SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 statementProxy Statement
[ ] Confidential, for useUse of the Commission onlyOnly (as permitted by Rule
14a-b(e)14a-6(e)(2))
[X] Definitive proxy statementProxy Statement
[ ] Definitive additional materialsAdditional Materials
[ ] Soliciting material pursuantMaterial Pursuant to Rule 14a-11(c)Section 240.14a-11(c) or Rule 14a-12Section 240.14a-12
FIRST MANISTIQUE CORPORATION
(Name of registrant as specified in its charter)
FIRST MANISTIQUE CORPORATION
(Name of person(s) filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) 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 determine)determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:Paid:
[ ] Fee paid previously with preliminary materials.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:
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(3) Filing party:
(4) Date filed:
First Manistique Corporation This Proxy is solicited
130 South Cedar Street on behalf of the
P.O. Box 369Manistique, Michigan 49854 Board of Directors
Manistique, Michigan 49854
PROXY
The undersigned hereby appoints Michael C. Henricksen and Ronald G. Ford 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 Common
Stock of First Manistique Corporation held of record by the undersigned on
February 17, 1997,19, 1998, at the annual meeting of shareholders to be held April 15,
1997,14,
1998, and at any adjournment thereof.
1. In the election of three directors to be elected for terms expiring in 20002001
[ ] FOR]FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
listed
contrary below) below
(INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.)
Charles B. Beaulieu, Bernard A. Bouschor, C. Ronald DurfinaStanley J. Gerou II, Thomas G. King, John Lindroth
2. Proposal to approve a stock compensation plan for key employees.change the Corporation's name to North Country Financial
Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve a stock option plan for non-employee directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR all nominees listed in Proposal 1 and FOR Each of the Other Proposals.Proposal.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. 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.
____________________________________ __________________________________________________________________________ __________________________________
Signature Signature if held jointly
DATED: _____________________, 1997Dated: ____________________, 1998
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
FIRST MANISTIQUE CORPORATION
P.O. Box 369, 130 South Cedar Street
Manistique, Michigan 49854
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 15, 199714, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of First Manistique Corporation (the "Corporation"), a Michigan
corporation, will be held on April 15, 1997,14, 1998, at 5 p.m. at Howard Johnsons,
Manistique, Michigan, for the following purposes:
1. To elect three (3) directors, each to hold office for a three-year
term.
2. To consider and act upon a proposal to approve a stock
compensation plan for key employees.change the Corporation's name
to North Country Financial Corporation.
3. To consider and act upon a proposal to approve a stock option
plan for nonemployee directors.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed February 17, 1997,19, 1998, as the record date for
the determination of shareholders entitled to notice of and to vote at the
meeting or any adjournment thereof.
By order of the Board of Directors
RICHARD B. DEMERS, Secretary
Your vote is important. Even if you plan to attend the meeting, please date
and sign the enclosed proxy form, indicate your choice with respect to the
matters to be voted upon, and return it promptly in the enclosed envelope.
Note that if the stock is held in more than one name, all parties must sign
the proxy form.
Dated: March 14, 19971998
FIRST MANISTIQUE CORPORATION
P.O. Box 369, 130 South Cedar Street
Manistique, Michigan 49854
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are furnished in connection
with the solicitation of proxies by the Board of Directors of First Manistique
Corporation (the "Corporation"), a Michigan bank holding company, to be voted at
the Annual Meeting of Shareholders of the Corporation to be held on Tuesday,
April 15, 1997,14, 1998, at 5 p.m., at Howard Johnsons, Manistique, Michigan, or at any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and in this Proxy
Statement.
VOTING AT THE MEETING
This Proxy Statement has been mailed on or about March 14, 1997,1998, to all
holders of record of common stock of the Corporation as of the record date. The
Board of Directors of the Corporation has fixed the close of business on
February 17, 1997,19, 1998, as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting of Shareholders and any
adjournment thereof.
The Corporation has only one class of common stock and one class of
preferred stock. As of February 17, 1997,January 15, 1998, there were 2,371,2632,380,194 shares of common
stock of the Corporation outstanding and no shares of preferred stock
outstanding. Each outstanding share will entitle the holder thereof to one vote
on each separate matter presented for vote at the meeting. Votes cast at the
meeting and submitted by proxy are counted by the inspectors of the meeting, who
are appointed by the Corporation.
If a Proxy in the enclosed form is properly executed and returned to the
Corporation, the shares represented by the Proxy will be voted at the Annual
Meeting and any adjournment thereof. If a shareholder specifies a choice, the
Proxy will be voted as specified. If no choice is specified, the shares
represented by the Proxy will be voted for the election of all of the nominees
named in the Proxy Statement and for the proposals set forth in this Proxy
Statement, and in accordance with the judgment of the persons named as proxies
with respect to any other matter which may come before the meeting. A proxy may
be revoked before exercise by notifying the Chairman of the Board in writing or
in open meeting, by submitting a proxy of a later date or attending the meeting
and voting in person. All shareholders are encouraged to date and sign the
enclosed proxy form, indicate your choice with respect to the matters to be
voted upon, and return it to the Corporation.
ELECTION OF DIRECTORS
The Bylaws of the Corporation provide for a Board of Directors consisting
of a minimum of five (5) and a maximum of fifteen (15) members. The Restated
Articles of Incorporation of the Corporation and the Bylaws also provide for the
division of the Board of Directors into three (3) classes of nearly equal size
with staggered three-year terms of office. Three persons have been nominated for
election to the Board, each to serve a three-year term expiring at the 20002001
Annual Meeting of Shareholders. The Board has nominated Charles B. Beaulieu,
Bernard A. Bouschor,Stanley J. Gerou II,
Thomas G. King and C. Ronald Dufina. Messrs. Beaulieu and DufinaJohn Lindroth, all of whom are incumbent directors previously
elected by the Corporation's shareholders. Mr.
Bouschor was appointed by the Board of Directors during 1996 to fill a vacancy
on the Board.
Unless otherwise directed by a shareholder's proxy, the persons named as
proxy holders in the accompanying proxy will vote for the nominees named above.
In the event any of such nominees shall become unavailable, which is not
anticipated, the Board of Directors in its discretion may designate substitute
nominees, in which event the enclosed proxy will be voted for such substitute
nominees. Proxies cannot be voted for a greater number of persons than the
number of nominees named.
A plurality of the votes cast at the meeting is required to elect the
nominees as directors of the Corporation. As such, the three individuals who
receive the largest number of votes cast at the meeting will be elected as
directors. Shares not voted at the meeting, whether by abstention, broker
nonvote, or otherwise, will not be treated as votes cast at the meeting.
The Board of Directors recommends a vote FOR the election of all the
persons nominated by the Board.
PROPOSAL TO APPROVE
CORPORATE NAME CHANGE
The Board of Directors has approved a proposed amendment to the
Corporation's Articles of Incorporation that would change the name of the
Corporation to "North Country Financial Corporation." This change would identify
the Corporation with its bank subsidiary, North Country Bank and Trust, and
would eliminate the parochial focus of the Corporation's present name.
Required Vote for Approval. The affirmative vote of a majority of the
Corporation's outstanding Common Stock is required to approve the name change.
Unless otherwise directed by marking the accompanying proxy, the proxy holders
named therein will vote for the approval of the name change.
The Board of Directors recommends a vote FOR THE APPROVAL OF THE PROPOSED
NAME CHANGE.
INFORMATION ABOUT DIRECTORS AND DIRECTOR NOMINEES
The following information relating to the principal occupation or
employment has been furnished to the Corporation by the respective directors and
director nominees. Each of those persons has been engaged in the occupations
stated below for more than five years.
Nominees for Election as Directors for Terms Expiring in 20002001
Director of
Age Corporation Since
Stanley J. Gerou II............................................................. 49 1989
Owner, Gerou Excavating, Inc.
Thomas G. King.................................................................. 45 1987
President, Top of Lake Investment Company, Owner, King's
Motel
John Lindroth................................................................... 42 1987
President, Superior State Agency, Inc. (Insurance Agency)
Directors Whose Terms Expire in 2000
Charles B. Beaulieu............................................................. 5960 1984
Owner, Beaulieu Funeral Home, Inc.
Bernard A. Bouschor............................................................. 4849 1996
Tribal Chairman, Sault Tribe of Chippewa Indians
C. Ronald Dufina................................................................ 5253 1992
Owner, Balsam Shop, Inc., HRD, Inc., Island Leasing, Inc., and
Mackinaw Island Hospitality, Inc. (companies involved in tourism)
Directors Whose Terms Expire in 1999
Michael C. Henricksen........................................................... 5455 1988
Co-Owner, Satellite Services, Inc., a service company
John P. Miller.................................................................. 5859 1976
Owner, Peoples Store Co., Inc. (Retail Clothing)
Ronald G. Ford.................................................................. 4950 1987
President, North Country Bank & Trust, First Manistique
Corporation, First Manistique Corporation,Agency, First Manistique Agency,Northern Services and
First Northern Services and
First Rural Relending Co.
Directors Whose Terms Expire in 1998
Stanley J. Gerou II............................................................. 48 1989
Owner, Gerou Excavating, Inc.
Loren Hulsizer.................................................................. 65 1994
Retired President of Bank of Stephenson
Thomas G. King.................................................................. 44 1987
Owner, King's Motel
John Lindroth................................................................... 41 1987
President, Superior State Agency, Inc. (Insurance Agency)
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BOARD COMMITTEES
The Board of Directors of the Corporation has an Audit Committee comprised
of John Miller, Chairman, John Lindroth, C. Beaulieu, Chairman, J. Clark, R.Ronald Dufina and L. Hulsizer.Loren Hulsizer
(who will be retiring at this year's Annual Meeting). Four meetings of the
Committee were held during 1996.1997. This Committee is responsible for the
recommendation of the independent accounting firm to be engaged for the external
audit, directing and supervising investigations into matters relating to audit
functions, reviewing with independent auditors the plan and results of the
external audit, the establishment and continued supervision of internal auditing
procedures, reviewing the degree of independence of the auditors and reviewing
the adequacy of internal accounting controls.
2
The Compensation Committee is comprised of Chairman J. Lindroth, T. King, S.
Gerou,C. Ronald Dufina,
Charles Beaulieu, Bernard Bouschor, and J. Miller, performs functions similar to those of a compensation
committee.John Miller. Four meetings of this
committeeCommittee were held in 1996.1997. This Committee is responsible for recommending
annually to the Board the salary of the President and CEO. This Committee
additionally reviews with management the annual projected salary ranges and
recommends those for Board approval. This Committee also annually reviews the
written Personnel Policy and audits the employee benefit package annually.
The Nominating Committee of the Board, comprised of T. King,Stanley Gerou,
Chairman, M.
Henricksen, J. Miller,Bernard Bouschor, John Lindroth, and L.Loren Hulsizer, held three
meetings during the year. The Board also has an Executive Committee comprised of
E.Michael C. Henricksen, Chairman, Thomas G. King, Chairman (who will
be retiring as a director as of this year's Annual Shareholders Meeting), M.
Henricksen,Ronald G. Ford and R. Ford.Richard B.
Demers. This Committee handles strategic planning for the Corporation and its
subsidiaries.
The Board of Directors of the Corporation held a total of six meetings and
tenone special meetingsmeeting during 1996.1997. No director attended less than 75 percent of
the aggregate number of meetings of the Board of Directors and the Committees on
which he served. There are no family relationships between or among any of the
directors, nominees, or executive officers of the Corporation, other than Ernest
and Thomas King, who are father and son.Corporation.
REMUNERATION OF DIRECTORS
The directors of the Corporation each receive an annuala fee of $1,250.
Directors are not paid$500 for attendance
at meetings of the Board, or committees on
which they serve, except for $250the Chairman who receives $1,000 per meeting for committee meetings that are
held on days when the entire Board is not
meeting. Some of the directors also serve on the Board of Directors of North
Country Bank and Trust ("Bank"), for which they are paid an annual fee of $7,200, except$1,200
and a fee of $1,000 per meeting (except for Mr. Ronald G. Ford, the Bank Board
Chairman, who receives an annual fee of $9,600. No compensation is paid$700 per meeting) for attendance at Bank Board or committee meetings
except forand $250 per meeting for committee meetings that are held on days when the
entire Bank Board is not meeting. In November 1984, the Corporation adopted a
deferred compensation plan for certain senior management employees and directors
that provides for benefit payments to the participant and his or her family upon
retirement or death. Messrs. Ernest King, John Clark, Charles Beaulieu, John
Miller, and Ronald Ford are participants in this plan. This plan was closed to
additional participants in 1986. The plan allows the deferral of director fees
and compensation in return for the payment of certain defined monthly benefits
payable upon termination of one's service as a director or officer of the
Corporation. Benefits under this plan may be funded by life insurance policies,
with the premiums paid for by the Corporation. Any benefits payable under this
plan are unsecured and payable out of the general assets of the Corporation.
At the 1996 shareholder meeting, the Corporation's shareholders approved of
the Corporation's Deferred Compensation, Deferred Stock and Current Stock
Purchase Plan for Non-Employee Directors ("the Plan") to provide an opportunity
for directors of the Corporation and its subsidiaries to defer payment of all or
a part of their director fees ("Plan Fees") or to receive shares of the
Corporation's stock in lieu of cash payment of Plan Fees. Each director who
participates in the Plan must elect to have his or her Plan Fees credited
quarterly to either (a) a Current Stock Purchase Account, (b) a Deferred Cash
Investment Account, or (c) a Deferred Stock Account. Plan Fees credited to a
Current Stock Purchase Account are converted to shares of the Corporation's
Common Stock at market value on the credit date and distributed to the director
in lieu of cash payment of Plan Fees. Plan Fees credited to a Deferred Cash
Investment Account are deferred for tax purposes and are credited quarterly with
an appreciation factor that may not exceed the prime rate of interest charged by
the Bank. Plan Fees credited to a Deferred Stock Account are also deferred for
tax purposes. At the credit date, the Plan Fees are converted into "Corporation
stock units" determined by dividing the amount of the Plan Fees credited for the
quarter by the fair market value of a share of the Corporation's Common Stock on
the credit date. From the credit date forward, the value of the Corporation
stock units in the director's account is tied
-3-
directly to the fair market value of the Corporation's Common Stock, including
the impact of paid dividends. Upon termination of a director's service with the
Corporation, the amount credited to his or her Deferred Cash Investment Account
or Deferred Stock Account is paid out in a lump sum, or if termination occurs
because of retirement, the distribution may be spread over 5 to 10 years.
3
PROPOSAL TO APPROVE
THE FIRST MANISTIQUE CORPORATION
STOCK COMPENSATION PLAN
On January 15,At the 1997 the Board of Directors adopted the First Manistique
Corporation Stock Compensation Plan (the "Plan"), subject to approval byshareholder meeting, the Corporation's shareholders. The following summary of the Plan is subject to the
specific provisions contained in the complete text of the Plan set forth in
Appendix A to this Proxy Statement.
Purpose. The purpose of the Plan is to promote the long-term success of the
Corporation for the benefit of its shareholders through stock-based
compensation, by aligning the personal interests of the Corporation's key
employees with those of its shareholders. The Plan is designed to allow key
employees of the Corporation and certain of its subsidiaries to participate in
the Corporation's future, as well as to enable the Corporation to attract,
retain, and reward such employees.
Administration. The Plan will be administered by a committee of the Board
of Directors (the "Committee"). Initially, the Committee will be composed of all
directors who are not employees of the Corporation. Each member of the Committee
is required to be a non-employee director within the meaning of Rule 16b-3 of
the General Rules and Regulations under the Securities and Exchange Act of 1934,
as amended, and no member of the Committee is eligible to participate in the
Plan. Subject to the Corporation's Restated Articles of Incorporation, Bylaws,
and the provisions of the Plan, the Committee has the authority to select key
employees to whom Awards may be awarded; the type of Awards (or combination
thereof) to be granted; the number of shares of Common Stock to be covered by
each Award; and the terms and conditions of any Award, such as conditions of
forfeiture, transfer restrictions and vesting requirements.
The Plan provides for the granting of a variety of stock-based Awards,
described in more detail below, such as Stock Options, including Incentive Stock
Options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), Restricted Stock, Performance Shares, and other
Stock-Based Awards. The term of the Plan is ten (10) years; no Awards may be
granted under the Plan after January 14, 2007.
Types of Awards. The following types of Awards may be granted under the
Plan:
An "Option" is a contractual right to purchase a number of shares at a
price determined at the date the Option is granted. Options include Incentive
Stock Options, as defined in Section 422 of the Code, as well as Nonqualified
Stock Options. The exercise price included in both Incentive Stock Options and
Nonqualified Stock Options must equal at least 100% of the fair market value of
the stock at the date of grant.
"Restricted Stock" are shares of Common Stock granted to an employee for no
or nominal consideration. Title to the shares passes to the employee at the time
of the grant; however, the ability to sell or otherwise dispose of the shares is
subject to restrictions and conditions determined by the Committee.
"Performance Shares" are an Award of the right to receive stock or cash of
an equivalent value at the end of the specified performance period upon the
attainment of specified performance goals.
An "Other Stock-Based Award" is any other Award that may be granted under
the Plan that is valued in whole or in part by reference to or is payable in or
otherwise based on Common Stock.
Shares Subject to Plan. Two hundred thousand (200,000) shares of Common
Stock, no par value, are proposed to be set aside for use under the Plan.
However, the number of shares available under the Plan will be reduced by any
shares which may be covered by, or issued pursuant to, options granted underapproved
the Corporation's 1997 Directors' Stock Option Plan. The shares to be issued under
the Plan will be authorized and unissued shares, including shares reacquired by
the Corporation which have that status. The number of shares that may be issued
under the Plan and the number of shares subject to Options are subject to
adjustments in the event of a merger, reorganization, consolidation,
recapitalization, stock dividend, stock splits, or other change in corporate
structure affecting the Common Stock. Subject to certain restrictions,
unexercised Options, lapsed shares of Restricted Stock, and shares surrendered
in payment for exercising Options may be reissued under the Plan.
4
Termination or Amendment of the Plan. The Board may at any time amend,
discontinue, or terminate this Plan or any part thereof; however, unless
otherwise required by law, after shareholder approval, the rights of a
participant may not be impaired without the consent of such participant. In
addition, without the approval of the Corporation's shareholders, no amendment
may be made which would increase the aggregate number of shares of Common Stock
that may be issued under the Plan, change the definition of employees eligible
to receive Awards under the Plan, extend the maximum option period under the
Plan, decrease the Option price of any Option to less than 100% of the fair
market value on the date of grant, or cause the Plan not to comply with certain
applicable securities and tax law requirements.
Eligibility. Key employees of the Corporation and its designated
subsidiaries are eligible to be granted awards under the Plan. Eligibility is
determined by the Committee. No awards have been granted under the Plan.
Information concerning options granted under the Corporation's former Stock
Option Plan is set forth on page 10 of this Proxy Statement. Any awards that may
be granted under the Plan prior to the 1997 Annual Shareholders Meeting will be
void and of no effect if the Plan is not approved by shareholders at the
Corporation's 1997 annual meeting. It is not possible to predict the number or
identity of future participants or, except as set forth in the Plan, to describe
the restrictions that may be included in award agreements.
Participation and Assignability. Neither the Plan nor any Award agreement
granted under the Plan entitles any participant or other employee to any right
to continued employment by the Corporation or any subsidiary. Generally, no
Award, Option, or other benefit payable under the Plan may, except as otherwise
specifically provided by law, be subject in any manner to assignment, transfer,
or encumbrance. However, Nonqualified Stock Options may be transferred without
consideration to (i) an immediate family member of the optionee, (ii) a trust
for the benefit of the optionee and/or one or more immediate family members of
the optionee, or (iii) a partnership or limited liability company whose only
partners or members are the optionee and/or one or more immediate family members
of the optionee, if the optionee satisfies such conditions to the transfer as
may be required by the Committee.
Federal Tax Consequences. The following summarizes the consequences of the
grant and acquisition of Awards under the Plan for federal income tax purposes,
based on management's understanding of existing federal income tax laws. This
summary is necessarily general in nature and does not purport to be complete.
Also, state and local income tax consequences are not discussed, and may vary
from locality to locality.
Options. Plan participants will not recognize taxable income at the time an
Option is granted under the Plan unless the Option has a readily ascertainable
market value at the time of grant. Management understands that Options to be
granted under the Plan will not have a readily ascertainable market value;
therefore, income will not be recognized by participants before the time of
exercise of an Option. For Nonqualified Stock Options, the difference between
the fair market value of the shares at the time an Option is exercised and the
Option price generally will be treated as ordinary income to the optionee, in
which case the Corporation will be entitled to a deduction equal to the amount
of the optionee's ordinary income. With respect to Incentive Stock Options,
participants will not realize income for federal income tax purposes as a result
of the exercise of such Options. In addition, if Common Stock acquired as a
result of the exercise of an Incentive Stock Option is disposed of more than two
years after the date the Option is granted and more than one year after the date
the Option was exercised, the entire gain, if any, realized upon disposition of
such Common Stock will be treated for federal income tax purposes as capital
gain. Under these circumstances, no deduction will be allowable to the
Corporation in connection with either the grant or exercise of an Incentive
Stock Option. Exceptions to the general rules apply in the case of a
"disqualifying disposition." If a participant disposes of shares of Common Stock
acquired pursuant to the exercise of an Incentive Stock Option before the
expiration of one year after the date of exercise or two years after the date of
grant, the sale of such stock will be treated as a 'disqualifying disposition."
As a result, such a participant would recognize ordinary income and the
Corporation would be entitled to a deduction in the year in which such
disposition occurred.
The amount of the deduction and the ordinary income recognized upon a
disqualifying disposition would generally be equal to the lesser of: (a) the
sale price of the shares sold minus the Option price, or (b) the fair market
value of the shares at the time of exercise minus the Option price. If the
disposition is to a related party (such as a spouse, brother, sister, lineal
descendant, or certain trusts or business entities in which the seller holds a
direct or indirect interest), the ordinary income recognized generally is equal
to the excess of the fair market value of the shares at the time of exercise
over the exercise price. Any additional gain recognized upon disposition, in
excess of the ordinary income,
5
will be taxable as capital gain. In addition, the exercise of Incentive Stock
Options may result in an alternative minimum tax liability.
Restricted Stock. Recipients of shares of Restricted Stock that are not
"transferable" and are subject to "substantial risk of forfeiture" at the time
of grant will not be subject to federal income taxes until the lapse or release
of the restrictions or sale of the shares, unless the recipient files a specific
election under the Code to be taxed at the time of grant. The recipient's income
and the Corporation's deduction will be equal to the excess of the then fair
market value (or sale price) of the shares less any purchase price.
Performance Shares. Participants are not taxed upon the grant of
Performance Shares. Upon receipt of the underlying shares or cash, a participant
will be taxed at ordinary income tax rates (subject to withholding) on the
amount of cash received and/or the current fair market value of stock received,
and the Corporation will be entitled to a corresponding deduction. The
participant's basis in any Performance Shares received will be equal to the
amount of ordinary income on which he or she was taxed and, upon subsequent
disposition, any gain or loss will be capital gain or loss.
Required Vote for Approval. The affirmative vote of a majority of the
Corporation's Common Stock voted at the Annual Meeting, in person or by proxy,
is required to approve the Plan. While broker nonvotes will not be treated as
votes cast on the approval of this Plan, shares voted as abstentions will be
counted as votes cast. Since a majority of the votes cast is required for
approval, the sum of any negative votes and abstentions will necessitate
offsetting affirmative votes to assure approval. Unless otherwise directed by
marking the accompanying proxy, the proxy holders named therein will vote for
the approval of the Plan.
The Board of Directors recommends a vote FOR THE APPROVAL OF THE PROPOSED
PLAN.
PROPOSAL TO APPROVE
THE FIRST MANISTIQUE CORPORATION
1997 DIRECTORS' STOCK OPTION PLAN
On January 15, 1997, the Board of Directors adopted the First Manistique
Corporation 1997 Directors' Stock Option Plan (the "Plan""Director Option Plan"), subject to approval
by the Corporation's shareholders. The following summary of the Plan is subject
to the specific provisions contained in the complete text of the Plan set forth
in Appendix B to this Proxy Statement.
Purpose. The Plan is intended
to encourage stock ownership by non-employee directors ("Eligible Directors") of
the Corporation's bank subsidiaries (the "Banks"("Banks"), and to provide those individuals with additional
incentiveincentives for them to manage the Banks effectively and
to contribute to their success.effectively. The Plan is also intended to provide a form of
compensation that will attract and retain highly qualified individuals as
non-employee members of the Boards of Directors of the Banks.
Annual Grant of Options to Acquire Common Stock. TheDirector Option Plan
provides that all
persons who are directorsfor the grant of a Bank, but are neither contractual nor common law
employees of the Corporation or a Bank, will be granted an option, as of the
first business dayoptions to Eligible Directors each year following each
annual meeting of the Corporation's
shareholders beginning in 1998 in accordance withbased on the following schedule: (i) if
the Bank'sBanks' return on equity ("ROE")
for the prior year ranging from 0 if the ROE was less than 13% - none;
(ii)to 400 shares if
the Bank'sBanks' ROE for the prior year was 13% but less than 14% - 200
Shares; (iii) if the Bank's ROE for the prior year was 14% but lessgreater than 15% -
300 Shares; and (iv) if the Bank's ROE for the prior year was 15% or greater -
400 Shares. If the Plan is approved by the Corporation's shareholders at the
1997 annual meeting, the initial grant under this Plan, if any, will occur on
April 22, 1998, the first business day following the 1998 annual meeting.
There are currently 19 persons who are eligible to participate in the Plan.
Based on the current number of nonemployee directors, options providing for the
purchase of up to an aggregate of 7,600 shares of Common Stock could be granted
to such persons under the Plan each year.. The term of each option granted under the Plan is 10ten (10) years, from the date of
grant
subject to earlier termination atin certain events, and the end of three years following the
director's termination of services as a director. The option price for each
option must equalis 100%
of the fair market value of the Corporation's Common
Stock on the date of grant. Based on the option is granted. In
6
general, no option may be exercisable in whole or in part prior to the first
anniversaryearnings of the date of grant of the option. The Plan does not obligate the
Corporation, its Board of Directors or its shareholdersNorth
County Bank and Trust for 1997, Messrs. Beaulieu, Bouschor, Dufina, Gerou,
Henricksen, King, Lindroth, Miller will, on April 15, 1998, each be granted an
option to retain an optionee as
a director of the Corporation or a Bank.
Administration. The Plan is administered by the three most senior executive
officers of the Corporation ("Committee"). The Committee's authority is limited
to interpreting the provisions of the Plan and supervising its administration,
including the power to adopt procedures and regulations for administrative
purposes.
Shares Subject to Plan. A total of 200,000purchase 400 shares of the Corporation's Common Stock are reserved for issuance under the Plan. However, the number of
shares available under the Plan will be reduced by any shares covered by, or
issued pursuant to, awards granted under the Corporation's Stock Compensation
Plan. The shares of Common Stock that may be delivered under the Plan pursuant
to the exercise of options will consist of authorized and unissued shares, which
may include shares reacquired by the Corporation. The Plan provides for an
equitable adjustment in the number, kind, or price of shares of Common Stock
covered by options in the event the outstanding shares of Common Stock are
increased, decreased or changed into or exchanged for a different number or kind
of shares of the Corporation through stock dividends or similar changes.
Termination or Amendment of the Plan. The Board of Directors of the
Corporation may amend or terminate the Plan with respect to shares not subject
to option at the time of amendment or termination. The Plan may not be amended
without shareholder approval if the amendment would increase the maximum number
of shares that may be issued under the Plan, increase the number of shares that
may be optioned to any one nonemployee director, extend the term of the options,
decrease the price at which options may be granted, remove the administration of
the Plan from the Committee, change the class of persons eligible to receive
options, or permit the granting of options under the Plan after January 14,
2007. Unless earlier terminated by the Board of Directors, the Plan will expire
on January 14, 2007.
Transferability of Options and Common Stock. Generally, options granted
under the terms of the Plan may be transferred only by will or according to the
laws of descent and distribution. However, options may be transferred without
consideration to (i) an immediate family member of the optionee, (ii) a trust
for the benefit of the optionee and/or one or more immediate family members of
an optionee, or (iii) a partnership or limited liability company whose only
partners or members are the optionee and/or one or more immediate family members
of an optionee ("Permitted Transferee"), if the optionee satisfies such
conditions to the transfer as may be required by the Committee. Options may be
exercised only by an optionee or a Permitted Transferee during the optionee's
lifetime. Before issuing any shares upon the exercise of an option, the
Corporation may require the optionee or Permitted Transferee to represent in
writing that the shares are being acquired for investment and not for resale.
The Corporation may also delay issuance of the shares until all appropriate
registrations or qualifications under federal and state securities laws have
been completed.
Federal Tax Consequences. The following summarizes the consequences of the
grant and exercise of options under the Plan for federal income tax purposes,
based on management's understanding of existing federal income tax laws. This
summary is necessarily general in nature and does not purport to be complete.
Also, state and local income tax consequences are not discussed, and may vary
from locality to locality.
Optionees will not recognize taxable income at the time an option is
granted under the Plan unless the option has a readily ascertainable market
value at the time of grant. Management understands that options to be granted
under the Plan will not have a readily ascertainable market value; therefore,
income will not be recognized by participants before the time of exercise of an
option. Because options will not qualify as incentive stock options under the
Code, the difference between the fair market value of the shares at the time an
option is exercised and the option exercise price generally will be treated as
ordinary income to the optionee. The Corporation is entitled to a corresponding
deduction equal to the amount of an optionee's ordinary income.
Tax consequences to the holder of the shares will arise again at the time
the shares of Common Stock are sold. In general, if the shares have been held
for more than one year, the gain or loss will be treated as long-term capital
gain or loss. Otherwise, the gain or loss will be treated as short-term capital
gain or loss. The amount of any gain or loss will be calculated under the
general principles for determining gain and loss, and will equal the difference
between the amount realized in the sale and the tax basis of the shares of
Common Stock. The tax basis will generally equal the cost of the shares (the
option exercise price paid) plus any income recognized upon exercise of the
option.
7
Required Vote for Approval. The affirmative vote of a majority of the
Corporation's Common Stock voted at the Annual Meeting, in person or by proxy,
is required to approve the Plan. While broker nonvotes will not be treated as
votes cast on the approval of this Plan, shares voted as abstentions will be
counted as votes cast. Since a majority of the votes cast is required for
approval, the sum of any negative votes and abstentions will necessitate
offsetting affirmative votes to assure approval. Unless otherwise directed by
marking the accompanying proxy, the proxy holders named therein will vote for
the approval of the Plan.
The Board of Directors recommends a vote FOR THE APPROVAL OF THE PROPOSED
PLAN.
COMPENSATION OF EXECUTIVE OFFICERS
Committee Report on Executive Compensation
Decisions on the compensation of the Corporation's executive officers are
made by the Board's Compensation Committee comprised of nonemployee directors
consisting of Chairman J. Lindroth, T. King, S. GerouC. Ronald Dufina, Charles Beaulieu, Barnard Bouschor and
J.John Miller. To ensure this Committee's independence, the Board of Directors has
used outside consultants to assist the Committee in its deliberations. This
Committee report addresses the Corporation's compensation policies and programs
for the year ended December 31, 1996.1997.
Base Salary - Excluding consideration of other relevant factors, which may
include individual performance, experience, expertise and tenure, the Board
intends to maintain the base salaries of the Corporation's executive officers
and senior managers within peer group levels.
Annually, the Committee recommends a base wage for the President and Chief
Executive Officer for consideration by the entire Board of Directors. The
Committee's recommendation is based upon compensation levels established by the
Corporation's peers and evaluations by consultants.
The base salaries of the Presidents of the Corporation's subsidiary banks
(the "Banks") are determined in a similar manner by the Corporation's President
and Chief Executive Officer and each Bank's Board of Directors. The base
salaries of all other executive officers are established by the Corporation's
President and Chief Executive Officer.
Annual Cash Incentive - To provide performance incentives and to compensate
for the reduction in base salary, the strategy provides for annual cash awards
that are payable if the Corporation and the Banks meet or exceed annual
performance objectives established by the Board of Directors.
Long-Term Incentives - To align the interests of its executive officers and
senior managers with the Corporation's shareholders, the Board's compensation
strategy provides for a 401(k) matching contribution and equity- basedequity-based
compensation under the Stock Option Plan and Restricted Stock Plan, which are
being replaced by a newCorporation's Stock Compensation Plan. Each of the
Corporation's compensation plans has been adopted by the Board of Directors, and
the equity-based compensation plans have been approved by the Corporation's
shareholders.
The new Stock Compensation Plan is being submitted for shareholder
approval at the 1997 annual meeting.
Thomas King, John Lindroth, Stanley Gerou, II and John P. Miller
8C. Donald Dufina, Charles Beaulieu, Bernard Bouschor
-4-
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the
Corporation's Chief Executive Officer and the Corporation's other executive
officers whose annual compensation exceeded $100,000, for any of the three years
ended December 31, 1996.1997
Long-Term
Compensation
Name and Annual Compensation Options Granted All Other
Principal Position Year Salary(2) Bonus(2) (#) Compensation(3)
Ronald G. Ford 1997 $180,000 $45,000 24,000 $23,900
President and CEO 1996 $150,050 $61,520 0 $29,550
President and CEO
1995 $145,000 $30,450 0 $29,300
1994 $105,000 $23,800 $25,550
Richard B. Demers(1) 1997 $100,000 $30,000 8,888 $ 6,007
Executive Vice 1996 $ 84,000 $20,140 0 $ 4,200
President and Chief 1995 $ 84,000 $16,800 0 $ 7,800
1994 $ 80,000 $16,800 $ 8,000Operating Officer
Sherry L. Littlejohn 1997 $116,000 $44,000 11,555 $ 6,940
President and Chief 1996 $ 84,000 $22,640 0 $ 4,200
Executive ViceOperating Officer, 1995 $ 78,824 $13,103 0 - 0 -
President 1994 $ 61,027 $10,762 - 0 -North Country Bank
and Trust
(1) Mr. Demers served as the President and Chief Executive Officer of the Bank
of Stephenson from February 1994 to October 1995.
(2) Includes amounts deferred by employees under the Corporation's retirement
plan account pursuant to Section 401(k) of the Internal Revenue Code.
(3) The amounts disclosed in this column include: (a) the amounts contributed
by the Corporation to the Corporation's retirement plan, in which
substantially all employees of the Corporation participate (the
Corporation made matching contributions equal to 5 percent of each
Employee's salary reduction contribution for calendar 1996,1997, (b) director
fees, and (c) the dollar value of premiums paid by the Corporation for
certain deferred compensation benefits, as follows:
1997 1996 1995 1994
---- ---- ----
Mr. Ford (a) $ 8,000 $ 7,500 $ 7,250
$ 5,250
(b) $12,050$15,950 12,050 10,30012,050
(c) $10,000 10,000 10,000
Mr. Demers (a) $ 4,2006,007 $ 4,200 $ 4,0004,200
(b) - 0 - -0- 3,600 4,000
Ms. Littlejohn (a) $ 4,2006,940 $ 4,200 $ 3,0504,200
Employment Contract-5-
EMPLOYMENT CONTRACT
Ronald G. Ford entered into an Employment Contract with North County Bank
and Trust, as President and CEO, effective July 1, 1994. This contract is for a
term of three years with an automatic annual one year extension unless notice of
termination is given six months before the end of the current year. This
contract provides that Mr. Ford's duties, responsibilities and administrative
authority, absent written agreement to the contrary, shall be as President and
CEO, respectively, of the Corporation and the Bank. If Mr. Ford's employment is
terminated following a change in control of the Corporation for reasons other
than his death, disability, normal retirement, for cause or by Ford without 9
good
reason, the contract provides that he will be paid 20 quarter annual payments
each equal to 25% of the average of his aggregate annual base salary for the
three immediately preceding years. If any payment to Mr. Ford under the
Employment Contract is subject to an excise tax under Section 4999 of the
Internal Revenue Code, Mr. Ford will receive additional payments so that the
amount he receives equals the amount he would receive under the contract if an
excise tax was not imposed.
Stock OptionThe Corporation has entered into individual Management Continuity
Agreements with Ms. Littlejohn and Restricted Stock PlanMr. Demers. These agreements provide
severance benefits if the executive's employment is terminated within thirty-six
(36) months after a change in control or within six (6) months before a change
in control if the Corporation terminates her or his employment in contemplation
of a change in control and to avoid the agreement. For the purposes of these
agreements, a "change in control" is any occurrence reportable as such in a
proxy statement under applicable rules of the Securities and Exchange
Commission, and would include, without limitation, the acquisition of beneficial
ownership of 25% of the Company's voting securities by any person or an
extraordinary change in the composition of the Board of Directors. Severance
benefits will not be payable if the Corporation terminates the employment for
cause, if employment terminates due to the executive's death or disability, or
if the executive resigns without good reason. An executive may resign with "good
reason" after a change in control and retain benefits if the Corporation reduces
the executive's salary or bonus, assigns duties inconsistent with the
executive's prior position, or shifts the executive's job location more than 40
miles. The agreements are for self-renewing terms of three (3) years unless the
Corporation takes action to terminate further extensions. Each agreement is
automatically extended for a three (3) year term from the date of a change in
control. These agreement provide a severance benefit of a lump-sum payment equal
to three (3) years' salary and bonus and continuation of benefits coverage for
three (3) years and provide for additional payment to make an executive whole,
on an after-tax basis, for any excise taxes imposed by Section 4999 of the IRC.
STOCK OPTION AND RESTRICTED STOCK PLAN
In 1992, the Corporation adopted a Stock Option Plan. Participants in the
Plan generally include senior officers and certain directors of the
Corporation's subsidiary banks who do not participate in the Bank's Deferred Compensation
Plan.banks. The Plan authorizes the issuance of 37,350
shares of Common Stock pursuant to the exercise of options under the Plan, all
of which have been granted. Except as to then-outstanding options, this Plan was
terminated at the same time that the Board of Directors approved the Stock
Compensation Plan described earlier in this Proxy Statement.below.
In 1995,1997, the Corporation adopted a Restricted Stock Compensation Plan. Senior officers
and directorsother key employees of the Corporation and its subsidiaries are eligible to
participate in the Plan. The Plan permits the grant of stock awards covering up
to 90,000200,000 shares of the Corporation's common Stock, less shares covered by
options granted under the 1997 Directors' Stock Option Plan. Under the Plan, a
Committee consisting of non-employee directors may award stock options,
restricted stock, awards which may, amongperformance shares or other things,stock based awards.
-6-
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
% of Total
Options Exercise Annual Rates of Stock
Options Granted Price Expiration Price Appreciation
Granted to Employees in (Per Share) Date for Option Term (2)
(1) Fiscal Year 5% 10%
Ronald G. Ford 24,000 46.90% $45 2007 $679,206 $1,721,242
Richard B. Demers 8,888 17.39% $45 2007 $251,537 $ 635,877
Sherry L. Littlejohn 11,555 22.61% $45 2007 $327,009 $ 828,706
(1) These options vest ratably over five years commencing one year from the
date of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
SEC's executive compensation disclosure rules. Actual gains, if any, on
stock option exercise depend on future performance of the Corporation's
Common Stock and overall stock market conditions. No assurances can be
conditioned on
continued employment with the Corporation or one of its subsidiaries for a
period of time. To date, no grants of restricted stock have been made under this
Plan. This Restricted Stock Plan was terminated at the same time that the Board
of Directors approved the Stock Compensation Plan described earlieramounts reflected in this
Proxy Statement.
AGGREGATEDthese columns will be achieved.
AGGREGATE STOCK OPTION EXERCISES IN 19961997 AND YEAR-END OPTION VALUES
The following table provides information on the exercise of stock options
during 19961997 by the executives listed in the Summary Compensation Table and the
value of unexercised options at December 31, 1996. No options were granted by
the Corporation during 1996.1997.
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
12/31/9697 12/31/96(1)97(2)
Shares Acquired
Name on Exercise Value Realized Exercisable/Unexercisable Exercisable/Unexercisable
Ronald G. Ford . . . . 0 $0$ 0 $00/24,000 0/$96,000
Richard B. Demers. . . 0 $0 2,250/0 $28,125/0Demers 1,200 $39,000 (1) 1,050/8,888 $38,325/$35,552
Sherry L. Littlejohn . 0 $0 2,250/0 $26,996/02,250 $51,755 (1) 0/11,555 0/$46,220
(1) Value realized is the difference between the last reported sale price of
the Corporation's Common Stock immediately prior to the date of exercise
and the exercise prices of the options.
(2) Values are based on the difference between the last reported sale price of
the Corporation's common stockCommon Stock prior to December 31, 19961997 ($26.67)49.00), and
the exercise prices of the options.
INDEBTEDNESS OF AND TRANSACTIONS WITH MANAGEMENT
Certain of the directors and officers of the Corporation have had and are
expected to have in the future, transactions with the subsidiary banks of the
Corporation, or have been directors or officers of corporations, or members of
partnerships, which have had and are expected to have in the future,
transactions with the subsidiary banks. In the opinion of management, all such
transactions with officers and directors and with such corporations and
partnerships are made in the ordinary course of business and substantially on
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with other customers, and these
transactions do not involve more than normal risk of collectibility or present
other unfavorable features.
10-7-
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of February 15,
1997,19987, as to the common stock of the Corporation owned beneficially by each
director, each executive named in the Summary Compensation Table above, and by
all directors and executive officers of the Corporation as a group. Mr. Ernest
D. King, listed in the table below, is the only shareholder known to the
Corporation to have been the beneficial owner of more than five percent (5%) of
the Corporation's outstanding common stock as of February 15, 1997.19987. His mailing
address is P.O. Box 216, Naubinway, Michigan 49762.
Shared
Sole Voting Voting and
and Investment Investment Percent
Power (1) Power (1) of Class(2)
----- ----- --------Class (2)
----------- ----------- ------------
Charles B. Beaulieu 1,690.00 12,428.00 0.52%1,727 12,867 .61%
Bernard A. Bouschor 100.00 *
John B. Clark 23,496.00 1,800.00 1.06%100
C. Ronald Dufina 2,013.00 5,012.00 *2,194 6,314 .35%
Ronald G. Ford 4,407.00 20,145.007,706 23,846 (3) 1.03%1.32%
Stanley Gerou 36,634.00 1.54%6,300 30,806 (4) 1.55%
Michael Henricksen 46,917.00 1.97%1,800 44,493 (4) 1.95%
Loren Hulsizer 18,081.00 .76%
Ernest D. King 200,428.00 8.40%18,000 .75%
Thomas G. King 12,663.00 .53%22,902 .95%
John Lindroth 19,817.00 .83%4,050 15,950 (5) .84%
John P. Miller 38,735.00 1.62%39,122 1.64%
Richard B. Demers 1,500.00 2,986.004,033 3,336 (3) *.31%
Sherry L. Littlejohn 3,853.003,144 (3) *.06%
All Directors and Executive 37,059.00 415,646.00 18.98%31,054 217,636 10.33%
Officers as a group (14(12 persons)
* Less than one-half of one percent.
(1) Includes shares with respect to which executive officers and directors
have the right to acquire beneficial ownership under stock options
exercisable in 60 days. At February 15, 1997,1998, there were a total of 22,05015,150
such shares.
(2) Calculated on the basis of the amount of shares outstanding, plus 22,05015,150
shares acquirable upon exercise of options described in the preceding
footnote.
(3) Messrs. Ford and Demers, and Ms. Littlejohn, together with one other
officer of the Corporation, share voting and investment power with respect
to 20,04023,739 shares. These shares are included in the shares shown as owned
by Mr. Ford.
11(4) Michael Henricksen and Stanley Gerou own 425 shares in a company called
SDM. These shares are not reported in their totals.
(5) John Lindroth owns 3,000 shares that are in the name Superior State
Agency. John is a major shareholder in Superior State and these shares are
reported in his totals.
-8-
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Corporation's common stock with
that of the cumulative total return on the NASDAQ Bank Stocks Index and the
NASDAQ Stock Market Index for the five year period ended December 31, 1996.1997. The
following information is based on an investment of $100, on January 1, 19911992 in
the Corporation's common stock, the NASDAQ Bank Stocks Index, and the NASDAQ
Stock Market Index, with dividends reinvested. There has been only limited
trading in the Corporation's Common Stock, there are no market makers for such
shares, and the Corporation's common stock does not trade on any stock exchange
or on the NASDAQ market. Accordingly, the returns reflected in the following
graph and table are based on sale prices of the Corporation's stock of which
management is aware. There may have been sales at higher or lower prices of
which management is not aware.
[GRAPHIC OMITTED]
1991
1992 1993 1994 1995 1996 1997
First Manistique Corporation 100 113.26 124.32 147.79 214.64 281.21102.24 114.96 165.28 213.36 392.00
Industry Index (1) 100 104.36 97.33 141.95 188.44 297.47
NASDAQ Stock Market Index 100 115.45 132.48 128.25 179.44 220.18
NASDAQ Bank Stocks Index 100 152.02 196.67 198.84 287.95 336.26119.95 125.94 163.35 202.99 248.30
(1) MG Industry Group 044 - East North Central Banks - Source: Media General
Financial Services, Richmond, Virginia.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of the Corporation for the year ended December 31,
1996,1997, have been examined by Crowe ChizekWipfli Ullrich and Company,Bertelson, LLP, independent
public accountants. A representative of Crowe ChizekWipfli Ullrich and Company,Bertelson, LLP, will
be at the Annual Meeting of Shareholders and will have an opportunity to make a
statement and will be available to answer appropriate questions. Wipfli Ullrich
and Bertelson, LLP has been appointed by the Board of Directors as the
independent public accountants of the Corporation and its subsidiaries for the
year ending December 31, 1997.
121998.
-9-
SHAREHOLDER PROPOSALS
Any shareholder proposal to be considered by the Corporation for inclusion
in the 19981999 Annual Meeting of Shareholders proxy materials must be received by
the Corporation no later than November 15, 1997.1998.
OTHER BUSINESS
The Board of Directors is not aware of any matter to be presented for
action at the meeting, other than the matters set forth herein. If any other
business should come before the meeting, the Proxy will be voted in respect
thereof in accordance with the best judgment of the persons authorized therein,
and discretionary authority to do so is included in the proxy. The cost of
soliciting proxies will be borne by the Corporation. In addition to solicitation
by mail, officers and other employees of the Corporation and its subsidiaries
may solicit proxies by telephone or in person, without compensation other than
their regular compensation.
The Annual Report of the Corporation for 19961997 is included with this Proxy
Statement. Copies of the report will also be available for all shareholders
attending the Annual Meeting.
Shareholders are urged to sign and return the enclosed proxy in the
enclosed envelope. A prompt response will be helpful and appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
Richard B. Demers
Secretary
March 14, 1997
13
APPENDIX A
FIRST MANISTIQUE CORPORATION
STOCK COMPENSATION PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 Establishment of the Plan. First Manistique Corporation, a Michigan
corporation (the "Company"), hereby establishes a stock compensation plan to be
known as the "First Manistique Corporation Stock Compensation Plan" (the
"Plan"), as set forth in this document. The Plan permits the granting of stock
options, restricted stock, and other stock-based awards to key employees of the
Company and its subsidiaries.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's shareholders,
through stock-based compensation, by aligning the personal interests of the
Company's key employees with those of its shareholders. The Plan is also
designed to allow key employees to participate in the Company's future, as well
as to enable the Company to attract, retain and award such employees.
Compensation related to Awards under the Plan is generally intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").
1.3 Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth below:
2.1 Award means any award under this Plan of any Options, Restricted Stock,
Performance Shares or Other Stock-Based Award.
2.2 Award Agreement means an agreement evidencing the grant of an Award
under this Plan. Awards under the Plan shall be evidenced by Award Agreements
that set forth the details, conditions and limitations for each Award, as
established by the Committee and shall be subject to the terms and conditions of
the Plan.
2.3 Award Date means the date that an Award is made, as specified in an
Award Agreement.
2.4 Board means the Board of Directors of the Company.
2.5 Change in Control is defined in Article 12.
2.6 Code means the Internal Revenue Code of 1986, as amended.
2.7 Committee means the Committee, as specified in Article 3, appointed by
the Board to administer the Plan, no members of which shall be eligible to
receive an Award pursuant to the Plan.
2.8 Common Stock means the Common Stock, no par value per share, of the
Company.
2.9 Disability means permanent and total disability as determined under the
rules and guidelines established by the Committee for purposes of the Plan.
2.10 Effective Date means January 15, 1997.
2.11 Employee means a salaried employee (including officers and directors
who are also employees) of the Company or a Subsidiary.
A-1
2.12 Fair Market Value means, as long as the Common Stock is not actively
traded in any recognized market, the average price per share at which shares of
Common Stock were bought and sold during the three (3) preceding months in
transactions known to management of the Company involving 100 or more shares
between purchasers and sellers none of whom are directors or officers of the
Company or any Subsidiary. If the shares of Common Stock are actively traded in
any recognized market, the "Fair Market Value" as used in the Plan shall mean
the average of the last reported sales price of Common Stock as of the close of
business for each of the last twenty(20) trading days ending the day immediately
preceding the day as of which "Fair Market Value" is to be determined.
2.13 Incentive Stock Option or ISO means an option to purchase shares of
Common Stock granted under Article 6, which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
2.14 Non-Employee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.
2.15 Nonqualified Stock Option or NQSO means an option to purchase shares
of Common Stock, granted under Article 6, which is not an Incentive Stock
Option.
2.16 Option means an Incentive Stock Option or a Nonqualified Stock Option.
2.17 Option Price means the price at which a share of Common Stock may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.
2.18 Other Stock-Based Award means an Award under Article 9 of this Plan
that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock.
2.19 Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.
2.20 Permitted Transferee means (i) the spouse, a child, or a grandchild of
a Participant (each an "Immediate Family Member"), (ii) a trust for the
exclusive benefit of a Participant and/or one or more Immediate Family Members,
or (iii) a partnership or limited liability company whose only partners or
members are a Participant and/or one or more Immediate Family Members.
2.21 Performance Shares means an Award granted under Article 8 of this Plan
evidencing the right to receive Common Stock or cash of an equivalent value at
the end of a specified performance period and upon achievement of specified
performance goals or objectives.
2.22 Retirement (including Normal, Early and Disability Retirement) means
the termination of a Participant's employment with the Company or a Subsidiary
with eligibility for normal, early or disability retirement benefits under the
terms of the Company's profit sharing plan, as amended and in effect at the time
of such termination of employment.
2.23 Restricted Stock means an Award granted to a Participant under Article
7 of this Plan.
2.24 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Act"), as amended
from time to time or any successor rule.
2.25 Subsidiary means any corporation in which the Company owns directly,
or indirectly through subsidiaries, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company owns
at least fifty percent (50%) of the combined equity thereof.
2.26 Termination of Employment means the termination of a Participant's
employment with the Company or a Subsidiary. A Participant employed by a
Subsidiary shall also be deemed to incur a Termination of Employment
A-2
if the Subsidiary ceases to be a Subsidiary and the Participant does not
immediately thereafter become an Employee of the Company or another Subsidiary.
ARTICLE 3
ADMINISTRATION
3.1 The Committee. The Plan shall be administered by a Committee designated
by the Board consisting of not less than three (3) directors who shall be
appointed from time to time by the Board, each of whom shall qualify as a
Non-Employee Director. Initially, the Committee shall consist of all directors
of the Company who are Non- Employee Directors.
3.2 Committee Authority. Subject to the Company's Articles of
Incorporation, Bylaws and the provisions of this Plan, the Committee shall have
full authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:
(a) To select the key Employees of the Company or a Subsidiary to
whom Awards may be granted under the Plan;
(b) To determine whether and to what extent Options, Restricted
Stock, Performance Shares and Other Stock-Based Awards, or any
combination thereof are to be granted under the Plan;
(c) To determine the number of shares of Common Stock to be
covered by each Award;
(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting
restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof, regarding
any Award and the shares Common Stock relating thereto, based on such
factors as the Committee shall determine in its sole discretion;
(e) To determine whether, to what extent and under what
circumstances grants of Awards are to operate on a tandem basis and/or
in conjunction with or apart from other cash compensation arrangement
made by Company other than under the terms of this Plan;
(f) To determine under what circumstances an Award may be settled
in cash, Common Stock, or a combination thereof; and
(g) To determine to what extent and under what circumstances
shares of Common Stock and other amounts payable with respect to an
Award shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously granted under the Plan or
cause the Plan or the Award not to meet the requirements of Rule 16b-3. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any
provisions of the Plan or any Award granted under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs, executors and assigns. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or an Award granted hereunder.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 12.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan shall not
exceed 200,000 shares, which may be either unauthorized and unissued
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Common Stock or issued Common Stock reacquired by the Company ("Plan Shares").
The number of Plan Shares shall be reduced by any Shares of Common Stock which
are covered by, or issued pursuant to, options granted under the First
Manistique Corporation 1997 Directors' Stock Option Plan. Determinations as to
the number of Plan Shares that remain available for issuance under the Plan
shall be made in accordance with such rules and procedures as the Committee
shall determine from time to time, which shall be consistent with the
requirements of Rule 16b-3 and such interpretations thereof. If an Award expires
unexercised or is forfeited, cancelled, terminated or settled in cash in lieu of
Common Stock, the shares of Common Stock that were theretofore subject (or
potentially subject) to such Award may again be made subject to an Award
Agreement; provided, however, that any such shares subject to a forfeited or
cancelled Award shall not again be made subject to an Award Agreement to any
Participant who received, directly or indirectly, any of the benefits of
ownership of the securities underlying such Award, excluding the right to vote
such shares.
ARTICLE 5
ELIGIBILITY
The persons who shall be eligible to receive Awards under the Plan shall be
such key Employees as the Committee shall select from time to time. In making
such selections, the Committee shall consider such factors as the Committee in
its discretion shall deem relevant. Participants may hold more than one Award,
but only on the terms and subject to the restrictions set forth in the Plan and
their respective Award Agreements.
ARTICLE 6
STOCK OPTIONS
6.1 Options. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").
6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.
6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987, that are exercisable for the first time by
a Participant during any calendar year shall not exceed the $100,000 limitation
imposed by Section 422(d) of the Code.
6.4 Terms of Options. Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which Agreement shall comply with and be subject to the following terms and
conditions:
(a) Option Price. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Committee at
the time of grant but shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock at the Award Date.
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten (10) years
after the date the Option is granted.
(c) Exercisability. Except as provided in Section 12.2, no Option
shall be exercisable in either in whole or in part prior to the first
anniversary of the Award Date. Thereafter, an Option shall be
exercisable
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at such time or times and subject to such terms and conditions as
shall be determined by the Committee and set forth in the Award
Agreement. If the Committee provides that any Option is exercisable
only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such
factors as the Committee may determine.
(d) Method of Exercise. Subject to whatever installment exercise
and waiting period provisions apply under subsection (c) above,
Options may be exercised in whole or in part at any time during the
term of the Option, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in such
form as the Committee may accept. Notwithstanding the foregoing, an
Option shall not be exercisable with respect to less than 100 shares
of Common Stock unless the remaining shares covered by an Option are
fewer than 100 shares. If and to the extent determined by the
Committee in its sole discretion at or after grant, payment in full or
in part may also be made in the form of Common Stock owned for at
least six months by the Participant (and for which the Participant has
good title free and clear of any liens and encumbrances) or Restricted
Stock, or by reduction in the number of shares issuable upon such
exercise based, in each case, on the Fair Market Value of the Common
Stock on the last trading date preceding payment as determined by the
Committee (without regard to any forfeiture restrictions applicable to
Restricted Stock). No shares of stock shall be issued until payment
has been made. A Participant shall generally have the rights to
dividends or other rights of a shareholder with respect to shares
subject to the Option when the optionee has given written notice of
exercise, has paid for such shares as provided herein, and, if
requested, has given the representation described in Section 13.1 of
the Plan. Notwithstanding the foregoing, if payment in full or in part
has been made in the form of Restricted Stock, an equivalent number of
shares of Common Stock issued on exercise of the Option shall be
subject to the same restrictions and conditions, and during the
remainder of the Restriction Period [as defined in Section 7.3(a)],
applicable to the shares of Restricted Stock surrendered therefor.
(e) Nontransferability of Options. No Option may be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution, provided, however, a Nonqualified Stock Option may be
transferred, without consideration, to a Permitted Transferee if the
Participant satisfies such conditions to the transfer as may be
required by the Committee. A Permitted Transferee shall succeed to all
rights and benefits (except any right to further transfer of the
Option) and be subject to all obligations and limitations applicable
to the original Participant. However, such rights and benefits (except
any right to further transfer of the Option), and obligations and
limitations shall be determined as if the original Participant
continued to hold the Option, whereby provisions of this Plan dealing
with termination of employment, retirement, disability or death of a
Participant will continue to refer to the original Participant
regardless of whether a Nonqualified Stock Option has been transferred
to a Permitted Transferee. The Company shall have no obligation to
notify a Permitted Transferee of the termination of employment,
retirement, disability, or death of a Participant. Further, all
Options shall be exercisable, during the Participant's lifetime, only
by such Participant, or, in the case of a Nonqualified Stock Option,
by a Participant or a Permitted Transferee, as the case may be. The
designation of a person entitled to exercise an Option after a
person's death will not be deemed a transfer.
(f) Termination of Employment for Reasons other than Retirement,
Disability, or Death. Upon Termination of Employment for any reason
other than Retirement or on account of Disability or death, each
Option held by the Participant shall, to the extent rights to purchase
shares under such Option have accrued at the date of such Termination
of Employment and shall not have been fully exercised, be exercisable,
in whole or in part, at any time within a period of three (3) months
following Termination of Employment, subject, however, to prior
expiration of the term of such Options and any other limitations on
the exercise of such Options in effect at the date of exercise.
(g) Termination of Employment for Retirement or Disability. Upon
Termination of Employment by reason of Retirement or Disability, each
Option held by such Participant shall, to the extent rights to
purchase shares under the Option have accrued at the date of such
Retirement or Disability and shall not have been fully exercised,
remain exercisable in whole or in part, for a period of three (3)
years following such Termination of Employment, subject, however, to
prior expiration according to its terms and other limitations
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imposed by the Plan. If the Participant dies after such Retirement or
Disability, the Participant's Options shall be exercisable in
accordance with Section 6.4(h) below.
(h) Termination of Employment for Death. Upon Termination of
Employment due to death, each Option held by such Participant shall,
to the extent rights to purchase shares under the Options have accrued
at the date of death and shall not have been fully exercised, be
exercisable, in whole or in part, by the personal representative of
the Participant's estate or by any person or persons who shall have
acquired the Option directly from the Participant by bequest or
inheritance only under the following circumstances and during the
following periods: (i) if the Participant dies while employed by the
Company or a Subsidiary, at any time within three (3) years after his
death, or (ii) if the Participant dies during the extended exercise
period following Termination of Employment specified in Section
6.4(g), at any time within the longer of such extended period or one
(1) year after death, subject, however, in any case, to the prior
expiration of the term of the Option and any other limitation on the
exercise of such Option in effect at the date of exercise.
(i) Termination of Options. Any Option that is not exercised
within whichever of the exercise periods specified in Sections 6.4(f),
(g) or (h) is applicable shall terminate upon expiration of such
exercise period.
(j) Purchase and Settlement Provisions. The Committee may at any
time offer to purchase an Option previously granted, based on such
terms and conditions as the Committee shall establish and communicate
to the Participant at the time that such offer is made.
ARTICLE 7
RESTRICTED STOCK
7.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards. The Committee may condition the grant of Restricted Stock upon the
achievement of specific business objectives, measurements of individual or
business unit or Company performances, or such other factors as the Committee
may determine. The provisions of Restricted Stock awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.
7.2 Awards and Certificates. A prospective Participant selected to receive
a Restricted Stock Award shall not have any rights with respect to such Award,
unless and until such Participant has executed an Award Agreement evidencing the
Award and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Acceptance. Awards of Restricted Stock must be accepted
within a period of 20 days (or such shorter period as the Committee
may specify at grant) after the Award Date, by executing an Award
Agreement and by paying whatever price (if any) the Committee has
designated for such shares of Restricted Stock.
(b) Legend. Each Participant receiving a Restricted Stock Award
shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the First Manistique
Corporation Stock Compensation Plan and related Award
Agreement entered into between the registered owner and the
Company, dated _______. Copies of such Plan
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and Agreement are on file in the offices of the Company, 130
South Cedar, Manistique, Michigan 49854."
(c) Custody. The Committee may require that the stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any award of Restricted Stock, the Participant shall have
delivered a duly signed stock power, endorsed in blank, relating to
the Common Stock covered by such Award.
7.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:
(a) Restriction Period. Subject to the provisions of this Plan
and the Award Agreement, during a period set by the Committee (the
"Restriction Period"), the Participant shall not be permitted to sell,
transfer, pledge, or assign shares of Restricted Stock awarded under
this Plan. Subject to these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions in whole or
in part, based on service, performance and/or such other factors or
criteria as the Committee may determine.
(b) Rights as Shareholder. Except as provided in this subsection
(b) and subsection (a) above, the Participant shall have, with respect
to the shares of Restricted Stock, all of the rights of a holder of
shares of Common Stock of the Company including the right to receive
any dividends. The Committee, in its sole discretion, as determined at
the time of Award, may permit or require the payment of dividends to
be deferred. If any dividends or other distributions are paid in
shares of Common Stock, such shares shall be subject to the same
restrictions on transferability and forfeitability as the shares of
Restricted Stock with respect to which they were paid.
(c) Termination of Employment. Subject to the applicable
provisions of the Award Agreement and this Article 7, upon Termination
of Employment for any reason during the Restriction Period, all
Restricted Shares still subject to restriction will vest or be
forfeited in accordance with the terms and conditions established by
the Committee as specified in the Award Agreement.
(d) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock, the
certificates for such shares shall be delivered to the Participant.
ARTICLE 8
PERFORMANCE SHARES
8.1 Award of Performance Shares. Performance Shares may be awarded either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the eligible persons to whom and the time or times at which
Performance Shares shall be awarded, the number of Performance Shares to be
awarded to any person, the duration of the period (the "Performance Period")
during which, and the conditions under which, receipt of the Performance Shares
will be deferred, and the other terms and conditions of the Award in addition to
those set forth in Section 8.2, as specified in the Award Agreement. The
Committee may condition the grant of Performance Shares upon the achievement of
specific business objectives, measurements of individual or business unit or
Company performance, or such other factors or criteria as the Committee shall
determine. The provisions of the award of Performance Shares need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.
8.2 Terms and Conditions. Performance Shares awarded pursuant to this
Article 8 shall be subject to the following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan
and the related Award Agreement, Performance Shares may not be sold,
assigned, transferred, pledged or otherwise encumbered during the
Performance Period. At the expiration of the Performance Period, share
certificates or cash of an equivalent
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value (as the Committee may determine in its sole discretion) shall be
delivered to the Participant, or his legal representative, in a number
equal to the shares covered by the Award Agreement.
(b) Dividends. Unless otherwise determined by the Committee at
the time of Award, amounts equal to any cash dividends declared during
the Performance Period with respect to the number of shares of Common
Stock covered by a Performance Share Award will not be paid to the
Participant.
(c) Termination of Employment. Subject to the provisions of the
Award Agreement and this Article 8, upon Termination of Employment for
any reason during the Performance Period for a given Award, the
Performance Shares in question will vest or be forfeited in accordance
with the terms and conditions established by the Committee at or after
grant.
(d) Accelerated Vesting. Based on service, performance and/or
such other factors or criteria as the Committee may determine and set
forth in the Award Agreement, the Committee may, at or after grant,
accelerate the vesting of all or any part of any award of Performance
Shares and/or waive the deferral limitations for all or any part of
such Award.
ARTICLE 9
OTHER STOCK-BASED AWARDS
9.1 Other Awards. Other Awards of Common Stock and other Awards that are
valued in whole or in part by reference to, or are payable in or otherwise based
on, Common Stock ("Other Stock-Based Awards"), may be granted either alone or in
addition to or in tandem with Options, Restricted Stock or Performance Shares.
Subject to the provisions of this Plan, the Committee shall have authority to
determine the persons to whom and the time or times at which such Awards shall
be made, the number of shares of Common Stock to be awarded pursuant to such
awards, and all other conditions of the Awards. The Committee may also provide
for the grant of Common Stock under such Awards upon the completion of a
specified performance period. The provisions of Other Stock-Based Awards need
not be the same with respect to each Participant and such Awards to individual
Participants need not be the same in subsequent years.
9.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article 9 shall be set forth in an Award Agreement and shall be subject to the
following terms and conditions:
(a) Nontransferability. Subject to the provisions of this Plan
and the Award Agreement, shares of Common Stock subject to Awards made
under this Article 9 may not be sold, assigned, transferred, pledged,
or otherwise encumbered prior to the date on which the shares are
issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.
(b) Dividends. Unless otherwise determined by the Committee at
the time of Award, subject to the provisions of this Plan and the
Award Agreement, the recipient of an Award under this Article 9 shall
be entitled to receive, currently or on a deferred stock basis,
dividends or other distributions with respect to the number of shares
of Common Stock covered by the Award.
(c) Vesting. Any Award under this Article 9 and any Common Stock
covered by any such Award shall vest or be forfeited to the extent so
provided in the Award Agreement, as determined by the Committee, in
its sole discretion.
(d) Waiver of Limitation. In the event of the Participant's
Retirement, Disability or death, or in cases of special circumstances,
the Committee may, in its sole discretion, waive in whole or in part
any or all of the limitations imposed hereunder (if any) with respect
to any or all of an Award under this Article 9.
(e) Price. Common Stock issued or sold under this Article 9 may
be issued or sold for no cash consideration or such consideration as
the Committee shall determine and specify in the Award Agreement.
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ARTICLE 10
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's shareholders, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan (except by operation of Section
12.1); (ii) change the definition of Employees eligible to receive Awards under
this Plan; (iii) decrease the option price of any Option to less than one
hundred percent (100%) of the Fair Market Value on the date of grant for an
Option; (iv) extend the maximum option period under Section 6.4(b) of the Plan;
or (v) cause the Plan not to comply with either Rule 16b-3, or any successor
rule under the Act, or Section 162(m) of the Code. The Committee may amend the
terms of any Award theretofore granted, prospectively or retroactively, but,
subject to Section 12.2, no such amendment or other action by the Committee
shall impair the rights of any Participant without the Participant's consent.
Awards may not be granted under the Plan after the Termination Date, but Awards
granted prior to such date shall remain in effect or become exercisable pursuant
to their respective terms and the terms of this Plan.
ARTICLE 11
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.
ARTICLE 12
ADJUSTMENT PROVISIONS
12.1 Antidilution. Subject to the provisions of this Article 12, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (i) the
maximum number and kind of shares provided in Article 4 of the Plan, (ii) the
number and kind of shares or other securities subject to the then outstanding
Awards, and (iii) the price for each share or other unit of any other securities
subject to the then outstanding Awards.
12.2 Change in Control. Notwithstanding Section 12.1, upon the occurrence
of a Change in Control, all Awards then outstanding under the Plan will be fully
vested and exercisable and all restrictions will immediately cease, unless, in
the case of a transaction described in clause (iii) or (iv) in the following
definition of Change in Control, provisions are made in connection with such
transaction for the continuance of the Plan and the assumption of or the
substitution for such Awards of new Awards covering the stock of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices. As used in this
Plan, "Change in Control" shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act; provided that, for
purposes of this Plan, a Change in Control shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company which represent 20% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's stockholders, of
each new director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding any individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such term is used
in Rule 14a-11 of Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on
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behalf of a person other than the Board; (iii) there is consummated any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common Stock
are converted into cash, securities or other property, other than a merger of
the Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; (iv) there is consummated any
consolidation or merger of the Company in which the Company is the continuing or
surviving corporation in which the holders of Common Stock immediately prior to
the merger do not own at least fifty percent (50%), or such greater percentage
as shall be set in any agreement with any Participant, or more of the stock of
the surviving corporation immediately after the merger; (v) there is consummated
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company; or (vi) the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company.
12.3 Adjustments by Committee. Any adjustments pursuant to this Article 12
will be made by the Committee, whose determination as to what adjustments will
be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments. Only cash payments will be made in lieu of fractional shares.
ARTICLE 13
GENERAL PROVISIONS
13.1 Legend. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
13.2 No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall there be a
limitation in any way on the right of the Company or any Subsidiary by which an
Employee is employed to terminate his or her employment at any time.
13.3 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Unless otherwise prohibited by the Committee,
each Participant may satisfy any such withholding tax obligation by any of the
following means or by a combination of such means: (a) tendering a cash payment;
(b) authorizing the Company to withhold from the shares otherwise issuable to
the Participant a number of shares having a Fair Market Value as of the "Tax
Date", less than or equal to the amount of the withholding tax obligation; or
(c) delivering to the Company unencumbered shares owned by the Participant
having a Fair Market Value, as of the Tax Date, less than or equal to the amount
of the withholding tax obligation. The "Tax Date" shall be the date that the
amount of tax to be withheld is determined.
13.4 No Assignment of Benefits. No Option, Award or other benefit payable
under this Plan shall, except as otherwise specifically provided in this Plan or
as otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, attach, sell,
transfer, assign, pledge, encumber or charge, any such benefits shall be void,
and any such benefit shall not in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment or legal process
for or against such person.
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13.5 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.
13.6 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.
13.7 Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
13.8 Cancellation of Prior Plans. Upon approval of this Plan by the Board,
all prior restricted stock plans and all prior employee stock option plans shall
be cancelled, terminated, and of no further force or effect, except insofar as
any such prior plan relates to restricted stock awards or options outstanding
immediately prior to approval of this Plan.
ARTICLE 14
SHAREHOLDER APPROVAL
The Plan shall be effective on the Effective Date and shall be submitted
for approval by the shareholders of the Company at the Annual Meeting of
Shareholders in 1997. If the shareholders do not approve the Plan, it, and any
action taken under the Plan, shall be void and of no effect.
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APPENDIX B
FIRST MANISTIQUE CORPORATION
1997 DIRECTORS' STOCK OPTION PLAN
Section 1. Establishment and Purpose.
First Manistique Corporation hereby establishes a stock option plan to be
named the First Manistique Corporation 1997 Directors' Stock Option Plan, for
certain directors of the Company's banking subsidiaries. The purpose of the Plan
is: (i) to provide a non-cash method of compensating directors that will
directly promote the interests of the stockholders because the rewards made
available to the directors would be directly related to the banking
subsidiaries' returns on equity, and thereby indirectly related to the Company's
return on equity and the price of its stock; and (ii) to aid the Company and its
subsidiaries in competing with other enterprises for the services of new
directors needed to help ensure the Company's continued progress.
Section 2. Definitions.
(a) Act means the Securities Exchange Act of 1934, as amended
from time to time.
(b) Administrator means the three most senior executive officers
of the Company.
(c) Authority means the shares of Stock authorized for issuance
pursuant to the Plan.
(d) Average Equity means the average equity of the Subsidiary as
computed in preparing the audited annual financial statements of the
Company.
(e) Board of Directors means the Board of Directors of the
Company.
(f) Company means First Manistique Corporation, a corporation
organized and existing under the laws of the State of Michigan.
(g) Eligible Director means a director of a Subsidiary who is not
otherwise an officer or employee of the Company or of any Subsidiary.
If a person is a director of more than one Subsidiary, such person
shall, for purposes of this Plan, be an Eligible Director only with
respect to the Subsidiary having the largest amount of assets.
(h) Effective Date means the date this Plan is approved by the
Company's stockholders.
(i) Fair Market Value means, as long as the Common Stock is not
actively traded in any recognized market, the average price per share
at which shares of Common Stock were bought and sold during the three
(3) preceding months in transactions known to management of the
Company involving 100 or more shares between purchasers and sellers
none of whom are directors or officers of the Company or any
Subsidiary. If the shares of Common Stock are actively traded in any
recognized market, the "Fair Market Value" as used in the Plan shall
mean the average of the last reported sales price of Common Stock as
of the close of business for each of the last twenty (20) trading days
ending the day immediately preceding the day as of which "Fair Market
Value" is to be determined.
(j) Grant Date means, with respect to each Option, the day that
an Eligible Director is granted the Option.
(k) Net Income means the net income of a Subsidiary as computed
in preparing the audited annual financial statements of the Company.
(l) Option means an option granted under this Plan to acquire
Stock.
(m) Optionee means the person to whom an Option is granted.
(n) Option Agreement means an Agreement issued to each Eligible
Director with respect to each Option.
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(o) Option Date means the first business day after an annual
meeting of Stockholders with respect to each Option.
(p) Permitted Transferee means either (i) the spouse, a child, or
a grandchild of an Optionee (each an "Immediate Family Member"), (ii)
a trust for the exclusive benefit of an Optionee and/or one or more
Immediate Family Members, or (iii) a partnership or limited liability
company whose only partners or members are an Optionee and/or one or
more Immediate Family Members.
(q) Plan means the First Manistique Corporation 1997 Directors'
Stock Option Plan.
(r) Prior Year means the immediately preceding fiscal year of the
Company.
(s) Post-Death Representative(s) means the executor(s) or
administrator(s) of the Optionee's estate or the person or persons to
whom the Optionee's rights under his or her Option pass by Optionee's
will or the laws of descent and distribution.
(t) ROE means the percentage obtained by dividing the Average
Equity of a Subsidiary for a fiscal year into the Net Income of the
Subsidiary for that fiscal year.
(u) Rule 16b-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Act, as amended from time to time or any
successor rule.
(v) Shares means shares of Stock.
(w) Stock means authorized and unissued shares of common stock,
no par value, of the Company and includes Shares which may be
reacquired by the Company.
(x) Subsidiary means any banking corporation in which the Company
owns directly, or indirectly through subsidiaries, at least fifty
percent (50%) of the total combined voting power of all classes of
stock, or any other entity (including, but not limited to,
partnerships and joint ventures) in which the Company owns at least
fifty percent (50%) of the combined equity thereof.
Any dispute as to the meaning of Average Equity, Net Income, or
ROE shall be resolved by the independent public accountants then
serving the Company.
Section 3. Administration.
The Plan shall be administered on behalf of the Company by the
Administrator. The Administrator may adopt, amend, and rescind from time to time
such administrative rules, and may take from time to time such actions, with or
without notice to affected Optionees or Permitted Transferees, as the case may
be, as the Administrator may deem appropriate to implement or interpret the
provisions of this Plan or to exercise any authority, discretion, or power
explicitly or implicitly granted to the Administrator under this Plan, provided
that no such rules or actions may be inconsistent with the provisions of this
Plan or Rule 16b-3, or any successor rule, under the Act (in the case of
Optionees affected thereby). The Administrator may make rules or take action
pursuant to this Section by any appropriate means.
Section 4. Shares Reserved Under the Plan.
(a) The maximum number of Shares which may be issued in
connection with Options granted hereunder is 200,000, less any Shares
which are covered by, or issued pursuant to, awards granted under the
First Manistique Corporation Stock Compensation Plan (the "Stock
Compensation Plan"). At any time during the existence of the Plan,
there shall be reserved for issuance upon the exercise of Options
granted under the Plan an amount of Stock (subject to adjustment as
provided in Section 10 hereof) equal to 200,000 Shares, less (i) the
total number of Shares issued pursuant to all such exercises which
shall have been made prior to such time, and (ii) the total number of
Shares issued prior to such time pursuant to awards granted under the
Stock Compensation Plan.
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(b) When an Option is granted, the total number of Shares
issuable upon complete exercise thereof shall be charged against the
maximum number of Shares of the Authority. When the Option is
exercised, no additional charge shall be made against the Authority.
If an exercise price is paid in Shares owned by the Optionee or the
Permitted Transferee, as the case may be, such Shares shall not be
added to the Authority.
(c) If an Option terminates in whole in part, by expiration or
for any other reason except exercise of such Option, the Shares
previously charged to the Authority upon grant of the Option shall be
restored to the Authority, and shall again be available for issuance
under the Authority, for as long as such Authority continues, as if
such Shares had never been subject to an Option.
Section 5. Granting of Options.
Each person who is an Eligible Director on the Option Date in 1998
and
each person who is an Eligible Director in each subsequent year on the Option
Date, shall receive an Option to acquire Shares at the Fair Market Value on such
date in accordance with the following schedule:
o if the Subsidiary's ROE for the Prior Year was less than 13%, No
Shares;
o if the Subsidiary's ROE for the Prior Year was 13% but less than
14%, 200 Shares;
o if the Subsidiary's ROE for the Prior Year was 14% but less than
15%, 300 Shares;
o if the Subsidiary's ROE for the Prior Year was 15% or greater,
400 Shares.
References in this Section 5 to Subsidiary relate to the Subsidiary of which the
Eligible Director served as a director during the prior year.
Section 6. Terms of Options.
Notwithstanding any other provisions of the Plan, each Option shall be
evidenced by an Option Agreement, which shall include the substance of the
following terms and conditions:
(a) The option price for each Share covered by an Option shall be
an amount equal to one hundred percent (100%) of the Fair Market Value
of a Share on the Grant Date of such Option.
(b) The Option by its terms shall not be transferable by the
Optionee otherwise than by will or by the laws of descent and
distribution; provided, however, an Option may be transferred, without
consideration, to a Permitted Transferee if the Optionee satisfies
such conditions to the transfer as may be required by the
Administrator. A Permitted Transferee shall succeed to all rights and
benefits (except any right to further transfer of the Option) and be
subject to all obligations and limitations applicable to the original
Optionee. However, such rights and benefits (except any right to
further transfer of the Option), and obligations and limitations shall
be determined as if the original Optionee continued to hold the
Option, whereby provisions of this Plan dealing with termination of
service or death of an Optionee will continue to refer to the original
Optionee regardless of whether an Option has been transferred to a
Permitted Transferee. The Company shall have no obligation to notify a
Permitted Transferee of the termination of service or death of an
Optionee. The designation of a beneficiary entitled to exercise an
Option upon the Optionee's death does not constitute a transfer. The
Option shall be exercisable, during the Optionee's lifetime, only by
the Optionee or a Permitted Transferee, as the case may be.
(c) Options shall become fully exercisable on the first
anniversary of the Grant Date. No Option shall be exercisable after
the expiration of ten years from the Grant Date. Notwithstanding the
foregoing, if the Optionee dies before his or her service as a
director terminates, the Option shall be exercisable as to all Shares,
to the extent not previously exercised.
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(d) The Option shall not be exercisable after the earlier of (i)
the last day of the thirty-sixth month after the month in which the
Optionee's service as a director terminates for any reason or (ii) the
expiration of ten years from the Grant Date.
Section 7. No Right to Remain a Director.
The grant of an Option shall not create any right in any person to remain
as a director of the Company.
Section 8. Exercise of Option.
(a) An Option shall be exercisable only (1) upon payment to the
Company on the exercise date of cash in the full amount of the option
price of the Shares with respect to which the Option is exercised, (2)
upon delivery to the Company on the exercise date of certificates
representing unencumbered Shares, owned by the Optionee or the
Permitted Transferee, as the case may be, having a Fair Market Value,
on the last trading date preceding such exercise and delivery, equal
to the full amount of the purchase price of the Shares with respect to
which the Option is exercised, or (3) a combination of (1) and (2),
except that (i) any portion of the exercise price representing a
fraction of a Share shall in any event be paid in cash, and (ii) no
Shares of Stock which have been held for less than six months may be
delivered in payment of the exercise price of an Option. If and to the
extent determined by the Administrator, in its sole discretion, at or
after the Grant Date, payment in full or in part may also be made by
reduction in the number of Shares issuable upon exercise of the Option
based on the Fair Market Value of the Stock on the last trading date
preceding the exercise.
(b) An Optionee or Permitted Transferee, as the case may be,
shall have none of the rights of a stockholder with respect to Shares
subject to the Option until Shares are issued to the Optionee or
Permitted Transferee upon the exercise of an Option.
Section 9. General Provisions.
The Company shall not be required to issue or deliver any certificate for
Shares to an Optionee or Permitted Transferee, as the case may be, upon the
exercise of an Option prior to:
(a) If requested by the Company, the filing with the Company by
the Optionee, the Permitted Transferee or the Optionee's Post-Death
Representative, as the case may be, of a representation in writing
that at the time of such exercise it is their then present intention
to acquire the Shares being purchased for investment and not for
resale, and/or the completion of any registration or other
qualification of such Shares under any state or federal laws or
rulings or regulations of any governmental regulatory body, which the
Company shall determine to be necessary or advisable; and
(b) The obtaining of any other consent, approval, or permit from
any state or federal governmental agency which the Administrator
shall, in the Administrator's absolute discretion upon the advice of
counsel, determine to be necessary or advisable.
Section 10. Adjustment Provisions.
In the event any stock dividend is declared upon the Stock or in the event
outstanding Shares of Stock shall be changed into or exchanged for a different
number, class or kind of Shares of Stock or other securities of the Company or
another corporation, whether by reason of a split or combination of shares,
recapitalization, reclassification, reorganization, merger, consolidation, or
otherwise, the maximum number of Shares of Stock which may be charged against
the Authority shall be appropriately and proportionately adjusted and in any
such event a corresponding adjustment shall be made changing the number, class
or kind of Shares of Stock or other securities which are deliverable upon the
exercise of any Option theretofore granted without change in the total price
applicable to the unexercised portion of such Option, but with a corresponding
adjustment in the price for each Share or other securities covered by the
unexercised portion of such Option. In the event the Company is merged,
consolidated, or reorganized with another corporation, appropriate provision
shall be made for the continuance of outstanding Options with respect to shares
of the succeeding parent corporation following a merger, or with respect to
shares of the consolidated or reorganized corporation in the case of a
consolidation or reorganization, and to prevent their dilution or enlargement
compared to
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the total shares issuable therein in respect of the Stock. Adjustments under
this Section 10 shall be made in an equitable manner by the Administrator, whose
determination shall be conclusive and binding on all concerned.
Section 11. Duration, Amendment, and Termination.
The Board of Directors may at any time terminate the Plan or make such
amendments thereto as it shall deem advisable and in the best interests of the
Company, without further action on the part of the Stockholders of the Company;
provided, however, that no such termination or amendment shall, without the
consent of the Optionee or Permitted Transferee, as the case may be, adversely
affect or impair the rights of such Optionee or Permitted Transferee, as the
case may be, and provided further, that, unless the Stockholders of the Company
shall have first approved thereof, no amendment of this Plan shall be made
whereby: (a) the total number of Shares which may be granted under the Plan to
all individuals, or to any of them, shall be increased, except by operation of
the adjustment provisions of Section 10 hereof; (b) the term of the Options
shall be extended; (c) the minimum option price shall be decreased; or (d) the
class of eligible persons to whom options may be granted shall be changed. The
period during which Options may be granted under the Authority shall terminate
on the tenth anniversary of the Effective Date, unless the Plan earlier shall
have been terminated as provided above.
Section 12. Date of Granting Options.
All Options granted under the Plan shall be in writing and shall be granted
as of a Grant Date.
Section 13. Stockholder Approval.
The Plan is to be submitted for approval by the Stockholders of the Company
at the 1997 annual meeting and shall be effective only upon receiving such
approval.
Section 14. Miscellaneous.
(a) Subject to the provisions of applicable federal law, the Plan
shall be administered, construed and enforced according to the
internal laws of the State of Michigan, excluding its conflict of law
rules, and applicable federal law and in courts situated in the State
of Michigan.
(b) Transactions under this Plan are intended to comply with
applicable conditions for exemption under Rule 16b-3. To the extent
any provision of this Plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Administrator.
(c) The invalidity of any particular provision herein shall not
invalidate all or any part of the remainder of the Plan, but such
remainder shall be and remain valid in all respects as fully as the
law will permit.
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