SCHEDULE 14A
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:
[ ] 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 ss 240.14a-11(c) or ss 240.14a-12
BREMER FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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:
<PAGE>
BREMER FINANCIAL CORPORATION
A MINNESOTA CORPORATION
445 MINNESOTA STREET - SUITE 2000
ST. PAUL, MINNESOTA 55101
---------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999 AT 8:00 O'CLOCK A.M.
---------------------------------------
TO BREMER FINANCIAL CORPORATION STOCKHOLDERS:
The Annual Meeting of Stockholders of Bremer Financial Corporation ("Company")
will be held on April 21, 1999 at 8:00 o'clock a.m., St. Paul, Minnesota time,
at the offices of Bremer Financial Corporation, Suite 2000, 445 Minnesota
Street, St. Paul, Minnesota 55101, for the following purposes:
1. To consider and act upon the Board of Directors'
recommendation to fix the number of directors of the Company
at not less than four nor more than ten.
2. To elect a Board of Directors.
3. To ratify the selection by the Board of Directors of Deloitte
& Touche LLP as the independent accountant to audit the
consolidated financial statements of the Company for the year
ended December 31, 1999.
4. To transact such other business as may properly come before
the meeting or any adjournments thereof.
The stock transfer books of the Company will not be closed. In lieu thereof, and
in accordance with the Bylaws, the Board of Directors has set the close of
business on March 5, 1999 as the record date for the determination of the
stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
Your attention is respectfully directed to the attached Proxy Statement and the
Proxy. IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN THE
ATTACHED PROXY AND DATE, SIGN AND MAIL IT AS PROMPTLY AS POSSIBLE IN ORDER TO
SAVE THE COMPANY FURTHER SOLICITATION EXPENSE.
By order of the Board of Directors
/s/ Janice A. Aus
JANICE A. AUS
Secretary
<PAGE>
BREMER FINANCIAL CORPORATION
A MINNESOTA CORPORATION
445 MINNESOTA STREET - SUITE 2000
ST. PAUL, MINNESOTA 55101
651-227-7621
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999
------------------------------------
GENERAL
This Proxy Statement is submitted in support of the solicitation of the attached
proxy by the Board of Directors of Bremer Financial Corporation, a Minnesota
corporation ("Company"), for the Annual Meeting of Stockholders of the Company
(the "Annual Meeting") to be held on April 21, 1999 at 8:00 o'clock a.m. at the
offices of Bremer Financial Corporation, Suite 2000, 445 Minnesota Street, St.
Paul, Minnesota 55101, and at any adjournments thereof. The cost of solicitation
will be borne by the Company. This Proxy Statement and the accompanying Proxy
and Notice of Annual Meeting of Stockholders will be mailed to its stockholders
on or about March 15, 1999. The Company will reimburse its transfer agent for
expenses reasonably incurred in forwarding solicitation materials to beneficial
owners of shares.
The Annual Meeting is being held for the purposes of fixing the number of and
electing the Company's Board of Directors, ratifying the selection of Deloitte &
Touche LLP as the independent accountant to audit the Company's consolidated
financial statements for the year ended December 31, 1999, and transacting such
other business as may properly come before the Annual Meeting or any
adjournments thereof.
The Annual Report of the Company for the year ended December 31, 1998, including
financial statements, is being mailed to stockholders simultaneously herewith,
but the Annual Report is not to be considered part of the proxy soliciting
materials unless a portion thereof is expressly incorporated herein by
reference.
Only holders of shares of the Company's no par value Class A Common Stock
("Class A Common Stock") recorded at the close of business on March 5, 1999, the
record date for the Annual Meeting, will be entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof. The securities of the Company
outstanding as of March 5, 1999 and which are entitled to vote at the Annual
Meeting consist of 1,200,000 shares of Class A Common Stock, each share being
entitled to one vote. Stockholders do not have the right to cumulate votes for
the election of directors.
The enclosed proxy, when properly signed and returned to the Company, will be
voted at the Annual Meeting as directed therein. Proxies in which no direction
is given with respect to the various matters of business to be transacted at the
Annual Meeting will be voted to set the number of the Board of Directors at not
less than four nor more than ten, in favor of the nominees for directors
proposed by the Board of Directors, in favor of ratifying the selection by the
Board of Directors of Deloitte & Touche LLP as the independent accountant to
audit the Company's consolidated financial statements for the year ended
December 31, 1999, and, as to any other matters that may properly come before
the Annual Meeting, in the best judgment of the proxy holders named in the
enclosed proxy.
The enclosed proxy may be revoked at any time prior to its exercise at the
meeting by the execution and exercise of a proxy bearing a later date and
notification in writing given to the Secretary of the Company prior to the
Annual Meeting. The authority of the proxy holders named in the enclosed proxy
will be suspended if the stockholder executing the proxy is present at the
meeting and elects to vote in person.
The Company may have one or more of its officers or employees communicate by
telephone, telegraph, or mail with some of the stockholders who may have omitted
to return proxies.
A quorum, consisting of a majority of the shares of Class A Common Stock
entitled to vote at the Annual Meeting, must be present in person or by proxy
before action may be taken at the Annual Meeting. In general, the stockholders
of the Company may take action by the affirmative vote of the holders of the
greater of (i) a majority of the voting power of the shares present and entitled
to vote on a particular item of business, or (ii) a majority of the voting power
of
1
<PAGE>
the minimum number of shares entitled to vote that would constitute a quorum. If
a stockholder signs and returns a proxy and abstains from voting on any matter,
the shares represented by such proxy will be considered present at the meeting
for purposes of determining a quorum and for purposes of calculating the vote,
but will not be considered to have been voted in favor of such matter. If an
executed proxy is returned by a broker holding shares in "street name" and it
indicates that the broker does not have discretionary authority to vote the
shares on one or more matters, such shares will be considered present at the
meeting for purposes of determining a quorum but will not be considered to be
represented at the meeting for purposes of calculating the vote with respect to
such matter.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Class A Common Stock of the Company as of March 5,
1999 by each stockholder who is known by the Company to own beneficially more
than 5% of the outstanding shares of Class A Common Stock, by each director and
by each nominee director, by each person named in the Summary Compensation Table
included later in this Proxy Statement, and by all officers and directors of the
Company as a group. None of the stockholders listed below beneficially owns
common stock of the Company's parent(s) or subsidiaries other than through their
ownership of the Company's Common Stock.
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership(1) Percent of Class(2)
------------------- ----------------------- -------------------
Otto Bremer Foundation (3)(4) 240,000 20.0%
Gene H. Sipe (4) 28,515 2.4%
Kenneth P. Nelson (4) 20,741 1.7%
Duaine C. Espegard (4) 19,720 1.6%
Terry M. Cummings (4) 12,877 1.1%
Stan K. Dardis (4) 3,332 *
William H. Lipschultz (4) 0 0%
Charlotte S. Johnson (4) 0 0%
Daniel C. Reardon 0 0%
OEI Business Products
21565 Hamburg Avenue
Lakeville, MN 55044
Sherman Winthrop 0 0%
Winthrop & Weinstine, P.A.
3200 Minnesota World Trade
Center
30 East Seventh Street
St. Paul, MN 55101
All officers and directors 97,244 8.1%
as a group (13 persons)
- ------------------------------
* Less than 1%.
(1) Each person or group has sole voting and investment power with respect
to all outstanding shares. The number and percentages of shares include
those allocated to the accounts of the individuals and groups in the
Company's Employee Stock Ownership Plan and the Bremer Banks Profit
Sharing Plus Plan. See "Election of Directors and Management
Information -- Executive Compensation."
(2) The percentage calculation is based on 1,200,000 shares of Class A
Common Stock outstanding at March 5, 1999.
2
<PAGE>
(3) Otto Bremer Foundation (the "Foundation") owns all of the 10,800,000
shares of the Company's Class B Common Stock, which are not entitled to
be voted except with respect to certain extraordinary corporate
transactions, none of which are being considered at the Annual Meeting
of Stockholders to be held on April 21, 1999. The Trustees of the
Foundation are William H. Lipschultz, Charlotte S. Johnson, and Daniel
C. Reardon.
(4) The address for each of these individuals is 445 Minnesota Street,
Suite 2000, St. Paul, Minnesota 55101.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by rules adopted by the Securities and Exchange Commission ("SEC")
under Section 16 of the Securities Exchange Act of 1934, a director or an
executive officer of the Company is required to file with the SEC an Initial
Report of Beneficial Ownership on Form 3 within a certain period after becoming
an executive officer or director stating the number of shares of Class A Common
Stock owned, a Report of Change in Beneficial Ownership on Form 4 to report
transactions in the Company's Class A Common Stock, and an Annual Statement of
Beneficial Ownership of Securities on Form 5 to report other transactions in the
Class A Common Stock that are not required to be reported on a Form 4. Based
upon the Company's review of such Forms furnished to it by the directors and
executive officers required to file such Forms, the Company believes that, with
the exception of isolated incidents of late filings reported by the Company in
previous Proxy Statements, all of these filing requirements have been satisfied.
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
The Bylaws of the Company provide that the number of directors may be set by the
stockholders (subject to the right of the Board of Directors to increase or
decrease the number of directors as otherwise permitted by law). At the Annual
Meeting held on April 21, 1998, the Company's stockholders voted to fix the
number of the Company's Board of Directors at not less than four nor more than
ten and elected six directors (Terry M. Cummings, Stan K. Dardis, William H.
Lipschultz, Charlotte S. Johnson, Daniel C. Reardon and Sherman Winthrop).
It is the recommendation of the Company's Board of Directors that the number of
directors be set at not less than four nor more than ten and that the six
nominees named below be elected as directors, to serve as directors until the
next Annual Meeting of the stockholders and until their successors are duly
elected and qualified as directors. The Board of Directors may appoint up to
four additional members to the Board if individuals qualified to serve as
Directors are found and agree to serve. The Board of Directors does not have a
nominating committee and, as such, the recommendations for election of Directors
have been made by the Board of Directors as a whole.
Unless otherwise directed, the proxies solicited by the Board of Directors will
be voted at the Annual Meeting in favor of setting the number of directors at
not less than four nor more than ten and in favor of the six nominees named
below. However, in the event of the inability or unwillingness of one or more of
these nominees to serve as a director at the time of the Annual Meeting on April
21, 1999 or any adjournments thereof, the shares represented by the proxies will
be voted in favor of the remainder of such nominees and may also (at the
discretion of the holders of said proxies) be voted for other nominees not named
herein in lieu of those unable or unwilling to serve. As of the date hereof, the
Board of Directors knows of no nominee who is unwilling or unable to serve.
The affirmative vote of a majority of the shares of Class A Common Stock of the
Company present at the Annual Meeting either in person or by proxy and entitled
to vote (assuming a quorum is present) is required to fix the number of
directors at not less than four nor more than ten, and a plurality of such
voting power is required to elect each director. A quorum consists of a majority
of the shares entitled to vote at the Annual Meeting.
3
<PAGE>
INFORMATION ABOUT NOMINEES FOR ELECTION AS DIRECTORS
All of the nominees for election as directors are presently serving as directors
of the Company. The names and ages of the six nominees are as follows:
Ages as of
Names and Nominees February 28, 1999 Director Since
------------------ ----------------- --------------
Terry M. Cummings 58 1988
Stan K. Dardis 49 1998
William H. Lipschultz 69 1961
Charlotte S. Johnson 52 1993
Daniel C. Reardon 37 1996
Sherman Winthrop 68 1995
Mr. Terry Cummings has been Chairman of the Board of the Company since March
1998. From July 1988 until March 1998, he was President, Chief Executive Officer
and a Director of the Company. Mr. Cummings is also a Director of Bremer
Financial Services, Inc. ("BFSI") and has served in that capacity since 1982. He
was President, Chief Executive Officer and Secretary of BFSI from July 1982
until March 1998.
Mr. Stan K. Dardis has been President, Chief Executive Officer and a Director of
the Company since March 1998. From June 1996 until March 1998, he was Executive
Vice President and Chief Operating Officer of the Company. From December 1993
until June 1996, he was Executive Vice President and Retail Banking Services
Director of the Company. He has also been President and Chief Executive Officer
of BFSI since March 1998 and a Director of BFSI since September 1993. In October
1998, Mr. Dardis became a Director of Bremer Investment Funds, Inc., an open-end
diversified investment company registered under the Investment Company Act of
1940, which offers shares in two different mutual funds.
Mr. William H. Lipschultz served as the Chairman of the Board of the Company
from April 1995 until March 1, 1998, at which time he resumed his role as Vice
President and continued as a Director of the Company. He has been a Director of
the Company and a Trustee of the Foundation since 1961, and he had been Vice
President and Treasurer of the Company from 1961 until his appointment as
Chairman of the Board in 1995. Mr. Lipschultz retired in 1996 from Stone
Container Corporation after serving as Vice President of that company since
1976. From August 1996 until October 1998, Mr. Lipschultz was a director of
Bremer Investment Funds, Inc.
Ms. Charlotte S. Johnson has been a Vice President and a Director of the Company
since April 1993 and a Trustee of the Foundation since July 1991. Since July
1991 she has been involved in the Foundation's affairs on a daily basis, serving
as a representative for the organization and working on special projects.
Mr. Daniel C. Reardon has been a Vice President and a Director of the Company
since May 1996 and a Trustee of the Foundation since January 1995. He has also
been a sales manager for OEI Business Products since January 1999 and is the
sole owner of U.S. Annuity Financial Group, an annuity brokerage firm formed in
1995. From January 1990 until May 1995, he was Vice President of Investments
with Prudential Securities.
Mr. Sherman Winthrop has been a Director of the Company since February 1995. He
has been a senior member of the law firm of Winthrop & Weinstine, P.A., general
counsel to the Company, since February 1979. Mr. Winthrop served as a Director
and Secretary of Zytec Corporation, a publicly-held company, until it was
acquired by Computer Products, Inc. effective on December 29, 1997.
No nominee for the Board of Directors is a director of another company (that is,
other than the Company) with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or subject to Section 15(d) of
that Act. With the exception of Mr. Dardis, no nominee for the Board of
Directors is a director of a company registered as an investment company under
the Investment Company Act of 1940.
DIRECTORS' COMPENSATION. Mr. William H. Lipschultz was paid $41,750 of
compensation in 1998 for rendering his services as Chairman of the Board and a
Director of the Company. Ms. Charlotte S. Johnson and Mr. Daniel C. Reardon were
paid $41,750 each in 1998 for serving as Vice Presidents and Directors of the
Company. Mr. Sherman Winthrop received $16,750 in 1998 for serving as a Director
of the Company. In addition, in 1998 Mr. Lipschultz, Ms. Johnson and Mr. Reardon
each received an annual trustee fee of $39,500 paid by the Foundation.
4
<PAGE>
INFORMATION ABOUT CERTAIN EXECUTIVE OFFICERS AND OTHER OFFICERS
Mr. Duaine C. Espegard, who is 55 years old, has been an Executive Vice
President and Group President of the Company and BFSI since December 1993. From
January 1989 until December 1993, he was a Vice President of the Company. Mr.
Espegard has been a Director of BFSI since 1984. He is also Chairman of the
Board and Chief Executive Officer of Bremer Bank, National Association in Grand
Forks, North Dakota, one of the Company's subsidiary banks ("Subsidiary Banks"),
and has served in such capacity since September 1993.
Mr. Kenneth P. Nelson, who is 60 years old, has been an Executive Vice President
and Group President of the Company and BFSI since December 1993. From January
1989 until December 1993, he was a Vice President of the Company. Mr. Nelson has
been a Director of BFSI since 1984. He was Chief Executive Officer of Bremer
Bank, National Association, in South St. Paul, Minnesota from May 1997 until
December 31, 1998, and he is currently serving as that bank's Chairman of the
Board.
Mr. Gene H. Sipe, who is 61 years old, has been an Executive Vice President and
Group President of the Company and BFSI since December 1993. From January 1989
until December 1993, he was a Vice President of the Company. Mr. Sipe has been a
Director of BFSI since 1984, and he is currently serving as Chairman of the
Board of Bremer Bank, National Association, in Moorhead, Minnesota.
Mr. Robert B. Buck, who is 50 years old, has been Senior Vice President and
Chief Financial Officer of the Company and BFSI since July 1997. He has also
been a Director of BFSI since July 1997. From July 1992 until July 1997, Mr.
Buck was Vice President of National City Bank of Minneapolis.
Mr. Ernest W. (Bud) Jensen, who is 51 years old, has been Senior Vice President
and Chief Credit Officer of the Company and BFSI since April 1994. From January
1991 until April 1994, he was Senior Vice President-Credit of BFSI. Mr. Jensen
has been a Director of BFSI since September 1996.
INFORMATION CONCERNING MEETINGS OF BOARD OF DIRECTORS
During the fiscal year ended December 31, 1998, the Board of Directors held nine
formal meetings and adopted no resolutions by a unanimous written action in lieu
of a meeting. No Director attended fewer than 75% of all meetings held in 1998
when he or she was a Director. Board members also met informally during the year
to discuss various aspects of the business affairs of the Company. The Company
has no standing audit, nominating or compensation committee or any other
committee performing similar functions.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table summarizes the annual compensation paid by the Company and
its subsidiaries for services rendered in all capacities during each of the
years ended December 31, 1996, 1997 and 1998 and certain other compensation paid
in 1996, 1997 and 1998 with respect to the Company's Chief Executive Officer and
its four most highly compensated executive officers, other than its Chief
Executive Officer, whose total annual salary and bonus exceeded $100,000 for
1998:
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Payouts
Name and Principal --------------------------------- --------------- All Other
Position Year Salary Bonus(1) LTIP Payouts(2) Compensation(3)
- ------------------ ---- ------ -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Terry M. Cummings, 1998 $ 277,500 $ 113,245 $ 101,640 $ 41,396
Chairman, President and 1997 284,778 116,986 -- 42,648
Chief Executive Officer(4) 1996 250,008 100,000 -- 43,514
Stan K. Dardis, 1998 $ 279,800 $ 119,422 $ 107,184 $ 19,232
President, Chief Executive 1997 227,333 76,923 -- 19,199
Officer and Executive 1996 204,917 58,674 -- 18,670
Vice President(4)
Gene H. Sipe, 1998 $ 176,117 $ 51,985 $ 49,352 $ 36,464
Executive Vice 1997 173,200 49,760 -- 38,175
President 1996 172,500 46,192 -- 38,318
Duaine C. Espegard, 1998 $ 160,500 $ 42,886 $ 44,828 $ 33,351
Executive Vice 1997 160,500 43,062 -- 33,739
President 1996 159,967 42,805 -- 34,047
Kenneth P. Nelson, 1998 $ 165,766 $ 48,863 $ 46,531 $ 32,475
Executive Vice 1997 161,067 47,400 -- 30,683
President 1996 157,750 42,245 -- 28,222
</TABLE>
----------------------------------
(1) Represents bonuses earned in the indicated year which were paid in the
subsequent year under the Company's Annual Incentive Compensation
Plans. See "Election of Directors and Management Information -- Report
of Board of Directors on Annual Compensation." The executive officers
named in the table above may elect to defer a part or all of the bonus
dollars earned under the Annual Incentive Compensation Plan pursuant to
the Company's Deferred Compensation Plan for Directors of Bremer
Financial Services, Inc. ("Deferred Compensation Plan").
(2) Consists of payouts earned in 1998 which were paid in 1999 to the named
executive officers under the Company's Long Term Compensation Plans
("Long Term Plans"). See "Election of Directors and Management
Information -- Report of Board of Directors on Annual Compensation --
Long Term Incentive Compensation Plans." No payouts under the Long Term
Plans were earned in 1996 or 1997.
(3) Consists of (i) life insurance premiums paid by the Company on behalf
of the executive officers named in the Table pursuant to the Company's
Benefit Bank program available to all employees; (ii) amounts
contributed by the Company on behalf of the named executive officers
under the Bremer Banks Profit Sharing Plus Plan ("Profit Sharing Plan")
available to all employees; (iii) amounts contributed by the Company on
behalf of the named executive officers under the Company's Supplemental
Executive Retirement Plan in the form of a nonqualified deferred
compensation plan (the "SERP") which supplements the Company's
qualified pension plan, known as the Bremer Banks Retirement Plan; and
(iv) amounts contributed by the Company on behalf of the named
executive officers under the Company's Employee Stock Ownership Plan
("ESOP"). Life insurance premiums paid in 1998 consisted of the
following: Mr. Cummings ($2,040), Mr. Dardis ($936), Mr. Sipe ($2,664),
Mr. Espegard ($1,572), and Mr. Nelson ($2,784). Amounts contributed
under the Profit Sharing Plan in 1998 consisted of the following: Mr.
Cummings ($10,491), Mr. Dardis ($10,491), Mr. Sipe ($10,491), Mr.
Espegard ($10,491), and Mr. Nelson ($10,491). Amounts contributed under
the SERP in 1998 consisted of the following: Mr. Cummings ($27,779),
Mr. Dardis ($6,719), Mr. Sipe ($22,223), Mr. Espegard ($20,202), and
Mr. Nelson ($18,114). Amounts contributed under the ESOP in 1998
consisting of the following: Mr. Cummings ($1,086), Mr. Dardis
($1,086), Mr. Sipe ($1,086), Mr. Espegard ($1,086), and Mr. Nelson
($1,086).
(4) In the year ended December 31, 1998, Mr. Cummings served as President
and Chief Executive Officer until March 1, 1998, when he was elected
Chairman, and Mr. Dardis served as Executive Vice President until March
1, 1998, when he was elected President and Chief Executive Officer.
6
<PAGE>
SUMMARY OF PLANS
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP"). The ESOP is a discretionary defined
contribution plan for all employees of the Company and its affiliates designed
to invest primarily in the capital stock of the Company, including the Class A
Common Stock. The ESOP is funded solely with contributions made by the Company.
It is the intention of the Company to make periodic contributions to the ESOP in
addition to or in lieu of the "discretionary" component of the Profit Sharing
Plan. See "Election of Directors and Management Information -- Compensation
Pursuant to Plans -- Profit Sharing Plan." The maximum amount contributable
under the ESOP (as it has not borrowed any funds to purchase the Company's
capital stock) is 15% of the plan compensation of all eligible employees,
reduced by any amounts contributed to the Company's Profit Sharing Plan (which
is discussed below). "Plan compensation" includes all regular salary and wages
paid or accrued for eligible employees and 100% of the current year's "qualified
commissions" (which is defined as commissions received as part of a specified
compensation plan as approved by the Plan Administrator), but excludes overtime
and bonuses. Amounts may be contributed for eligible employees for each year in
which a contribution is made to the ESOP from the time the employee becomes
eligible to participate until the time the employee no longer participates.
Benefits are distributed to employees or their beneficiaries in the event of an
employee's retirement, death or disability. In addition, an employee who
terminates his or her employment with the Company or any of its related entities
may elect a distribution beginning not later than one year after the fifth year
following the year in which the employee leaves the ESOP and then over a period
of not longer than five years.
No amounts were paid or distributed by the ESOP during 1998 to the individuals
named in the Summary Compensation Table. Benefit amounts contributed by the
Company pursuant to the ESOP for the individuals named in the Summary
Compensation Table are included under the heading "All Other Compensation." The
employer contribution (which was made in 1999), for all the Company's employees
(including executive officers) participating in the ESOP in 1998, was $250,000.
PROFIT SHARING PLAN. The Company maintains under Sections 401(a) and 401(k) of
the Code a profit sharing plan known as the Bremer Banks Profit Sharing Plus
Plan ("Profit Sharing Plan"), in which executive officers participate on the
same basis as all other employees, subject to certain overall and specific
anti-discrimination restrictions. It is a defined contribution profit sharing
plan designed to provide retirement benefits to the employees of the Company and
its affiliates. The Profit Sharing Plan is designed to be funded with both
Company contributions and employee contributions. The Company's contribution
consists of three components: 2% Credit, Match and Discretionary. Eligible
employees are given 2% of their pay as a credit which they can redeposit in the
Profit Sharing Plan, which constitutes part of the Section 401(k) portion of the
Profit Sharing Plan. The employees are able to contribute to the Profit Sharing
Plan on a pre-tax basis up to an additional 13% of their "plan compensation"
(which is also part of the Section 401(k) portion of the Profit Sharing Plan).
"Plan compensation" includes all regular salary and wages paid to or accrued for
employees and 100% of the current year's "qualified commissions" (consisting of
commissions received as part of a specified compensation plan as approved by the
Plan Administrator), but excludes overtime and bonuses. The Company will "match"
between 50% and 100% (depending on the percentage of pay contributed) of the
first 1% to 5% of plan compensation the employee contributes on a pre-tax basis.
The match can exceed neither 2.5% of any individual employee's plan compensation
nor 50% of the adjusted net earnings of the Company for the particular plan
year. The discretionary contribution is based on consolidated earnings of the
Company. It may be paid in the form of the Company's stock contributions (or
contributions of cash used to purchase Company capital stock) to the ESOP or
cash contributions to the Profit Sharing Plan. See "Election of Directors and
Management Information -- Summary of Plans -- Employee Stock Ownership Plan."
Under the Profit Sharing Plan, all cash dividends paid on the Class A Common
Stock are allocated to the accounts of the participants holding shares of Class
A Common Stock in their profit sharing accounts.
No amounts were paid or distributed during 1998 by the Profit Sharing Plan to
the individuals in the Summary Compensation Table. Benefit amounts contributed
by the Company pursuant to the Profit Sharing Plan for the individuals named in
the Summary Compensation Table during 1996, 1997 and 1998 are included in the
Summary Compensation Table under the heading "All Other Compensation." Employer
contributions (which were made in 1998 and 1999), for all the Company's
employees (including executive officers) participating in the Profit Sharing
Plan in 1998, were $2,399,000.
PENSION PLAN. The Company maintains the Bremer Banks Retirement Plan ("Pension
Plan"), which is a defined benefit pension plan designed to provide retirement
benefits to the employees of the Company and its subsidiaries. The following
table sets forth estimated annual retirement benefits payable under the Pension
Plan at age 65 (normal retirement age), calculated based on final average
compensation (salaries are assumed to remain constant), years of service under
the Pension Plan, and a Social Security Covered Compensation amount of $45,216
for someone born in 1940:
7
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PENSION PLAN TABLE
Estimated Annual Retirement Benefits
Years of Service(1)
--------------------------------------------------------
Compensation 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
$ 125,000............ $ 25,000 $ 33,300 $ 41,600 $ 49,900 $ 49,900
150,000............ 30,700 40,900 51,100 61,300 61,300
175,000............ 36,400 48,500 60,600 72,700 72,700
200,000............ 42,100 56,100 70,100 84,100 84,100
225,000............ 47,800 63,700 79,600 95,500 95,500
250,000............ 53,500 71,300 89,100 106,900 106,900
275,000............ 59,200 78,900 98,600 118,300 118,300
300,000............ 64,900 86,500 108,100 129,700 129,700
325,000............ 70,600 94,100 117,600 141,100 141,100
350,000............ 76,300 101,700 127,100 152,500 152,500
375,000............ 82,000 109,300 136,600 163,900 163,900
400,000............ 87,700 116,900 146,100 175,300 175,300
425,000............ 93,400 124,500 155,600 186,700 186,700
450,000............ 99,100 132,100 165,100 198,100 198,100
- --------------------
(1) The plan incorporates the pay limits under Section 401(a)(17) of the
Code. The pay limit for 1998 was $160,000, and this amount is indexed
each year. The retirement benefits shown above do not reflect the pay
limit.
With respect to the individuals named in the Summary Compensation Table, the
years of credited service are as follows: Mr. Terry M. Cummings (22), Mr. Stan
K. Dardis (5), Mr. Gene H. Sipe (36), Mr. Duaine C. Espegard (29) and Mr.
Kenneth P. Nelson (25).
The Company's contributions under the Pension Plan are actuarially determined
based upon the age, compensation, and years of service of the participating
employees. The criteria used to determine the amounts contributed or payable
does not depend upon any performance formula or measure. The "normal retirement
benefit" is equal to 1% of an employee's "final average compensation" multiplied
by the employee's "credited service" (one month for each calendar month during
which the employee is compensated as a participant under the Pension Plan), at
normal retirement date with a maximum of 30 years plus .52% of the employee's
final average compensation in excess of the "Social Security covered
compensation amount" multiplied by the employee's credited service at normal
retirement date, up to a maximum of 30 years. "Final average compensation" is
defined to mean average monthly compensation during the 60 consecutive months
which produce the highest average out of the last 120 consecutive months of
employment. The "Social Security covered compensation amount" is the average of
the Social Security taxable wage base in effect for the 35 year period ending in
the year before the employee attains Social Security retirement age. In
addition, an employee may receive an early retirement benefit if he or she has
attained age 55 and has completed at least five years of vesting service. The
early retirement benefit can be reduced to a minimum of 42% of the regular
retirement benefit, depending upon the number of years of service the employee
has within the Pension Plan. For purposes of the Pension Plan, the term
"compensation" includes salary and wages, and for those eligible participants in
the Executive Incentive Program, the "target award" portion of the Annual
Incentive Compensation Plan described below, but it excludes any employee's
credits under any flexible benefit program under Section 125 of the Code. In
addition, compensation excludes any contributions made to the ESOP or the Profit
Sharing Plan, except for elective pre-tax contributions to the Profit Sharing
Plan by employees. At retirement, benefits are computed on a straight life
annuity basis.
REPORT OF BOARD OF DIRECTORS ON ANNUAL COMPENSATION
The Company's Board of Directors is responsible for insuring that the
compensation for executives is consistent with the Company's compensation
philosophy. The Board believes that the Company's executive compensation is
reasonable given its financial performance and as compared to other similar
companies in the industry.
The Board annually evaluates the performance and compensation of the Company's
Chairman of the Board, Terry Cummings, its Chief Executive Officer, Stan Dardis,
and the other executive officers. The Board's deliberations regarding the annual
compensation of Mr. Cummings, Mr. Dardis and other executive officers do not
take place in the presence of the officer whose compensation is being discussed.
In the year ended December 31, 1998, Mr. Terry M. Cummings served as Chief
Executive Officer until he was appointed as Chairman on March 1, 1998, and Mr.
Stan K. Dardis served as Executive Vice President until he was appointed as
Chief Executive Officer on March 1, 1998.
8
<PAGE>
COMPENSATION PRINCIPLES. The executive compensation strategy of the Company's
Board of Directors is based on the beliefs and guiding principles that
compensation should be aligned with business strategy, Company values, and
management initiatives. The program:
Rewards executives for strategic management and the enhancement of
stockholder value as measured by financial performance.
Integrates compensation programs with the Company's strategic planning
and measurement processes.
Supports a performance-oriented environment that rewards performance
with respect to the goals of the Company and its affiliates.
Attracts, retains, and motivates key executives critical to the
long-term success of the Company as a whole.
RELATIONSHIP OF COMPENSATION TO PERFORMANCE. Profitability and attainment of
strategic corporate objectives are the major determinants in the compensation
awarded to the Company's executive officers. While there is no precise formula
for determining base salary as compared to Company performance, these measures
are generally the basis for the Annual Incentive Compensation Plans, as
described below.
ANNUAL INCENTIVE COMPENSATION PLANS. The Company's Annual Incentive Compensation
Plans ("Annual Plans") are designed to provide, through cash awards, an
incentive to key executives of the Company to meet or exceed the business plan.
The basis of payout for the Annual Plans for Mr. Cummings and Mr. Dardis is
Return on Realized Equity ("RORE"), measured at the Company level on a
consolidated basis. The remainder of the Annual Plans are primarily based on
consolidated RORE in addition to work plan objectives tied to each executive's
specific area of responsibility. The Annual Plans for participants for the year
ended December 31, 1998 specified a maximum award ranging from 30% to 60% of
salary depending upon the executive's position and level of responsibility.
Lesser amounts may be paid to an executive based on the degree of attainment of
the goals. The amounts paid under the Annual Plans to the executives named in
the Summary Compensation Table are set forth under the heading "Annual
Compensation -- Bonus Earned."
LONG TERM INCENTIVE COMPENSATION PLANS. The Company's Long Term Incentive
Compensation Plans ("Long Term Plans") are designed to provide, through cash
awards, an incentive to key officers of the Company to meet or exceed prescribed
business objectives. More specifically, the goals of the Long Term Plans are to:
1) ensure high levels of profitability; 2) encourage growth through
acquisitions; and 3) increase efficiencies. The performance measure is RORE
measured at the Company level on a consolidated basis, averaged over a two or
three year performance period. The Long Term Plans were effective January 1,
1996 covering the years 1996 through 1998 ("1996 Long Term Plans") and January
1, 1998 covering the years 1998 through 1999 ("1998 Long Term Plans").
Incentives totalled $349,535 under the 1996 Long Term Plans, and partial
reserves have been set aside for potential payouts under the 1998 Long Term
Plans. For Mr. Cummings and Mr. Dardis, the target payout is 60% of salary, and
the maximum award is 120% of salary. For Messrs. Sipe, Espegard, and Nelson, the
target payout is 45% of salary, and the maximum payout is 105% of salary. Lesser
amounts may be paid to an executive officer based on the degree of attainment of
the goals. The officers named above have the option to defer a part or all of
any incentive dollars earned under the Long Term Plans pursuant to the Deferred
Compensation Plan described below.
DEFERRED COMPENSATION PLAN. Effective January 1, 1994, the Company implemented
the Deferred Compensation Plan (the "Deferred Compensation Plan"). All of the
executive officers named in the Summary Compensation Table are eligible to be
participants in the Deferred Compensation Plan. Under the Deferred Compensation
Plan, each participant may elect to defer certain percentages of payouts under
the Annual Plans and the Long Term Plans. Interest at an annual market rate is
accrued with respect to compensation deferred under the Deferred Compensation
Plan.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. Effective January 1, 1994, the Company
implemented the Supplemental Executive Retirement Plan ("SERP"). Messrs.
Cummings, Dardis, Sipe, Espegard, and Nelson are participants in the SERP.
Eligibility to participate requires that the individual be a Director of BFSI
and have a base annual salary greater than $140,000, indexed yearly for the cost
of living. The participant becomes vested in this benefit after five years of
service with the Company. The SERP is designed to replace benefits lost due to
changes in the Code. Specifically, it supplements the benefits determined under
the Pension Plan to the extent the benefits under the Pension Plan with its pay
limit of $160,000 (as indexed in the future based on the cost of living) is less
than what the benefits would have been had the pay limit remained at $260,000
(as indexed in the future based on the cost of living). The criteria used to
determine the amounts contributed or payable does not depend upon any
performance formula or measures.
9
<PAGE>
COMPANY PERFORMANCE AND COMPENSATION OF CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER. During 1998, both Mr. Cummings and Mr. Dardis served in the
capacity of Chief Executive Officer of the Company, with Mr. Cummings assuming
an active Chairman of the Board role effective March 1, 1998 upon the
appointment of Mr. Dardis to the position of President and Chief Executive
Officer.
Over the last three years, the Company has posted record earnings, with
increases in net income of 17%, 10% and 18%, respectively, in the years ended
December 31, 1996, 1997 and 1998. Over that same period, the Company's Return on
Realized Equity has increased from 13.08% in 1996, to 13.32% in 1997 to 14.55%
in 1998. These results reflect steady earnings improvements for the Company over
an extended period of time. Both Company performance and base executive
compensation in 1998 were comparable to industry and peer group averages. Annual
and long-term bonus awards for both Mr. Cummings and Mr. Dardis reflect the
attainment of business plan objectives identified in individual compensation
plans, as previously discussed.
APPROVAL OF EXECUTIVE COMPENSATION. The entire Board of Directors of the
Corporation, in lieu of appointing a compensation committee, sets and
administers the policies and plans which govern executive compensation. The
identities of the members of the Board of Directors are set forth in the section
of this Proxy Statement entitled "Election of Directors and Management
Information -- Information About Nominees for Election as Directors."
The Board believes that its current compensation philosophy and approach has
served the Company's stockholders fairly, and it plans to continue the same
compensation philosophy and approach for the foreseeable future.
By the Board of Directors:
Terry M. Cummings
Stan K. Dardis
William H. Lipschultz
Charlotte S. Johnson
Daniel C. Reardon
Sherman Winthrop
PERFORMANCE GRAPH
The following graph and table compare the cumulative total stockholder return
during the five years ended December 31, 1998 on (a) the Company's Class A
Common Stock (as measured by dividing (i) the sum of (A) the cumulative amount
of dividends for the measurement period, assuming dividend reinvestment, and (B)
the difference between the realized book value of the Company's Class A Common
Stock at the end and the beginning of the measurement period; by (ii) such
realized book value at the beginning of the measurement period), (b) the S&P
(Standard & Poor's) 500 Composite and (c) the Nasdaq Bank Stocks Composite. The
graph and table assume a $100 investment on December 31, 1993, with the
reinvestment of all dividends. It should be noted that the Company's Class A
Common Stock is not actively traded on an established market and generally all
sales of shares of Class A Common Stock consist of transfers through the
Company's Profit Sharing Plan. As such, sales are based on the Company's
unrealized book value per share. The "prices" for shares of Class A Common Stock
in the graph and table reflect the realized book value per share in effect at
that time, which excludes unrealized market value adjustments pursuant to
Statement of Financial Accounting Standards No. 115 and which is not greatly
influenced by market forces which otherwise may affect the trading value of
stocks, such as government policy, investor psychology, speculation, and
perceptions of the Company's industry.
10
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
CUMULATIVE TOTAL STOCKHOLDER RETURN SINCE DECEMBER 31, 1993
[PLOT POINTS CHART]
<TABLE>
<CAPTION>
At December 31,
================================================================================================
1993 1994 1995 1996 1997 1998
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bremer Financial Corporation $100.00 $113.05 $127.47 $145.15 $165.80 $191.50
----------------------------------------------------------------
S&P 500 Index $100.00 $101.29 $138.71 $170.56 $227.46 $292.47
----------------------------------------------------------------
Nasdaq Bank Index $100.00 $ 99.63 $148.53 $196.31 $327.08 $293.53
================================================================================================
</TABLE>
CERTAIN TRANSACTIONS
BFSI had employment agreements with Messrs. Terry M. Cummings, Duaine C.
Espegard, Kenneth P. Nelson and Gene H. Sipe ("BFSI Agreements") which provided
for an employment term that expired December 31, 1998. These agreements have not
been renewed.
The Subsidiary Banks have had, and expect to have in the future, banking
transactions in the ordinary course of business with some directors and officers
of the Company and directors of a significant subsidiary (including the
Subsidiary Banks) or with an associate of such person. Such transactions have
been and will be made on substantially the same terms, including interest rates
on loans and collateral, as those prevailing at the time for comparable
transactions with unrelated persons and do not and will not involve more than
normal risk of collectibility. The dollar amount of these loans was $16.7
million at December 31, 1997 and $16.4 million at December 31, 1998. During
1998, $74.0 million of new loans were made, repayments totalled $74.6 million,
and changes in the composition of directors and officers or their associations
increased the loans outstanding by $300 thousand. No loans to a related person
were restructured to provide for a deferral of payments and/or a reduction in
interest rates.
11
<PAGE>
ACCOUNTANTS
On January 26, 1999, and subject to the ratification of the holders of Class A
Common Stock, the Board of Directors recommended that Deloitte & Touche LLP be
engaged as the Company's principal accountant to audit the Company's
consolidated financial statements for the year ended December 31, 1999. The
affirmative vote of a majority of the shares of Class A Common Stock is
necessary at the Annual Meeting at which a quorum is present either in person or
by proxy to ratify the selection by the Board of Directors of Deloitte & Touche
LLP as the Company's independent accountant. If the holders of Class A Common
Stock do not ratify the selection of Deloitte & Touche LLP, other certified
public accountants will be considered and selected by the Board of Directors.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement, if they desire
to do so, and will be available to respond to appropriate questions.
OTHER BUSINESS
All items of business intended by the management to be brought before the Annual
Meeting are set forth in this Proxy Statement, and management knows of no other
business to be presented. If other matters of business not presently known to
the Board of Directors shall be properly raised at the Annual Meeting, the
persons named as the proxies will vote on such matters in accordance with their
best judgment.
ANNUAL REPORT
For a copy of the Company's Annual Report on Form 10-K, please contact Stuart F.
Bradt, Bremer Financial Corporation, 445 Minnesota Street, Suite 2000, St. Paul,
Minnesota 55101, (651) 312-3715.
FUTURE STOCKHOLDER PROPOSALS
Under the Securities Exchange Act of 1934 ("Exchange Act"), the Company's
stockholders may submit proposals to be considered at an annual stockholders'
meeting. Rule 14a-8 under the Exchange Act sets forth the procedures and
requirements for requesting that a company include these proposals in its proxy
statement. However, a stockholder may submit proposals to be voted on at an
annual meeting without having the proposals included in the company's proxy
statement. These proposals are known as "non-Rule 14a-8 proposals."
Rule 14a-4(c)(1) under the Exchange Act states when individuals named as proxies
by a company for an annual meeting may exercise their discretionary voting
powers for proposals not included in the company's proxy statement, including
non-Rule 14a-8 stockholder proposals. Rule 14a-4(c)(1) was recently amended to
provide that proxies named by a company to vote at an annual meeting may be
given discretionary authority to vote all proxies with respect to any non-Rule
14a-8 proposals which properly come before the annual meeting for a vote of the
stockholders if (i) the company has not received advance notice of the proposal
at least 45 days before the date on which the company first mailed its proxy
materials for the prior year's annual stockholder's meeting and (ii)
stockholders have been notified by the company of this 45-day advance notice
requirement.
The Company hereby notifies its stockholders that for the annual meeting of
stockholders expected to be held in April 2000, the deadline for notifying the
Company of any non-Rule 14a-8 stockholder proposals is January 29, 2000. Notice
of any such proposal must be given in writing to the Secretary of the Company,
Ms. Janice Aus, Bremer Financial Corporation, 445 Minnesota Street, Suite 2000,
St. Paul, Minnesota 55101. Therefore, the Company's proxies will be able to
exercise their discretionary voting authority with respect to any non-Rule 14a-8
proposal not submitted to the Company or submitted to the Company after January
29, 2000.
The notification deadline for stockholders wishing to have a Rule 14a-8 proposal
considered for inclusion in the Company's proxy solicitation materials for the
Annual Meeting of Stockholders to be held in 2000 is November 15, 1999. Such
proposals must be set forth in writing and received by the Secretary of the
Company, Ms. Janice Aus, at the above address on or before November 15, 1999.
Proposals received by that date that are proper for consideration at the 2000
Annual Meeting and otherwise conform to the rules of the Securities and Exchange
Commission will be included in the 2000 Proxy Statement.
12
<PAGE>
Due to the technical nature of the rights of stockholders and the Company in
this area, a stockholder desiring to make a stockholder proposal should consider
consulting his or her personal legal counsel with respect to such rights.
By Order of the Board of Directors
/s/ Janice A. Aus
JANICE A. AUS
Dated: March 15, 1999 Secretary
<PAGE>
Bremer Financial Corporation
A Minnesota Corporation
445 Minnesota Street - Suite 2000
St. Paul, Minnesota 55101
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Terry M. Cummings and Stan K. Dardis, and either of them, are hereby appointed
Proxies, each with the power to appoint his substitute, to represent and to
vote, as designated below, all shares of the Class A Common Stock of Bremer
Financial Corporation held of record by the undersigned on March 5, 1999 at the
Annual Meeting of Shareholders to be held on April 21, 1999 or any adjournment
thereof.
1. PROPOSAL TO FIX NUMBER OF DIRECTORS AT NOT LESS THAN FOUR (4) NOR MORE
THAN TEN (10):
[ ] For [ ] Against [ ] Abstain
2. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below except as marked to the contrary
below.
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name below.)
Terry M. Cummings, Stan K. Dardis, William H. Lipschultz,
Charlotte S. Johnson, Sherman Winthrop, and Daniel C. Reardon
3. PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
INDEPENDENT ACCOUNTANT TO AUDIT THE CONSOLIDATED FINANCIAL STATEMENTS
OF BREMER FINANCIAL CORPORATION FOR THE YEAR ENDED DECEMBER 31, 1999:
[ ] For [ ] Against [ ] Abstain
In the event of the inability or unwillingness of one or more of the above named
nominees to serve as a director at the time of the Annual Meeting on April 21,
1999 or any adjournments thereof, the shares represented by the proxies will be
voted in favor of the remainder of such nominees and may also, in the discretion
of the holders of said proxies, be voted for other nominees not named herein in
lieu of those unable or unwilling to serve. As of the date hereof, the Board of
Directors knows of no nominee who is unwilling or unable to serve.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting; management is not presently aware of
any such matters to be presented for action at the meeting.
The undersigned hereby ratifies and confirms all the proxies shall lawfully do
or cause to be done by virtue hereof and hereby revokes all proxies previously
given to vote such shares.
This Proxy, when properly executed, shall be voted in the manner indicated by
the undersigned shareholder, but if no direction is made, this Proxy will be
voted in favor of fixing the number of Directors at not less than four nor more
than ten, for the directors named in the Proxy Statement, and in favor of the
proposal to ratify the selection of Deloitte & Touche LLP to audit the
consolidated financial statements of Bremer Financial Corporation for the year
ended December 31, 1999.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, or in some other fiduciary capacity, please give full title
as such.
DATED:__________________, 1999. If a corporation, please sign in full
corporate name by president or other
authorized officer(s). If a partnership,
please sign in a partnership name by
authorized person(s).
________________________________________
Signature
________________________________________
Signature if held jointly
(PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY, USING THE ENCLOSED ENVELOPE)
