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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO
RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A)
VERMONT FINANCIAL SERVICES CORP.
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(Name of issuer)
COMMON STOCK, par value $1.00 per share
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(Title of class of securities)
924180102
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(CUSIP number)
Paul A. Perrault
Chairman, Chief Executive Officer and President
Chittenden Corporation
Two Burlington Square
Burlington, Vermont 05401
(802) 658-4000
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(Name, address and telephone number of person authorized to receive notices and
communications)
December 16, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13(d)-1(g), check the
following box [ ].
(Continued on the following pages)
Page 1 of 10 Pages
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SCHEDULE 13D
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CUSIP NO. 924180102 PAGE 2 OF 10 PAGES
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Chittenden Corporation
I.R.S. Identification No. 03-0228404
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
WC,OO
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
5 PURSUANT TO ITEMS 2(d) or 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
State of Vermont
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SOLE VOTING POWER
7
NUMBER OF 2,557,073/(1)/
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
NONE
OWNED BY
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EACH SOLE DISPOSITIVE POWER
9
REPORTING 2,557,073/(1)/
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
NONE
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
2,557,073 SHARES OF COMMON STOCK/(1)/
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 [_]
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
16.6%/(2)/
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TYPE OF REPORTING PERSON*
14
HC/CO
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/(1)/ Beneficial ownership of all such shares is being reported hereunder solely
as a result of the Option (as hereinafter defined) granted pursuant to the Stock
Option Agreement (as described in Item 4 hereof). The reporting person expressly
disclaims any beneficial ownership of such shares of Common Stock (as
hereinafter defined) pursuant to Rule 13d-4 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), because the Option is exercisable only in
the circumstances set forth in Item 4, none of which has occurred as of the date
hereof.
/(2)/ This percentage is calculated in accordance with Rule 13d-3(d)(1) by
dividing the number of shares of Common Stock issuable pursuant to the Option by
the sum of (A) the currently outstanding number of shares of Common Stock, as
represented to Chittenden in the Merger Agreement (as hereinafter defined), and
(B) the shares underlying the Option. The shares of Common Stock represented by
the Option are 19.9% of the currently outstanding number of shares of Common
Stock, as represented to Chittenden in the Merger Agreement.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 2 of 10 Pages
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ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the common stock, par value per share
$1.00 (the "VFSC Common Stock"), of Vermont Financial Services Corp. ("VFSC").
The principal executive offices of VFSC are located at 100 Main Street,
Brattleboro, Vermont 05301.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f). This Schedule 13D is being filed by Chittenden
Corporation, a Vermont corporation ("Chittenden"). Chittenden is a registered
bank holding company under the Bank Holding Company Act of 1956, as amended,
which provides a wide variety of banking services through its subsidiaries to
individuals, corporations and other customers. These services include retail
banking, consumer and commercial lending, mortgage origination and servicing and
trust services. Chittenden's wholly-owned subsidiaries are Chittenden Trust
Company, Chittenden Connecticut Corporation, Flagship Bank and Trust Company and
The Bank of Western Massachusetts. Chittenden Trust Company's wholly-owned
subsidiaries include Chittenden Insurance Products and Services Inc. and
Chittenden Securities, Inc. The principal executive offices of Chittenden are
located at Two Burlington Square, Burlington, Vermont 05401.
Each executive officer and each director of Chittenden is a citizen of
the United States. The name, business address, and present principal occupation
of each executive officer and director is set forth in Annex A to this Schedule
13D and is specifically incorporated herein by reference.
(d)-(e). During the last five years neither Chittenden nor, to the
best knowledge of Chittenden, any executive officer or director of Chittenden
has been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
Pursuant to the Stock Option Agreement described in Item 4, VFSC has
granted Chittenden an option (the "Option") to purchase, upon the occurrence of
certain specified events which are not within the control of Chittenden, up to
2,557,073 authorized but unissued shares of VFSC Common Stock (the "Option
Shares") at a price of $22.00 per share, which numbers are subject to
adjustment. The exercise of the Option to purchase the full number of shares of
VFSC Common Stock currently covered thereby would require aggregate funds of
$56,255,606, excluding administrative fees and expenses associated therewith.
If Chittenden were to purchase the Option Shares pursuant to the Stock Option
Agreement, Chittenden currently anticipates that such funds would be provided
from one or more of the following
Page 3 of 10 Pages
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sources: working capital, dividends from Chittenden's subsidiaries and/or
borrowings from sources yet to be determined.
ITEM 4. PURPOSE OF TRANSACTION.
On December 16, 1998, Chittenden entered into an Agreement and Plan of
Merger (the "Merger Agreement") by and among Chittenden, Chittenden Acquisition
Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of
Chittenden, and VFSC. The Merger Agreement provides for a series of
transactions pursuant to which VFSC will merge with and into Chittenden (the
"Merger") and VFSC's separate corporate existence will cease. Chittenden will
be the surviving corporation (the "Surviving Corporation") of the Merger and
will continue its corporate existence under the laws of the State of Vermont.
As a result of the Merger, each outstanding share of VFSC Common Stock
at the Effective Time (as such term is defined in the Merger Agreement),
excluding treasury shares, will be converted into the right to receive 1.07
shares of the common stock, par value $1.00 per share (the "Chittenden Common
Stock"), of Chittenden, subject to adjustment under certain circumstances
specified in the Merger Agreement. The Merger would result in the VFSC Common
Stock ceasing to be authorized to be quoted on the NASDAQ National Market and
the termination of registration of such securities pursuant to the Exchange Act.
Consummation of the Merger is subject to a number of conditions set
forth in the Merger Agreement, including, without limitation, approval by the
requisite vote of the shareholders of each of Chittenden and VFSC, the receipt
of regulatory approvals, the effectiveness of a registration statement relating
to the shares of Chittenden Common Stock to be issued to the holders of VFSC
Common Stock in the Merger, the approval for listing of the Chittenden Common
Stock to be issued in the Merger on the New York Stock Exchange, and the absence
of any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins, prohibits or makes illegal the consummation of the
Merger. The Merger Agreement is included as Exhibit 2.1 to Chittenden's Current
Report on Form 8-K, which was filed with the Securities and Exchange Commission
(the "SEC") on December 17, 1998 (the "Chittenden Form 8-K"), and is hereby
incorporated herein by reference.
As an inducement to the willingness of Chittenden to enter into the
Merger Agreement, Chittenden and VFSC entered into a Stock Option Agreement,
dated as of December 16, 1998 (the "Stock Option Agreement"). Pursuant to the
Stock Option Agreement, VFSC granted Chittenden the Option to purchase up to
2,557,073 authorized but unissued shares of VFSC Common Stock at a price of
$22.00 per share, which Option is exercisable only upon the occurrence of
certain events. The number of Option Shares issuable upon exercise of the
Option is subject to adjustment in the event that any shares of VFSC Common
Stock are issued or otherwise become outstanding or are redeemed, repurchased,
retired or otherwise cease to be outstanding after the date of the Stock Option
Agreement such that after such action the number of Option Shares equals 19.9%
of the number of shares of VFSC Common Stock then outstanding without giving
effect to any shares subject to or issued under the Option. In addition, the
number of shares subject to the Option will be adjusted in the event of any
change in the number of outstanding shares of VFSC Common Stock by
Page 4 of 10 Pages
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reason of any stock dividend, split-up, merger, recapitalization, combination,
subdivision, conversion, exchange of shares or the like by VFSC. Under certain
circumstances set forth in the Stock Option Agreement, VFSC can be required to
repurchase the Option and any Option Shares at a formula price based on the
difference between (x) the price paid or offered to be paid to VFSC or its
stockholders in certain competing transactions involving the acquisition of VFSC
or the highest last sale price of VFSC Common Stock within a defined period and
(y) the exercise price of the Option. The Stock Option Agreement is included as
Exhibit 10.1 to the Chittenden Form 8-K and is hereby incorporated herein by
reference.
Pursuant to the Merger Agreement, effective as of the Effective Time,
Chittenden shall cause the size of its Board of Directors to be increased to
seventeen members and shall cause six members of the Board of Directors of VFSC
to be elected to Chittenden's Board of Directors. The six members of VFSC's
Board of Directors to be elected to Chittenden's Board of Directors shall be
chosen by Chittenden after consultation with VFSC. Pursuant to the Merger
Agreement, upon consummation of the Merger, (i) the charter and bylaws of the
Surviving Corporation will be the charter and bylaws of Chittenden, as such
charter and bylaws may be amended prior thereto and (ii) the corporate name of
the Surviving Corporation shall be Chittenden Corporation. Paul A. Perrault,
Chairman of the Board, Chief Executive Officer and President of Chittenden, will
have the same title of the Surviving Corporation.
Under the terms of the Merger Agreement, VFSC has agreed that prior to
the Effective Time, if such action would prevent or impede the Merger from
qualifying for "pooling of interests" accounting treatment under generally
accepted accounting principles then neither it nor its subsidiaries shall pay
any dividend other than regular quarterly cash dividends payable on VFSC Common
Stock in the ordinary course consistent with past practice (with any increase as
is consistent with past practice).
Except as set forth in this Item 4, the Merger Agreement or the Stock
Option Agreement, neither Chittenden nor, to the best of Chittenden's knowledge,
any of the individuals named in Annex A hereto, has any plans or proposals that
relate to or would result in any of the actions specified in clauses (a) through
(j) of Item 4 of this Schedule 13D.
The preceding summary of certain provisions of the Merger Agreement
and the Stock Option Agreement, copies of which were previously filed as Exhibit
2.1 and Exhibit 10.1, respectively, to the Chittenden Form 8-K and which are
incorporated by reference as exhibits hereto, is not intended to be complete and
is qualified in its entirety by reference to the full text of such agreements.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) By reason of its execution of the Stock Option Agreement,
pursuant to Rule 13d-3(d)(1)(i) promulgated under the Exchange Act, Chittenden
may be deemed to own beneficially 2,557,073 shares of VFSC Common Stock, which,
following the issuance of such shares, will represent approximately 16.6% of the
outstanding shares of VFSC Common
Page 5 of 10 Pages
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Stock. If Chittenden were to acquire such shares, it would have sole voting and
investment power with respect thereto. Because of the limited circumstances in
which the Option is exercisable, Chittenden expressly disclaims present
beneficial ownership of the Option Shares.
Except as set forth above or in a fiduciary capacity, neither
Chittenden nor, to the best of Chittenden's knowledge, any of the individuals
named in Annex A hereto, owns any shares of VFSC Common Stock.
(c) Neither Chittenden nor, to the best of Chittenden's knowledge, any
of the individuals named in Annex A hereto, has effected any transaction in the
VFSC Common Stock during the past 60 days, excepting transactions in a fiduciary
capacity.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Merger Agreement contains certain customary restrictions on the
conduct of the business of VFSC pending the Merger, including certain customary
restrictions relating to the VFSC Common Stock. Except as provided in the
Merger Agreement or the Stock Option Agreement, neither Chittenden nor, to the
best of Chittenden's knowledge, any of the individuals named in Annex A hereto,
has any contract, arrangement, understanding or relationship (legal or
otherwise) with any person with respect to any securities of VFSC, including but
not limited to, transfer or voting of any securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement and Plan of Merger, dated as of December 16, 1998, by and
between Chittenden Corporation, Chittenden Acquisition Subsidiary,
Inc. and Vermont Financial Services Corp. (Incorporated by reference
to Exhibit 2.1 of Chittenden's Form 8-K, which was filed with the
Securities and Exchange Commission on December 17, 1998.)
2. Stock Option Agreement, dated as of December 16, 1998, by and between
Chittenden Corporation and Vermont Financial Services Corp.
(Incorporated by reference to Exhibit 10.1 of Chittenden's Form 8-K,
which was filed with the Securities and Exchange Commission on
December 17, 1998.)
Page 6 of 10 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 23, 1998
CHITTENDEN CORPORATION
By: /s/ F. Sheldon Prentice
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Name: F. Sheldon Prentice
Title: Senior Vice President, General Counsel
and Secretary
Page 7 of 10 Pages
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ANNEX A
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IDENTITY AND BACKGROUND
The following table sets forth the names, addresses and principal
occupations of the directors and executive officers of Chittenden Corporation.
Except as set forth below, the principal business address of each such director
and executive officer is the address of Chittenden Corporation, Two Burlington
Square, Burlington, Vermont 05401. Each of such directors and executive
officers is a citizen of the United States.
DIRECTORS
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Name and Business Address Present Principal Occupation or Employment
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Frederic H. Bertrand Retired
David M. Boardman President - Associates in Financial
346 Sheburne Road Planning
Burlington, VT 05402
Paul J. Carrara President - J.P. Carrara & Sons, Inc.
R.D. 3
Middlebury, VT 05753
Richard D. Driscoll Retired
Lyn Hutton Vice President and Treasurer - The John D. &
140 South Dearborn Street Catherine T. MacArthur Foundation
Suite 1000
Chicago, IL 60603
Philip A. Kolvoord Of Counsel in the law firm of Kolvoord,
3 Main Street Overton & Wilson
Essex Junction, VT 05452
Martel D. Wilson, Jr. Retired
Paul A. Perrault Chairman of the Board, President and Chief
Executive Officer of Chittenden
James C. Pizzagalli President - Pizzagalli Construction Company
P.O. Box 2009, Joy Drive
South Burlington, VT 05407
Pall D. Spera President - Pall Spera Company
Route 108 Mountain Road
Stowe, VT 05672
Page 8 of 10 Pages
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EXECUTIVE OFFICERS
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Name and Business Address Present Principal Occupation or Employment
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Paul A. Perrault Chairman of the Board, President and Chief
Executive Officer
Howard L. Atkinson Chief Auditor
John P. Barnes Executive Vice President
Lawrence W. DeShaw Executive Vice President
John W. Kelly Executive Vice President
Danny H. O'Brien Executive Vice President
F. Sheldon Prentice Senior Vice President, General Counsel &
Secretary
Kirk W. Walters Executive Vice President, Chief Financial
Officer and Treasurer
Page 9 of 10 Pages
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EXHIBIT INDEX
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Exhibit Number Description
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1. Agreement and Plan of Merger, dated as of December 16, 1998, by
and between Chittenden Corporation, Chittenden Acquisition
Subsidiary, Inc. and Vermont Financial Services Corp.
(Incorporated by reference to Exhibit 2.1 of Chittenden's Form 8-
K, which was filed with the Securities and Exchange Commission on
December 17, 1998.)
2. Stock Option Agreement, dated as of December 16, 1998, by and
between Chittenden Corporation and Vermont Financial Services
Corp. (Incorporated by reference to Exhibit 10.1 of Chittenden's
Form 8-K, which was filed with the Securities and Exchange
Commission on December 17, 1998.)
Page 10 of 10 Pages
