[LETTERHEAD OF GRANITE STATE BANKSHARES]
122 West Street
Post Office Box 627
Keene, New Hampshire 03431-0627
Telephone: 603/352-1600
March 18, 1996
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders (the "Annual Meeting") of Granite State Bankshares, Inc.
("Granite State" or the "Company"), to be held on April 9, 1996 at 10:00
a.m., at the Keene Country Club, Keene, New Hampshire.
Matters to be considered at the Annual Meeting include the election
of two directors, and the ratification of the appointment of independent
auditors for the fiscal year ending December 31, 1996. During this
meeting, we will also report on the operations of Granite State. Directors
and officers of Granite State, as well as representatives of Grant
Thornton LLP, the Company's independent auditors, will be present at the
Annual Meeting to respond to any questions that our stockholders may have.
For the reasons set forth in the proxy statement, the Board unanimously
recommends a vote "FOR" each of the nominees listed under Proposal 1 and
"FOR" Proposal 2.
Detailed information concerning the activities and operating
performance of Granite State during the year ended December 31, 1995, is
contained in our annual report, which is enclosed.
I hope you will be able to attend this meeting in person. Whether or
not you expect to attend, I urge you to sign, date and return the enclosed
proxy card so that your shares will be represented.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ CHARLES W. SMITH
Charles W. Smith
GRANITE STATE BANKSHARES, INC.
122 WEST STREET
KEENE, NEW HAMPSHIRE 03431
(603) 352-1600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 9, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Granite State Bankshares, Inc. will be held on April 9, 1996, at 10:00
a.m., at the Keene Country Club, West Hill Road, Keene, New Hampshire.
A proxy statement and proxy card for this Annual Meeting are
enclosed herewith. The Annual Meeting is for the purpose of considering
and voting upon the following matters:
1. The election of two directors for terms of three years each or
until their successors are elected and qualified;
2. The ratification of Grant Thornton LLP as independent auditors
of the Company for the fiscal year ending December 31, 1996; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of
any such other business.
Pursuant to the Bylaws, the Board of Directors has fixed March
11,1996, as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting. Only holders of Common
Stock of the Company as of the close of business on March 11, 1996 will be
entitled to vote at the Annual Meeting or any adjournments thereof. In the
event there are not sufficient votes for a quorum or to approve or ratify
any of the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further solicitation of
proxies by the Company.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL
MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY
THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY
MAY BE REVOKED BY FILING WITH THE SECRETARY OF GRANITE STATE A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER
PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE
PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ CHARLES B. PAQUETTE
Charles B. Paquette
Secretary
Keene, New Hampshire
March 18, 1996
GRANITE STATE BANKSHARES, INC.
122 WEST STREET
KEENE, NEW HAMPSHIRE 03431
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
GRANITE STATE BANKSHARES, INC.
APRIL 9, 1996
SOLICITATION AND VOTING OF PROXIES
This proxy statement is being furnished to stockholders of Granite
State Bankshares, Inc. ("Granite State" or the "Company"), in connection
with the solicitation by the Board of Directors of the Company ("Board of
Directors" or the "Board") of proxies to be used at the annual meeting of
stockholders (the "Annual Meeting") to be held on April 9, 1996, at the
Keene Country Club, Keene, New Hampshire, at 10:00 a.m., and at any
adjournments thereof.
This proxy statement and the accompanying proxy card are initially
being mailed to recordholders on or about March 18, 1996.
Regardless of the number of shares of common stock owned, it is
important that recordholders of a majority of the shares be represented by
proxy or in person at the Annual Meeting. Stockholders are requested to
vote by completing the enclosed proxy card and returning it signed and
dated in the enclosed postage-paid envelope. Stockholders are urged to
indicate their vote in the spaces provided on the proxy card. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS OF GRANITE STATE WILL BE VOTED IN
ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE
INDICATED, SIGNED PROXIES WILL BE VOTED FOR THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT, AND FOR THE
RATIFICATION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to
vote the shares in accordance with their best judgment on such other
business, if any, that may properly come before the Annual Meeting or any
adjournments thereof, including any motion to adjourn the Annual Meeting
in order to solicit additional proxies or otherwise.
The cost of solicitation of proxies in the form enclosed herewith
will be borne by Granite State. In addition to the solicitation of proxies
by mail, Registrar and Transfer Company, a proxy solicitation firm, will
assist the Company in soliciting proxies for the Annual Meeting and will
be paid a fee estimated to be $2,000, plus out-of-pocket expenses. Proxies
may also be solicited personally or by telephone or telegraph by
directors, officers and regular employees of the Company or Granite Bank,
a subsidiary of the Company (the "Bank"), without additional compensation
therefor. Granite State will also request persons, firms and corporations
holding shares in their names, or in the name of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
REVOCATION OF PROXY
A proxy may be revoked at any time prior to its exercise by the
filing of a written notice of revocation with the Secretary of the
Company, by delivering to the Company a duly executed proxy bearing a
later date, or by attending the Annual Meeting and voting in person.
However, if you are a stockholder whose shares are not registered in your
own name, you will need additional documentation from your recordholder to
vote personally at the Annual Meeting.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of Granite State, par value $1.00 per share (the
"Common Stock"), with each share entitling its owner to one vote on all
matters to be voted on at the Annual Meeting.
The close of business on March 11, 1996 has been fixed by the Board
of Directors as the record date (the "Record Date") for the determination
of stockholders entitled to notice of and to vote at this Annual Meeting
and any adjournments thereof. On the Record Date, Granite State had
2,022,781 shares of Common Stock outstanding.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. In the event there
are not sufficient votes for a quorum or to approve or to ratify any
proposal at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by
the Board of Directors enables a stockholder to vote for the election of
the nominees proposed by the Board, or to withhold authority to vote for
one or more of the nominees being proposed. Under New Hampshire law and
the Company's Certificate of Incorporation and Bylaws, directors are
elected by a plurality of shares voted, without regard to either (i)
broker non-votes or (ii) proxies as to which authority to vote for one or
more of the nominees being proposed is withheld.
Concerning all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, a stockholder may: (i)
vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" with
respect to the item. Unless otherwise required by law, all other matters
shall be determined by a majority of the votes entitled to be voted.
Hence, shares as to which the "ABSTAIN" box has been selected on the proxy
card and broker non-votes will have the effect of a negative vote as to
that matter.
Proxies solicited hereby will be returned to the proxy solicitors or
the Company's transfer agent, and will be tabulated by inspectors of
election designated by the Board. After the final adjournment of the
Annual Meeting, the proxies will be returned to the Board for safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to those
persons believed by management to be beneficial owners of more than 5% of
the Company's outstanding shares of Common Stock on the Record Date as
disclosed in certain reports regarding such ownership filed with the
Company and with the Securities and Exchange Commission ("SEC"), in
accordance with Sections 13(d) or 13(g) of the Securities Exchange Act of
1934, as amended ("Exchange Act") by such persons or groups. Other than
those persons listed below, the Company is not aware of any person or
group that owns more than 5% of the Company's Common Stock as of the
Record Date.
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -----------------------------------------------------------------------------------
<S> <S> <C> <C>
Common Stock Granite State Bankshares, Inc. 183,414<F1> 9.07%
Employee Stock Ownership
Plan and Trust ("ESOP")
122 West Street
Keene, New Hampshire 03431
Common Stock Charles W. Smith 129,336<F2> 6.21%
P.O. Box 587
Spofford, New Hampshire 03462
Common Stock Charlton MacVeagh, Jr. 110,056 5.44%
Cloudlands
Marlboro, New Hampshire 03455
- -------------------
<FN>
<F1> Messrs. Cole, Smedley and Smith serve as the administrative committee
of the ESOP (the "ESOP Committee"). In addition, Future Planning
Associates, Inc., an unrelated corporate trustee has been appointed
ESOP Trustee ("ESOP Trustee"). Includes 183,414 shares held in the
ESOP Trust which have been allocated to participants, which will be
voted by the ESOP Trustee as directed by such participants.
<F2> Includes 60,400 shares underlying options which Mr. Smith has the
immediate right to acquire and 29,486 shares held in the ESOP Trust
over which Mr. Smith has voting rights.
</FN>
</TABLE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 -- ELECTION OF DIRECTORS
Pursuant to its Bylaws, Granite State currently has eight (8)
directors. The Bylaws previously provided for nine (9) directors; however,
effective May 8, 1995, the Bylaws were amended to reduce the number of
directors to eight (8). Directors of the Company are elected for staggered
terms of three years each, with a term of office of only one of the three
classes of directors expiring each year. Directors serve until their
successors are elected and qualified. The Bylaws of Granite State provide
that no person may serve as director after attaining 70 years of age,
provided that if a person had attained age 70 as of June 13, 1994, such
person may serve as director until the earlier of the expiration of their
remaining term or the attainment of age 75.
All nominees named are presently directors of the Company. No person
being nominated as a director is being proposed for election pursuant to
any agreement or understanding between any person and Granite State.
In the event that such nominee is unable to serve or declines to
serve for any reason, it is intended that proxies will be voted for the
election of the balance of those nominees named and for such other persons
as may be designated by the present Board of Directors. The Board of
Directors has no reason to believe that any of the persons named will be
unable or unwilling to serve. Unless authority to vote for the directors
is withheld, it is intended that the shares represented by the enclosed
proxy card if executed and returned will be voted FOR the election of all
nominees proposed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of
nominees, continuing directors and "named executive officers", as defined
below, their ages, the year in which each became a director and the year
in which their terms (or in the case of nominees, their proposed terms) as
director of the Company expire and the amount of Common Stock and the
percent thereof beneficially owned by each and all directors and executive
officers as a group as of the Record Date.
<TABLE>
<CAPTION>
EXPIRATION PERCENT
DIRECTOR OF TERM AS AMOUNT AND NATURE OF OF
NAME AGE SINCE DIRECTOR BENEFICIAL OWNERSHIP<F1> CLASS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOMINEES
Jane B. Reynolds 66 1986 1999 10,805<F3> .53%
William Smedley, V 64 1986 1999 20,250 1.00%
CONTINUING DIRECTORS
Stacey W. Cole 74 1986 1997 6,300 .31%
Philip M. Hamblet 50 1990 1997 27,847 1.38%
James L. Koontz 61 1994 1997 2,760 .14%
Charles W. Smith 53 1986 1998 129,336<F2><F4> 6.21%
C. Robertson Trowbridge 64 1988 1998 17,563 .87%
James C. Wirths III 59 1994 1998 14,500 .72%
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
William C. Henson 40 -- -- 37,125<F5><F6> 1.81%
Charles B. Paquette 43 -- -- 62,718<F5><F6><F7> 3.05%
William G. Pike 44 -- -- 25,069<F5><F6> 1.23%
William D. Elliott 48 -- -- 39,012<F5><F6> 1.92%
All directors and executive officers
as a group (15 persons) 421,467<F8><F9><F10> 19.45%
- -------------------
<FN>
<F1> Includes all shares of stock owned by each director or named
executive officer, their spouse, or as custodian or trustee for
minor children, over which shares such individuals effectively
exercise sole or shared voting or investment power.
<F2> Includes 29,486 shares accrued under the ESOP Trust for the benefit
of Mr. Smith and over which Mr. Smith has current voting rights.
<F3> Includes 4,800 shares as to which Ms. Reynolds is co-trustee and
thereby shares voting and dispositive power.
<F4> Includes 60,400 shares subject to options granted to Mr. Smith
pursuant to the Granite State Bankshares, Inc. Stock Option Plan
(the "Stock Option Plan"), which became exercisable effective
April 24, 1993.
<F5> Includes 13,120 shares, 14,040 shares, 3,032 shares and 3,766 shares
accrued under the ESOP Trust for the benefit of Messrs. Henson,
Paquette, Pike and Elliott, respectively, and over which they have
current voting rights.
<F6> Includes 24,000 shares, 31,200 shares, 14,000 shares and 14,000
shares subject to options granted to Messrs. Henson, Paquette, Pike
and Elliott, respectively, pursuant to the Stock Option Plan which
became exercisable effective April 24, 1993.
<F7> Includes 2,925 shares as to which Mr. Paquette is trustee and
thereby has voting and dispositive power.
<F8> Excludes shares held by the ESOP that are allocated to non-executive
officers and employees.
<F9> Includes shares owned by three persons who are members of the Board
of Directors of Granite Bank, but not of the Company.
<F10> Includes 143,600 shares subject to options granted to executive
officers, pursuant to the Stock Option Plan, which options became
exercisable effective April 24, 1993, and 63,444 shares accrued
under the ESOP Trust for the benefit of the executive officers and
over which the executive officers have current voting rights.
</FN>
</TABLE>
DIRECTORS' PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE FOR FIVE YEARS
Stacey W. Cole is Chairman of the Board of Granite Bank. Mr. Cole is
the retired Executive Director of the New Hampshire Petroleum Council, a
division of the American Petroleum Institute Trade Association.
Philip M. Hamblet is President of Fred H. Hamblet, Inc. an
electrical contracting firm.
Jane B. Reynolds has been active in community affairs, serving as a
trustee of Cheshire Hospital.
William Smedley, V, is the Vice President of Human Resources at
National Grange Mutual Insurance Co., Keene, New Hampshire.
Charles W. Smith is Chairman of the Board and Chief Executive
Officer of Granite State. Mr. Smith has been the President and Chief
Executive Officer of Granite Bank since October 1982.
C. Robertson Trowbridge is Chairman of the Board of Yankee
Publishing, Inc., a publishing firm.
James L. Koontz is President and Chief Executive Officer of
Kingsbury Corporation, a manufacturer of factory automation and machine
tools.
James C. Wirths, III is Vice President of Finance and Treasurer of
Tilcon-Arthur Whitcomb, Inc., a building supplier of ready-mix concrete.
COMMITTEES OF THE BOARD OF GRANITE STATE
Granite State's Board of Directors has appointed an Executive
Committee consisting of Messrs. Smith, Cole and Koontz and Mrs. Reynolds,
an Audit Committee composed of Messrs. Wirths, Hamblet and Koontz and a
Personnel Committee which serves as the Company's Compensation Committee
consisting of Messrs. Smedley, Smith, Cole and Koontz and Mrs. Reynolds.
The Board of Directors of Granite State does not have a standing
Nomination Committee. The Executive Committee met separately 4 times from
the Board of Directors during 1995, the Audit Committee met 2 times and
the Personnel Committee met 3 times. The Executive Committee is vested
with the authority of the Granite State Board in most matters between
meetings of the Granite State Board. The Audit Committee reviews audit
procedures and internal controls at the Company and the report and
performance of the Company's independent auditors. The Personnel Committee
determines compensation for the officers and other employees of the
Company, as well as reviewing the employee benefit plans of the Company.
The Company's Board of Directors met 5 times, and Granite Bank's Board of
Directors met 13 times in 1995. All directors were present for at least
75% of the meetings of the Board and the Committees of which they were a
member.
DIRECTORS' COMPENSATION
Directors' Fees. The directors of Granite State are paid $700 for
each Board of Directors meeting attended and $150 for each committee
meeting attended. The directors of Granite State who are also directors of
Granite Bank, are paid $700 for attendance at board meetings and $150 for
each committee meeting attended of the subsidiary. Additionally, the
Chairman of the Board of Directors of the Bank is also paid a $1,500
annual retainer. The directors may elect to defer their compensation.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows, for the years
ending December 31, 1995, 1994 and 1993, the cash compensation paid by
Granite State or its subsidiary, as well as certain other forms of
compensation paid or accrued for those years, to the executive officers of
the Company who each received total salary and bonus in excess of $100,000
in 1995 ("Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ ------------
AWARDS
------------
SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)<F4> (#)<F2> COMPENSATION<F3>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S> <C>
Charles W. Smith 1995 $235,800<F1> $79,380 $ -- -- $29,049
Chairman of the Board of Granite State; 1994 219,425<F1> 63,000 -- -- 17,609
President and Chief Executive Officer of 1993 206,800<F1> 20,000 -- -- 16,245
Granite State and Granite Bank
William C. Henson 1995 113,558 28,390 -- -- 18,225
Executive Vice President of the Company and 1994 108,150 21,630 -- -- 11,432
President, Seacoast Region of the Bank 1993 103,000 7,210 -- -- 7,961
Charles B. Paquette 1995 113,558 28,390 -- -- 18,815
Executive Vice President, Chief Operating 1994 108,150 21,630 -- -- 11,694
Officer and Secretary of the Company and 1993 103,000 7,210 -- -- 8,037
the Bank
William G. Pike 1995 113,558 28,390 -- -- 11,888
Executive Vice President and Chief Financial 1994 108,150 21,630 -- -- 8,679
Officer of the Company and the Bank 1993 103,000 7,210 -- -- 7,249
William D. Elliott 1995 113,558 28,390 -- -- 12,380
Executive Vice President and Senior Lending 1994 108,150 21,630 -- -- 8,873
Officer of the Bank 1993 98,000 6,860 -- -- 6,973
- -------------------
<FN>
<F1> Includes Board of Directors' fees.
<F2> The Company maintains the Stock Option Plan for the benefit of
officers and employees. No options were granted under the Stock Option
Plan during the years ending December 31, 1995, 1994 and 1993.
<F3> Reflects amounts allocated to officers' accounts pursuant to the
Employee Stock Ownership Plan ("ESOP"). Amounts reflect the number of
shares allocated for the respective year, multiplied by the year-end
price per share of Common Stock, which were $16.375, $11.375 and $9.50
at December 31, 1995, 1994 and 1993, respectively.
<F4> For the periods presented, there were no (a) perquisites over the
lesser of $50,000 or 10% of the individual's total salary and bonus for
each year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; (d) payments of reimbursements
for taxes or (e) preferential discounts on stock.
</FN>
</TABLE>
Employment Agreements. Granite State and Granite Bank have entered
into employment contracts with Messrs. Smith, Paquette and Henson. Mr.
Smith receives a minimum base salary of $240,408 under this 5 year
contract subject to minimum annual increases of 10%. The contract
automatically renews each year, so that the remaining term is five years
unless notice of nonrenewal is provided by the Board in which event the
contract expires five years after such notice. In the event of a change in
control as defined in the contract of Granite State or Granite Bank,
resulting in a termination of employment, other than for cause, or upon
certain other events of termination of employment other than for cause,
Mr. Smith would receive a severance payment equal to the greater of the
payments remaining under the contract or three times his average annual
salary for the five immediately preceding years, plus an accelerated
retirement benefit.
Messrs. Paquette and Henson have entered into contracts for three
year terms providing that in the event of a change in control of 20% of
any class of equity stock resulting in a termination of employment or upon
certain other events of termination of employment, other than for cause,
each would receive a severance payment equal to three times their
respective average annual salaries (over the last 5 years) plus
accelerated retirement benefits and continued health insurance. These
contracts automatically renew each year, so that the remaining term is
three years, unless notice of nonrenewal is provided by the Board, in
which event the contracts expire three years after such notice.
Under all of the contracts, in the event of a change in control of
Granite State or Granite Bank, previously granted but unexercised stock
options will become fully vested and accelerated retirement benefits and
insurance coverage will be provided and continued. The officer will be
reimbursed for all legal expenses incurred in enforcing the employment
contract. Such payments will be made and such rights will vest if the
officer terminates his employment following a change in control, either
involuntarily or voluntarily.
Under current tax law, certain of the payments that may be made
under these agreements in the event of a change in control may not be
deductible by Granite State.
Stock Option Plan. The Board of Directors of Granite State adopted
and the stockholders approved the Granite State Bankshares, Inc. Stock
Option Plan (the "Stock Option Plan") to promote growth and profitability
of the Company. There were no stock options granted under the Stock Option
Plan during 1995.
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding stock options
held by the named executive officers as of December 31,1995. Also reported
are the values for "in-the-money" options which represent the spread
between the exercise price of such options and the year-end price of
Common Stock. No options were exercised in fiscal 1995.
FISCAL YEAR OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END(#)<F1> FISCAL YEAR-END($)<F1><F2>
--------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles W. Smith 60,400 0 $687,050 $0
William C. Henson 31,200 0 354,900 0
Charles B. Paquette 31,200 0 354,900 0
William G. Pike 14,000 0 159,250 0
William D. Elliott 14,000 0 159,250 0
- -------------------
<FN>
<F1> The shares reported hereunder became exercisable on April 24, 1993,
and could be acquired by the named executive as of December 31, 1995.
<F2> Based on the difference between the market price per share of the
Common Stock on December 31, 1995, which was $16.375 and the exercise
price of $5.00 per share.
</FN>
</TABLE>
Defined Benefit Plan. Granite State provides a defined benefit
retirement plan for all eligible employees of Granite State and its
subsidiary age 21 or older who have completed at least one year of
credited service. Benefits earned become 100% vested after 5 years of
vesting service after the attainment of age 18.
Supplemental Executive Retirement Plan. Effective in January 1993,
the Bank adopted the Supplemental Executives' Retirement Plan for Granite
Bank (the "SERP"). The SERP is intended to provide certain executives, who
are approved by the Board as participants in the SERP and their
beneficiaries, with the amount of employer-provided benefits under the
Defined Benefit Plan and the Employee Stock Ownership Plan ("ESOP") that
the Defined Benefit Plan and the ESOP are not permitted to provide because
of the limitations on compensation, benefits, and allocations imposed by
Section 415 and 401(a)(17) of the Internal Revenue Code, and, with respect
to the Defined Benefit Plan, the reduction of benefits payable under such
plan in the event of retirement prior to attainment of Normal Retirement
Age, as defined in such plan. Currently, Mr. Smith is the only designated
participant in the SERP. For fiscal 1995, 1994 and 1993, the Bank
contributed $80,769, $65,685 and $49,830, respectively, to the SERP Trust.
The following table indicates the estimated annual benefit payable
to employees under the Defined Benefit Plan and SERP by the salary and
years of service classifications indicated, assuming retirement at age 65,
during 1995 and a straight line annuity form of payment. As of December
31, 1995, Messrs. Smith, Henson, Paquette, Pike and Elliott, had 22 years
and 10 months, 15 years, 21 years and 2 months, 4 years and 1 month, and 5
years and 9 months, respectively, of credited service for purposes of the
defined benefit retirement plan. Messrs. Smith, Henson and Paquette will
have more than the maximum credited service of 30 years at the normal
retirement age. Messrs. Pike and Elliott will have 24 years and 9 months
and 22 years and 6 months of credited service, respectively, at the normal
retirement age.
<TABLE>
<CAPTION>
BENEFIT BASED UPON YEARS OF CREDITED SERVICE AT AGE 65
AVERAGE ------------------------------------------------------
EARNINGS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 40,000 $ 5,696 $ 8,544 $11,392 $14,240 $17,088
60,000 9,512 14,268 19,024 23,780 28,536
80,000 13,512 20,268 27,024 33,780 40,536
100,000 17,512 26,268 35,024 43,780 52,536
120,000 21,512 32,268 43,024 53,780 64,536
140,000 25,512 38,268 51,024 63,780 76,536
160,000 27,512 41,268 55,024 68,780 82,536
180,000 27,512 41,268 55,024 68,780 82,536
200,000 27,512 41,268 55,024 68,780 82,536
220,000 27,512 41,268 55,024 68,780 82,536
235,840 27,512 41,268 55,024 68,780 82,536
</TABLE>
Under the Defined Benefit Plan, the maximum benefit payable per
year, in 1995, is $120,000. The compensation utilized in the formula to
calculate pension benefits consists of the salary reported in the "Summary
Compensation Table." The benefit amounts shown in the preceding table are
subject to deductions for Social Security benefits or other offset
amounts.
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS
In the ordinary course of business, Granite Bank makes loans to
Granite State's and the Bank's directors, officers and parties related to
them. Such transactions are on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and do not involve more than
normal risk of collectibility or present other unfavorable features.
SECTION 16 COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the National
Association of Securities Dealers, Inc. Executive officers, directors and
greater than 10-percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons, the Company
believes that, since January 1, 1995, all Section 16(a) filing
requirements applicable to its executive officers, directors and greater
than 10-percent beneficial owners were satisfied except that: 1) Gordon
Billipp, a member of the Board of Directors of Granite Bank, but not of
the Company, failed to report one transaction involving a gift of shares,
which was subsequently reported, and 2) William D. Elliott, Executive Vice
President and Senior Lending Officer of Granite Bank, but not of the
Company, failed to report two transactions on one Form 4, which were
subsequently reported.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended
December 31, 1995 were Grant Thornton LLP. The Company's Board of
Directors has reappointed Grant Thornton LLP to continue as independent
auditors for the Bank and the Company for the year ending December 31,1996
subject to ratification of such appointment by the stockholders.
Representatives of Grant Thornton LLP will be present at the
Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions
from stockholders present at the Meeting. UNLESS MARKED TO THE CONTRARY,
THE SHARES REPRESENTED BY THE ENCLOSED PROXY WILL BE VOTED FOR
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement and proxy
relating to the Annual Meeting of Stockholders to be held in 1997, a
stockholder proposal must be received by the Secretary of the Company at
the address set forth on the first page of this Proxy Statement, not later
than November 18,1996. Any such proposal will be subject to 17 C.F.R.
240.14a-8 of the Rules and Regulations under the Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The
stockholder must give written advance notice to the Secretary of the
Company not less than one hundred twenty (120) days before the date on
which the Company's proxy statement was released to stockholders in
connection with the previous annual meeting. The advance notice by a
stockholder must include the stockholder's name and address, as it appears
on the Company's record of stockholders, a brief description of the
proposed business, the reason for conducting such business at the Annual
Meeting, the class and the number of shares of the Company's capital stock
that are beneficially owned by such stockholder and any material interest
of such stockholder in the proposed business. In the case of nominations
to the Board, certain information regarding the nominee must be provided.
Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to the Annual Meeting
any stockholder proposal which does not meet all of the requirements for
inclusion established by the Securities and Exchange Commission in effect
at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented
for consideration at the Annual Meeting other than as stated in the Notice
of Annual Meeting of Stockholders. If, however, other matters are properly
brought before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote the shares represented thereby on
such matters in accordance with their best judgment.
Whether or not you intend to be present at this Annual Meeting, you
are urged to return your proxy promptly. If you are present at this Annual
Meeting and wish to vote your shares in person, your proxy may be revoked.
A COPY OF THE FORM 10-KSB (WITHOUT EXHIBITS) FOR THE YEAR ENDED
DECEMBER 31, 1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS OF RECORD UPON WRITTEN
REQUEST TO GRANITE STATE BANKSHARES, INC., MR. WILLIAM G. PIKE, EXECUTIVE
VICE PRESIDENT, 122 WEST STREET, KEENE, NEW HAMPSHIRE 03431.
By Order of the Board of Directors
/s/ CHARLES B. PAQUETTE
Charles B. Paquette, Secretary
Keene, New Hampshire
March 18, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN
AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
[PROXY CARD]
REVOCABLE PROXY
GRANITE STATE BANKSHARES
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 9, 1996
The undersigned hereby appoints the Proxy Committee of the Board of
Directors, with full power of substitution to act as attorneys and proxies
for the undersigned to vote all shares of Common Stock of the Company
which the undersigned is entitled to vote at an Annual Meeting of
Stockholders ("Meeting") to be held at the Keene Country Club, Keene, New
Hampshire at 10:00 a.m. (local time) on April 9, 1996. The Proxy Committee
of the Board of Directors is authorized to cast all votes to which the
undersigned is entitled as follows:
FOR ALL
FOR WITHHOLD EXCEPT
1. The election as directors of all nominees [ ] [ ] [ ]
listed (except as marked to the contrary
below):
Jane B. Reynolds William Smedley, V
INSTRUCTION: To withhold your vote for any nominee(s), mark "For All
Except" and write that nominee's name on the line below.
___________________________________________________________________________
FOR AGAINST ABSTAIN
2. The ratification of the appointment of [ ] [ ] [ ]
Grant Thornton LLP as auditors for the
fiscal year ending December 31, 1996.
Check box if you plan to attend Meeting -------------------> [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
LISTED UNDER PROPOSAL 1 AND "FOR" PROPOSAL 2.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED
ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, INCLUDING
WITHOUT LIMITATION A MOTION TO ADJOURN OR POSTPONE THE ANNUAL MEETING TO
ANOTHER TIME AND/OR PLACE FOR THE PURPOSE OF SOLICITING ADDITIONAL PROXIES
OR OTHERWISE, THIS PROXY WILL BE VOTED BY THE PROXY COMMITTEE OF THE BOARD
OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
-----------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
--------------------------------------------------------------
| |
| |
| |
---Stockholder sign above-----Co-holder (if any) sign above---
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
GRANITE STATE BANKSHARES
Should the above signed be present and elect to vote at the Meeting
or at any adjournment thereof and after notification to the Secretary of
the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect. This proxy may also be
revoked by sending written notice to the Secretary of the Company at the
address set forth on the Notice of Annual Meeting of Stockholders, or by
the filing of a later proxy card prior to a vote being taken on a
particular proposal at the Meeting.
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of the Meeting and a proxy statement
dated March 18, 1996 and the 1995 Annual Report to Stockholders.
Please sign exactly as your name appears on this card. When signing
as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
