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OMB APPROVAL
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OMB Number:
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3235-0059
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Expires:
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January 31, 2008
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Estimated average burden
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14
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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MIDLAND CAPITAL HOLDINGS CORPORATION
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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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.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed: September , 2006
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SEC 1913 (02-02)
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Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number.
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TABLE OF CONTENTS
8929 S.Harlem Ave., Bridgeview, Illinois 60455 Phone (708) 598-9400 Fax (708) 598-5445
September 19, 2007
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Midland Capital Holdings Corporation, we
cordially invite you to attend Midland Capitals 2007 Annual Meeting of Stockholders. The meeting
will be held at 2:00 p.m., local time, on October 17, 2007, at the main office of Midland Capital
located at 8929 South Harlem Avenue, Bridgeview, Illinois.
In addition to the election of two directors, stockholders are being asked to ratify the
appointment of Cobitz, VandenBerg & Fennessy as auditors for Midland Capital. Accordingly, your
Board of Directors unanimously recommends that you vote for each of these proposals.
We encourage you to attend the meeting in person. Whether or not you plan to attend, however,
please read the enclosed proxy statement and then complete, sign and date the enclosed proxy and
return it in the accompanying postpaid return envelope as promptly as possible
. This will save
Midland Capital additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Thank you for your attention to this important matter.
Very truly yours,
PAUL M. ZOGAS
Chairman of the Board,
President and Chief
Executive Officer
MIDLAND CAPITAL HOLDINGS CORPORATION
8929 South Harlem Avenue
Bridgeview, Illinois 60455
(708) 598-9400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 17, 2007
Notice is hereby given that the 2007 Annual Meeting of Stockholders of Midland Capital
Holdings Corporation will be held at 2:00 p.m., local time, on October 17, 2007, at the main office
of Midland Capital located at 8929 South Harlem Avenue, Bridgeview, Illinois.
A proxy card and a proxy statement for the Meeting are enclosed. The Meeting is for the
purpose of considering and acting upon:
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1.
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The election of two directors of Midland Capital;
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2.
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The ratification of the appointment of Cobitz, VandenBerg & Fennessy as
independent auditors of Midland Capital for the fiscal year ending June 30, 2008; and
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such other matters as may properly come before the meeting or any adjournments or postponements
thereof. The Board of Directors is not aware of any other business to come before the meeting.
Any action may be taken on any one of the foregoing proposals at the meeting on the date
specified above, or on any date or dates to which the meeting may be adjourned or postponed.
Stockholders of record at the close of business on September 12, 2007 are the stockholders entitled
to vote at the meeting and any adjournments or postponements thereof. A complete list of
stockholders entitled to vote at the meeting will be available at the main office of Midland
Capital during the ten days prior to the meeting, as well as at the meeting.
You are requested to complete, sign and date the enclosed form of proxy, which is solicited on
behalf of the Board of Directors, and to mail it promptly in the enclosed postage paid return
envelope. The proxy will not be used if you attend and vote at the meeting in person.
By Order of the Board of Directors
PAUL M. ZOGAS
Chairman of the Board, President
and Chief Executive Officer
Bridgeview, Illinois
September 19, 2007
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR
PROXIES TO ENSURE A QUORUM AT THE MEETING. A PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
PROXY STATEMENT
MIDLAND CAPITAL HOLDINGS CORPORATION
8929 South Harlem Avenue
Bridgeview, Illinois 60455
(708) 598-9400
ANNUAL MEETING OF STOCKHOLDERS
October 17, 2007
This proxy statement is furnished in connection with the solicitation of proxies on behalf of
the Board of Directors of Midland Capital Holdings Corporation (Midland Capital or the Company)
to be used at the 2007 Annual Meeting of Stockholders to be held at the main office of Midland
Capital located at 8929 South Harlem Avenue, Bridgeview, Illinois, on October 17, 2007 at 2:00
p.m., local time, and at all adjournments or postponements of the meeting. The accompanying Notice
of Meeting, proxy card and this proxy statement are first being mailed to stockholders on or about
September 19, 2007. Certain of the information provided herein relates to Midland Federal Savings
and Loan Association, a wholly owned subsidiary of Midland Capital.
At the meeting, the stockholders of Midland Capital are being asked to consider and vote upon
(i) the election of two directors of Midland Capital and (ii) the ratification of the appointment
of Cobitz, VandenBerg & Fennessy as the Midland Capitals independent accountants for the fiscal
year ending June 30, 2008. Your Board of Directors unanimously recommends that you vote for each
of managements nominees for election as directors and for the ratification of the appointment of
Cobitz, VandenBerg & Fennessy.
Vote Required and Proxy Information.
All shares of Midland Capital common stock, par value $.01 per share, represented at the
meeting by properly executed proxies received prior to or at the meeting, and not revoked, will be
voted at the Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the nominees and the adoption of the
proposal set forth in this proxy statement. Midland Capital does not know of any matters, other
than as described in the Notice of Meeting, that are to come before the meeting. If any other
matters are properly presented at the meeting for action, the persons named in the enclosed form of
proxy and acting thereunder will have the discretion to vote on such matters in accordance with
their best judgment.
Directors shall be elected by a plurality of the votes present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. Votes withheld and broker
non-votes will have no effect on the election of directors. The ratification of the appointment of
auditors requires the affirmative vote of a majority of the votes cast on the proposal. Proxies
marked to abstain will have the same effect as votes against the proposal to ratify the appointment
of the independent auditors. Broker non-votes will have no effect on this proposal. One-third of
the shares of the common stock, present in person or represented by proxy, shall constitute a
quorum for purposes of the Meeting. Abstentions and broker non-votes are counted for purposes of
determining a quorum.
A proxy given pursuant to this solicitation may be revoked at any time before it is voted.
Proxies may be revoked by: (i) filing with the Secretary of Midland Capital at or before the
meeting a written notice of revocation bearing a later date than the proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary of Midland Capital
at or before the meeting; or (iii) attending the meeting and voting in person (although attendance
at the Meeting will not in and of itself constitute revocation of a proxy). Any written notice
revoking a proxy should be delivered to Charles A. Zogas, Secretary, at the address stated above.
Voting Securities and Principal Holders Thereof.
Stockholders of record as of the close of business on September 12, 2007, will be entitled to
one vote for each share then held. As of that date, Midland Capital had 372,600 shares of common
stock issued and outstanding. The following table sets forth information regarding share ownership
of: (i) those persons or entities known by management to beneficially own more than five percent of
Midland Capitals common stock, (ii) Midland Capitals
Chief Executive Officer, and each other executive officer whose salary and bonus for fiscal
2007 exceeded $100,000 (the Named Officers) and (iii) all directors, nominees and executive
officers of Midland Capital and Midland Federal as a group.
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Beneficial Owner
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Shares Beneficially Owned
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Percent of Class
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Over 5% Beneficial Owners
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Algerd A. Brazis & Aldona Brazis Trust
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20,000
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(1)
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5.37
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%
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13438 Westview Drive
Palos Heights, Illinois 60463
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Jeffrey S. Halis
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20,000
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(2)
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5.37
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%
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500 Park Avenue
Fifth Floor
New York, New York 10022
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Richard A. Horstman
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20,000
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(3)
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5.37
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%
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31 Boulder Wood Drive
Bernardsville, New Jersey 07924
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Named Officers
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Paul M. Zogas, Chairman of the Board,
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107,907
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(4)
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28.96
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%
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President, Chief Executive Officer and
Chief Financial Officer
8929 South Harlem Avenue
Bridgeview, Illinois 60455
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Richard Taylor, Director, Vice President
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8,308
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2.23
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%
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8929 South Harlem Avenue
Bridgeview, Illinois 60455
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Charles A. Zogas, Director, Executive
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87,987
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(4)
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23.61
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%
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Vice President and Secretary
8929 South Harlem Avenue
Bridgeview, Illinois 60455
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Directors and executive officers of the
Company as a group
(5 persons)
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219,852
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(5)
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59.00
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%
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(1)
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The above information is based on a Statement on Schedule 13D filed on August 3,
1998, by Mr. Brazis and a Form 4 filed in November 5, 2003 by Mr. Brazis. Mr. Brazis reported
shared voting and investment power with his wife and the Algerd A. and Aldona Brazis Living
Trust with respect to the shares.
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(2)
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The above information is as reported in a Schedule 13D filed June 29, 1999. Mr.
Halis claimed sole voting and dispositive power in regards to all 20,000 shares.
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(3)
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The above information as reported in a Schedule 13D filed September 9, 1993.
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(4)
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Each person has reported sole voting and investment power with respect to the shares
held by them, respectively.
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(5)
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Includes shares held directly, held in retirement accounts, held by certain members
of the named individuals families, or held by trusts of which the named individuals may be
deemed to have sole or shared voting or dispositive power.
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2
I. ELECTION OF DIRECTORS
General.
Midland Capitals Board of Directors consists of five members. The Board of Directors is
divided into three classes, each of which contains approximately one-third of the Board of
Directors. One-third of the directors are elected annually. Directors of Midland Capital are
generally elected to serve for a three-year period or until their respective successors are elected
and qualified. The Company does not have a policy regarding director attendance at stockholder
meetings. All of the Companys directors attended our 2006 annual meeting of stockholders.
The table below sets forth certain information regarding the present members and nominees of
Midland Capitals Board of Directors. The Board of Directors acting as the nominating committee
has recommended and approved the nominees identified in the following table. Current directors
Jonas Vaznelis and Paul M. Zogas have been nominated for terms of three years. It is intended that
the proxies solicited on behalf of the Board of Directors (other than proxies in which the vote is
withheld as to a nominee) will be voted at the meeting
FOR
the election of the nominees
identified below. If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of Directors may recommend.
At this time, the Board of Directors knows of no reason why the nominees may be unable to serve, if
elected. Except as disclosed herein, there are no arrangements or understandings between the
nominees and any other person pursuant to which the nominees were selected.
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Shares of
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Position(s) Held
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Common Stock
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Percent
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in the Company
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Director
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Term to
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Beneficially
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of
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Name
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Age
(1)
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and the Association
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Since
(2)
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Expire
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Owned
(3)
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Class
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NOMINEES
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Jonas Vaznelis
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87
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Director
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1977
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2010
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3,925
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1.05
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%
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Paul M. Zogas
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52
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Chairman of the Board,
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1982
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2010
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107,907
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28.96
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%
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President, Chief Executive
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Officer and Chief
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Financial Officer
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DIRECTORS CONTINUING IN OFFICE
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Michael J. Kukanza
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47
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Director
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1996
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2008
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11,725
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3.15
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%
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Richard Taylor
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57
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Director and Vice President
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1990
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2008
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8,308
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2.23
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%
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Charles A. Zogas
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53
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Director, Executive Vice
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1983
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2009
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87,987
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23.61
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%
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President and Secretary
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(1)
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At June 30, 2007.
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(2)
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Includes service as a director of the Association.
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(3)
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Amounts include shares held directly as well as shares held by certain members of
the named individuals families with respect to which shares the respective directors may be
deemed to have sole or shared voting and/or investment power.
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The business experience of each director of Midland Capital is set forth below. All
directors have held their present position for at least five years unless otherwise indicated.
Jonas Vaznelis.
Mr. Vaznelis retired as the owner and President of Gifts International, a
retail store located in Chicago, Illinois, in 1995. Mr. Vaznelis is a member of the Lithuanian
Community Council of Chicago, Illinois, and the Lithuanian Foundation, Inc.
Paul Zogas
. Mr. Zogas has been Chairman of the Board, President and Chief Executive Officer
since 1983, a Director since 1982 and Chief Financial Officer since 1977. Mr. Zogas holds an AB
degree in Economics from the University of Michigan in Ann Arbor, and a Juris Doctor degree from
DePaul University College of Law in Chicago. Mr. Zogas provides legal services from time to time
to private clients. Mr. Zogas is the brother of Charles Zogas.
3
Michael J. Kukanza.
Mr. Kukanza was elected to the Board of Directors in October 1996. Mr.
Kukanza is a self-employed private investor. Mr. Kukanza was a founding General Partner of Compass
Asset Management, L.L.C., a Chicago-based asset management company, from 1997 to 2003. Prior to
joining Compass Asset Management, Mr. Kukanza was Senior Vice President, Global Foreign Exchange
Options Head at NationsBanc-CRT until April 1996. Prior to that position, Mr. Kukanza was Managing
Director responsible for Global Foreign Exchange Options at Merrill Lynch & Company based both in
New York and London from April 1989 to September 1994. Before joining Merrill Lynch, Mr. Kukanza
was a Principal in Equity Options at OConnor & Associates, based in Chicago, beginning in
September 1982. Mr. Kukanza holds a BA degree in Economics from the University of Chicago.
Richard Taylor.
Mr. Taylor joined Midland Federal in 1972. Since joining Midland Federal in
1972, he has held various lending positions and has held the position of Vice President in Charge
of Lending since 1982. Mr. Taylor holds a BS degree from Illinois State University, and is also a
licensed real estate and insurance broker.
Charles Zogas.
Mr. Zogas has been the Executive Vice President and the Chief Operations
Officer of Midland Federal since 1982. He was elected a Director in 1983, and also serves as
Secretary and Treasurer. Mr. Zogas holds a BS degree from the University of Notre Dame in Notre
Dame, Indiana, and a Juris Doctor degree from IIT/Chicago Kent College of Law. Mr. Zogas also
provides legal services from time to time to private clients. Mr. Zogas is the brother of Paul
Zogas.
Meetings and Committees of the Board of Directors.
Meetings of the Midland Capitals Board of Directors are generally held on a quarterly basis.
The Board of Directors met six times during fiscal 2007. During fiscal 2007, no incumbent director
of Midland Capital attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of Directors on which he
served.
The Board of Directors has established Executive, Audit, Loan, Asset/Liability, Compensation
and Stock Option and Incentive Plan committees.
The Executive Committee, consisting of Directors P. Zogas, C. Zogas and Vaznelis, meets on an
as needed basis to exercise the power of the Board in between Board meetings. This committee did
not meet during the fiscal year ended June 30, 2007.
The Compensation Committee, composed of Directors Kukanza and Vaznelis, meets at least
annually to make compensation recommendations and to decide the compensation of the Chief Executive
Officer. This committee met once for the fiscal year ended June 30, 2007. Our Board of Directors
has adopted a written charter for the compensation committee which is attached hereto as Appendix
A.
The Stock Option and Incentive Plan Committee, composed of Directors Kukanza and Vaznelis,
meets to make awards under the Stock Option Plan. This committee did not meet during the fiscal
year ended June 30, 2007.
The Audit Committee consists of Directors Kukanza and Vaznelis. The Audit Committee appoints
and oversees the Companys independent auditors, oversees managements activities with respect to
accounting, recordkeeping, financial reporting and internal and other controls, reviews the
Companys annual audited and quarterly financial statements, and maintains a procedure for
confidential complaints regarding accounting matters. Our Board of Directors has adopted an
amended and restated written charter for the audit committee which is attached hereto as Appendix
B.
The Board of Directors has determined that none of the members of the audit committee
qualifies as an audit committee financial expert under applicable SEC rules. However, the Board
of Directors believes that the audit committee is able to perform its functions without an audit
committee financial expert on the committee because each committee member is financially literate
and either has long experience as a director in reviewing financial institution financial
statements or extensive work experience in the financial field. In fiscal 2007, this committee met
five times.
4
Board Nominations for Election of Directors.
Nominations of candidates for election to the Board of Directors may be made only by or at the
direction of the Board of Directors or by stockholders entitled to vote for the election of
directors who comply with the notice procedures set forth below.
Midland Capital does not have a nominating committee as the Board as the entire Board performs
the nominating function. The Board of Directors believes that it is unnecessary for the Company to
have a separate nominating committee because the Board of Directors can effectively perform this
function by itself due to the small number of Board members and the stability of the Board.
The Board will consider suggestions from stockholders of persons they believe should be Board
nominees for election as directors. Any such suggestions must be received not later than the close
of the fiscal year prior to the stockholders meeting as to which nomination and election is sought.
The Board will consider such suggestions in its discretion and may consider, among other factors,
the Companys need for new directors, the qualifications, experience and background of the
candidates and the adequacy of the information supplied by the suggesting shareholders. If the
Board believes that the current Board is adequate, it may not review any stockholder suggestions
for directors.
Stockholder Nominations for Director.
Pursuant to the Companys bylaws, stockholder nominations for election as directors by
stockholders must be made in writing and delivered to the Secretary of the Company at least 70 days
prior to the annual meeting date. If, however, less than 80 days notice of the date of the meeting
is given or made to stockholders, nominations must be received by the Company not later than the
close of business on the tenth day following the earlier of the day on which notice of the date of
the meeting is mailed to stockholders or the day on which public disclosure of the date of the
meeting is first made. In addition to meeting the applicable deadline, nominations must be
accompanied by certain information specified in the Companys bylaws.
Stockholder Communications with the Board of Directors.
The Company does not have a specific policy for stockholder communications with the Board of
Directors. However, the Board of Directors may consider stockholder communications and proposals
on an ad hoc basis. Any such communications should be addressed to the Companys Chairman of the
Board at its main office address.
Compensation of Directors.
Set forth below is information regarding the compensation of our directors for fiscal 2007
other than Paul Zogas and Richard Taylor whose director compensation is included in the Summary
Compensation Table below.
DIRECTOR COMPENSATION
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Non-equity
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Nonqualified
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Fees earned
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Stock
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Option
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incentive plan
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deferred
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All other
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or paid in
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awards
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awards
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compensation
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compensation
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compensation
|
|
Total
|
Name
|
|
cash ($)
|
|
($)
|
|
($)
|
|
($)
|
|
earnings ($)
|
|
($)
|
|
($)
|
Jonas Vaznelis
|
|
$
|
18,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,050
|
|
Michael J. Kukanza
|
|
$
|
16,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16,400
|
|
Charles A. Zogas
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,000
|
|
Directors fees are currently paid in the amount of $1,250 for each regular meeting of the
board attended and $250 for each special meeting attended. Non-employee directors received a fee
in the amount of $250 for each committee meeting attended.
5
Board Independence.
The Board of Directors has determined that Directors Vaznelis and Kukanza are each
independent within the meaning of the Nasdaq corporate governance listing standards. Directors
P. Zogas, Taylor and C. Zogas are not independent by virtue of their being employees of the Bank.
Executive Compensation.
The following table sets forth for the year ended June 30, 2007 certain information as to the
total remuneration paid by us to Mr. Paul Zogas, who serves as Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer and Mr. Richard Taylor, Vice President.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
incentive
|
|
Nonqualified
|
|
|
|
|
Name and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
plan
|
|
deferred
|
|
All other
|
|
|
principal
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
awards
|
|
awards
|
|
compensation
|
|
compensation
|
|
compensation
|
|
|
Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($
|
|
earnings ($)
|
|
($)
|
|
Total ($)
|
Paul Zogas,
|
|
|
2007
|
|
|
$
|
196,810
|
|
|
$
|
15,756
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
27,492
|
(1)
|
|
$
|
240,058
|
|
President,
Chairman, Chief
Executive
Officer and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Taylor,
Vice President
|
|
|
2007
|
|
|
$
|
109,805
|
|
|
$
|
8,790
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
20,762
|
(2)
|
|
$
|
139,357
|
|
|
|
|
(1)
|
|
Includes $15,000 in director fees, $6,684 in contributions to Mr. Zogas 401(k)
Savings Plan, $3,462 in health club dues, $2,070 in imputed income under the Companys
disability insurance plan and $276 in imputed income under the Companys group term life
insurance plan.
|
|
(2)
|
|
Includes $15,000 in director fees, $3,486 in contributions to Mr. Taylors 401(k)
Savings Plan, $1,760 in imputed income under the Companys disability insurance plan and $516
in imputed income under the Companys group term life insurance plan.
|
No stock appreciation rights, limited stock appreciation rights or stock options were granted
to Mr. P. Zogas. Mr. C. Zogas or Mr. Taylor during the fiscal year ended June 30, 2007.
Outstanding Equity Awards at Year End.
None of Midland Capitals named executive officers had any outstanding equity awards during
2007.
Employment Agreement with Paul Zogas
. Midland Capital has a three year employment agreement
with Paul Zogas. The agreement with Paul Zogas provides for an annual base salary in an amount not
less than Mr. Zogass salary as of the effective date of the agreement as it may be increased from
time to time. The term of the agreement is automatically extended daily by one day so that the
term is always three years, unless Midland Capital has given Mr. Zogas 90 days advance notice that
the term is not to be extended. The agreement provides for termination upon Mr. Zogass death, for
cause or in the case of certain other events specified in the agreement.
If Mr. Zogass employment is involuntarily terminated by Midland Capital other than in
connection with or within 36 months after a change in control of Midland Capital or Midland
Federal, he will be entitled to receive (i) payment of his base salary during the remaining term of
the agreement in the same manner and at the same times received by him while employed and (ii) for
the remaining term of the agreement, substantially the same health insurance benefits as he
receives as of the date of termination. The term involuntary termination means termination by
Midland Capital or Midland Federal other than for cause or due to the retirement, death or
disability of Mr. Zogas, and includes a material reduction of Mr. Zogass current duties, benefits
and responsibilities.
6
If Mr. Zogass employment is involuntarily terminated in connection with or within 36 months
after a change in control of Midland Capital or Midland Federal, he will be entitled to receive (i)
a lump sum cash payment equal to 299% of his base amount of compensation and (ii) for the
remaining term of the agreement substantially
the same health insurance benefits as he receives as of the date of termination. The lump sum
payment is subject to reduction to ensure that all amounts payable by Midland Capital and Midland
Federal to him in connection with a change in control are deductible by Midland Capital or Midland
Federal for federal income tax purposes.
Employment Agreement with Richard Taylor
. Midland Federal has an employment agreement with
Richard Taylor for a one year term. The employment agreement with Richard Taylor provides for an
initial base salary equal to his salary in effect on the date of the contract, with an annual raise
to be determined by the Board of Directors. The contract automatically extends for one year at
each anniversary date (provided that there is a performance review of the employee) until either
the Association or Mr. Taylor gives written notice to the contrary. The contract provides for
termination upon Mr. Taylors death, for cause or in certain events specified by regulations of the
Office of Thrift Supervision. Under the terms of the contract, in the event that Mr. Taylor is
terminated in connection with a change in control, he may be entitled to be paid for the remaining
term of his contract as well as to receive a payment equal to one years salary. The contracts
provide, among other things, for participation in an equitable manner in employee benefits
applicable to executive personnel. The employment contract may have an anti-takeover effect that
could affect a proposed future acquisition of control of Midland Federal by rendering it more time
consuming and expensive to remove the subject employee.
Pension Plan.
Defined Benefit Pension Plan
. Midland Federal sponsors a defined benefit pension plan.
Eligible employees participate in the pension plan after they attain age 21 and following the
completion of 12 months of service, provided the employee has completed at least 1,000 hours of
work during such 12-month period. The pension plan is funded solely through contributions made by
the Association.
The table below sets forth, as of June 30, 2007, estimated annual pension benefits for
individuals at age 65 payable in the form of benefit for various levels of compensation and years
of service. The figures in this table are based upon the assumption that the individual is
currently age 65 as of June 30, 2007 with a specified number of years of service. At June 30,
2007, the estimated credited years of service of Mr. P. Zogas was 29 and of Mr. R. Taylor was 35.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Annual
|
|
|
|
Annual Pension Benefit Based on Years of Service
|
Compensation
|
|
|
|
10
|
|
20
|
|
30
|
|
40
|
|
$
|
20,000
|
|
|
|
|
$
|
2,000
|
|
|
$
|
4,000
|
|
|
$
|
6,000
|
|
|
$
|
8,200
|
|
|
40,000
|
|
|
|
|
|
4,900
|
|
|
|
9,800
|
|
|
|
14,700
|
|
|
|
20,200
|
|
|
60,000
|
|
|
|
|
|
7,900
|
|
|
|
15,800
|
|
|
|
23,700
|
|
|
|
32,200
|
|
|
80,000
|
|
|
|
|
|
10,900
|
|
|
|
21,800
|
|
|
|
32,700
|
|
|
|
44,200
|
|
|
100,000
|
|
|
|
|
|
13,900
|
|
|
|
27,800
|
|
|
|
41,700
|
|
|
|
56,200
|
|
|
120,000
|
|
|
|
|
|
16,900
|
|
|
|
33,800
|
|
|
|
50,700
|
|
|
|
68,200
|
|
|
140,000
|
|
|
|
|
|
19,900
|
|
|
|
39,800
|
|
|
|
59,700
|
|
|
|
80,200
|
|
Code of Ethics.
The Company has adopted a code of ethics that is applicable to senior financial officers of
the Company, including the Companys principal executive officer, principal financial officer,
principal accounting officer and all officers performing similar functions as defined in the Code
of Ethics. The Code of Ethics was filed with the U.S. Securities and Exchange Commission as an
Exhibit to the Companys Annual Report on Form 10-KSB for the year ended June 30, 2004.
Report of the Audit Committee of the Board of Directors.
The Audit Committee consists of the following members of Midland Capitals Board of Directors:
Kukanza and Vaznelis. Each of the members of the Audit Committee is believed to be independent as
defined under the current NASDAQ listing standards, although the Companys shares are not so
listed.
Company management is primarily responsible for the Companys financial reporting and its
internal and disclosure controls. However, the Audit Committee is responsible for the relationship
between the Company and its
7
independent auditor. The Committee also receives reports with respect
to financial reporting, internal controls, disclosure controls and internal controls over financial
reporting. In addition, under the Audit Committees charter,
the Committee reviews the Companys unaudited interim financial statements and audited year
end financial statements.
During the Audit Committees meetings during fiscal 2007 and thereafter:
|
|
The Audit Committee reviewed and discussed certain consolidated financial statements with management and the
independent auditor.
|
|
|
The Audit Committee discussed with the independent auditor the matters required to be discussed by Statement on
Auditing Standards No. 61, including the quality (not just the acceptability) of the relevant accounting principles,
the reasonableness of the significant judgments, and the clarity of the included disclosures.
|
|
|
The Audit Committee received the written disclosures and the letter from the independent auditor required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and discussed with the
independent auditor its independence from the Company and management.
|
|
|
The Audit Committee members reviewed the overall scope and plans for the 2007 audit.
|
|
|
The Audit Committee met with the independent auditor (with and without management present) to discuss the results of
its examination, its evaluation of the Companys internal controls, and the overall quality of the Companys financial
reporting.
|
In performing these functions, the Audit Committee acted only in an oversight capacity. In
this oversight role, the Audit Committee relied on the work and assurances of the Companys
management, which has the primary responsibility for financial statements and reports, and on the
independent auditor which, in its report, expressed an opinion on the conformity of the Companys
financial statements to generally accepted principles. The Audit Committees oversight did not
provide it with an independent basis to determine whether management maintained appropriate
accounting and financial accounting standards and complied with applicable laws and regulations.
Furthermore, the Audit Committees review and discussions with management and the independent
auditor did not assure that the Companys financial statements were audited in accordance with
generally accepted auditing standards or that the Companys independent auditor was in fact
independent.
In reliance on the above, the Audit Committee recommended to the Board of Directors, and the
Board has directed, that the audited consolidated financial statements be included in the Companys
Annual Report on Form 10-KSB for the year ended June 30, 2007 for filing with the Securities and
Exchange Commission. The Audit Committee has also selected, subject to stockholder ratification,
the Companys independent auditor for fiscal 2008.
This report shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we
specifically incorporate this information by reference, and it shall not otherwise be deemed filed
under such Acts.
|
|
|
Michael J. Kukanza
|
|
Jonas Vaznelis
|
Certain Relationships and Related Transactions.
Midland Federal, like many financial institutions, has followed a policy of granting loans to
eligible officers, directors and employees for the financing of their personal residences. Loans
are made in the ordinary course of business on substantially the same terms and conditions as those
of comparable transactions prevailing at the time, and do not involve more than the normal risk of
collectibility or present other unfavorable features. Federal law requires that all such
transactions with officers and directors be on terms and conditions comparable to those for similar
transactions with non-affiliates.
The following table sets forth loans made by Midland Federal to its directors and executive
officers where the largest amount of all indebtedness outstanding during the year ended June 30,
2007 and all amount of interest payable during the year ended June 30, 2007 exceeded $120,000.
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Largest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
aggregate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
balance
|
|
|
|
|
|
|
|
|
|
Principal paid
|
|
Interest paid
|
|
|
|
|
between
|
|
|
|
|
|
|
|
|
|
between
|
|
between
|
|
|
|
|
July 1, 2006
|
|
|
|
|
|
Principal
|
|
July 1, 2006
|
|
July 1, 2006
|
Name and
|
|
Natre of
|
|
and
|
|
Interest
|
|
balance
|
|
and
|
|
and
|
position
|
|
transaction
|
|
June 30, 2007
|
|
rate
|
|
June 30, 2007
|
|
June 30, 2007
|
|
June 30, 2007
|
Paul Zogas
|
|
Line of Credit
|
|
$
|
520,000
|
(1)
|
|
|
7.75
|
%
|
|
$
|
218,800
|
|
|
$
|
35,000
|
|
|
$
|
8,893
|
|
President and Chief
|
|
Mortgage Loan on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
primary residence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Zogas
|
|
Mortgage Loan on
|
|
$
|
280,084
|
|
|
|
5.00
|
%
|
|
$
|
263,080
|
|
|
$
|
17,005
|
|
|
$
|
13,618
|
|
Executive Vice
|
|
primary residence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles Zogas
|
|
Line of Credit
|
|
$
|
246,000
|
(2)
|
|
|
7.75
|
%
|
|
$
|
245,649
|
|
|
$
|
|
|
|
$
|
17,598
|
|
Executive Vice
|
|
Mortgage Loan on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
primary residence
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The largest aggregate balance on this loan reflects the maximum credit limit. The
interest rate on this loan is variable and is set at Prime minus one-half percent, adjusted
monthly.
|
|
(2)
|
|
The largest aggregate balance on this loan reflects the maximum credit limit. The
interest rate on this loan is variable and is set at Prime minus one-half percent, adjusted
monthly.
|
The Board of Directors does not have any written procedures for the review, approval or
ratification of transactions between us and our directors, officers or their immediate family
members. As a matter of practice, the entire board will consider a potential transaction involving
a director, officer or their immediate family members. Any transaction will be made on terms no
less favorable to us as would be obtainable from an unaffiliated party.
II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors by the Company has appointed Cobitz, VandenBerg
& Fennessy to be the Companys independent auditor for the fiscal year ending June 30, 2008.
Representatives of Cobitz, VandenBerg & Fennessy are expected to attend the Meeting to respond to
appropriate questions and to make a statement if they so desire.
Audit Fees.
The aggregate fees billed to the Company by Cobitz, VandenBerg & Fennessy for professional
services rendered for the audit of the Companys annual financial statements, the review of the
financial statements included in the Companys Quarterly Reports on Form 10-QSB and services that
are normally provided by Cobitz, VandenBerg & Fennessy in connection with statutory and regulatory
filings and engagements were $50,720 for the fiscal year ended June 30, 2007. The aggregate fees
billed to the Company by Cobitz, VandenBerg & Fennessy for professional services rendered by
Cobitz, VandenBerg & Fennessy for the audit of the Companys annual financial statements, the
review of the financial statements included in the Companys Quarterly Reports on Form 10-QSB and
services that are normally provided by Cobitz, VandenBerg & Fennessy in connection with statutory
and regulatory filings and engagements were $49,875 for the fiscal year ended June 30, 2006.
9
Audit Related Fees.
There were no fees billed to the Company by Cobitz, VandenBerg & Fennessy for assurance and
related services rendered by Cobitz, VandenBerg & Fennessy that are reasonably related to the
performance of the audit of and review of the financial statements and that are not already
reported in Audit Fees above during the fiscal years ended June 30, 2006 and 2007.
Tax Fees.
An aggregate of $4,500 and $4,500, respectively, per year was billed to the Company by Cobitz,
VandenBerg & Fennessy for tax compliance, tax advice and tax planning during each of the fiscal
years ended June 30, 2006 and 2007.
All Other Fees.
There were no fees billed to the Company by Cobitz, VandenBerg & Fennessy for all services
other than those described above for the fiscal years ended June 30, 2006 and 2007.
The Audit Committee has considered whether the provision of non-audit services is compatible
with maintaining the independence of Cobitz, VandenBerg & Fennessy. The Audit Committee concluded
that the performance of such services will not affect the independence of Cobitz, VandenBerg &
Fennessy in performing its function as independent auditor of the Company.
The Audit Committee preapproves all audit and permissible non-audit services to be provided by
the Companys independent auditor.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF COBITZ, VANDENBERG & FENNESSY AS THE COMPANYS INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING
JUNE 30, 2008.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Companys directors and executive officers, and
persons who beneficially own more than 10% of the Common Stock, to file with the Securities and
Exchange Commission (the SEC) initial reports of ownership and reports of changes in ownership of
the Common Stock. Officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on a review of the copies of such reports furnished
to the Company and written representations that no other reports were required, during the fiscal
year ended June 30, 2007, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were met.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in Midland Capitals proxy materials for next years
Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be
received at Midland Capitals office, 8929 South Harlem Avenue, Bridgeview, Illinois 60455, no
later than May 23, 2008. Any such proposals shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934, as amended, the Companys certificate of
incorporation and bylaws and applicable law.
To be considered for presentation at the next annual meeting (although not necessarily for
inclusion in the Companys proxy materials), proposals must be received at Midland Capitals main
office later than August 19, 2008, provided however, that in the event that the date of next years
annual meeting is held before September 28, 2008 or after December 17, 2008, the stockholder
proposal must be received on or before the close of business on the later of the 60th day prior to
such annual meeting or the tenth day following the day on which notice of the date of the annual
meeting is mailed or public announcement of the date of such meeting is made.
10
OTHER MATTERS
The Board of Directors is not aware of any business to come before the Meeting other than the
matters described above in this proxy statement. However, if any other matters should properly
come before the Meeting, it is intended that holders of the proxies will act in accordance with
their best judgment.
The cost of solicitation of proxies will be borne by Midland Capital. Midland Capital will
reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial owners of Midland Capital common
stock. In addition to solicitation by mail, directors and officers of Midland Capital and its
regular employees may solicit proxies personally or by telegraph or telephone, without additional
compensation.
By Order of the Board of Directors
Paul Zogas
Chairman of the Board, President,
Chief Executive Officer and
Chief Financial Officer
Bridgeview, Illinois
September 19, 2007
11
APPENDIX A
MIDLAND CAPITAL HOLDINGS CORPORATION
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
The compensation committee of the Board of Directors (the Board) of Midland Capital Holdings
Corporation (the Company), shall consist of a minimum of two directors, as determined by the
Board. Members of the committee shall be appointed by the Board and may be removed by the Board.
All members of the committee shall be independent, as defined using the methodology utilized by
the Board in identifying independent directors, and shall satisfy the applicable OTC Bulletin Board
listing standards for independence. In addition, all members of the committee shall be
non-employee directors as defined by Rule 16b-3 under the Securities Exchange Act of 1934, as
amended and outside directors under Section 162m of the Internal Revenue Code.
The purpose of the committee shall be to assist the Board in carrying out the Boards overall
responsibility relating to executive compensation.
In furtherance of this purpose, the committee shall have the following authority and
responsibilities:
1. To assist the Board in developing and evaluating potential candidates for executive
positions and to oversee the development of executive succession plans.
2. To recommend to the Board for approval the Chief Executive Officers annual compensation,
including salary, bonus, incentive and equity compensation. Although the Chief Executive Officer
shall be afforded the opportunity to discuss with the committee his proposed compensation, he may
not be present during the committees deliberations or voting on his compensation.
3. To review and recommend to the Board for approval on an annual basis an evaluation process
and compensation structure for the Companys executive officers and a compensation review process
for all employees of the Company and subsidiaries. The committee shall, with the participation of
the Chief Executive Officer, evaluate the performance of the Companys senior executive officers
and recommend to the Board annual compensation packages, including salary, bonus, incentive and
equity compensation, for such executive officers. The committee shall also provide oversight of
managements decisions concerning the performance and compensation of other Company officers.
4. To review the Companys stock-based and other major incentive/compensation plans and
recommend to the Board such changes as may be appropriate. The committee shall make
recommendations to the Board regarding the recipients, amounts and form of any stock awards to be
issued under any stock-based incentive plan of the Company. The committee shall have and shall
exercise all the authority of the Board with respect to the administration of such plans.
5. To prepare and publish any required compensation committee reports including any reports
required for the Companys proxy statement.
6. To review, in consultation with the Nominating/Corporate Governance Committee, director
compensation and benefits.
The committee shall have the authority to delegate any of its responsibilities to such
subcommittees as the committee may deem appropriate in its sole discretion.
The committee shall have authority to retain such compensation consultants, outside counsel
and other advisors as the committee may deem appropriate in its sole discretion. The committee
shall have sole authority to approve related fees and retention terms.
The committee shall report its actions and any recommendations to the Board after each
committee meeting. The committee shall review at least annually the adequacy of this charter and
recommend any proposed changes to the Board for approval.
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APPENDIX B
MIDLAND CAPITAL HOLDINGS CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AMENDED AND RESTATED CHARTER
PREAMBLE
This Audit Committee Charter (the Charter) has been adopted by the Board of Directors of Midland
Capital Holdings Corporation (the Company). The Audit Committee of the Board shall review and
reassess this charter annually and recommend any proposed changes to the Board for approval.
OBJECTIVES OF COMMITTEE
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To provide assistance to the Board of Directors in fulfilling its fiduciary responsibilities
and oversee managements activities relating to accounting, record keeping, financial
reporting, disclosure controls and internal control over financial reporting.
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Provide a vehicle and establish a forum for the free and open communication of views and
information among the Companys directors, independent public accounting firm, internal
auditor and management.
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To review the independence of the Companys independent public accounting firm and the
objectivity of internal auditor.
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To perform the audit committee functions specified by the Securities and Exchange Commission
and the OTC Bulletin Board.
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To establish and maintain a system for confidential complaints regarding the Companys
accounting, financial reporting, disclosure controls, and internal control over financial
reporting.
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ROLES AND RESPONSIBILITIES
The responsibilities of the committee include the following:
Independent Auditors:
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Appoint an independent public accounting firm for the purpose of auditing the Companys
financial statements and, if and when required, attesting to its internal control over
financial reporting.
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Assess the qualifications of the Companys public auditing firm and its lead engagement
partner. Oversee and evaluate the performance of such person and firm; if necessary, remove
them.
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Obtain annually from the Companys independent public auditing firm a formal written
statement describing all relationships between the firm and the Company. Discuss with the
Companys independent public auditing firm any relationships that may impact the objectivity
and independence of such firm and take, or recommend that the Board take, appropriate actions
with respect to the independence of such firm from the Company.
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Obtain annually from the Companys independent auditing firm a statement regarding its
quality control procedures.
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Resolve any disagreements between management and the Companys independent public auditing
firm regarding accounting, financial reporting, disclosure controls, internal control over
financial reporting and similar matters.
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Approve, in advance, all audit and non-audit services to be performed for the Company by its
independent public auditing firm, subject to applicable law and regulation. Negotiate and
approve all fees and engagement terms of the Companys independent public auditing firm for
audit and non-audit services.
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Obtain assurance from the Companys independent public auditing firm that Section 10A(b) of
the Exchange Act has not been implicated.
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Review with the Companys independent public auditing firm the plan, procedures and scope of
its annual audit of the Companys financial statements.
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Prepare such committee reports as may be required for inclusion in the Companys annual proxy
statement.
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Financial Reporting Review:
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Receive at least annually reports on critical accounting policies, alternate treatments
within GAAP and significant assumptions and estimates with respect to the Companys financial
statements from its management and independent public auditing firm. In connection with such
review, review the financial accounting and reporting treatments preferred by the Companys
independent auditing firm.
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Review and discuss the Companys audited financial statements with management and the
Companys independent public auditing firm including all of the matters indicated in
Statement of Auditing Standards Number 61. Based on such review, recommend to the board
whether such audited financial statements should be included in the Companys Annual Report
on Form 10-KSB and Annual Report to Stockholders for the relevant fiscal year.
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Review material written communications between the Companys independent public auditing firm
and management including the management letter and schedule of unadjusted differences.
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Receive reports from management on at least an annual basis on the Companys disclosure of
material off-balance sheet data and non-financial data.
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Receive reports from management on the appropriateness of any material pro forma data to be
included in the Companys public financial reports.
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Review and discuss with management and the Companys independent public auditing firm prior
to release any proposed earnings announcement or financial press release.
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Review and discuss with management and the Companys independent public auditing firm prior
to filing the Companys Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and
any other SEC financial disclosure filings.
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Monitor the efforts of management and the Companys independent public auditors to cure any
deficiencies noted in its financial statements or accounting process.
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Disclosure Controls and Internal Control over Financial Reporting:
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Oversee the selection, compensation and performance of the Companys internal auditor or
auditing firm. Assess the qualifications and independence of the Companys internal auditor
or auditing firm.
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Discuss with the Companys management, independent public auditing firm and internal auditor
the organization, scope, objectivity, budget and staffing of the Companys internal audit
function.
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Instruct that no restrictions be placed upon the scope of the internal audit. Receive
reports from the Companys internal auditors regarding its computer systems, facilities and
backup systems.
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Review material regulatory examination reports and internal audit reports and receive reports
from management regarding its compliance efforts.
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Discuss with the Companys independent public auditing firm, internal auditor and management,
the adequacy and effectiveness of the Companys financial and reporting controls including
internal control over financial reporting and disclosure controls.
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Review reports of management and the Companys independent public auditing firm on internal
and quality controls including, if and when required by applicable law or regulation,
managements report and the independent public auditing firms attestation on internal
control over financial reporting.
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Discuss with management on a quarterly basis its review and conclusions regarding the
Companys disclosure controls and whether there has been any changes in the Companys
internal control over financial reporting.
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Other:
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Discuss the Companys legal and regulatory compliance with the Companys Chief Compliance
Officer on at least an annual basis.
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To the extent required under applicable SEC and OTC Bulletin Board rules, review and approve
all transactions with related parties.
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Establish procedures for (a) the receipt, retention and treatment of any complaints received
by the Company on accounting, financial reporting, internal control over financial reporting,
or auditing matters and (b) the confidential, anonymous submission by the Companys employees
of concerns regarding questionable accounting, financial reporting, internal control over
financial reporting and auditing matters.
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Reassess the adequacy of this Charter at least annually.
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ORGANIZATION
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The committee shall consist of a minimum of two outside directors of the Company. All members
must be (i) able to read and understand financial statements and (ii) able to satisfy
applicable OTC Bulletin Board, SEC and other requirements with respect thereto. In addition,
if required by applicable SEC, OTC Bulletin Board or other regulations, at least one member
shall have past employment experience in finance or accounting, requisite professional
certifications in accounting, or any other comparable experience, training or background
which results in such members financial sophistication (including being or having been a
chief executive officer, chief financial officer or other senior officer with financial
oversight responsibilities).
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All members of the committee must be free from any relationship with the Company which would
interfere with their independent judgement. Other than in his or her capacity as a member of
the board of directors or any committee thereof, no audit committee member shall accept
directly or indirectly any financial consulting or advisory fee from the Company or any
subsidiary. All audit committee members must comply with all applicable independence
requirements of the OTC Bulletin Board, the SEC and any exchange or electronic trading system
on which the Companys stock is traded.
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The committee shall meet at least four times a year and more frequently as circumstances
require. The timing of meetings shall be determined by the committee. However, at least
once per year, the committee shall have private meetings with each of the Companys
independent public auditing firm, management and the internal auditor.
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One member of the committee shall be appointed as chairman. The chairman shall be responsible
for leadership of the committee, including scheduling and presiding over meetings, preparing
agendas, and making regular reports to the board. The chairman will also maintain liaison as
needed with the Companys CEO, CFO, the lead partner of its independent public auditing firm,
the internal auditor and the general counsel.
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The committee shall create written minutes of its meetings. Following approval by the
committee, the minutes shall be reported to the Board of Directors and shall be maintained
with the books and records of the committee.
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The committee shall perform annually a self-assessment relative to its performance relative
to the purpose, duties and responsibilities as outlined herein.
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The committee shall have the power to conduct or authorize investigations into any matters
within its scope of responsibilities. The committee is empowered to engage independent
counsel and such other advisers as it determines necessary or appropriate to carry out its
duties. The Company shall pay all expenses of such advisors and any other expenses that are
necessary or appropriate for carrying out the committees duties.
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Other
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The committee, and each member of the committee in his or her capacity as such, shall be
entitled to rely, in good faith, on information, opinions, reports or statements, or other
information prepared or presented to them by (i) officers and other employees of the Company
and its subsidiaries whom such member believes to be reliable and competent in the matters
presented, and (ii) counsel, public accountants or other persons as to matters which the
member reasonably believes to be within the professional competence of such person.
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The committees duties do not include planning or conducting external or internal audits or
determining that the Companys financial statements are complete, accurate and in accordance
with generally accepted accounting principles. Nor is it the duty of the committee to assure
compliance with laws and regulations. These are the responsibilities of management.
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16
PLEASE MARK VOTES REVOCABLE PROXY X With- For All AS IN THIS EXAMPLE MIDLAND CAPITAL HOLDINGS
CORPORATION For hold Except I. The election as directors of all nomi- ANNUAL MEETING OF
STOCKHOLDERS nees listed (except as marked to the October 17, 2007 contrary below): The undersigned
hereby appoints the Board of Directors of Midland Capital JONAS VAZNELIS (3-year term) Holdings
Corporation (the Company), and its survivor, with full powers of PAUL M. ZOGAS (3-year term)
substitution, to act as attorney and proxy for the undersigned to vote all shares of common stock
of the Company which the undersigned is entitled to vote at INSTRUCTION: To withhold authority to
vote for any individual the Annual Meeting of Stockholders, to be held on October 17, 2007, at 2:00
nominee, mark For All Except and write that nominees name in the p.m., local time, at the main
office of Midland Capital located at 8929 South space provided below. Harlem Avenue, Bridgeview,
Illinois, and at any and all adjournments thereof, as follows: For Against Abstain II. The
ratification of the appointment of Cobitz, VandenBerg & Fennessy as independent auditors of Midland
Capital for the fiscal year ending June 30, 2008. In their discretion, the proxies are authorized
to vote upon any other business matters that may properly come before the Meeting or any
adjournment thereof. The Board of Directors recommends a vote FOR the election of the nominees
listed above and FOR the ratification for the appointment of Cobitz, VandenBerg & Fennessy. THIS
PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED
Please be sure to sign and date Date FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR THE this proxy
in the box below. RATIFICATION FOR THE APPOINTMENT OF COBITZ, VANDENBERG & FENNESSY. IF ANY OTHER
BUSINESS IS PRESENTED AT THIS MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING. Stockholder sign above Co-holder (if any) sign above ? Detach above card,
sign, date and mail in postage-paid envelope provided. ? MIDLAND CAPITAL HOLDINGS CORPORATION THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This proxy may be revoked at any time
before it is voted by: (i) filing with the Secretary of the Company at or before the Meeting a
written notice of revocation bearing a later date than this proxy; (ii) duly executing a subsequent
proxy relating to the same shares and delivering it to the Secretary of the Company at or before
the Meeting; or (iii) attending the Meeting and voting in person (although attendance at the
Meeting will not in and of itself constitute revocation of this proxy). If this proxy is properly
revoked as described above, then the power of such attorneys and proxies shall be deemed terminated
and of no further force and effect. The above signed acknowledges receipt from the Company, prior
to the execution of this proxy, of a Notice of the Meeting, a proxy statement and the Companys
Annual Report to Stockholders for the fiscal year ended June 30, 2007. Please sign exactly as your
name appears above on this card. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each holder should sign. PLEASE
PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE IF YOUR
ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN
THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED. ___
___
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