WASHINGTON BANCORP
102 East Main Street
Washington, Iowa 52353
(319) 653-7256
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 20, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Washington Bancorp (the "Company") will be held at the Company's
office located at 102 East Main Street, Washington, Iowa at 4:00 p.m.,
Washington, Iowa time, on October 20, 1998.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Company;
2. The ratification of the appointment of McGladrey & Pullen, LLP as
the auditors of the Company for the fiscal year ending June 30,
1999;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on August 31, 1998
are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stan Carlson
-------------------------------------
Stan Carlson
President and Chief Executive Officer
Washington, Iowa
September 18, 1998
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
PROXY STATEMENT
WASHINGTON BANCORP
102 East Main Street
Washington, Iowa 52353
(319) 653-7256
ANNUAL MEETING OF STOCKHOLDERS
October 20, 1998
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Washington Bancorp ("Washington," and
with its subsidiaries, the "Company"), the parent company of Washington Federal
Savings Bank ("Washington Federal") and Rubio Savings Bank of Brighton ("Rubio,"
collectively with Washington Federal, the "Banks"), of proxies to be used at the
Annual Meeting of Stockholders of the Company (the "Meeting") which will be held
at the Company's office located at 102 East Main Street, Washington, Iowa on
October 20, 1998, at 4:00 p.m., Washington, Iowa time, and all adjournments of
the Meeting. The accompanying Notice of Annual Meeting, Proxy Card and this
Proxy Statement are first being mailed to stockholders on or about September 18,
1998.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the election of three directors and the ratification of the
appointment of McGladrey & Pullen, LLP as auditors for the Company.
Vote Required and Proxy Information
All shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), represented at the 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 thereon. If no instructions are
indicated, properly executed proxies will be voted for the director nominees and
the other proposal set forth in this Proxy Statement. The Company does not know
of any matters, other than as described in the Notice of Annual Meeting, that
are to come before the Meeting. If any other matters are properly presented at
the Meeting for action, the persons named in the enclosed form of proxy and
acting thereunder will have the discretion to vote on such matters in accordance
with their best judgment.
Directors shall be elected by a plurality of the votes of the shares
present or represented by proxy at the Meeting. The ratification of the
appointment of McGladrey & Pullen, LLP as auditors requires the affirmative vote
of a majority of the votes present in person or represented by proxy at the
Meeting and entitled to vote on the matter. Proxies marked to abstain and broker
non-votes have no effect on the vote. One-third of the shares of the Common
Stock, present in person or represented by proxy, shall constitute a quorum for
purposes of the Meeting. Abstentions and broker non-votes are counted for
purposes of determining a quorum.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to the
Secretary, Washington Bancorp, 102 East Main Street, Washington, Iowa 52353.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on August 31, 1998
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 603,006 shares of Common Stock issued and
outstanding. The following table sets forth information regarding share
ownership of: (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock, (ii) the Company's Chief
Executive Officer and each other executive officer whose salary and bonus for
fiscal 1998 exceeded $100,000 (the "Named Officers") and (iii) all directors,
nominees and executive officers of the Company as a group.
Shares
Beneficially Percent
Beneficial Owner Owned of Class
- ------------------------------------------------- ------------ --------
Over 5% Beneficial Owners
Washington Bancorp Employee Stock Ownership Plan 52,602(1) 8.7%
102 East Main Street
Washington, Iowa 52353
Jeffrey L. Gendell 65,400(2) 10.8%
200 Park Avenue, Suite 3900
New York, New York 10166
Named Officers
Stan Carlson 33,965(3) 5.6%
102 East Main Street
Washington, Iowa 52353
Directors and executive officers of the Company 107,822(4) 17.3%
as a group (10 persons)
- ----------------------
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), of which 8,202 have been allocated to accounts of
participants. First Bankers Trust Company, N.A., Quincy, Illinois, the
trustee of the ESOP, may be deemed to beneficially own the shares held by
the ESOP which have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to the
voting of shares allocated to their accounts under the ESOP. Unallocated
shares held in the ESOP's suspense account or allocated shares for which no
voting instructions are received are voted by the trustee in the same
proportion as allocated shares voted by participants.
(2) As reported on Schedule 13-D/A dated August 7, 1997 filed on behalf of
Jeffrey L. Gendell, Tontine Financial Partners, L.P., and Tontine
Management, L.L.C. in which Mr. Gendell individually as managing member of
Tontine Management, L.L.C., Tontine Management, L.L.C. as general partner
of Tontine Financial Partners, L.P. and Tontine Financial Partners, L.P.
claim shared voting and dispositive power in regards to 65,400 shares held
by Tontine Financial Partners, L.P.
(3) Includes shares held directly and jointly with family members, as well as
shares which are held in retirement accounts, or held by certain members of
the named individuals' families, or held by trusts of which the named
individual is a trustee or substantial beneficiary, with respect to which
shares the respective individuals may be deemed to have sole or shared
voting and/or dispositive powers. Also includes 6,574 shares, which are
subject to options currently exercisable or which become exercisable within
60 days of August 31, 1998, granted under the Stock Option Plan and 5,261
restricted shares of Common Stock awarded under the RRP.
(4) Includes shares held directly and jointly with family members, as well as
shares held in retirement accounts, or by certain members of the named
individuals' families, or held by trusts of which the named individual is a
trustee or substantial beneficiary, with respect to which shares the
respective individuals may be deemed to have sole or shared voting and/or
dispositive power. Also includes (i) 1,127, 902, 902, 902, 902, 1,754, 902,
5,261, 2,192 and 902 restricted shares of Common Stock awarded under the
RRP to Mr. Edwards, Ms. Levy, Mr. Wiley, Mr. Graber, Mr. Weeks, Mr.
Johnson, Mr. Hofer, Mr. Carlson, Ms. Linge and Mr. Gorham, respectively,
which have not yet vested but over which such individuals have sole voting
power, and (ii) 564, 1,128, 1,128, 1,128, 1,128, 2,192, 2,192, 1,128, 1,128
and 6,574 shares, subject to options granted under the Stock Option Plan to
Mr. Edwards, Ms. Levy, Mr. Wiley, Mr. Graber, Mr. Weeks, Mr. Johnson, Ms.
Linge, Mr. Hofer, Mr. Gorham and Mr. Carlson, respectively, which are
currently exercisable or exercisable within 60 days after August 31, 1998.
(4) PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of eight
members. Directors of the Company are generally elected to serve for a
three-year term or until their respective successors shall have been elected and
shall qualify. Approximately one-third of the directors are elected annually.
The following table sets forth certain information regarding the
Company's Board of Directors, including their terms of office and nominees for
election as directors. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to
one or more nominees) will be voted at the Meeting for the election of the
nominees identified in the following table. If any nominee is unable to serve,
the shares represented by all such proxies will be voted for the election of
such substitute as the Board of Directors may recommend. At this time, the Board
of Directors knows of no reason why any of the nominees might be unable to
serve, if elected. There are no arrangements or understandings between any
director or nominee and any other person pursuant to which such director or
nominee was selected.
Shares of Common Stock
Beneficially Percent
Director Term to Owned at of
Name Age Positions Held in the Company Since(1) Expire June 30, 1998(2) Class
---------------- --- ----------------------------- -------- ------- ---------------------- -------
NOMINEES
Dean Edwards 62 Director 1968 2001 2,127 *
James D. Gorham 60 Director 1991 2001 2,755 *
Mary Levy 44 Director 1993 2001 9,255 1.5
DIRECTORS CONTINUING IN OFFICE
Richard L. Weeks 76 Director 1978 1999 19,255 3.2
J. Richard Wiley 62 Director 1978 1999 3,755 *
Myron L. Graber 50 Director 1992 2000 8,750 1.5
Rick R. Hofer 50 Chairman of the Board 1988 2000 10,255 1.7
Stan Carlson 41 President, Chief Executive 1993 2000 33,965 5.6
Officer and Director
<FN>
* Less than 1%.
(1) Includes service as a director of one of the Banks.
(2) Includes shares held directly, as well as, in retirement accounts, held by
certain members of the named individuals' families, or held by trusts of
which the named individual is a trustee or substantial beneficiary, with
respect to which the named individuals may be deemed to have sole voting
and investment power.
</FN>
The business experience of each director and director nominee is set
forth below. All directors have held their present positions for at least the
past five years, except as otherwise indicated.
Dean Edwards has been President and Chief Executive Officer of Rubio
since 1981. He is a past President of Iowa Bankers Association Group 11 and past
member of their Board of Directors. He is Treasurer of the Lake Darling Youth
Center, a member of the Brighton City Council, and charter member of the
Brighton Lions Club. Mr. Edwards is a director of Rubio and a director of
Washington Federal.
James D. Gorham is a past District Agent for Northwestern Mutual Life
Insurance Co. and is currently a sales agent for Northwest Mutual Life Insurance
Co. in Washington, Iowa. Mr. Gorham is a past President of the Washington
Economic Development Group and also a member of Rotary, Sierra Club, Nature
Conservatory and Washington County Historical Society. Mr. Gorham is also a
director of Washington Federal.
Mary Levy is treasurer and co-owner of Mose Levy Co., Inc., a steel
distributor in Washington, Iowa. Ms. Levy is also a member of Washington County
Historical Society, American Cancer Society, Iowa Natural Heritage Foundation,
and YWCA/YMCA. Ms. Levy is also a director of Washington Federal.
Richard L. Weeks is President and Owner of Sitler Electric Supply,
Inc., an electrical wholesaler and operator of two lighting showrooms in
Washington and Marion, Iowa. Mr. Weeks is also a member of Noon Kiwanis,
Methodist Church, Country Club, YMCA, Masonic Lodge, Shriners, Washington County
I-Club, and the Athletic Club of Iowa City. Mr. Weeks is also a director of
Washington Federal.
J. Richard Wiley is currently the owner of Wiley Computers, a computer
retailer in Washington, Iowa. Prior to founding Wiley Computers, Mr. Wiley was
the manager of Apex Computer Systems in Iowa City, Iowa, the owner of Wiley's
Mere Farm, a family farm corporation and Iowa Computer Solutions, Inc., a
computer retailer in Washington, Iowa. Mr. Wiley is also a member of United
Presbyterian Church and Farm Bureau. Mr. Wiley is also a director of Washington
Federal.
Myron L. Graber is President of Graber Home Improvement, Inc., a
building materials supply company in Washington, Iowa. Mr. Graber is also a
member of Habitat for Humanity, Washington Concert Association, Optimist Club
and Washington Mennonite Church. Mr. Graber is also a director Washington
Federal.
Rick R. Hofer has been the personnel and credit manager of Sitler
Electric Supply in Washington, Iowa since 1993. Prior to that time, he was the
manager of Spurgeon's Department Store for 20 years. Mr. Hofer is also a member
of Noon Kiwanis and St.
James Church. Mr. Hofer is also Chairman of the Board of Washington Federal.
Stan Carlson is the President and Chief Executive Officer of Washington
and Washington Federal. He was elected President and Chief Executive Officer of
Washington Federal in 1993 and of the Company upon its formation in 1995. Prior
to 1993, he was a Vice President of Northwoods State Bank. Mr. Carlson is also a
member of Optimists Club, a past president of Washington Athletic Booster Club,
a past president of the Rotary Club and a member of Immanuel Lutheran Church.
Mr. Carlson is a director of Washington Federal and a director of Rubio.
Board of Directors' Meetings and Committees
Board and Committee Meetings of the Company. Meetings of the Company's
Board of Directors are generally held on a quarterly basis. The Board of
Directors of the Company held seven meetings during the year ended June 30,
1998. No incumbent director attended fewer than 75% of the total number of
meetings held by the Board of Directors and by all committees of the Board of
Directors on which he or she served during the year.
The Board of Directors of the Company has the same standing committees
as Washington Federal. None of the Company-level committees met during fiscal
year 1998.
Board and Committee Meetings of Washington Federal. Meetings of
Washington Federal's Board of Directors are held on a monthly basis. The Board
of Directors met 23 times during the fiscal year ended June 30, 1998. During
fiscal 1998, no incumbent director of Washington Federal attended fewer than 75%
of the aggregate of the total number of Board meetings or the total number of
meetings held by the committees of the Board of Directors on which he served.
The principal committees of the Board of Directors of Washington Federal are
Audit, Compensation, Planning, Investment and Loan Committees.
The Audit Committee is comprised of Directors Graber and Weeks. The
Audit Committee is responsible for selecting the independent accountants and
meeting with the independent accountants to outline the scope and review the
results of the annual audit. The Audit Committee met once during fiscal year
1998. The Audit Committee also performs periodic cash audits, in addition to
reviewing loan files and appraisers for Washington Federal.
The Compensation Committee is comprised of Directors Gorham and Levy.
The Compensation Committee is responsible for continual review of the
performance of the management group consisting of the President/Chief Executive
Officer, the Vice Presidents and the Controller. It also sets levels of
compensation for all employees. The Compensation Committee met four times in
fiscal year 1998.
The Planning Committee is comprised of Directors Wiley and Graber. The
Planning Committee approves the budget and strategic plan. The Planning
Committee met twice in fiscal year 1998.
The Investment Committee is comprised of Directors Weeks and Gorham.
The investment committee functions as the asset/liability committee and monitors
Washington Federal's interest rate spread and interest rate risk. The investment
committee also makes recommendations on purchases and sales, and sets the
interest rates to be paid on deposits. The Investment Committee met 40 times in
fiscal 1998.
The Loan Committee is comprised of Directors Gorham, Levy, Hofer, and
Wiley. The Loan Committee approves all real estate loans and ratifies all
consumer and commercial loans as well as home equity and home improvement loans.
They also set the interest rates charged on loans. The Loan Committee met 38
times in fiscal year 1998.
The Boards of Directors of the Company and Washington Federal have no
standing nominating committees. The full Boards of Directors act as nominating
committees. While the Boards will consider nominees recommended by others, the
Boards have not actively solicited nominations nor established any procedures
for this purpose.
Director Compensation
Cash Compensation of the Company. During fiscal 1998, the Board of
Directors of Washington were not paid for their service in such capacity.
Cash Compensation of Washington Federal. Each member of the Board of
Directors of Washington Federal receives $500 for each monthly and one annual
meeting of the Board attended. There are no fees paid for service on any Board
committee.
Cash Compensation of Rubio. Each member of the Board of Directors of
Rubio receives $225 for each monthly and one annual meeting of the Board
attended. There are no fees paid for service on any Board Committee.
Stock Benefit Plans. Each non-employee member of the Board of Directors
of the Company received a one time award of an option to purchase 2,818 shares
pursuant to the Stock Option Plan and a restricted stock award of 1,127 shares
under the RRP.
Executive Compensation
Washington has not paid any compensation to its executive officers
since its formation. Washington does not presently anticipate paying any
compensation to such persons.
The following table sets forth the compensation paid or accrued by
Washington Federal for services rendered by the Chief Executive Officer. No
executive officer of Washington made in excess of $100,000 during fiscal 1998.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------------
Awards
- ----------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Award(s) Options Compensation
($)(1) ($) ($)(2) ($)(3) (#) ($)
- ----------------------------------------------------------------------------------------------------------------------------
Stan Carlson, President, Chief 1998 $84,250 $1,250 --- --- --- ---
Executive Officer and Director 1997 $76,500 $2,197 --- $73,980(4) 16,437 ---
1996 $60,000 $8,121 --- --- --- ---
<FN>
(1) Includes director fees.
(2) Does not include perquisites which did not exceed the lesser of $50,000 or
10% of Mr. Carlson's salary and bonus.
(3) Based on the $18.56 closing price per share of the Common Stock on June 30,
1998, the 5,261 restricted shares held by Mr. Carlson as of June 30, 1998,
had an aggregate market value of $97,644.
(4) Represents the dollar value, based on the $11.25 closing price per share of
the Common Stock on October 15, 1996, the date of grant. The shares of
restricted stock vest in five equal annual installments, provided the
individual maintains "Continuous Service" (as defined in the RRP) with the
Company or a subsidiary of Washington. Dividends are paid on the restricted
shares to the extent and on the same date as dividends are paid on all
other outstanding shares of Common Stock.
</FN>
No stock appreciation rights or limited stock appreciation rights were
granted to the named executive officer under the Company's Stock Option and
Incentive Plan or the Recognition and Retention Plan ("RRP"). No stock options
or restricted stock awards were granted to the named officer during the fiscal
year ended June 30, 1998.
The following table sets forth certain information concerning the
number and value of in-the-money (when the fair market value of the common stock
exceeds the exercise price of the option) stock options at June 30, 1998 held by
the named executive officer and stock options exercised during fiscal 1998.
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Securities Underlying In-the-Money
Unexercised Options Options at
at FY-End FY-End
Shares Acquired Value ---------------------------------- -------------------------------------
Name On Exercise (#) Realized ($) Exercisable(#) Unexercisable(#) Exercisable($)(1) Unexercisable($)
- ------------------------------------------------------------------------------------------------------------------------------
Stan Carlson --- --- 6,574 9,863 48,056 72,099
<FN>
(1) Represents the aggregate (market value market price of the Common Stock
less the exercise price) of the options held based upon the average of the
high and low sales price of the Company's Common Stock of $18.56 per share
as quoted on the National Daily Quotation Service by the National Quotation
Bureau on June 30, 1998, the last day on which the Company's Common Stock
traded in fiscal 1998, less the respective exercise price.
</FN>
Employment Agreement. During 1995, Washington Federal entered into an
employment agreement with President Stan Carlson. The agreement is for a term of
three years and has a base salary of $60,000. The agreement is terminable by
Washington Federal for just cause, defined in the agreement as personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease and desist order, or material breach of any
provision of the employment agreement. Any request by a bank regulator that
President Stan Carlson be removed shall also be deemed just cause. If the
agreement is terminated for just cause, the employee only receives his salary up
to the date of termination. If Washington Federal terminates the agreement
without just cause, the employee is entitled to a continuation of salary from
the date of termination through the remaining term of the agreement.
The agreement provides that in the event of involuntary termination of
employment in connection with, or within one year after, any change in control
of the Company or Washington Federal, the employee will be paid a lump sum equal
to approximately three times the employee's annual "base" salary. If a lump sum
payment had been made as of June 30, 1998, Mr. Carlson would have received a
payment of approximately $249,000. The agreement may be renewed annually if the
Board of Directors determines that the executive has met its requirements and
standards.
Benefit Plans
Employee Stock Ownership Plan. Washington has established an employee
stock ownership plan (the "ESOP") for the exclusive benefit of participating
employees. Participating employees are employees who have completed one year of
service with Washington or its subsidiaries and have attained the age of 21.
The ESOP is funded by contributions made by Washington in cash or its
common stock. Benefits may be paid either in shares of common stock or in cash.
Washington Federal anticipates contributing approximately $45,600 annually to
the ESOP to meet principal obligations under the ESOP loan, as proposed, and an
additional amount for accrued interest on the loan. It is anticipated that all
such contributions shall be tax-deductible.
Contributions to the ESOP and shares released from the suspense account
will be allocated among participants on the basis of total compensation,
excluding bonuses. All participants must be employed at least 1,000 hours in a
plan year and be employed on the last day of the plan year in order to receive
an allocation. Participant benefits become 100% vested after seven years of
service. Employment prior to the adoption of the ESOP shall count toward
vesting. Vesting will be accelerated upon retirement, death, disability, change
of control of the Company, or termination of the ESOP. Forfeitures will be
reallocated to participants on the same basis as other contributions in the plan
year. Benefits may be payable in the form of a lump sum upon retirement, death,
disability or separation from service. Washington's contributions to the ESOP
are discretionary and may cause a reduction in other forms of compensation.
Therefore, benefits payable under the ESOP cannot be estimated.
The Board of Directors has appointed all outside directors to the
Compensation Committee to administer the ESOP. The Compensation Committee 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 in
accordance with the instructions of the participating employees. Unallocated
shares and allocated shares for which no timely direction is received will be
voted by the ESOP Trustee, subject to the Trustee's fiduciary duties.
Certain Relationships and Related Transactions
The Banks have followed a policy of granting loans to eligible
directors, officers, employees and members of their immediate families for the
financing of their personal residences and for consumer purposes. As of June 30,
1998, all loans or extensions of credit to executive officers and directors were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with the general
public and do not involve more than the normal risk of repayment or present
other unfavorable features. Loans to officers and directors of Washington and
their affiliates, amounted to approximately $631,124 or 6.0% of Washington's
stockholders' equity at June 30, 1998.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
At the Annual Meeting of Stockholders, the stockholders will consider
and vote on the ratification of the appointment of McGladrey & Pullen, LLP
("M&P") as the Company's independent auditors for the Company's fiscal year
ending June 30, 1999.
The Board of Directors of the Company has heretofore renewed the
Company's arrangement for M&P to be the Company's auditors for the fiscal year
ending June 30, 1999, subject to ratification by the Company's stockholders.
Representatives of M&P are expected to attend the Meeting to respond to
appropriate questions and to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF M&P AS THE COMPANY'S AUDITORS FOR THE FISCAL
YEAR ENDING JUNE 30, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's Common Stock (or any other equity securities, of which there is
none), to file with the Securities and Exchange Commission (the "SEC") initial
reports of ownership and reports of changes in ownership of the Company's Common
Stock. Officers, directors and greater than 10% shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a 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 June 30, 1998, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with except that Mr. Edwards inadvertently
failed to file a Form 4 to report the grant of 1,127 shares of restricted stock
pursuant to the Company's RRP and 2,818 options granted under the Company's
Stock Option Plan. On August 14, 1998, he filed a Form 5 disclosing the grants.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next annual meeting of stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's office located at 102
East Main Street, Washington, Iowa 52353, no later than May 18, 1998. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Exchange Act. If a proposal does not meet the above requirements for
inclusion in the Company's proxy materials, but otherwise meets the Company's
eligibility requirements to be presented at the next Annual Meeting of
Stockholders, the persons named in the enclosed form of proxy and acting thereon
will have the discretion to vote on any such proposal in accordance with their
best judgement if the proposal is received at the Company's main office later
than August 1, 1998.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
Washington, Iowa
September 18, 1998