<PAGE> 1
NICHOLAS FINANCIAL, INC.
Building C. #501B
2454 McMullen Booth Road
Clearwater, FL 33759-1343
(813) 726-0763
PROXY STATEMENT AND INFORMATION CIRCULAR
AS AT AND DATED JUNE 26, 1998
This Proxy Statement and Information Circular accompanies the Notice of the
1998 Annual General Meeting of Members (the "Meeting") of Nicholas Financial,
Inc. (hereinafter called the "Company") to be held on Wednesday August 5, 1998,
at 10:00 a.m. (Clearwater, Florida time), and is furnished in connection with a
solicitation of proxies on behalf of the Board of Directors of the Company for
use at that Meeting and at any adjournment thereof.
The Company's Annual Report on Form 10-KSB for the fiscal year ended March
31, 1998, together with this Proxy Statement and Information Circular and the
accompanying proxy form ("Proxy") are first being mailed on or about July 2,
1998 to shareholders entitled to vote at the Meeting.
REVOCABILITY OF PROXY
If the accompanying Proxy is completed, signed and returned, the shares
represented thereby will be voted at the Meeting. The giving of the Proxy does
not affect the right to vote in person should the member be able to attend the
Meeting. The member may revoke the Proxy at any time prior to the voting
thereof.
In addition to revocation in any other manner permitted by law, a proxy may
be revoked by instrument in writing executed by the member or his attorney
authorized in writing, or if the member is a corporation, by a duly authorized
officer or attorney thereof, and deposited either at the registered office of
the Company at any time up to and including the last business day preceding the
day of the Meeting, or any adjournment thereof, or, as to any matter in respect
of which a vote shall not already have been cast pursuant to such proxy, with
the Chairman of the Meeting on the day of the Meeting, or any adjournment
thereof, and upon either of such deposits the proxy is revoked.
PERSONS MAKING THE SOLICITATION
THE ENCLOSED PROXY IS BEING SOLICITED BY
THE BOARD OF DIRECTORS OF THE COMPANY
Solicitations will be made by mail and possibly supplemented by telephone
or other personal contact to be made without special compensation by regular
officers and employees of the Company. The Company may reimburse members'
nominees or agents (including brokers holding shares on behalf of clients) for
the cost incurred in obtaining from their principals authorization to execute
forms of proxy. No solicitation will be made by specifically engaged employees
or soliciting agents. The cost of solicitation of proxies on behalf of the
board of Directors will be borne by the Company.
<PAGE> 2
VOTING SHARES AND OWNERSHIP
OF MANAGEMENT AND PRINCIPAL HOLDERS
The Company is authorized to issue 50,000,000 Common shares without par
value and 5,000,000 Preference shares without par value. As of June 26, 1998,
there were issued and outstanding 2,357,013 Common shares and no Preference
shares had been issued. At a General Meeting of the Company, on a show of hands,
every member present in person and entitled to vote shall have one vote and on a
poll, every member present in person or represented by proxy and entitled to
vote shall have one vote for each share of which such member is the registered
holder. Shares represented by proxy will only be voted on a poll.
The following table sets forth certain information regarding the beneficial
ownership of Common shares as of June 26, 1998 regarding (i) each of the
Company's directors, (ii) each of the Company's executive officers, (iii) all
directors and officers as a group, and (iv) each person known by the Company to
beneficially own, directly or indirectly, more than 5% of the outstanding
common shares:
<TABLE>
<CAPTION>
Name of Shareholder Number of Shares Percentage of Issued and
Outstanding
==================================================================================
<S> <C> <C>
Peter L. Vosotas (1) 1,111,498 41%
Joseph G. Bowes (2) NIL 0%
Raymond Robert Cottrell (3) NIL 0%
Ralph T. Finkenbrink 5,666 *
All directors and
officers as a Group 1,117,164 41%
<FOOTNOTE>
* Represents less than one percent of the common stock outstanding.
</TABLE>
(1) Mr. Vosotas' and Mr. Finkenbrink's business address is 2454 McMullen Booth
Road, Building C., #501B, Clearwater, Florida 33759.
(2) Mr. Bowes' business address is 3639 Garibaldi Drive, North Vancouver, BC
Canada V7H 2W2.
(3) Mr. Cottrell's business address is 2250-650 West Georgia Street,
Vancouver, BC Canada V6B 4N7.
The directors have determined that all members of record as of the close of
business on June 26, 1998 will be entitled to receive notice of and to vote at
the Meeting. Those members so desiring may be represented by proxy at the
Meeting. The Proxy, and the power of attorney or other authority, if any, under
which it is signed or a notarially certified copy thereof, must be deposited
either at the office of the Registrar and Transfer Agent of the Company,
Montreal Trust Company of Canada, 510 Burrard Street, Vancouver, B.C., V6C 3B9
or at the Head Office of the Company at Building C. #501B, 2454 McMullen Booth
Road, Clearwater, FL 33759-1343 not less than 48 hours, Saturdays and holidays
excepted, prior to the time of the holding of the Meeting or any adjournment
thereof.
<PAGE> 3
Votes cast by proxy or in person at the Meeting will be tabulated by the
inspector of elections appointed for the Meeting, who will also determine
whether a quorum is present for the transaction of business. The Company's
Articles provide that a quorum is present if two members of the Company are
present in person or represented by proxy. Abstentions will be counted as
shares that are present and entitled to vote for purposes of determining whether
a quorum is present. Shares held by nominees for beneficial owners will also be
counted for purpose of determining whether a quorum is present if the nominee
has the discretion to vote on at least one of the matters presented, even though
the nominee may not exercise discretionary voting power with respect to other
matters and even though voting instructions have not been received from the
beneficial owner (a "broker non-vote"). Neither abstentions nor broker non-votes
are counted in determining whether a proposal has been approved.
If a quorum exists, directors are elected by a plurality of the votes cast
by the shares entitled to vote in the election. The proposals set forth herein
to approve the Company's 1998 Employee Stock Option Plan and the Company's 1998
Non- Employee Director Plan will be adopted if a majority of the total votes
present, or represented, and entitled to vote at the Meeting vote in favor of
such proposals. The proposal set forth herein to amend the Company's Articles
will be adopted if three-fourths (3/4ths) of the total votes present, or
represented, and entitled to vote at the Meeting vote in favor of such proposal.
Members are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed Proxies will be voted FOR each proposal listed in the Notice
of the Meeting which are set forth more completely herein. Returning your
completed Proxy will not prevent you from voting in person at the Meeting should
you be present and wish to do so.
Advance Notice of the Meeting was published pursuant to Section 111 of the
Company Act at Vancouver, B.C. on June 1, 1998.
PROPOSALS 1 and 2: NUMBER AND ELECTION OF DIRECTORS
The persons listed below have been nominated by the Board to serve as
directors of the Company. Nominees who receive a plurality of the votes cast
shall be elected. Abstentions, broker non-votes, and withheld votes will not
be counted.
Each director of the Company is elected annually and holds office until the
next Annual General Meeting of the members unless that person ceases to be a
director before then (although there is a proposal at this Meeting to extend the
term of directors to three years, as described below). In the absence of
instructions to the contrary the shares represented by proxy will be voted on a
poll for the nominees herein listed.
<PAGE> 4
If Proposal 6 regarding amending the Articles to provide for a classified
Board of Directors is approved, the Board will be divided into three classes.
Accordingly, if Proposal 6 is approved, one director will be elected to Class I
with a term expiring at the Company's 1999 annual general meeting, one director
will be elected to Class II with a term expiring at the Company's 2000 annual
general meeting, and one director will be elected to Class III with a term
expiring at the Company's 2001 annual general meeting. If Proposal 6 is not
approved, directors elected at the meeting will serve one-year terms expiring at
the Company's 1999 annual general meeting and until their successors are duly
elected and qualified.
Management does not contemplate that any of the nominees will be unable to
serve as a director. In the event that prior to the Meeting any vacancies occur
in the slate of nominees herein listed, it is intended that discretionary
authority shall be exercised by the person named in the proxy as nominee to vote
the shares represented by proxy on a poll for the election of any other person
or persons as directors.
Management proposes that the number of directors for the Company be
determined at three (3) for the ensuing year subject to such increases as may be
permitted by the Articles of the Company, and the Management nominees for the
Board of Directors and information concerning them as furnished by the
individual nominees is as follows:
<TABLE>
<CAPTION>
Name and Present Director Term will Expire Principal Occupation and if
Office Held Since (if proposal 6 is not at present an elected
approved) director, occupation during
the past five (5) years
================================================================================================
<S> <C> <C> <C>
Peter L. Vosotas(1) Since July 28, 2001 (CLASS III) Chairman of the Board, Chief
Clearwater, FL. 1986 Executive Officer, President of
President and Nicholas Data Services, Inc. and
Chairman of the Nicholas Financial, Inc.
Board and Director
(Age 56)
Joseph G. Bowes(1) Since August 2000 (CLASS II) President, Angus Management,
Vancouver, B.C. 29, 1991 Vancouver, BC.
Director (Age 43)
Raymond Robert Since 1999 (CLASS I) Vice-President, Biocoll Medical,
Cottrell(1) November 16, Corp, Vancouver, BC.
Vancouver, B.C. 1990
Director (Age 51)
<FOOTNOTE>
(1) Member of Audit Committee.
</TABLE>
All of the nominees are residents of Canada except Peter L. Vosotas, who is a
resident of the State of Florida.
<PAGE> 5
PROPOSAL 3: APPROVAL OF 1998 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN
The Board of Directors recommends the approval of the 1998 Non-Employee
Director Stock Option Plan (the "Director Plan") and urges each shareholder to
vote "for" the Director Plan. Executed and unmarked proxies in the accompanying
form will be voted at the Meeting in favor of the approval of the Director Plan.
General
The Board of Directors of the Company approved the Director Plan on June 3,
1998 (the "Effective Date"). The Director Plan provides for the grant of
options in the form of nonqualified stock options. Such options do not meet the
applicable statutory requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). The Director Plan is attached to this Proxy Statement as
Exhibit A and the summary of the Director Plan set forth herein is qualified in
its entirety by reference to the Director Plan. The purpose of shareholder
approval of the Director Plan is to comply with the shareholder approval
requirements of Rule 16b-3 under Section 16(b) of the Securities Exchange Act of
1934, as amended.
Purpose
The purpose of the Director Plan is to enable the Company and its
subsidiaries to compete successfully in attracting, motivating and retaining
members of the Company's Board of Directors, who are not employees of the
Company or any of its subsidiaries (each a "Non-Employee Director"), with
outstanding abilities by making it possible for them to purchase shares of
Common Stock on terms which will give them a direct and continuing interest in
the future success of the businesses of the Company and its subsidiaries and
encourage them to remain as directors of the Company or one or more of its
subsidiaries.
Shares Subject to Options
The Director Plan permits options to be granted to purchase up to 120,000
shares of Common Stock , subject to adjustment. To the extent that options
granted under the Director Plan expire or terminate without having been
exercised in full, the Common Stock subject thereto will become available
for further options under the Director Plan.
Administration and Duration of the Director Plan
The Director Plan is intended to be self-governing. Therefore, the Director
Plan requires no discretionary action by any administrative body with regard to
any transaction under the Director Plan. To the extent, if any, that any
questions of interpretation arise, these shall be resolved by the Board of
Directors.
The Director Plan terminates ten years after its effective date, unless
sooner terminated by the Board of Directors. Upon such termination, the
outstanding options granted pursuant to the Director Plan will remain in effect
until their exercise or expiration. The Board may, in its discretion, suspend or
terminate the Director Plan at any time prior to such date, but such termination
or suspension shall not adversely affect any right or obligation with respect to
any outstanding option.
<PAGE> 6
Granting and Terms of Options
On the date on which a Non-Employee Director, other than a Non-Employee
Director who was serving as such on the Effective Date, is first elected or
appointed as a Non-Employee Director during the existence of the Director Plan,
such Non- Employee Director shall automatically be granted an option to purchase
5,000 shares of Common Stock. Each Non-Employee Director as of the Effective
Date has been granted an option to purchase 5,000 shares of voting Common Stock.
In subsequent years after the year in which a Non-Employee Director is
first elected or appointed (or has otherwise received options as provided in the
preceding paragraph), such Non-Employee Director shall, on the day following the
Annual General Meeting of Members in each year during the time the Director Plan
is in effect, automatically be granted an option to purchase 5,000 shares of
voting Common Stock.
Exercise Price
The per share exercise price of each option granted pursuant to the
Director Plan shall be an amount equal to 100% of the fair market value of the
Common Stock on the date that the option is granted (subject to adjustment as
provided under the antidilution provisions). For purposes of the Director Plan,
the "fair market value" of a share of Common Stock is defined as the average
closing price of the Common Stock on an established national or regional stock
exchange or automated quotation system, including, without limitation,
the Nasdaq Small Cap Market, during the five trading days immediately preceding
the date that the option is granted. If the Common Stock is not listed on such
an exchange or quoted on such a quotation system, the fair market value of the
Common Stock will be determined by the Board of Directors.
Vesting Schedule
Options granted pursuant to the Director Plan may be exercised, in whole or
in part, as follows (i) the option may not be exercised to any extent prior to
one year following the date of grant and (ii) the option may be exercised to the
extent of 33- 1/3% of the shares subject to such option after one year following
the date of grant and may be exercised to the extent of an additional 33-1/3% of
the shares subject to such option after each of the second and third years
following the date of grant.
Option Period
The term of each option granted pursuant to the Director Plan shall be for
a period of ten years from the date of its grant. In certain circumstances
involving certain (i) mergers and reorganizations and (ii) transactions
involving the sale or transfer of substantially all of the assets of the Company
or the acquisition of more than 50% of the voting Common Stock by any person or
group of related persons without the prior approval of the Board, options that
have been granted under the Director Plan shall become immediately exercisable
in full.
<PAGE> 7
Method of Payment
Payment of the option price may be made in cash or by check, or by delivery
of shares of voting Common Stock equivalent in fair market value to the option
price, or by a combination of cash and shares of voting Common Stock, at the
election of the Non-Employee Director and subject to the terms of the applicable
stock option agreement.
Method of Exercise and Payment Terms
Subject to the terms of each stock option agreement, options granted under
the Director Plan may be exercised in whole or in part. Upon exercise of an
option, the Non-Employee Director must pay in full the option price for the
shares of voting Common Stock being purchased.
Limitations on Transferability and Effect of Death or Resignation
Options granted under the Director Plan are not transferable other than by
will or by the laws of descent and distribution.
During the lifetime of a Non-Employee Director, an option granted under the
Director Plan shall be exercisable only by such Non- Employee Director and only
while he is a member of the Company's Board of Directors, or, if after
termination of service as a Non-Employee Director, either within (i) one month
after the date on which he ceases to be a Non-Employee Director, other than by
reason of death or resignation from the Board with the consent of the Company,
or (ii) three months after his death or resignation from the Board with the
prior consent of the Company, but only if and to the extent the option was
exercisable prior to death or resignation. If a Non-Employee Director is removed
as a director for "cause"(as defined in the Company's Articles of Incorporation,
as amended from time to time), all options of such Non- Employee Director shall
terminate immediately on the date of removal. If a Non- Employee Director dies
within a period during which a stock option could have been exercised under the
Director Plan, the stock option may be exercised after his death by those
entitled to exercise such option under the Non-Employee Director's will or the
laws of descent and distribution, but only if and to the extent such stock
option was exercisable immediately prior to his death. In the discretion of the
Board, the three- month period referenced above may be extended for a period of
up to one year.
The above exceptions to the general rule that options granted under the
Director Plan must be exercised while the Non-Employee Director is a member of
the Board are further limited by the requirement that no option may be exercised
after its expiration.
Federal Income Tax Considerations
The following is a summary, but not a complete discussion, of certain of
the federal income tax consequences of stock options granted under the Director
Plan. Future legislative changes or changes in administrative or judicial
interpretation, some or all of which may be retroactive, could significantly
alter the tax treatment discussed herein. No discussion of state income tax law
has been included. Each optionee should therefore consult with his or her own
tax advisor with respect to the tax consequences of participation in the
Director Plan, including the exercise of options granted under the Plan and the
sale or other disposition of shares of Common Stock acquired from the exercise
of such options. The Director Plan is not required to be qualified under Section
401(a) of the Code and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended (commonly known as "ERISA").
<PAGE> 8
Nonqualified Stock Options - General. The grant of a nonqualified stock
option will generally result in the recognition of ordinary income by an
optionee at the time of exercise in an amount equal to the excess of the fair
market value of the Common Stock acquired at such time over the exercise price
paid for such shares. The Company will generally be entitled to a deduction in
the same amount and at the same time as ordinary income is recognized by the
optionee. A subsequent disposition of the Common Stock by the optionee will
typically give rise to capital gain or loss to the extent the amount realized
from the sale differs from the optionee's tax basis, which is usually the fair
market value of the Common Stock acquired on the date of exercise. This capital
gain or loss will be a long-term gain or loss if the Common Stock sold had been
held for more than one year after the date of exercise. The long- term capital
gain recognized will be eligible for a maximum capital gains rate of 28% if the
Common Stock has been held for more than one year and not more than 18 months
from the date of exercise and will be eligible for a maximum capital gains rate
of 20% if the Common Stock has been held for more than 18 months.
Payment of Option Price in Common Stock. The exercise of a nonqualified
stock option by using previously owned stock ("Former Shares") will result in
the optionee obtaining a basis in the shares of newly acquired stock equal in
number to the shares of the previously owned stock that will be the same as the
optionee's basis in the Former Shares, and the basis in the shares of the newly
acquired stock in excess of the number of Former Shares will generally be equal
to the fair market value of the shares on the date of the exercise. The optionee
will include as ordinary income at the time of exercise the fair market value of
the excess shares received. The period of time during which the Former Shares
were held will be included in computing the capital gain holding period for the
number of shares of new stock equal to the number of Former Shares. The holding
period of the excess shares will begin at the time of exercise.
Withholding. If the Company determines that it is required to withhold
state or federal income tax as a result of the exercise of any option, it may
require the optionee to make arrangements satisfactory to the Company in order
to enable the Company to satisfy such withholding requirements. If such
arrangements are not made, the Company may refuse to issue or transfer shares of
stock upon exercise of the option.
If an optionee satisfies such withholding requirements by tendering
previously owned shares of Common Stock or requesting the Company to withhold
shares of Common Stock from the exercised option stock, the transaction will be
treated as a redemption of the Common Stock by the Company. If the redemption
meets one of three tests, the employee will be entitled to treat the transaction
in the same manner as a taxable sale of the Common Stock. Accordingly,
the difference between the fair market value on the date income is recognized on
the option shares and the tax basis of such delivered shares will be a long-term
or short-term capital gain or loss, depending on the holding period of the
delivered shares. If the redemption does not meet any of these three tests, the
amount of the withholding obligation satisfied by tendering or withholding
shares of Common Stock will be treated as a distribution taxable as a dividend
to the extent of the Company's earnings and profits. Absent unusual
circumstances, however, the redemption should be treated as a taxable sale and
not as a distribution.
<PAGE> 9
PROPOSAL 4: APPROVAL OF 1998 EMPLOYEE STOCK OPTION PLAN
The Board of Directors recommends the approval of the 1998 Employee Stock
Option Plan (the "Employee Plan") and urges each shareholder to vote "for" the
Employee Plan. Executed and unmarked proxies in the accompanying form will be
voted at the Meeting in favor of the approval of the Employee Plan.
General
The Employee Plan was approved by the Company's Board of Directors on June
3, 1998. The Employee Plan provides for the grant of options in the form of
incentive stock options ("incentive stock options") meeting the applicable
statutory requirements of the Internal Revenue Code of 1986, as amended
(the "Code"), and options not meeting such requirements ("nonqualified stock
options"). Each option granted under the Employee Plan will be evidenced by a
written stock option agreement. The Employee Plan is attached to this Proxy
Statement as Exhibit B and the summary of the Employee Plan set forth herein is
qualified in its entirety by reference to the Plan. The purposes of shareholder
approval of the Employee Plan are: (i) to permit the options to purchase shares
of Common Stock under the Employee Plan to qualify for incentive stock option
treatment pursuant to Section 422 of the Code; (ii) to satisfy the performance-
based compensation exception to the $1.0 million limit under Section 162(m) of
the Code; and (iii) to satisfy the applicable requirements of The Nasdaq
Stock Market.
Purpose
The purpose of the Employee Plan is to enable the Company and its
subsidiaries to compete successfully in attracting, motivating and retaining
employees with outstanding abilities by making it possible for them to purchase
shares of Common Stock on terms which will give them a direct and continuing
interest in the future success of the businesses of the Company and its
subsidiaries.
Shares Subject to Options
The Employee Plan permits options to be granted to purchase up to 350,000
shares of Common Stock in the aggregate. As of the date hereof, no options have
been granted to employees under the Employee Plan. At this time, it is not known
which eligible employees, if any, will receive grants under the Employee Plan or
the number of shares which will be covered by any such grants. Such
determinations will be made from time to time by the Committee (as hereinafter
defined). To the extent that options granted under the Employee Plan expire or
terminate without having been exercised in full, the Common Stock subject
thereto will become available for further options under the Employee Plan.
Provision is made under the Employee Plan for appropriate adjustment in
the number of shares of Common Stock covered by the Employee Plan, and by each
option granted thereunder and the related option price, in the event of any
change in the Common Stock by reason of a stock dividend , merger,
reorganization, stock split, recapitalization, combination, exchange of shares
or otherwise.
<PAGE> 10
Administration and Duration of the Employee Plan
The Employee Plan is administered by a committee (the "Committee") of the
Company's Board, consisting of not less than two directors, each of whom shall
qualify as a "non-employee director" within the meaning of Rule 16b-3 ("Rule
16b-3") promulgated pursuant to Section 16(b) of the Securities Exchange Act of
1934, as amended ("the 1934 Act"), and as an "outside director" under Section
162(m)(4)(C) of the Code, or any successor provisions thereto. If at any time
the Committee shall not be in existence, the Board shall administer the Plan.
To the extent permitted by applicable law, the Board may delegate to another
committee of the Board or to one or more senior officers of the Company any or
all of the authority and responsibility of the Committee with respect to
the Plan, other than with respect to participants who are subject to Section 16
of the 1934 Act.
Subject to the terms of the Employee Plan and applicable law, the Committee
has full power and authority to interpret and administer the Employee Plan and
any instrument or agreement relating to, or made under, such Employee Plan,
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the
Employee Plan, and make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the
Employee Plan. The number of shares of Common Stock subject to such options
granted, if any, in each year, the employees to whom stock options are granted
and the terms of the stock options granted, including the number of shares of
Common Stock subject to such options, shall be wholly within the discretion
of the Committee, subject to the terms and conditions set forth in the Employee
Plan.
The Employee Plan terminates ten years after its effective date, unless
sooner terminated by the Board. Upon such termination, the outstanding options
granted pursuant to the Employee Plan will remain in effect until their exercise
or expiration.
The Board may at any time terminate the Employee Plan, or amend the
Employee Plan as it shall deem advisable , including (without limiting the
generality of the foregoing) any amendment deemed by the Board to be necessary
or advisable to assure conformity of the Employee Plan and any incentive stock
options granted thereunder to the requirements of Section 422 of the Code, as
now or hereafter in effect and to assure conformity with any requirements of
other applicable state or federal laws or regulations.
<PAGE> 11
Eligibility and Extent of Participation
Employees eligible to receive options pursuant to the Employee Plan are
persons, including officers, who are regularly employed on a salary basis by the
Company or any subsidiary of the Company, including officers or directors of the
Company or such subsidiary. As of the date hereof, there were approximately 38
such eligible employees. No incentive stock option shall be granted to any
employee who immediately after such option is granted, owns capital stock of the
Company possessing more than 10% of the total combined voting power or value of
all classes of capital stock of the Company unless the option price at the time
such incentive stock option is granted is at least 110% of the fair market value
of the shares subject to the incentive stock option and such incentive stock
option is not exercisable by its terms after the expiration of five years from
the date of its grant. Directors who are not also employees of the Company or a
subsidiary of the Company are not eligible to participate under the Employee
Plan. An incentive stock option shall be granted under the Employee Plan to an
optionee only if the aggregate fair market value (determined as of the date the
option is granted) of the Common Stock for which options are exercisable for the
first time by such optionee during any calendar year does not exceed $100,000.
No participant in the Employee Plan is eligible to receive, at the time of
grant, options to purchase more than 100,000 shares of Common Stock under the
Employee Plan during any calendar year.
Option Price
Except for options granted to shareholders owning 10% or more of the voting
power of all classes of the Company's capital stock as described in the
preceding paragraph, the per share option price of an incentive stock option
granted or to be granted pursuant to the Employee Plan, as determined by the
Committee, shall be an amount not less than 100% of the fair market value of
the Common Stock on the date that the option is granted (subject to adjustment
as provided under the Antidilution Provisions). For purposes of the Employee
Plan, the "fair market value" of a share of Common Stock is defined as the
average closing price of the Common Stock on an established national or regional
stock exchange or automated quotation system, including, without limitation,
the Nasdaq Small Cap Market, during the ten trading days immediately preceding
the date that the option is granted. If the Common Stock is not listed on such
an exchange or quoted on such a quotation system, the fair market value of the
Common Stock will be determined by the Committee.
Option Period
The term of each option granted pursuant to the Employee Plan shall be as
determined by the Committee, but in no event shall the term of an option exceed
a period of ten years from the date of its grant. In certain circumstances
involving certain mergers, reorganizations, transactions involving the sale or
transfer of substantially all of the assets of the Company or the acquisition of
more than 50% of the Common Stock by any person or group of related persons
without the prior approval of the Board , options that have been granted under
the Employee Plan shall become immediately exercisable in full.
<PAGE> 12
Method of Payment
Payment of the option price may be made in cash or by check, or by delivery
of shares of Common Stock equivalent in fair market value to the option price,
or by a combination of cash and shares of Common Stock, at the election of the
optionee and subject to the terms of the applicable stock option agreement. In
the event an optionee exercises an option by surrendering shares of Common
Stock as payment of the exercise price, the Employee Plan permits the Committee
to grant a replacement option equal to the number of shares surrendered
as payment.
Method of Exercise and Payment Terms
Subject to the terms of each stock option agreement, options granted under
the Employee Plan may be exercised in whole or in part. Upon exercise of an
option, the employee must pay in full the option price for the shares of Common
Stock being purchased.
Limitations on Transferability and Effect of Death or Termination of Employment
Except as otherwise provided by the Committee, options granted under the
Employee Plan are not transferable other than by will or by the laws of descent
and distribution.
Except as otherwise provided by the Committee, during the lifetime of an
optionee, his or her option shall be exercisable only by him or her and only
while continuously employed by the Company or one of its subsidiaries, or , if
after termination of employment, either within (i) one month after termination
of employment, other than by reason of the optionee's death, retirement with
the consent of the Company or such subsidiary as the case may be, or permanent
disability within the meaning of Section 22(e)(3) of the Code, or (ii) three
months after termination of employment if the optionee dies, retires with the
appropriate consent or is permanently disabled as described above, but only if
and to the extent the option was exercisable on the last day of such
employment. If an optionee dies within a period during which a stock option
could have been exercised by the optionee, the stock option may be exercised
after his or her death by those entitled to exercise such option under the
optionee's will or the laws of a descent and distribution, but only if and to
the extent such stock option was exercisable immediately prior to his or her
death. In the discretion of the Committee, the three month period referenced
above may be extended for a period of up to one year.
The above exceptions to the general rule that options granted under the
Employee Plan must be exercised during employment by the Company or one of its
subsidiaries are further limited by the requirement that no option may be
exercised after the expiration of such option .
Federal Income Tax Considerations
Nonqualified Stock Options. See discussion under Proposal 3: Approval of
1998 Non-Employee Director Stock Option Plan - Federal Income Tax
Considerations.
Incentive Stock Options - General. The grant of an incentive stock option
under the Plan will create no income tax consequences to the optionee or the
Company. Also, an optionee generally will not recognize income or gain as a
result of the exercise of an incentive stock option (except that the
alternative minimum tax may apply - See Alternative Minimum Tax).
<PAGE> 13
The general rule will not apply, however, if the option is exercised more
than three months (one year if the optionee is disabled) after an optionee
terminates employment with the Company or any subsidiary of the Company,
except in the case of the death of the optionee. If an incentive stock option
is exercised after such dates, the exercise of the option will be a taxable
event, and the optionee will generally recognize ordinary income at such time
equal to the excess of the fair market value of the Common Stock on the date
of exercise over the optionee's basis. If an incentive stock option is
exercised in accordance with the terms of the Plan after the death of the
optionee, the general rule of nonrecognition of income or gain will apply
regardless of the time period that has elapsed between the date of death and
the date of exercise.
An optionee who holds the shares of Common Stock acquired pursuant to the
exercise of an incentive stock option for at least two years from the date of
grant and one year from the date of exercise before disposing of the Common
Stock will recognize a long-term capital gain or loss on the disposition of
the Common Stock in an amount measured by the difference between the amount
received and the optionee's basis in the Common Stock, which is generally the
amount paid at the exercise date to acquire the Common Stock plus any basis
the optionee had in the option itself. The long-term capital gain recognized
will be subject to a maximum capital gains rate of 28% if the Common Stock has
been held for more than one year and not more than 18 months from the date of
exercise and will be subject to a maximum capital gains rate of 20 % if the
Common Stock has been held for more than 18 months from the date of exercise.
No deduction will be allowed to the Company.
If the holding period requirement is not satisfied, a " disqualifying
distribution" occurs and the optionee will recognize ordinary income at the
time of the disqualifying disposition equal to the lesser of (i) the gain
realized on the disposition; or (ii) the difference between the exercise price
and the fair market value of the shares of Common Stock on the date of
exercise. The Company will be entitled to a deduction in the same amount and
at the same time as ordinary income is recognized by the optionee. Any gain
realized by the optionee in excess of the amount recognized as ordinary income
will be treated as a capital gain. This capital gain will be a long-term
capital gain if the Common Stock has been held for more than one year from the
date of exercise. The long-term capital gain recognized will be subject to a
maximum capital gains rate of 28% if the Common Stock has been held for more
than one year and not more than 18 months and will be subject to a maximum
capital gains rate of 20% if the Common Stock has been held for more than 18
months. If the optionee realizes a loss from the sale of Common Stock in a
disqualifying disposition, the loss will be a capital loss, and will be a
long-term capital loss if the Common Stock has been held for more than one
year from the date of exercise.
Payment of Option Price in Common Stock. Except as discussed in this
section, the exercise of an incentive stock option by using previously owned
stock will not affect the tax consequences on exercise or result in any
immediate tax on any appreciation in the value of the stock surrendered. An
optionee's tax basis in the shares of newly acquired stock equal in number to
the shares of previously owned stock ( the "Former Shares") will be the same as
the optionee's basis in the Former Shares, and the basis in the shares of the
newly acquired stock in excess of the number of Former Shares will generally
be equal to zero. The period of time during which the Former Shares were held
will be included in computing the capital gain holding period for the number
of shares of new stock equal to the number of Former Shares. The holding
period of the excess shares begins at the time of exercise. Proposed Treasury
regulations also provide that if any shares of stock acquired upon exercise of
an incentive stock option by using Former Shares are disposed of in a
disqualifying disposition, the zero basis shares will be deemed to have been
disposed of first and the amount paid for these shares by the optionee will be
deemed to be zero.
<PAGE> 14
If an optionee exercises an incentive stock option by delivery of Former
Shares acquired by the optionee under another incentive stock option, or
certain other types of employee plans, and if the holding period requirement
for the Former Shares has not been met, the delivery of the Former Shares will
be a disqualifying disposition of the Former Shares. As a result, the optionee
will recognize ordinary income in an amount equal to the difference between
the option price attributable to the Former Shares and their fair market value
at the time the previous option was exercised. If the previous incentive stock
option was exercised by payment of the option price in cash, the basis of a
number of shares of stock received on exercise of the current option equal to
the number of Former Shares will be equal to the fair market value of the
Former Shares at the time the previous option was exercised, and such new
shares will have a holding period that includes the optionee's holding period
with respect to the Former Shares. If the previous incentive stock option was
exercised by payment of the option price with Former Shares, a number of new
shares equal to the number of Former Shares which were deemed to have a zero
basis under the rules discussed above will have a basis equal to the amount of
ordinary income recognized by the optionee due to the disqualifying
disposition and a holding period which includes the holding period of such
Former Shares. The number of additional new shares equal to the difference
between (i) the number of surrendered shares deemed to have a zero basis,
and (ii) the total number of surrendered shares , will be deemed to have a
carryover basis and holding period. The basis of the remainder of the acquired
shares (i.e. the number of new shares received in excess of the number
surrendered) will be zero and their holding period will begin on the date the
second option is exercised.
Certain Modifications. It should be noted that in certain circumstances,
changes in the terms of an incentive stock option in order to grant additional
benefits to a participant could result in disqualification of the option for
incentive stock option tax treatment and make the nonstatutory stock option
rules applicable.
Alternative Minimum Tax. At the time of exercise of an incentive stock
option, the excess of the fair market value of stock received over the option
price will generally be treated as a tax preference item in calculating
alternative minimum taxable income. This treatment will not apply if the
optionee disqualifies the incentive stock option by selling the stock in the
same calendar year in which the optionee recognizes income for purposes of the
alternative minimum tax regime. The alternative minimum tax is imposed in
addition to the regular tax to the extent it exceeds the individual's regular
tax. An optionee may be entitled to a credit against the optionee's regular
tax in later years to the extent that the alternative minimum tax is paid with
respect to incentive stock options. The calculation of the alternative minimum
tax due, if any, is complicated and each optionee should discuss it with his
or her personal tax advisor.
<PAGE> 15
PROPOSALS 5 AND 6: AMENDMENT TO ARTICLES
Amendment of Quorum Requirement
As a consequence of the Company's listing of its common shares on the
NASDAQ Small Cap Market, and in order to bring the Company into compliance with
NASDAQ rules, the management of the Company propose to amend the existing
Articles which set the current quorum for annual general meetings at two members
or proxyholders representing two members , or one member and a proxyholder
representing another member. The proposed amendment to the Articles will include
a provision that the minimum share representation for a quorum at any general
meeting shall be at least 33-1/3% of the total issued and outstanding shares of
the Company at the date of record for the meeting.
In this regard, the members will be asked to consider, and if thought fit,
to approve by special resolution the alteration to the Articles of the Company
by deleting Article 10.3 in its entirety and inserting the following in its
place:
10.3 Save as herein otherwise provided, a quorum shall be two members or
proxyholders representing two members, or one member and a
proxyholder representing another member, holding an aggregate
at least 33-1/3% of the total issued and outstanding shares of the
Company on the record date for the meeting. The Directors, the
Secretary or, in his absence, an Assistant Secretary, and the
solicitor of the Company shall be entitled to attend at any general
meeting but no such person shall be counted in the quorum or be
entitled to vote at any general meeting unless he shall be a member
or proxyholder entitled to vote thereat.
Classification of Board of Directors
The current Articles of the Company provide that all Directors shall
retire at each annual general of the Company. To promote the stability and
continuity of management, the Board proposes to amend the Articles of the
Company to provide for three year terms for the appointment of Directors and to
classify the Board into three classes.
In this regard, the members will be asked to consider and if thought fit,
to approve by special resolution the following alteration to the Articles of the
Company by deleting Article 13.1 in its entirety and inserting the following in
its place:
13.1 The Directors shall be classified, with respect to the time for
which they hold office, into three classes, as nearly equal in
number as possible, Class I to be originally elected for a term
expiring at the annual general meeting to be held in 1999 , Class II
to be originally elected to a term expiring at the annual general
meeting to be held in 2000, and Class III to be originally elected
for a term expiring at the annual general meeting to be held in
2001, with the Directors in each class to hold office until his or
her successor is duly elected and qualified. At each annual general
meeting after 1998, the successors of the class of directors whose
term expires at that meeting shall be elected in the third year
following the year of their election. If the Company is, or becomes,
a Company that is not a reporting Company and the business to be
transacted at any annual general meeting is consented to in writing
by all the members who are entitled to attend and vote thereat, such
annual general meeting shall be deemed for the purpose of this Part
to have been held on such written consent becoming effective.
<PAGE> 16
A "special resolution" of the Company means a resolution passed by not less
than of the votes cast by those members of the Company who, being entitled to
do so, vote in person or by proxy at a general meeting of the Company of which
notice as the Articles provide , and not being less than 21 days notice
specifying the intention to propose the resolution as a special resolution, has
been duly given. Any special resolution approved by the members of the Company
will become effective upon its filing with and receipt by the Registrar of
Companies for British Columbia.
The proposed amendment to the Articles described in Proposal 6 to
classify the Company's Board of Directors is not the result of management's
knowledge of any specific effort to accumulate the Common Stock or to obtain
control of the Company by means of a merger, tender offer, solicitation in
opposition to management, or otherwise. Nonetheless, Proposal 6 is being
proposed at this time because the Board of Directors believes that the amendment
to the Articles to classify the Board would, if adopted, enhance the likelihood
of continuity and stability in the composition of the Company's Board of
Directors and in the policies formulated by the Board, and, at the same time,
effectively reduce the possibility that a third party could effect a sudden or
surprise change in majority control of the Company's Board of Directors without
the support of the incumbent Board. However, the proposed amendment could have
significant effects on the ability of members of the Company to change
the composition of the incumbent Board of Directors and to benefit from certain
transactions that are opposed by the incumbent Board.
In addition, the proposed amendment could make more difficult or discourage
a proxy contest or the assumption of control by a holder of a substantial block
of the Company's stock or the removal of the incumbent Board and could thus
increase the likelihood that incumbent directors will retain their positions.
However, these provisions will help ensure that the Board, if confronted by a
surprise proposal from a third party which has acquired a block of the Company's
stock, will have sufficient time to review the proposal and alternatives thereto
and, if deemed appropriate, to seek a premium price for the members.
PROPOSALS 7 and 8: APPOINTMENT AND REMUNERATION OF AUDITORS
Management proposes the appointment of Ernst & Young LLP, Chartered
Accountants, as Auditors of the Company for the ensuing year and that the
directors be authorized to fix their remuneration. Ernst & Young LLP
have been the Company's Auditors since September 13, 1994. A representative
of Ernst & Young LLP will be present at the Meeting. Such representative will be
available to respond to appropriate questions and may make a statement if he
or she so desires.
<PAGE> 17
EXECUTIVE OFFICERS AND COMPENSATION
(Form 41, B.C. Securities Act and Regulations)
Executive Officers
The Company has two (2) executive officers, Peter L. Vosotas, President and
Chairman, and Ralph T. Finkenbrink, Vice-President, Finance. Mr. Finkenbrink,
age 37, has served as Vice President, Finance of the Company since 1992. For the
Company's most recently completed financial year , cash compensation of
US$177,242 was paid to the executive officers. There are no plans in effect to
which cash or non-cash compensation was paid or distributed to the executive
officers during the most recently completed financial year or is proposed to be
paid or distributed in a subsequent year. The following table summarizes the
executive compensation paid during the last three (3) financial years:
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Fiscal Annual Compensation Long Term All Other
Position Year Salary Bonus Other Compensation Compensation
Shares under ($)
Option
==================================================================================================
<S> <C> <C> <C> <C> <C> <C>
PETER L. VOSOTAS 1998 $102,281 $7,500 Nil 33,332 Nil
President and Chairman 333,333(1)
of the Board
1997 $98,000 $12,500 Nil 33,332 Nil
333,333(1)
1996 $98,000 $21,864 Nil 33,332 Nil
333,333(1)
RALPH T. FINKENBRINK 1998 $64,961 $2,500 Nil 24,999 Nil
Vice-President, Finance
1997 N/A N/A N/A N/A N/A
1996 N/A N/A N/A N/A N/A
<FOOTNOTE>
(1) Bonus warrant exercisable at US$5.38/sh until June 3, 1999 issued to Mr.
Vosotas for guaranteeing the Company's indebtedness to BankAmerica under a
US$30,000,000 line of credit.
</TABLE>
Note: All of the above named executive's salaries are expressed in U.S.
dollars and for 1998 exceeded $100,000 Cdn. The Company has no other executive
officers. Certain columns may have been omitted because there was no
compensation awarded to, earned by or paid to any of the named executives
required to be reported in the above table.
<PAGE> 18
Option Grants During the Most Recently Completed Fiscal Year
<TABLE>
<CAPTION>
Market
Value of
% of Total Securities
Options Underlying
Granted to Exercise or Options on
Name of Executive Option Granted Employees in Fiscal Base Price Date of Expiration Date
Officer (#) Year ($/Share) Grant($/Share)
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Peter L. Vosotas 16,666 16% $4.59 $4.59 April 9, 2002
Ralph T. Finkenbrink 20,000 20% $4.25 $4.25 Dec. 15, 2002
</TABLE>
Aggregated Option Exercises During the Most Recently Completed Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Unexercised In-the-Money Options
Options at Fiscal at Fiscal Year
Year End (#) End ($)
Securities Aggregate Exercisable/
Name of Executive Acquired on Value Realized Exercisable/ Unexercisable
Officer Exercise (#) ($) Unexercisable
================================================================================================
<S> <C> <C> <C> <C>
Peter L. Vosotas 16,666 $29,014 366,665/0 $0/$0
Ralph T. Finkenbrink 6,833 $12,351 3,334/21,665 $279/$0
<FOOTNOTE>
Note 1:The aggregate value realized as shown above is calculated by the
difference between the exercise price and the marketprice at the time of
exercise, and does not necessarily mean the shares were sold.
Note 2:Potential value of the exercisable/unexercisable in the money options was
calculated by taking the difference between the option exercise price and the
market bid price of the stock on March 31, 1998.
</TABLE>
Directors
The directors of the Company have not been compensated by the Company in
their capacities as directors during the most recently completed financial
year. Non-qualified stock options were granted in the most recently completed
fiscal year to non-employee Directors to purchase 3,332 shares at a price of
US$4.59/share exercisable on or before April 9, 1999, and 2,000 shares at a
price of US$4.25/share exercisable on or before Dec. 15, 1999.
<PAGE> 19
Committees of the Board
The Board of Directors has established an audit committee. Both the Board
of Directors and Audit committee had one meeting during the year and all members
of the Board were present.
The Audit Committee is comprised of Messrs. Vosotas, Bowes and Cottrell and
is responsible for reviewing the independence, qualifications and activities of
the Company's independent certified public accountants and the Company's
financial policies, control procedures and accounting staff. The Audit Committee
recommends to the Board the appointment of the independent certified public
accountants and reviews and approves the Company's financial statements. The
Audit Committee is also responsible for the review of transactions between the
Company and any Company officer, director or entity in which a Company officer
or director has a material interest.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Act of 1934, as amended (the "Exchange
Act"), requires directors, certain officers and beneficial owners of more than
10% of a class of securities registered under the Exchange Act to file reports
of ownership and changes of ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission (the "Commission"). The Company's Common Stock was
registered pursuant to Section 12 of the Exchange Act on March 13, 1996. As of
the date hereof, none of the Company's directors, officers or 10% shareholders
has filed any reports of ownership or changes of ownership on Forms 3, 4 or 5.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
None of the Directors or senior officers of the Company, no proposed
nominee for election as a Director of the Company , and no associates or
affiliates of any of them, is or has been indebted to the Company or its
subsidiaries at any time since the beginning of the Company's last completed
financial year.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
No director or executive officer of the Company, no proposed nominee for
election as a director of the Company and no associate, affiliate or member of
the immediate family of any of the foregoing, has any material interest, direct
or indirect, in any transaction during the last two years or in any proposed
transaction, other than as disclosed under the heading "Interest of Certain
Persons in Matters to be Acted Upon".
<PAGE> 20
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the directors or senior officers of the Company, no management
nominee for election as a director of the Company, none of the persons who have
been directors or senior officers of the Company since the commencement of the
Company's last completed financial year and no associate or affiliate of any of
the foregoing has any material interest , direct or indirect, by way of
beneficial ownership of securities or otherwise, in any matter to be acted upon
at the Meeting other than the following transactions:
1. In January 1998, Dr. Ellis Hyman, a Director of Nicholas Data
Services, Inc., a subsidiary of the Company, agreed to subordinate a
promissory note in the principal amount of US$150,000 bearing
interest at 12% per anum payable in semi-annual interest payments
only. The entire principal balance plus accrued interest is due and
payable on January 26, 2000. Dr. Hyman has the option of
converting the promissory note into common shares of the Company at a
price of US$5.00 per share; and
2. In February 1998, Stephen Bragin, a Director of Nicholas Data
Services, Inc., a subsidiary of the Company, agreed to subordinate a
promissory note in the principal amount of US$150,000 bearing
interest at 12% per annum and payable in semi-annual interest
payments only. The entire principal balance plus accrued interest is
due and payable on February 28, 2000. Mr. Bragin has the option of
converting the promissory note into common shares of the Company at a
price of US$5.00 per share.
MEMBER PROPOSALS
Proposals which members intend to present at the 1999 Annual General
Meeting of Members must be received by the Company no later than March 2, 1999
to be eligible for inclusion in the proxy material for that meeting.
<PAGE> 21
OTHER MATTERS
MANAGEMENT KNOWS OF NO OTHER MATTERS TO COME BEFORE THE MEETING OTHER THAN
THOSE REFERRED TO IN THE NOTICE OF MEETING. HOWEVER, SHOULD ANY OTHER
MATTERS PROPERLY COME BEFORE THE MEETING, THE SHARES REPRESENTED BY THE
PROXY SOLICITED HEREBY WILL, ON A POLL, BE VOTED ON SUCH MATTERS IN
ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSONS VOTING THE SHARES
REPRESENTED BY THE PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
"Peter L. Vosotas"
President
<PAGE> 1
NICHOLAS FINANCIAL, INC.
Building C. #501B
2454 McMullen Booth Road
Clearwater, FL.
33759-1343
(813) 726-0763
NOTICE OF ANNUAL GENERAL MEETING
TAKE NOTICE that the 1998 Annual General Meeting of the Members (the "Meeting")
of Nicholas Financial, Inc. (hereinafter called the "Company") will be
held at Countryside Country Club, 3001 Countryside Boulevard, Clearwater,
Florida on:
WEDNESDAY, AUGUST 5, 1998
at the hour of 10:00 in the forenoon (Clearwater time) for the following
purposes:
1. to receive the Report of the Directors;
2. to receive the financial statements of the Company for its fiscal
year ended March 31, 1998 and the report of the Auditors thereon;
3. to determine the number of directors and to elect directors;
4. to approve the Company's 1998 Non-Employee Director Stock Option
Plan, as more particularly described in the Proxy Statement and
Information Circular accompanying this Notice;
5. to approve the Company's 1998 Employee Stock Option Plan, as more
particularly described in the Proxy Statement and Information Circular
accompanying this Notice;
6. to alter and amend the Articles of the Company by special resolution,
with or without amendment, by deleting Article 10.3 in its entirety and
inserting the following in its place:
10.3 Save as herein otherwise provided, a quorum shall be two
members or proxyholders representing two members, or one
member and a proxyholder representing another member,
holding an aggregate at least 33-1/3% of the total issued
and outstanding shares of the Company on the record date for
the meeting. The Directors, the Secretary or, in his
absence, an Assistant Secretary, and the solicitor of the
Company shall be entitled to attend at any general meeting
but no such person shall be counted in the quorum or be
entitled to vote at any general meeting unless he shall be
a member or proxyholder entitled to vote thereat.
7. to alter and amend the Articles of the Company by special resolution,
with or without amendment, by deleting Article 13.1 in its entirety and
inserting the following in its place:
13.1 Each Director shall hold office until the date of the third
annual general meeting after the calendar year in which
the Director was appointed. At each annual general meeting
of the Company, the members shall elect a board of
directors consisting of the number of Directors whose term
of appointment is expiring at that meeting, up to the
number of Directors for the time being fixed pursuant
to these Articles. If the Company is, or becomes, a
Company that is not a reporting Company and the business
to be transacted at any annual general meeting is consented
to in writing by all the members who are entitled to attend
and vote there at such annual general meeting shall be
deemed for the purpose of this Part to have been held
on such written consent becoming effective.
<PAGE> 2
8. to appoint Auditors for the ensuing year and to authorize the
Directors to fix their remuneration; and
9. to transact such other business as may properly come before the Meeting.
Accompanying this Notice are a Proxy Statement and Information Circular and
Form of Proxy.
Members of record as of the close of business on June 26, 1998 will be
entitled to attend and vote at the Meeting, or any adjournment or
postponement thereof. A member entitled to attend and vote at the Meeting
is entitled to appoint a proxyholder to attend and vote in his stead. Your
vote is important. If you are unable to attend the Meeting (or any
adjournment or postponement thereof ) in person , please read the Notes
accompanying the Form of Proxy enclosed herewith and then complete and return
the Proxy within the time set out in the Notes. The enclosed Form of
Proxy is solicited by Management of the Company but, as set out in the Notes,
you may amend it if you so desire by striking out the names listed therein
and inserting in the space provided the name of the person you wish to
represent you at the Meeting.
DATED at Clearwater, Florida, June 22, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
"Peter L. Vosotas"
President
<PAGE> 1
NICHOLAS FINANCIAL, INC.
Building C. #501B
2454 McMullen Booth Road
Clearwater, FL.
33759-1343
(813) 726-0763
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
NICHOLAS FINANCIAL, INC.
(the "Company")
PROXY FOR THE 1998 ANNUAL GENERAL MEETING OF
MEMBERS TO BE HELD ON WEDNESDAY, AUGUST 5, 1998.
The undersigned member of Nicholas Financial, Inc. hereby appoints Peter
L. Vosotas, President, Chairman of the Board and a Director, or failing
him, Ralph T. Finkenbrink, Vice-President, Finance or ,
as nominee of the undersigned, to attend and act for and on behalf of
the undersigned at the 1998 Annual General Meeting of Members of the
Company to be held on August 5, 1998 and at any adjournment thereof and,
on a poll, the shares represented by this proxy are specifically
directed to be voted or to be withheld from voting as indicated below:
1. To determine the number of directors at three (3):
In favour: Against: Withhold Vote:
2. a. To elect as directors all the persons named in 4(b) below:
In favour: Withhold vote:
OR
b. To elect as a director:
Peter L. Vosotas In favour:
Withhold Vote:
Joseph G. Bowes In favour:
Withhold Vote:
Raymond R. Cottrell In favour:
Withhold Vote:
<PAGE. 2
3. To approve the Company's 1998 Non-Employee Director Stock Option
Plan, as more particularly described in the Proxy Statement and
Information Circular.
In favour: Against: Withhold Vote:
4. To approve the Company's 1998 Employee Stock Option Plan, as more
particularly described in the Proxy Statement and Information
Circular:
In favour: Against: Withhold Vote:
5. To alter and amend the Articles of the Company by special resolution,
with or without amendment, by deleting Article 10.3 in its entirety
and inserting the following in its place:
10.3 Save as herein otherwise provided, a quorum shall be two
members or proxyholders representing two members, or one
member and a proxyholder representing another member,
holding an aggregate at least 33 1/3% of the total
issued and outstanding shares of the Company on the
record date for the meeting. The Directors, the
Secretary or, in his absence, an Assistant Secretary,
and the solicitor of the Company shall be entitled to
attend at any general meeting but no such person shall
be counted in the quorum or be entitled to vote at any
general meeting unless he shall be a member or
proxyholder entitled to vote thereat.
In favour: Against: Withhold Vote:
6. To alter and amend the Articles of the Company by special resolution,
with or without amendment, by deleting Article 13.1 in its entirety
and inserting the following in its place:
13.1 Each Director shall hold office until the date of the
third annual general meeting after the calendar year in
which the Director was appointed. At each annual general
meeting of the Company, the members shall elect a board
of directors consisting of the number of Directors whose
term of appointment is expiring at that meeting , up to
the number of Directors for the time being fixed
pursuant to these Articles. If the Company is, or
becomes, a Company that is not a reporting Company and
the business to be transacted at any annual general
meeting is consented to in writing by all the members
who are entitled to attend and vote at such annual
general meeting shall be deemed for the purpose of this
Part to have been held on such written consent becoming
effective.
In favour: Against: Withhold Vote:
7. To appoint Ernst & Young, Chartered Accountants, as Auditors of
the Company:
In favour: Against: Withhold vote:
8. To authorize the directors to fix the remuneration of the Auditors:
In favour: Against: Withhold vote:
<PAGE> 3
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED OR WITHHELD FROM
VOTING ON ANY BALLOT THAT MAY BE CALLED FOR IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN AND, IF A CHOICE IS SPECIFIED WITH RESPECT TO ANY
MATTER TO BE ACTED UPON, THE SHARES SHALL BE VOTED OR WITHHELD
FROM VOTING ACCORDINGLY. WHERE NO CHOICE IS OR WHERE BOTH CHOICES
ARE SPECIFIED IN RESPECT OF ANY MATTER TO BE ACTED UPON, THE SHARES
REPRESENTED HEREBY SHALL, ON ANY BALLOT THAT MAY BE CALLED FOR, BE
VOTED FOR THE ADOPTION OF ALL SUCH MATTERS. THIS PROXY CONFERS
UPON THE PERSON NAMED HEREIN AS NOMINEE DISCRETIONARY AUTHORITY
WITH RESPECT TO AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN
THE NOTICE AND OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING.
The undersigned hereby acknowledges receipt of the Notice of the 1998
Annual General Meeting of Members and the accompanying Proxy Statement
and Information Circular dated July 1,1998.
If this Form of Proxy is not dated by the member in the space below, it
is deemed to bear the date on which it is mailed by the Company to the
member.
The undersigned hereby revokes any proxy previously given in respect of
the Meeting.
DATED this _______ day of _____________________________, 1998.
____________________________________
Name (Please Print)
_____________________________________
Address
_____________________________________
_____________________________________
Signature
Number of Shares Held:
____________________________________
<PAGE> 4
NOTES TO FORM OF PROXY
1. IF THE MEMBER DOES NOT WISH TO APPOINT ANY OF THE PERSONS
NAMED IN THIS FORM OF PROXY, HE SHOULD STRIKE OUT THEIR NAMES
AND INSERT IN THE BLANK SPACE THE NAME OF THE PERSON HE
WISHES TO ACT AS HIS PROXY. SUCH PERSON NEED NOT BE A MEMBER
OF THE COMPANY.
2. This Form of Proxy must be signed by the member or his
attorney authorized in writing or , if the member is a
corporation , under the hand of a duly authorized officer
or attorney of the corporation.
3. This Form of Proxy , and the power of attorney or other
authority, if any, under which it is signed, or a notarially
certified copy thereof , must be deposited either at the
office of the Registrar and Transfer Agent of the Company,
Montreal Trust Company of Canada, at 510 Burrard Street,
Vancouver, B.C., V6C 3B9, or at the Head Office of the
Company at Building C. #501B, 2454 McMullen Booth Road,
Clearwater, FL., 33759 - 1343 not less than 48 hours,
Saturdays and holidays excepted, prior to the time of the
holding of the Meeting or any adjournment thereof.
