<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 240.14a-11(c) or 240.14a-12
RED OAK HEREFORD FARMS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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>
RED OAK HEREFORD FARMS, INC.
2010 Commerce Drive
Red Oak, Iowa 51566
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 26, 1999
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TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Red Oak Hereford Farms, Inc. (the
"Company") will be held at the Red Oak Country Club, 2038 200th Street, Red Oak,
Iowa, on Wednesday, May 26, 1999, at 10:30 a.m. (local time) for the following
purposes:
(1) to elect eight directors to hold office until the Annual Meeting of
Shareholders in 2000, and until their successors are elected and qualified;
(2) to transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on April 15, 1999,
will be entitled to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Peter Hudgins
Secretary
May 14, 1999
Red Oak, Iowa
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SHAREHOLDERS ARE REQUESTED TO SIGN, MARK, DATE, AND PROMPTLY RETURN THE ENCLOSED
PROXY IN THE ADDRESSED REPLY ENVELOPE, WHICH IS FURNISHED FOR YOUR CONVENIENCE.
THIS ENVELOPE NEEDS NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
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<PAGE>
RED OAK HEREFORD FARMS, INC.
2010 Commerce Drive
Red Oak, Iowa 51566
712-623-9224
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PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
May 26, 1999
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INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Red Oak Hereford Farms, Inc. (the
"Company") to be used in voting at the Annual Meeting of Shareholders to be held
on Wednesday, May 26, 1999, at 10:30 a.m., at the Red Oak Country Club, 2038
200th Street, Red Oak, Iowa, or at any adjournment or adjournments thereof. This
Proxy Statement, the Notice, the Proxy and the Company's 1998 Annual Report have
been mailed on or before May 14, 1999 to each shareholder of record at the close
of business April 15, 1999.
You are requested to sign, mark and complete the enclosed Proxy and
return it in the addressed reply envelope which is furnished for your
convenience. If any matters that are not specifically set forth on the proxy
card and in this Proxy Statement properly come before the Annual Meeting, the
proxies intend to vote on such matters in accordance with their reasonable
business judgement.
Proxies in the form enclosed, if duly signed, marked, and received in
time for voting, will be voted in accordance with the directions of the
shareholders. The giving of a Proxy does not preclude the right to vote in
person should the shareholder so desire. A shareholder may revoke a Proxy by
giving notice to the Secretary of the Company in writing at the address of the
principal executive offices or in open meeting, but such revocation shall not
affect any vote previously taken.
The expense of soliciting Proxies for the Annual meeting, including the
cost of preparing, assembling, and mailing the Notice, Proxy and Proxy
Statement, will be paid by the Company. The solicitation will be made by the use
of the mails and through brokers and banking institutions and may also be made
by officers and regular employees of the Company. Proxies may be solicited by
personal interview, mail, telephone and possibly by facsimile transmission.
As hereinafter used, and unless otherwise provided, the term "Executive
Officers" refers to the President and Chief Executive Officer, and the Vice
President and Chief Financial Officer.
<PAGE>
VOTING SECURITIES
General
Each holder of record of the Company's Common Stock, par value $0.001
per share, at the close of business on April 15, 1999 is entitled to one vote
per share on matters that come before the Annual Meeting.
The presence, in person or by proxy, of shareholders entitled to cast
at least a majority of the votes which all shareholders are entitled to cast on
a particular matter constitutes a quorum to take action at a shareholders'
meeting. Shares which are present, or represented by a proxy, will be counted
for quorum purposes regardless of whether the holder of the shares or proxy
fails to vote on a matter ("Abstentions") or whether a broker with discretionary
authority fails to exercise its discretionary authority to vote shares with
respect to the matter ("Broker Non-Votes"). The affirmative vote of at least a
majority of the votes cast at the Annual Meeting of Shareholders by all
shareholders entitled to vote thereon is required to adopt any proposal. For
voting purposes, only shares voted either for or against the adoption of
proposal or the election of directors, and neither Abstentions not Broker
Non-Votes, will be counted as voting in determining whether a proposal is
approved or a director is elected. As a consequence, Abstentions and Broker
Non-Votes will have no effect on the adoption of a proposal or the election of a
director.
At the close business on April 15, 1999, there were 15,009,665 shares
of the Company's Common Stock entitled to vote at the Annual Meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of April 15, 1999, the shares of the
Company's Common Stock held by shareholders of the Company who were known by the
Company to own beneficially more that 5% of its outstanding Common Stock, by the
Directors and nominees, and by all Directors and Executive Officers of the
Company as a group:
<TABLE>
<CAPTION>
Amount and Nature Percentage of Shares
Title of Name of of Beneficial Owned by Beneficial
Class Beneficial Owner Ownership (1) Owners and Management
- --------------- ------------------------------- -------------------------- -------------------------------
<S> <C> <C> <C>
Common Gordon Reisinger 5,976,320 (2) 33.3%
Rural Route 3
Red Oak, Iowa 51566
Common Cimarron Investments, LP 2,100,000 11.7%
RR 3
Red Oak, Iowa 51566
Common John Derner 6,426,321 (3) 35.9%
2353 213th Avenue
Milford, Iowa 51351
Common JKSBM, LP 2,175,000 12.1%
2353 213th Avenue
Milford, Iowa 51351
Common Charles Kolbe 775,821 (4) 4.3%
Common Dwayne Lewis 79,000 *
Common Florentine Van Tiem 0 *
Common Johan Smit 0 *
Common Jack Holden 29,000 (5) *
Common Ron Daggett 29,000 (6) *
Common All Officers and Directors as 13,376,462 (7) 69.7%
a Group: (10 persons)
</TABLE>
* Represents less than 1%
(1) Beneficial ownership has been determined pursuant to Rule 13(d)-3 (d) (1)
under the Securities Exchange Act of 1934, as amended.
<PAGE>
(2) Includes 512,820 shares owned by Cimarron Properties which is owned and
controlled by Gordon Reisinger and 2,100,000 shares owned by Cimarron
Investments, LP, a family partnership controlled by Mr. Reisinger.
Also, includes 1,380,000 stock options held by Mr. Reisinger.
(3) Includes 2,175,000 shares owned by JKSBM, a family limited partnership,
which is owned and controlled by Mr. Derner, and 512,821 shares owned by
Derner's of Milford, a company controlled by Mr. Derner and 265,000 shares
owned by the Derner Foundation which Mr. Derner controls. Also, includes
1,380,000 stock options held by Mr. Derner.
(4) Includes 512,821 shares owned by Wall Lake Cattle Company, a company
controlled by Mr. Kolbe. Mr. Kolbe also holds 60,000 of stock options.
(5) Includes options to purchase 5,000 shares of Common Stock and warrants to
purchase 10,000 shares of Common Stock.
(6) Includes 10,000 shares of Common Stock held jointly with Mr. Daggett's
spouse. Also includes warrants to purchase 10,000 shares of Common Stock
and options to purchase 5,000 shares of Common Stock.
(7) Includes warrants to purchase 41,750 shares of Common Stock and options to
purchase 2,875,000 shares of Common Stock.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
At the Annual Meeting, eight persons will be elected to the Board of
Directors to serve for one year.
Listed below are the nominees for the Board of Directors. Any Proxy not
specifically marked will be voted by the named proxies for the election of the
nominees named below, except as otherwise instructed by the shareholders. It is
not contemplated that any of the nominees will be unable or unwilling to serve
as a Director, but, if that should occur, the Board of Directors reserves the
right to nominate another person.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
FOLLOWING NOMINEES:
NOMINEES FOR DIRECTORS
Florentine Stewart Van Tiem, age 60. Mrs. Van Tiem is an entrepreneur,
marketing consultant, and real estate developer. She has a history of successful
management ventures.
Mrs. Van Tiem is the sole owner of the Troumassee Estates. The 1,200+
acres of cattle (the largest herd on the island and one of the largest in the
Caribbean), copra, and bananas, as well as six miles of beach and ocean frontage
on the island of St. Lucia, located in the West Indies. She is Chairman of the
Board of her own national franchising company for solely owned products in the
bread and cookie lines. Her bread mixes, cookie mixes, promotional programs, and
wrappers are sold nationally.
Mrs. Van Tiem is the recipient of numerous awards including--Crusade
for Freedom, Viscountess, National Woman of the Year, National Creativity Award.
She has been a director of Hillcrest Laboratories, F.I.C.C. Louise K. Buell
Scholarship and Award Foundation, National Enrichment Association, Society for
the Performing Arts, Central Business Association of the Detroit Symphony, TB
and Healthy Society, Pilot Club, American Baker's Association, and American
Women in Radio and Television. She has also served on the Board of Regents of
St. Mary's University. She is also listed in Who's Who and the National Social
Register.
Johan Alexander Smit, age 45. Mr. Smit is Managing Director of Smitfort
Steel. As director of Smitfort-Staal BV, Mr. Smit manages a worldwide steel
company. He attended the London School of Economics and received his Masters in
Business Administration from the University of Neyerrode.
Mr. Smit is an honorary member of the Dutch Export Federation, a board
member of Business Club Zwijndrecht (ovz) and a supervisory board member of the
Dutch Trading Company.
<PAGE>
Gordon Reisinger, Director and President, age 58. Prior to its
acquisition by the Company, Mr. Reisinger was the managing partner and a 33.33%
owner in Midland Cattle Company, which he formed in 1987. Midland is a cattle
trader, which buys and sells feeder cattle nationwide, including cattle for the
CHB program. Mr. Reisinger was also a managing partner and a 33.33% owner in
Mid-Ag prior to its reverse acquisition of the Company. Mr. Reisinger has
managed the Eldora Livestock auction his father built in 1939 and has been
active in family farming and cattle operations, cattle feeding, commercial and
farmer feedlot quality-control auditing, and nationwide cattle brokering his
entire life. Mr. Reisinger holds a Bachelor's Degree in Animal Science from Iowa
State University.
John Derner, Director and Vice President, age 47. Mr. Derner owns and
manages an 8,000 head cattle feedlot and a large row crop operation in West Lake
Okoboji, Iowa. Mr. Derner also owns a manufacturing company, Shell Rock
Products, Inc., that manufactures and distributes numerous ornamental concrete
products nationwide. Mr. Derner was also a 33.33% partner in Midland and Mid-Ag
prior to their acquisition by the Company.
Charles Kolbe, Director and Chairman of the Board, age 56. Mr. Kolbe
owns a family farming and cattle feeding operation in Lake View, Iowa. In
addition to farming and cattle feeding operations, Mr. Kolbe has been active in
the financial world, having held positions as a director and principal of banks
in Iowa and Minnesota. Mr. Kolbe was a co-founder and 33.33% owner of Midland
prior to its acquisition by the Company. He is on the executive committee of the
Iowa Cattleman's Association, Iowa Beef Industry Council and the National
Livestock and Meat Board. He is past President of the Iowa Cattleman's
Association and past Chairman of the Iowa Beef Industry Council.
Jack B. Holden, Director, age 33. Mr. Holden manages his family's
Hereford operation, Holden Herefords, on a 2,000-acre ranch near Valier,
Montana. Mr. Holden is active in the National Cattleman's Beef Association,
Montana Stockgrowers and its Seedstock Committee. He is also active in the
American Hereford Association and the Montana Farm Bureau. He serves as Director
of the Montana Hereford Association, and Vice President and Director of the
Pondera County Canal and Reservoir Company.
Dwayne Lewis, Director, age 66. Mr. Lewis operates Lewis Feedlot. He
currently runs approximately 17,000 cattle in this operation. He has been active
in the Nebraska Livestock Feeders Association and chaired the Environmental
Committee for the National Feeders Association. He has been a member of National
Cattlemen's Beef Association and Nebraska Cattlemen's Association.
Mr. Lewis' quarterhorse operation is recognized as one of the top
stables in the United States. He has served as President of the Nebraska
Quarterhorse Association and a member of the Board of Directors of the American
Quarterhorse Association.
Along with his cattle feeding and quarterhorse operations, Mr. Lewis
and his two sons operate 3,500 acres of irrigated farmland. He has also served
as Chairman of the Board of Gibbon Bank for 12 years. His community service
included 20 years as a member and term as President of the local School Board in
his district near Kearney, Nebraska.
Ron Daggett, Director, age 51. Mr. Daggett served as a First Vice
President, Sales for Dean Witter from 1994 to 1997. For the past two years, Mr.
Daggett has served as First Vice President, Sales for Everen Securities, Inc.
<PAGE>
During the fiscal year ended December 31, 1998, seven
scheduled meetings of the Board of Directors were held.
The Company issues each director 1,000 shares of Common Stock for
attendance at each meeting of the Board of Directors. The Company also
reimburses directors for their travel and other reasonable expenses incurred in
attending each meeting of the Board of Directors or any of its committees.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has a standing Audit Committee.
The Committee is charged with the responsibility of reviewing reports from the
Company's independent certified public accountants, keeping the Board informed
with respect to the Company's accounting policies and the adequacy of internal
controls, making recommendations regarding the selection of the Company's
independent certified public accountants and reviewing the scope of their audit.
The Audit Committee was created by corporate resolution by the Board of
Directors on January 29, 1999. The Audit Committee members currently consist of
Ron Daggett and Chuck Kolbe. The Audit Committee has held no meeting since
formation in January of 1999.
The Board of Directors has a standing Compensation Committee, the
function of which is to review and make recommendations with respect to
compensation of the President and Chief Executive Officer and the other key
executive officers of the Company, including salary, bonus and benefits under
the various compensation plans maintained by the Company. The Compensation
Committee members are Gordon Reisinger and Ron Daggett. During the fiscal year
ended December 31, 1998, there was one meeting of the Compensation Committee.
The Board of Directors has a standing Nominating Committee charged with
the responsibility of making its recommendations annually to the Board with
respect to those persons for whose election as Directors by the shareholders
proxies shall be solicited by the Board of Directors and the filling of any
vacancy among the shareholder-elected Directors. The Nominating Committee will
consider shareholder recommendations of nominees for election to the Board if
the recommendations are accompanied by comprehensive written information
relating to the recommended individual's business experience and background and
by a consent executed by the recommended individual stating that he or she
desires to be considered as a nominee, and, if nominated or elected, that he or
she will serve as a Director. Recommendations should be sent to the Secretary of
the Company by December 1, 1999, to consider and recommend the candidates to be
nominated for election at this meeting.
EXECUTIVE OFFICERS (Not Also Directors):
Harley Dillard, Vice President and Chief Financial Officer. Mr. Dillard
worked in public accounting and then with Monfort of Colorado in several
capacities, including plant Controller for the Monfort Greeley Slaughter Plant
and Controller for the Monfort Portion Foods Division. He gained more consumer
product experience as Controller and Director of Finance for the Denver
Coca-Cola Franchise. From 1984 until 1996, Mr. Dillard held positions with
Robertson Associates Manufacturing, Inc., ("RAMI") an aluminum beverage
packaging manufacturer. Mr. Dillard joined RAMI as Controller and was promoted
to Vice President and Chief Financial Officer. Since 1996 until he joined the
Company, Mr. Dillard was General Manager of Cruisin Cuisine/WP&G Distributing, a
privately held manufacturer and distributor of wholesale food products. Mr.
Dillard is a Certified Public Accountant.
<PAGE>
Pete Hudgins, Vice President - Special Projects. Mr. Hudgins' lifelong
cattle industry experience began with his participation as the fifth generation
of a commercial Hereford Ranching and buying business in Texas. His
entrepreneurial activities in Real Estate Development, oil and gas, and Niche
Cattle Marketing bring a unique skill profile to the special projects of
building a unique proprietary branded beef business. Among his responsibilities
are investor, customer, and producer relations, which draw on substantial cattle
organization and capitol formation experience. He also coordinates projects with
Mr. Reisinger and other management in various areas of the enterprise.
COMPLIANCE WITH SECTION 16(a)
All Directors and Executive Officers have inadvertently omitted filing
Form 3 within ten days of election. The Form 3 for each Director and Executive
Officer is in the process of being filed.
The Directors and Executive Officers include: Gordon Reisinger, John
Derner, Charles Kolbe, Dwayne Lewis, Jack Holden, Ron Daggett, Harley Dillard,
and Pete Hudgins.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Policies Applicable To Executive Officers
The purpose of the Company's executive compensation program is to
attract, retain and motivate qualified executives to manage the business of the
Company so as to maximize profits and shareholder value. Executive compensation
in the aggregate is made up principally of the executive's annual base salary, a
bonus which may be awarded under the Company's Management Incentive Plan and
awards of Company stock or stock options under the Company's 1997 and 1998 Stock
Option Plans. The Company's Compensation Committee (the "Committee") annually
considers and makes recommendations to the Board of Directors as to executive
compensation including changes in base salary and bonuses.
Consistent with the above-noted purpose of the executive compensation
program, it is the policy of the Committee, in recommending the aggregate annual
compensation of executive officers of the Company, to consider the overall
performance of the Company, the performance of the division of the Company for
which the executive has responsibility and the individual contribution and
performance of the executive. The performance of the Company and of the function
for which the executive has responsibility are significant factors in
determining aggregate compensation although they are not necessarily
determinative. While shareholders' total return is important and is considered
by the Committee, it is subject to the vagaries of the public market place and
the Company's compensation program focuses on the Company's strategic plans,
corporate performance measures, and specific corporate goals, which should lead
to improved performance. The corporate performance measures which the Committee
considers include sales, earnings, return on equity and comparisons of sales and
earnings with prior years, with budgets, and with the Company's competitors and
peer group.
The Compensation Committee does not rely on any fixed formulae or
specific numerical criteria in determining an executive's aggregate
compensation. It considers both corporate and personal performance criteria,
competitive compensation levels, the economic environment and changes in the
cost of living as well as the recommendations of management. The Committee
exercises business judgment based on all of these criteria and the purpose of
the executive compensation program.
<PAGE>
Compensation Committee
Gordon Reisinger
Ron Daggett
<TABLE>
<CAPTION>
Summary Compensation Table
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Long-term Compensation
---------------------------------------
Annual Compensation Awards Payouts
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(1)
Name and Principal Other Annual Restricted Number of LTIP All Other
Position Year Salary Bonus Compensation Stock Awards Options Payouts Compensation
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gordon Reisinger 1998 $ 120,000 -0- $53,333 $97,970 -0- -0- -0-
President/ Director
Harley Dillard 1998 $ 110,000 -0- -0- $ 25,000 140,000 $408,800 -0-
Treasurer/Chief
Financial Officer
John Derner 1998 $ 55,000 -0- $33,333 $ 97,970 -0- -0- -0-
Vice President/
Director
Charles Kolbe 1998 $ 60,000 -0- $ 33,333 $11,970 -0- -0- -0-
Chairman
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</TABLE>
(1) Values of Restricted Stock Awards shown in the Summary Compensation Table
are based on the average market price of the Company's Common Stock on the
date of the grant.
Certain Relationships and Related Party Transactions
Mr. Gordon Reisinger is paid an annual salary of $120,000 as President
of the Company. Mr. Reisinger is also paid a consulting fee of $53,333. Mr.
Reisinger is part owner of a company that leases an office building to the
Company. The lease payments made in 1998 were $48,000. He was also paid $1,000
and issued 4,000 shares of Common Stock for his services as a director. Mr.
Reisinger also received 50,000 shares of Common Stock for additional services to
the Company. During 1998, ROF purchased cattle totaling $596,433 from a company
owned by Mr. Reisinger.
Mr. John Walker, Mr. Reisinger's son-in-law, works for Midland
as its General Manager. He buys and sells cattle for Midland and was paid
$69,000 for his services in 1998. Mr. Walker and his wife, Mrs. Kathy Walker,
own an entity that buys cattle from Midland. During 1998, cattle purchases by
Mr. and Mrs. Walker from Midland were approximately $626,600. In order to insure
a sufficient supply of CHB, the Company started entering into financing
arrangements, i.e., repurchase agreements, with related parties during 1998. The
Company's agreement with the related party is that the Company retains the
benefit from any gains on the cattle and the risk of any losses. In addition,
the Company reimburses the related party for any costs incurred on the cattle,
such as grain, vet, yardage, etc., as well as pays interest on the funds
advanced by the related party to "purchase" the cattle and to pay other expenses
related to the cattle. The cattle are purchased by the Company for meat
processing. During 1998, Midland paid $776,731 under this arrangement.
<PAGE>
Mr. Todd Reisinger, Mr. Reisinger's son, works as a meat salesman for
ROF and was paid $50,000 in 1998. Mrs. Walker works as a part-time bookkeeper
for Midland and received $4,800 in 1998.
Mr. Charles Kolbe, a director and employee of the Company, received
$1,000 in director fees in 1998 and was issued 4,000 shares of Common Stock. Mr.
Kolbe also received consulting fees from Midland totaling $33,333 in 1998. Mr.
Kolbe also received $60,000 for work performed for Midland. In order to insure a
sufficient supply of CHB, the Company started entering into financing
arrangements, i.e., repurchase agreements, with related parties during 1998. The
Company's agreement with the related party is that the Company retains the
benefit from any gains on the cattle and the risk of any losses. In addition,
the Company reimburses the related party for any costs incurred on the cattle,
such as grain, vet, yardage, etc., as well as pays interest on the funds
advanced by the related party to "purchase" the cattle and to pay other expenses
related to the cattle. The cattle are purchased by the Company for meat
processing. During 1998, Midland paid $413,000 under this arrangement.
Mr. Reisinger, Mr. Walker, and Mr. Kolbe are owners of a trucking
business that transported cattle for Midland and ROF. During 1998, this entity
was paid $196,602 for its services.
Mr. Reisinger and Mr. Walker are owners of a trucking company that
transports cattle for Midland and ROF. During 1998, this entity was paid
$68,104.
Mr. Dwayne Lewis, a director of the Company, was issued 4,000 shares of
Common Stock and $1,000 for his services as a director. He was also issued
50,000 shares of Common Stock for additional services to the Company. During
1998, Midland sold cattle to his entity totaling $302,764 and ROF purchased
cattle totaling $6,847,497.
Mr. John Derner was paid a consulting fee of $33,333 from Midland in
1998. He was also paid a salary of $55,000 as an employee of ROF. He received
$1,000 as a fee and was issued 4,000 shares of Common Stock for his services as
a director of the Company. Mr. Derner also received 50,000 shares of Common
Stock for additional services to the Company. Mr. Derner is an owner of an
entity that purchases cattle from Midland. In 1998, such purchases totaled
approximately $1,800,000. Also during 1998, ROF purchased cattle totaling
$3,269,3112 from a company owned by Mr. Derner. Mr. Derner also provided an
airplane for the use by the Company. The Company pays Mr. Derner rent on the
airplane. The Company makes payments for the pilot, fuel, and expenses to third
parties. The total of rent expense paid for 1998 was $19,500.
Messrs. Holden, Daggett, and Sturm each were issued 4,000 shares of
Common Stock for their services as directors of the Company.
Mr. Harley Dillard, the Company's Chief Financial Officer, received
compensation in 1998 totaling $110,000. Mr. Dillard was also issued 5,000 shares
of Common Stock and was granted options to purchase 140,000 shares of Common
Stock.
<PAGE>
PERFORMANCE GRAPH
Comparison of three-year cumulative total return among Red Oak Hereford
Farms, Inc. (HERF) and The Bloomberg Food-Meat Products Group (FMP*).
Total Return
Stock Price Plus Reinvested Dividends
---------------- -------------------- --------------------
HERF FMP*
---------------- -------------------- --------------------
12/31/96 $ 2.00 $ 12.39
12/31/97 $ 5.00 $ 17.82
12/31/98 $ 0.75 $ 13.74
---------------- -------------------- --------------------
* Based on information from the Bloomberg Food-Meat Products Group, as
available from Bloomberg, which includes the following companies, but from
which the company has been excluded:
Hormel Foods Corporation, Iowa Beef Packers Inc., Smithfield Foods Inc.,
Thorn Apple Valley Inc., Fresh Foods Inc., Doughtie's Foods Inc.,
Cattleman's Inc., Rymer Foods Inc., and Agri-Foods International Inc.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The intention of the Board of Directors is to select HLB Gross Collins,
P.C. for the 1999 certifying accountants. HLB Gross Collins, P.C. will be
available to answer questions at the Annual Meeting and make any statement, if
they so choose.
On December 4, 1998, BDO Seidman, LLP resigned as the Company's
certifying accountants. During the most recent fiscal year, there have been no
disagreements with BDO Seidman, LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure or any
reportable events. BDO Seidman, LLP's report on the financial statements for the
past year contained no adverse opinion or disclaimer of opinion and was not
qualified as to audit scope or accounting principles. The accountant's report
contained an explanatory paragraph regarding substantial doubt about the
Company's ability to continue as a going concern for a reasonable period of
time.
On January 18, 1998, the Company retained HLB Gross Collins, P.C. as
the Company's certifying accountants.
OTHER BUSINESS
The Board of Directors does not know of any other business to come
before the Annual Meeting. However, if any additional matters are presented at
the meeting, it is the intention of the persons named in the accompanying Proxy
to vote such Proxy in accordance with their judgment on such matters.
PROPOSALS FOR THE 2000 ANNUAL MEETING
Shareholders of the Company are entitled to submit proposals on matters
appropriate for shareholder action consistent with regulations of the Securities
and Exchange Commission ("SEC") and the Company's By-Laws. Should a shareholder
wish to have a proposal considered for inclusion in the proxy statement for the
Company's 2000 Annual Meeting, under Rule 14a-8 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), such proposal must be received by the
Company on or before December 1, 1999.
In connection with the Company's 2000 Annual Meeting and pursuant to
Rule 14a-4 under the Exchange Act, if the shareholder's notice is not received
by the Company on or before February 7, 2000, the Company (through management
proxy holders may exercise discretionary voting authority when the proposal is
raised at the annual meeting without any reference to the matter in the proxy
statement.
The above summary, which sets forth only the procedures by which
business may be properly brought before and voted upon at he Company's Annual
Meeting, is qualified in its entirety by reference to the Company's By-Laws.
All shareholder proposals and notices should be directed to the
Secretary of the Company at 2010 Commerce Drive, Red Oak, Iowa 51566.
<PAGE>
ANNUAL REPORT ON FORM 10-K FILED WITH
SECURITIES AND EXCHANGE COMMISSION
A copy of the Company's Annual Report on Form 10-K for its fiscal year
ended December 31, 1998 may be obtained, without charge, by any shareholder,
upon written request directed to Peter Hudgins, Secretary, Red Oak Hereford
Farms, Inc., 2010 Commerce Drive, Red Oak, Iowa 51566.
By Order of the Board of Directors
Peter Hudgins
Secretary
<PAGE>
PROXY Red Oak Hereford Farms, Inc. 2010 Commerce Drive, Red Oak, Iowa 51566
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholders of Red Oak Hereford Farms, Inc. (the "Company")
hereby appoints Gordon Reisinger and Pete Hudgins as the attorney and proxy of
the undersigned, with the powers the undersigned would possess if personally
present, and with full power of substitution, to vote all shares of Common Stock
of the Company at the annual meeting of shareholder(s) of the Company to be held
on May 26, 1999 at 10:30 a.m. central time at the Red Oak Country Club, 2038
200th Street, Red Oak, Iowa 51566, and any adjournment or postponement thereof,
upon all subjects that may properly come before the meeting, including the
matters described in the proxy statement furnished herewith, subject to any
directions indicated below.
Proposal No. 1 - Election of Directors
/ / FOR all eight nominees listed below.
/ / WITHHOLD AUTHORITY to vote for all eight nominees listed below..
/ / FOR all eight nominees listed below, except WITHHOLD AUTHORITY to vote for
the nominee((whose name(s) is (are) lined through.
Nominees: Florentine Stewart Van Tiem, Johan Alexander Smit, Gordon Reisinger,
John Derner, Charles Kolbe, Jack B. Holden, Dwayne Lewis, and
Ron Daggett
Proposal No. 2 - To transact such other business as may properly come before
the meeting and adjournments thereof.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this Proxy will be
voted "FOR" the nominees of the Board of Directors in the election of directors.
This proxy also delegates discretionary authority to vote with respect to any
other business which may properly come before the meeting or any adjournment or
postponement thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF
THE NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT FURNISHED IN CONNECTION HEREWITH,
AND HEREBY RATIFIES ALL THAT THE SAID
ATTORNEYS AND PROXIES MAY DO BY VIRTUE HEREOF.
DATED:________________________________,1999
________________________________________________
(Shareholder's signature)
________________________________________________
(Shareholder's signature)
Note: Please mark, date and sign this proxy
card and return it in the enclosed envelope.
Please sign as your name appears below. If
shares are registered in more than one name,
all owners should sign. If signing in a
fiduciary or representative capacity, please
give full title and attach evidence of
authority. Corporations please sign with
corporate name by a duly authorized officer
and affix corporate seal.
