SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] 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
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FIRST LITCHFIELD FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
April 24, 2000
Dear Shareholder:
On behalf of the Board of Directors of FIRST LITCHFIELD FINANCIAL
CORPORATION (the "Company") you are cordially invited to attend the Annual
Meeting of Shareholders of the Company to be held on May 24, 2000 at 3:00 p.m.
at the Litchfield Inn, Route 202, Litchfield, Connecticut.
The Notice of the Annual Meeting and the Proxy Statement which are
enclosed, describe the matters to be voted upon at the meeting. In addition to
the specific items on our agenda, we will discuss generally the operations of
the Company and its subsidiary, The First National Bank of Litchfield (the
"Bank"). We welcome any appropriate questions you may have concerning the
Company and the Bank, and we will provide time during the meeting for questions
from shareholders.
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company, and the expense of the solicitation will be borne by the Company.
Any person giving a proxy pursuant to this solicitation may revoke it at any
time by written notice given prior to the Annual Meeting of Shareholders or the
proxy may be withdrawn and you may vote in person should you attend the meeting.
The enclosed proxy will be voted "FOR" the proposed slate of four (4) directors
unless marked to the contrary. The Board of Directors of the Company currently
consists of twelve (12) directors, four (4) of whom have been nominated for
re-election at the 2000 Annual Meeting for a term of three (3) years. The
nominees for re-election are: John H. Field, Perley H. Grimes, Jr.. Thomas A.
Kendall and Charles E. Orr.
We hope you will be able to attend the meeting, but if you cannot do
so, it is still important that your shares be represented at the Annual Meeting.
Please execute and date the enclosed proxy and return it as soon as possible in
the envelope provided.
Sincerely,
/s/ Jerome J. Whalen
--------------------
Jerome J. Whalen
President and
Chief Executive Officer
A copy of the Company's Annual Report to Shareholders, including financial
statements of the Company for the fiscal year ended December 31, 1999, is
enclosed.
<PAGE>
FIRST LITCHFIELD FINANCIAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 24, 2000
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2000
To the Shareholders of First Litchfield Financial Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
Litchfield Financial Corporation (the "Company") will be held at 3:00 p.m. on
May 24, 2000 at the Litchfield Inn, Route 202, Litchfield, Connecticut, for the
following purposes:
1. To elect four (4) shareholders to the Board of Directors, each to serve
for a term of three (3) years and until their successors are elected
and qualified, as described in the Proxy Statement.
2. To transact such other business as may properly come before the
meeting, or any adjournments thereof.
Only those Shareholders of record at the close of business on the 10th
day of April, 2000 are entitled to notice of, and to vote at this Annual
Meeting. A list of those shareholders will be available for inspection by
shareholders for ten (10) days preceding the meeting at the office of the
Secretary of the Company at the Company's main office, 13 North Street,
Litchfield, Connecticut, and will also be available for inspection by
shareholders at the meeting itself.
BY ORDER OF THE BOARD OF DIRECTORS OF
FIRST LITCHFIELD FINANCIAL CORPORATION
/s/ Philip G. Samponaro
-----------------------
Philip G. Samponaro,
Secretary
April 24, 2000
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE REGARDLESS OF WHETHER THEY PLAN TO ATTEND THE MEETING. ANY
PROXY GIVEN BY A SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED,
AND ANY SHAREHOLDER WHO EXECUTES AND RETURNS A PROXY AND WHO ATTENDS THE ANNUAL
MEETING MAY WITHDRAW THE PROXY AT ANY TIME BEFORE IT IS VOTED AND VOTE HIS OR
HER SHARES IN PERSON. A PROXY MAY BE REVOKED BY GIVING NOTICE TO PHILIP G.
SAMPONARO, SECRETARY OF FIRST LITCHFIELD FINANCIAL CORPORATION, IN WRITING PRIOR
TO THE TAKING OF A VOTE.
<PAGE>
Proxy Statement of First Litchfield Financial Corporation
-----------------------
ANNUAL MEETING OF SHAREHOLDERS OF
FIRST LITCHFIELD FINANCIAL CORPORATION
May 24, 2000
-----------------------
SOLICITATION OF PROXIES
The enclosed proxy (the "Proxy") is solicited by the Board of Directors
of FIRST LITCHFIELD FINANCIAL CORPORATION (the "Company"), 13 North Street,
Litchfield, Connecticut, 06759, for use at the Annual Meeting of Shareholders,
to be held on May 24, 2000, and at any and all adjournments thereof. Any Proxy
given may be revoked at any time before it is actually voted on any matter in
accordance with the procedures set forth on the Notice of Annual Meeting. This
Proxy Statement and the enclosed form of Proxy are being mailed to shareholders
(the "Shareholders") on or about April 24, 2000. The cost of preparing,
assembling and mailing this Proxy Statement and the material enclosed herewith
is being borne by the Company. In addition to this solicitation by mail,
directors, officers and employees of the Company, and its subsidiary The First
National Bank of Litchfield (the "Bank"), without additional compensation, may
make solicitations personally or by telephone or telegraph. The Company will
reimburse banks, brokerage firms and others holding shares in their names or in
the names of nominees for their reasonable out-of-pocket expenses in forwarding
proxies and proxy materials to the beneficial owners of such shares.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on April 10, 2000 as the Record Date (the "Record Date") for the determination
of Shareholders entitled to notice of and to vote at this Annual Meeting. As of
the Record Date, 1,514,931 shares of the common stock of the Company (par value
$.01 per share) were issued and outstanding and held of record by approximately
445 shareholders (the "Common Stock"), each of which shares is entitled to one
vote on all matters to be presented at this Annual Meeting. The holders of
one-third of the Company"s Common Stock must be present, in person or by proxy,
at the Annual Meeting to constitute a quorum. Abstentions and broker non-votes
are not treated as having voted in favor of any proposal and are counted as
present for establishing a quorum. No other class of the Company's capital stock
is outstanding or entitled to vote at the Annual Meeting. A plurality of the
votes cast by shares of Common Stock entitled to vote, in person or by proxy, at
the Annual Meeting shall be required to elect directors if a quorum is present.
If the enclosed form of Proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted "FOR" the election of the four (4)
nominees for election to the Board of Directors. The Board of Directors does not
know of any matters other than those described in the Notice of Annual Meeting
that are to come before the Annual Meeting. If any other matters are properly
brought before the Annual Meeting, the persons named in the Proxy will vote the
shares represented by such Proxy upon such matters as determined by a majority
of the Board of Directors.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table includes certain information as of March 31, 2000
regarding the principal shareholders (the "Principal Shareholders") of the
Company. With the exception of the Principal Shareholders listed below, the
Company is not aware of any beneficial owner of five percent (5%) or more of the
Company"s Common Stock.
<TABLE>
<CAPTION>
Percent of
Name and Address Number of Shares Outstanding
of Beneficial Owner Beneficially Owned (1) Common Stock
- ------------------- ---------------------- ------------
<S> <C> <C>
Donald K. Peck 111,144 (2) 7.34%
Litchfield, CT
William J. Sweetman 90,867 (3), (4) 5.98%
Litchfield, CT
</TABLE>
- ----------
1. The definition of beneficial owner includes any person who,
directly or indirectly, through any contract, agreement or
understanding, relationship or otherwise has or shares voting
power or investment power with respect to such security.
2. Includes shares owned by, or as to which voting power is shared
with spouse.
3. Includes options to purchase 4,232 additional shares of the
Company's Common Stock.
4. Includes 11,956 shares owned by an estate as to which individual
has voting power as fiduciary of said estate.
PROPOSAL (1)
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three (3)
classes, each class being approximately equal in size. Each class of directors
will stand for re-election once every three (3) years. Directors are elected by
a plurality of the votes of shares present in person or represented by proxy at
the meeting and entitled to vote.
Pursuant to the Company's Certificate of Incorporation and Bylaws, the
Board has fixed the number of directorships at twelve (12). At this Annual
Meeting, four (4) directors are to be elected, each for a term of three (3)
years and until their successors are elected and qualified. The terms of
directors John H. Field, Perley H. Grimes, Jr., Thomas A. Kendall, and Charles
E. Orr expire at the 2000 Annual Meeting. All nominees are now serving as
directors. Each candidate for director has been nominated by the Board of
Directors. Each of the nominees has indicated his willingness to serve as a
director. If any of them become unavailable, the Proxy may be voted for a
nominee or nominees who would be designated by the Board of Directors.
There are no arrangements or understandings between any of the
directors or any other persons pursuant to which any of the above directors have
been selected as directors.
2
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE ELECTION OF ITS NOMINEES FOR
DIRECTOR
The following sets forth the name and age of each nominee (the first
four (4) directors listed), and each director who will continue his or her term
of office, the year in which each was first elected a director of the Company
and the principal occupation and business experience of each during the past
five (5) years:
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION
Position Held with Expiration Date
Name & Age the Company of Current Term
- ---------- ----------- ---------------
<S> <C> <C>
John H. Director of the Company 2000
Field and the Bank since 1990 (1)
(74)
Perley H. Director of the Company 2000
Grimes, Jr. since 1988 and of the
(55) Bank since 1984 (2)
Thomas A. Director of the Company 2000
Kendall and of the Bank since 1999 (3)
(44)
Charles E. Director of the Company 2000
Orr since 1988 and of the
(64) Bank since 1981 (4)
CONTINUING DIRECTORS
Clayton L. Director of the Company 2002
Blick since 1988 and of the
(82) Bank since 1953 (5)
Ernest W. Chairman of the Board of 2001
Clock Directors; Director of the
(75) Company since 1988 and of
the Bank since 1973 (6)
Bernice D. Director of the Company 2002
Fuessenich since 1988 and of the
(81) Bank since 1978 (7)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Position Held with Expiration Date
Name & Age the Company of Current Term
- ---------- ----------- ---------------
<S> <C> <C>
George M. Director of the Company 2001
Madsen and the Bank since 1988 (8)
(66)
William J. Director of the Company 2001
Sweetman and the Bank since 1990 (9)
(53)
H. Ray Director of the Company 2002
Underwood and of the
(46) Bank since 1998 (10)
Patricia D. Director of the Company 2001
Werner and the Bank since 1996 (11)
(53)
Jerome J. President, Chief Executive Officer 2002
Whalen and Director of the Company
(58) and of the Bank since 1990 (12)
</TABLE>
- --------------------
1. Mr. Field is retired. He served as Executive Vice President of
Union Carbide Corporation until December 1986.
2. Mr. Grimes is a Partner in the Law Firm of Cramer & Anderson.
3. Mr. Kendall is a self employed investor.
4. Mr. Orr is President of New Milford Volkswagen, Inc.
5. Mr. Blick is a Partner in the Law Firm of Cramer & Anderson.
6. Mr. Clock is Chairman of the Board of F. North Clark Insurance
Agency.
7. Ms. Fuessenich is a realtor and an owner of the Fuessenich
Agency.
8. Mr. Madsen is retired. He formally served as President of Roxbury
Associates, Inc.
9. Mr. Sweetman is the President and owner of Dwan & Co., Inc.
10. Mr. Underwood is President of Underwood Services, Inc.
11. Ms. Werner is the head of the Washington Montessori Association,
Inc.
12. Mr. Whalen has served as the President of the Company and the
Bank since March 1, 1990.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company met fourteen (14) times in 1999.
With the exception of Messrs. Kendall and Sweetman, all directors, while holding
such position, attended at least 75% of the aggregate of the total number of
meetings of the board of directors and the total number of meetings held by all
committees of the board on which such director served during 1999.
4
<PAGE>
In 1999, each director of the Company who was not an employee of the
Bank, received $300 for each Board meeting attended and $250 for each committee
meeting attended. The Chairman of the Board of Directors also receives an annual
retainer of $6,000 and each non-officer director of the Company also receives an
annual retainer of $5,000 for serving as a director. Directors who are employees
of the Bank receive no additional compensation for their services as members of
the Board or any board committee.
The Board of Directors has established several standing committees to
assist in the discharge of their responsibilities. All members are appointed
annually and serve until their successors are named. All committees report their
deliberations and recommendations to the Board. The principal responsibilities,
membership and number of meetings of each committee are described below.
Audit and Security Committee
- ----------------------------
The Audit and Security Committee met four (4) times in 1999. The
Committee members were: Bernice D. Fuessenich, Charles E. Orr and Patricia D.
Werner. This Committee is responsible for oversight of the internal audit
function, internal accounting controls, security programs and recommendations
regarding the selection of independent accountants.
Nominating Committee
- --------------------
The Nominating Committee met two (2) times in 1999. The Committee
members were: Ernest W. Clock, John H. Field, Bernice D. Fuessenich, Perley H.
Grimes, Jr., George M. Madsen and Jerome J. Whalen. This Committee reviews and
evaluates potential candidates for nomination to the Boards of Directors of the
Company and the Bank, respectively, and recommends proposed nominees for
election as members of the Boards of Directors and committees. The Nominating
Committee will consider recommendations by shareholders for nomination as
director, provided such recommendations are submitted in accordance with certain
procedures set forth in the Company's Bylaws and applicable regulations. A copy
of the Bylaws will be sent to any shareholder upon request.
Planning Committee
- ------------------
The Planning Committee met eleven (11) times in 1999. The Committee
members were: Ernest W. Clock, John H. Field, Perley H. Grimes, Jr., Thomas A.
Kendall, George M. Madsen, William J. Sweetman and Jerome J. Whalen.
Additionally, Senior Vice President and Senior Loan Officer Revere H. Ferris,
Senior Vice President and Senior Trust Officer John S. Newton, Senior Vice
President and Chief Financial Officer of the Bank and Treasurer of the Company
Carroll A. Pereira, and Senior Vice President, Chief Administrative Officer and
Cashier of the Bank and Secretary of the Company Philip G. Samponaro generally
attended these meetings. This Committee is responsible for oversight of the
strategic planning function, including development and implementation of the
strategic plan's short and long term components.
5
<PAGE>
COMMON STOCK OWNED BY DIRECTORS AND
EXECUTIVE OFFICERS
The following table sets forth the number and percentage of Common
Stock beneficially owned by each current Director, each of the Executive
Officers named in the Summary Compensation Table, and the Directors and
Executive Officers as a group at March 31, 2000.
<TABLE>
<CAPTION>
Common Shares
Name Of Beneficially Owned
Beneficial Owner At March 31, 2000 (1) Percent of Class
- ---------------------- ----------------------------- ----------------
<S> <C> <C>
Clayton L. Blick 11,545 (2), (3) .76%
Ernest W. Clock 22,822 (2), (3) 1.50%
John H. Field 7,010 (2) .46%
Bernice D. Fuessenich 9,060 (2) .60%
Perley H. Grimes, Jr 16,765 (2) 1.10%
Thomas A. Kendall 552 .04%
George M. Madsen 13,782 (2) .91%
Charles E. Orr 12,053 (2) .79%
William J. Sweetman 90,867 (2), (4) 5.98%
H. Ray Underwood 110 .01%
Patricia D. Werner 3,298 (5) .22%
Jerome J. Whalen 42,602 (3), (6) 2.76%
Carroll A. Pereira 14,233 (3), (7) .93%
Philip G. Samponaro 18,919 (8) 1.24%
Revere H. Ferris 31,345 (9) 2.05%
All Directors and Executive 294,963 19.35%
Officers as a group (16 persons)
</TABLE>
1. The definition of beneficial owner includes any person who,
directly or indirectly, through any contract, agreement or
understanding, relationship or otherwise has or shares voting
power or investment power with respect to such security.
2. Includes options to purchase 4,232 shares of common stock.
- ---------------------------
Footnotes continued on next page
6
<PAGE>
3. Includes shares owned by, or as to which voting power is shared
with, spouse, children or controlled business.
4. Includes 11,956 shares owned by an estate as to which individual
has voting power as fiduciary of said estate.
5. Includes options to purchase 2,948 shares of common stock.
6. Includes options to purchase 26,581 shares of common stock.
7. Includes options to purchase 14,042 shares of common stock.
8. Includes options to purchase 17,237 shares of common stock.
Includes 939 shares of common stock held in a trust for which Mr.
Samponaro is a beneficiary.
9. Includes options to purchase 7,354 shares of common stock. In
addition, the total for Mr. Ferris includes 12,062 shares of
common stock held in trusts for which Mr. Ferris serves as
trustee.
EXECUTIVE OFFICERS
The following table sets forth information concerning Executive
Officers of the Company and/or the Bank. Unless otherwise indicated, each person
has held the same or a comparable position for the last five years.
<TABLE>
<CAPTION>
Name and Age Position Held with the Company and/or Bank
------------ ------------------------------------------
<S> <C>
Jerome J. Whalen (58) President, Chief Executive Officer
and Director of the Company and of the Bank since 1990
Carroll A. Pereira (44) Treasurer of the Company, Senior Vice President and
Chief Financial Officer of the Bank since 1984
Philip G. Samponaro (58) Senior Secretary of the Company, Senior Vice President,
Chief Administrative Officer,
Cashier and Secretary of the Bank since 1976
Revere H. Ferris (59) Senior Vice President and Senior Loan Officer
of the Bank since 1997 (1)
John S. Newton (61) Senior Vice President and Trust Officer of the
Bank since 1999 (2)
</TABLE>
- -----------
1. Mr. Ferris has served as Senior Vice President and Senior Loan
Officer of the Bank since 1997. Mr. Ferris served as Vice
President from January, 1997 through December, 1997 and served as
Assistant Vice President from January, 1996 through December,
1996. From 1994 through December, 1995, Mr. Ferris was self
employed as a financial consultant.
2. Mr. Newton has served as Senior Vice President and Trust Officer
of the Bank since April, 1999. Prior to joining the Bank, Mr.
Newton served as Vice President and Senior Trust Officer of The
Bank of Western Massachusetts from October, 1995 to April, 1999.
Prior to joining The Bank of Western Massachusetts, Mr. Newton
served as Vice President and Senior Account Executive for
Fidelity Management Trust Company from February, 1994 to May,
1995.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table provides certain information regarding the
compensation paid by the Company and the Bank to certain Executive Officers of
the Company and the Bank for services rendered in all capacities during the
fiscal years ended December 31, 1999, 1998 and 1997. Other than the Named
Executive Officers set forth below (the "Named Executive Officers") Ms. Pereira
(whose compensation exceeded $100,000 for the 1998 calendar year), Mr. Whalen
and Messrs. Ferris and Samponaro (whose compensation exceeded $100,000 for the
1999 calendar year), no other individual employed by the Company and/or the Bank
received aggregate compensation of $100,000 or more during the fiscal year ended
December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payout($)
Restricted
Other Annual Stock Options/
Name and Principal Compensation Awards SARs LTIP All Other
Position Year Salary($)(1)(2) Bonus($) ($) ($) (#) Payouts Compensation ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerome J. Whalen 1999 $186,454 5,576 (3) $ 6,061 (4)
President and Chief 1998 $170,746 5,576 (3) $ 10,859 (5)
Executive Officer of the Bank 1997 $160,411 5,320 (3) $ 5,189 (7)
and Company
Revere H. Ferris 1999 $102,316 3,677 (3) $ 3,064 (8)
Senior Vice President and 1998 $ 75,229 3,677 (3) $ 2,251 (8)
Senior Loan Officer of the Bank 1997 $ 55,232 $ 1,258 (8)
Carroll A. Pereira 1999 $ 96,472 3,677 (3) $ 2,888 (8)
Treasurer of the Company, 1998 $ 85,457 3,677 (3) $ 29,252 (6)
Senior Vice President 1997 $ 83,372 3,344 (3) $ 2,495 (8)
and Chief Financial Officer
of the Bank
Philip G. Samponaro
Secretary, 1999 $101,796 3,677 (3) $ 3,048 (8)
Senior Vice President, Chief 1998 $ 94,196 3,677 (3) $ 2,703 (8)
Administrative Officer and 1997 $ 84,096 3,344 (3) $ 2,367 (8)
Cashier of the Bank and
Secretary of the Company
</TABLE>
- ------------------------
Footnotes on next page
8
<PAGE>
1. The Company furnishes the Named Executive Officers with certain
non-cash compensation and other personal benefits aggregating
less than 10% of their cash compensation.
2. All employees of the Bank, including the above officers, are
eligible after 1 year of service to participate in the Bank's
401(k) deferred compensation plan. The Bank's contribution of up
to 75% of the first 4% of each employee's voluntary salary
reduction contributed to the 401(k) plan becomes immediately
vested. The Officer's compensation above is without deduction for
their 401(k) contribution.
3. Options granted pursuant to the 1994 Stock Option Plan for
officers and outside directors. The numbers of options have been
adjusted to reflect stock splits and dividends. (See "1994 Stock
Option Plan for Officers and Outside Directors").
4. Amount includes the Named Executive Officer"s taxable benefit
portion of the Split Dollar Life Insurance policy for the benefit
of the Named Executive Officer pursuant to the 1994 Supplemental
Employee Retirement Plan Agreement, $460. ( See "1994
Supplemental Employee Retirement Plan for Mr. Whalen").
Additionally, the amount includes $5,601 which is the Bank"s
matching contribution to the Bank's 401(k) plan for the benefit
of the Named Executive Officer.
5. Amount includes the Named Executive Officer"s taxable benefit
portion of the Split Dollar Life Insurance policy, for the
benefit of the Named Executive Officer pursuant to the 1994
Supplemental Employee Retirement Plan Agreement, $422.
Additionally, the amount includes $5,422 which can be attributed
to the exercise of stock options by the Named Executive Officer
and $5,015 which is the Bank's matching contribution to the
Bank's 401(k) plan for the benefit of the Named Executive
Officer.
6. This amount includes $26,546 which can be attributed to the
exercise of stock options by the Named Executive Officer and
$2,706 which reflects the Bank's matching contribution to the
Bank's 401(k) plan for the benefit of the Named Executive
Officer.
7. Amount includes the Named Executive Officer's taxable benefit
portion of the Split Dollar Life Insurance policy for the benefit
of the Named Executive Officer pursuant to the 1994 Supplemental
Employee Retirement Plan Agreement, $383. Additionally, the
amount includes $4,806 which is the Bank's matching contribution
to the 401(k) plan for the benefit of the Named Executive
Officer.
8. Amount reflects the Bank's matching contribution to the Bank's
401(k) plan for the benefit of the Named Executive Officer.
OPTION/SAR Grants in Last Fiscal Year
The following table contains information regarding options granted to
the Named Executive Officers during 1999. All shares purchased upon the exercise
of any option must be paid in full at the time of purchase. The number of
options granted and the per share exercise prices have been adjusted to reflect
stock splits and dividends.
<PAGE>
<TABLE>
<CAPTION>
Individual Grants
- --------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total/Options
Underlying SARs Granted Exercise or
Options/SARs to Employees Base Price Expiration
Name Granted (#)(1) in Fiscal Year ($/sh) Date
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jerome J. Whalen 5,576 33.6% $17.62 01/29/09
Revere H. Ferris 3,677 22.1% $17.62 01/29/09
Carroll A. Pereira 3,677 22.1% $17.62 01/29/09
Philip G. Samponaro 3,677 22.1% $17.62 01/29/09
</TABLE>
- -------------------
1. Options granted pursuant to the 1994 Stock Option Plan for Officers and
Outside Directors. (See "1994 Stock Option Plan for Officers and
Directors"). The number of securities underlying options granted and
the per share exercise prices have been adjusted to reflect stock
splits and dividends. No SARs have been granted by the Company.
9
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
The following table sets forth information regarding stock options that
were exercised, if any, during the last fiscal year, and unexercised stock
options held by the Named Executive Officers. The number of options and the per
share exercise prices have been adjusted to reflect stock splits and dividends.
<TABLE>
<CAPTION>
Value of Unexercised
Number of In-the-Money
Securities/Underlying Options/SARs
Name Shares Acquired Value Realized Unexercised At FY-End ($)(1)
on Exercise (#) ($) Options/SARs at FY-End (#)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jerome J. Whalen 0 0 56,578 $523,745
Revere H. Ferris 0 0 7,354 $16,730
Carroll A. Pereira 0 0 14,042 $66,255
Philip G. Samponaro 0 0 17,237 $99,227
</TABLE>
- -----------------
1. Represents the difference between the closing bid price of the
Company's common stock at December 31, 1999, $17.75, and the
exercise price of options, multiplied by the number of options.
No SARs have been granted by the Company.
Agreements with Management
- --------------------------
While there are no employment contracts between the Company and any of
its Executive Officers, there are change of control agreements between the Bank
and its Executive Officers. These agreements provide that in certain instances
if the Executive Officer is terminated or reassigned within twenty-four (24)
months following the occurrence of a change of control (as such term is defined
in the Change of Control Agreements), then such individual shall be entitled to
receive an amount as provided by such agreement equal to twenty-four (24) months
salary, reasonable legal fees and expenses incurred by the Executive Officer as
a result of such termination or reassignment, and continued participation in
certain benefit plans.
Agreements with Employees
- -------------------------
While there are no employment contracts between the Company and any of
its employees, there are change of control agreements between the Bank and
twenty-eight (28) employees who have been employed by the Bank for more than ten
years. These agreements provide that in certain instances if the employee is
terminated or reassigned within six (6) months following the occurrence of a
change of control (as such term is defined in the Change of Control Agreements),
then such individual shall be entitled to receive an amount as provided by such
agreement equal to six (6) months salary, reasonable legal fees and expenses
incurred by the employee as a result of such termination or reassignment, and
continued participation in certain benefit plans.
10
<PAGE>
Long Term Incentive and Deferred Compensation Plans
- ---------------------------------------------------
The Bank expects to create a non-qualified Long Term Deferred Incentive
Plan ("LTDIP") for its executive officers. In the event it is adopted and
implemented, which is expected to occur during the second calendar quarter of
2000, the LTDIP will trigger the award of deferred bonuses to executive officers
if specified bank performance objectives are achieved, based upon a formula
approved by the Board of Directors and upon which tax deferred earnings will
accrue at rates which will generally range between 4% and 15%. Amounts are
expected to be awarded after the end of each fiscal year. Such awards are
expected to vest 20% per additional year of service subsequent to the year with
respect to which the award is granted with 100% vesting upon a change in
control, termination without cause, or, at normal retirement or at age 55 with
20 years of service. If a participant dies while serving as an executive officer
of the Bank, the amount payable to the participant's beneficiary is expected to
be in an amount equal to the participant's projected retirement benefit (as
defined in the LTDIP) if the Bank acquires and maintains a corporate life
insurance policy on the life of the participant at the time of death (see
below).
The Bank expects to create an Outside Director Deferred Compensation
Plan ("DDCP"). In the event it is adopted and implemented, which is expected to
occur during the second calendar quarter of 2000, the DDCP will award a director
with a right to earn and defer the receipt of a bonus in an amount or percentage
of director and retainer fees, and have earnings accrue on such amounts at a
rate anticipated to be between 4% and 15% and generally equivalent to the
appreciation in the Company"s stock price over the period of time for which the
fees are in the DDCP if specified bank performance objectives are achieved. All
amounts in the DDCP are expected to be vested 20% per additional year of service
with 100% vesting upon a change in control, at normal retirement or full term
years of service. If a participant dies while serving as an outside director of
the Bank, the amount payable to the participant's beneficiary is expected to be
the amount equal to the participant's projected retirement benefit (as defined
in the DDCP) if the Bank has acquired and maintains a corporate life insurance
policy on the life of the participant at the time of death (see below).
In concert with the LTDIP and DDCP, the Bank has invested $3.5 million
in universal cash surrender value life insurance. Insurance policies were
acquired on the lives of each of the Bank's 5 executive officers and all but
three of the Bank's directors which are designed to recover the costs of the
Bank's LTDIP and DDCP. The policy death benefit will be structured to indemnify
the Bank against the death benefit provision of these benefit plans. The
policies were paid with a single premium. Policy cash values will earn interest
at a current rate of approximately 5.5% and policy mortality costs will be
charged against the cash value monthly. There are no load or surrender charges
associated with the policies.
1994 Supplemental Employee Retirement Plan for President Whalen
- ----------------- ---------------------------------------------
Effective September 1, 1994, the Bank entered into a Supplemental
Employee Retirement Plan Agreement (SERP) with Jerome J. Whalen, President and
CEO. The SERP was amended in 1998. The purpose of the SERP is to provide
President Whalen with increased retirement benefits through a trust arrangement,
such that his total retirement payments from all sources will approximate 60% of
his last
11
<PAGE>
three years annual compensation. The premium paid by the Bank on the policy to
fund the SERP during 1998 was $37,250. Upon the death of Mr. Whalen, the Bank
expects to recover its costs from the face amount of the policy. Upon
termination of employment, prior to retirement, Mr. Whalen may continue the
policy, provided he makes all future premium payments.
1990 Stock Option Agreement with President Whalen
- -------------------------------------------------
The Board of Directors, with shareholder approval on April 11, 1990,
granted the Company's President, Jerome J. Whalen, stock options to purchase a
maximum of 3,000 shares of the Company's Common Stock (the "1990 Plan"). The
options had a term of ten years from the 1990 date of grant. The original
exercise price was $55.00 per share which was the fair market value of the
Common Stock on March 1, 1990, the date Mr. Whalen joined the Company as
President and Chief Executive Officer. On May 4, 1994, an amendment to the 1990
Plan was approved by shareholders thereby increasing the number of stock options
available to President Whalen on December 31, 1994 to 3,829 at an adjusted price
of $43.08 per share. As a result of stock splits and dividends, as of December
31, 1999, President Whalen had options to purchase 29,997 shares at a price of
$5.41 per share pursuant to the 1990 Plan. In accordance with the Plan, Mr.
Whalen exercised his options to purchase 29,997 shares of common stock in
February, 2000.
1994 Stock Option Plan For Officers and Outside Directors
- ---------------------------------------------------------
On May 4, 1994, Shareholders approved a stock option plan for officers
and outside directors of the Company and the Bank, respectively (the "1994 Stock
Option Plan"). The Plan expired on May 4, 1999. Pursuant to the 1994 Stock
Option Plan, in 1995, the Board of Directors granted options to President
Whalen, which as a result of stock splits, stock dividends and exercises allows
Mr. Whalen to purchase 4,789 shares of the Company"s Common Stock at $7.43 per
share, 5,320 shares of Common Stock at $9.46 per share, 5,320 shares of Common
Stock of $11.23 per share, 5,576 shares at an exercise price of $13.33 per share
and 5,576 shares at an exercise price of $17.62 per share.
Pursuant to the 1994 Stock Option Plan, in January 1995, the Board of
Directors granted stock options to Mr. Samponaro which as a result of stock
splits and dividends allows him to purchase 3,195 shares of the Company's Common
Stock at $7.43 per share. In January 1996, the Board granted stock options to
Ms. Pereira and Mr. Samponaro which as a result of stock splits and dividends
allow each such individual to purchase 3,344 shares of the Company's Common
Stock at $9.46 per share. In January 1997, the Board granted stock options to
Ms. Pereira and Mr. Samponaro which as a result of stock splits and dividends
allows such individuals to purchase 3,344 shares of Common Stock at an exercise
price of $11.23 per share. In January 1998, the Board granted stock options to
Ms. Pereira and Messrs. Ferris and Samponaro which as a result of stock splits
and dividends allow such individuals to each purchase 3,677 shares of Common
Stock at an exercise price of $13.33 per share. In January, 1999, the Board
granted options to each of these individuals, which as a result of a stock
dividend, allows each individual to purchase 3,677 shares at an exercise price
of $17.62 per share.
12
<PAGE>
Pursuant to the 1994 Stock Option Plan, with the exceptions of Patricia
D. Werner who became a director in 1996, H. Ray Underwood who became a Director
in 1998 and Thomas A. Kendall who became a Director in 1999, each outside
director who is not an officer of the Company or the Bank ("Outside Director")
has received stock options, which are presently exercisable, to purchase a total
of 4,232 shares of the Company's Common Stock. More specifically, in May 1994,
each Outside Director was granted options, which as a result of stock splits and
dividends allows such individuals to purchase 2,520 shares of Common Stock at
$6.43 per share. Moreover, in June, 1995, each Outside Director was granted
options, which as a result of stock splits and dividends allows such individuals
to purchase 428 shares of Common Stock at $7.46 per share. In June 1996, each
Outside Director was granted options, which as a result of stock splits and
dividends, allows such individuals to purchase 428 shares of Common Stock at
$10.22 per share. In June, 1997, each Outside Director was granted options which
as a result of stock splits and dividends allows such individuals to purchase
428 shares of Common Stock at an exercise price of $11.33 per share. In June
1998, each Outside Director was granted options, which as a result of a stock
dividend, allows each individual to purchase 428 shares of Common Stock at an
exercise price of $15.94. Moreover, Patricia D. Werner has options to purchase
2,948 shares of Common Stock consisting of options to acquire 2,520 shares at
$11.39 per share and options to acquire 428 shares at $15.94 per share.
401(k) Plan
- -----------
The Bank offers an employee savings plan under Section 401(k) of the
Internal Revenue Code. Currently, the Bank makes matching contributions equal to
75% of participant contributions up to the first 4% of pre-tax compensation of a
contributing participant. Participants vest immediately in both their own
contributions and the Bank's contributions. Employee savings plan expense was
$69,194 for 1999 and $64,127 for 1998.
Noncontributory Defined Benefit Pension Plan
- --------------------------------------------
The Bank has a noncontributory defined benefit pension plan that covers
substantially all employees who have completed one year of service and have
attained age 21. The benefits are based on years of service and the employee's
compensation during the last five years of employment. The Bank's funding policy
is to contribute amounts to the Plan sufficient to meet the minimum funding
requirements set forth in ERISA, plus such additional amounts as the Bank may
determine to be appropriate from time to time.
CERTAIN TRANSACTIONS WITH DIRECTORS AND MANAGEMENT
The Bank has had and expects to have in the future, transactions in the
ordinary course of its business with Directors, Officers, principal shareholders
and their associates, on substantially the same terms, including interest rates
and collateral on loans, as those prevailing at the same time for comparable
transactions with others, on terms that do not involve more than the normal risk
of collectibility or present other unfavorable features. The aggregate dollar
amount of these loans was $3,440,194 and $2,694,547 at December 31, 1999 and
1998, respectively. During 1999, $8,468,941 of new loans were made, and
repayments totaled $7,749,587. At December 31, 1999, all loans to Officers,
Directors, principal shareholders and their associates were performing in
accordance with the contractual terms of the loans.
13
<PAGE>
Clayton L. Blick and Perley H. Grimes, Jr., both of whom are Directors
of the Company and the Bank, are partners in Cramer & Anderson, a law firm which
renders certain legal services to the Bank in connection with various matters.
During 1999 and 1998, the Bank paid Cramer & Anderson $66,185 and $68,722,
respectively for legal services rendered, a portion of which was reimbursed to
the Bank by third parties.
Ernest W. Clock, Director of the Company and the Bank, is the Chairman
of F. North Clark Insurance Agency, Inc., which serves as insurance agent for
many of the Bank's insurance needs. In 1999, and 1998, the Bank paid insurance
premiums to F. North Clark Insurance Agency, Inc. in the aggregate amount, of
$72,472 and $74,345, respectively.
PROPOSAL (2)
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matters to be presented for action by the
shareholders at the 2000 Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting, the persons named in the
accompanying Proxy will vote such Proxy in accordance with the determination of
a majority of the Board of Directors.
The enclosed Proxy, if voted "FOR" the approval of Proposal (2) confers
authority to the designated proxies to vote in accordance with their best
judgment consistent with the recommendations of the Board of Directors.
The Board of Directors recommends a vote "FOR" the approval of Proposal
(2).
The favorable vote of a majority of the shares present in person or
represented by proxy at the meeting is required for the approval of Proposal
(2).
INDEPENDENT PUBLIC ACCOUNTANTS
The independent accounting firm of McGladrey & Pullen, LLP has served
as the independent auditors for the Company and has audited the annual
consolidated financial statements of the Company since 1997. McGladrey & Pullen,
LLP rendered an unqualified opinion regarding the consolidated financial
statements of the Company for the year ended December 31, 1999, which is
included in the Company's Annual Report to Shareholders for the year ended
December 31, 1999.
There have been no disagreements between the Company and McGladrey &
Pullen, LLP regarding any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure. Subsequent to the
Annual Meeting, the Board of Directors of the Company, after considering the
recommendations of the Board's Audit and Security Committee, will select and
engage independent public accountants for the Company for the year ending
December 31, 2000.
14
<PAGE>
A representative of McGladrey & Pullen, LLP is expected to be available
at the Annual Meeting to respond to appropriate shareholder questions and to
make a statement if he or she desires to do so.
PROPOSALS OF SHAREHOLDERS
Under the Company's Bylaws, for business proposed by a shareholder
(other than director nomination) to be a proper subject for action at an Annual
Meeting of Shareholders, in addition to any requirement of law, the shareholder
must timely request that the proposal be included in the Company's proxy
statement for the meeting, and such request must satisfy all of the provisions
of Rule 14a-8 under the Securities and Exchange Act of 1934. The Company
received no such request from any shareholder with respect to the 2000 Annual
Meeting.
In order to be included in the Company's proxy statement and form of
proxy for 2001 Annual Meeting of Shareholders and in order to be a proper
subject for action at that meeting, proposals of shareholders intended to be
presented to that meeting must be received at the Company's principal executive
offices by January 25, 2001. Shareholder proposals should be mailed to: Philip
G. Samponaro, Secretary, First Litchfield Financial Corporation, P.O. Box 578,
13 North Street, Litchfield, Connecticut 06759.
ANNUAL REPORT TO SHAREHOLDERS
The Company files with the Securities and Exchange Commission Annual
Reports on Form 10-KSB. A copy of the Company's Annual Report on Form 10-KSB,
without exhibits and Annual Report to Shareholders, including consolidated
financial statements, may be obtained without charge upon written request to:
Philip G. Samponaro, Secretary, First Litchfield Financial Corporation, P.O. Box
578, 13 North Street, Litchfield, Connecticut 06759.
By Order of the Board of Directors
April 24, 2000 /s/ Philip G. Samponaro
------------------------
Philip G. Samponaro, Secretary
<PAGE>
PROXY
FIRST LITCHFIELD FINANCIAL CORPORATION
PLEASE MARK VOTES
[X] AS IN THIS EXAMPLE
PROXY FOR 2000 ANNUAL MEETING OF FIRST LITCHFIELD FINANCIAL
CORPORATION. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF FIRST LITCHFIELD FINANCIAL CORPORATION
The undersigned holder(s) of the Common Stock of First Litchfield Financial
Corporation (the "Company") do hereby nominate, constitute and appoint Herbert
L. Curtiss, Jr. and Arthur B. Webster of Litchfield County, Connecticut, jointly
and severally, as our proxies with full power of substitution, for us and in our
name, place and stead to vote all the Common Stock of said Company, standing in
our name on its books on April 10, 2000 at the Annual Meeting of its
shareholders to be held at the Litchfield Inn, Route 202, Litchfield,
Connecticut on May 24, 2000 at 3:00 p.m. or at any adjournment thereof with all
the powers the undersigned would possess if personally present, as follows:
Please be sure to sign and date this Proxy in the box below.
----------------------------------
Date
----------------------------------
Stockholder sign above
----------------------------------
Co-holder (if any) sign above
1. ELECTION OF DIRECTORS: To re-elect four (4) Directors to the Board of
Directors each to serve for a term of three (3) years and until their
successors are elected and qualified, as described in the Proxy Statement.
Nominees: John H. Field, Perley H. Grimes, Jr., Thomas A. Kendall and
Charles E. Orr
With- For All
[ ] For [ ] hold [ ] Except
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
================================================================================
2. OTHER BUSINESS: To transact such other business as may properly come before
the meeting, or any adjournments thereof. Management knows of no other
business to be presented by or on behalf of the Company or its management
at the meeting. However, if any other matters are properly brought before
the meeting, the persons named in this Proxy or their substitutes will vote
in accordance with the determination of a majority of the Board of
Directors.
[ ] For [ ] Against [ ] Abstain
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS (1) & (2). THIS PROXY
WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION INDICATED. IF NO
SPECIFICATION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS (1) & (2).
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST LITCHFIELD FINANCIAL CORPORATION
Please sign exactly as name appears. When shares are held in more than one name,
including joint tenants, each party should sign. When signing as attorney,
executor, administrator, trustee or guardian, give full title as such.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY WRITTEN NOTICE TO
THE COMPANY OR MAY BE WITHDRAWN AND YOU MAY VOTE IN PERSON SHOULD YOU ATTEND THE
ANNUAL MEETING.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
