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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
Middlefield Banc Corp.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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April 7, 2003
Dear Shareholders:
You are cordially invited to attend the 2003 Annual Meeting of
Shareholders of Middlefield Banc Corp. The meeting will be held on Wednesday,
May 14, 2003, 1:00 p.m. local time at the Grandview Inn, 13404 Old State Road,
Middlefield, Ohio. The attached Notice of Annual Meeting of Shareholders and
proxy statement discuss the business to be conducted at the meeting.
Your vote is important, regardless of the number of shares you own.
PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN ENVELOPE
AS PROMPTLY AS POSSIBLE. This will not prevent you from voting in person, but it
will ensure that your vote is counted.
Thank you for your attention to this important matter.
Sincerely,
Donald D. Hunter
Chairman of the Board
MIDDLEFIELD BANC CORP.
15985 EAST HIGH STREET
MIDDLEFIELD, OHIO 44062
(440) 632-1666
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Notice is hereby given that the 2003 Annual Meeting of Shareholders of
Middlefield Banc Corp. will be held at the Grandview Inn, 13404 Old State Road,
Middlefield, Ohio on Wednesday, May 14, 2003 at 1:00 p.m. local time.
A proxy and a proxy statement for the 2003 Annual Meeting are enclosed.
The purpose of the annual meeting is to consider and act upon--
1) election of three directors to serve until the 2006 Annual
Meeting of Shareholders or until their successors are elected
and qualified,
2) ratification of the board's appointment of S.R. Snodgrass,
A.C. as independent auditor for the fiscal year ending
December 31, 2003, and
3) such other business as may properly come before the meeting or
any adjournment thereof.
The board of directors is not aware of any other business to come
before the annual meeting. Any action may be taken on the foregoing proposals at
the 2003 Annual Meeting on the date specified or on any date or dates to which
the annual meeting may be adjourned or postponed. The record date for
determining shareholders entitled to notice of and to vote at the meeting is
March 24, 2003.
You are requested to complete and sign the enclosed proxy, which is
solicited by the board of directors, and to return it promptly in the
postage-paid return envelope provided. Please sign your name on the proxy
exactly as indicated thereon.
By Order of the Board of Directors,
Nancy C. Snow
Secretary
Middlefield, Ohio
April 7, 2003
IMPORTANT: PLEASE VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE, REGARDLESS OF WHETHER YOU
PLAN TO ATTEND THE ANNUAL MEETING
THANK YOU FOR ACTING PROMPTLY
MIDDLEFIELD BANC CORP.
15985 EAST HIGH STREET
MIDDLEFIELD, OHIO 44062
(440) 632-1666
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PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation
by the board of directors of Middlefield Banc Corp., an Ohio corporation, of
proxies to be voted at the 2003 annual meeting of shareholders and at any
adjournment or postponement thereof. The annual meeting will be held on
Wednesday, May 14, 2003 at 1:00 p.m., local time, at the Grandview Inn, 13404
Old State Road, Middlefield, Ohio. The accompanying Notice of Meeting and this
proxy statement are first being mailed to shareholders on or about April 7,
2003.
PURPOSE OF THE MEETING
At the annual meeting, we will ask Middlefield shareholders to elect
three directors to serve until the 2006 annual meeting or until their successors
are elected and qualified. We will also ask shareholders to ratify the
appointment of Middlefield's independent auditor.
VOTING AND REVOCATION OF PROXIES
Proxies solicited hereby may be used at the annual meeting only and
will not be used for any other meeting. Proxies solicited by the board will be
voted in accordance with the directions given. If no instructions are given,
proxies will be voted in favor of the proposals set forth in this proxy
statement.
Shareholders who execute proxies retain the right to revoke them at any
time before completion of the annual meeting, but revocation will not affect a
vote previously taken. You may revoke a proxy by --
- attending the annual meeting and advising Middlefield's
Secretary that you intend to vote in person (but your
attendance at the annual meeting will not constitute
revocation of a proxy),
- giving a subsequent proxy relating to the same shares, or
- filing with the Secretary at or before the annual meeting a
written notice of revocation bearing a later date than the
proxy.
A written notice revoking a proxy should be delivered to Ms. Nancy C.
Snow, Secretary, Middlefield Banc Corp., 15985 East High Street, P.O. Box 35,
Middlefield, Ohio 44062. Unless revoked, the shares represented by proxies will
be voted at the annual meeting.
RECORD DATE AND OUTSTANDING SHARES; QUORUM
If you were a shareholder at the close of business on March 24, 2003,
you are entitled to vote at the annual meeting. As of March 24, 2003 there were
1,155,853 shares of Middlefield common stock issued and outstanding. When
present in person or by proxy at the annual meeting, the holders of a majority
of the shares of Middlefield common stock issued and outstanding and entitled to
vote will constitute a quorum for the conduct of business at the meeting.
VOTE REQUIRED
Directors are elected by a plurality vote of shareholders present in
person or by proxy and constituting a quorum, meaning the nominees receiving the
greatest numbers of votes will be elected. Shareholders are entitled to
one vote for each share held. Shareholders are not entitled to cumulate their
votes in the election or removal of directors or otherwise.
ABSTENTIONS AND BROKER NON-VOTES
Abstention may be specified on all proposals except the election of
directors. Although they are counted for purposes of establishing that a quorum
is present, abstentions and broker non-votes are not counted as votes cast.
Because directors are elected by a plurality of votes cast, abstentions and
broker non-votes have no effect on the election of directors.
VOTING SECURITIES AND PRINCIPAL HOLDERS
No person who is known by Middlefield to own beneficially more than 5%
of the outstanding common stock. The following table shows the beneficial
ownership of Middlefield common stock on March 24, 2003 by --
- each director and director nominee and each executive officer
identified in the Summary Compensation Table, and
- all directors, nominees, and executive officers as a group.
For purposes of the table, a person is considered to beneficially own
any shares over which he or she exercises sole or shared voting or investment
power or of which he or she has the right to acquire beneficial ownership within
60 days. Unless otherwise indicated, voting power and investment power are
exercised solely by the person named or they are shared with members of his or
her household. Shares deemed to be outstanding for purposes of computing
"Percent of stock" are calculated on the basis of 1,155,853 shares outstanding,
plus the number of shares each individual has the right to acquire within 60
days.
SHARES SHARES ACQUIRABLE
BENEFICIALLY WITHIN 60 DAYS BY PERCENT
DIRECTORS, NOMINEES AND NAMED EXECUTIVE OFFICERS OWNED EXERCISE OF OPTIONS (1) OF STOCK
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Thomas G. Caldwell, President and Chief Executive Officer...... 9,136 (2) 3,675 1.1%
Richard T. Coyne............................................... 1,691 (3) 1,050 0.2%
Frances H. Frank............................................... 6,967 (4) 1,459 0.7%
Thomas C. Halstead............................................. 9,045 (5) 1,050 0.9%
George F. Hasman............................................... 5,788 1,459 0.6%
James R. Heslop, II, Executive Vice President and Chief
Operating Officer............................................. 780 (6) 3,150 0.3%
Donald D. Hunter, Chairman of the Board........................ 8,079 (7) 1,459 0.8%
Martin S. Paul................................................. 21 1,459 0.1%
Donald E. Villers.............................................. 7,739 (8) 1,249 0.8%
------------- --------------------- --------
All directors, nominees and executive officers as a group
(15 people)................................................... 51,499 20,209 6.1%
============= ===================== ========
(1) Options granted under Middlefield's 1999 Stock Option Plan. Options
granted under the plan vest and become exercisable one year after the
grant date and have ten-year terms.
(2) Includes 106 shares held by Mr. Caldwell as custodian for his minor
children.
(3) Includes 68 shares held by Mr. Coyne as custodian for his minor
grandchildren.
(4) Includes 4,051 shares held by Mrs. Frank's spouse. Mrs. Frank disclaims
beneficial ownership of shares held by her spouse.
(5) Includes 3,062 shares held by Mr. Halstead's spouse in trust.
(6) Includes 128 shares held by Mr. Heslop as custodian for his minor
children.
(7) Includes 494 shares held by First United Methodist Church, for which
Mr. Hunter acts as trustee.
(8) Includes 647 shares held by Mr. Villers' spouse individually or jointly
with her children. Mr. Villers disclaims beneficial ownership of the
shares held by his spouse. The remaining shares are held by Mr. Villers
individually or jointly with his spouse and children.
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FIRST PROPOSAL -- ELECTION OF DIRECTORS
According to Article III, Section 2 of Middlefield's regulations, the
board may consist of no fewer than five and no more than 25 directors, the
precise number being fixed or changed from time to time within that range by the
board or by majority vote of shareholders acting at an annual meeting. At the
2003 annual meeting, three individuals identified below will be nominated to
serve as directors for three-year terms ending at the 2006 annual meeting of
shareholders, or until their successors are elected and qualified.
CURRENT
THREE DIRECTOR NOMINEES AND DIRECTOR TERM
SIX CONTINUING DIRECTORS AGE SINCE EXPIRES PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
---------------------------- ------- ---------- ---------- --------------------------------------------------------
THREE NOMINEES FOR THE TERM ENDING IN 2006:
George F. Hasman 77 1989 2003 Retired, Mr. Hasman served as President of Middlefield until
October 2000 but did not serve on a full-time basis. He
previously served as Chairman and President of The Twinsburg
Banking Company, which was sold to FirstMerit Corporation in
1982
James R. Heslop, II 49 2001 2003 Executive Vice President and Chief Operating Officer of The
Middlefield Banking Company since 1996, Mr. Heslop became
Executive Vice President and Chief Operating Officer of
Middlefield on October 30, 2000. He became a director of the
bank in July 1999 and a director of Middlefield on November
19, 2001. From July 1993 until joining the bank in April
1996, Mr. Heslop was a director, President and Chief Executive
Officer of First County Bank in Chardon, Ohio, an institution
with total assets exceeding $40 million. First County Bank is
an affiliate of FNB Corporation of Naples, Florida
Martin S. Paul 59 1999 2003 Since 1970 Mr. Paul has served as President of Paul Feed &
Supply Co., Inc. in Garrettsville, Ohio. Mr. Paul is also a
partner in real estate and real estate development
partnerships
SIX CONTINUING DIRECTORS:
Thomas G. Caldwell 45 1997 2004 Mr. Caldwell is President and Chief Executive Officer of
Middlefield and the bank. Mr. Caldwell served as Vice
President of Middlefield until October 2000, when he became
its President and CEO as well
Richard T. Coyne 67 1997 2004 Mr. Coyne is the General Manager of Jaco Products, a
production plastics component manufacturer located in
Middlefield, Ohio
Frances H. Frank 55 1995 2005 Mrs. Frank is the Secretary and Treasurer of The Frank Agency,
Inc., a general insurance agency located in Middlefield, Ohio
Thomas C. Halstead 71 1988 2005 Mr. Halstead is co-owner of Settlers Farm, a retail shopping
area located in Middlefield, Ohio. He previously was owner of
Settlers Collections, a retail gift outlet
Donald D. Hunter 74 1977 2004 Retired since 1996, Mr. Hunter serves as Chairman of the Board
of each of Middlefield and the bank. He is co-owner of H&H
Hardware, Inc. in Middlefield, Ohio
Donald E. Villers 69 1987 2005 Mr. Villers is retired, having previously served as a
superintendent with Copperweld Steel, from which he retired
after 31 years of service. Mr. Villers has been a Township
Trustee of Parkman Township in Geauga County, Ohio since 1988
Directors of Middlefield also serve as directors of The Middlefield
Banking Company. However, directors of The Middlefield Banking Company are
elected annually and do not serve staggered terms. All of Middlefield's
directors are expected to be nominated and elected to serve as directors of The
Middlefield Banking Company for the following year.
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There are no family relationships among any of Middlefield's directors
or executive officers. No director or executive officer of Middlefield serves as
a director of (1) a company with a class of securities registered under or that
is subject to the periodic reporting requirements of the Securities Exchange Act
of 1934, or (2) any investment company registered under the Investment Company
Act of 1940. None of Middlefield's directors or executive officers has been
involved in any legal proceedings concerning bankruptcy, either individually or
in respect of any businesses with which they have been involved. None of them
have been convicted of any crime, excluding traffic violations and similar minor
offenses.
Director Nominations. Neither Middlefield nor the bank has a nominating
committee. The full board acts as a nominating committee, selecting nominees for
election as director.
A shareholder may submit a nomination for director by following the
procedures specified in Article III, section 4 of Middlefield's regulations.
Among other things, these procedures require that the shareholder deliver to
Middlefield's Secretary a written notice stating the name and age of each
nominee, the nominee's principal occupation, and the number of shares of
Middlefield common stock he or she beneficially owns. The written consent of the
nominee to serve as a director must also be provided by the shareholder making
the nomination. The information must be provided to the Secretary at least 60
days before the date corresponding to the date on which Middlefield's proxy
materials were mailed to shareholders for the previous year's annual meeting,
and no more than 120 days before that date. A nomination made by a shareholder
who does not comply with these procedures will be disregarded.
Board Committees. The only committees of Middlefield's board are the
compensation committee and the audit committee. In 2002, the members of
Middlefield's compensation committee and the bank's compensation committee were
Directors Frank (chair of the committee), Halstead, Hunter, and Paul. The
compensation committee establishes the compensation of the senior executive
officers of Middlefield and the bank. The bank's compensation committee met
three times in 2002. The members of Middlefield's audit committee are Directors
Coyne (chair of the committee), Halstead, and Hasman. The audit committee is
charged with examining or superintending the examination or audit of assets,
liabilities, and results of operations on at least an annual basis, reporting
the results to the board. It met six times in 2002.
Audit Committee Independence. Middlefield believes that none of the
directors who serve on the audit committee have a relationship with Middlefield
or the bank that would interfere with the exercise of independent judgment in
carrying out their responsibilities as director. None of them is or has for the
past three years been an employee of Middlefield or the bank, and no immediate
family members of any of them is or has for the past three years been an
executive officer of Middlefield or the bank. Although certain of the directors
and their affiliates are indebted to the bank for credit extended in the
ordinary course of business, payments made by them to Middlefield or the bank in
the past three years have not in any of those years exceeded the greater of 5%
of the affiliates' revenues or $200,000. In the opinion of Middlefield's board
the directors who serve on the audit committee are "independent directors," as
that term is defined in Rule 4200(a)(15) of the rules of the National
Association of Securities Dealers, Inc. The audit committee's charter was
adopted by Middlefield's board in August 2001.
Audit Committee Report. The audit committee has submitted the following
report for inclusion in this proxy statement--
The Audit Committee has reviewed and discussed the audited
financial statements for the year ended December 31, 2002 and has
discussed the audited financial statements with management. The Audit
Committee has also discussed with S.R. Snodgrass, A.C., Middlefield's
independent accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61 (having to do with accounting
methods used in the financial statements). The Audit Committee has
received the written disclosures and the letter from S.R. Snodgrass,
A.C. required by Independence Standards Board Standard No. 1 (having to
do with matters that could affect the auditor's independence), and has
discussed with S.R. Snodgrass, A.C. the independent accountants'
independence. Based on this, the Audit Committee recommended to the
board that the audited financial statements be included in
Middlefield's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 for filing with the Securities and Exchange
Commission.
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Submitted by the Audit Committee
Richard T. Coyne
Thomas C. Halstead
George F. Hasman
Meeting Attendance. Middlefield's board met eleven times in 2002. The
individuals who served in 2002 as directors of Middlefield attended at least 75%
of (1) the total number of board meetings and (2) the total number of meetings
held by all committees on which he or she served.
Director Compensation. In 2002 Middlefield directors received
compensation of $200 for each meeting attended. The Chairman of the Board
received additional annual compensation of $2,400. Under Middlefield's 1999
Stock Option Plan, options to acquire 1,050 shares of Middlefield common stock
at an exercise price of $30.24 per share were granted effective June 14, 1999 to
each Middlefield director who was not also a full-time officer or employee of
Middlefield or the bank. The share amount and the exercise price are adjusted
for the June 14, 2002 5% stock dividend. The 1999 Stock Option Plan provides for
an automatic grant of options on similar terms to any other nonemployee director
elected or appointed after the May 12, 1999 adoption of the 1999 Stock Option
Plan but during the term of the plan. In December 2000 each of Middlefield's
seven non-employee directors received an additional grant of options to acquire
409 shares, exercisable at $22.86 per share (adjusted for the June 14, 2002 5%
stock dividend). In December 2002 each of Middlefield's nonemployee directors
received an option representing the right to acquire 200 shares at $28.50 per
share.
Directors are also entitled to life insurance benefits under the bank's
group term life insurance program, paying benefits of ranging from $10,000 to
$30,000 to the director's beneficiaries if the director dies while in service to
the bank.
The Middlefield Banking Company entered into Director Retirement
Agreements with each nonemployee director (each director other than Directors
Caldwell and Heslop) in 2001. The agreements are intended to encourage existing
directors to remain directors of the bank, assuring the bank that it will have
the benefit of the directors' experience and guidance in the years ahead.
Middlefield and the bank believe it is necessary and appropriate to reward
director service with a competitive compensation package, including board fees
and post-retirement benefits. The agreements provide directors with a
retirement benefit that Middlefield considers modest.
For retirement on or after the normal retirement age estimated for each
director, ranging from ages 71 to 78, the Director Retirement Agreements provide
for an annual benefit for ten years in an amount equal to 25% of the final
average annual fees earned by the director in the three years before retirement.
However, no benefits are payable unless the director has served as a director
for at least five years, including years of service before the Director
Retirement Agreements were entered into. If a director terminates service before
his or her estimated normal retirement age for reasons other than death or
disability, he or she will receive over a period of ten years a payment equal to
the retirement-liability balance accrued by The Middlefield Banking Company at
the end of the year before the year in which the director's service terminated.
However, no benefits are payable in the case of early termination unless the
director is at least 55 years of age and has served as a director for at least
five years, including years of service before the Director Retirement Agreements
were entered into. If a director becomes disabled before his or her estimated
normal retirement age, the director will receive a lump-sum payment in an amount
equal to the retirement-liability balance accrued by The Middlefield Banking
Company at the end of the year before the year in which disability occurred. If
a change in control occurs and a director's service terminates within 12 months
after the change in control, the director will receive a lump-sum payment equal
to the retirement-liability balance accrued by the bank at the end of the year
before the year in which termination occurred. For this purpose, the term
"change in control" means --
- a merger in which Middlefield's shareholders end up with less
than 50% of the resulting company's voting stock, or
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- a beneficial ownership report is required to be filed under
sections 13(d) or 14(d) of the Securities Exchange Act of 1934
by a person (or group of persons acting in concert) to report
ownership of 15% or more of Middlefield's voting securities,
or
- during any period of two consecutive years, individuals who
constitute Middlefield's board of directors at the beginning
of the two-year period cease for any reason to constitute a
majority of the board. Directors elected during the two-year
period are treated as if they were directors at the beginning
of the period if they were nominated by at least two-thirds of
the directors in office at the beginning of the period, or
- Middlefield sells substantially all of its assets to a third
party, including sale of The Middlefield Banking Company.
No benefits are payable under the Director Retirement Agreements to a
director's beneficiaries after the director's death. The Director Retirement
Agreements of Directors Frank, Halstead, Hunter and Villers provide that The
Middlefield Banking Company shall also obtain and maintain health insurance
coverage for the lifetime of those directors and their spouses if the coverage
can be obtained on commercially reasonable terms. A director forfeits all
benefits under the Director Retirement Agreement if he or she is not nominated
for reelection because of the director's neglect of duties, commission of a
felony or misdemeanor, or acts of fraud, disloyalty, or wilful violation of
significant bank policies, or if the director is removed by order of the FDIC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE
IDENTIFIED NOMINEES TO SERVE AS DIRECTORS UNTIL THE 2006 ANNUAL MEETING
OR UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED
Executive Officers. The executive officers of Middlefield and the bank
who do not also serve as Middlefield directors are--
NAME AGE PRINCIPAL OCCUPATION IN THE LAST 5 YEARS
----------------------------- ------- ---------------------------------------------------------------------------------------
Jay P. Giles................. 53 Mr. Giles is Senior Vice President--Senior Commercial Lender. He joined the bank in
September 1998, having previously served as Vice President and Senior Commercial
Lender at Huntington National Bank in Burton, Ohio since 1985
Teresa M. Hetrick............ 39 Ms. Hetrick is Senior Vice President--Operations/Administration. Ms. Hetrick served
as Vice President and Secretary of First County Bank in Chardon, Ohio before joining the
bank in December 1996
Jack L. Lester............... 57 Mr. Lester is Vice President--Compliance and Security Officer. He joined the bank in
August 1990 as a loan officer and has served in his current position since 1991
Nancy C. Snow................ 68 Ms. Snow is Secretary of Middlefield and Vice President, Secretary, and Branch Manager
of the bank. She has been with the bank since 1979, and has served in her current
capacities since the mid-1980s
Donald L. Stacy.............. 49 Mr. Stacy joined the bank in August 1999 and serves as its Senior Vice President and
Chief Financial Officer. On October 30, 2000 he was appointed as the Treasurer and
Chief Financial Officer of Middlefield. He previously served for 20 years with Security
Dollar Bank and Security Financial Corp. in Niles, Ohio, where he was Senior Vice
President and Treasurer
Alfred F. Thompson, Jr....... 43 Mr. Thompson is the bank's Vice President--Senior Retail Lender. Mr. Thompson has
been with the bank since March 1996. He was promoted from loan officer to Assistant
Vice President in 1997, and promoted again to his current position in 1998. Before
joining the bank, Mr. Thompson served as Loan Officer in the Small Business Group of
National City Bank, Northeast
Executive Compensation. The following table shows compensation for
services in all capacities for the fiscal years ended December 31, 2002, 2001,
and 2000 for the President and Chief Executive Officer and for the
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other executive officers whose salary and bonus exceeded $100,000 during 2002.
None of Middlefield's executive officers receives any cash remuneration from
Middlefield. All of the cash remuneration reflected in the table was paid by the
bank. Because Middlefield's business is expected to consist for the foreseeable
future of acting merely as the holding company for The Middlefield Banking
Company, Middlefield expects that no separate cash compensation will be paid to
officers of Middlefield in addition to compensation paid to them by The
Middlefield Banking Company.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------- --------------------- ------------
($) (#)
($) RESTRICTED SECURITIES ($) ($)
NAME AND ($) ($) OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS (2) COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
-------------------- ----- ----------- ----------- ------------- ------------ ------------ ---------- -----------------
Thomas G. Caldwell 2002 $ 129,900 $ 0 (3) -- 1,500 -- $ 3,453 (4)
President and Chief 2001 $ 123,700 $ 500 (3) -- 0 -- $10,003
Executive Officer 2000 $ 118,300 $ 7,169 (3) -- 2,625 -- $ 9,823
James R. Heslop, II 2002 $ 119,650 $ 0 (3) -- 1,500 -- $ 2,105 (4)
Executive Vice 2001 $ 112,850 $ 500 (3) -- 0 -- $ 1,754
President and Chief 2000 $ 102,750 $ 7,169 (3) -- 2,625 -- $ 1,354
Operating Officer
(1) Includes amounts deferred at the election of the named executive officers
pursuant to the 401(k) plan. Also includes fees for service as a director of
Middlefield or the bank.
(2) Represents profit-sharing distributions earned. Profit-sharing distributions
are made shortly after the end of the year in which earned.
(3) Perquisites and other personal benefits did not exceed the lesser of $50,000
or 10% of total salary and bonus.
(4) Represents matching contributions under the bank's 401(k) plan.
Bank officers also have life insurance benefits under a group term life
insurance program, paying benefits to the officer's beneficiaries if the
officer dies while employed by the bank, up to the lesser of (1) twice the
officer's annual salary at the time of death or (2) $240,000.
Stock Option Plan. Middlefield's 1999 Stock Option Plan provides for the
grant of options to acquire a maximum of 119,779 shares of common stock.
Options granted under the plan can be either incentive stock options or
non-qualified stock options. Options to acquire 30,446 shares of Middlefield
common stock were issued and outstanding as of March 24, 2003. The 1999
Stock Option Plan also allows for the grant of stock appreciation rights,
restricted stock, and performance unit awards.
Under the stock option plan, qualified stock options -- also commonly
known as incentive stock options or ISOs -- may be granted to Middlefield's
or the bank's officers and employees, and non-qualified stock options may be
granted to directors, officers, and employees. No individual may be granted
options to acquire more than 20% of the total shares acquirable by exercise
of options that may be granted under the plan. Similarly, all non-employee
directors as a group may be granted options to acquire no more than 20% of
the total shares acquirable by exercise of options that may be granted under
the plan. The stock option plan has a ten-year term, and it provides that
options to acquire no more than 10% of the total shares acquirable under the
plan may be granted in any one year. The plan is administered by a committee
of at least 2 nonemployee directors.
A qualified stock option, or ISO, is an option that satisfies the terms
of Section 422 of the Internal Revenue Code of 1986. All other options
granted under the stock option plan are non-qualified options, also known as
NQSOs. All options granted to officers and employees under the plan to date
are ISOs, and all options granted to non-employee directors are NQSOs. The
exercise price of ISOs must be no less than the fair market value of the
shares on the date of grant (or 110% of fair market value in the case of any
ISO grant to a holder of more than 10%
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of Middlefield's common stock), and the exercise price of NQSOs must be no
less than book value at the end of the most recent fiscal year.
The committee administering the stock option plan determines the vesting
schedule of stock options. All stock options granted to date become fully
exercisable one year after the date of grant. Options granted under the plan
are not transferable except by will or the laws of descent and distribution,
and are exercisable during the option grantee's lifetime by the option
grantee only. Exercisable options not exercised within three months after
termination of the option holder's service expire, except in the case of the
option holder's death, in which case they expire after one year. If the
option holder's service is terminated for cause, all of his options expire
immediately. However, unexercisable options become fully exercisable if a
tender offer for Middlefield common stock occurs or if Middlefield's
shareholders approve an agreement whereby Middlefield ceases to be an
independent, publicly owned company or whereby Middlefield agrees to sale of
substantially all of its assets. If a merger occurs and Middlefield is not
the surviving entity, option holders have the right to receive in exchange
for the value of their options the cash or other consideration paid in the
merger.
The following table shows stock option grants by Middlefield in 2002 to
the individuals identified in the Summary Compensation Table above. No stock
appreciation rights have been granted under the stock option plan.
OPTIONS/STOCK APPRECIATION RIGHTS GRANTED IN 2002
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION
------------------------------------------------------------------------------------------------- TERM
-------------------------------
NUMBER OF PERCENT OF TOTAL EXERCISE
SECURITIES OPTIONS GRANTED PRICE
UNDERLYING TO EMPLOYEES IN PER
NAME OPTIONS GRANTED FISCAL YEAR SHARE EXPIRATION DATE 5% 10%
-------------------- ----------------- ----------------- ---------- ------------------ ------------ ----------------
Thomas G. Caldwell 1,500 15.9 % $ 28.50 December 9, 2012 $ 26,885 $ 68,132
James R. Heslop, II 1,500 15.9 % $ 28.50 December 9, 2012 $ 26,885 $ 68,132
AGGREGATED OPTIONS/STOCK APPRECIATION RIGHTS EXERCISED IN 2002
AND FISCAL YEAR-END 2002 OPTIONS/STOCK APPRECIATION RIGHT VALUES
The following table shows the number of shares of Middlefield common
stock acquired in 2002 or acquirable by option exercise by the individuals named
in the Summary Compensation Table. The table also indicates the extent to which
the options were exercisable at December 31, 2002, as well as the approximate
value of the options based on the estimated fair market value of Middlefield
common stock on December 31, 2002.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
SHARES AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END (1)
ACQUIRED ON VALUE -------------------------------- ----------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- --------------- --------------- ------------- --------------- ---------------- --------------
Thomas G. Caldwell - 0 - -- 3,675 1,500 $ 17,175 $ 1,350
James R. Heslop, II - 0 - -- 3,150 1,500 $ 17,175 $ 1,350
(1) The value of unexercised options equals the estimated fair market value of a
share acquirable by exercise of an option at December 31, 2002, less the
exercise price per share, multiplied by the number of shares acquirable by
exercise of the options. Middlefield common stock is not actively traded and
is not authorized for quotation or trading on any exchange or on Nasdaq.
Solely for purposes of the table and for no other purpose, Middlefield
estimated the per share market value of Middlefield common stock on December
31, 2002 at $29.40. This is an estimate only and does not necessarily
reflect actual transactions in Middlefield common stock. The estimate does
not necessarily reflect the price shareholders could obtain upon sale of
their stock or the price at which shares of Middlefield common stock may be
acquired. The
8
estimate should not be taken to represent management or the board's estimate
of the intrinsic value or appropriate market value of the common stock.
Retirement Plan. Neither Middlefield nor the bank maintains a defined
benefit or actuarial plan providing retirement benefits for officers or
employees based on actual or average final compensation. The bank maintains a
section 401(k) employee savings and investment plan for substantially all
employees and officers of the bank who have more than one year of service. The
bank's contribution to the plan is based on 50% matching of voluntary
contributions, up to 6% of compensation. An eligible employee may contribute up
to 15% of his or her salary. Employee contributions are vested at all times.
Bank contributions are fully vested after 6 years, vesting in 20% annual
increments beginning with the second year.
Profit-Sharing Plan. In 1999 the bank adopted a profit-sharing plan to
reward employees with additional cash compensation if the bank's
return-on-equity improves from one year to the next. The plan may be terminated
by the board at any time. All employees are eligible to receive a profit-sharing
distribution. Profit-sharing distributions are made in the first quarter of the
year if the bank's return-on-equity in the preceding year satisfied plan
thresholds. That is, a profit-sharing distribution will not be made unless the
bank's return-on-equity for the preceding year exceeded the average
return-on-equity in the three years before the last year. Return-on-equity is
calculated on an adjusted basis. Total equity is first increased or decreased as
necessary to an amount that equals 9% of assets, a normalized or base
equity-to-assets ratio. Net income is then decreased by the average after-tax
yield on the excess capital over 9%, or increased by the after-tax yield on the
difference between 9% capital and actual capital. A similar adjustment is made
to account for "leverage borrowed funds," if any, which are borrowings entered
into as investment arbitrage. The bank's board may also make other adjustments
of the net income figures employed in the return-on-equity calculations,
accounting for such things as gains or losses on sale of securities,
extraordinary acquisition costs, and the like. If the adjusted return-on-equity
figure for the last year exceeds the average return-on-equity, similarly
adjusted, for the three years before the last year, a profit-sharing
distribution is made. Because the bank's return-on-equity in 2002 did not
satisfy plan thresholds, no profit-sharing distributions were made in 2003 for
the 2002 plan year.
A portion of net income representing the last year's improvement in
return-on-equity is set aside for profit- sharing distributions. The portion to
be set aside is determined by the board at the beginning of each year. The board
fixed the percentage at 25% in early 2002. Distribution of the aggregate
profit-sharing benefit is then allocated among employees based on a combination
of objective factors, such as departmental and functional objectives, and
subjective factors, such as an individual's annual performance evaluation. The
objective factors considered are determined at the beginning of each year by the
senior executive officers, taking into account the bank's strategic goals and
objectives for the year. The distribution of profit-sharing benefits to
employees is determined by the board's compensation committee, with the
recommendation of the senior executive officers. But distribution to the senior
executive officers is determined solely by the compensation committee.
Severance Agreements. Neither the bank nor Middlefield has written
employment agreements with officers. Middlefield entered into severance
agreements with six officers on November 28, 2001, including Messrs. Caldwell
and Heslop. The initial term of the severance agreement is three years, renewing
each year for an additional one- year term unless the board determines that the
executive has not met the requirements and standards of the board and that the
term therefore will not be extended.
The severance agreements provide that the executive will be entitled to
severance compensation if two conditions are satisfied --
1) a change in control occurs during the agreement's term, and
2) the executive is involuntarily terminated within two years after the
change in control or the executive voluntarily terminates employment for
"good reason" within two years after the change in control.
The severance compensation will be paid in a lump sum in cash within five
days after termination of the executive's employment. The amount of the
severance compensation is twice the executive's annual compensation,
9
meaning the executive's (1) base salary at the time of the change in control or
at the time of termination of employment, whichever amount is higher, and (2)
average bonus and incentive compensation in the three years preceding the year
in which the change in control occurred. The severance compensation is not
discounted to present value. The executive is also entitled to continued life,
health, and disability insurance coverage for 24 months, and accelerated vesting
of benefits under benefit plans. Middlefield has also agreed to pay up to
$500,000 of legal fees incurred by the executives associated with the
interpretation, enforcement, or defense of their rights under the severance
agreements if Middlefield initiates the legal proceeding but the executive
prevails.
The term "change in control" can be defined in a variety of ways from
one corporation to the next and from one benefit plan to the next. Under the
severance agreements, a change in control means any of the following events
occur --
- Merger: Middlefield merges into or consolidates with another
corporation, or merges another corporation into Middlefield,
with the result in either case that less than a majority of
the total voting power of the resulting corporation
immediately after the merger or consolidation is held by
persons who were Middlefield shareholders immediately before
the merger or consolidation, or
- Acquisition of Significant Share Ownership: a person or group
of persons acting in concert acquires the power to vote 15% or
more of Middlefield's common stock, or
- Change in Board Composition: during any period of two
consecutive years, individuals who constituted Middlefield's
board at the beginning of the two-year period (including
directors later elected by the board, or later nominated by
the board for election by shareholders, by a vote of at least
two-thirds (2/3) of the directors who were directors at the
beginning of the period) cease for any reason to constitute a
majority, or
- Sale of Assets: Middlefield sells to a third party
substantially all of its assets.
If the executive terminates employment for "good reason" within two
years after a change in control, he will be entitled to severance benefits just
as if he were terminated involuntarily and without cause. Under the severance
agreements, "good reason" includes occurrence of any of the following events
without the executive's written consent --
- Change in Status: an adverse change in the executive's status,
title, position or responsibilities, or
- Salary Reduction: a reduction in the executive's annual
compensation, or
- Reduction of Benefits. the executive's benefits under employee
benefit plans are materially reduced, or
- Liquidation or Merger: Middlefield merges with another entity,
or transfers substantially all of its assets, or liquidates,
unless the successor entity assumes all obligations under the
severance agreements, or
- Relocation of the Executive: the executive's principal place
of employment is relocated outside of Middlefield, Ohio.
For a limited time after a change in control, the executive would also
be entitled to severance compensation under the agreements if he terminates
employment voluntarily with or without good reason. The period during which an
executive may terminate employment for any reason or for no reason without
forfeiting severance benefits begins 12 months after the change in control and
continues for a period of 90 days. An executive terminated for cause is entitled
to no severance compensation.
Comparative Performance Graph. The graph below compares the cumulative
total shareholder return on Middlefield common stock to the cumulative total
return of the Nasdaq Total US Index and the SNL Financial L.C. index of 169
commercial banks and bank holding companies for which bid prices or trades are
reported in the "pink sheets" of the National Quotation Bureau, LLC, a static
paper-quotation medium printed weekly and distributed to broker/dealers, or on
the OTC Bulletin Board, an electronic, screen-based market maintained by the
National
10
Association of Securities Dealers, Inc.'s subsidiary, NASD Regulation, Inc. The
following comparison covers the period from June 16, 2001, the day Middlefield's
common stock became registered under section 12 of the Securities Exchange Act
of 1934, to December 31, 2002. The graph assumes that $100 was invested on June
16, 2001 and that all dividends were reinvested.
COMPARISON* OF THE CUMULATIVE TOTAL RETURN
OF
MIDDLEFIELD BANC CORP.,
THE SNL $100M - $500M OTC-BB AND PINK BANK INDEX,
AND THE NASDAQ - TOTAL US**
FROM JUNE 16, 2001 TO DECEMBER 31, 2002
[ graph omitted ]
PERIOD ENDING *
---------------------------------------------------
6/16/2001 12/31/2001 12/31/2002
-------------------------------------------------------------- ------------ ---------------- ----------------
NASDAQ - Total US** (1)....................................... $ 100.00 $ 96.27 $ 66.56
SNL $100 - $500M OTC-BB and Pink Bank Index (1)............... $ 100.00 $ 107.37 $ 128.79
Middlefield Banc Corp. (1).................................... $ 100.00 $ 93.20 *** $ 117.28
* Source: SNL Financial L.C., Charlottesville, Virginia
** Source: CRSP, Center for Research in Security Prices, Graduate
School of Business, The University of Chicago 2003
*** Adjusted for the June 14, 2002 5% stock dividend
(1) Middlefield is not among the approximately 4,000 companies
included in the NASDAQ - Total US index. The SNL Securities $100M -
$500M OTC-BB and Pink Bank Index is a market-weighted index that
includes 169 commercial banks and bank holding companies with total
assets between $100 million and $500 million, whose stocks trade
over-the-counter on the OTC Bulletin Board or in the National Quotation
Bureau, LLC's pink sheets. Middlefield Banc Corp. is included in the
SNL $100M - $500M OTC-BB and Pink Bank Index.
Middlefield common stock is traded very infrequently. Although there is
no established market for the common stock, bid prices are quoted from time to
time under the symbol "MBCN" on the National Quotation Bureau, LLC's pink
sheets.
Compensation Committee Report. The members of the compensation
committee in 2002 were Directors Frank, Halstead, Hunter, and Paul, with
Director Frank acting as chair of the committee. The committee recommends the
compensation of executive officers of Middlefield and the bank, subject to
approval by the full board. Messrs. Caldwell and Heslop do not participate in
board deliberations and voting concerning their own compensation.
11
The committee's executive compensation policies are designed to provide
competitive levels of compensation to executive officers, rewarding them for
individual performance and for Middlefield's performance as a whole. Each
executive officer's performance during the fiscal year is reviewed individually
by the committee, focusing primarily upon --
- the amount and quality of work performed,
- overall skill levels and supervisory skills,
- dependability and attendance,
- demonstrated initiative, and
- overall value to Middlefield.
The committee's review takes into account performance of Middlefield
and the bank. The committee employs no fixed criteria, goals, or standards to
establish compensation of individual officers. The committee's determinations
about executive compensation are subjective, although allocation among all
employees -- including executive officers -- of a profit-sharing distribution
for a given year is influenced not only by subjective performance evaluations
but also by more objective standards having to do with the bank's strategic
goals and objectives for the year, as determined by the senior executive
officers at the beginning of each year. Based on its subjective evaluation of
individual and corporate performance factors, the committee recommends to the
full board executive officer salary levels for the coming year. Although the
bank has paid discretionary bonuses in the past and may do so again, bonuses are
the exception rather than the rule, and the decision whether to pay bonuses is a
subjective one on the part of the board. Executive officers also receive
matching contributions under the 401(k) savings and investment plan, and they
may receive profit-sharing distributions if plan return-on-equity criteria are
satisfied, as discussed under the subheading " -- Profit-Sharing Plan." The
amount of an executive officer's profit- sharing distribution is based on the
compensation committee's analysis of a combination of objective and subjective
factors, without fixed weights given to the various factors considered.
The compensation committee also administers the 1999 Stock Option Plan.
Stock options are an important part of a competitive compensation package,
creating a direct, personal incentive for officers to promote growth in a
company's stock price. The value of stock options to officers increases as the
price of the underlying stock increases beyond the option exercise price,
aligning officers' financial interests more closely with shareholders'
interests. But having been registered under section 12 of the Securities
Exchange Act of 1934 since the summer of 2001 only, Middlefield's common stock
is not widely followed and is traded very infrequently. Executive officers hold
a substantial number of vested, exercisable stock options granted in 1999 and
2000. Some of those exercisable options have exercise prices exceeding recent
bid prices for Middlefield common stock. As Middlefield's public profile
increases over time and as the market for financial stocks recovers, the
committee believes that the value of stock options held by executive officers
will increase in the years ahead.
Thomas G. Caldwell's 2002 salary was based on the committee's
subjective determinations concerning his performance and overall corporate
performance. Under Mr. Caldwell's guidance in the past year, Middlefield
achieved disciplined and conservative growth while economic conditions at the
national level continued to be somewhat challenging. Return-on-equity in 2002
was not sufficiently greater than average return on equity for 1999, 2000, and
2001 to allow for a profit-sharing distribution under the bank's profit-sharing
plan, and as a consequence no profit-sharing distributions were made in the
first quarter of 2003 to bank employees, including executive officers.
The qualifying compensation regulations issued by the Internal Revenue
Service under Internal Revenue Code section 162(m) provide that no deduction is
allowed for applicable employee remuneration paid by a publicly held corporation
to a covered employee to the extent that the remuneration exceeds $1.0 million
for the applicable taxable year, unless certain conditions are satisfied. Salary
and bonus amounts deferred by executives are not subject to section 162(m).
Currently, remuneration is not expected to exceed $1.0 million for any employee.
Therefore, compensation should not be affected by the qualifying compensation
regulations. The compensation committee and Middlefield's board of directors
intend to maintain executive compensation within the section 162(m)
deductibility limits, but could permit compensation exceeding the section 162(m)
limits in the future.
12
Submitted by the Compensation Committee
Frances H. Frank (committee chair)
Thomas C. Halstead
Donald D. Hunter
Martin S. Paul
Compensation Committee Interlocks and Insider Participation. None of
the members of the compensation committee has served as an officer or employee
of Middlefield or the bank. Director Frank is Secretary and Treasurer of The
Frank Agency, Inc., a general insurance agency located in Middlefield. Mrs.
Frank's spouse is the principal executive officer of The Frank Agency, Inc. The
Middlefield Banking Company has from time to time purchased and expects to
continue to purchase insurance through The Frank Agency, Inc., including
directors and officers liability insurance, blanket bond coverage, and pension
and welfare benefits insurance. The Frank Agency, Inc. receives commissions and
fees for its service as insurance agent for these purchases. The Middlefield
Banking Company also pays fees for miscellaneous benefit plan-related
administrative services provided by The Frank Agency, Inc. During 2002, fees and
premiums for insurance purchased through The Frank Agency, Inc. did not exceed
$60,000. Fees and premiums to be paid by The Middlefield Banking Company for
insurance purchased through The Frank Agency, Inc. in 2003 are not expected to
exceed $60,000.
Directors and executive officers of Middlefield and The Middlefield
Banking Company, and their associates, were customers of and had banking
transactions with The Middlefield Banking Company in the ordinary course of
business in 2002. Middlefield expects that these relationships and transactions
will continue in the future. The existing transactions do not involve more than
the normal risk of collectability or present other unfavorable features. Loans
and commitments to lend included in these transactions were made and will be
made in the future on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons not employed by Middlefield or The Middlefield Banking Company.
Senior Vice President Jay Giles is a director of a local non-profit housing
corporation that has a loan in excess of $500,000 from The Middlefield Banking
Company.
SECOND PROPOSAL -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Middlefield's independent auditor for the year ended December 31, 2002
was S.R. Snodgrass, A.C. With the recommendation of the audit committee, S.R.
Snodgrass, A.C. has been appointed by the board, subject to shareholder
ratification, to continue as independent auditor for the current fiscal year
ending December 31, 2003.
We expect one or more representatives of S.R. Snodgrass, A.C. to be
present at the annual meeting. The representative of S.R. Snodgrass, A.C. will
have the opportunity to make a statement if desired, and will be available to
respond to appropriate questions.
Audit Fees. The aggregate fees billed for professional services
rendered by S.R. Snodgrass, A.C. for the audit of Middlefield's annual financial
statements for the year ended December 31, 2002 and for S.R. Snodgrass,
A.C.'s reviews of the financial statements included in Middlefield's Forms 10-Q
filed with the Securities and Exchange Commission during 2002 were $48,037.
Financial Information Systems Design and Implementation Fees. In 2002
S.R. Snodgrass, A.C. performed no services and therefore billed no fees relating
to operating or supervising the operation of Middlefield's information systems
or local area network or for designing or implementing Middlefield's financial
information management systems.
All Other Fees. The aggregate fees billed for other services rendered
to Middlefield by S.R. Snodgrass, A.C. in 2002 were $11,425, including tax
preparation services.
Auditor Independence. The audit committee of the board believes that
the non-audit services provided by S.R. Snodgrass, A.C. are compatible with
maintaining the auditor's independence. To the best of Middlefield's knowledge,
none of the time devoted by S.R. Snodgrass, A.C. on its engagement to audit
Middlefield's financial
13
statements for the year ended December 31, 2002 is attributable to work
performed by persons other than full-time, permanent employees of S.R.
Snodgrass, A.C.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF S.R. SNODGRASS, A.C. AS MIDDLEFIELD'S INDEPENDENT
AUDITOR FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003
SHAREHOLDER PROPOSALS
The proxy is solicited by management and confers discretionary
authority to vote on any matters that properly come before the annual meeting or
any adjournments thereof. If any matter not set forth in the Notice of Annual
Meeting of Shareholders is properly presented at the 2003 annual meeting, the
persons named as proxies will vote thereon in accordance with their best
judgement.
Shareholders desiring to submit proposals for inclusion in
Middlefield's proxy materials for the 2004 annual meeting must submit the
proposals to Middlefield at its executive offices no later than December 7,
2003. We will not include in our proxy statement or form of proxy for the 2004
annual meeting a shareholder proposal that is received after that date or that
otherwise fails to meet requirements for shareholder proposals established by
Securities and Exchange Commission regulations.
If a shareholder intends to present a proposal at the 2004 annual
meeting without seeking to include the proposal in Middlefield's proxy materials
for that meeting, the shareholder must give advance notice to Middlefield.
According to Article I, section 8 of Middlefield's regulations, the shareholder
must give notice at least 60 days but no more than 120 days before the date in
2004 corresponding to the mailing date of this proxy statement for the 2003
annual meeting. This proxy statement is being mailed to shareholders on or about
April 7, 2003. Accordingly, a shareholder who desires to present a proposal at
the 2004 annual meeting without seeking to include the proposal in Middlefield's
proxy materials for that meeting should provide notice of the proposal to
Middlefield no earlier than December 7, 2003 and no later than February 5, 2004.
If the shareholder fails to do so, Middlefield's management proxies for the 2004
annual meeting will be entitled to use their discretionary voting authority on
that proposal, without any discussion of the matter in Middlefield's proxy
materials. Shareholders who desire to submit a proposal for the 2004 annual
meeting without seeking to include the proposal in Middlefield's proxy materials
for that meeting should refer to Article I, section 8 of Middlefield's
regulations for information concerning the procedures for submitting proposals,
including information required to be provided by shareholders submitting
proposals.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
Middlefield's directors and executive officers, as well as any persons who own
more than 10% of a registered class of Middlefield's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Middlefield stock. Based solely on review of
the copies of such reports furnished to Middlefield and written representations
to Middlefield, to Middlefield's knowledge all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than 10% beneficial
owners were complied with during the fiscal year ended December 31, 2002.
14
GENERAL
The persons named in the proxy will vote all properly executed proxies.
If a shareholder specifies a choice for a proposal to be acted upon, the proxy
will be voted in accordance with his or her specifications. If no choice is
specified, the proxy will be voted FOR election of the nominees identified
herein and FOR ratification of Middlefield's independent auditor.
The board is not aware of any business to come before the meeting other
than those matters described in this proxy statement. However, if any other
matters should properly come before the annual meeting, proxies in the
accompanying form will be voted in respect thereof in accordance with the
judgment of the person or persons voting the proxies, including matters relating
to the conduct of the annual meeting.
The cost of solicitation of proxies will be borne by Middlefield. We
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy material to the
beneficial owners of common stock. In addition to solicitations by mail,
directors, officers and regular employees of The Middlefield Banking Company may
solicit proxies personally or by telephone without additional compensation.
INFORMATION AVAILABLE TO SHAREHOLDERS
Our 2002 Annual Report has been mailed to persons who were shareholders
as of the close of business on March 24, 2003. Additional copies may be obtained
without charge by written request. The 2002 Annual Report is not part of these
proxy soliciting materials and is not incorporated in this proxy statement by
reference. Middlefield files periodic reports and other information with the SEC
under the Securities Exchange Act of 1934. Copies of the public portions of
reports to the SEC may be inspected and copied at the headquarters of the SEC,
450 Fifth Street, NW, Washington, D.C. 20549. The SEC maintains an Internet web
site containing reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of that
site is http://www.sec.gov.
If you and others who share your address own your shares in street
name, your broker or other holder of record may be sending one copy only of the
annual report and proxy statement to your address. Known as "householding," this
practice reduces Middlefield's printing and postage costs. However, if you wish
to receive a separate annual report or proxy statement in the future, you should
contact your broker or other holder of record. If you own your shares in street
name and are receiving multiple copies of our annual report and proxy statement,
you can request householding by contacting your broker or other holder of
record. Shareholders who share an address to which a single annual report or
proxy statement is delivered may orally or in writing request a separate copy of
the annual report or proxy statement. Middlefield will deliver the separate
annual report or proxy statement promptly at your request.
----------------------
A COPY OF MIDDLEFIELD BANC CORP.'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2002, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION BUT WITHOUT EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS UPON WRITTEN REQUEST TO: MR. DONALD L. STACY, CHIEF FINANCIAL
OFFICER, MIDDLEFIELD BANC CORP., 15985 EAST HIGH STREET, MIDDLEFIELD, OHIO 44062
----------------------
15
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MIDDLEFIELD BANC CORP.
The undersigned shareholder of Middlefield Banc Corp. hereby
constitutes and appoints George F. Hasman and Donald D. Hunter, and each of
them, with full power of substitution, as proxies to represent the undersigned
at the Annual Meeting of Shareholders of Middlefield Banc Corp. to be held on
May 14, 2003 and any adjournments and postponements thereof, and to vote the
shares of common stock the undersigned would be entitled to vote upon all
matters referred to herein and in their discretion upon any other matters that
properly come before the Annual Meeting:
WITHHOLD VOTE
PROPOSAL--ELECTION OF DIRECTORS FOR ALL NOMINEES FOR ALL NOMINEES
------------------------------------------------------------------------- ------------------- -------------------
1) To elect the three nominees identified below as directors for terms of three [ ] [ ]
years and until their successors are elected and qualified...................
Instruction: To withhold your vote for any individual nominee, strike a line through the nominee's name:
George F. Hasman James R. Heslop, II Martin S. Paul
OTHER PROPOSALS FOR AGAINST ABSTAIN
-------------------------------------------------------------------------------- --------- ------------ -----------
2) To ratify the appointment of S.R. Snodgrass, A.C. as independent auditor for the [ ] [ ] [ ]
fiscal year ending December 31, 2003.............................................
THE BOARD RECOMMENDS A VOTE FOR ELECTION OF THE IDENTIFIED NOMINEES AND FOR
PROPOSAL 2
The shares represented by this proxy will be voted as specified. Unless
specified to the contrary, all shares of the undersigned will be voted "FOR"
election of the nominees identified above and "FOR" proposal 2. If any other
business is properly presented at the meeting, this proxy will be voted by those
named herein in accordance with their best judgment. The board knows of no other
business to be presented at the meeting.
The undersigned acknowledges receipt from Middlefield Banc Corp.,
before execution of this proxy, of Notice of the Meeting, a Proxy Statement and
Annual Report.
------------------------------------
Dated: , 2003 Signature
------------------
------------------------------------
Signature
(Please sign exactly as your name
appears on this card. If shares are held
jointly, each holder should sign. When
signing as attorney, executor,
administrator, trustee, guardian, or in
another representative capacity, please
give your full title. If a corporation,
please sign in full corporate name by
the President or other duly authorized
officer. If a partnership, please sign
in partnership name by a duly authorized
person (general partner).)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
POSTAGE-PAID, SELF-ADDRESSED ENVELOPE PROVIDED