the last election
of directors. Since the Company last held a shareholder meeting in 1998, the
Company agreed to treat the lawsuit as a valid request for a special meeting by
shareholders in accordance with the Company's bylaws and insisted in its
pleadings with the court and its discussions with the petitioner's counsel that
all appropriate laws, regulations and procedures be followed in the conduct of
the special meeting and election. The court ordered that an election be held on
November 16, 2005 in Reno, Nevada. Although it was not required to do so, the
Company has already paid the petitioners' attorney's fees in an aggregate
amount of $25,000, which the parties have stipulated fully satisfies any and
all requests the petitioners have made or could have made in the future
concerning reimbursement for petitioners attorney's fees and expenses
associated with the Court Action. In addition, although it was not required to
do so, the Company has also agreed to pay printing and distribution costs for
the petitioners' proxy materials in an amount not to exceed $20,000.
What am I voting on?
You are being asked to vote on the election of four directors. When you
sign and mail the White Proxy Card, you appoint Robert P. Freeman and Jack
(J.D.) Draper as your representatives at the meeting. When we refer to the
"named proxies" in this proxy statement we are referring to Messrs. Freeman and
Draper. This way, your shares will be voted even if you cannot attend the
meeting.
How does the Board of Directors recommend I vote on each of the proposals?
FOR the Board's director nominees.
How do I vote my shares?
Record holders may vote by using the proxy card. Persons who beneficially
own stock held:
o in a brokerage account can vote by using the voting instruction form
provided by the broker;
o by a bank and have the power to vote or to direct the voting of the
shares can vote using the proxy or the voting information form
provided by the bank; or
o in trust under an arrangement that provides the beneficial owner with
the power to vote or to direct the voting of the shares can vote in
accordance with the provisions of such arrangement.
Persons who beneficially own stock can vote at the meeting provided that
they obtain a "legal proxy" from the person or entity holding the stock for
him, typically a broker, bank, or trustee. A beneficial owner can obtain a
legal proxy by making a request to the broker, bank, or trustee. Under a legal
proxy, the bank, broker, or trustee confers all of its rights as a record
holder (which may in turn have been passed on to it by the ultimate record
holder) to grant proxies or to vote at the meeting.
Simply sign and date the White Proxy Card or voting instruction form
received with this proxy statement and mail it in the enclosed prepaid and
addressed envelope. If you mark your choices on the card or voting instruction
form, your shares will be voted as you instruct.
If you return a signed proxy card but do not mark your choices, your
shares will be voted in accordance with the recommendations of the Board of
Directors shown above. If you do not mark your choices on the voting
instruction form, the voting of your shares will be subject to rules relating
to broker non-votes.
A person who has already returned a proxy card may revoke the proxy by
delivering a later-dated proxy card. Thus a person who votes on November 1,
2005 can change his or her vote on November 2, 2005 and the effect of the
voting on November 2, 2005 would be to revoke the earlier November 1, 2005
vote. A record holder can also attend the meeting and vote, which will have the
effect of revoking a previously given proxy. A beneficial holder who has been
given a legal proxy by the record holder can attend the meeting and vote, which
will have the effect of revoking a previously given proxy or voting information
form.
If you have any questions or need assistance in voting your shares, please
call the firm assisting the Company in the solicitation of proxies:
Mellon Investor Services
44 Wall Street
7th Floor
New York, New York 10005
Call Toll Free: (888) 509-7937
What if I receive multiple White Proxy Cards?
If you received more than one White Proxy Card, it means that you hold
shares in more than one account. Please sign and return all White Proxy Cards
to ensure that all of your shares are voted.
2
What business may be properly brought before the meeting and what discretionary
authority is granted?
Under the Company's articles of incorporation and bylaws, a special
meeting is limited to the purposes described in the Notice of the meeting which
is attached to this proxy statement. A shareholder may nominate persons for
election of directors at the meeting only if the shareholder has given written
notice to the Company on or before 10 days after the Notice of the meeting in
accordance with the Company's bylaws. The only such business as to which the
Company received notice are the matters described under the heading "Other
Matters to Come Before the Meeting." Under SEC Rule 14a-4(c)(6), the form of
proxy may grant discretionary authority regarding proposals omitted under SEC
Rule 14a-8 and the White Proxy Card does grant such authority. As to matters
that properly come before the meeting and are not on the proxy card, the named
proxies will vote the shares for which they hold proxies in accordance with
their best judgment.
What if I change my mind after I submit my proxy?
You may revoke your proxy and change your vote by delivery of a
later-dated proxy or voting at the meeting. You may do this at a later date or
time by:
o signing and delivering a proxy card with a later date, or
o voting at the meeting. (If you hold your shares beneficially through a
broker, you must bring a legal proxy from the record holder in order
to vote at the meeting.)
If you are a registered shareholder, you may obtain a new proxy card by
contacting the Company's Corporate Secretary, FIRSTPLUS Financial Group, Inc.,
5100 N. O'Connor Boulevard, 6th Floor, Irving, Texas 75039, telephone (214)
496-1266. If your shares are held by a broker, trustee or bank, you may obtain
a new voting instruction materials by contacting your broker, trustee or bank.
If you sign and date the proxy card or voting instruction and submit it in
accordance with the accompanying instructions and in a timely manner, any
earlier proxy card or voting instructions will be revoked and your choices on
the proxy card or voting instruction will be voted as you instruct.
What is a broker non-vote?
As indicated above, if you are a shareholder of record who submits a proxy
but does not indicate how the proxies should vote on one or more matters, the
named proxies will vote as recommended by the Company. However, if your shares
are held by a broker and you do not provide voting instructions to the broker,
the absence of instructions may cause a "broker non-vote" on the matters for
which you do not provide instructions. Accordingly, if you want to vote your
shares on a matter, it is important that you provide voting instructions on
that matter.
May I vote in person at the meeting?
The inspector of election will pass out a ballot to anyone who requests
one at the meeting. If you hold your shares through a broker, you must bring a
legal proxy from your broker in order to vote at the meeting. You may request a
legal proxy from your stockbroker by indicating on your voting instruction form
that you plan to attend and vote your shares at the meeting. Please allow
sufficient time to receive a legal proxy through the mail after your broker
receives your request.
How many shares must be present to hold the meeting?
A majority of the Company's outstanding shares as of the record date must
be present at the meeting and entitled to vote in order to hold the meeting and
conduct business (i.e., to constitute a quorum). Shares are counted as present
at the meeting if the shareholder of record attends the meeting, if the
beneficial holder attends with a legal proxy from the record holder, or the
record holder has granted a proxy without regard to whether the proxy actually
casts a vote, withholds or abstains from voting.
3
How many votes must the nominees have to be elected?
Directors are elected by a plurality, and the four nominees who receive
the highest number of for votes will be elected. There is no cumulative voting
for the Company's directors. A properly executed proxy marked "Withheld for
all" or withholding authority to vote for one or more nominees with respect to
the election of directors will not be voted for the directors from whom
authority to vote is withheld. However, the shares represented will be counted
for purposes of determining whether there is a quorum. Withheld votes and
broker non-votes, if applicable, will not be taken into account in determining
the outcome of the election of directors.
How are votes counted?
Voting results will be tabulated by Mellon Investor Services, the transfer
agent for our common stock. Election results will be certified by Carl Hagberg,
who will serve as the inspector of elections at the meeting. Mr. Hagberg was an
expert witness in the Court Action who discussed the election process for
public companies in his testimony. The Company paid Mr. Hagberg approximately
$8,400 for fees and expenses related to his acting as an expert witness in the
Court Action.
Who pays the costs of proxy solicitation?
The Company pays for distributing and soliciting the Company's proxies and
reimburses brokers, nominees, fiduciaries and other custodians their reasonable
fees and expenses in forwarding the Company's proxy materials to beneficial
owners. As a result of the Court Action, the Company's expenses related to its
solicitation or proxies will exceed those normally spent of a special meeting
and election of directors. The Company has engaged Mellon Investor Services
("Mellon") to assist in the solicitation of proxies for the meeting and Buck
Consultants ("Buck") to assist in the preparation of shareholder communication
materials. Mellon may use one of the Company's employees in connection with the
solicitations. It is intended that proxies will be solicited by the following
means: additional mailings, personal interview, mail, telephone and electronic
means. Proxies may also be solicited by the persons identified as Participants
under the heading "Participants in the Solicitation," who will receive no
additional compensation therefor, except for reimbursement of expenses.
Although no precise estimate can be made at this time, we anticipate that the
aggregate amount we will pay to Mellon and Buck in connection with the
solicitation of proxies will be $12,500 and $50,000, respectively, of which
$12,500 and $25,000, respectively, has been incurred to date. This amount
includes fees payable to Mellon and Buck, but excludes salaries and expenses of
our officers, directors and employees. In addition, although it was not
required to do so, the Company has also agreed to pay printing and distribution
costs for the petitioners' proxy materials in an amount not to exceed $20,000.
Is a list of shareholders entitled to vote at the meeting available?
A list of shareholders of record entitled to vote at the special meeting
will be available at the special meeting. It will also be available Monday
through Friday from November 4, 2005 through November 15, 2005, between the
hours of 9 a.m. and 4 p.m., local time, at the offices of the Corporate
Secretary, 5100 N. O'Connor Boulevard, 6th Floor, Irving, Texas 75039. A
shareholder of record may examine the list for any legally valid purpose
related to the special meeting.
Where can I find the voting results of the meeting?
The Company will publish the final results in a Current Report on Form
8-K. You can read or print a copy of that report by going to the Company's
website, www.firstplusgroup.com. You will be able to find the same Form 8-K by
going directly to the SEC EDGAR files at www.sec.gov. You can also get a copy
by calling us at (214) 496-1266, or by calling the SEC at (800) SEC-0330 for
the location of a public reference room.
4
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The Company currently has four directors. Directors are elected to hold
office until their successors are elected and qualified, or until resignation
or removal in the manner provided in the Company's bylaws. Four directors are
nominees for election this year.
The Company's bylaws provide that the number of directors shall be fixed
from time to time by the Board of Directors. The Board has set the number of
directors at four. The four nominees for director listed below will stand for
election at the meeting for a one year term of office expiring at the 2006
Annual Meeting of Shareholders or until their successors are duly elected and
qualified. Three of the nominees of the Board, Messrs. Fitzgerald, Freeman and
Ward, are "independent" pursuant to Item 303A.02 of the corporate governance
rules of the New York Stock Exchange.
The following table sets forth certain information as to the nominees for
directors of the Company:
Director
Name Age Positions and Offices With the Company Since
- ------------------------------- ----- ---------------------------------------- ---------
Robert P. Freeman .......... 74 Director and Chairman of the Board 1998
John R. Fitzgerald ......... 57 Director 1995
Daniel T. Phillips ......... 56 Director 1994
David B. Ward .............. 65 Director 1999
Robert P. Freeman. Robert P. Freeman has served as a Director since 1998.
Mr. Freeman has served as President and founder of Hennessy Freeman Associates
since 1985. His major area of expertise is developing and implementing
customized, interactive Process Management Programs, which he describes as the
best real-world methodology to optimize decision-making, quality improvement.
Previously, Mr. Freeman was Senior Vice President and a member of the
Management Committee at Beneficial Corporation, a $15 billion diversified
financial services firm. Mr. Freeman holds a Bachelor of Science degree in
Marketing and a Master of Business Administration from Rutgers University. He
also completed the Advanced Management Program at Harvard. Mr. Freeman is also
an Adjunct Associate Professor of Management at Fairleigh Dickinson Graduate
School of Business.
John R. Fitzgerald. John R. Fitzgerald has served as a Director since
1995. Mr. Fitzgerald has been Executive Vice President of Dexter & Company
since 1989. Previously, Mr. Fitzgerald served as Account Executive for
Corrigan-Jordan Insurance Agency from 1981 to 1989. From 1970 to 1981, Mr.
Fitzgerald played with the National Football League's Dallas Cowboys, including
two Super Bowl championship teams. He was elected as player representative
during contract negotiations and served on the players association Executive
Committee in 1975. Mr. Fitzgerald earned a Bachelor of Science, Business
Administration from Boston College in 1970. Mr. Fitzgerald has served as
speaker and consultant for Xerox Corporation, Lion Funding Corporation,
Equities International, Grand Bank-Dallas and The Associates Corporation of
North America. Mr. Fitzgerald's current and former professional experience and
affiliations include the following:
o NFL Alumni Association
- President, Dallas Chapter, 1993
- Member, Board of Directors, 1985-1992
o Board of Governors, Canyon Creek Country Club, 1990-1994
o Participant, Muscular Dystrophy Association's Jerry Lewis Telethon
o Chairman, Celebrity Selection Committee, PGAS and MDA Golf Tournaments
o Board Member, Big Brothers and Big Sisters of Arlington
o Consultant, Tournament Committee for Celebrities, Colonial National
Invitation PGA Golf Tournament's Pro-Am Tournament
5
Daniel T. Phillips. Daniel T. Phillips has served as a Director since
1994. Mr. Phillips is co-founder of FIRSTPLUS Financial Group, Inc. From 1996
to 2003, Mr. Phillips served as Chairman and CEO of FIRSTPLUS, overseeing the
operations of its subsidiaries, which combined had 6,000 employees producing,
securitizing and servicing up to $7.7 billion dollars of loans. Currently, Mr.
Phillips serves as Manager of Capital Lending Strategies, LLC, a position he
has held since 2003. Mr. Phillips has also served as Chairman of the Board of
Renaissance Acceptance Group, Inc. since 2001. From 1993 to 1996, Mr. Phillips
served as President and CEO of RAC Financial Group, Inc., the parent of
FIRSTPLUS Financial Inc., FIRSTPLUS Financial West, Inc., First Security
Mortgage Corporation and State Financial Acceptance Corporation. He is also
former President and CEO of LinCo Financial Corporation and served in the
United States Marine Corps from 1967 to 1970. Mr. Phillips is responsible for
the development of sophisticated risk scorecards for the high loan to value
second mortgage business and in his career he has successfully securitized $9
billion of business rated by S&P, Moody's and Fitch.
David B. Ward. David B. Ward has served as a Director since 1999. Mr. Ward
has been a partner of Ward & Gross, a law firm in Flanders, New Jersey, since
1989. The firm's practice currently emphasizes residential property purchase
and sale closings, and government relations consulting and representation,
primarily in the credit area. The firm handles refinance and purchase money
mortgage closings in New Jersey for corporate and individual clients. The firm
expects to be involved in more than 200 such transactions in 2005. Previously,
Mr. Ward was Senior Executive and Attorney for Beneficial Corporation for 14
years. He served as a member of the Executive Committee, as Senior Vice
President of Government Relations for 12 years, and as Chairman and CEO of Real
Estate operations for several years in the 1980s. Prior to taking over the
Government Relations function, Mr. Ward was counsel to Beneficial's insurance
companies and a member of the corporate legal department. Prior to joining
Beneficial, Mr. Ward practiced law in Pittsburgh, Pennsylvania from 1965 to
1976. Mr. Ward has been Counsel to the New Jersey Financial Services
Association ("NJFSA") since 1989, and was Executive Director from 1994 to 2004.
The NJFSA represents national and local companies engaged in mortgage banking,
secondary mortgage lending, consumer lending, credit insurance and sales
finance activities in New Jersey. Mr. Ward holds a Juris Doctorate from the
Dickinson School of Law and a Bachelor of Arts degree from Harvard College. He
also completed the Harvard School of Business Administration's Advanced
Management Program. Mr. Ward's current and former professional experience and
affiliations include:
o Member of New Jersey Department of Banking Advisory Board, 1990-1996
o Member of Federal Reserve Board Consumer Advisory Council, 1989-1991
o Member of American Financial Services Association Law Committee
o Member of the New Jersey and American Bar Associations
o Military Service: Lt. j.g U.S. Coast Guard, active duty 1966-1969
While it is not anticipated that any of the nominees will be unable to
serve, if any nominee should decline or become unable to serve as a director
for any reason, votes will be cast instead for a substitute nominee designated
by the Board of Directors or, if none is so designated, will be cast according
to the judgment of the person or persons voting the proxy.
The Board unanimously recommends a vote FOR each of the four nominees
named above. Proxies executed and returned will be so voted unless contrary
instructions are indicated on the proxy card.
6
Except as set forth in this Proxy Statement or in Annex A hereto, to the
best knowledge of the Company, none of the directors, nor any of the Board's
nominees for election, nor any other persons participating in this solicitation
on behalf of the Company, or with respect to items (ii), (viii) and (ix) of
this paragraph, any associate (within the meaning of Rule 14a-1 of the Exchange
Act) of the foregoing persons (i) have any substantial interest, direct or
indirect, in any matter to be acted upon at the Special Meeting, other than the
interest of the Board's nominees in being elected and each director's interest
in the operations of the Company, (ii) own beneficially, directly or
indirectly, any securities of the Company, (iii) own any securities of the
Company of record but not beneficially, (iv) have purchased or sold any
securities of the Company within the past two years, (v) have incurred
indebtedness for the purpose of acquiring or holding securities of the Company
within the past two years, (vi) are or have within the past year been a party
to any contract, arrangement or understanding with any person with respect to
any securities of the Company, (vii) own beneficially, directly or indirectly,
any securities of any parent or subsidiary of the Company, (viii) have since
the beginning of the Company's last fiscal year, been indebted to the Company
or any of its subsidiaries in excess of $60,000 or (ix) have any arrangement or
understanding with respect to future employment by the Company or its
affiliates or with respect to any future transactions to which the Company or
any of its affiliates will or may be a party. In addition, except as set forth
in this Proxy Statement or in Annex A hereto, to the best knowledge of the
Company, none of the directors, nor any of the Board's nominees for election,
nor any other person participating in this solicitation on behalf of the
Company, nor any associates of any of the foregoing persons, have had or are to
have a direct or indirect material interest in any transaction or proposed
transaction with the Company in which the amount involved exceeds $60,000 since
the beginning of the Company's last fiscal year.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE ELECTION OF ALL NOMINEES NAMED ABOVE. IF YOU SIGN AND RETURN THE
ENCLOSED WHITE PROXY CARD, UNLESS YOU DIRECT TO THE CONTRARY ON THAT CARD, THE
SHARES REPRESENTED BY THAT PROXY CARD WILL BE VOTED "FOR" THE ELECTION OF ALL
NOMINEES LISTED ABOVE.
IF YOU HAVE ANY QUESTIONS, OR REQUIRE ASSISTANCE IN VOTING YOUR SHARES,
PLEASE CALL THE FIRM ASSISTING THE COMPANY IN THE SOLICITATION OF PROXIES,
MELLON INVESTOR SERVICES, TOLL-FREE AT (888) 509-7937.
THE COMPANY HAS RECEIVED NOTICE THAT A GROUP OF SHAREHOLDERS AFFILIATED
WITH PETITIONERS IN THE COURT ACTION INTEND TO NOMINATE AND SUPPORT THEIR
NOMINEES AT THE SPECIAL MEETING AND MAY SOLICIT YOUR PROXY FOR THOSE NOMINEES.
THE TERM OF OFFICE OF EACH PERSON ELECTED AS A DIRECTOR SHALL CONTINUE UNTIL
THE NEXT SPECIAL MEETING OF SHAREHOLDERS AND UNTIL THAT PERSON'S SUCCESSOR HAS
BEEN ELECTED.
THE BOARD WILL OPPOSE THE CANDIDATES NOMINATED BY THE PETITIONERS IN THE
COURT ACTION AND UNANIMOUSLY RECOMMENDS A VOTE AGAINST THESE CANDIDATES. YOU
MAY RECEIVE A PROXY CARD SOLICITING YOUR VOTE FOR THE PETITIONERS' CANDIDATES.
WE URGE YOU TO DISREGARD ANY SUCH PROXY SOLICITATION AND TO SIGN AND DATE THE
ENCLOSED WHITE PROXY CARD AND RETURN IT TODAY IN THE ENCLOSED PRE-ADDRESSED
POSTAGE-PAID ENVELOPE.
7
CORPORATE GOVERNANCE
Structure of the Board of Directors
In accordance with the Nevada Revised Statutes and the Company's Articles
of Incorporation and Bylaws, the Company's business affairs are managed under
the direction of its Board of Directors. Directors meet their responsibilities
by, among other things, participating in meetings of the Board, discussing
matters with the Company's President and Chief Executive Officer and other
officers, reviewing materials provided to them, and visiting the Company's
facilities. The Board of Directors held four meetings during 2004, and each
Director attended each of the meetings. The Company expects its directors to
attend meetings of the Board of Directors, shareholders meetings and meetings
of any committees of the Board on which they serve. All directors then serving
on the Board attended the Company's prior Annual Meeting of Shareholders held
in 1998.
The Board of Directors has the authority to create or terminate committees
to assist it with its duties. Due to the small size of the Board and the
Company's limited operations, currently, there are no standing committees or
committee charters. However, the full Board of Directors reviews, discusses and
acts on matters that would otherwise be the subject of typical committee
meetings. As the Company evolves, the Board may use working committees with
functional responsibility in areas where committee oversight is deemed
necessary. The Board will adopt charters for each committee it creates. Each
committee will have the authority to hire, at Company expense, independent
legal, financial, or other consultants as it may deem necessary, without
consulting or obtaining the approval of any Company officer in advance.
Possible committees may include:
o Audit Committee
o Compensation Committee
o Nominating Committee
o Corporate Governance Committee
Director Independence
Robert B. Freeman, John R. Fitzgerald and David B. Ward meet the
independence requirements pursuant to Item 303A.02 of the corporate governance
rules of the New York Stock Exchange. As a small company with limited
operations, the Board of Directors does not believe that it is necessary to
actively search for an outside person to serve on the Board of Directors to
qualify as an audit committee financial expert. The Board of Directors has
authority to engage legal counsel, other experts or consultants as it deems
appropriate to carry out its responsibilities. The Board of Directors includes
one individual with varied experience in the finance industry, including
responsibilities for analysis of financial statements in connection with the
financial services industry and as chief executive officer of public companies
in the financial services industry, and one individual with varied experience
in management consulting and as President of a management consulting firm and
has a Masters in Business Administration degree. The Board of Directors
believes all four members of the Board of Directors have the ability to read
and understand financial statements to perform their duties as Directors. The
Board of Directors does not have a standing audit committee and has not
determined whether any of the current members of the Board meet the definition
of audit committee financial expert. The Company may consider the addition of a
Board member in the future meeting the definition of audit committee financial
expert.
Director Resignation in Fiscal Year 2004
On December 22, 2004, George Davis resigned from his position as director
of the Company. On December 30, 2004, the Board of Directors accepted Mr.
Davis' resignation. Mr. Davis did not hold any positions on any committee of
the Board of Directors at the time of his resignation.
8
In his letter to Robert Freeman, Chairman of the Board of Directors of the
Company, attached as Exhibit 99.1 to the Company's Current Report on Form 8-K
filed with the SEC on January 5, 2005 (the "Form 8-K"), Mr. Davis stated that
since he received a summons to appear in court to test the validity of his
appointment as sole trustee of the FIRSTPLUS Financial Group, Inc. Grantor
Residual Trust (the "Grantor Trust"), he was compelled to hire an attorney to
plead his case, and this put him at odds with the decision of the Board of
Directors to add two additional trustees to the Trust.
In addition, in his letter to the Board of Directors of the Company,
attached as Exhibit 99.2 to the Form 8-K, Mr. Davis stated that the Company has
taken actions which led The FPFI Creditor Trust to bring an interpleader action
against the Grantor Trust and other members of the Board. Rather than recusing
himself with respect to the anticipated votes as a director of the Company on
matters related to this interpleader action, Mr. Davis decided to resign from
the Board.
In Exhibit 99.3 to the Form 8-K, counsel for The FPFI Creditor Trust
stated that Mr. Davis' communications to the trustee of The FPFI Creditor Trust
were the reason for the filing of the interpleader.
Mr. Davis did not resign as trustee of the Grantor Trust. In November
2004, the Company appointed two additional trustees for the Grantor Trust.
Davis challenged the appointment of the additional trustees and refused to
agree to a distribution of funds from the Grantor Trust to the shareholders of
the Company. The Company and the additional trustees filed suit in Texas state
court in Dallas (FirstPlus Financial Group, Inc., Michael Montgomery, Jack
Draper and The FirstPlus Financial Group Grantor Residual Trust v. George T.
Davis and The FPFI Creditor Trust; Civil Action No. 05-02962; in the 298th
District Court of Dallas County, Texas) (the "Trust Suit") seeking declaratory
relief against Davis and the FPFI Creditor Trust to the effect that the
additional trustees had been properly appointed and were authorized to act.
However, in 2005, the interpleader action was pending, the Company, as settlor
of the Grantor Trust, terminated Davis for cause pursuant to the terms of the
trust agreement governing the Grantor Trust and appointed a successor trustee.
Mr. Davis has sought declaratory relief in the Trust Suit to the effect that he
has not been terminated.
Procedures for Director Nominations
The Company's articles of incorporation provide that a shareholder may
nominate one or more candidates for the election as directors if the
shareholder gives the Company written notice of the intent to make the
nomination at least ten (10) days after the date of the notice of the special
meeting sent to shareholders. The shareholder notice must set forth:
o the name and address of the shareholder who intends to make the
nomination and the persons to be nominated;
o a representation that the shareholder is a holder of record stock of
the Company entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons
specified in the notice;
o a description of all arrangements or understandings between the
shareholder and each of his or her nominees;
o such other information regarding each nominee as would be required to
include in a proxy statement filed pursuant to the proxy rules of the
SEC, had the nominee been nominated by the Board of Directors; and
o the consent of each nominee to serve as a director of the Company if
so elected.
Although the Board of Directors is willing to consider candidates
recommended by shareholders, it has not adopted a formal policy with regard to
the consideration of any director candidates recommended by security holders.
The Board of Directors believes that a formal policy is not necessary or
appropriate because of the small size of the Board of Directors and because the
Company's current Board of Directors already has a diversity of business
background, shareholder representation and industry experience. The members of
the Board of Directors have each served in that capacity for a number of years.
No replacement of these directors is currently contemplated.
9
The Board of Directors does not have specific minimum qualifications that
must be met by a candidate for election to the Board of Directors in order to
be considered for nomination. In identifying and evaluating nominees for
director, the Board of Directors will consider each candidate's qualities,
experience, background and skills, as well as any other factors which the
candidate may be able to bring to the Board that the Board of Directors
currently does not possess. The process is the same whether the candidate is
recommended by a shareholder, another director, management or otherwise. The
Company does not pay a fee to any third party for the identification of
candidates.
With respect to the nominees for director at the Special Meeting, each of
the nominees is a current director nominated by the full Board of Directors
standing for re-election.
Shareholder Communication Policy
Any shareholder or interested party who wishes to communicate with our
Board of Directors or any specific directors, including non-management
directors, may write to:
FIRSTPLUS Financial Group, Inc.
5100 N. O'Connor Boulevard, 6th Floor
Irving, Texas 75039
Attn: Corporate Secretary
or
jd@firstplusgroup.com.
Depending on the subject matter, management will:
o forward the communication to the director or directors to whom it is
addressed;
o attempt to handle the inquiry directly (for example, where it is a
request for information about the Company or the Company's operations
or it is a stock-related matter that does not appear to require direct
attention by the Board of Directors or an individual director); or
o not forward the communication if it is primarily commercial in nature
or if it relates to an patently offensive, improper or irrelevant
topic.
Director Compensation
The Company pays our directors $600 for each meeting in which the director
participates. In June 2004, the Company paid each director $3,700 representing
accrued and unpaid director fees for previous meetings. The Company does not
pay directors who are also employees of the Company, if any, any additional
compensation for their service as directors, except for the reimbursement of
expenses incurred in attending meetings. Directors may also receive stock
options for their services as directors; however, the issuance of options to
directors was suspended for 2003 and 2004.
Code of Ethics
The Board of Directors has adopted a Code of Ethics for all directors and
officers which is attached as an exhibit to the Company's Form 10-KSB for the
year ended December 31, 2004. The primary goal of the Code of Ethics is to
establish precepts which govern business decisions and to preserve the
integrity by which businesses are created. As the Company continues to evolve
and re-emerge in the financial services industry, the officers and directors
strive to attain the highest possible standards in all aspects of business
activity.
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's executive offices are shared with the facilities leased by
Capital Lending Strategies, LLC ("Capital Lending"), which incurs the cost and
full responsibility of the lease. The value of this lease arrangement to the
Company amounted to $320 in 2004 and $400 in 2005. There is no formal agreement
between the Company and Capital Lending with respect to the lease arrangement.
Daniel T. Phillips, our Director, is a Manager and Member of Capital Lending.
The Company has outstanding loans to Capital Lending in an outstanding
amount of approximately $125,388 as of June 30, 2005 based on a series of loan
advances made to Capital Lending in 2002, 2003 and 2004 pursuant to a revolving
promissory note. The note allows Capital Lending to borrow, repay and re-borrow
in the maximum amount of $275,000. The outstanding amounts under the note
accrue interest at rate per year equal to the prime rate as set forth in the
Money Rates section of the Wall Street Journal plus one percent. Any advance
under the note, together with accrued and unpaid interest in connection with
the advance, matures on the second anniversary of the advance, and the note
provides for remedies for nonpayment. The last advance was made in January
2004. Capital Lending has been making regular payments on the loans in varying
amounts on a twice-monthly basis since January 2003 as requested by the
Company. The parties have informally permitted borrowings and repayments on
terms at odds with the specific provisions of the note to provide flexibility
in the payment arrangement and based on the capital needs of the Company at the
times of the repayments. Had the parties enforced this provision, as of June
30, 2005 approximately $9,600 would have been in default for nonpayment at
maturity. However, since the note is a revolving note which provides Capital
Lending the ability to borrow, repay and re-borrow funds under the note, the
Company has not insisted that Capital Lending re-borrow funds to re-pay amounts
outstanding under the note that have matured, as permitted by the note, since
the economic impact to the parties in that situation would have been similar to
the current repayment practices of the parties.
In August 2001, the Company invested seed capital for a one-third profits
interest in Capital Lending. In connection with the above described
transaction, the profits interest was converted to an equity interest in
Capital Lending. Mr. Phillips provided consulting advice and direction to
Capital Lending in connection with its formation and development and, for such
services, an affiliate of Mr. Phillips received a one-third profits interest in
Capital Lending. As a result of the transaction, and after accounting for
certain employee interests, the Company held a 40.2% equity interest in Capital
Lending.
In June 2002, Capital Lending acquired 25,639 shares of the Company's
Series D Convertible Preferred Stock (the "Series D Preferred"). The sale of
Series D Preferred to Capital Lending was unanimously approved by the Board of
Directors of the Company, with the exception of Daniel T. Phillips, then
Chairman and Chief Executive Officer of the Company, who abstained from the
vote because of his affiliation with Capital Lending. As a result of the
transaction, Capital Lending acquired control of the Company and held
approximately 51% of the outstanding voting securities of the Company. In
connection with the transaction, the Company agreed to expand its Board of
Directors to seven members. Consequently, George T. Davis, a significant
shareholder of the Company became a member of the Board of Directors and agreed
to serve as Vice President -- Investor Relations for the Company. The Company
acquired 42.3% of the outstanding limited liability company interests for
shares of Series D Preferred acquired by Capital Lending.
The terms of the Series D Preferred provided that neither Capital Lending,
nor any of its affiliates or assigns, would be entitled to any of the Company's
rights in the cash flow from the derivative interests in mortgage-backed or
asset-backed securitization transactions of FirstPlus Financial, Inc., a
subsidiary of the Company, which had been set aside for the benefit of the
Company's shareholders and creditors in the Grantor Trust. The beneficiary of
the Grantor Trust is the Company, with its shareholders' and creditors' rights
recognized through their status as Designated Recipients under the Grantor
Trust, but excluded Capital Lending and its affiliates and assigns. George T.
Davis was appointed as the initial trustee of the Grantor Trust.
11
In 2003, the Company entered into a swap transaction with Capital Lending
whereby:
o the Company transferred most of its ownership interests in Capital
Lending back to Capital Lending, and
o Capital Lending transferred back to the Company all of the shares of
Series D Convertible Preferred Stock of the Company then owned by
Capital Lending.
The Company did not transfer back to Capital Lending the ownership
interests assigned to the plaintiffs' co-lead counsel in escrow on behalf of
the authorized claimants under the settlement of the Company's consolidated
class action lawsuit styled In re: FirstPlus Financial Group, Inc. Securities
Litigation, Civil Action No. 3:98-CV-2551-M, a securities-related lawsuit
settled in October 2003 without the Company admitting any wrongdoing or
liability.
Prior to the reciprocal swap, the mutual ownership positions of the
Company and Capital Lending resulted in Capital Lending holding:
o a controlling interest in the Company, and
o approximately 12% of the Company's ownership of Capital Lending
"attributing back" to Capital Lending through Capital Lending's
ownership interest in the Company.
Following the swap, the Company retained the same economic interest in
Capital Lending because there was no longer any attribution of ownership back
to Capital Lending on account of Capital Lending's ownership of Company stock.
As a result of the swap, Capital Lending no longer owns any shares of the
Company and is no longer in a position to control the Company through its stock
ownership. In May 2004, the Company sold its remaining interest in Capital
Lending, other than the interest assigned on behalf of the claimants in the
class action lawsuit, for $796,580.
In May 2004, the Company reimbursed United Lending Partners an amount of
$37,681.18 for payments United Lending Partners made on behalf of the Company
to the Company's stock transfer agent. In August 2004, the Company made a loan
of $100,000 to United Lending Partners. The original term of the note was for
60 days with an interest rate of 15 percent. The note was renewed twice and
became due in February 2005. All of the outstanding principal amount and
accrued interest from December 2004 remains due. The loan is currently in
default. United Lending Partners is a subsidiary of Renaissance Acceptance
Group, Inc. Daniel T. Phillips, our Director, is a director and shareholder of
Renaissance Acceptance Group, Inc.
The Company has a insurance policy with American Financial Services
covering its directors and officers. The total premium for the policy is
$59,260. Dexter & Company was the broker for the policy. John R. Fitzgerald, a
Director of the Company, is Executive Vice President of Dexter & Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers to send reports of their
ownership of Company common stock and changes in such ownership to the SEC. The
Company assists its directors and officers by preparing forms for filing. SEC
regulations also require the Company to identify in this proxy statement any
person subject to this requirement who failed to file a report on a timely
basis. Based on a review of copies of reports furnished to the Company and
written representations that no reports were required, the Company believes
that all of its directors and officers subject to Section 16(a) complied with
the reporting requirements with respect to transactions during 2004.
12
INDEPENDENT AUDITORS
Engagement of Independent Auditors
On June 3, 2005, the Company engaged Lightfoot Guest Moore & Co., PC, as
its independent auditor for the year ending December 31, 2004. The Company had
not formally had an independent auditor since September 1999, when Ernst &
Young LLP resigned as the Company's principal accountant. The resignation of
Ernst & Young LLP was discussed in a Current Report on Form 8-K filed with the
SEC on October 6, 1999.
On June 3, 2005, FirstPlus Financial Group, Inc. (the "Company") engaged
Lightfoot Guest Moore & Co., PC as its new independent registered public
accounting firm.
The Company disclosed the engagement of Lightfoot Guest Moore & Co., PC in
a Current Report on Form 8-K filed with the SEC on September 22, 2005 (the
"Form 8-K"), which included the following information:
During the fiscal years ended December 31, 2004 and 2003 and through June
3, 2005, the Company had not consulted Lightfoot Guest Moore & Co., PC
regarding either (i) the application of accounting principles to a specific
completed or contemplated transaction, or the type of audit opinion that might
be rendered on the Company's financial statements, and neither written nor oral
advice was provided to the Company that was an important factor considered by
the Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any manner that was either the subject of a
disagreement or event identified in response to paragraph (a)(1)(iv) of Item
304 of Regulation S-B.
Selection of Independent Auditors for the Current Fiscal Year
The Board of Directors has selected Lightfoot Guest Moore & Co., PC as the
Company's independent public auditors for the current fiscal year.
Representatives of Lightfoot Guest Moore & Co., PC are not expected to attend
the meeting.
Audit Fees
The following table sets forth fees billed to us during the fiscal years
ended December 31, 2004 and 2003 by our independent auditors:
December 31, December 31,
2004 2003
-------------- -------------
(i) Audit Fees .................. $ 0 $0
(ii) Audit Related Fees .......... $ 0 $0
(iii) Tax Fees .................... $ 0 $0
(iv) All Other Fees .............. $15,046 $0
Audit Fees. Consists of fees billed for professional services rendered for
the audit of the Company's financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by our auditors in connection with statutory and
regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company's financial statements and are not reported under "Audit Fees."
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. There were no tax services provided in
fiscal 2004 or 2003.
All Other Fees. Consists of accounting fees paid to Daniel Erickson PC in
connection with tax preparations services. At the time of these services, the
Company had not engaged an independent auditor. There were no management
consulting services provided in fiscal 2004 or 2003.
13
Policy on Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
The Board of Directors' policy is that the Company's auditor performs its
services independently and with the highest integrity and professionalism.
There is no formal written policy. Any engagement of the Company's outside
auditor must be consistent with principles determined by the SEC, namely, that
the independent auditor cannot audit its own work, perform management functions
or act as an advocate for the client.
The Company currently does not have a designated Audit Committee, and
accordingly, the Company's Board of Directors' policy is to pre-approve all
audit and permissible non-audit services provided by the independent auditors.
These services may include audit services, audit-related services, tax services
and other services. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The independent
auditors and management are required to periodically report to the Company's
Board of Directors regarding the extent of services provided by the independent
auditors in accordance with this pre-approval, and the fees for the services
performed to date. The Board of Directors may also pre-approve particular
services on a case-by-case basis.
AUDIT REPORT OF THE BOARD OF DIRECTORS
The Board of Directors has not established an Audit Committee. Due to the
small size of the Board, and the Company's limited operations, the Board of
Directors did not consider establishing an Audit Committee to be necessary.
However, the full Board of Directors has reviewed, discussed and acted on
matters that would otherwise be the subject of Audit Committee meetings.
The following report of the Board of Directors shall not be deemed to be
soliciting material or to be filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or incorporated by reference in any document so filed.
Review of the Company's Audited Financial Statements
The Board of Directors has reviewed and discussed the audited financial
statements with management. The Board of Directors has discussed with the
independent auditors the matters required to be discussed by SAS 61, as may be
modified or supplemented. The Board of Directors has received the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Board of Directors), as may be
modified or supplemented, and has discussed with the independent accountant the
independent accountant's independence. Based on the review and discussions
described above, the Board of Directors approved the audited financial
statements to be included in the Company's Annual Report on Form 10-KSB for the
last fiscal year for filing with the Securities and Exchange Commission.
Robert P. Freeman
John R. Fitzgerald
Daniel T. Phillips
David B. Ward
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of October 10, 2005, by (1) each
director and named executive officer of the Company, (2) all officers and
directors of the Company as a group, and (3) all persons who are known by the
Company to be beneficial owners of 5% or more of the Company's outstanding
common stock. The Company is also aware of an additional purported "committee"
(the "Additional Committee") that may include Company shareholders in addition
to the FPFX Shareholder Value Committee listed in the table below. Neither the
FPFX Shareholder Value Committee nor the Additional Committee is affiliated
with the Company in any way. As of the date of filing of this Proxy Statement,
neither the Additional Committee nor the petitioner group in the Court Action
have filed a Schedule 13D.
Shares Percent
Name and Address of Beneficial Owner Owned of Class(1)
- -------------------------------------------------------------------------- ------------------ ------------
Daniel T. Phillips ....................................................... 350,000(2) *
Robert P. Freeman ........................................................ 337,000(3) *
John R. Fitzgerald ....................................................... 313,724(4) *
David B. Ward ............................................................ 300,000(5) *
Jack (J.D.) Draper ....................................................... -- --
FPFX Shareholder Value Committee(6) ...................................... 3,627,555(6) 8.0%
All directors and officers as a group (5 persons)(2)(3)(4)(5) ............ 1,300,724 2.8%
- ------------
* Indicates less than one percent (1%).
(1) The percentage of ownership is based on 45,340,090 shares of common stock
outstanding as of October 10, 2005. Except as otherwise indicated, the
persons named in the table possess sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them.
Beneficial ownership as reported in the above table has been determined
according to Rule 13d-3 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The amounts shown in the table include shares of
common stock issuable upon exercise of outstanding options exercisable
within 60 days of October 10, 2005. Except as otherwise noted, the address
of the named individuals is 5100 N. O'Connor Boulevard, 6th Floor, Irving,
Texas 75039.
(2) Consists of 50,000 shares of common stock held by Phillips Partners, Ltd.,
over which Mr. Phillips has voting and dispositive control, and 300,000
shares of common stock issuable upon the exercise of options.
(3) Includes 300,000 shares of common stock issuable upon the exercise of
options.
(4) Includes 324 shares of common stock held by Mr. Fitzgerald's wife and
300,000 shares of common stock issuable upon the exercise of options.
(5) Consists of 300,000 shares of common stock issuable upon the exercise of
options.
(6) The purported "committee" is in no way affiliated with the Company.
According to Schedule 13D/A, filed on October 6, 2005. Consists of (i)
11,297 shares of common stock held by James T. Capretz, (ii) 265,699 shares
of common stock held by Robert D. Davis, (iii) 215,759 shares of common
stock held by George R. Ebertings, (iv) 430,000 shares of common stock held
or controlled by James P. Hanson and related entities, and (v) 2,699,800
shares of common stock held by Danford C. Martin. The address of the
"committee" is 7 Egret Lane, Aliso Viejo, California 92656.
15
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company for services rendered during each of the three years ended December
31, 2004 to the Company's President and Chief Executive Officer, referenced to
in this Proxy Statement as "named executive officers." The Company does not
currently have any other executive officers and had no executive officers whose
compensation exceeded $100,000 in 2004.
Annual Compensation Long-Term Compensation
------------------------------------------------ --------------------------------
Awards
--------------
Securities
Other Annual Underlying All Other
Name & Principal Position Year Salary ($) Bonus ($) Compensation ($)(1) Options/SARs Compensation ($)
- ---------------------------- ------ -------------- ----------- --------------------- -------------- -----------------
Jack (J.D.) Draper
President and Chief
Executive Officer ......... 2004 $ 33,000 -- $ 7,606(1) -- --
2003 2,500(2) -- -- -- --
- ------------
(1) Consists of $6,606 in premiums paid by the Company for health insurance and
$1,000 in fees related to Mr. Draper's appointment as trustee of the
FIRSTPLUS Financial Group, Inc. Grantor Residual Trust.
(2) Mr. Draper's employment with the Company began in October 2003.
Stock Option/SAR Grants
There were no grants of stock options or stock appreciation rights made
during the year ended December 31, 2004 to any named executive officer.
Option Exercises and Holdings
There were no option exercises during 2004 or options held at December 31,
2004 by the named executive officers of the Company.
Report on Executive Compensation
The following Report of the Board of Directors does not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this Report by reference therein. The Board of Directors has
provided the following report on the compensation policies of the Company as
they apply to its executive officers and the relationship of Company
performance to executive compensation and the Chief Executive Officer's
compensation.
During 2004, there was no formally designated Compensation Committee of
the Company's Board of Directors. The entire Board of Directors performed the
function of a Compensation Committee and has overall responsibility for the
Company's executive compensation policies and practices. In this regard, the
Board of Directors functions include:
o determining the compensation of the President and Chief Executive
Officer of the Company,
o upon recommendation of the Chief Executive Officer, reviewing and
approving any other executive officers' compensation; however, during
2004 and as of the date of this Report there is no other officer of
the Company, and
o reviewing, approving and granting awards under stock incentive plans.
The Company currently has only one executive officer, Mr. Jack (J.D.)
Draper, the Company's President and Chief Executive Officer. The Company
intends to hire additional personnel as circumstances require.
16
If the Board of Directors decides to hire additional personnel, it intends
to determine compensation according to the following five elements:
o establishing objectives for compensation,
o defining appropriate competitive reference points,
o creating an appropriate linkage between compensation programs and
Company objectives and values,
o describing the roles of various elements of compensation, and
o maintaining good governance practices concerning compensation.
The Board of Directors will work with senior management to develop and
implement the Company's executive compensation philosophy. Generally, the
Company's philosophy on executive compensation will be to provide base cash
compensation and to provide additional incentive compensation in the form of
cash bonuses and grants of options based on the realization of stated
objectives, expected to result in improvements in total shareholder return.
Stated another way, the Company's executive compensation policy is based on
pay-for-performance.
During 2004, Mr. Draper, the Company's President and Chief Executive
Officer, received base compensation related primarily to level of the Company's
operations, his level of responsibility and the Company's ability to pay his
compensation. Mr. Draper does not have an employment agreement with the
Company.
The Board of Directors endorses the view that equity ownership by
management is beneficial in aligning management and shareholders' interests in
the enhancement of shareholder value. The Board of Directors intends to
implement equity-based compensation plans to facilitate equity ownership by
management as the Company evolves and begins to resume ongoing operations.
As the Company moves forward in its efforts to create shareholder value in
the years ahead, the Board of Directors will continue to review, monitor and
evaluate the Company's program for executive compensation to ensure that it is
internally effective in support of the Company's strategy, is competitive in
the marketplace to attract, retain and motivate the talent needed to achieve
the Company's objectives, and appropriately rewards the creation of value on
behalf of the Company's shareholders.
Section 162(m) of the Internal Revenue Code eliminates the Company's
ability to deduct certain compensation over $1 million paid to the named
executives unless such compensation is based on performance objectives meeting
certain criteria or is otherwise excluded from the limitation. The Company
strives whenever possible to structure its compensation plans such that they
are tax deductible by the Company. At this time, none of the Company's
executive officers' compensation subject to the deductibility limits exceeds $1
million, and it is the Board's view that the Company will not likely be
affected by the deductibility rules in the near future.
Robert P. Freeman
John R. Fitzgerald
Daniel T. Phillips
David B. Ward
17
OTHER MATTERS TO COME BEFORE THE MEETING
Other Matters; Opposing Solicitation
Other than the election of directors included in this proxy statement the
Company is not aware of any matters to be properly presented for a vote at the
meeting. However, counsel for the petitioners in the Court Action provided the
Company with a letter notifying the Company of its intention to nominate seven
persons to be elected as directors at the meeting and later amended the notice
to include only four nominees. Certain petitioners also filed a preliminary
proxy statement on July 28, 2005 referencing their intention to solicit proxies
for the nomination of Danford L. Martin, James T. Capretz, James P. Hanson and
Robert D. Davis to be elected as directors. The nominators did not request in
that notice that the Company include their nominees in the Company's proxy
materials, and the Company believes it otherwise would have been permitted to
exclude such a request under SEC Rule 14a-8(i)(8). However, the nominators
referenced the Company's articles of incorporation, which allow for
shareholders entitled to vote in the election of directors to nominate one or
more persons for the election as directors at a meeting if written notice is
provided to the Company by the close of business on the tenth day following the
date on which notice of the meeting is first given to shareholders. The Company
notified the petitioners that the Company will hold the notice and deem it
received upon appropriate commencement of the applicable notice period and the
petitioners would not have to resubmit the notice at the appropriate time.
Although it was not required to do so, and does not expect to do so in the
future, the Company has notified the nominators of certain defects identified
by the Company in their notice of nomination. The nominators, nominees and
filing persons of the proxy statement with respect to opposing solicitation are
responsible for the truth, accuracy and completeness of such disclosures and
for making any corrections to false or misleading disclosures. If any
information comes to the Company's attention that any of such information is
false or misleading with respect to any material fact, or that such disclosures
omit to state any material fact necessary in order to make such disclosures not
false or misleading, the Company reserves all rights available to it under its
articles of incorporation, bylaws and all applicable federal and state laws and
regulations. If it is determined at the meeting that such proposals are
properly presented, the named proxies will use the discretionary authority
granted to them to vote the shares for which they hold proxies against these
nominees.
Participants in the Solicitation
Each member of the Board of Directors may be deemed to be a "Participant"
in the Company's solicitation of proxies in connection with the Special
Meeting. Set forth below are the names and principal occupations of each member
of the Board (each of whom are also nominees), and the name, principal business
and address of any corporation or other organization in which that director's
occupation or employment is carried on. For additional information concerning
each of the directors, see "Election of Directors" and "Certain Relationships
and Related Transactions" in this Proxy Statement.
Name Business Address Principal Business of Employer
- ----------------------------- ------------------------------------------------- -------------------------------
Robert P. Freeman ........... 28 Cornhill Drive, Morristown, New Jersey 07960 Business Consulting
John R. Fitzgerald .......... 3601 Cedar Springs, Dallas, Texas 75219 Insurance
Daniel T. Phillips .......... 5100 N. O'Connor Boulevard, 6th Floor, Lending Programs
Irving, Texas 75039
David B. Ward ............... 227 US Highway 206, Flanders, New Jersey 07836 Legal Services
18
Other Participants
Jack (J.D.) Draper, President and Chief Executive Officer of the Company,
may also be deemed to be a Participant. Mr. Draper's principal business address
is that of the Company, 5100 N. O'Connor Boulevard, 6th Floor, Irving, Texas
75039.
Information Regarding Ownership of the Company's Securities by Participants
The number of shares of common stock held by each director and named
executive officer and their associates at October 10, 2005 is set forth in the
"Security Ownership of Certain Beneficial Owners and Management" section of
this proxy statement.
Information Regarding Transactions in the Company's Stock by Participants;
Understandings with Respect to Securities of the Company
The Company granted options to purchase 300,000 shares of the Company's
common stock to each of Messrs. Freeman, Fitzgerald, Phillips and Ward in their
capacity as directors of the Company in June, 2002. The options vested
immediately upon grant, had an exercise price of $0.10 per share and a term of
ten years.
Except as described in this proxy statement, no Participant has any
arrangement or understanding with any person with respect to any securities of
the Company.
Understandings with Respect to Future Employment by the Company
See "Executive Compensation" in this Proxy Statement. No other
Participant, nor any Associate of any Participant, has any understanding with
respect to future employment. No Participant or any Associate of any
Participant has any arrangement or understanding with respect to future
transactions to which the Company or any of its affiliates will or may be a
party.
Costs of Solicitation
The engagement of Mellon and Buck as proxy solicitors and consultants is
described under "Special Meeting Information" above. Expenses related to the
solicitation of proxies for this meeting in excess of those normally spent for
a special meeting are not expected to exceed approximately $12,500 and $50,000,
respectively, of which $12,500 and $25,000, respectively, has been incurred to
date. In addition, although it was not required to do so, the Company has also
agreed to pay printing and distribution costs for the petitioners' proxy
materials in an amount not to exceed $20,000.
19
SUBMISSION OF PROPOSALS FOR NEXT ANNUAL MEETING
The Company expects to hold its next annual meeting on or about November
1, 2006. Shareholder proposals to be included in the proxy statement for the
next annual meeting must be received by the Company at its principal executive
offices on or before June 27, 2006 for inclusion in the Company's proxy
statement relating to that meeting. The Company's articles of incorporation
provides that a shareholder seeking to have a proposal included in the
Company's proxy statement shall comply with the requirements of Regulation 14A
under the Securities Exchange Act of 1934, as amended.
For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing
to the Secretary of the Company. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company, not less than twenty (20) days nor more than fifty (50) days prior to
the meeting; provided, however, that in the event that less than thirty (30)
days' notice or prior public disclosure of the date of the meeting is given or
made to the shareholders, notice by the shareholder to be timely must be
received not later than the close of business on the tenth (10th) day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. A shareholder's notice to the Secretary shall
set forth as to each matter the shareholder proposes to bring before the annual
meeting the following information:
o a brief description of the business proposed to be brought before the
annual meeting and the reasons for conducting such business at the
annual meeting;
o the name and address, as they appear on the Company's books, of the
shareholder proposing such business;
o the number of shares of the Company which are beneficially owned by
the shareholder; and
o any material interest of the shareholder in such business.
IMPORTANT NOTE
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU HOLD.
PLEASE VOTE ONLY ON THE ENCLOSED WHITE PROXY CARD. PLEASE SIGN AND DATE THE
ENCLOSED WHITE PROXY CARD AND RETURN IT TODAY IN THE ENCLOSED PRE-ADDRESSED
POSTAGE-PAID ENVELOPE. PLEASE DO NOT COMPLETE ANY SUBSEQUENTLY DELIVERED PROXY
CARDS UNLESS THEY ARE SOLICITED BY THE COMPANY. IF YOUR SHARES ARE HELD IN
STREET NAME, ONLY YOUR BROKER OR BANK CAN VOTE YOUR SHARES AND ONLY UPON
RECEIPT OF YOUR SPECIFIC INSTRUCTIONS. PLEASE RETURN THE ENCLOSED WHITE PROXY
CARD TO YOUR BROKER AND CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT TO
ENSURE THAT A WHITE PROXY CARD IS VOTED ON YOUR BEHALF. IN ADDITION, TO ENSURE
THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PLEASE SIGN AND
DATE THE ENCLOSED WHITE PROXY CARD AND RETURN IT TODAY IN THE ENCLOSED
PRE-ADDRESSED POSTAGE-PAID ENVELOPE.
20
Annex A
INFORMATION CONCERNING PARTICIPANTS IN THE SOLICITATION OF PROXIES BY
FIRSTPLUS FINANCIAL GROUP, INC.
Under applicable Securities and Exchange Commission regulations,
directors, the Board of Director's nominees for election and certain officers
and employees of the Company may be deemed to be "participants" with respect to
the Company's solicitation of proxies in connection with its 2005 Special
Meeting of Shareholders. The following sets forth the name and the present
principal occupation or employment, and the name and principal business address
of the corporation or other organization in which such employment is carried
on, if any, of the persons who may be deemed "participants."
Directors and Nominees
The principal occupations and the name and business addresses of the
organizations of employment of the Company's current directors and director
nominees are as follows:
Name Business Address Principal Business of Employer
- ----------------------------- ------------------------------------------------- -------------------------------
Robert P. Freeman ........... 28 Cornhill Drive, Morristown, New Jersey 07960 Business Consulting
John R. Fitzgerald .......... 3601 Cedar Springs, Dallas, Texas 75219 Insurance
Daniel T. Phillips .......... 5100 N. O'Connor Boulevard, 6th Floor, Lending Programs
Irving, Texas 75039
David B. Ward ............... 227 US Highway 206, Flanders, New Jersey 07836 Legal Services
Officers and Employees Participating in the Solicitation
Jack (J.D.) Draper, President and Chief Executive Officer of the Company,
may also be deemed to be a Participant. Mr. Draper's principal business address
is that of the Company, 5100 N. O'Connor Boulevard, 6th Floor, Irving, Texas
75039.
Information Regarding Ownership of the Company's Securities by Participants
Except as described in this Annex A or the Proxy Statement, none of the
persons listed above under "Directors and Nominees" and "Officers and
Employees" owns any of the Company's Securities of record which they do not own
beneficially. The number of shares of the Company Common's Stock held by
directors and he named executive officers as of October 10, 2005, and any
associate of the foregoing persons, is set forth in the "Security Ownership of
Certain Beneficial Owners and Management" section of the Proxy Statement.
Information Regarding Transactions in the Company's Securities by the
Participants
The following sets forth purchases and sales during the past two years of
shares of the Company's Common Stock by the persons listed above under
"Directors and Nominees" and "Officers and Employees Participating in the
Solicitation":
Purchases and Sales of FIRSTPLUS Common Stock by Robert P. Freeman:
None.
Purchases and Sales of FIRSTPLUS Common Stock by John R. Fitzgerald:
None.
Purchases and Sales of FIRSTPLUS Common Stock by Daniel T. Phillips:
None.
A-1
Purchases and Sales of FIRSTPLUS Common Stock by David B. Ward:
None.
Purchases and Sales of FIRSTPLUS Common Stock by Jack (J.D.) Draper:
None.
Miscellaneous Information Concerning Participants
Except as described in this Annex A or the Proxy Statement, neither any
participant nor any of their respective associates or affiliates (together, the
"Participant Affiliates"), is either a party to any transaction or series of
transactions in the past fiscal year, or has knowledge of any currently
proposed transaction or series of proposed transactions, (a) to which the
Company or any of its subsidiaries was or is to be a party, (b) in which the
amount involved exceeds $60,000, and (c) in which any participant or
Participant Affiliate had, or will have, a direct or indirect material
interest. Furthermore, except as described in this Annex A or the Proxy
Statement, no participant or Participant Affiliate directly or indirectly
beneficially owns any securities of the Company or any securities of any
subsidiary of the Company.
Except as described in this Annex A or the Proxy Statement, no participant
or Participant Affiliate has entered into any agreement or understanding with
any person respecting any future employment by the Company or any of its
affiliates or any future transactions to which the Company or any of its
affiliates will or may be a party. Except as described in this Annex A or the
Proxy Statement, there are no contracts, arrangements or understandings by any
participant or Participant Affiliate within the past year with any person with
respect to any securities of the Company.
A-2
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
FIRSTPLUS FINANCIAL GROUP, INC.
The undersigned hereby appoints Robert P. Freeman and Jack (J.D.) Draper, and
each of them, with power to act without the other and with power of
substitution, as proxies and attorneys-in-fact and hereby authorizes them to
represent and vote, as provided on the other side, all the shares of FIRSTPLUS
Financial Group, Inc. Common Stock which the undersigned is entitled to vote,
and, in their discretion, to vote upon such other business as may properly come
before the Special Meeting of Shareholders of the company to be held November
16, 2005 or at any adjournment or postponement thereof, with all powers which
the undersigned would possess if present at the Meeting.
(Continued and to be marked, dated and signed, on the other side)
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Address Change/Comments (Mark the corresponding box on the reverse side)
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^ FOLD AND DETACH HERE ^
| |
You can now access your FIRSTPLUS Financial Group, Inc. account
online.
Access your FIRSTPLUS Financial Group, Inc. shareholder account online via
Investor ServiceDirect(R) (ISD).
Mellon Investor Services LLC, Transfer Agent for FIRSTPLUS Financial Group, Inc,
now makes it easy and convenient to get current information on your shareholder
account.
o View account status o View payment history for dividends
o View certificate history o Make address changes
o View book-entry information o Obtain a duplicate 1099 tax form
o Establish/change your PIN
Visit us on the web at http://www.melloninvestor.com
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect(R) is a registered trademark of Mellon Investor Services
LLC
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE Please | |
VOTED "FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR AND AT THE Mark Here | |
DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS THAT MAY PROPERLY COME BEFORE For Address | |
THE MEETING. Change or | |
Comments
SEE REVERSE SIDE
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- --------------------------------------------------------------------------------
ITEM 1. ELECTION OF FOR WITHHOLD AUTHORITY
DIRECTORS all nominees for all nominees
| | | |
| | | |
Nominees:
01 Robert P. Freeman
02 John R. Fitzgerald
03 Daniel T. Philips
04 Daniel B. Ward
You may withhold authority to vote for one or more
nominees by marking the "FOR all nominees" box above
and writing the name of the nominee(s) below.
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Signature______________________________________________________Signature_______________________________________Date_________________
Note: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
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^ FOLD AND DETACH HERE ^
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