<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MID AM, INC.
- -------------------------------------------------------------------------------
(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)(4) 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:
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<PAGE> 2
[MID AM, INC. LOGO]
221 South Church Street
Bowling Green, Ohio 43402
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Mid Am, Inc.: March 4, 1998
The Annual Meeting of Shareholders of Mid Am, Inc. (the "Company") will be held
on April 24, 1998 at 10:00 a.m. at The Toledo Club, Madison Avenue at 14th
Street, Toledo, Ohio, for the purpose of considering and voting upon the
following matters:
1. Election of six Class I Directors to serve until the annual meeting of
shareholders in 2001.
2. Approval of the Amended and Restated Mid Am, Inc. 1997 Stock Option
Plan.
3. Amendment of Article Fourth of the Amended Articles of Incorporation of
the Company to increase the number of common shares authorized from 35
million shares to 100 million shares.
4. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on February 23, 1998, are
entitled to notice of and to vote at the Annual Meeting of Shareholders. The
Annual Report of the Company, the Proxy Statement and Annual Report Supplement,
including financial statements for the year ended December 31, 1997, have been
mailed to all shareholders with this Notice of Annual Meeting.
By Order of the Board of Directors
/S/MARCI L. KLUMB
MARCI L. KLUMB
Secretary
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST CONVENIENCE. IF
YOUR STOCK IS HELD IN MORE THAN ONE NAME, ALL OWNERS MUST SIGN THE PROXY FORM.
<PAGE> 3
Mid Am, Inc.
221 South Church Street
Bowling Green, Ohio 43402
PROXY STATEMENT
GENERAL INFORMATION
The Board of Directors of Mid Am, Inc. (the "Company") is soliciting
proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held on April 24, 1998. Each of the shares of common stock of the
Company, without par value ("Common Stock") outstanding on February 23, 1998
will be entitled to one vote on matters acted upon at the Annual Meeting, either
in person or by proxy. The shares represented by all properly executed proxies
sent to the Company will be voted as designated, and in the absence of
instructions will be voted affirmatively. The proxy confers discretionary
authority on the proxy holders as to any other matter that may properly come
before the Annual Meeting. Any shareholder executing a proxy has the right to
revoke it prior to its exercise, by written notice delivered to the Secretary of
the Company, by subsequently dated proxy, or by voting in person at the Annual
Meeting any time prior to its exercise.
All costs associated with the solicitation of proxies will be paid for by
the Company. Proxies will be solicited primarily by mail, but certain officers
and employees of the Company or its subsidiaries may personally solicit proxies
without additional compensation. Banks, brokers and other record holders will be
asked to send proxies and proxy materials to the beneficial owners of Common
Stock to obtain necessary voting instructions, and the Company will reimburse
them for their reasonable expenses.
The proxy materials are first being mailed to shareholders on March 4,
1998.
ELECTION OF DIRECTORS
Under the Code of Regulations of the Company, the Board of Directors is
divided into three classes, designated as Class I, Class II and Class III. Each
class consists of approximately one-third of the total number of directors, as
fixed from time to time by the Board of Directors. Directors serve staggered
three-year terms so that directors of only one class are elected at each annual
meeting of shareholders.
On August 15, 1997, the Board of Directors acknowledged the retirement of
Board member Harry W. Kessler. The Company wishes to acknowledge the generous
service of Mr. Kessler, who has served on the Board of Directors since the
Company's formation in 1988. As of the date of this Proxy Statement, no
vacancies exist in the Company's Board of Directors.
At the Annual Meeting, the shareholders will be asked to elect as Class I
Directors the six persons listed below, all of whom are presently serving as
Class I Directors of the Company. If any of the Company's nominees are unable to
serve, which is not now contemplated, the proxies will be voted for such
substitute nominee(s) as the Board of Directors recommends. In accordance with
the Company's Code of Regulations and Ohio law, if a quorum is present at the
Annual Meeting, the nominees for director who receive the greatest number of
votes cast by the shares present in person or by proxy and entitled to vote at
the Annual Meeting will be elected to serve as Class I Directors. Proxies will
be voted in favor of the nominees named below or any substitutes unless
otherwise instructed by the shareholder. Abstentions and shares not voted by
brokers and other entities holding shares on behalf of beneficial owners will
not affect the election of directors, because such shares are not considered
present for voting purposes.
<PAGE> 4
INFORMATION AS TO NOMINEES
The following information is provided with respect to each Class I
Director, all of whom are nominees for re-election at the Annual Meeting.
CLASS I DIRECTORS -- TERM EXPIRES 2001
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Shares of Common Stock
Beneficially Owned
December 31, 1997 (1)
- -----------------------------------------------------------------------------------------------------
Director of
Name, Age & Principal Company Amount % of
Occupation During Past 5 Years Since (2) Class
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gerald D. Aller, 60.................................... 1988 94,053 .39%
President, Aller's Pharmacy, Inc., a retail pharmacy
Walter L. Lamb, Jr., 51................................ 1991 22,489 .09
Chairman, Mid-States Container Corp., a manufacturer of
specialty packaging
James E. Laughlin, 68.................................. 1993 98,589 .41
Retired; former Chairman and CEO, AmeriFirst Bank,
N.A., a subsidiary of Mid Am, Inc.
Thomas S. Noneman, 57.................................. 1988 61,039 .25
President, Tomco Plastic, Inc., a custom plastic
injection molding manufacturer
Douglas J. Shierson, 56................................ 1995 185,856 .77
Private Investor
Robert E. Stearns, DDS, 58............................. 1988 50,184 .21
Dentist, Dr. Stearns -- Dr. Zouhary, DDS, Inc.
- -----------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
INFORMATION AS TO DIRECTORS WHOSE TERM OF OFFICE CONTINUES
The following information is provided with respect to incumbent Class II
and Class III Directors who are not nominees for election at the Annual Meeting.
CLASS II DIRECTORS -- TERM EXPIRES 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Shares of Common Stock
Beneficially Owned
December 31, 1997 (1)
- -----------------------------------------------------------------------------------------------------
Director of
Name, Age & Principal Company Amount % of
Occupation During Past 5 Years Since (2) Class
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wayne E. Carlin, 66.................................... 1988 84,525 .35%
President, Carlin Farms, Inc.
David R. Francisco, 51................................. 1988 93,746 .39
President and COO, Mid Am, Inc.; formerly CEO, Mid
American National Bank and Trust Company (Mid Am Bank),
a subsidiary of Mid Am, Inc.
D. James Hilliker, 50.................................. 1995 83,646 .34
Vice President, Better Food Systems, Inc., a company
that owns and operates Wendy's Restaurant franchises
Marilyn O. McAlear, 62................................. 1988 51,997 .21
Vice President and Treasurer, Service Spring Corp., a
manufacturer of spring products
Richard G. Tessendorf, Jr., 55......................... 1993 69,202 .28
Owner and CEO, R.I.C. Security Consultants & Services,
Inc., and R.I.C. Alarms, Inc., service companies that
assist corporations with their security needs
Donald D. "Pete" Thomas, 60............................ 1988 50,904 .21
President, Thomas Farms, Inc.
- -----------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 6
CLASS III DIRECTORS -- TERM EXPIRES 2000
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Shares of Common Stock
Beneficially Owned
December 31, 1997 (1)
- ------------------------------------------------------------------------------------------------------
Director of
Name, Age & Principal Company Amount % of
Occupation During Past 5 Years Since (2) Class
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James F. Bostdorff, 60................................ 1988 28,271 .12%
Farmer -- Self employed
David A. Bryan, 50.................................... 1991 19,584 .08
Partner in the law firm of Wasserman, Bryan, Landry &
Honold
Edward J. Reiter, 58.................................. 1988 265,330 1.09
Chairman and CEO, Mid Am, Inc.; formerly Chairman, Mid
Am Bank, a subsidiary of Mid Am, Inc.
Emerson J. Ross, Jr., 56.............................. 1988 32,528 .13
Manager of Corporate Community Relations, Owens
Corning, a manufacturer of building materials and
composite products
C. Gregory Spangler, 57............................... 1993 31,815 .13
Chairman and CEO, Spangler Candy Company, a
manufacturer of candy products
Jerry L. Staley, 65................................... 1988 143,422 .59
Retired; formerly Senior Vice President, Mid Am Bank,
a subsidiary of Mid Am, Inc.
All Directors and Executive Officers as a group (42
persons)............................................ 2,151,355 8.64%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares held in the name of spouses, minor children, certain
relatives, trusts, estates and certain affiliated companies as to which
beneficial ownership may be disclaimed.
(2) The amounts shown represent the total shares owned outright by such
individuals together with shares issuable upon the exercise of currently
vested, but unexercised stock options. Specifically, the following
individuals have the right to acquire the shares indicated after their
names, upon the exercise of such stock options: Mr. Aller, 28,789; Mr.
Bostdorff, 15,184; Mr. Bryan, 12,550; Mr. Carlin, 26,180; Mr. Francisco,
52,619; Mr. Hilliker, 16,662; Mr. Lamb, 7,686; Mr. Laughlin, 33,500; Mrs.
McAlear, 20,499; Mr. Noneman, 26,365; Mr. Reiter, 71,479; Mr. Ross, 18,566;
Mr. Shierson, 18,226; Mr. Spangler, 25,290; Mr. Staley, 7,686; Mr. Stearns,
20,375; Mr. Tessendorf, 23,452; Mr. Thomas, 19,179; and all directors and
executive officers as a group, 645,934.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based upon the information available to management of the Company, no
person beneficially owns more than 5% of the outstanding shares of Common Stock.
The Trust Department of Mid Am Bank holds Common Stock with sole or shared
voting authority in various fiduciary capacities. Mid Am Bank also serves as
trustee to the Company's Employee Stock Ownership Pension Plan (the "Pension
Plan") and Employee Stock Ownership and Savings Plan (the "Profit Sharing Plan")
under which voting rights are passed through to participants, and in such
capacity regularly purchases shares of Common Stock from the Company, in the
open market or in privately negotiated transactions through independent third
party purchasing agents. In its fiduciary capacity, Mid Am Bank held 2,223,717
shares of the Company's Common Stock on December 31, 1997, representing 9.17% of
the outstanding shares of Common Stock.
4
<PAGE> 7
BOARD OF DIRECTORS
MEETINGS, COMMITTEES, FUNCTIONS, AND COMPENSATION
The Board of Directors of the Company met 12 times during 1997, with
committee meetings scheduled as needed. All directors attended at least 75% of
the aggregate meetings of the Board of Directors and the committees on which
they served.
The Company does not have a standing compensation committee or nominating
committee. The functions of a compensation committee are served by the Special
Projects Committee, which annually reviews and approves levels of compensation
of the Company's senior officers and subsidiary presidents and chief executive
officers. The Special Projects Committee members in 1997, all of whom are
non-employee directors, were Messrs. Aller, Bostdorff, Bryan, Lamb, Noneman,
Spangler, Staley and Stearns, and Mrs. McAlear. The Special Projects Committee
met three times during 1997.
The Company has a standing Audit Committee, which approves and reviews the
internal audit programs of the Company and its subsidiaries, and reviews the
results of the independent accountant's audit. Members of the Audit Committee in
1997, all of whom are non-employee directors, were Messrs. Carlin, Hilliker,
Kessler, Laughlin, Ross, Shierson, Tessendorf and Thomas. The Audit Committee
met six times during 1997.
Non-employee directors of the Company received an annual retainer in 1997
of $13,000, a fee of $400 for each Board of Directors meeting attended and a fee
of $225 for each committee meeting attended in 1997. In addition, the Mid Am,
Inc. 1992 Stock Option Plan, as amended (the "1992 Option Plan") and the Amended
and Restated Mid Am, Inc. 1997 Stock Option Plan (the "1997 Option Plan")
provide for an automatic grant to non-employee directors of the Company of
non-qualified options to acquire 1,098.07 shares of Common Stock in November of
each year including 1997. Directors who are employees of the Company are not
compensated for their service on the Board of Directors.
EXECUTIVE COMPENSATION
The following table is a summary of certain compensation awarded to, paid
to, or earned by the Company's Chief Executive Officer and each of the other
four most highly compensated executive officers of the Company (the "Named
Executives") during each of the last three fiscal years.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
- ---------------------------------------------------------------------------------------------------------------
Securities Securities
Underlying Underlying
Option Elective All Other
Name/Title Year Salary (1) Bonus Grants (2) Options (3) Compensation (4)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Dorr(5)........... 1997 $310,000 $512,108 10,977 $20,162
President & CEO 1996 159,103 10,095 3,300 432
Mid Am Credit Corp. 1995
Edward J. Reiter............ 1997 $415,000 $291,685 84,523 $82,015
Chairman & CEO 1996 385,000 250,594 19,250 66,225
Mid Am, Inc. 1995 373,000 133,123 24,200 7,098 46,365
David R. Francisco.......... 1997 $325,000 $229,618 63,016 $64,432
President & COO 1996 300,000 202,524 13,750 51,860
Mid Am, Inc. 1995 291,000 104,290 18,150 4,425 34,319
James F. Burwell............ 1997 $201,792 $122,357 16,762 $40,086
President & CEO 1996 193,100 90,346 4,400 33,640
First National Bank 1995 178,100 89,183 3,816 3,540 22,461
Northwest Ohio
Patrick A. Kennedy.......... 1997 $199,073 $120,194 16,762 $39,381
President & CEO 1996 190,500 95,659 4,400 34,136
Mid Am Bank 1995 167,500 80,918 3,757 3,512 20,281
</TABLE>
- --------------------------------------------------------------------------------
(1) Included are amounts earned but deferred at the election of a Named
Executive, and amounts forfeited in exchange for Elective Options (defined
below) pursuant to the Company's 1992 Option Plan. The amount of
compensation forfeited in exchange for Elective Options is also reported in
this table as Securities Underlying Elective Options. (See footnote 3).
(2) Securities Underlying Option Grants represents options to acquire shares of
Common Stock granted as long-term incentive compensation under the 1992
Option Plan and the 1997 Option Plan (collectively, the "Option Plans").
Reflected in 1997 are the following make-up option grants awarded to Named
Executives as a supplement to their 1996 Option Grants (Mr. Dorr, 5,077; Mr.
Reiter, 34,523; Mr. Francisco, 23,016; Mr. Burwell, 8,462; and Mr. Kennedy,
8,462). See "REPORT ON EXECUTIVE COMPENSATION, Long-Term Compensation."
Options granted are adjusted for stock splits, stock dividends and similar
occurrences affecting all outstanding shares.
(3) Securities Underlying Elective Options represents stock options ("Elective
Options") granted on December 31, 1995 in exchange for the Named Executive's
voluntary forfeiture of a portion of 1996 salary and/or director fees
pursuant to the 1992 Option Plan. Elective Options are adjusted for stock
splits, stock dividends and similar occurrences affecting all outstanding
shares.
(4) In 1997, All Other Compensation consists of the maximum allowable
contributions under the 401(k) plan, Profit Sharing Plan and Pension Plan
for Messrs. Reiter, Francisco, Burwell and Kennedy of $4,800, $4,800 and
$9,600, respectively, and for Mr. Dorr of $4,677, $4,677 and $9,354,
respectively; amounts paid or accrued under the Company's Make Up Plan (Mr.
Reiter, $60,870; Mr. Francisco, $43,708; Mr. Burwell, $16,106; and Mr.
Kennedy, $16,385); and group term life insurance premiums paid by the
Company (Mr. Dorr, $1,454; Mr. Reiter, $1,945; Mr. Francisco, $1,524; Mr.
Burwell, $947; and Mr. Kennedy, $934).
(5) Mr. Dorr is the President and CEO of Mid Am Credit Corp. (MACC), the
Company's commercial leasing and finance subsidiary. In connection with the
founding of MACC in 1996, the Company entered into an employment agreement
with Mr. Dorr which includes a cash incentive based upon the subsidiary's
net after tax income after meeting certain performance standards. See
"REPORT ON EXECUTIVE COMPENSATION, Employment Contracts and Change in
Control Arrangements." Mr. Dorr's historical information reflects the nine
months in 1996 during which MACC operated.
6
<PAGE> 9
BENEFICIAL OWNERSHIP
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Shares of Common Stock
Beneficially Owned
December 31, 1997 (1)
- -------------------------------------------------------------------------------------------------
Name Number (2) Percent of Class
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
Robert E. Dorr.............................................. 1,235 .01%
Edward J. Reiter............................................ 265,330 1.09
David R. Francisco.......................................... 93,746 .39
James F. Burwell............................................ 59,816 .25
Patrick A. Kennedy.......................................... 58,096 .24
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes shares held in the name of spouses, minor children, certain
relatives, trusts, estates and certain affiliated companies as to which
beneficial ownership may be disclaimed.
(2) The amounts shown represent the total shares owned outright by such
individuals together with shares issuable upon the exercise of currently
vested, but unexercised stock options. Specifically, the following
individuals have the right to acquire the shares indicated after their
names, upon the exercise of such stock options: Mr. Dorr, 660; Mr. Reiter,
71,479; Mr. Francisco, 52,619; Mr. Burwell, 24,953; and Mr. Kennedy, 24,577.
STOCK OPTIONS
The following table sets forth information concerning 1997 grants to the
Named Executives of options to purchase Common Stock under the Option Plans.
OPTION GRANTS TABLE
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed Rates
of Stock Price
Appreciation for
Option Term(2)
- -----------------------------------------------------------------------------------------------------------------
Number of % of
Securities Total
Underlying Options Exercise
Options Granted Price Expiration
Name Granted(1) to Employees Per Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Robert E. Dorr........ 03/97 5,077 3.2% $15.34 03/20/07 $ 48,979 $ 124,122
11/97 5,900 2.3 21.00 11/20/07 77,920 197,465
Edward J. Reiter...... 03/97 34,523 21.5 15.34 03/20/07 333,052 844,019
11/97 50,000 19.8 21.00 11/20/07 660,339 1,673,429
David R. Francisco.... 03/97 23,016 14.3 15.34 03/20/07 222,041 562,695
11/97 40,000 15.9 21.00 11/20/07 528,271 1,338,743
James F. Burwell...... 03/97 8,462 5.3 15.34 03/20/07 81,635 206,879
11/97 8,300 3.3 21.00 11/20/07 109,616 277,789
Patrick A. Kennedy.... 03/97 8,462 5.3 15.34 03/20/07 81,635 206,879
11/97 8,300 3.3 21.00 11/20/07 109,616 277,789
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options were granted on March 20, 1997 as a supplement to the Named
Executives' 1996 option grants (see "REPORT ON EXECUTIVE COMPENSATION,
Long-Term Incentive Compensation"), and on November 20, 1997, and vest in
20% increments over five years. The option exercise price is not adjustable
except for stock splits, stock dividends and similar occurrences affecting
all outstanding shares.
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation, if any, in the market
value of the Common Stock.
7
<PAGE> 10
FISCAL YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Number of Shares Value of
Underlying Unexercised
Unexercised Options In-the-Money
at 12/31/97 Options at 12/31/97
- --------------------------------------------------------------------------------------------------------------------------
Shares Value
Acquired on Realized Exercisable Unexercisable Exercisable Unexercisable
Name Exercise(#) ($) (#) (#) ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Dorr....... 0 $0 660 13,617 $ 6,270 $ 105,956
Edward J. Reiter..... 0 0 71,479 120,457 1,030,992 1,014,263
David R. Francisco... 0 0 52,619 89,417 764,299 737,413
James F. Burwell..... 0 0 24,953 24,914 365,315 225,523
Patrick A Kennedy.... 0 0 24,577 24,647 358,072 221,443
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACTS
In connection with the establishment of MACC in 1996, the Company entered
into an employment agreement with Mr. Dorr, who is the only Named Executive with
an employment agreement. The Company's philosophy of autonomous subsidiaries
managed by entrepreneurial leaders provided the basis for the agreement. The
Company's unique approach to Mr. Dorr's employment arrangement protects the
Company in the event of losses in the subsidiary, and allows Mr. Dorr to
participate with the Company in the event of MACC's success.
Under the employment agreement, Mr. Dorr is personally liable to the
Company if MACC incurs a cumulative net after tax loss in excess of $2 million.
If MACC achieves a profit, Mr. Dorr earns a cash incentive based upon the
subsidiary's net after tax income after meeting certain financial performance
standards. The cash incentive is paid over two years, contingent upon Mr. Dorr's
continued employment by the Company. Mr. Dorr does not participate in the
Company's general annual incentive compensation plan. The employment agreement
is for a term of ten years, is terminable for cause including the subsidiary's
failure to achieve certain financial performance goals, and contains a covenant
not to compete.
CHANGE IN CONTROL ARRANGEMENTS
To assure continuity of management and operations, the Company and its
subsidiaries have Change in Control Agreements (the "Agreements") with certain
of their executive officers. The Company has entered into an Agreement with each
of the Named Executives.
Pursuant to the Agreements, the Company and its subsidiaries may terminate
an executive officer's employment for any reason or for no reason, with or
without notice. In the event of an involuntary termination or diminution of
status without cause after a change in control (as defined), the executive
officers are entitled to compensation payable in a lump sum or monthly
installments in the following multiples of the individual's average total
compensation for the immediately preceding two years: (1) one and one-half times
for all senior vice presidents of the Company; (2) two times for all presidents
and chief executive officers of the Company's subsidiaries; and (3) two and
one-half times for the Company's executive vice presidents, President and Chief
Executive Officer. If an individual has been with the Company or a subsidiary
for less than two years at the time of a change in control, the amount payable
under the Agreement will be based upon the individual's average total
compensation during the term of his or her employment. The Company and its
subsidiaries are not obligated to pay any amount which is in excess of the then
maximum amount which is deductible for federal income tax purposes.
For purposes of the Agreements, a change in control is defined, among other
occurrences, as a merger, consolidation or sale of substantially all of the
assets of the Company with or into any other corporation where shareholders of
the Company receive less than 50% of the shares of the resulting corporation;
certain situations involving the issuance, ownership, or control of in excess of
24.99% of the outstanding Common Stock or assets of the Company; or the removal,
termination or retirement of more than 49% of the members of the Board of
Directors.
8
<PAGE> 11
REPORT ON EXECUTIVE COMPENSATION
The compensation of executive officers of the Company and the presidents
and chief executive officers of each of its subsidiaries is reviewed and
established annually by the Special Projects Committee (the "Committee"), which
is comprised entirely of non-employee directors. The compensation of executive
officers of the subsidiaries, with the exception of each of their presidents and
chief executive officers, is established annually by the Boards of Directors of
the subsidiaries.
In 1996, the Company retained Towers Perrin, a nationally recognized
compensation and employee benefit consulting firm. Towers Perrin assisted the
Committee in analyzing the competitiveness of the Company's 1996 executive
compensation package as compared with similar organizations, to ensure that 1997
compensation arrangements effectively support the Company's long-term business
strategy. The Company's compensation philosophy applicable to executive
officers, as implemented under the supervision of the Committee, is to enable
the Company to attract and retain qualified executives through competitive cash
compensation, to reward quality performance through incentive compensation, and
to encourage executives to manage the Company in a manner that maximizes
long-term shareholder value through stock option grants and Profit Sharing Plan
contributions.
Prior to 1996, the Committee separately evaluated base salary, annual
incentive compensation and long-term incentive compensation as compared with
competitive market data. Beginning in 1996, the Committee shifted its focus to
the combination of base salary, short- and long-term incentives, or total direct
compensation. The Committee continued to separately evaluate base salary and
annual incentive compensation, and utilized long-term incentive compensation to
bring 1997 total direct compensation to a competitive level.
The Committee believes that the Company's most direct competitors for
executive talent are not necessarily all of the companies that should be
included in a peer group established to compare shareholder returns. Therefore,
while certain members of the compensation peer group are included in the Nasdaq
Bank Index, the compensation peer group is not identical to the peer group index
in the Comparison of Five Year Cumulative Total Return graph included in this
Proxy Statement.
BASE SALARY
Base salaries for executive officers are set at levels competitive with
peer banking institutions and general industries, as applicable, and are
adjusted for individual performance. To develop peer groups for the Company and
its subsidiaries, Towers Perrin collected market pay data from surveys covering
the banking industry and applicable general industries. Towers Perrin then
analyzed the compensation of the Company's executive officers as compared with
compensation packages offered by United States companies of similar asset or
revenue size, as applicable.
ANNUAL INCENTIVE COMPENSATION
Corporate-wide incentive compensation awards play a key role in
implementing the Company's strategy of attracting and retaining qualified
executive officers, by rewarding quality performance. The Company's annual cash
incentive compensation is based on short-term performance, including (1)
achievement of Company or subsidiary annual return on equity ("ROE") and return
on assets goals, which are established by the Boards of Directors of the Company
and its subsidiaries; (2) achievement of work group or departmental goals; and
(3) individual performance. These criteria are weighted on the basis of the
participant's job responsibilities and ability to affect the financial
performance of the Company or subsidiary as a whole. For example, awards to
executive officers who are senior vice presidents are comprised of 70% corporate
performance and 30% individual and/or workgroup performance, while a bank
teller's criteria is weighted 80% on individual and banking center performance
and 20% on corporate performance. Incentive compensation for Messrs. Reiter and
Francisco is awarded solely on the basis of the financial performance of the
Company while Messrs. Burwell and Kennedy are awarded incentive compensation
based upon the financial performance of their respective subsidiaries (75%) and
the financial performance of the Company (25%). Each individual's total award
may then be modified up or down based upon overall Company performance. Mr. Dorr
does not participate in the Company's incentive plan, but is instead paid a cash
bonus pursuant to the terms of his employment agreement. See "Employment
Agreements and Change in Control Arrangements."
9
<PAGE> 12
Awards under the incentive plan are paid on a matrix, with the payout
corresponding to varying levels of achievement in the financial, work group and
individual performance perspectives. Target and maximum bonus percentages for
Messrs. Reiter and Francisco are 35% and 70% of base salary, respectively.
Target and maximum bonus percentages for the remaining Named Executives, with
the exception of Mr. Dorr who is not a plan participant, are 30% and 60% of
their base salaries, respectively. No incentive awards are payable to a Named
Executive if the Company and his or her subsidiary fail to meet minimum levels
of financial performance established by the Boards of Directors of the Company
and its subsidiaries.
LONG-TERM INCENTIVE COMPENSATION
In 1996, the Company determined that long-term incentive compensation was
the appropriate vehicle to incrementally move executive officers' total direct
compensation in line with the Company's peer group. Long-term incentive
compensation is comprised of stock option grants and Company contributions to
the Profit Sharing Plan. Based upon peer group information provided by Towers
Perrin, the Committee determined that total direct compensation levels for the
Company's executive officers were below competitive market benchmark levels.
Therefore, in March, 1997, the Committee approved a "make-up" option grant as a
supplement to its November, 1996 grant.
Options to purchase Common Stock are granted to executive officers under
the Option Plan to encourage these individuals to manage the Company in a manner
that will increase long-term shareholder value. Grants are made at an option
price of 100% of the Common Stock's market value on the grant date, generally
vest in 20% increments over five years, and expire 10 years from the date of
grant unless the optionee no longer serves as an executive officer. Options are
granted by the Committee using the Black-Scholes option valuation model, and may
be adjusted based upon considerations such as dilution, the number of shares of
Common Stock outstanding, and Company, subsidiary and individual performance.
Profit Sharing Plan contributions up to 3% of the participant's base salary
are made by the Company if corporate ROE targets set by the Board of Directors
are met. Contributions are intended to qualify as employee stock ownership
contributions and are invested primarily in Common Stock.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The compensation of the Chief Executive Officer is reviewed by the
Committee annually in the last quarter of each year to establish the total
compensation of the CEO for the following year. In determining the CEO's
compensation, the Committee considered the Company's 1996 financial performance,
the CEO's contribution to the short- and long-term objectives of the Company and
the competitive total direct compensation data for the Company's peer group as
developed by Towers Perrin.
The Committee considered the Company's financial performance in 1996 to be
strong, with return on average common shareholders' equity and return on average
total assets reaching the Company's long-term earnings objectives. Total return
to Common Stock shareholders was 18.76% in 1996 and the Company had record
earnings of $26 million. The Company's 1996 financial performance ranked in the
74th percentile as compared with the financial performance of the Company's
peers.
Based upon this performance and market pay data supplied by Towers Perrin,
the Committee established the CEO's initial base salary for 1997 at $415,000,
representing a 7.8% increase over the previous year's base salary of $385,000
and placing the CEO slightly above the fiftieth percentile of the Company's peer
group for base salaries. The corresponding short-term cash bonus target and
maximum increased to $145,250 and $290,500, respectively. Because the CEO's
total direct compensation was significantly below the competitive market
benchmark level reported by Towers Perrin, the Committee granted the CEO a 1996
make-up grant of options to acquire 34,523 shares of Common Stock, and a 1997
grant of options to acquire 50,000 shares of Common Stock.
The foregoing report is submitted by the members of the Company's Special
Projects Committee.
<TABLE>
<S> <C> <C>
Gerald D. Aller James F. Bostdorff David A. Bryan
Walter L. Lamb, Jr. Marilyn O. McAlear Thomas S. Noneman
C. Gregory Spangler Jerry L. Staley Robert E. Stearns
</TABLE>
10
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, Mid Am Bank paid legal fees to Wasserman, Bryan, Landry &
Honold, a law firm in which Mr. Bryan is a partner. Mr. Staley is a retired
Senior Vice President of Mid Am Bank.
MID AM, INC. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph shows a comparison of cumulative total shareholder
returns for the Company, the Standard & Poor's 500 Stock Index and the Nasdaq
Bank Index for the five-year period ended December 31, 1997. The total
shareholder return assumes a $100 investment in the Common Stock and each index
on December 31, 1992, and that all dividends were reinvested.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Measurement Period
(Fiscal Year Covered) Mid Am, Inc. S&P 500 Index Nasdaq Bank Index
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1992 100 100 100
1993 121 110 114
1994 138 111 114
1995 175 153 169
1996 208 189 223
1997 355 251 377
- ---------------------------------------------------------------------------------------------------------
</TABLE>
APPROVAL OF THE 1997 OPTION PLAN
The Board of Directors of the Company approved the 1997 Option Plan at its
meeting on March 20, 1997, and amended and restated the 1997 Option Plan at its
meeting on January 15, 1998. The 1997 Option Plan (1) permits the grant of
incentive stock options and non-qualified stock options to key managerial
personnel of the Company and its subsidiaries; and (2) provides for the
automatic grant to each non-employee director of the Company of non-qualified
options to purchase (a) 2196.15 shares of Common Stock on the date such person
becomes a director, and (b) 1098.07 shares of Common Stock annually. Five
percent of the Company's issued and outstanding shares of Common Stock are
reserved for issuance under the 1997 Option Plan.
Under the 1997 Option Plan, the exercise price of options is 100% of the
fair market value of the Common Stock on the grant date. Options may be
transferred with the approval of the Company's Board of Directors and expire
upon the earlier of (1) ten years from the grant date; (2) three years after
retirement; (3) one year after death or permanent disability; or (4) two months
after termination of employment for any reason. Options granted to non-employee
directors vest immediately, and options granted to employees generally vest on a
schedule of 20% per year over five years.
To date, only non-qualified options have been granted under the Option
Plans. A non-qualified stock option will not result in any taxable income to the
optionee or deduction for the Company at the time it is granted. In general, the
optionee will recognize ordinary income at the time of exercise of the option in
an amount measured by the excess of the fair market value of the optioned shares
at the time of exercise over the option price, and the Company will be entitled
to a corresponding deduction. Generally, upon a subsequent sale of the optioned
stock, the difference between the proceeds of the sale and the fair market value
of the stock on the date of exercise will be taxed as capital gain or loss
(long- or short-term, depending on the holding period).
The 1997 Option Plan is attached to this Proxy Statement as Annex 1, and
will be submitted to the shareholders for approval at the Annual Meeting. The
affirmative vote of a majority of the total votes cast in person or by proxy and
entitled to vote at the Annual Meeting is required to adopt the 1997 Option
Plan. Proxies will be voted in favor of the proposal unless otherwise instructed
by the shareholder. Abstentions and shares not voted by brokers and other
entities holding shares on behalf of the beneficial owners will not affect the
approval of the 1997 Option Plan, because such shares are not considered present
for voting purposes.
11
<PAGE> 14
AMENDMENT OF ARTICLE FOURTH OF
THE AMENDED ARTICLES OF INCORPORATION
The Board of Directors recommends the amendment of Article Fourth of the
Company's Amended Articles of Incorporation to increase the number of authorized
shares of Common Stock from 35 million shares to 100 million shares. This
amendment would be effective on the date it is filed with the Ohio Secretary of
State.
The Board of Directors believes that it is prudent to have a sufficient
number of authorized but unissued shares available for use in future
acquisitions, for general corporate purposes such as future stock splits or
stock dividends, and for other proper purposes. The Company has no current plans
to issue any of the additional authorized shares, but such shares would be
available for issuance without further action by the shareholders except as
required by applicable law.
The resolution attached to this Proxy Statement as Annex 2 will be
submitted for adoption at the Annual Meeting. The affirmative vote of the
holders of shares of Common Stock entitling them to exercise a majority of the
voting power of the Company is required to adopt the proposed amendment. Proxies
will be voted in favor of the resolutions unless otherwise instructed by the
shareholder. Abstentions and shares not voted by brokers and other entities
holding shares on behalf of beneficial owners will have the same effect as votes
cast against the Amendment.
TRANSACTIONS WITH MANAGEMENT
The Company's bank subsidiaries have engaged and expect to continue to
engage in transactions with directors and executive officers of the Company,
members of their immediate families, and entities which they control. These
transactions consisted of extensions of credit in the ordinary course of
business made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
non-affiliated persons and did not involve more than a normal risk of
collectibility or present other unfavorable features.
Patricia A. Wise, spouse of Mr. Francisco, is the President of Wise People
Management, Inc. and a member of Wise and Dorner, Ltd., a limited liability
company formed for the practice of law. In 1997, the Company and its
subsidiaries paid approximately $122,000 for consulting, litigation and
employment law services provided by Ms. Wise and her companies.
RELATIONSHIPS WITH AFFILIATES
Certain banking centers and/or real estate upon which Mid Am Bank banking
centers are situated are owned by Bancsites, Inc. and are leased to the bank
pursuant to long-term lease agreements. Bancsites was a wholly owned subsidiary
of the bank until 1977, when all of its shares were distributed pro rata to the
bank's shareholders. Subsequently, Bancsites effected a reverse stock split
whereby minority shareholders received cash in exchange for their shareholdings
in the corporation. Currently, Mr. Reiter and certain officers and directors of
the Company and Mid Am Bank beneficially own 13.66% of the outstanding shares of
Bancsites, including approximately 7.38% held by Mr. Reiter. Furthermore, a
senior officer of Mid Am Bank has a management position with Bancsites.
During 1997, Mid Am Bank made lease payments to Bancsites totaling
$496,000. Mid Am Bank expects to continue to make lease payments to Bancsites in
1998. Furthermore, Mid Am Bank performs certain administrative services for
Bancsites at a cost of approximately $7,600 per year. The long-term leases
between the bank and Bancsites are on terms comparable to those in similar
transactions with unrelated parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934, members of the
Board of Directors and certain executive officers of the Company and its
subsidiaries file periodic reports with the Securities and Exchange Commission
disclosing their beneficial ownership of Common Stock. During 1997, and based
solely upon a review of such reports, the Company believes that all filing
requirements under Section 16 were complied with on a timely basis, except that
David A. Bryan failed to timely file one Form 4 relating to a single
transaction. The report was promptly filed on behalf of Mr. Bryan upon learning
of the error.
12
<PAGE> 15
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
During 1997, the Company engaged Price Waterhouse LLP to provide audit
services for the Company and its subsidiaries and to provide certain non-audit
services including advice on accounting, tax and reporting matters. The Board of
Directors of the Company has selected Price Waterhouse LLP as its independent
accountants for 1998. Price Waterhouse LLP is expected to have a representative
at the Annual Meeting. Such representative will have an opportunity to make a
statement if (s)he desires to do so, and is expected to be available to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Any proposals to be considered for inclusion in the proxy material to be
provided to shareholders of the Company for its 1999 annual meeting must be made
by a qualified shareholder and must be received by the Company no later than
November 4, 1998, for review and consideration for inclusion in the Company's
proxy statement.
OTHER BUSINESS MATTERS
The Board of Directors of the Company is not aware of any other matters
that may come before the Annual Meeting. However, the enclosed proxy will confer
discretionary authority with respect to matters which are not now known to the
Board of Directors and which may properly come before the meeting.
Copies of the Company's Annual Report on Form 10-K will be available
without charge to shareholders upon request. Address all requests, in writing,
to the Shareholder Relations Department, Mid Am, Inc., 221 South Church Street,
P.O. Box 428, Bowling Green, Ohio 43402.
March 4, 1998 By Order of the Board of Directors
Marci L. Klumb
MARCI L. KLUMB
Secretary
13
<PAGE> 16
ANNEX 1
AMENDED AND RESTATED Mid AM, INC. 1997 STOCK OPTION PLAN
WHEREAS, Mid Am, Inc. adopted the Mid Am, Inc. 1997 Stock Option Plan,
effective March 20, 1997; and
WHEREAS, Mid Am, Inc. has reserved the right to amend the Mid Am, Inc. 1997
Stock Option Plan, and now deems it desirable to do so.
NOW, THEREFORE, pursuant to the power reserved to Mid Am, Inc. to amend the
Mid Am, Inc. 1997 Stock Option Plan, the Mid Am, Inc. 1997 Stock Option Plan is
hereby amended and restated in its entirety effective March 20, 1997 (the
"Effective Date") as follows:
ARTICLE I
PURPOSE AND SCOPE OF PLAN
1.01 ESTABLISHMENT
Mid Am, Inc., an Ohio corporation, hereby establishes a plan to be called
the Amended and Restated Mid Am, Inc. 1997 Stock Option Plan (the "Plan").
1.02 PURPOSE
The purpose of the Plan is to promote the long-term growth and prosperity
of Mid Am, Inc. by providing officers, directors and key employees, who are in a
position to contribute materially to the prosperity of the Company, a financial
incentive through stock ownership to make significant contributions toward this
success. The Plan is designed to attract and retain employees and directors and
to encourage them to acquire an ownership interest in Mid Am, Inc. The Plan
provides for granting these individuals options for the purchase of shares of
common stock of the Company.
1.03 DEFINITIONS
Unless otherwise defined herein or the context clearly indicates otherwise,
the following terms have the meanings set forth below:
(a) "Board" shall mean the Board of Directors of Mid Am, Inc.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board appointed by the
Board to administer the Plan, composed of directors satisfying the
definition of a "non-employee director" under Rule 16b-3 promulgated
pursuant to Section 16 of the Exchange Act.
(d) "Company" shall mean Mid Am, Inc., an Ohio corporation, and its
subsidiaries and affiliates.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(f) "Fair Market Value" shall mean the closing price of the Stock on
the Nasdaq National Market.
(g) "Key Employees" shall mean employees at the level of senior vice
president or above, and any other employees of the Company who, in the sole
determination of the Board, have rendered valuable service to the Company
or whose present or potential service to the Company merits the grant of
Options.
(h) "Non-Employee Directors" shall mean all statutory directors of the
Company who are not employees of the Company.
(i) "Incentive Stock Option" shall mean an Option that qualifies as an
Incentive Stock Option as described in Section 422(b) of the Code.
(j) "Non-Qualified Stock Option" means an Option other than an
Incentive Stock Option.
<PAGE> 17
(k) "Option" shall mean a right to purchase shares of Stock, granted
pursuant to the Plan.
(l) "Option Price" shall mean the purchase price for Stock under an
Option, determined pursuant to the Plan.
(m) "Participant" shall mean a Key Employee, officer, or Non-Employee
Director of the Company to whom an Option is granted under the Plan.
(n) "Plan" shall mean this Amended and Restated Mid Am, Inc. 1997
Stock Option Plan, as amended.
(o) "Stock" shall mean the common stock of the Company, no par value.
1.04 ADMINISTRATION
(a) The Plan shall be administered by the Board which, to the extent it
shall determine, may delegate its powers with respect to the administration of
the Plan to a Committee. If the Board chooses to appoint a Committee, all
references to the Board shall be deemed to refer to the Committee.
The Board from time to time may adopt (and thereafter amend and rescind)
rules and regulations for carrying out the Plan and take such action in the
administration of the Plan, not inconsistent with the provisions hereof, as it
shall deem proper. The interpretation and construction of any provisions of the
Plan by the Board shall be final and conclusive. No member of the Board shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted under it.
(b) Notwithstanding any other provision of the Plan, the Company shall not
be required and shall have no liability to deliver any shares of Stock under the
Plan or make any distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.
1.05 SHARES SUBJECT TO PLAN
Subject to Section 3.02, the maximum number of shares of Stock which may be
issued upon exercise of Options under the Plan shall not exceed five percent
(5%) of the total shares of Stock issued and outstanding as of the Effective
Date; provided, however, that if the number of issued and outstanding shares of
Stock is increased after the Effective Date, the maximum number of shares of
Stock for which Options may be granted under the Plan shall be increased by five
percent (5%) of such increase. The shares to be transferred or sold under the
Plan shall be authorized but unissued shares of common stock or authorized
shares held as treasury stock. The Company shall purchase any other shares
required for the Plan on the open market or from private sources. In the event
that any Options under the Plan expire or are forfeited or canceled, the shares
of Stock allocable to the unexercised portion of all such Options shall again be
available for an Option grant under the Plan.
1.06 ELIGIBILITY
(a) Options may be awarded from time to time only to Non-Employee Directors
and Key Employees of the Company. The Board will, in its discretion, determine
the Key Employees to be awarded Options, the time or times at which such Options
shall be granted and, in connection therewith, the number of shares to be
covered by each grant of such Options and the manner in which they may be
exercised. In making this determination, the Board may take into consideration
the value of the services rendered by the respective individuals, their present
and/or potential contributions to the success of the Company and such other
factors which the Board may deem relevant in accomplishing the purpose of the
Plan. All terms and conditions of Options, other than Options granted to Non-
Employee Directors, shall be subject to all restrictions and conditions imposed
by the Board, and these terms and conditions need not be the same for all
Participants. Eligible directors are all Non-Employee Directors of the Company.
The award of Options to these Non-Employee Directors is not subject to the
discretion of the Board. Directors serving on the Committee who are Non-Employee
Directors may receive Options.
(b) Options to Non-Employee Directors are awarded pursuant to the terms of
the 1992 Stock Option Plan, as amended (the "1992 Plan"). Options under this
Plan may be awarded on the same terms as provided in the 1992
2
<PAGE> 18
Plan, if the requisite number of Options are not available under the 1992 Plan
to fulfill the Option requirements of the Non-Employee Directors.
(c) Nothing in the Plan or in any grant of Options shall confer on any
person any right to continue in the employ of the Company, nor interfere with
the right of the Company to terminate the person's employment at any time. No
employee shall have a right to be selected as a Participant, nor having been so
selected, to be selected again as a Participant.
ARTICLE II
PROVISIONS RELATING TO OPTIONS
2.01 GENERAL
The grant of an Option entitles the Participant to purchase shares of Stock
at the Option Price established by the Board. It is the intent of the Plan that
Options granted shall be Incentive Stock Options, to the extent and only to the
extent that these Options are so identified in writing. All Options not
identified as Incentive Stock Options at the time of grant are intended to be
Non-Qualified Stock Options.
2.02 TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced by a Stock Option
Agreement in a form not inconsistent with the Plan, provided that the subject of
the following terms and conditions be included:
(a) Option Price. The Option Price shall be determined by the Board,
but shall not be less than one hundred percent (100%) of the Fair Market
Value of the Stock on the trading day immediately preceding the date of the
grant.
(b) Term of Option. The Option and any related right shall not be
exercisable after the expiration of ten (10) years from the date the Option
was granted.
(c) Exercise. An Option shall be exercisable in accordance with such
terms and conditions and during such periods as may be established by the
Board. No Option may be exercised with respect to a fractional share, and
no fractional shares will be issued upon the exercise of an Option.
(d) Termination of Employment. Upon the termination of a Participant's
employment by the Company or service as a Non-Employee Director for any
reason other than death, such Participant may exercise vested Options until
the earlier of the expiration of its original term or:
(1) if termination is due to retirement, three (3) years after
termination;
(2) if termination is due to total and permanent disability as
determined by the Board, one (1) year after termination;
(3) if termination is for any other reason, two (2) months after
the date of notice of termination.
Leaves of absence for periods and purposes conforming to the personnel
policy of the Company, as may be approved by the Board, shall not be deemed
terminations or interruptions of employment.
(e) Death of Participant. In the event of the death of a Participant
during the period in which an Option is exercisable, the Option granted to
that person shall be exercisable only within the twelve (12) months next
succeeding such death, and then only:
(1) by the executor, executrix, administrator or administratrix of
such Participant's estate or by the person or persons to whom such
Participant's rights under the Option shall pass by such Participant's
will or the laws of descent and distribution; and
(2) if and to the extent that such Participant was entitled to
exercise the Option at the date of such Participant's death.
3
<PAGE> 19
(f) Transferability. Except as otherwise provided by the Board,
Options are not transferable except as designated by the Participant by
will or the laws of descent and distribution.
2.03 DATE OF GRANTING OF OPTIONS
The granting of an Option pursuant to the Plan shall take place on the date
the Board decides to grant the Option. Within sixty (60) days of the granting of
the Option, the Company shall submit to such Participant a Stock Option
Agreement duly executed by and on behalf of the Company, with the request that
such Participant execute the Agreement within thirty (30) days after the
delivery by the Company of the Agreement to such Participant. If a Participant
shall fail to execute the Stock Option Agreement within this thirty (30) day
period, such Participant's Option may be terminated at the Board's election.
2.04 PAYMENT OF OPTION PRICE
The payment of the Option Price of an Option granted under this Plan shall
be subject to the following:
(a) Subject to the following provisions of this Section 2.04, the full
Option Price for shares of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise (except that, in the case of an
exercise arrangement approved by the Company and described in subsection
2.04(d), payment may be made as soon as practicable after the exercise).
(b) Payment of the Option Price may be in United States dollars,
payable in cash or by check, determined as of the date of exercise, equal
to the number of shares with respect to which the Option is exercised,
multiplied by the Option Price per share. An Option shall be deemed
exercised on the date payment and written request are received by the Board
or by any person designated by the Board.
(c) Participant may elect to pay the Option Price by tendering shares
of Stock (by either actual delivery of shares or by attestation) valued at
the Fair Market Value on the trading day immediately preceding the exercise
date, subject to conditions the Board may impose through the adoption of
rules or regulations or otherwise; provided, however, that this form of
payment shall not be permitted unless at least one hundred (100) shares of
Stock are delivered for this purpose.
(d) Notwithstanding the provisions of subsections (b) and (c) of this
Section 2.04, (i) Participants may, with the consent of the Company, elect
to pay the exercise price of an Option through a broker-assisted cashless
exercise and simultaneous sale procedure pursuant to which funds to pay the
exercise price are delivered to the Company by a broker, and the broker
subsequently sells the shares upon receipt of stock certificates from the
Company; and (ii) Participants not subject to Section 16 of the Exchange
Act may, with the consent of the Company, elect to engage in a cashless
exercise and simultaneous sale of the underlying shares to the Company
under its stock repurchase program, pursuant to which the Company shall
withhold from the gross proceeds an amount equal to the exercise price of
the Options and any Withholding Taxes required by Section 3.01.
2.05 FORM AND TIME OF ELECTION
Granting of an Option shall impose no obligation on a Participant to
exercise the Option. Unless otherwise specified herein, each election required
or permitted to be made by any Participant, and any permitted modification or
revocation thereof, shall be in writing filed with the Mid Am, Inc. Shareholder
Relations Department at such times, in such form, and subject to such
limitations and restrictions not inconsistent with the terms of this Plan, as
the Board may require.
4
<PAGE> 20
ARTICLE III
GENERAL PROVISIONS
3.01 TAX WITHHOLDING
Each Participant shall, as a condition of exercising an Option, pay to the
Company the amount, if any, required to satisfy applicable federal, state and
local income tax withholding requirements ("Withholding Taxes"). Withholding
Taxes shall be payable as of the date income from the exercise is included in a
Participant's gross income for federal income tax purposes (the "Tax Date"). A
Participant may satisfy this requirement by electing one of the following
methods (or a combination), which election is subject to the approval of the
Board:
(a) remitting to the Company, in cash or by check, the amount of the
Withholding Taxes;
(b) remitting to the Company a number of shares of Stock (by either
actual delivery of shares or attestation) having an aggregate Fair Market
Value as of the trading day immediately preceding the Tax Date equal to the
amount of the Withholding Taxes;
(c) electing to have the Company withhold from the distribution the
number of shares of Stock having an aggregate Fair Market Value as of the
trading day immediately preceding the Tax Date equal to the amount of the
Withholding Taxes.
Any election by a Participant pursuant to clause (b) or (c) of this Section
3.01 must be made in accordance with such conditions not inconsistent with the
terms of the Plan as the Board may impose through the adoption of rules or
regulations or otherwise.
3.02 CHANGE IN STOCK, ADJUSTMENTS, ETC.
(a) Change in Stock. In the event that the outstanding shares of common
stock of the Company are increased or decreased or changed into or exchanged for
a different number of shares or kind of shares or other securities of the
Company or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares of a dividend payable in capital stock, appropriate adjustment shall be
made by the Board in the number and kind of shares for the purchase of which
Options may be granted under the Plan. In addition, the Board shall make
appropriate adjustment in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, to the end
that the Participant's proportionate interest shall be maintained as before the
occurrence of such event, and this adjustment of outstanding Options shall be
made without change of the total price applicable to the unexercised portion of
the Option and with a corresponding adjustment in the Option Price per share.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(b) Change in Control. Upon the Change in Control of the Company, as
defined below, each Option granted shall be immediately vested and fully
exercisable as of the effective date of the Change in Control. After the
effective date of the Change in Control, the Option shall remain fully
exercisable until it would otherwise expire by reason of lapse of time. "Change
in Control" means any one or more of the following events: (i) the merger or
consolidation or sale of substantially all of the assets of the Company with or
into any other corporation other than a transaction in which substantially all
of the shareholders of the Company receive 50% or more of the common stock of
the corporation resulting from the transaction (ii) in excess of 24.99% of the
outstanding common stock of the Company is owned, held or controlled by an
entity, person or group acting in concert with the power to control the Company,
as that term is defined in Rule 405 of the Securities Act of 1933; (iii) the
sale or exchange of in excess of 24.99% of the assets of the Company to any
entity, person or group acting in concert; (iv) the recapitalization,
reclassification of securities or reorganization of the Company, which has the
effect of either subpart (ii) or (iii) above; (v) the issuance by the Company of
securities in an amount in excess of 24.99% of the outstanding common stock of
the Company to any entity, person or group acting in concert and intending to
exercise control of the Company; or (vi) the removal, termination or retirement
of more that 49% of the members of the Board.
5
<PAGE> 21
3.03 DURATION, AMENDMENT AND TERMINATION
The Board may, at any time, terminate or amend the Plan, provided that,
subject to the provisions of this Plan relating to certain adjustments to
shares, no termination or amendment shall, without the consent of the affected
Participant, adversely affect the rights of that Participant under any Option
granted under the Plan prior to the date such amendment is adopted by the Board.
3.04 APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Stock subject to an
Option are to be added to the general funds of the Company.
3.05 EFFECTIVE DATE OF PLAN
Subject to the approval of the shareholders of Mid Am, Inc. at the 1998
annual meeting of Mid Am, Inc. shareholders, this Plan shall become effective
March 20, 1997.
Executed the 15th day of January, 1998, effective as of the Effective Date.
MID AM, INC.
_______________________________________ By _____________________________________
Witness
6
<PAGE> 22
ANNEX 2
RESOLVED, that the first sentence of the first paragraph of Article FOURTH
of the Amended Articles of Incorporation is hereby amended to read in its
entirety as follows:
"FOURTH: The total authorized number of shares of the Corporation is one
hundred two million (102,000,000), of which one hundred million
(100,000,000) are common shares without par value ("Common Shares") and two
million (2,000,000) are preferred shares without par value ("Preferred
Shares")."
RESOLVED, FURTHER, that the proper officers of the Corporation be, and they
hereby are, authorized and directed to take all actions, execute all
instruments, and make all payments which are necessary or desirable, in their
discretion, to make effective the foregoing amendment to the Amended Articles of
Incorporation of the Corporation, including without limitation, filing a
certificate of such amendment with the Secretary of State of Ohio.
7
<PAGE> 23
[x] PLEASE MARK VOTES
AS IN THIS EXAMPLE With- For All
For hold Except
1. Election of all Nominees for Director in Class . [ ] [ ] [ ]
GERALD D. ALLER THOMAS S. NONEMAN
WALTER L. LAMB, JR. DOUGLAS J. SHIERSON
JAMES E. LAUGHLIN ROBERT E. STEARNS
NOTE: If you do not wish your shares voted "FOR" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the
exception(s) above. Your shares will be voted for the remaining nominees.
2. Approval of the Amended and Restated Mid Am, Inc. 1997 Stock Option Plan.
For Against Abstain
[ ] [ ] [ ]
3. Amendment of Article Fourth of the Amended Articles of Incorporation of the
Company to increase the number of common shares authorized from 35 million
shares to 100 million shares.
For Against Abstain
[ ] [ ] [ ]
4. Transaction of such other business as may properly come before the meeting
or any adjournment thereof.
DIRECTORS RECOMMEND A VOTE "FOR" ALL PROPOSALS.
Please be sure to sign and date this Proxy. Date_____________________________
_________________________________ ___________________________________
Shareholder sign here Co-owner sign here
Please check appropriate box below
if you wish to attend one of our Corporate Updates.
I will attend the April 22nd Corporate Update at Walnut Grove Country Club in
Dayton, Ohio.
[ ]
I will attend the April 23rd Corporate Update at The Holiday Inn in Montpelier,
Ohio.
[ ]
I will attend the April 28th Corporate Update at Lima Memorial Civic Center in
Lima, Ohio
[ ]
I will attend the April 30th Corporate Update at Croswell Opera House in
Adrian, Michigan.
<PAGE> 24
[ ]
I will attend the May 2nd Corporate Update at Stranahan (Masonic) Great Hall in
Toledo, Ohio.
[ ]
PLEASE SEE REVERSE SIDE FOR DETAILS ON OUR
CORPORATE UPDATES
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If more than one trustee, all should sign.
________________________________________________________________________________
____________________________________________________
DETACH CARD
DETACH CARD
MID AM(R), INC.
Dear Shareholder,
Enclosed is your Notice of Annual Meeting of Shareholders and related
Proxy Statement for our 1998 Annual Meeting. In an effort to provide our
shareholders a greater opportunity to review the progress of the Company,
we have also scheduled five separate Corporate Updates in each of the
geographic regions in which the Company operates.
These Corporate Updates will include a detailed review of the financial,
business and operating performance of the Company and an opportunity to
ask questions of management. The Corporate Updates will, in the tradition
of Mid Am, Inc., include food and refreshments prior to the meeting. The
dates, times, and locations for each session are shown on the reverse side
of this card.
The business of the 1998 Annual Meeting, including the matters to be voted
upon as described in the Notice and Proxy Statement, will be conducted on
April 24, 1998 at 10:00 a.m. at the Toledo Club, Corinthian Room, Madison
at 14th Street, Toledo, Ohio. You are also welcome to attend this Annual
Meeting of Shareholders.
The matters to be acted upon at the meeting are important to you as a
shareholder. Therefore, whether or not you plan to attend, we urge you to
complete and return the proxy card at your earliest convenience.
We look forward to seeing you at our Corporate Updates.
Sincerely,
Edward J. Reiter
Edward J. Reiter
Chairman and CEO
MID AM, INC. PROXY VOTING INSTRUCTION CARD
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 24, 1998
<PAGE> 25
The undersigned hereby appoints James F. Bostdorff and Emerson J. Ross, Jr.,
and each of them, proxies, with the powers the undersigned would possess if
present, and with full power of substitution, to vote all common shares of the
undersigned in Mid Am, Inc. at the Annual Meeting and at any adjournments or
postponements thereof, upon all subjects that may properly come before the
Annual Meeting including the matters described in the Proxy Statement furnished
herewith, subject to any directions indicated on this card. If no directions
are given, the proxies will vote for the election of all listed nominees and,
at their discretion, on any other matter that may properly come before the
Annual Meeting.
PLEASE DATE, SIGN AND MAIL YOUR INSTRUCTION CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
___________________________ ____________________________
___________________________ ____________________________
MID AM, INC. CORPORATE UPDATES
We hope you can join us! Please mark the appropriate box on the proxy card
with the session you'd like to attend. We look forward to seeing you at one of
these five sessions.
- -------------------------------------------------------------------------------
WEDNESDAY, APRIL 22, 1998
WALNUT GROVE COUNTRY CLUB
5050 LINDEN AVENUE, DAYTON, OHIO
5:30 PM RECEPTION / 6:15 PM PRESENTATION
HOSTED BY: AMERIFIRST BANK
QUESTIONS? CALL KELLY REITER @ (937)372-6933
THURSDAY, APRIL 23, 1998
HOLIDAY INN
13508 STATE RT. #15, MONTPELIER, OHIO
5:30 PM RECEPTION / 6:30 PM PRESENTATION
HOSTED BY: FIRST NATIONAL BANK NORTHWEST OHIO
QUESTIONS? CALL LORI LADD @ (419) 636-1164
TUESDAY, APRIL 28, 1998
LIMA MEMORIAL CIVIC CENTER
7 TOWNE SQUARE, LIMA, OHIO
5:30 PM RECEPTION / 6:30 PM PRESENTATION
HOSTED BY AMERICAN COMMUNITY BANK
QUESTIONS CALL CHRISTIE BARNS @ (800)837-0187
THURSDAY, APRIL 30, 1998
CROSWELL OPERA HOUSE
129 EAST MAUMEE STREET, ADRIAN, MICHIGAN
5:30 PM RECEPTION / 6:00 PM PRESENTATION
HOSTED BY: ADRIAN STATE BANK
QUESTIONS? CALL SUE KOTTS @ (517)265-8125
SATURDAY, MAY 2, 1998
STRANAHAN (MASONIC) GREAT HALL
4645 HEATHERDOWNS BOULEVARD, TOLEDO, OHIO
1:00 PM LUNCHEON / 2:00 PM PRESENTATION
HOSTED BY: MID AMERICAN NATIONAL BANK & TRUST COMPANY
QUESTIONS? CALL MELISSA ZATKO @ (419)249-3360
