UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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FirstPlus Financial Group, Inc.
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(Name of Registrant as Specified in Its Charter)
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| | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
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FIRSTPLUS FINANCIAL GROUP, INC.
122 W. JOHN CARPENTER FREEWAY, SUITE 450
IRVING, TEXAS 75039-2001
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NOTICE OF 2007 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 17, 2007
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To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Stockholders (the
"Meeting") of FIRSTPLUS FINANCIAL GROUP, INC., a Nevada corporation (the
"Company"), will be held at 9:00 a.m., local time on October 17, 2007 at the
Cooper Conference Center, Berkley Room, 12230 Preston Road, Dallas, Texas 75230,
for the following purposes:
o To elect five (5) members of the Board of Directors to serve until
the 2008 Annual Meeting of Stockholders and until their successors
have been duly elected and qualify;
o To ratify the appointment of Buckno Lisicky & Company as the
Company's independent auditors for the year ending December 31,
2007; and
o To transact such other business as may properly be brought before
the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 14,
2007 as the record date for the Meeting. Only stockholders of record on the
stock transfer books of the Company at the close of business on that date are
entitled to notice of, and to vote at, the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. THE
COMPANY URGES YOU TO PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE.
ANY STOCKHOLDER GIVING A PROXY MAY REVOKE IT AT ANY TIME BEFORE THE PROXY
IS VOTED BY GIVING WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY,
BY SUBMITTING A LATER DATED PROXY, OR BY ATTENDING THE MEETING AND VOTING IN
PERSON.
By Order of the Board of Directors,
/s/ David Roberts
DAVID ROBERTS, Secretary
Dated: September 20, 2007
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
FIRSTPLUS FINANCIAL GROUP, INC.
122 W. JOHN CARPENTER FREEWAY, SUITE 450
IRVING, TEXAS 75039-2001
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PROXY STATEMENT
FOR
2007 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 17, 2007
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INTRODUCTION
This Proxy Statement and the accompanying proxy are being furnished to
stockholders by the Board of Directors of FirstPlus Financial Group, Inc., a
Nevada corporation (the "Company"), in connection with the solicitation of the
accompanying proxy for use at the 2007 Annual Meeting of Stockholders of the
Company (the "Meeting") to be held at 9:00 a.m., local time on October 17, 2007
at the Cooper Conference Center, Berkley Room, 12230 Preston Road, Dallas, Texas
75230, or at any adjournments thereof.
The principal executive offices of the Company are located 122 W. John
Carpenter Freeway, Suite 450, Irving, Texas 75039-2001. The approximate date on
which this Proxy Statement and the accompanying proxy will first be sent or
given to stockholders is September 21, 2007.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on September 14,
2007, the record date (the "Record Date") for the Meeting, will be entitled to
notice of, and to vote at, the Meeting and any adjournments thereof. As of the
close of business on the Record Date, there were outstanding 49,845,090 shares
of the Company's common stock, $.01 par value (the "Common Stock"). The holder
of each outstanding share of Common Stock is entitled to one vote. There was no
other class of voting securities of the Company outstanding on the Record Date.
VOTING OF PROXIES
A stockholder may ensure that his or her shares are voted at the Meeting
in accordance with the recommendations of the Board of Directors by completing,
signing, dating and returning the enclosed proxy in the envelope provided.
Submitting your proxy will not affect your right to attend the Meeting and to
vote in person. If your proxy is signed and returned without any direction
given, your shares will be voted in accordance with the recommendations of the
Board of Directors as described in this Proxy Statement with respect to Proposal
I and Proposal II. Any stockholder giving a proxy may revoke it at any time
before the proxy is voted by giving written notice of revocation to the
Secretary of the Company, by submitting a later dated proxy, or by attending the
Meeting and voting in person.
The Board of Directors is soliciting votes FOR election to the Board of
Directors of its nominees William Handley, John Maxwell, Roger S. Meek, Robert
O'Neal and David Roberts and FOR ratification of the appointment of Buckno
Lisicky & Company as the Company's auditors. The Board of Directors urges you to
sign, date and return the enclosed proxy today.
If you have any questions, or need any assistance in voting your shares,
please call Margaret C. Foster, Investor Relations Manager, at 972-717-7969.
If your shares are held in "street name," only your bank or broker can
vote your shares. Please contact the person responsible for your account and
instruct that individual to vote your shares as soon as possible.
QUORUM
In order to conduct any business at the Meeting, a quorum must be present
in person or represented by valid proxies. A quorum consists of a majority of
the shares of stock entitled to be voted present in person or represented by
proxy on the Record Date. All shares that are voted "FOR", "AGAINST" or
"WITHHOLD AUTHORITY" on any matter will count for purposes of establishing a
quorum and will be treated as shares entitled to vote at the Meeting (the "Votes
Present").
ABSTENTIONS
Abstentions are counted for purposes of determining both (i) the total
number of Votes Present, for the purpose of determining whether a quorum is
present; and (ii) the total number of Votes Present that are cast (the "Votes
Cast") with respect to a matter (other than in the election of the Board of
Directors). Abstentions, if any, will be included in the number of Votes Cast
with respect to the proposal to ratify the appointment of Buckno Lisicky &
Company as the Company's independent auditors and, therefore, will have the
effect of a vote against such proposal.
BROKER NON-VOTES
Shares of Common Stock held in street name that are present by proxy will
be considered as Votes Present for purposes of determining whether a quorum is
present. With regard to certain proposals, the holders of record of shares of
Common Stock held in street name are permitted to vote as they determine, in
their discretion, in the absence of direction from the beneficial holder of the
shares of Common Stock.
The term broker "non-vote" refers to shares held in street name that are
not voted with respect to a particular matter, generally because the beneficial
owner did not give any instructions to the broker as to how to vote such shares,
but which shares are present on at least one matter. In the absence of
instructions, the broker is permitted to vote such shares on the election of
directors and ratification of independent auditors at the Meeting. The Company
intends to count broker "non-votes," as Votes Present for the purpose of
determining whether a quorum is present. Broker "non-votes," however, will not
be included in the number of Votes Cast for any of the proposals identified in
the Notice of the 2007 Annual Meeting of Stockholders and, therefore, will not
have the effect of a vote against such proposals.
VOTES REQUIRED FOR APPROVAL
A plurality of the total Votes Cast by holders of Common Stock is required
for the election of directors. A vote to "WITHHOLD AUTHORITY" for any nominee
for director will be counted for purposes of determining the Votes Present, but
will have no other effect on the outcome of the vote on the election of
directors.
A majority of the total Votes Cast by holders of Common Stock is required
to ratify the appointment of Buckno Lisicky & Company as the Company's
independent auditors for the year ending December 31, 2007.
HOUSEHOLDING
Unless the Company has received contrary instructions, it sends a single
copy of the annual report, proxy statement and notice of annual or special
meeting to any household at which two or more stockholders reside, if it
believes the stockholders are members of the same family. Each stockholder in
the household will continue to receive a separate proxy card. This process,
known as "householding," reduces the volume of duplicate information received at
your household and helps to reduce the Company's expenses.
If you would like to receive your own set of the Company's annual
disclosure documents this year or in future years, follow the instructions
described below.
If your shares are registered in your own name, please contact the
Company's transfer agent and inform it of your request to revoke householding by
calling it at 800-522-6645 or writing to it at Mellon Investor Services LLC,
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Newport Office Center VII, 480 Washington Boulevard, Jersey City, New Jersey,
07310. Within 30 days after your revocation, the Company will require the
records to reflect your request.
If a bank, broker or other nominee holds your shares, please contact your
bank, broker or other nominee directly.
NO APPRAISAL RIGHTS
Under the General Corporation Law of the State of Nevada, stockholders of
the Company do not have appraisal rights in connection with any of the proposals
upon which a vote is scheduled to be taken at the Annual Meeting.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Company's Common Stock, as of the Record Date, by each person known by the
Company to be the beneficial owner of more than five percent of the Common
Stock, each director, each executive officer, as defined in Item 402(a)(2) of
Regulation S-B ("Regulation S-B"), promulgated by the Securities and Exchange
Commission (the "SEC"), and by all directors and executive officers of the
Company as a group. Unless otherwise indicated, the address for five percent
stockholders, directors and executive officers of the Company is c/o FirstPlus
Financial Group, Inc., 122 W. John Carpenter Freeway, Suite 450, Irving, Texas
75039-2001. The percentage of shares owned is based on 49,845,090 shares
outstanding as of the Record Date.
Percent of
Name and Address of Beneficial Owner Shares Owned Class(1)
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5% STOCKHOLDERS
Deutsche Bank AG(2) 3,544,500 7.1%
Rupen Gulenyan(3) 3,488,300 7.0%
NAMED EXECUTIVE OFFICERS AND DIRECTORS
William Handley 0 *
John Maxwell(4) 2,000,000 4.0%
Roger S. Meek 0 *
Robert O'Neal 0 *
David Roberts 0 *
All directors and officers as a group (5 persons)(4) 2,000,000 4.0%
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* Indicates less than one percent (1%).
(1) The percentage of ownership is based on 49,845,090 shares of common stock
outstanding as of the Record Date. 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 after the Record Date.
(2) According to Schedule 13G, filed on February 2, 2007. The address of the
filing person is Taunusanlage 12, D-60325 Frankfurt am Main, Federal
Republic of Germany.
(3) According to Schedule 13D/A, filed on March 23, 2006. Mr. Gulenyan's
address is 3040 E. Tremont Ave., Suite 201, Bronx, New York 10461.
(4) Mr. Maxwell has been granted an irrevocable proxy until December 7, 2007 to
vote 2,000,000 shares, all of which are owned or to be owned by persons
formerly affiliated with the Company.
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PROPOSAL I
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors is currently composed of five directors of a single
class. Directors are elected for a term of office to expire at the succeeding
annual meeting of stockholders of the Company after their election and until
their respective successors are elected and qualify. The terms of all five
directors are expiring at the Meeting and the Board of Directors has nominated
all five current directors of the Company, William Handley, John Maxwell, Roger
S. Meek, Robert O'Neal and David Roberts, as nominees for reelection to the
Board of Directors. The term of nominees elected will expire at the 2008 Annual
Meeting and when their respective successors are duly elected and qualify.
On June 7, 2007, the Board of Directors of the Company increased from five
to 10 the number of directors constituting the whole Board of Directors and
elected Harold Garber, William Handley, John Maxwell, Robert O'Neal and David
Roberts to the Board of Directors. Immediately thereafter, Robert P. Freeman
(Chairman), John R. Fitzgerald, Daniel T. Phillips, James Roundtree and David B.
Ward resigned from the Company's Board of Directors. The remaining directors
then reduced from 10 to five the number of directors constituting the whole
Board of Directors. As a result of Mr. Garber's subsequent death, Robert O'Neal
was elected Chairman of the Board of Directors on August 27, 2007. On the same
day, the Board of Directors elected Roger S. Meek to fill the vacancy created by
Mr. Garber's death.
Unless otherwise specified, all of the proxies received will be voted in
favor of the election of William Handley, John Maxwell, Roger S. Meek, Robert
O'Neal and David Roberts. The directors will be elected by a plurality of the
Votes Cast, in person or by proxy, at the Meeting. Management has no reason to
believe that any of the nominees will be unable or unwilling to serve as
directors, if elected. Should any of the nominees not remain a candidate for
election at the date of the Meeting, the proxies may be voted for a substitute
nominee selected by the Board of Directors.
The following table sets forth the ages and length of service of the
directors of the Company who are nominated for reelection:
Director
Name Age Since
----------------------------------------------------- ----- -------------
William Handley.................................... 64 June 2007
John Maxwell....................................... 55 June 2007
Roger S. Meek...................................... 75 August 2007
Robert O'Neal...................................... 49 June 2007
David Roberts...................................... 36 June 2007
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WILLIAM HANDLEY has served as a director, Chief Financial Officer and
Treasurer of the Company since June 2007. Mr. Handley, served as Controller of
Miami Beach Community Development Center, a non-profit community housing
developer, from January 2007 to June 2007; Chief Financial Officer of Fort
Hurricane Products, a manufacturing company, from April 2006 to December 2006;
Controller of National Publishing Company, an outdoor publishing firm, from July
2005 to March 2006; Chief Financial Officer of Celebration Cruises LP, a charter
cruise line, from July 2004 to June 2005; and Controller of J.C. Yacht
Mechanics, a large engine repair facility, from January 2001 to June 2004. In
his 25 years of senior-level experience, both domestically and internationally,
Mr. Handley also served in financial executive positions with C.A. Grupo
Credival in Caracas, Venezuela, and General Electric Co. in New York and
Venezuela. Mr. Handley is a graduate of Fairleigh Dickinson University.
JOHN MAXWELL has served as a director and Chief Executive Officer of the
Company since June 2007. Mr. Maxwell served as a Client Solutions Executive of
Inside Enterprises Inc., an IT solutions company, from 2004 to May 2007; a
Senior Account Executive of Pomeroy Computer Systems Inc., an IT solutions
company, from 2002 to 2004; and an Account Executive of En Pointe Technologies
Inc., an IT solutions company, from 2000 to 2002. Mr. Maxwell attended Louisiana
State University.
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ROGER S. MEEK has served as a director of the Company since 2007. A
shareholder in the Beaumont, Texas-based firm of Lawrence, Blackburn, Meek,
Maxey & Co., P.C., Mr. Meek has more than 30 years of public accounting
experience. Mr. Meek is a Certified Public Accountant, a member of the Texas
Society of Certified Public Accountants as well as the American Institute of
Certified Public Accountants. Prior to joining Lawrence, Blackburn, Meek, Maxey
& Co. in 1975, Mr. Meek served as an officer and aviator in the US Navy. He
holds a Bachelor of Science degree in Accounting from the University of
Tennessee and a Master of Education degree from Georgia Southern College.
ROBERT O'NEAL has served as a director since June 2007 and has served as
Chairman of the Board of Directors of the Company since August 2007. Dr. O'Neal
presently serves as President of Cosmetic, Weight Loss & Surgical Centers of
America as well as, for the past 17 years, Chief Executive Officer of Health &
Medical Practice Associates, Beaumont, Texas. He is a member of a number of
health and medical boards, including the American Academy of Anti-aging Medicine
and American Board of Disability Analysts. Dr. O'Neal graduated from the Texas
Chiropractic College in 1984.
DAVID ROBERTS has served as a director and Secretary of the Company since
2007. Mr. Roberts currently serves as the President of Rutgers Investment Group,
LLC, a wholly owned subsidiary of the Company. Mr. Roberts has a
well-established career as Senior Loan Officer and Branch Manager in the
financial services industry with leading East Coast firms, including: The Money
Store (2005 - 2006), US Mortgage (2005), Financial Resources (2004 - 2005),
Mainline Mortgage Co. (2002 - 2004), and Power Express Mortgage Bankers (2002).
Mr. Roberts also spent more than five years, from 1997 to 2002, with Nynex Corp.
(Verizon) in an infrastructure supervisory capacity.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than 10% of a registered class of the Company's equity securities to
file initial reports of ownership and reports of changes in ownership with the
SEC. Such persons are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that its officers and directors complied with all
applicable filing requirements during 2006, except as noted below:
On December 15, 2006, each of John R. Fitzgerald, Daniel T. Phillips,
James Roundtree and David B. Ward filed a Statement of Changes in Beneficial
Ownership of Securities on Form 4 covering one transaction that occurred on
December 12, 2006.
On December 18, 2006, each of Jack (J.D.) Draper, Daniel Chu, Robert P.
Freeman and Edward P. Perkins filed a Statement of Changes in Beneficial
Ownership of Securities on Form 4 covering one transaction that occurred on
December 12, 2006.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
ITS NOMINEES.
CORPORATE GOVERNANCE
The members of the Board of Directors elected in June and August 2007 have
instituted significant changes in the way that the Company is governed. These
changes include the formation of an Audit Committee of the Board, the adoption
of governance policies and procedures and the regular and timely reporting of
significant corporate events. The Board of Directors will continue to evaluate
such policies and procedures with a view to governance utilizing best practices.
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DIRECTOR INDEPENDENCE
The Company has determined that two out of the five current members of the
Board of Directors, Messrs. O'Neal and Meek, meet the independence standards
under Rule 4200 of the National Association of Securities Dealers ("NASD") rules
for The Nasdaq National Market ("Nasdaq").
BOARD OF DIRECTORS MEETINGS
Directors are expected to attend all Board meetings and meetings of
committees on which they serve and each annual meeting of stockholders.
For the year ended December 31, 2006, there were 13 meetings of the Board
of Directors, and no director attended fewer than 75% of the meetings. Each of
the incumbent directors and proposed nominees became a director subsequent to
the year ended December 31, 2006 and therefore did not attend any of the
meetings of the Board of Directors during 2006.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors had a Compensation Committee during 2006 and has
recently created an Audit Committee. Each of the Board of Directors, the Audit
Committee and the Compensation Committee may seek legal or other expert advice
from outside sources.
AUDIT COMMITTEE
On August 27, 2007, the Company created a separately-designated standing
Audit Committee in conformity with the definition contained in Section
3(a)(58)(A) of the Exchange Act. The Company has adopted an Audit Committee
Charter, which is attached hereto as Exhibit A. The Audit Committee is
responsible for assisting the Board in overseeing: (i) the integrity of the
Company's financial statements, (ii) the Company's compliance with legal and
regulatory requirements, (iii) the independent auditor's qualifications and
independence, (iv) the performance of the Company's independent auditor, (iv)
the Company's system of disclosure controls and system of internal financial,
accounting and legal compliance controls, and other responsibilities as
discussed in the Audit Committee Charter. The Audit Committee is also to provide
an open avenue of communication among the independent auditors, financial and
other senior management and the Board of Directors. The Audit Committee is also
responsible for engaging, overseeing and compensating the Company's independent
auditors, and the independent auditors report directly to the Audit Committee.
The Company did not have an audit committee at any time during 2006. The
Audit Committee currently comprises Messrs. Meek (Chairman) and O'Neal, who are
independent directors, as defined in Rule 4200 of the NASD listing standards and
who satisfy the requirements for audit committee independence under Rule 4350(d)
of the NASD listing standards. Both members of the Audit Committee are
financially literate, and Mr. Meek is considered an audit committee financial
expert within the meaning of Item 407(d) of Regulation S-B.
COMPENSATION COMMITTEE
The Compensation Committee recommends to the Board of Directors
compensation for the Company's key employees. For the year ended December 31,
2006, Compensation Committee comprised Robert P. Freeman and David B. Ward, and
the Compensation Committee met once. The Compensation Committee currently
comprises Messrs. Meek (Chairman) and O'Neal. Please see "Executive
Compensation"-- "Determination of Executive Compensation."
The Board of Directors has the authority to create or terminate additional
committees to assist it with its duties. 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.
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PROCEDURES FOR DIRECTOR NOMINATIONS
Due to the small size of the Board of Directors, currently, there is no
standing nominating committee. However, the full Board of Directors reviews,
discusses and acts on matters that would otherwise be the subject of typical
nominating committee meetings.
The Company's Articles of Incorporation provide that a stockholder may
nominate one or more candidates for the election as directors if the stockholder
gives the Company written notice of the intent to make the nomination (a) with
respect to an election to be held at an annual meeting of stockholders, 90 days
prior to the date one year after the immediately preceding annual meeting of
stockholders, and (b) with respect to an election to be held at a special
meeting of stockholders, the close of business on the tenth day following the
date on which notice of such meeting is first given to stockholders. The
stockholder notice must set forth:
o the name and address of the stockholder who intends to make the
nomination and the persons to be nominated;
o a representation that the stockholder 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
stockholder 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 stockholders, 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, stockholder representation and industry experience. No replacement
of these directors is currently contemplated.
The Board of Directors believes that all of its members should have a
record of personal integrity, proven ability and good judgment. The Board also
believes that its directors should ideally reflect a mix of experience and other
qualifications, including independence, leadership ability, prior managerial
experience as a director or member of senior management, expertise in the
Company's industries, experience developing and analyzing business strategies,
financial literacy, risk management skills and, for incumbent directors, his or
her past performance. The nomination process will be the same whether the
candidate is recommended by a stockholder, another director, management or
otherwise. The Company does not pay a fee to any third party for the
identification of candidates.
Each of the nominees for election is a current director nominated by the
full Board of Directors standing for re-election.
STOCKHOLDER COMMUNICATION POLICY
Any stockholder 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.
122 W. John Carpenter Freeway, Suite 450
Irving, Texas 75039-2001
Attn: Corporate Secretary
7
or
mfoster@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.
CODE OF ETHICS
The Board of Directors has adopted the Company's Code of Ethics to protect
the Company's reputation and to promote compliance with laws, rules and
regulations. The Code of Ethics sets out the basic standards of ethics and
conduct to which all of our directors, officers and employees are held. These
standards are designed to deter wrongdoing and to promote honest and ethical
conduct. A copy of the Company's Code of Ethics is attached hereto as Exhibit B.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to compensation
earned by the Named Executive Officers for the year ended December 31, 2006.
Name and Principal Option Awards Other Annual
Position Year Salary ($) Bonus ($) ($)(2) Compensation ($) Total ($)
--------------------- -------- -------------- -------------- --------------- ---------------- ----------
Jack (J.D.) Draper 2006 59,847 15,000 603 26,500(3) 101,950
PRESIDENT AND CHIEF
EXECUTIVE OFFICER (1)
Daniel T. Phillips 2006 6,000 60,000 603 12,000(4) 100,603
PRESIDENT AND CHIEF
EXECUTIVE OFFICER (1)
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(1) Mr. Draper served as President and Chief Executive Officer from January 1,
2006 to November 15, 2006, when the Board of Directors appointed Mr.
Phillips as President and Chief Executive Officer and Mr. Draper as
Executive Vice President. In connection with these appointments, the Board
of Directors set a monthly salary for Mr. Phillips and Mr. Draper of
$4,000 and $4,250, respectively.
(2) On December 12, 2006, the then incumbent Board of Directors granted stock
options to purchase 470,000 shares of Common Stock under the Company's
Stock Option Plan to each of Mr. Phillips and Mr. Draper. The exercise
price per share for each of the options was $.08 per share, and each award
had a term of 10 years, subject to earlier termination. The options vested
with respect to one-third of the shares issuable thereunder on the date of
grant, one-third of the shares on the first anniversary of the date of
grant and one-third of the shares on the second anniversary of the date of
grant. Under the terms of the Company's Stock Option Plan, the unexercised
portion of the options was cancelled 60 days after the option holder
ceased to be a director and/or officer of the Company.
(3) Consists of $9,000 for attendance of meetings of the Company's Investment
Committee and $17,500 for Mr. Draper's service as trustee of the FirstPlus
Financial Group Grantor Residual Trust.
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(4) Consists of fees for attendance of meetings of the Company's Investment
Committee.
OUTSTANDING EQUITY AWARDS AT YEAR-END
The following table sets forth information concerning unexercised options
and stock that had not vested for each of the Company's named executive officers
that were outstanding as of December 31, 2006.
Option Awards
----------------------------------------------------------------------------------------
Number of Securities Number of Securities
Underlying Underlying
Unexercised Options Unexercised Options Option Exercise Option Expiration
Name (#) Exercisable (#) Unexercisable Price ($) Date
------------------------- ----------------------- ----------------------- ------------------ ---------------------
Jack (J.D.) Draper 156,667 313,333 .08 12/12/16
Daniel T. Phillips 156,667 313,333 .08 12/12/16
DETERMINATION OF EXECUTIVE COMPENSATION
The Compensation Committee has overall responsibility for the Company's
executive compensation policies and practices. For 2006, the Compensation
Committee comprised Robert P. Freeman and David B. Ward. The Compensation
Committee currently comprises Roger S. Meek and Robert O'Neal. The
Compensation Committee's 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; and
o reviewing, approving and granting awards under stock incentive
plans.
The Compensation Committee determines 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 Compensation Committee works with senior management to develop and
implement the Company's executive compensation philosophy. Generally, the
Company's philosophy on executive compensation is 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 stockholder return.
Stated another way, the Company's executive compensation policy is based on
pay-for-performance. The Company does not use compensation consultants in
determining or recommending the amount or form of executive and director
compensation.
The Company conducted minimal operations through the end of 2006. Since
that time, the operations of its subsidiary, Ole Auto Group, Inc., have expanded
and the Company has made two acquisitions. As a result, the Company has
significant ongoing operations. The Company's officers and directors will
receive increased compensation in 2007 and thereafter, reflecting their
increased responsibilities (see "Employment Agreements").
9
As the Company continues in its efforts to create stockholder value in the
years ahead, the Compensation Committee will 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 stockholders.
During 2006, Mr. Draper, the Company's President and Chief Executive
Officer until November 2006, and Mr. Phillips, the Company's President and Chief
Executive Officer from November 2006 until June 2007, each received base
compensation related primarily to the level of the Company's operations, his
level of responsibility and the Company's ability to pay his compensation,
respectively.
The Board of Directors endorses the view that equity ownership by
management is beneficial in aligning management and stockholders' interests in
the enhancement of stockholder value. The Board of Directors may implement
additional equity-based compensation plans to facilitate equity ownership by
management as the Company evolves and resumes ongoing operations.
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.
EMPLOYMENT AGREEMENTS
On August 27, 2007, the Company entered into an employment agreement with
John Maxwell, the Company's Chief Executive Officer and President. The
agreement, effective as of July 1, 2007, provides for an initial term ending on
June 30, 2009 and is automatically renewed for additional one-year terms unless
either party provides the other party with advance notice of its intent not to
renew. Mr. Maxwell is to receive a base salary at the annual rate of $200,000
and such incentive compensation and bonuses, if any, (i) as the Board of
Directors in its absolute discretion may determine, and (ii) to which the Mr.
Maxwell may become entitled pursuant to the terms of any incentive compensation
or bonus program, plan or agreement from time to time in effect in which he is a
participant.
On August 27, 2007, the Company entered into an employment agreement with
William Handley, the Company's Chief Financial Officer, Vice President and
Treasurer. The agreement is substantially identical to Mr. Maxwell's agreement,
except that it provides for a base salary at the annual rate of $145,000.
DIRECTOR COMPENSATION FOR 2006
The following table sets forth the amounts paid to the Company's former
directors, other than the directors whom also served as named executive
officers, for their service as directors of the Company.
Change in
Pension
Fees Value and
Earned Non-Equity Nonqualified
or Paid in Stock Option Incentive Plan Deferred All Other
Cash Awards Awards Compensation Compensation Compensation Total
Name ($)(1) ($) ($)(2) ($) Earnings ($) ($) ($)
----------------------- ------------ ---------- ----------- ---------------- -------------- ---------------- ---------
Robert P. Freeman 23,500 -- 603 -- -- 30,000 54,103
John R. Fitzgerald (3) 34,000 -- 603 -- -- 30,000 64,603
Daniel T. Phillips (4) 40,000 -- 603 -- -- 60,000 100,603
James Roundtree (3)(5) 26,000 -- 603 -- -- 60,000 86,603
David B. Ward 23,500 -- 603 -- -- 30,000 54,103
10
-------------
(1) In 2006, the Company paid directors $1,500 for each meeting in which they
participated. The Company did not pay directors who were also employees of
the Company any additional compensation for their service as directors,
except for the reimbursement of expenses incurred in attending meetings.
Directors were also eligible to receive stock options for their service as
directors.
(2) On December 12, 2006, the Company's then incumbent Board of Directors
approved awards of stock options to purchase 470,000 shares of Common Stock
under the Company's Stock Option Plan to each of the directors. The
exercise price per share for each of the awards was $.08 per share, and
each award had a term of 10 years. The options vested with respect to
one-third of the shares issuable thereunder on the date of grant, one-third
of the shares on the first anniversary of the date of grant and one-third
of the shares on the second anniversary of the date of grant. Under the
terms of the Company's Stock Option Plan, the unexercised portion of the
options was cancelled 60 days after the option holder ceased to be a
director and/or officer of the Company.
(3) During 2006, Mr. Fitzgerald and Mr. Roundtree each received $1,500 per
month from the FirstPlus Financial Group, Inc. Grantor Residual Trust for
their services as trustees.
(4) Mr. Phillips was appointed as the Company's President and Chief Executive
Officer in November 2006.
(5) Mr. Roundtree was appointed as the Company's Chief Financial Officer in
November 2006 and as a director in December 2006.
In December 2006, the then incumbent Board of Directors reviewed options
granted to certain former directors and determined that the exercise price of
these options exceeded the fair market value of the Company's Common Stock. The
options granted to such directors had an exercise price of $.10 per share. The
Board of Directors was concerned that the Company's total compensation package
for its directors was less attractive than compensation offered by its
competitors and other comparable companies because the exercise price of options
granted to new executives of such companies would afford greater opportunity for
appreciation than the Company's options. The Board of Directors was also
concerned because issuance of stock options for service as directors had been
suspended since 2003 and payment of director compensation had at times been
postponed between 1999 and 2004.
As a result, on December 12, 2006, the Board of Directors approved awards
of stock options to purchase 470,000 shares of Common Stock under the Company's
Stock Option Plan to each of Robert P. Freeman, John R. Fitzgerald, Daniel P.
Phillips and David B Ward. The exercise price per share for each of the awards
was $.08 per share, and each award had a term of 10 years. The options vested
with respect to one-third of the shares issuable thereunder on the date of
grant, one-third of the shares on the first anniversary of the date of grant and
one-third of the shares on the second anniversary of the date of grant. Under
the terms of the Company's Stock Option Plan, the unexercised portion of the
options was cancelled 60 days after the option holder ceased to be a director
and/or officer of the Company.
These stock option awards were granted in replacement of outstanding
options to purchase 300,000 shares at an exercise price of $.10 per share
granted to each of Mr. Freeman, Mr. Fitzgerald, Mr. Phillips and Mr. Ward in
July 2002.
Commencing with their election to the Board of Directors, in 2007, Roger
S. Meek and Robert O'Neal will each receive annual compensation of $52,000,
payable quarterly, for their service on the Company's Board of Directors, Audit
Committee and Compensation Committee, comprising $30,000 in director's fees and
$22,000 in committee fees. William Handley, John Maxwell and David Roberts will
not receive any additional compensation for serving on the Company's Board of
Directors.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Until August 2007, the Company's executive offices were shared with the
facilities leased by Capital Lending Strategies, LLC ("Capital Lending"), which
incurred the cost and full responsibility of the lease. The value of this lease
11
arrangement to the Company amounted to $400 in each of 2005 and 2006. There was
no formal agreement between the Company and Capital Lending with respect to the
lease arrangement. Until August 2007, Ole Auto Group, Inc. had a sublease from
Capital Lending for its executive office facilities with rent payments of
$3,881.50 per month, plus certain expenses. Daniel T. Phillips, the Company's
former President, Chief Executive Officer and director, was a Manager and Member
of Capital Lending.
The Company has outstanding loans to Capital Lending in an amount of
approximately $63,132 as of June 30, 2006 based on a series of loan advances
made to Capital Lending in 2002, 2003 and 2004 pursuant to a revolving
promissory note. The line of credit bears interest at the prime rate of interest
as established by the Wall Street Journal plus 1% and matures on the second
anniversary of any advance on the line of credit. The Company expects that the
balance will continue to be paid down and does not intend to extend any
additional credit to Capital Lending.
During 2006, the Company had a liability insurance policy with American
Financial Services covering its directors and officers. The total premium for
the policy was $77,500. Dexter & Company was the broker for the policy. John R.
Fitzgerald, a former director of the Company, was Executive Vice President of
Dexter & Company.
PROPOSAL II
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
TERMINATION OF LIGHTFOOT GUEST MOORE & CO., PC
On June 11, 2007, the Company terminated Lightfoot Guest Moore & Co., PC
as its independent registered public accounting firm, effective immediately. The
termination was recommended by the Company's Board of Directors.
The reports of Lightfoot on the consolidated financial statements of the
Company as at and for the years ended December 31, 2006 and 2005 did not contain
any adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles.
The reports of Lightfoot on the consolidated financial statements of the
Company as at and for the years ended December 31, 2006 and 2005 did not contain
any adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles.
During the years ended December 31, 2006 and 2005 and through the date of
termination, there were no disagreements with Lightfoot Guest Moore & Co. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure which, if not resolved to the satisfaction of
Lightfoot Guest Moore & Co., would have caused it to make reference thereto in
its reports on the financial statements for such years.
During the years ended December 31, 2006 and 2005 and through the date of
termination, there were no events of the type described in Item 304(a)(1)(iv) of
Regulation S-B.
ENGAGEMENT OF BUCKNO LISICKY & COMPANY
On June 11, 2007, the Company engaged Buckno Lisicky & Company as the
Company's independent registered public accountant. The engagement of Buckno
Lisicky & Company was approved by the Company's Board of Directors.
During the years ended December 31, 2006 and 2005 and through the date of
termination of Lightfoot Guest Moore & Co., the Company did not consult with
Buckno Lisicky & Company with respect to any of (i) the application of
accounting principles to a specified transaction, either completed or proposed;
(ii) the type of audit opinion that might be rendered on the Company's financial
statements; or (iii) any matter that was either the subject of disagreement (as
12
defined in Item 304(a)(1)(iv) of Regulation S-B) or an event of the type
described in Item 304(a)(1)(iv) of Regulation S-B.
The Company provided Lightfoot Guest Moore & Co. with a copy of the
foregoing disclosure and requested Lightfoot Guest Moore & Co. to furnish it
with a letter addressed to the SEC stating whether it agrees with the statements
made therein. A copy of Lightfoot Guest Moore & Co.'s letter was filed with the
SEC on June 18, 2007.
Although the selection of independent auditors does not require
ratification, the Board of Directors has directed that the appointment of Buckno
Lisicky & Company be submitted to stockholders for ratification due to the
significance of such appointment to the Company. If stockholders do not ratify
the appointment of Buckno Lisicky & Company as the Company's independent
auditors, the Board of Directors will consider the appointment of other
certified public accountants. A representative of Buckno Lisicky & Company will
be present at the Meeting, will be available to respond to appropriate questions
and will have the opportunity to make a statement if he or she desires. The
Company does not expect that a representative of Lightfoot Guest Moore & Co.
will be present at the Meeting. The approval of the proposal to ratify the
appointment of Buckno Lisicky & Company requires the affirmative vote of a
majority of the Votes Cast.
FEES
The following table sets forth fees billed to us during the years ended
December 31, 2006 and 2005 by Lightfoot, the Company's independent auditors:
December 31, 2006 December 31, 2005
----------------- -----------------
(i) Audit Fees $67,592 $64,500
(ii) Audit Related Fees -- $5,256
(iii) Tax Fees -- --
(iv) All Other Fees -- --
AUDIT FEES. Consists of fees billed for professional services rendered by
Lightfoot Guest Moore & Co. 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 the Company's
auditors in connection with statutory and regulatory filings or engagements.
AUDIT RELATED FEES. Consists of fees billed by Lightfoot Guest Moore & Co.
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 for tax compliance, tax advice and tax
planning.
ALL OTHER FEES. Consists of fees for products and services other than
the services reported above. There were no management consulting services
provided in 2006 or 2005.
POLICY ON PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT AUDITORS
Durring 2006, the Company's then incumbent Board of Directors' did not
have a formal written policy regarding pre-approval of audit and permissible
non-audit services provided by the independent auditors.
On August 27, 2007, the Company created a separately-designated standing
Audit Committee. The Company's current policy is that all audit and non-audit
services to be performed by the Company's independent accountant must be
approved in advance by the Audit Committee. These services may include audit
services, audit-related services, tax services and other services. Consistent
with applicable law, limited amounts of services, other than audit, review or
attest services, may be approved by one or more members of the Audit Committee
pursuant to authority delegated by the Audit Committee, provided each such
approved service is reported to the full Audit Committee at its next meeting.
13
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF BUCKNO LISICKY & COMPANY AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2007.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than May 25, 2008. The Company's Articles of Incorporation provide that
a stockholder seeking to have a proposal included in the Company's proxy
statement must comply with the requirements of Regulation 14A under the
Securities Exchange Act of 1934, as amended.
Under SEC rules, if the Company does not receive notice of a stockholder
proposal at least 45 days prior to the first anniversary of the date of mailing
of the prior year's proxy statement, then the Company will be permitted to use
its discretionary voting authority when the proposal is raised at the annual
meeting, without any discussion of the matter in the proxy statement. In
connection with the Company's 2008 Annual Meeting of Stockholders, if the
Company does not have notice of a stockholder proposal on or before August 6,
2008, the Company will be permitted to use its discretionary voting authority as
outlined above.
The Company's Articles of Incorporation establish procedures for bringing
business before any annual meeting or special meeting of stockholders of the
Company. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder'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 stockholders, notice by the stockholder 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 stockholder's notice to the Secretary shall
set forth as to each matter the stockholder 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
stockholder proposing such business;
o the number of shares of the Company which are beneficially owned by
the stockholder; and
o any material interest of the stockholder in such business.
The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company. The
chairman of the meeting may, if the facts warrant, determine that a nomination
was not made in accordance with the foregoing procedure, in which event, the
officer will announce that determination to the Meeting and the defective
nomination will be disregarded.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited through the mail and through telephonic or telegraphic
communications to, or by meetings with, stockholders or their representatives by
directors, officers and other employees of the Company who will receive no
additional compensation therefor. We have retained Mackenzie Partners, Inc., 105
Madison Avenue, 14th Floor, New York, New York 10016, as proxy solicitor, for a
fee of $5,000 plus out-of-pocket expenses.
14
The Company requests persons such as brokers, nominees and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy material to their
principals and to request authority for the execution of the proxy, and the
Company will reimburse such persons for their reasonable expenses.
ANNUAL REPORT
All stockholders of record as of September 14, 2007 have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report for the
year ended December 31, 2006. Such report contains certified consolidated
financial statements of the Company and its subsidiaries for the year ended
December 31, 2006.
By Order of the Company,
DAVID ROBERTS
Secretary
Dated: September 20, 2007
Irving, Texas
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2006 (WITHOUT EXHIBITS), AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION TO STOCKHOLDERS OF RECORD ON THE
RECORD DATE WHO MAKE WRITTEN REQUEST THEREFOR TO DAVID ROBERTS, SECRETARY,
FIRSTPLUS FINANCIAL GROUP, INC., 122 W. JOHN CARPENTER FREEWAY, SUITE 450,
IRVING, TEXAS 75039-2001.
15
EXHIBIT A
FIRSTPLUS FINANCIAL GROUP, INC.
AUDIT COMMITTEE CHARTER
PURPOSE OF THE AUDIT COMMITTEE
The Audit Committee (the "Committee") is a committee of the Board of
Directors (the "Board") of FirstPlus Financial Group, Inc. (the "Company")
established for the purpose of overseeing the accounting and financial reporting
processes of the Company and audits of its financial statements.
The purposes of the Committee shall be to assist the Board in overseeing:
(i) the integrity of the Company's financial statements, (ii) the Company's
compliance with legal and regulatory requirements, (iii) the independent
auditor's qualifications and independence, (iv) the performance of the Company's
independent auditor, and (v) the Company's system of disclosure controls and
system of internal financial, accounting and legal compliance controls. The
Committee shall also provide an open avenue of communication among the
independent auditors, financial and other senior management and the Board.
The Committee shall oversee the Company's accounting and financial
reporting processes and the quality and integrity of its financial reports and
other financial information provided by the Company to any non-tax governmental
body.
The Committee shall be solely responsible for the appointment,
compensation and oversight of the Company's independent auditors, and the
independent auditors shall report directly to the Committee.
The Committee shall serve as an independent and objective party to monitor
the Company's financial reporting process and internal control system. In
discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and to engage, determine funding for,
and obtain advice and assistance from independent counsel and other advisors as
the Committee deems necessary to carry out its duties. The Company shall also
provide funding for ordinary administrative expenses of the Committee that the
Committee deems necessary or appropriate in carrying out its duties.
COMPOSITION AND MEMBERSHIP REQUIREMENTS
The Board shall appoint the Committee and shall designate its Chairman.
The Committee shall consist of at least two independent directors, each of whom
shall satisfy the independence requirements of the Sarbanes-Oxley Act of 2002
and the regulations thereunder (the "Act"), the Securities and Exchange
Commission (the "SEC") and the Nasdaq Stock Market ("Nasdaq"). Without limiting
the foregoing, each appointed director shall be independent of the management of
the Company, both directly and indirectly, and free from any relationship that,
in the opinion of the Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee.
The Committee members shall have working familiarity with basic finance
and accounting practices and have the knowledge and experience required to
fulfill their responsibilities, as specified by Nasdaq requirements. At least
one member of the Committee shall have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background that results in that individual's financial
sophistication, including being or having been a chief executive officer, a
chief financial officer or other senior officer with financial oversight
responsibilities and, therefore, shall qualify as a "financial expert," as
contemplated by the Act and SEC and Nasdaq rules. The identity of such member(s)
shall be disclosed in periodic filings as required by the SEC.
Committee members shall be elected by the Board at a meeting of the Board;
members shall serve until their successors shall be duly elected and qualified.
The Board may, at any time, remove any member of the Committee and fill the
vacancy created by such removal. The Committee's chairman shall be designated by
the full Board, comprising a majority of independent directors, or the full
Committee.
COMMITTEE MEETINGS
1. COMMITTEE MEETINGS. The Committee shall meet as a committee at least
quarterly, or more frequently as circumstances require, either in person or by
telephone conference call. The Chairman shall prepare and/or approve an agenda
in advance of each meeting. The agenda should be developed in consultation with
management, other Committee members and independent auditors and shall be
consistent with this Charter. The Committee shall maintain minutes of meetings
and report to the Board on significant results of its activities. The Chairman
shall also be responsible for leadership of the Committee, including presiding
over the meetings, making Committee assignments and reporting to the Board. The
Chairman shall also maintain regular liaison with the Chief Executive Officer,
Chief Financial Officer and the lead independent audit partner. If the Chairman
is not present at any meeting, the members of the Committee may designate a
Chairman by majority vote of the Committee members. Meetings should be scheduled
to permit appropriate prior review and timely filing of the Company's interim
and year-end financial statements.
2. MEETINGS WITH INDEPENDENT AUDITORS. The Committee shall meet with the
independent auditors prior to the commencement of the audit and to review the
annual financial statements prior to their release and at such other times that
the Chairman may deem necessary or appropriate for any reason, including at the
request of the independent auditors. At the discretion of the Chairman, the
principal financial and accounting officers of the Company may be invited to
attend the meetings of the Committee (or portions thereof) held with the
independent auditors.
3. SEPARATE MEETINGS. A regularly scheduled meeting may include an
executive session of the Committee, absent members of management, and on such
terms and conditions as the Committee may elect. As part of its job to foster
open communication, the Committee may meet periodically with management and the
independent auditors in separate executive sessions to discuss any matters that
the Committee or either of these groups believe should be discussed privately.
A-2
4. AVAILABILITY. The Committee shall make itself available to meet with
management of the Company to discuss any matters that it or management deems
appropriate, and shall be available to the independent auditors during the year
for consultation purposes.
COMMITTEE RESPONSIBILITIES AND DUTIES
The Committee shall assist the Board in fulfilling the Board's oversight
responsibilities with respect to financial reporting to stockholders and the
SEC, the system of controls that management has established, and the external
audit process, and report the results of its activities to the Board.
The following shall be the principal recurring processes of the Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate:
1. REVIEW AND OVERSIGHT PROCEDURES.
a. REVIEW OF CHARTER. The Committee shall review and reassess the
adequacy of this Charter at least annually, propose changes to this Charter to
the Board for its approval as necessary, and cause this Charter to be published
at least triennially in accordance with SEC regulations.
b. REVIEW OF FILINGS, FINANCIAL STATEMENTS AND OTHER DISCLOSURES.
i. The Committee shall review with management (including the
principal financial and accounting officers of the Company) and the independent
auditors, prior to release, the filings required to be made by the Company with
the SEC on an annual and quarterly basis, as well as any other required interim
reports, filings or documents that contain financial information about the
Company. The Committee shall specifically review the results of the annual audit
of the Company's consolidated financial statements prior to the filing or
distribution thereof, including the Company's disclosures under "Management's
Discussion and Analysis of Financial Condition and Results of Operations," any
appropriate matters regarding the clarity of the disclosures in such financial
statements, accounting principles, practices and any other matters required to
be communicated to the Committee by the independent auditors under Generally
Accepted Auditing Standards ("GAAS"). The Committee shall cause the independent
auditors to conduct a SAS 100 Interim Financial Review prior to each filing of
the Company's Form 10-Q. The Committee shall recommend to the Board whether the
financial statements should be included in the periodic filings of the Company.
ii. The Committee shall review: (a) material issues regarding
accounting principles and financial statement presentations, including any
significant changes in the Company's selection or application of accounting
principles, and material issues as to the adequacy of the Company's internal
controls and any special audit steps adopted in light of material control
deficiencies; (b) analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and judgments made in
connection with the preparation of the financial statements, including analyses
of the effects on the financial statements of alternative methods pursuant to
Generally Accepted Accounting Principles ("GAAP"); (c) the effect of regulatory
and accounting initiatives, as well as off-balance sheet structures, on the
A-3
financial statements of the Company; and (d) the type and presentation of
information to be included in earnings press releases (paying particular
attention to any use of "pro forma," or "adjusted" non-GAAP, information), as
well as review of any financial information and earnings guidance provided to
analysts and rating agencies.
iii. The Committee shall review analyses and significant
findings by the independent auditors with respect to financial reporting issues
and judgments made in connection therewith, including (a) any material
difficulties or problems with any audit work, (b) any restrictions on the scope
of the independent auditors' activities or access to requested information, (c)
any significant disagreements with management and the independent auditors and
any accounting adjustments noted or proposed by the independent auditors, but
not accepted by management, (d) any communications between the independent
auditing team and the firm's national office respecting material auditing or
accounting issues presented by the engagement, (e) any management or internal
control letter issues raised, or proposed to be raised, by the independent
auditors to the Company, and (f) any material issue as to the adequacy of the
Company's internal controls and specific audit steps adopted in light of
material control deficiencies. After completion of such review, the Committee
shall make its recommendation to the Board.
c. COMMITTEE OVERSIGHT OF ACCOUNTING PERSONNEL. The Committee shall
meet from time to time with the principal financial and accounting officers of
the Company to review accounting policies followed, changes therein, accounting
controls, and any issues that may be raised by the independent auditors. In
conformity with the Company's continuing policy, the accounting officers shall
report to the Board upon submission of the annual and quarterly financial
statements of the Company.
d. ANNUAL PERFORMANCE EVALUATION. The Committee shall perform an
annual self-evaluation of its performance.
2. INDEPENDENT AUDITORS.
a. COMMITTEE OVERSIGHT OF INDEPENDENT AUDITORS. The Committee shall
have the sole authority regarding, and shall be directly responsible for, the
appointment, compensation, oversight, termination and replacement of, as well as
funding for, the independent auditors for the purpose of preparing or issuing an
audit report or related work, or any non-audit work, subject, if applicable, to
stockholder ratification. The Committee shall have a clear understanding with
management and the independent auditors that the independent auditors report
directly to the Committee, as representatives of the Company's stockholders.
b. AUDITORS' INDEPENDENCE. The Committee shall annually request from
the auditors, a formal written statement delineating all relationships between
the auditors and the Company consistent with Independence Standards Board
Standard 1, including fees paid by the Company to the auditors, in accordance
with the Act's requirements; review with the auditors all relationships between
the auditors and management of the Company that may impact the objectivity and
independence of the auditor and take, or recommend that the full Board take,
appropriate action to oversee the independence of the outside auditor.
A-4
c. AUDIT PLAN. Prior to the commencement of the annual audit, the
scope of the independent auditors' examination and the planning therefor shall
be presented to the Committee by the independent auditors. The Committee shall
review the independent auditors' plan and discuss scope, staffing, locations,
reliance upon management and general audit approach. The Committee should be
satisfied that the audit plan is sufficiently detailed and covers any
significant areas of concern that the Committee may have.
d. PRE-APPROVAL OF THE INDEPENDENT AUDITORS' FEES. The Committee
shall review and pre-approve both audit and non-audit services to be provided by
the independent auditor (other than with respect to the de minimis exceptions
permitted by the Act). This duty may be delegated to one or more designated
members of the Committee with any such pre-approval reported to the Committee at
its next regularly scheduled meeting. Approval of non-audit services shall be
disclosed to investors in periodic reports required by Section 13(a) of the
Securities Exchange Act of 1934.
e. INDEPENDENT AUDITORS' REPORT ON PRACTICES. The independent
auditors shall report promptly to the Committee (a) all critical accounting
policies and practices to be used; (b) all alternative treatments of financial
information, ramifications of such treatment, and the treatment preferred by the
auditors; and (c) all material written communications between the independent
audit firm and Company management. The Committee shall also review any problems
with management and any other matters required to be communicated to the
Committee under GAAS or applicable rules under or of the Act, the SEC, Nasdaq,
or other regulatory authorities. The independent auditors shall also report on
recently issued and adopted accounting standards, the Company's compliance
therewith, and the effect of unusual or extraordinary transactions. The
independent auditors must discuss their judgments about the quality and content
of the Company's accounting principles with the Committee.
f. QUALITY CONTROL OF THE INDEPENDENT AUDITORS. On an annual basis,
the Committee shall obtain a report from the independent auditors describing (i)
the independent auditors' internal quality-control procedures, and (ii) any
material issues raised by the most recent internal quality-control review, or
peer review, of the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting one or
more independent audits carried out by such firm, and any steps taken to deal
with any such issues. The Committee shall then present its conclusions with
respect to the independent auditor to the full Board.
g. ROTATION OF THE INDEPENDENT AUDITORS. The Committee shall
annually (i) assess the qualifications, performance and independence of the
auditors and the lead (or coordinating) audit partner (or other audit partner
having primary responsibility for the audit); and ii) take any actions necessary
to ensure the rotation, not less than every five years, of the audit partner.
h. HIRING POLICIES. The Committee shall confirm that the Company has
complied with the Act in the hiring of any employees or former employees of the
independent auditors, after consultation with management.
A-5
3. LEGAL COMPLIANCE.
a. LEGAL COMPLIANCE. The Committee shall review with the Company's
counsel any legal matters that could have a significant impact on the Company's
financial statements, compliance with applicable laws and regulations, and
inquiries received from regulators or governmental agencies, including corporate
securities trading policies.
b. REVIEW OF DISCLOSURES BY OFFICERS. The Committee shall review
disclosures made by the Company's principal executive officer and principal
financial officer regarding compliance with their certification obligations
under the Act, including the Company's disclosure controls and procedures and
internal controls for financial reporting.
c. RELATED PARTY TRANSACTIONS. The Committee shall be responsible
for reviewing and approving all related party transactions involving the Company
and any director, executive officer, other employee, or family member thereof.
d. COMPLIANCE WITH CONFLICTS OF INTERESTS POLICY. The Committee
shall, on behalf of the Board and stockholders of the Company, satisfy itself
that the policies set forth in the Company's Employee Handbook are strictly
adhered to by the Company's officers, directors and employees.
4. OTHER COMMITTEE ACTIVITIES.
a. EARNINGS RELEASES. The Committee shall discuss earnings releases,
prior to their release to the public, as well as financial information and
earnings guidance provided to analysts and rating agencies.
b. COMPLAINT PROCEDURES. The Committee shall establish procedures
for the receipt, retention and treatment of complaints received by the Company
regarding the Company's accounting, internal accounting controls and auditing
matters and for the confidential, anonymous submissions by employees of the
Company of concerns relating to questionable accounting or auditing matters.
c. COMMITTEE REPORTS. The Committee shall prepare reports to
stockholders as required by the SEC's proxy rules to be included in the
Company's annual proxy statement.
d. OTHER. The Committee shall have the power and authority to
perform any other activities consistent with this Charter, the Company's
by-laws, and governing law, as the Committee or the Board deems necessary or
appropriate.
LIMITATION
Nothing in this Charter is intended to alter in any way the standard of
conduct that applies to any of the directors of the Company under the Nevada
General Corporation Law, as from time to time amended, and this Charter does not
impose, nor shall it be interpreted to impose, any duty on any director greater
than, or in addition to, the duties or standard established by the Nevada
General Corporation Law.
A-6
EXHIBIT B
FIRSTPLUS FINANCIAL GROUP, INC.
CODE OF ETHICS
Introduction
FirstPlus Financial Group, Inc.'s reputation for honesty and integrity is
the sum of the personal reputations of our directors, officers and employees. To
protect this reputation and to promote compliance with laws, rules and
regulations, this Code of Ethics has been adopted by our Board of Directors.
This Code sets out the basic standards of ethics and conduct to which all
of our directors, officers and employees are held. These standards are designed
to deter wrongdoing and to promote honest and ethical conduct, but will not
cover all situations. If a law or employment agreement conflicts with a policy
in this Code, you must comply with the law or employment agreement; however, if
a local custom or policy conflicts with this Code, you must comply with the
Code.
If you have any doubts whatsoever as to the propriety of a particular
situation, you should submit it in writing to FirstPlus Financial Group, Inc.'s
President, who will review the situation and take appropriate action in keeping
with this Code, our other corporate policies, and the applicable law. If your
concern relates to the President, you should submit your concern, in writing, to
the Company's Board of Directors.
1. Honest and Ethical Conduct
For directors, officers and employees, we, as a Company, require honest
and ethical conduct from everyone subject to this Code. Each of you has a
responsibility to all other directors, officers and employees of FirstPlus
Financial Group, Inc., and to FirstPlus Financial Group, Inc. itself, to act in
good faith, responsibly, with due care, competence and diligence, without
misrepresenting material facts or allowing your independent judgment to be
subordinated. In essence, you are expected to conduct yourself in a manner that
meets with our ethical and legal standards.
2. Compliance with Laws, Rules and Regulations
For directors, officers and employees, you are required to comply with all
applicable governmental laws, rules and regulations, both in letter and in
spirit. Although you are not expected to know the details of all applicable
laws, rules and regulations, we expect you to seek advice from FirstPlus
Financial Group, Inc.'s President, who may seek advice from legal counsel, if
you have any questions about whether the requirement applies to the situation or
conduct that may be required to comply with any law, rule or regulation.
3. Conflicts of Interest
For directors, officers and employees, you must handle in an ethical
manner any actual or apparent conflict of interest between your personal and
business relationships. Conflicts of interest are prohibited as a matter of
policy. A "conflict of interest" exists when a person's private interest
interferes with the interests of FirstPlus Financial Group, Inc. For example, a
conflict situation arises if you or a member of your family receives an improper
personal benefit as a result of your position with FirstPlus Financial Group,
Inc. If you become aware of any material transaction or relationship that
reasonably could be expected to effect a conflict of interest, you should report
it promptly to FirstPlus Financial Group, Inc.'s President. Conflicts of
interest are prohibited as a matter of Company policy, except under guidelines
set forth in the Company By-Laws or approved by the Board of Directors.
4. Public Disclosures
For directors, officers and employees, it is FirstPlus Financial Group,
Inc.'s policy to provide disclosure in accordance with applicable law in all
reports and documents that we file with, or submit to, the Securities and
Exchange Commission (the "Commission") and in all other public communications
made by FirstPlus Financial Group, Inc.
5. Confidentiality
For directors, officers and employees, you should maintain the privacy of
all confidential information entrusted to you by FirstPlus Financial Group, Inc.
or by persons with whom FirstPlus Financial Group, Inc. does business, except
when disclosure is authorized or legally mandated. Confidential information
includes all non-public information that might be of use to competitors of, or
harmful to, FirstPlus Financial Group, Inc., customers, or persons with whom
FirstPlus Financial Group, Inc. does business, if disclosed.
6. Insider Trading
If you have access to material, non-public information concerning
FirstPlus Financial Group, Inc., you are not permitted to use or share that
information for stock trading purposes, or for any other purpose except the
conduct of FirstPlus Financial Group, Inc.'s business. All non-public
information about FirstPlus Financial Group, Inc. should be considered
confidential information. Insider trading, which is the use of material,
non-public information for personal financial benefit or to "tip" others who
might make an investment decision on the basis of this information, is not only
unethical but also illegal. The prohibition on insider trading applies not only
to FirstPlus Financial Group, Inc.'s securities, but also applies to securities
of other companies should you learn of material, non-public information about
these companies in the course of your duties to FirstPlus Financial Group, Inc.
"Insider trading" violations may subject you to criminal or civil liability, in
addition to disciplinary action by FirstPlus Financial Group, Inc.
7. Interpretations and Waivers of the Code of Business Conduct and Ethics
As directors, officers and employees, if you are uncertain whether a
particular activity or relationship is improper under this Code or requires a
waiver of this Code, you should disclose it to FirstPlus Financial Group, Inc.'s
President, who will determine first whether a waiver of this Code is required
and second, if required, whether a waiver will be granted. You may be required
to agree to conditions before a waiver or a continuing waiver is granted.
However, any waiver of this Code for an executive officer or director may be
made only by FirstPlus Financial Group, Inc.'s Board of Directors and will be
promptly disclosed to the extent required by applicable law, rule or regulation.
B-2
8. Reporting any Illegal or Unethical Behavior
Any report or allegation of a violation this Code need not be signed and
may be sent to FirstPlus Financial Group, Inc.'s President anonymously. All
reports of violations of this Code, including reports sent anonymously, will be
promptly investigated and, if found to be accurate, acted upon in a timely
manner. If any report of wrongdoing relates to accounting or financial reporting
matters, or relates to persons involved in the development or implementation of
FirstPlus Financial Group, Inc.'s system of internal controls, a copy of the
report will be promptly provided to the Board of Directors, which may
participate in the investigation and resolution of the matter. It is the policy
of FirstPlus Financial Group, Inc. not to allow actual or threatened
retaliation, harassment or discrimination due to reports of misconduct by others
made in good faith by employees. Employees are expected to cooperate in internal
investigations of misconduct.
9. Compliance Standards and Procedures
This Code is intended to be a statement of basic principles and standards
and does not include specific rules that apply to every situation. Its contents
must be viewed within the framework of FirstPlus Financial Group, Inc.'s
employment agreements, other policies, practices, instructions as well as the
requirements of the law. This Code is in addition to other policies, practices
or instructions of FirstPlus Financial Group, Inc. that must be observed.
Moreover, the absence of a specific corporate policy, practice or instruction
covering a particular situation does not relieve you of the responsibility for
exercising ethical standards applicable to the circumstances.
Violation of any of the standards contained in this Code, or in any other
policy, practice or instruction of FirstPlus Financial Group, Inc., can result
in disciplinary actions, including dismissal and civil or criminal action
against the violator. This Code should not be construed as a contract of
employment and does not change any employment agreement or any person's status
as an at-will employee.
This Code is for the benefit of FirstPlus Financial Group, Inc., and no
other person is entitled to enforce this Code. This Code does not, and should
not be construed to, create any private cause of action or remedy in any other
person for a violation of the Code.
B-3
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2. Please ------
Mark Here
for Address
Change or |_|
Comments
SEE REVERSE SIDE
FOR AGAINST ABSTAIN
1. Election of nominees named FOR all nominees WITHHOLD AUTHORITY 2. To ratify the appointment ----- ----- -----
below to the Board of listed to the left to vote for all of Buckno Lisicky & Company
Directors of the Company. (except as marked to nominee(s) listed to as the Company's
the contrary to the the left independent auditors for |_| |_| |_|
Nominees: left) the fiscal year ending
------ ------ December 31, 2007.
01 William Handley
This proxy may be revoked prior to the time it is voted
02 John Maxwell |_| |_| by delivering to the secretary of the Company either a
written revocation or a proxy bearing a later date or
03 Roger S. Meek by appearing at the Annual Meeting and voting in
person.
04 Robert O'Neal and
PLEASE SIGN AND DATE THIS PROXY CARD AND RETURN IT IN
05 David Roberts THE ENCLOSED ENVELOPE TODAY.
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.
----------------------------------------------------------------------
Signature Signature Date
-------------------------------------------- -------------------------------------------- -----------------
Your signature should appear the same as your name appears hereon. In signing as attorney, executor, administrator, trustee or
guardian, please indicate the capacity in which signing. When signing as joint tenants, all parties in the joint tenancy must sign.
When a proxy is given by a corporation, it should be signed by an authorized officer and the corporate seal affixed. No postage is
required if mailed in the United States.
^ FOLD AND DETACH HERE ^
FIRSTPLUS FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS - OCTOBER 17, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of FirstPlus Financial Group, Inc., a Nevada corporation (the "Company"), does hereby appoint
William Handley and John Maxwell, and each of them, the true and lawful attorneys and proxies with full power of substitution, for
and in the name, place and stead of the undersigned, to vote all of the shares of Common Stock of the Company that the undersigned
would be entitled to vote if personally present at the 2007 Annual Meeting of Stockholders (the "Annual Meeting") of the Company to
be held at 9:00 a.m., local time on October 17, 2007 at the Cooper Conference Center, Berkley Room, 12230 Preston Road, Dallas,
Texas 75230, and at any and all adjournments and postponements thereof.
This proxy when properly executed and returned will be voted in the manner directed by the undersigned stockholder. If no
direction is made, this proxy will be voted (1) FOR the election of all nominees listed in Proposal 1; (2) FOR the ratification of
the appointment of Buckno Lisicky & Company as the Company's independent auditors; and (3) in accordance with the discretion of the
proxies or proxy with respect to any other business transacted at the Annual 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 ^