<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/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 Section 240.14a-11(c) or Section
240.14a-12
FIRST MERCHANTS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL PRINTING, AS AGENT FOR FIRST MERCHANTS CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
<PAGE>
(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:
------------------------------------------------------------------------
2
<PAGE>
FIRST MERCHANTS CORPORATION
200 EAST JACKSON STREET
MUNCIE, INDIANA 47305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 8, 1997
The annual meeting of the shareholders of First Merchants Corporation (the
"Corporation") will be held at the Horizon Convention Center, 401 South High
Street, Muncie, Indiana 47305, on Tuesday, April 8, 1997, at 3:30 p.m. for the
following purposes:
(1) To elect four directors, three to hold office for a term of three years and
one to hold office for a term of one year and, in each case, until their
successors are duly elected and qualified.
(2) To consider and vote upon the adoption of an amendment to the Corporation's
Articles of Incorporation to reduce the minimum number of directors of the
Corporation from twelve to nine.
(3) To ratify the appointment of the firm of Geo. S. Olive & Co., LLC, as
independent public accountants for 1997.
(4) To transact such other business as may properly come before the meeting.
Only those shareholders of record at the close of business on February 18, 1997
shall be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Larry R. Helms
Secretary
Muncie, Indiana
February 25, 1997
IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY
IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE
MEETING, YOU ARE URGED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
February 25, 1997
FIRST MERCHANTS CORPORATION
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 8, 1997
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by and on behalf of the Board of Directors of First Merchants
Corporation (the "Corporation") for use at the annual meeting of shareholders of
the Corporation to be held April 8, 1997. The distribution of these proxy
materials is expected to commence on February 25, 1997.
Any shareholder giving a proxy has the right to revoke it any time before it is
exercised by written notice to the Secretary received prior to the meeting or in
person at the meeting. The shares represented by proxies will be voted in
accordance with the instructions on the proxies. In the absence of specific
instructions to the contrary, proxies will be voted in favor of Items 1, 2 and
3.
VOTING SECURITIES
Only shareholders of record at the close of business on February 18, 1997 will
be entitled to notice of and to vote at the annual meeting. The number of
shares of common stock outstanding and entitled to vote as of February 1, 1997
was 6,603,901. Each share of the Corporation's common stock is entitled to one
vote. The affirmative vote of a majority of the shares present and voting at
the meeting in person or by proxy is required for approval of all items being
submitted to the shareholders for their consideration, except that the
affirmative vote of at least seventy-five percent (75%) of the Corporation's
outstanding common shares is required for approval of the proposed amendment to
the Articles of Incorporation to reduce the minimum number of directors of the
Corporation from 12 to 9. The Secretary will count the votes and announce at
the meeting the number voting for and against each item and the number
abstaining. Abstentions will be counted for the purpose of determining whether
a quorum is present but for no other purpose. Broker non-votes will not be
counted.
ELECTION OF DIRECTORS
Four directors will be elected at the annual meeting.
The persons named below have been nominated for election to the Board of
Directors (the "Board"), with terms expiring for the Class III directors as of
the 2000 annual meeting of shareholders and for the Class I director as of the
1998 annual meeting of shareholders. All of the nominees are currently members
of the Board.
<PAGE>
Those persons nominated as directors include:
NAME AND AGE PRESENT OCCUPATION DIRECTOR SINCE
- ------------ ------------------ --------------
CLASS III (TERMS EXPIRE 2000):
Frank A. Bracken; Of Counsel, Bingham Summers 1994
age 62 Welsh & Spilman, Attorneys
Ted J. Montgomery; Senior Vice President, First 1996
age 57 (1) Merchants Corporation and
President, The Union County
National Bank of Liberty
Michael D. Wickersham; President, Wicks Pies, Inc. and 1996
age 43 (1) Vice President, Wicks Foods, Inc.
(Wicks Pies, Inc. is a producer
and retailer of pies and pie shells.)
CLASS I:(TERM EXPIRES 1998):
Norman M. Johnson; Retired Executive Vice President, 1996
age 62 (1) Stein Roe & Farnham,
Investment Counsel
Those persons named below continue to serve as directors:
CLASS I (TERMS EXPIRE 1998):
Michael L. Cox; Executive Vice President and 1984
age 52 Chief Operating Officer, First
Merchants Corporation and
President and Chief Operating
Officer, First Merchants Bank,
N.A.
George A. Sissel; President, Ball Corporation (Ball 1995
age 60 Corporation manufactures metal
and plastic packaging products
and communications products
and services.)
- 2 -
<PAGE>
NAME AND AGE PRESENT OCCUPATION DIRECTOR SINCE
- ------------ ------------------ --------------
Robert M. Smitson; Vice Chairman of the Board and 1982
age 60 Chief Executive Officer, Maxon
Corporation (Maxon Corporation
designs and manufactures
specialty industrial combustion
systems and valves.)
CLASS II (TERMS EXPIRE 1999):
Stefan S. Anderson; Chairman of the Board, President 1982
age 62 and Chief Executive Officer,
First Merchants Corporation and
Chairman of the Board and Chief
Executive Officer, First
Merchants Bank, N.A.
Thomas B. Clark; President, Alltrista Corporation 1989
age 51 (Alltrista Corporation
manufactures metal, plastics and
consumer products and industrial
equipment.)
David A. Galliher; President and Treasurer, Wm. A. 1982
age 64 Didier & Sons, Inc. (Wm. A.
Didier & Sons, Inc. manufactures
credit cards.)
John E. Worthen; President, Ball State University 1987
age 63
(1) Under the Agreement of Reorganization and Merger between the Corpora-
tion and Union National Bancorp, the Corporation agreed to create two
vacancies on its Board of Directors and to elect Messrs. Johnson and
Montgomery to fill these vacancies. Pursuant to this Agreement, on
August 13, 1996, Messrs. Johnson and Montgomery were elected directors
of the Corporation. Under the Agreement of Reorganization and Merger
between the Corporation and Randolph County Bancorp, Inc., the Corpo-
ration agreed to create a vacancy on its Board of Directors and to
elect Mr. Wickersham to fill the vacancy. Pursuant to this Agreement,
on November 12, 1996, Mr. Wickersham was elected a director of the
Corporation.
The occupations set forth above have been the principal occupations of the
director-nominees and continuing directors during the past 5 years except as
follows: Mr. Bracken was the Deputy Secretary to the United States Department of
the Interior from 1989 to 1993. He joined Bingham Summers Welsh & Spilman in
1994. Mr. Bracken is also a director of Ball Corporation. Mr. Clark
- 3 -
<PAGE>
was Senior Vice President and Chief Financial Officer of Alltrista
Corporation from 1992 until 1994, when he became President and Chief
Operating Officer. He became President and Chief Executive Officer in 1995.
Mr. Clark is also a director of Alltrista Corporation. Mr. Cox was Group
President of Ontario Corporation from 1989 until 1994, when he became
Executive Vice President and Chief Operating Officer of the Corporation and
Executive Vice President of the Corporation's wholly-owned subsidiary, First
Merchants Bank, N.A. ("First Merchants"). Mr. Cox became President and Chief
Operating Officer of First Merchants in 1996. Mr. Johnson was Executive Vice
President and a member of the Executive Committee of Stein Roe & Farnham,
investment counsel, prior to his retirement in 1994. Mr. Montgomery has
served as President of the Corporation's wholly-owned subsidiary, The Union
County National Bank of Liberty ("Union County") since 1983. He became a
Senior Vice President of the Corporation in 1996. Mr. Sissel was Senior Vice
President, General Counsel and Corporate Secretary of Ball Corporation from
1987 until 1994. He became Acting President and Chief Execu-tive Officer of
Ball Corporation in 1994 and President and Chief Executive Officer in 1995.
Mr. Sissel is also a director of Ball Corporation.
The Articles of Incorporation of the Corporation provide that the Corporation
shall have not less than 12 and not more than 21 directors, as may be specified
from time to time by the Bylaws. However, the total of the number of nominees
named in this proxy statement for election to the Board (4) and the number of
continuing directors (7) is only 11. The Board of Directors has approved and is
recommending to the Corporation's shareholders that the Articles of Incorpora-
tion be amended to reduce the minimum number of directors to 9. See "Proposal
to Amend Articles of Incorporation to Reduce the Minimum Number of Directors of
the Corporation." In anticipation that this proposal will be adopted by the
shareholders and that the Bylaws will be amended to specify that the Corporation
shall have 11 directors, only 4 nominees were named. Proxies cannot be voted
for a greater number of persons than the number of nominees named.
CERTAIN COMMITTEES OF THE BOARD
The Corporation's Executive Committee functions as a nominating committee. It
recommends to the Board: (a) candidates to fill any vacancies on the Board, and
(b) a slate of directors to be elected each year at the annual meeting of
shareholders. The Committee will consider nominees recommended by shareholders.
Any such recommendation should be in writing and addressed to the Secretary,
First Merchants Corporation, 200 East Jackson Street, Muncie, Indiana 47305.
The members of the Executive Committee are Messrs. Smitson (Chairman), Anderson,
Bracken, Clark, Cox, and Sissel. John W. Hartmeyer, who is a director of First
Merchants, serves as a non-voting member of the Executive Committee. The
Executive Committee met 4 times during 1996.
The Corporation has an Audit Committee whose functions are: (a) to assist the
Board in fulfilling its responsibilities related to accounting, auditing and
financial reporting functions; (b) to review or cause to be reviewed all
reports of examination made by banking authorities; (c) to meet with the
internal auditors and to make or cause to be made internal examinations and
audits of the affairs of the Corporation and its subsidiaries; (d) to meet
with the external auditors and to review the scope and results of external
audits; and (e) to consult with management on the selection of the
independent public accountants to serve as external auditors for the ensuing
year. The members of the Audit Committee are Messrs. Galliher (Chairman),
Clark, Wickersham, Worthen and Robert F.
- 4 -
<PAGE>
Wisehart, who is retiring as a director of the Corporation as of the 1997
annual meeting. Thomas K. Gardiner, Hurley C. Goodall, and Nelson W.
Heinrichs, who are directors of First Merchants, and George R. Likens, who is
a director of the Corporation's wholly-owned subsidiary, Pendleton Banking
Company ("Pendleton"), serve as non-voting members of the Audit Committee.
The Audit Committee met 5 times during 1996.
The Corporation has a Compensation Committee whose functions are: (a) to review
and approve the compensation and benefits to be paid to the executive officers
and senior management employees of the Corporation and the chief executive
officers of its subsidiaries, and (b) to review and approve the compensation and
benefits to be paid to the executive officers and senior management employees
and the compensation ranges and benefits for other officers and employees of the
Corporation's subsidiaries. The authority to periodically adjust the compensa-
tion and benefits of employees, other than executive officers and senior
management of the Corporation and the chief executive officers of its subsidiar-
ies, has been delegated by the Compensation Committee to the chief executive
officers of the subsidiaries. The Compensation Committee is responsible for the
administration of the Corporation's incentive compensation and stock plans. The
members of the Compensation Committee are Messrs. Smitson (Chairman), Bracken,
and Clark. John W. Hartmeyer, who is a director of First Merchants, serves as a
non-voting member of the Compensation Committee . The Compensation Committee
met 3 times during 1996.
MEETINGS OF THE BOARD
The Board of Directors held 7 meetings during 1996. The directors of the
Corporation who attended fewer than 75% of the total number of meetings of the
Board and the committees on which they served were Messrs. Clark and Wisehart.
COMPENSATION OF DIRECTORS
Directors of the Corporation who were employees of the Corporation or one of its
subsidiaries received no separate compensation for their services as directors
in 1996. Other than Messrs. Johnson, Wickersham and Wisehart, directors of the
Corporation who were not employees received no compensation for attending
meetings of the Corporation's Board; however, they were paid an annual retainer
of $3,100 and $225 for each meeting of First Merchants' Board of Directors that
they attended in 1996. In addition, they were paid $225 per meeting for
attending meetings of the Executive Committee and the other committees of the
Corporation's or First Merchants' Board of Directors. The Chairman of the
Executive Committee was paid an additional $175 and the chairmen of the other
committees were paid an additional $75 for each meeting over which they presid-
ed. Messrs. Johnson, Wickersham and Wisehart were paid an annual retainer of
$3,100 by the Corporation, $300 for each meeting of the Corporation's Board of
Directors, and $225 for each meeting of the Corporation's committees that they
attended in 1996. Messrs. Johnson's and Wickersham's retainers were prorated to
reflect their partial year's service as directors of Corporation since August
1996 and November 1996, respectively. Mr. Johnson was paid a retainer of $8,400
and a bonus of $900, and he received life insurance coverage in the amount of
$50,000, for his service as a director and Chairman of the Executive Committee
of Union County in 1996.
- 5 -
<PAGE>
Mr. Wickersham was paid a retainer of $4,200 for his service as a director
and Chairman of the Board of Directors of the Corporation's wholly-owned
subsidiary, Randolph County Bank ("Randolph County"), and Randolph County
paid him $350 for each Board meeting and $50 for each Loan Committee meeting
that he attended in 1996. Mr. Wisehart received $6,560 for serving as
Chairman of the Board of Directors of the Corporation's wholly-owned
subsidiary, First United Bank ("First United"), and First United paid him
$250 per month for attendance at Board of Directors' meetings, $500 per month
for serving on its Executive Committee and $400 per month for serving on its
Loan Workout Committee in 1996. Mr. Wisehart was also covered by First
United's health insurance plan.
Under the provisions of the 1994 Stock Option Plan, on July 1, 1996 options to
purchase shares of the Corporation's common stock were granted to the non-emplo-
yee directors of the Corporation. Each option is for 600 shares at an option
price of $25 per share, the market price on the date of the grants.
First Merchants maintains an unfunded deferred compensation plan which gives
each director of First Merchants an annual election to defer the receipt of
director's fees from First Merchants. Any amounts reflected in a director's
account under the plan are credited with interest at a rate equal to First
Merchants' 18-month variable rate IRA account rate. Payments are made or begun
when the individual ceases to be a director of either First Merchants or the
Corporation. During 1996, 3 of the Corporation's directors, including one
current director, participated in the plan, deferring fees totalling $34,425.
The Corporation adopted an unfunded deferred compensation plan, effective
January 1, 1997, which gives each director of the Corporation an annual election
to defer the receipt of director's fees from the Corporation. The plan's
provisions are the same as those contained in First Merchants' plan.
COMPENSATION OF EXECUTIVE OFFICERS
The tables in this section of the Proxy Statement contain information concerning
the compensation of certain named executive officers as of the Corporation's
most recent fiscal year-end, December 31, 1996. The information in these tables
concerning stock options reflects the 3-for-2 common stock split which was
effective at the close of business on October 27, 1995 for shareholders of
record at the close of business on October 20, 1995.
- 6 -
<PAGE>
SUMMARY COMPENSATION TABLE
The following table contains information concerning the compensation paid by the
Corporation and its subsidiaries for the years 1994, 1995 and 1996 to the
Corporation's Chief Executive Officer and its 4 most highly compensated execu-
tive officers other than the Chief Executive Officer.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
AWARDS
------
NAME AND SECURITIES
PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
($) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STEFAN S. ANDERSON, 1996 188,543 51,270 3,500 2,294
Chairman of the Board and 1995 180,384 42,629 3,600 2,194
Chief Executive Officer, 1994 168,148 49,197 4,200 2,044
Corporation and First
Merchants; President,
Corporation
MICHAEL L. COX, 1996 144,593 30,055 3,000 1,766
Executive Vice President 1995 134,401 19,708 9,975 821
and Chief Operating Officer, 1994 83,718 15,742 8,849 0
Corporation; President and
Chief Operating Officer, First
Merchants (2)
TED J. MONTGOMERY, 1996 145,024 22,959 4,500 2,520
Senior Vice President,
Corporation; President,
Union County (3)
LARRY R. HELMS, 1996 96,119 17,055 2,300 1,166
Senior Vice President, 1995 92,733 12,488 2,475 1,129
Corporation and First 1994 89,364 16,434 2,850 1,088
Merchants; General Counsel
and Secretary, Corporation
JAMES L. THRASH, 1996 89,931 16,050 2,300 878
Senior Vice President, 1995 86,461 11,673 2,475 844
Corporation and First 1994 82,690 15,244 2,850 807
Merchants; Chief Financial
Officer, Corporation
</TABLE>
(1) Employer contributions for fiscal year to defined contribution plans:
for Messrs. Anderson, Cox, Helms and Thrash, employer matching
contributions to First Merchants Corporation Retirement Savings Plan;
for Mr. Montgomery, employer matching contributions to Union County
National Bank Employees' Stock Ownership and
- 7 -
<PAGE>
401(k) Plan. Employer ESOP contributions for 1996 on Mr. Montgomery's
behalf to Union County National Bank Employees' Stock Ownership and
401(k) Plan had not been determined as of the proxy statement
distribution date.
(2) Mr. Cox joined the Corporation as Executive Vice President and Chief
Operating Officer and First Merchants as Executive Vice President on
May 9, 1994.
(3) Mr. Montgomery became Senior Vice President of the Corporation on
August 13, 1996, following the Corporation's acquisition of Union
County. His 1996 compensation shown in the table includes compensation
received from Union County and the Corporation during the entire 1996
calendar year.
OPTION GRANTS TABLE
The 1994 Stock Option Plan, which became effective as of July 1, 1994, provides
for the issuance of options to key employees of the Corporation or any
subsidiary to purchase the Corporation's common stock at prices not less than
the market price of the stock on the dates of grant. The following table
contains information concerning individual grants of stock options under the
plan made during 1996 to each of the executive officers named in the Summary
Compensation Table above.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT ANNUAL RATES
SECURITIES OF TOTAL OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stefan S. Anderson 3,500 7.69 24.125 July 31, 2006 53,196 134,256
Michael L. Cox 3,000 6.59 24.125 July 31, 2006 45,596 115,076
Ted J. Montgomery 4,500 9.89 24.250 August 14, 2006 68,749 173,509
Larry R. Helms 2,300 5.05 24.125 July 31, 2006 34,957 88,225
James L. Thrash 2,300 5.05 24.125 July 31, 2006 34,957 88,225
</TABLE>
(1) Mr. Cox was granted an option for 3,000 shares on July 31, 1996, of which
1,500 are exercisable on or after January 1, 1997 and 1,500 are exercisable
on or after January 1, 1998. The option is not exercisable after
July 31, 2006. Mr. Montgomery was granted an option for 4,500 shares on
August 14, 1996 which is exercisable on or after February 14, 1997 but not
after August 14, 2006. Each of the other options was granted on
July 31, 1996 and is exercisable on or after January 31, 1997, but not
after July 31, 2006.
-8-
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table contains information concerning (1) each exercise of stock
options during 1996 under the 1989 Stock Option Plan or the 1994 Stock Option
Plan by each of the executive officers named in the Summary Compensation Table
above, and (2) the value as of December 31, 1996 of each of the named executive
officer's unexercised options on an aggregated basis.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
EXERCISE REALIZED (#) ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stefan S. Anderson 0 0 27,825 / 3,500 311,039 / 8,313
Michael L. Cox 0 0 15,956 / 5,868 86,967 / 21,226
Ted J. Montgomery 0 0 0 / 4,500 0 / 10,125
Larry R. Helms 0 0 17,700 / 2,300 191,013 / 5,463
James L. Thrash 0 0 7,350 / 2,300 38,238 / 5,463
</TABLE>
PENSION PLAN TABLES
The Corporation has a defined benefit pension plan covering, in general, all
full-time employees of the Corporation and its subsidiaries. The following table
shows the estimated annual benefits payable upon retirement at age 65 to persons
born in 1941 (the average of the birth years of the executive officers named in
the Summary Compensation Table above) in specified compensation and years of
service classifications under the plan.
-9-
<PAGE>
PENSION PLAN TABLE(1)
REMUNERATION YEARS OF SERVICE
-------------------------------------------------------------
15 20 25 30 35
- ------------- ----------- ---------- ---------- ---------- ---------
$ 125,000 $ 35,985 $ 47,980 $ 59,975 $ 59,975 $ 59,975
150,000 43,860 58,480 73,100 73,100 73,100
175,000 43,860 58,480 73,100 73,100 73,100
200,000 43,860 58,480 73,100 73,100 73,100
(1) For plan years beginning on or after January 1, 1994, $150,000 is the
maximum amount of compensation that can be considered for purposes of
calculating pension benefits accruing under the plan.
Benefits under the plan are determined primarily by average final compensation
and years of service and are computed on the basis of straight-life annuity
amounts. They are not subject to any deduction for Social Security or other
offset amounts.
Remuneration for purposes of the Pension Plan Table above consists of the base
salary and service award components of the salary amounts reported in the
Summary Compensation Table above. As of January 1, 1997, Messrs. Anderson, Cox,
Montgomery, Helms and Thrash, the executive officers named in the Summary
Compensation Table, have 22.2, 2.7, 0.0, 25.3, and 19.0 credited years of
service, respectively, and their 1996 remuneration for purposes of calculating
their pension benefits under the plan was $150,000, $141,300, $139,992, $93,425
and $87,895, respectively.
Participants in the plan who had at least 15 credited years of service and whose
combined age and years of service totaled at least 65 as of January 1, 1991,
including Messrs. Anderson and Helms, are entitled to a pension benefit
calculated under the formula that was in effect prior to 1990 if that will
produce a greater benefit. The following table shows the estimated annual
benefits payable upon retirement at age 65 in specified compensation and years
of service classifications under the formula that was in effect prior to 1990.
-10-
<PAGE>
PENSION PLAN TABLE (PRE-1990 FORMULA)(1)
REMUNERATION YEARS OF SERVICE
- -------------------------------------------------------------------------
15 20 25 30 35
---------- ---------- ---------- --------- ---------
$ 125,000 $ 37,500 $ 50,000 $ 62,500 $ 62,500 $ 62,500
150,000 45,000 60,000 75,000 75,000 75,000
175,000 45,000 60,000 75,000 75,000 75,000
200,000 45,000 60,000 75,000 75,000 75,000
(1) For plan years beginning on or after January 1, 1994, $150,000 is the
maximum amount of compensation that can be considered for purposes of
calculating pension benefits accruing under the plan.
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Corporation and First Merchants have entered into change-in-control
agreements on a year-to-year basis with Messrs. Anderson and Cox which provide
severance benefits in the event of both a change in control of the Corporation
or First Merchants and a termination or constructive termination of the
employment of the executive within 24 months after the change in control, unless
such termination was for cause, because of the executive's death or disability,
or by the executive other than on account of constructive termination. In
general, a "change in control" means an acquisition by any person of 25% or more
of the Corporation's or First Merchants' voting shares, a change in the makeup
of a majority of the Corporation's or First Merchants' Board of Directors over a
24-month period, a merger of the Corporation or First Merchants in which the
shareholders before the merger own 50% or less of the Corporation's or First
Merchants' voting shares after the merger, or approval by the Corporation's
shareholders of a plan of complete liquidation of the Corporation or First
Merchants or an agreement to sell or dispose of substantially all of the
Corporation's or First Merchants' assets. A "constructive termination" means,
generally, a significant reduction in duties, compensation or benefits or a
relocation of the executive's office outside of Muncie, Indiana unless agreed to
by the executive. The severance benefits payable, in addition to base salary
and incentive compensation accrued through the date of termination are: a lump
sum payment equal to 299% of an amount based on the executive's previous 5
calendar years' average W-2 compensation (but not more than the amount which
would cause the payment to be subject to the excise tax imposed under Section
280G of the Internal Revenue Code), 2 years of life, disability, accident and
health insurance benefits, the bargain element value of then outstanding stock
options, outplacement services, and reasonable legal fees and expenses incurred
as a result of the termination. The agreements were not entered into in
response to any effort to acquire control of the Corporation or First Merchants,
and the Board of Directors is not aware of any such effort.
-11-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Corporation is comprised of the following
non-employee directors: Robert M. Smitson (Chairman), Frank A. Bracken, and
Thomas B. Clark. John W. Hartmeyer, who is a director of First Merchants,
serves as a non-voting member of the Compensation Committee. Mr. Smitson is the
Vice Chairman of the Board and Chief Executive Officer of Maxon Corporation.
Stefan S. Anderson, the Chairman of the Board, President and Chief Executive
Officer of the Corporation and the Chairman of the Board and Chief Executive
Officer of First Merchants, serves as a director of Maxon Corporation. Mr.
Bracken is of counsel with the firm of Bingham Summers Welsh & Spilman, which
provides legal services to the Corporation and its subsidiaries on a
transactional basis.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the
Corporation's executive compensation program. It is responsible for
establishing the compensation and benefits of the Corporation's chief executive
officer and approving the compensation and benefits of the other executive
officers of the Corporation, after receiving recommendations from the chief
executive officer. The Committee is also responsible for administering the
Corporation's incentive compensation and stock plans.
GENERAL POLICY ON EXECUTIVE COMPENSATION. The Board of Directors of the
Corporation has established an executive compensation program which is designed
to provide incentives to executive officers to achieve short-term and long-term
corporate strategic management goals, with the ultimate objective of obtaining a
superior return on the shareholders' investment. To this end, the compensation
program for executive officers is comprised of cash and equity-based components
which consider: the executive officer's individual performance; the
Corporation's performance as measured against previously-established annual and
long-term goals; the Corporation's performance compared to industry peers; and
the compensation paid by competitors to individuals holding similar management
positions.
The Compensation Committee believes that the Corporation's executive
compensation program is a significant contributor to the Corporation's excellent
short-term and long-term performance, compared to industry peers. In 1996 the
Corporation and its subsidiary banks again received national recognition for
their financial strength, and the Corporation's and First Merchants' earnings
grew for the 21st consecutive year.
The annual compensation paid to the executive officers for 1996 (reported in the
"salary" and "bonus" columns of the Summary Compensation Table) was greater than
the compensation for 1995, due to salary increases in the 4% range and increased
bonuses under the Corporation's incentive compensation plans. Mr. Cox's 1996
compensation increased more than the other executive officers, reflecting his
increased management reponsibilities as the Chief Operating Officer of the
Corporation and First Merchants.
-12-
<PAGE>
SALARIES. The salaries paid to the Corporation's executive officers were
subjectively determined after consideration of the executive officer's
individual responsibilities, performance, and experience, the evaluation by the
chief executive officer of the executive officers other than the chief executive
officer, the Corporation's financial results compared with industry peers,
various industry salary surveys, and other factors such as budgetary
considerations and inflation rates.
The Compensation Committee tries to set the executive officers' salaries at or
above the average of the salaries paid to executive officers with similar
responsibilities at Indiana and Midwestern banks and bank holding companies of
similar size. The salaries paid executive officers at peer financial
organizations were determined by consulting several surveys, most importantly:
the Indiana Bankers Association survey of Indiana banks; the Crowe Chizek
Mid-West Bank Compensation Survey; salary surveys prepared by the American
Compensation Association and several benefits consultants; and a survey of the
Financial Associates banks (11 Indiana banks with assets between $200,000,000
and $1,500,000,000).
INCENTIVE COMPENSATION. The Compensation Committee believes that
performance-based pay should be a significant component of the executive
officers' total compensation package. Therefore, each of the executive officers
is covered by an incentive plan. The objectives of the plans are: to link
compensation to organization and individual goal achievement, to motivate and
retain key personnel, and to attract qualified talent to the organization. The
executive officers qualified for bonuses under the plans if the Corporation or
subsidiary bank met or exceeded pre-established minimum ("threshold")
performance levels in 1996. Each plan contains a schedule setting forth the
percentage of salary, if any, payable to the executive officer as a bonus,
depending on the Corporation's or subsidiary bank's performance relative to each
of the criteria. The plans are administered by the Compensation Committee.
Mr. Anderson's bonus was determined under the Corporation's Management Incentive
Plan for Chief Executive Officer. This plan provides for a bonus of up to 40%
of annual base salary, if the Corporation meets specific targets for return on
assets ("ROA"), return on equity ("ROE"), and income growth ("IG"). These are
commonly-used criteria for measuring institutional performance in the banking
industry. Mr. Anderson received a bonus of 27.94% of base salary for 1996. The
threshold performance levels which would qualify him for a bonus under the plan
were exceeded for all criteria: the Corporation's ROA, ROE, and IG; however, the
maximum levels were not exceeded for any of the criteria.
Mr. Cox's bonus was determined under the Corporation's Management Incentive Plan
for Executive Vice President and Chief Operating Officer. This plan provides
for a bonus of up to 30% of annual base salary, if the Corporation and First
Merchants meet specific targets for ROA, ROE, and IG. Mr. Cox received a bonus
of 21.27% of base salary for 1996. The threshold performance levels which would
qualify him for a bonus under the plan were exceeded for all criteria: the
Corporation's and First Merchants' ROA, ROE, and IG; the maximum level was
exceeded for First Merchants' ROA, but not for the Corporation's ROA or any of
the other criteria.
The bonuses paid to Messrs. Helms and Thrash in 1996 were determined under the
Corporation's Management Incentive Plan for Administrative Officers. This plan
provides for a bonus of up to 25% of annual base salary, if the Corporation and
First Merchants meet specific targets for ROA,
-13-
<PAGE>
ROE, and IG. Messrs. Helms and Thrash each received a bonus of 18.28% of base
salary for 1996. The threshold performance levels which would qualify them
for a bonus under the plan were exceeded for all criteria: the
Corporation's and First Merchants' ROA, ROE, and IG; the maximum level was
exceeded for First Merchants' ROA, but not for the Corporation's ROA or any
of the other criteria.
Mr. Montgomery's bonus was determined under the Corporation's Management
Incentive Plan for Chief Executive Officer, The Union County National Bank.
This plan provides for a bonus of up to 20% of annual base salary, if Union
County meets specific targets for ROA, IG, and achievement of annual plan
objectives ("AAPO"). Mr. Montgomery received a bonus of 16.40% of base salary
for 1996. The threshold performance levels which would qualify him for a bonus
under the plan were exceeded for all criteria: Union County's ROA, IG, and AAPO;
the maximum level was exceeded for Union County's IG and equaled for its AAPO,
but not for its ROA.
STOCK PLANS. Equity-based compensation, including compensation under the
Corporation's Stock Option Plan and Employee Stock Purchase Plan, is intended to
encourage ownership and retention of the Corporation's common stock by key
employees, thereby giving them a meaningful stake in the Corporation's continued
success and aligning their interests with those of other shareholders.
The Stock Option Plan is briefly described in the paragraph above the Option
Grants Table. During 1996 the Compensation Committee awarded options under the
plan to the 5 executive officers as follows: for 3,500 shares to Mr. Anderson,
for 3,000 shares to Mr. Cox, for 4,500 shares to Mr. Montgomery, and for 2,300
shares each to Messrs. Helms and Thrash.
The Employee Stock Purchase Plan generally provides that full-time employees of
the Corporation or a participating subsidiary with more than 6 months of service
may elect, prior to the offering period (July 1 to June 30), to purchase common
shares of the Corporation at a price equal to 85% of the lesser of the market
price of the stock at the beginning of the period and the market price at the
end of the period. For the offering period ending June 30, 1996, Messrs.
Anderson, Cox, Montgomery, Helms and Thrash, the executive officers named in the
Summary Compensation Table, purchased 405, 337, 0, 135, and 715 shares,
respectively, under the 1994 Employee Stock Purchase Plan. Mr. Montgomery was
not eligible to participate in the plan during the offering period ending June
30, 1996. The 1994 Employee Stock Purchase Plan covers 5 offering periods,
expiring on June 30, 1999.
OTHER COMPENSATION. The executive officers are also covered by medical and
retirement plans which are generally applicable to full-time employees of the
Corporation and its subsidiaries. In 1996 Messrs. Anderson, Cox, Helms and
Thrash were covered by the First Merchants Corporation Retirement Pension Plan,
a defined benefit pension plan (described in the "Pension Plan Tables" section),
and by the First Merchants Corporation Retirement Savings Plan, an Internal
Revenue Code Section 401(k) plan (referred to in note (1) to the Summary
Compensation Table). In 1996 Mr. Montgomery was covered by the Union County
National Bank Employees' Stock Ownership and 401(k) Plan, a combined Section
401(k) and ESOP plan (referred to in note (1) to the Summary Compensation
Table). Mr. Montgomery will be covered by the two First Merchants Corporation
retirement plans beginning on January 1, 1997. The Section 401(k) portion of
the Union County National Bank Employees' Stock Ownership and 401(k) Plan was
spun off and merged into the
-14-
<PAGE>
First Merchants Retirement Savings Plan, effective as of January 1, 1997,
and the ESOP portion of the Union County National Bank Employees' Stock
Ownership and 401(k) Plan is to be terminated as of June 30, 1997.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The chief executive officer's salary is
determined in the manner described above in this section. Mr. Anderson's total
compensation for 1996, including salary and bonus, was approximately 7.5% higher
than his 1995 compensation, but still below average compared to chief executive
officers with similar positions and responsiblities in the banking industry.
Mr. Anderson's 1996 salary increased over his 1995 salary by 4.5%, whereas his
bonus increased by approximately 20% because of the Corporation's improved
performance as measured by the criteria (ROA, ROE,and IG) established under the
Management Incentive Plan for Chief Executive Officer.
FIRST MERCHANTS CORPORATION COMPENSATION
COMMITTEE
Robert M. Smitson, Chairman
Frank A. Bracken
Thomas B. Clark
John W. Hartmeyer
-15-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly change in the Corporation's cumulative
total shareholder return on its common stock during the last 5 years with (1)
the cumulative total return of the CRSP Index for NASDAQ Stock Market (U.S.
Companies), and (2) the cumulative total return of the CRSP Index for NASDAQ
Bank Stocks. The graph assumes $100 was invested on January 1, 1992 in the
Corporation's common stock, and in each of the two indexes shown, and all
dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG FIRST MERCHANTS CORPORATION, NASDAQ STOCK
MARKET (U.S. COMPANIES) AND NASDAQ BANK STOCKS
[GRAPH]
FMC. . . . . . . . . . 100 . . 155.2 . . 154.9 . . 179.7 . . 220.5 . . 234.5
NASDAQ Stock Market. . 100 . . 116.4 . . 133.6 . . 130.6 . . 184.7 . . 227.2
NASDAQ Bank Stocks . . 100 . . 145.6 . . 166.0 . . 165.4 . . 246.3 . . 325.6
-16-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Corporation is not aware of any person who is the beneficial owner of more
than 5% of the Corporation's outstanding common stock. The following is a
summary of the amount and percent of the Corporation's common stock beneficially
owned on February 1, 1997 by each director and director nominee, by each
executive officer named in the Summary Compensation Table above, and by all
directors and executive officers as a group. Unless otherwise noted, the
beneficial owner has sole voting and investment power.
AMOUNT AND NATURE PERCENT
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
----------------------- -------------------------- --------
Stefan S. Anderson (12) 96,362 (2) 1.45%
Frank A. Bracken (12) 175,616 (3) 2.66%
Thomas B. Clark 2,025 *
Michael L. Cox 24,798 (4) *
David A. Galliher 6,201 (5) *
Norman M. Johnson 254,660 (6) 3.86%
Ted J. Montgomery 30,613 (7) *
George A. Sissel (13) 1,425 (8) *
Robert M. Smitson (12) 7,875 (9) *
Michael D. Wickersham 625 *
Robert F. Wisehart 40,949 (10) *
John E. Worthen 2,650 *
Larry R. Helms 23,092 (11) *
James L. Thrash 15,186 *
Directors and Executive
Officers as a Group (14 persons) 682,077 10.18%
(1) The information contained in this column is based upon information
furnished to the Corporation by the persons and entities named above
and shareholder records of the Corporation. The shares shown include
the following shares which may be acquired during the next 60 days
under a stock option plan by the executive officers named above: Mr.
Anderson, 31,325 shares; Mr. Cox, 20,324 shares; Mr. Montgomery, 4,500
shares; Mr. Helms, 20,000 shares; Mr. Thrash, 9,650 shares; and the
following shares which may be acquired during the next 60 days under
the 1994 Stock Option Plan by the non-employee directors named above:
Messrs. Clark, Galliher, and Worthen, 1800 shares each; Messrs.
Bracken, Sissel and Smitson, 1200 shares each; and Mr. Wisehart, 1285
shares. The shares shown for directors and executive officers as a
group include 96,084 shares which may be acquired during the next 60
days under a stock option plan.
(2) Includes 3,375 shares held by his spouse, Joan Anderson, in which he
disclaims any beneficial interest.
-17-
<PAGE>
(3) Includes 2,780 shares held by his spouse, Judy Bracken, in which he
disclaims any beneficial interest; and 130,165 shares held in trust
for another family member for which Mr. Bracken, as co-trustee, has
sole voting and shared investment power.
(4) Includes 1,552 shares held jointly with his spouse, Sharon Cox.
(5) Includes 605 shares held by his spouse, Nancy Galliher, in which he
disclaims any beneficial interest.
(6) Includes 16,329 shares held by his spouse, Julia Johnson, in which he
disclaims any beneficial interest; and 60,750 shares held by the estate
of N.H. Johnson, for which Mr.Johnson, as co-executor, has shared
voting and shared investment power.
(7) Includes 4,276 shares held jointly with his spouse, Barbara Montgomery.
(8) Includes 225 shares held jointly with his spouse, Mary R. Sissel.
(9) Includes 3,375 shares held by his spouse, Marilyn S. Smitson, in which
he disclaims any beneficial interest.
(10) Includes 18,906 shares held by his spouse, Jean Wisehart, in which he
disclaims any beneficial interest; and 702 shares held by Wisehart
Farms, Inc.
(11) Includes 3,092 shares held jointly with his spouse, Sandra Helms.
(12) Messrs. Anderson, Bracken and Smitson serve as directors of the George
and Frances Ball Foundation, Muncie, Indiana, which owns 293,720
shares (4.45%) of the Corporation's outstanding common stock. The
Foundation's Board of Directors, which has 6 members, has the voting
and investment power over the shares held by the Foundation. The
Foundation's shares are not included in the totals of the shares
beneficially owned by Messrs. Anderson, Bracken and Smitson.
(13) Mr. Sissel serves as a director of the Ball Brothers Foundation,
Muncie, Indiana, which owns 27,576 shares (0.42%) of the Corporation's
outstanding common stock. The Foundation's Board of Directors, which
has 9 members, has the voting and investment power over the shares
held by the Foundation. The Foundation's shares are not included in
the total of the shares beneficially owned by Mr. Sissel.
* Percentage beneficially owned is less than 1% of the outstanding
shares.
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Certain directors and executive officers of the Corporation and its subsidiaries
and their associates are customers of, and have had transactions with the
Corporation's subsidiary banks from time to time in the ordinary course of
business. Additional transactions may be expected to take place in
-18-
<PAGE>
the ordinary course of business in the future. All loans and commitments
included in such transactions were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features.
Frank A. Bracken, a director of the Corporation, is of counsel with the firm of
Bingham Summers Welsh & Spilman, Indianapolis, Indiana, which provides legal
services to the Corporation and its subsidiaries on a transactional basis.
PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO REDUCE THE MINIMUM NUMBER OF
DIRECTORS OF THE CORPORATION
On December 10, 1996, the Corporation's Board of Directors unanimously approved
and agreed to recommend to the Corporation's shareholders that Article VII,
Section 1 of the Articles of Incorporation of the Corporation be amended to
reduce the minimum number of directors of the Corporation from 12 to 9. The
affirmative vote of at least seventy-five percent (75%) of the outstanding
shares of the common stock entitled to vote is required to adopt this amendment.
With the proposed amendment, Article VII, Section 1 would read as follows:
ARTICLE VII
DIRECTORS
SECTION 1. NUMBER. The number of Directors of the Corporation shall not
be less than nine (9) nor more than twenty-one (21), as may be
specified from time to time by the Bylaws. If and whenever the Bylaws
do not contain a provision specifying the number of Directors, the
number shall be sixteen (16). The Directors shall be classified, with
respect to the time for which they severally hold office, into three
(3) classes as nearly equal in number as possible, as shall be
specified in the Bylaws, one class to be elected for a term expiring
at each annual meeting of shareholders, with each Director to hold
office until his successor is elected and qualified. At each annual
meeting of shareholders, the successor of each Director whose term
expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of shareholders held in the third year
following the year of his election, or until his successor is elected
and qualified.
The Board of Directors believes it is in the Corporation's best interest to give
the Board greater flexibility to establish the size of the Board than currently
exists under the provisions of Article VII, Section 1. The number of directors
serving on the Corporation's and First Merchants' Boards have been reduced as
the result of a restructuring of these Boards in December 1996. The Board of
Directors of the Corporation formerly had 18 members, and it now has 12. With
the
-19-
<PAGE>
retirement of Mr. Wisehart as of the 1997 annual meeting, the Board will
have 11 members, assuming no other changes in the makeup of the Board prior to
that date.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board, subject to the approval of the shareholders, has selected Geo. S.
Olive & Co., LLC, Certified Public Accountants, as its independent public
accountants for 1997. Representatives of the firm are expected to be present at
the annual shareholder's meeting. They will have an opportunity to make a
statement, if they desire, and are expected to be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1998 annual meeting of
the shareholders must be received by the Secretary of the Corporation at the
Corporation's principal office by October 28, 1997, for inclusion in the
Corporation's 1998 proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
The cost of soliciting proxies will be borne by the Corporation. In addition to
solicitations by mail, proxies may be solicited personally or by telephone or
telegraph, but no solicitation will be made by specially engaged employees or
paid solicitors.
The Board and management are not aware of any other matters to be presented at
the annual meeting other than the election of the directors, the amendment to
the Corporation's Articles of Incorporation, and the ratification of the
appointment of the independent public accountants. However, if any other
matters properly come before such meeting or any adjournment thereof, the
holders of the proxies are authorized to vote thereon at their discretion.
By Order of the Board of Directors
Larry R. Helms
Secretary
Muncie, Indiana
February 25, 1997
-20-
<PAGE>
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF FIRST MERCHANTS CORPORATION
MUNCIE, INDIANA
The undersigned hereby appoints Clell W. Douglass and Hamer D. Shafer, and each
of them, as proxies with power of substitution, to represent and to vote all
shares of common stock of First Merchants Corporation which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of First
Merchants Corporation to be held on April 8, 1997, and at any adjournment
thereof, with all of the powers the undersigned would possess if personally
present. If any of the nominees for election as directors are unable to serve
for any reason, the persons listed above have the authority to vote as directed
for any substitute nominee.
Dated: _______________________, 1997.
(Please sign exactly as your name appears hereon)
________________________________________________
(Signature of Shareholder)
________________________________________________
(Signature of Shareholder)
(Joint owners should each sign personally.
Trustees and others signing in a representative
capacity should indicate the capacity in which
they sign.)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE.
(SEE REVERSE SIDE FOR IMPORTANT INFORMATION)
<PAGE>
(CONTINUED FROM OTHER SIDE)
I do / / do not / / plan to attend the Annual Meeting. Number attending:_______
THE BOARD OF DIRECTORS AND MANAGEMENT OF FIRST MERCHANTS CORPORATION RECOMMEND A
VOTE "FOR" THE PROPOSALS LISTED.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' AND MANAGEMENT'S
RECOMMENDATIONS, JUST SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
1. Election of Directors: / / FOR all nominees listed / / WITHHOLD VOTE
below (except as withheld (do NOT vote for
in the space below) any of the nominees
listed below)
Frank A. Bracken, Norman M. Johnson, Ted J. Montgomery, Michael D. Wickersham
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
_____________________________________________________________________________
2. Proposal to amend the Corporation's Articles of Incorporation to reduce the
minimum number of Directors of the Corporation from 12 to 9.
FOR / / AGAINST / / ABSTAIN / /
3. Ratification of the appointment of the firm of Geo. S. Olive & Co., LLC, as
independent public accountants for 1997.
FOR / / AGAINST / / ABSTAIN / /
4. In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED THIS PROXY
WILL BE VOTED "FOR" APPROVAL OF THE MATTERS DESCRIBED IN ITEMS 1, 2 AND 3 ABOVE.
