<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
PDS 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 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>
PDS FINANCIAL CORPORATION
6442 CITY WEST PARKWAY, SUITE 300
MINNEAPOLIS, MN 55344
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1997
------------------------
TO THE STOCKHOLDERS OF PDS FINANCIAL CORPORATION
Please take notice that the annual meeting of stockholders of PDS Financial
Corporation (the "Company") will be held, pursuant to due call by the Board of
Directors of the Company, at the Radisson Plaza Hotel, 35 Seventh Street South,
Minneapolis, Minnesota, on Wednesday, May 14, 1997, at 3:30 p.m., or at any
adjournment or adjournments thereof, for the purpose of considering and taking
appropriate action with respect to the following:
1. To elect six directors for the ensuing year.
2. To ratify the appointment of Coopers & Lybrand L.L.P. as the
independent accountants of the Company for the fiscal year ending December
31, 1997.
3. To act upon any other business that may properly come before the
meeting or any adjournments thereof.
Pursuant to due action of the Board of Directors, only stockholders of
record on April 1, 1997 will be entitled to notice of and to vote at the meeting
or any adjournments thereof.
WHETHER OR NOT YOU PLAN TO COME TO THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY IN THE REPLY ENVELOPE PROVIDED. YOUR COOPERATION IN PROMPTLY SIGNING
AND RETURNING YOUR PROXY WILL HELP AVOID FURTHER SOLICITATION EXPENSE. IF YOU
LATER DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS
EXERCISED.
By order of the Board of Directors,
PDS Financial Corporation
[SIG]
David R. Mylrea,
SECRETARY
April 11, 1997
<PAGE>
PROXY STATEMENT
OF
PDS FINANCIAL CORPORATION
6442 CITY WEST PARKWAY, SUITE 300
MINNEAPOLIS, MINNESOTA 55344
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PDS Financial Corporation (the "Company")
to be used at the Annual Meeting of Stockholders of the Company to be held May
14, 1997. The approximate date upon which this Proxy Statement and the
accompanying Proxy are expected to be first sent or given to stockholders is
April 11, 1997. Each stockholder who signs and returns a Proxy in the form
enclosed with this Proxy Statement may revoke the same at any time prior to its
use by giving notice of such revocation to the Company in writing, in open
meeting or by executing and delivering a new Proxy to the Secretary of the
Company. Unless so revoked, the shares represented by each Proxy will be voted
at the meeting and at any adjournments thereof. Presence at the meeting of a
stockholder who has signed a Proxy does not alone revoke that Proxy.
Only stockholders of record at the close of business on April 1, 1997 (the
"Record Date") will be entitled to vote at the meeting or any adjournments
thereof. All shares which are entitled to vote and are represented at the Annual
Meeting by properly executed proxies received prior to or at the Meeting, and
not revoked, will be voted at the Meeting in accordance with the instructions
indicated on such proxies.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company's only outstanding class of voting securities is Common Stock,
$0.01 par value, of which 3,119,816 shares were outstanding as of the close of
business on the Record Date. Each share of Common Stock is entitled to one vote
on all matters put to a vote of stockholders.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding Common Stock, (ii) each director, (iii) each executive
officer of the Company, and (iv) all executive officers and directors as a
group. Unless otherwise indicated, each of the following persons has sole voting
and investment power with respect to the shares of Common Stock set forth
opposite their respective names:
<TABLE>
<CAPTION>
PERCENT OF
NAME NUMBER (4)(5) CLASS
- -------------------------------------- ------------- ------------
<S> <C> <C>
Johan P. Finley (1)(2) 1,088,691 34.9%
David R. Mylrea (1) 150,800 4.6%
Robert M. Mann (1) 22,000 0.7%
Peter D. Cleary (1) 12,000 0.4%
Lona M.B. Finley (1)(3) 376,032 11.6%
Charles R. Patterson 8,500 0.3%
801 12th Avenue North
Minneapolis, MN 55411
Joel M. Koonce 11,000 0.4%
5500 Cenex Drive
Inver Grove Heights, MN 55077
James L. Morrell 5,000 0.2%
1323 Waterford Road
Woodbury, MN 55125
All officers and directors as a group 1,674,023 48.6%
(8 persons)
</TABLE>
- ------------------------
(1) The address of such person is 6442 City West Parkway, Suite 300,
Minneapolis, Minnesota 55344.
<PAGE>
(2) Includes 10,000 shares held as co-trustee for minor child also claimed by
spouse as co-trustee. Mr. Finley disclaims beneficial ownership of the
shares held by Lona M.B. Finley, his spouse.
(3) Includes 5,000 shares held by Ms. Finley as custodian for her son and 10,000
shares held as co-trustee for minor child also claimed by spouse as
co-trustee. Ms. Finley disclaims beneficial ownership of the shares held by
Johan P. Finley, her spouse.
(4) Includes shares of Common Stock issuable to the following persons upon the
conversion of the April 1, 1997 principal balance of the Company's
Convertible Subordinated Debentures: Johan P. Finley, 3,191 shares; David R.
Mylrea, 1,595 shares; Lona M.B. Finley, 3,191 shares; all executive officers
and directors as a group, 7,977 shares.
(5) Includes shares of Common Stock issuable to the following persons upon
exercise of options that are currently exercisable or that will become
exercisable within 60 days of the date of this Proxy Statement: David R.
Mylrea, 149,205 shares; Robert M. Mann, 22,000 shares; Peter D. Cleary,
12,000 shares; Lona M.B. Finley, 112,841 shares; Charles R. Patterson, 7,500
shares; Joel M. Koonce, 7,500 shares; James L. Morrell, 5,000 shares; all
executive officers and directors as a group, 316,046 shares.
CERTAIN TRANSACTIONS
Johan P. Finley, the Company's President, Chief Executive Officer,
controlling stockholder and Chairman of the Board, has guaranteed amounts loaned
to the Company from time to time under its $5 million and $1 million credit
lines.
In April 1994, the Company entered into a Tax Indemnification Agreement with
Johan P. Finley that provides for the indemnification of Mr. Finley for certain
tax liabilities, if any, that may arise with respect to the Company's operations
during the period in which it was an S corporation. The Company is currently not
aware of any such potential liabilities.
In November 1994, Mr. Finley purchased 66,667 shares of Advanced Cart
Technology, Inc. ("ACT"), a Nevada-based casino change cart manufacturer,
representing approximately 3% of its outstanding stock. During 1995, the Company
made various loans to ACT, all of which were either extended or repaid. The
Company believes the terms of these loans were no less favorable to the Company
than could have been obtained from unaffiliated parties. In December 1995, the
Company loaned $267,000 to ACT, which amount was to be repaid within 12 months.
In February 1996, ACT defaulted on this loan and ultimately filed for bankruptcy
protection. In December 1996, the Company charged off the remaining loan balance
of $237,000. The Company is presently pursuing legal alternatives under the loan
agreement.
ITEM 1: ELECTION OF DIRECTORS
Six directors are to be elected at the meeting, each director to hold office
until the next Annual Meeting of Stockholders or until his successor is elected
and qualified. Each of the persons listed below is now serving as a Director of
the Company and has consented to continue to serve as a Director, if elected.
The Board of Directors proposes for election the following nominees:
JOHAN P. FINLEY, age 35 is the founder of the Company and has been the
President, Chief Executive Officer and Chairman of the Board of Directors of the
Company since its inception in February 1988. In addition, Mr. Finley was the
President and Chief Executive Officer of RCM Inc. and Home Products, Inc. from
1991 to 1994.
DAVID R. MYLREA, age 40, has been the Chief Operating Officer of the Company
since July 1994 and has been General Counsel, Secretary and a Director of the
Company since January 1994. Mr. Mylrea had been engaged in the practice of law
in Minneapolis, Minnesota since 1984. He was a partner of the law firm of
Parsinen, Bowman and Levy, P.A. from 1989 to 1993. He is a director of Edwards
Sales Corporation.
2
<PAGE>
PETER D. CLEARY, age 39, has been Vice President and Chief Financial Officer
since September 1995 and has been a Director of the Company since January 1996.
From 1980 to 1995, Mr. Cleary served in various positions with Coopers & Lybrand
L.L.P., most recently as Audit Manager. Coopers & Lybrand L.L.P. provides
accounting services to the Company.
CHARLES R. PATTERSON, age 54, has been a member of the Company's Board of
Directors since March 1994. Since 1992, he has served as President of The Walman
Optical Company, a Minnesota manufacturer and distributor of eyeglasses,
accessories and ophthalmic examination equipment. He has served in various
capacities with Walman Optical since 1971. Mr. Patterson is a member of the
Board of Directors of F D Optical Manufacturing, Inc., a Minnesota optical
company, and also serves as a member of the Regional Board of the Optical
Laboratory Association of the United States.
JOEL M. KOONCE, age 58, has been a member of the Company's Board of
Directors since April 1994. Since 1986, he has served as Chief Financial and
Administrative Officer of CENEX, Inc., a distributor of petroleum and agronomy
products and other farm supplies located in St. Paul, Minnesota. Prior to
joining CENEX, Mr. Koonce served in various management positions with Land
O'Lakes, most recently as Vice President of Administration and Planning for
Agricultural Services. Mr. Koonce served in various management positions for
General Mills from 1965 to 1981. He is Chairman of the Board of Directors of St.
Paul Bank for Cooperatives.
JAMES L. MORRELL, age 43, has been a member of the Company's Board of
Directors since March 1996. He is currently an independent business consultant.
From 1986 to 1995, Mr. Morrell was employed by Dain Bosworth Incorporated, where
he held a number of management positions, most recently Managing Director,
Corporate Finance.
Directors of the Company are elected to serve until their successors are
duly elected and qualified. Each non-employee Board member receives an annual
cash retainer of $2,500 and a fee of $1,000 for each Board meeting attended.
Upon election or appointment to the Board of Directors, each non-employee
director is automatically granted a non-qualified option to purchase 10,000
shares of the Company's Common Stock at its fair market value on the date of
grant. These options have a term of ten years and become exercisable as to 2,500
shares on the date of each Annual Meeting of Stockholders at which the director
is re-elected or is serving an unexpired term. Messrs. Patterson and Koonce each
received 10,000 such options in March 1994 and April 1994, respectively, which
have an exercise price of $5.00 per share. Mr. Morrell received 10,000 such
options in March 1996 with an exercise price of $2.50 per share. The Company
reimburses officers and directors for their authorized expenses.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, which currently consists of
Johan P. Finley, Joel M. Koonce and James L. Morrell. The Audit Committee
reviews and makes recommendations to the Board of Directors with respect to
designated financial and accounting matters. The Audit Committee held one
meeting during 1996.
The Board of Directors has a Compensation Committee, which currently
consists of Johan P. Finley, Charles R. Patterson and Joel M. Koonce. The
Compensation Committee determines executive compensation and administers the
provisions of the Company's 1993 Stock Option Plan. The Compensation Committee
held one meeting during 1996.
The Board of Directors has no standing nomination committee.
During 1996, the Board of Directors held four meetings. All incumbent
directors attended 100% of those meetings of the Board and committees on which
they were members that were held while they were serving on the Board or on such
committees.
3
<PAGE>
PROXIES AND VOTING
The affirmative vote of the holders of the greater of (a) a majority of the
outstanding shares of Common Stock of the Company present and entitled to vote
on the election of Directors or (b) a majority of the voting power of the
minimum number of shares entitled to vote that would constitute a quorum for
transaction of business at the meeting, is required for election to the Board of
the nominees named above. A stockholder who abstains with respect to the
election of Directors is considered to be present and entitled to vote on the
election of Directors at the Meeting, and is in effect casting a negative vote;
a stockholder (including a broker) who does not attend the Meeting and who does
not give authority to a proxy to vote, or withholds authority to vote, on the
election of Directors shall not be considered present and entitled to vote on
the election of Directors.
All shares represented by proxies will be voted for the election of the
foregoing nominees unless a contrary choice is specified. If any nominee
withdraws or otherwise becomes unavailable for any reason, the proxies that
would otherwise have been voted for such nominee will be voted for such
substitute nominee as may be selected by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the two other
executive officers who received total salary and bonus in excess of $100,000
during the three preceding fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- ---------------------------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Johan P. Finley 1996 $ 159,135 $ 33,902 -- $ 45,397(1)
President and Chief 1995 $ 154,500 -- -- $ 16,620(1)
Executive Officer 1994 $ 150,000 $ 200,300 -- $ 14,963(1)
David R. Mylrea 1996 $ 110,210 $ 16,532 -- $ 19,821(2)
Chief Operating Officer 1995 $ 107,000 $ 9,360 7,500 $ 10,020(2)
and Secretary 1994 $ 100,000 $ 97,800 145,455 $ 5,625(2)
Robert M. Mann 1996 $ 127,764 $ 19,165 -- $ 9,020(3)
Executive Vice President 1995 $ 98,800 $ 9,360 54,000 $ 33,740(3)
1994 (4) -- -- -- --
</TABLE>
- ------------------------
(1) Consists primarily of Company contributions to a 401(k) plan in the amount
of $4,500, $4,620 and $2,963 in 1996, 1995 and 1994, respectively, an annual
automobile allowance of $12,000 and a fee in the amount of $27,654 paid for
personally guaranteeing bank lines of credit in 1996.
(2) Consists primarily of Company contributions to a 401(k) plan in the amount
of $4,060 and $4,620 in 1996 and 1995, respectively, an annual automobile
allowance of $5,400, $5,400 and $5,625 in 1996, 1995 and 1994, respectively,
and a transaction-related fee of $10,000 in 1996.
(3) Consists primarily of Company contributions to a 401(k) plan in the amount
of $2,877 in 1996, an annual automobile allowance of $4,800 and $3,800 in
1996 and 1995, respectively, and reimbursement for moving and temporary
living expenses in the amount of $29,940 in 1995.
(4) Mr. Mann joined the Company in March 1995.
4
<PAGE>
EMPLOYMENT AGREEMENTS
In September 1993, the Company entered into a five-year employment agreement
with Johan P. Finley as President and Chief Executive Officer. Mr. Finley is
entitled to an annual bonus during the term of his agreement of up to 7% of the
Company's pre-tax income. The agreement will automatically renew for additional
one-year periods at the expiration of the term, provided that either Mr. Finley
or the Company may prevent the renewal by written notice at least 30 days prior
to the expiration of the term.
In January 1994, the Company entered into a five-year employment agreement
with David R. Mylrea to serve as Chief Operating Officer, General Counsel and
Secretary. In accordance with an income-based formula, Mr. Mylrea is eligible to
earn a bonus of up to 55% of his base salary. Under his employment agreement, he
may receive an annual discretionary bonus of up to 15% of his base salary.
In February 1995, the Company entered into a five-year employment agreement
with Robert M. Mann to serve as Executive Vice President. In accordance with an
income-based formula, Mr. Mann was eligible to earn a bonus of up to 20% of his
base salary in 1996. Under his employment agreement, Mr. Mann may receive an
annual discretionary bonus of up to 15% of his base salary.
In September 1995, the Company entered into an employment agreement with
Peter D. Cleary to serve as Chief Financial Officer and Vice President. This
contract automatically renewed for another year in September 1996. In accordance
with an income-based formula, Mr. Cleary is eligible to earn an annual bonus of
up to 32.5% of his base salary. Under his employment agreement, Mr. Cleary may
receive an annual discretionary bonus of up to 15% of his base salary.
In March 1994, the Company entered into a three-year employment agreement
with Lona M.B. Finley. This contract has automatically renewed for an additional
year. In accordance with an income-based formula, Ms. Finley is eligible to earn
a bonus of up to 55% of her base salary. Under her employment agreement, she may
receive an annual discretionary bonus of up to 15% of her base salary.
Mr. Finley has agreed not to compete with the Company following termination
of employment for a period of one year, and Messrs. Mylrea, Mann and Cleary are
subject to two-year non-compete provisions.
STOCK OPTIONS
There were no stock options granted in 1996 to the executive officers named
in the compensation table set forth above.
In the event of dissolution, liquidation, or an event changing control of
the Company (as described in the Stock Option Plan), all outstanding options
under the Stock Option Plan will become exercisable in full and each optionee
will have the right to exercise his or her options or to receive a cash payment
in certain circumstances.
To date, none of the executive officers named in the compensation table has
exercised any options.
The following table sets forth the number and aggregate dollar value of all
unexercised options held by the named executive officers as of the end of 1996.
The value of each unexercised, in-the-money option was determined by multiplying
(1) the difference between (a) the market price of a share of Common Stock as of
the end of 1996 ($1.75), and (b) the exercise price of the option, by (ii) the
number of shares subject to the option.
<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996
---------------------------- --------------------------------
NAME EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- ------------------------------ ----------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Johan P. Finley -0- -0- -- --
David R. Mylrea 149,205 3,750 $ 450 $ 450
Robert M. Mann 12,000 42,000 $ 240 $ 240
</TABLE>
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for establishing compensation policies for all executive officers of
the Company. The Committee establishes the total compensation for the executive
officers in light of these policies. The Committee is composed of two
non-employee directors and one employee director.
The following report describes the Company's executive compensation program
and discusses the factors considered by the Committee in determining the
compensation of the Company's Chief Executive Officer and other executive
officers for its 1996 fiscal year.
COMPENSATION PHILOSOPHY
The goals for the executive compensation program are to:
- Motivate executives to assist the Company in achieving superior levels of
financial and stock performance by closely linking executive compensation
to performance in those areas; and
- Attract, retain and motivate executives by providing compensation and
compensation opportunities that are comparable to those offered by other
companies in the financial services industry.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
The elements of the executive compensation program are designed to meet the
Company's compensation philosophy. Currently, the Executive Compensation Program
is comprised of annual cash compensation and longer-term stock compensation.
Annual cash compensation consists of base salary and performance bonuses.
For lower level employees, salaries are set to be competitive for the industry
or marketplace, as appropriate, and bonuses are designed to represent a
relatively small percentage of annual cash compensation. For higher-level
employees, base salaries are in the low to average range for the financial
services industry and potential bonuses constitute a high percentage of annual
cash compensation. The Company's executive compensation bonus program has two
components: (1) a bonus of up to a specified percentage of base salary is based
upon the Company's earnings performance for the year, and (2) an additional
bonus of up to 15% of base salary can be awarded at the discretion of the
Compensation Committee. The Company's Chief Executive Officer, Chief Operating
Officer and Chief Financial Officer and certain other executive officers whose
responsibilities primarily focus on administrative and operational aspects of
the Company are paid bonuses semiannually.
The structure and earnings goals for the executive performance bonus program
are reviewed and adjusted annually by the Committee. Discretionary bonus awards
for the executive officers are initially determined by the Chief Executive
Officer and are submitted to the Committee for discussion and approval. An
executive officer's discretionary bonus is based upon the officer's duties and
responsibilities, individual performance and future potential. Many of these
assessments are subjective in nature and are made annually on a case-by-case
basis.
The Company's 1993 Stock Option Plan as amended provides for the granting of
options ("Options") to purchase up to an aggregate of 1,100,000 shares of Common
Stock to certain key employees, officers, directors and consultants of the
Company. Options granted under the Stock Option Plan may be either Options that
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986 ("Incentive Options"), or those that do not
qualify as "incentive stock options" ("Non-Statutory Options"). The Stock Option
Plan is administered by the Board of Directors and the Committee, which
determines the persons who are to receive Options, the terms and number of
shares subject to each Option and whether the Option is an Incentive Option or a
Non-Statutory Option.
6
<PAGE>
The Company currently anticipates that new executive officers would be
granted options at the time of hiring, which options would typically vest over a
number of years. The Committee believes these grants are in line with external,
competitive opportunities and provide a stronger, more direct motivation to
executive officers to increase stockholder value. The Company awarded options to
purchase a total of 35,000 shares in 1996, all of which vest over a period of
years.
EXECUTIVE OFFICER COMPENSATION
The executive officers' compensation was established at the beginning of
1996 and ratified by the Compensation Committee.
JOHAN P. FINLEY, CHARLES R. PATTERSON AND JOEL M. KOONCE
The Members of the Compensation Committee
ITEM 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At the meeting, a vote will be taken on a proposal to ratify the appointment
of Coopers & Lybrand L.L.P. by the Board of Directors to act as independent
accountants of the Company for the fiscal year ending December 31, 1997. Coopers
& Lybrand L.L.P. are independent accountants and auditors who have audited the
accounts of the Company annually since inception.
Representatives of Coopers & Lybrand L.L.P. will attend the stockholder
meeting. They will have the opportunity to make a statement if they desire to do
so, and will be available to answer appropriate questions that may be asked by
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF COOPERS &
LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
As of this date, the Board of Directors does not know of any business to be
brought before the meeting other than as specified above. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their judgment
on such matters.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and beneficial owners of more than ten percent
of the outstanding shares of Common Stock are also required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and ten-
percent owners were satisfied.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders must be received by the Secretary of the Company, PDS
Financial Corporation, 6442 City West Parkway, Suite 300, Minneapolis, Minnesota
55344, no later than December 15, 1997, for inclusion in the Proxy Statement for
such annual meeting.
7
<PAGE>
SOLICITATION OF PROXIES
The Company will bear the cost of preparing, assembling and mailing the
Proxy Statement, Annual Report and other material which may be sent to the
stockholders in connection with this solicitation. Brokerage houses and other
custodians, nominees and fiduciaries may be requested to forward soliciting
material to the beneficial owners of stock, in which case they will be
reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by facsimile or by
special letter.
The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other matters come before the
meeting, it is the intent of the persons named in the enclosed Proxy to vote the
Proxy in accordance with their best judgment.
[SIG]
David R. Mylrea
SECRETARY
8
<PAGE>
PDS FINANCIAL CORPORATION
6442 CITY WEST PARKWAY, SUITE 300
MINNEAPOLIS, MN 55344
APRIL 11, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Johan P. Finley and David R. Mylrea, and each of
them, with power to act without the other and with all the right of substitution
in each, the proxies of the undersigned to vote all shares of PDS Financial
Corporation (the "Company") held by the undersigned on April 1, 1997, at the
Annual Meeting of Stockholders of the Company, to be held on May 14, 1997, at
3:30 P.M., at the Radisson Plaza Hotel, 35 Seventh Street, Minneapolis,
Minnesota, and all adjournments thereof, with all powers the undersigned would
possess if present in person. All previous proxies given with respect to the
meeting are revoked.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS PROVIDED BY THE
UNDERSIGNED STOCKHOLDER, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL
NOMINEES FOR DIRECTOR NAMED IN ITEM 1 AND FOR PROPOSAL 2 LISTED HEREIN. UPON ALL
OTHER MATTERS, THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS OF THE
COMPANY.
Receipt of Notice of Annual Meeting of Stockholders and Proxy Statement is
acknowledged by your execution of this proxy. Complete, sign, date, and return
this proxy in the addressed envelope--no postage required. Please mail promptly
to save further solicitation expenses.
P R O X Y
1. ELECTION OF DIRECTORS: Nominees: Johan P. Finley, David R. Mylrea, Peter D.
Cleary, Charles R. Patterson, Joel M. Koonce and James L. Morrell
/ / VOTE FOR all nominees listed / / WITHHOLD AUTHORITY
above (except vote withheld for to vote for all nominees listed
the following nominees, if any, above
whose names are written below).
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2. To ratify the appointment of Coopers & Lybrand L.L.P. as the independent
accountants of the Company for the fiscal year ending December 31, 1997.
FOR / / AGAINST / / ABSTAIN / /
3. To vote with discretionary authority upon such other matters as may come
before the meeting.
INSTRUCTION: When shares are held by joint tenants, all joint tenants should
sign. When signing as attorney, executor, administrator, trustee, custodian, or
guardian, please give full title as such. If shares are held by a corporation,
this proxy should be signed in full corporate name by its president or other
authorized officer. If a partnership holds the shares subject to this proxy, an
authorized person should sign in the name of such partnership.
SIGNATURE(S)
___________________________________
___________________________________
Dated: ______________________, 1997
