[LETTER TO RECOGNITION AND RETENTION PLAN ("RRP") PARTICIPANTS]
June 5, 1998
To: All Recognition and Retention Plan ("RRP") Participants
Re: Annual Meeting of Shareholders to be held on June 15, 1998
----------------------------------------------------------
As you know, Mid-Coast Bancorp, Inc. (the "Company"), established a new
benefit plan and trust for the benefit of eligible employees of the Company
and the Bank. This Plan is known as the Recognition and Retention Plan of
Mid-Coast Bancorp, Inc. or the "RRP." Shares of the Company's common stock
(the "Common Stock") were purchased by the RRP, and are held in trust by its
trustee Merrill Merchants Bank (the "Trustee"). The RRP allows its
participants to have certain voting rights at the Company's shareholder
meetings with respect to shares of Common Stock held by the Trustee.
In connection with the Annual Meeting of Shareholders of Mid-Coast
Bancorp, Inc. to be held on July 15, 1998, enclosed are the following
documents:
1. Confidential Voting Instruction card for the RRP;
2. Proxy Statement dated June 5, 1998, including a Notice of the
1998 Annual Meeting of Shareholders; and
3. 1998 Annual Report to Shareholders
As a participant in the RRP, you have the right to direct the Trustee
how to vote the shares awarded to you under the RRP as of June 1, 1998, the
record date for the Annual Meeting (the "Record Date"), on the proposals to
be voted on by the Company's Shareholders.
Each RRP participant has the right to specify how the RRP Trustee
should vote the shares awarded to such participant under the RRP as of the
Record Date. In general, the Trustee will vote the shares awarded to you by
casting votes FOR, AGAINST or ABSTAIN with respect to each proposal as you
specify on the Confidential Voting Instruction card accompanying this
letter. The number of shares awarded to you under the RRP are shown on the
enclosed Confidential Voting Instruction card.
The Trustee's fiduciary duties require it to vote any shares not yet
awarded under the RRP, in a manner determined to be prudent and solely in
the interest of the RRP participants and beneficiaries. With respect to
shares of Common Stock not yet awarded under the RRP, the Trustee will, to
the extent consistent with its fiduciary duties, vote such shares in a
manner calculated to most accurately reflect the instructions received from
other participants in the RPP. If you do not direct the Trustee how to vote
the shares awarded to you under the RRP, such shares will not be voted.
* * * * *
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the
Trustee. You should then seal the completed card in the enclosed envelope
and return it directly to the Trustee using the postage-paid return envelope
provided. The Confidential Voting Instruction card must be received by the
Trustee no later than July 10, 1998.
Please note that the voting instructions of individual participants are
to be kept confidential by the Trustee, who has been instructed not to
disclose them to anyone at the Bank or the Company. If you have any
questions regarding your voting rights or the terms of the RRP, please call
Bob Carter at (207) 832-7521.
Very truly yours,
The Compensation Committee of
Mid-Coast Bancorp, Inc.
Enclosures
[PROXY STATEMENT]
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 15, 1998
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 15th day of July, 1998 at the
Samoset Resort, Rockport, Maine, for the following purposes:
1. To vote upon the election of one director for a three-year term;
2. To ratify the appointment of Baker Newman & Noyes as Independent
Auditors to Bancorp for the fiscal year ending March 31, 1999; 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 1, 1998.
By Order of the Board of Directors,
/s/ WESLEY E. RICHARDSON
WESLEY E. RICHARDSON
President and Chief Executive Officer
June 5, 1998
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.
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 15, 1998, and at
any adjournment(s) or postponements 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 5, 1998.
RECORD DATE; VOTE REQUIRED FOR APPROVAL; SHAREHOLDER PROPOSAL
All persons who were shareholders of Bancorp at the close of business
on June 1, 1998 (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 712,449 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 votes cast
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
or, in the absence of such direction, as determined by a majority of the
Board of Directors. Each shareholder shall have one vote for each share of
stock owned of record as of the Record Date.
A shareholder giving a proxy generally has the power to revoke the
proxy at any time before it is exercised by delivering to the Secretary of
the Holding Company (Dianne Y. Lawrence, 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.
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 5,
1999. 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 15, 1998.
<TABLE>
<CAPTION>
Amount and Nature Percent
Name and Address of Beneficial Owner of Beneficial Ownership of Class
- ------------------------------------ ----------------------- --------
<S> <C> <C>
Wesley E. Richardson 37,200 (1) 5.22
893 North Pond Road
Warren, Maine 04864
<FN>
- -------------------
<F1> Includes 1,185 shares of common stock subject to options granted to
Mr. Richardson, all of which are immediately exercisable. Also
includes 7,200 shares granted under the Recognition and Retention
Plan of Mid-Coast Bancorp, Inc.
</FN>
</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 15, 1998.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1)(2) OF CLASS
- ---------------------- --------------- --------
<S> <C> <C>
Robert E. Carter, Jr. 8,175 (3) 1.15
Samuel Cohen 27,003 (4) 3.79
Sharon E. Crowe 6,144 (5) 0.86
Ronald E. Dolloff 9,066 (6) 1.27
Lincoln O. Orff 24,909 (7) 3.50
Wesley E. Richardson 37,200 (8) 5.22
Robert W. Spear 17,484 (9) 2.45
Waite Weston 12,885 (10) 1.81
Total owned by directors and executive
officers as a group (8 persons) 142,866 19.94
<FN>
- -------------------
<F1> All shares are held individually unless otherwise indicated.
<F2> Includes restricted stock awards of 900 shares of Common Stock made to
each of the outside directors under the Recognition and Retention Plan
of Mid-Coast Bancorp, Inc. ("RRP"). Under the RRP, Messrs.
Richardson and Carter were also granted restricted stock awards of
7,200 and 4,200 shares of common stock, respectively. Each recipient
of a restricted stock award has sole voting, but no investment power,
over the shares of common stock covered by the award. The restricted
stock awards vest in 20% increments on an annual basis, with the first
installment vesting on April 1, 1998.
<F3> Includes 978 shares held individually by spouse, for which Mr. Carter
disclaims beneficial ownership, 789 shares held by his son, over which
Mr. Carter exercises voting and investment control, 504 shares held by
another son, over which Mr. Carter exercises voting and investment
control, and 537 stock options which are exercisable within 60 days.
<F4> Includes 26,103 shares held jointly with spouse.
<F5> Includes 1,779 options which are exercisable within 60 days.
<F6> Includes 8,166 shares held jointly with spouse.
<F7> Includes 24,009 shares held jointly with spouse.
<F8> Includes 7,956 shares held jointly with spouse, 3,612 shares held
individually by spouse, for which Mr. Richardson disclaims beneficial
ownership, and 1,185 stock options which are immediately exercisable.
<F9> Includes 6,195 shares held jointly with spouse, 768 shares held
individually by spouse and 1,149 stock options which are exercisable
within 60 days.
<F10> Includes 9,534 shares held jointly with spouse.
</FN>
</TABLE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The following table shows the name, age, and position during the past
five years of the nominee for election as director and the length of time he
has served as a director. The term 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 person named in
the following table to be director of the Holding Company for a three-year
term, and until his successor is 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.
Nominee for Three-Year Term Expiring 2001
<TABLE>
<CAPTION>
Director
Age Since Position
--- -------- --------
<S> <C> <C> <C>
Wesley E. Richardson 55 1989 Director
</TABLE>
WESLEY E. RICHARDSON, has been President, Chief Executive Officer and
Treasurer of the Bank since 1985. He is Vice President of Tanglewood, a 4H
camp, a trustee of Northeast Healthcare and a member of the Rockland Rotary.
While management has no reason to believe that the nominee for the office of
director will, prior to the date of the meeting, refuse or become unable to
accept the nomination, if 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.
DIRECTORS WHO WILL CONTINUE IN OFFICE AFTER THE MEETING
<TABLE>
<CAPTION>
Director Term
Name Since* Expires Age
------------------ -------- ------- ---
<S> <C> <C> <C>
Samuel Cohen 1990 1999 57
Sharon E. Crowe 1994 2000 43
Ronald E. Dolloff 1988 1999 61
Lincoln O. Orff 1990 1999 66
Robert W. Spear 1976 2000 57
Waite W. Weston 1967 2000 57
<FN>
- -------------------
<F*> Includes service as director of the Bank prior to the formation of`the
Holding Company.
</FN>
</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.
SHARON E. CROWE, since 1988, has served as the Director of Safety for Crowe
Rope Company and is currently employed in the field of public relations and
marketing by Sebasticook Valley Hospital. In addition, she operates a
consulting firm specializing in safety and employee relations issues. Ms.
Crowe is a member and recent past president of Rockland Rotary Club and is a
Rotary International Paul Harris Fellow. She is also an alumnus of the
Leadership Maine Program.
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. Mr.
Dolloff is a former selectman, assessor and acting Town Manager of Waldoboro
and currently serves as treasurer, organist and minister of the Waldoboro
United Methodist Church.
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 served 34 years as First Selectman of Jefferson and he also serves
as the secretary of The Windsor Agricultural Fair.
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 59 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 II of the Holding Company's
bylaws, only persons who are nominated in accordance with the procedures set
forth in section 14 shall be eligible for election as directors. No
nominations for directors (except those made by or at the direction of the
board of directors) shall be voted upon at the Meeting unless shareholders
submit in writing and deliver such nominations 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,
written 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 meeting was given.
During the Holding Company's fiscal year ended March 31, 1998, the
Board of Directors held 21 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 21 times and
during the fiscal year ended March 31, 1998, 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, and Dolloff. During the fiscal year, the Security Committee met
50 times.
The Bank also has an Executive Committee which consists of Messrs.
Spear, Weston, Dolloff, Cohen and Richardson. The Executive Committee, when
the Board of Directors is not in session, may exercise certain powers of the
Board of Directors. During the fiscal year, the Executive Committee met 11
times.
The Holding Company's audit committee consists of Messrs. Weston,
Spear, and Orff. 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.
Finally, the Bank has a Compensation Committee which is responsible
for establishing guidelines for management and employee compensation. The
Compensation Committee met eight times during the fiscal year ended March
31, 1998. The Compensation Committee consists of Ms. Crowe and Messrs. 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., 47, has been Vice President of the Bank since 1988
and Vice President of the Holding Company since its incorporation. Mr.
Carter is a director of Mid-Coast Childrens Services, a pre-school agency
for children with special needs, President of Knox Suburban Little League,
secretary of Medomak Valley High School All Sports Boosters and serves on
local community scholarship committees.
Executive Compensation
During the fiscal year ended March 31, 1998, 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, 1998.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------- ------------------------------------------------------
Awards Payouts
----------------------- ----------
Securities
Other Restricted Underlying
Name and Annual Stock Options/ LTIP All Other
Principal Position Year Salary Bonus Compensation(1) Award(2) SARs Payouts(3) Compensation(4)
- -------------------- ---- ------- ------ --------------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wesley E. Richardson 1998 $86,991 $6,531 $3,600 $46,800 ------ ------ $2,195
President, Treasurer 1997 $82,067 ----- $3,600 ------ ------ ------ $2,637
and CEO 1996 $82,067 $8,730 $3,600 ------ ------ ------ $1,584
<FN>
- -------------------
<F1> Includes an annual mileage allowance for Mr. Richardson.
<F2> Pursuant to the RRP, Mr. Richardson was awarded 7,200 shares of
restricted stock, as of July 16, 1997, which vest in 20% increments on
an annual basis, with the first installment vesting on April 1, 1998.
The dollar amounts shown in the table of 1998 are based on the closing
price of a share of common stock on July 16, 1997, which was $6.50.
The aggregate fair market value of the restricted stock awards made
to Mr. Richardson was $99,562 at March 31, 1998, based on a closing
price of $13.828 per share. Dividends attributable to such shares are
paid to individuals on the payment date for such dividends.
<F3> Neither the Holding Company nor the Bank has a Long-term Incentive
Plan
<F4> 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, Pentegra, formerly
known as 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."
</FN>
</TABLE>
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").
Director Weston failed to file a Form 4 in a timely manner reporting
the purchase of 1,500 shares of common stock. The transaction has been
reported on Form 5, and Director Weston is now current in his Section 16(a)
filings.
Mr. Lincoln Davis, III, a former director failed to file a Form 4 in a
timely manner reporting the sale of 1,500 shares of common stock. The
transaction has been reported on Form 5, and Mr. Davis is now current in his
Section 16(a) filings.
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
that all other Section 16(a) filing requirements were complied with.
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 1998 was $86,991. 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; or (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.
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 $240,148. 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 Pentegra. 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.
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 1997 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
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 20,000 $ 3,000 $ 4,000 $ 6,000 $ 8,000
40,000 6,693 8,924 13,387 17,849
60,000 11,193 14,924 22,387 29,849
80,000 15,693 20,924 31,387 41,849
100,000 20,193 26,924 40,387 53,849
</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 $24,860 for Mr. Richardson. Mr. Richardson presently has 14 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. Beginning in July 1996, the Bank approved a
matching contribution to Participants in the 401(k) Plan. The Bank matches
50% of the first 6% invested by the Participant employee.
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.
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
4,278 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
1,185 shares have been granted to Mr. Richardson and options with respect to
6,783 shares have also been granted to other executive officers and
employees as a group. These options are exercisable at a price per share
ranging from $2.47 to $4.68.
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 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 Unexercisable
- -------------------- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Wesley E. Richardson ------ ------- 1,185/0 (1) $11,966 (2)
<FN>
- -------------------
<F1> All of Mr. Richardson's stock options are immediately exercisable.
<F2> Based upon a market price of $13.828 at March 31, 1998, minus the
exercise price.
</FN>
</TABLE>
Recognition and Retention Plan
The RRP was adopted by the Board of Directors of the Holding Company
and approved by its shareholders at the 1997 Annual Meeting. Similar to the
Option Plan, the RRP functions as a long-term incentive compensation program
for eligible officers, employees and outside directors of the Holding
Company. The RRP is administered by the members of the Board's Compensation
Committee who are disinterested directors ("Compensation Committee"). All
costs and expenses of administering the RRP are paid by the Holding Company.
As required by the terms of the RRP, the Holding Company has
established a trust ("Trust") with Merrill Merchants Bank and will
contribute, or cause to be contributed, to the Trust, from time to time,
funds sufficient to purchase up to 27,621 shares of Common Stock, the
maximum number of restricted stock awards ("Restricted Stock Awards") that
may be granted under the RRP. Shares of Common Stock subject to a
Restricted Stock Award are held in the Trust until the Award vests at which
time the shares of Common Stock attributable to the portion of the Award
that have vested are distributed to the Award holder. An Award recipient is
entitled to exercise voting rights and receive cash dividends with respect
to the shares of Common Stock subject to his Award, whether or not the
underlying shares have been vested. Restricted Stock Awards are granted
under the RRP on a discretionary basis to eligible officers and executives
selected by the Compensation Committee and are awarded to outside directors
pursuant to the terms of the RRP. Following shareholder approval of the
RRP, on July 16, 1997, the President and Chief Executive Officer of the
Holding Company, as well as the Vice President of the Holding Company were
granted Restricted Stock Awards with respect to 7,200 and 4,200 shares of
Common Stock, respectively. On July 16, 1997, each outside director was
granted a Restricted Stock Award with respect to 900 shares of Common Stock.
All outstanding Restricted Stock Awards to outside directors will vest and
become distributable at the rate of 20% per year, over a five year period,
commencing on April 1, 1998, subject to automatic full vesting on the date
of the Award holder's death, disability or upon a change in control of the
Holding Company. Restricted Stock Awards to eligible employees will vest
and become distributable at a rate determined by the Compensation Committee
at the time of the grant, subject to automatic full vesting on the date of
the Award holder's death, disability, retirement or upon a change in control
of the Holding Company.
The Holding Company may amend or terminate the RRP, in whole or in
part, at any time, subject to the requirements of all applicable laws.
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 act as independent auditors for the Holding Company
for the fiscal year ending March 31, 1999 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.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Holding Company's Annual Report to Shareholders for the
year ended March 31, 1998 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.
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, 1998, 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.
[PROXY CARD-1]
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 Weston and Robert Spear as their designees, 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 15, 1998 at
the Samoset Resort, Rockport, Maine, and all adjournments or postponements
thereof, with all powers the undersigned would possess if personally
present, and particularly (without limiting the generality of the foregoing)
to vote and act.
1. Election of the following Director for a three year term:
Wesley E. Richardson.
FOR nominee WITHHOLD AUTHORITY
listed above to vote for nominee
listed above.
[ ] [ ]
2. Proposal to ratify the appointment of Baker Newman & Noyes as the
Corporation's independent certified public accountants for fiscal year
1999.
[ ] 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 judgment of the Proxy Holders. This Proxy will be used only at the July
15, 1998 Annual Meeting or any adjournment(s) or postponements thereof.
Undersigned hereby acknowledge(s) receipt of the Notice of Annual
Meeting of Shareholders and accompanying Proxy Statement dated June 5, 1998
prior to signing this Proxy.
The Board of Directors recommends a vote FOR all matters to be voted.
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.
[PROXY CARD-2]
MID-COAST BANCORP, INC.
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE COMPENSATION COMMITTEE
OF MID-COAST BANCORP, INC.
FOR THE RECOGNITION AND RETENTION PLAN
OF MID-COAST BANCORP, INC.
The undersigned participant of the Recognition and Retention Plan of
Mid-Coast Bancorp, Inc. (the "RRP") hereby provides the voting instructions
specified to the trustee (the "Trustee") of the RRP trust (the "RRP Trust"),
which instructions shall be taken into account by the Trustee in voting, in
person, by limited or general power of attorney, or by proxy, the shares of
common stock of Mid-Coast Bancorp, Inc. that are held by the Trustee, in its
capacity as Trustee of the RRP, as of June 1, 1998, at the 1998 Annual
Meeting of Shareholders of Mid-Coast Bancorp, Inc. to be held on July 15,
1998, and at any adjournment or postponement thereof.
As to the proposals listed on the reverse side, which are more
particularly described in the Proxy Statement dated June 5, 1998, the
Trustee will vote the common stock of Mid-Coast Bancorp, Inc. held by the
RRP Trust to reflect the voting instructions on this Confidential Voting
Instruction, in the manner described in the accompanying letter from the
Compensation Committee dated June 5, 1998.
(Continued on reverse side. Please complete, sign and date on the
reverse side and promptly return in the enclosed postage-paid envelope.)
The Board of Directors of Mid-Coast Bancorp, Inc. recommends a vote
"FOR" the nominee in Proposal No. 1 and "FOR" Proposal No. 2. If this
Confidential Voting Instruction is signed but no direction is given, this
voting instruction card will be deemed to instruct votes "FOR" the nominee
in Proposal No. 1 and "FOR" Proposal No. 2. The directions, if any, given
in this Confidential Voting Instruction will be kept confidential from all
directors, officers and employees of Mid-Coast Bancorp, Inc. or The
Waldoboro Bank.
Please mark your votes like this
[X]
1. Election of one Director for a term of three years.
Nominee: Wesley E. Richardson
To withhold authority to vote FOR the nominee, write the nominee's name in
the space provided: _________________________________________________________
FOR the nominee WITHHOLD as to the nominee
(except as otherwise indicated) [ ]
[ ]
2. Ratification of the appointment of Baker Newman & Noyes as independent
auditors of Mid-Coast Bancorp, Inc. for the fiscal year ending
March 31, 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In its discretion, the Trustee is authorized to vote upon such other
business as may come before the 1998 Annual Meeting or any adjournment or
postponement thereof or to cause such matters to be voted upon in the
discretion of the individuals named in any proxies executed by the Trustees.
All proposals listed above in this Confidential Voting Instruction were
proposed by Mid-Coast Bancorp, Inc.
The undersigned hereby instructs the Trustee to vote in accordance with
the voting instruction indicated above and hereby acknowledges receipt, prior
to the execution of this Confidential Voting Instruction, of a Voting
Instruction Letter, a Notice of the 1998 Annual Meeting of Shareholders of
Mid-Coast Bancorp, Inc., a Proxy Statement dated June 5, 1998 for the Annual
Meeting and a 1998 Annual Report to Shareholders.
Please sign and date below and return promptly in the enclosed
postage-paid envelope. Your Confidential Voting Instruction must be received
no later than July 10, 1998.
Date ______________________________________
Signature _________________________________
Signature of participant, former participant
or designated beneficiary of deceased former
participant. Please sign name exactly as it
appears herein. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title as such.
