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:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 240.14a-11(c) or [ ] 240.14a-12
MID-CENTRAL FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
MID-CENTRAL FINANCIAL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 6, 1997
Notice is hereby given that the Annual Meeting of Shareholders of
Mid-Central Financial Corporation will be held at the main office of Mid-Central
Federal Savings Bank, 520 South Jefferson Street, Wadena, Minnesota 56482, on
Monday, January 6, 1997 at 2:00 p.m., Central Standard Time, for the following
purposes:
1. To elect two directors to hold office until the 2000 Annual Meeting of
Shareholders or until successors are elected.
2. To ratify and approve amendments to the Mid-Central Financial
Corporation 1994 Stock Option Plan to (i) increase the total number of
shares of Common Stock available for issuance under such Plan from
26,038 shares to 51,038 shares and (ii) provide for an automatic grant
of non-qualified stock options to purchase 1,000 shares of Common Stock
to non-employee directors of the Company.
3. To ratify and approve the selection of independent public accountants
for the current fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on November 22,
1996 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting.
By Order of the Board of Directors,
Gary W. Sellman
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Wadena, Minnesota
December 2, 1996
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON.
SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON
IF THEY SO DESIRE.
MID-CENTRAL FINANCIAL CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Mid-Central
Financial Corporation (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company to be voted at the Annual
Meeting of Shareholders to be held on January 6, 1997, or any adjournment or
adjournments thereof. The cost of this solicitation will be borne by the
Company. In addition to the solicitation by mail, officers, directors and
employees of the Company may solicit proxies by telephone, telegraph or in
person. The Company may also request banks and brokers to solicit their
customers who have a beneficial interest in the Company's Common Stock
registered in the name of nominees and will reimburse such banks and brokers for
their reasonable out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by revocation
of a written proxy by request in person at the Annual Meeting; if not so
revoked, the shares represented by such proxy will be voted. The Company's
principal offices are located at 520 South Jefferson Street, Wadena, Minnesota
56482, and its telephone number is (218) 631-1414. The mailing of this Proxy
Statement to shareholders of the Company commenced on or about December 2, 1996.
The total number of shares of capital stock of the Company outstanding
and entitled to vote at the meeting as of November 22, 1996 consists of 233,018
shares of $.10 par value Common Stock (the "Common Stock"). Each share of Common
Stock is entitled to one vote. There is no cumulative voting for the election of
directors. The presence in person or by proxy of the holders of the shares
representing a majority of the votes entitled to be cast at the Annual Meeting
of Shareholders constitutes a quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a
meeting of shareholders generally must be approved by the affirmative vote of
the holders of a majority of the voting power of the shares present, in person
or by proxy, and entitled to vote on that item of business. However, if the
shares present and entitled to vote on that item of business would not
constitute a quorum for the transaction of business at the meeting, then the
item must be approved by a majority of the voting power of the minimum number of
shares that would constitute such a quorum. Votes cast by proxy or in person at
the Annual Meeting of Shareholders will be tabulated by the election inspectors
appointed for the meeting and will determine whether or not a quorum is present.
The election inspectors will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of the matter submitted to the
stockholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
SECURITY OWNERSHIP OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
The following table includes information as of November 22, 1996
concerning the beneficial ownership of the Common Stock of the Company by (i)
each person known to own five percent or more of the Common Stock of the
Company, (ii) each director and director nominee, (iii) the executive officer
named in the Summary Compensation Table below, and (iv) all executive officers
and directors of the Company as a group.
<TABLE>
<CAPTION>
Name of Shares Beneficially Percent
Beneficial Owner Owned(1) of Class
<S> <C> <C>
Athena Capital Management, Inc....................... 21,700(2) 9.3%
75 James Way
Southhampton, PA 18966
Tudor Trust.......................................... 19,381(3) 8.3%
233 South Beverly Drive
Beverly Hills, CA 90212
The Baupost Group, Inc............................... 13,019(4) 5.6%
P.O. Box 389125
44 Brattie Street, 2nd Floor
Cambridge, MA 02238-9125
Gary W. Sellman...................................... 12,254(5)(6) 5.2%
520 South Jefferson Street
Wadena, MN 56482
Robert D. Iken, Sr................................... 11,749(5)(7) 4.9%
Alfred H. Neitzke.................................... 10,615(5)(8) 4.5%
Michael J. Ebner..................................... 9,974(5) 4.2%
Duane J. Polman...................................... 8,474(5)(9) 3.6%
All officers and directors of the
Company as a group (6 persons) .................... 54,970(5) 22.1%
- --------------------------
</TABLE>
(1) Unless otherwise indicated, all shares are beneficially owned and the
sole voting and investment power is held by the person indicated.
(2) Based upon information included in a Schedule 13D filed with the
Securities and Exchange Commission and correspondence with Athena
Capital Management, Inc.
(3) Based upon information included in a Schedule 13D filed with the
Securities and Exchange Commission and correspondence with the Tudor
Trust.
(4) Based upon information included in a Schedule 13G filed with the
Securities and Exchange Commission. Consists of shared voting and
investment power.
(5) Includes the following numbers of shares which (i) may be purchased
pursuant to the exercise of outstanding options: Mr. Sellman, 4,630
shares; Mr. Iken, Sr., 3,906 shares; Mr. Neitzke, 1,953 shares; Mr.
Ebner, 1,953 shares; Mr. Polman, 1,953 shares; and all executive
officers and directors as a group, 15,543 shares; and (ii) were granted
pursuant to the Mid-Central Federal Savings Bank Management Recognition
and Development Plan and Trust Agreement, for which the individuals
have sole voting power and no investment power: Mr. Sellman, 938
shares; Mr. Neitzke, 313 shares; Mr. Ebner, 313 shares; Mr. Polman, 313
shares; and all offices and directors as a group, 2,190 shares.
(6) Includes 822 shares held by his wife for which he has no voting or
investment power and 1,624 shares held jointly with his wife for which
he has shared voting and investment power.
(7) Includes 1,100 shares held jointly with his wife, for which he has
shared voting and investment power, and 500 shares held by his wife,
for which he has no voting or investment power.
(8) Includes 641 shares held by his wife, for which he has no voting or
investment power.
(9) Includes 6,000 shares held jointly with his wife for which he has
shared voting and investment power.
-----------------------------------
PROPOSAL 1
ELECTION OF DIRECTORS
Two directors will be elected to the Company's Board of Directors for a
three-year term at the Annual Meeting. Pursuant to the Company's Articles of
Incorporation, the Board of Directors is divided into three classes of
directors, each serving a three-year term. Each year only one class of directors
is subject to a shareholder vote, and, with the exception of the class to be
elected in 1998, one-third of the directors belong to each class.
The Board of Directors recommends that the shareholders elect the
nominees named below as directors of the Company for the ensuing three years. It
is intended that the persons named as proxies in the enclosed form of proxy will
vote the proxies received by them for the election of the nominees named below.
Unless otherwise indicated, the nominees and the other directors named below
have held their present occupations as set forth below or have been officers
with the organization indicated for more than the past five years. The other
directors named below are presently directors of the Company and of Mid-Central
Federal Savings Bank, a federal savings bank (the "Bank"). The Bank is a
wholly-owned subsidiary of the Company. Each director named below has been a
director of the Company since December 1993, except for Gary W. Sellman, who was
elected in January 1995.
- -------------------------------------------------------------------------------
The following nominees have indicated a willingness to serve, but in
case a nominee is not a candidate at the meeting, for reasons not presently
known to the Company, the proxies named in the enclosed form of proxy may vote
for a substitute nominee in their discretion.
<TABLE>
<S> <C>
Robert D. Iken, Sr. Retired executive; President and
Age -- 64 Chief Executive Officer of the
Company from December 1993, and of
the Bank from 1963, until December
1994; previously served as Mayor
of the City of Wadena, Minnesota;
member of the Lion's Club.
Michael J. Ebner Managing Partner of M.J. Ebner Insurance
Age -- 60 Agency, Wadena, Minnesota since 1962.
- ---------------------------------------------------------------------------------------
Other director whose term of office will continue after the 1997 Annual
Meeting and whose term expires on the date of the 1998 Annual Meeting:
Gary W. Sellman President and Chief Executive Officer of
Age -- 44 the Company and the Bank since January
1995; Chief Financial Officer and
Treasurer of the Company since its
inception in December 1993 and Chief
Financial Officer of the Bank since
1992; Vice President of the Company from
1993 to January 1995 and Executive Vice
President of the Bank from 1992 to 1995;
Assistant Director of the Office of
Thrift Supervision from 1988 to 1991.
- ----------------------------------------------------------------------------------------
Other directors whose terms of office will continue after the 1997
Annual Meeting and whose terms expire on the date of the 1999 Annual Meeting:
Alfred H. Neitzke Retired owner and operator of an
Age -- 72 optometric practice in Wadena, Minnesota
from 1947 to 1995; Chairman of the Board
of Directors of the Company since its
inception in December 1993 and Chairman
of the Board of Directors of the Bank
since 1982.
Duane J. Polman Retired President and majority
Age -- 69 shareholder of Polman Transfer Inc.,
Wadena, Minnesota, a transport company;
member of the V.F.W., the American
Legion, the Elks and the Minnesota
Permit Truckers Association.
- ----------------------------------------------------------------------------------------
</TABLE>
The affirmative vote of holders of Common Stock representing a majority
of the voting power represented at the meeting is required for the election of
the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NOMINEES
---------------------------
OTHER INFORMATION REGARDING THE BOARD
MEETINGS. The Board of Directors of the Bank met 16 times during the
year ended September 30, 1996. The Board of Directors of the Company met 12
times during the year ended September 30, 1996. Each of the directors attended
at least 75% of the meetings of the Board and any Committees of which they were
members during the year ended September 30, 1996.
BOARD COMMITTEES OF THE COMPANY. The full Board of Directors will
perform the duties of an Audit Committee by investigating and monitoring
internal affairs and regulatory compliance and meet with the Company's
independent public accountants. The Board of Directors met two times in this
capacity during the year ended September 30, 1996.
The Compensation Committee, consisting of Messrs. Neitzke, Polman,
Ebner and Iken, reviews and recommends employee compensation, including
executive officer compensation, and administers the 1994 Stock Option Plan. The
Compensation Committee met one time in this capacity during the year ended
September 30, 1996.
The Company does not have a Nominating Committee.
BOARD COMPENSATION. During 1996, each director of the Bank received a
fee of $600 per month and fees in aggregate totaling $960 for special Board
meetings. The directors of the Company do not receive additional compensation
for serving on the Company's Board of Directors. Each director of the Bank also
receives $150 per meeting attended for the Loan Committee, of which two meetings
were held during 1996. Subject to shareholder approval of the proposal to amend
the Company's 1994 Stock Option Plan, each non-employee director of the Company
will be granted a ten-year, non-qualified option to purchase 1,000 shares of
Common Stock at an exercise price equal to the fair market value of the Common
Stock on the date of the shareholder approval.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth all compensation which was paid by the
Company or the Bank during the year ended September 30, 1996 to Mr. Sellman, the
Company's President and Chief Executive Officer (the "Named Executive"). None of
the Company's executive officers' cash compensation exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Restricted Securities
Stock Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Awards($) Options(#) Compensation($) (2)
<S> <C> <C> <C> <C> <C> <C>
Gary W. Sellman 1996 $69,788 $3,500 $ -0-(1) 724 $8,841
Chief Executive Officer, 1995 64,937 2,000 -0- -0- 7,129
President, Treasurer and 1994 53,062 1,900 15,620 3,906 -0-
Chief Financial Officer
</TABLE>
(1) As of September 30, 1996, Mr. Sellman held 938 shares of restricted
common stock with an aggregate value of $15,008. Dividends on the
restricted stock will be accrued and paid at the time that the
restrictions on the shares lapse. The restricted stock vests at the
rate of 20% per year.
(2) Represents the Bank's contribution for Mr. Sellman to its defined
contribution money purchase pension plan.
STOCK OPTIONS
The following table contains information concerning stock options
granted to the Named Executive:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Number of % of Total
Securities Options Exercise
Underlying Granted to Price
Options Employees in Per Expiration
Name Granted (#) Fiscal Year Share($) Date
<S> <C> <C> <C> <C>
Gary W. Sellman 724 37.6% $14.38 12/19/05
</TABLE>
STOCK OPTION EXERCISES AND HOLDINGS
The Named Executive did not exercise any stock options during the
year ended September 30, 1996. The following table sets forth information with
respect to the Named Executive concerning unexercised options held as of
September 30, 1996:
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Value of Unexercised In-the-Money
Number of Securities Options at FY-End($)
Underlying Unexercised (Based on FY-End Price
Name Options at FY-End(#) of $16.00/Share)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Gary W. Sellman 4,630 -0- $24,613 N/A
</TABLE>
CERTAIN TRANSACTIONS
The Bank makes loans from time to time to the officers and directors of
the Bank and the Company. Loans to officers and directors of the Bank and the
Company at September 30, 1996 by the Bank were $254,301. Such loans were made in
the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, except as described below, and did not involve
more than the normal risk of collectability. Prior to 1989, the Bank had a
policy of offering preferred mortgage loans to officers, directors and employees
for the financing and improvement of their personal residences. As a result of
this policy, at September 30, 1996 the Company had two remaining mortgage loans
with an unpaid principal balance of approximately $146,000 at an interest rate
of 6.125%, which was 1.25% below the prevailing market rate when originated.
-----------------------------------
PROPOSAL 2
APPROVAL OF AMENDMENTS TO COMPANY'S
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
INTRODUCTION
On December 23, 1993, the Board of Directors adopted the Mid-Central
Financial Corporation 1994 Stock Option Plan (the "Plan") and the Plan was
approved by the shareholders on January 6, 1995. On November 19, 1996, the Board
amended and restated the Plan. The purpose of the Plan is to enable the Company
and its subsidiaries to retain and attract executives, other key employees and
non-employee directors who contribute to the Company's success by their ability,
ingenuity and industry, and to enable such individuals to participate in the
long-term success and growth of the Company by giving them a proprietary
interest in the Company. The Plan authorizes the granting of awards in the form
of incentive stock options and non-qualified stock options.
PROPOSED PLAN AMENDMENTS
The Plan originally authorized the issuance of 26,038 shares of common
stock pursuant to incentive stock options and non-qualified stock options
granted under the Plan. The Board of Directors has amended the Plan, subject to
ratification and approval of the shareholders, to increase the total number of
shares available under the Plan by 25,000 shares to a total of 51,038 shares.
There were outstanding on November 22, 1996 options to purchase 18,850 shares
under the Plan and no shares have been purchased through the exercise of options
granted under the Plan. Therefore, absent shareholder approval of this amendment
to the Plan, 7,188 shares remain available under the Plan for awards. The Board
of Directors has deemed it prudent to increase the shares available for grant
under the Plan by 25,000 shares to facilitate future option grants.
The Plan originally provided for an automatic, one-time grant of a
non-qualified option to purchase 1,953 shares of stock to non-employee directors
upon the initial approval of the Plan or their initial election to the Board of
Directors. The Board of Directors has amended the Plan to provide for an
automatic one-time grant of a non-qualified stock option to purchase 1,000
shares to directors who are not employees of the Company or any subsidiary upon
shareholder approval of the Plan amendment and to any non-employee directors
elected to the Board subsequent to the date of shareholder approval of the Plan
amendment. The exercise price would be equal to the fair market value of the
stock on the date of grant and the option shall become exercisable as to 50% of
the shares granted on the date granted and 50% one year after the date the
option is granted.
SUMMARY OF THE PLAN
NUMBER OF SHARES. The maximum number of shares of common stock reserved
and available for awards under the Plan, as amended by the Board, is currently
51,038 shares (subject to possible adjustment in the event of future stock
splits or similar changes in the common stock). Shares of common stock covered
by expired or terminated stock options may be used for subsequent awards under
the Plan.
ELIGIBILITY AND ADMINISTRATION. Officers, other key employees of the
Company and subsidiaries and non-employee directors are eligible to be granted
stock options under the Plan. Approximately 12 officers and other key employees
and four non-employee directors are currently eligible to participate in the
Plan. The Plan is administered by the Board of Directors of the Company or by a
Committee appointed by the Board, consisting of at least two directors, all of
whom are "Non-Employee Directors" as defined in the Plan. The Committee has the
power to make awards, determine the number of shares covered by each award and
other terms and conditions of such awards, construe the Plan, and prescribe,
amend and rescind the rules and regulations with respect to the administration
of the Plan.
STOCK OPTIONS. The Committee may grant stock options that qualify
either as "incentive stock options" under the Internal Revenue Code or as
"non-qualified stock options" in such form and upon such terms as the Committee
may approve from time to time. Stock options granted under the Plan may be
exercised during their respective terms as determined by the Committee. The
purchase price may be paid by tendering a certified or bank check, or by any
other form of legal consideration deemed sufficient by the Committee and
consistent with the Plan's purpose and applicable law, including promissory
notes and, under certain circumstances, unrestricted stock already owned by the
optionee. If the terms of a stock option so permit, an optionee may elect to pay
all or part of the exercise price by having the Company withhold from the shares
of stock that would otherwise be issued upon exercise, that number of shares of
stock having a fair market value equal to the aggregate exercise price for the
shares with respect to which such election is made. No stock option shall be
transferable by the optionee or exercised by anyone else during the optionee's
lifetime.
Stock options may be exercised during varying periods of time after an
optionee's termination of employment by the Company and any subsidiary or parent
corporation, dependent upon the reason for the termination. Following an
optionee's death, the optionee's stock options may be immediately exercised by
the legal representative of the estate or the optionee's legatee for a period of
three years (or on such accelerated basis as the Committee shall determine at or
after grant) from the date of death or until the expiration of the stated term
of the option, whichever is less. The same time periods apply if the optionee is
terminated by reason of disability. If an optionee's employment terminates by
reason of retirement, the optionee's vested stock options may be exercised until
the expiration of the stated term of the option. If the optionee's employment
with the Company or any subsidiary or parent corporation is involuntarily
terminated without cause, the option may be exercised for the lesser of three
months or the balance of the option's term. If the optionee's employment with
the Company or any subsidiary or parent corporation is terminated for cause, as
defined in the Plan, all of the optionee's unexercised stock options immediately
terminate.
No incentive stock options shall be granted under the Plan after
December 22, 2003. The term of an incentive stock option may not exceed 10 years
from the date the stock option is granted (or 5 years if issued to an optionee
who owns or is deemed to own more than 10% of the combined voting power of all
classes of stock of the Company or any subsidiary or parent corporation). The
aggregate fair market value of the common stock with respect to which an
incentive stock option is exercisable for the first time by an optionee during
any calendar year shall not exceed $100,000. The option price per share of
common stock purchasable under a stock option shall be determined by the
Committee at the time of grant. In the event that the Committee does not
determine the exercise price per share of stock purchasable under a stock
option, the exercise price shall be the fair market value of the stock on the
date the stock option is granted. In no event shall the stock option price per
share of stock purchasable under an incentive stock option or a non-qualified
stock option be less than 100% or 85%, respectively, of the fair market value of
the stock on the date the stock option is granted (or, in the event the employee
owns or is deemed to own more than 10% of the combined voting power of all
classes of stock of the Company or any subsidiary or parent corporation, the
exercise price shall be no less than 110% of the fair market value of the stock
on the date the stock option is granted).
The Plan, as amended, also provides for the automatic granting of a
defined number of options to non-employee directors. Such options are granted to
each person who is not an employee of the Company or any subsidiary or parent
corporation and who is either (i) serving on the Board on the date of
shareholder approval of the Plan, as amended, or (ii) elected as a director by
the Board or the shareholders after the date of shareholder approval of the
Plan, as amended. Each such person shall, as of such date, automatically receive
a non-qualified option to purchase 1,000 shares of common stock with the option
price equal to the fair market value of the Company's common stock on such date.
The term of such option shall be ten years after the date of grant and will not
expire upon termination of service as a director. The options shall become
exercisable as to 50% of the shares subject to the option beginning on the date
the option is granted and the remaining 50% one year after the date the option
is granted. No stock appreciation rights shall be granted with options to
non-employee directors.
RIGHT OF REPURCHASE. The Committee may, at the time of any grant under
the Plan, provide that the shares of common stock received under the Plan shall
be subject to a repurchase right in favor of the Company in the event of
optionee's termination of employment. Except as otherwise provided by the
Committee, the repurchase price will be the fair market value of the stock or,
in the case of a termination for cause, an amount equal to the consideration
paid for the stock. The Committee may also, at the time of grant, provide the
Company with similar repurchase rights, upon terms and conditions specified by
the Committee, with respect to any optionee who, at any time within two years of
employment with the Company or any subsidiary or parent corporation, directly or
indirectly competes with, or is employed by a competitor of, the Company or any
subsidiary or parent corporation.
FEDERAL TAX TREATMENT OF OPTIONS. An optionee will not realize taxable
compensation income upon the grant of an incentive stock option. In addition, an
optionee generally will not realize taxable compensation income upon the
exercise of an incentive stock option if he or she exercises it as an employee
or within three months after termination of employment (or within one year after
termination if the termination results from a permanent or total disability).
The amount by which the fair market value of the shares purchased exceeds the
aggregate option price at the time of exercise (or, in the case of an executive
officer, director or 10% shareholder, six months after the date the option was
granted, if later) shall be treated as alternative minimum taxable income for
purposes of the alternative minimum tax.
If stock acquired pursuant to an incentive stock option is not disposed
of prior to the date two years from the option grant date or prior to one year
from the option exercise date, any gain or loss realized upon the sale of such
shares will be characterized as capital gain or loss. If the applicable holding
periods are not satisfied, then any gain realized in connection with the
disposition of such stock will generally be taxable as compensation income in
the year in which the disposition occurred, to the extent of the difference
between the fair market value of such stock on the date of exercise and the
option exercise price. The Company is entitled to a tax deduction to the extent,
and at the time, the optionee realizes compensation income. The balance of any
gain will be characterized as a long-term or short-term capital gain depending
on whether the shares were held for more than one year.
An optionee will not realize taxable compensation income upon the grant
of a non-qualified stock option. When an optionee exercises a non-qualified
stock option, he or she will realize taxable compensation income at the time
equal to the difference between the aggregate option price and the fair market
value of the stock on the date of exercise. The Company is entitled to a tax
deduction to the extent, at the time, that the optionee realizes compensation
income.
Upon the exercise of a non-qualified stock option, the Plan requires
the optionee to pay to the Company any amount necessary to satisfy applicable
federal, state or local withholding tax requirements. Under the Plan, the Board
may grant options that permit the optionee to elect to satisfy withholding tax
requirements associated with the exercise of an option by authorizing the
Company to retain from the number of shares that would otherwise be deliverable
to the optionee that number of shares having an aggregate fair market value
equal to the tax required to be withheld. In such event, the Company would pay
the tax liability from its own funds.
Upon the disposal of stock acquired pursuant to a non-qualified option,
the optionee's basis for determining taxable gain or loss will be the sum of the
option price paid for the stock plus any related compensation income recognized
by the optionee, and such gain or loss will be long-term or short-term capital
gain or loss depending on whether the optionee has held the shares for more than
one year.
APPROVAL OF PLAN AMENDMENTS
Approval of the amendments to the Plan to (i) increase the aggregate
number of shares available for issuance under the Plan to 51,038 shares and (ii)
provide for an automatic grant to the non-employee directors of a non-qualified
stock option to purchase 1,000 shares of Common Stock requires the affirmative
vote of holders of voting stock representing a majority of the voting power
represented at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
-----------------------------------
PROPOSAL 3
APPROVAL OF AUDITORS
Larson, Allen, Weishair & Co., independent certified public
accountants, have been auditors for the Company since 1994 and have been
auditors for the Bank since 1989. They have been reappointed by the Board of
Directors as the Company's auditors for the current fiscal year and shareholder
approval of the appointment is requested. In the event the appointment of
Larson, Allen, Weishair & Co. is not approved by the shareholders, the Board of
Directors will make another appointment to be effective at the earliest feasible
time.
A representative of Larson, Allen, Weishair & Co. will be present at
the Annual Meeting of Shareholders, will have an opportunity to make a statement
if he or she desires to do so, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF THE AUDITORS
----------------------------------
SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission ("SEC") permit
shareholders of a company, after timely notice to the company, to present
proposals for shareholder action in the company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate for
shareholder action and are not properly omitted by company action in accordance
with the proxy rules. The Mid-Central Financial Corporation 1998 Annual Meeting
of Shareholders is expected to be held on or about January 5, 1998 and proxy
materials in connection with that meeting are expected to be mailed on or about
December 1, 1997. Shareholder proposals prepared in accordance with the proxy
rules must be received by the Company on or before July 31, 1997.
GENERAL
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) under the Securities Act of 1934, executive
officers, directors and 10% shareholders ("insiders") of the Company are
required to file reports on Forms 3, 4 and 5 of their beneficial holdings and
transactions in the Company's common stock. To the Company's knowledge, all such
reports were filed in a timely manner during the year ended September 30, 1996.
OTHER MATTERS
The Board of Directors of the Company knows of no matters other than
the foregoing to be brought before the meeting. However, the enclosed proxy
gives discretionary authority in the event that any additional matters should be
presented.
The 1996 Annual Report of the Company is enclosed herewith and contains
the Company's financial statements for the fiscal year ended September 30, 1996.
A copy of Form 10-K, the Annual Report filed by the Company with the SEC, will
be furnished without charge to any shareholder who requests it in writing from
Gary W. Sellman, President, Mid-Central Financial Corporation at the address
noted on the first page of this Proxy Statement.
BY THE ORDER OF THE
BOARD OF DIRECTORS
Gary W. Sellman
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PROXY
MID-CENTRAL FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS -- JANUARY 10, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alfred H. Neitzke and Gary W. Sellman,
or either of them, as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of stock of Mid-Central Financial Corporation which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders to be held on
January 6, 1997, or at any adjournment or adjournments thereof, hereby revoking
all former proxies.
(1) ELECTION OF DIRECTORS
[ ] FOR THE NOMINEES LISTED BELOW
(except as marked below)
[ ] WITHHOLD AUTHORITY
to vote for the nominees listed
ROBERT D. IKEN, SR., MICHAEL J. EBNER
(INSTRUCTION: to withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
--------------------------------------------------------
(2) Proposal to ratify and approve the amendments to the Mid-Central
Financial Corporation Amended and Restated 1994 Stock Option Plan to
(i) increase the total number of shares of Common Stock available for
issuance under such Plan from 26,038 shares to 51,038 shares and (ii)
provide for an automatic grant of a non-qualified stock option to
purchase 1,000 shares to non-employee directors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
--------------------------------------------------------
(3) Proposal to ratify and approve the appointment of Larson, Allen,
Weishair & Co. as the independent auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED IN FAVOR OF ELECTION OF ALL THE NOMINEES AND "FOR" PROPOSALS (2) & (3).
Dated: ______________________________________
Signed: _____________________________________
(Signature of Shareholder)
_____________________________________
(Signature of Shareholder)
Please vote, date and sign this proxy exactly
as your name is printed hereon. When signing
as attorney, executor, administrator,
trustee, guardian, etc. give full title as
such. If the stock is held jointly, each
owner should sign. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
