FRONTEER FINANCIAL HOLDINGS, LTD. ANNUAL MEETING
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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|X| Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FRONTEER FINANCIAL HOLDINGS, LTD.
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(Name of Registrant as Specified in its Charter)
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.
(1) Title of each class of securities to which the 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:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE>
FRONTEER FINANCIAL HOLDINGS, LTD.
One Norwest Center
1700 Lincoln Street, 32nd Floor
Denver, Colorado 80203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 30, 1998
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
"Meeting") of Fronteer Financial Holdings, Ltd., a Colorado corporation (the
"Company"), will be held in the Board Room of the Company, One Norwest Center,
1700 Lincoln Street, 31st Floor, Denver, Colorado 80203, on Tuesday, June 30,
1998, at 10:00 a.m. Mountain Time, for the purpose of considering and voting
upon proposals to:
(1) Elect six directors to serve until the next Annual Meeting of
Stockholders;
(2) Ratify the Board of Directors' selection of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending
September 30, 1998; and
(3) Transact such other business as may lawfully come before the Meeting
or any adjournment(s) thereof.
Only stockholders of record at the close of business on June 2, 1998, are
entitled to notice of and to vote at the Meeting and at any adjournment thereof.
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of the Company. All stockholders are cordially invited to attend the Meeting in
person. Whether you plan to attend or not, please date, sign and return the
accompanying proxy in the enclosed return envelope, to which no postage need be
affixed if mailed in the United States. The giving of a proxy will not affect
your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
GARY L. COOK, SECRETARY
Denver, Colorado
June 3, 1998
<PAGE>
FRONTEER FINANCIAL HOLDINGS, LTD.
One Norwest Center
1700 Lincoln Street, 32nd Floor
Denver, Colorado 80203
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 30, 1998
This proxy statement ("Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Directors of Fronteer Financial
Holdings, Ltd. (the "Company") to be used at the Annual Meeting of Stockholders
(the "Meeting") to be held in the Board Room of the Company, One Norwest Center,
1700 Lincoln Street, 31st Floor, Denver, Colorado 80203, on June 30, 1998, at
10:00 a.m. Mountain Time, and at any adjournment(s) thereof.
It is planned that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's stockholders on or about June 3, 1998.
Any person signing and mailing the enclosed Proxy may revoke it at any time
before it is voted by: (i) giving written notice of the revocation to the
Company's corporate secretary; (ii) voting in person at the Meeting; or (iii)
voting again by submitting a new proxy card. Only the latest dated proxy card,
including one which a person may vote in person at the Meeting, will count.
VOTING SECURITIES
Voting rights are vested exclusively in the holders of the Company's $0.01
par value common stock ("Common Stock") with each share entitled to one vote.
Cumulative voting in the election of directors is not permitted. Only
stockholders of record at the close of business on June 2, 1998, are entitled to
notice of and to vote at the Meeting or any adjournments thereof. On June 2,
1998, the Company had 16,920,475 shares of Common Stock outstanding.
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of June 2, 1998, the number of shares of
the Company's outstanding Common Stock beneficially owned by each of the
Company's current directors and by all of the Company's current directors and
executive officers as a group, sets forth the number of shares of the Company's
outstanding Common Stock beneficially owned by Robert L. Long, a nominee for
director, sets forth the number of shares of the Company's Common Stock owned by
each person who owned of record, or was known to own beneficially, more than 5%
of the Company's outstanding shares of Common Stock and sets forth the number of
shares of the Company's outstanding Common Stock beneficially owned by Robert A.
Fitzner, Jr. and Dennis W. Olson, former officers and directors of the Company.
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial
Name Ownership(1) Percent of Class
- ---- ----------- ----------------
<S> <C> <C>
Fai H. Chan ............................ 30,797,756(2)(6) 72.5%
1700 Lincoln Street
32nd Floor
Denver, CO 80202
Robert H. Trapp ........................ 0(3) 0%
Kwok Jen Fong .......................... 0(3) 0%
Jeffrey M. Busch ....................... 0 0%
Robert Jeffers, Jr ..................... 0 0%
All executive officers and ............. 30,897,756(2)(4) 72.6%
directors as a group (6
persons)
Robert L. Long ......................... 530,000(5) 3.0%
Heng Fung Holdings ..................... 30,797,756(6) 72.5%
Company Limited
Lippo Protective Tower
10th Floor
231-235 Gloucester Road
Wanchai, Hong Kong
Robert A. Fitzner, Jr .................. 679,667(7) 4.0%
Dennis W. Olson ........................ 190,425(8) 1.1%
</TABLE>
(1) Except as indicated below, each person has the sole voting and/or
investment power over the shares indicated.
(2) Consists of shares beneficially owned by Heng Fung Holdings Company
Limited, Lippo Protective Tower, 10th Floor, 231-235 Gloucester Road,
Wanchai, Hong Kong. Mr. Chan is an executive officer, a director and an
11.8% stockholder of Heng Fung Holdings Company Limited.
(3) Messrs. Trapp and Fong are directors of Heng Fung Holdings Company Limited.
Messrs. Trapp and Fong disclaim beneficial ownership of the shares
beneficially owned by Heng Fung Holdings Company Limited.
2
<PAGE>
(4) Includes 100,000 shares underlying stock options held by Gary L. Cook, the
Secretary, Treasurer and Chief Financial Officer of the Company.
(5) Includes 480,000 shares underlying stock options currently exercisable, or
exercisable within 60 days.
(6) Heng Fung Holdings Company Limited is the parent of Heng Fung Private. Heng
Fung Private owns 5,235,559 shares of the Company's outstanding Common
Stock. Also, pursuant to the Convertible Debenture Agreement, Heng Fung
Finance, a wholly owned subsidiary of Heng Fung Private, beneficially owns
25,562,197 shares of the Company's outstanding Common Stock.
(7) Includes shares underlying options Mr. Fitzner has given to two persons to
purchase 300,000 shares from Mr. Fitzner's personal holdings.
(8) Includes 100,000 shares of Common Stock underlying stock options, 6,534
shares held in the Company's ESOP Plan, 2,172 shares held in the Company's
401(k) Plan, and 70,495 shares underlying Mr. Olson's 50% share in 140,990
shares jointly held by a former employee of the Company.
ACTIONS TO BE TAKEN AT MEETING
The Meeting has been called by the directors of the Company (the
"Directors") to consider and act upon the following matters:
(1) The election of six Directors of the Company;
(2) The ratification of the selection by the Board of Directors of
KPMG Peat Marwick LLP as independent auditors of the Company
for the fiscal year ending September 30, 1998; and
(3) Such other matters as may properly come before the Meeting or
any adjournment(s) thereof.
The holders of a majority of the outstanding shares of Common Stock of the
Company present at the Meeting in person or represented by proxy shall
constitute a quorum. If a quorum is present, Directors are elected by a
plurality of the vote, i.e., the candidates receiving the highest number of
votes cast in favor of their election will be elected to the Board of Directors.
As to all other actions voted on at the Meeting, if a quorum is present, the
affirmative vote of a majority of the shares represented in person or by proxy
at the Meeting and entitled to vote on the subject matter shall be the act of
the stockholders. Where brokers have not received any instruction from their
clients on how to vote on a particular proposal, brokers are permitted to vote
on routine proposals but not on nonroutine matters. The absence of votes on
nonroutine matters are "broker nonvotes." Abstentions and broker nonvotes will
3
<PAGE>
be counted as present for purposes of establishing a quorum, but will have no
effect on the election of Directors. Abstentions and broker nonvotes on
proposals other than the election of Directors, if any, will be counted as
present for purposes of the proposal and will have the effect of a vote against
the proposal to ratify the selection of the independent auditors of the Company.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The number of Directors on the Company's Board of Directors has been
established by resolution of the Board of Directors as six Directors. The terms
of all of the current Directors expire at this Meeting.
The persons named in the enclosed form of Proxy will vote the shares
represented by such Proxy for the election of the six nominees for Director
named below. If, at the time of the Meeting, any of these nominees shall become
unavailable for any reason, which event is not expected to occur, the persons
entitled to vote the Proxy will vote for such substitute nominee or nominees, if
any, as they determine in their sole discretion. If elected, Fai H. Chan, Robert
H. Trapp, Kwok Jen Fong, Jeffrey M. Busch, Robert Jeffers, Jr. and Robert L.
Long will hold office until the annual meeting of stockholders to be held in
1999, until their successors are duly elected or appointed or until their
earlier death, resignation or removal. The nominees for Director, each of whom
has consented to serve if elected, are as follows:
4
<PAGE>
<TABLE>
<CAPTION>
Director
Name of Nominee Since Age Principal Occupation for Last Five Years
- --------------- -------- --- ----------------------------------------
<S> <C> <C> <C>
Fai H. Chan 1997 53 Chairman of the Board of Directors and
President of the Company since February 18,
1998 and a Director of the Company since
December 26, 1997. Mr. Chan has been a
Director of R A F Financial Corporation
("RAF"), a wholly owned subsidiary of the
Company that is a broker-dealer in
securities, since February 18, 1998. Mr.
Chan is the Chairman and Managing Director
of Heng Fung Holdings Company Limited and
has been a Director of Heng Fung Holdings
Company Limited since September 2, 1992.
Mr. Chan was elected Managing Director of
Heng Fung Holdings Company Limited on May
1, 1995 and Chairman on June 3, 1995. Heng
Fung Holdings Company Limited's primary
business activities include real estate
investment and development, merchant
banking, the manufacturing of building
material machinery, pharmaceutical products
and retail fashion. Mr. Chan has been the
President and a Director of Powersoft
Technologies, Inc., which owns various
industrial companies, since May 1994 and
Chief Executive Officer thereof since June
1995; a Director of Intra-Asia Equities,
Inc., a merchant banking company, since
June 1993; Executive Director of Hua Jian
International Finance Co., Ltd. from
December 1994 until December 1996; and
Chairman of the Board of Directors of
American Pacific Bank since March 1988 and
Chief Executive Officer thereof between
April 1991 and April 1993. Mr. Chan is also
a Director of Global Med Technologies, Inc.
5
<PAGE>
<CAPTION>
Director
Name of Nominee Since Age Principal Occupation for Last Five Years
- --------------- -------- --- ----------------------------------------
<S> <C> <C> <C>
Robert H. Trapp 1997 43 Managing Director of the Company since
February 18, 1998 and a Director of the
Company since December 26, 1997. Mr. Trapp
has been the President and a Director of
RAF since February 18, 1998. Mr. Trapp has
been a Director of Heng Fung Holdings
Company Limited since May 1995; a Director
of Inter-Asia Equities, Inc., a merchant
banking company, since February 1995 and
the Secretary thereof since April 1994;
Director, Secretary and Treasurer of
Powersoft Technologies, Inc., which own
various industrial companies, since May,
1994; and the Canadian operational manager
of Pacific Concord Holding (Canada) Ltd. of
Hong Kong, which operates in the consumer
products industry, from July 1991 until
November 1997. Mr. Trapp is also a Director
of Global Med Technologies, Inc.
Kwok Jen Fong 1998 48 A Director of the Company since February
18, 1998. Mr. Fong has been a Director of
Heng Fund Holdings Company Limited since
May 1995. Mr. Fong has been a practicing
solicitor in Singapore for at least the
last five years. Mr. Fong is also a
Director of Global Med Technologies, Inc.
Jeffrey M. Busch 1988 40 A Director of the Company since February
20, 1998. Mr. Busch has been a practicing
attorney for at least the last five years.
Mr. Busch is also a Director of Global Med
Technologies, Inc.
Robert Jeffers, Jr. 1988 50 A Director of the Company since February
20, 1998. Mr. Jeffers has been a practicing
attorney for at least the last five years.
Robert L. Long Not 65 Senior Vice President of the Corporate
Currently Finance Division of RAF since 1990;
a Secretary of the Company from 1996 to
Director February 1998 and a Director of the Company
from 1995 to February 1998. Mr. Long is
also a Director of Global Med Technologies,
Inc.
</TABLE>
6
<PAGE>
The Company's Board of Directors held five meetings during the Company's
fiscal year ended September 30, 1997. Such meetings consisted of consent
Directors minutes signed by all Directors and actual meetings at which all of
the Directors were present in person or by telephone. No incumbent Directors
were Directors of the Company during the fiscal year ended September 30, 1997.
On February 20, 1998, the Board of Directors appointed an Audit Committee
composed of Robert H. Trapp, Jeffrey M. Busch and Robert Jeffers, Jr. The
functions of the Audit Committee are to represent the Board of Directors in
discharging its responsibilities relating to the accounting, reporting and
financial control practices of the Company and its subsidiaries. The Audit
Committee will annually review the qualifications and objectivity of the
Company's independent auditors, the Company's accounting policies and reporting
practices, the Company's contracts and internal auditing and internal controls,
compliance with the Company's policies regarding business conduct and other
matters as deemed appropriate. The Audit Committee is also empowered to conduct
its own investigations into issues related to the aforementioned
responsibilities and to retain independent counsel or outside experts for such
purposes. The Company did not have an Audit Committee during the fiscal year
ended September 30, 1997. The Board of Directors has no standing nominating or
compensation committees or committees performing similar functions.
Except as described in "Transactions with Management and Others and Certain
Business Relationships," there was no arrangement or understanding between any
Director and any other person pursuant to which any person was selected as a
Director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF THE
NOMINEES LISTED ABOVE.
EXECUTIVE OFFICERS
The executive officers of the Company are Fai H. Chan, information
pertaining to whom is set forth under "Election of Directors" above, and Gary L.
Cook, information pertaining to whom is set forth below. The executive officers
of the Company are elected annually at the first meeting of the Company's Board
of Directors held after each annual meeting of stockholders. Each executive
officer will hold office until his or her successor duly is elected and
qualified, until his or her death or resignation or until he or she shall be
removed in the manner provided by the Company's Bylaws. Gary L. Cook's positions
with the Company, his age and the period during which he has served as an
executive officer of the Company are as follows:
7
<PAGE>
<TABLE>
<CAPTION>
Name of Officer
Executive Officer Since Age Principal Occupation for Last Five Years
- ----------------- ------- --- ----------------------------------------
<S> <C> <C> <C>
Gary L. Cook 1996 40 Secretary and Treasurer of the Company
since February 18, 1998 and Chief Financial
Officer of the Company since 1996. Mr. Cook
has been the Treasurer of RAF since
February 18, 1998, and the Chief Financial
Officer and Secretary of RAF since 1996.
Mr. Cook was a public accountant with KPMG
Pear Marwick LLP from 1982 through 1994,
when he was a senior manager.
</TABLE>
Except as described in "Transactions with Management and Others and Certain
Business Relationships," there was no arrangement or understanding between any
executive officer and any other person pursuant to which any person was selected
as an executive officer.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors and persons who own more than ten percent of the
Company's outstanding Common Stock to file reports of ownership with the
Securities and Exchange Commission ("SEC"). Directors, officers and greater than
ten percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during and for the Company's fiscal year ended
September 30, 1997, there were no Directors, officers or more than ten percent
stockholders of the Company that failed to timely file a Form 3, 4 or 5.
EXECUTIVE COMPENSATION
The following table provides certain information pertaining to the
compensation paid by the Company and its subsidiaries during the Company's last
three fiscal years for services rendered by Robert A. Fitzner, Jr., the Chairman
of the Board of Directors of the Company and the President of RAF during the
fiscal year ended September 30, 1997, Dennis W. Olson, the President of the
Company during the fiscal year ended September 30, 1997, and Robert L. Long, the
Secretary of the Company and the Senior Vice President of RAF during the fiscal
year ended September 30, 1997. RAF became a subsidiary of the Company in April
1995.
8
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
Fiscal ------------------------------------------ ------------
Year Other
Ended Annual Securities All Other
Name and Septem- Compen- Underlying Compensa-
Principal Position ber 30, Salary($) Bonus($) sation($) Options(#) tion($)
- ------------------ ------- -------- ------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Fitzner, Jr ................. 1997 172,124(a) 30,000 0 0 1,291(d)
Former Chairman of ................... 1996 162,000(a) 40,000 0 0 76,300(d)
the Board of Directors ............... 1995 162,000(a) 40,000 0 0 1,279(d)
and former President
of RAF
Dennis W. Olson ....................... 1997 121,160 0 (b) 100,000 0
Former President of .................. 1996 123,500 9,000 (b) 0 0
the Company .......................... 1995 119,710 10,000 (b) 0 100,000(d)
Robert L. Long ........................ 1997 414,103(c) 0 0 0 0
Former Secretary of .................. 1996 272,612(c) 0 0 800,000 667,236(d)
the Company and ...................... 1995 320,500(c) 0 0 0 0
former Senior Vice
President of RAF
</TABLE>
(a) Includes $30,000 paid as a directors fee to Mr. Fitzner by Secutron
Corporation, 60% of the outstanding stock of which is owned by the Company.
(b) The Company provided Mr. Olson with certain other benefits; however, these
benefits did not exceed 10% of his aggregate cash compensation for each of
the periods indicated.
(c) Officers of the Company are frequently responsible for conducting
transactions for which they receive commission and/or fee compensation. In
Mr. Long's case, total annual compensation is and has been transactional
commissions and/or fees. During 1997, $131,377 of fees were paid in the
form of a portion of RAF's proprietary inventory positions. The inventory
positions were transferred to Mr. Long at market value.
(d) Mr. Olson received a commission as a result of the sale of several of the
Company's telephone directories to McLeod USA Publishing Company, formerly
known as Telecom USA Publishing Company. Mr. Fitzner received a commission
as a result of the sale of the Company's clearing division and has received
an annual Company matching contribution as a result of his contribution to
a savings plan. Mr. Long received commissions as a result of the
acquisition of the assets of RAFCO, Ltd., which was the holding company of
RAF, and as a result of the sale of the Company's clearing division. Mr.
Long also realized a profit of $417,236 as a result of the exercise of
warrants of companies that he received as compensation for underwritings by
RAF. This amount represents the difference between the exercise price of
the warrants and the sales price of the underlying stock. See "Transactions
With Management and Others and Certain Business Relationships."
9
<PAGE>
STOCK OPTION PLANS
Effective September 30, 1988, as amended September 10, 1996, the Company
adopted an Incentive Stock Option Plan ("Plan"), in order to attract and retain
the best available personnel for positions of responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business. The Plan authorizes the granting of
options to officers, Directors, and employees of the Company to purchase 600,000
shares of the Company's Common Stock subject to adjustment for various forms of
recapitalization that may occur. No options may be granted after September 30,
1998, and the fair value of options granted to each optionee cannot exceed
$100,000 per year.
An employee must have six months of continuous employment with the Company
before he or she may exercise an option granted under the Plan. Options under
the Plan may not be granted at less than fair market value at the date of the
grant. Options granted under the Plan are nonassignable and terminate three
months after the optionee's employment ceases, except in the case of employment
termination due to disability of the optionee, in which event the option expires
twelve months from the date employment ceases. The Plan is administered by the
Company's Board of Directors or by a committee selected by the Company's Board
of Directors.
As of June 2, 1998, options to purchase 457,000 shares of the Company's
Common Stock at $0.625 per share through September 8, 2006 were outstanding and
exercisable under the Plan.
On April 8, 1996, as amended on September 10, 1996, the Company adopted the
1996 Incentive and Nonstatutory Option Plan ("1996 Plan") in order to attract
and retain the best available personnel for positions of responsibility, to
provide additional incentive to employees and consultants of the Company and to
promote the success of the Company's business. The 1996 Plan authorizes the
granting of options to officers, Directors, employees and consultants of the
Company to purchase 1,250,000 shares of the Company's Common Stock subject to
adjustment for various forms of recapitalization that may occur. No option may
be granted after April 8, 2006.
Under the 1996 Plan, inventive stock options may only be granted to
employees and nonstatutory stock options may be granted to employees and
nonemployees. Options may not be granted at less than fair market value at the
date of the grant. Options granted are nonassignable and terminate three months
after the optionee's employment ceases, except in the case of employment
termination due to disability of the optionee, in which event the option expires
twelve months from the date employment ceases. The 1996 Plan is administered by
the Company's Board of Directors or by a committee selected by the Company's
Board of Directors.
As of June 2, 1998, options to purchase 1,205,000 shares were outstanding
at an exercise price of $0.625 per share through September 9, 2007 and options
to purchase 935,000 shares were exercisable under the 1996 Plan.
10
<PAGE>
The Company adopted the September 1996 Incentive and Nonstatutory Option
Plan, as amended by a First Amendment ("September 1996 Plan"), in order to
attract and retain the best available personnel for positions of responsibility,
to provide additional incentive to employees and consultants of the Company and
to promote the success of the Company's business.
The September 1996 Plan authorizes the granting of options to purchase
2,500,000 shares of the Company's Common Stock subject to adjustment for various
forms of recapitalization that may occur. The terms and conditions of the
September 1996 Plan are similar to that discussed for the 1996 Plan.
As of June 2, 1998, options to purchase 1,743,000 shares were outstanding
at exercise prices between $0.625 and $0.96875 per share through April 30, 2008,
and options to purchase 1,323,000 shares were exercisable under the September
1996 Plan.
As of June 2, 1998, the Company had granted 340,000 nonqualified stock
options to certain officers and employees at an exercise price of $0.95 per
share. These options are exercisable and expire August 25, 1998.
EMPLOYEE STOCK OWNERSHIP PLAN
On September 22, 1989, the Company's Board of Directors adopted an Employee
Stock Ownership Plan ("ESOP") which provides in pertinent part that the Company
may annually contribute tax deductible funds to the ESOP, at its discretion,
which are then allocated to the Company's employees based upon the employees'
wages in relation to the total wages of all employees in the ESOP.
The ESOP provides that more than half of the assets in the ESOP must
consist of the Company's Common Stock. The ESOP is administered by a board of
trustees under the supervision of an advisory committee, both of which are
appointed by the Company's Board of Directors. As of June 2, 1998, the ESOP
owned 517,900 shares of the Company's Common Stock and no other marketable
securities. Employees become vested in the shares of the Company's Common Stock
after six years in the ESOP. Executive officers participate in the ESOP in the
same manner as other employees. Employees are 20% vested after two years,
vesting an additional 20% each year up to 100% after six years in the ESOP.
SAVINGS PLANS
The Company has three retirement saving plans covering all employees who
are over 21 years of age and have completed one year of eligibility service. The
plans meet the qualifications of Section 401(k) of the Internal Revenue Code.
Under the plans, eligible employees can contribute through payroll deductions up
to 15% of their base compensation. The Company makes a discretionary matching
contribution equal to a percentage of the employee's contribution. Officers
participate in the plans in the same manner as other employees. One of the
Company's savings plans owns 16,000 shares of the Company's Common Stock.
11
<PAGE>
The Company has no other bonus, profit sharing, pension, retirement, stock
purchase, deferred compensation or other incentive plans.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of an
option by the Company to Dennis W. Olson during the fiscal year ended September
30, 1997. No options were granted by the Company to Robert A. Fitzner, Jr., or
to Robert L. Long during the fiscal year ended September 30, 1997.
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Expiration Grant Date
Name Granted (#) Fiscal Year Price ($/Sh) Date Present Value
- ---- ---------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Dennis W. Olson 100,000(1) 29.4% $0.95 8/25/98 $ 0(2)
</TABLE>
(1) The options granted were extensions of options that were previously
granted and that were due to expire on August 25, 1997.
(2) The options were extended at the same price at which they were
previously granted, $0.95, which on the date of the extension was above
market value. Given the volatility in the price of the Company's Common
Stock, the current market value and the expiration date, the Company
does not believe the options had any value on the date they were
extended.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth information with respect to Dennis W. Olson
and Robert L. Long concerning the unexercised options held by them as of
September 30, 1997. Neither Dennis W. Olson nor Robert L. Long exercised any
options during the fiscal year ended September 30, 1997. Robert A. Fitzner, Jr.,
does not own any options to purchase securities of the Company.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-Money
Options at Options at
September 30, 1997(#) September 30, 1996($)(1)
---------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Dennis W. Olson .............. 100,000 - 0 - - 0 - - 0 -
Robert L. Long ............... 320,000 480,000 - 0 - - 0 -
</TABLE>
12
<PAGE>
(1) The value of unexercised in-the-money options is the market price of
the underlying shares of Common Stock at September 30, 1997, less the
exercise price of the options.
COMPENSATION OF DIRECTORS--STANDARD ARRANGEMENT
Directors of the Company receive no compensation for their services as
Directors. Directors of Secutron Corporation, a subsidiary of the Company
("Secutron"), including Robert A. Fitzner, Jr., who are not also officers or
employees of Secutron received $30,000 during the fiscal year ended September
30, 1997.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
There are no employment contracts between the Company or RAF and Fai H.
Chan, Robert H. Trapp or Gary L. Cook. There was no employment contract between
the Company or RAF and Robert A. Fitzner, Jr., during the fiscal year ended
September 30, 1997. During the fiscal year ended September 30, 1997, Robert L.
Long and RAF had an agreement whereby Mr. Long received commissions based on a
percentage of the dollar amount of his clients' transactions and the dollar
amount of all RAF corporate finance transactions and he received one fourth of
all warrants received by RAF as compensation for corporate finance transactions.
The Company had an employment contract with Dennis W. Olson that expired January
1, 1998. As of that date, the Company had no further obligations to Mr. Olson.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
AND CERTAIN BUSINESS RELATIONSHIPS
Certain officers and Directors of the Company made personal loans to the
Company when it was in need of short term financing. Dennis Olson made personal
demand loans to the Company of which $100,000 remained outstanding as of
September 30, 1997. The entire balance was paid to Mr. Olson subsequent to
September 30, 1997. Interest was paid to Mr. Olson by the Company at 11.5% per
annum. All loan transactions with related persons were on terms no less
favorable than those available from third parties. Management has no intentions
to engage in such borrowing activities in the future.
Dennis W. Olson resigned as an officer and a Director of the Company
effective February 18, 1998. On February 25, 1997, the Company entered into an
agreement to sell certain of its directory business assets to McLeod USA
Publishing Company ("McLeod"), formerly known as Telecom USA Publishing Company.
Pursuant to the agreement with McLeod, Mr. Olson and certain other employees of
the Company entered into agreements not to compete with McLeod. As compensation
for this noncompetition agreement, McLeod paid Mr. Olson $334,000 in total
noncompetition compensation. The Company repaid $150,000 in obligations to Mr.
Olson during the fiscal year ended September 30, 1996 and $100,000 in
obligations to Mr. Olson subsequent to September 30, 1997. These obligations
related to short term financing provided to the Company by Mr. Olson.
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Robert L. Long, who is a nominee for Director of the Company, resigned as
the Secretary and a Director of the Company effective February 18, 1998. Mr.
Long received consulting fees of $131,377 during the fiscal year ended September
30, 1997, in the form of a portion of RAF's inventory positions. The inventory
positions were transferred to Mr. Long at market value.
In December 1997, Heng Fung Capital [S] Private Limited ("Heng Fung
Private"), a wholly owned subsidiary of Heng Fung Holdings Company Limited
("Heng Fung Holdings"), a public company traded on the Hong Kong Stock Exchange,
purchased 1,136,364 shares of the outstanding Common Stock of the Company from
Robert A. Fitzner, Jr., and Robert L. Long, officers and directors of the
Company at that time, and from two other employees at R A F Financial
Corporation ("RAF"), a wholly owned subsidiary of the Company. In December 1997,
Robert A. Fitzner, Jr., and Heng Fung Private agreed that, upon the approval of
the National Association of Securities Dealers, Inc. ("NASD") of a change in the
beneficial ownership of 25% or more of RAF, Heng Fung Private would purchase an
additional 3,556,777 shares of the Company's outstanding Common Stock from Mr.
Fitzner. In conjunction with the transaction, the Company entered into an
agreement ("Convertible Debenture Agreement") with Heng Fung Finance Company
Limited ("Heng Fung Finance"), a wholly owned subsidiary of Heng Fung Private,
pursuant to which the Company agreed to sell to Heng Fung Finance a 10 year,
$4,000,000 10% convertible debenture that is convertible at $0.53125 per share
into 7,529,411 shares of the Company's Common Stock. The purchase of the
$4,000,000 convertible debenture was completed on December 30, 1997. On December
26, 1997, the Board of Directors, at the request of Heng Fung Finance and
pursuant to the terms of the Convertible Debenture Agreement, appointed Fai H.
Chan and Robert H. Trapp to the Board of Directors of the Company.
On January 29, 1998, the NASD approved (subject to certain restrictions
that have been agreed to by RAF) the change in the beneficial ownership of 25%
or more of RAF, and on February 18, 1998, Heng Fung Private purchased the
additional 3,556,777 shares of the Company's outstanding Common Stock from Mr.
Fitzner. Contemporaneously with the purchase, Mr. Fitzner, Mr. Long and Dennis
W. Olson resigned as directors of the Company and its subsidiaries. Also, Mr.
Fitzner resigned as the Chairman of the Company and as the President and Chief
Executive Officer of RAF, Mr. Long resigned as the Secretary of the Company and
Mr. Olson resigned as the President of the Company. At the same time, the two
remaining directors, Mr. Chan and Mr. Trapp, reduced the number of directors on
the Company's Board of Directors to three and appointed Mr. Kwok Jen Fong as a
director of the Company to fill the remaining vacancy. The directors also
appointed Mr. Chan as the Chairman of the Board of Directors and the President
of the Company, Mr. Trapp as Executive Director of the Company and Mr. Gary L.
Cook as the Secretary and Treasurer of the Company. Messrs. Chan and Trapp and
Brian F. Zucker also became directors of RAF, Mr. Trapp was appointed the
President of RAF, Mr. Zucker was appointed the Managing Director of RAF and Mr.
Cook was appointed the Treasurer of RAF. Mr. Cook also remains as the Secretary
of RAF. After giving effect to the transactions described above, Heng Fung
Holdings, through Heng Fung Private and Heng Fung Finance, beneficially owns
approximately 27.8% of the Company's outstanding Common Stock, owns the
$4,000,000 convertible debenture that is convertible at $0.53125 per share into
7,529,411 of the Company's Common Stock and has the option to purchase an
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additional 10 year, $11,000,000 10% convertible debenture that will be
convertible at $0.61 per share into 18,032,786 shares of the Company's Common
Stock. If the $4,000,000 convertible debenture and the $11,000,000 10%
convertible debenture are purchased and converted, Heng Fung Holdings, through
Heng Fung Private and Heng Fung Finance, would beneficially own approximately
71.3% of the Company's outstanding Common Stock. On May 18, 1998, Heng Fung
Finance exercised its option and purchased $1,500,000 of the $11,000,000 10%
convertible debenture.
In payment of the $102,222 of interest due on March 31, 1998, on the
$4,000,000 convertible debenture, the Company issued Heng Fung Finance 192,418
shares of the Company's Common Stock in May 1998.
On April 14, 1998, Fronteer Capital, Inc. ("Fronteer Capital"), a wholly
owned subsidiary of the Company, and Heng Fung Finance committed to provide to
Global Med Technologies, Inc. ("Global") lines of credit for up to $1,500,000
each for a total combined loan commitment of $3,000,000 over the next twelve
months. The loans will bear interest calculated at the rate of 12% per annum and
will mature 366 days after April 14, 1998.
Pursuant to the loan commitment provided by Heng Fung Finance, Global has
agreed that Global's board of directors will not exceed nine and that Heng Fung
Finance has the right to appoint five members to the board of directors of
Global and has the option to cancel all Global management and employee
contracts. Global has the right to call the $1,500,000 from Heng Fung Finance as
needed by Global. For issuing the commitment, Heng Fung Finance earned warrants
to purchase 6,000,000 shares of Global's common stock. The warrants are
exercisable at $0.25 per share for up to 10 years and Global has agreed to
register by July 14, 1998, the shares for resale under the Securities Act of
1933. So long as Global has used its best efforts to file such registration
statement covering such shares with the Securities and Exchange Commission and
responded to any comments from the Securities and Exchange Commission in a
timely fashion, Global will not be deemed to be in default under the Heng Fung
Finance loan if the shares are not registered for resale by July 14, 1998.
The loan commitment provided by Fronteer Capital has substantially the same
terms and conditions as the loan commitment provided by Heng Fung Finance except
that, if Heng Fung Finance does not appoint directors to Global's board of
directors, Fronteer Capital has the right to appoint a maximum of three members
to the board of directors of Global, Global has the right to call the $1,500,000
from Fronteer after the total loan from Heng Fung Finance is drawn down, and if
the loan provided by Fronteer is drawn down, Fronteer will earn warrants to
purchase 6,000,000 shares of Global's common stock upon the same terms and
conditions as the warrants to purchase 6,000,000 shares of Global's common stock
earned by Heng Fung Finance. Further, Michael I. Ruxin, the Chief Executive
Officer of Global, has agreed to personally guarantee the repayment of
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$1,500,000 of the Fronteer Capital loan. The guarantee is limited to certain of
Dr. Ruxin's assets. For issuing the commitment, Fronteer Capital has earned
warrants to purchase 1,000,000 of the 6,000,000 shares of Global's common stock.
If Global defaults on the repayment of any amount borrowed by Global
pursuant to the Heng Fung Finance commitment, all existing members of the board
of directors of Global will have to resign and Heng Fung Finance will have the
right to appoint all new members to the board of directors, Heng Fung Finance
will have the right to convert the outstanding amount of the loan into shares of
Global's common stock at a conversion price of $0.05 per share and all
employment contracts of the management and officers of Global will be invalid
immediately and their employment will be subject to reconfirmation by Heng Fung
Finance. If there is no default on the repayment to Heng Fung Finance or if
there is a default and Heng Fung Finance does not exercise its rights on
default, Fronteer Capital will have the same rights on default on the repayment
of any amounts borrowed pursuant to the Fronteer Capital commitment as Heng Fung
Finance as are specified above.
RAF, a wholly-owned subsidiary of the Company, will receive a fee of 9% of
the amount drawn down by Global under the Fronteer Capital commitment.
In May 1998, Heng Fung Finance advanced $250,000 to Global against the Heng
Fung Finance commitment and in May 1998, Heng Fung Finance caused Global to
appoint Fai H. Chan, Robert H. Trapp, Kwok Jen Fong, Jeffrey M. Busch and Robert
L. Long as directors of Global so that Global now has a Board of Directors
consisting of nine directors.
On April 25, 1998, the Company agreed to compensate Heng Fung Finance for
its time, efforts, capital costs and expenses in setting up and operating a New
York City Office which was transferred to the Company to be operated as an
institutional sales location of RAF upon final approval by the NASD. The
compensation of $350,000 that was paid by the Company issuing Heng Fung Finance
350,000 shares of the Company's Common Stock was determined based upon actual
capital costs and expenses incurred, as well as certain estimates.
PROPOSAL NUMBER TWO
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Company engaged KPMG Peat Marwick LLP ("Peat Marwick") as the Company's
principal independent public accountants for the two fiscal years ended
September 30, 1997. The Board of Directors has selected Peat Marwick as auditors
to examine the financial statements of the Company for the fiscal year ending
September 30, 1998, and to perform other appropriate accounting services and is
requesting ratification of such appointment by the stockholders.
In the event that the stockholders do not ratify the appointment of Peat
Marwick, the adverse vote will be considered as a direction to the Board of
Directors to select other auditors for the next fiscal year. However, because of
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the difficulty and expense of making any substitution of auditors after the
beginning of the current fiscal year, it is contemplated that the appointment
for the year ending September 30, 1998, will be permitted to stand unless the
Board of Directors finds other reasons for making a change.
It is understood that even if the selection of Peat Marwick is ratified,
the Board of Directors, in its discretion, may direct the appointment of a new
independent accounting firm at any time during the year if the Board of
Directors feels that such a change would be in the best interests of the Company
and its stockholders.
Representatives of Peat Marwick are expected to be present at the Meeting,
have an opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions.
1997 ANNUAL REPORT TO STOCKHOLDERS
Included with this Proxy Statement is the Company's 1997 Annual Report to
Stockholders which contains the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997. The Company will provide, without charge,
an additional copy of the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1997, as required to be filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
upon written request to Gary L. Cook, Secretary, at the Company at its principal
offices, One Norwest Center, 1700 Lincoln Street, 32nd Floor, Denver, Colorado,
80203. Each such request must set forth a good faith representation that, as of
June 2, 1998, the person making the request was a beneficial owner of the
Company's Common Stock. The exhibits to the Annual Report on Form 10-K may be
obtained by any shareholder upon written request to Gary L. Cook. Each person
making any such request will be required to pay a fee of $0.25 per page to cover
the Company's expenses in furnishing such exhibits.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next annual
meeting of the Company's stockholders must be received by the Company within a
reasonable time prior to the mailing of the proxy statement for such Meeting but
no later than February 3, 1999.
SOLICITATION OF PROXIES
The cost of soliciting proxies, including the cost of preparing, assembling
and mailing this proxy material to stockholders, will be borne by the Company.
Solicitations will be made only by use of the mails, except that, if necessary
to obtain a quorum, officers and regular employees of the Company may make
solicitations of proxies by telephone or electronic facsimile or by personal
calls. Brokerage houses, custodians, nominees and fiduciaries will be requested
to forward the proxy soliciting material to the beneficial owners of the
Company's shares held of record by such persons and the Company will reimburse
them for their charges and expenses in this connection.
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OTHER BUSINESS
The Company's Board of Directors does not know of any matters to be
presented at the Meeting other than the matters set forth herein. If any other
business should come before the Meeting, the persons named in the enclosed form
of Proxy will vote such Proxy according to their judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
GARY L. COOK, SECRETARY
Denver, Colorado
June 3, 1998
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PROXY
FRONTEER FINANCIAL HOLDINGS, LTD.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 30, 1998
The undersigned hereby constitutes and appoints Fai H. Chan and Robert H.
Trapp, and each of them, the true and lawful attorneys and proxies of the
undersigned with full power of substitution and appointment, for and in the
name, place and stead of the undersigned, to act for and to vote all of the
undersigned's shares of $0.01 par value common stock ("Common Stock") of
Fronteer Financial Holdings, Ltd. (the "Company") at the Annual Meeting of
Stockholders (the "Meeting") to be held in the Board Room of the Company, One
Norwest Center, 1700 Lincoln Street, 31st Floor, Denver, Colorado 80203, on June
30, 1998, at 10:00 a.m. Mountain Time, and at all adjournment(s) thereof for the
following purposes:
1. Election of Directors;
[ ] FOR THE DIRECTOR [ ] WITHHOLD AUTHORITY TO VOTE
NOMINEES LISTED BELOW FOR ALL NOMINEES LISTED
(EXCEPT AS MARKED TO
THE CONTRARY BELOW)
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
Fai H. Chan Jeffrey M. Busch
Robert H. Trapp Robert Jeffers, Jr.
Kwok Jen Fong Robert L. Long
2. Ratification of the Board of Directors' selection of KPMG Peat Marwick
LLP as independent auditors of the Company for the fiscal year ending
September 30, 1998; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN FROM VOTING
3. In their discretion, the Proxies are authorized to vote upon such
other business as lawfully may come before the Meeting.
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The undersigned hereby revokes any proxies as to said shares heretofore
given by the undersigned and ratifies and confirms all that said attorneys and
proxies lawfully may do by virtue hereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THEN THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
AT THE MEETING (1) FOR ELECTION OF THE NOMINEES FOR DIRECTOR AS SELECTED BY THE
BOARD OF DIRECTORS AND (2) TO RATIFY SELECTION OF KPMG PEAT MARWICK LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30,
1998.
It is understood that this proxy confers discretionary authority in respect
to matters not known or determined at the time of the mailing of the Notice of
Annual Meeting of Stockholders to the undersigned. The proxies and attorneys
intend to vote the shares represented by this proxy on such matters, if any, as
determined by the Board of Directors.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders and the Proxy Statement and Annual Report to Stockholders
furnished therewith.
Dated and Signed:
, 1998
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Signature(s) should agree with the
name(s) stenciled hereon. Executors,
administrators, trustee, guardians
and attorneys should so indicate
when signing. Attorneys should
submit powers of attorney.
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