SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Under Rule
[_] Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
MIDLAND CAPITAL HOLDINGS CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
[MIDLAND CAPITAL HOLDINGS CORPORATION]
September 25, 2002
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Midland Capital
Holdings Corporation, we cordially invite you to attend Midland Capital's 2002
Annual Meeting of Stockholders. The meeting will be held at 2:00 p.m., local
time, on October 16, 2002, at the main office of Midland Capital located at 8929
S. Harlem Avenue, Bridgeview, Illinois.
In addition to the election of two directors, stockholders are being asked
to ratify the appointment of Cobitz, VandenBerg & Fennessy as auditors for
Midland Capital. Accordingly, your Board of Directors unanimously recommends
that you vote for each of these proposals.
We encourage you to attend the meeting in person. Whether or not you plan
to attend, however, please read the enclosed proxy statement and then complete,
sign and date the enclosed proxy and return it in the accompanying postpaid
return envelope as promptly as possible. This will save Midland Capital
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Thank you for your attention to this important matter.
Very truly yours,
/s/ Paul M. Zogas
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PAUL M. ZOGAS
Chairman of the Board,
President and
Chief Executive Officer
MIDLAND CAPITAL HOLDINGS CORPORATION
8929 South Harlem Avenue Bridgeview, Illinois 60455
(708) 598-9400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 16, 2002
Notice is hereby given that the 2002 Annual Meeting of Stockholders of
Midland Capital Holdings Corporation will be held at 2:00 p.m., local time, on
October 16, 2002, at the main office of Midland Capital located at 8929 South
Harlem Avenue, Bridgeview, Illinois.
A proxy card and a proxy statement for the Meeting are enclosed. The
Meeting is for the purpose of considering and acting upon:
1. The election of two directors of Midland Capital; and
2. The ratification of the appointment of Cobitz, VandenBerg & Fennessy
as independent auditors of Midland Capital for the fiscal year ending
June 30, 2003; and
such other matters as may properly come before the meeting or any adjournments
or postponements thereof. The Board of Directors is not aware of any other
business to come before the meeting.
Any action may be taken on any one of the foregoing proposals at the
meeting on the date specified above, or on any date or dates to which the
meeting may be adjourned or postponed. Stockholders of record at the close of
business on September 16, 2002 are the stockholders entitled to vote at the
meeting and any adjournments or postponements thereof. A complete list of
stockholders entitled to vote at the meeting will be available at the main
office of Midland Capital during the ten days prior to the meeting, as well as
at the meeting.
You are requested to complete, sign and date the enclosed form of
proxy, which is solicited on behalf of the Board of Directors, and to mail it
promptly in the enclosed postage paid return envelope. The proxy will not be
used if you attend and vote at the meeting in person.
By Order of the Board of Directors
/s/ Paul M. Zogas
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Paul M. Zogas
Chairman of the Board,
President and
Chief Executive Officer
Bridgeview, Illinois
September 25, 2002
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A PRE-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
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PROXY STATEMENT
MIDLAND CAPITAL HOLDINGS CORPORATION
8929 South Harlem Avenue Bridgeview, Illinois 60455
(708) 598-9400
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ANNUAL MEETING OF STOCKHOLDERS
October 16, 2002
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This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Midland Capital Holdings
Corporation to be used at the 2002 Annual Meeting of Stockholders to be held at
the main office of Midland Capital located at 8929 South Harlem Avenue,
Bridgeview, Illinois, on October 16, 2001 at 2:00 p.m., local time, and at all
adjournments or postponements of the meeting. The accompanying Notice of
Meeting, proxy card and this proxy statement are first being mailed to
stockholders on or about September 25, 2002. Certain of the information provided
herein relates to Midland Federal Savings and Loan Association, a wholly owned
subsidiary of Midland Capital.
At the meeting, the stockholders of Midland Capital are being asked to
consider and vote upon (i) the election of two directors of Midland Capital and
(ii) the ratification of the appointment of Cobitz, VandenBerg & Fennessy as the
Midland Capital's independent accountants for the fiscal year ending June 30,
2003. Your Board of Directors unanimously recommends that you vote for each of
management's nominees for election as directors and for the ratification of the
appointment of Cobitz, VandenBerg & Fennessy.
Vote Required and Proxy Information
All shares of Midland Capital common stock, par value $.01 per share,
represented at the meeting by properly executed proxies received prior to or at
the meeting, and not revoked, will be voted at the Meeting in accordance with
the instructions thereon. If no instructions are indicated, properly executed
proxies will be voted for the nominees and the adoption of the proposal set
forth in this proxy statement. Midland Capital does not know of any matters,
other than as described in the Notice of Meeting, that are to come before the
meeting. If any other matters are properly presented at the meeting for action,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors. Votes withheld and broker non-votes will have no effect on the
election of directors. The ratification of the appointment of auditors requires
the affirmative vote of a majority of the votes cast on the proposal. Proxies
marked to abstain will have the same effect as votes against the proposal to
ratify the appointment of the independent auditors. Broker non-votes will have
no effect on this proposal. One-third of the shares of the common stock, present
in person or represented by proxy, shall constitute a quorum for purposes of the
Meeting. Abstentions and broker non-votes are counted for purposes of
determining a quorum.
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
Midland Capital at or before the meeting a written notice of revocation bearing
a later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of Midland Capital at or
before the meeting; or (iii) attending the meeting and voting in person
(although attendance at the Meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be delivered
to Charles A. Zogas, Secretary, at the address stated above.
Voting Securities and Principal Holders Thereof
Stockholders of record as of the close of business on September 16, 2002,
will be entitled to one vote for each share then held. As of that date, Midland
Capital had 363,975 shares of common stock issued and outstanding. The following
table sets forth information regarding share ownership of: (i) those persons or
entities known by management to beneficially own more than five percent of
Midland Capital's common stock, (ii) Midland Capital's Chief Executive Officer,
and each other executive officer whose salary and bonus for fiscal 2002 exceeded
$100,000 (the "Named Officers") and (iii) all directors, nominees and executive
officers of Midland Capital and Midland Federal as a group.
Beneficial Owner Shares Beneficially Owned Percent of Class
---------------- ------------------------- ----------------
Over 5% Beneficial Owners
-------------------------
Algerd A. Brazis, Director 21,725(1) 5.94%
8929 South Harlem Avenue
Bridgeview, Illinois 60455
Jeffrey S. Halis 20,000(2) 5.49%
500 Park Avenue
Fifth Floor
New York, New York 10022
Richard A. Horstman 20,000(3) 5.49%
31 Boulder Wood Drive
Bernardsville, New Jersey 07924
Named Officers
Paul M. Zogas, Chairman of the Board, 107,907(4) 29.65%
President and Chief Executive Officer
8929 South Harlem Avenue
Bridgeview, Illinois 60455
Charles A. Zogas, Director, Executive 87,987(4) 24.17%
Vice President and Secretary
8929 South Harlem Avenue
Bridgeview, Illinois 60455
Directors and executive officers 241,444(5) 64.80%
of the Company as a group
(6 persons)
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(1) The above information is as reported in a Schedule 13D filed August 3,
1998, by Mr. Brazis. An additional 1,725 options were issued to Mr. Brazis
pursuant to Midland Capital's Stock Option and Incentive Plan. Mr. Brazis
reported shared voting and investment power with his wife and the Algerd A.
and Aldona Brazis Loving Trust with respect to the shares.
(2) The above information is as reported in a Schedule 13D filed June 29, 1999.
Mr. Halis claimed sole voting and dispositive power in regards to all
20,000 shares.
(3) The above information as reported in a Schedule 13D filed September 9,
1993.
(4) Each person has reported sole voting and investment power with respect to
the shares held by them, respectively. (5) Includes shares held directly,
held in retirement accounts, held by certain members of the named
individuals' families, or held by trusts of which the named individuals may
be deemed to have sole or shared voting or dispositive power. Includes
8,265 shares of all directors and executive officers as a group, which are
subject to options currently exercisable or exercisable within 60 days of
September 16, 2002, granted under the Stock Option Plan.
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I. ELECTION OF DIRECTORS
General
Midland Capital's Board of Directors consists of six members. The Board of
Directors is divided into three classes, each of which contains one-third of the
Board of Directors. One-third of the directors are elected annually. Directors
of Midland Capital are generally elected to serve for a three-year period or
until their respective successors are elected and qualified.
The table below sets forth certain information regarding the present
members and nominees of Midland Capital's Board of Directors. The Board of
Directors acting as the nominating committee has recommended and approved the
nominees identified in the following table. Michael J. Kukanza and Richard
Taylor have been nominated for terms of three years. It is intended that the
proxies solicited on behalf of the Board of Directors (other than proxies in
which the vote is withheld as to a nominee) will be voted at the meeting "FOR"
the election of the nominees identified below. If a nominee is unable to serve,
the shares represented by all valid proxies will be voted for the election of
such substitute nominee as the Board of Directors may recommend. At this time,
the Board of Directors knows of no reason why the nominees may be unable to
serve, if elected. Except as disclosed herein, there are no arrangements or
understandings between the nominees and any other person pursuant to which the
nominees were selected.
Shares of
Shares of Position(s)Held Common stock
in the Company Director Term to Beneficially
Name Age(1) and the Association Since(2) expire Owned(3)
NOMINEES
Michael J. Kukanza 42 Director 1996 2005 3,925 1.07%
Richard Taylor 52 Director and Vice President 1990 2005 8,175 2.23%
DIRECTORS CONTINUING IN OFFICE
Algerd Brazis 87 Director 1976 2003 21,725 5.94%
Charles A. Zogas 48 Director, Executive Vice 1983 2003 87,987 24.17%
President and Secretary
Jonas Vaznelis 82 Director 1977 2004 11,725 3.21%
Paul M. Zogas 47 Chairman of the Board, President 1982 2004 107,907 29.65%
and Chief Executive Officer
(1) At June 30, 2002.
(2) Includes service as a director of the Association.
(3) Amounts include shares held directly as well as shares held by certain
members of the named individuals' families with respect to which shares the
respective directors may be deemed to have sole or shared voting and/or
investment power. Also includes 1,725, 1,725, 3,450 and 1,725 shares
subject to options granted under the Stock Option Plan to Mr. Brazis, Mr.
Kukanza, Mr. Taylor and Mr. Vaznelis, respectively, which are currently
exercisable or exercisable within 60 days of September 16, 2002.
The business experience of each director of Midland Capital is set forth
below. All directors have held their present position for at least five years
unless otherwise indicated.
Michael J. Kukanza. Mr. Kukanza was elected to the Board of Directors in
October 1996. Mr. Kukanza is a principal in a Chicago-based asset management
company, Compass Asset Management, L.L.C. Prior to joining Compass Asset
Management, Mr. Kukanza was Senior Vice President, Global Foreign Exchange
Options Head at NationsBanc-CRT until April 1996. While at NationsBanc-CRT, Mr.
Kukanza served on the Federal Reserve Bank Foreign Exchange Advisory Committee
and held a seat on the FX Risk Management Subcommittee. Prior to that position,
Mr. Kukanza was Managing Director responsible for Global Foreign Exchange
Options at Merrill Lynch & Company based both in New York and London from April
1989 until September 1994. Before joining Merrill Lynch, Mr. Kukanza was a
Principal in Equity Options at O'Connor & Associates, based in Chicago,
beginning in September
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1982. Mr. Kukanza holds a BA degree in Economics from the University of Chicago
and has completed all graduate level courses for an MA degree in Economics from
the University of Virginia.
Richard Taylor. Mr. Taylor joined Midland Federal in 1972. Since joining
Midland Federal in 1972, he has held various lending positions and has held the
position of Vice President in Charge of Lending since 1982. Mr. Taylor holds a
BS degree from Illinois State University, and is also a licensed real estate and
insurance broker.
Algerd Brazis. Mr. Brazis retired as the owner of Al's Hilltop Lounge
located in Justice, Illinois in 1983. Mr. Brazis is a Director of the Knights of
Lithuania Mid-America District and is an Officer of the Lithuanian Chamber of
Commerce.
Charles Zogas. Mr. Zogas has been the Executive Vice President and the
Chief Operations Officer of Midland Federal since 1982. He was elected a
Director in 1983, and also serves as Secretary and Treasurer. Mr. Zogas holds a
BS degree from the University of Notre Dame in Notre Dame, Indiana, and a Juris
Doctor degree from IIT/Chicago -Kent College of Law. Mr. Zogas also provides
legal services from time to time to private clients. Mr. Zogas is the brother of
Paul Zogas.
Jonas Vaznelis. Mr. Vaznelis retired as the owner and President of Gifts
International located in Chicago, Illinois, in 1995. Mr. Vaznelis is a member of
the Lithuanian Community Council of Chicago, Illinois, and the Lithuanian
Foundation, Inc. He is also a committee member of the Board of Zoning Appeals
for Beverly Shores, Indiana.
Paul Zogas. Mr. Zogas has been Chairman of the Board, President and Chief
Executive Officer since 1983, and a Director since 1982. Mr. Zogas holds a BA
degree in Economics from the University of Michigan in Ann Arbor, and a Juris
Doctor degree from De Paul University College of Law in Chicago. Mr. Zogas
provides legal services from time to time to private clients. Mr. Zogas is the
brother of Charles Zogas.
Meetings and Committees of the Board of Directors
Meetings of the Midland Capital's Board of Directors are generally held on
a quarterly basis. The Board of Directors met five times during fiscal 2002.
During fiscal 2002, no incumbent director of Midland Capital attended fewer than
75% of the aggregate of the total number of Board meetings and the total number
of meetings held by the committees of the Board of Directors on which he served.
The Board of Directors has established Executive, Audit, Loan,
Asset/Liability, Compensation and Stock Option and Incentive Plan committees.
The Executive Committee, consisting of Directors P. Zogas, C. Zogas and
Brazis, meets on an as needed basis to exercise the power of the Board in
between Board meetings. This committee did not meet during the fiscal year ended
June 30, 2002.
The Compensation Committee, composed of Directors P. Zogas, Kukanza and
Brazis, meets at least annually to make compensation recommendations. This
committee met once during the fiscal year ended June 30, 2002.
The Stock Option and Incentive Plan Committee, composed of Directors Brazis
and Vaznelis, meets to make awards under the Stock Option Plan and the BIP. This
committee did not meet during the fiscal year ended June 30, 2002.
The Audit Committee consisting of Directors Brazis, Kukanza and Vaznelis
meets as needed to review recommendations of the internal auditor, and annually
to review the annual audit by the independent auditors. In fiscal 2002, this
committee met once at the company level. Midland Federal's Audit Committee has
the identical makeup of Midland Capital's Audit Committee and met four times
during fiscal 2002.
The entire Board of Directors acts as a nominating committee for selecting
nominees for election as directors. Nominations of persons for election to the
Board of Directors may be made only by or at the direction of the Board of
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Directors or by any stockholder entitled to vote for the election of directors
who complies with the notice procedures set forth in Midland Capital's Bylaws.
Director Compensation
Directors fees are paid to directors in the amount of $1,100 for each
regular meeting of the board attended and $150 for each special meeting attended
in fiscal 2002. Non-employee directors received a fee in the amount of $150 for
each committee meeting attended.
Executive Compensation
The following table sets forth information regarding compensation paid or
accrued by Midland Capital and Midland Federal to their Chief Executive Officer
and Vice President for services rendered during the past three fiscal years. No
other executive officer made in excess of $100,000 during the year ended June
30, 2002.
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SUMMARY COMPENSATION TABLE
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Annual Compensation Awards
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Restricted
Other Annual Stock All Other
Name and Principal Salary Bonus Compensation Award(s) Compensation
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Position Year ($)(1) ($) ($) ($)(3) ($)(4)
Paul Zogas, Chairman of the Board, 2002 $173,295 $12,566 $3,300(2) $ $ --
President and Chief Executive 2001 165,546 -- 1,247 21,625 --
Officer 2000 149,819 -- -- 12,068 --
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Richard Taylor, Vice President 2002 $105,199 $7,216 -- $ -- $ --
2001 102,529 -- -- 8,625 --
2000 94,816 -- -- 4,830 --
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(1) Includes directors fees paid to Mr. Zogas and Mr. Taylor of 13,200 for the
years ended June 30, 2002 and 2001 and $7,800 for the year ended June 30,
2000.
(2) Represents club dues paid for Mr. Zogas.
(3) Represents the dollar value of shares of Midland Capital's stock vested
during the 2000 and 2001 fiscal years and granted pursuant to a Company
restricted stock plan, based on the closing price of the common stock of
$14.00 on June 30, 2000 and $25.00 on June 30, 2001. Mr. Zogas vested in
862 shares in 2000 and 865 shares in 2001. Mr. Taylor vested in 345 shares
in 2000 and 2001. There was a grant of 4,313 shares of stock under this
plan to Mr. Zogas and 1,725 shares to Mr. Taylor, which vested in five
equal installments with the first vesting starting on November 20, 1996.
(4) Consists of other personal benefits which, in aggregate, did not exceed 10%
of total salary and bonuses reported.
No stock appreciation rights, limited stock appreciation rights or stock
options were granted to the Named Officers during the fiscal year ended June 30,
2002.
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The following table sets forth certain information concerning the number
and value of unexercised stock options held at June 30, 2002.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
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Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at FY-End (#) at FY-End ($)(1)
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------------------------
Paul Zogas -- $ -- -- -- $ -- $ --
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Richard Taylor -- $ -- 3,450 -- $57,788 $ --
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(1) Represents the aggregate market value (market price of the common stock
less the exercise price) of the option granted based upon the closing bid
price of $26.75 per share of the common stock on June 28, 2002, as reported
on the OTC Electronic Bulletin Board.
Employment Agreement with Paul Zogas. On July 20, 2000, Midland Capital
entered into a three year employment agreement with Paul Zogas. The agreement
with Paul Zogas provides for an annual base salary in an amount not less than
Mr. Zogas's salary as of the effective date of the agreement. The term of the
agreement is automatically extended daily by one day so that the term is always
three years, unless Midland Capital has given Mr. Zogas 90 days' advance notice
that the term is not to be extended. The agreement provides for termination upon
Mr. Zogas's death, for cause or in the case of certain other events specified in
the agreement.
If Mr. Zogas's employment is "involuntarily terminated" by Midland Capital
other than in connection with or within 36 months after a change in control of
Midland Capital or Midland Federal, he will be entitled to receive (i) payment
of his base salary during the remaining term of the agreement in the same manner
and at the same times received by him while employed and (ii) for the remaining
term of the agreement, substantially the same health insurance benefits as he
receives as of the date of termination. The term "involuntary termination" means
termination by Midland Capital or Midland Federal other than for cause or due to
the retirement, death or disability of Mr. Zogas, and includes a material
reduction of Mr. Zogas's current duties, benefits and responsibilities.
If Mr. Zogas's employment is involuntarily terminated in connection with or
within 36 months after a change in control of Midland Capital or Midland
Federal, he will be entitled to receive (i) a lump sum cash payment equal to
299% of his "base amount" of compensation and (ii) for the remaining term of the
agreement substantially the same health insurance benefits as he receives as of
the date of termination. The lump sum payment is subject to reduction to ensure
that all amounts payable by Midland Capital and Midland Federal to him in
connection with a change in control are deductible by Midland Capital or Midland
Federal for federal income tax purposes.
Based on his current salary, if Mr. Zogas had been terminated as of June
30, 2002 under circumstances entitling him to severance benefits as described
above, he would have been entitled to receive a lump sum cash payment of
approximately $479,563 in addition to health insurance for the period remaining
under his employment agreement.
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Employment Agreement with Richard Taylor. In fiscal 1993, Midland Federal
entered into an employment agreement with Richard Taylor for a one year term.
The employment agreement with Richard Taylor provides for an initial base salary
equal to his salary in effect on the date of the contract, with an annual raise
to be determined by the Board of Directors. The contract automatically extends
for one year at each anniversary date (provided that there is a performance
review of the employee) until either the Association or Mr. Taylor gives written
notice to the contrary. The contract provides for termination upon Mr. Taylor's
death, for cause or in certain events specified by regulations of the Office of
Thrift Supervision ("OTS"). Under the terms of the contract, in the event that
Mr. Taylor is terminated in connection with a change in control, he may be
entitled to be paid for the remaining term of his contract as well as to receive
a payment equal to one year's salary. The contracts provide, among other things,
for participation in an equitable manner in employee benefits applicable to
executive personnel. The employment contract may have an "anti-takeover" effect
that could affect a proposed future acquisition of control of Midland Federal by
rendering it more time consuming and expensive to remove the subject employee.
Based on his current salary, if Mr. Taylor had been terminated as of June
30, 2002, under circumstances entitling him to severance pay as describe above,
he would have been entitled to receive a lump sum cash payment of approximately
$92,102, in addition to the other payments to be received based on the term
remaining under his employment agreement, as described above.
Pension Plan
Defined Benefit Pension Plan. Midland Federal sponsors a defined benefit
pension plan. Eligible employees participate in the pension plan after they
attain age 21 and following the completion of 12 months of service, provided the
employee has completed at least 1,000 hours of work during such 12-month period.
The pension plan is funded solely through contributions made by the Association.
The table below sets forth, as of June 30, 2002, estimated annual pension
benefits for individuals at age 65 payable in the form of benefit for various
levels of compensation and years of service. The figures in this table are based
upon the assumption that the individual is currently age 65 as of June 30, 2002
with a specified number of years of service. At June 30, 2002, the estimated
credited years of service of Mr. P. Zogas was 24 and of Mr. R. Taylor was 30.
Average Annual Annual Pension Benefit Based on Years of Service
------------------------------------------------
Compensation 10 20 30 40
------------ -- -- -- --
$20,000 $2,500 $ 5,000 $ 7,500 $ 10,300
40,000 5,500 11,000 16,500 22,300
60,000 8,500 17,000 25,500 34,300
80,000 11,500 23,000 34,500 46,300
100,000 14,500 29,000 43,500 58,300
120,000 17,500 35,000 52,500 70,300
140,000 20,500 41,000 61,500 82,300
Report of the Audit Committee of the Board of Directors
Membership and Role of the Audit Committee. The Audit Committee consists of
the following members of Midland Capital's Board of Directors: Brazis, Kukanza
and Vaznelis. Each of the members of the Audit Committee is believed to be
independent as defined under the National Association of Securities Dealers'
current listing standards. The Audit Committee does not operate under a written
charter. None of the members of the Audit Committee has experience in the
preparation or audit of financial statements of generally comparable issuers.
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities regarding accounting, tax
and legal compliance. The Audit Committee's primary duties and responsibilities
are to (1) serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; (2) review and appraise
the audit efforts of the Company's independent accountants and internal audit
department; (3) evaluate Midland Capital's quarterly financial reporting as well
as its compliance with laws and regulations;
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and (4) provide an open avenue of communication among the independent
accountants, financial and senior management, counsel, the persons responsible
for internal audit and the Board of Directors. In the future, the Audit
Committee will also be responsible for (i) setting the terms of the relationship
between the Company and its independent auditors and (ii) monitoring procedures
to receive and respond on a confidential basis to any complaints or concerns
about the Company's accounting practices.
The Audit Committee has issued the following report with respect to the
Company's financial statements for the year ended June 30, 2002: Notwithstanding
anything to the contrary set forth in any of Midland Capital's filings under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate this Proxy Statement, the following report shall
not be deemed to be incorporated by reference, in whole or in part, into any
such filing.
! The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended June 30, 2002 with
Midland Capital's management.
! The Audit Committee has discussed with Cobitz, VandenBerg & Fennessy, the
Company's independent public accountants, the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees).
! The Audit Committee has also received the written disclosures and the
letter from Cobitz, VandenBerg & Fennessy required by Independence
Standards Board Standard No. 1 (Independence Discussion with Audit
Committees) and the Audit Committee has discussed the independence of
Cobitz, VandenBerg & Fennessy with that firm.
! Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that Midland
Capital's audited financial statements be included in its Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2002, for filing with the
Securities and Exchange Commission.
Algerd Brazis Michael J. Kukanza Jonas Vaznelis
Certain Relationships and Related Transactions
Midland Federal, like many financial institutions, has followed a policy of
granting loans to eligible officers, directors and employees for the financing
of their personal residences. Loans are made in the ordinary course of business
on substantially the same terms and conditions as those of comparable
transactions prevailing at the time, and do not involve more than the normal
risk of collectibility or present other unfavorable features. Federal law
requires that all such transactions with officers and directors be on terms and
conditions comparable to those for similar transactions with non-affiliates.
No loans with reduced interest rates or fees were outstanding to any of its
directors and officers whose aggregate indebtedness exceeded $60,000 at any time
during the year ended June 30, 2002.
II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has appointed Cobitz, VandenBerg & Fennessy to be
its auditors for the 2003 fiscal year, subject to the ratification of the
appointment by Midland Capital's stockholders. A representative of Cobitz,
VandenBerg & Fennessy is expected to attend the annual meeting to respond to
appropriate questions and will have an opportunity to make a statement if he or
she so desires.
8
During the fiscal year ended June 30, 2002, Cobitz VandenBerg & Fennessy
provided various audit and non-audit services to Midland Capital. Set forth
below are the aggregate fees billed for these services.
(a) Audit Fees: Aggregate fees billed for professional services rendered for
the audit of Midland Capital's fiscal 2002 annual financial statements and
review of financial statements $45,500.
(b) Financial Information Systems Design and Implementation: $0.
(c) All other fees: $3,700.
The Audit Committee of Midland Capital's Board of Directors determined that
the provision of services covered by item (c) above is compatible with
maintaining the independence of Cobitz, VandenBerg & Fennessy.
The Board of Directors recommends that you vote "FOR" the ratification of
the appointment of Cobitz, VandenBerg & Fennessy as Midland Capital's
independent auditors for the fiscal year ending June 30, 2003.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in Midland Capital's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at Midland Capital's office, 8929 South
Harlem Avenue, Bridgeview, Illinois 60455, no later than May 30, 2003. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended. If a proposal does not meet the
above requirements for inclusion in Midland Capital's proxy materials, but
otherwise meets Midland Capital's eligibility requirements to be represented at
the next annual meeting of Stockholders, the persons named in the enclosed form
of proxy and acting thereon will have the discretion to vote on any such
proposal in accordance with their best judgment if the proposal is received at
Midland Capital's main office later than August 18, 2003; provided however, that
in the event that the date of next year's annual meeting is held before
September 26, 2003 or after December 15, 2003, the stockholder proposal must be
received on or before the close of business on the later of the 60th day prior
to such annual meeting or the tenth day following the day on which notice of the
date of the annual meeting was mailed or public announcement of the date of such
meeting was made, whichever occurs first.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this proxy statement. However,
if any other matters should properly come before the Meeting, it is intended
that holders of the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by Midland Capital.
Midland Capital will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of Midland Capital common stock. In addition
to solicitation by mail, directors and officers of Midland Capital and its
regular employees may solicit proxies personally or by telegraph or telephone,
without additional compensation.
By Order of the Board of Directors
/s/ Paul Zogas
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Paul Zogas
Chairman of the Board, President
and Chief Executive Officer
Bridgeview, Illinois
September 25, 2002
9
REVOCABLE PROXY
MIDLAND CAPITAL HOLDINGS CORPORATION
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
October 16, 2002
The undersigned hereby appoints the Board of Directors of Midland Capital
Holdings Corporation (the "Company"), and its survivor, with full powers of
substitution, to act as attorney and proxy for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders, to be held on October 16, 2002, at 2:00
P.M., local time, at the main office of Midland Capital located at 8929 South
Harlem Avenue, Bridgeview, Illinois, and at any and all adjournments thereof, as
follows:
I. The election as directors of all nominees listed (except as
marked to the contrary below):
With- All For
For hold Except
[ ] [ ] [ ]
MICHAEL J. KUKANZA (3-year term)
RICHARD TAYLOR (3-year term)
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
For Against Abstain
[ ] [ ] [ ]
II. The ratification of the appointment of Cobitz, VandenBerg & Fennessy as
independent auditors for the Company for the fiscal year ending June 30, 2003.
In their discretion, the proxies are authorized to vote upon any other business
matters that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote"FOR" the election of the nominees
listed above and"FOR" the ratification for the appointment of Cobitz, VandenBerg
& Fennessy.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR THE
RATIFICATION FOR THE APPOINTMENT OF COBITZ, VANDEN-BERG & FENNESSY. IF ANY OTHER
BUSINESS IS PRESENTED AT THIS MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Please be sure to sign and date Date this proxy in the box below.
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Date
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Stockholder sign above
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Co-holder (if any) sign above
Detach above card, sign, date and mail in postage-paid envelope provided.
MIDLAND CAPITAL HOLDINGS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Should the above signed be present and elect to vote at the Meeting or at any
adjournment thereof, and after notification to the Secretary of the Company at
the Meeting of the stockholder's decision to terminate this proxy, then the
power of such attorney and proxy shall be deemed terminated and of no further
force and effect.
The above signed acknowledges receipt from the Company, prior to the execution
of this proxy, of Notice of the Meeting, a proxy statement and the Company's
Annual Report to Stockholders for the fiscal year ended June 30, 2002.
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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