<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
T&W FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it
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<PAGE> 2
[T&W LOGO]
Tacoma, Washington
April 10, 1998
Dear Shareholders:
You are cordially invited to attend the T&W Financial Corporation Annual
Meeting of Shareholders on Thursday, April 30, 1998 at 6:00 p.m. (Pacific
Daylight Time). The meeting will be held at Rainier Club, 820 Fourth Avenue,
Seattle, Washington 98104. Directions to the Rainier Club appear on the back
cover of this Notice of Annual Meeting and Proxy Statement.
The matters to be acted upon are described in the accompanying Notice of
Annual Meeting and Proxy Statement. At the meeting, we will also report on T&W
Financial Corporation's operations and respond to any questions you may have.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED. PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED, POSTAGE-PREPAID
ENVELOPE IN ORDER TO ENSURE THAT YOUR VOTE IS COUNTED. IF YOU ATTEND THE
MEETING, YOU WILL, OF COURSE, HAVE THE RIGHT TO REVOKE THE PROXY AND VOTE YOUR
SHARES IN PERSON.
Very truly yours,
/s/ MICHAEL A. PRICE
Michael A. Price
Chairman of the Board and Chief
Executive Officer
<PAGE> 3
T&W FINANCIAL CORPORATION
6416 PACIFIC HIGHWAY EAST
TACOMA, WASHINGTON, 98424
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
ON
APRIL 30, 1998
The Annual Meeting of Shareholders of T&W Financial Corporation, (the
"Company") will be held at the Rainier Club, on Thursday, April 30, 1998, at
6:00 p.m. (Pacific Daylight Time) for the following purposes:
1. To elect directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified;
2. To ratify the selection of BDO Seidman, LLP as the Company's independent
auditors for fiscal year 1998; and
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 31, 1998 will
be entitled to notice of and to vote at the Annual Meeting of Shareholders and
any adjournments or postponement thereof.
The Company's Proxy Statement is attached hereto. Financial and other
information concerning the Company is contained in the enclosed Annual Report
for the fiscal year ended December 31, 1997.
By Order of the Board of Directors,
/s/ PAUL B. LUKE
Paul B. Luke
Senior Vice President, Chief Financial
Officer,
Treasurer and Secretary
Tacoma, Washington
April 10, 1998
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN
THE ENCLOSED, POSTAGE-PREPAID ENVELOPE TO ENSURE THE PRESENCE OF A QUORUM FOR
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY, OF COURSE, REVOKE THE PROXY AND
VOTE IN PERSON. PLEASE NOTE, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE
MEETING A LETTER FROM YOUR BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR
BENEFICIAL OWNERSHIP OF THE SHARES. ADDITIONALLY, IN ORDER TO VOTE AT THE
MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 4
T&W FINANCIAL CORPORATION
6416 PACIFIC HIGHWAY EAST
TACOMA, WASHINGTON, 98424
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
GENERAL
This Proxy Statement is furnished by and on behalf of the Board of
Directors of T&W Financial Corporation, a Washington corporation ("T&W" or the
"Company") in connection with the solicitation of proxies for use at the Annual
Meeting of Shareholders of the Company (the "Annual Meeting") for the fiscal
year ended December 31, 1997 ("fiscal year 1997") to be held at 6:00 p.m.
(Pacific Daylight Time) on Thursday, April 30, 1998 at the Rainier Club, 820
Fourth Avenue, Seattle, Washington 98104 and at any adjournment thereof.
Directions to the Rainier Club are provided on the back cover of this Proxy
Statement.
VOTING RIGHTS AND OUTSTANDING SHARES
A shareholder who delivers an executed proxy pursuant to this solicitation
may revoke it at any time before it is exercised by (i) executing and delivering
a later dated proxy card to the Secretary of the Company prior to the Annual
Meeting, (ii) delivering written notice of revocation of the proxy to the
Secretary of the Company prior to the Annual Meeting or (iii) attending and
voting in person at the Annual Meeting. Attendance at the Annual Meeting, in and
of itself, will not constitute a revocation of a proxy. Proxies will be voted as
specified by the shareholder or shareholders granting the proxy. Unless contrary
instructions are specified, if the enclosed proxy is executed and returned (and
not revoked) prior to the Annual Meeting, the shares of common stock, par value
$0.01 per share ("Common Stock"), of the Company represented thereby will be
voted for (1) the election of the directors nominated by the Board of Directors;
(2) the ratification of the selection of BDO Seidman, LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998 ("fiscal year
1998"), and (3) in accordance with the best judgment of the named proxies on
other matters properly brought before the Annual Meeting.
The presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock is required to constitute a quorum for the
transaction of business at the Annual Meeting. Michael A. Price, the Chairman
and Chief Executive Officer of the Company, beneficially owns sufficient shares
to constitute a quorum. Under Washington law, if a quorum is present, a nominee
for election to a position on the Board of Directors will be elected as a
director if the votes cast for the nominee exceed the votes cast against the
nominee and exceed the votes cast for any other nominee for that position.
Abstentions and "broker non-votes" (shares held by a broker or nominee that does
not have the authority, either express or discretionary, to vote on a particular
matter) are counted for purposes of determining the presence or absence of a
quorum for the transaction of business at the Annual Meeting. For the election
of directors, abstentions and broker non-votes will have the effect of neither a
vote for nor a vote against the nominee. Ratification of the selection of BDO
Seidman, LLP as the Company's independent auditors and any other matter that
properly comes before the meeting requires the affirmative vote of a majority of
the shares of Common Stock represented in person or by proxy and entitled to
vote on the matter. Accordingly, abstention and broker non-votes, because they
are not affirmative votes, will have the effect of a vote against the proposal.
Proxies and ballots will be received and tabulated by TranSecurities
International, Inc., the Company's transfer agent and the inspector of elections
for the Annual Meeting.
This Proxy Statement and the enclosed proxy card will be first mailed on or
about April 10, 1998 to the Company's shareholders of record on March 31, 1998
(the "Record Date").
<PAGE> 5
SOLICITATION
The expense of preparing, printing and mailing this Proxy Statement and the
proxies solicited hereby will be borne by the Company. Proxies will be solicited
by mail and may also be solicited by directors, officers and other employees of
the Company, without additional remuneration, in person or by telephone or
facsimile transmission. The Company will also request brokerage firms, banks,
nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of Common Stock as of the record date and will
reimburse such persons for the cost of forwarding the proxy materials in
accordance with customary practice. The Company has retained TranSecurities
International, Inc., to aid in the solicitation of proxies. Your cooperation in
promptly signing and returning the enclosed proxy card will help to avoid
additional expense.
At the close of business on the Record Date, there were 8,387,718 shares of
Common Stock (the "Shares") outstanding and there were no outstanding shares of
any other class of stock. Holders of Shares authorized to vote are entitled to
cast one vote per Share on all matters.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Seven directors are to be elected at the annual meeting, to hold office
until the next annual meeting of shareholders and until their successors are
elected and qualified, or until such director's earlier death, resignation or
removal.
Unless otherwise directed, the persons named in the proxy intend to vote
all proxies FOR the election of Messrs. Michael A. Price, Thomas W. Price, Paul
B. Luke, Kenneth W. McCarthy, Jr., Kenneth L. Hatch, David N. Syferd and Robert
E. Kadlec to the Board of Directors. The nominees have consented to serve as
directors of the Company if elected. If at the time of the Annual Meeting,
Messrs. Michael and Thomas Price, Luke, McCarthy, Hatch, Syferd or Kadlec is
unable or declines to serve as a director, the discretionary authority provided
in the enclosed proxy will be exercised to vote for a substitute candidate
designated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees will be unable or will decline to serve as a
director. It is intended that the accompanying proxy will be voted in favor of
the following persons to serve as directors unless the shareholder indicates to
the contrary on the proxy. Management expects that each of the nominees will be
available for election, but if any of them is not a candidate at the time the
election occurs, it is intended that such proxy will be voted for the election
of another nominee to be designated by the Board of Directors to fill any such
vacancy.
Set forth below is certain information furnished to the Company by the
director nominees.
INFORMATION ABOUT THE NOMINEES
The following table sets forth certain information with respect to those
persons nominated by the Board of Directors for election as directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
---- --- ------------------------- --------
<S> <C> <C> <C>
Michael A. Price 52 Director, Chairman of the Board 1976
and Chief Executive Officer
Thomas W. Price 34 Director and President 1991
Kenneth W. McCarthy, Jr. 57 Director, Senior Vice President 1996
and General Counsel
Paul B. Luke 42 Director, Senior Vice President, 1996
Chief Financial Officer,
Secretary and Treasurer
Kenneth L. Hatch 62 Director 1997
David N. Syferd 52 Director 1997
Robert E. Kadlec 62 Director Nominee
</TABLE>
2
<PAGE> 6
Michael A. Price is the founder of the Company and has been Chairman of the
Board and Chief Executive Officer of the Company and its predecessors since its
formation in 1976. Prior to 1976, Mr. Price was a Vice President of
International Finance, an independent leasing company. Mr. Price was one of the
founders, and is a past director, of the United Association of Equipment Lessors
("UAEL"), a national association of leasing companies.
Thomas W. Price has been a director of the Company and its predecessors
since 1991. Mr. Price is the son of Mr. Michael A. Price and has served as
President of the Company and its predecessors since 1996. He was Vice President,
Secretary and Treasurer of the Company from 1992 through 1995, and has been
employed by the Company since 1982. Mr. Price received his B.S. in Finance and
Economics from Central Washington University.
Kenneth W. McCarthy, Jr. has been a director of the Company and its
predecessors since July 1996. Mr. McCarthy was appointed Senior Vice President
and General Counsel of the Company and its predecessors in July 1996. Mr.
McCarthy was a principal with the law firm of McCarthy & Hogan, P.S. which
performed general legal services for the Company and its predecessor since its
formation in 1976. Mr. McCarthy received his B.S. in Chemistry from Seattle
University and his J.D. from Gonzaga University.
Paul B. Luke has been a director of the Company and its predecessors since
July 1996. Mr. Luke joined the Company in July 1996 as Senior Vice President,
Chief Financial Officer, Secretary and Treasurer. From 1993 through June 1996,
Mr. Luke was with the accounting firm of BDO Seidman, LLP, where he was most
recently a partner responsible for the structured finance and equipment leasing
practice group. Mr. Luke worked extensively on assisting BDO Seidman, LLP
clients in securitizations. Prior to 1993, Mr. Luke owned an accounting firm,
besides being an associate for a Washington based accounting firm. Mr. Luke
received his B.S. in Accounting and Economics from Nebraska Wesleyan University,
his J.D. from the University of Pittsburgh and his M.B.A. from Pepperdine
University.
Kenneth L. Hatch has been a director of the Company and its predecessors
since July 1997. Mr. Hatch has served as the President of The Pacific Institute,
a corporate consulting firm, since February 1996. From February 1995 through
February 1996, Mr. Hatch was a Senior Vice President of AH Belo. From 1980
through 1995, Mr. Hatch served as Chairman, President and Chief Executive
Officer of KIRO, Inc., a division of Bonneville International Corporation. From
1980 through 1995, Mr. Hatch also had additional responsibilities as Senior Vice
President of Bonneville International Corporation. Mr. Hatch received his B.S.
in Business and Finance from the University of Utah.
David N. Syferd has been a director of the Company and its predecessors
since July 1997. Mr. Syferd has been a partner in the Seattle based
advertising/public relations agency of KNCF/Dave since its formation in 1995.
From 1981 through 1995, Mr. Syferd was the chairman of Elgin Syferd/DDB Needham.
Mr. Syferd received his B.S. in Political Science in 1967 from Whitworth
College.
Robert E. Kadlec served as the President of Inland, the predecessor to BC
Gas, from 1972 to 1995, Chief Executive Officer since 1983 and Chief Executive
Officer of BC Gas from 1988 to 1995. Mr. Kadlec is an Engineering Graduate of
the University of Toronto and is a Director of the Conference Board of Canada,
the Bank of Montreal, Trans Mountain Pipe Line Company and Questar. Mr. Kadlec
is a past Chairman of the Canadian Gas Association and Vancouver Board of Trade.
COMMITTEES
In connection with the initial public offering in November 1997 the
Company's Board of Directors established the Compensation and Audit Committees.
The Company does not have a standing Nominating Committee. The entire Board
performs those duties. The members of each Committee and the functions performed
thereby are described below:
Compensation Committee. During fiscal year 1997, the Compensation Committee
was comprised of Messrs. Michael A. Price (Chairman), Hatch and Syferd. The
Compensation Committee is responsible for reviewing and recommending to the
Board the compensation and benefits to be provided to the Company's
3
<PAGE> 7
officers and key employees and reviewing general policy matters relating to
employee compensation and benefits.
Audit Committee. During fiscal year 1997, the Audit Committee was comprised
of Messrs. Luke (Chief Financial Officer), Hatch and Syferd. The Audit Committee
is responsible for reviewing the Company's internal accounting procedures and
consulting with and reviewing the services provided by the Company's independent
auditors.
During fiscal year 1997, the Compensation Committee met one time, the Audit
Committee met one time, and the entire Board of Directors met one time. Each
director attended at least 75 percent of all Board meetings and meetings of
Committees on which they served during the periods they served.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information concerning the beneficial
ownership of Common Stock of the Company of (i) those persons known by
management of the Company to own beneficially more than 5% of the Company's
outstanding Common Stock, (ii) the directors and nominees of the Company, (iii)
the executive officers named in the Summary Compensation Table set forth in the
"Executive Compensation" section of this Proxy Statement and (iv) all current
directors and officers of the Company as a group. Such information is provided
as of March 31, 1998. According to the rules adopted by the SEC, a person is the
"beneficial owner" of securities if he or she has or shares the power to vote
them or to direct their investment or has the right to acquire beneficial
ownership of such securities within 60 days through the exercise of an option,
warrant, right of conversion of a security or otherwise. Except as otherwise
noted, the indicated owners have sole voting and investment power with respect
to shares beneficially owned. An asterisk in the percent of class column
indicates beneficial ownership of less than 1%, based upon 8,387,718 shares of
Common Stock outstanding.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(2)
BENEFICIAL OWNERS, DIRECTORS, -----------------------
EXECUTIVE OFFICERS AND NOMINEES(1) NUMBER PERCENTAGE
---------------------------------- --------- ----------
<S> <C> <C>
Michael A. Price(3)................................. 4,787,780 57.08%
Thomas W. Price(4).................................. 470,420 5.61%
Kenneth W. McCarthy, Jr............................. 90,900 1.08%
Paul B. Luke........................................ 90,900 1.08%
Kenneth L. Hatch.................................... 13,100 *
David N. Syferd..................................... 3,225 *
Robert E. Kadlec.................................... --
All directors and executive officers as a group (6
persons).......................................... 5,456,325 65.05%
========= =====
</TABLE>
- ---------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities, subject to the community
property laws, where applicable. The address of each beneficial owner is c/o
T&W Financial Corporation, 6416 Pacific Highway East, Tacoma, Washington
98424.
(2) Based on an aggregate of 8,387,718 shares of Common Stock outstanding.
(3) Includes 1,000,000 shares of Common Stock owned by the Michael A. Price
Grantor Retained Annuity Trust, dated August 1, 1997, and 1,000,000 shares
of Common Stock as Trustee of the Katherine M. Price Grantor Retained
Annuity Trust, dated August 1, 1997, and 1,376,050 shares of Common Stock
owned by Michael A. Price through a limited liability company.
(4) Includes 110,084 shares of Common Stock owned by Thomas W. Price through a
limited liability company.
4
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth all information regarding the annual
compensation during fiscal year 1997 for the Company's Chief Executive Officer
and those officers of the Company who received compensation in excess of
$100,000 (collectively referred to herein as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------------
----------------------------- NUMBER OF SHARES
NAME AND ALL OTHER UNDERLYING
PRINCIPAL POSITION SALARY COMPENSATION(1)(2) OPTIONS
------------------ -------- ------------------ ----------------
<S> <C> <C> <C>
Michael A. Price........................... $198,500 $551,735.50 --
Chairman of the Board and Chief Executive
Officer
Executive Officers
Thomas W. Price............................ $198,500 $551,735.50 --
President
Kenneth W. McCarthy, Jr.................... $148,604 $ 235,868 --
Senior Vice President and General Counsel
Paul B. Luke............................... $148,604 $ 235,868 --
Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
</TABLE>
- ---------------
(1) Includes management and consulting fees paid to P.L.M. Consulting Group,
L.L.C. ("PLM"), the members of which are Michael A. Price, Thomas W. Price,
Kenneth W. McCarthy, Jr. and Paul B. Luke. Includes lease origination
related commissions of $438,432 to Michael A. Price.
(2) Does not include distributions from pass-through entities.
The Company has entered into an agreement with PLM effective November 1997,
pursuant to which PLM will provide the Company with the services of Michael A.
Price, Thomas W. Price, Paul B. Luke and Kenneth W. McCarthy, Jr. to act as
executive officers of T&W. Under the agreement, PLM is entitled to an annual
base fee of $1,440,000 and an annual bonus equal to 35% of the Company's annual
audited after tax return on equity in excess of 20%, with proportionate
reductions in the event that any of such individuals ceases to be an executive
officer of the Company.
STOCK OPTION GRANTS IN FISCAL YEAR 1997
No options were granted to the Company's Named Executive Officers during
fiscal year 1997 to purchase shares of the Company's Common Stock. The Company
has no outstanding stock appreciation rights.
EXERCISES OF STOCK OPTIONS
In July 1997 Messrs. Luke and McCarthy each exercised options for 147,900
shares of the Common Stock of the Company. There was no difference between the
exercise price of such options and the fair market value of the Company's Common
Stock at the time of such exercise. No other Named Executive Officer held or
exercised options for the Company Common Stock in fiscal year 1997 and no
unexercised options held by the Named Executive Officers were outstanding on
December 31, 1997.
COMPENSATION OF DIRECTORS
Each director who is not an officer or employee of the Company receives a
quarterly fee of $3,000 and an additional fee of $250 for each meeting of the
Board or committee attended other than regular quarterly
5
<PAGE> 9
meetings of the Board and an annual meeting of each committee. Each director who
is not an officer or employee of the Company also receives 50 shares of Common
Stock for attendance at each meeting of the Board pursuant to the Company's 1997
Director Stock Grant Plan. The Company will continue to reimburse all directors
for all travel-related expenses incurred in connection with their activities as
directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the formation of the Compensation Committee in August 1997, all of
the compensation for the Company's officers were determined by Michael A. Price,
the Company's Chief Executive Officer, and Thomas W. Price, the Company's
President.
The members of the Company's Compensation Committee are Messrs. Michael A.
Price, Hatch and Syferd.
The Company entered into a Management Consulting Agreement, with The
Pacific Institute in July of 1997 under which The Pacific Institute has provided
certain employee continuity consulting to the Company for a total fee of
$81,820. Kenneth L. Hatch, a director of the Company is also the President of
The Pacific Institute.
The Company entered into a Public Relations Agreements, with KNCF/Dave in
November of 1997 under which KNCF/Dave agreed to provide certain public
relations consulting to the Company for a total fee of $37,000. David N. Syferd,
a director of the Company, is also a partner of KNCF/Dave.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
In connection with the Company's initial public offering of its Common
Stock in November 1997, the Company formed the Compensation Committee of the
Board of Directors to review and recommend to the Board the compensation and
benefits to be provided to the Company's officers and key employees and to
review general policy matters relating to employee compensation and benefits.
The Compensation Committee is made up of the Chief Executive Officer of the
Company and two directors who are non-employees.
Effective November 1997, the Company entered into an agreement with P.L.M.
Consulting Group, L.L.C. ("PLM"), pursuant to which PLM provides the Company
with the services of Michael A. Price, Thomas W. Price, Paul B. Luke and Kenneth
W. McCarthy, Jr. to serve as executive officers of the Company (the
"Agreement"). The members of PLM are Messrs. Price, Mr. Luke, and Mr. McCarthy.
Under the Agreement, PLM is entitled to an annual base fee of $1,440,000 and an
annual bonus equal to 35% of the Company's annual audited after tax return on
equity in excess of 20%. The Agreement allocates the base fee as follows:
$480,000 to each of Messrs. Price and $240,000 each to Messrs. Luke and
McCarthy. The Agreement has a term of one year. The Compensation Committee does
not directly determine the compensation of the Company's Chief Executive Officer
or any other named executive officers of the Company (the "Executive Officers").
After the Company's initial public offering the Compensation Committee
reviewed the Agreement in light of the Company's performance and reaffirmed its
terms. The Compensation Committee anticipates that on or around the first
anniversary of the Agreement, the terms of the Agreement will be reconsidered in
light of the Company's performance in 1998. At that time the Compensation
Committee will determine the terms of any new agreement with PLM.
The following is a summary of policies which the Compensation Committee
intends to apply in the future in setting the amounts to be paid under such
Agreement and in determining other compensation matters.
- ---------------
*The report of the Compensation Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under either the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended (together, the "Acts"),
except to the extent that the Company specifically incorporates such report by
reference; and further, such report shall not otherwise be deemed filed under
the Acts.
6
<PAGE> 10
COMPENSATION COMPONENTS. The Compensation Committee believes that Executive
Officer compensation should be closely aligned with the performance of the
Company, and that such compensation should assist the Company in attracting and
retaining key executives critical to its long-term success. To that end, the
Committee's policy is that the compensation should consist of two components:
(i) an annual base salary; and (ii) the potential to earn incentive bonuses, the
amount of which will be dependent on the Company's performance during the prior
fiscal year.
BASE SALARY. The annual base fee of $1,440,000 to be paid under the
Agreement indicates the level of base salary for the Company's Executive
Officers as a group. The Compensation Committee will set the aggregate amount of
the fee on the basis of the Executive Officers' responsibilities and performance
and an assessment of salary levels in effect for comparable positions in the
specialty commercial finance sector. The weight given to each of these factors
may vary based on the Committee's understanding of the salary levels in effect
for similar positions at those companies with which the sector competes for
executive talent. The base fee will be reviewed on an annual basis, and
adjustments will be made in accordance with the factors indicated above.
INCENTIVE BONUS. The incentive bonus is based on specified performance
goals as established by the Compensation Committee each fiscal year. Under the
Agreement PLM is entitled to an annual bonus equal to 35% of the Company's
annual audited after tax return on equity in excess of 20%. For fiscal year
1997, the Executive Officers received bonuses that ranged from $575,000 to
$625,000. The allocation of the bonuses payable under the Agreement among the
Executive Officers is made by PLM, not by the Compensation Committee.
STOCK OPTIONS. The Company's 1997 Stock Option Plan (the "1997 Plan") was
presented to and approved by the Company's shareholders in fiscal year 1997 and
is designed to reward superior performance. All options granted by the Company
in fiscal year 1997 were granted with an exercise price equal to the market
price of the Company's Common Stock on the date of grant and, accordingly, will
have value only if the Company's stock price increases. The Compensation
Committee believes that stock option awards under the Company's 1997 Stock
Option Plan align the long-term interests of the Company's Executive Officers
with those of its stockholders and contribute to the recruitment and retention
of executive personnel. In addition, the Company expects that its long-term
equity-based incentive compensation plans will increasingly be linked to
specific performance objectives.
Under the 1997 Stock Option Plan, the Company's Executive Officers are
eligible to receive grants of options to purchase shares of the Company's Common
Stock. The options are generally granted upon initial employment and annually
thereafter with exercise prices generally equal to the prevailing market price
at date of grant. Therefore, stock options will have value to the executive only
to the extent that the market price for the Company's Common Stock increases.
Stock option grants generally become exercisable or "vested" in increments over
four years, so long as service of the option recipient with the Company
continues.
Respectfully submitted,
Michael A. Price, Chairman
Kenneth L. Hatch
David N. Syferd
PERFORMANCE GRAPH
No performance graph has been included in this year's proxy statement since
the Company completed its initial public offering in November 1997, and,
accordingly, no meaningful period exists for comparing total shareholder return
with market indexes.
7
<PAGE> 11
CERTAIN TRANSACTIONS
TRANSACTIONS WITH AFFILIATES OF CERTAIN OFFICERS AND DIRECTORS
Michael A. Price, Thomas W. Price and PLM own all of the membership
interests of T&W unding Company VI, L.L.C. ("Funding VI"). The Company owns an
85% membership interest in T&W Financial Services Company L.L.C., (the "LLC")
and Funding VI owns the remaining 15% membership interest in the LLC. Profits
and losses of the LLC are allocated to T&W Financial Corporation and Funding VI
in accordance with their respective ownership of the LLC; however, 99% of the
deductions or losses associated with secured lines of credit or other recourse
liabilities of the LLC are allocated to Funding VI, whose principals guarantee
such liabilities.
The Company entered into an agreement with PLM pursuant to which PLM
provides the Company with the services of Michael A. Price, Thomas W. Price,
Paul B. Luke and Kenneth W. McCarthy, Jr. to act as executive officers of T&W
Financial Corporation. Under the agreement, PLM is entitled to an annual base
fee of $1,440,000 and an annual bonus equal to 35% of the Company's annual
audited after tax return on equity in excess of 20%, with proportionate
reductions in the event that any of such individuals ceases to be an executive
officer of T&W. Messrs. M. Price, T. Price, McCarthy and Luke each devote
approximately 90% of their time to the Company's business. The amounts paid by
the Company to PLM were approximately $2.6 million and $900,000 for the years
ended December 31, 1997 and 1996, respectively.
PLM owns substantially all of the membership interests of Bonney Lake
Supermarket, LLC ("Bonney Lake"). Bonney Lake owns and operates an independent
grocery store located in the Seattle, Washington area. The Company and Bonney
Lake are parties to three lease agreements pursuant to which the Company leases
certain equipment to Bonney Lake on standard market terms. The first lease was
entered into in December 1996 with monthly lease payments of $4,000 for the
first year, $8,000 for the second year, $11,000 for the third year, $15,000 for
the fourth year and $19,000 for the fifth year. The second lease was entered
into in February 1997 with monthly lease payments of $6,500 over a five year
term. The third lease was entered into in May 1997 with monthly lease payments
of $2,000 over a seven year term.
PLM is the beneficial owner of 25% of the membership interests of Universal
Metering L.L.C. ("Universal Metering"). Universal Metering was created for the
purpose of selling water meter installation, reading and maintenance services to
residential and commercial properties. The Company and Universal Metering are
parties to a letter of intent pursuant to which the Company and Universal
Metering would enter into an agreement under which the Company would lease
certain water meter equipment to the owners or operators of such properties on
standard market terms. The Company has approved six leases with lease payments
aggregating approximately $800,000. To date, two leases have been funded.
The Company and PLM were parties to a credit arrangement pursuant to which,
PLM borrows amounts from time to time from third party lenders and advances such
amounts to the Company at the same rate and on the same terms and conditions
offered to PLM by its lenders. As of December 31, 1997, there was no outstanding
principal balance and accrued interest under such arrangement.
OFFICERS AND DIRECTORS
Michael A. Price and Thomas W. Price own 40% of the membership interests of
NW, L.L.C. ("NW LLC"). NW LLC provides consulting and financial services to
small and medium-sized businesses in the commercial mortgage industry. The
Company and NW LLC are parties to five lease agreements pursuant to which the
Company leases certain computer and office equipment to NW LLC on standard
market terms. The first lease was entered into in January 1996 with monthly
lease payments of $5,683 over a five year term. The second and third leases were
entered into in February 1996 with monthly lease payments of $524 and $1,378,
respectively, over five year terms. The fourth lease was entered into in March
1996 with monthly lease payments of $830 over a five year term. The fifth lease
was entered into in July 1997 with monthly lease payments of $310 over a three
year term.
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The Company and Michael A. Price are parties to a lease agreement pursuant
to which the Company leases its current headquarters and related property from
Mr. Price on standard market terms. The lease was entered into in December 1991
with current monthly rental payments of $8,500 per month and expires on October
31, 1998. The amounts paid by the Company to Mr. Price under the lease were
$102,000, $60,000 and $49,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
The Company intends to enter into a new lease agreement with Mr. Price
pursuant to which the Company would lease its existing facilities and new
headquarters currently under construction on the same premises from Mr. Price on
standard market terms. The Company anticipates that the lease will commence in
October 1998 and will run through September 2003 with monthly rental payments of
approximately $28,125.
In July 1997, Paul B. Luke and Kenneth W. McCarthy, Jr. each exercised
options for 147,900 shares of the Common Stock of the Company. Messrs. Luke and
McCarthy each paid for the exercise price of such options with a promissory note
payable to the Company. As of August 1, 1997, the aggregate amount outstanding
for each of Messrs. Luke and McCarthy under their respective promissory notes
was $581,079 with interest at 8% payable annually. All of the unpaid interest
and principal under the promissory notes were paid in full in November 1997.
In August 1997, the Company loaned Right Price Recreation, which is
principally owned by Thomas W. Price, an aggregate amount of $400,000 with
interest at 8% payable annually, which amount, including accrued interest. All
of the unpaid interest and principal were paid in full in November 1997.
The Company entered into two lease agreements with R.P.R. Company, L.L.C.
("RPR"), which is principally owned by Thomas W. Price, for an airplane and
related equipment leased by the Company to RPR. The first lease was entered into
in September 1995 with monthly lease payments of $11,584 over a five year term.
The second lease was entered into in May 1997 with monthly lease payments of
$3,423 per month over a five year term. The balance of the remaining lease
payments was paid in full and such leases were terminated in November 1997.
The Company entered into six lease agreements with Waterhouse Charters,
which is principally owned by Michael A. Price for a boat and related equipment
leased by the Company to Waterhouse Charters. The first lease was entered into
in December 1993 with monthly lease payments of $3,515 over a five year term.
The second lease was entered into in August 1994 with monthly lease payments of
$1,028 over a three year term. The third lease was entered into in February 1995
with monthly lease payments of $1,424 over a three year term. The fourth lease
was entered into in August 1995 with monthly lease payments of $2,825 over a
three year term. The fifth lease was entered into in May 1996 with monthly lease
payments of $13,860 over a five year term. The sixth lease was entered into in
March 1997 with monthly lease payments of $3,525 over a five year term. The
balance of the remaining lease payments was paid in full and such leases were
terminated in November 1997.
The Company entered into two transactions with AST Leasing, which is
principally owned by Michael A. Price for certain personal property primarily
consisting of furniture, fixtures and other related equipment leased by the
Company to AST Leasing. The first lease was entered into in October 1995 with
monthly lease payments of $18,514 over a five year term. The second lease was
entered into in September 1996 with monthly lease payments of $24,620 over a two
year term. The balance of the remaining lease payments was paid in full and such
leases were terminated in November 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than 10% of the Common Stock, to file with the
Securities and Exchange Commission initial reports of beneficial ownership
("Forms 3") and reports of changes in beneficial ownership of Common Stock and
other equity securities of the Company ("Forms 4"). Officers, directors, and
greater than 10% shareholders of the Company are required by Securities and
Exchange Commission regulations to furnish to the Company copies of all Section
16(a) reports that they file. To the Company's knowledge, based solely on a
review of the copies of
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<PAGE> 13
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors, and greater than 10% beneficial owners were complied with
for the fiscal year ended December 31, 1997, other than Messrs. Michael Price,
Thomas Price, Luke, McCarthy, Hatch and Syferd, who filed their respective
initial reports of beneficial ownership on Form 3 late.
PROPOSAL 2 -- RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors requests that the shareholders ratify its selection
of BDO eidman, LLP to serve as the Company's independent auditors for the fiscal
year ending December 31, 1998. BDO Seidman, LLP audited the consolidated
financial statements of the Company for the fiscal year ended December 31, 1997.
Representatives of BDO Seidman, LLP will be present at the Annual Meeting to
make a statement if they desire to do so and to respond to questions by
shareholders. The affirmative vote of a majority of the shares represented at
the meeting is required for the ratification of the Board's selection of BDO
Seidman, LLP as the Company's independent auditors for the fiscal year ending
December 31, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF BDO SEIDMAN, LLP AS INDEPENDENT AUDITORS OF THE COMPANY.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting of Shareholders. However, if any other matters are properly
brought before the Annual Meeting, the persons appointed in the accompanying
proxy intend to vote the shares represented thereby in accordance with their
best judgment.
PROPOSALS OF SHAREHOLDERS
Shareholder proposals to be presented at the Company's next Annual Meeting
of Shareholders and included in the Company's Proxy Statement relating to such
meeting must be received by the Company at its executive offices at 6416 Pacific
Highway East, Tacoma, Washington, 98424, Attention: Paul B. Luke, Secretary, on
or prior to December 1, 1998.
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<PAGE> 14
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
The Company's Annual Report to Shareholders for fiscal year 1997 (which is
not a part of the Company's proxy soliciting materials) is being mailed to the
Company's shareholders with this Proxy Statement. A copy of the Company's Annual
Report on Form 10-K, without exhibits, will be furnished without charge to
shareholders upon request to:
Investor Relations
T&W Financial Corporation
6416 Pacific Highway East
Tacoma, Washington, 98424
(253)922-5164
By Order of the Board of Directors,
/s/ PAUL B. LUKE
Paul B. Luke
Senior Vice President, Chief Financial
Officer,
Treasurer and Secretary
Tacoma, Washington
April 10, 1998
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<PAGE> 15
DIRECTIONS TO THE T&W FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
AT
RAINIER CLUB
820 FOURTH AVENUE, SEATTLE,WASHINGTON
AT
6:00 P.M. (PACIFIC DAYLIGHT TIME)
ON
APRIL 30, 1998
TRAVELING NORTH ON INTERSTATE 5
Take Exit 164A, marked "Dearborn St/James St/Madison St". Watch for the
"James St." exit. After exiting, turn left (under I-5) on James. Go 3 blocks to
4th Avenue. Turn right, and proceed up 4th Ave. 2 1/2 blocks. The club is on the
right.
TRAVELING SOUTH ON INTERSTATE 5
Take Exit 165A, marked "James St." Just after merging onto 6th Ave., turn
right onto Columbia St. Go 2 blocks to 4th Ave., and turn right. The club is on
the right.
Parking is available in several nearby lots and garages, including the
SeaFirst Columbia Center (entrance off westbound Columbia St. between 5th and
4th Avenues).
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<PAGE> 16
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
OF
T&W FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Michael A. Price and Thomas A. Price
(collectively, the "Proxies"), and each of them, with full power of
substitution, as proxies to vote the shares which the undersigned is entitled to
vote at the Annual Meeting of Shareholders of T&W Financial Corporation to be
held at the Rainier Club, on Thursday, April 30, 1998 at 6:00 p.m. Pacific
Daylight Time and at any adjournments thereof.
Please mark your votes as indicated in this example [X]
1. ELECTION OF DIRECTORS:
Michael A. Price, Thomas W. Price, Paul B. Luke, Kenneth W. McCarthy,
Jr., Kenneth L. Hatch, David N. Syferd and Robert E. Kadlec
[ ] FOR All nominees listed (except as withheld)
[ ] WITHHOLD AUTHORITY To vote for nominees listed
WITHHOLD AUTHORITY to vote for the following Directors:
- --------------------------------------------------------------------------------
2. Proposal to ratify the selection of BDO Seidman, LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy when properly signed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
IMPORTANT -- PLEASE SIGN AND RETURN PROMPTLY.
Dated:
- ------------------------------------ , 1998
--------------------------------------
Signature
--------------------------------------
Signature, if held jointly
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
an authorized person.
