0001012709-01-500718.txt : 20011008
0001012709-01-500718.hdr.sgml : 20011008
ACCESSION NUMBER: 0001012709-01-500718
CONFORMED SUBMISSION TYPE: PRER14A
PUBLIC DOCUMENT COUNT: 1
FILED AS OF DATE: 20010917
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: JORDAN AMERICAN HOLDINGS INC
CENTRAL INDEX KEY: 0000855663
STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282]
IRS NUMBER: 650142815
STATE OF INCORPORATION: FL
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: PRER14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-18974
FILM NUMBER: 1738406
BUSINESS ADDRESS:
STREET 1: 1875 SKI TIME SQUARE DRIVE
STREET 2: SUITE ONE
CITY: STEAMBOAT SPRINGS
STATE: CO
ZIP: 80487-9015
BUSINESS PHONE: 9708791189
MAIL ADDRESS:
STREET 1: 1875 SKI TIME SQUARE
STREET 2: SUITE ONE
CITY: STEAMBOAT SPRINGS
STATE: CO
ZIP: 80487-9015
FORMER COMPANY:
FORMER CONFORMED NAME: CHRISTIAN PURCHASING NETWORK INC
DATE OF NAME CHANGE: 19920703
PRER14A
1
prer2-901.txt
JORDAN AMERICAN HOLDINGS
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
--------------------------------------------------------------------------------
JORDAN AMERICAN HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of the transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
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JORDAN AMERICAN HOLDINGS, INC.
333 WEST VINE STREET, SUITE 206
LEXINGTON, KENTUCKY 40507
(859) 254-2240
-------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 4, 2001
-------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Jordan
American Holdings, Inc., a Florida corporation (the "Company"), will be held on
Thursday, October 4, 2001, at 2:00 P.M., Eastern Daylight Time, in the Company's
offices at 333 West Vine Street, Suite 206, Lexington, Kentucky 40507, for the
following purposes, all of which are set forth more completely in the
accompanying proxy statement:
1. To remove W. Neal Jordan as a Class I Director of the Company;
2. To elect a total of four persons to the Board of Directors, one for a
one-year term, one for a two-year term, and two for a three-year term;
3. To amend the Company's Articles of Incorporation to change the name of
the Company to "IMPACT Holdings, Inc.;"
4. To amend the Company's 1991 Stock Option Plan;
5. To ratify the selection of Spicer, Jeffries & Co. as the Company's
independent auditor; and
6. To transact such other business as may properly come before the
meeting.
Pursuant to the Company's Bylaws, the Board of Directors has fixed the close of
business on August 6, 2001, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting.
A FORM OF PROXY IS ENCLOSED. THE ANNUAL REPORT OF THE COMPANY, INCLUDING ITS
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2000, IS ALSO ENCLOSED IF YOU DID
NOT RECEIVE A COPY OF IT IN CONNECTION WITH THE COMPANY'S PROXY SOLICITATION
EARLIER THIS YEAR. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Charles R. Clark, Chairman of the Board
Lexington, Kentucky
September 19, 2001
PRELIMINARY COPY
----------------
JORDAN AMERICAN HOLDINGS, INC.
333 WEST VINE STREET, SUITE 206
LEXINGTON, KENTUCKY 40507
(859) 254-2240
-------------------------------------------------
PROXY STATEMENT
-------------------------------------------------
The enclosed proxy is solicited by the Board of Directors of Jordan American
Holdings, Inc., a Florida corporation (the "Company" or "JAHI"), for use at the
Company's Annual Meeting of Shareholders to be held on October 4, 2001, at 2:OO
P.M., Eastern Daylight Time, in the Company's offices at 333 West Vine Street,
Suite 206, Lexington, Kentucky 40507 (the "Meeting"). The Company had originally
called an Annual Meeting of Shareholders to be held on May 22, 2001, and had
solicited proxies for that scheduled meeting. However, that meeting did not
achieve a quorum and, as a result, that meeting was not held. Therefore, even if
you voted by proxy in connection with the scheduled May 2001 meeting, you need
to vote again now in connection with the September 2001 Meeting in order for
your vote to count.
You are urged to indicate your vote on each matter in the space provided. The
form of proxy provides a space for you to withhold your vote for or to vote
against any proposal. If no space is marked, then the proxy will be voted by the
persons therein named at the meeting: 1) for the removal of W. Neal Jordan as a
Class I Director of the Company; 2) for the election of four Directors to serve
varying terms as specified elsewhere herein; 3) in favor of the proposal to
amend the Company's Articles of Incorporation to change the Company's name; 4)
for the amendment of the Company's 1991 Stock Option Plan; 5) for the
ratification of the selection of the Company's independent auditors; and 6) in
their discretion, upon such other business as may properly come before the
meeting. Whether or not you plan to attend the meeting, please fill in, sign and
return your proxy card in the enclosed envelope.
Mr. Jordan opposed all of the foregoing proposals at the meeting of the
Company's Board of Directors held on June 27, 2001. Mr. Jordan has indicated
that he will oppose his removal as a Director of the Company and the nominees
for Director recommended by the Company and all of the other proposals presented
by the Board of Directors to the Shareholders at the Meeting, except for the
ratification of the Company's selection of independent auditors.
The Board of Directors urges you not to sign any proxy card sent to you by Mr.
Jordan. If you have previously signed and returned a proxy card sent to you by
Mr. Jordan, you can revoke it by signing, dating and mailing the enclosed proxy
card in the enclosed envelope.
The approximate date on which this statement and the enclosed proxy will first
be sent to Shareholders is September 19, 2001. In addition to solicitation by
mail, directors, officers and employees of the Company may solicit proxies
personally and by telephone and telegraph, all without extra compensation. The
Company has also engaged the firm of D.F. King & Co., Inc., to assist the
Company in the solicitation of proxies. The Company has agreed to pay that firm
the sum of $10,000 plus $4.00 for each Shareholder whom that firm contacts and
to reimburse the firm's expenses in connection with its efforts on behalf of the
Company.
The cost of the proxy solicitation by the Board of Directors will be borne by
the Company. The estimated total amount that may be considered to be in
connection with this proxy solicitation in excess of what the Company would
normally spend on a proxy solicitation is approximately $137,000, which includes
the Company's defense costs of approximately $110,000 in connection with
litigation initiated by Mr. Jordan against the Company, Charles R. Clark and
A.J. Elko and the anticipated payments to D.F. King & Co., Inc. The litigation
initiated by Mr. Jordan is described in the section of this Proxy Statement
entitled "PROPOSAL TO THE SHAREHOLDERS - Removal of W. Neal Jordan as a Class I
Director of the Company - Mr. Jordan's Attempt to Take Control of the Company's
Board of Directors." If any additional motions or appeals are filed in the
litigation, the estimated total additional amount may increase by up to
approximately $15,000. As of the date of this Proxy Statement, the Company has
paid $25,000 of the foregoing estimated amount. The foregoing estimated amount
does not include the amount that the Company normally would spend for a proxy
solicitation for an election of directors in the absence of a contest and costs
represented by salaries and wages of regular officers and employees of the
Company.
At the record date for the meeting, the close of business on August 6, 2001, the
Company had outstanding 14,217,266 shares of $.001 par value common stock (the
"Common Stock") and 2,000,000 shares of 2000 variable rate convertible
cumulative preferred stock (the "Preferred Stock"). Each share of Common Stock
entitles the holder thereof on the record date to one vote on each matter
submitted to a vote of Shareholders. The Preferred Stock is non-voting.
Only holders of the Common Stock of record at the close of business on August 6,
2001, are entitled to notice of and to vote at the Meeting. If there are not
sufficient shares represented in person or by proxy at the Meeting in order to
establish a quorum, then the Meeting may be adjourned in order to permit further
solicitation of proxies for the purpose of establishing a quorum. The quorum
necessary to conduct business at the Meeting consists of a majority of the
outstanding shares of Common Stock. The election of Directors will be by a
plurality of votes cast, either in person or by proxy, at the Meeting. The
approval of the proposals covered by this Proxy Statement, other than the
election of Directors, will require an affirmative vote of the holders of a
majority of the shares of Common Stock of the Company voting in person or by
proxy at the Meeting.
A STOCKHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING FORM HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY, BY EXECUTING A LATER-DATED PROXY, OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. UNLESS AUTHORITY IS WITHHELD, PROXIES THAT ARE
PROPERLY EXECUTED WILL BE VOTED FOR THE PURPOSES SET FORTH THEREON.
If you have any questions, or need any assistance in voting your shares, please
call D.F. King & Co., Inc., who is assisting the Company in the solicitation of
proxies. Its toll-free telephone number is (800) 669-5550.
2
MANAGEMENT
----------
DIRECTORS AND EXECUTIVE OFFICERS
The Company currently has five Directors serving on its Board. The Directors and
Executive Officers of the Company are as follows:
NAME AGE POSITIONS
---- --- ---------
Charles R. Clark 41 Chairman of the Board; Chief Investment
Officer
A.J. Elko (2) 38 Director; President and Chief Executive
Officer
Emmett Pais 37 Chief Financial Officer
Gerald L. ("Jerry") Bowyer 38 Director
(1) (2) (3)
Richard K. Williams 34 Director
(1) (2) (3)
W. Neal Jordan 61 Director
-------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) On May 30, 2001, a majority of the Directors then remaining in office
elected Messrs. Bowyer and Williams as Directors of the Company. They
filled the vacancies created by the resignations of Herald Stout and Terri
W. Abady as Directors of the Company on May 21 and 28, 2001, respectively.
Neither Mr. Stout nor Ms. Abady in their respective written notices of
resignations indicated that the reason for resignation was a disagreement
with the Company on any matter relating to the Company's operations,
policies or practices. At the time of their respective resignations,
however, both Mr. Stout and Ms. Abady were aware of the differences that
had arisen between Messrs. Clark and Elko on the one hand and Mr. Jordan on
the other hand regarding the appropriate future course of the Company's
business and of certain actions of Mr. Jordan. For more detail regarding
the differences and proposed actions, please see "PROPOSALS TO THE
SHAREHOLDERS - Removal of W. Neal Jordan as a Class I Director of the
Company."
Charles R. Clark has served as Chairman of the Board and Chief Investment
Officer of the Company since June 1, 2001; a Director of the Company since
August 1995; and as the Chief Market Analyst of the Company since July 1999. He
served as Chief Executive Officer of the Company from October 1997 through July
1999 and Senior Assistant Portfolio Manager of the Company from August 1995 to
June 1, 2001. He has served as President of Equity Assets Management, Inc., a
Delaware corporation ("New EAM"), a registered investment adviser and
wholly-owned subsidiary of the Company, since June 4, 2001, and as its Vice
President from its formation in November 2000 until June 4, 2001. Mr. Clark is
currently Chairman of the Board of IMPACT Management Investment Trust, an
affiliated open-end investment company. He has also served as President of
IMPACT Financial Network, Inc. ("IFNI"), a registered broker-dealer and since
1991 a wholly-owned subsidiary of the Company, since June 4, 2001, and was Vice
President of IFNI from August 1995 to June 4, 2001. From August 1995 until his
appointment as Chief Executive Officer, Mr. Clark served as Chief Operating
Officer, prior to which time he served as Vice President of the Company and,
beginning in 1991, Technical Research Analyst. Mr. Clark received a B.S. in
Management and Administrative Science from the University of Northern Colorado
in 1984 and an M.A. in Biblical Studies from the Dallas Theological Seminary in
1991.
3
A.J. Elko has served as President and Chief Executive Officer of the Company
since June 1, 2001, and a Director of the Company since November 23, 1999. He
served as Chief Operating Officer and Chief Financial Officer of the Company
from August 1999 until June 1, 2001 and Secretary of the Company since February
1999. Mr. Elko also served as Vice President of Finance and Operations of the
Company from January 1999 through August 1999. Mr. Elko is currently President
of the Board of IMPACT Management Investment Trust. Mr. Elko also is a
registered Financial Officer and Vice President of IFNI. He has served since
June 4, 2001, as President of IMPACT Administrative Services, Inc. ("IASI"),
which is a mutual fund servicing company, a registered transfer agent and a
wholly-owned subsidiary of the Company, and was Vice President of IASI from
January 1999 to June 4, 2001. He has also been President of IMPACT Tax and
Business Services, Inc. ("ITABS"), which provides professional tax planning and
tax preparation services for individuals, businesses, not-for-profit
organizations, estates and trusts, since its formation in October 2000. Prior to
1999, Mr. Elko provided consulting services to the Company in his capacity as
President of Albert John & Company, Inc., a registered transfer agent with the
Securities and Exchange Commission (the "SEC") and a company which specializes
in providing administrative services to small mutual funds. In 1995, Mr. Elko
founded A.J. Elko & Associates LLC (the "LLC"), a provider of professional tax
planning and preparation services for individuals, businesses, estates, and
trusts, and served as its President prior to selling the LLC to the Company in
November 2000. See "MANAGEMENT - Certain Relationships and Related
Transactions." Mr. Elko received his Bachelor of Science Degree in Business
Administration with an emphasis in Accounting from Duquesne University in 1985.
Emmett Pais has served as Chief Financial Officer of the Company since June 1,
2001. He has also served as Secretary and Treasurer of IFNI, IASI and ITABS
since June 4, 2001. He has also been the Accounting and Tax Manager of ITABS
since November 1, 2000. Mr. Pais worked as an accountant and tax preparer for
John W. Sinichak, C.P.A., from March 1998 through October 2000. He served in the
Audit Department of USBANCORP, Inc., from August 1997 until March 1998 and
worked as an auditor for the Allegheny County Controller's Officer from August
1995 until August 1997. Mr. Pais received his Bachelor of Science Degree in
Business/Accounting from the University of Pittsburgh in August 1995 and became
licensed as a Certified Public Accountant in December 1997.
Gerald L. ("Jerry") Bowyer is host of The Jerry Bowyer Program, a daily
Pittsburgh radio program launched in 1999 focusing on business, leadership,
politics and current events. Mr. Bowyer also hosts Pennsylvania Newsmakers and
Focus on the Issues, weekly syndicated public affairs television programs
discussing politics and policy issues in Pennsylvania. In addition to hosting
his radio and television programs, Mr. Bowyer served from 1995 until earlier
this year as President of the Allegheny Institute, a non-partisan research and
educational institute and the first think tank in the United States dedicated
exclusively to the study of local public policy issues.
Richard K. Williams has been the owner/operator of Stars Yogurt, a chain of
retail drive-thru smoothie/yogurt stores in the metropolitan area of Tampa,
Florida, since 1989. Mr. Williams has been a member of the Kirkland S. & Rena B.
Lamb Foundation (the "Lamb Foundation") since 1990 and has served as one of the
three members of the investment committee for the Lamb Foundation since 1998. As
of the record date, the Lamb Foundation held of record 3,850,000 shares of the
Company's common stock, making it the second largest holder of the Company's
common stock, and 2,000,000 shares of the Company's preferred stock as the only
holder of the Company's preferred stock. The Lamb Foundation's equity interest
in the Company stems from its 1993 investment in the Company of $3,000,000 in
cash. Mr. William received a B.A. in Business from Wheaton College in 1989.
W. Neal Jordan has been a Director of the Company since April 1993; and served
as the Chairman of the Board of the Company from August 1, 1995 through June 1,
2001; as Chief Executive Officer of the Company from July 1999 through June 1,
2001, and from August 1995 until October 1997; and as Chief Investment Officer
of the Company from October 1997 through June 1, 2001. He was President of New
EAM from its formation in November 2000 through June 4, 2001. He had served as
the President, Chief Executive Officer and Portfolio Manager of Equity Assets
Management, Inc., a Florida corporation ("Old EAM"), from Old EAM's inception in
1972 until its merger into the Company in 1995. He was President of IFNI, which
he founded in 1986, through June 4, 2001.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
All of the persons who were Directors of the Company during the fiscal year
ended December 31, 2000 (collectively, the "2000 Directors"), attended all of
the meetings of the Board during that year. During fiscal 2000,
4
there were a total of five regular and no special Board meetings held, and one
action taken by written consent without a meeting. The Board has two committees,
which are the Audit and Compensation Committees. During fiscal 2000, the
Compensation Committee met on two occasions and the Audit Committee met on one
occasion. Ms. Abady was unable to attend one compensation Committee meeting
because she was out of town. Other than that, all of the 2000 Directors attended
all of the meetings of committees of the Board of which they respectively were
members during the fiscal year. The Board does not have a standing nominating
committee or any other committee performing a similar function.
The Compensation Committee makes recommendations to the Board as to executive
salaries, reviews salaries and benefits of executives, and recommends bonuses
and stock option awards for directors, officers and other employees of the
Company. From May 30, 2000, until the respective resignations of Ms. Abady and
Mr. Stout as Directors of the Company on May 21 and 28, 2001, respectively, Mr.
Stout, as Chairperson, Ms. Abady and A.J. Elko comprised the Board's
Compensation Committee. Since June 1, 2001, Gerald L. ("Jerry") Bowyer, as
Chairperson, Richard K. Williams and A.J. Elko have comprised the Board's
Compensation Committee.
The Audit Committee recommends to the Board of Directors the engagement of
independent auditors for the ensuing year; reviews the scope of the annual
audit; reviews with auditors the results of the audit engagement, including
review of the financial statements and the management letter; and reviews the
scope of and compliance with the Company's internal controls. The Audit
Committee has reviewed and discussed the audited financial statements with the
Company's management. In addition, the Audit Committee has discussed with, and
has received from, the Company's independent auditors all matters and written
disclosures contemplated by the rule on Audit Committee Reports implemented by
the SEC, including any matters required to be discussed by SAS 61; the written
disclosures and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees;" and discussion regarding the independent auditor's
independence. Based on the foregoing, the Audit Committee recommended to the
Board that the audited financial statements be included in the Company's Annual
Report on Form 10-KSB for the fiscal year 2000 for filing with the SEC. At the
present time, the Company is not required to adopt, and the Board has not
adopted, a written charter for the Audit Committee.
Teri W. Abady, as Chairperson, Charles R. Clark and Herald Stout comprised the
Board's Audit Committee from May 30, 2000, until, as to Ms. Abady and Mr. Stout,
their resignations as Directors of the Company on May 21 and 28, 2001,
respectively, and as to Mr. Clark, until July 27, 2001. Ms. Abady was an
"independent" member of the Audit Committee, as independence is defined under
Rule 4200(a)(14) of the Listing Standards of the National Associations of
Securities Dealers, Inc. (the "NASD"). The Company also considered Mr. Stout to
be an "independent" member of the Audit Committee within the foregoing
definition because (1) Mr. Stout was an independent contractor of the Company
and of IFNI when he was an Investment Advisor Representative with the Company
and a Registered Representative of IFNI from June 4, 1997 to December 31, 1999
and (2) Mr. Stout received nominal compensation from the Company and IFNI as a
result of those independent contractor relationships. Gerald L. ("Jerry")
Bowyer, as Chairperson, and Richard K. Williams have comprised the Board's Audit
Committee since June 27, 2001. Messrs. Bowyer and Williams are "independent"
members of the Audit Committee, as independence is defined under Rule
4200(a)(14) of NASD's Listing Standards.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The SEC has implemented a rule that requires companies to disclose in their
proxy statements information with respect to reports that are required to be
filed pursuant to Section 16 of the Securities Exchange Act of 1934, as amended,
by directors, officers and 10% Shareholders of each company, if any of those
reports are not filed timely. Based solely upon a review of Forms 3 and 4 and
amendments thereto furnished to the Company during 2000 and Forms 5, if any with
respect to that year, the Company has determined that, A.J. Elko, a Director and
Executive Officer of the Company, did not file one Form 4 on a timely basis and
that all other required filings were made in a timely manner.
EXECUTIVE OFFICER COMPENSATION
The following tables provide information with respect to the compensation paid
or accrued by the Company and its subsidiaries to the Company's Chief Executive
Officer in all capacities and all other executive officers of the Company who
received combined salary and bonus compensation in 2000 in excess of $100,000.
5
Long Term
Annual Compensation Compensation
---------------------------------------------------------------- ------------
Securities
Other Underlying
Annual Options/
Salary Bonus Compensation(1) SARs
Name and Principal Position Year ($) ($) ($) (#)
--------------------------------- ----------- ------------ -------------- ------------------ ------------
W. Neal Jordan, 2000 182,500 108,953 0 12,500
Chairman of the Board, 1999 150,000 52,823 4,375 (2) 725,232
Chief Executive Officer and Chief 1998 143,438 0 0 12,500
Investment Officer
A.J. Elko, 2000 112,500 4,000 0 12,500
Director, Chief Operating Officer, 1999 85,000 0 0 100,000
Chief Financial Officer and Secretary 1998 0 0 0 0
(1) The table does not include amounts for personal benefits extended to
Executive Officers by the Company, such as, but not limited to, health
or life insurance. The Company believes that the incremental cost of
those annual benefits during 1998-2000 did not exceed the lesser of
$50,000 or 10% of their total annual salary and bonus.
(2) Payment of previously deferred compensation.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
Number of
Securities % of Total
Underlying Options/SARs Exercise or Base
Options/SARs Granted to Price Expiration
Name Granted Employees ($/Share) Date
--------------- ------------ ------------ ----------------- ----------
W. Neal Jordan 12,500 21.3% $.352 3/1/10
A.J. Elko 12,500 21.3% $.32 3/1/10
6
DIRECTOR COMPENSATION
Through 2000, the Company paid each non-employee Director of the Company $500
per calendar quarter for service as a director, and $500 annually for each
committee upon which the non-employee Director served. Beginning in 2001, the
Company pays each non-employee Director of the Company $1,000 per quarter for
regular Board meetings, $250 for each special Board meeting attended and $250
for each committee meeting attended. In addition, pursuant to the Company's 1991
Stock Option Plan, as amended (the "Plan"), mandatory grants of options to
purchase the following number of shares of the Company's Common Stock are to be
awarded to Directors on an annual basis: 12,500 shares for serving as a
Director; 1,250 shares for serving on one or more committees, and 1,250 for
serving as Chairman of one or more committees. Under the Plan, all options
granted to Directors (i) have a maximum term of ten years from date of grant,
(ii) have a minimum exercise price of 100% of the fair market value of the
Company's common stock on the date of grant and (iii) vest immediately upon the
date of grant.
EMPLOYMENT AGREEMENTS
W. Neal Jordan had an employment agreement with the Company from 1991 until its
expiration on August 14, 2001. Pursuant to the agreement, Mr. Jordan had served
as the head of the Company's investment advisory business. The employment
agreement provided for an initial annual base salary of $150,000, and increases
at the discretion of the Board of Directors. The Board of Directors had approved
an increase to $175,000 effective January 1, 2000, citing the additional
responsibilities taken on by Mr. Jordan as the Company's Chief Executive
Officer, and approved an additional increase to $250,000 effective October 1,
2000, citing the salary comparability study for the positions held by Mr. Jordan
as the Company's Chief Executive Officer and Chief Investment Officer. The
Company's Board of Directors removed Mr. Jordan from the positions of Chief
Executive Officer and Chief Investment Officer on June 1, 2001, and replaced him
as the head of the Company's investment advisory business on June 4, 2001. The
Company continued to pay Mr. Jordan the salary and certain employee benefits
pursuant to his employment agreement until its expiration.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of August 6, 2001, approximately 7.64% of the Company's issued and
outstanding shares of Common Stock were held in the Company's client accounts.
In April 1997, the Company discontinued all directed purchasing activities for
clients related to JAHI stock and warrants. Since then, the Company has handled
transactions in JAHI securities for clients only as instructed in writing by the
clients. See "VOTING SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT." Another potential conflict of interest that exists as a result of
the Mr. Clark's ownership of common stock in the Company and control over the
Company's client accounts is that Mr. Clark may be faced with the issue of
whether to advise the Company's clients to sell the Company's common stock,
which sale may have an adverse effect on the market price of the Company's
common stock and thus on Mr. Clark's equity investment in the Company. Mr. Clark
is limited only by his fiduciary obligation to its clients.
In November 2000, the Company, through a wholly-owned subsidiary, IMPACT Tax and
Business Services, Inc., purchased substantially all of the assets of A.J. Elko
& Associates, LLC (the "LLC"), a provider of tax planning and preparation
services for individuals, businesses, estates and trusts. A.J. Elko, a Director
, the President and Chief Executive Officer of the Company, owned all of the
outstanding interests in the LLC. The Board, with Mr. Elko abstaining, had
approved the transaction. The Company (i) paid Mr. Elko $75,000 in cash, (ii)
granted Mr. Elko ten year options to purchase 100,500 shares of the Company's
common stock at an exercise price of $0.20 per share and (iii) agreed to pay Mr.
Elko an additional $10,000 in cash pursuant to an earn-out provision.
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 6, 2001, certain information
regarding the Company's Common Stock owned of record or beneficially by (i) each
person who owns
7
beneficially more than 5% of the Company's outstanding Common Stock; (ii) each
of the Company's Directors and Executive Officers and the other nominee for
Director; and (iii) all Directors and Executive Officers as a group.
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF
OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------------------ ----------------------- ----------------
W. Neal Jordan 4,836,483 (2) 32.9%
223B Main Street
Boxford, Massachusetts 01921
Kirkland S. & Rena B. Lamb 3,850,000 (3) 27.1%
Foundation
5612 Meletio
Dallas, Texas 75230
Charles R. Clark 227,350 (4) 1.6%
333 W. Vine St., Ste. 206
Lexington, KY 40507
A. J. Elko 210,750 (5) 1.5%
333 W. Vine St., Ste. 206
Lexington, KY 40507
Emmett Pais 0 *
2993 Jacks Run Road
White Oak, PA 15131
Gerald Bowyer 0 *
820 Pine Hollow Rd.
McKees Rocks, PA 15136
Richard Williams 3,850,000 (6) 27.1%
207 Chapman Rd.
West Lutz, FL 33549
M. Clare Gilchrist, Jr. 200,405 (7) 1.4%
54 Ashford Drive,
Cranberry Township, PA 16066
-------------------
* Less than 1%.
(1) Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.
(2) Includes 334,095 shares issuable upon exercise of the IPO
Underwriter's warrants and stock purchase warrants included therein
owned by Mr. Jordan; 42,500 shares issuable upon exercise of public
warrants owned by Mr. Jordan; and 109,232 shares issuable upon
exercise of options granted to Mr. Jordan. Excludes 550,600 shares
held in certain irrevocable trusts established for Mr. Jordan's
children, as to which trusts Mr. Jordan recently appointed a new
trustee after the resignation of Charles R. Clark as the trustee.
(3) Does not include 571,428 shares issuable upon conversion of 2,000,000
shares of the Company's 2000 Variable Rate Convertible Cumulative
Preferred Stock (the "2000 Preferred Stock"). The Preferred Stock is
non-voting. The Lamb Foundation on August 6, 2001, had exchanged
1,500,000 shares of 2000
8
Preferred Stock for 3,100,000 shares of the Company's Common Stock
valued at $0.165 per share. The Company agreed to amend the dividend
rate on the 2000 Preferred Stock so that the Company will pay the same
cash dividends on the remaining 2000 Preferred Stock through the end
of 2002 as it would have paid before the exchange. The Company will
pay 42.9% less cash dividends beginning in 2003 and thereafter because
of the reduced number of outstanding shares of the 2000 Preferred
Stock. The Lamb Foundation on December 29, 2000, had exchanged
3,000,000 shares of the Company's 8% Convertible Redeemable Cumulative
Preferred Stock (the "8% Preferred Stock") that the Company had issued
to the foundation in 1993 in connection with a $3,000,000 cash
investment by the foundation in the Company for 3,500,000 shares of
the 2000 Preferred Stock. At the time, there were cumulative accrued
but unpaid dividends of $600,000 on the 8% Preferred Stock. As part of
the exchange, the Company declared and paid $100,000 in dividends on
the 8% Preferred Stock and the Lamb Foundation agreed to cancel the
other $500,000 in dividend arrearages. The annual dividend rate on the
2000 Preferred Stock at the time of the December 2000 exchange was 3%
for each of 2001 and 2002, 4% for 2004, 5% for 2005, 6% for 2006, 7%
for 2007 and 8% for 2008 and thereafter.
(4) Includes 13,100 shares owned by his relatives, as to which shares Mr.
Clark disclaims any beneficial interest, and 205,250 shares issuable
upon exercise of options granted to Mr. Clark. Excludes 45,000 shares
issuable upon the exercise of options granted to Mr. Clark that are
not exercisable within 60 days after the record date. Also excludes
5,000 shares issuable upon exercise of stock purchase warrants owned
by Mr. Clark's relatives, as to all of which shares Mr. Clark
disclaims any beneficial interest. Excludes 1,133,828 shares and
307,238 shares underlying warrants that are held in the Company's
client accounts (see "Certain Transactions" above regarding the
Company's securities held in client accounts).
(5) Includes 180,750 shares issuable upon exercise of options granted to
Mr. Elko. Excludes 76,000 shares issuable upon the exercise of options
granted to Mr. Elko that are not exercisable within 60 days after the
record date.
(6) Represents the shares of the Company's common stock owned of record by
the Lamb Foundation because Mr. Williams, as a member of the
investment committee of the Lamb Foundation, is deemed a "beneficial
owner" of those shares because he shares the power to direct the
voting or disposition of those shares. Mr. Williams disclaims any
beneficial interest in those shares.
(7) Since September 1, 1999, Mr. Gilchrist has purchased on the open
market shares of the Company's common stock in the following amounts
and on the following dates: 14,000 shares on October 4, 1999; 19,000
shares on November 15, 1999; 1,275 shares on December 3, 1999; 10,000
shares on December 29, 1999; 5,000 shares on January 3, 2000; and
15,000 shares on January 5, 2000.
(8) Mr. Jordan has indicated that he will oppose his removal as a Director
of the Company and the nominees for Director recommended by the
Company and all of the other proposals presented by the Board of
Directors to the Shareholders at the Meeting, except for the
ratification of the Company's selection of independent auditor. Mr.
Jordan owns of record 30.6% of the outstanding shares of the Company's
common stock entitled to vote at the Meeting (the "Voting Stock"). He
may also be able to influence the trustee he recently appointed for
the irrevocable trusts of his children, which collectively own of
record 3.9% of the Voting Stock, to vote with him. The Lamb Foundation
has indicated to the Company that it has no confidence in Mr. Jordan's
ability to manage the Company and opposes Mr. Jordan's efforts to
control the Company. The Lamb Foundation, the other members of the
Company's management and the other nominee for Director recommended by
the Company collectively own 28.8% of the Voting Stock.
PROPOSALS TO THE SHAREHOLDERS
Four of the five members of the Board of Directors, with Mr. Jordan casting the
only negative vote, approved the following proposals as of June 27, 2001, for
presentation to the Company's Shareholders:
1. REMOVAL OF W. NEAL JORDAN AS A CLASS I DIRECTOR OF THE COMPANY.
9
It is intended that votes will be cast pursuant to the accompanying proxy to
remove W. Neal Jordan as a Class I Director of the Company. Section 3 of Article
III of the Company's Bylaws and Florida corporate law permit the removal of a
Director, with or without cause, by the Shareholders. Removal of Mr. Jordan as a
Director requires a vote in favor of removal by the holders a majority of the
shares of Common Stock of the Company voting in person or by proxy at the
Meeting.
Events that occurred earlier this year have culminated in the removal of Mr.
Jordan on June 1, 2001, from all positions with the Company and its subsidiaries
by the Company's Board of Directors; in litigation filed by Mr. Jordan and one
of his children on June 27, 2001, which was amended on August 2, 2001, to
include five of his six children, against the Company and Messrs. Clark and
Elko; and in this proposal for his removal as a Director of the Company. The
events can be summarized in four categories as follows:
1. Mr. Jordan's interest in using the Company's funds for sports
gambling.
2. Mr. Jordan's desire to abandon the Company's business plan implemented
over the last few years to diversify revenue sources in favor of
dismantling all of the Company business activities other than its
investment advisory and related broker-dealer activities, which are
the only operations of the Company in which Mr. Jordan primarily
participated historically and which would then become the Company's
sole source of any revenue.
3. Mr. Jordan's expressed intent to take control of the Company's Board
of Directors at the Annual Meeting of Shareholder scheduled to be held
on May 22, 2001, by proposing and voting for his own nominees for the
two directorships up for election without any disclosure about his
nominees' qualifications to the other Shareholders of the Company or
any knowledge of those other Shareholders of the slate of candidates
in opposition to the slate presented by the Company's management or
any chance for them to vote on the two competing slates.
4. Mr. Jordan's potentially illegal insider trading activities.
MR. JORDAN'S SPORTS GAMBLING INTEREST.
--------------------------------------
In late February or early March of 2001, Mr. Elko, then the Company's Chief
Financial Officer, had informed Mr. Jordan that the estimated revenue to be
generated from the Company's investment advisory business during all of 2001 was
not promising1. Mr. Elko suggested to Mr. Jordan that the Company use $30,000 of
its cash on hand (about 1% of its assets at the time) for aggressive investment
in the securities markets in an attempt to generate realized equity gains and
thus create additional revenue for 2001. Mr. Jordan indicated to Mr. Elko a
general approval of the aggressive approach but told Mr. Elko that Mr. Jordan
may have a better investment alternative for the Company's funds2.
Later in the first quarter of 2001, Mr. Jordan contacted Mr. Elko and suggested
to Mr. Elko that the Company should consider betting on sports games as a more
attractive alternative for investment of the Company's funds3. Mr. Elko
disagreed with Mr. Jordan and stated his belief that, even if such
sports-related gambling were legal, it would not be a wise use of the funds of a
public company, especially one engaged in the money management business. Mr.
Jordan in essence responded that the wisdom of the Company's engagement in
sports-related gambling would not matter if the Company made money from such
gambling. Mr. Elko told Mr. Jordan that Mr. Elko would consult with corporate
legal counsel about Mr. Jordan's suggestion.4
-------------------
1 Affidavit of A.J. Elko, dated July 16, 2001, filed with the United States
District Court for the Eastern District of Kentucky in the lawsuit filed by
W. Neal Jordan vs. Jordan American Holdings, Inc., et. al. Case No. -1-264.
2 Id.
3 Affidavit of W. Neal Jordan dated July 20, 2001, filed with the United
States District Court for the Eastern District of Kentucky in the lawsuit
filed by W. Neal Jordan vs. Jordan American Holdings, Inc., et. al. Case
No. -1-264, and statement of W. Neal Jordan in the August 27, 2001
Securities and Investment Weekly.
4 See footnote 1.
10
Mr. Elko contacted corporate legal counsel, who advised Mr. Elko that sports
related gambling may be illegal and questioned the appropriateness of using the
funds of a public company for such gambling. Mr. Elko relayed the legal
counsel's advice to Mr. Jordan. Special legal counsel in Nevada was also
contacted, and it was determined that the sports-related gambling that Mr.
Jordan proposed for the Company can be legally done within the United States
only in person within the State of Nevada. Nevertheless, Mr. Jordan thereafter
contacted Mr. Elko on multiple occasions to pursue the idea of sports-related
gambling by the Company. According to Mr. Elko, Mr. Jordan even asked Mr. Elko
to have the Company issue Mr. Jordan checks in amounts small enough to avoid
detection in an audit or to lend Mr. Jordan $10,000 to use for sports-related
gambling. Mr. Elko continued to oppose the idea of gambling by the Company and,
as the Company's Chief Financial Officer, refused to release any of the
Company's funds to Mr. Jordan for that purpose.5
On June 1, 2001, Mr. Elko reported to the Board of Directors that Mr. Jordan had
asked Mr. Elko to have the Company issue Mr. Jordan checks in amounts small
enough to avoid detection in an audit so that Mr. Jordan could use those funds
for sports-related gambling on behalf of the Company.6
At the meeting of the Company's Board of Directors on June 1, 2001, Mr. Jordan
acknowledged his interest in using funds of the Company for sports-related
gambling7.
Mr. Jordan also acknowledged such interest in an affidavit dated July 20, 2001,
filed in the pending litigation described later in this proposal. In the
affidavit, Mr. Jordan specifically stated that he "believed controlled betting
on baseball implementing proper money management techniques had a better
potential for favorable returns and was less risky, in my view, than gambling on
options." Also in the affidavit, Mr. Jordan denied that he had asked Mr. Elko to
issue small Company checks for sports-related gambling to avoid audit detection
and that he had asked Mr. Elko to have the Company lend him $10,000 to use for
sports-related gambling.8
On June 5, 2001, the Company inspected the offices of New EAM in Andover,
Massachusetts, at which Mr. Jordan had worked prior to his removal from all
officer positions with the Company and the termination of his employment with
the Company. At that time, the Company found a number of files indicating that
Mr. Jordan was placing personal bets on sporting events through organizations
located in foreign countries, ranging from Antigua, Costa Rica, Jamaica to
Australia. In one instance, Mr. Jordan had requested that Canbet Sports
Bookmakers Pty. Limited, located in Australia, allow him to open an unidentified
"corporate account," but that request was denied9. No Company funds were used
for any of these bets or for any gambling activities.
At the hearing in the pending litigation on July 23, 2001, the presiding judge
characterized Mr. Jordan's interest in using corporate funds for sports gambling
as the "wildest thing [the judge had] ever heard of."10
MR. JORDAN'S DESIRE TO DISMANTLE THE COMPANY.
---------------------------------------------
Early in 2001, Mr. Jordan started indicating to the other members of the
Company's management that he wanted to shut down the IMPACT Total Return
Portfolio (the "IMPACT Mutual Fund"), the Company's affiliated mutual fund
product11. He took this position despite the fact that the IMPACT Mutual Fund
had since January 2001 been listed in The Wall Street Journal's Mutual Fund
Scorecard/Midcap Value section as one of the top performing mutual funds in its
category over the previous 12 months. In the listing published on August 3,
2001, the IMPACT
-------------------
5 Id.
6 See June 1, 2001 Minutes of the Board of Directors' meeting.
7 Id.
8 See Jordan affidavit identified in footnote 3.
9 See affidavit of Charles Brink, dated July 16, 2001, filed with the United
States District Court for the Eastern District of Kentucky in the lawsuit
filed by W. Neal Jordan vs. Jordan American Holdings, Inc., et. al. Case
No. -1-264.
10 See July 23, 2001 transcript, p. 14 and 15, from the proceedings before the
United States District Court for the Eastern District of Kentucky in the
lawsuit filed by W. Neal Jordan vs. Jordan American Holdings, Inc., et. al.
Case No. -1-264.
11 See footnote 1.
11
Mutual Fund ranked in the top ten mutual funds in its class12. In addition,
during the first seven months of 2001, the IMPACT Mutual Fund added new assets
of $2,015,000. The Company's investment advisor, mutual fund servicing and
broker-dealer affiliates receive annual aggregate gross fees ranging from 1.85%
to 2.60% (depending upon the class of shares sold) of the IMPACT Mutual Fund's
average daily net assets.
Because the other Executive Officers of the Company did not agree with Mr.
Jordan's position about the IMPACT Mutual Fund and other matters regarding the
Company, Mr. Elko approached Mr. Jordan in late March or early April 2001 about
the prospect of spinning off the Company's investment advisory business to Mr.
Jordan in exchange for Mr. Jordan's equity interest in the Company. Mr. Jordan
expressed interest in the proposal and asked Mr. Elko to prepare a more detailed
outline regarding the proposal. Over approximately the next six weeks, Mr.
Jordan requested more information from Mr. Elko regarding the proposal. After
Mr. Elko presented a more detailed outline of the proposal to Mr. Jordan, Mr.
Jordan requested more detailed information about it, including revenue
projections and financial reports. Mr. Elko had the requested information
prepared and met with Mr. Jordan on May 14, 2001, eight days before the
Company's Annual Meeting of Shareholders scheduled for May 22, 2001, to present
the information to Mr. Jordan13.
At the May 14 meeting, instead of evaluating and discussing the detailed
proposal that Mr. Elko had prepared and was presenting to Mr. Jordan at Mr.
Jordan's request, Mr. Jordan instead informed Mr. Elko that Mr. Jordan intended
to take control of the Company. Mr. Jordan indicated that he was going to shut
down the IMPACT Mutual Fund and all of the other business activities of the
Company except the investment advisory business and its related broker-dealer
activities; close the new headquarters of the Company in Lexington, Kentucky,
that had been opened in November 2000 with the approval of the Company's Board
or Directors, including Mr. Jordan; and fire all of the Company's employees,
except three. Those three were a male assistant recently hired to assist Mr.
Jordan, a female assistant with whom Mr. Jordan lives and the Company's
portfolio administrator in Steamboat Springs, Colorado. Mr. Elko stated his
opinion that this course of action was not in the long-term best interest of the
Company's Shareholders and may create regulatory problems for the Company if not
properly handled.
Mr. Jordan also indicated that Mr. Jordan was going to oppose the election of
directors and the proposals to shareholders scheduled to be presented at the
Annual Meeting of Shareholders scheduled to be held on May 22, 2001. Mr. Jordan
stated that he planned to vote for his own nominees for the two directorships up
for election, which would give him control of three of the five members of the
Board of Directors14.
MR. JORDAN'S ATTEMPT TO TAKE CONTROL OF THE COMPANY'S BOARD OF DIRECTORS.
------------------------------------------------------------------------
Until May 14, 2001, the Executive Officers of the Company other than Mr. Jordan
were not aware of his plan to take control of the Company's Board of Directors.
At the regularly scheduled quarterly meeting of the Board of Directors on
February 20, 2001, the Board, including Mr. Jordan, approved various matters to
be presented to the Company's Shareholders at the 2001 Annual Meeting of
Shareholders. The Board unanimously voted to recommend the election of Charles
R. Clark and Gerald L. ("Jerry") Bowyer to the Board. The Board also unanimously
voted to recommend that the Company change its name to IMPACT Holdings, Inc.15
As stated in both the May 2001 Proxy Statement and this Proxy Statement, the
purpose of the name change was to recognize the diverse services offered by the
Company under the IMPACT name. Please see "PROPOSALS TO THE SHAREHOLDERS -
Amendment of Articles of Incorporation to Change the Name of the Company."
As previously described, Mr. Jordan informed Mr. Elko only eight calendar days
before the Annual Meeting of Shareholders scheduled for May 22, 2001, of his
intent to vote against the slate of directors he had previously voted to
recommend to the Shareholders at the February 2001 Board meeting. That is also
when the Company learned that Mr. Jordan intended to attempt to install his own
then undisclosed slate of directors, terminate the other members of the
Company's current management and dismantle the Company. Shortly before the May
22 Annual Meeting, Mr.
-------------------
12 August 3, 2001 edition of the Wall Street Journal.
13 See footnote 1.
14 See footnote 1; see also W. Neal Jordan's Amended 13-D filed on June 22,
2001 with SEC; statements by Mr. Jordan in the July 16, 2001 edition of the
Securities and Investment Weekly.
15 See minutes of February 20, 2001 Board of Directors' meeting.
12
Elko further learned that Mr. Jordan had contacted one or more of the other
Shareholders of the Company to request that they join Mr. Jordan in voting for
his slate of Directors16.
On the morning of the Annual Meeting but before its starting time, the sum of
the shares voted by proxy and Mr. Jordan's shares added up to more than 50%, the
minimum number required for a quorum to hold the meeting, but less than the
minimum to outvote Mr. Jordan. Mr. Clark, on behalf of himself and as the then
trustee of the irrevocable trusts for Mr. Jordan's children, and one other
Shareholder, upon learning of Mr. Jordan's intent, timely revoked proxies
already submitted to the Company17.
The revocations resulted in a lack of a quorum for the meeting, which prevented
Mr. Jordan from taking control of the Board and allowed the meeting to be
rescheduled so that all of the Shareholders of the Company are able to vote with
knowledge of Mr. Jordan's intentions. More than 4,500,000 shares of the
Company's Common Stock, or approximately 43.6% of the then outstanding shares of
the Company's Common Stock, were not voted, most likely based at least in part
upon the assumption that the Board's apparently unanimous recommendations would
be routinely approved18. The Board on June 27, 2001, rescheduled the Meeting to
September 25, 2001, with a new record date of August 6, 2001. Because of the
time required to complete the SEC proxy material review process, the Board on
September 14, 2001, changed the date of the Meeting to October 4, 2001. The
record date remains the same.
On June 27, 2001, Mr. Jordan commenced litigation in the United States District
Court for the Eastern District of Kentucky, Lexington Division, naming the
Company, Mr. Elko and Mr. Clark as defendants and seeking only injunctive
relief. Mr. Jordan demanded that the Company be prohibited from issuing any more
shares of Common Stock or taking any action which would dilute his percentage of
ownership of the Company. Jordan also requested that Mr. Clark be terminated as
the trustee of trusts that Mr. Jordan had created for the benefit of his
children19.
Mr. Jordan's Complaint alleges violation by the Company of the federal
regulations relating to proxy solicitations, which he contends require the
Company to include express language in a proxy statement that management might
seek the revocation of a proxy. The Company contends that the federal proxy
regulations permit management to seek the revocation of a proxy because those
regulations define the terms "solicit' and "solicitation", which are used in the
Company's May 2001 Proxy Statement, to include a request to revoke a proxy.
Furthermore, the Company contends that the federal proxy regulations do not
require such express language in the circumstances that existed just prior to
the scheduled May 22 Annual Meeting of Shareholders20.
Mr. Jordan further asserts that Messrs. Clark and Elko breached a fiduciary duty
to Shareholders in connection with the lack of the quorum at the Annual Meeting
of Shareholders scheduled for May 22, 2001. The Company and Messrs. Elko and
Clark deny any violation of law, including any regulations concerning proxy
solicitations and/or fiduciary obligations. Instead, the Company contends that
Mr. Jordan violated federal securities laws and his fiduciary obligations in
failing to disclose his intent to vote against the slate of directors
recommended by the Company's management, to terminate management, to reduce the
business and long-term diversification efforts, and to engage in sports gambling
efforts21.
-------------------
16 See footnote 1; see also affidavit of Charles R. Clark, dated July 16,
2001, filed with the United States District Court for the Eastern District
of Kentucky in the lawsuit filed by W. Neal Jordan vs. Jordan American
Holdings, Inc., et. al. Case No. -1-264.
17 See Supplemental Affidavit of A.J. Elko, dated August 2, 2001, filed with
the United States District Court for the Eastern District of Kentucky in
the lawsuit filed by W. Neal Jordan vs. Jordan American Holdings, Inc., et.
al. Case No. -1-264. See also affidavit of Mr. Clark identified in footnote
16.
18 See Supplemental Affidavit of A.J. Elko referenced in footnote 17.
19 See Complaint filed with the United States District Court for the Eastern
District of Kentucky in the lawsuit filed by W. Neal Jordan vs. Jordan
American Holdings, Inc., et. al. Case No. -1-264.
20 See Motion to Dismiss the Mr. Jordan's Complaint filed by JAHI, including
subsequent Memoranda in support of the Motion to Dismiss.
21 See footnote 20.
13
As of the date of this Proxy Statement, no decision or order of the court on
Jordan's Complaint or request for injunctive relief has been issued. At the
hearing held on July 23, 2001, the presiding judge preliminarily indicated that
the Annual Meeting of Shareholders scheduled for September 25, 2001, can be held
and that the record date of August 6, 2001, set by the Company's Board of
Directors can be the record date for the meeting. The presiding judge declined,
at that time, to grant Mr. Jordan's request that the Company be precluded from
issuing any authorized but unissued shares of its stock. He also stated at that
time that he was not going to enjoin the holder of the Company's Preferred Stock
[which is not a party to the litigation] from converting any of the Preferred
Stock to Common Stock. He also preliminarily indicated that any shares of stock
issued by the Company must have a fair price22.
The presiding judge further said, "What court in Kentucky, what court in
Colorado, would remove a trustee [referring to Mr. Clark] for voting stock
contrary to Mr. Jordan's wishes and desires where he is talking about taking
corporate funds and going to Las Vegas and betting them.23" Nevertheless, in
order to eliminate any claims of conflict, Mr. Clark resigned as the trustee of
the trusts for Mr. Jordan's children in early August 2001.
On August 6, 2001, the Board approved the issuance of 3,100,000 shares of the
Company's Common Stock in exchange for 1,500,000 shares of the Company's
outstanding Preferred Stock held by the Lamb Foundation. The Common Stock issued
to the Lamb Foundation was valued at $0.165 per share, which was 65% above the
market price of $0.10 per share for the Common Stock on August 6, 2001. The
Company will pay the same cash dividends on the remaining Preferred Stock
through the end of 2002 as it would have paid before the exchange, but will pay
42.9% less cash dividends beginning in 2003 and thereafter because of the
reduced number of outstanding shares of Preferred Stock.
Mr. Jordan subsequently filed another motion with the Court asking that the Lamb
Foundation be prevented from voting these shares of Common Stock at the 2001
Annual Meeting of Shareholders. The Company contends that no basis exists for
granting Mr. Jordan's motion as stated. The judge who presided over the hearing
on July 23, 2001, had subsequently withdrawn from presiding over the pending
litigation for scheduling reasons. The litigation is now assigned to a different
federal judge24.
MR. JORDAN'S INSIDER TRADING ACTIVITIES.
----------------------------------------
The Company has been asked to provide information to the NASD concerning Mr.
Jordan's purchase of 10,000 shares of Company stock on May 21, 2001, and of an
additional 10,000 shares purchased on May 22, 2001. Mr. Jordan also attempted to
place a "good til canceled" order for 100,000 shares on May 21, 200125. However,
the Company, upon learning about it, demanded that the order be withdrawn and
Mr. Jordan complied with the demand. The NASD is investigating whether the
purchases constitute illegal insider trading as Mr. Jordan purchased the stock
during the time he knew he intended to take control of the Company but had not
disclosed that intent to the public.
SUMMARY.
--------
The Board recommends voting to remove Mr. Jordan as a Director of the Company
for the following reasons:
1. The Board considers that Mr. Jordan's activities earlier this year,
including his interest in the use of Company funds for betting on sporting
events, possibly illegal insider trading, and the apparent attempted use of
limited partnership funds for personal purposes, indicate that Shareholders of
the Company would be at increased risk if Mr. Jordan obtains control of the
Company. Specifically, before May 22, 2001, Jordan asked the Company to invest
or lend funds to Mr. Jordan to invest in a "program" to determine the benefit of
betting on gambling events. Mr. Jordan acknowledged his interest in using
Company funds for sporting events gambling at the Board meeting on June 1, 2001,
and in an affidavit filed in Court. Management completely rejected any such
idea.
-------------------
22 See footnote 10.
23 Id.
24 See Court Orders dated August 8, 2001 and August 14, 2001.
25 See July 6, 2001 response to the NASD by IMPACT Financial Network, Inc., a
wholly owned subsidiary of JAHI.
14
Since the Board meeting on June 27, 2001, the Board is of the opinion that
other action by Mr. Jordan supports the Board's recommendation to remove him as
a Director. On July 24, 2001, Mr. Jordan purchased 45,000 shares of Company
stock with funds from the Jordan Index Fund, a limited partnership of which Mr.
Jordan is the general partner. On July 25, 2001, Mr. Jordan requested that the
purchase of those 45,000 shares be canceled and the purchase transferred to his
individual retirement account. This request was completed and the 45,000 shares
were purchased by Mr. Jordan with funds in his individual retirement account26.
2. Mr. Jordan has stated in his Schedule 13-D, as amended on June 22,
2001, that he intends to reduce the Company to its "core business." The Board
does not consider the elimination of the diversified services developed by the
Company over the last several years to be in the best interests of the Company
or its Shareholders. These diversified services provide varied revenue sources
and several of these items are now achieving the growth needed to improve
shareholder value. The elimination of these lines of business would revert the
Company to its status before 1996 when it only offered the investment advisory
and related broker/dealer services.
Further, the Company's revenues from advisory fees during the first six
months of 2001 were down approximately 90% due primarily to decreased revenues
from performance fee based managed accounts. This decrease in performance fee
revenues resulted from investment losses during the last 12-month period in the
performance fee accounts. Performance fees are only earned when the fair market
value of accounts exceed their historical highs. Furthermore, as stated in the
Company's most recent quarterly report filed with the SEC, management of the
Company does not anticipate any performance billings (and thus no revenue)
during the last six months of this year due to the depressed value of these
accounts relative to their historical highs.
3. To the Board's knowledge, Mr. Jordan has no succession plan for
control of the Company. As a result, if Mr. Jordan were to obtain control of the
Company, the Board is of the opinion that the value of the Company, and
therefore the value of the Common Stock held by the Shareholders, would then be
dependent solely on one individual who is now in his early 60's.
4. The NASD is currently conducting an inquiry as to whether Mr. Jordan
engaged in illegal insider trading in connection with his May 2001 purchases of
shares of the Company's Common Stock in the open market.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF MR. JORDAN'S REMOVAL FROM THE BOARD OF
DIRECTORS.
2. ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide that the Board be divided into
three classes, with all Directors in each class serving staggered three-year
terms or until their respective successors are qualified and elected. There are
presently five Directors divided into three classes.
W. Neal Jordan is a Class I Director, elected in 1999 to serve until the 2002
Annual Meeting of Shareholders. However, if the proposal to remove Mr. Jordan as
a Director of the Company is adopted by the Shareholders at the Meeting, his
term will end on the date of the Meeting.
A.J. Elko and Richard K. Williams are Class II Directors. Mr. Elko was elected
as a Director in 2000 to serve until the 2003 Annual Meeting of Shareholders.
Mr. Williams was appointed in accordance with the Company's Bylaws as a Director
on May 30, 2001, by a majority of the then remaining Directors of the Company to
serve until the 2001 Annual Meeting of Shareholders. As a result, Mr. Williams
is up for election this year as a Class II Director to serve until the 2003
Annual Meeting of Shareholders. For biographical information regarding Mr.
Williams, please see "MANAGEMENT - Directors and Executive Officers."
Charles R. Clark and Gerald L. ("Jerry") Bowyer are Class III Directors. Mr.
Clark was elected as a Director in 1998 to serve until the 2001 Annual Meeting
of Shareholders. Mr. Bowyer was appointed in accordance with the Company's
Bylaws as a Director on May 30, 2001, by a majority of the then remaining
Directors of the Company to
-------------------
26 See August 16, 2001 affidavit of Phyllis Harrelson, Portfolio Administrator
of IMPACT Financial Networks, Inc.
15
serve until the 2001 Annual Meeting of Shareholders. As a result, Messrs. Clark
and Bowyer are up for election this year to serve as a Class III Director until
the 2004 Annual Meeting of Shareholders. For biographical information regarding
Messrs. Clark and Bowyer, please see "MANAGEMENT - Directors and Executive
Officers."
The Board has nominated M. Clare Gilchrist, Jr., to become a Class I Director to
serve until the 2002 Annual Meeting of Shareholders. Mr. Gilchrist, age 75,
retired as Quality Assurance Manager of the Synthetic Fuels Division of
Westinghouse Corp. in 1987. Prior to his retirement, he had worked for
Westinghouse Corp. in various capacities for 27 years since 1960. He established
a special quality training program for top management to change the culture
throughout the Synthetic Fuels Division. His prior experience included
engineering management of environmental, nuclear and waste management businesses
throughout the United States and foreign countries. He also once owned a real
estate business specializing in renovating rental properties. He graduated from
the University of Michigan with a BS degree in chemical engineering and took
additional courses at Georgia Tech, University of Idaho, University of
Pittsburgh and Massachusetts Institute of Technology.
Consequently, Mr. Gilchrist is a Board nominee for Class I Director and is
proposed for a term of one year, Mr. Williams is a Board nominee for Class II
Director and is proposed for a term of two years, and Messrs. Clark and Bowyer
are Board nominees for Class III Director and are proposed for a term of three
years.
It is intended that the votes will be cast pursuant to the accompanying proxy
for the four nominees named above, unless otherwise directed. Each of the
nominees has consented to being named in this Proxy Statement and to serve if
elected. The Board has no reason to believe that any nominee will become
unavailable to serve if elected. However, if any nominee should be unavailable,
then proxies solicited by the Board will be voted for the election of a
substitute nominee designated by the Board.
W. Neal Jordan owns of record 30.6%, and the Lamb Foundation owns of record
27.1%, of the outstanding shares of the Company's Common Stock. If Mr. Jordan
and the Lamb Foundation were to vote for the same nominees, they would be able
to elect all of the Directors of the Company and thereby control the Company.
Depending on the percentage of the outstanding shares of the Company's common
stock constituting a quorum at a meeting of shareholders, Mr. Jordan
individually may be in a position to elect all of the Directors of the Company
and thereby control the Company.
Proxies cannot be voted for a greater number of persons than the four nominees
named above. The Directors will be elected by a plurality of the votes cast,
either in person or by proxy, at the Meeting. Votes cast as abstentions will not
be counted as votes for or against the election of the Director and therefore
will have no effect on the number of votes necessary to elect the Directors.
So-called "broker non-votes" (brokers failing to vote by proxy shares of the
Company's Common Stock held in nominee name for customers) will not be counted
at the Meeting and also will have no effect on the number of votes necessary to
elect a Director.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE PROPOSED NOMINEES FOR ELECTION TO
THE BOARD.
3. AMENDMENT OF ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY.
The Company proposes to change its name to "IMPACT Holdings, Inc." The Board had
originally approved the presentation of this proposal to the Company's
Shareholders at the Board's February 2001 meeting by a unanimous vote, which
included the affirmative vote of Mr. Jordan. The Company, which is a holding
company for various wholly-owned subsidiaries, already utilizes the IMPACT name
in conducting much of its business. For example, the Company has subsidiaries
that include the sponsoring investment adviser for the IMPACT Management
Investment Trust ("IMIT"), a diversified open-end investment company, and
manages the IMPACT Total Return Portfolio, a mutual fund formed pursuant to
IMIT; a registered broker-dealer named IMPACT Financial Network, Inc.; a mutual
fund-servicing company named IMPACT Administrative Services, Inc.; and a tax
planning and preparation service named IMPACT Tax and Business Services, Inc.
The Board believes that the Company can develop more extensive brand-name
recognition in the marketplace through the consistent use of the IMPACT name.
Because the Company is a holding company for various subsidiaries operating
under the IMPACT name, the Board believes that adopting the corporate name
"IMPACT
16
Holdings, Inc." is a logical strategy that will serve the best interests of the
Company. It is intended that the votes will be cast pursuant to the accompanying
proxy to approve the name change.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
4. AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN
It is intended that votes will be cast pursuant to the accompanying proxy to
approve the amendment of the Company's 1991 Stock Option Plan, as amended (the
"Plan"), to increase to 4,000,000 from 2,000,000 the number of shares of the
Company's Common Stock reserved for issuance pursuant to the exercise of stock
options granted pursuant to the Plan. The purpose of the Plan is to enable the
Company to offer to its directors, officers and other key employees incentives
to continue in the employ of the Company and to increase their identification
with the interests of the Company's Shareholders through additional ownership of
the Company's Common Stock. The Plan is administered by the Company's
Compensation Committee, or in lieu thereof, the Company's Board of Directors.
Options granted under the Plan may or may not be "incentive stock options"
("Incentive Options") within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), depending on the decision of the
granting authority on the date of grant. The exercise price of an option granted
under the Plan may not be less than 100% of the fair market value of the
Company's Common Stock at the date of grant (110% of such fair market value if
the grant is an Incentive Option to an employee who owns more than 10% of the
Company's outstanding Common Stock). The period for which options may be
exercised is limited to no more than 10 years after date of grant (and no more
than 5 years after date of grant for Incentive Options if the grant is made to
an employee who owns more than 10% of the Company's outstanding Common Stock).
Options granted under the Plan may not be transferred by a participant in the
Plan, other than by will or the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined in Section 414(p) of the Code,
or Title I of the Employee Retirement Income Security Act or the rules
thereunder. Under the Plan, if any shares of Common Stock that are subject to an
option cease to be subject to the option, such shares shall again be available
for distribution in connection with future grants under the Plan. The Company
has registered pursuant to the Securities Act of 1933, as amended, the first
1,000,000 of shares of Common Stock that are issued pursuant to the Plan.
Pursuant to the Plan, Directors of the Company receive mandatory annual grants
of options to purchase shares of Common Stock. In the first quarter of each
calendar year, Directors are granted options to purchase 12,500 shares of Common
Stock. A Director receives options to purchase an additional 1,250 shares of
Common Stock for each committee of the Board upon which the Director serves and
for chairmanship of each such committee. See "MANAGEMENT - Meetings of the Board
of Directors and Committees."
During the life of the Plan, options to purchase over 1,950,000 shares of the
Company's Common Stock have been issued. Although some of those options have
expired, the Company currently has approximately 200,000 shares of Common Stock
available for reservation pursuant to the grant of stock options in the future.
The Board believes that best interests of the Company will be furthered by
increasing the aggregate number of shares of Common Stock available for issuance
pursuant to the exercise of stock options. The Board wishes to ensure the
continued availability of options to purchase Common Stock that may be awarded
to all current and future officers, directors and employees. The Board believes
that is important to have the flexibility to deal with future events that may
include engaging professional services, recruitment of professional management
or pursuing potential acquisitions and mergers.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
5. RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
It is intended that votes will be cast pursuant to the accompanying proxy for
the ratification of Spicer, Jeffries & Co. ("Spicer"), as the Company's
independent auditor, unless otherwise directed. Spicer's service as the
Company's independent auditor began with the audited financial statements for
1998.
The following table sets forth the aggregate fees billed by Spicer to the
Company for 2000:
17
Annual Audit Fees $ 39,564.00
Financial Information Systems Design an Implementation Fees 0
All Other Fees (1) $ 4,396.00
-----------
Total $ 43,960.00
===========
-------------------
(1) Represents primarily tax services for the year 2000.
Based on the foregoing, the Company's Audit Committee believes that the
provision of services to the Company by Spicer is compatible with maintaining
Spicer's independence.
No member of Spicer or any associate thereof has any financial interest in the
Company or its subsidiaries. By mutual agreement, a member of that firm will not
attend the Meeting in person but will be available by conference telephone call
to respond to appropriate questions and to have the opportunity to make a
statement if he desires to do so.
Shareholder approval of the Company's auditor is not required under Florida law.
The Board is submitting its selection of Spicer to its Shareholders for
ratification in order to determine whether the Shareholders generally approve of
the Company's auditor. If the selection of Spicer is not approved by the
Shareholders, the Board will reconsider its selection.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
6. OTHER MATTERS
The Board of Directors is not aware of any other business that may come before
the meeting. However, if additional matters properly come before the meeting,
then proxies will be voted at the discretion of the proxy-holders.
SHAREHOLDER PROPOSALS
The Company expects that its 2002 Annual Meeting of Shareholders will be held in
late May, as has been the Company's practice. Based on that expectation,
shareholder proposals intended to be presented at, and included in the Company's
proxy statement and proxy relating to, the 2002 Annual Meeting of Shareholders
of the Company must be received by the Company no later than Monday, December
24, 2001, at its principal executive offices, located at 333 West Vine Street,
Suite 206, Lexington, Kentucky 40507. Shareholder proposals intended to be
presented at, but not included in the Company's proxy statement and proxy for,
that meeting must be received by the Company no later than Friday, March 8,
2002, at the foregoing address; otherwise, such proposals will be subject to the
grant of discretionary authority contained in the Company's form of proxy to
vote on them.
ADDITIONAL INFORMATION
Copies of the Company's 2000 Annual Report to Shareholders, which includes the
Form 10-KSB for the year ended December 31, 2000, were provided to Shareholders
as of April 2, 2001, in connection with the previous attempt to hold an Annual
Meeting of Shareholders. Copies of the 2000 Annual Report to Shareholders are
being provided with this Proxy Statement to each Shareholder as of the record
date for this Meeting who was not a Shareholder as of April 2. If any
Shareholder wants an extra copy of the report, please call the Company at (859)
254-2240 to request it.
BY ORDER OF THE BOARD OF DIRECTORS
Charles R. Clark, Chairman of the Board
September 19, 2001
Lexington, Kentucky
18
IMPORTANT
---------
Your proxy is important. No matter what number of shares of the Common Stock of
Jordan American Holdings, Inc., that you own, please mark your proxy card "FOR"
all of the proposals listed on it and then sign, date and return the Company's
proxy card today in the postage paid envelope provided.
If any of your shares are held in the name of a brokerage firm, bank, nominee or
other institution, it can vote your shares only upon receipt of instructions
from you. Please sign, date and mail the proxy card provided to you in the
envelope provided with the proxy card. Remember, your shares cannot be voted
unless you return a signed and dated proxy card.
If you have any questions or require any assistance in voting your shares,
please call D.F. King & Co., Inc., at either of the numbers listed below:
D.F. King & Co. Inc.
77 Water Street
New York, New York 10005
Call Collect: (212) 269-5550 or
Toll Free: (800) 669-5550
19
PRELIMINARY COPY
----------------
FORM OF PROXY
PROXY FOR ANNUAL MEETING OF JORDAN AMERICAN HOLDINGS, INC.
333 WEST VINE STREET, SUITE 206
LEXINGTON, KENTUCKY 40507
(859) 254-2240
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF
JORDAN AMERICAN HOLDINGS, INC.
THE UNDERSIGNED hereby appoint(s) A.J. Elko and Charles R. Clark, or either of
them, with full power of substitution, to vote at the Annual Meeting of
Shareholders of Jordan American Holdings, Inc. (the "Company"), to be held on
October 4, 2001, at 2:00 P.M., Eastern Daylight Time, in the Company's offices
at 333 West Vine Street, Suite 206, Lexington, Kentucky 40507, or any
adjournment thereof, all shares of the common stock which the undersigned
possess(es) and with the same effect as if the undersigned was personally
present, as follows:
PROPOSAL (1): REMOVE W. NEAL JORDAN AS A CLASS I DIRECTOR OF THE COMPANY
( ) For ( ) Against ( ) Abstain
PROPOSAL (2): ELECT DIRECTORS
Class III: Gerald L. ("Jerry") Bowyer
Class III: Charles R. Clark
Class II: Richard K. Williams
Class I: M. Clare Gilchrist, Jr.
( ) For All Nominees Listed Above ( ) Withhold Authority to Vote
(except as marked to the contrary below) for All Nominees Listed Above
------------------------------------------------------------------------
(To withhold vote for any nominee or nominees, print the name(s) above.)
PROPOSAL (3): APPROVE COMPANY NAME CHANGE
( ) For ( ) Against ( ) Abstain
PROPOSAL (4): AMEND THE COMPANY'S 1991 STOCK OPTION PLAN
( ) For ( ) Against ( ) Abstain
PROPOSAL (5): RATIFY SELECTION OF INDEPENDENT AUDITOR
( ) For ( ) Against ( ) Abstain
PROPOSAL (6): TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING
( ) In their discretion, the proxy-holders are ( ) Withhold Authority
authorized to vote upon such other business
as may properly come before the meeting or
any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 THROUGH 5 AND IN THE DISCRETION
OF THE PROXIES NOMINATED HEREBY ON ANY OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
(Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons, then each should sign. Executors, administrators,
trustees, guardians, attorneys and corporate officers should include their
capacity or title.)
Please sign, date and promptly return
this Proxy in the enclosed envelope.
____________________________________________ _________________________
Signature Date
____________________________________________ _________________________
Signature Date
2