SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy 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-11(c) or Section 240.14a-12
FIRST CHESAPEAKE FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
FIRST CHESAPEAKE FINANCIAL CORPORATION
Notice of Annual Meeting of Shareholders
To Be Held on December 29, 2000
TO THE SHAREHOLDERS OF FIRST CHESAPEAKE FINANCIAL CORPORATION:
The annual meeting of shareholders of First Chesapeake Financial
Corporation (the "Company") will be held at the Philadelphia Marriott West,
Matsonford at Front Street, 111 Crawford Avenue, West Conshohocken, PA 19428, on
December 29, 2000, at 10:00 A.M., local time, for the following purposes:
1. To elect eight Directors for the ensuing year and until their
successors are duly elected and qualified; and
2. To transact such other business as may properly come before
the meeting or any adjournments thereof.
The close of business on November 22, 2000 has been fixed as the record
date for the shareholders meeting. All shareholders of record as of that date
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
By Order of the Board of Directors
/s/ James J. Greenfield
-----------------------
James J. Greenfield
Secretary
November 29, 2000
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY. YOU MAY WITHDRAW THIS PROXY AT
ANY TIME BEFORE YOUR SHARES ARE ACTUALLY VOTED AND MAY VOTE YOUR OWN SHARES IF
YOU ATTEND THE MEETING IN PERSON.
<PAGE>
FIRST CHESAPEAKE FINANCIAL CORPORATION
PROXY STATEMENT
TO BE MAILED ON OR ABOUT NOVEMBER 29, 2000
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 29, 2000
The enclosed proxy is solicited by and on behalf of the Board of
Directors of First Chesapeake Financial Corporation (the "Company") for use at
the Annual Meeting of Shareholders of the Company to be held on December 29,
2000, at 10:00 a.m. local time at the Philadelphia Marriott West, Matsonford at
Front Street, 111 Crawford Avenue, West Conshohocken, PA 19428 or any
adjournments thereof, for the purposes set forth in this Proxy Statement and the
attached Notice of Annual Meeting of Shareholders. If sufficient proxies are not
returned in response to this solicitation, supplementary solicitations may be
made by mail or by telephone or personal interview by directors, officers, and
regular employees of the Company, none of whom will receive additional
compensation for these services. The Company reserves the right to retain an
outside proxy solicitation firm to assist in the solicitation of proxies, but at
this time does not have plans to do so. Costs of solicitation of proxies will be
borne by the Company, which will reimburse banks, brokerage firms, and other
custodians, nominees, and fiduciaries for reasonable out-of-pocket expenses
incurred by them in forwarding proxy materials to the beneficial owners of stock
held by them.
The stock represented by all properly executed proxies received by the
Secretary of the Company and not revoked will be voted for the election of all
the directors nominated, unless the shareholder directs otherwise in the proxy,
in which event such stock will be voted in accordance with such directions. Any
proxy may be revoked at any time before the shares to which it relates are voted
either by giving written notice (which may be in the form of a substitute proxy
delivered to the secretary of the meeting) or by attending the meeting and
voting in person.
A majority of the votes entitled to be cast on matters to be considered
at the meeting constitutes a quorum. If a share is represented for any purpose
at the meeting, it is deemed to be present for quorum purposes and for all other
matters as well. Abstentions and shares held of record by a broker or its
nominee ("Broker Shares") that are voted on any matter are included in
determining the number of votes present or represented at the meeting. Broker
Shares that are not voted on any matter at the meeting will not be included in
determining whether a quorum is present at such meeting.
The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of common stock cast in the election
of directors at a meeting at which a quorum is present. Votes that are withheld
and Broker Shares that are not voted in the election of directors will not be
included in determining the number of votes cast and, therefore, will have no
effect on the election of directors. Any other matters submitted to a vote of
the Shareholders will be determined by a majority of the votes cast.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Shareholders Meeting and voting in person. If you
are the beneficial owner of shares of the common stock of the Company which are
not registered in your name, you will need appropriate documentation from the
holder of record of your shares to vote personally at the meeting.
1
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
--------------------------------------------
Record Date
The Board of Directors has fixed the close of business on November 22,
2000, as the record date for the determination of shareholders entitled to
notice of and to vote at the annual meeting and any adjournment thereof. As of
the close of business on the record date, 7,353,536 shares of common stock of
the Company were outstanding and entitled to vote at the annual meeting. All of
such shares were of one class, with equal voting rights, and each holder thereof
is entitled to one vote on all matters voted on at the Shareholders Meeting for
each share registered under such holder's name.
The Company's common stock is not listed on any exchange. However,
market quotes for the Common Stock (under the symbol "FCFK") may be obtained
from the National Association of Securities Dealers through the NASD OTC
Bulletin Board, its automated system for reporting non-NASDAQ quotes. As of
November 21, 2000 the high bid price was $0.84375. The low offer price was
$0.8125, as reported on the NASD OTC Bulletin Board.
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of November 29, 2000 by i)
each person known by the Company to own beneficially 5% of such stock, ii) each
Director of the Company, iii) each executive officer of the Company, and iv) all
Directors and executive officers of the Company as a group. Other than as listed
below, the address for each of the listed individuals is: 12 E. Oregon Avenue,
Philadelphia, Pennsylvania 19148.
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Beneficial Owner (F1) Beneficially Owned of Total
----------------------------- ------------------ --------
<S> <C> <C>
Mark Mendelson (F2), (F3).......................... 3,604,333 40.2%
John E. Dell (F2).................................. 450,000 5.0%
c/o Gallagher Broidy & Butler, Attn: Thomas P. Gallagher
212 Carnegie Center, Suite 402, Princeton, NJ 08540
Richard N. Chakejian, Jr. (F4)..................... 998,167 11.1%
Mark E. Glatz (F5)................................. 873,333 9.7%
James Greenfield (F6).............................. 138,000 1.5%
John Papandon (F6)................................. 138,000 1.5%
Pasquale Nestico (F7).............................. 76,667 0.9%
--------------------- ------ ----
All Directors and officers as a group.............. 5,828,500 65.0%
Total number of (fully diluted) shares............. 8,971,536 100.0%
</TABLE>
NOTES:
(F1) Unless otherwise indicated, each person has sole voting and investment
powers with respect to the shares
(F2) Consists of 450,000 shares of common stock owned by Mr. Dell subject to an
irrevocable voting trust which is voted by Mr. Mendelson.
(F3) Includes options to purchase 550,000 shares under the Company's 1998 Plan
and 250,000 shares under the Company's 1999 ISO Plan
(F4) Includes options to purchase 120,000 shares under 1998 Plan and 100,000
shares under 1999 ISO Plan
(F5) Includes options to purchase 120,000 shares under 1998 Plan and 200,000
shares under the 1999 ISO Plan
(F6) Includes options to purchase 30,000 shares under 1998 Plan and 38,000
shares under 1999 ISO Plan (F7) Includes options to purchase 10,000 shares
under 1999 ISO Plan
2
<PAGE>
Legal Proceedings
No director, officer, affiliate or 5% shareholder is a party adverse to
the Company or has a material interest adverse to the Company in any material
proceeding.
PROPOSAL 1
----------
Election of Directors
The Company's Board of Directors presently consists of eight directors. The
terms of all Directors will expire at the time of the next Annual Meeting.
Unless otherwise instructed on the proxy, the shares represented by proxies will
be voted for the election as directors of all of the nominees named below. Each
of the nominees has consented to being named as a nominee in the Proxy Statement
and has agreed that, if elected, he will serve on the Board of Directors for his
term and until his successor has been elected. If any nominee becomes
unavailable for any reason, the shares represented by proxies may be voted for a
substitute nominee designated by the Board of Directors. The Company is not
aware of any family relationship among any of the directors, executive officers
or nominees to become directors or executive officers of the Company. The names,
positions, ages and backgrounds of nominees for director of the Company are set
forth below.
Name Age Position and Background
---- --- -----------------------
Mark Mendelson 44 Chairman of the Board of Directors and
Chief Executive Officer. Mr. Mendelson
has been a Director of the Company since
August 1996. Since 1984, Mr. Mendelson
has served as Chairman and Chief
Executive Officer of Hampton Real Estate
Group, Inc., a diversified real estate
brokerage, development, and management
firm specializing in commercial and
residential properties throughout the
United States. Mr. Mendelson is a
former director and past chairman of the
Audit Committee of Equimark Bank
Corporation (currently known as Integra)
and sits on the boards of a variety of
civic and philanthropic institutions.
Richard N. Chajekian, Jr. 38 Director. Mr. Chakejian is experienced
in the food, laundry products and
chemical industries, and served as
President of the Company from December
1997 until September 11, 2000, at which
time the Board of Directors terminated
Mr. Chakejian as President of the
Company and certain subsidiaries.
Paul A. Dandridge 73 Director. Mr. Dandridge is an attorney
and former City of Philadelphia Judge
who currently services as Chairman of
Philadelphia Health Management
Corporation, a non-profit, public health
organization committed to improving the
health of the community. Mr. Dandridge
was elected to fill a vacancy on the
Board of Directors in September 2000.
Mark Glatz 38 Director and Chief Financial Officer.
Mr. Glatz is experienced in finance,
banking, and a wide array of industries,
and holds a degree in accounting and an
MBA in financial management. Mr. Glatz
has served as Chief Financial Officer of
the Company since July 1998.
3
<PAGE>
James Greenfield 48 Director and Secretary. Mr. Greenfield
is an attorney with experience in
private practice, emphasizing
municipal law, real estate matters, and
complex commercial litigation and
arbitration.
Vincent Muratore 54 Director. Mr. Muratore has over 30
years mortgage banking experience,
having successfully grown organizations
of over $3.0 billion and $1.5 billion of
annual loan volume prior to joining the
Company as a senior officer of the
mortgage banking operations.
Pasquale Nestico, M.D. 54 Director. Dr. Nestico is a practicing
physician certified in cardiology and
internal medicine as well as an
extensively published clinical professor
of medicine at both Allegheny Hospital
(formerly Hahnemann University) and
Jefferson Medical College.
John Papandon 38 Director. Mr. Papandon is an attorney
and Certified Public Accountant with a
Masters degree in taxation with 15 years
experience in the accounting industry.
PROXIES RECEIVED IN RESPONSE TO THIS SOLICITATION WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES NAMED ABOVE IN ALL EVENTS UNLESS OTHERWISE SPECIFIED IN
THE PROXY.
Directors are elected at each annual meeting of stockholders and serve
until the next annual meeting. The bylaws of the Company require a minimum of
seven Directors. Executive officers are elected annually at a meeting of the
Board of Directors and, subject to individual contractual arrangements, serve at
the pleasure of the Board of Directors.
Meetings and Committees of the Board
------------------------------------
The Board of Directors held four meetings during 1999. Excluding the
newly appointed directors, each director who is standing for election attended
all of such meetings of the Board of Directors during which he was a director
except for Mr. Chakejian, who attended two of the four meetings during 1999.
As of this date, the Board of Directors has held three meetings during
2000. Excluding the newly appointed directors, each director who is standing for
election attended all of such meetings of the Board of Directors during which he
was a director except for Mr. Chakejian, who attended two of the three meetings
during 2000.
The Nominating Committee considers nominees for the Board recommended
by the Company's shareholders. The Nominating Committee consists of John
Papandon, Mark Mendelson, and Richard Chakejian, Jr. A shareholder who is
interested in nominating a person to the Board should submit to the Secretary of
the Company written notice of his or her intent to make such nomination. Such
notice must be given either by personal delivery or by United States mail,
postage prepaid, not later than 120 days in advance of the annual meeting, or
with respect to a special meeting of shareholders for the election of directors,
the close of business on the seventh day following the date on which notice of
such meeting is first given to shareholders. Such notice should include
biographical information about the candidate and his or her qualifications for
office.
The Audit Committee consists of John Papandon and James Greenfield. The
Audit Committee met once during 1999 and, as of this date, met once in 2000. The
committee's primary function is to oversee and maintain adequate financial and
operating policies, safeguards and procedures exist and are followed to assure
integrity of the Company's books and records and to protect its shareholders.
4
<PAGE>
The Compensation Committee consists of John Papandon and James
Greenfield. The Compensation Committee met once during 1999 and, as of this
date, has yet to meet in 2000. The committee is responsible for recommending to
the Board of Directors the amount and nature of compensation paid to executive
officers and key employees of the Company. The principal objective in designing
and recommending compensation policies is to develop and administer a
comprehensive program designed to attract, motivate and retain outstanding
managers who are likely to enhance the profitability of the Company and create
value for its shareholders.
Compliance with Section 16(a) of the Securities Exchange Act
------------------------------------------------------------
Section 16 (a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities, to file reports of
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
("SEC") and the National Association of Security Dealers. Officers, directors
and greater than ten percent (10%) beneficial owners are required by SEC
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all its officers, directors and greater than
ten percent (10%) beneficial owners are in compliance with all filing
requirements applicable to them with respect to transactions during the fiscal
year ended December 31, 1999.
Resignation of Board Members
----------------------------
On May 10, 2000, Jay Vederman resigned as a Director of the Company.
Mr. Vederman had served as a Director since November 1999.
Matthew Coppolino served as a Director from july 1998 until his death
in June, 2000.
Compensation of Directors
-------------------------
Directors who are not executive officers of the Company ("Outside
Directors") are entitled to receive compensation of $2,000 per calendar quarter
served.
In December 1999, the Executive Compensation Committee and Board of
Directors authorized the optional conversion of accrued Outside Director fees to
stock options under the 1999 ISO Plan. The options are immediately vested,
exercisable at $1.20 per share, and expire on December 29, 2004. The then
Outside Directors elected to convert their accrued directors fees into a total
of 39,000 shares under the 1999 ISO Plan.
In June 2000 the Company awarded 50,000 option shares to the Outside
Directors of the Company at that time at an exercise price of $1.50 per share
and an expiration date of Juine 30, 2005 under the 1999 ISO Plan. Specifically,
20,000, 20,000 and 10,000 option shares were awarded to James Greenfield, John
Papandon and Pasquale Nestico, respectively, based on length of service to the
Company.
5
<PAGE>
Compensation of Executive Officers
----------------------------------
The following table sets forth, for the three years ended December 31, 1999,
certain information as to the total remuneration paid to each of the Company's
executive officers whose total annual salary and bonus exceeded $100,000 for
services in all capacities:
<TABLE>
<CAPTION>
Annual Compensation
------------------- Other All Other
Name Salary Other Reimb. Compensation
Principal Position (F1) Year (F2) (F3) (F4) (F5)
----------------------- ---- ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C>
Mark Mendelson 1999 $120,000 $ 0 $ 12,000 $ 12,000
Chairman and CEO 1998 $ 75,000 $100,000 $ 9,000 $ 12,000
1997 $ 0 $ 0 $ 0 $ 0
Richard N. Chakejian, Jr. 1999 $ 0 $ 9,515 $ 0 $ 0
President 1998 $ 50,000 $100,000 $ 9,000 $ 12,000
1997 $ 0 $ 0 $ 0 $125,000
Mark E. Glatz 1999 $120,000 $ 0 $ 12,000 $ 12,000
Chief Financial Officer 1998 $ 50,000 $ 50,000 $ 9,000 $ 12,000
1997 $ 0 $ 0 $ 0 $ 0
</TABLE>
(F1) No other executive officer had compensation whose salary and bonus
exceeded $100,000.
(F2) All 1999 and 1998 salaries to the three executive officers, Messrs.
Mendelson, Chakejian, Jr. and Glatz, have been deferred.
(F3) Includes amounts converted to subordinated debentures in 1998.
(F4) Includes perquisites, including automobile and incidental expense
allowance.
(F5) Includes premiums paid or reimbursed for health, disability and life
(where the spouse is the beneficiary) insurance.
Employment Agreements
---------------------
There are no employment agreements with the above-named executive
officers.
Stock Option Plans
------------------
In May 1992, the Board of Directors adopted an Incentive Stock Option
Plan (the "1992 Plan"). Pursuant to the 1992 Plan, 500,000 shares of the
Company's common stock were made available for awards. The 1992 Plan allows for
Incentive Stock Options intended to qualify as Incentive Stock Options within
the meaning of Section 422 of the Internal Revenue Code of 1986, and for
Nonqualified Stock Options not intended to qualify as Incentive Stock Options.
Incentive Stock Options may be granted only to employees of the Company.
Non-qualified Stock Options may be granted to employees as well as non-employee
directors and consultants to the Company. Exercise prices under the Plan must be
at fair market value per share at date of grant or, in the case of Incentive
Stock Options granted to employees who own more than 10% of the voting power of
all classes of stock of the Company, at 110% of the fair market value per share
at date of grant.
In 1999, 1992 Plan options to purchase 150,000 shares were exercised by
holders; no 1992 Plan options were exercised in 1998. In 1999, the remaining
50,000 shares expired unexercised, and there are no outstanding shares under the
1992 plan. In November 2000, the Board of Directors approved the termination of
the 1992 Plan.
6
<PAGE>
In July 1998, the Board of Directors adopted a Non-Qualified Stock
Option Plan (the "1998 Plan"). Pursuant to the 1998 Plan, 1,000,000 shares of
the Company's common stock were made available for awards. The 1998 Plan allows
for Nonqualified Stock Options not intended to qualify as Incentive Stock
Options within the meaning of Section 422 of the Internal Revenue Code of 1986.
Non-qualified Stock Options may be granted to employees as well as non-employee
directors and consultants to the Company. Exercise prices under the Plan must be
at fair market value per share at date of grant.
In July 1998, the Executive Compensation Committee awarded 500,000
option shares under 1998 Plan to three executive officers of the Company.
In July 1998, the Board of Directors awarded 30,000 option shares under
the 1998 Plan to three outside directors of the Company.
In February 1999, the Company issued 100,000 option shares under the
1998 Plan at an exercise price of $2.00 per share and 100,000 1998 Plan option
shares at an exercise price of $5.00 per share as partial compensation to seven
individuals, including three executive officers, one subsidiary officer, two
Outside Directors of the Company and one unaffiliated individual, for personally
guaranteeing a $1,500,000 bank loan to the Company.
In November 1999, the Company issued 200,000 option shares under the
1998 Plan at an exercise price of $0.875 per share as compensation to the
Chairman of the Company, for personally guaranteeing and providing additional
collateral to secure an incremental $600,000 bank loan to the Company.
No 1998 Plan options have been exercised as of this date. In June 2000,
the Board of Directors approved the termination of the 1998 Plan.
In December 1999 the shareholders of the Company approved an Incentive
Stock Option Plan (the "1999 ISO Plan"), which was adopted by the Board of
Directors on November 17, 1999. Pursuant to the 1999 ISO Plan, 1,500,000 shares
of the Company's common stock were made available for awards. The 1999 Plan
allows for Incentive Stock Options intended to qualify as Incentive Stock
Options ("ISOs") pursuant to Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code"), or they may be Non-Qualified Stock Options ("NSOs").
Exercise prices under the Plan must be at no less than fair market value per
share at date of grant, and shall expire no more than five years from date of
issuance.
In December 1999 the Company awarded 550,000 option shares under the
1999 ISO Plan to certain officers of the Company at exercise prices of $1.20 per
share and expiration dates of December 29, 2004.
In December 1999 the Company awarded a total of 29,500 option shares
under the 1999 ISO Plan to 18 employees of the Company in grants ranging from
500 option shares to 10,000 option shares at exercise prices ranging from $1.13
to $1.50 and expiration dates between July 9, 2004 and December 31, 2004.
In December 1999 the Company awarded 39,000 option shares under the
1999 ISO Plan to certain Outside Directors of the Company at an exercise price
of $1.20 per share and an expiration date of December 29, 2004.
In May 2000, the Company awarded 2,000 option shares under the 1999 ISO
Plan to an employee of the Company at an exercise price of $1.50 per share and
an expiration date of May 19, 2005.
In June 2000 the Company awarded 50,000 option shares under the 1999
ISO Plan to certain Outside Directors of the Company at an exercise price of
$1.00 per share and an expiration date of June 30, 2005.
In September 2000, the Company awarded 20,000 option shares under the
1999 ISO Plan to an employee of the Company at an exercise price of $1.05 per
share and an expiration date of September 18, 2005.
7
<PAGE>
No 1999 ISO Plan options have been exercised as of this date.
In 1998, the Company issued $635,000 of convertible subordinated
debentures. Up to 20% of the subordinated debenture notes are convertible, at
any time at option of the holder, into the Company's common stock at a price of
$2.00 per share. The $635,000 includes $350,000 of subordinated debentures
issued to certain officers of the Company in exchange for a similar reduction in
amounts due officers.
In November 1999, the Company offered to convert up to 100% of the
convertible subordinated debentures into Company common stock at a conversion
price of $1.50 per share. Holders of $560,000 of debentures elected to convert
their holdings into 373,333 shares of common stock, including conversion of all
debentures held by officers of the Company. At December 31, 1999, the remaining
$75,000 of convertible subordinated debentures remain outstanding under the
original terms and conditions of the issuance.
Other than the November 1999 conversions, none of the remaining $75,000
of subordinated debenture options have been exercised as of this date.
Option activity under the above plans is summarized following:
<TABLE>
<CAPTION>
November 22, December 31, December 31,
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Outstanding options at beginning of period 1,546,000 730,000 200,000
1998 Plan options granted -0- 400,000 530,000
1999 ISO Plan options granted (net of cancellations) 64,500 608,500 -0-
1992 Plan options exercised -0- (150,000) -0-
1992 Plan options cancelled -0- (50,000) -0-
--------------------------- --- -------- ---
Outstanding options at end of period 1,610,500 1,546,000 730,000
========= ========= =======
Exercise prices
Low $ .60 $ .60 $ .25
High 5.00 5.00 .60
Latest expiration date 9/18/05 12/31/04 7/9/03
Option/SAR Grants in Last Fiscal Year
-------------------------------------
The following table sets forth, for the period ended December 31, 1999,
certain information as to the Option/SAR grants to the above-named executive
officers in the last fiscal year:
<CAPTION>
Number of
Securities % of Total
Underlying Options/SARs Exercise or Latest
Options/SARs to Employees in Base Price Expiration
Granted Fiscal Year ($/share) Date
------- ----------- --------- ----
Mark Mendelson 250,000 24.5% $1.20 December 29, 2004
200,000 19.6% $0.875 November 10, 2004
25,000 2.5% $2.00 February 5, 2004
25,000 2.5% $5.00 February 5, 2004
Richard Chakejian, Jr. 100,000 9.8% $1.20 December 29, 2004
10,000 1.0% $2.00 February 5, 2004
10,000 1.0% $5.00 February 5, 2004
Mark E. Glatz 200,000 19.6% $1.20 December 29, 2004
10,000 1.0% $2.00 February 5, 2004
10,000 1.0% $5.00 February 5, 2004
</TABLE>
8
<PAGE>
The following table presents information concerning each exercise of
stock options during the fiscal year ended December 31, 1999 by each of the
named executive officers and the value of unexercised options at December 31,
1999:
<TABLE>
<CAPTION>
Number of Shares Value of
Underlying Unexercised
Shares Unexercised In-the-Money
Acquired Options at FY-End Options at FY-End
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Mark Mendelson 100,000 $88,120** 800,000/-0- $223,120/-0-
Richard N. Chakejian, Jr. 0 0 220,000/-0- $55,620/-0-
Mark E. Glatz 0 0 320,000/-0- $55,620/-0-
Stock Appreciation Rights and Long Term Incentive Plans
-------------------------------------------------------
None.
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of November 22, 2000 by i)
each person known by the Company to own beneficially 5% of such stock, ii) each
Director of the Company, iii) each executive officer of the Company, and iv) all
Directors and executive officers of the Company as a group. Other than as listed
below, the address for each of the listed individuals is: 12 E. Oregon Avenue,
Philadelphia, Pennsylvania 19148.
<CAPTION>
Number of Shares Percent
Name of Beneficial Owner (F1) Beneficially Owned of Total
----------------------------- ------------------ --------
Mark Mendelson (F2), (F3)......................... 3,604,333 40.2%
John E. Dell (F2)................................. 450,000 5.0%
c/o Gallagher Broidy & Butler, Attn: Thomas P. Gallagher
212 Carnegie Center, Suite 402, Princeton, NJ 08540
Richard N. Chakejian, Jr. (F4).................... 998,167 11.1%
Mark E. Glatz (F5)................................ 873,333 9.7%
James Greenfield (F6)............................. 138,000 1.5%
John Papandon (F6)................................ 138,000 1.5%
Pasquale Nestico (F7)............................. 76,667 0.9%
--------------------- ------ ----
All Directors and officers as a group............. 5,828,500 65.0%
Total number of (fully diluted) shares............ 8,971,536 100.0%
</TABLE>
NOTES:
(F1) Unless otherwise indicated, each person has sole voting and investment
powers with respect to the shares
(F2) Consists of 450,000 shares of common stock owned by Mr. Dell subject to an
irrevocable voting trust which is voted by Mr. Mendelson.
(F3) Includes options to purchase 550,000 shares under the Company's 1998 Plan
and 250,000 shares under the Company's 1999 ISO Plan
(F4) Includes options to purchase 120,000 shares under 1998 Plan and 100,000
shares under 1999 ISO Plan
(F5) Includes options to purchase 120,000 shares under 1998 Plan and 200,000
shares under the 1999 ISO Plan
(F6) Includes options to purchase 30,000 shares under 1998 Plan and 38,000
shares under 1999 ISO Plan
(F7) Includes options to purchase 10,000 shares under 1999 ISO Plan
9
<PAGE>
Certain Relationships and Related Transactions
----------------------------------------------
In January 1999, the Company issued 200,000 shares of common stock,
options to purchase 100,000 shares at $2.00 per share, and options to purchase
100,000 shares at $5.00 per share as compensation to certain individuals for
personally guaranteeing a $1,500,000 bank loan to the Company. The guarantors
included the three executive officers of the Company and two Outside Directors
of the Company, as well as Lester W. Salzman, at that time President of First
Chesapeake Funding, a wholly-owned subsidiary of the Company, as follows:
Number of Number of Number of
Shares Option Shares Option Shares
Issued at $2.00 Issued at $5.00 Issued
------ --------------- ---------------
Mark Mendelson 50,000 25,000 25,000
Richard N. Chakejian, Jr. 20,000 10,000 10,000
Mark E. Glatz 20,000 10,000 10,000
John Papandon 20,000 10,000 10,000
James Greenfield 20,000 10,000 10,000
Lester W. Salzman 20,000 10,000 10,000
(Unrelated party) 50,000 25,000 25,000
----------------- ------ ------ ------
Totals 200,000 100,000 100,000
In January 1999, the Company issued 50,000 shares of common stock to
James Greenfield and 50,000 shares of common stock to John Papandon, both
Directors of the Company, for prior services rendered in lieu of cash payments.
Richard Chakejian, Sr., the father of the President, was manager and
sole employee of Premiere Chemical Products, and was the purchaser of the stock
of this subsidiary upon its divestiture as of January 1, 1999.
There are no other family relationships among any of the Directors or
executive officers of the Company or its subsidiaries.
The Company currently utilizes approximately 2,000 square feet of
office and warehouse space in a property owned by an entity controlled by Mark
Mendelson, Chairman of the Board and Chief Executive Officer. NAI also utilizes
approximately 25,000 square feet of office and warehouse space in the same
property. No current rental payments are made by either the Company or by NAI,
although both entities contribute pro rata toward the utilities and operating
costs of the property.
All future transactions with officers, Directors or five percent (5%)
stockholders of the Company will be approved by the independent disinterested
members of the Company's Board of Directors and be on terms no less favorable to
the Company than could otherwise be obtained from unaffiliated third parties.
Other Matters
The Board of Directors knows of no other matters to be brought before
the meeting. If any other matters are properly presented, however, or if any
question arises as to whether any matter has been properly presented and is a
proper subject for shareholder action, the persons named as proxies in the
accompanying proxy intend to vote the shares represented by such proxy in
accordance with their best judgment.
10
<PAGE>
Shareholder Proposals
The shareholders may present proposals for consideration at the 2001
annual meeting of shareholders of the Company for the inclusion in its proxy
materials for such meeting. Any such proposal should be submitted in writing in
accordance with Securities and Exchange Commission rules to First Chesapeake
Financial Corporation. Shareholder proposals must be received by March 1, 2001,
to be included in the proxy materials for the 2001 annual meeting.
Annual Report to Shareholders
The Annual Report to shareholders of the Company for the year ended
December 31, 1999, including audited consolidated financial statements, has been
mailed to the shareholders concurrently herewith, but such report is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy
solicitation material.
Further Information
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON FROM WHOM A PROXY
IS SOLICITED BY THE BOARD OF DIRECTORS, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF
1934 FOR THE COMPANY'S YEAR ENDED DECEMBER 31, 1999. SUCH WRITTEN REQUEST SHOULD
BE SENT TO FIRST CHESAPEAKE FINANCIAL CORPORATION, 12 EAST OREGON AVENUE,
PHILADELPHIA, PA 19148, ATTENTION: JAMES J. GREENFIELD, SECRETARY.
By Order of the Board of Directors
/s/ James J. Greenfield
-----------------------
James J. Greenfield
Secretary
November 29, 2000
<PAGE>
FIRST CHESAPEAKE FINANCIAL CORPORATION
The undersigned hereby appoints James J. Greenfield and Mark Mendelson,
and each of them, the attorneys and proxies of the undersigned, with full power
of substitution, to vote on behalf of the undersigned all of the shares of
Common Stock of First Chesapeake Financial Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders thereof to be held on
December 29, 2000 and at any and all postponements and adjournments thereof,
upon the following matters:
1. For the election of Mark Mendelson, Richard N. Chakejian,
Jr., Paul A. Dandridge, Mark E. Glatz, James Greenfield,
Vincent Muratore, Pasquale Nestico and John Papandon to
serve as Directors until the Annual Meeting of Shareholders
of the Company to be held in the year 2000 and until their
successors are elected and qualified:
_____For All Nominees _____Against All Nominees
(INSTRUCTIONS: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEES NAME BELOW):
Mark Mendelson, Richard N. Chakejian, Jr., Paul A.
Dandridge, Mark E. Glatz, James Greenfield, Vincent
Muratore, Pasquale Nestico and John Papandon.
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting
including matters incident to its conduct.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM NO. 1.
IF NO SPECIFICATION IS MADE, SUCH PROXY WILL BE VOTED "FOR" SUCH ITEM.
Dated ____________________________, 2000
_______________________________________ Please sign as name appears on stock
Signature certificate. If stock is jointly
owned, both parties must sign.
_______________________________________
Signature
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE DATE, SIGN AND RETURN THIS PROXY IMMEDIATELY.
