-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bq9FC5oVzZEWxaO+ViTmdwZ6YxufTM4F/pjUbC8Ir1tDobD8sZn9ugc+Bp9M7ZTb 6u3Y+iQJIZ9uHNR0jRTpvw== 0000946275-96-000252.txt : 19960913 0000946275-96-000252.hdr.sgml : 19960913 ACCESSION NUMBER: 0000946275-96-000252 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961022 FILED AS OF DATE: 19960912 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REDWOOD FINANCIAL INC /MN/ CENTRAL INDEX KEY: 0000942895 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 411807233 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-25884 FILM NUMBER: 96629130 BUSINESS ADDRESS: STREET 1: 301 S WASHINGTON ST STREET 2: P O BOX 317 CITY: REDWOOD FALLS STATE: MN ZIP: 56283 BUSINESS PHONE: 5076378730 MAIL ADDRESS: STREET 1: 301 S WASHINGTON ST STREET 2: PO BOX 317 CITY: REDWOOD FALLS STATE: MN ZIP: 56283 DEF 14A 1 FORM DEF 14A [Redwood Financial, Inc. Letterhead] September 12, 1996 Dear Fellow Stockholder: On behalf of the Board of Directors and management of Redwood Financial, Inc. (the "Company"), I cordially invite you to attend the Annual Meeting of Stockholders to be held at the office of the Company and its wholly owned subsidiary, Redwood Falls Federal Savings and Loan Association, 301 South Washington Street, Redwood Falls, Minnesota on October 22, 1996 at 10:00 a.m. The attached Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted at the Annual Meeting. During the Annual Meeting, I will report on the operations of the Company. Directors and officers of the Company, as well as a representative of KPMG Peat Marwick LLP, certified public accountants, will be present to respond to any questions stockholders may have. The matters to be considered by stockholders at the Annual Meeting are described in the accompanying Notice of Annual Meeting and Proxy Statement. The Board of Directors of the Company has determined that the matters to be considered at the Annual Meeting are in the best interest of the Company and its stockholders. For the reasons set forth in the Proxy Statement, the Board of Directors unanimously recommends a vote "FOR" each matter to be considered. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from voting in person at the Annual Meeting, but will assure that your vote is counted if you are unable to attend the Annual Meeting. YOUR VOTE IS VERY IMPORTANT. Sincerely, /s/Paul W. Pryor Paul W. Pryor President - -------------------------------------------------------------------------------- REDWOOD FINANCIAL, INC. 301 SOUTH WASHINGTON STREET REDWOOD FALLS, MINNESOTA 56283-0317 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To be Held on October 22, 1996 - -------------------------------------------------------------------------------- NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting") of Redwood Financial, Inc. (the "Company"), will be held at the office of the Company and its wholly owned subsidiary, Redwood Falls Federal Savings and Loan Association, at 301 South Washington Street, Redwood Falls, Minnesota on October 22, 1996 at 10:00 a.m. The Meeting is for the purpose of considering and acting upon the following matters: 1. The election of two directors of the Company; and 2. The ratification of the appointment of KPMG Peat Marwick LLP as independent auditors of the Company for the fiscal year ending June 30, 1997. The Board of Directors is not aware of any other business to come before the Meeting. Any action may be taken on the foregoing proposals at the Meeting on the date specified above or on any date or dates to which, by original or later adjournment, the Meeting may be adjourned. Stockholders of record at the close of business on September 3, 1996 are the stockholders entitled to vote at the Meeting and any adjournments thereof. EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY REVOKE HIS PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE IN PERSON AT THE MEETING. BY ORDER OF THE BOARD OF DIRECTORS /s/Rebecca A. Olson Rebecca A. Olson Secretary Redwood Falls, Minnesota September 12, 1996 - -------------------------------------------------------------------------------- IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PROXY STATEMENT OF REDWOOD FINANCIAL, INC. 301 SOUTH WASHINGTON STREET REDWOOD FALLS, MINNESOTA 56283-0317 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANNUAL MEETING OF STOCKHOLDERS October 22, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GENERAL - -------------------------------------------------------------------------------- This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Redwood Financial, Inc. (the "Company") to be used at the Annual Meeting of Stockholders of the Company which will be held at the office of the Company and its wholly owned subsidiary, Redwood Falls Federal Savings and Loan Association (the "Association"), at 301 South Washington Street, Redwood Falls, Minnesota on October 22, 1996 at 10:00 a.m. local time (the "Meeting"). The accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement are being first mailed to stockholders on or about September 12, 1996. The Company acquired all of the outstanding stock of the Association issued in connection with the Association's mutual-to-stock conversion on July 7, 1995 (the "Conversion"). At the Meeting, stockholders will consider and vote upon (i) the election of two directors and (ii) the ratification of the appointment of KPMG Peat Marwick LLP as independent auditor of the Company for the fiscal year ending June 30, 1997. The Board of Directors of the Company (the "Board" or the "Board of Directors") knows of no additional matters that will be presented for consideration at the Meeting. Execution of a proxy, however, confers on the designated proxy holder discretionary authority to vote the shares represented by such proxy in accordance with their best judgment on such other business, if any, that may properly come before the Meeting or any adjournment thereof. - -------------------------------------------------------------------------------- VOTING AND REVOCABILITY OF PROXIES - -------------------------------------------------------------------------------- Stockholders who execute proxies retain the right to revoke them at any time. Unless so revoked, the shares represented by such proxies will be voted at the Meeting and all adjournments thereof. Proxies may be revoked by written notice to the Secretary of the Company at the address above or by the filing of a later dated proxy prior to a vote being taken on a particular proposal at the Meeting. A proxy will not be voted if a stockholder attends the Meeting and votes in person. Proxies solicited by the Board of Directors will be voted in accordance with the directions given therein. Where no instructions are indicated, proxies will be voted "FOR" the nominees for directors set forth below and "FOR" the other listed proposal. The proxy confers discretionary authority on the persons named therein to vote with respect to the election of any person as a director where the nominee is unable to serve, or for good cause will not serve, and matters incident to the conduct of the Meeting. - -------------------------------------------------------------------------------- VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF - -------------------------------------------------------------------------------- Stockholders of record as of the close of business on September 3, 1996 (the "Record Date"), are entitled to one vote for each share of common stock of the Company (the "Common Stock") then held. As of the Record Date, the Company had 1,068,750 shares of Common Stock issued and outstanding. The articles of incorporation of the Company ("Articles of Incorporation") provide that in no event shall any record owner of any outstanding Common Stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the then outstanding shares of Common Stock (the "Limit") be entitled or permitted to any vote with respect to the shares held in excess of the Limit. Beneficial ownership is determined pursuant to the definition in the Articles of Incorporation and includes shares beneficially owned by such person or any of his or her affiliates or associates (as such terms are defined in the Articles of Incorporation), shares which such person or his or her affiliates or associates have the right to acquire upon the exercise of conversion rights or options, and shares as to which such person and his or her affiliates or associates have or share investment or voting power, but shall not include shares beneficially owned by any employee stock ownership plan or similar plan of the Company or any subsidiary. The presence in person or by proxy of at least a majority of the outstanding shares of Common Stock entitled to vote (after subtracting any shares held in excess of the Limit) is necessary to constitute a quorum at the Meeting. With respect to any matter, any shares for which a broker indicates on the proxy that it does not have discretionary authority as to such shares to vote on such matter (the "Broker Non-Votes") will be considered present for purposes of determining whether a quorum is present. In the event there are not sufficient votes for a quorum or to ratify any proposals at the time of the Meeting, the Meeting may be adjourned in order to permit the further solicitation of proxies. As to the election of directors, the proxy being provided by the Board enables a stockholder to vote for the election of the nominees proposed by the Board, or to withhold authority to vote for one or more of the nominees being proposed. Directors are elected by a plurality of votes of the shares present in person or represented by proxy at a meeting and entitled to vote in the election of directors. As to the ratification of independent auditors as set forth in Proposal II, by checking the appropriate box, a stockholder may; (1) vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Ratification of Proposal II requires a majority of votes cast at the Meeting. Unless otherwise required by law, all other matters shall be determined by a majority of votes cast affirmatively or negatively without regard to (a) Broker Non-Votes or (b) proxies marked "ABSTAIN" as to that matter. Persons and groups owning in excess of 5% of the Common Stock are required to file certain reports regarding such ownership pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). The following table sets forth, as of the Record Date, persons or groups who own more than 5% of the Common Stock and the ownership of all executive officers and directors of the Company as a group. Other than as noted below, management knows of no person or group that owns more than 5% of the outstanding shares of Common Stock at the Record Date. -2-
Percent of Shares of Amount and Nature of Common Stock Name of Beneficial Owner Beneficial Ownership Outstanding - ------------------------ -------------------- -------------------- Redwood Falls Federal Savings and Loan Association Employee Stock Ownership Plan Trust 301 South Washington Street, Redwood Falls, Minnesota 82,748(1) 7.74% Laifer Capital Management, Inc. 45 West 45th Street New York, New York 10036 66,700(2) 6.24% Wellington Management Company 75 State Street Boston, Massachusetts 02109 93,800(3) 8.78% First Financial Fund, Inc. One Seaport Plaza - 25th Floor New York, New York 10292 93,800(4) 8.78%
- ---------------------------------- (1) Held directly for the benefit of employees of the Association. (2) Based on a Schedule 13G filed with the Securities and Exchange Commission, dated February 7, 1996. (3) Based on a Schedule 13G filed with the Securities and Exchange Commission, dated February 9, 1996. (4) Based on a Schedule 13G filed with the Securities and Exchange Commission, dated February 7, 1996. - -------------------------------------------------------------------------------- SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE - -------------------------------------------------------------------------------- Section 16(a) of the 1934 Act requires the Company's officers and directors, and persons who own more than ten percent of the Common Stock, to file reports of ownership and changes in ownership of the Common Stock, on Forms 3, 4 and 5, with the Securities and Exchange Commission ("SEC") and to provide copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any beneficial owner of more than ten percent of its Common Stock. Based upon a review of the copies of the forms furnished to the Company, or written representations from certain reporting persons that no Forms 5 were required, the Company believes that all Section 16(a) filing requirements applicable to its officers and directors were complied with during the 1996 fiscal year. -3- - -------------------------------------------------------------------------------- I - INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS - -------------------------------------------------------------------------------- Election of Directors The Articles of Incorporation require that the Board of Directors be divided into three classes, each of which contains approximately one-third of the members of the Board. The directors are elected by the stockholders of the Company for staggered three-year terms, or until their successors are elected and qualified. The Board of Directors currently consists of six members. Two directors will be elected at the Meeting to serve for three-year terms or until a successor has been elected and qualified. James P. Tersteeg and J. Scott Nelson have been nominated by the Board of Directors to serve as directors with three-year terms to expire in 1999. Messrs. Tersteeg and Nelson currently serve on the Board of Directors as Chairman and Vice Chairman, respectively. If a nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute as the Board of Directors may recommend or the size of the Board may be reduced to eliminate the vacancy. At this time, the Board knows of no reason why a nominee might be unavailable to serve. The following table sets forth the nominees and the directors continuing in office, their name, age, the year they first became a director of the Company or the Association, the expiration date of their current term as a director, and the number and percentage of shares of the Common Stock beneficially owned. Each director of the Company is also a member of the Board of Directors of the Association.
Shares of Year First Current Common Stock Elected or Term to Beneficially Owned Percent Name Age(1) Appointed(2) Expire (3)(4) of Class(5) - ---- ------ ------------ ------- ------------------ ----------- BOARD NOMINEES FOR TERM TO EXPIRE IN 1999 James P. Tersteeg 50 1980 1996 37,500(6) 3.5% J. Scott Nelson 40 1987 1996 27,912(6) 2.6% DIRECTORS CONTINUING IN OFFICE Paul W. Pryor 65 1966 1997 26,307 2.5% Blaine C. Farnberg 68 1972 1997 23,922(6) 2.2% Donald C. Orth 52 1982 1998 7,284 -.-%(7) Thomas W. Stotesbery 43 1991 1998 7,775(6) -.-%(7) All Directors and Executive Officers as a Group (6 persons) 130,700 12.2%
- ------------------------ (1) At June 30, 1996. (2) Refers to the year the individual first became a director of the Company or the Association. All directors of the Association during January 1995 became directors of the Company when it was incorporated in January 1995. -4- (3) Includes shares of Common Stock held directly as well as by spouses or minor children, in trust, and other indirect ownership, over which shares the individuals effectively exercise sole or shared voting and investment power, unless otherwise indicated. Excludes shares of Common Stock subject to options not exercisable as of the Voting Record Date. (4) Beneficial ownership as of the Record Date. (5) Percentages are calculated on the basis of the amount of outstanding Common Stock, excluding Common Stock held by or for the account of the Company or its subsidiaries, plus Common Stock deemed outstanding pursuant to the rules under the 1934 Act. The amount of Common Stock that an individual has a right to acquire (e.g., pursuant to the exercise of options or through the vesting of restricted stock) within 60 days from the Record Date is included when calculating that individual's percentage of Common Stock beneficially owned. There were no options or restricted stock beneficially owned as of the Record Date. (6) Excludes 74,468 unallocated shares of Common Stock held under the Employee Stock Ownership Plan ("ESOP") for which such person serves as a member of the ESOP Committee or Trustee Committee. Such individual disclaims beneficial ownership with respect to such shares held in a fiduciary capacity. See "Director and Executive Officer Compensation - Other Benefits - Employee Stock Ownership Plan." Excludes 45,000 shares of Common Stock held under the Management Stock Bonus Plan for which such person serves as a member of the Management Stock Bonus Plan Committee or as trustee. See "Director and Executive Officer Compensation - Other Benefits - Management Stock Bonus Plan." (7) Less than 1.0%. Biographical Information Set forth below is certain information with respect to the directors of the Company. All directors have held their present positions for five years unless otherwise stated. Messrs. Pryor and Orth are the executive officers of the Company. James P. Tersteeg has been a director of the Association since 1980 and a director of the Company since its formation in January 1995. Mr. Tersteeg is the owner of Tersteeg's Inc., a grocery store in Redwood Falls, Minnesota. Mr. Tersteeg is also a member of the District 637 Foundation, the Lion's Club, and the Redwood Falls Planning Task Force. J. Scott Nelson has been a director of the Association since 1987 and a director of the Company since its formation in January 1995. Dr. Nelson, a doctor of pharmacy, is a part-owner and chief executive officer of Sward-Kemp Drug, Inc., a provider of pharmaceutical services in Redwood Falls. Dr. Nelson is also a member of the Redwood Falls Public Utilities Commission and a director of Redwood Falls Venture Capital. Paul W. Pryor has been with the Association as an officer and a director since 1966 and a director of the Company since its formation in January 1995. Mr. Pryor became the President and Chief Executive Officer of the Association in 1974. Mr. Pryor is a member of the Redwood City Task Force, a member of the Minnesota League of Savings and Community Bankers, and a member of America's Community Bankers. Blaine C. Farnberg has been a director of the Association since 1972 and a director of the Company since its formation in January 1995. Mr. Farnberg is retired from the retail shoe business. He is also Treasurer of the Battle Lake Food Shelf and a director of Art of the Lakes. -5- Donald C. Orth has been with the Association since 1975 and has been a director of the Association since 1982 and a director of the Company since its formation in January 1995. Mr. Orth serves as a Vice President of the Company and the Association and has been a branch manager since 1975. Mr. Orth is also an officer of the Olivia Chamber of Commerce, the Kiwanis Club, and the Youth Baseball League. Thomas W. Stotesbery has been a director of the Association since 1991 and a director of the Company since its formation in January 1995. Mr. Stotesbery has been a Certified Public Accountant for more than 14 years. He is also a member of the Redwood Falls Public Utilities Commission, secretary of the Redwood Falls Lions Club, and a member of the St. Catherine Parish Council. Nominations for Directors Pursuant to Article X of the Articles of Incorporation, nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Company as set forth in that Article. To be timely, a stockholder's notice shall be delivered to, or mailed and received at, the principal executive offices of the Company not less than 60 days prior to the anniversary date of the immediately preceding annual meeting of stockholders of the Company. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director and as to the stockholder giving the notice (i) the name, age, business address, and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of Common Stock which are beneficially owned by such person on the date of such stockholder notice, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies with respect to nominees for election as directors pursuant to Regulation 14A under the 1934 Act; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Company's books, of such stockholder and any other stockholders known by such stockholder to be supporting such nominees and (ii) the class and number of shares of Common Stock which are beneficially owned by such stockholder on the date of such stockholder notice and, to the extent known, by any other stockholders known by such stockholder to be supporting such nominees on the date of such stockholder notice. At the request of the Board of Directors, any person nominated by, or at the direction of, the Board for election as a director at an annual meeting shall furnish to the Secretary of the Company that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. The Board of Directors may reject any nomination by a stockholder not timely made in accordance with the requirements of the Articles of Incorporation. If the presiding officer at the meeting determines that a nomination was not made in accordance with the terms of the Articles of Incorporation, the presiding officer shall so declare at the annual meeting, and the defective nomination shall be disregarded. Meetings and Committees of the Board of Directors The Board of Directors conducts its business through its meetings and through the activities of its committees. During the year ended June 30, 1996, the Board of Directors held twelve regular meetings and two special meetings. No director attended fewer than 75% of the total meetings of the Board of Directors and committees on which such director served during the fiscal year ended June 30, 1996. -6- The Compensation Committee is comprised of directors Tersteeg, Nelson, Farnberg, and Stotesbery. The committee is responsible for continual review of the performance of the senior management group consisting of the President/Chief Executive Officer and the Vice President/Branch Manager. The Compensation Committee is also responsible for setting the levels of compensation of all employees. The committee met once in fiscal 1996. The Audit Committee is comprised of directors Farnberg, Stotesbery, and Nelson. The audit committee is responsible for overseeing the Company's and the Association's audit procedures and other related matters. The audit committee met once during fiscal 1996. The Company does not have a standing nominating committee. - -------------------------------------------------------------------------------- DIRECTOR AND EXECUTIVE OFFICER COMPENSATION - -------------------------------------------------------------------------------- Director Compensation Each member of the Board of Directors receives a fee of $500 for each meeting attended. No additional fees are paid for committee meetings. For the fiscal year ended June 30, 1996, fees paid to all directors totalled $41,000. Directors also received awards of stock option and restricted stock under the 1995 Stock Option Plan and the Management Stock Bonus Plan as of the date of stockholder approval of these plans. See "- Other Benefits - 1995 Stock Option Plan" and "- Management Stock Bonus Plan." Executive Compensation Summary Compensation Table. The following table sets forth the cash and non-cash compensation awarded to or earned by the Chief Executive Officer. No other executive officer had a salary and bonus during the fiscal year ended June 30, 1996 that exceeded $100,000 for services rendered in all capacities to the Company. All compensation listed below was paid by the Association.
Long Term Compensation Annual Compensation Awards -------------------------------------- -------------------------- Securities Restricted Underlying Name and Principal Other Annual Stock Options/ All Other Position Year Salary Bonus Compensation(1) Awards($) SARS(#) Compensation - -------------------- ---- ------ ----- --------------- --------- ------- ------------ Paul W. Pryor 1996 $109,440 $9,120 $7,000 110,391(2) 28,125(3) $12,255(4) President and Chief 1995 $104,232 $8,686 $7,200 -- -- -- Executive Officer 1994 $ 97,416 $8,118 $3,450 -- -- --
- ------------------ (1) Consists solely of Board of Director's fees. For the fiscal years 1996, 1995, and 1994, there were no (a) perquisites over the lesser of $50,000 or 10% of the named executive officer's total salary and bonuses for the year; (b) payments of above-market preferential earnings on deferred compensation; (c) payments of earnings with respect to long term incentive plans prior to settlement or maturity; (d) tax payment reimbursements; or (e) preferential discounts on stock. -7- (2) Mr. Pryor has 11,250 shares of restricted stock in the aggregate which have a total value of $105,469 (calculated by multiplying the aggregate number of restricted stock by the Common Stock's average bid and ask price as of the last day of the 1996 fiscal year). Dividends, if any, are paid on the restricted stock awarded and are accrued until the restricted stock becomes vested. Awards are earned by participants at a rate of 20% per year for five years, as long as the participant remains an employee of the Association. The value of restricted stock granted is calculated by multiplying (i) the number of restricted stock granted by (ii) the Common Stock's closing average bid and ask price as of the date of grant. (3) Such options by their term shall be first exercisable at the rate of one-fifth per year beginning on the anniversary date of the date that the option was granted (January 17, 1996). (4) Consists of an allocation of 1,307.19 shares of Common Stock under the ESOP as of June 30, 1996, with a value of $9.375 (average of the bid and ask price) at June 30, 1996. Employment Agreement. During 1995, in connection with the Conversion, the Association entered into an employment agreement with President Paul Pryor. The agreement is for a term of three years and has a base salary of $109,440. The agreement is terminable by the Association for just cause. Just cause is defined in the agreement as termination by reason of personal dishonesty; incompetence; willful misconduct; breach of a fiduciary duty involving personal profit; intentional failure to perform stated duties; willful violation of any law, rule, or regulation (other than traffic violations or similar offenses); entering into a final cease-and-desist order; or material breach of any provision of the agreement. If the agreement is terminated for just cause, the employee only receives his salary up to the date of termination. If the Association terminates the agreement without just cause, the employee is entitled to a continuation of salary from the date of termination through the remaining term of the agreement. The agreement provides that in the event of involuntary termination of employment in connection with, or within one year after, any change in control of the Company or the Association, the employee will be paid a lump sum equal to 2.99 times the employee's average compensation during the prior five year period. If a lump sum payment had been made as of June 30, 1996, Mr. Pryor would have received a payment of up to $295,034. That payment would be an expense to the Association, reducing net earnings and the Association's capital by that amount. The agreement may be renewed annually if the board of directors determines that the executive has met its requirements and standards. Other Benefits Deferred Compensation. The Association maintains a non-qualified deferred compensation plan that allows an employee to annually defer up to one month's salary into an account for the benefit of the employee. Upon attaining the age of 65, the employee is entitled to the amount in the account payable in six annual installments. Such six year period may be shortened or lengthened (up to a total of ten years) by the Association's board of directors. Employee Stock Ownership Plan. The Association has established an employee stock ownership plan, the ESOP, for the exclusive benefit of participating employees, which was implemented upon the completion of the Conversion. The ESOP purchased 82,748 shares for the exclusive benefit of plan participants with funds borrowed from the Company. These shares are held in a suspense account and will be allocated among ESOP participants annually on the basis of compensation as the ESOP debt is repaid. The ESOP Committee or the Board instructs the ESOP Trustees regarding investment of ESOP plan assets. The ESOP Trustees must vote all shares allocated to participant accounts under the ESOP as directed by participants. Unallocated shares and shares for which no timely voting direction is received will be voted by the ESOP Trustees as directed by the ESOP Committee. As of the Record Date, 4,140 shares have been allocated under the ESOP to participant accounts. -8- 401(k) Savings Plan. The Association has a tax-qualified defined contribution savings plan ("401(k) Plan") in place for the benefit of its employees. The Association does not match contributions made by its employees. Pension Plan. The Association sponsors a tax-qualified defined benefit pension plan (the "Pension Plan"). All full-time employees of the Association are eligible to participate after 1 year of services and attainment of age 21. A qualifying employee becomes fully vested in the Pension Plan upon completion of five years of qualifying service. The Pension Plan is intended to comply with ERISA. The Pension Plan provides for monthly payments to each participating employee at normal retirement age (age 65). For service prior to January 1, 1994, the monthly benefits payable under the Pension Plan are equal to 34.5% of average monthly compensation, plus 13.5% of average monthly compensation in excess of one-twelfth of covered compensation, reduced for less than 30 years of credited service. Covered compensation is a 35 year average of social security taxable wage bases. Benefits for service after December 31, 1993, are based upon 1.15% of Average Monthly Compensation times years of service (to a maximum of 30 years), plus 0.45% of Average Monthly Compensation in excess of one-twelfth of covered compensation. Covered compensation is a 35 year average of social security taxable wage bases. The maximum benefit is $7,500 per month. If a participant elects early retirement (age 55), the participant receives a reduced monthly benefit. If a participant elects late retirement, the participant receives an increased monthly benefit. Benefits are paid for the life of the participant following retirement. The Pension Plan also provides for payments in the event of death. At June 30, 1996, Mr. Pryor had 30 years of credited service under the Pension Plan. At June 30, 1996, the monthly benefit payable to Mr. Pryor at normal retirement age would have been $3,651. Total pension expense for the years ended June 30, 1996, 1995, and 1994 amounted to $21,770, $31,125, and $29,647, respectively. Benefits are payable in the form of various annuity alternatives, including a joint and survivor option. For the Pension Plan year ended June 30, 1996, the highest permissible annual benefit under the Code is $120,800. Benefits under the Pension Plan are subject to offset for Social Security benefits. 1995 Stock Option Plan. The Board of Directors has adopted the Redwood Financial, Inc. 1995 Stock Option Plan (the "Option Plan"), which was approved by the Company's stockholders at the special meeting of stockholders on January 17, 1996. Pursuant to the Option Plan, a number of shares equal to 10% of the Common Stock issued in the Company's initial public offering (i.e., 112,500 shares of Common Stock) were reserved for issuance by the Company upon exercise of stock options to be granted to officers, directors, and key employees of the Company (or any present of future parent or subsidiary of the Company), from time to time under the Option Plan. The purpose of the Option Plan is to provide additional incentive to certain officers, directors, and key employees by facilitating their purchase of a stock interest in the Company. The Option Plan became effective on January 17, 1996 and provides for a term of up to ten years, after which no awards may be made. An initial grant of 92,500 stock options under the Option Plan was made upon the Company's receipt of stockholder approval on January 17, 1996, and the option exercise price is the closing price of the Common Stock on the date of stockholder approval. The initial grants of stock options were the only options granted to officers, directors, and key employees during the fiscal year ended June 30, 1996. Each of Messrs. Tersteeg, Nelson, Farnberg, and Stotesbery received options to purchase 5,625 shares of Common Stock. Messrs. Pryor and Orth received options to purchase 28,125 and 16,875 shares of Common Stock, respectively. As of the Record Date, no stock options have been exercised pursuant to the Option Plan and 20,000 options are still available for grant. -9- OPTION/SAR GRANTS IN LAST FISCAL YEAR (Individual Grants)
Potential Realizable Percent of Value at Assumed Number of Total Options/ Annual Rate of Stock Securities SARs Granted Price Appreciation for Underlying to Employees Exercise or Option Term Options/SARs in Fiscal Base Price ---------------------- Name Granted (#) Year ($/Sh) Expiration Date 5%($) 10%($) - -------------------- -------------- -------------- --------------- ---------------- ----- ------ Paul W. Pryor 28,125 30.41% $9.8125 January 17, 2006 $173,560 $439,836
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Securities Underlying Unexercised Value of Unexercised Shares Options/SARs at in-the-Money Options/SARs Acquired on Value Fiscal Year-End (#) at Fiscal Year-End ($) Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable - ---------------------- -------------- -------------- ------------------------- -------------------------- Paul W. Pryor 0 $0 0 / 28,125 $0 / $0
Management Stock Bonus Plan. The Board of Directors has adopted the Redwood Falls Federal Savings and Loan Association Management Stock Bonus Plan (the "Management Stock Bonus Plan" or "MSBP"), which was approved by the Company's stockholders at the special meeting of stockholders on January 17, 1996. The purpose of the MSBP is to provide directors, officers, and key employees of the Association with a proprietary interest in the Company in a manner designed to encourage such persons to remain with the Association. Officers, directors, and key employees of the Association were awarded a total of 27,000 shares of restricted stock pursuant to the MSBP on the date stockholders of the Company approved the MSBP. Each of Messrs. Tersteeg, Nelson, Farnberg and Stotesbery received 2,250 shares of restricted stock. Messrs. Pryor and Orth received 11,250 and 6,750 shares of restricted stock, respectively. - -------------------------------------------------------------------------------- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------------------------------------------------------------------------------- The Association, like many financial institutions, has followed a policy of granting various types of loans to officers, directors, and employees. The loans have been made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the Association's other customers, and do not involve more than the normal risk of collectibility, or present other unfavorable features. -10- - -------------------------------------------------------------------------------- II - RATIFICATION OF INDEPENDENT AUDITOR - -------------------------------------------------------------------------------- KPMG Peat Marwick LLP was the Company's independent auditor for the fiscal year ended June 30, 1996. The Board of Directors has approved the selection of KPMG Peat Marwick LLP as its auditor for the fiscal year ending June 30, 1997, subject to ratification by the Company's stockholders. If not ratified, the Board of Directors will reconsider its selection. A representative of KPMG Peat Marwick LLP is expected to be present at the Meeting to respond to stockholders' questions and will have the opportunity to make a statement if he or she so desires. Ratification of the appointment of the auditor requires the approval of a majority of the votes cast by the stockholders of the Company at the Meeting. The Board of Directors recommends that stockholders vote "FOR" the ratification of the appointment of KPMG Peat Marwick LLP as the Company's auditor for the fiscal year ending June 30, 1997. - -------------------------------------------------------------------------------- OTHER MATTERS - -------------------------------------------------------------------------------- The Board of Directors is not aware of any business to come before the Meeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the Meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the persons named in the accompanying proxy. - -------------------------------------------------------------------------------- MISCELLANEOUS - -------------------------------------------------------------------------------- The cost of soliciting 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 materials to the beneficial owners of Common Stock. The Company's Annual Report to Stockholders for the fiscal year ended June 30, 1996, including financial statements, will be mailed on September 12, 1996 to all stockholders of record as of the close of business on September 3,1996. Any stockholder who has not received a copy of such Annual Report may obtain a copy by writing to the Secretary of the Company. Such Annual Report is not to be treated as a part of the proxy solicitation material or as having been incorporated herein by reference. - -------------------------------------------------------------------------------- STOCKHOLDER PROPOSALS - -------------------------------------------------------------------------------- In order to be eligible for inclusion in the Company's proxy materials for next year's Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be received at the Company's executive offices at 301 South Washington Street, P.O. Box 317, Redwood Falls, Minnesota 56283-0317, no later than May 15, 1997. -11- - -------------------------------------------------------------------------------- FORM 10-KSB - -------------------------------------------------------------------------------- A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED JUNE 30, 1996, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, REDWOOD FINANCIAL, INC., 301 SOUTH WASHINGTON STREET, P.O. BOX 317, REDWOOD FALLS, MINNESOTA 56283-0317. BY ORDER OF THE BOARD OF DIRECTORS /s/Rebecca A. Olson Rebecca A. Olson Secretary Redwood Falls, Minnesota September 12, 1996 -12- ANNEX A - -------------------------------------------------------------------------------- REDWOOD FINANCIAL, INC. 301 SOUTH WASHINGTON STREET REDWOOD FALLS, MINNESOTA 56283-0317 (507) 637-8730 - -------------------------------------------------------------------------------- ANNUAL MEETING OF STOCKHOLDERS October 22, 1996 - -------------------------------------------------------------------------------- The undersigned hereby appoints the Board of Directors of Redwood Financial, Inc. (the "Company"), or its designee, with full powers of substitution, to act as attorneys and proxies for the undersigned, to vote all shares of common stock of the Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders (the "Meeting"), to be held at the office of the Company and its wholly owned subsidiary, Redwood Falls Federal Savings and Loan Association, 301 South Washington Street, Redwood Falls, Minnesota on October 22, 1996 at 10:00 a.m. and at any and all adjournments thereof, in the following manner: FOR WITHHELD --- -------- 1. The election as director of all nominees listed below: |_| |_| James P. Tersteeg J. Scott Nelson INSTRUCTIONS: To withhold your vote for any individual nominee, insert the nominee's name on the line provided below.
FOR AGAINST ABSTAIN --- ------- ------- 2. The ratification of the appointment of KPMG Peat Marwick LLP as independent auditors of Redwood Financial, Inc., for the fiscal year ending June 30, 1997. |_| |_| |_|
In their discretion, such attorneys and proxies are authorized to vote upon such other business as may properly come before the Meeting or any adjournments thereof. The Board of Directors recommends a vote "FOR" all of the above listed propositions. - -------------------------------------------------------------------------------- THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. - -------------------------------------------------------------------------------- THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS Should the undersigned be present and elect to vote at the Meeting, or at any adjournments thereof, and after notification to the Secretary of the Company at the Meeting of the stockholder's decision to terminate this proxy, the power of said attorneys and proxies shall be deemed terminated and of no further force and effect. The undersigned may also revoke this proxy by filing a subsequently dated proxy or by written notification to the Secretary of the Company of his or her decision to terminate this proxy. The undersigned acknowledges receipt from the Company prior to the execution of this proxy of a Notice of Annual Meeting of Stockholders and a Proxy Statement dated September 12, 1996. Please check here if you Dated: , 1996 |_| plan to attend the Meeting. ----------------------------- - --------------------------------- ------------------------------------ PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER - --------------------------------- ------------------------------------ SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER Please sign exactly as your name appears on this proxy. When signing as attorney, executor, administrator, trustee, or guardian, please give your full title. If shares are held jointly, each holder should sign. - -------------------------------------------------------------------------------- PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. - -------------------------------------------------------------------------------- ANNEX B SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) 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)) [X]Definitive Proxy Statement [ ]Definitive Additional Materials [ ]Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12 Redwood Financial, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of filing fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [ ] 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: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (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.) - -------------------------------------------------------------------------------- (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: - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----