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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Jayhawk Acceptance Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(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:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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:
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Notes:
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JAYHAWK ACCEPTANCE CORPORATION
2001 BRYAN TOWER, SUITE 600 - DALLAS, TEXAS 75201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders (the "Annual Meeting") of Jayhawk
Acceptance Corporation (the "Company") will be held at the Le Meridien Hotel,
650 N. Pearl Street, Dallas, Texas 75201, on May 14, 1998, at 5:00 p.m., Dallas,
Texas time, for the following purposes:
(1) to elect nine directors to serve on the Company's Board of Directors;
and
(2) to transact any other business that may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record of the Company's common stock, $.01 par value
per share, at the close of business on March 17, 1998, will be entitled to
notice of and to vote at the Annual Meeting or any adjournment thereof.
We hope that you attend the Annual Meeting in person, but in any event you
are urged to mark, date, sign and return your proxy in the enclosed self-
addressed envelope as soon as possible so that your shares may be voted in
accordance with your wishes. Any proxy given by a shareholder may be revoked by
that shareholder at any time prior to the voting of the proxy.
JAYHAWK ACCEPTANCE CORPORATION
/s/ BETH PROTHRO
Beth Prothro, Secretary
Dallas, Texas
April 15, 1998
<PAGE>
JAYHAWK ACCEPTANCE CORPORATION
2001 BRYAN TOWER, SUITE 600 - DALLAS, TEXAS 75201
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1998
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Jayhawk Acceptance Corporation, a Texas corporation (the "Company"), for use
at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
Le Meridien Hotel, 650 N. Pearl Street, Dallas, Texas 75201, on May 14, 1998, at
5:00 p.m., Dallas, Texas time, and at any adjournment of such Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are described
in the foregoing notice of the Annual Meeting and this Proxy Statement. The
persons named as proxies are Carl H. Westcott and Jack T. Smith, each of whom is
presently an executive officer of the Company.
This Proxy Statement and the related form of proxy are being mailed on or
about April 15, 1998, to all shareholders of record on March 17, 1998. Shares
of the Company's common stock, $.01 par value per share (the "Common Stock"),
represented by proxies will be voted as described in this Proxy Statement or as
otherwise specified by a shareholder. See "Method of Voting." The cost of
soliciting, preparing, assembling and mailing the proxy, this Proxy Statement,
and other materials enclosed herewith, and all clerical and other expenses of
proxy solicitation will be borne by the Company. Arrangements may be made with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy materials to the beneficial owners of the Common Stock, and such
persons may be reimbursed for their expenses. In addition, directors, officers
and employees of the Company and its subsidiaries may solicit proxies by
telephone, telegram or in person.
ANNUAL REPORT
The annual report for the Company's fiscal year ended December 31, 1997,
including audited financial statements, is being furnished with this Proxy
Statement to shareholders of record as of March 17, 1998. The annual report
does not constitute a part of the proxy solicitation materials.
REVOCATION OF PROXY
Any shareholder returning the accompanying proxy may revoke his proxy at
any time prior to its exercise by (a) giving written notice to the corporate
secretary of the Company of such revocation prior to its use, (b) voting in
person at the Annual Meeting, or (c) executing and filing with the corporate
secretary of the Company a later dated proxy.
VOTING RIGHTS
The holders of record of the 27,785,326 shares of Common Stock outstanding
on March 17, 1998, will be entitled to one vote for each share held on all
matters coming before the Annual Meeting.
METHOD OF VOTING
Subject to revocation of a proxy, shares will be voted in accordance with
the instructions on the proxy. As to the election of directors, a shareholder
may, by checking the appropriate box on the proxy: (a) vote for all director
nominees as a group; (b) withhold authority to vote for all director nominees as
a group; or (c) vote for all director nominees as a group, except those nominees
identified by the shareholder in the appropriate area. In the event no
instructions are given, the persons named in the accompanying proxy will vote
FOR the election of the nominees for director listed in this Proxy Statement.
As to any other business that may properly be brought before the Annual
<PAGE>
Meeting, the persons named in the accompanying proxy will vote in accordance
with their best judgment. Management does not know of any such other matters of
business. Should any nominee named herein for the office of director become
unable or be unwilling to accept nomination for or election to such position,
the persons acting under the proxy will vote for the election, in his stead, of
such other person as the management of the Company may recommend. Management has
no reason to believe that any of the nominees will be unable or unwilling to
serve if elected to office.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
in determining the presence of a quorum. A "broker non-vote" occurs when a
nominee holding shares for a beneficial owner has voted on certain matters at
the Annual Meeting pursuant to discretionary authority or instructions from the
beneficial owner but may not have received instructions or exercised
discretionary voting power with respect to other matters. If a quorum is not
present, the shareholders represented in person or by proxy at the Annual
Meeting may adjourn such meeting until such time and to such place as may be
determined by a vote of the holders of a majority of the shares represented in
person or by proxy at the Annual Meeting. Once a quorum is present at the
Annual Meeting, the shareholders represented in person or by proxy at the
meeting may conduct such business as may be properly brought before the Annual
Meeting until it is adjourned, and the subsequent withdrawal from the Annual
Meeting of any shareholder or the refusal of any shareholder represented in
person or by proxy to vote shall not affect the presence of a quorum at the
meeting.
Directors of the Company shall be elected by a plurality of the votes cast
by the holders of shares entitled to vote in the election of directors of the
Company at the Annual Meeting, and abstentions and broker non-votes will have no
effect in the election of directors.
2
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SECURITY OWNERSHIP IN THE COMPANY
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 17, 1998 by: (i) each person known by
the Company to own beneficially five percent or more of the outstanding Common
Stock; (ii) each of the Company's directors; (iii) each of the persons named in
the Summary Compensation Table; and (iv) all directors and executive officers of
the Company as a group.
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE OF
OWNED/(1)/ OUTSTANDING SHARES
---------------- ------------------
Carl H. Westcott/(2)/.................. 11,580,900 41.7
Jack T. Smith/(3)/..................... 211,133 *
Joe J. Pollard, III/(4)/............... 382,525 1.4
Philip E. Falcosky..................... 0 *
Paul M. Bass/(5)/...................... 2,500 *
John D. Curtis/(6)/.................... 2,574,850 9.3
C. Gregory Earls/(7)/.................. 704,214 2.5
Arthur W. Hollingsworth/(8)/........... 2,500 *
Regina T. Montoya/(9)/................. 38,887 *
Kern Wildenthal, M.D., Ph.D./(10)/..... 7,000 *
Michael I. Smartt/(11)/................ 252,025 *
All directors and executive officers
as a group (10 persons)/(12)/.......... 15,504,509 55.8
- --------------------
* Represents less than 1.0% of the outstanding Common Stock.
/(1)/ Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to the
shares of Common Stock shown as beneficially owned by them, subject to
community property laws where applicable.
/(2)/ Includes 112,107 shares of Common Stock held by First Extended Service
Corporation, a wholly owned subsidiary of a corporation of which Mr.
Westcott is the sole shareholder. The shares held by First Extended
Service Corporation are also considered to be beneficially owned by Mr.
Curtis. The principal business address of Mr. Westcott is 2001 Bryan
Street, Suite 600, Dallas, Texas 75201.
/(3)/ Includes 27,500 shares of Common Stock issuable upon exercise of options
granted under the Company's Amended and Restated Non-Employee Stock
Option Plan (the "Non-Employee Plan") and exercisable within 60 days.
/(4)/ Includes 200,000 shares of Common Stock issuable upon exercise of
options granted under the Amended and Restated 1994 Stock Option and
Restricted Stock Plan (the "1994 Stock Option Plan") and exercisable
within 60 days and 500 shares of Common Stock held by Charline Pollard,
Mr. Pollard's wife, as to which Mr. Pollard disclaims beneficial
ownership.
/(5)/ Includes 2,500 shares of Common Stock issuable upon exercise of options
granted under the Company's Non-Employee Plan and exercisable within 60
days.
/(6)/ Includes 10,000 shares of Common Stock issuable upon exercise of options
granted under the 1994 Stock Option Plan and exercisable within 60 days,
7,500 shares of Common Stock issuable upon exercise of options granted
under the Non-Employee Plan and exercisable within 60 days, and
1,149,000 and 1,149,000 shares of Common Stock held by Mr. Curtis as
trustee of the Court Hilton Westcott 1987 Trust and Chart Hampton
Westcott 1987 Trust, respectively, as to which Mr. Curtis disclaims
beneficial ownership. Also includes 112,107 shares of Common Stock held
by First Extended Service Corporation, as to which Mr. Curtis disclaims
beneficial ownership. The shares held by First Extended Service
Corporation are also considered to be beneficially owned by Mr.
Westcott.
/(7)/ Includes 17,500 shares of Common Stock issuable upon exercise of options
granted under the Non-Employee Plan and exercisable within 60 days and
675,064 and 11,650 shares of Common Stock held by Mr. Earls as trustee
under the Earls' Children Irrevocable Educational Trust Agreement and by
members of his family, respectively, as to which Mr. Earls disclaims
beneficial ownership.
/(8)/ Includes 2,500 shares of Common Stock issuable upon exercise of options
granted under the Non-Employee Plan and exercisable within 60 days.
3
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/(9)/ Includes 27,500 shares of Common Stock issuable upon the exercise of
options granted under the Non-Employee Plan and exercisable within 60
days.
/(10)/ Includes 2,500 shares of Common Stock issuable upon exercise of options
granted under the Non-Employee Plan and exercisable within 60 days.
/(11)/ Mr. Smartt is no longer employed by the Company. The number of shares
reported as beneficially owned by him is based on his last Form 4 which
was filed for the month of February 1997.
/(12)/ Includes 210,000 shares of Common Stock issuable upon exercise of
options granted under the 1994 Stock Option Plan and exercisable within
60 days and 87,500 shares of Common Stock issuable upon exercise of
options granted under the Non-Employee Plan and exercisable within 60
days.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Company's Amended and Restated Bylaws provide that the Board of
Directors or shareholders shall establish the number of directors. The Board of
Directors has established the Board at nine members. Each of the persons set
forth below has been nominated for election to the Board of Directors, to serve
for a term of one year until the next annual meeting of shareholders or until
his successor is elected and qualified. See "Directors and Executive Officers."
DIRECTOR NOMINEE
- ------------------------------
Carl H. Westcott
Jack T. Smith
Joe J. Pollard, III
Paul M. Bass
John D. Curtis
C. Gregory Earls
Arthur W. Hollingsworth
Regina T. Montoya
Kern Wildenthal, M.D., Ph.D.
The shares represented by proxies will be voted as specified by the
shareholder. If a shareholder does not specify his choice, the shares will be
voted in favor of the election of the nominees listed on the proxy except that,
in the event any nominee should not continue to be available for election, such
proxies will be voted for the election of such other person as the Board of
Directors may recommend. The Company does not presently contemplate that any of
the nominees will become unavailable for election for any reason.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
EACH OF THE NINE NOMINEES NAMED ABOVE.
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DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE OFFICERS AND NOMINEES FOR ELECTION AS DIRECTORS
The following sets forth certain information regarding the nominees for
election to the Company's Board of Directors and the Company's executive
officers:
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------
Carl H. Westcott.............. 58 Chairman of the Board, Chief Executive
Officer and Director
Jack T. Smith................. 45 President, Chief Operating Officer and
Director
Joe J. Pollard, III........... 58 President--Automotive Division and Director
Philip E. Falcosky............ 46 Controller and Chief Accounting Officer
Paul M. Bass.................. 62 Director
John D. Curtis................ 57 Director
C. Gregory Earls.............. 53 Director
Arthur W. Hollingsworth....... 35 Director
Regina T. Montoya............. 44 Director
Kern Wildenthal, M.D., Ph.D... 56 Director
Carl H. Westcott has served as Chairman of the Board and Chief Executive
Officer of the Company since February 1997 and as a director of the Company
since its inception in June 1993. Since April 1997 Mr. Westcott has also served
as Chairman of the Board and Chief Executive Officer of Jayhawk Medical
Acceptance Corporation, a wholly owned subsidiary of the Company ("JMAC"). He
provided a substantial portion of the initial capital to the Company and is the
principal shareholder of the Company. From June 1996 until he joined the
Company, Mr. Westcott acted primarily as an investor through his wholly-owned
consulting and private investment company, Carl Westcott LLC. From 1986 until
its acquisition by Primedia, Inc. (formerly known as K-III Communications
Corporation) in June 1996, Mr. Westcott was Chairman of the Board, Chief
Executive Officer and a director of Westcott Communications, Inc., a
communications company that produces information programming for subscribers in
the health care, automotive and other industries. Until its sale in January
1996, he was the sole director and shareholder of Atlanta Toyota, Inc., one of
the largest Toyota dealerships in the United States.
Jack T. Smith has served as President and Chief Operating Officer of the
Company since March 1997 and as a director of the Company since its inception.
From September 1996 to March 1997, Mr. Smith served as a consultant to the
Company. From June 1996 until March 1997, he was employed by Carl Westcott LLC.
From 1989 until its acquisition by Primedia, Inc. in June 1996, Mr. Smith was
President and Chief Operating Officer of Westcott Communications, Inc.
Joe J. Pollard, III has served as President--Automotive Division of the
Company since November 1997 and as a director of the Company since September
1994. Mr. Pollard served as General Manager--Automotive Division of the
Company from March 1997 to November 1997 and as President and Chief Operating
Officer of the Company from August 1994 until his resignation from the Company
in January 1996. Between January 1996 and March 1997, Mr. Pollard was self-
employed as a private investor and served as a consultant to the Company. From
August 1993 to August 1994, Mr. Pollard served as President and General Manager
of Atlanta Toyota, Inc. From March 1990 to August 1993, Mr. Pollard was self-
employed as a private investor.
5
<PAGE>
Philip E. Falcosky was named Controller and Chief Accounting Officer
effective June 1997. Mr. Falcosky joined the Company in October, 1995, as
Director of Internal Audit and in January 1996 was named Manager of Dealer
Underwriting and Collateral Control. Prior to joining the Company, Mr. Falcosky
served from 1990 to 1994 as Vice President and Manager of Audit-Division with
BankAmerica Corp., from 1983 to 1990 as Senior Vice President/Director of
Internal Audit with MeraBank, F.S.B., and from 1974 to 1983 as an accountant
with Peat, Marwick Mitchell & Co. and Arthur Young & Company.
Paul M. Bass has served on the Board of Directors of the Company since
August 1997. Since 1989, Mr. Bass has served as Vice Chairman of First
Southwest Company, a privately held investment banking firm. Mr. Bass is
currently also a director of California Federal Bank F.S.B., Source Services,
Inc. and Richman Goodman 1/2 Price Stores, Inc. Mr. Bass has more than thirty-
seven years of experience in the securities industry.
John D. Curtis has served as a consultant to the Company since September
1996 and as a director of the Company since October 1995. Since November 1995
Mr. Curtis has served as President of First Extended Service Corporation, a
provider of claims administration services for automotive extended service
agreements. First Extended Service Corporation is a wholly-owned subsidiary of
a corporation of which Mr. Westcott is the sole shareholder. Mr. Curtis has also
served as a director of Farah Incorporated, a clothing manufacturer, since June
1996. From November 1992 until joining First Extended Service Corporation, Mr.
Curtis was a partner in the law firm of Baker & McKenzie.
C. Gregory Earls has served as a director of the Company since its
inception. Mr. Earls is President and a director of Equitable Production
Funding of Canada, Inc., a film licensing company; U.S. Viewing Corporation, a
management company; and National Networks, Inc., a private investment company.
Mr. Earls has held these positions since June 1981, March 1985 and January 1993,
respectively. Mr. Earls was President and a director of Health and Sciences
Television Network, a subsidiary of Westcott Communications, Inc., from November
1991 until its acquisition by Primedia, Inc. in June 1996.
Arthur W. Hollingsworth has served as a director of the Company since
August 1997. Since 1989, Mr. Hollingsworth has served as Managing Director of
Lewis Partners, an investment firm that primarily makes equity investments in
basic manufacturing and distribution companies.
Regina T. Montoya has served as a director of the Company since February
1994. Ms. Montoya has also served as a member of the Board of Directors of the
Student Loan Marketing Association (Sallie Mae) since March 1994. Since August
1995, Ms. Montoya has served as a political analyst for KDFW-TV in Dallas,
Texas, and since September 1995 has served as a Visiting Professor at the
University of Texas in Dallas, Texas, and as a consultant. From December 1993
to April 1997, she served as a member of the Board of Directors of Trammell Crow
Company. From June 1995 until December 1996, she served as a member of the
Board of Directors of Integrated Communications Network, Inc. Between January
1994 and August 1995, Ms. Montoya served as a Vice President of Westcott
Communications, Inc. From September 1993 to December 1993, Ms. Montoya was self-
employed as a consultant. Ms. Montoya served as an Assistant to President
Clinton and Director of the Office of Intergovernmental Affairs from January to
August of 1993.
Kern Wildenthal, M.D., Ph.D. has served on the Board of Directors of the
Company since November 1997. Since 1986, Dr. Wildenthal has served as President
of the University of Texas Southwestern Medical Center. Before assuming his
current position, he served as Dean of the medical school at the University of
Texas Southwestern for six years. Dr. Wildenthal also served as a director of
Westcott Communications, Inc. immediately prior to its acquisition by Primedia,
Inc. in June 1996.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The following sets forth information regarding meetings of the Board of
Directors and its standing committees during fiscal 1997:
Board of Directors. The Board of Directors met 14 times during fiscal
1997. In 1997, each member of the Board of Directors attended or acted upon
at least seventy-five percent of the aggregate number of Board of
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Directors meetings and Board of Directors committee meetings held or
consents acted upon during the period he or she served as a director and/or
committee member, as applicable.
Nominating Committee. The Company has no Nominating Committee.
Audit Committee. The Audit Committee is responsible for recommending
independent auditors, reviewing the audit plan, the adequacy of internal
controls, the audit report and management letter and undertaking such other
incidental functions as the Board of Directors may authorize. The Audit
Committee met once during fiscal 1997. The current members of the Audit
Committee are C. Gregory Earls, Arthur W. Hollingsworth and Regina T.
Montoya.
Compensation Committee. The Compensation Committee is responsible for
determining executive compensation policies and administering all
compensation plans, including the 1994 Stock Option Plan and the Non-
Employee Plan. The Compensation Committee met or unanimously voted on
resolutions a total of two times during fiscal 1997. The current members
of the Compensation Committee are C. Gregory Earls, Arthur W. Hollingsworth
and Kern Wildenthal.
COMPENSATION OF DIRECTORS
The Company pays non-employee directors an annual retainer of $4,000 and a
fee of $1,000 for each Board of Directors or committee meeting attended. The
Company also reimburses out-of-pocket expenses related to the director's
attendance at such meetings. Non-employee directors of the Company and its
subsidiaries who do not own more than ten percent of the outstanding Common
Stock also receive grants of options for Common Stock under the Company's Non-
Employee Plan, which was adopted in February 1994, amended and restated in its
entirety in July 1995, and further amended in November 1997. A total of 450,000
shares of Common Stock are reserved for issuance upon exercise of options
granted under the Non-Employee Plan. The Non-Employee Plan provides for the
grant of options to directors of the Company and its subsidiaries and other
persons rendering critical services to the Company or its subsidiaries who are
not full-time employees of the Company or any of its subsidiaries and on the
date of grant do not own more than ten percent of the outstanding Common Stock
("Eligible Individuals"). As of December 31, 1997, options to purchase 20,000,
20,000, 10,000, 30,000, 40,000 and 20,000 shares of Common Stock at respective
exercise prices per share of $.01, $1.1875, $2.00, $4.46, $12.8125 and $14.125
were outstanding under the Non-Employee Plan.
The Non-Employee Plan provides that immediately following the initial
election or appointment of an Eligible Individual to the Company's Board of
Directors, such individual shall automatically receive an option to purchase
10,000 shares of Common Stock at a price per share equal to the fair market
value of such stock on the date of such election. Thereafter, upon the
reelection of any Eligible Individual to the Board of Directors, such individual
shall automatically be granted an option to purchase an additional 10,000 shares
of Common Stock at a price per share equal to the fair market value of such
stock on the date of such reelection; provided that no Eligible Individual shall
receive an option upon reelection if such option, together with all unexercised
options previously granted under the Non-Employee Plan to such director, exceed
options to purchase 50,000 shares of Common Stock. Twenty-five percent of any
such option shall vest on each of the six month, one year, two year, and three
year anniversaries of the date of grant and no such option shall be exercisable
after the date which is ten years from the date of grant.
The Non-Employee Plan is administered by the Compensation Committee and
permits the grant of options to such Eligible Individuals as the Compensation
Committee may determine from time to time, which options will be subject to such
terms and conditions as the Compensation Committee may determine. In addition,
the Compensation Committee may grant cash awards payable in connection with the
exercise of an option. The exercise price of any such option shall be such
price as is determined by the Compensation Committee; provided that the exercise
price shall not be less than 85% of the fair market value of the shares subject
to such option on the date of grant. Except as otherwise provided in the
agreement evidencing the option, if a holder of an option ceases to be a
director of, or otherwise render the service for which the option was granted
to, the Company or its subsidiaries, the unexercised portion of such option
shall terminate, if a holder of any option ceases by reason of disability to be
a director of the Company or any of its subsidiaries or to otherwise render the
service for which the option was granted, the unexercised portion of such option
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shall terminate 90 days thereafter, and if a holder of an option dies, the
unexercised portion of such option shall terminate one year thereafter.
On September 5, 1996 the Company entered into a consulting agreement with
Jack T. Smith, who at the time was only a member of the Company's Board of
Directors, pursuant to which Mr. Smith provided business, financial and
management consulting services to the Company. In accordance with the
consulting agreement, the Company granted Mr. Smith an option to purchase
100,000 shares of Common Stock under the 1994 Stock Option Plan at an exercise
price of $14.125 per share. In March 1997 Mr. Smith was appointed President and
Chief Operating Officer of the Company and the parties agreed to terminate the
consulting agreement. On August 21, 1997 Mr. Smith relinquished all options he
was granted pursuant to his consulting agreement and received 100,000
replacement options at an exercise price of $1.25 per share. See "Ten-Year
Option Repricings" and "Compensation Committee Report--Option Repricings."
On September 27, 1996 the Company entered into a consulting agreement with
John D. Curtis, a member of the Company's Board of Directors, pursuant to which
Mr. Curtis provides legal and business consulting services to the Company. In
accordance with the consulting agreement, the Company granted Mr. Curtis an
option to purchase 20,000 shares of Common Stock under the 1994 Stock Option
Plan at an exercise price of $14.125 per share exercisable in increments of
5,000 shares, with the first 5,000 shares becoming exercisable on the sixth
month anniversary of the date of grant and each subsequent increment becoming
exercisable on each of the next three anniversaries of the date of grant.
Unvested options automatically terminate upon termination of the consulting
agreement, which can be terminated by either party on 30 days' notice.
COMPENSATION OF EXECUTIVE OFFICERS
The Summary Compensation Table below provides certain summary information
concerning compensation paid or accrued by the Company to or on behalf of the
Company's Chief Executive Officers during 1997 and each of the other persons who
served as executive officers of the Company during 1997, excluding persons who
are no longer executive officers of the Company and whose total salary and bonus
did not exceed $100,000 in 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- ------------
OTHER ANNUAL
NAME AND FISCAL COMPENSATION AWARDS
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS/SARS
- ----------------------------------------- ------ ------------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Carl H. Westcott,/(1)/ 1997 $ --- $ --- $ --- ---
Chairman of the Board, Chief Executive 1996 --- --- --- ---
Officer and Director 1995 --- --- --- ---
Jack T. Smith,/(2)/ 1997 95,000 --- 1,000/(3)/ 300,000/(4)/
President, Chief Operating Officer and 1996 --- --- 14,000/(3)/ 100,000/(5)/
Director 1995 --- --- 3,000/(3)/ ---
Joe J. Pollard,/(6)/ 1997 87,629 --- --- 100,000/(7)/
President--Automotive Division and 1996 19,535/(8)/ --- --- ---
Director 1995 127,123 --- --- ---
Philip E. Falcosky,/(9)/ 1997 83,750 30,000 --- 50,000/(10)/
Controller and Chief Accounting Officer 1996 67,083 --- --- 3,500/(11)/
1995 16,250 --- --- ---
Michael I. Smartt/(12)/ 1997 87,871 --- --- ---
1996 259,422 --- --- 50,000/(13)/
1995 177,964 --- --- 100,000/(14)/
</TABLE>
8
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________________
/(1)/ Mr. Westcott became an executive officer of the Company in February
1997. Mr. Westcott also serves as Chairman of the Board and Chief
Executive Officer of JMAC. See "Directors and Executive Officers." He
does not receive compensation, cash or otherwise, from either the
Company or JMAC.
/(2)/ Mr. Smith became an executive officer of the Company in March 1997. If
he had been employed by the Company for all of 1997, his annual salary
would have been $120,000.
/(3)/ Amounts paid to Mr. Smith in connection with his services as a non-
employee director of the Company prior to his becoming an executive
officer. See "Directors and Executive Officers" and "Compensation of
Directors."
/(4)/ Options granted August 21, 1997 as part of grants totaling 505,000
options to certain officers and key employees pursuant to the 1994 Stock
Option Plan.
/(5)/ Options granted September 27, 1996 to Mr. Smith pursuant to the 1994
Stock Option Plan under his consulting agreement with the Company, which
agreement terminated upon his becoming an executive officer of the
Company. On August 21, 1997, Mr. Smith relinquished these options in
connection with the grant of the options described in footnote (4)
above. See "Ten-Year Option Repricings" and "Compensation Committee
Report--Option Repricings."
/(6)/ Mr. Pollard became an executive officer of the Company in March 1997. If
he had been employed by the Company for all of 1997, his annual salary
would have been $122,992. Mr. Pollard also served as President and Chief
Operating Officer of the Company from August 1994 to January 1996. See
"Directors and Executive Officers."
/(7)/ Options granted August 21, 1997 as part of grants totaling 505,000
options to certain officers and key employees pursuant to the 1994 Stock
Option Plan.
/(8)/ Mr. Pollard resigned his position as an executive officer of the Company
in January 1996. See "Directors and Executive Officers."
/(9)/ Mr. Falcosky became an executive officer of the Company in June 1997.
/(10)/ Options granted August 21, 1997 as part of grants totaling 505,000
options to certain officers and key employees pursuant to the 1994 Stock
Option Plan.
/(11)/ Options granted September 27, 1996 as part of grants totaling 378,000
options to certain officers and key employees pursuant to the 1994 Stock
Option Plan. On August 21, 1997 Mr. Falcosky relinquished these options
in connection with the grant of the options described in footnote (10)
above. See "Ten-Year Option Repricings" and "Compensation Committee
Report--Option Repricings."
/(12)/ Mr. Smartt served as the Company's Chairman of the Board and Chief
Executive Officer and as a director until February 1997. Mr. Westcott
succeeded Mr. Smartt as Chairman of the Board and Chief Executive
Officer. See "Directors and Executive Officers."
/(13)/ Options granted September 27, 1996 as part of a total grant of 378,000
options to certain officers and key employees pursuant to the 1994 Stock
Option Plan. These options terminated sixty (60) days following Mr.
Smartt's departure from the Company.
/(14)/ Options granted July 10, 1995 as part of a total grant of 157,500
options to certain officers and key employees pursuant to the Company's
1994 Stock Option Plan. These options terminated sixty (60) days
following Mr. Smartt's departure from the Company.
9
<PAGE>
GRANTS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth certain information with respect to the
individuals listed in the Summary Compensation Table who were granted options to
acquire Common Stock in 1997. No SARs were granted in 1997.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME GRANTED (#)/(1)/ FISCAL YEAR (%) ($/SHARE)/(2)/ DATE 5% ($) 10%($)
- ---- ---------------- --------------- -------------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Jack T. Smith 300,000 33.1 1.25 8/21/04 47,130 209,615
Joe J. Pollard 100,000 11.0 1.25 8/21/04 15,710 69,872
Philip E. Falcosky 50,000 5.5 1.25 8/21/04 7,855 34,936
</TABLE>
_____________
/(1)/ All options to Messrs. Smith and Falcosky were granted August 21, 1997
and vest in 50% increments on the first and second anniversaries of the
date of grant of the options. All options to Mr. Pollard were granted on
August 21, 1997 and were fully vested upon the date of grant.
/(2)/ The market price of the Common Stock on the date of grant was $1.00.
TEN-YEAR OPTION REPRICINGS
The following table sets forth certain information with respect to the
individuals listed in the Summary Compensation Table whose options were repriced
in 1997. No other person's options were repriced in 1997. Since its inception
in 1993, the Company has not previously repriced any options. See "Compensation
Committee Report--Option Repricing."
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT PRICE AT REMAINING AT
OPTIONS/SARS TIME OF TIME OF NEW DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) AMENDMENT ($) PRICE ($) AMENDMENT/(1)/
- -------------------- -------- ------------ ------------- ------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Jack T. Smith 08/21/97 100,000 1.00 14.125 1.25 6 years
Philip E. Falcosky 08/21/97 3,500 1.00 14.125 1.25 6 years
</TABLE>
_____________
/(1)/ The new options vest in 50% increments on the first and second
anniversaries of the date of grant of the options.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to the
individuals listed in the Summary Compensation Table who hold options to acquire
Common Stock concerning the value of unexercised options to acquire Common Stock
held as of December 31, 1997. No SARs have been granted under any incentive
plan.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE/(1)/
- -------------------- ------------ ------------ -------------------------- ------------------------------
<S> <C> <C> <C> <C>
Jack T. Smith --- --- 27,500/302,500 13,650/56,250
Joe J. Pollard --- --- 200,000/0 18,750/0
Philip E. Falcosky --- --- 0/50,000 0/9,375
</TABLE>
____________
/(1)/ The options were valued using the closing sale price of the Common Stock
on December 31, 1997, which was $1.375. On April 8, 1998, the closing
sale price of the Common Stock was $.875.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Until June 1997, the Company's Compensation Committee consisted of Dan W.
Cook III, C. Gregory Earls and John C. Tolleson. Messrs. Tolleson and Cook
resigned from the Board of Directors in June and July 1997, respectively. Paul
M. Bass and Arthur W. Hollingsworth were appointed to the Compensation Committee
in August 1997 following their election to the Board of Directors. Mr. Bass
resigned from the Compensation Committee in November 1997 and Kern Wildenthal
was appointed as Mr. Bass' replacement that same month. The Compensation
Committee currently consists of Messrs. Earls, Hollingsworth and Wildenthal. No
person serving as a member of the Compensation Committee during 1997 has ever
been employed by the Company, and no such person had any relationships during
1997 requiring disclosure according to applicable rules and regulations of the
Securities and Exchange Commission ("SEC").
CERTAIN RELATIONSHIPS AND TRANSACTIONS
During 1997 the Company maintained business relationships and engaged in
certain transactions with affiliated companies and parties as described below.
It is the policy of the Company to engage in transactions with related parties
on terms, in the opinion of the Company, no less favorable to the Company than
could be obtained from unrelated parties.
On November 15, 1995 the Company entered into an agreement with First
Extended Service Corporation pursuant to which First Extended Service
Corporation performs certain claims administration services on behalf of the
Company with respect to the extended service agreement program the Company
offered to its automotive dealers. Under the extended service agreement program,
an automotive dealer could sell a vehicle service product to a customer whose
automotive installment sales contract is purchased by the Company, which
reimburses the customer for certain repairs made to the vehicle securing the
automotive installment sales contract. The amounts payable by the Company to
First Extended Service Corporation under the agreement were directly related to
the number of such vehicle service products sold by the Company's automotive
dealers and are on terms the Company believes are no less favorable to the
Company than could be obtained for similar services from unrelated parties. The
Company paid approximately $1,537,000 to First Extended Service Corporation for
reimbursement of service contract claims and administrative services during 1997
pursuant to this agreement. The Company ceased offering these extended service
agreements in 1997. First Extended Service Corporation is a wholly owned
subsidiary of a corporation of which Mr. Westcott is the sole shareholder. Mr.
Curtis is an executive officer of First Extended Service Corporation.
In late 1996 the Company entered into an agreement with Cougar Advertising,
Inc., which agreement was approved by a committee of disinterested directors of
the Company, pursuant to which Cougar Advertising, Inc. agreed to develop and
produce commercials and execute media buys for JMAC for a commission of
approximately 5% of the commercials and media buys. The agreement is on terms
the Company believes are at least as favorable to the Company as could be
obtained for similar services from unrelated parties. Pursuant to the
agreement, the Company paid
11
<PAGE>
approximately $2,603,000 to Cougar Advertising, Inc., including cost
reimbursements of approximately $2,490,000 and commissions of approximately
$113,000 for these services in 1997. Mr. Westcott is the sole shareholder of
Cougar Advertising, Inc.
On November 7, 1996 the Company entered into a build-to-suit agreement with
Cougar Real Estate, Ltd., which agreement was approved by a committee of
disinterested directors of the Company after obtaining the advice of an
unaffiliated advisor, pursuant to which Cougar Real Estate, Ltd. agreed to
construct a 102,400 square foot office building in accordance with
specifications mutually agreed upon by the parties and subsequently lease the
office building to the Company pursuant to a triple net lease. As a result of
the Company's Chapter 11 bankruptcy proceeding commenced in February 1997 (the
"Chapter 11 Proceeding") and the Company's reduced level of operations, the
Company elected to reject the agreement in connection with the Chapter 11
Proceeding and Cougar Real Estate, Ltd. agreed to assert no claim for damages as
a result of such rejection. No payments were made by the Company to Cougar Real
Estate, Ltd. pursuant to the agreement. Mr. Westcott is the sole shareholder of
the general partner of Cougar Real Estate, Ltd.
On October 1, 1996 JMAC executed a revolving credit promissory note (the
"NationsBank Note") in the face amount of $15,000,000 payable to NationsBank
Texas, N.A. ("NationsBank"). The NationsBank Note was due October 1, 1997 and
bore interest at the prime rate of interest. Mr. Westcott unconditionally
guaranteed payment of the NationsBank Note. In January 1997, as a condition to
Mr. Westcott guaranteeing any future advances under the NationsBank Note or
otherwise, JMAC granted him a security interest in all the assets of JMAC to
secure payment of any and all claims arising pursuant to Mr. Westcott's
guaranty. Additionally, after commencement of the Chapter 11 Proceeding,
NationsBank refused to make any further advances under the NationsBank Note. In
addition, JMAC had loaned approximately $7.1 million (the "JMAC Loan") to the
Company prior to the Company's filing of the Chapter 11 petition, and the
bankruptcy court prohibited the Company from providing JMAC with any cash to
finance its activities, including any repayment of the JMAC Loan. To fund
JMAC's operations, Mr. Westcott provided approximately $12.3 million of
financing to JMAC between January 30, 1997 and September 30, 1997 (including
$5.0 million in proceeds from Mr. Westcott's purchase of 50,000 shares of JMAC's
Series A Redeemable, Convertible Preferred Stock (the "JMAC Preferred Stock")
discussed below). Furthermore, at the request of NationsBank, on February 28,
1997, Mr. Westcott purchased the NationsBank Note evidencing the $13.5 million
principal amount of indebtedness outstanding under the facility. The majority
of the financing provided by Mr. Westcott to JMAC was in the form of demand
notes secured by all of the assets of JMAC. On November 12, 1997 Mr. Westcott
agreed to consolidate and extend the maturities of the notes evidencing his
loans to JMAC. Notes payable to Mr. Westcott at December 31, 1997 totaled $20.8
million. The notes bear interest at the prime rate announced from time to time
by NationsBank and are payable, to the extent of $7.1 million, in quarterly
principal installments (plus interest) aggregating approximately $2.4 million in
1998 and $4.7 million in 1999, and to the extent of $13.7 million (plus
interest) on November 12, 1999. Both notes continue to be secured by all of the
assets of JMAC, and JMAC continues to owe Mr. Westcott approximately $1.0
million of accrued interest that is payable upon demand.
On April 14, 1997, in a transaction approved by a committee of
disinterested directors of the Company after obtaining the advice of an
unaffiliated financial advisor, JMAC entered into a Preferred Stock Purchase
Agreement with Mr. Westcott, pursuant to which Mr. Westcott purchased from JMAC
50,000 shares of JMAC Preferred Stock in exchange for $2.0 million of
indebtedness to Mr. Westcott and $3.0 million. As provided in the Company's
Plan of Reorganization, on November 12, 1997, Mr. Westcott exchanged the JMAC
Preferred Stock for 3,855,555 shares of the Company's Common Stock.
12
<PAGE>
PERFORMANCE OF THE COMMON STOCK
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the five months commencing August 1, 1995 (the
first trading day following the initial public offering of Common Stock by the
Company), and ending on December 31, 1997, with the cumulative total shareholder
return on the Nasdaq Market Index and on the Dow Jones Industry Group Index FIS
(Financial Services, Diversified) for the same period, assuming a $100
investment on August 1, 1995.
[PERFORMANCE GRAPH APPEARS HERE]
Total Return Analysis
8/1/95 12/29/95 12/31/96 12/31/97
----------------------------------------
Jayhawk Acceptance Corporation $100.00 $ 63.48 $ 78.26 $ 9.57
Dow Jones Industry Group FIS 100.00 117.13 157.58 234.74
Nasdaq Market Index 100.00 102.74 127.67 156.17
The closing sale price of Common Stock reported by the Nasdaq Stock Market
on April 8, 1997, was $.875 per share.
13
<PAGE>
COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION
Since its inception in June 1993, the Company's executive compensation
program has consisted of base salary and long-term incentive compensation in the
form of stock options. The Company formed a Compensation Committee in April
1995 to determine and administer all executive compensation policies, including
cash compensation and option grants under the 1994 Stock Option Plan. The
Compensation Committee reviews all aspects of the Company's compensation program
at least once annually and has directed management to provide suggested
executive compensation plans to the Compensation Committee. The specific
objectives of the Compensation Committee are:
Provide compensation that will attract and retain superior talent and
reward the executive officer based upon Company and individual performance.
Support the achievement of the Company's strategic operating objectives.
Align the executive officer's financial interests with the success of the
Company by placing a substantial portion of pay at risk (i.e., payout that
is dependent upon Company and/or Common Stock performance).
The factors considered by the Compensation Committee in establishing
executive officer cash compensation and stock option grants in 1997 included an
assessment of the level of compensation required to attract and/or retain the
executive officer, the individual's performance (as viewed by the Compensation
Committee following consultation with management), the responsibilities of the
individual and the operating performance of the Company. The Compensation
Committee also considered the compensation practices of other corporations that
most likely compete with the Company for services of executive officers.
Although the Compensation Committee did not apply any formula based upon
particular performance measures in 1997, the Compensation Committee's decisions
were affected by, among other things, the state of the Company's business and
the fact that all the executive officers of the Company became executive
officers in 1997.
The Compensation Committee anticipates that stock options will continue to
form a significant part of the Company's overall executive compensation program
and that incentive cash compensation will be used to reward exceptional
performance and meeting Company performance goals. See "--Option Repricings."
Carl H. Westcott has served as Chairman of the Board and Chief Executive
Officer of the Company since February 1997. Prior to such time he served solely
as a director of the Company. At Mr. Westcott's request, he receives no
compensation, cash or otherwise, for his services as Chairman of the Board and
Chief Executive Officer of the Company. Michael I. Smartt served as Chairman of
the Board and Chief Executive Officer of the Company until February 1997. Mr.
Smartt's 1997 cash compensation related to decisions made by the Compensation
Committee in 1996. See "Compensation of Executive Officers."
OPTION REPRICINGS
The Board of Directors has consistently believed that the granting of stock
options to executive officers provides a significant incentive to those officers
and aligns their interests with those of the Company and its shareholders. Due
to the significant decrease in the price of the Common Stock in 1997, the
Compensation Committee determined that it was unlikely that options previously
granted to certain executive officers (which were exercisable at prices
substantially above the current market price of the Common Stock) would provide
suitable incentives for such officers. Based on its belief that retention of
key employees was particularly important given the state of the Company's
operations, on August 21, 1997 the Compensation Committee determined that it was
in the best interests of the Company and its shareholders to grant to such
officers new options which reflected the current market price of the Common
Stock, in exchange for those officers' agreement to relinquish their previously
granted options, some of which were vested. The relinquishment of the options
in connection with the grant of new options was the equivalent of repricing the
relinquished options. See "Ten-Year Option Repricings."
14
<PAGE>
Jack T. Smith became an executive officer in March 1997, when he was named
President and Chief Operating Officer of the Company. On August 21, 1997, the
Company granted Mr. Smith an option to purchase 300,000 shares of Common Stock
at an exercise price of $1.25 per share. On August 21, 1997, the last sales
price of a share of Common Stock quoted on the Nasdaq Stock Market was $1.00. In
connection with such grant, Mr. Smith relinquished options to purchase 100,000
shares of Common Stock at an exercise price of $14.125 per share. The options
Mr. Smith relinquished were granted to him in connection with his prior services
as a consultant to the Company. Philip E. Falcosky became an executive officer
in June 1997, when he was named Controller and Chief Accounting Officer of the
Company. On August 21, 1997, the Company granted Mr. Falcosky an option to
purchase 50,000 shares of Common Stock at an exercise price of $1.25 per share.
In connection with such grant, Mr. Falcosky relinquished options to purchase
3,500 shares of Common Stock at an exercise price of $14.125 per share. The
options Mr. Falcosky relinquished were granted to him prior to his becoming an
executive officer of the Company. See "Compensation of Executive Officers."
The Compensation Committee believes the grant of new options to Messrs. Smith
and Falcosky provide them incentives consistent with their status as executive
officers and help align their interests with those of the Company and its
shareholders.
By: Arthur W. Hollingsworth
Kern Wildenthal, M.D., Ph.D.
C. Gregory Earls, Chairman
15
<PAGE>
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Directors, executive officers and greater than ten percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
received by it with respect to the fiscal year ended December 31, 1997 and
written representations from certain reporting persons, the Company believes
that all filing requirements applicable to its directors, executive officers and
persons who own more than ten percent of a registered class of the Company's
equity securities have been complied with by such persons, except for one Form 3
of Mr. Falcosky that was not filed on a timely basis.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Ernst & Young, L.L.P. has been the Company's independent public
accountant since fiscal year 1995. Representatives of Ernst & Young, L.L.P. are
expected to be present at the Annual Meeting. Such representatives will have
the opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
OTHER BUSINESS
The management knows of no other business that will be presented for
consideration at the Annual Meeting, but should any other matters be brought
before the Annual Meeting, it is intended that the persons named in the
accompanying proxy will vote such proxy at their discretion.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder desiring to present a proposal to the shareholders at the
1999 Annual Meeting of shareholders, which currently is expected to be scheduled
on May 13, 1999, must transmit such proposal to the Company so that it is
received by the Company at its principal executive offices on or before December
17, 1998. All such proposals should be in compliance with applicable SEC
regulations.
By Order of the Board of Directors,
/s/ BETH PROTHRO
Beth Prothro,
Secretary
Dallas, Texas
April 15, 1998
16
<PAGE>
JAYHAWK ACCEPTANCE CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 14, 1998
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders of Jayhawk Acceptance Corporation (the "Company"), to
be held on May 14, 1998, and the proxy statement in connection therewith, each
dated April 15, 1998, (b) appoints Carl H. Westcott and Jack T. Smith, or
either of them, as Proxies, each with the power to appoint a substitute, (c)
authorizes the Proxies to represent and vote, as designated below, all the
shares of Common Stock of the Company held of record by the undersigned on
March 17, 1998, at such annual meeting and at any adjournment(s) thereof, and
(d) revokes any proxies heretofore given.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE ADOPTION AND APPROVAL OF PROPOSAL 1 AND ON ANY
OTHER BUSINESS, IN THE DISCRETION OF THE PROXIES.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
- -
JAYHAWK ACCEPTANCE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
[ ]
1. To elect as Directors the following nominees: Carl H. Westcott, Jack T.
Smith, Joe J. Pollard III, Paul M. Bass, John D. Curtis, C. Gregory Earls,
Arthur W. Hollingsworth, Regina T. Montoya and Kern Wildenthal, M.D., Ph.D.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE OVAL
ENTITLED "WITHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE" AND LIST THAT
NOMINEE'S NAME. UNLESS AUTHORITY TO VOTE FOR ALL THE FOREGOING NOMINEES IS
WITHHELD, THIS PROXY WILL BE DEEMED TO CONFER AUTHORITY TO VOTE FOR EVERY
NOMINEE WHOSE NAME IS NOT LISTED.
[_] For All Nominees
[_] Withhold All Nominees
[_] Withhold Authority to Vote for Any Individual Nominee.
Write Name of Nominee(s) Below.
------------------------------------------------------
------------------------------------------------------
IMPORTANT: Please date this proxy and sign exactly as your name or names appear
thereon. If stock is held jointly, signature should include both names.
Executors, administrators, trustees, guardians and others signing in the
representative capacity, please so indicate when signing.
Dated: _________________________________________________________, 1998
Signature ______________________________________________________________________
Signature if held jointly ______________________________________________________
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
- -
