SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Soliciting Material Under Rule
|_| Confidential, For Use of the 14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|X| Definitive Additional Materials
First Litchfield Financial Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|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:
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|_| Fee paid previously with preliminary materials:
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|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
________________________________________________________________________________
April 18, 2005
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 Wednesday, May 18, 2005 at
3:00 p.m. at the Torrington Country Club, Torrington Road (Route 4 East),
Goshen, 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 two (2) directors
unless marked to the contrary. The Board of Directors of the Company currently
consists of twelve (12) directors, two of whom have been nominated for
re-election at the 2005 Annual Meeting for a term of three (3) years. The
nominees for re-election are: Kathleen A. Kelley and H. Ray Underwood. In
addition, unless marked to the contrary, the enclosed proxy will be voted "FOR"
ratification of appointment of McGladrey & Pullen, LLP, as the Company's
independent auditors for the year ending December 31, 2005.
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,
Joseph J. Greco
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 ending December 31, 2004 is
enclosed.
FIRST LITCHFIELD FINANCIAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 18, 2005
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 2005
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
Wednesday, May 18, 2005 at the Torrington Country Club, 250 Torrington Road
(Route 4), Goshen, Connecticut, 06756 for the following purposes:
1. To elect two (2) 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 ratify the appointment of McGladrey & Pullen, LLP as the Company's
independent auditors for the year ending December 31, 2005.
3. 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 5(th)
day of April, 2005 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
Assistant 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 Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS OF
FIRST LITCHFIELD FINANCIAL CORPORATION
George M. Madsen
Secretary
April 18, 2005
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 STEPHEN M.
RILEY, II, ASSISTANT SECRETARY OF FIRST LITCHFIELD FINANCIAL CORPORATION, IN
WRITING PRIOR TO THE TAKING OF A VOTE.
Proxy Statement of First Litchfield Financial Corporation
ANNUAL MEETING OF SHAREHOLDERS OF
FIRST LITCHFIELD FINANCIAL CORPORATION
May 18, 2005
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 Wednesday, May 18, 2005, 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 in 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 18, 2005. 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 5, 2005 as the Record Date (the "Record Date") for the determination of
Shareholders entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, 2,027,295 shares of the common stock of the Company (par value $.01
per share) were issued and outstanding and held of record by approximately 437
Shareholders (the "Common Stock"), each of which shares is entitled to one vote
on all matters to be presented at the 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. Assuming the presence of
a quorum at the Annual Meeting, directors will be elected by a plurality of the
votes of the shares of Common Stock present in person or represented by proxy
and entitled to vote. The affirmative vote of the majority of the votes cast is
required to ratify the appointment of the Company's independent auditors.
Shareholders' votes will be tabulated by the persons appointed by the Board of
Directors to act as inspectors of election for the Annual Meeting.
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 two (2)
nominees for election to the Board of Directors; and FOR ratification of
appointment of McGladrey & Pullen, LLP as the Company's independent auditors for
the year ending December 31, 2005. 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. The proxies confer discretionary authority to vote on any
matter of which the Company did not have notice at least 45 days prior to the
date of the Annual Meeting.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table includes certain information as of April 1, 2005
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.
Percent of
Name and Address Number of Shares Outstanding
of Beneficial Owner Beneficially Owned (1) Common Stock
- ------------------- ---------------------- ------------
The Estate of Donald K. Peck 110,407 5.45%
Litchfield, CT
William J. Sweetman 107,348 (2), (3) 5.30%
Litchfield, CT
Helen W. Buzaid 135,249 6.67%
Danbury, CT
- ----------
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 2,184 additional shares of the Company's
Common Stock.
3. Includes 14,313 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.
-2-
Pursuant to the Company's Certificate of Incorporation and Bylaws, the
Board has fixed the number of directorships at eleven (11). At this Annual
Meeting, two (2) 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
Clayton L. Blick, Kathleen A. Kelley and H. Ray Underwood expire at the 2005
Annual Meeting. Each nominee is now serving as a director. Mr. Blick has
indicated that he will retire from the Company's Board of Directors at the end
of his current term and will not seek re-election to the Board. Each of the
other two (2) directors whose terms expire at this meeting, Kathleen A. Kelley
and H. Ray Underwood, are nominated for re-election and each has indicated a
willingness to serve as a director. If either of them becomes 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.
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 two
(2) 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:
NOMINEES FOR ELECTION
Position Held with Expiration Date
Name & Age the Company of Current Term
- ---------- -------------------- ---------------
Kathleen A. Director of the Company 2005
Kelley since 2004 and of the
(52) Bank since 2004 (1)
H. Ray Director of the Company 2005
Underwood and of the Bank since 1998 (2)
(51)
CONTINUING DIRECTORS
Position held with Expiration Date
Name & Age the Company of Current Term
- ---------- -------------------- ---------------
Joseph J. President and Chief Executive 2006
Greco Officer and Director of the
(54) Company and of the Bank
since 2002 (3)
Perley H. Director of the Company 2006
Grimes, Jr. since 1988 and of the
(60) Bank since 1984 (4)
-3-
CONTINUING DIRECTORS
(continued)
Position held with Expiration Date
Name & Age the Company of Current Term
- ---------- -------------------- ---------------
Thomas A. Director of the Company 2006
Kendall and of the Bank since 1999 (5)
(49)
George M. Director of the Company 2007
Madsen and of the Bank since 1988 (6)
(71)
Alan B. Director of the Company 2007
Magary and of the Bank since 2002 (7)
(62)
Gregory S. Director of the Company 2007
Oneglia and of the Bank since 2002 (8)
(57)
Charles E. Director of the Company 2006
Orr since 1988 and of the
(69) Bank since 1981 (9)
William J. Director of the Company 2007
Sweetman and of the Bank since 1990 (10)
(58)
Patricia D. Director of the Company 2007
Werner and of the Bank since 1996 (11)
(58)
- ----------
1. Ms. Kelley is the principal in the firm Kelly & Company, CPA's. Ms. Kelley
was appointed by the Board on March 25, 2004 to fill the vacancy created
by the retirement of Mrs. Fuessenich.
2. Mr. Underwood is Secretary and Treasurer of Underwood Services, Inc.
3. Mr. Greco has served as the President and Chief Executive Officer of the
Company and the Bank since June 2002. Mr. Greco served as President and
Chief Executive Officer of Marketing Solutions from 1998 to 2002, and
served as Senior Vice President of Hudson United Bancorp from 1993 to
1997.
4. Mr. Grimes is a Partner in the Law Firm of Cramer & Anderson.
5. Mr. Kendall is a self employed investor.
6. Mr. Madsen is retired. He formerly served as President of Roxbury
Associates, Inc.
7. Mr. Magary is retired. He served as principal of Magary Consulting
Services through December 1999.
8. Mr. Oneglia is Vice-Chairman of O&G Industries, Inc. since 2000. Mr.
Oneglia served as President of O&G Industries, Inc. from 1997 to 2000.
9. Mr. Orr is retired. He served as President of New Milford Volkswagen, Inc.
until April 2002.
10. Mr. Sweetman is the President and Owner of Dwan & Co., Inc.
11. Ms. Werner is the head of the Washington Montessori Association, Inc.
-4-
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company met twelve (12) times in 2004. With
the exception of Thomas A. Kendall, all directors 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 2004. The Company does not maintain an attendance policy
for directors at the Company's Annual Meetings. Ten of the twelve directors of
the Company attended the Company's annual meeting on May 19, 2004.
In 2004, each director of the Company who was not an employee of the Bank,
received $330 for each Board meeting attended and $300 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.
Board of Directors' Communications with Shareholders
While the Company's Board of Directors does not have a formal process for
shareholders to send communications to the Board, the volume of such
communications has historically been de minimus. Accordingly, the Board
considers the Company's informal process to be adequate to address the Company's
needs. Historically, such informal process has functioned as follows: A Board
recipient of a shareholder communication would forward same to the Chairman and
Chief Executive Officer for appropriate discussion by the Board and the
formulation of an appropriate response. Shareholders may forward written
communications to the Board by addressing such comments to the Board of
Directors of First Litchfield Financial Corporation, 13 North Street,
Litchfield, Connecticut 06759.
The Board of Directors has established several standing committees to
assist in the discharge of its 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.
Nominating Committee
- --------------------
The Nominating Committee met one (1) time in 2004. The current Committee
members, all of whom are "independent" in accordance with the independence
standards of the American Stock Exchange ("AMEX"), are: Perley H. Grimes, Jr.,
George M. Madsen, Charles E. Orr and H. Ray Underwood. 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.
While the Nominating Committee does not have a formal charter or written
policy, the Company has procedures and guidelines for the selection and election
of directors.
The procedure for nomination of directors by the Nominating Committee is
as follows:
1. The Nominating Committee, selected by the board from among its
members, identifies potential candidates with input from management
and other directors and obtains background information on
candidates.
2. The Nominating Committee presents proposed candidates to the board
before contacting such candidates.
-5-
3. The Nominating Committee approaches the candidate and if such
candidate is interested, he or she fills out a questionnaire.
4. After review of the questionnaire, the board or Nominating Committee
decides whether to nominate the candidate.
In addition, the Company's Bylaws include procedures for nominations by
shareholders. A copy of the Company's Bylaws is available by sending a written
request to or by calling Stephen M. Riley, II, Assistant Secretary, 13 North
Street, Litchfield, Connecticut 06759, (860) 567-6469. The Nominating
Committee's process for identifying and evaluating nominees for director,
including nominees recommended by shareholders, has historically operated
informally and without any differences in the manner in which nominees
recommended by shareholders are evaluated.
The Nominating Committee considers factors such as those summarized below
in evaluating Director candidates and believes that the Company's Bylaws and the
qualifications and considerations such as those enumerated below provide
adequate guidance and flexibility in evaluating candidates.
o Experience in business or a profession, either active currently or
recently retired, and ability to contribute sound judgment to Bank
matters.
o Participation in community affairs.
o Residency, whether home or business in the Company's primary
marketing area.
o Ability to refer desirable business to the Bank.
o Having integrity, ethical character and good reputation.
o Candidates must be less than 65 years of age when first elected.
o Candidates should be willing and able to attend board meetings and
board committees (of at least one committee) on a regular basis.
o Candidates should not be employed by or a partner in any corporation
or business firm which already has an employee or partner on the
board.
o Candidates should not be close relatives of any member of the board.
o Candidates must not be a director of any other bank.
o Candidates should not have any significant conflict of interest with
the Company or the Bank which cannot be satisfactorily handled by
full disclosure and abstention of voting when appropriate.
The Company has not paid a fee to any third party or parties to identify
or assist in identifying or evaluating potential nominees. The Nominating
Committee does not discriminate on the basis of sex, race, color, gender,
national origin, religion or disability in the evaluation of candidates. All
nominees for election as directors at the 2005 Annual Meeting were nominated by
the Nominating Committee and Board of Directors.
Compensation Committee
- ----------------------
The Company does not have a Compensation Committee. Rather the Bank has a
Compensation Committee. The Bank's Compensation Committee met two (2) times in
2004. The Compensation Committee consists solely of independent directors, in
accordance with the AMEX Independence Standards. The current Committee members
are: Alan B. Magary, Gregory S. Oneglia, Charles E. Orr and Patricia D. Werner.
The Compensation Committee is responsible for developing policies relating to
employee compensation, benefits and incentives,
-6-
annually evaluating the president and chief executive officer, and making
recommendations concerning salaries and other types of compensation to the full
Board of Directors of the Bank. The full Board of Directors of the Company
reviews and approves this Committee's recommendations.
The philosophy of the Committee is based on the belief that executive
compensation should closely reflect the achievements as measured by the key
performance indicators of the Company. These indicators include short-term and
long term measures as well as the development and execution of effective
strategic business plans. Within the last year, the Committee has developed a
Management Incentive plan for senior management and officers in key positions of
the Bank. This plan recognizes that both salary and incentive compensation play
important roles in attracting, retaining and motivating that talent which is
critical to the success of the Company. The Management Incentive Plan includes
components that ties both Company-wide and individual goals to incentive
compensation. Company-wide goals include achieving net income levels in
accordance with the Company's annual budget. Individual goals are determined
based on strategic and annual business objectives for each member's area of
responsibility.
The Company utilized the services of a compensation consulting firm to
assist the Committee in the development of this plan. The Company continues to
utilize the service of a compensation consulting firm to perform peer group
analysis on different forms of compensation to ensure that the Bank's
compensation levels remain competitive as well as to keep the Committee current
of various incentive and benefit plans available in the Bank's peer group market
place.
The Compensation Committee has established base salary levels for each
position and additionally takes into consideration an individual's performance,
level of expertise, responsibilities, length of service to the Company and
comparable levels of remuneration paid to executives of other companies of
comparable size and development within the industry. The individual does not
participate in the review, discussion or decisions of the Compensation Committee
regarding this remuneration.
The Committee reviews the Chief Executive Officer's performance annually
and adjusts his compensation based on the previously mentioned factors, the
Bank's performance, and a comparison of the Chief Executive Officer's salary and
the salaries paid to chief executive officers of peer companies in the banking
industry. The annual review is based on an assessment of the Chief Executive
Officer's performance as measured by such factors as the Company's financial
performance, attainment of objectives, development and execution of strategic
initiatives. The Chief Executive Officer does not participate in the review,
discussion or decision of the Committee regarding his remuneration.
The First National Bank of Litchfield
Compensation Committee
Alan B. Magary
Gregory S. Oneglia
Charles E. Orr
Patricia D. Werner
-7-
Audit/Compliance and Security Committee
- ---------------------------------------
The Audit/Compliance and Security Committee (the Audit Committee) met five
(5) times in 2004. The current Committee members are: Alan B. Magary, Kathleen
A. Kelley, Thomas A. Kendall and H. Ray Underwood. In addition, the Bank's
Compliance Officer, Stephen M. Riley, II, attends the Audit Committee Meetings.
Subject to the more detailed descriptions set forth in its Charter, attached as
Exhibit A, this Committee is responsible for oversight of the internal audit
function, internal accounting controls, security programs and selection of
independent accountants. As of the date of this Proxy Statement, each of the
Audit Committee Members is an "independent director" under the (AMEX") Listing
Standards. The members of the Audit Committee bring a range of education,
business and professional experience that is beneficial to the Audit Committee's
function of the Company and the Bank and is sufficient to enable the Audit
Committee to fulfill its responsibility. The Board has determined that Kathleen
A. Kelley and Thomas A. Kendall are "audit committee financial experts."
Audit Committee Report
The following Report of the Company's Audit Committee is provided in
accordance with the rules and regulations of the Securities and Exchange
Commission (the SEC). Pursuant to such rules and regulations, this report shall
not be deemed "soliciting material," filed with the SEC, subject to Regulation
14A and 14C of the SEC or subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act").
FIRST LITCHFIELD FINANCIAL CORPORATION
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2004 with
management. The Audit Committee has also reviewed and discussed with McGladrey &
Pullen, LLP ("McGladrey"), the Company's independent auditors, certain matters
specified in Statement on Auditing Standards No. 61, communication with Audit
Committees, as may be modified or supplemented.
The Audit Committee has received the written disclosures and the letter
from McGladrey required by Independence Standards Board Standard No. 1, as may
be modified or supplemented, and has discussed McGladrey's independence with
respect to the Company with McGladrey.
Based on the review and discussions referred to in this audit committee
report, the Audit Committee recommended to the Board of Directors that the
Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2004 for filing with the
SEC.
First Litchfield Financial Corporation
Audit Committee
Thomas A. Kendall, Chairman
Kathleen A. Kelley
Alan B. Magary
H. Ray Underwood
-8-
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 April 1, 2005.
Common Shares
Name Of Beneficially Owned
Beneficial Owner At April 1, 2005 (1) Percent of Class
- ---------------- -------------------- -----------------
Clayton Blick 14,726(3) .73%
Joseph J. Greco 1,086 .05%
Perley H. Grimes, Jr 16,618(2) .82%
Kathleen A. Kelley 210 .01%
Thomas A. Kendall 701 .03%
George M. Madsen 16,457 .81%
Alan B. Magary 231(3) .01%
Gregory S. Oneglia 11,418(3) .56%
Charles E. Orr 15,376 (3) .76%
William J. Sweetman 107,348(4) 5.30%
H. Ray Underwood 2,291 .11%
Patricia D. Werner 4,207(5) .21%
Carroll A. Pereira 17,947(3),(6) .89%
Revere H. Ferris 46,407(3),(7) 2.29%
Joelene E. Smith 245 .01%
All Directors and Executive 255,268 12.59%
Officers as a group (16 persons)
- --------------------------------
Footnotes on next page
-9-
- -----------------------
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 2,184 shares of Common Stock.
3. Includes shares owned by, or as to which voting power is shared with,
spouse or children.
4. Includes 14,313 shares owned by an estate as to which individual has
voting power as fiduciary of said estate. In addition, the total for Mr.
Sweetman includes options to purchase 2,184 shares of Common Stock.
5. Includes options to purchase 3,762 shares of Common Stock.
6. Includes options to purchase 17,613 shares of Common Stock.
7. Includes options to purchase 9,388 shares of Common Stock. In addition,
the total for Mr. Ferris includes 20,326 shares of Common Stock held in
trusts for which Mr. Ferris serves as trustee.
EXECUTIVE OFFICERS
The following table sets forth information concerning the current
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.
Name and Age Position Held with the Company and/or Bank
------------ ------------------------------------------
Joseph J. Greco (54) President, Chief Executive Officer
and Director of the Company and of the Bank
since 2002 (1)
Carroll A. Pereira (49) Treasurer of the Company, Senior Vice President
and Chief Financial Officer of the Bank since
1984
Joelene E. Smith (46) Senior Vice President and Operations Officer
of the Bank since 2003 (2)
Revere H. Ferris (64) Senior Vice President and Senior Loan Officer
of the Bank since 1997
John S. Newton (66) Senior Vice President and Trust Officer of
the Bank since 1999
1. Mr. Greco has served as President and Chief Executive of the Company and
Bank since June 17, 2002. Prior to joining the Bank and Company, Mr. Greco
served as President and CEO of Marketing Solutions from 1998 to 2002, and
served as Senior Vice President of Hudson United Bancorp from 1993 to
1997.
2. Ms. Smith has served as Senior Vice President and Operations Officer of
the Bank since 2003. Prior to that, Ms. Smith served as Vice President of
Operations and Information Systems and in similar capacities since her
employment with the Bank in 1977.
-10-
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, 2004, 2003 and 2002. Other than the Named
Executive Officers set forth below (the "Named Executive Officers"), only one
other individual employed by the Company and/or the Bank received aggregate
compensation of $100,000 or more during the fiscal year ended December 31, 2004.
---------------------------
Long Term Compensation
- --------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
Securities
Restricted Underlying
Other Annual Stock Options/
Name and Principal Compensation Awards SARs LTIP All Other
Position Year Salary($)(1)(2) Bonus($) ($) ($) (#) Payout($) Compensation ($)
- --------------------------------------------------------------------------------------------------------------------------------
Joseph J. Greco 2004 $208,247 $28,869 (4)
President & Chief 2003 $177,985 $23,580 (5)
Executive Officer of 2002 $ 90,197 (3) $10,000 $ 5,796 (6)
The Bank and Company
Revere H. Ferris 2004 $119,170 $17,651 (7)
Senior Vice President and 2003 $113,786 $14,837 (8)
Senior Loan Officer of the 2002 $110,631 $10,622 (9)
Bank
John S. Newton 2004 $134,809 $18,372 (10)
Senior Vice President and 2003 $129,115 $16,090 (11)
Trust Officer of the Bank 2002 $125,822 $11,018 (12)
Carroll A. Pereira 2004 $120,947 $22,507 (13)
Treasurer of the Company, 2003 $111,327 $15,544 (14)
Senior Vice President and 2002 $108,147 $10,706 (15)
Chief Financial Officer
of the Bank
Philip G. Samponaro 2004 $ 60,640 (16) $37,401 $226,843 (17)
Secretary, Senior Vice 2003 $114,329 $ 67,675 (18)
President, Chief Admini- 2002 $111,143 $ 10,786 (19)
strative Officer and
Cashier of the Bank and
Secretary of the Company
- ----------
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 Named Executive 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 50% 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. Mr. Greco began serving as President and Chief Executive Officer of the
Company and the Bank on June 17, 2002.
-11-
4. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $3,489. Additionally, the
amount includes $25,380 awarded to Mr. Greco pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
5. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $1,800. Additionally, the
amount includes $21,780 awarded to Mr. Greco pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
6. The amount includes $5,796 awarded to Mr. Greco pursuant to the Bank's
Long Term Incentive and Deferred Compensation Plan. (See "Long Term
Incentive and Deferred Compensation Plans.")
7. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $2,230. Additionally,
amount includes $15,421 awarded to Mr. Ferris pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
8. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $1,604. Additionally,
amount includes $13,233 awarded to Mr. Ferris pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
9. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $3,155. Additionally,
amount includes $7,467 awarded to Mr. Ferris pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
10. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $2,282. Additionally,
amount includes $16,090 awarded to Mr. Newton pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
11. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $2,282. Additionally,
amount includes $13,808 awarded to Mr. Newton pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
12. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $3,228. Additionally,
amount includes $7,790 awarded to Mr. Newton pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
13. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $2,247. Additionally,
amount includes $15,544 awarded to Ms. Pereira pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.") Additionally, the amount includes
$4,716 which can be attributed to the exercise of stock options by the
Named Executive Officer.
14. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $2,205. Additionally,
amount includes $13,339 awarded to Ms. Pereira pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
15. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $3,180. Additionally,
amount includes $7,526 awarded to Ms. Pereira pursuant to the Bank's Long
Term Incentive and Deferred Compensation Plan. (See "Long Term Incentive
and Deferred Compensation Plans.")
16. Amount includes a special severance benefit paid to Mr. Samponaro pursuant
to the Early Retirement Agreement (the "ERA") between Mr. Samponaro and
the Bank. Mr. Samponaro retired on March 31, 2004. In accordance with the
ERA, the Bank agreed to pay Mr. Samponaro a special severance benefit
equal to his regular weekly salary during the period from April 1, 2004
through June 30, 2004.
17. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $595. Additionally, the
amount includes $226,249 which can be attributed to the exercise of stock
options by the Named Executive Officer.
-12-
18. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $2,208. Additionally,
amount includes $13,362 awarded to Mr. Samponaro pursuant to the Bank's
Long Term Incentive and Deferred Compensation Plan. (See "Long Term
Incentive and Deferred Compensation Plans.") Additionally, the amount
includes $52,105 which can be attributed to the exercise of stock options
by the Named Executive Officer.
19. Amount includes the Bank's matching contribution to the Bank's 401(k) plan
for the benefit of the Named Executive Officer, $3,247. Additionally,
amount includes $7,539 awarded to Mr. Samponaro pursuant to the Bank's
Long Term Incentive and Deferred Compensation Plan. (See "Long Term
Incentive and Deferred Compensation Plans.")
Aggregated Option/SAR Exercises in Last Fiscal Year and
FY-End Option/SAR Values
The following table sets forth information regarding stock options that
were exercised, if any, during the last fiscal year, and unexercised stock
options held by the Named Executive Officers. The number of options and the per
share exercise prices have been adjusted to reflect stock splits and dividends.
Number of Value of Unexercised
Securities Underlying In-the-Money
Unexercised Options/SARs
Shares Acquired Value Realized Options/SARs at FY-End (#) At FY-End ($)(1)
Name on Exercise (#) ($)(2) Exercisable/Unexercisable (3) Exercisable/Unexercisable (3)
- ----------------------------------------------------------------------------------------------------------------------
Revere H. Ferris 0 0 9,388 $167,764
Carroll A. Pereira 315 4,716 17,613 $347,631
Philip G. Samponaro 17,928 226,249 0 $ 0
- -------------
1. Represents the difference between the fair market value price of the
Company's Common Stock at December 31, 2004, $30.00, and the exercise
price of options, multiplied by the number of options. No SARs have been
granted by the Company. Options are in the money if the fair market value
of the underlying securities exceeds the exercise or base price of the
options.
2. Represents the difference between the closing bid price of the Company's
common stock on the date the options are exercised and the exercise price
of options, multiplied by the number of options.
3. All options are exercisable.
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.
-13-
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-two (22) 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.
Long Term Incentive and Deferred Compensation Plans
- ---------------------------------------------------
During November and December 2000, the Bank entered into Long Term
Incentive Retirement Agreements (the "Executive Incentive Agreements") with its
Executive Officers to encourage the Executives to remain employees of the Bank.
The Executive Incentive Agreements will trigger the award of deferred bonuses to
the 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 awarded after the end of each fiscal year. Such awards will
immediately 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 the Executive Officer dies while serving as an executive
officer of the Bank, the amount payable to the participant's beneficiary is
projected to be equivalent to the participant's projected retirement benefit (as
defined in the Executive Incentive Agreements) if the Bank acquires and
maintains a corporate life insurance policy on the life of the participant at
the time of death (see below). Upon retirement, the Executive Officer's total
deferred compensation, including earnings thereon, may be paid out in one lump
sum, or paid in equal annual installments over fifteen (15) years.
During November and December 2000, the Bank entered into Long Term
Incentive Retirement Agreements with each of its Directors (the "Director
Incentive Agreements") to reward past service and encourage continued service of
each Director. In December 2002, the Bank entered into Long Term Incentive
Retirement Agreements with two newly appointed directors, Gregory S. Oneglia and
Alan B. Magary. In September 2004, the Bank entered into a Long Term Incentive
Retirement Agreement with newly appointed director, Kathleen A. Kelley.
The Director Incentive Agreements 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 deferred
pursuant to the Director Incentive Agreements if specified Bank performance
objectives are achieved. All amounts in the Director Incentive Agreements will
immediately vest 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 projected to be equivalent to the
participant's projected retirement benefit (as defined in the Director Incentive
Agreements) if the Bank has acquired and maintains a corporate life insurance
policy on the life of the participant at
-14-
the time of death (see below). Upon retirement, the Director's total deferred
compensation, including earnings thereon, may be paid out in one lump sum, or
paid in equal annual installments over ten (10) years.
In concert with the Executive and Director Incentive Agreements, the Bank
has invested in universal cash surrender value life insurance with a cash
surrender value of $8.9 million as of December 31, 2004. Insurance policies were
acquired on the lives of each of the Bank's Executive Officers, four (4)
non-senior officers and all but one (1) of the Bank's directors which are
designed to recover the costs of the Bank's Executive and Director Incentive
Agreements. The policy death benefit has been structured to indemnify the Bank
against the death benefit provision of these benefit agreements. The policies
were paid with a single premium. Policy cash values will earn interest at a
current rate of approximately 4% and policy mortality costs will be charged
against the cash value monthly. There are no load or surrender charges
associated with the policies.
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 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 4,270 shares of the
Company's Common Stock at $7.41 per share. In March 2004, Mr. Samponaro
exercised these options in accordance with the plan. In September 2004, Ms.
Pereira exercised options for 315 shares in accordance with the plan. In January
1997, the Board granted stock options to Ms. Pereira and Mr. Samponaro which as
a result of stock splits and dividends allow such individuals to purchase 4,270
shares of Common Stock at an exercise price of $8.80 per share. In May 2004, Mr.
Samponaro exercised these options in accordance with the plan. 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 4,694 shares of Common Stock at an exercise price of $10.45 per share.
In May 2004, Mr. Samponaro exercised these options in accordance with the plan.
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 4,694 shares
at an exercise price of $13.81 per share. In October 2004, Mr. Samponaro
exercised these options in accordance with the plan.
Pursuant to the 1994 Stock Option Plan, with the exception of Patricia D.
Werner who became a director in 1996, H. Ray Underwood who became a Director in
1998, Thomas A. Kendall who became a Director in 1999, Gregory S. Oneglia and
Alan B. Magary, who both became directors in 2002, and Kathleen A. Kelley who
became a director in 2004, each outside director who is not an officer of the
Company or the Bank ("Outside Director") as well as retired Directors Clock and
Field, received stock options, which are presently exercisable, to purchase
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, allow such individuals to purchase 3,216 shares of Common Stock at
$5.04 per share. Directors Blick, Madsen and Orr exercised these options during
2003. Directors Fuessenich, Grimes and Sweetman exercised these options in 2004.
Moreover, in June 1995, each Outside Director was granted options, which as a
result of stock splits and dividends, allow such individuals to purchase 546
shares of Common Stock at $5.85 per share. Director Orr exercised those options
-15-
during 2003. Directors Blick and Madsen exercised those options during 2004. In
June 1996, each Outside Director was granted options, which as a result of stock
splits and dividends, allow such individuals to purchase 546 shares of Common
Stock at $8.01 per share. Director Orr exercised those options during 2003.
Director Blick exercised those options during 2004. In June 1997, each Outside
Director was granted options, which as a result of stock splits and dividends,
allow such individuals to purchase 546 shares of Common Stock at an exercise
price of $8.89 per share. Director Orr exercised those options during 2003.
Director Blick exercised those options during 2004. In June 1998, each Outside
Director was granted options, which as a result of a stock dividend, allow each
individual to purchase 546 shares of Common Stock at an exercise price of
$12.50. Director Orr exercised those options during 2003. Director Blick
exercised those options during 2004. Patricia D. Werner has options to purchase
3,762 shares of Common Stock consisting of options to acquire 3,216 shares at
$8.92 per share and options to acquire 546 shares at $12.50 per share. In May of
2003, retired Directors Clock and Field exercised all remaining options in
accordance with the plan. In April of 2004, retired Director Fuessenich
exercised all remaining options in accordance with the plan. In accordance with
the plan, in January 2005, Director Madsen exercised options to purchase a total
of 1,638 shares of common stock.
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
50% 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
$57,432 for 2004 and $54,632 for 2003. The Bank has revised the employee savings
plan and effective May 1, 2005, the Plan will contain significant enhancements,
expanded investment capabilities, and a wider array of fund options and
services. The Bank will provide an automatic employer contribution of 3% of
compensation (subject to Internal Revenue Service (IRS) compensation limits) for
all eligible participants whether or not the participant is making voluntary
contributions to the 401(k) plan. Also, the Plan provides for a discretionary
employer match on participant pre-tax contributions of fifty cents ($.50) for
each one-dollar ($1.00) of compensation (up to six percent (6%) of compensation
subject to IRS compensation limits) that an eligible participant elects to
defer. In addition, the Plan provides for a discretionary annual employer profit
sharing contribution. Participants will be vested in these contributions
immediately.
Noncontributory Defined Benefit Pension Plan
- --------------------------------------------
The Bank established a noncontributory defined benefit pension plan in
1959 that covers substantially all employees who have completed one year of
service and have attained age 21. Benefits are based on years of service and the
employee's compensation during the last five (5) years of employment. Until
first quarter 2005, the Bank's funding policy has been 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. During the first quarter of 2005, the Bank's pension plan was
curtailed as the Bank's Board of Directors approved the cessation of benefit
accruals under the Plan effective April 30, 2005. Because of this action, for
the Plan year beginning November 15, 2004, no contributions will be made by the
Bank.
-16-
PENSION PLAN TABLE
=============================================================================
ESTIMATED ANNUAL RETIREMENT BENEFIT WITH
YEARS OF SERVICE AT RETIREMENT
=============================================================================
Average Base
Salary at
Retirement 15 20 25 30 35
- -----------------------------------------------------------------------------
$ 75,000 $17,438 $23,250 $29,063 $ 29,063 $ 29,063
- -----------------------------------------------------------------------------
$100,000 $23,250 $31,000 $38,750 $ 38,750 $ 38,750
- -----------------------------------------------------------------------------
$125,000 $29,063 $38,750 $48,438 $ 48,438 $ 48,438
- -----------------------------------------------------------------------------
$150,000 $34,875 $46,500 $58,125 $ 58,125 $ 58,125
- -----------------------------------------------------------------------------
$175,000 $40,688 $54,250 $67,813 $ 67,813 $ 67,813
- -----------------------------------------------------------------------------
$200,000 $46,500 $62,000 $77,500 $ 77,500 $77,500
- -----------------------------------------------------------------------------
$225,000 $47,663 $63,550 $79,438 $79,438 $79,438
- -----------------------------------------------------------------------------
$250,000 $47,663 $63,550 $79,438 $79,438 $79,438
- -----------------------------------------------------------------------------
Pension benefits are based upon average salary (determined as of each
November 15th) during the highest five (5) consecutive plan years of services
prior to attaining normal retirement age. The amount of the annual benefit is
1.55% of average salary per year of service (to a maximum of 25 years). This
benefit formula may be modified to conform with changes in the pension laws.
Internal Revenue Code Section 401 (a)(17) limits earnings used to calculate
qualified plan benefits to $205,000 for 2004. This limit was used in the
preparation of this table.
The present average salary (using last five years of salary only) and
years of service to date of Messrs. Greco, Ferris, Newton, Samponaro and Ms.
Pereira are: Mr. Greco: $150,041 with 3 years of service; Mr. Ferris: $105,961
with 9 years of service; Mr. Newton: $110,050 with 6 years of service; Mr.
Samponaro: $103,551 with 28 years of service; and Ms. Pereira: $106,589 with 21
years of service. The above table shows estimated annual retirement benefits
payable at normal retirement date as a straight life annuity guaranteed for a
minimum of 10 years for various average salary and service categories.
Directors' Fees Plan
- --------------------
The Company offers Directors the option to defer their Directors' fees. If
deferred, the fees are held in a trust account with the Bank. The Bank has no
control over the trust. The cost of the related trust assets and corresponding
liability was $367,738 and $349,160 at December 31, 2004, and 2003,
respectively.
-17-
STOCK PRICE PERFORMANCE GRAPH
-----------------------------
Set forth below is a line graph with an explanatory table comparing the
yearly percentage change in the cumulative total shareholder return on the
Company's Common Stock, based on the market price of the Company's Common Stock
and assuming reinvestment of dividends, with the total return of the AMEX Major
Market Index and the SNL Bank Index for Banks with total assets more than $250
million and less than $500 million. The calculation of total cumulative return
assumes a $100 investment in the Company's Common Stock and each of the other
indices on December 31, 1999.
[LINE GRAPH OMITTED]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG FIRST LITCHFIELD FINANCIAL CORP., THE AMEX MAJOR MARKET INDEX
AND THE SNL $250M-$500M BANK INDEX
Period Ending
Index 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
First Litchfield Financial 100.00 71.82 90.02 105.12 149.43 226.16
AMEX Major Market Index 100.00 94.27 91.81 80.57 99.97 110.02
SNL $250M to $500M Bank Index 100.00 96.28 136.80 176.39 254.86 289.27
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 $2,800,077 and $2,579,194 at December 31, 2004 and
2003, respectively. During 2004, $960,934 of new loans were made, and repayments
totaled $501,502. At December 31, 2004, all loans to Officers, Directors,
principal shareholders and their associates were performing in accordance with
the contractual terms of the loans.
-18-
During 2004 and 2003, the Bank paid The Business Center a total of $52,794
and $119,908 respectively for purchases of office supplies, equipment and
courier services. The owner of The Business Center is the spouse of Clayton L.
Blick, who is a Director of the Company and the Bank.
Clayton L. Blick, a Director of the Company and Perley H. Grimes, Jr., a
Director 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 2004 and 2003, the Bank paid Cramer & Anderson $105,831 and
$72,537, respectively for legal services rendered, a portion of which was
reimbursed to the Bank by third parties.
Gregory Oneglia, Director of the Company and the Bank, is a one-sixth
owner of property that is leased by the Bank for a branch. During 2004 and 2003,
the Bank paid rent expense for that property in the amount of $42,300 and
$42,300.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Exchange Act requires that the Company's directors,
executive officers, and any person holding more than ten percent (10%) of the
Company's Common Stock file with the SEC reports of ownership and changes in
ownership of the Company's Common Stock and that such individuals furnish the
Company with copies of the reports.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, with the exception of
the following, the Company believes that all of its executive officers and
directors complied with all Section 16(a) filing requirements applicable to
them.
Mr. Madsen filed two Form 4s late to reflect two transactions and Mr.
Sweetman filed one form late which reflected one transaction.
PROPOSAL (2)
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee, in its capacity as a committee of the Board of
Directors has selected McGladrey & Pullen, LLP as independent auditors to audit
the consolidated financial statements of the Company for the fiscal year ending
December 31, 2005. McGladrey & Pullen, LLP has served as the accountants for the
Company for the fiscal year ended December 31, 2004. McGladrey & Pullen, LLP's
opinion on the Consolidated Financial Statements of First Litchfield Financial
Corporation and Subsidiary for the year ended December 31, 2004 is included in
the First Litchfield Financial Corporation 2004 Annual Report on Form 10-K.
-19-
During the period covering the fiscal year ended December 31, 2004,
McGladrey & Pullen, LLP and RSM McGladrey, Inc. performed the following
professional services:
First Litchfield Financial Corporation
Principal Accountant Fees and Services
Years Ended December 31, 2004 and 2003
Description 2004 2003
- ------------------------------------------------------- -------- -------
Audit Fees consist of fees for professional services
rendered for the audit of the consolidated financial
statements and review of financial statements included
in quarterly reports on Form 10-QSB and services
connected with statutory and regulatory filings or
engagements. $129,446 $87,433
Audit-related Fees are fees principally for professional
services rendered for the audits of the FHLB Qualified
Collateral Report and the financial statements of
Common Trust Fund A, and consultations on various
accounting matters. $ 8,800 $ 9,950
Tax Fees consist of fees for tax return preparation,
planning and tax advice for the Company and Common
Trust Fund A. $ 11,300 $ 9,925
All Other Fees $ 0 $ 0
Independence
- ------------
The Audit Committee of the Board of Directors of the Company has
considered and determined that the provision of services rendered by McGladrey &
Pullen, LLP relating to audit related and tax service matters above, is
compatible with maintaining the independence of such accountants.
A representative of McGladrey & Pullen, LLP will be available at the
Annual Meeting to answer questions and will be afforded the opportunity to make
a statement if he or she desires to do so.
-20-
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of
Independent Auditor
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent auditors, other than those listed under the
de minimus exception. These services may include audit services, audit-related
services, tax services and other services. Pre-approval is detailed as to a
particular service or category of services, and is generally subject to a
specific budget. The Audit Committee has delegated pre-approval authority to its
Chairman when expeditious delivery of services is necessary. The independent
auditors and management are required to report to the full Audit Committee
regarding the extent of services provided by independent auditors in accordance
with this pre-approval, and the fees for the services performed to date. None of
the audited-related fees, tax fees or other fees paid in 2004 and 2003 were
approved per the Audit Committee's pre-approval policies.
Required Vote For Ratification of the Independent Auditors
- ----------------------------------------------------------
The affirmative vote of a majority of the shares represented at the
meeting is required to ratify the appointment of the independent auditors for
the year ending December 31, 2005.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE FOR RATIFICATION OF THE INDEPENDENT AUDITORS
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 2005 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.
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. The Company received no such request from any shareholder with
respect to the 2005 Annual Meeting.
In order to be included in the Company's proxy statement and form of proxy
for the 2006 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
December 18, 2005, pursuant to proxy soliciting regulations of the SEC. The
SEC's rules contain standards as to what shareholder proposals are required to
be in the proxy statement. Any such proposal will be subject to 17
C.F.R.ss.240.14a-8 of the rules and regulations promulgated by the SEC. Nothing
in this paragraph shall be deemed to require the Company to include in its proxy
statement and form of proxy for such meeting any
-21-
shareholder proposal which does not meet the requirements of the SEC in effect
at the time. In addition, under the Company's Bylaws, shareholders who wish to
nominate a director or bring other business before an annual meeting must comply
with the following:
You must be a shareholder of record and must have given timely notice in
writing to the Secretary of the Company.
Your notice must contain specific information required in the Company's
Bylaws.
Any other proposal for consideration by shareholders at the Company's 2006
annual meeting of shareholders must be delivered to, or mailed to and received
by, the Company's Assistant Secretary of the Company not less than 45 days nor
more than 90 days prior to the date of the meeting if the Company gives at least
30 days notice or prior public disclosure of the meeting date to shareholders.
Shareholder proposals should be mailed to: Assistant Secretary, Stephen M.
Riley, II, 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-K. A copy of the Company's Annual Report on Form 10-K,
without exhibits and Annual Report to Shareholders, including consolidated
financial statements, may be obtained without charge upon written request to:
Carroll A. Pereira, Treasurer, First Litchfield Financial Corporation, P.O. Box
578, 13 North Street, Litchfield, Connecticut 06759.
By Order of the Board of Directors
April 18, 2005 George M. Madsen
Secretary
-22-
EXHIBIT A
---------
FIRST LITCHFIELD FINANCIAL CORPORATION
--------------------------------------
AUDIT/COMPLIANCE & SECURITY COMMITTEE CHARTER
---------------------------------------------
Organization
- ------------
There shall be a committee of the Board of Directors of First Litchfield
Financial Corporation (the "Corporation") to be known as the Audit/Compliance &
Security Committee herein referred to as the "Audit Committee". Such Committee
shall serve as the Audit Committee for the Corporation and its subsidiaries. The
Audit Committee shall be composed of at least three (3) directors. All Audit
Committee members must be "independent directors" within the meaning of
240.101Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
All members of the Audit Committee must be financially literate at the time of
their appointments and at least one member of the audit committee shall have
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background,
including current or past service as a chief executive, chief financial or other
senior officer with financial oversight responsibilities. A member of the Audit
Committee may not, other than in his or her capacity as a member of the Audit
Committee, the Board of Directors, or any other Board committee, accept any
consulting, advisory, or other compensatory fee from the Corporation. Members of
the Audit Committee are also prohibited from being an affiliated person of the
Corporation or any of its subsidiaries.
Statement of Policy
- -------------------
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the Corporation, and the quality and integrity of the financial reports of the
Corporation. In so doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
Corporation.
Responsibilities
- ----------------
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the Corporation are in accordance with all
requirements and are of the highest quality.
The Audit Committee in its capacity as a committee of the Board of Directors
shall be directly responsible for the appointment, compensation and oversight of
the work of any registered public accounting firm employed by the Corporation
(including resolution of disagreements between management and the auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work, and each such accounting firm shall report directly to
the Audit Committee.
The Audit Committee is responsible for ensuring its receipt on an annual basis
from the outside auditor of a formal written statement detailing all
relationships between the auditor and the Corporation and its subsidiaries and
affiliates consistent with Independence Standards Board Standard Number 1,
Independence Discussions with Audit Committees (January 1999).
The Audit Committee shall be responsible for actively engaging in a dialogue
with respect to any disclosed relationships or services that may impact the
objectivity and independence of the
A-1
auditor and for taking or recommending that the full board take appropriate
action to oversee the independence of the outside auditor.
The Audit Committee shall meet with the independent auditors and financial
management of the Corporation to review the scope of the proposed audit for the
current year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations of the
independent auditors.
The Audit Committee shall review with the independent auditors, the
Corporation's internal auditor(s) and financial and accounting personnel, the
adequacy and effectiveness of the accounting and financial controls of the
Corporation, and elicit any recommendations for the improvement of such internal
control procedures or particular areas where new or more detailed controls or
procedures are desirable. Particular emphasis should be given to the adequacy of
such internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the Committee
periodically should review company policy statements to determine their
adherence to the code of ethics.
The Audit Committee shall obtain and review a report from the independent
auditors, at least annually, describing the independent auditors' internal
quality-control procedures, any material issues raised by the most recent
quality-control review or peer review, or by any inquiry or investigation by
governmental or professional authorities within the past five (5) years
respecting one or more independent auditors carried out by the auditors, and any
steps taken to deal with any such issues, and to assess the independent
auditors' independence, all relationships between the independent auditor and
the Corporation. The Audit Committee shall also review the experience and
qualifications of the senior members of the independent auditor's team.
The Audit Committee shall review the financial statements contained in the
annual report to shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the shareholders.
The Audit Committee shall review and discuss with management and the independent
auditors any changes in accounting principles.
The Audit Committee shall provide sufficient opportunity for the internal and
independent auditors to meet with the members of the audit committee without
members of management present. Among the items to be discussed in these meetings
are the independent auditors' evaluation of the Corporation's financial,
accounting, and auditing personnel, and the cooperation that the independent
auditors received during the course of the audit.
The Audit Committee shall review accounting and financial human resources and
succession planning within the Corporation.
The Audit Committee shall submit the minutes of all meetings of the audit
committee to, or discuss the matters discussed at each committee meeting with,
the Board of Directors.
The Audit Committee shall investigate any matter brought to its attention within
the scope of its duties, with the power to engage independent counsel and other
advisors as it determines necessary to carry out is duties.
The Audit Committee shall determine the appropriate funding to be provided by
the Corporation for payment of compensation to the registered public accounting
firm employed by the Corporation for purposes of rendering an audit report and
to any advisors employed by the Audit Committee.
The Audit Committee shall have the authority and funding to engage independent
counsel and any other advisors as the Audit Committee may determine to be
necessary to carry out its duties and responsibilities.
A-2
The Audit Committee shall receive, and act upon as appropriate, the disclosures
made by the Chief Executive Officer and the Chief Financial Officer concerning
internal controls and fraud required by Rule 13a-14 of the Securities Exchange
Act of 1934, as amended.
Oversight of Internal Audit Function
- ------------------------------------
The Audit Committee shall oversee and review with the Board of Directors the
activities, structure and qualifications of the internal audit function of the
Corporation including the independence and authority of its reporting
obligations, the proposed audit plans for the coming year, and the coordination
of such plans, and shall consider whether the internal audit activities are
conducted in accordance with professional standards.
The Audit Committee shall review summaries of findings from completed internal
audits and progress reports on the proposed internal audit plan, with
explanations for any deviations from the original plan. The Audit Committee
shall also review and approve the internal auditor's control risk assessment and
the scope of the audit plan, at least annually.
The Audit Committee, in its oversight of the internal auditors, should ensure
that any consulting activities of the internal auditors do not interfere or
conflict with its objectivity.
Meetings of the Audit Committee
- -------------------------------
The Audit Committee shall meet on at least a quarterly basis or more frequently
as circumstances dictate.
Reports of the Audit Committee
- ------------------------------
The Audit Committee shall prepare a report suitable for appropriate disclosure
as may be required in the Corporation's annual meeting proxy statement
concerning the Audit Committee's review of the Corporation's financial
statements and disclosing whether the Audit Committee recommended to the Board
of Directors that the audited financial statements be included in the
Corporation's annual report and addressing such other issues as may be required
by the Securities Exchange Act of 1934, as amended, the Regulations of the
Securities Exchange Commission promulgated pursuant thereto, and all other
applicable laws and regulations.
In addition, the Audit Committee shall report to the Board of Directors, which
will make appropriate disclosures regarding whether each member of the Audit
Committee is an independent director and whether each member is financially
literate, and whether any members are "financial experts" as defined by the
Securities Exchange Act of 1934, as amended.
Annual Review and Appropriate Disclosure by the Board of Directors of the
- --------------------------------------------------------------------------------
Charter of the Audit Committee
- ------------------------------
The Audit Committee shall review the charter of the Audit Committee at least
annually and shall recommend to the Board of Directors appropriate revisions
thereto and shall make disclosure of any adopted changes to the Charter in
accordance with applicable law.
Whistle-blower Procedures
- -------------------------
The Audit Committee shall establish procedures for the receipt, retention, and
treatment of complaints received by the Corporation regarding accounting,
internal accounting controls, or auditing matters; and the confidential
anonymous submission by employees of the Corporation of concerns regarding
questionable accounting or auditing matters.
A-3
Pre-Approval Procedures
- -----------------------
All auditing services and non-audit services, other than those which are subject
to the de minimus exception of the applicable rules of the Securities and
Exchange Commission, which an auditor provides to the Corporation, shall be
authorized and pre-approved in advance by the Audit Committee pursuant to the
Committee's Pre-Approval Policy. The Audit Committee must document all non-audit
services performed by the auditor that the Audit Committee pre-approves. The
Audit Committee may delegate to one or more of its members the authority to
grant such required pre-approvals. The decisions of any member to whom authority
is delegated to pre-approve an activity requiring pre-approval shall be
presented to the full Audit Committee at each of its meetings. The Audit
Committee, on an annual basis, shall review and approve the Pre-Approval Policy,
a copy of which is attached hereto as Appendix A. ----------
A-4
Appendix A
First Litchfield Financial Corporation Audit/Compliance and Security
Committee Procedures for Addressing Concerns or Complaints
Relating to Accounting and Auditing Matters
First Litchfield Financial Corporation (the "Corporation"), as a public
company, is committed to conducting its affairs in a responsible way and to
complying with the requirements of the Securities and Exchange Commission. The
Audit/Compliance and Security Committee (hereinafter, the "Audit Committee") of
the Corporation has adopted these Procedures for handling concerns and
complaints relating to the accounting and auditing of the Corporation (commonly
referred to as "whistle-blowing"). Such Procedures are designed to assist in
reporting and investigating and, as may be appropriate, acting upon a complaint
or concern by any person within or outside the Corporation about any accounting
or auditing matters.
During the normal course of business, concerns or complaints should be
directed to the employee's direct supervisor. If any employee is not satisfied
with the results of that process or is dissatisfied with the progress being made
with regard to such matters or wishes to use an alternative channel for such
communication, concerns or complaints raised in connection with the
Corporation's accounting and auditing procedures may be mailed, e-mailed or
reported by telephone to any of the designated Contacts at addresses and
telephone numbers set forth below. Anonymous written or telephonic complaints of
employees will be accepted. Persons submitting concerns or complaints are
encouraged to provide as much specific information as possible, including names,
dates, places and events that took place, the person's perception of why the
incident(s) may warrant investigation and what actions may be warranted. Contact
information is set forth on Schedule A to these Procedures.
----------
As the law provides, no detrimental action of any kind will be taken
against a person making a complaint pursuant to these Procedures provided that
the person reasonably believes that applicable accounting or auditing standards
have been violated or that the Corporation has engaged in a questionable
practice with respect to such matters. The Contact will inform the full Audit
Committee of any concerns or complaints submitted to the Corporation or the
Audit Committee.
In cases in which a concern has been expressed or complaint has been made,
the Audit Committee will acknowledge receipt of same if the person(s) submitting
the concern or complaint has provided his or her name, and will keep record of
such concern or complaint and the action taken with respect thereto in
accordance with the Corporation's record-keeping procedures. All concerns or
complaints submitted, including those submitted anonymously, will be given a
number so that the Audit Committee may log and track the investigation of same.
The Chairman of the Audit Committee or such other designee of the Audit
Committee will be responsible for logging in such matters and forwarding
information regarding same to the Audit Committee members.
A-5
The Audit Committee will investigate concerns and complaints addressed to
it regarding accounting or auditing practices of the Corporation. In instances
in which it deems to be appropriate, the Audit Committee may retain outside
advisors or counsel with respect to any complaint or concern addressed to it.
The identity of any person making a complaint or expressing concerns with
respect to any accounting or auditing matters will be kept confidential to the
extent it is consistent with the need to conduct an adequate investigation.
Provided that the complaint has been submitted lawfully and in good faith, the
submission of such a complaint may not be a basis for retaliatory action.
These Procedures will be provided to all officers, directors and employees
of the Corporation and will be provided upon request at the office of the
Corporation.
APPROVED: April 17, 2003
EMPLOYEE ACCEPTANCE:
"I have read and understand the procedures outlined above and will
abide by these rules during my tenure at The First National Bank of
Litchfield"
---------------------------------- --------------------------------
Employee Name (printed) Employee Signature
DATE
---------------------
A-6
SCHEDULE A
----------
Contact Information:
Stephen M. Riley II
Auditor and Compliance Officer
First Litchfield Financial Corporation
13 North Street
Litchfield, CT 06759
Telephone: (860) 567-6469
Email: sriley@fnbl.com
---------------
Patricia D. Werner
First Litchfield Financial Corporation
Audit/Compliance & Security Committee
13 North Street P.O. Box 578
Litchfield, CT 06759
Telephone: (860) 567-8752
A-7
PROXY FOR 2005 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 5, 2005 at the Annual Meeting of its
shareholders to be held at the Torrington Country Club, 250 Torrington Road
(Route 4), Goshen, Connecticut, 06756 on Wednesday, May 18, 2005 at 3:00 p.m. or
at any adjournment thereof with all the powers the undersigned would possess if
personally present, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS (1) & (2)
(1) ELECTION OF DIRECTORS:
To re-elect the following two (2) 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:
Kathleen A. Kelley and H. Ray Underwood).
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY [ ] FOR ALL NOMINEES
TO VOTE FOR ALL NOMINEES EXCEPT AS WRITTEN
BELOW:
------------------
------------------
(2) APPOINTMENT OF AUDITORS:
To ratify the appointment of McGladrey & Pullen, LLP as the Company's
independent auditors for the year ending December 31, 2005.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) 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.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION INDICATED. IF NO
SPECIFICATION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1; "FOR" THE RATIFICATION OF THE COMPANY'S
APPOINTMENT OF INDEPENDENT AUDITORS (PROPOSAL 2); AND IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO ANY OTHER MATTERS.
DATE: PLEASE SIGN, DATE AND RETURN
----------------------
(L.S.)
--------------------------------
(L.S.)
--------------------------------
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 SIGN AND RETURN