SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant: Yes.
Filed by a Party other than the Registrant: No.
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
UNION ACCEPTANCE CORPORATION
(Name Of Registrant As Specified In Its Charter)
UNION ACCEPTANCE CORPORATION
(Name of Person(s) Filing Proxy Statement)
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: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing. N/A
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[UAC LOGO}
250 North Shadeland Avenue
Indianapolis, Indiana 46219
(317) 231-6400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On November 14, 2000
Notice is hereby given that the Annual Meeting of Shareholders of Union
Acceptance Corporation (the "Company") will be held at 250 North Shadeland
Avenue, Indianapolis, Indiana, on Tuesday, November 14, 2000, at 10:00 A.M.,
Indianapolis time.
The Annual Meeting will be held for the following purposes:
1. Election of Directors. Election of eight directors of the Company for
terms to expire in 2001.
2. Ratification of Auditors. Ratification of the appointment of Deloitte
& Touche LLP as auditors for the Company for the fiscal year 2001.
3. Approval of Amendment to Incentive Stock Plan. Approval of an
amendment to the Union Acceptance Corporation 1999 Incentive Stock
Plan to increase the number of shares of Class A Common Stock reserved
for issuance to 600,000 shares.
4. Other Business. Such other matters as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on September 8, 2000, are
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose or vote your
shares by telephone or by using the Internet. If you vote by telephone or the
Internet following the instructions included with the proxy card, you do not
need to return your proxy card.
A copy of our Annual Report for the fiscal year ended June 30, 2000, is
enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this letter.
By Order of the Board of Directors,
\s\John M. Stainbrook
-----------------------------------
John M. Stainbrook,
President and Chief Executive Officer
Indianapolis, Indiana
October 18, 2000
IT IS IMPORTANT THAT THE PROXIES BE EXECUTED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, WE URGE
YOU TO SIGN, DATE AND PROMPTLY MAIL YOUR PROXY CARD IN THE ENCLOSED ENVELOPE OR
VOTE YOUR SHARES BY TELEPHONE OR THE INTERNET.
<PAGE>
[UAC LOGO}
250 North Shadeland Avenue
Indianapolis, Indiana 46219
(317) 231-6400
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
November 14, 2000
This Proxy Statement is being furnished to the holders of Class A
Common Stock, without par value (the "Class A Common Stock"), and to the holders
of Class B Common Stock, without par value (the "Class B Common Stock") of Union
Acceptance Corporation (the "Company"), an Indiana corporation, in connection
with the solicitation of proxies by the Board of Directors of the Company to be
voted at the Annual Meeting of Shareholders to be held at 10:00 A.M.,
Indianapolis time, on November 14, 2000, at the Company's headquarters located
at 250 North Shadeland Avenue, Indianapolis, Indiana, and at any adjournment of
such meeting. This Proxy Statement is expected to be mailed to shareholders on
or about October 18, 2000.
The proxy solicited hereby, if properly executed and not revoked prior to
its use, will be voted in accordance with the instructions contained therein. If
no contrary instructions are given, each proxy received will be voted for each
of the matters described below and, upon the transaction of such other business
as may properly come before the meeting, in accordance with the best judgment of
the persons appointed as proxies.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company (250
North Shadeland Avenue, Indianapolis, Indiana 46219) written notice thereof,
(ii) submitting a duly executed proxy bearing a later date, or (iii) by
appearing at the Annual Meeting and giving the Secretary notice of his or her
intention to vote in person. Proxies solicited hereby may be exercised only at
the Annual Meeting and any adjournment thereof and will not be used for any
other meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on September 8,
2000 (the "Voting Record Date"), will be entitled to vote at the Annual Meeting.
On the Voting Record Date, there were 5,816,024 shares of the Class A Common
Stock and 7,461,608 shares of Class B Common Stock issued and outstanding, and
the Company had no other class of equity securities outstanding. Each share of
Class A Common Stock is entitled to one vote and each share of Class B Common
Stock is entitled to five votes at the Annual Meeting in respect of the election
of directors. On all other matters to be presented at the Annual Meeting, each
share is entitled to one vote.
The following table sets forth certain information regarding the
beneficial ownership of the Class A Common Stock and Class B Common Stock as of
the Voting Record Date, by each person who is known by the Company to own
beneficially 5% or more of either Class A Common Stock or Class B Common Stock.
Unless otherwise indicated, based on information furnished by such owners, the
named beneficial owners have sole voting and dispositive power with respect to
the shares reported, subject to community property laws where applicable.
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Shares of Shares of Percentage Percentage
Class A Class B of Voting of Voting
Common Stock Percentage Common Stock Percentage of Power (3) Power (4)
Name and Address Beneficially of Class A Beneficially Class B In Election In Other
of Beneficial Owner Owned Common Stock (1) Owned Common Stock (2) of Directors Matters
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Waterfield (5) (6) (7) (8) 83,520 1.44% 7,003,008 93.85% 81.39% 53.37%
Waterfield Mortgage Company, Incorporated
7500 W. Jefferson Boulevard
Fort Wayne, IN 46804
Rhinehart Family Partnership, L.P. (9) --- --- 1,748,097 23.43% (3) (4)
11409 Creekwood Drive
Fort Wayne, IN 46804-9051
Elizabeth W. Chapman (10) (11) 2,567 0.04% 1,210,885 16.23% (3) (4)
c/o Barrett & McNagny
215 East Berry Street, P.O. Box 2263
Fort Wayne, IN 46801-2263
Frances W. LeMay (11) (12) 2,567 0.04% 427,041 5.72% 4.95% 3.24%
c/o Barrett & McNagny
215 East Berry Street, P.O. Box 2263
Fort Wayne, IN 46801-2263
John M. Eggemeyer, III (13) (14) 1,551,558 26.68% --- --- 3.60% 11.69%
6051 El Tordo
Rancho Santa Fe, CA 92067
William J. Ruh (13) (15) 1,506,808 25.91% --- --- 3.49% 11.35%
6051 El Tordo
Rancho Santa Fe, CA 92067
Monarch Capital Management, Inc. (13) 635,557 10.93% --- --- 1.47% 4.79%
127 W. Berry Street, Suite 402
Fort Wayne, IN 46802
Fifth Third Bancorp (13) 513,400 8.83% --- --- 1.19% 3.87%
38 Fountain Square Plaza
Cincinnati, OH 45263
Michael G. & Shelley L. Stout (16) 375,770 6.46% --- --- 0.87% 2.83%
609 Hampshire Court
Carmel, IN 46032
Susan Lee Hanzel (13) 331,857 5.71% --- --- 0.77% 2.50%
4612 Craftsbury Circle
Fort Wayne, IN 46818
Dimensional Fund Advisors Inc. (13) 296,400 5.10% --- --- 0.69% 2.23%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
-------------------------------
</TABLE>
(1) Based upon 5,816,024 shares of Class A Common Stock outstanding.
(2) Based upon 7,461,608 shares of Class B Common Stock outstanding. Shares of
Class B Common Stock convert automatically on a share for share basis into
shares of Class A Common Stock upon transfer.
(3) Based upon one vote for each of the 5,816,024 shares of Class A Common
Stock outstanding and five votes per share for each of the 7,461,608 shares
of Class B Common Stock outstanding in respect to the election of
directors. Shares beneficially owned by persons for whom no voting power is
indicated are held in the Voting Trust described below in note 6.
(4) Based upon one vote for each of the 5,816,024 shares of Class A Common
Stock outstanding and one vote per share for each of the 7,461,608 shares
of Class B Common Stock outstanding in respect to all matters voted upon
excluding the election of directors. Shares beneficially owned by persons
for whom no voting power is indicated are held in the Voting Trust
described below in note 6.
(5) Includes 10,320 shares of restricted Class A Common Stock issued to
non-employee directors pursuant to the Incentive Stock Plans.
(6) Includes 3,510,185 shares of Class B Common Stock beneficially owned by Mr.
Waterfield and held of record by a voting trust created under agreement
dated as of June 10, 1994, as amended (the "Voting Trust"), of which
433,821 shares are owned beneficially by a limited partnership of which Mr.
Waterfield is General Partner. Also includes 3,486,023 additional shares of
Class B Common Stock held by Mr. Waterfield as trustee of the Voting Trust,
which additional shares are owned beneficially by Elizabeth W. Chapman,
Frances W. LeMay, Rhinehart Family Partnership, L.P., Jerry D. Von Deylen,
Donald A. Sherman, and certain family members of Mr. Waterfield and the
foregoing persons. The term of the Voting Trust expires in June 2004.
(7) Includes 1,000 shares of Class A Common Stock and 6,800 shares of Class B
Common Stock held in a limited partnership of which Mr. Waterfield is
General Partner.
(8) Includes 2,567, 2,567 and 29,066 shares of Class A Common Stock controlled
by Frances W. LeMay, Elizabeth W. Chapman and Richard D. Waterfield,
respectively, which are held of record by Waterfield Foundation, Inc., of
which Mr. Waterfield is an officer and director. Mr. Waterfield disclaims
beneficial ownership of such shares.
(9) Held of record by the Voting Trust described above in note 6.
(10) Ms. Chapman owns indirectly all 1,210,885 shares of Class B Common Stock
held of record by the Voting Trust described above in note 6.
(11) Includes 2,567 and 2,567 shares of Class A Common Stock controlled by Ms.
Chapman and Ms. LeMay, respectively, and held of record by the Waterfield
Foundation Inc., of which shares Ms. Chapman and Ms. LeMay disclaim
beneficial ownership.
(12) Ms. LeMay owns indirectly all 427,041 shares of Class B Common Stock held
of record by the Voting Trust described above in note 6.
(13) Based solely on the shareholder's report on Form 13D, Form 13F or Form 13G.
(14) Per Form 13D filing received by the Company, 1,501,558 shares of Class A
Common Stock held of record by various entities in which Mr. Eggemeyer is a
partner or officer, with an additional 50,000 shares of Class A Common
Stock owned by Mr. Eggemeyer.
(15) Per Form 13D filing received by the Company, 1,501,558 shares of Class A
Common Stock held of record by various entities in which Mr. Ruh is a
partner or officer, with an additional 5,250 shares of Class A Common Stock
owned by members of Mr. Ruh's family.
(16) Sycamore Creek, LLC, of which Mr. Stout is a director, holds 320,000 shares
of Class A Common Stock. Members of Mr. Stout's family hold an additional
55,770 shares of Class A Common Stock.
<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
The Board of Directors has eight members. In April 2000, the Board of
Directors increased the number of directors from seven to eight upon the
appointment of Michael G. Stout to the Board. In addition, Fred M. Fehsenfeld,
Jr. will retire from the Board of Directors in October 2000. John M. Eggemeyer,
III has been nominated for election at the Annual Meeting to fill the resulting
vacancy. The Company's Articles of Incorporation provide that members of the
Board of Directors are to be elected for a term of one year and until their
successors are elected and qualified. The nominees for director are John M.
Davis, John M. Eggemeyer, III, Donald A. Sherman, John M. Stainbrook, Michael G.
Stout, Jerry D. Von Deylen, Richard D. Waterfield, and Thomas M. West. Each of
the nominees (with the exception of John M. Eggemeyer, III as herein discussed)
is a current director of the Company. If elected by the shareholders at the
Annual Meeting, the terms of the nominees will expire at the 2001 Annual Meeting
of Shareholders.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of the nominees listed below. If any
person named as a nominee should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxy holders will nominate and vote for a
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the nominees listed below may not be
able to serve as directors if elected.
The following table sets forth certain information regarding the nominees
for election as a director, including the number and percent of shares of Class
A Common Stock and Class B Common Stock beneficially owned by such persons as of
the Voting Record Date. The table also sets forth the number of shares of Class
A Common Stock and Class B Common Stock beneficially owned by certain executive
officers of the Company and by all directors and certain executive officers of
the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Number of Shares
of Class A Common Percentage of of Class B Common Percentage of
Name and Address Director of Stock Beneficially Class A Stock Beneficially Class B
of Beneficial Owner Company Since Owned Common Stock (1 Owned Common Stock (2)
-----------------------------------------------------------------------------------------------------------------------------------
Nominee:
<S> <C> <C> <C> <C> <C>
John M. Davis (3) 1994 16,983 0.29% --- ---
John M. Eggemeyer, III N/A 1,551,558 26.68% --- ---
Donald A. Sherman (4) 1994 218,427 3.76% 50,000 0.67%
John M. Stainbrook (6) 1994 130,537 2.24% --- ---
Michael G. Stout 2000 375,770 6.46% --- ---
Jerry D. Von Deylen (6)(9) 1994 118,620 2.04% 155,790 2.09%
Richard D. Waterfield (3)(5)(7)(8) 1994 83,520 1.44% 7,003,008 93.85%
Thomas M. West (3) 1994 47,920 0.82% --- ---
Other Executive Officers:
David S. Nash (6) 54,816 0.94% --- ---
Chief Credit Officer and Vice President
Rick A. Brown (6) 32,100 0.55% --- ---
Chief Financial Officer and Treasurer
Maureen A. Schoch (6) 30,784 0.53% --- ---
Chief Operations Officer and Assistant Secretary
Timothy I. Shaw 21,293 0.37%
Chief Information Officer
All directors and executive officers as a group 2,682,328 46.12% 7,108,798 95.27%
(12 persons)
________________________________
</TABLE>
(1) Based upon 5,816,024 shares of Class A Common Stock outstanding and options
exercisable by above officers and directors within 60 days.
(2) Based upon 7,461,608 shares of Class B Common Stock outstanding. Shares of
Class B Common Stock convert automatically on a share for share basis into
shares of Class A Common Stock upon transfer.
(3) Includes 10,320 shares of restricted Class A Common Stock issued to
non-employee directors pursuant to the Incentive Stock Plans.
(4) Includes 8,427 shares of restricted Class A Common Stock issued to
non-employee directors pursuant to the Incentive Stock Plans.
(5) Includes 3,510,185 shares of Class B Common Stock beneficially owned by Mr.
Waterfield and held of record by a voting trust created under agreement
dated as of June 10, 1994, as amended (the "Voting Trust"), of which
433,821 shares are owned beneficially by a limited partnership of which Mr.
Waterfield is General Partner. Also includes 3,486,023 additional shares of
Class B Common Stock held by Mr. Waterfield as trustee of the Voting Trust,
which additional shares are owned beneficially by Elizabeth W. Chapman,
Frances W. LeMay, Rhinehart Family Partnership, L.P., Jerry D. Von Deylen,
Donald A. Sherman, and certain family members of the foregoing persons. The
term of the Voting Trust expires in June 2004.
(6) Includes options for 68,500, 98,620, 24,816, 24,900, 24,984 and 19,293
shares of Class A Common Stock granted to Mr. Stainbrook, Mr. Von Deylen,
Mr. Nash, Mr. Brown, Ms. Schoch and Mr. Shaw, respectively, under the
Incentive Stock Plan which are currently exercisable in accordance with
their terms. Does not include shares of Class A Common Stock reserved for
issuance upon exercise of other options granted to such individuals which
are not exercisable within 60 days.
(7) Includes 1,000 shares of Class A Common Stock and 6,800 shares of Class B
Common Stock held in a limited partnership of which Mr. Waterfield is
General Partner.
(8) Includes 2,567, 2,567 and 29,066 shares of Class A Common Stock controlled
by Frances W. LeMay, Elizabeth W. Chapman and Richard D. Waterfield,
respectively, which are held of record by Waterfield Foundation, Inc., of
which Mr. Waterfield is an officer and director. Mr. Waterfield disclaims
beneficial ownership of such shares.
(9) Includes 97,468 shares of Class B Common Stock held by Union Federal Bank
of Indianapolis as custodian for Mr. Von Deylen's individual retirement
account, of which 50,000 shares are held of record by the Voting Trust.
<PAGE>
Mr. Von Deylen (age 58) was appointed Chairman of the Board of the Company
upon its formation. He has served as President of Union Federal Bank of
Indianapolis (formerly Union Federal Savings Bank of Indianapolis) ("Union
Federal") since 1987 and was appointed Chairman of the Board. Mr. Von Deylen
joined Union Federal as a Director and Executive Vice President in 1984, after
participating in the acquisition of Union Federal Savings and Loan Association
by an affiliate of Waterfield Mortgage Company, Incorporated ("WMC"), for which
he served as Controller from 1983-1984. Between 1963 and 1983, Mr. Von Deylen
held positions with First Federal Savings and Loan of Ft. Wayne, Indiana,
including Vice President and Treasurer. Mr. Von Deylen also holds positions with
various affiliates of Union Federal and WMC.
Mr. Stainbrook (age 52) was named President of the Company upon its
formation, was appointed to the Board of Directors in May 1994 and was appointed
Chief Executive Officer in 1998. Beginning January 1986, he served as the Senior
Vice President of Union Federal's Consumer Lending Department, where he held
primary management and budgetary authority with respect to the indirect retail
automobile financing operations of Union Federal. Before coming to Union Federal
in 1986, Mr. Stainbrook was Vice President of Indirect Lending for Merchants
National Bank and Trust Company of Indianapolis, Indiana (now National City
Bank, Indiana) for fifteen years, working primarily in the area of indirect
consumer lending.
Mr. Waterfield (age 55) served as Chairman of Union Federal from September
1984 to May 1999. Mr. Waterfield also served as Chairman of WMC, a mortgage
banking company and parent of Union Federal, from 1980 to May 1999. Mr.
Waterfield now serves as Vice Chairman of WMC, is a director of Union Federal,
and also holds positions with various affiliates of those entities. He has been
a director of the Company since its formation.
Mr. Davis (age 48) has served as Vice President, General Counsel and
Secretary of IWC Resources Corporation ("IWC") and its subsidiary, the
Indianapolis Water Company since July 1993. IWC is a subsidiary of NISOURCE,
Inc., a publicly traded utility holding company. He also serves as a director of
Waterway Holdings, Inc., another subsidiary of IWC, and the Indiana Railroad
Company, a subsidiary of CSX Transportation Company. He was previously a tax
partner at KPMG Peat Marwick LLP (now KPMG LLP), Indianapolis, from June 1974 to
June 1993. He has been a director of the Company since June 1994.
Mr. Eggemeyer (age 54) has been nominated to serve on the Company's Board
of Directors. He has over thirty years of banking and investment banking
experience having served as a senior executive of organizations such as First
Chicago, Norwest, Chase, U.S. Bancorp and Drexel Burnham. Mr. Eggemeyer
currently serves as Chief Executive Officer of Castle Creek Capital, LLC and
Castle Creek Financial, LLC (formerly Belle Plaine Financial, LLC) which he
co-founded in 1995. Mr. Eggemeyer also serves as a director for TCF Financial
Corporation and First Community Bancorp.
Mr. Fehsenfeld (age 49) was named to the Company's Board of Directors in
June 1994. Since 1989, he has served as managing trustee of the Heritage Group,
a family-owned holding company with interests in road construction,
environmental management, oil refining and aggregate production.
Mr. Sherman (age 49) has served on the Company's Board of Directors since
its formation. He has served as Executive Vice President of Union Federal since
July 1990, has served on its board of directors since September 1984 and was
appointed Vice Chairman in 1999. Mr. Sherman is President, CEO and Chairman of
WMC. He holds positions with various other affiliates of Union Federal and WMC
and also serves as a director for Pursell Industries, Inc., a manufacturer and
distributor of lawn and garden fertilizers.
Mr. Stout (age 44) was named to the Company's Board of Directors in April
2000. Since 1997, he has served as a director of Numismatic Funding, LLC, and
Coastal Credit, LLC, companies involved in the commercial and auto finance
industries, respectively. In addition, Mr. Stout is a director of Ballard
Petroleum, LLC, an independent Rocky Mountain oil and gas exploration company.
He was previously a Managing Director at Donaldson, Lufkin and Jenrette.
Mr. West (age 60) was named to the Company's Board of Directors in June
1994 and has been a member of the board of directors of Union Federal since
April 1992. Mr. West served for over thirty years in various management and
executive positions with Lincoln National Reinsurance Cos. and its affiliates,
most recently serving as President and Chief Executive Officer of Lincoln
National Reinsurance Cos. until late 1994. Mr. West serves as President of West
Consult Corp., a privately-owned investment and consulting company. In March
1999, Mr. West was appointed Chairman, CEO and President of the General &
Cologne Life RE of America. From September 1997 through March 1999, Mr. West was
a director and officer of certain funding and securitization subsidiaries of the
Company.
<PAGE>
Mr. Nash (age 37) was named Vice President-Lending Operations of the
Company upon its formation and was appointed Chief Credit Officer in 1998. Mr.
Nash joined Union Federal in 1988 as a sales representative. He also served as
Assistant Vice President-Dealer Banking and Vice President-Dealer Banking.
Between 1986 and 1988, Mr. Nash worked as a field/sales representative for Pat
Ryan & Associates, in which capacity he worked with retail automobile dealers to
improve sales techniques and profitability, especially in their finance and
insurance departments.
Mr. Brown (age 37) was named Treasurer and Chief Financial Officer of the
Company upon its formation and also serves as a Vice President of the Company. A
certified public accountant, Mr. Brown served as Assistant Controller for Union
Federal since coming to the bank in 1990. From 1988 to 1990, he was a senior
auditor for Greenwalt Sponsel & Co., Inc., an accounting firm in Indianapolis,
Indiana. Mr. Brown worked for Ernst and Young LLP, formerly Arthur Young & Co.,
from 1986 to 1988 as both a staff assistant and a senior auditor.
Ms. Schoch (age 39) was named Vice President of Operations and Servicing of
the Company upon its formation, was named Assistant Secretary during 1994, and
was appointed Chief Operations Officer in 1998. In May 1986 she joined Union
Federal as Senior Operations Assistant. She also served as Assistant Manager of
Direct Lending, Internal Loan Review Manager and Assistant Vice President of
Operations and Servicing. From 1984 until 1986, she was employed at Merchants
National Bank and Trust Company of Indianapolis, Indiana (now National City
Bank, Indiana) in their indirect lending area.
Mr. Timothy I. Shaw (age 36) was named Vice President of Management
Information Systems ("MIS") of the Company upon its formation. He was appointed
Chief Information Officer of the Company in 1998. Mr. Shaw joined Union Federal
in December 1990 as a Systems Developer. He also served as Assistant Vice
President of MIS for Union Federal responsible for company-wide MIS operations.
Mr. Shaw was the head of Systems Design for DNA Software Company from 1989 to
1990 and worked for Kimmerling, Myers & Co. from 1986 to 1989, where he was
responsible for their MIS division beginning in 1987.
THE DIRECTORS SHALL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES CAST AT
THE ANNUAL SHAREHOLDER MEETING.
<PAGE>
Meetings and Committees of the Board of Directors
During the fiscal year ended June 30, 2000, the Board of Directors of the
Company met five times, including teleconferences, in addition to taking a
number of actions by unanimous written consent. During fiscal 2000, no incumbent
director of the Company attended fewer than 75% of the aggregate of the total
number of Board meetings and the total number of meetings held by the committees
of the Board of Directors on which he served.
The Company's Audit Committee is responsible for: recommending the
appointment of the Company's independent accountants, reviewing quarterly and
annual earnings releases, meeting with the independent accountants to outline
the scope and review the results of the annual audit, and reviewing with the
internal auditor the systems of internal control and audit reports. The current
members of this committee are Messrs. Davis, Sherman and West. The Committee met
five times, including teleconferences, during fiscal 2000. In accordance with
the new rules adopted in December 1999 by the Securities and Exchange
Commission, the National Association of Securities Dealers, and the Auditing
Standards Board, the Company's Board of Directors adopted a restated audit
committee charter in April 2000.
The Compensation Committee of the Board of Directors is comprised of
Messrs. Davis, Fehsenfeld and Waterfield. The Committee recommends employee
compensation, benefits and personnel policies to the Board of Directors and
establishes for Board approval salary and cash bonuses for senior officers. The
Compensation Committee also administers the Union Acceptance Corporation 1994
Incentive Stock Plan ("1994 Plan") and Union Acceptance Corporation 1999
Incentive Stock Plan ("1999 Plan") and has certain responsibilities for the
Company's bonus plan for senior officers of the Company. During fiscal 2000, the
Compensation Committee held two meetings and took other actions by written
consent.
Management Remuneration and Related Transactions
Report of the Compensation Committee:
The objectives of the Compensation Committee with respect to executive
compensation are the following:
(1) Provide compensation opportunities generally comparable to those
offered by other similarly situated companies to ensure the Company's
ability to attract and retain talented executives who are essential to
the Company's long-term success;
(2) Reward executive officers based upon their ability to achieve
short-term and long-term strategic goals and objectives and to enhance
shareholder value; and
(3) Align the interests of the executive officer with the long-term
interests of shareholders by granting stock options which will become
more valuable to the executives as the value of the Company's shares
increases.
At present, the Company's executive compensation program is comprised of
base salary, annual incentive bonuses and long-term incentive opportunities
provided in the form of stock options. Annual incentive bonuses are tied to the
Company's financial performance during the fiscal year and the executive's
individual performance, and stock options have a direct relation to long-term
enhancement of shareholder value. In years in which the Company's performance
goals are met or exceeded, executive compensation should tend to be higher than
in years in which performance is below expectations.
Base Salary. The base salary levels of the Company's executive officers,
including Mr. Stainbrook's, are intended to be generally comparable to those
offered to executives holding similar positions within WMC and affiliated
entities, with a particular view to parameters of salaries paid to executives
with similar talent and experience in similarly situated finance companies. In
determining base salaries, including Mr. Stainbrook's, the Compensation
Committee also takes into account individual performance and experience.
<PAGE>
Bonus Plan. In fiscal 1998, the Compensation Committee authorized a bonus
plan for the executive officers (other than Mr. Von Deylen). Such plan provides
for a bonus factor for each officer to be applied to the amount by which return
on equity exceeds a targeted level. The Company keeps an accounting of each
officer's earned bonus amount. After each fiscal quarter, 25% of the officer's
positive account balance is paid to the officer as bonus and the balance is
deferred on an unfunded basis with interest. At the end of the fiscal year, 100%
of the officer's positive account balance is paid to the officer as a bonus. Any
positive balance will be paid if the officer leaves the Company, but is subject
to forfeiture if the officer is employed by a competitor or is terminated for
cause. The Committee believes this arrangement helps to serve the objective of
retaining senior management.
In addition, to reward extraordinary individual performance, the
Compensation Committee authorized Mr. Stainbrook to allocate to other senior
officers and management employees, a discretionary performance-based bonus fund
of $100,000 for fiscal 2000, a portion of which was allocated to each of Mr.
Nash, Mr. Brown, Ms. Schoch and Mr. Shaw, among others.
Mr. Von Deylen is compensated by an annual bonus payment equal to 1.5% of
the Company's net earnings. Mr. Von Deylen did not receive any regular salary
nor any director compensation during fiscal 2000.
Stock Options and Restricted Stock. The Union Acceptance Corporation 1994
Incentive Stock Plan ("1994 Plan") and the Union Acceptance Corporation 1999
Incentive Stock Plan ("1999 Plan") are the Company's long-term incentive plans
for directors, executive officers and other key employees. The objectives of the
1994 and 1999 Plans are to align executive and shareholder long-term interests
by creating a strong and direct link between executive compensation and
shareholder return, and to enable executive officers and other key employees to
develop and maintain a significant long-term ownership position in the Company's
Class A Common Stock. The 1994 and 1999 Plans authorize the Compensation
Committee to award executive officers and other key employees incentive and
non-qualified stock options and restricted shares of Class A Common Stock.
A total of 500,000 shares and 600,000 shares of Class A Common Stock have
been reserved for issuance under the 1994 Plan and 1999 Plan respectively, of
which options for 474,115 shares of Class A Common Stock were granted to senior
officers and other management employees through fiscal 2000 as follows: Mr. Von
Deylen, 143,750; Mr. Stainbrook, 87,500; Mr. Nash, 27,500; Mr. Brown, 26,000;
Ms. Schoch, 24,500; Mr. Shaw, 11,750; and 94 other officers and key employees as
a group, 153,115. In addition, each of the non-employee directors of the Company
was awarded 937 shares of restricted Class A Common Stock under the Incentive
Stock Plan upon consummation of the Company's initial public offering, and a
total of 9,383 shares at the Company's subsequent Annual Meetings. Mr.
Stainbrook's and Mr. Von Deylen's stock option grants have been determined in
order to create a substantial incentive of both executives to work toward the
continued success of the Company and in recognition of the important leadership
role each has played and will continue to play in the establishment and
development of the Company.
Employee Stock Purchase Plan. In February 2000, the Company's Board of
Directors approved the Union Acceptance Corporation Employee Stock Purchase Plan
("Stock Purchase Plan"). The Stock Purchase Plan provides a means for employees
to purchase shares of Class A Common Stock at market prices current at the time
of purchase through regular payroll deductions. As an additional benefit, the
Company will contribute an amount equal to 10% (subject to change at the
discretion of the Company's directors) of the employee's payroll deductions.
To date, the Compensation Committee has not taken steps to cause the
Company's executive compensation arrangements to accommodate the provisions of
Section 162(m) of the Internal Revenue Code of 1986, as amended, which limit the
deductibility of an executive's compensation to $1 million annually, because it
does not presently anticipate that any executive officer's remuneration will
exceed $1 million per year. Both the 1994 and 1999 Plans have been structured so
that option awards should qualify as performance-based compensation excluded
from the $1 million limit.
<PAGE>
The Compensation Committee believes that linking executive compensation
generally to corporate performance results in better alignment of compensation
with corporate goals and the interest of the Company's shareholders. As
performance goals are met or exceeded, most probably resulting in increased
value to shareholders, executives are appropriately rewarded. The Committee
believes that compensation levels for the year ended June 30, 2000, for
executives, and for Mr. Stainbrook in particular, adequately reflect the
Company's compensation goals and policies.
Compensation
Committee Members
John M. Davis
Fred M. Fehsenfeld, Jr.
Richard D. Waterfield
Compensation Committee Interlocks and Insider Participation. During fiscal
2000, the directors named above were the members of the Compensation Committee
of the Board of Directors. No members of the Compensation Committee have any
interlocks required to be reported.
Remuneration of Named Executive Officers.
The following table sets forth for each of the Company's last three
fiscal years information with respect to the Company's Chief Executive Officer
and the four most highly compensated individuals serving as an executive officer
whose aggregate salary and bonus for fiscal year 2000 exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
ANNUAL COMPENSATION
LONG TERM
FISCAL COMPENSATION AWARDS ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) COMPENSATION ($) (1)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John M. Stainbrook 2000 340,000 252,000 9,000 5,800
Chief Executive Officer and President 1999 325,000 205,000 - 7,400
1998 300,000 - 10,000 6,700
David S. Nash 2000 205,000 87,000 7,500 5,800
Chief Credit Officer and Vice President 1999 195,000 55,000 - 7,400
1998 170,000 - 5,000 6,600
Rick A. Brown 2000 185,000 90,000 6,000 5,600
Chief Financial Officer and Treasurer 1999 175,000 55,000 - 7,200
1998 150,000 - 5,000 6,300
Maureen A. Schoch 2000 175,000 87,000 4,500 5,800
Chief Operations Officer and 1999 150,000 55,000 - 6,100
Assistant Secretary 1998 125,000 - 5,000 3,600
Jerry D. Von Deylen 2000 - 256,000 5,000 -
Chairman 1999 - 215,000 25,000 -
1998 50,000 - 10,000 -
</TABLE>
(1) Represents the Company's 25% match up to 6% of employee deferrals of
currently earned income into the Waterfield Plan, and any discretionary
profit sharing contributions made by the Company to the Waterfield Plan.
<PAGE>
Incentive Stock Plans
The 1994 Plan was approved by Union Federal as the Company's sole
shareholder in June, 1994, prior to the Company's initial public offering, and
the 1999 Plan was approved by the Company's shareholders at the 1999 Annual
Meeting of Shareholders. The amendment to the 1999 Plan increasing the shares
authorized for issuance thereunder by 300,000 will be presented to shareholders
for approval at the 2000 Annual Meeting. Options or other grants to be received
by executive officers or other employees in the future are within the discretion
of the Compensation Committee. Stock options granted under the 1994 and 1999
Plans are exercisable at such times (not after ten years and one day from the
date of the grant) and at such exercise prices (not less than 85% of the fair
market value of the Class A Common Stock at date of grant) as the Committee
determines and will, except in limited circumstances, terminate if the grantee's
employment terminates prior to exercise.
The following table sets forth information related to options granted
during the fiscal year ended June 30, 2000, to each of the executive officers
identified in the summary compensation table above.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
----------------------------------------------------------------------------------------------
Potential Realized
Value at Assumed
Individual Grants Annual Rates of
--------------------------------------------------------------------- Stock Price Appreciation
% of Total for Option Term
Options Granted Exercise Price ------------------------
Name Options Employees in Per Share Expiration 5% 10%
Name Granted Fiscal Year ($/Share) Date
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John M. Stainbrook (1) 9,000 15.1% $ 7.0000 08/17/09 $ 39,620 $ 100,406
Jerry D. Von Deylen (1) 5,000 8.4% $ 7.0000 08/17/09 $ 22,011 $ 55,781
David S. Nash (2) 7,500 12.6% $ 7.0000 08/17/09 $ 33,017 $ 83,671
Rick A. Brown (2) 6,000 10.1% $ 7.0000 08/17/09 $ 26,414 $ 66,937
Maureen A. Schoch (2) 4,500 7.6% $ 7.0000 08/17/09 $ 19,810 $ 50,203
</TABLE>
(1) Mr. Stainbrook's and Mr. Von Deylen's options become exercisable in full on
the third and fifth anniversary, respectively, of the date of the option
grant.
(2) Options become exercisable in 20% increments on each of the first through
fifth anniversaries of the date of the option grant.
The following table sets forth the number of shares covered by both
exercisable and unexercisable stock options held by the individuals named above
as of June 30, 2000. As indicated below, none of such options were
"in-the-money" options (options whose exercise price is lower than the market
value of the shares) as of such date.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Number of Shares Underlying Value of Unexercised
Unexercised Option In-the-Money Options (2)
Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John M. Stainbrook (1) 54,000 33,500 - -
Jerry D. Von Deylen (1) 78,932 64,818 $ - $ -
David S. Nash 13,500 14,000 - -
Rick A. Brown 13,500 12,500 - -
Maureen A. Schoch 13,500 11,000 - -
</TABLE>
(1) Approximately one-half (44%) of Mr. Stainbrook's options and one-half (50%)
of Mr. Von Deylen's options are non-qualified stock options.
(2) Based on market value of the Class A Common Stock of $4.59 per share at
June 30, 2000.
<PAGE>
Defined Contribution Plan
Eligible employees of the Company, including its executive officers,
currently may participate in the Waterfield Group Savings and Investment Plan, a
401(k) profit-sharing plan ("Waterfield Plan"). Under the Waterfield Plan, each
participant is entitled to receive a matching contribution from the Company in
an amount equal to 25% of the first 6% of the participant's own pre-tax
contribution. In addition to the employer matching amounts, the Company may make
discretionary profit-sharing contributions to the Waterfield Plan from time to
time.
Compensation of Directors
The 1994 and 1999 Plans provide that each director of the Company who is
not also an executive officer is automatically granted shares of Class A Common
Stock with a fair market value of $15,000 following each annual meeting of
shareholders. The 1999 Plan also provides for such automatic grants to the
extent shares available under the 1994 Plan are exhausted. Shares so granted
under the 1994 Plan have a six-month period of restriction during which they may
not be transferred. Shares granted under the 1999 Plan are not be subject to
such restriction.
In addition to the annual grants of shares, the Company's non-employee
directors are paid $8,000 per year plus $500 per board or committee meeting
(plus $300 for any meeting date requiring out of town travel) and $250 for any
substantive telephonic committee meeting. They are also eligible for
reimbursement of travel and similar expenses.
Comparative Stock Performance
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the period beginning August 2, 1995 and ending
June 30, 2000, with the cumulative total return on the Nasdaq Stock Market(1),
the Company's peer group(2) for the period beginning August 2, 1995 and ending
June 30, 1999, and the Company's peer group(3) for the period beginning August
2, 1995 and ending June 30, 2000, assuming the investment of $100 in the
Company's Common Stock, the Nasdaq Stock Market and the Company's peer groups on
August 2, 1995, and reinvestment of all dividends. The Company has modified its
peer group for comparative presentation to include AmeriCredit Corp. and to
eliminate Arcadia Financial Ltd. for which data is no longer available because
it has been acquired by another corporation.
UAC PEER GROUP 1 PEER GROUP 2 NASDAQ MARKET
8/2/95 100.00 100.00 100.00 100.00
6/28/96 96.88 124.32 138.89 115.45
6/30/97 65.63 73.46 144.35 139.08
6/30/98 50.00 44.47 177.61 184.35
6/30/99 43.75 62.29 181.91 258.35
6/30/00 28.91 198.30 388.73
(1) The Broad Market Index is the NASDAQ Market Index.
(2) The Peer Group is made up of the following securities: Arcadia Financial
Ltd., ONYX Acceptance Corp., and WFS Financial, Inc.
(3) The Peer Group is made up of the following securities: AmeriCredit Corp.,
ONYX Acceptance Corp., and WFS Financial, Inc.
<PAGE>
Certain Transactions With Related Persons
Union Federal is a federally chartered stock savings bank operating through
offices in Indiana, with total assets of approximately $2.1 billion at June 30,
2000. Jerry D. Von Deylen, Chairman of the Board of Directors of the Company,
has served as President of Union Federal since 1987 and was appointed Chairman
of the Board in 1999. Donald A. Sherman, a director of UAC, serves as Vice
Chairman of the Board. Union Federal is owned by WMC. Based in Fort Wayne,
Indiana, WMC is one of the largest privately-owned mortgage banking companies in
the United States. Donald A. Sherman is President, CEO, Chairman and a
significant shareholder of WMC. Richard D. Waterfield and Jerry D. Von Deylen
are also directors and shareholders of WMC.
Certain Lease Arrangements. The Company's principal offices are located at
250 North Shadeland Avenue, Indianapolis, Indiana (the "Office Building"). The
Office Building is owned by Shadeland Properties, LP, which is controlled by
Richard D. Waterfield and members of his family. The Company has a lease for the
above-referenced property. The lease term is seven years and six months, and
commenced on November 1, 1995 (the "UAC Lease"). The UAC Lease was originally
entered into with WMC. WMC assigned the Office Building and the UAC Lease to
Shadeland Properties, LP during 1999. Under the UAC Lease, the Company is
responsible for taxes, insurance and maintenance expenses and all other
responsibilities relating to the Office Building, as if it were the owner of the
Office Building during the term of the UAC Lease. The lease provides for a
monthly rental payment of $75,943.
The Company has entered into a sublease with Union Federal for 2,155 square
feet of office space located at the Office Building. The sublease has a term of
six years and nine months commencing on August 1, 1996, and provides for a
monthly rental payment of $3,592. The Company remains responsible for all costs
associated with the Office Building under the sublease.
Ongoing Banking and Financial Services. Union Federal provides banking and
related financial services to the Company and its subsidiaries on arm's-length
terms. The Company is one of Union Federal's largest commercial customers. Such
services include, without limitation, checking account services, lockbox
services (including processing of checks and drafts drawn on the Company's
accounts), and wire transfer services. The cost to the Company of these
services, aggregated approximately $491,000 for the fiscal year ended June 30,
2000. In order to comply with Federal thrift regulations, Union Federal provides
such services on terms that are no less favorable to Union Federal than
arm's-length terms between independent parties.
Union Federal and its affiliates continue to originate automobile loans
directly with customers in the ordinary course of its business. The Company
services certain consumer loans for Union Federal and its affiliates for an
annual fee equal to one percent of the principal balance of the loans serviced.
The portfolio of Union Federal loans serviced by the Company consists of fixed
and variable rate loans on mobile homes, boats and autos, which portfolio was
approximately $554,000 at June 30, 2000.
Legal Services. The law firm of Barrett & McNagny regularly provides legal
services to the Company. Fees for legal services paid to Barrett & McNagny
during fiscal 2000 by the Company were approximately $501,000. Howard L.
Chapman, one of the Company's directors until June 1999, is a partner in such
firm. Mr. Chapman's wife, Elizabeth W. Chapman, is the sister of Mr. Waterfield
and a shareholder of the Company.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors proposes the ratification by the shareholders at the
Annual Meeting the appointment of the accounting firm of Deloitte & Touche LLP
("Deloitte & Touche") as independent auditors for the fiscal year ended June 30,
2001.
<PAGE>
On February 25, 1999, the Company notified KPMG LLP that such firm was
dismissed as its independent auditors as of such date. The audit reports of KPMG
LLP on the Company's financial statements for the fiscal years ended June 30,
1998 and 1997 did not contain an adverse opinion or a disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles. The decision to change accountants was approved by the Audit
Committee of the Company's Board of Directors. In connection with the audits of
the Company's financial statements for the fiscal years ended June 30, 1998 and
1997, and in the subsequent interim period through February 25, 1999, there were
no disagreements with KPMG LLP on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures
which, if not resolved to the satisfaction of KPMG LLP, would have caused KPMG
LLP to make reference to the matter in its report.
On March 12, 1999, the Company engaged Deloitte & Touche to audit the
Company's financial statements as of, and for the year ended June 30, 1999. The
decision to appoint Deloitte & Touche was approved by the Audit Committee of the
Board of Directors. Deloitte & Touche was not consulted by the Company as to the
application of accounting principles to a specific completed or proposed
transaction or the type of audit opinion that might be rendered on the Company's
financial statements during the last two fiscal years or subsequent interim
period through March 12, 1999.
A representative of Deloitte & Touche is expected to be present at the
Annual Meeting with the opportunity to make a statement if he so desires. He
will also be available to respond to any appropriate questions shareholders may
have.
RATIFICATION OF THE APPOINTMENT OF AUDITORS REQUIRES THAT THE VOTES CAST
(IN PERSON OR BY PROXY) AT THE ANNUAL MEETING OR AT ANY ADJOURNMENT THEREOF IN
FAVOR OF RATIFICATION EXCEED THOSE CAST AGAINST.
PROPOSAL III - APPROVAL OF AMENDMENT TO THE 1999 INCENTIVE STOCK PLAN
In July 2000, the Company's Board of Directors adopted, subject to
shareholder approval, an amendment to the Union Acceptance Corporation 1999
Incentive Stock Plan ("1999 Plan") increasing the number of shares authorized
under the 1999 Plan from 300,000 to 600,000 shares.
As of June 30, 2000, 265,675 shares remained available under the 1999 Plan
for grant. The Compensation Committee approved an award of stock options to
senior officers, management and other key employees totaling 479,001 shares as
of July 26, 2000. Thus, approval of the amendment as proposed will accommodate
the award of stock options.
Purpose
The purpose of the 1999 Plan is to provide to directors, officers and other
key employees of the Company and its subsidiaries who are materially responsible
for the management or operation of the Company and its subsidiaries and have
provided valuable service to the Company, a favorable opportunity to acquire
Class A Common Stock of the Company, thereby providing them with an increased
incentive to work for the success of the Company and its subsidiaries and better
enabling each entity to attract and retain capable executive personnel.
<PAGE>
Administration
The 1999 Plan is administered by the Compensation Committee of the Board of
Directors. The members of the Committee are designated from time to time by the
Board of Directors. The 1999 Plan also empowers the full Board of Directors and
a Special Option Committee to take action to grant options and awards under the
Plan. The Special Option Committee is a committee of one or more directors
designated by the Board of Directors which may include the Chairman or Chief
Executive Officer; provided that such committee is not empowered to make grants
exceeding 1,000 shares nor grants to any person subject to reporting under
Section 16(a) of the Securities Exchange Act of 1934.
For purposes of determining options and awards under the 1999 Plan, the
Compensation Committee, the full Board of Directors, or the Special Option
Committee are referred to as the "Committee". Consistent with the terms of the
1999 Plan, the Committee selects the individuals to whom options or cash awards
will be granted, determines the time of grant, the number of shares or amount of
any cash awards, the option price, the period during which an option may be
exercised, the extent to which an option is an incentive stock option or a
non-qualified stock option, and any other terms or conditions applicable to
options granted. The Committee has full power to construe and interpret the 1999
Plan, to establish, amend, waive or rescind rules and regulations relating
thereto, to accelerate the vesting of any stock options or cash awards made
under the 1999 Plan, and to amend the terms and conditions of outstanding awards
to the extent such terms and conditions are within the discretion of the
Committee.
Shares Subject to the 1999 Plan
The Company initially reserved 300,000 shares of its Class A Common Stock
for issuance upon exercise of options and restricted share awards granted under
the 1999 Plan, and the 1999 Plan was approved by shareholders at the 1999 Annual
Meeting. In July 2000, the Board of Directors adopted an amendment to the 1999
Plan, subject to shareholder approval, increasing the number of shares reserved
for issuance to 600,000 shares. Shares issued under the 1999 Plan may be
authorized but unissued shares or treasury shares of the Company. In the event
of corporate changes affecting the Company's Class A Common Stock, such as
reorganizations, recapitalizations, stock splits, stock dividends, mergers,
consolidations and liquidations, the Committee may make appropriate adjustments
in the number and kind of shares reserved under the 1999 Plan and in the option
price under, and the number and kind of shares covered by, outstanding options
granted under the 1999 Plan.
Through fiscal 2000, 34,325 options had been granted under the 1999 Plan to
officers and other key employees of the Company. As of July 26, 2000, an
additional 479,001 options were granted (of which 213,326 options were granted
subject to shareholder approval), leaving 86,674 shares available for future
grant assuming the amendment is approved. If any option expires or terminates
for any reason without having been exercised in full, the unpurchased shares
will (unless the 1999 Plan shall have terminated) become available for issuance
under the 1999 Plan.
Eligibility
Awards may be granted under the 1999 Plan to directors, officers and other
key employees of the Company or a subsidiary who, in the opinion of the
Committee, are from time to time materially responsible for the management or
operation of the business of the Company or a subsidiary and have provided
valuable services to the Company or a subsidiary.
<PAGE>
Terms of the Options
Stock Option Price. At the time it grants an option, the Committee sets the
price at which the shares may be purchased upon exercise of the option. The
purchase price to be paid for shares of Class A Common Stock subject to an
incentive stock option must not be less than the fair market value of such
shares on the date on which the option is granted, as determined by the
Committee consistent with the requirements of the Internal Revenue Code of 1986,
as amended (the "Code"). The Committee may not award non-qualified stock options
to eligible employees at a price less than 85% of the fair market value of such
shares on the date of the grant. The option price is subject to adjustment by
the Committee for corporate changes affecting the Company's outstanding shares
of Class A Common Stock.
Option Term. An option shall not be exercisable after the expiration of
such period as shall be fixed by the Committee at the time of the grant thereof,
but such period in no event shall exceed ten years and one day from the date on
which such option is granted; provided, that incentive stock options granted
hereunder shall have terms not in excess of ten years. Options are subject to
earlier termination. Incentive stock options granted to holders of more than 10%
of the combined voting power of all classes of stock of the Company may be
granted at an option price no less than 110% of the market value of the stock on
the date of grant and cannot be exercised beyond five years from the date of
grant.
Exercise of Option. The option price of each share of stock is to be paid
in full at the time of such exercise. Payment may be made in cash. Under certain
circumstances, the 1999 Plan permits optionees to deliver a notice to their
broker to deliver to the Company the total option price in cash and the amount
of any taxes to be withheld from the optionee's compensation as a result of any
withholding tax obligations of the Company. Subject to prior approval by the
Committee, payment of the option price may also be effected by tendering whole
shares of the Company's Class A Common Stock owned by the optionee and cash
having a fair market value equal to the cash exercise price of the shares with
respect to which the option is being exercised. Options may be exercisable in
full at any time during their term or in such installments, on a cumulative
basis, as the Committee may determine, except that no option may be exercised at
any time as to fewer than 100 shares unless the exercise is with respect to an
entire residue of fewer than 100 shares.
Termination of Options. Except as provided below or as otherwise provided
by the Committee in an option agreement, upon termination of an optionee's
employment by the Company, all rights under any options granted to him but not
yet exercised terminate thirty days after the optionee ceases to be an employee
of the Company or any of its subsidiaries. If an optionee retires pursuant to
any then existing pension plan of the Company, he may exercise any option
granted to him in whole or in part within three months after his retirement
whether or not the option was otherwise exercisable by him at his date of
retirement. If an optionee's employment by the Company terminates by reason of
permanent and total disability, he may exercise any option granted to him in
whole or in part within one year after such termination of employment, whether
or not the option was otherwise exercisable by him at the time of such
termination of employment. If the optionee dies while employed by the Company or
its subsidiaries, within three months after his retirement, or within one year
after his termination of employment because of permanent and total disability,
his option may be exercised by his estate or by the person or persons entitled
thereto by will or by the applicable laws of descent or distribution at any time
within one year after the date of such death, whether or not the option was
otherwise exercisable by the optionee at the date of his death. Notwithstanding
the foregoing, in no event may any option be exercised after the expiration of
the option term set by the Committee.
<PAGE>
In the case of an option granted to a non-employee director, unless an
earlier or later date of termination is specified by the Committee, such option
will expire and terminate on the date one year following the optionee's
resignation or removal or other discontinuance of service as a director
(including discontinuance by reason of death); provided that in the event of the
death of such optionee during the one year period following such date, the
option shall be further extended and shall expire and terminate on the first
anniversary of the optionee's date of death.
Nontransferability of Option. Generally, an optionee may not transfer any
options except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules and
regulations thereunder. During the lifetime of an optionee, only the optionee or
his guardian or legal representative may exercise any options granted to him.
Non-qualified stock options may be transferred to members of the optionee's
immediate family, to trusts for the benefit of such immediate family members,
and to trusts for the benefit of the optionee, to the extent permitted by the
stock option agreement between the optionee and the Company.
Maximum Stock Options. The aggregate fair market value of stock with
respect to which incentive stock options are exercisable for the first time by
an optionee during any calendar year may not exceed $100,000. For purposes of
these computations, the fair market value of the shares is to be determined as
of the date the option is granted and computed in the manner determined by the
Committee consistent with the requirements of the Code. This limitation does not
apply to non-qualified stock options granted under the 1999 Plan. In no event
may any person be awarded more than 200,000 shares under the 1999 Plan.
Replacement and Extension of the Terms of Options and Cash Awards
Surrender. The Committee from time to time may permit an optionee under the
1999 Plan or any other stock option plan adopted by the Company or any of its
subsidiaries to surrender for cancellation any unexercised outstanding stock
option and receive in exchange therefor an option for such number of shares of
Class A Common Stock as may be designated by the Committee. Such optionees may
also be granted related cash awards as described in the next paragraph.
Cash Awards. The Committee may, at any time and in its sole discretion,
grant to any optionee who is granted a non-qualified stock option the right to
receive, at such times and in such amounts as determined by the Committee in its
discretion, a cash amount (cash award) which is intended to reimburse the
optionee for all or a portion of the federal, state and local income taxes
imposed upon such optionee as a consequence of the exercise of a non-qualified
stock option and the receipt of a cash award.
<PAGE>
Restricted Share Awards
The Committee may also grant restricted share awards of Class A Common
Stock which entitle awardees to receive shares of Class A Common Stock. Each
restricted share award will be subject to terms and conditions established by
the Committee consistent with the provisions of the 1999 Plan.
At the time of an award of restricted shares, the Committee may establish
for each awardee a period during which, or at the expiration of which, the
restricted shares shall vest. During this "restricted period," the restricted
shares may not be sold, assigned, transferred, pledged or otherwise encumbered
by the awardee, except as otherwise set forth in the 1999 Plan. Subject to the
restrictions set forth in the 1999 Plan, a holder of restricted shares generally
has all the rights of a shareholder including, without limitation, dividend and
voting rights. The Committee has the authority, in its discretion and when
appropriate in light of changes in circumstances or tax law or other laws, to
accelerate the time at which any or all of the restrictions will lapse prior to
the expiration of the restricted period.
If an awardee ceases to be an employee of the Company or ceases to be a
non-employee director of the Company for any reason other than permanent and
total disability or death, unless otherwise determined by the Committee and
except as provided in any restricted share agreement evidencing the award, all
restricted shares awarded to such awardee which remain subject to restrictions
at the time of the cessation of employment or service shall be forfeited and
returned to the Company. However, if an awardee ceases to be an employee of the
Company or a non-employee director by reason of retirement pursuant to Company
plans or policies, the Committee, in its sole discretion, may lift all or a
portion of the restrictions on the restricted shares. Furthermore, unless the
Committee shall have provided in the restricted share agreement evidencing the
award for a ratable lapse of restrictions with respect to the shares during the
restricted period, if the awardee ceases to be an employee of the Company or a
non-employee director by reason of permanent or total disability or death, such
portion of the restricted shares awarded to the awardee which is equal to the
elapsed portion of the restricted period at the time of such cessation of
employment or service shall be free of restrictions and shall not be forfeited.
<PAGE>
Restricted share awards may be evidenced by a restricted share agreement
between the awardee and the Company. The certificate evidencing shares subject
to a period of restriction must bear a restrictive legend set forth in the 1999
Plan and must be deposited with the Company until the lapse of the restrictions.
At the time of an award of restricted shares, the Committee may, in its
discretion, determine that the payment of dividends on such shares to the
awardee shall be deferred (and held by the Company for the account of the
awardee) until the earlier of the lapse of the restrictions on the shares or the
forfeiture of the shares. In this event, interest shall be credited at the end
of the year on the amount of the account existing at the beginning of the year
at a rate determined by the Committee.
The 1999 Plan also continues provision for the automatic grant of shares of
Class A Common Stock to each non-employee director of the Company with a fair
market value of $15,000 upon each non-employee director's re-election at each
annual meeting of shareholders (valued at the fair market value price on the
date of such annual meeting.) Such grants will continue to be made automatically
under the 1999 Plan to the extent shares are no longer available for such
purpose under the 1994 Plan.
Other Provisions. The Committee may provide for such other terms,
provisions and conditions of an option as are not inconsistent with the 1999
Plan. The Committee may also prescribe, amend, waive and rescind rules and
regulations relating to the 1999 Plan, accelerate the vesting of stock options
under the 1999 Plan, and make all other determinations necessary or advisable in
the administration of the 1999 Plan.
Amendment and Termination
The Company's Board of Directors may terminate the 1999 Plan at any time
and no award shall be granted thereafter. Such termination, however, shall not
affect the validity of any award theretofore granted under the 1999 Plan. In any
event, no incentive stock option may be granted under the 1999 Plan after July
1, 2009.
The Company's Board of Directors may amend or modify the 1999 Plan from
time to time, and, with the consent of the optionee, may amend the terms and
provisions of his or her options, or cash awards, except that without the
ratification of the holders of at least a majority of the shares of the Company
voting in person or by proxy at a duly constituted meeting, or adjournment
thereof: (1) the number of shares of stock which may be reserved for issuance
under the 1999 Plan may not be increased except for certain adjustments made in
response to corporate changes (such as recapitalization, stock splits or stock
dividends) that affect the nature of the shares of the Company; and (2) the
class of persons to whom options, restricted shares, or cash awards may be
granted under the 1999 Plan may not be expanded materially. No amendment of the
1999 Plan, however, may, without the consent of the awardees, make any changes
in any outstanding options, restricted shares, or cash awards previously granted
under the 1999 Plan which would adversely affect the rights of such awardees.
Federal Income Tax Consequences
The grant of incentive and a non-qualified stock option under the 1999 Plan
will have no immediate tax consequence to the Company or the optionee. Moreover,
if an incentive stock option is exercised (a) while the employee is employed by
the Company or its subsidiaries, (b) within three months after the optionee
ceases to be an employee of the Company or its subsidiaries, (c) after the
optionee's death, or (d) within one year after the optionee ceases to be an
employee of the Company or its subsidiaries if the optionee's employment is
terminated because of permanent and total disability, the exercise of the
incentive stock option will ordinarily have no federal income tax consequences
to the Company or the optionee. However, the amount by which the fair market
value of the shares at the time of exercise exceeds the option price of the
option will, along with other specified items, be considered taxable income in
the taxable year of the optionee in which the option was exercised for purposes
of determining the applicability of the alternative minimum tax. As a result,
the exercise of an incentive stock option may subject an optionee to an
alternative minimum tax depending on the optionee's particular circumstances.
On the other hand, the recipient of a non-qualified stock option generally
will realize taxable ordinary income at the time of exercise of his option in an
amount equal to the excess of the fair market value of the shares acquired at
the time of such exercise over the option price. A like amount is generally
deductible by the Company for federal income tax purposes as of that date, as
long as the Company includes the amount in the recipient's gross income. The
1999 Plan permits, under certain circumstances, holders of non-qualified stock
options to satisfy their withholding obligation by having shares equal in value
to the applicable withholding taxes withheld from the shares which they would
otherwise receive upon the exercise of a non-qualified stock option.
<PAGE>
Upon the sale of the shares acquired upon the exercise of an incentive
stock option no sooner than two years after the grant of an option and no sooner
than one year after receipt of the shares by the optionee, any capital gain
recognized would be taxed to the optionee at long-term rates. Upon the sale of
shares acquired upon the exercise of an incentive stock option prior to two
years after the grant of an option or prior to one year after receipt of the
shares by the optionee, the optionee will generally recognize, in the year of
disposition, ordinary income equal to the lesser of (a) the spread between the
fair market value of the shares on the date of exercise and the exercise price,
and (b) the gain realized upon the disposition of those shares. The Company will
be entitled to a deduction equal to the amount of income recognized as ordinary
income by the optionee, so long as the Company includes the amount in the
recipient's gross income. If the aforementioned spread is the basis for
determining the amount of ordinary income realized by the optionee, there will
be additional long-term or short-term capital gain realized if the proceeds of
such sale exceed such spread.
Upon the subsequent sale of shares acquired upon exercise of a
non-qualified stock option, the optionholder will recognize long-term capital
gain or loss if the shares are deemed to have been held for more than 12 months,
and short-term capital gain or loss in all other cases. Long-term capital gains
are currently subject to a maximum rate of 20%.
An award of restricted shares under the 1999 Plan would not normally be
included in a optionee's gross income or be deductible by the Company for
federal income tax purposes, as long as the shares granted are subject to
forfeiture in the event a optionee terminates his employment during a period of
restriction and assuming the optionee does not file a special election under
Section 83(b) of the Code to have the shares taxed to him as of the date of
grant. At the time the transfer restrictions lapse, the optionee would be deemed
to have received ordinary income measured by the fair market value of the shares
received at the time of lapse. The Company would be entitled to a federal income
tax deduction at that time in the same amount. Income reporting is required as
though cash compensation has been paid. If the payment of dividends has been
deferred, holders of restricted shares will also recognize ordinary income equal
to their dividends when such payments are received. Except for dividends on
shares as to which a Section 83(b) election has been made, such dividends should
also be deductible by the Company.
Upon a sale of shares after the restrictions lapse, the optionee will
recognize long-term capital gain or loss if the shares are deemed to have been
held for more than 12 months, and short-term capital gain or loss in other
cases.
Recommendation of the Board of Directors
The Board of Directors determined to increase the number of shares under
the 1999 Plan to provide a means to grant additional stock options and awards to
directors, officers and other key employees. The Board of Directors continues to
believe that such equity-based awards provide the most direct link between
management's performance incentive and the interests of shareholders. Thus, the
Board of Directors believes adoption of the 1999 Plan is necessary and
appropriate to provide for the Company's ongoing management compensation
objectives.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE INCREASE
IN SHARES RESERVED UNDER THE 1999 PLAN. AN AMENDMENT TO THE 1999 PLAN REQUIRES
THE FAVORABLE VOTE OF AT LEAST A MAJORITY OF THE VOTING POWER OF THE HOLDERS OF
THE COMPANY'S COMMON STOCK VOTING IN PERSON OR BY PROXY AT THE ANNUAL MEETING,
OR ANY ADJOURNMENT THEREOF.
<PAGE>
SHAREHOLDER PROPOSALS
Any proposal that a shareholder wishes to have presented at the next Annual
Meeting of the Company to be held in 2001 must be received at the main office of
the Company for the inclusion in the proxy statement no later than 120 days in
advance of October 18, 2001. Any such proposal should be sent to the attention
of the Secretary of the Company at 250 North Shadeland, Indianapolis, Indiana
46219.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"1934 Act") requires that the Company's officers and directors and persons who
own more than 10% of the Company's Common Stock file reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC").
Such persons are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely on its review of copies of such filings received by the
Company, and certain representations of executive officers and directors
respecting such matters, the Company believes that, for the fiscal year ended
June 30, 2000, the Company's officers, directors and greater than 10% beneficial
owners timely filed all required reports with the SEC pursuant to Section 16(a)
of the 1934 Act.
OTHER MATTERS
Abstentions, broker non-votes (i.e. where brokers or nominees indicate they
have not received instructions from the beneficial owner or other person
entitled to vote shares with respect to a particular matter) and votes withheld
will be included in the calculation of the presence of a quorum. Abstentions and
broker non-votes are not counted for purposes of the election of directors or
for purposes of approving other actions.
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of Class A Common Stock and Class B Common Stock. In
addition to solicitation by mail, directors, officers, and employees of the
Company may solicit proxies personally or by telephone without additional
compensation.
Each Shareholder is urged to execute the proxy promptly by signing, dating
and returning the enclosed card by mail or by following the telephone or
Internet voting instructions contained with the proxy card.
Insofar as any of the information in this Proxy Statement may rest
peculiarly within the knowledge of persons other than the Company, the Company
relies upon information furnished by others for the accuracy and completeness
thereof.
By Order of the Board of Directors,
\s\John M. Stainbrook
-----------------------------------
John M. Stainbrook,
President and Chief Executive Officer
October 18, 2000
<PAGE>
PROXY UNION ACCEPTANCE CORPORATION PROXY
Proxy Solicited on Behalf of the Board of Directors
For The Annual Meeting of Shareholders-November 14, 2000
The undersigned appoints Rick A. Brown and Leeanne W. Graziani, and each of
them, as proxies, with full power of substitution and revocation, to vote, as
designated on the reverse side hereof, all the shares of Class A Common Stock of
Union Acceptance Corporation which the undersigned has power to vote, with all
powers which the undersigned would possess if personally present, at the Annual
Meeting of Shareholders thereof to be held on November 14, 2000, or at any
adjournment thereof.
Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named and FOR each of the other proposals identified herein. In their
discretion, the proxies are authorized to vote on any other business that may
properly come before the Meeting or any adjournment thereof.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ATTACHED ENVELOPE.
(Continued and to be signed on reverse side.)
- - - - - - - - - - - - - - - -
<PAGE>
UNION ACCEPTANCE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
For Withhold For all
All All Except
1. Election of Directors
Nominees: 01-J. Davis,02-J. Eggemeyer, III,[ ] [ ] [ ]
03-D. Sherman, 04-J. Stainbrook,
05-M. Stout, 06-J. Von Deylen,
07-R. Waterfield, 08-T. West
_________________________________
(Except nominee(s) written above
For Against Abstain
2. Ratification of DeLoitte & Touche LLP as [ ] [ ] [ ]
auditors for fiscal 2001.
3. Approval of Amendment to Union Acceptance [ ] [ ] [ ]
Corporation 1999 Incentive Stock Plan
The undersigned acknowledges receipt of
the Notice of Annual Meeting of
Shareholders and the Proxy Statement.
Dated: ___________________________, 2000
________________________________________
Signature
________________________________________
Please sign exactly as name appears.
Joint owners should each sign
personally. Where applicable, indicate
your official position or representation
capacity.
- - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
<PAGE>
IF YOU WISH TO VOTE BY TELEPHONE OR THE INTERNET,
PLEASE READ THE INSTRUCTIONS BELOW.
Union Acceptance Corporation is offering you the choice of several ways to vote
your shares. If not voting in person, you may vote by mail, or choose one of the
two methods described below. Your vote by telephone or the Internet authorizes
the named proxies to vote your shares in the same manner as if you marked,
signed and returned your proxy card. To vote by telephone or the Internet,
follow these steps:
TO VOTE BY PHONE:
1. Call toll-free 877-587-0755 any time using a touch tone telephone. There is
no charge for this call.
2. Enter the 6-digit Control Number located on the upper left-hand corner of
your proxy card.
3. Follow the recorded instructions.
TO VOTE BY INTERNET:
1. Go to the following website: www.computershare.com/us/proxy.
2. Enter the information requested on your computer screen, including the
6-digit Control Number located on the upper left-hand corner of your proxy
card.
3. Follow the instructions on the screen.
If you vote by telephone or the Internet, there is no need to and you
should NOT return your proxy card.
