GRANITE
STATE
BANKSHARES
122 West Street
Post Office Box 627
Keene, New Hampshire 03431-0627
Telephone:603/352-1600
March 24, 1997
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 15, 1997 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, 1997. 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, 1996, 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 15, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Granite State Bankshares, Inc. will be held on April 15, 1997, 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, 1997; 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 7,1997,
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 7, 1997 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 OF
RECORD 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 24, 1997
GRANITE STATE BANKSHARES, INC.
122 WEST STREET
KEENE, NEW HAMPSHIRE 03431
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
GRANITE STATE BANKSHARES, INC.
APRIL 15, 1997
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 15, 1997, 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 24, 1997.
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, 1997.
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 7, 1997 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 2,019,016
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 Company 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. 197,914<F1> 9.80%
Employee Stock Ownership
Plan and Trust ("ESOP")
122 West Street
Keene, New Hampshire 03431
Common Stock Charles W. Smith 132,561<F2> 6.52%
P.O.Box 587
Spofford, New Hampshire 03462
Common Stock Charlton MacVeagh, Jr. 110,056 5.45%
Cloudlands
Marlboro, New Hampshire 03455
- --------------------
<FN>
<F1> Messrs. Koontz, 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"). All shares held in the
ESOP Trust have been allocated to participants, and will be voted by
the ESOP Trustee as directed by such participants.
<F2> Includes 13,400 shares underlying options which Mr. Smith has the
immediate right to acquire and 31,527 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
In accordance with its Bylaws, Granite State currently has seven (7)
directors. 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.
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 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.
<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
Philip M. Hamblet 51 1990 2000 29,540 1.46%
James L. Koontz 62 1994 2000 3,720 .18%
CONTINUING DIRECTORS
Charles W. Smith 54 1986 1998 132,561<F2><F4> 6.52%
C. Robertson Trowbridge 65 1988 1998 17,808 .88%
James C. Wirths III 60 1994 1998 15,400 .76%
Jane B. Reynolds 67 1986 1999 11,705<F3> .58%
William Smedley, V 65 1986 1999 21,150 1.05%
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
William C. Henson 41 -- -- 38,504<F5><F6> 1.89%
Charles B. Paquette 44 -- -- 64,334<F5><F6><F7> 3.16%
William G. Pike 45 -- -- 26,775<F5> 1.33%
William D. Elliott 49 -- -- 40,839<F5><F6> 2.02%
All directors and executive officers
as a group (13 persons) 409,302<F8><F9><F10> 19.72%
- --------------------
<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 31,527 shares held by 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 13,400 shares subject to options granted to Mr. Smith
pursuant to the Granite State Bankshares, Inc. Stock Option Plan (the
"Stock Option Plan"), which are currently exercisable.
<F5> Includes 14,499 shares, 15,615 shares, 4,068 shares and 5,013 shares
held by the ESOP Trust for the benefit of Messrs. Henson, Paquette,
Pike and Elliott, respectively, and over which they have current
voting rights.
<F6> Includes 17,205 shares, 19,055 shares and 7,000 shares subject to
options granted to Messrs. Henson, Paquette and Elliott,
respectively, pursuant to the Stock Option Plan which are currently
exercisable.
<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 two persons who are members of the Board of
Directors of Granite Bank, but not of the Company.
<F10> Includes 56,660 shares subject to options granted to executive
officers, pursuant to the Stock Option Plan, which options are
currently exercisable, and 70,722 shares allocated 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
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 retired and formerly was 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 Chairman of the Board of Granite Bank. Mr. Koontz
is President and Chief Executive Officer of Kingsbury Corporation, a
manufacturer of factory automation and machine tools.
James C. Wirths, III is retired and formerly was the 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, Koontz, Smedley and Wirths 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 and Koontz and Mrs. Reynolds.
The Board of Directors of Granite State does not have a standing Nomination
Committee. The Executive Committee met 4 times during 1996, the Audit
Committee met 2 times and the Personnel Committee met 4 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 1996. 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. Additionally, in
January of each year Directors are given the opportunity to receive ninety
percent of their estimated fees for attendance at Board meetings during the
upcoming year, as a retainer payment, which amount is utilized for the
purpose of purchasing shares of Company Common Stock in the open market for
the benefit of the individual Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows, for the years
ending December 31, 1996, 1995 and 1994, 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 $100,000
in 1996 ("Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------
AWARDS
------------
SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)<F4> (#)<F2> COMPENSATION<F3>
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Smith 1996 $252,308<F1> $96,163 $132,804<F5> -- $19,097
Chairman of the Board of Granite State; 1995 235,800<F1> 79,380 -- -- 10,742
President and Chief Executive Officer of 1994 219,425<F1> 63,000 -- -- 9,976
Granite State and Granite Bank
William C. Henson 1996 119,236 33,386 48,628<F5> -- 16,639
Executive Vice President of the Company and 1995 113,558 28,390 -- -- 10,169
Director of Community Banking of the Bank 1994 108,150 21,630 -- -- 8,179
Charles B. Paquette 1996 119,236 33,386 36,398<F5> -- 16,769
Executive Vice President, Chief Operating 1995 113,558 28,390 -- -- 10,185
Officer and Secretary of the Company and 1994 108,150 21,630 -- -- 8,190
the Bank
William G. Pike 1996 119,236 33,386 -- -- 15,116
Executive Vice President and Chief Financial 1995 113,558 28,390 -- -- 10,153
Officer of the Company and the Bank 1994 108,150 21,630 -- -- 8,133
William D. Elliott 1996 119,236 33,386 -- -- 15,225
Senior Vice President and Commercial 1995 113,558 28,390 -- -- 10,185
Lending Officer of the Bank 1994 108,150 21,630 -- -- 8,133
- --------------------
<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, 1996, 1995 and 1994.
<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 $21.75, $16.375 and
$11.375 at December 31, 1996, 1995 and 1994, 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; or (d)
preferential discounts on stock.
<F5> Represents the reimbursement by the Company of taxes related to the
exercise by the executive of nonstatutory stock options, which
reimbursement approximated the tax benefit received by the Company.
</FN>
</TABLE>
Employment Agreements. Granite State and Granite Bank have entered
into employment contracts with Messrs. Smith, Paquette, Henson, Pike and
Elliott. Mr. Smith receives a minimum base salary of $254,832 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. In addition, the Company is obligated to indemnify Mr. Smith for
any golden parachute excise tax, and any income tax with respect to such
indemnification payment, for which he would become liable in connection with
a termination following a change in control.
Messrs. Paquette, Henson, Pike and Elliott 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 3 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 1996.
Set forth below is certain information concerning options exercised in
1996 by the Named Executive Officers, and options outstanding to such Named
Executive Officers at December 31,1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR-END<F2>
------------------------- ---------------------------
SHARES ACQUIRED VALUE EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME UPON EXERCISE REALIZED<F1> (#) ($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Smith 23,500 $393,625 36,900 0 $618,075 $0
William C. Henson 9,835 126,936 21,365 0 357,864 0
Charles B. Paquette 5,965 99,914 25,235 0 422,686 0
William G. Pike 1,300 21,775 12,700 0 212,725 0
William D. Elliott 1,200 20,100 12,800 0 214,400 0
- --------------------
<FN>
<F1> Equals the difference between the aggregate exercise price of the
options exercised and the aggregate fair market value of the shares
of Common Stock received upon exercise computed by using the closing
bid price of the Common Stock as quoted on Nasdaq Stock Market on the
date of exercise.
<F2> Equals the difference between the aggregate exercise price of such
options and the aggregate fair market value of the shares of Common
Stock that would be received upon exercise, assuming such exercise
occurred on December 31, 1996, at which date the last sale price of
the Common Stock as quoted on the Nasdaq Stock Market was $21.75.
</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. The normal form of benefit at retirement is
a straight life annuity. A participant's retirement benefit will equal 2% of
the participant's average annual earnings (over a 3-year period) multiplied
by the number of years of credited service (up to a maximum of 30 years),
reduced by 1-2/3% of his primary social security benefit multiplied by the
number of years of credited service (up to 30 years).
The following table indicates the estimated annual benefit payable to
employees under the Defined Benefit Plan by the salary and years of service
classifications indicated, assuming retirement at age 65, during 1996 and a
straight life annuity form of payment. As of December 31, 1996, Messrs.
Smith, Henson, Paquette, Pike and Elliott, had 23 years and 10 months, 16
years, 22 years and 2 months, 5 years and 1 month, and 6 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 $ 5,572 $ 8,358 $11,144 $13,930 $16,716
60,000 9,352 14,028 18,704 23,380 28,056
80,000 13,348 20,022 26,696 33,370 40,044
100,000 17,348 26,022 34,696 43,370 52,044
120,000 21,348 32,022 42,696 53,370 64,044
140,000 25,348 38,022 50,696 63,370 76,044
160,000 27,348 41,022 54,696 68,370 82,044
180,000 27,348 41,022 54,696 68,370 82,044
200,000 27,348 41,022 54,696 68,370 82,044
220,000 27,348 41,022 54,696 68,370 82,044
240,000 27,348 41,022 54,696 68,370 82,044
255,000 27,348 41,022 54,696 68,370 82,044
</TABLE>
Under the Internal Revenue Code of 1986 (the "Code"), the maximum
benefit payable under the Defined Benefit Plan per year, in 1996, was
$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. Under the
Code, only $150,000 of compensation may be considered for purposes of
determining retirement benefits.
Supplemental Executive Retirement Plan. In August 1996, the Bank
restated its Supplemental Executive Retirement Plan ("SERP"). The SERP is
designed to provide a benefit (less the benefits in fact provided under the
defined benefit plan) that is equal to 60% of the participant's average
annual salary at retirement, which would have been provided to the
participant but for the restrictions imposed by the Code, plus the SERP is
designed to provide an additional benefit to replace amounts the covered
executive is giving up under the Bank's ESOP as a result of Code
restrictions. Currently, Mr. Smith is the only designated participant in the
SERP. Under the restated SERP, the amount of benefit to which the executive
would be entitled has been actuarially determined to be $184,797 upon
retirement at age 62. The benefit will be paid over the executive's life or
20 years, whichever is greater. The Bank has established a rabbi trust which
has purchased a life insurance policy on the executive's life in order to
ensure that the Bank can satisfy its obligation under the SERP. Beginning in
1996, the Bank will make annual contributions in an amount equal to the
expense accrual under the SERP, into a secular trust for the benefit of the
executive. Amounts accrued prior to the restatement of the SERP were
transferred to the secular trust. In the event of the executive's
termination of employment within 36 months of a change in control of the
Bank, or in the event of the executive's death, the Bank is required to make
contributions to the secular trust from its general assets or from the
assets held by the rabbi trust which, when added to the remaining assets in
the secular trust, are sufficient to fund the supplemental retirement income
benefit. Contributions with respect to the SERP relating to the years 1996,
1995 and 1994 were $175,748, $80,769 and $65,685, respectively.
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.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 1996 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 31,1997 subject to
ratification of such appointment by the stockholders.
Representatives of Grant Thornton LLP will be present at the Annual
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 Annual 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 1998, 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 24,1997. 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, 1996, 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 24, 1997
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, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 15, 1997
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 15, 1997. 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):
Philip M. Hamblet James L. Koontz
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, 1997.
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. | |
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| |
| |
| |
---Stockholder sign above----Co-holder (if any) sign above------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
GRANITE STATE BANKSHARES, INC.
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 24, 1997 and the 1996 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
