<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
Midwest Federal Financial Corp
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Midwest Federal Financial Corp
- --------------------------------------------------------------------------------
(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 transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
Midwest Federal Financial Corp. Logo
March 21, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Midwest Federal Financial Corp. to be held at its main office, 1159 Eighth
Street, Baraboo, Wisconsin, on Thursday, April 24, 1997, at 3:00 p.m., Central
Time.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement
describes the formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Corporation. Directors and
officers of the Corporation will be present to respond to any appropriate
questions stockholders may have.
To ensure proper representation of your shares at the Annual Meeting,
please sign, date and return the enclosed proxy card in the enclosed
postage-prepaid envelope as soon as possible even if you currently plan to
attend the meeting. This will not prevent you from voting in person but will
assure that your vote is counted if you are unable to attend the meeting.
Sincerely,
GARY E. WEGNER
Gary E. Wegner
President and CEO
<PAGE> 3
MIDWEST FEDERAL FINANCIAL CORP.
1159 EIGHTH STREET
P.O. BOX 450
BARABOO, WISCONSIN 53913-0450
(608) 356-7771
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 24, 1997
---------------------
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders ("Meeting")
of Midwest Federal Financial Corp. ("Corporation") will be held at the main
office of the Corporation, 1159 Eighth Street, Baraboo, Wisconsin, on Thursday,
April 24, 1997, at 3:00 p.m., Central Time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the following purposes:
1. to elect two directors of the Corporation;
2. to amend the Corporation's Articles of Incorporation to increase
the number of authorized shares of Common Stock from 3,000,000 to
9,000,000; and
3. to transact such other business as may properly come before the
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Corporation's Bylaws, the Board of Directors has fixed the close of business on
February 28, 1997, as the record date for the determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed Proxy Card which is
solicited by the Board of Directors, and to mail it promptly in the enclosed
envelope. The Proxy will not be used if you attend the Meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
Nancy L. Bilz
NANCY L. BILZ
SECRETARY
Baraboo, Wisconsin
March 21, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
<PAGE> 4
PROXY STATEMENT
OF
MIDWEST FEDERAL FINANCIAL CORP.
1159 EIGHTH STREET
P.O. BOX 450
BARABOO, WISCONSIN 53913-0450
(608) 356-7771
---------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 24, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Midwest Federal Financial Corp. ("Midwest
Federal" or "Corporation") to be used at the Annual Meeting of Stockholders
("Meeting") of the Corporation. The Meeting will be held at the Corporation's
main office, 1159 Eighth Street, Baraboo, Wisconsin, on Thursday, April 24,
1997, at 3:00 p.m., Central Time. The accompanying Notice of Meeting and this
Proxy Statement are being first mailed to stockholders on or about March 21,
1997.
REVOCATION OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice delivered in person or mailed to the Secretary of the Corporation at 1159
Eighth Street, P.O. Box 450, Baraboo, Wisconsin 53913-0450, or the filing of a
later proxy prior to a vote being taken on a particular proposal at the Meeting.
A proxy will not be voted if a stockholder attends the Meeting and votes in
person. Proxies solicited by the Board of Directors of Midwest Federal will be
voted in accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted FOR the election of the two director nominees
and FOR the proposed amendment to the Corporation's Articles of Incorporation
set forth below.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on February 28, 1997,
are entitled to one vote for each share of common stock of the Corporation
("Common Stock") then held. Stockholders are not permitted to cumulate their
votes for the election of directors. As of February 28, 1997, the Corporation
had 1,621,629 shares of Common Stock issued and outstanding. The presence, in
person or by proxy, of the holders of at least a majority of such issued and
outstanding shares shall constitute a quorum at the Meeting.
Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum at the Meeting. An abstention
with respect to any proposal will have the effect of a vote against that
proposal. A broker non-vote would occur with respect to a given proposal when a
broker holding shares in street name (i.e., as nominee for the beneficial owner)
returns an executed Proxy Card (or voting directions) indicating that the broker
does not have discretionary authority to vote on a proposal. Under the rules of
the national securities exchanges, brokers who hold shares of Common Stock as
nominees will have discretionary authority to vote such shares on all of the
proposals being submitted at the Meeting. Broker non-votes, should they occur,
are not considered entitled to vote on a specified matter.
A plurality of the votes of the shares of Common Stock present in person or
by proxy at the Meeting will be necessary for the election of directors. The
affirmative vote of a majority of the total votes eligible to be cast at the
Meeting will be required for the adoption of the amendment to the Corporation's
Articles of Incorporation to increase the authorized shares of Common Stock.
<PAGE> 5
Persons and groups beneficially owning in excess of 5% of the Common Stock
are required to file certain reports disclosing such ownership pursuant to the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Based upon such
reports the following table sets forth, as of February 28, 1997 certain
information as to those persons who were beneficial owners of more than 5% of
the outstanding shares of Common Stock. Management knows of no persons other
than those set forth below who owned more than 5% of the outstanding shares of
Common Stock at February 28, 1997. See "Proposal I -- Election of Directors" for
information regarding beneficial ownership of Common Stock by the directors and
nominees for director, the executive officers named in the Summary Compensation
Table and all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ------------------------------------ ----------------- ------------
<S> <C> <C>
Baraboo Federal Bank, FSB Employee Stock Ownership Plan
Trust(1).................................................. 193,578 11.94%
1159 Eighth Street
P.O. Box 450
Baraboo, WI 53913
Joyce Weigel................................................ 100,000 6.17%
5387 Mariner's Cove Drive
Unit 309
Madison, WI 53704
</TABLE>
- ---------------
(1) The Baraboo Federal Bank, FSB ("Bank") Employee Stock Ownership Plan
("ESOP") purchased 207,000 shares of the Common Stock for the exclusive
benefit of participating employees with funds borrowed from the Corporation
in connection with the Bank's conversion from mutual to stock form
("Conversion"). ESOP shares are held in a suspense account for allocation
among participants on the basis of compensation as the loan is repaid. A
committee appointed by the Board of Directors of the Corporation ("ESOP
Committee") administers the ESOP. The ESOP Committee is composed of Gary E.
Wegner, Dean Carter and Beverly Shook. The Board of Directors has appointed
Gary E. Wegner as trustee for the ESOP ("ESOP Trustee"). The Board of
Directors may instruct the ESOP Trustee regarding investments of funds
contributed to the ESOP. The ESOP Trustee must vote all allocated shares
held in the ESOP according to the instructions of the participating
employees. Unallocated shares will be voted by the ESOP Trustee as directed
by the ESOP Committee. As of February 28, 1997, 98,691 shares held by the
ESOP were allocated to participants' accounts.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Corporation's Board of Directors is composed of seven members. The
Corporation's Bylaws provide that Directors are to be elected for terms of three
years, approximately one-third of whom are elected annually. Two directors will
be elected at the Meeting to serve for a three-year period or until their
respective successors have been elected and qualified. The Nominating Committee
has nominated for election as directors George F. McArthur and Robert J.
Schwarz. The nominees are current members of the Boards of Directors of the
Corporation and the Bank. Each director of the Corporation is also a director of
the Bank.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute nominee as the Board
of Directors may recommend or the Board of Directors may amend the Bylaws and
reduce the size of the Board. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
The nominees must be elected by a plurality of the votes eligible to be
cast at the Meeting, provided that a quorum is present.
2
<PAGE> 6
The following table sets forth as to each nominee for election as a
director, and as to each director continuing in office, his name, age and
principal occupation or occupations for the past five years, the year in which
he was first elected as a director and the year in which his current term as a
director expires.
<TABLE>
<CAPTION>
YEAR
FIRST YEAR
ELECTED TERM
NAME AGE(1) PRINCIPAL OCCUPATION DIRECTOR(2) EXPIRES
- ---- ------ -------------------- ----------- -------
<S> <C> <C> <C> <C>
NOMINEES FOR DIRECTOR
George F. McArthur..................... 66 Chairman of the Board of the 1967 1997
Corporation and Bank; Vice
President of McArthur Towels,
Inc., Baraboo, Wisconsin
Robert J. Schwarz...................... 60 Vice Chairman of the Board of the 1975 1997
Corporation and Bank; retired as
a principal in Schwarz Insurance
Agency, Prairie du Sac,
Wisconsin
DIRECTORS CONTINUING IN OFFICE
Gary E. Wegner......................... 47 President and Chief Executive 1988 1998
Officer of the Corporation and
Bank
Albert R. Dippel....................... 67 Retired as principal in Fishkin, 1979 1998
Dippel & Horman, Baraboo,
Wisconsin, a public accounting
firm
Dr. James D. Mathers................... 44 Private practitioner with Medical 1992 1998
Associates, S.C., Baraboo,
Wisconsin
David M. Gunderson..................... 47 President of Gunderson 1990 1999
Construction Co., Inc. Portage,
Wisconsin
John D. Jenks.......................... 64 President and Chief Executive 1978 1999
Officer of Equity Cooperative
Livestock Sales, Baraboo,
Wisconsin
</TABLE>
- ---------------
(1) At December 31, 1996.
(2) Includes prior service on the Board of Directors of the Bank.
3
<PAGE> 7
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 28, 1997, the number of
shares of Common Stock beneficially owned by each director and nominee for
director, the executive officers named in the Summary Compensation Table, and
all directors and executive officers of the Corporation as a group. The address
of each of the persons named in the following table is: c/o Midwest Federal
Financial Corp., 1159 Eighth Street, P.O. Box 450, Baraboo, Wisconsin
53913-0450.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AT
NAME FEBRUARY 28, 1997(1) PERCENT OF CLASS
- ---- ---------------------- ----------------
<S> <C> <C>
George F. McArthur....................................... 47,945 2.96%
Chairman of the Board
Robert J. Schwarz........................................ 49,770 3.07%
Vice Chairman of the Board
Gary E. Wegner........................................... 94,097 5.80%
President and Chief Executive Officer and Director
Albert R. Dippel......................................... 36,750 2.27%
Director
David M. Gunderson....................................... 40,038 2.47%
Director
John D. Jenks............................................ 22,300 1.38%
Director
Dr. James D. Mathers..................................... 18,925 1.17%
Director
Melvin Bindl
Executive Officer...................................... 6,600 .41%
All directors and executive officers as a group (19
persons)............................................... 412,780 25.45%
</TABLE>
- ---------------
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), a person is deemed to be the beneficial owner
of shares if he has or shares voting or investment power with respect
thereto. The table, therefore, includes shares owned by spouses and other
immediate family members, shares held in retirement accounts or funds or in
trust for the benefit of the named individuals, and shares over which the
named individuals otherwise have or share voting or investment power. In
accordance with Rule 13d-3, this table also includes 126,826 shares of
Common Stock that are subject to outstanding stock options exercisable
within 60 days of February 28, 1997; those shares are beneficially owned by
the named individuals and all other executive officers as a group as
follows: Mr. McArthur -- 8,850, Mr. Schwarz -- 13,350, Mr.
Wegner -- 14,250, Mr. Dippel -- 10,350, Mr. Gunderson -- 10,350, Mr.
Jenks -- 13,350, Mr. Mathers -- 8,175, and all other executive officers as
a group -- 48,151.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Corporation and Bank conduct their business
through meetings and committees of the Boards. During the fiscal year ended
December 31, 1996, the Board of Directors of the Corporation held 12 meetings
and the Board of Directors of the Bank held 12 meetings. No director of the
Corporation or the Bank attended fewer than 75% of the total meetings of the
Boards and committee, on which he served during this period.
The Audit Committee, consisting of Directors Gunderson, Jenks, Mathers, and
Schwarz, reviews the Bank's budget and audit performance and meets with the
Bank's auditors. This Committee also oversees and monitors the Bank's system of
internal controls by, among other things, monitoring and reviewing regulatory
4
<PAGE> 8
reports and the Internal Audit Department activities. This Committee met once
during the year ended December 31, 1996.
The Compensation Committee, consisting of Directors, Jenks, Schwarz,
McArthur, and Wegner, presents its recommendations to the Board of Directors
which reviews and adjusts compensation paid to the Bank's executive officers.
This committee also reviews the Bank's personnel budget and fringe benefit
policy. The recommendations of the Compensation Committee are presented to the
Board of Directors annually. This Committee met once during the year ended
December 31, 1996.
The Corporation's Bylaws provide that the Board of Directors shall act
as a nominating committee for selecting the management nominees for election as
directors. The Bylaws also provide that no nominations for directors, except
those made by the nominating committee, will be voted upon at the annual
meeting unless other nominations by stockholders are made in writing and
delivered to the Secretary of the Corporation in accordance with the provisions
of the Corporation's Articles of Incorporation. The Articles of Incorporation
provide that notice of a stockholder's intent to make a nomination for director
at the meeting ("stockholder notice") must be given not less than 30 days nor
more than 60 days prior to the meeting; provided, however, that if less than 31
days notice of the meeting is given to stockholders by the Corporation, a
stockholder notice shall be delivered or mailed, as prescribed, to the
Secretary of the Corporation not later than the close of the tenth day
following the day on which notice of the meeting was mailed to stockholders. If
properly made, such nominations will be considered by stockholders at the
meeting. The Board of Directors of the Corporation met once in its capacity as
the nominating committee during the fiscal year ended December 31, 1996.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Bank receive $775 for each monthly
Board meeting attended. The Chairman of the Board of the Bank receives $800 for
each monthly meeting attended. Members of the Board of Directors of the
Corporation receive $100 for each board meeting attended. Total fees paid to
directors during the fiscal year ended December 31, 1996, were $83,100. No
additional fees are paid for service on committees of the Board of the Bank or
the Corporation.
Directors Deferred Compensation Plan. Directors may elect to defer the
directors' fees paid to them by the Bank and the Corporation until retirement
with no income tax payable by the director until retirement benefits are
received. This alternative is made available to them through a deferred
compensation plan for directors adopted by the Bank in 1980.
If a participating director's service as a director is terminated on or
after he has attained the age of 55, the Bank shall pay an amount equal to the
fair market value of the assets in his account to him or his heirs in a lump sum
or over a period of ten years with one-tenth of the principal plus all interest
earned on the account since the date of the last payment payable each year. The
payments begin in the first year following termination. The estimated liability
under the agreement is accrued as earned by the director. The plan contains
certain hardship withdrawal provisions. The plan also permits employees to
participate in the plan at the discretion of the Board of Directors; however, no
employees other than Gary E. Wegner are currently participating in the plan.
5
<PAGE> 9
EXECUTIVE COMPENSATION
Summary Compensation Information. The following table sets forth
compensation information for the fiscal years 1994 through 1996 with respect to
the Corporation's President and Chief Executive Officer and to the Bank's next
highest paid officer whose compensation salary exceeded $100,000. The amounts
reflected in the table were paid by the Bank for services rendered to the Bank.
Officers of the Corporation do not receive any additional compensation for
serving in such capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) OPTIONS(#) ($)
- --------------------------- ---- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Wegner.......................... 1996 101,000 25,400 10,500 -- 26,193(2)
President and 1995 91,850 13,750 9,825 1,500 14,770(3)
Chief Executive 1994 83,500 10,000 8,700 -- 11,113(4)
Officer
Melvin Bindl............................ 1996 106,325 -- -- -- 419(5)
Sr. Vice President 1995 -- -- -- -- 9,500(6)
</TABLE>
- ---------------
(1) Director fees.
(2) This number represents $2,614 in 401(k) contributions, $22,903 in employee
stock ownership plan contribution (based on 1,238 shares multiplied by a
per share price of $18.50, representing the fair market value of the Common
Stock as reported on the Nasdaq "Small-Cap" Market on December 31, 1996)
and $676 for insurance premiums paid by the Bank.
(3) This number represents $2,174 in 401(k) contributions, $12,051 in employee
stock ownership plan contribution (based on 1,236 shares multiplied by a
per share price of $9.75, representing the fair market value of the Common
Stock as reported on the Nasdaq "Small-Cap" Market on December 31, 1995)
and $545 for insurance premiums paid by the Bank.
(4) This number represents $1,856 in 401(k) contributions, $8,736 in employee
stock ownership plan contribution (based on 1,379 shares multiplied by a
per share price of $6.33, representing the fair market value of the Common
Stock as reported on the Nasdaq "Small-Cap" Market on December 31, 1994)
and $521 for insurance premiums paid by the Bank.
(5) This number represents $419 for insurance premiums paid by the Bank.
(6) This number represents a signing bonus of 1,000 shares of Midwest Federal
Financial Corp. Common Stock with a market value of $9,500.00.
The following table sets forth information regarding the fiscal year-end
values of unexercised stock options held by the named executive officer.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES STOCK OPTIONS AT FISCAL STOCK OPTIONS
ACQUIRED ON VALUE YEAR END (#) AT FISCAL YEAR END ($)
EXERCISE REALIZED --------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Wegner............... 40,500 606,089 14,250 0 204,625(1) 0
</TABLE>
- ---------------
(1) This amount represents the difference between the exercise prices and the
market value of one share of the Corporation's Common Stock on December 31,
1996, multiplied by the number of shares.
6
<PAGE> 10
Employment Agreements. The Corporation and the Bank (collectively the
"Employers") are parties to a three-year employment agreement with Messrs. Gary
E. Wegner and Melvin Bindl. Under these agreements, Mr. Wegner's 1997 salary
level is $117,800 and Mr. Bindl's 1997 salary level is $66,000, which will be
paid by the Bank and may be increased at the discretion of the Board of
Directors or an authorized committee of the Board. Messrs. Wegner's and Bindl's
salaries may not be decreased during the term of employment agreement without
their prior written consent. On each anniversary of the commencement date of the
agreements, the term of the agreements may be extended by action of the Board of
Directors for an additional year unless a notice of termination of the agreement
is given. The agreements are terminable by the Employers for just cause at any
time or in certain events specified by Office of Thrift Supervision ("OTS")
regulations.
The employment agreements provide for severance payments and other benefits
in the event of involuntary termination of employment in connection with any
change in control of the Corporation. Severance payments also will be provided
on a similar basis in connection with a voluntary termination of employment
where, subsequent to a change in control, officers are assigned duties
inconsistent with their positions, duties, responsibilities and status
immediately prior to such change in control. The term "change in control" is
defined in the agreement as, among other things, any time during the period of
employment when a change of control is deemed to have occurred under OTS or a
change in the composition of a majority of the Board of Directors of the
Corporation occurs.
The severance payments from the Employers will equal 2.99 times the average
annual compensation during the then preceding five years. Such amount will be
paid within five business days following the termination of employment, unless
Messrs. Wegner and Bindl elect to receive equal monthly installments over a
three-year period. Section 280G of the Internal Revenue Code of 1986, as
amended, states that severance payments which equal or exceed three times the
base compensation of the individual are deemed to be "excess parachute payments"
if they are contingent upon a change in control. Individuals receiving excess
parachute payments are subject to a 20% excise tax on the amount of such excess
payments, and the Employers are not entitled to deduct the amount of such excess
payments. The employment agreements provide that if the severance payments to
Messrs. Wegner and Bindl constitute parachute payments in the opinion of counsel
to the Employers, then Messrs. Wegner and Bindl may elect to receive the maximum
amount of severance payments that can be paid without constituting excess
parachute payments, or if Messrs. Wegner and Bindl did not make such election,
then the Employer shall pay a lump sum cash payment equal to 2.99 times the base
compensation.
The agreements restrict Messrs. Wegner's and Bindl's right to compete
against the Employers for a period of three years from the date of termination
of their employment if they voluntarily terminate their employment, except in
the event of a change in control, or if the Employers terminate their employment
for cause.
TRANSACTIONS WITH MANAGEMENT
Effective with the passage of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, officers and directors of the Bank are prohibited
from receiving any loan or extension of credit at other than market rates and
terms. The Bank adopted a policy effective on the date of such legislation to
discontinue granting preferred loans to directors and officers. Beginning
January 1, 1990, directors, officers and employees no longer receive any loans
on preferred terms. The terms of existing loans will not change, as allowed by
the legislation. At December 31, 1996 no loans outstanding to directors,
officers and employees were on preferred terms.
PROPOSAL NO. 2 -- APPROVAL OF AMENDMENT TO ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors by unanimous vote on January 21, 1997 adopted
resolutions approving and recommending that the shareholders adopt an amendment
to Article VI of the Corporation's Articles of
7
<PAGE> 11
Incorporation (the "Articles") to increase its total authorized capital stock
from 4,000,000 to 10,000,000 shares and its authorized common stock from
3,000,000 to 9,000,000 shares. The rights and limitations of the Common Stock
would remain unchanged under the amendment. The Common Stock does not have
preemptive rights. The Corporation's Articles also authorize 1,000,000 shares of
serial preferred stock, $.01 par value per share. At February 28, 1997, the
Corporation did not have any shares of preferred stock outstanding.
In recent years, the Corporation has declared several stock splits in the
form of 100% stock distributions. The Corporation declared a two-for-one stock
split in the form of a stock dividend in May 1996 and a three-for-two stock
split in the form of a stock dividend in May 1995. Payment of these two stock
splits required 1,379,973 shares of Common Stock which significantly reduced the
number of authorized shares available for future issuance. At February 28, 1997,
the Corporation had 1,621,629 shares of Common Stock issued and outstanding, and
448,369 shares issued and held by the Corporation as treasury stock. An
additional 286,826 shares were reserved for issuance under the Corporation's
incentive stock plans or upon exercise of options issued under incentive stock
plans. Thus, as of February 28, 1997, the Corporation had 643,176 shares of
Common Stock available for future issuance. Adoption of the proposed amendment
would increase the number of authorized shares of Common Stock available for
future issuance to 6,643,176 shares. The additional shares of Common Stock for
which authorization is sought would, if and when issued, have the same rights
and privileges as the presently outstanding shares of Common Stock.
The proposed increase in the authorized Common Stock has been recommended
by the Board of Directors to assure that an adequate supply of authorized but
unissued shares is available to provide the Corporation with additional Common
Stock for (i) general corporate needs, such as future stock dividends or stock
splits, (ii) raising additional capital to finance the operations of the
Corporation, (iii) facilitating the acquisition of other financial institutions
and (iv) providing for future equity-based compensation for the Corporation's
employees and directors. There currently are no plans or arrangements relating
to the issuance of any of the additional shares of Common Stock proposed to be
authorized (other than under its incentive stock plans).
All of the additional shares of authorized Common Stock would be available
for issuance without any further action by the shareholders, unless required by
the Articles, the Corporation's bylaws or applicable law. Although the Board of
Directors has no present intention of doing so, authorized but unissued shares
of Common Stock (or shares of Common Stock held as treasury shares) could be
issued, subject to applicable law and regulatory requirements, in one or more
transactions that would make a takeover of the Corporation more difficult.
Issuances of Common Stock by their very nature dilute the voting power of
already outstanding stock and can, depending upon their issuance price, dilute
the economic value of outstanding stock as well.
The increase in authorized shares of Common Stock has not been proposed for
an antitakeover-related purpose, and the Board of Directors and management have
no knowledge of any current efforts to obtain control of the Corporation.
If the amendment to the Articles is adopted, the first sentence of the
first paragraph of Article VI of the Articles will be amended to read as follows
(with the changed portion in italics):
"The total number of shares of all classes of the capital stock which
the Corporation has authority to issue is 10,000,000 of which 9,000,000
shall be common stock, $.01 par value per share, and 1,000,000 shall be
serial preferred stock, $.01 par value per share."
The affirmative vote of a majority of the total votes eligible to be cast
at the Meeting will be required for adoption of the proposed amendment to
increase the authorized Common Stock. All of the Corporation's directors have
expressed their intent to vote for the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE PROPOSED INCREASE IN THE AUTHORIZED COMMON STOCK. PROXIES RECEIVED BY THE
BOARD OF DIRECTORS WILL BE VOTED FOR SUCH PROPOSAL UNLESS SHAREHOLDERS SPECIFY A
CONTRARY CHOICE IN THEIR PROXIES.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on a review of copies of Forms 3, 4 and 5 beneficial ownership
reports and amendments thereto furnished to the Corporation, the Corporation
believes that its directors, officers and greater than 10% stockholders complied
with all applicable requirements of Section 16(a) of the Exchange Act during the
fiscal year ended December 31, 1996.
AUDITORS
On October 4, 1996, the Registrant dismissed Wipfli Ullrich Bertelson CPAs
("Wipfli") as the Registrant's certifying accountants. In connection with
Wipfli's report on the Registrant's consolidated financial statements for the
two most recent fiscal years ended December 31, 1994 and 1995, such reports did
not contain an adverse opinion or disclaimer opinion, nor were the reports
modified as to uncertainty, audit scope, or accounting principles.
Wipfli's dismissal was approved by Registrant's Board of Directors. During
the Registrant's two most recent fiscal years and any subsequent interim period
through the date of dismissal, there were no disagreements or "reportable
events" with Wipfli, whether or not resolved, on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of Wipfli, would have
caused it to make reference to the subject of such disagreement in connection
with its reports.
The Registrant formally engaged McGladrey & Pullen, LLP on October 4, 1996
as its new certifying accountants.
OTHER MATTERS
The Board of Directors of the Corporation is not aware of any business to
come before the Meeting other than the matter described above in this Proxy
Statement. However, if any other matters should properly come before the
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of the person or persons holding
the proxies.
FINANCIAL STATEMENTS
The Corporation's Annual Report to Stockholders, including financial
statements, has been mailed to all stockholders of record as of the close of
business on February 28, 1997. Any stockholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary of the
Corporation at 1159 Eighth Street, P.O. Box 450, Baraboo, Wisconsin 53913-0450.
Such Annual Report is not to be treated as part of the proxy solicitation
material or as having been incorporated herein by reference.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by the Corporation. In
addition to solicitations by mail, directors, officers and regular employees of
the Corporation may solicit proxies personally or by telegraph or telephone
without additional compensation.
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STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Corporation's main office at 1159
Eighth Street, P.O. Box 450, Baraboo, Wisconsin 53913-0450, no later than
November 21, 1997. Any such proposals shall be subject to the requirements of
the proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
Nancy L. Bilz
NANCY L. BILZ
SECRETARY
Baraboo, Wisconsin
March 21, 1997
FORM 10-KSB
A COPY OF THE FORM 10-KSB FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO NANCY L. BILZ, SECRETARY, MIDWEST FEDERAL FINANCIAL CORP., 1159
EIGHTH STREET, P.O. BOX 450, BARABOO, WISCONSIN 53913-0450.
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