SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 Rule 14a-11(c) or Rule 14a-12
WESTMARK GROUP HOLDINGS, INC.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than 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)(4) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(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.
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(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
<PAGE>
WESTMARK GROUP HOLDINGS, INC.
8000 NORTH FEDERAL HIGHWAY
BOCA RATON, FLORIDA 33487
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON TUESDAY, JUNE 22, 1999
The Annual Meeting of Shareholders of Westmark Group Holdings, Inc.
(the "Company") will be held on Tuesday, June 22, 1999 at the Delray Beach
Marriott, 10 North Ocean Boulevard, Delray Beach, Florida 33483 at 10:00 a.m.,
local time, to consider and act upon the following matters:
1. To elect six directors to serve for the ensuing year;
2. To ratify the selection by the Board of Directors of Rachlin Cohen &
Holtz as the Company's independent accountants for the current fiscal year; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on May 3, 1999 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. The stock transfer books of the Company will remain open following the
record date.
All shareholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors,
Mark D. Schaftlein
President and Chief Executive Officer
Boca Raton, Florida
April 30, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
WESTMARK GROUP HOLDINGS, INC.
8000 NORTH FEDERAL HIGHWAY
BOCA RATON, FLORIDA 33487
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Dated: April 30, 1999
This Proxy Statement has been prepared and is furnished by the Board of
Directors of Westmark Group Holdings, Inc. (the "Company") in connection with
the solicitation of proxies for the Annual Meeting of Shareholders of the
Company to be held on June 22, 1999, and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Meeting.
It is anticipated that this Proxy Statement and the accompanying form
of proxy will be mailed to shareholders on or about May 10, 1999. The Company's
Annual Report, including audited financial statements for the fiscal year ended
December 31, 1998, is being mailed or delivered concurrently with this Proxy
Statement. The Annual Report is not to be regarded as proxy soliciting material.
Only shareholders of record of the Company's common stock, $.005 par
value (the "Common Stock"), at the close of business on May 3, 1999, are
entitled to vote at the Annual Meeting. On that date, there were 3,318,332
issued and outstanding shares of Common Stock entitled to vote on each matter to
be presented at the meeting.
Shares represented by a properly executed proxy received in time to
permit its use at the Annual Meeting or any adjournment thereof will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, the shares represented by the proxy will be voted: (i) for the
election of all nominees for director; (ii) for the ratification of the
appointment of Rachlin Cohen & Holtz as the independent certified public
accountants of the Company for the fiscal year ending December 31, 1999; and
(iii) in the discretion of the proxy holders as to any other matter which may
properly come before the Annual Meeting. A shareholder who has given a proxy may
revoke it at any time before it is voted at the Annual Meeting by giving written
notice of revocation to the Secretary of the Company, by submitting a proxy
bearing a later date, or by attending the Annual Meeting and voting in person.
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company may solicit proxies personally, by telephone or by
facsimile transmission. The Company will reimburse custodians, nominees or other
persons for their out-of-pocket expenses in sending proxy material to beneficial
owners.
Each share of Common Stock entitles the holder thereof to cast one vote
on each matter to be voted upon at the 1999 Annual Meeting. A majority of the
outstanding shares will constitute a quorum at the meeting. Abstentions and
broker non-votes are counted only for purposes of electing directors in
accordance with Proposal One. None of the actions to be voted upon at the 1999
Annual Meeting shall create dissenters' rights under the Delaware General
Corporation Law.
You are requested, regardless of the number of shares you hold, to sign
the proxy and return it promptly in the enclosed envelope.
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PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The table below is based on information obtained from the persons named
below with respect to the shares of Common Stock beneficially owned, as of April
20, 1999, by (i) each person known by the Company to be the owner of more than
5% of the outstanding shares of Common Stock, (ii) each director and nominee for
director, (iii) each executive officer included in the Summary Compensation
Table and (iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING SHARES OWNED(2)
- ---------------------------------------------------- ------------------------------ --------------------------
<S> <C> <C>
Medical Industries of America(3) 783,457 20.8%
1903 S. Congress Avenue, #400
Boynton Beach, Florida 33426
Generation Capital Associates(4) 340,150 9.5%
1085 Riverside Trace
Atlanta, Georgia 30328
Mark D. Schaftlein(5) 275,289 8.0%
8000 North Federal Highway
Boca Raton, Florida 33487
Payton Story, III(6) 223,334 6.6.%
8000 North Federal Highway
Boca Raton, Florida 33487
Harry C. Coolidge, Esq.(7) 221,821 6.5%
Twin Palms Financial Center
1260 41st Avenue, Suite N
Capitola, California 95010
Irving H. Bowen(8) 144,334 4.3%
8000 North Federal Highway
Boca Raton, Florida 33487
Louis J. Resweber(9) 76,206 2.2%
5555 Hilton Avenue, Suite 400
Baton Rouge, Louisiana 70808
John O. Hopkins(10) 15,048 0.5%
8000 North Federal Highway
Boca Raton, Florida 33487
Allan C. Sorensen(11) 15,000 0.5%
8000 North Federal Highway
Boca Raton, Florida 33487
All executive officers and directors as a 749,211 20.6%
group (6 persons)(12)
</TABLE>
(1) The number of shares of Common Stock beneficially owned by each person
is determined under the rules of the Securities and Exchange
Commission, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the holder has
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<PAGE>
sole or shared voting power or investment power and also any shares of
Common Stock which the holder has the right to acquire within 60 days
after April 30, 1999 through the exercise of any stock option or other
right. The inclusion herein of any shares of Common Stock deemed
beneficially owned does not constitute an admission of beneficial
ownership of those shares. Unless otherwise indicated, the persons
named in the table have sole voting and investment power with respect
to all shares of Common Stock shown as beneficially owned by them.
(2) Percentage of outstanding shares owned is calculated on the basis of
the amount of outstanding shares plus, for each person or group, any
shares that person or group has the right to acquire within 60 days
after April 30, 1999, pursuant to options, warrants, conversion
privileges, or other rights.
(3) Includes 100,000 shares that may be issued upon the exercise of
outstanding warrants.
(4) Includes: (i) 74,081 shares that may be issued upon the conversion of
50,005 shares of the Company's Series B Convertible Preferred Stock;
ii) 94,118 shares that may be issued upon the conversion of convertible
debt; and (iii) 89,555 shares that may be issued upon the exercise of
outstanding warrants.
(5) Includes: (i) 90,000 shares that may be issued upon the exercise of
outstanding options; and (ii) 18,000 shares that may be issued upon
the exercise of outstanding warrants.
(6) Includes 80,000 shares that may be issued upon the exercise of
outstanding options.
(7) Includes 69,500 shares that may be issued upon the exercise of
outstanding options.
(8) Includes 50,000 shares that may be issued upon the exercise of
outstanding options.
(9) Includes: (i) 20,000 shares that may be issued upon the exercise of
outstanding options; and (ii) 50,000 shares that
may be issued upon the exercise of outstanding warrants.
(10) Includes 5,000 shares that may be issued upon the exercise of
outstanding options.
(11) Includes 5,000 shares that may be issued upon the exercise of
outstanding options.
(12) See footnotes (1) through (11) above.
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 any persons who
beneficially own ten percent or more of the Company's Common Stock, to file with
the Securities and Exchange Commission (the "Commission") initial reports of
beneficial ownership and reports of changes in beneficial ownership of Common
Stock. Such persons are required by regulations of the Commission to furnish the
Company with copies of all Section 16(a) forms they file. Based solely upon a
review of (i) copies of section 16(a) filings received by the Company during or
with respect to the 1998 fiscal year and (ii) certain written representations of
its officers and directors with respect to the filing of annual reports of
changes in beneficial ownership, the Company believes that each filing required
to be made pursuant to Section 16(a) of the Exchange Act during the 1998 fiscal
year has been filed in a timely manner, except as follows:
Mark D. Schaftlein, an officer and director of the Company, failed to
timely file a Form 4 with respect to four acquisitions of the Company's common
stock during the month of February 1998, which were subsequently reported on a
Form 4 filed in May 1998. Based on outside counsel's erroneous advice, Mr.
Schaftlein also failed to timely file a Form 4 with respect to two acquisitions
of the Company's common stock during the month of December 1998, which were
subsequently reported on a timely filed Form 5. Payton Story, III, an officer
and director of the Company, failed to timely file a Form 4 with respect to
three acquisitions of the Company's common stock during the month of February
1998, which were subsequently reported on a Form 4 filed in May 1998. Irving H.
Bowen, an officer and director of the Company, failed to timely file a Form 4
with respect to one acquisition of the Company's common stock during the month
of February 1998, which was subsequently reported on a Form 4 filed in May 1998.
Based on outside counsel's erroneous advice, Mr. Bowen also failed to timely
file a Form 4 with respect to one acquisition of the Company's common stock
during the month of December 1998, which was subsequently reported on a timely
filed Form 5. Louis J. Resweber, a director and former officer of the Company,
failed to timely file a Form 4 with respect to one acquisition of the Company's
common stock during the month of February 1998, which was subsequently reported
on a Form 4 filed in May 1998. John O. Hopkins, a director of the Company,
failed to timely file a Form 3 with respect to his holdings of the Company's
common stock and a grant of options to purchase the Company's common stock
during the month of February 1998, which was subsequently reported on a Form 3
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filed in May 1998. Mr. Hopkins also failed to timely file a Form 4 with respect
to one acquisition of the Company's common stock during the month of April 1998,
which was subsequently reported on a timely filed Form 5. Allan C. Sorensen, a
director of the Company, failed to timely file a Form 3 for February 1998 with
respect to one grant of options to purchase the Company's common stock during
the month of February 1998, which was subsequently reported on a Form 3 filed in
May 1998. Based on outside counsel's erroneous advice, Mr. Sorensen also failed
to timely file a Form 4 with respect to three acquisitions of the Company's
common stock during the month of December 1998, which were subsequently reported
on a timely filed Form 5.
PROPOSAL ONE
ELECTION OF DIRECTORS
The persons named in the accompanying form of proxy intend to vote all
valid proxies received in favor of the election of each of the persons named
below as nominees for director unless authority is withheld. Directors elected
at the Annual Meeting will serve until the next Annual Meeting of Shareholders
and until their successors are elected and qualified, subject to the election
and qualification of their successors and to their earlier death, resignation or
removal. In the event that any nominee is unable or unwilling to serve,
discretionary authority is reserved to the persons named in the accompanying
form of proxy to vote for substitute nominees. Management does not anticipate
that such an event will occur. Each director shall be elected by a plurality of
the votes cast.
NOMINEES FOR DIRECTOR
The Company's Board of Directors consists of six persons. The following
six persons have been nominated by the Board of Directors to fill such
positions. All are currently Directors of the Company. Three are the Company's
executive officers in addition to their positions as Directors of the Company.
Set forth below are the names, ages as of March 1, 1999, and business experience
of all six:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Mark D. Schaftlein 41 President, CEO and Chairman of the Board of Directors
Irving H. Bowen 57 Exec. V. P. - Treasurer, Chief Financial Officer and Director
Payton Story, III 52 President of Westmark Mortgage Corporation and Director
Louis J. Resweber 36 Consultant and Director
Allan C. Sorensen 61 Outside Director
John O. Hopkins 39 Outside Director
</TABLE>
Mr. Schaftlein has been President and Chief Executive Officer of the
Company and Chief Executive Officer of Westmark Mortgage Corporation since May
1997, and Chairman of the Board since June 1998. From February 1996 until May
1997, he served as President of Westmark Mortgage Corporation. Mr. Schaftlein
has been a Director of the Company since January 1996. From February 1995 until
February 1996, he was Director of the Non-conforming Division of Westmark
Mortgage Corporation, managing the transition of Westmark Mortgage Corporation
from a conforming to a non-conforming lender. He established the bulk loan sales
programs with Household Finance Corp. and The Money Store which the Company
presently utilizes. From September 1993 until February 1995, Mr. Schaftlein was
a Senior Vice President with National Lending Center, Inc., where he oversaw
expansion of operations into multiple states and assisted in development of the
non-conforming loan program. From January 1993 until September 1993, he served
as Vice President of Fleet Finance and was responsible for developing a new
wholesale division in the non-conforming credit market. From 1984 to January
1993, he was a Vice President at Citicorp. In 1996, he was the President of the
Gold Coast Chapter of the Florida Association of Mortgage Brokers.
Mr. Bowen has been Executive Vice President - Treasurer, Chief
Financial Officer and Director of the Company since September 1997. He has also
served as Executive Vice President - Treasurer, and Chief Financial Officer of
Westmark Mortgage Corporation since September 1997. From 1967 to 1988, he was
with the major accounting firm KPMG in the Audit Department, serving many
financial services companies, real estate companies and public and
privately-held companies subject to Securities and Exchange Commission
regulation. He became a KPMG Peat Marwick partner in 1976. Since 1988, he has
provided business advice and consulting to selected clients, operated the Mai
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Kai restaurant as the trustee of the owner's estate, from 1991 to 1994, served
as Chief Operating Officer for Crown America Developments. Ltd. (Successor to
Olympia & York Southeast Equity Corp.). From May 1994 until June 1997, he was
Managing Director of J. Michael Reisert, a full service securities
broker-dealer.
Mr. Story has been President and Director of Westmark Mortgage since
May 1997. From May 1996 until May 1997, he was Senior Vice-President of Lending.
He has served as a Director of the Company since February 1997. From July 1985
to April 1996, he was Chief Executive Officer and President of West Coast
Mortgage Services, Inc. From January 1969 to July 1985, he was the Marketing
Director of Beneficial Management Corporation in Peapock, New Jersey. In 1992,
he was President of the Florida Association of Mortgage Brokers-Gulf Coast. He
is a certified mortgage consultant of the Florida and National Associations of
Mortgage Brokers.
Mr. Resweber has been a Director of the Company since December 1996. He
served as Chairman of the Board of Directors of the Company from February 1997
until June 1998. From July 1997 to July 1998 he was Executive Vice President of
Westmark Group Holding, Inc. From October 1992 until May 1995, he was Senior
Vice President, Capital Markets, for United Companies Financial Corp., a New
York Stock Exchange listed financial services company. From 1995 to 1997, he was
President and Chief Executive Officer of Network Acquisition Corp. He has
extensive experience in capital markets, mergers and acquisitions, business
administration and management, and investor relations.
Mr. Hopkins has been an outside director of the Company since February,
1998. He has served as President and Managing Director of his own law firm for
over ten years, which specializes in corporate and commercial transactions, real
estate law and commercial litigation. He is a member of the Florida Bar as well
as the United States District Court for the Southern District of Florida and the
South Palm Beach County Bar Association. He is also a licensed Florida Real
Estate Broker and Mortgage Broker. From March 1983 until December 1986 he served
as President of a retail mortgage organization company that specialized in
residential financing. He has been a Director and Vice-President of Professional
Golf Advertising, Inc. since May 1997. Mr. Hopkins has been involved in various
other outside business ventures.
Mr. Sorensen has been an outside director of the Company since
February, 1998. From April 1967 until October 1997, he served in various
capacities, including President, Chief Executive Officer, Chairman of the Board
of Directors of Interim Services, Inc., a New York Stock Exchange company. Since
October 1997, he has been a Director and Vice Chairman of Interim HealthCare,
Inc., a spin-off of Interim Services, Inc. He has been a Director of Let's Talk
Cellular & Wireless, Inc. since October 1994. Let's Talk Cellular & Wireless
successfully completed an initial public offering in November 1997. He has also
been a director of Republic Services, Inc., a New York Stock Exchange company,
since November 1998.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ALL NOMINEES FOR DIRECTOR.
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company held 9 meetings during the year
ended December 31, 1998. The Board has a standing Audit Committee, a standing
Compensation Committee, and a standing Nomination Committee. During the fiscal
year ended December 31, 1998, the Compensation Committee met 3 times, the Audit
Committee met 2 times, and the Nomination Committee met 1 time. During the most
recent fiscal year, each director attended at least 75% of the meetings of the
Board and any committee on which such director served.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the results of the audit engagement, approves professional services provided by
the independent accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees, and reviews the
adequacy of the Company's internal accounting controls. The Audit Committee is
presently comprised of Allan C. Sorensen, who serves as Chairman, and John O.
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Hopkins, both of whom serve as independent members, and Irving H. Bowen and Mark
D. Schaftlein, the latter of whom serves as a non-voting member.
The Compensation Committee makes recommendations to the Board regarding
the executive and employee compensation programs of the Company. The
Compensation Committee is presently comprised of John O. Hopkins, who serves as
Chairman, and Allan C. Sorensen, both of whom serve as independent members, and
Payton Story, III and Mark D. Schaftlein, the latter of whom serves as a
non-voting member.
The Nomination Committee makes recommendations to the Board regarding
the nomination of new directors to the Board. The Nomination Committee is
presently comprised of Allan C. Sorensen and John O. Hopkins, both of whom serve
as independent members, and Louis J. Resweber and Mark D. Schaftlein, the latter
of whom serves as a non-voting member.
DIRECTORS' COMPENSATION
All directors hold office until the next annual meeting of shareholders
and the election and qualification of their successors. Directors who are not
employees and do not otherwise receive compensation from the Company are
entitled upon appointment to the Board of Directors to receive an option to
purchase 5,000 shares of Common Stock of the Company at an exercise price equal
to or above market value at the date of grant, $1,000 per full day meeting
attended, $500 per half-day meeting attended (other than telephonic meetings),
and $250 per committee meeting of the Board of Directors attended (which are not
held in conjunction with a meeting of the full Board of Directors), in addition
to the reimbursement of reasonable expenses incurred to attend any meetings.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION.
The following table sets forth the annual and long term compensation
paid by the Company for services performed on the Company's behalf for fiscal
years ended December 31, 1996, December 31, 1997 and December 31, 1998, with
respect to those persons who were, as of December 31, 1998, (i) the Company's
Chief Executive Officer and (ii) Company executive officers who earned in excess
of $100,000 in salary and bonus during 1998 (the "Named Executive Officers").*
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<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
--------------------------------------------------- --------------------------------------------
Annual Compensation Awards Payouts
--------------------------------------------------- --------------------------------------------
Other Annual Securities
Name and Principal Position Year Salary Bonus Compensation Underlying (i)
- --------------------------- ---- ------ ----- ------------ Options LTIP All Other
(Number of Payouts Compensation
Shares) ($) ($)
-------
<S> <C> <C> <C> <C> <C> <C>
Mark D. Schaftlein, 1996 $143,353 $ $ 0 18,000 $ 0 $ 0
President and Chief 1997 $181,281 $ 38,531 $ 0 135,000 $ 0 $ 0
Executive Officer, and 1998 $222,692 $ 169,906 $ 7,800(1) 0 $ 0 $ 0
Chairman of the Board
Payton Story, III 1996 $ 0 $ 0 $ 41,600(2) 0 $ 0 $ 0
President of the 1997 $152,745 $ 0 $ 15,300(3) 115,000 $ 0 $ 0
Company's wholly owned 1998 $215,980 $ 169,906 $ 7,800(1) 0 $ 0 $ 0
subsidiary Westmark
Mortgage Corporation
and Director
Irving H. Bowen, Exec. 1996 $ 0 $ 0 $ 0 0 $ 0 $ 0
V.P. - Treasurer, 1997 $ 60,000 $ 0 $ 3,600(1) 80,000 $ 0 $ 0
Chief Financial Officer 1998 $199,230 $ 91,401 $ 6,900(1) 0 $ 0 $ 0
and Director
</TABLE>
- ----------------------------------
1 Consists of automobile allowance.
2 Consists of consulting fees.
3 Consists of $7,500 automobile allowance and $7,800 in consulting fees.
*See "Employment Agreements" for a detailed description of the Employment
Agreements for the Named Executive Officers. See "Certain Relationships and
Related Transactions" for a description of the Consulting Agreements with (i)
Harry C. Coolidge, a beneficial owner of over 5% of the Company's Common Stock,
who earned in excess of $100,000 for services performed for the Company during
1998, and (ii) Louis J. Resweber, a Company Director, consultant and former
employee, who earned in excess of $100,000 for services performed for the
Company during 1998.
OPTION GRANTS IN LAST FISCAL YEAR
There were no grants of options for the Company's Common Stock to the
Named Executive Officers during 1998.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Year Ended December 31, 1998
and Year-End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised Options In-The-Money Options1
at December 31, 1998 at December 31, 1998
-------------------- --------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mark D. Schaftlein 78,000 75,000 $ 0 $ 0
Payton Story, III 55,000 60,000 $ 0 $ 0
Irving H. Bowen 30,000 50,000 $ 0 $ 0
------- ------- ------- -------
TOTAL: 163,000 185,000 $ 0 $ 0
======= ======= ======= =======
</TABLE>
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(1) The dollar value of the unexercised options has been calculated by
determining the difference between the fair market value of the securities
underlying the options and the exercise or base price of the option at
exercise or fiscal year-end, respectively.
EMPLOYMENT AGREEMENTS
MARK D. SCHAFTLEIN
Mr. Schaftlein entered into an Employment Agreement (the "Agreement")
on April 25, 1997 pursuant to which he serves as President and Chief Executive
Officer of Westmark Group Holdings, Inc. and Chief Executive Officer of Westmark
Mortgage Corporation (collectively, the "Company"). The Agreement was amended on
August 27, 1997 and March 31, 1998. The term of employment ends on April 25,
2000, unless earlier terminated by either party as described below. The
Agreement provides for an initial annual salary of $150,000, increasing to
$162,000 the second year, and $174,000 the third year. At any time the salary
can be increased as determined by the Board of Directors of the Company based
upon job performance. On February 21, 1998, the Board of Directors increased Mr.
Schaftlein's salary to $225,000 per year commencing April 1, 1998. Mr.
Schaftlein has the right to terminate the Agreement for any reason other than
change of control or good reason, as defined in the Agreement, upon sixty (60)
days written notice to the Company. In the event of voluntary termination other
than for change of control or good reason, Mr. Schaftlein is entitled to any
compensation due and owing to him up to the date of termination. In the event
Mr. Schaftlein terminates his employment for good reason, he is entitled to a
lump sum payment equal to the number of months remaining in the term of the
Agreement multiplied by his monthly compensation. The Company can terminate the
Agreement with cause at any time. If, subsequent to a change of control, the
Company terminates Mr. Schaftlein's employment without cause, as defined in the
Agreement, or Mr. Schaftlein rejects on a reasonable basis an offer for
continuing employment, he would be entitled to a lump sum payment equal to the
number of months then remaining in the term of the Agreement multiplied by his
monthly compensation. In addition, the Agreement provides Mr. Schaftlein with
options to purchase 120,000 shares of Common Stock of Westmark Group Holdings,
Inc. The options are fully vested, are exercisable at $2.50 per share, and
terminate in June 2004. The vested options may be exercised on or after the
following dates: 30,000 shares on 3/31/98; 15,000 on 10/31/98; 30,000 shares on
3/31/99; 15,000 shares on 10/31/99; and 30,000 shares on 3/31/00. In the event
of a sale, divestiture, spin-off or transfer of all or substantially all of the
assets or stock of Westmark Mortgage Corporation, all options shall immediately
become exercisable, provided, however, that no option shall be exercisable after
the expiration of ten years from the date of grant.
PAYTON STORY, III
Mr. Story entered into an Employment Agreement (the "Agreement") on
April 25, 1997 pursuant to which he serves as the President of the Company's
wholly-owned subsidiary, Westmark Mortgage Corporation. The Agreement was
amended on August 27, 1997 and March 31, 1998. The term of employment ends on
April 25, 2000, unless earlier terminated by either party as described below.
The Agreement provides for an initial annual salary of $126,000, increasing to
$138,000 the second year, and $150,000 the third year. At any time the salary
can be increased as determined by the Board of Directors of the Company based
upon job performance. On February 21, 1998, the Board of Directors increased Mr.
Story's annual salary to $225,000 per year commencing April 1, 1998. Mr. Story
has the right to terminate the Agreement for any reason other than change of
control or good reason, as defined in the Agreement, upon sixty (60) days
written notice to the Company. In the event of voluntary termination other than
for change of control or good reason, Mr. Story is entitled to any compensation
due and owing to him up to the date of termination. In the event Mr. Story
terminates his employment for good reason, he is entitled to a lump sum payment
equal to the number of months then remaining in the term of the Agreement
multiplied by his monthly compensation. The Company can terminate the Agreement
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<PAGE>
for cause at any time. If, subsequent to a change of control, the Company
terminates Mr. Story's employment without cause, as defined in the Agreement, or
Mr. Story rejects on a reasonable basis an offer for continuing employment, he
would be entitled to a lump sum payment equal to the number of months then
remaining in the term of the Agreement multiplied by his monthly compensation.
In addition, the Agreement provides Mr. Story with options to purchase 100,000
shares of Common Stock of Westmark Group Holdings, Inc. The options are fully
vested, are exercisable at $2.50 per share, and terminate in June 2004. The
vested options may be exercised on or after the following dates: 25,000 shares
on 3/31/98; 15,000 on 10/31/98; 25,000 shares on 3/31/99; 15,000 shares on
10/31/99; and 25,000 shares on 3/31/00. In the event of a sale, divestiture,
spin-off, or transfer of all or substantially all of the assets or stock of
Westmark Mortgage Corporation, all options shall immediately become exercisable,
provided, however, that no option shall be exercisable after the expiration of
ten years from the date of grant.
IRVING H. BOWEN
Mr. Bowen entered into an Employment Agreement (the "Agreement")
commencing July 1, 1997 and terminating September 30, 1997 pursuant to which he
served as an Advisor to Westmark Group Holdings, Inc. and Westmark Mortgage
Corporation (collectively, the "Company"), specifically with regard to corporate
finance, mergers and acquisitions, capital raises, financial audits, accounting
due diligence and miscellaneous tax and legal matters. The Agreement was amended
on March 31, 1998. The term of employment was extended by mutual agreement for
an additional thirty (30) months, subject to termination by either party as
described below. The Agreement provided for an initial annual salary of
$120,000. Pursuant to the provisions for an extended term of employment, Mr.
Bowen's annual salary increases to $132,000 the second year, and $144,000 the
third year. At any time and from time to time the salary can be increased for
the remaining portion of the term of employment as determined by the Board of
Directors of the Company based upon job performance. On February 21, 1998, the
Board of Directors of the Company increased Mr. Bowen's annual salary to
$200,000 commencing April 1, 1998. Mr. Bowen shall have the right to terminate
the Agreement for any reason other than change of control or good reason, as
defined in the Agreement, upon sixty (60) days written notice to the Company. In
the event of voluntary termination other than for change of control or good
reason, Mr. Bowen would be entitled to any compensation due and owing to him up
to the date of termination. In the event Mr. Bowen terminates his employment for
good reason, he would be entitled to a lump sum payment equal to the number of
months remaining in the term of the Agreement multiplied by his monthly
compensation. The Company can terminate the Agreement with cause at any time.
If, subsequent to a change of control, the Company terminates Mr. Bowen's
employment without cause, as defined in the Agreement, or Mr. Bowen rejects on a
reasonable basis an offer for continuing employment, he would be entitled to a
lump sum payment equal to the number of months then remaining in the term of the
Agreement multiplied by his monthly compensation. In addition, the Agreement
provided Mr. Bowen with options to purchase 80,000 shares of Common Stock of
Westmark Group Holdings, Inc. The options are fully vested, are exercisable at
$2.50 per share, and terminate in June 2004. The vested options may be exercised
on or after the following dates: 20,000 shares on 3/31/98; 10,000 on 10/31/98;
20,000 shares on 3/31/99; 10,000 shares on 10/31/99; and 20,000 shares on
3/31/00. In the event of a sale, divestiture, spin-off or transfer of all or
substantially all of the assets or stock of Westmark Mortgage Corporation, all
options shall immediately become exercisable, provided, however, that no option
shall be exercisable after the expiration of ten years from the date options
were granted.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Green World Sale
Effective July 1996, we acquired all of the issued and outstanding
capital stock of Green World Technologies, Inc., a provider of air conditioner
enhancement products, from GTB Company. GTB had recently acquired Green World
from Medical Industries of America, Inc., an affiliate of the Company. We
subsequently decided to focus our resources exclusively on our mortgage
operations. In December 1997, we divested substantially all of our interest in
Green World pursuant to an exchange agreement between us, GTB and Green World.
As a result of the exchange agreement, we have reduced our ownership interest in
Green World to Green World Series A Preferred Stock. The preferred stock
represents approximately 18.5% of Green World's capital stock on a diluted
basis. This 18.5% interest in Green World is reflected in our financial
statements as an investment in preferred stock. At the end of 1998, we wrote
down the value of our investment in Green World from $876,778 to $76,778.
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Westmark-Medical Industries Agreement
On October 20, 1998, we executed an exchange agreement with our largest
equity and debt holder, Medical Industries of America, Inc., settling pending
litigation with Medical Industries and resolving all outstanding issues relating
to our stock and debt held by Medical Industries. The agreement supersedes all
prior agreements entered into between us and Medical Industries.
The agreement, among other things, provides for: (1) the conversion of
200,000 shares of Westmark Series C Convertible Preferred Stock ($3.50 stated
value per share) held by Medical Industries into 350,000 shares of our common
stock, at a conversion ratio of $2.00 per share - as a result, Medical
Industries now owns 683,457 shares of our common stock, or approximately 20.7%
of our 3.316 million shares of common stock outstanding at December 31, 1998;
(2) the issuance to Medical Industries of two-year warrants to buy 100,000
shares of our common stock at $3.25 per share; (3) elimination of Medical
Industries' claim to a guaranteed 49% ownership interest in us; (4) satisfaction
of our Promissory Note payable to Medical Industries with a principal balance as
of September 30, 1998 of approximately $1,707,555 in exchange for the return by
us to Medical Industries of 172,750 shares of Medical Industries Series B
Convertible Preferred Stock with a $10.00 stated value per share, and payment of
$112,500 to Medical Industries; (6) our waiver of the right to payment of
approximately $350,000 of Medical Industries Series B Convertible Preferred
Stock accrued dividends, and waiver by Medical Industries of the right to
payment of approximately $179,000 of Westmark Series C Preferred Stock accrued
dividends.
The agreement provides for us the right to repurchase our common stock
held by Medical Industries at $5.73 per share. The agreement also provides for
our potential obligation to repurchase up to $666,667 of our stock at $5.73 per
share from Medical Industries, if our diluted earnings per share, excluding
non-recurring gains and losses, are less that $0.45 per share in the first half
of 1999 or less than $0.55 per share in the second half of 1999. This potential
obligation is secured by a contingency reserve fund and the 27,250 shares of
Medical Industries Series B Convertible Preferred Stock we still own.
Harry C. Coolidge
Mr. Coolidge, a beneficial owner of over 5% of the Company's Common
Stock, entered into a Consulting Services Agreement (the "Agreement") effective
January 24, 1996 pursuant to which he provides consulting services to Westmark
Group Holdings, Inc. and Westmark Mortgage Corporation. Pursuant to a February
4, 1997 amendment to the Agreement, Mr. Coolidge was appointed Corporate Counsel
for the Company effective February 1, 1997. The Agreement was further amended on
August 27, 1997 and March 31, 1998. The term of the Agreement ends on April 24,
2000, unless earlier terminated by either party as described below. The
Agreement initially provided for compensation consisting of $9,000 per month and
the issuance of Common Stock of Westmark Group Holdings, Inc. with a net value
of $6,000 per month. On February 21, 1998, the Board of Directors of the Company
increased Mr. Coolidge's annual compensation to $180,000 per year commencing
April 1, 1998, payable $10,000 per month in cash and $15,000 quarterly in
arrears in cash or restricted shares of Company Common Stock. In addition to the
$180,000 in annual compensation, Mr. Coolidge receives $6,000 per month in cash
to cover his operating expenses. Mr. Coolidge shall have the right to terminate
the Agreement for any reason other than change of control or good reason, as
defined in the Agreement, upon sixty (60) days written notice to the Company. In
the event of voluntary termination other than for change of control or good
reason, Mr. Coolidge is entitled to any compensation due and owing to him up to
the date of termination. In the event Mr. Coolidge terminates the Agreement for
good reason, he is entitled to a lump sum payment equal to the number of months
remaining in the term of the Agreement multiplied by his monthly compensation.
The Company can terminate the Agreement with cause at any time. If, subsequent
to a change of control, the Company terminates the Agreement without cause, as
defined in the Agreement, or Mr. Coolidge rejects on a reasonable basis an offer
for continuing employment, he would be entitled to a lump sum payment equal to
the number of months then remaining in the term of the Agreement multiplied by
his monthly compensation. In addition, the Agreement provided Mr. Coolidge with
options to purchase 80,000 shares of Common Stock of Westmark Group Holdings,
Inc. The options are fully vested, are exercisable at $2.50 per share, and
terminate in June 2004. The vested options may be exercised on or after the
following dates: 20,000 shares on 3/31/98; 10,000 on 10/31/98; 20,000 shares on
3/31/99; 10,000 shares on 10/31/99; and 20,000 shares on 3/31/00. In the event
of a sale, divestiture, spin-off or transfer of all or substantially all of the
assets or stock of Westmark Mortgage Corporation, all options shall immediately
become exercisable, provided, however, that no option shall be exercisable after
the expiration of ten years from the date of grant.
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Louis J. Resweber
Mr. Resweber, a Director of the Company, entered into a Consulting
Agreement (the "Agreement") effective July 1, 1998 pursuant to which he provides
consulting services to Westmark Group Holdings, Inc. with regard to investor
relations and capital markets. The term of the Agreement ends on June 30, 1999,
unless earlier terminated by either party as described below. The Agreement
provides for annual compensation of $120,000, payable $10,000 per month in two
equal installments. Mr. Resweber receives an additional $6,000 per month in cash
to cover his business expenses and is eligible for an annual bonus as determined
by the Compensation Committee and Board of Directors of the Company based upon
performance. Mr. Resweber acts as an independent contractor in the performance
of his duties under the Agreement. Mr. Resweber shall have the right to
terminate the Agreement for any reason other than change of control or good
reason, as defined in the Agreement, upon sixty (60) days written notice to the
Company. In the event of voluntary termination other than for change of control
or good reason, Mr. Resweber would be entitled to any compensation due and owing
to him up to the date of termination. In the event Mr. Resweber terminates the
agreement for good reason, he would be entitled to a lump sum payment equal to
the number of months remaining in the term of the Agreement multiplied by his
monthly compensation. The Company can terminate the Agreement with cause at any
time. If, subsequent to a change of control, the Company terminates the
Agreement without cause, as defined in the Agreement, or Mr. Resweber rejects on
a reasonable basis an offer for continuing consulting services, he would be
entitled to a lump sum payment equal to the number of months then remaining in
the term of the Agreement multiplied by his monthly compensation. The Employment
Agreement entered into between Westmark Group Holdings, Inc. and Mr. Resweber on
July 1, 1997, as amended, was terminated upon execution of the Consulting
Agreement. Previous stock options granted to Mr. Resweber pursuant to said
Employment Agreement shall continue in full force and effect. The Employment
Agreement provided Mr. Resweber with options to purchase 30,000 shares of Common
Stock of Westmark Group Holdings, Inc. The options are fully vested, are
exercisable at $2.50 per share, and terminate in June 2004. The vested options
may be exercised on or after the following dates: 10,000 shares on 3/31/98;
4,000 on 10/31/98; 6,000 on 3/31/99; 4,000 shares on 10/31/99; and 6,000 shares
on 3/31/00. In the event of a sale, divestiture, spin-off or transfer of all or
substantially all of the assets or stock of Westmark Mortgage, all options shall
immediately become exercisable, provided, however, that no option shall be
exercisable after the expiration of ten years from the date the options were
granted. The foregoing options are in addition to warrants previously issued to
purchase 50,000 shares of Common Stock of Westmark Group Holdings, Inc. with an
exercise price of $2.50 per share, which expire in December 2001.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Rachlin Cohen & Holtz
to continue as independent certified public accountants for the Company for the
fiscal year ending December 31, 1999. Rachlin Cohen & Holtz has been acting as
independent certified public accountants of the Company since January 1998.
Unless otherwise indicated, properly executed proxies will be voted for the
ratification of the appointment of Rachlin Cohen & Holtz, independent certified
public accountants, to audit the books and accounts of the Company for the
fiscal year ending December 31, 1998.
Representatives of Rachlin Cohen & Holtz are expected to be present at
the Annual Meeting, will be given an opportunity to make a statement if they
desire to do so, and will also be available to respond to appropriate questions
from shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF
RACHLIN COHEN & HOLTZ AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit proposals to the Company's
shareholders at the 2000 Annual Meeting of Shareholders must submit such
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proposals to the Company no later than January 30, 2000 in order to be
considered for inclusion in the Proxy Statement and Proxy to be distributed by
the Board of Directors in connection with that meeting. Shareholder proposals
should be submitted to Irving H. Bowen, Chief Financial Officer, Westmark Group
Holdings, Inc., 8000 North Federal Highway, Boca Raton, Florida 33487.
ADDITIONAL INFORMATION
The Board of Directors is not aware of any matters to be presented at
the meeting other than the matters described herein and does not intend to bring
any other matters before the meeting. However, if any other matters should come
before the meeting, or any adjournment thereof, the persons soliciting the
proxies will have discretionary authority to vote all proxies in accordance with
their best judgment.
If you do not plan to attend the meeting, in order that your shares may
be represented and in order to assure the required quorum, please sign, date and
return your proxy promptly. In the event you are able to attend the meeting, at
your request, the Company will cancel any proxy executed by you.
FINANCIAL MATTERS
Detailed financial information of the Company for the fiscal year ended
December 31, 1998 is included in the Company's Annual Report to Stockholders, a
copy of which is enclosed herewith.
REPORT TO STOCKHOLDERS
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO THE COMPANY
AT WESTMARK GROUP HOLDINGS, INC., 8000 NORTH FEDERAL HIGHWAY, BOCA RATON,
FLORIDA 33487, ATTENTION: CHIEF FINANCIAL OFFICER.
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies from its
shareholders and will enlist the help of banks and brokerage houses in
soliciting proxies from their customers. The Company will reimburse these
institutions for out-of-pocket expenses incurred thereby. In addition to being
solicited through the mails, proxies may also be solicited personally or by
telephone by the directors, officers and employees of the Company.
Kindly date, sign and return the enclosed proxy card.
By Order of the Board of Directors
/s/ Mark Schaftlein
-------------------
MARK D. SCHAFTLEIN
President and Chief Executive Officer
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WESTMARK GROUP HOLDINGS, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) Mark D.
Schaftlein and Irving H. Bowen, and each of them, with full power of
substitution, as proxies to represent and vote, as designated herein, all shares
of stock of WESTMARK GROUP HOLDINGS, INC. (the "Company"), which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company to be held on June 22, 1999 at the Delray Beach
Marriott, 10 North Ocean Boulevard, Delray Beach, Florida 33483 at 10:00 a.m.
local time, and at any adjournment thereof (the "Meeting").
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is given, this
proxy will be voted FOR all proposals. Attendance of the undersigned at the
meeting or at any adjournment thereof, will not be deemed to revoke this proxy
unless the undersigned shall revoke this proxy in writing or shall deliver a
subsequently dated proxy to the Secretary of the Company or shall vote in person
at the Meeting.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
1. To elect the following six (6) directors (except as marked below) for the
ensuing year.
NOMINEES: Mark D. Schaftlein; Irving H. Bowen; Payton Story,
III; Louis J. Resweber; Allan C. Sorensen; and
John O. Hopkins.
[ ] FOR all nominees (except as marked below)
[ ] WITHHOLD authority to vote for all nominees
For all nominees except the following nominee(s):
- --------------------------------------------------------------------------------
(CONTINUED AND TO BE SIGNED, ON REVERSE SIDE)
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2. To ratify the selection by the Board of Directors of Rachlin Cohen &
Holtz as the Company's independent accountants for the fiscal year
ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: _______________ , 1999
___________________________
Signature
___________________________
Print name
___________________________
Signature if held jointly
___________________________
Print name
Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons, each should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should add their titles.
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