MID-COAST BANCORP, INC.
1768 Atlantic Highway, Box 589
Waldoboro, Maine 04572
Telephone (207) 832-7521
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JULY 18, 1996
NOTICE IS HEREBY GIVEN to the Shareholders of Mid-Coast Bancorp, Inc.
("Bancorp" or the "Holding Company") that the Annual Meeting of such
Shareholders will be held at 3:00 p.m. on the 18th day of July, 1996 at the
Samoset Resort, Rockport, Maine, for the following purposes:
1. To vote upon the election of three directors for three-year terms;
2. To ratify the appointment of Baker, Newman & Noyes as Independent
Auditors to Bancorp for fiscal year 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The date fixed by the Board of Directors as the record date for determining
shareholders entitled to notice of and to vote at the Annual Meeting is the
close of business on June 3, 1996.
By Order of the Board of Directors
/s/ WESLEY E. RICHARDSON
WESLEY E. RICHARDSON
President and Chief Executive Officer
June 7, 1996
Waldoboro, Maine
THE BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND RETURN YOUR PROXY CARD AS
SOON AS POSSIBLE, EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. YOU
MAY REVOKE YOUR PROXY BY WRITTEN INSTRUMENT AT ANY TIME PRIOR TO THE VOTE AT THE
ANNUAL MEETING.
<PAGE>
MID COAST-BANCORP, INC.
1768 Atlantic Highway, Box 589
Waldoboro, Maine 04572
Telephone: (207) 832-7521
PROXY STATEMENT
GENERAL STATEMENT
This Proxy Statement has been prepared in connection with the solicitation
of proxies by the Board of Directors of the Holding Company for use at the
Annual Meeting of Shareholders to be held July 18, 1995, and at any
adjournment(s) thereof (the "Meeting"). The Meeting will be held at 3:00 p.m. at
the Samoset Resort, Rockport, Maine. The approximate date of mailing of this
Proxy Statement is June 7, 1996.
RECORD DATE; VOTE REQUIRED FOR APPROVAL; SHAREHOLDER PROPOSAL
All persons who were shareholders of Bancorp on June 3, 1996 (the "Record
Date") will be entitled to cast votes at the Meeting. Voting may be by proxy or
in person. As of the Record Date, Bancorp had 229,488 shares of common stock,
$1.00 par value, having one vote each, outstanding. Bancorp has no other class
of equity securities outstanding.
Holders of one-third of the outstanding shares of common stock entitled to
vote, represented in person or by proxy, will constitute a quorum for purposes
of transacting business at the Meeting. All matters to be voted on must be
approved by the holders of a majority of the shares present in person or by
proxy at the meeting. Abstentions, votes withheld from nominees for directors
and broker non-votes will be counted for purposes of determining whether a
quorum is present at the Meeting for purposes of transacting business. With
respect to matters to be voted on at the Meeting, in determining whether the
requisite number of holders have approved any such matter, abstentions, as well
as votes for and against the matter, but not broker non-votes, will be included
in the denominator or base against which the number of favorable votes will be
measured.
Each proxy solicited hereby, if properly executed, duly returned to
management and not revoked prior to the Meeting, will be voted at the Meeting in
accordance with the shareholder's instructions indicated thereon. Each
shareholder shall have one vote for each share of stock owned of record as of
the Record Date.
A shareholder giving a proxy has the power to revoke the proxy at any time
before it is exercised by delivering to the Secretary of the Holding Company
(Clarice J. Giusani, Mid-Coast Bancorp, Inc., 1768 Atlantic Highway, Box 589,
Waldoboro, Maine 04572) written instructions revoking it. A duly executed proxy
bearing a later date will be sufficient to revoke an earlier proxy. A proxy
executed by a shareholder who attends the Meeting will be revoked only if the
shareholder delivers written instructions to that effect to the Secretary prior
to the beginning of the voting.
<PAGE>
In addition to the solicitation of proxies through the mail, proxies may be
solicited by officers, directors and regular employees of the Holding Company
personally, by telephone or by further correspondence. The cost of soliciting
proxies from shareholders will be borne by the Holding Company.
A shareholder who wishes to present a proposal for action at the next
Annual Meeting of Shareholders of the Holding Company must submit a written
proposal to the Secretary of the Holding Company at its office, 1768 Atlantic
Highway, Box 589, Waldoboro, Maine 04572 on or before February 7, 1997. If such
proposal is in compliance with all of the requirements of Rule 14a-8 of the
Securities Exchange Act of 1934 (the "Exchange Act"), it will be included in the
proxy statement and set forth on the form of proxy issued for the next Annual
Meeting of Shareholders. It is urged that any such proposals be sent by
certified mail, return receipt requested.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
To the knowledge of management of Bancorp, the following shareholders
beneficially owned, directly or indirectly, more than 5% of Bancorp's common
stock as of May 22, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- - ------------------------------------ ----------------------- --------
<S> <C> <C>
The Baupost Group, Inc. 13,240-Partnership 5.77%
P. O. Box 1288
Cambridge, MA 02238
</TABLE>
The following table sets forth the amount and percentage of Bancorp's
common stock beneficially owned, directly or indirectly, by directors and
executive officers of the Holding Company individually and by directors and
executive officers of the Holding Company as a group, as of May 22, 1996.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF
BENEFICIAL PERCENT
NAME OWNERSHIP (1) OF CLASS
---- ----------------- --------
<S> <C> <C>
Robert E. Carter 1,325 (2) 0.58
Samuel Cohen 8,701 (3) 3.79
Sharon E. Crowe 1,748 0.76
Lincoln Davis 9,679 4.22
Ronald E. Dolloff 2,722 (4) 1.19
Clarice J. Giusani 2,107 (5) 0.92
Lincoln O. Orff 8,003 (6) 3.49
Maynard A. Prock 4,085 (7) 1.78
Wesley E. Richardson 9,930 (8) 4.33
Robert W. Spear 5,272 (9) 2.30
Waite Weston 3,442 (10) 1.50
Roy W. Winchenbach 4,019 (11) 1.75
Total owned by directors and
executive officers as a
group (12 persons)
- - ---------------------------- ------------------ --------
61,031 26.59%
1. All shares are held individually unless otherwise indicated.
2. Includes 326 shares held individually by spouse, for which Mr. Carter
disclaims beneficial ownership, 263 shares held by his son, over which Mr.
Carter exercises voting and investment control, 168 shares held by another son,
over which Mr. Carter exercises voting and investment control, and 179 stock
options which are exercisable in 60 days.
3. Includes 7,658 shares held jointly with spouse and 1,043 stock options which
are exercisable in 60 days.
4. Includes 1,724 shares held jointly with spouse and 998 stock options which
are exercisable in 60 days.
5. Includes 1,351 shares held jointly with her daughter and 756 stock options
which are exercisable in 60 days.
6. Includes 6,960 shares held jointly with spouse and 1,043 stock options which
are exercisable in 60 days.
- 3 -
<PAGE>
7. Includes 3,042 shares held jointly with spouse, and 1,043 stock options
which are exercisable in 60 days.
8. Includes 2,652 shares held jointly with spouse, 1,204 shares held
individually by spouse, for which Mr. Richardson disclaims beneficial ownership,
and 395 stock options which are exercisable in 60 days.
9. Includes 2,075 shares held jointly with spouse and 833 stock options which
are exercisable in 60 days.
10. Includes 2,992 shares held jointly with spouse and 450 stock options which
are exercisable in 60 days.
11. Includes 919 shares held individually by spouse, for which Mr. Winchenbach
disclaims beneficial ownership, and 783 shares held jointly with spouse.
</TABLE>
- 4 -
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The following table shows the name, age, and position during the past five
years of the three nominees for election as directors and the length of time
each has served as a director. The term of each director will be three years.
Unless otherwise specified on the proxies received by the Holding Company,
it is intended that proxies received in response to this solicitation will be
voted in favor of the election of the persons named in the following table to be
directors of the Holding Company for three-year terms, and until their
successors are elected and qualified. There are no arrangements or
understandings between any nominee or director and any other person pursuant to
which any such person was or is selected as a director or nominee.
NOMINEES FOR THREE-YEAR TERMS EXPIRING 1999
<TABLE>
<CAPTION>
DIRECTOR
AGE SINCE POSITION
--- -------- --------
<S> <C> <C> <S>
Samuel Cohen 56 1990 Director
Ronald E. Dolloff 60 1988 (1) Director
Lincoln O. Orff 65 1990 Director
(1) Includes term as a director of The Waldoboro Bank, F.S.B. (the "Bank"),
prior to formation of the Holding Company.
</TABLE>
SAMUEL COHEN is an attorney in Waldoboro. He is a past member of the Waldoboro
Planning Board and the M.S.A.D. #40 School Board. He is currently a member of
the American Legion, the Masons, the Lincoln County Bar Association and the
Maine Trial Lawyers Association. Mr. Cohen is also a member of the Maine and
Massachusetts Bars.
RONALD E. DOLLOFF retired as the principal of Medomak Valley High School in
1994. Mr. Dolloff has been employed in education since 1956 and is a retired
member of the Maine and National Secondary Principals Associations.
LINCOLN O. ORFF is a real estate broker in Jefferson, Maine. He is a Past Master
of the Riverside Lodge, Past Patron of the Eastern Star and the former owner of
the Tilton Agency, an insurance agency located in Jefferson, Maine. He is
currently in his 34th year as First Selectman in Jefferson and he also serves as
the secretary of The Windsor Agricultural Fair.
While management has no reason to believe that any of the nominees for the
office of director will, prior to the date of the meeting, refuse or become
unable to accept the nomination, if any such nominee should refuse or become
unable to accept, it is the intention of the persons named in the proxy to vote
for such other person or persons for office of director as management may
recommend.
- 5 -
<PAGE>
DIRECTORS WHO WILL CONTINUE IN OFFICE AFTER THE MEETING
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME SINCE (1) EXPIRES AGE
- - -----------------------------------------------------------------------
<S> <C> <C> <C>
Sharon E. Crowe 1994 1997 41
Lincoln Davis, III 1977 1998 50
Maynard A. Prock 1992 1998 55
Wesley E. Richardson 1989 1998 53
Robert W. Spear 1976 1997 53
Waite W. Weston 1967 1996 55
(1) Includes service as director of the Bank prior to the formation of the
Holding Company.
</TABLE>
SHARON E. CROWE, since 1988, has served as the Director of Safety for Crowe Rope
Company. In addition, she has recently founded a consulting firm specializing in
safety and employee relations issues. Ms. Crowe is a member of Rockland Rotary
Club and is a Rotary International Paul Harris Fellow.
LINCOLN DAVIS, III owns and operates Stetson & Pinkham Mercury outboard boat
dealership in Waldoboro.
MAYNARD A. PROCK owns and operates Prock Marine, a marine construction firm. Mr.
Prock has operated the business since 1962 with his three brothers.
WESLEY E. RICHARDSON has been President, Chief Executive Officer and Treasurer
of the Bank since 1985. He is President of Tanglewood, a 4H camp, a trustee of
Northeast Healthcare and a member of the Rockland Rotary.
ROBERT W. SPEAR, the Vice Chairman of the Board, owns and operates Spear Farm,
Inc., a 450 acre dairy and crop operation. Mr. Spear is Chairman of the Board of
Selectmen for the Town of Nobleboro, Maine, and is State Representative for
District 79 in the Maine House of Representatives.
WAITE W. WESTON, the Chairman of the Board, owns and operates Weston's Hardware,
a family business that has been in existence since 1921.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
As required by Section 14 of Article 11 of the Holding Company's bylaws,
the Board of Directors shall act as a nominating committee for selecting
nominees for election as directors. Except in the case of a management nominee
substituted as a result of the death or other incapacity of a management
nominee, the nominating committee shall deliver written nominations to the
Secretary at least 20 days prior to the date of the Meeting. Upon delivery,
- 6 -
<PAGE>
such nominations shall be posted in a conspicuous place in the offices of the
Holding Company. No nominations for directors except those made by the
nominating committee shall be voted upon at the Meeting unless other nominations
by shareholders are made in writing and delivered to the principal executive
offices of the Holding Company not less than 30 nor more than 90 days prior to
the date of the Meeting. In the event that less than 40 days prior notice or
public disclosure of the date of the Meeting is given to shareholders,
nominations by shareholders must be delivered to the principal executive offices
no later than the close of business on the tenth day following the day on which
notice of the annual meting was given. Upon delivery, such nominations shall be
posted in a conspicuous place in the offices of the Holding Company. Ballots
bearing the names of all persons nominated by the nominating committee and by
shareholders shall be provided for use at the Meeting. However, if the
nominating committee shall fail or refuse to act at least 20 days prior to the
Meeting, nominations for directors may be made at the Meeting by any shareholder
entitled to vote and shall be voted upon.
During the Holding Company's fiscal year ended March 31, 1996, the Board of
Directors held 15 regular meetings. The directors of the Holding Company do not
receive any fees from the Holding Company for attendance at these meetings.
The Chairman and Vice Chairman of the Board of Directors of the Bank
receive annual retainers of $2,000 and $1,000, respectively. Directors of the
Bank receive $250 for each board meeting attended, and $50 for each committee
meeting attended. Committee appointments are made yearly in August of the given
fiscal year. The Bank's Board of Directors met 15 times during the fiscal year
ended March 31, 1996. With the exception of Mr. Winchenbach, whose absences were
excused, each director attended at least 75% of the aggregate number of meetings
of the Board of Directors and all committees of which such director was a
member.
The Board of Directors has a standing Security Committee which is
responsible for assessing the adequacy of the value of real estate pledged as
collateral for mortgage loans. The Security Committee consists of Messrs. Spear,
Orff, Dolloff and Winchenbach. During the fiscal year, the Security Committee
met 39 times. The Bank also has an Executive Committee which consists of Messrs.
Winchenbach, Spear, Weston and Richardson. The Executive Committee, when the
Board of Directors is not in session, has and may exercise all of the authority
of the Board of Directors except that the Executive Committee shall not have the
authority of the Board of Directors with reference to: the declaration of
dividends; the amendment of the charter or bylaws of the Bank; recommending to
the shareholders a plan of merger, consolidation, or conversion; the sale, lease
or other disposition of all or substantially all of the property and assets of
the Bank otherwise than in the usual and regular course of its business; a
voluntary dissolution of the Bank; a revocation of any of the foregoing; or the
approval of a transaction in which any member of the Executive Committee,
directly or indirectly, has any material beneficial interest. During the fiscal
year, the Executive Committee met 12 times.
The full Board of Directors functions as the Holding Company's audit
committee. The audit committee ensures that internal controls are adequate and
that financial disclosures made by management portray the Holding Company's and
the Bank's financial condition and results of operations. The committee also
maintains contact with, and nominates the independent auditor.
- 7 -
<PAGE>
Finally, the Bank has a Compensation Committee which is responsible for
establishing guidelines for management and employee compensation. The
Compensation Committee met once during the fiscal year ended March 31, 1996. The
Compensation Committee consists of Ms. Crowe and Messrs. Prock, Orff and
Richardson. Mr. Richardson abstains from voting on all matters relating to his
compensation.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
ROBERT E. CARTER, JR., 45, has been Vice President of the Bank since 1988 and
Vice President of the Holding Company since its incorporation. Mr. Carter is a
former director of the Waldo Theatre and serves on community scholarship
committees.
CLARICE J. GIUSANI, 71, has served as Vice President and Secretary of the
Holding Company since its incorporation.
REMUNERATION
During the fiscal year ended March 31, 1996, the Holding Company did not
pay any compensation to its officers and directors.
The following table provides certain summary information concerning
compensation paid or accrued by the Bank to or on behalf of the Holding
Company's President, Treasurer and Chief Executive Officer for the last three
fiscal years ended March 31, 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------- -----------------------------------------------------------
AWARDS PAYOUTS
------------------------ -----------
SECURITIES
OTHER RESTRICTED UNDERLYING
NAME AND PRINCIPAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1) AWARD(S) SARS PAYOUTS (2) COMPENSATION (3)
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S> <S> <S> <C>
Wesley E. Richardson 1996 $82,067 $ 8,730 $3,600 N/A N/A N/A $1,584
President, Treasurer 1995 $77,422 $12,600 $3,600 N/A N/A N/A $1,284
and C.E.O. 1994 $73,039 $ 8,900 $3,600 N/A N/A N/A $1,763
(1) The Bank furnishes an annual mileage allowance for Mr. Richardson.
(2) Neither the Holding Company nor the Bank has a Long-term Incentive Plan.
(3) Includes amounts paid on behalf of Mr. Richardson for group life insurance
and medical coverage. In addition, the Bank makes an annual contribution to its
benefit plan on behalf of Mr. Richardson and all other eligible employees. The
plan administrator, Financial Institutions Retirement Fund, is unable to
determine the contribution made by the Bank attributable to Mr. Richardson or
any other employee individually. See discussion under "Pension Plan."
</TABLE>
- 8 -
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16 of the Exchange Act requires the Holding Company's executive
officers and directors, and any person owning more than ten percent (10%) of a
class of the Holding Company's stock, to file certain reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC"). Based
solely upon a review of the reports filed with the SEC and furnished to the
Holding Company, as well as information furnished to the Holding Company by
various reporting persons, the Holding Company believes it has complied fully
with Section 16. The Holding Company is aware of no other transactions during
the fiscal year ended March 31, 1996 giving rise to filing obligations under
Section 16(a) as to which filings were not timely made.
EMPLOYMENT AGREEMENT
On March 31, 1993, the Bank and the Holding Company entered into an
employment agreement with Wesley E. Richardson as President of the Bank and the
Holding Company. The employment agreement provides for an automatic extension
for an additional year on each anniversary date of the employment agreement,
commencing with the second anniversary date, unless contrary notice is given by
the Bank, the Holding Company or Mr. Richardson. The base salary payable to Mr.
Richardson under the employment agreement for fiscal year 1996 was $82,067. The
employment agreement also provides for participation in discretionary bonuses,
stock option, retirement and other benefit plans.
In addition, the employment agreement provides for a severance payment
equal to 2.99 times the average annual compensation paid to Mr. Richardson and
includable in his gross income, for federal income tax purposes, during the five
calendar years preceding the taxable year in which the date of termination
occurs in the event of termination of employment by Mr. Richardson for "good
reason" following a change in control of the Holding Company or the Bank. "Good
reason" includes a breach by either the Holding Company or the Bank of the
agreement and, subsequent to a change in control of the Holding Company or the
Bank, the assignment of Mr. Richardson to duties inconsistent with those
performed immediately prior to the change in control, a change in Mr.
Richardson's reporting responsibilities, title of office, a reduction in annual
salary or failure of the Bank or the Holding Company to continue for him any
bonus, benefit or compensation plan. The term "change in control" as defined in
the agreement includes, but is not limited to, the following: (1) the
acquisition of beneficial ownership by certain individuals of 25% or more of the
combined voting power of the Holding Company's or the Bank's then outstanding
securities; and (2) during any period of two consecutive years, a change in the
majority of the Board of Directors of the Holding Company or the Bank for any
reason unless the election of each new director was approved by at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
If Mr. Richardson terminates his employment for good reason following a
change in control, such severance payments will be paid in a lump sum on or
before the fifth day following the date of termination. However, if the
severance payment would be deemed to constitute an "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the severance payment will be reduced to the extent necessary to ensure
that no portion of the severance payment is subject to the excise tax imposed by
Section 4999 of the Code.
- 9 -
<PAGE>
If Mr. Richardson terminates his employment at any time for breach of
contract by the Bank or the Holding Company, which termination is not preceded
by a change of control, or the Bank or the Holding Company terminates his
employment for other than just cause, he will receive periodic severance
payments over a period not to exceed two years in the amount not to exceed 2.99
times his current salary in effect at the date of termination.
The agreement with Mr. Richardson, to the extent that it increases the cost
of any acquisition of control of the Holding Company, could be deemed to have an
anti-takeover effect. Assuming that Mr. Richardson continues to earn his current
base salary, his maximum severance payments upon a change in control will
approximate $383,040. As a result, the agreement may tend to perpetuate existing
management by discouraging takeover attempts which may be deemed by certain
shareholders to be in their best interest and which might be at prices in excess
of the then current market value of the common stock.
CERTAIN TRANSACTIONS AND RELATIONSHIPS WITH MANAGEMENT AND OTHERS
The Bank has extended real estate or consumer loans to certain of its
directors, officers and employees. These loans are made in the ordinary course
of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time of comparable transactions with
other persons and, in the judgement of management, do not involve more than the
normal risk of noncollectibility or other unfavorable features. In this regard,
extension of credit to executive officers and directors is in full compliance
with Section 22(h) of the Federal Reserve Act.
PENSION PLAN
The Bank maintains a qualified, noncontributory, defined benefit pension
plan (the "Pension Plan") for the benefit of its employees. The Pension Plan is
administered by the Financial Institutions Retirement Fund. All employees
participate in the Pension Plan upon the attainment of age 21 and the completion
of one year of service. Retirement benefits are fully vested after five years of
service or age 65. There are no deductions for Social Security or other offset
amounts under the Pension Plan.
Beginning July 1, 1991, the Pension Plan changed to an integrated plan with
Social Security. The current plan uses the year of birth of a participant
employee as an additional factor in calculating the retirement benefit, along
with the highest five consecutive years' average salary, and the number of years
of benefit service.
The Pension Plan provides an early retirement allowance for participants
who commence benefits prior to age 65 after becoming partially or fully vested.
The vested accrued benefit otherwise payable at age 65 is reduced by applying an
early retirement factor based on the participants age and vesting service when
payments begin. Provisions in the Pension Plan allows for benefits to be delayed
after age 65.
The Pension Plan is qualified under Section 401(a) of the Code and is being
administered in accordance with all applicable legal requirements.
- 10 -
<PAGE>
The Bank makes contributions in an amount sufficient to fund the Pension
Plan's normal cost of pension benefits and the one-year term cost of death and
disability benefits and to amortize unfunded accrued liabilities to the extent
required by law.
The following table illustrates annual pension benefits for a participant
retiring in 1996 at age 65, for various levels of compensation and years of
service.
ANNUAL PENSION BENEFITS BASED ON YEAR OF SERVICE
<TABLE>
<CAPTION>
AVERAGE
COMPENSATION 15 YEARS 20 YEARS 30 YEARS 40 YEARS
------------ -------- -------- -------- --------
<C> <C> <C> <C> <C>
$ 20,000 $ 3,000 $ 4,000 $ 6,000 $ 8,000
40,000 7,124 9,500 14,248 18,998
60,000 11,624 15,500 23,248 30,998
80,000 16,124 21,500 32,248 42,998
100,000 20,624 27,500 41,248 54,998
</TABLE>
Estimated annual retirement benefits under the Bank's pension plan at the
normal retirement date computed upon the basis of present salary level would be
$22,292 for Mr. Richardson. Mr. Richardson presently has 12 years of service for
purposes of the Pension Plan.
401(K) PLAN
On April 21, 1994, the Bank adopted a 401(k) plan for the benefit of the
Bank's employees. The Plan is a tax-exempt, trusteed savings plan sponsored by
the Financial Institutions Thrift Plan. Generally, an employee is eligible to
become a Participant on the first day of the month after she completes one year
of employment and becomes 21 years of age. Participants may elect to make
personal contributions from 1% to 15% of their eligible compensation to the
Plan. The Bank is not required to make any contributions, but may, in its sole
discretion, make an annual supplemental contribution for any year.
STOCK OPTION PLAN
The Holding Company has in effect an Option Plan, under which an amount
equal to 10% of the common stock of the Holding Company is reserved from the
authorized but unissued common stock of the Holding Company for future issuance
upon exercise of stock options granted to certain key employees and to directors
of the Holding Company and the Bank from time to time. The purpose of the Option
Plan is to encourage the retention of such key employees and directors by
facilitating their purchase of a stock interest in the Holding Company. The
Option Plan is intended to provide for the granting of "incentive stock options"
under Section 422A of the Code to employees and non-incentive stock options to
directors who are not employees of the Holding Company or the Bank.
- 11 -
<PAGE>
The Option Plan is administered by the Option Committee of the Holding
Company's Board of Directors. The Committee selects the employees from the Bank
and the Holding Company to whom options are to be granted and the number of
shares to be granted.
Employees selected by the Committee receive, at no cost to them, options
under the Option Plan. The option exercise price will be equal to the fair
market value of the shares on the date of the grant, and no option will be
exercisable after the expiration of 10 years from the date it is granted. The
fair market value of the shares will be determined by the Options Committee as
specified in the Option Plan. The optionee cannot transfer or assign any option
other than by will or in accordance with the laws of decent and distribution,
and the option may be exercised only by the employee during the employee's
lifetime. Section 422A of the Code limits option grants by providing that during
the term of the Option Plan, no grant may be made to any employee owning more
than 10% of the shares unless the exercise price is at least 110% of the shares'
fair market value and such option is not exercisable more than five years
following the option grant. The aggregate fair market value of the stock for
which any employee may be granted options in any calendar year may generally not
exceed $100,000 plus any "unused limit carryover" ($50,000 per year for each
prior year of employment up to three years).
The Holding Company receives no monetary consideration for granting
incentive stock options. Upon the exercise of options, the Holding company
receives payment from optionees in exchange for shares issued. Payment may be
made by cash, shares of common stock or a combination of both.
No federal income tax consequences will be incurred by the Holding Company
at the time incentive stock options are granted or exercised, unless the
optionee incurs liability for ordinary income tax treatment upon exercise of the
option, as discussed below, in which case the Holding Company would be entitled
to a deduction equal to the optionee's ordinary income attributable to the
options. Provided the employee holds the shares received on exercise of the
stock option for the longer of two years after the option was granted or one
year after it was exercised, the optionee will realize capital gain (or loss)
equal to the proceeds on disposition less the option exercise price paid for
shares. However, if the employee sells the shares prior to the expiration of the
holding period, the employee must recognize compensation income (and the Holding
Company may deduct compensation expense) in the year of disposition equal to the
difference between the fair market value of the shares on the date of exercise
and the exercise price (not to exceed the gain determined without regard to
these rules). In this situation any appreciation between the exercise of the
options and the ultimate disposition will also be recognized as capital gain
upon disposition.
In addition to the tax consequences discussed above, the excess of the
option price over the fair market value of the optioned stock at the time of the
option exercise is required to be treated by an incentive optionee as an item of
tax preference for purposes of the alternative minimum tax.
The Holding Company has granted options to purchase an aggregate of 6,885
shares of common stock of the Holding Company to non-employee members of the
Board of Directors of the Holding Company. Options with respect to 395 shares
have been granted to Mr. Richardson and options with respect to 5,091 shares
have also been granted to other executive officers and
- 12 -
<PAGE>
employees as a group. These options are exercisable at a price per share ranging
from $7.40 to $14.05.
The following table provides information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of last year:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FY-END (#) FY-END
ON VALUE EXERCISABLE/ EXERCISABLE
NAME EXERCISE (#) REALIZED UNEXERCISABLE (1) UNEXERCISABLE
---- ------------ -------- ----------------- -------------
<S> <S> <C> <C> <C>
Wesley E. Richardson N/A $ N/A 395 $ 2,635 (2)
1. All of Mr. Richardson's stock options are immediately exercisable.
2. Based upon a market price of $17.88 per share at March 31, 1996, minus the
exercise price.
</TABLE>
PROPOSAL 2 - RATIFICATION OF BAKER, NEWMAN & NOYES AS INDEPENDENT AUDITORS
Article VII of the Holding Company's bylaws provides that the Holding
Company shall be subject to an annual audit as of the end of its fiscal year by
independent public accountants appointed by and responsible to the Board of
Directors. The Board of Directors has appointed the accounting firm of Baker,
Newman & Noyes to perform such annual audit and recommends a vote FOR the
ratification of such appointment.
A representative of Baker, Newman & Noyes will be present at the Meeting.
The representative will have an opportunity to make a statement, if so desired,
and will be available to answer appropriate questions.
Nearly all fees paid to Baker, Newman & Noyes during the year ended March
31, 1996 were for services performed in connection with examination of the
Holding Company's consolidated financial statements. Baker, Newman & Noyes also
prepared the Holding Company's United States Corporation Income Tax Return and
Maine Corporate Income Tax Return. The Board of Directors specifically
authorized Baker, Newman & Noyes to perform such functions.
Neither of the reports of the Company's independent auditors on its
financial statements for either of the past two years contained an adverse
opinion or a disclaimer of opinion, nor were such reports qualified or modified
as to uncertainty, audit scope or accounting principles.
- 13 -
<PAGE>
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Holding Company's Annual Report to Shareholders for the year
ended March 31, 1996 was mailed to shareholders in conjunction with the mailing
of the Proxy Statement. Additional copies of the Holding Company's Annual Report
to Shareholders may be obtained by written request to the Vice President of the
Holding Company at the address indicated below. Such Annual Report is part of
the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST OF ANY PERSON WHO, ON THE RECORD DATE, WAS
RECORDED OWNER OF THE HOLDING COMPANY'S COMMON STOCK OR WHO REPRESENTS IN GOOD
FAITH THAT HE OR SHE WAS ON SUCH DATE THE BENEFICIAL OWNER OF SUCH STOCK
ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS, THE HOLDING COMPANY WILL
FURNISH TO SUCH PERSONS, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM
10-KSB FOR THE FISCAL YEAR ENDED MARCH 31, 1996, AND THE EXHIBITS THERETO
REQUIRED TO BE FILED WITH THE SEC UNDER THE EXCHANGE ACT. ANY SUCH REQUEST
SHOULD BE MADE IN WRITING TO ROBERT E. CARTER, JR., MID-COAST BANCORP, INC.,
1768 ATLANTIC HIGHWAY, BOX 589, WALDOBORO, MAINE 04572. THE FORM 10-KSB IS NOT
PART OF THE PROXY SOLICITATION MATERIALS.
- 14 -
<PAGE>
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF MID-COAST BANCORP, INC.
UNDERSIGNED Shareholder(s) of MID-COAST BANCORP, INC. (the "Corporation"),
1768 Atlantic Highway, Waldoboro, Maine 04572, hereby appoint(s) Waite W. Weston
and Robert W. Spear as their designees and each of them, with full powers of
substitution, proxies of the undersigned to cast all votes which the undersigned
would be entitled to vote at the Annual Meeting of the Shareholders of the
Corporation to be held at 3:00 p.m. on July 18, 1996 at the Samoset Resort ,
Rockport, Maine, and all adjournments thereof, with all powers undersigned would
possess if personally present, and particularly (without limiting the generality
of the foregoing) to vote and act.
1. Election of the following Directors for three year terms: Samuel Cohen,
Ronald E. Dolloff, Lincoln L. Orff.
<TABLE>
<S> <S> <S>
FOR all nominees WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority to vote for any
listed above (except as to vote for all nominees individual nominee, write that nominee's name on the
marked to the contrary.) listed above. space provided below.)
[ ] [ ] ____________________________________________________
</TABLE>
2. Proposal to ratify the appointment of Baker, Newman & Noyes as the
Corporation's independent certified public accountants for fiscal year 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE: THE CORPORATION KNOWS OF NO OTHER BUSINESS TO COME BEFORE THE MEETING.
The Proxy Holders intend to vote FOR the Directors and proposals listed
herein unless marked to the contrary. If any other business should come before
the meeting, this Proxy will be voted in accordance with the best judgement of
the Proxy Holders. This Proxy will be used only at the July 18, 1996 Annual
Meeting or any adjournment(s) thereof.
Undersigned hereby acknowledge(s) receipt of the Notice of Annual Meeting
of Shareholders and accompanying Proxy Statement dated June 7, 1996 prior to
signing this Proxy.
The Board of Directors recommends a vote FOR all matters to be voted on.
Please sign, date and return today in the envelope provided. PLEASE SIGN EXACTLY
AS SHOWN ON THE REVERSE SIDE OF THIS PROXY. ONLY ONE SIGNATURE IS NEEDED FOR
JOINT OWNERSHIP.
_______________________________________
Signature
_______________________________________
Signature
_______________________________________
Date
[ ] I (We) plan to attend the annual meeting.
