SCHEDULE 14A
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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GRANITE STATE BANKSHARES, INC.
---------------------------------------------------------------------------
(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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing party:
---------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------
[PROXY STATEMENT]
[GRANITE STATE BANKSHARES LETTERHEAD]
March 18, 1999
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 13, 1999 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 four directors and the ratification of the appointment of independent
auditors for the fiscal year ending December 31, 1999. 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, 1998, 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
<PAGE>
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 13, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Granite State Bankshares, Inc. will be held on April 13, 1999, 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 four directors, one of which shall be for a term
of one year and three of which shall be 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, 1999; 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 5,
1999, 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 5, 1999 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 18, 1999
<PAGE>
GRANITE STATE BANKSHARES, INC.
122 West Street
Keene, New Hampshire 03431
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
GRANITE STATE BANKSHARES, INC.
April 13, 1999
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 13, 1999, 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, 1999.
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, 1999.
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 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.
<PAGE> 1
The close of business on March 5, 1999 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 5,856,912
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 the other matter to 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.
This matter shall be determined by a majority of the votes cast FOR or
AGAINST. Hence, shares as to which the "ABSTAIN" box has been selected on
the proxy card and broker non-votes will not affect the 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> <C> <C> <C>
Common Stock Granite State Bankshares, Inc. 345,012<F1> 5.89%
Employee Stock Ownership
Plan and Trust ("ESOP")
122 West Street
Keene, New Hampshire 03431
<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 and allocated to participants (333,698 shares), will be
voted by the ESOP Trustee as directed by such participants.
Unallocated shares are voted by the ESOP Trustee in a manner that
reflects the directions received as to the allocated shares.
</FN>
</TABLE>
<PAGE> 2
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 -- ELECTION OF DIRECTORS
In accordance with the Bylaws, Granite State currently has twelve
(12) directors. Effective as of this Annual Meeting, two persons currently
serving as Directors will discontinue their service on the Board, and the
number of Directors will be set at ten (10). 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
Joseph S. Hart 49 1999 2000 8,430<F2> *
David J. Houston 64 1997 2002 34,109<F3> *
William Smedley, V 67 1986 2002 36,633<F4> *
E. Story Wright 59 1999 2002 13,979<F2> *
CONTINUING DIRECTORS
Philip M. Hamblet 53 1990 2000 54,402<F4> *
James L. Koontz 64 1994 2000 12,702<F4> *
Dr. David M. Bartley 64 1997 2001 7,071<F4> *
Charles W. Smith 56 1986 2001 219,546<F5><F6> 3.74%
C. Robertson Trowbridge 67 1988 2001 29,357<F7> *
James C. Wirths III 62 1994 2001 30,190<F4> *
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
William C. Henson 43 -- -- 66,416<F8><F9> 1.13%
Charles B. Paquette 46 -- -- 120,507<F8><F9> 2.05%
William G. Pike 47 -- -- 63,395<F8><F9> 1.08%
All directors and executive officers
as a group (18 persons) 788,307<F10><F11><F12> 13.17%
(footnotes on next page)
<PAGE> 3
<FN>
- --------------------
<F*> Represents less than 1.00% of the Company's voting securities.
<F1> Includes all shares of stock owned by each director or named
executive officer, their spouse, or as custodian or trustee, over
which shares such individuals effectively exercise sole or shared
voting or investment power.
<F2> Includes 3,750 shares subject to options granted to each of Mr. Hart
and Ms. Wright, which are currently exercisable.
<F3> Includes 8,326 shares subject to options granted to Mr. Houston,
which are currently exercisable.
<F4> Includes 6,000 shares subject to options granted to each of Messrs.,
Smedley, Hamblet, Koontz, Bartley and Wirths, which are currently
exercisable.
<F5> Includes 51,338 shares held by the ESOP Trust for the benefit of Mr.
Smith and over which Mr. Smith has current voting rights.
<F6> Includes 17,571 shares subject to options granted to Mr. Smith, which
are currently exercisable.
<F7> Includes 2,250 shares subject to options granted to Mr. Trowbridge,
which are currently exercisable.
<F8> Includes 23,709 shares, 26,334 shares, and 7,767 shares held by the
ESOP Trust for the benefit of Messrs. Henson, Paquette, and Pike,
respectively, and over which they have current voting rights.
<F9> Includes 12,000 shares subject to options granted to each of Messrs.
Henson, Paquette and Pike, which are currently exercisable.
<F10> Excludes shares held by the ESOP Trust that are allocated to non-
executive officers and employees.
<F11> Includes 57,521 shares (including 10,125 shares subject to options)
owned by two directors, whose service as directors will terminate
effective with the Annual Meeting. Also includes 34,049 shares
(including 16,076 shares subject to options) owned by three persons
who are members of the Board of Directors of Granite Bank, but not of
the Company.
<F12> Includes 101,647 shares subject to options granted to Directors and
executive officers, which are currently exercisable and 109,148
shares held by the ESOP Trust for the benefit of executive officers
and over which the executive officers have current voting rights.
</FN>
</TABLE>
Directors' Principal Occupation and Business Experience for Five Years
Dr. David M. Bartley is President of Holyoke Community College,
Holyoke, Massachusetts.
Philip M. Hamblet is President of Fred H. Hamblet, Inc., an
electrical contracting firm.
Joseph S. Hart is President and Chief Executive Officer of
Peterborough Oil Co., Inc., a wholesaler and retailer of branded gasolines
and an operator of convenience stores.
David J. Houston is President of David J. Houston Company, a surplus
equipment sales company and also is President of Hadley Properties, Inc.
James L. Koontz is Chairman of the Executive Committee 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.
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 and Granite Bank. Mr. Smith has been the 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 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.
E. Story Wright, has been active in community affairs, serving as a
trustee of Cheshire Hospital, New Hampshire Charitable Foundation,
Monadnock Community Foundation and Monadnock United Way and as a governor
of New Hampshire Public Television.
<PAGE> 4
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, an Audit
Committee composed of Messrs. Wirths, Bartley, Hamblet and Koontz and a
Personnel Committee which serves as the Company's Compensation Committee
consisting of Messrs. Smedley, Smith, Koontz and Hart. The Board of
Directors of Granite State does not have a standing Nomination Committee.
The Executive Committee met 6 times during 1998, the Audit Committee met 2
times and the Personnel Committee met 2 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 1998. 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 Executive Committee 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 the first quarter of each year
Directors are given the opportunity to receive eighty 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. During 1998, directors received option
grants under the 1997 Long-Term Incentive Stock Benefit Plan. Director
Bartley was granted options to purchase 9,000 shares of common stock.
Directors serving on the board of directors of both Granite State and
Granite Bank (Directors Hamblet, Koontz Reynolds, Smedley and Wirths) were
each granted an option to purchase 3,000 shares of common stock. Directors
serving on the Granite State board but not on the board of Granite Bank
(Directors Houston, McKerley and Trowbridge) were each granted an option to
purchase 1,125 shares of common stock. Directors serving on the Granite
Bank board but not on the board of Granite State (five persons) were each
granted an option to purchase 1,875 shares of common stock. The exercise
price of all shares underlying the options granted is the fair market value
of the common stock on the date of grant.
EXECUTIVE COMPENSATION
Personnel Committee Report on Executive Compensation
Under rules established by the Securities and Exchange Commission
("SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and other executive officers of the Company. The
disclosure requirements for the Chief Executive Officer and other executive
officers include the use of tables and a report explaining the rationale
and considerations that led to fundamental compensation decisions affecting
those individuals. In fulfillment of this requirement, the Personnel
Committee, at the direction of the Board of Directors, has prepared the
following report for inclusion in this proxy statement.
The Company does not pay direct cash compensation to the executive
officers of the Company. However, the Company's executives are also
executive officers of the Bank and are compensated by the Bank. The members
of the Personnel Committee are three non-employee members of the Board of
Directors and Charles W. Smith, Chairman and Chief Executive Officer of
Granite State and the Bank. Mr. Smith offers input and advice as to
executive compensation affecting members of the senior management team
other than himself. Compensation decisions and recommendations made as to
Mr. Smith are made without the participation of Mr. Smith. All decisions by
the Personnel Committee relating to the compensation of the Company's
executive officers are reviewed by the full Board of Directors, except for
decisions about awards under certain of the Company's stock-based
compensation plans, which can be made solely by the Committee. The
Committee meets at least annually to review and make recommendations to the
Board of Directors regarding the compensation of the Chief Executive
Officer and other executives.
The decisions made by the Personnel Committee as to executive
compensation are subjective in nature, and not subject to specific
criteria. Set forth below are certain considerations taken into account in
determining compensation for the Chief Executive Officer ("CEO") and the
other executive officers.
<PAGE> 5
Base Salaries-In determining the base salaries for the CEO and other
executive officers, the committee reviews salaries to ensure that the
Bank's base salary levels are competitive with financial institutions
similar in size, geographic market and business profile in order for the
Bank to attract and retain persons of high quality. The Bank has retained
the services of Tom Warren and Associates, Inc., compensation consultants
("Warren"), to provide an independent outside survey and analysis of the
appropriateness of senior management compensation. Warren's salary data was
based upon financial institutions engaged in comparable activities and
provided information as to the median salary by position. Warren relied on
several established surveys in establishing the salary ranges for senior
management positions. The Committee relied upon the market salaries as
indicated by the Warren report in approving salary adjustments.
Bonus Awards-Bonus compensation for the executive officers generally
consist of cash bonuses and long-term benefits such as stock options and
restricted stock awards. There is no established incentive compensation or
bonus plan. Historically, the Personnel Committee has granted cash bonuses
to executive officers based on profitability and/or other factors regarding
individual accomplishments and performance towards meeting overall Company
and Bank goals and objectives.
The Company also maintains a stock benefit plan in order to promote the
growth and profitability of Granite State and to provide key officers and
employees with an incentive to achieve corporate objectives. Under the 1997
Long-Term Incentive Stock Benefit Plan, grants of stock options and shares
of restricted stock may be made to officers and employees. The Company's
previous stock benefit plan, the 1986 stock option plan, expired in 1996.
Information concerning individual grants of options and restricted stock is
included elsewhere in this proxy statement.
Compensation of Chief Executive Officer-The Board of Directors approved a
base salary for the CEO for the year 1998 of $290,000 which represented a
14% increase from the base salary provided in 1997. The salary level was
based in part upon the compensation survey provided by Warren. Mr. Smith's
contract calls for a minimum increase of 10% per year, although actual
increases, with the consent of Mr. Smith, historically have been less. The
increase in salary for 1998 was also based on the overall performance of
the Bank during 1997 and the increase in the size and complexity of the
organization resulting from the acquisition of Primary Bank. The Committee
also recommended that a bonus of $116,000 be paid to the CEO. In arriving
at the bonus amount, the committee considered the successful integration of
Primary Bank and the Company's net earnings for 1998. The CEO also received
an allocation of shares of Common Stock under the Employee Stock Ownership
Plan (which was established in 1986), which allocation was automatic under
the ESOP in accordance with the provisions of the ESOP Plan. Under the 1997
Long-Term Incentive Stock Benefit Plan, the Board granted Mr. Smith options
to purchase 46,000 shares of Common Stock at an exercise price equal to the
market value of the Common Stock at the dates of grant, which represented
29.03% of all options granted to employees in 1998. These options become
exercisable over a five to seven year period. The Board also granted Mr.
Smith 18,000 shares of restricted stock under this plan, which shares vest
over a five year period. In making the grants of options and shares of
restricted stock, the committee wanted to provide Mr. Smith with additional
performance incentives with the period following the acquisition of Primary
Bank as the measurement base.
Personnel Committee
William Smedley, V, Chairman
Jane B. Reynolds
James L. Koontz
Charles W. Smith
<PAGE> 6
Comparison of Five-Year Cumulative Total Return*
The graph below compares the cumulative total shareholder return on
Granite State common stock for the last five years against the cumulative
total return of the SNL New England Bank Index and the NASDAQ Total Return
Index for the same period.
Granite State Bankshares, Inc.
Total Return Performance
<TABLE>
<CAPTION>
Period Ending
-------------------------------------------------------------------------
Index 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Granite State Bankshares, Inc. $100.00 $123.67 $184.02 $251.75 $474.84 $426.13
NASDAQ-Total US 100.00 97.75 138.26 170.01 208.58 293.21
SNL New England Bank Index 100.00 96.10 157.58 214.87 342.02 374.29
<FN>
- --------------------
<F*> Investment of $100 in Granite State's common stock, the SNL New
England Bank Index and the NASDAQ Total Return Index. Total return
assumes reinvestment of all dividends.
</FN>
</TABLE>
<PAGE> 7
Summary Compensation Table. The following table shows, for the years
ended December 31, 1998, 1997 and 1996, 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 five highest paid
executive officers of the Company who each received total salary and bonus
in excess of $100,000 in 1998 ("Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------------------ ----------------------
Awards
----------------------
Securities
Other Restricted Underlying
Annual Stock Options All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($)<F4> ($)<F6> (#)<F7> Compensation<F8>
- --------------------------- ---- --------- -------- ------------------- ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles W. Smith 1998 $301,900<F2> $116,000 $279,280<F5> $374,750 46,000 $ 9,927
Chairman and Chief Executive 1997 270,082<F2> 101,933 132,804<F5> -- 75,000 12,947
Officer of Granite State and 1996 252,308<F2> 96,163 132,804<F5> -- -- 9,680
Granite Bank
Christopher J. Flynn<F1> 1998 232,900<F2> 42,454 -- 35,813 11,000 689,544<F9>
President of Granite Bank 1997 36,155<F3> 61,500 -- -- -- 12,947
William C. Henson 1998 140,000 39,200 41,684<F5> 187,375 23,000 9,927
Executive Vice President of the 1997 125,198 35,055 19,674<F5> -- 37,500 12,947
Company and Director of Community 1996 119,236 33,386 48,628<F5> -- -- 9,680
Banking of the Bank
Charles B. Paquette 1998 140,000 39,200 77,114<F5> 187,375 23,000 9,927
Executive Vice President, Chief 1997 125,198 35,055 37,382<F5> -- 37,500 12,947
Operating Officer and Secretary 1996 119,236 33,386 36,398<F5> -- -- 9,680
of the Company and the Bank
William G. Pike 1998 140,000 39,200 -- 187,375 23,000 9,927
Executive Vice President and 1997 125,198 35,055 -- -- 37,500 12,947
Chief Financial Officer of the 1996 119,236 33,386 -- -- -- 9,680
Company and the Bank
<FN>
- --------------------
<F1> Effective November 30, 1998, Mr. Flynn discontinued his service as a
director and officer of the Company and the Bank.
<F2> Includes Board of Directors' fees.
<F3> Represents salary and Board of Directors' fees paid to Mr. Flynn by
the Bank commencing November 1, 1997, the effective date of the
merger of Primary Bank with and into Granite Bank.
<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.
<F6> With respect to Messrs. Smith, Henson, Paquette and Pike, the amount
of the restricted stock awards relate to awards of 18,000 shares,
9,000 shares, 9,000 shares, and 9,000 shares, respectively. The
number of unvested shares at December 31, 1998 for Messrs. Smith,
Henson, Paquette and Pike were 16,000 shares, 8,000 shares, 8,000
shares and 8,000 shares, respectively, and based upon the year-end
price of Common Stock, the value of these unvested shares were
$376,000, $188,000, $188,000 and $188,000, respectively. With respect
to Mr. Flynn, the amount of the restricted stock award relates to
1,500 shares which vested at the time of his discontinuance of
service. Mr. Flynn had no unvested shares at December 31, 1998. No
restricted stock awards were granted prior to 1998.
<F7> No options were granted during the year ended December 31, 1996.
<F8> With respect to Messrs. Smith, Henson, Paquette and Pike, 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 $23.50, $26.75 and $14.50 at
December 31, 1998, 1997 and 1996, respectively.
<F9> Represents $679,617 paid to or accrued for the benefit of Mr. Flynn
in connection with his departure as an officer of the Bank, in
accordance with the employment agreement between him and the Bank,
and $9,927 allocated to his account pursuant to the ESOP.
</FN>
</TABLE>
<PAGE> 8
Employment Agreements. Granite State and Granite Bank have entered
into contracts with Messrs. Smith, Paquette, Henson and Pike. Mr. Smith
receives a minimum base salary of $307,400 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 and Pike have entered into contracts for
three year terms providing that in the event of a change in control as
defined therein, followed by 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 Options. Options to purchase common stock (as well as shares of
restricted stock) may be granted under the 1997 Long-Term Incentive Stock
Benefit Plan. There are also options outstanding under the 1986 stock
option plan (which plan has expired) and under various Primary Bank option
plans that were assumed by the Company as a result of the acquisition of
Primary Bank on October 31, 1997.
Set forth below is information relating to options granted under the
Stock Option Plans to Named Executive Officers during 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term
- ------------------------------------------------------------------------------------------- ----------------------------------
Percent of Total
Options Granted
to Employees in Exercise or Expiration
Name Options Granted<F1> 1998 Base Price Date 5% 10%
- ---- ------------------- ---------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Charles W. Smith 18,000 11.36% $23.875 01/09/08 $270,267 $684,911
28,000 17.67% 17.00 10/13/08 299,354 758,621
Christopher J. Flynn 11,000 6.94% 23.875 01/09/08 165,163 418,557
William C. Henson 9,000 5.68% 23.875 01/09/08 135,134 342,455
14,000 8.83% 17.00 10/13/08 149,677 379,311
Charles B. Paquette 9,000 5.68% 23.875 01/09/08 135,134 342,455
14,000 8.83% 17.00 10/13/08 149,677 379,311
William G. Pike 9,000 5.68% 23.875 01/09/08 135,134 342,455
14,000 8.83% 17.00 10/13/08 149,677 379,311
<FN>
- --------------------
<F1> Options granted to Messrs. Smith, Henson, Paquette and Pike vest over
a five to seven year period. With respect to Mr. Flynn, all options
became exercisable upon the discontinuance of his service in November
of 1998. All options granted include a reload feature, which
automatically grants a new option, with an exercise price at the then
fair market value, equal in number to the number of shares used as
payment for the exercise.
</FN>
</TABLE>
<PAGE> 9
Set forth below is certain information concerning options exercised
in 1998, by the Named Executive Officers, and options outstanding to such
Named Executive Officers at December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End<F2>
------------------------- -------------------------
Shares Acquired Value Exercisable/Unexercisable Exercisable/Unexercisable
Name Upon Exercise Realized<F1> (#) ($)
- ---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Smith 20,100 $ 455,600 7,500 113,500 $ 48,750 $620,750
Christopher J. Flynn 76,900 1,317,083 25,715 -- 179,699 --
William C. Henson 25,807 590,747 5,357 55,143 34,821 299,930
Charles B. Paquette 26,883 609,438 5,357 55,143 34,821 299,930
William G. Pike -- -- 5,357 55,143 34,821 299,930
<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, 1998, at which date the last sale price of
the Common Stock as quoted on the Nasdaq Stock Market was $23.50.
</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 1998 and a
straight life annuity form of payment. As of December 31, 1998, Messrs.
Smith, Flynn, Henson, Paquette and Pike, had 25 years and 10 months, 1
year, 18 years, 24 years and 2 months and 7 years and 1 month,
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. Mr. Pike
will have 24 years and 9 months of credited service 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 $ 5,478 $ 8,217 $10,957 $13,696 $16,435
60,000 9,234 13,852 18,469 23,086 27,703
80,000 13,228 19,842 26,456 33,070 39,683
100,000 17,228 25,842 34,456 43,070 51,683
120,000 21,228 31,842 42,456 53,070 63,683
140,000 25,228 37,842 50,456 63,070 75,683
150,000 27,228 40,842 54,456 68,070 81,683
160,000 29,228 43,842 58,456 73,070 87,683
</TABLE>
Under the Internal Revenue Code of 1986 (the "Code"), the maximum
benefit payable under the Defined Benefit Plan per year, in 1998, was
$130,000. 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 $160,000 of compensation may be considered for purposes of
determining retirement benefits.
<PAGE> 10
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 life insurance policies on the executive's life
in order to ensure that the Bank can satisfy its obligation under the SERP.
The Bank makes 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 1998, 1997 and 1996 were $256,873, $256,873 and $175,748,
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, 1998 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 31,1999 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
William C. Henson, Executive Vice President of the Company, filed a
report on Form 4 on February 17, 1998 to report the exercise of options to
purchase 3,000 shares of Common Stock during the month of January 1998,
which Form 4 should have been filed by February 10, 1998. Charles B.
Paquette, Executive Vice President of the Company, filed a Form 4 on
February 17, 1998 to report the exercise of options to purchase 26,883
shares of Common Stock during the month of January 1998, which Form 4
should have been filed by February 10, 1998. David J. Houston, a Director
of the Company filed a Form 4 on September 10, 1998 to report the purchase
of 600 shares by his wife on April 23, 1998, which Form 4 should have been
filed by May 10, 1998. Charles E. Whittemore filed a Form 4 on August 19,
1998 to report the exercise of options to purchase 5,162 shares of Common
Stock during June of 1998, which Form 4 should have been filed by July 10,
1998.
<PAGE> 11
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 the year 2000,
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 19,1999. 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.
Accordingly, advance written notice for certain business, or nominations to
the Board of Directors, to be brought before the Annual Meeting to be held
in the year 2000, must be given to the Company by November 19, 1999.
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 COMPANY'S FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR
ENDED DECEMBER 31, 1998, 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, 1999
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.
<PAGE> 12
[PROXY CARD]
REVOCABLE PROXY
GRANITE STATE BANKSHARES, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 13, 1999
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 13, 1999. 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):
Joseph S. Hart, David J. Houston,
William Smedley, V and E. Story Wright
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, 1999.
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 IN THEIR DISCRETION. 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------
<PAGE>
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 dated 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, 1999 and the 1998 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
<PAGE>
