<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WESTAR FINANCIAL SERVICES INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
WESTAR FINANCIAL SERVICES INCORPORATED
PROXY STATEMENT
1998 ANNUAL MEETING OF STOCKHOLDERS
MONDAY, APRIL 26, 1999
This proxy statement is furnished to the stockholders of Westar Financial
Services Incorporated, formerly known as Republic Leasing Incorporated, in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders on April 26, 1999, and all adjournments thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. This
proxy statement and the enclosed form of proxy are first being mailed to
stockholders on or about March 22, 1999.
Whether or not you expect to be personally present at the meeting, please
fill in, sign, date and return the enclosed form of proxy.
Any person giving such proxy has the right to revoke it at any time before
it is voted by giving notice to the Secretary of the Company. All shares
represented by duly executed proxies in the accompanying form will be voted
unless proxies are revoked prior to the voting thereof.
The close of business on March 1, 1999 has been fixed as the record date
for the determination of stockholders entitled to vote at the Annual Meeting of
Stockholders. As of the record date, there were outstanding and entitled to vote
at such meeting 2,187,300 shares of common stock. The holders of common stock
will be entitled to one vote for each share of common stock held of record on
the record date.
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998 accompanies this proxy statement.
The solicitation of this proxy is made by the Board of Directors of the
Company. The solicitation will be made by mail and the expense thereof will be
paid by the Company. The Company has retained TranSecurities International, Inc.
to assist in the solicitation of proxies at an estimated cost of $500, plus
expenses.
In addition, solicitation of proxies may be made by telephone or telegram
by directors, officers or regular employees of the Company.
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<PAGE>
VOTE REQUIRED
The election of the Company's directors requires a plurality of the votes
represented in person or by proxy at the annual meeting, and the other proposal
described in the accompanying Notice to Stockholders and any other business that
may properly come before the Annual Meeting require that the votes cast in favor
exceed the votes cast against the proposal.
EFFECT OF AN ABSTENTION AND BROKER NON-VOTES
A stockholder who abstains from voting on any or all proposals will be
included in the number of stockholders present at the Annual Meeting for the
purpose of determining the presence of a quorum. Abstentions will not be counted
either in favor of or against the election of the nominees or any other
proposal. Under the rules of the National Association of Securities Dealers,
brokers holding stock for the accounts of their clients who have not been given
specific voting instructions as to a matter by their clients may vote their
clients' proxies in their own discretion.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
NOMINEES AND CONTINUING DIRECTORS
The Board of Directors is divided into three classes, with the terms of
office of each class ending on successive years. Two directors of the Company
are to be elected for term ending in 2001, at the Annual Meeting, or until their
respective successors have been elected and qualified. Certain information with
respect to the nominees for election as directors proposed by the Company and
the other directors whose terms of office as directors will continue after the
Annual Meeting is set forth below. Should any one or more of the nominees be
unable or unwilling to serve (which is not expected), the proxies (except
proxies marked to the contrary) will be voted for such other person or persons
as the Board of Directors may recommend.
NOMINEES FOR TERMS UNTIL 2001
Robert L. Lovely, age 61, is a director and Chairman of the Compensation
Committee of the Company. He is the President and owner of Cruise Center
Consultants, Inc. and operates a chain of cruise only travel agencies. He is
also President of the Lovely Corp., a business development and management firm.
He was previously President and CEO of Satellite Information Systems Company
(1983-1985) and prior
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<PAGE>
to that, founder and CEO of Allied Data (1967-1983). He is a director of
Applied Voice Technology (since 1983). Mr. Lovely is a director of Mud Bay
Holdings, Ltd., a privately held investment company. Mr. Lovely graduated from
Washington State University (B.A., Mathematics) and received an MBA from
Pacific Lutheran University. He has served on the Board of Directors of the
Company and predecessor corporations since 1978.
Michael A. Price, age 52, was elected to the Board of Directors in June
1998 and was named to the Compensation Committee. He is the founder of T & W
Financial Corporation and has been Chairman of the Board and Chief Executive
Officer of T & W Financial Corporation and its predecessors since its formation
in 1976. Prior to 1976, Mr. Price was a Vice President of International Finance,
an independent leasing company. Mr. Price was one of the founders, and is a past
director, of the United Association of Equipment Lessors ("UAEL"), a national
association of leasing companies.
TO CONTINUE IN OFFICE UNTIL 2000
R. W. Christensen, Jr., age 50, is the President and Chairman of the Board
of Directors of the Company. Prior to 1978 he held positions as a financial
analyst with Olympia Brewing Company, Assistant to the President of Pacific Hide
& Fur, a natural resources and steel distribution firm, and as Corporate Pilot
with Buttrey Food Stores. Mr. Christensen served as Vice Chairman (1989-1990)
and a member of the Board of Directors (1987-1990) of Heritage Federal Savings &
Loan Association. He was President and director of PacWest Financial
Corporation, a privately held investment firm. Mr. Christensen is President and
a member of the Board of Directors of Mud Bay Holdings, Ltd., a privately held
investment company. Mr. Christensen has previously served as an officer,
director and President of the National Vehicle Leasing Association (1981-1988)
in which capacities he presented dozens of articles and scores of speeches on
the state and future of the automobile leasing industry, subjects in which he is
regarded as expert. He was awarded the industry's most prestigious recognition,
the Clemens-Pender Award, in 1988. He has served as director of Washington
Independent Bankshares (1982). Mr. Christensen serves as the court-appointed
Trustee of CASR Trust, a multi-year, multi-million dollar fund established by
the bankruptcy court for the benefit of the creditors of All Seasons Resorts. He
graduated from the College of Great Falls (B.A. with Honors, Management and
Economics) and received an MBA from the University of Puget Sound. He serves as
a Director (since 1978) and as Chairman (since 1995).
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<PAGE>
David C. Soward, age 42, is a Director of the Company. Since 1992 he has
been the Senior Vice President of & Capital Partners, Inc., the General Partner
of & Capital Partners, LP, a venture capital company based in San Francisco. He
was previously a Senior Manager with KPMG Peat Marwick, San Francisco (1987-
1992). Mr. Soward graduated from Portland State University (BS, Accounting) and
is a Certified Public Accountant. Mr. Soward is a member of the Compensation
Committee. He has served on the Board of Directors of the Company since 1995.
TO CONTINUE IN OFFICE UNTIL 1999
Joel I. Davis, age 64, is the Assistant Secretary and a director of the
Company. He is President of MasterForms, Inc. (since 1983), and President of
Davis Construction and Development Corporation. He has been engaged as a home
builder and land developer in various capacities for more than twenty-five
years. Mr. Davis is an officer and member of the Board of Directors of Mud Bay
Holdings, Ltd., a privately held investment company. Mr. Davis graduated from
St. Martin's College (B.A., Accounting). Mr. Davis is a member of the Audit
Committee. He has served on the Board of Directors of Westar Financial Services
Incorporated and predecessor corporations since 1978.
Charles S. Seel, age 50, is the Secretary of the Company, a director and
Chairman of the Audit Committee. He is President and Chief Operating Officer of
Summit Management Company, a holding company for Spectrum Glass and Vanguard
Properties. He previously served in positions as Executive Vice President,
Treasurer and Controller (1977). Mr. Seel is the Secretary and a member of the
Board of Directors of Mud Bay Holdings, Ltd., a privately held investment
company. He is a Certified Public Accountant and a member of the Washington
Society of CPAs and the American Institute of CPAs. Mr. Seel graduated from
Montana State University (B.A., Accounting). He has served on the Board of
Directors of Westar Financial Services Incorporated and predecessor corporations
since 1978.
OTHER EXECUTIVE OFFICERS OF THE COMPANY
Robert E. Kanatzar, Jr., age 45, is the Vice President-Risk Management,
with responsibilities for the design and implementation of its risk/reward
criteria, strategies, policies and procedures; the supervision of Lease
Production Officers; the development of credit and collection policies and
procedures; and, the supervision of personnel engaged in risk, credit or
collection activities (1997). Prior to joining the Company he was Senior Vice
President of Credit Policy and Risk Management for NationsCredit Corporation,
with a $10 billion con-
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sumer portfolio, a part of the Financial Services Group of NationsBank
Corporation (1996). Previously, he served as Vice President-Manager of Risk
Management for Bank One Credit Company and managed its $10 billion consumer
portfolio (1992). Mr. Kanatzar has served in areas of similar and increasing
responsibilities with Texas Commerce Bank, Citicorp Acceptance Company and
Citicorp Mortgage Inc. He graduated from the University of Kansas and received
an MBA from the University of Kansas Graduate School of Business.
Warren Kornfeld, age 37, joined the company in August 1998, as its Senior
Vice President-Finance with responsibility for all accounting and finance
functions. Prior to joining the Company Mr. Kornfeld was Vice President of the
Industrial Bank of Japan, Ltd. in New York, responsible for heading their term
asset-backed efforts (1994). Mr. Kornfeld was the co-founder and partner of
Bickford & Partners, Inc., a New York-based investment banking firm specializing
in securitizations and asset-backed securities markets (1991). Previously, he
headed the securitization consulting group of Trepp & Company, Inc., a New York
investment firm (1983). Mr. Kornfeld received his B.S. in Economics with a dual
concentration in Finance and Decision Sciences from the University of
Pennsylvania.
Thomas M. Foley served as Vice President-Finance until he accepted
employment in a different industry and resigned from the firm in July 1998.
Cathy Carlson served as a director and as Westar's Vice President-Operations
until she resigned in May 1998, to pursue other opportunities. Both of these
former employees are included in this Proxy Statement because they were officers
during the period ending March 31, 1998.
BOARD OF DIRECTORS AND COMMITTEES
There were five meetings of the Board of Directors during the fiscal year
ended March 31, 1998. All of the directors attended every meeting of the Board
and committees on which they served except for one member who missed one meeting
and Mr. Soward who was unable to attend two meetings. All directors are
compensated for attendance at Board meetings at $300 per meeting. Additionally,
outside directors are paid $1,000 per quarter in consideration for their
availability to the Company. The Company incurred $25,000 and $31,300 in
directors' compensation during the fiscal years ended March 31, 1998 and 1997,
respectively.
The members of the Board of Directors are elected to various committees.
The standing committees of the Board are the Audit and Compensation Committees.
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<PAGE>
The functions of the Audit Committee are to recommend appointment of the
firm of independent accountants to perform the annual audit; and, review and
approve the scope of the independent accountants' work. The Committee met twice
in the fiscal year ended March 31, 1998 and again immediately following the
fiscal year end. The members of the Committee during the past fiscal year were
Charles Seel and Joel Davis. Mr. Seel served as Chairman.
The functions of the Compensation Committee are to review and approve the
salaries of all executive officers of the Company; and, review and approve all
additional compensation plans. The Committee met twice in the fiscal year ended
March 31, 1998. The members of the Committee during the past fiscal year were R.
L. Lovely, Chairman; David Soward, member. Mr. Price was named to the
Compensation Committee upon his election to the Board in June 1998.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
Stock
Beneficially Class Nature of Percentage
Owned on of Beneficial of
December 31, 1998 Stock Ownership Class(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PLMC, L.L.C. 546,825 (2) Common Sole Voting and Disposition 20.00%(2)
P.O. Box 6104
Federal Way, WA 98063
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& Capital Partners, LP 348,700 (3) Common Sole Voting and Disposition 13.75%(3)
600 California, Suite 1850 1,250 Series 4 Preferred Sole Disposition 100.00%
San Francisco, CA 94108
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Mud Bay Holdings, Ltd. 368,894 (8) Common Sole Voting and Disposition 16.87%
P.O. Box 919
Olympia, WA 98507
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R. W. Christensen, Jr. 546,825 (2) Common Shared Voting and Disposition 30.97%(5)
Chairman, President 368,894 (8) Common Shared Voting and Disposition
and Director 160,050 (4) Common Sole voting and Disposition
P.O. Box 919 ---------
Olympia, WA 98507 1,075,769
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Cathy Carlson 0 Common Sole Voting and Disposition **
Former V.P.-Operations
and Director
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Joel I. Davis 20,000 Common Sole Voting and Disposition
Assistant Secretary 368,894 (8) Common Shared Voting and Disposition 17.62%(7)
and Director ---------
388,894
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Robert L. Lovely 28,000 (4) Common Sole Voting and Disposition
Director 368,894 (8) Common Shared Voting and Disposition 17.92%(9)
---------
396,894
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Charles S. Seel 30,000 Common Sole Voting and Disposition
Secretary 368,894 (8) Common Shared Voting and Disposition 17.99%(10)
and Director ---------
398,894
- ----------------------------------------------------------------------------------------------------------------------------------
David Soward 20,000 (4) Common Sole Voting and Disposition
Director 348,700 (11) Common Shared Voting and Disposition 14.42%(12)
---------
368,700
1,250 (11) Series 4 Preferred Non-Voting 100.00%
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Michael A. Price 546,825 (2) Common Shared Voting and Disposition
Director 219,800
---------
766,625 27.84%(13)
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Thomas M. Foley 0 Common Sole Voting and Disposition **
Former V. P.-Finance
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Robert Kanatzar 7,000 (4) Common Sole Voting and Disposition **
V. P.-Risk Management
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All Directors and Officers as a 1,749,269 Common 47.06%(14)
Group (9 persons)
</TABLE>
** Denotes less than 1%
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<PAGE>
FOOTNOTES TO SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(1) Except as otherwise indicated, Stock Beneficially Owned and Percentage
of Class are based upon 2,187,300 shares of common stock outstanding as of
December 31, 1998. Under Rule 13d-3(d)(1), any securities not outstanding which
are subject to options, warrants, rights or conversion privileges shall be
deemed to be outstanding for purposes of computing the percentage of outstanding
securities owned by such person, but not deemed outstanding for computing
percentage ownership by any other person.
(2) PLMC, L.L.C. holds a Convertible Subordinated Note which may be
converted into 20% of the outstanding common Stock on a fully-diluted basis. The
holdings listed are based upon 2,734,125 common shares outstanding. Mr.
Christensen and Mr. Price, directors of Westar, are principals in PLMC, L.L.C.
The holdings of PLMC, LLC are attributed to both Mr. Christensen and Mr. Price
under Rule 13d-3.
(3) & Capital Partners, LP has the right to convert its Series 4 B
Preferred Shares into 10% of the outstanding Common Stock on a fully-diluted
basis. It also holds warrants for 3.75% of the outstanding Common Stock on a
fully-diluted basis. The holdings are based upon 2,536,000 common shares
outstanding. Mr. Soward, a director of Westar, is the Senior Vice President of
the general partner & Capital Partners, LP
(4) Includes shares options and/or conversion rights which may be
exercised within 60 days.
(5) Based upon 3,263,069 common shares outstanding.
(6) Includes the interest of Summit Capital Resources, Ltd. of which Mr.
Christensen is the sole director and officer. The interest is attributed to Mr.
Christensen under Rule 13d-3.
(7) Based upon 2,207,300 common shares outstanding.
(8) The interest of Mud Bay Holdings, Ltd. of which Messrs. Christensen,
Davis, Lovely and Seel are directors collectively holding dispositive power. All
four individuals are attributed all of the holdings of Mud Bay Holdings, Ltd.
under Rule 13d-3.
(9) Based upon 2,215,300 common shares outstanding.
(10) Based upon 2,217,300 common shares outstanding.
(11) Includes the interest of & Capital Partners, LP, under Rule 13d-3.
Mr. Soward is the Senior Vice President of & Capital Partners, Inc., the general
partner of & Capital Partners, LP
(12) Based upon 2,556,000 common shares outstanding.
(13) Based upon 2,754,125 common shares outstanding.
(14) Based upon 3,716,759 common shares outstanding.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION FOR PAST THREE FISCAL YEARS
ENDING MARCH 31, 1998
<TABLE>
<CAPTION>
Name Annual Compensation
And Fiscal Long-Term All Other
Principal Year Compensation Compensation
Position(1)
- -------------------------------------------------------------------------------------------------------------------------
Salary Bonus Other Awards Payouts
Annual
Compensa-
tion(1)
- -------------------------------------------------------------------------------------------------------------------------
Restricted LTIP
Stock Options Payouts
Awards
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R.W. Christensen, Jr. 3/31/98 $150,000 $0
President and 3/31/97 $142,500 $0
Chairman 3/31/96 $120,000 $0
- -------------------------------------------------------------------------------------------------------------------------
Robert Kanatzar 3/31/98(3) $172,500 $60,000(4) 37,000
V.P.-Risk Management
- -------------------------------------------------------------------------------------------------------------------------
Thomas M. Foley 3/31/98 $125,000 $0
V.P.-Finance 3/31/97 $124,166 $0 20,000
- -------------------------------------------------------------------------------------------------------------------------
Cathy Carlson 3/31/98 $115,000 $0
V.P.-Operations 3/31/97 $103,700 $0
3/31/96 $ 72,000 $0
</TABLE>
(1) All other executive officers of the Company received less than
$100,000 annually in total compensation during the years ended March 31, 1998,
1997 and 1996.
(2) Westar has concluded that the individual and aggregate amounts of
personal benefits provided, which are not reflected in the above table, did not
exceed the lesser of $50,000 or 10% of the total annual salary and bonus
reported above for each of the named persons.
(3) Mr. Kanatzar's employment with Westar began in August 1997.
(4) Mr. Kanatzar received an interest-free loan as an inducement to join
the Company. If Mr. Kanatzar remains with the Company for seventeen months, the
loan will be forgiven. The loan is therefore characterized as a bonus for
purposes of this Table.
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<PAGE>
OPTIONS GRANTED IN FISCAL 1998
The following table sets forth certain information with respect to stock
options granted to the Named Executives during the year ended March 31, 1998.
<TABLE>
<CAPTION>
Potential Realizable Value at
Individual Grants Assumed Annual Rates of Stock Price
Appreciation for Option Term
Percent of Total
Options Options Granted Exercise Base Expiration Date
Name Granted to Employees in Price 5% 10%
Fiscal Year
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<S> <C> <C> <C> <C> <C> <C>
Robert Kanatzar 37,000(1) 100% $5 - $11(1) 2 years -0- (3) -0-
from grant(2)
</TABLE>
(1) Options exercisable 7,000 @ $5 per share beginning on August 5, 1997;
10,000 @ $7.00 per share beginning on August 5, 1999; 10,000 @ $9 per share
beginning on August 5, 2000; and 10,000 @ $11.00 per share beginning on August
5, 2001.
(2) Options expire two years after first exercisable, except the option
which is exercisable on August 5, 2001 which expires on 2002.
(3) Assumes future stock prices of $3.83 and $4.83 at compound rates of
five percent and 10 percent, respectively, for five years, and are computed
solely because the requirements of the SEC. Westar makes no representation that
its stock will perform similarly or show similar appreciation.
AGGREGATE OPTIONS EXERCISED IN FISCAL 1998
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information with respect to the
exercise of stock options during fiscal 1997 and outstanding stock options held
by the Named Executives as of March 31, 1998.
<TABLE>
<CAPTION>
Shares Value Number of Unexercised Options at Value of Unexercised
Name Acquired Realized Fiscal Year-End In-the-Money Options at Fiscal
On Exercise Year-End
- --------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable(1)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
R.W. Christensen -0- -0- 80,000 -0- $40,000 -0-
Robert Kanatzar -0- -0- 7,000 30,000 -0- -0-
Thomas M. Foley -0- -0- 10,000(2) 10,000(2) -0- -0-
Cathy Carlson -0- -0- 40,000(2) -0- $50,000 -0-
</TABLE>
(1) The indicated value is based on $2.50 per share market value of the
Common Stock at March 27, 1998, the day nearest to the fiscal year end in which
a trade took place, minus the exercise price.
(2) Options expired 90 days after termination of employment.
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<PAGE>
INFORMATION ABOUT WESTAR 1994 STOCK OPTION PLAN
In 1996, the Company adopted, and the stockholders approved, the amendment
of the 1994 Stock Option Plan (the "1994 Stock Option Plan") providing for the
granting of options to purchase 600,000 shares to employees, directors and
consultants of the Company and its affiliates. On October 8, 1998, the Board of
Directors approved an increase of 750,000 shares to a total of 1,350,000. The
Company estimates that approximately 25 employees and three consultants, along
with all current directors of the Company, are currently eligible to receive
option grants under the 1994 Stock Option Plan. The Company, by means of the
1994 Stock Option Plan, seeks to retain the services of persons now employed by
or serving as consultants or directors to the Company, to secure and retain the
services of persons capable of filling such positions and to provide incentives
for such persons to exert maximum efforts toward the success of the Company. The
1994 Stock Option Plan provides for the granting of Incentive Stock Options
("ISOs") as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), as well as for the granting of Non-statutory
Stock Options ("NSOs") which do not qualify as incentive stock options under the
Code.
The 1994 Stock Option Plan is administered by the Board of Directors upon
recommendation of its Compensation Committee. The Board or the Committee
determines from time to time which of the persons eligible under the 1994 Stock
Option Plan shall be granted options, when and how the options shall be granted,
whether such options shall be ISOs or NSOs and the provisions of each of the
options (which need not be identical), subject to the restrictions set forth in
the 1994 Stock Option Plan. ISOs may be granted only to employees (including
officers) of the Company and its affiliates while NSOs may be granted to
employees (including officers) and directors of, or consultants to, the Company
and its affiliates.
The exercise price of each option shall not be less than one hundred
percent (100%) of the fair market value of the stock subject to the option on
the date the option is granted. The exercise price of any ISO granted to any
optionee owning more than ten percent (10%) of the voting power of all classes
of the Company's stock, shall not be less than one hundred ten percent (110%) of
the fair market value of the stock on the date of the grant of the ISO.
Generally, an option shall terminate three months after termination of the
optionee's employment or relationship as a consultant to, or director of, the
Company or its affiliates, and an option shall not be transferable except by
will or the laws of descent and distribution (although an ISO may also be
transferred pursuant to a qualified domestic relations order as defined
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<PAGE>
by the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder). The market price of the Company's common stock as of the
close of trading on Thursday, April 2, 1998, the day closest to March 31, 1998
on which a trade took place, was $3.50.
The 1994 Stock Option Plan permits options granted to be either qualified
Incentive Stock Options pursuant to the Code or non-qualified stock options, as
the Board may elect. Upon exercise of a non-qualified option, the optionee will
realize ordinary income in an amount equal to the excess of the fair market
value of the shares of common stock received over the exercise price of such
shares. That amount increases the optionee's basis in the stock acquired
pursuant to the exercise price of such shares. That amount increases the
optionee's basis in the stock acquired pursuant to the exercise of the
non-qualified option. Upon a subsequent sale of the stock, the optionee will
generally recognize additional capital gain or loss. The Company generally will
be allowed a federal income tax deduction for the amount recognized as ordinary
income by the optionee upon the exercise of the option.
The Board may at any time, and from time to time, amend the 1994 Stock
Option Plan. However, no amendment shall be effective unless approved by the
stockholders of the Company where such amendment would, among other things,
increase the number of shares reserved for issuance pursuant to options granted
under such plan.
As of March 31, 1998, options representing a total of 529,133 shares have
been granted, 105,800 of which had been exercised, the remainder include 202,000
options which were vested and were exercisable, 40,000 options which had not
vested yet, and 28,000 options which have expired. These options are held by
twenty one (21) persons, are exercisable at between $0.50 - $11.00 per share and
remain exercisable for three to five years from the date of grant, subject to
certain conditions.
As a group, all employees who are not executive officers received 20,000
options. As a group, executive officers as of March 31, 1998, have received
177,000 options under the 1994 Stock Option Plan. Current directors, excluding
executive officers, have received 100,000 options, as a group.
On October 8, 1998, the Board awarded R. W. Christensen, Jr. options for
30,000 shares for each of the next five years exercisable at $4 to $8 per share.
Since the total grant of 150,000 shares exceeds the number of options available
under the Plan, the portion of the award which exceeds the authorized number of
option shares awarded is contingent upon shareholder approval of the increased
number of
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<PAGE>
options. The Company expects to grow rapidly and believes that the
availability of stock options will allow it to be competitive in attracting
key employees.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR THE EXCHANGE ACT THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS
PROXY STATEMENT IN WHOLE OR IN PART, THE FOLLOWING REPORT SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and establishes management compensation,
compensation policies and procedures. Following review and approval by the
Committee, all issues pertaining to executive compensation are submitted to the
full Board of Directors for its approval. The Committee also has responsibility
for the grant of awards under Westar's stock option plan.
Executive officer compensation is based on Westar's overall performance in
the past year and an analysis of compensation levels necessary to attract,
maintain and motivate quality personnel. In this way, Westar is able to compete
for and retain talented executives who are critical to our long-term strategies
for success. It also aligns the interest of those executives with the long-term
interests of our stockholders.
Executive compensation consists of three components: cash compensation,
long term incentives in the form of stock options and normal employee fringe
benefits. The three components are intended to provide executives with
incentives to achieve the long-range objectives of Westar and to reward
exceptional performance. Performance is evaluated not only with respect to
Westar's earnings but also with respect to the accomplishment of Westar's
business objectives, the individual's contribution to stockholder value, and
also with respect to comparable industry results and experience. Executive
officers receive all normal employee fringe benefits.
In determining the overall compensation package for the Chief Executive
Officer, the Committee considered each of the factors enumerated in the
preceding paragraphs regarding compensation for executive officers of Westar as
well as the performance achieved by Westar during the past fiscal year.
To motivate extraordinary job performance and to encourage growth in
stockholder value, significant stock options are granted under
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Westar's stock option plan to all executives and all other company personnel
in order to encourage substantial contributions toward the overall success of
Westar. The Committee believes that this focuses attention on managing Westar
from the perspective of owners with an equity stake in the business. All of
the corporate objectives established at the beginning of the year were met or
exceeded prior to year-end.
Dated this 31st day of March, 1998
The Compensation Committee
R. L. Lovely, Chairman
David C. Soward
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
R. L. Lovely is a member of the Board of Directors of Mud Bay Holdings,
Ltd., a privately held investment company. R. W. Christensen, Jr. is the
President and a member of the Board of Directors of Mud Bay Holdings, Ltd.
Charles Seel and Joel Davis, directors of the Company, are also officers and
members of the Board of Directors of Mud Bay Holdings, Ltd.
RELATED PARTY TRANSACTIONS
The Company leased office space from a limited partnership in which it had
a 10% interest in the fiscal year. The lease expires in November 2000.
The Company has a subordinated note agreement, effective January 1997, with
Mud Bay Holdings, Ltd. pursuant to which the Company may borrow up to $750,000.
Interest is calculated at the rate of 8%.
The Company has a subordinated note agreement, effective April 15, 1997,
with & Capital, Inc., in the amount of $1,500,000. Interest is calculated at the
rate of 6%. The loan is due upon the earlier of (I) April 1, 1999, or (ii)
receipt by the company of not less than $5,000,000 from other financing. The
lender was granted warrants to purchase 3.75% of the Company's stock which is
outstanding at the time of exercise at an exercise price of $.01 per share.
Director David Soward is the Senior Vice President of the lender.
The Company had a 120-day subordinated note agreement with Cathy Carlson in
the amount of $100,000. Interest was calculated at the rate of 11%. The note was
paid in full in May 1998.
In January, 1998, the company borrowed $500,000 from & Capital, Inc. The
note is due on April 1, 1999. Interest accrues at 9.5%.
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The Company has an account receivable of approximately $155,000 from All
Seasons Resorts. Mr. Christensen, a director and officer of the Company, is the
bankruptcy court-appointed Trustee of CASR Trust, a fund established by the
bankruptcy court for the benefit of the creditors of All Seasons Resorts. The
trustee is in the process of liquidating real estate for the creditors' benefit.
The Company expects to recover its receivable in full.
In April 1998, the company entered into an agreement with PLMC, LLC, which
is owned by two directors ( R. W. Christensen, Jr. and Michael A. Price) and
other unrelated parties, to borrow $400,000 in subordinated debt. Interest
accrued at 9.5%. The note was paid on May 13, 1998.
In May 1998, the Company entered into an agreement to exchange a note
payable for $500,000 for all of R. W. Christensen's Series 3 preferred stock.
The note bears interest at the rate of 10.5% and is paid quarterly. The note is
due April 1, 1999.
In May 1998, the company issued $4,000,000 in subordinated convertible note
to PLMC, LLC. The note is due May 2003 and bears interest at the rate of 10.5%.
The note is convertible into 20% of the outstanding stock of the Company.
On July 22, 1998, the Company entered into a lease purchase/repurchase
agreement in the amount of $1.6 million with T & W Financial Services, Inc.
Director Michael Price is an officer and director of T &W Financial. The
agreement bears interest at 9.5%. The assets were repurchased on August 12,
1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of the common stock, to file initial reports of ownership (Form 3) and
changes of ownership (Form 4) of Company common stock with the Securities and
Exchange Commission. Minor changes of ownership may be reported once annually
(Form 5). The Company is required to disclose in this proxy statement any late
filings of those reports made by its directors and executive officers and
greater than 10% stockholders during the fiscal year ended March 31, 1998. Based
solely upon the review of the copies of the forms furnished to the Company and
written representations that no such other reports are required, the Company
believes that during the fiscal year all executive officers and directors, and
greater than 10% stockholders timely filed all such required reports, other than
as follows: Cathy
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Carlson, R.W. Christensen, Jr., Robert Kanatzar, Joel Davis and Charles Seel
each filed a single report late.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OR THE EXCHANGE ACT THAT MIGHT
INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT IN WHOLE OR IN PART,
THE FOLLOWING STOCKHOLDER RETURN PERFORMANCE PRESENTATION SHALL NOT BE
INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the Company's cumulative total
stockholder return on its common stock with the return of the NASDAQ Market
Index and a peer group* constructed by the Company.
[GRAPH]
* For comparison purposes, the "Automobile Financial Services Sector" peer
group is composed of Aegis Consumer Funding Group; Consumer Portfolio Services;
CTL Credit, Inc.; Jayhawk Acceptance Corporation; MS Financial, Inc.; Olympic
Financial (Arcadia); Oxford Resources; and, WFS Financial, not all of which
concentrate on producing prime consumer financial instruments. CTL was acquired
by Bayview Bank, Inc. on 6-14-96. OXFD was acquired by Barnett Banks, Inc. on
1-15-97. MSFI was acquired by Search Capital on 8-1-97.
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INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ("KPMG") was appointed as Westar's independent public
accountants for the year ending March 31, 1998. This appointment was recommended
by the Audit Committee of Westar and approved by the Board of Directors of
Westar.
KPMG has advised Westar that neither the firm nor any of its members has
any direct or indirect financial interest in, or during the last three years,
has had any other connection with Westar other than the usual relationship which
exists between independent public accountants and clients.
A representative of KPMG will not be present at the Annual Meeting.
On May 18, 1998, Westar chose not to continue to retain the accounting firm
of BDO Seidman LLP ("BDO") and engaged the accounting firm of KPMG as principal
accountants for the year ended March 31, 1998. Westar's Audit Committee approved
the engagement of KPMG on May 18, 1998.
During the two most recent fiscal years and the subsequent interim period
prior to May 18, there have been no disagreements with BDO on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure or any reportable events.
BDO's report on the consolidated financial statements for the last two
years contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting principles.
Westar provided the above disclosure to both BDO and KPMG, and requested
that BDO furnish Westar with a respective letter addressed to the Securities and
Exchange Commission stating whether they agree with the above statements. BDO
filed a letter of agreement with the statement.
PROPOSAL 1
ELECTION OF TWO DIRECTORS
The Board has nominated Mr. Robert L. Lovely and Mr. Michael A. Price to
each serve as a director of the Company for a three-year term ending March 31,
2001 and until the election and qualification of his successor. Management
believes that the proposed nominees for elec-
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tion as director are willing to serve as such, and it is intended that the
person named in the accompanying form of proxy or their substitute will vote
for the election of the nominees unless specifically instructed to the
contrary. However, if either nominee at the time of the election is unable or
unwilling to serve or is otherwise unavailable for election and as a
consequence another nominee is designated, the person named in the proxy or
his substitute shall have discretion or authority to vote or refrain from
voting in accordance with his judgment with respect to the other nominees.
VOTE REQUIRED
The affirmative vote of a majority of the shares of common stock of the
Company represented (in person or by proxy) and entitled to vote at the Annual
Meeting is required to elect a director.
The board unanimously recommends voting "for" the two nominees named above, and
your proxy will be so voted unless you specify otherwise.
PROPOSAL 2
APPROVAL OF AMENDMENT OF THE WESTAR FINANCIAL SERVICES INCORPORATED 1994 STOCK
OPTION PLAN
The Board of Directors of the Company proposes that the shareholders
approve an amendment of the Westar Financial Services Incorporated 1994 Stock
Option Plan that increased by 750,000 the number of shares reserved for
issuance. The Board believes that the ability to grant stock options allows the
Company to attract and maintain the services of experienced and knowledgeable
people and provides an incentive for recipients of options to work for the
benefit of the Company and its shareholders. The increase in the number of
shares authorized is necessary in order to have sufficient reserved shares to
continue to grant options and in anticipation of providing incentives to present
and future employees. The Board has approved an option grant of 150,000 shares
to R.W. Christensen, Jr., exercisable at the rate of 30,000 shares per year at
prices from $4 to $8 per shares. The excess grant over the presently available
option shares depends upon shareholder approval of the increased authorization
of option shares. The Board approved the amendment to the 1994 Plan on October
8, 1998 and recommends that the shareholders also approve the amendment. A copy
of the 1994 Plan, as amended may be obtained by sending a written request to
P.O. Box 919, Olympia, WA 98507
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The board of directors recommends a vote FOR the approval of the amendment
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board
intends to present or knows that others will present at the meeting as set forth
above. If any other matter or matters are properly brought before the meeting,
or any adjournment thereof, it is the intention of the persons named in the
accompanying form of Proxy to vote the Proxy on such matters in accordance with
their best judgment.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
solicitation materials to be used in connection with the next annual meeting of
stockholders of Westar must be received at the main office of Westar not less
than 120 days in advance of the date of the release of the proxy statement. If
such proposal is in compliance with all of the requirements of Rule 14a-8 under
the Exchange Act, it will be included in the proxy statement and set forth on
the form of proxy issued for the next annual meeting of stockholders. It is
urged that any such proposals be sent by certified mail, return receipt
requested.
ANNUAL REPORTS
This Proxy Statement includes the information and materials contained
within the 1998 Annual Report to Stockholders of Westar Financial Services
Incorporated. Any document or part thereof not delivered herewith, will be
provided without charge to each person, including any beneficial owner, to whom
the Proxy Statement is delivered, upon written request of such person directed
to Westar Financial Services Incorporated, Shareholder Relations Department,
P.O. Box 919, Olympia, Washington 98507.
March 22, 1999
By Order of the Board of Directors
Charles S. Seel, Secretary
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WESTAR FINANCIAL SERVICES INCORPORATED
Solicitation of Proxies for Westar Financial
Services Incorporated, a Washington Corporation
This Proxy is being solicited by Westar Financial Services Incorporated in
connection with the Proxy Statement. Capitalized terms used but not defined
herein have the meanings given to them in the Proxy Statement.
Name and Address of Stockholder and Number of Shares Owned.
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<S><C>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY 1998 ANNUAL MEETING
APRIL 26, 1999
THE UNDERSIGNED HEREBY APPOINTS RICHARD G. PHILLIPS, JR., PROXY TO REPRESENT THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, AT
THE 1997 ANNUAL MEETING OF STOCKHOLDERS OF WESTAR FINANCIAL SERVICES INCORPORATED, TO BE HELD AT 9:00 A.M. ON MONDAY, APRIL 26,
1999, IN THE MAKAH ROOM, WEST COAST TYEE HOTEL, 500 TYEE DRIVE, TUMWATER, WASHINGTON, AND AT ANY AND ALL ADJOURNMENTS THEREOF.
WITHHOLD
FOR AUTHORITY
1. ELECTION OF DIRECTOR:
ROBERT L. LOVELY FOR A 3 YEAR TERM ENDING MARCH 31, 2000 _____ _____
MICHAEL A. PRICE FOR A 3 YEAR TERM ENDING MARCH 31, 2000 _____ _____
2. AMENDMENT OF 1994 STOCK OPTION PLAN _____ _____
3. IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE
SPECIFIED, THE SHARES WILL BE VOTED FOR PROPOSALS 1 AND 2.
DATED: ___________________________
NOTE: SIGNATURE SHOULD AGREE WITH NAME ON STOCK CERTIFICATE AS PRINTED HEREON. _____________________________________
EXECUTORS, ADMINISTRATORS, TRUSTEES, AND OTHER FIDUCIARIES SHOULD SO INDICATE WHEN SIGNING. _____________________________________
SIGNATURE OF STOCKHOLDER(S)
_____ I PLAN TO ATTEND THE MEETING IN TUMWATER, WASHINGTON, AT 9:00 A.M. ON APRIL 26, 1999. PLEASE DATE, SIGN AND
RETURN THIS PROXY.
THANK YOU.
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