SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
UNION BANKSHARES, LTD.
(Name of Registrant as Specified in Its Charter)
UNION BANKSHARES, LTD.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
April 17, 1998
TO THE STOCKHOLDERS OF UNION BANKSHARES, LTD.:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of Union Bankshares, Ltd. (the "Company") to be held on May 27,
1998, at the Westin Hotel Tabor Center Denver, 1672 Lawrence Street, Denver,
Colorado, at 10:00 a.m., Denver Time.
The purpose of the Annual Meeting is to consider and vote upon (1) the
approval of an amendment to the Company's certificate of incorporation to
increase the number of shares of common stock authorized for issuance from
5,000,000 to 10,000,000 and the approval or ratification of a two-for-one stock
split of the Company's common stock in the form of a share for share stock
dividend; (2) the election of Messrs. Harrison, Logan and Saunders as Class I
directors; (3) ratification of the appointment of Baird, Kurtz & Dobson as
independent auditors for the current fiscal year; and (4) such other business as
may properly come before the Annual Meeting or any adjournment(s) thereof.
Enclosed is a notice of the Annual Meeting and a Proxy Statement. You are
urged to read the Proxy Statement carefully. A proxy is also enclosed for your
convenience. Please complete, sign, date and return the proxy promptly. If you
attend the Annual Meeting, you may vote your shares personally, whether or not
you have previously submitted a proxy.
Your Board of Directors strongly supports and recommends these actions.
Accordingly, we request that you vote in favor of all proposals. We also urge
you to make plans if at all possible to attend the meeting in person. Thank you
for your consideration.
FOR THE BOARD OF DIRECTORS,
----------------------------------------
Charles R. Harrison
Chairman of the Board of Directors
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY, RETURNING IT PROMPTLY TO ENSURE THAT YOUR SHARES ARE VOTED. A
BUSINESS REPLY ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF YOU MAIL THIS PROXY FROM ANYWHERE IN THE UNITED STATES.
<PAGE>
April 17, 1998
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF UNION BANKSHARES, LTD.:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of Union
Bankshares, Ltd., a Delaware corporation (the "Company"), will be held at the
Westin Hotel Tabor Center Denver, 1672 Lawrence Street, Denver, Colorado, at
10:00 a.m., Denver Time, on May 27, 1998, for the following purposes:
1. To approve an amendment to the Company's certificate of incorporation
to increase the number of shares of common stock authorized for
issuance from 5,000,000 to 10,000,000 and to approve or ratify a
two-for-one stock split of the Company's common stock in the form of a
share for share stock dividend;
2. To elect Charles R. Harrison, Harold R. Logan, Jr. and Richard C.
Saunders to serve as the Class I directors of the Company as set forth
in the attached Proxy Statement;
3. To ratify the appointment of Baird, Kurtz & Dobson as the Company's
independent auditors for the current fiscal year; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof.
These matters are more fully described in the accompanying Proxy
Statement. The Board of Directors of the Company has fixed the close of business
on April 16, 1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting. The Company's stock
transfer books will not be closed and all stockholders are cordially invited to
attend the Annual Meeting. Only holders of the Company's common stock, $.01 par
value per share, at the close of business on the record date are entitled to
notice of, and to vote at, the Annual Meeting. A complete list of stockholders
entitled to vote at the Annual Meeting will be available for examination during
normal business hours by any stockholder, for purposes related to the Annual
Meeting, for a period of ten days prior to the meeting, at the Company's
principal executive offices located at 1825 Lawrence Street, Suite 444, Denver,
Colorado 80202.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend the Annual Meeting in person, please complete, date and sign the
accompanying proxy card and return it promptly in the enclosed envelope to
ensure that your shares, regardless of the size of your holdings, are
represented and voted in accordance with your wishes. If you choose, you may
still vote in person at the Annual Meeting even though you previously submitted
your proxy.
BY ORDER OF THE BOARD OF DIRECTORS:
-------------------------------------------
Bruce E. Hall, Secretary
<PAGE>
April 17, 1998
UNION BANKSHARES, LTD.
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
This statement is furnished in connection with a solicitation of proxies
by the Board of Directors of Union Bankshares, Ltd. (the "Company") for use at
the 1998 Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Wednesday, May 27, 1998, at 10:00 a.m., Denver Time, at the Westin Hotel Tabor
Center, Denver, 1672 Lawrence Street, Denver, Colorado, and at any adjournment
or postponement thereof. Proxies so given may be revoked at any time before
being voted by submitting a written revocation to the Secretary of the Company,
by executing another valid proxy bearing a later date, or by attending the
meeting and voting in person.
Properly executed and dated Proxies received by 5:00 p.m. May 26, 1998
will be voted in accordance with the instructions therein. If no instructions
are given with respect to the matters to be acted upon, the shares represented
by the Proxy will be voted FOR the approval of an amendment to the Company's
certificate of incorporation to increase the number of shares of common stock
authorized for issuance from 5,000,000 to 10,000,000 and the approval or
ratification of a two-for-one stock split of the Company's common stock in the
form of a share for share stock dividend; FOR the election of Messrs. Harrison,
Logan and Saunders, nominees for director; FOR ratification of the appointment
of Baird, Kurtz & Dobson as independent auditors for the current fiscal year;
and FOR approval of all of the other proposals. The persons named in the proxies
will have discretionary authority to vote all proxies with respect to additional
matters that are properly presented for action at the Annual Meeting. The cost
of preparing, assembling, mailing, and soliciting Proxies and other related
expenses will be borne by the Company.
The Company intends to request banks, brokerage houses, custodians,
nominees, and other fiduciaries to forward copies of these proxy materials to
those persons for whom they hold shares. In addition to solicitation by mail,
certain officers and employees of the Company, who will receive no compensation
for their services other than their regular salaries, may solicit proxies in
person or by telephone. The approximate date of mailing these proxy materials is
April 17, 1998.
<PAGE>
QUORUM AND VOTING RIGHTS
A quorum of one-third of the shares outstanding and entitled to vote is
required to vote on matters before the Annual Meeting. The holders of record of
shares of Common Stock of the Company at the close of business on April 16,
1998, the record date determined by the Board of Directors, may vote at the
Annual Meeting. On March 12, 1998, the Company had outstanding and entitled to
vote 1,168,507 shares of Common Stock. Each share of Common Stock is entitled to
one vote on each of the matters listed in the Notice of Annual Meeting. At the
Annual Meeting, directors of the Company will be elected by a plurality of the
shares voting in the election of directors. Thus, the director candidates, up to
the number of directors to be elected, receiving the highest number of votes
will be elected. Abstentions and broker non-votes will have no effect on the
election of directors. A majority of the votes present in person or by proxy is
required to pass each other issue brought before the stockholders, except for
the proposal to amend the Company's certificate of incorporation, which
amendment requires approval by a majority of all outstanding shares entitled to
vote thereon. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the vote cast on proposals presented
to the stockholders and thus have the same effect as a negative vote, whereas
broker non-votes are not tabulated for any purpose in determining whether a
proposal has been approved.
ANNUAL REPORT
The Company is also mailing with this proxy statement its Annual Report on
Form 10-KSB for the year ended December 31, 1997 (the "10-KSB"), as filed with
the U.S. Securities and Exchange Commission (excluding exhibits), which includes
financial statements for the year ended December 31, 1997. The 10-KSB is not a
part of this Proxy Statement. The Company will furnish an additional copy of the
10-KSB to any stockholder free of charge, and will furnish a copy of any exhibit
to the 10-KSB upon payment of the Company's reasonable expenses in furnishing
such exhibit. Interested parties may request a copy of the 10-KSB or any exhibit
thereto from the Secretary of the Company.
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<PAGE>
PROPOSAL NO. 1
AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK AND
TO APPROVE OR RATIFY A TWO-FOR-ONE STOCK SPLIT
IN THE FORM OF A STOCK DIVIDEND
PROPOSED AMENDMENT
On January 21, 1998, the Board of Directors adopted a resolution proposing
that the Company's certificate of incorporation (the "Certificate of
Incorporation") be amended to increase the total number of shares of common
stock (the "Common Stock") that the Company is authorized to issue from
5,000,000 shares to 10,000,000 shares (the "Amendment").
INTRODUCTION
The Common Stock of the Company is currently listed on the NASDAQ National
Market System ("NASDAQ-NMS"). On March 12, 1998, the reported closing price of
the Common Stock on the NASDAQ-NMS was $28.25. As of March 12, 1998, 5,000,000
shares of Common Stock were authorized to be issued under the Certificate of
Incorporation, 1,168,507 shares were issued and outstanding and approximately
538,011 were reserved for issuance under the Company's employee and director
stock option plans (the "Option Plans").
On November 23, 1997, the NASDAQ-NMS and the Securities and Exchange
Commission approved changes to the listing and maintenance standards required to
be met for companies listed on the NASDAQ-NMS. Under the revised maintenance
requirements, the Company's qualification for continued listing after February
23, 1998 requires that (i) the Company maintain at least $4.0 million in net
tangible assets, (ii) the minimum bid price of Company Common Stock be at least
$1.00 per share, (iii) there be at least 750,000 shares held by non-affiliates
of the Company (i.e. in the public float), (iv) the market value of the public
float be at least $5 million, (v) the Common Stock have at least two active
market makers and (vi) the Common Stock be held by at least 400 round lot
holders.
The Company was notified in a letter dated February 26, 1998 that it did
not meet the requirement that there be at least 750,000 shares in the public
float. If the Company is unable to satisfy the NASDAQ-NMS maintenance
requirements, the Company's Common Stock may be delisted from the NASDAQ-NMS
which may be expected to have a negative effect on the marketability and
liquidity of the Common Stock. In response to the February 26, 1998 letter from
NASDAQ-NMS, on March 4, 1998 the Company contacted the NASDAQ Hearings
Department (the "Hearings Department") and requested an expedited, written
hearing regarding its plan for compliance with the new maintenance requirements.
All delisting proceedings have been stayed pending the results of such hearing.
On or before March 27, 1998, the Company will submit documentation supporting
its request for a temporary exemption from the revised maintenance standards
pending the Annual Meeting on May 27, 1998, as further discussed below. The
decision of the Hearings Department is expected some time in April 1998.
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<PAGE>
The Board of Directors has considered several alternative remedial actions
in order for the Company to come into compliance with the revised maintenance
standards and to maintain its listing on the NASDAQ-NMS and has decided to
conduct a two-for-one stock split in the form of a stock dividend (the "Stock
Split"). The effect of this action would be to increase the number of shares of
Common Stock held by non-affiliates of the Company to a number over the 750,000
share requirement for continued listing.
At the hearing, the Company intends to request a temporary exemption from
the revised public float requirement until the Annual Meeting to which this
Proxy Statement relates. At the Annual Meeting, the proposal for approval of an
increase in the number of shares authorized for issuance and for approval or
ratification of a two-for-one stock split in the form of a stock dividend will
be voted upon by the Company's stockholders.
If the temporary exemption is granted by the Hearings Department, then the
proposal of the Board of Directors to the stockholders shall be for the approval
of an amendment to the Company's Certificate of Incorporation to increase the
number of shares of Common Stock authorized for issuance and for the approval of
the Stock Split. If such stockholder approval is given, the Company will take
all steps necessary to file the Certificate of Amendment to the Certificate of
Incorporation for the purpose of increasing the number of authorized shares and
to implement the Stock Split by means of a stock dividend to the holders of
record as of May 27, 1998 in order to come into compliance with the new listing
and maintenance standards as soon as reasonably practicable after May 27, 1998.
If the temporary exemption is not granted by the Hearings Department, then
the Board of Directors intends to declare the stock dividend and consummate the
Stock Split as soon as is required by the Hearings Department for the purpose of
coming into compliance with the revised public float requirements and avoiding
delisting proceedings. In the event that the Stock Split has been consummated as
of the date of the Annual Meeting, the proposal of the Board of Directors before
the stockholders shall be for the ratification of the Stock Split and related
actions taken by the Board of Directors.
The proposal for approval or ratification of the two-for-one stock split
in the form of a share for share stock dividend is not required to be submitted
to the Company's stockholders under applicable law. However, the Board believes
that it is desirable to obtain the approval or ratification of the Stock Split
as a matter of proper corporate governance. The Board of Directors has
determined that maintaining the listing of the Company's Common Stock on the
NASDAQ-NMS is in the best interests of the Company and its stockholders.
Therefore, the Board of Directors will take all necessary reasonable steps to
maintain such listing even in the event that the Company's stockholders fail to
approve this Proposal No. 1.
PURPOSES AND EFFECTS OF AMENDMENT TO CERTIFICATE OF INCORPORATION
Under the current authorized capitalization of 5,000,000 shares and not
taking into effect the possible approval of an increase in the number of shares
authorized for issuance, the issuance of the shares necessary to consummate the
Stock Split would decrease the total number of shares of Common Stock available
for issuance to 1,586,964 (which number does not include the
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<PAGE>
1,076,022 shares that would be reserved for issuance under the Option Plans
following the Stock Split). The number of currently authorized but unissued
shares is sufficient to allow the Board of Directors to consummate the Stock
Split. However, absent approval of this Proposal No. 1, the Board of Directors
believes that the number of shares that would be available for issuance
following the Stock Split would be insufficient to ensure that the Company will
continue to have additional shares available for future issuance from time to
time as approved by the Board of Directors.
The Board of Directors believes that the proposed increase in authorized
shares is desirable because it will provide the Company with additional
flexibility to issue shares of its Common Stock as the need may arise without
the expense and delay of a special meeting of stockholders, unless stockholder
action is required by applicable law or under the rules of the NASDAQ-NMS or any
exchange on which the Company's Common Stock may then be listed. Such shares
could be issued by the Board of Directors for proper corporate purposes,
including, in connection with possible future stock dividends or stock splits,
equity financings, strategic investments, mergers or acquisitions, and grants of
additional options or other equity incentives to the Company's employees and
other persons. The issuance of any additional shares will be on terms deemed by
the Board of Directors to be in the best interests of the Company and its
stockholders. Except for issuances under the existing Option Plans, the Board of
Directors has no present plans or commitments with respect to the issuance of
the proposed additional authorized shares of Common Stock.
Each additional share of Common Stock authorized by the proposed Amendment
will have the same rights and privileges as each share of Common Stock currently
authorized of the same class. Stockholders will have no statutory preemptive
rights to receive or purchase any of the Common Stock authorized by the proposed
Amendment. The increase in authorized Common Stock will not have any immediate
effect on the rights of existing stockholders. To the extent that the additional
authorized shares are issued in the future, they will decrease the existing
stockholders' percentage equity ownership and, depending on the price at which
they are issued, could be dilutive to the existing stockholders.
The increase in the authorized shares of Common Stock could have an
anti-takeover effect. Shares of authorized and unissued Common Stock could
(within the limits imposed by applicable law) be issued in one or more
transactions that would make a takeover of the Company more difficult, and
therefore less likely. Any such issuance of additional stock could have the
effect of diluting the earnings per share and book value per share of
outstanding shares of Common Stock, and such additional shares could be used to
dilute the stock ownership or voting rights of persons seeking to obtain control
of the Company.
PURPOSES AND EFFECTS OF THE STOCK SPLIT
As discussed above, the Board of Directors has determined that it is in
the best interests of the Company to conduct a two-for-one stock split in the
form of a stock dividend in order to come into compliance with the revised
maintenance requirements of the NASDAQ-NMS and to maintain the listing of the
Company's Common Stock on the NASDAQ-NMS.
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<PAGE>
The Board of Directors believes that the Stock Split, if consummated,
would result in a decrease in the market price of the Common Stock. Although the
impact on the market price of shares of Common Stock cannot be predicted with
certainty, it is likely that the Stock Split would initially result in the
market price of each share of Common Stock being approximately one-half of the
price previously prevailing and that the aggregate market price of all shares of
Common Stock held by a particular stockholder should remain approximately the
same.
Proportionate voting rights and other rights of stockholders will not be
altered by the Stock Split. In addition, the number of shares of Common Stock
subject to outstanding options granted pursuant to the Company's Option Plans
and the number of shares of Common Stock reserved for issuance under the Option
Plans would be doubled, and the exercise price of outstanding options would be
divided by two. The Stock Split would not change the stockholders' equity or
interest in the Company, and the book value of the number of shares of Common
Stock outstanding immediately after the Stock Split would be equal to the book
value of the number of shares of Common Stock outstanding immediately prior to
the Stock Split. Because the $.01 par value of the Common Stock would not change
as a result of the Stock Split, the capital in excess of par value of the Common
Stock ($.01 for each issued share of Common Stock) will be transferred to the
capital stock account for the Common Stock on the Company's balance sheet. Thus,
total stockholders' equity would remain unchanged.
The number of shares of Common Stock outstanding immediately prior to the
Stock Split, without taking into effect the possible increase in the authorized
shares (1,168,507 shares as of March 12, 1998), would be split into 2,337,014
shares, assuming no additional shares of Common Stock are issued by the Company
after the record date for the Annual Meeting. In addition, an aggregate of
approximately 538,011 shares of Common Stock reserved for issuance as of March
12, 1998 pursuant to stock options issued and issuable under the Option Plans
would be split into 1,076,022 shares reserved for issuance.
STOCKHOLDER APPROVAL OF AMENDMENT AND IMPLEMENTATION
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for approval of the proposed Amendment. If
the Amendment is adopted by the required vote of the Company's stockholders, it
will become effective when the Certificate of Amendment to the Certificate of
Incorporation is filed with the Secretary of State of the State of Delaware (the
"Effective Date"). The Company currently anticipates that this filing will be
made on May 27, 1998.
EFFECTIVE DATE OF THE STOCK SPLIT
Assuming the Company's request for a temporary exemption is granted by the
Hearings Department and this Proposal No. 1 is approved by the required vote of
the Company's stockholders, stockholders of record as of the close of business
on the Effective Date would receive, as soon as practicable after the Effective
Date, an additional stock certificate representing one share of the Company's
Common Stock for each share held immediately prior to the Stock Split.
Stockholders would retain certificates issued prior to the Effective Date, and
those certificates would continue to represent the number of shares of Common
Stock evidenced
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<PAGE>
thereby. CERTIFICATES SHOULD NOT BE RETURNED TO THE COMPANY OR ITS
TRANSFER AGENT.
If the Company's request for a temporary exemption is not granted by the
Hearings Department, and the Board of Directors is required to declare an
immediate stock dividend to consummate the Stock Split before the approval of
the Amendment at the 1998 Annual Meeting in order to maintain the Company's
listing on the NASDAQ-NMS, then stockholders of record as of the close of
business on the date of the declaration by the Board of Directors of the stock
dividend will receive, as soon as practicable after such date, an additional
stock certificate representing one share of the Company's Common Stock for each
share held immediately prior to the Stock Split.
Because several months will have elapsed between the time the Board of
Directors approved the Amendment and the date of the Annual Meeting, the Board
of Directors may determine that proceeding with the Stock Split and the increase
in the authorized number of shares of Common Stock would not be advisable under
circumstances existing at the time. The Board of Directors does not presently
anticipate that any such circumstances will arise, but believes it prudent to
retain the flexibility to evaluate conditions at the time of the Annual Meeting.
Accordingly, at any time prior to the Effective Date, notwithstanding
authorization of the Stock Split and the increase in the authorized number of
shares of Common Stock by the stockholders, the Company may abandon the
Amendment and the Stock Split without further action by the stockholders.
TAX CONSEQUENCES OF THE STOCK SPLIT
The Company has been advised by tax counsel that under existing United
States federal income tax laws, holders of Common Stock will not be required to
recognize taxable gain or loss as a result of the Stock Split. The tax basis of
each new share and each retained share of Common Stock would be equal to
one-half of the tax basis of the corresponding share immediately preceding the
Stock Split. In addition, the holding period for the additional shares issued
pursuant to the Stock Split would be the same as the holding period for the
original shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION AND OF THE APPROVAL OR
RATIFICATION OF THE TWO-FOR-ONE STOCK SPLIT IN THE FORM OF A STOCK DIVIDEND.
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<PAGE>
PROPOSAL NO. 2
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation establishes a classified Board
of Directors with three classes of directors. At each annual meeting of
stockholders, the successors to the class of directors whose terms expire at
that meeting are elected to serve as directors for a three-year term. At this
annual meeting, two directors are nominated for election to hold office until
the annual meeting of stockholders in 2001 or until their successors are elected
and shall qualify.
The Board of Directors has nominated Charles R. Harrison, Harold R. Logan,
Jr. and Richard C. Saunders for election to the Board of Directors. Each nominee
other than Mr. Logan is currently a director of the Company.
Brief statements setting forth the principal occupations of and other
information concerning the nominees appear below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE
IDENTIFIED ABOVE.
INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names, ages and titles of the executive
officers and the members of, and nominees for election to, the Board of
Directors of the Company:
<TABLE>
<CAPTION>
Term as
Name and Age of Director Director Director
DIRECTOR SINCE CLASS EXPIRES IN POSITION
<S> <C> <C> <C> <C>
Charles R. Harrison, 51 1985 I 2001* Chairman of the Board of Directors and Chief
Executive Officer
Herman J. Zueck, 56 1985 III 2000 President and Director of the Company; Chairman of
the Board of Directors and Chief Executive Officer
of Union Bank & Trust
Bruce E. Hall, 45 1989 II 1999 Vice President, Treasurer, Secretary and Director
Jerrold B. Evans, 53 1994 III 2000 President of Union Bank & Trust and Director
Wayne T. Biddle, 73 1993 III 2000 Director
Ralph D. Johnson, 70 1993 II 1999 Director
Harold R. Logan, Jr., 53 -- I 2001* Nominee for Director (holds no current position)
Richard C. Saunders, 57 1993 I 2001* Director
</TABLE>
* Assuming election at the Annual Meeting.
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<PAGE>
CHARLES R. HARRISON has been Chairman of the Board of Directors and Chief
Executive Officer of the Company since its founding in 1985, and was President
of the Company from its founding until December 1994. Mr. Harrison has also been
Chairman of the Board of Directors and Chief Executive Officer of American
Securities Transfer Incorporated, a Denver-based securities transfer agent since
1979. Mr. Harrison was Senior Vice President, Cashier and a Director of Arvada
State Bank, Arvada, Colorado, from August 1976 until February 1979. At the same
time, Mr. Harrison served as the President of the Colorado chapter of the
American Institute of Banking. From 1969 until 1976, Mr. Harrison served in
roles of increasing responsibility, including Vice President and Cashier, at
Jefferson Bank & Trust in Lakewood, Colorado.
HERMAN J. ZUECK has been a Vice President, Executive Vice President or the
President of the Company and the Chairman of the Board of Directors and Chief
Executive Officer of Union Bank & Trust, a state-chartered commercial bank
located in Denver, Colorado (the "Bank"), all of the capital stock of which was
acquired in 1985 by the Company, since 1985. From 1982 to 1985, Mr. Zueck was
Chairman of the Board of Directors, Chief Executive Officer and President of
Affiliated Littleton National Bank in Littleton, Colorado, a subsidiary of
Affiliated Bankshares of Colorado, Inc. ("Affiliated"). Prior to that time, Mr.
Zueck served in officer positions of increasing seniority at two other
Affiliated bank subsidiaries, Affiliated Denver National Bank and Affiliated
Lakeside National Bank. Mr. Zueck has over 33 years of banking industry
experience.
BRUCE E. HALL has been Vice President, Treasurer, Secretary and a Director
of the Company since 1989. Mr. Hall has been Vice President, Chief Financial
Officer, Secretary and Treasurer of American Securities Transfer since 1981, and
conducts an accounting tax consulting practice in Denver, Colorado. Mr. Hall is
a certified public accountant.
JERROLD B. EVANS has been President of the Bank and senior loan officer
since January 1989, and was its Executive Vice President and senior loan officer
from June 1986 until December 1988. He was elected to the Board of Directors of
the Company at the 1994 Annual Meeting of Stockholders. Mr. Evans has served on
the Bank's Board of Directors since 1987 and its Loan Committee since 1986. From
1980 to 1986, Mr. Evans was Senior Vice President and senior loan officer for
the First National Bank of Englewood, Englewood, Colorado, a subsidiary of
Affiliated. From 1972 until 1980, Mr. Evans had served First National Bank of
Englewood in a variety of officer positions of increasing responsibility. Mr.
Evans has over 22 years of banking industry experience, and is a past President
of the Rocky Mountain Chapter of Robert Morris Associates, a banking industry
association.
WAYNE T. BIDDLE has been a Director of the Company since 1993 and a
director of the Bank since 1978. He also was a director and Vice Chairman of
Caza Drilling Co., a Denver- based contract drilling and exploration company
from 1987 to 1994. In addition, Mr. Biddle served as a director of Associated
Natural Gas, Inc., a Denver-based company, from 1983 until 1994. Currently, Mr.
Biddle owns 51% of Taurus, Ltd., a Denver-based investment company.
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<PAGE>
RALPH D. JOHNSON has been a Director of the Company since 1993 and a
director of the Bank since 1970. Mr. Johnson was chief executive officer of
Johnson Storage & Moving, a Denver-based moving company, from 1960 until his
retirement in September 1995. Mr. Johnson is also a member of the Colorado Bar
Association.
HAROLD R. LOGAN, JR., a nominee for Director of the Company has been a
member of the Advisory Board of the Company since 1996 and is occupied as
Executive Vice President, Chief Financial Officer and Director of TransMontaigne
Oil Company, a publicly-held holding company engaged in the marketing and
distribution of petroleum products. From 1987 to 1995, Mr. Logan was Senior Vice
President of Finance and a Director of Associated Natural Gas Corporation. Mr.
Logan is also a member of numerous other trade and educational associations.
RICHARD C. SAUNDERS has been a Director of the Company since 1993 and a
director of the Bank since 1982. Mr. Saunders has been a majority partner of
Saunders Construction, a Denver-based commercial building contractor, since
1972. Mr. Saunders has over 37 years of building and construction industry
experience.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's officers and directors and persons who are beneficial owners
of more than 10% of the Company's Common Stock ("10% beneficial owners") are
required to file reports of their holdings and transactions in the Company's
Common Stock with the SEC and to furnish the Company with copies of such
reports. Based primarily upon its review of the copies it has received and upon
written representations it has obtained from some of these persons, the Company
believes that during the fiscal year ended December 31, 1997, the Company's
officers, directors, and 10% beneficial owners have complied with all such
filing requirements except as set forth in this paragraph. Mr. Biddle, a
director of the Company, made one late Form 4 filing in 1997 with respect to a
transaction involving the exercise of 1,000 options held by him. Mr. Johnson, a
director of the Company, made two late Form 4 filings in 1997, one with respect
to a transaction involving the exercise of 250 options held by him and the other
with respect to 1,000 shares purchased by him (jointly with his wife). Mr.
Sellens (now deceased) made one late Form 4 filing in 1997 with respect to a
transaction involving the exercise of 250 options held by him. Mr. Saunders, a
director of the Company, made one late Form 4 filing in 1997 with respect to a
transaction involving the exercise of 250 options held by him.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS COMMITTEES. The Company maintains an Audit Committee of
the Board of Directors, comprised of Messrs. Biddle, Johnson (Chairman) and
Saunders and, until his passing in February 1998, Mr. C. Gale Sellens. The Audit
Committee met two times during 1997. The Audit Committee has the responsibility
of making recommendations to the Board of Directors concerning the engagement of
the Company's independent auditors, reviewing the overall scope and results of
the annual audit, and performing such functions as may be prescribed by the
Board of Directors. The members of the Audit Committee are elected annually by
the directors. The Company maintains a Compensation Committee of the Board of
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<PAGE>
Directors, comprised of Messrs. Biddle, Johnson and Saunders (current Chairman)
and, until his passing in February 1998, Mr. Sellens (former Chairman). The
Compensation Committee met three times during 1997. The Compensation Committee
is authorized to review the compensation of the officers of the Company and the
Bank and to make recommendations to the Board of Directors concerning officers'
salaries, stock options and any other forms of compensation, to review
recommendations to the Board of Directors concerning the compensation of the
directors, and to perform such other functions as the Board of Directors may
direct. The members of the Compensation Committee are elected annually by the
directors.
The Company does not maintain a nominating committee.
The Board of Directors met six times in 1997. No director attended fewer
than 75% of the total meetings of the Board of Directors and of all committees
of the Board of Directors of which such director was a member.
DIRECTOR COMPENSATION. In 1997, the Company paid its nonemployee directors
an annual retainer of $6,000 plus per meeting fees of $600 (Board of Directors)
and $300 (Committee). The Company reimburses its nonemployee directors for their
reasonable expenses incurred in attending Board of Directors and committee
meetings. There has been no change in director compensation for fiscal year
1998. Under the Company's Equity Compensation Plan for Nonemployee Directors
(the "Director Equity Plan"), nonemployee directors may elect to receive their
retainer in shares of the Company's common stock, instead of cash.
In addition, the Company has adopted compensation and incentive benefit
plans to enhance its ability to continue to attract, retain, and motivate
qualified persons to serve as nonemployee directors of the Company. Under the
Nonemployee Directors' Stock Option Plan (the "Directors' Plan"), which was
approved by the Company's stockholders in December 1992, nonemployee directors
of the Company receive stock options to encourage and provide incentives for a
high level of performance. Only directors who are not also employees of the
Company or any of its subsidiaries are eligible to participate in the Directors'
Plan. The Company has four nonemployee directors.
An aggregate of 11,000 shares of Common Stock are reserved for issuance
under the Directors' Plan. Nonemployee directors are automatically granted
options to purchase 250 shares once during each fiscal year following election
to the Board of Directors. The Board of Directors or a committee consisting of
such Board of Directors members or other persons as may be appointed by the
Board of Directors will administer the Directors' Plan. The Directors' Plan is
currently administered by the Board of Directors.
Each option granted under the Directors' Plan is exercisable one year from
the date of grant and expires five years from the date of grant. The option
exercise price must be equal to 100% of the fair market value of the stock on
the date of grant of the option. The option price must be paid in cash. Options
granted pursuant to the Directors' Plan may not be exercised more than three
months after the option holder ceases to be a director of the Company, except
that in the event of the death or permanent and total disability of the option
holder, the option may be exercised by the holder (or his estate, as the case
may be), for a period of up to one year after the death or permanent or total
disability. Options granted to directors under the
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Directors' Plan will be treated as nonstatutory stock options under the Internal
Revenue Code of 1986, as amended.
The Directors' Plan provides that the total number of option shares
covered by such plan, the number of shares covered by each option and the
exercise price per share may be proportionately adjusted by the Board of
Directors or the Committee in the event of a stock split, reverse stock split,
stock dividend or similar capital adjustment effected without receipt of
consideration by the Company.
As of March 12, 1998, the Company has granted options that are currently
outstanding on a total of 4,500 shares of Common Stock under the Directors' Plan
at a weighted average exercise price of $14.27 per share.
The Board of Directors may amend or terminate the Directors' Plan at any
time without the approval of the stockholders; provided, however, that
stockholder approval is required for any amendment which increases the number of
shares for which options may be granted, changes the designation of the class of
persons eligible to participate or changes in any material respect the
limitations or provisions of the options subject to the Directors' Plan.
However, no action by the Board of Directors or stockholders may alter or impair
any option previously granted without the consent of the optionee.
The Director Equity Plan was approved by the Company's stockholders at the
1994 Annual Meeting, and took effect in 1995. The Director Equity Plan
authorizes the issuance of up to 50,000 shares of Common Stock to directors of
the Company who are not also employees of the Company or any subsidiary of the
Company. The Company presently has three nonemployee directors and a fourth, Mr.
Logan, has been nominated for election.
The Director Equity Plan is administered by the Board of Directors, and
provides that each nonemployee director will be given the option to elect to
receive his annual retainer for a particular fiscal year of the Company in
Common Stock rather than cash. The number of shares of Common Stock to be issued
to a nonemployee director making such election is equal to the then-current
annual retainer paid by the Company (currently $6,000) divided by 100% of the
fair market value of the Company's Common Stock on the first trading day of the
fiscal year. The Common Stock will be forfeited and returned to the Company,
however, if the nonemployee director does not remain a director of the Company
through the end of the fiscal year or fails to attend at least 75% of all Board
of Directors and applicable Board of Directors committee meetings held during
such year. The forfeiture of the Common Stock will occur whether the nonemployee
director ceases to be a director of the Company voluntarily or involuntarily,
except that no forfeiture will occur if the participant ceases to be a director
due to his death or disability. In addition, these forfeiture provisions will be
of no effect upon a change of control of the Company. Unless a nonemployee
director makes an election permitted under the federal income tax laws, shares
issued pursuant to the Director Equity Plan in lieu of the annual retainer will
not be taxable to the nonemployee director until the forfeiture restrictions
lapse at the end of the fiscal year. At that time, the nonemployee director will
have ordinary income equal to the fair market value of the shares on that date.
The amount that is includable in income by the nonemployee director is
deductible by the Company at the same time as the inclusion by the
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<PAGE>
nonemployee director. Common Stock issued under the Director Equity Plan in lieu
of the annual retainer is not transferable until after the forfeiture provisions
lapse other than by will or the laws of descent and distribution in the event of
the director's death or pursuant to a qualified domestic relations order as
defined by the Code, Title I of the Employee Retirement Income Security Act or
the rules thereunder.
A nonemployee director may terminate his election to receive his annual
retainer in Common Stock only upon giving the Company an irrevocable, six
months' advance notice to that effect.
The Board of Directors may from time to time alter, amend, suspend or
discontinue the Director Equity Plan, except that it may not take any action
which would adversely affect the rights and obligations with respect to Common
Stock which has been issued under the Director Equity Plan. The Board of
Directors may not, without the approval of the stockholders, (i) materially
increase the maximum number of shares of Common Stock that may be issued
pursuant to the Plan (unless necessary to effect adjustments for stock splits,
stock dividends, recapitalizations and similar events), (ii) materially increase
the benefits accruing to participants under the Director Equity Plan, or (iii)
materially modify the requirements as to eligibility for participation in the
Director Equity Plan. As of the date of this Proxy Statement, 8,475 shares have
been issued pursuant to the Director Equity Plan.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash compensation paid by the Company
to the Chairman and Chief Executive Officer of the Company, and the two most
highly compensated executive officers of the Company other than the Chairman and
Chief Executive Officer. The table shows compensation received during the fiscal
years ended December 31, 1995, 1996, and 1997. No other person serving as an
executive officer as of December 31, 1997 received compensation in excess of
$100,000 during fiscal 1997.
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<TABLE>
<CAPTION>
ANNUAL COMPENSATION Long Term
Other COMPENSATION
Name and Annual Restricted Options/ All Other
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) STOCK($) SARS(#) COMPENSATION($)
<S> <C> <C> <C> <C> <C> <C> <C>
Charles R. Harrison 1997 115,000 72,000 9,102/1/ -- 6,000/2/ 13,050/3/
Chairman and Chief 1996 105,000 60,000 8,998/1/ -- 3,600/2/ 11,400/3/
Executive Officer 1995 75,000 40,000 10,041/1/ -- 36,000/2/ 7,950/3/
Herman J. Zueck 1997 221,000 96,000 21,851/5/ -- 2,000/2/ 24,250/3/
President 1996 210,000 --/4/ 20,383/5/ -- 17,936/2/ /6/ 22,300/3/
1995 200,000 53,336 18,931/5/ -- 12,000/2/ 12,524/3/
Bruce E. Hall 1997 125,000 72,000 4,859/1/ -- 2,000/2/ 10,350/3/
Vice-President, 1996 115,000 --/4/ 4,710/1/ -- 13,752/2/ /6/ 11,850/3/
Secretary, and 1995 95,000 40,000 6,022/1/ -- 12,000/2/ 9,750/3/
Treasurer
Jerrold B. Evans 1997 103,387 20,000 16,275/7/ -- 600/2/ 9,048/3/
President 1996 99,220 500/4/ 15,123/7/ -- 5,080/2/ /6/ 9,617/3/
Union Bank & Trust 1995 94,500 15,000 13,885/7/ -- 3,500/2/ 8,700/3/
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</TABLE>
(1) Includes amounts included in officer's gross income for personal use of a
Company car, the cost of country club and/or athletic club dues, and tax
advice provided by third parties.
(2) Represents shares underlying stock options granted in designated year. The
Company has made no SAR grants.
(3) Represents Company's contributions to officer's account in the Company's
401(k) Profit Sharing Plan.
(4) Does not reflect amounts elected by officer to be taken in the form of
options pursuant to the Company's Option Bonus Plan. See Footnote (6).
(5) Includes amounts included in officer's gross income for personal use of a
Company car, the cost of country club and/or athletic club dues, Board of
Directors of director fees for service as a member of the Bank's Board of
Directors, and tax advice provided by third parties.
(6) Includes 16,736, 12,552 and 4,080 shares underlying stock options received
by Messrs. Zueck, Hall and Evans, respectively, pursuant to the Company's
Option Bonus Plan.
(7) Includes amounts included in officer's gross income for an automobile
allowance, the cost of country club dues, and Board of Directors of
director fees for service as a member of the Bank's Board of Directors.
For fiscal 1998, the Company's Board of Directors has set the salaries of
Charles R. Harrison, Herman J. Zueck and Bruce E. Hall at $131,000, $236,000,
and $141,000, respectively. Mr. Evans salary for 1998 has been set at $108,557.
OFFICERS' EMPLOYMENT AGREEMENTS. In December 1992, Messrs. Harrison, Hall
and Zueck each entered into five-year employment agreements with the Company.
Each of the agreements is terminable at any time by either the Company's Board
of Directors or the employed officer. The Company may terminate the agreements
at any time for cause without incurring any post-termination obligation to the
terminated officer. The agreements each provide severance benefits in the event
the officer is terminated without cause, including severance compensation equal
to the officer's salary for the balance of the term of the agreement and a
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bonus for each year remaining in the term based upon past bonuses. The Company
also must pay the officer all accrued salary, vested deferred compensation, and
other benefits then due the officer. The agreements provide for annual renewal
for successive one-year periods. If the Company elects not to renew the
officer's agreement, the officer may terminate his employment prior to the
expiration of the remaining term and receive compensation equal to that payable
upon a change in control of the Company. If the officer is terminated upon a
change in control, the officer shall be paid severance compensation equal to
three times his salary at the rate in effect at the time of termination, plus a
bonus based upon past bonuses. At the election of the officer, such severance
compensation may be paid in a lump sum. The agreements also require Messrs.
Harrison and Hall to devote such time, attention and effort to the affairs of
the Company as is necessary to discharge their duties as Chairman of the Board
of Directors and Chief Executive Officer, and Vice President, Treasurer and
Secretary, respectively. Mr. Zueck's agreement requires that he devote all of
his business time to the Company, except for limited time and services for the
management of his personal investments, or except with the prior consent of the
Company. Each of Messrs. Harrison, Hall and Zueck is prohibited from competing
with the Company or its subsidiaries for a period of two years following his
voluntary termination of the agreement, but is not prohibited from competing
with the Company in the event he is terminated without cause or upon a change in
control. The agreements each include provisions for the increase of the
officer's salary, performance bonuses, reimbursement for financial and tax
planning, an automobile allowance, participation in the Company's benefit plans
and disability benefits.
OPTION GRANTS. The following table sets forth information concerning the
grants of stock options made during fiscal year 1997 to the Company's Chief
Executive Officer and the three other most highly compensated executive officers
of the Company whose compensation exceeded $100,000 during fiscal year 1997:
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE
Charles R. Harrison 6,000(2) 25.8% 23.50 2/31/08
Herman J. Zueck 2,000(2) 8.6% 23.50 1/21/08
Bruce E. Hall 2,000(2) 8.6% 23.50 1/21/08
Jerrold B. Evans 600(2) 2.6% 23.50 1/21/08
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(1) The Company has made no SAR grants.
(2) Consists of options vesting in equal increments over a 3-year schedule from
1998-2000.
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<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Charles R. Harrison -- -- 84,400/5,200 1,159,000/12,500
Herman J. Zueck -- -- 46,636/1,800 560,240/4,200
Bruce E. Hall -- -- 42,452/1,800 523,630/4,200
Jerrold B. Evans -- -- 14,380/800 184,925/3,700
</TABLE>
INDEMNIFICATION AND LIABILITY INSURANCE
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify all directors and officers of the Company to the fullest
extent now or hereafter permitted by the Delaware General Corporation Law. Under
such provisions any director or officer, who in his capacity as such, is made or
threatened to be made, a party to any suit or proceeding, shall be indemnified
if such director or officer acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful.
There is no pending litigation or proceeding involving a director,
officer, employee or other agent of the Company as to which indemnification is
being sought. The Company is not aware of any other threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
The Company has purchased a directors and officers insurance policy
providing not less than a $3.0 million coverage limit in the aggregate per year.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 12, 1998,
regarding beneficial ownership of the Company's Common Stock: (i) by each person
who owns of record (or is known by the Company to own beneficially) more than 5%
of the Common Stock or as to which he has the right to acquire within 60 days of
March 12, 1998; (ii) by each director and named executive officer of the
Company; and (iii) by all directors and executive officers as a group. Except as
otherwise indicated, the Company believes that the beneficial owners of the
Common Stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such shares.
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<PAGE>
Number of Percentage of
NAME AND ADDRESS SHARES COMMON STOCK
Charles R. Harrison(1) 374,332 26.3%
1825 Lawrence Street, Suite 444
Denver, CO 80202
Herman J. Zueck(2) 110,476 7.8
100 Broadway
Denver, CO 80203
Bruce E. Hall(3) 132,797 9.3
1825 Lawrence Street, Suite 444
Denver, CO 80202
Jerrold B. Evans(4) 27,662 1.9
1825 Lawrence Street, Suite 444
Denver, CO 80202
Wayne T. Biddle(5) 22,686 1.6
1825 Lawrence Street, Suite 444
Denver, CO 80202
Ralph D. Johnson(6) 43,462 3.0
1825 Lawrence Street, Suite 444
Denver, CO 80202
Harold R. Logan, Jr.(7) 0 0.0
1825 Lawrence Street, Suite 444
Denver, CO 80202
Richard C. Saunders(8) 32,936 2.3
1825 Lawrence Street, Suite 444
Denver, CO 80202
All officers and directors as a
group (7 persons)(9) 744,351 52.2%
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(1) Includes 84,400 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include an additional 5,200 options
which will vest in the next two years.
(2) Includes 46,636 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include an additional 1,800 options
which will vest in the next two years.
(3) Includes 42,452 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include an additional 1,800 options
which will vest in the next two years.
(4) Includes 14,380 shares issuable upon exercise of options which are
exercisable within 60 days. Does not include an additional 800 option
shares which will vest in the next two years.
(5) Includes 250 shares issuable upon exercise of outstanding options. Does not
include an additional 250 options which will vest in one year.
(6) Includes 1,000 shares issuable upon exercise of outstanding options. Does
not include an additional 250 options which will vest in one year.
(7) Mr. Logan holds no options.
(8) Includes 1,000 shares issuable upon exercise of outstanding options. Does
not include an additional 250 options which will vest in one year.
(9) Includes 190,118 shares issuable upon exercise of options which are
exercisable within 60 days as set forth in footnotes (1)-(8) above.
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<PAGE>
SHAREHOLDERS' AGREEMENTS
Pursuant to a Shareholders' Agreement among Charles R. Harrison, Herman J.
Zueck, Bruce E. Hall, Wayne T. Biddle, Jerrold B. Evans, Lloyd E. Hayne, Ralph
D. Johnson, Richard C. Saunders and C. Gale Sellens (collectively, the
"Shareholders," and individually, a "Shareholder") and the Company dated
December 31, 1993 (the "Shareholders' Agreement"), the Shareholders agreed to
certain restrictions upon the transfer of shares of the Company's common stock
owned by any of the Shareholders ("Shares"). Among other things, the
Shareholders' Agreement provides that any member of the Bank Director Group (as
defined by the Shareholders' Agreement) wishing to transfer any or all of the
Shares owned by him must, except in the case of certain transfers, give notice
of such intent to the Company, the Management Group (as defined by the
Shareholders' Agreement) and the other members of the Bank Director Group, and
that the members of the Management Group and the other members of the Bank
Director Group have rights of first refusal with respect to such Shares.
Under the Shareholders' Agreement, a member of the Management Group
wishing to transfer any or all of the Shares owned by him must, except in the
case of certain transfers, give notice of such intent to the Company and the
other members of the Management Group, and the other members of the Management
Group have rights of first refusal with respect to such Shares.
On January 25, 1995, the Shareholders' Agreement was amended to modify the
definition of "Shares" to include any transferable options, warrants or other
rights to purchase common stock of the Company that were owned by the
Shareholders as of December 31, 1992, to provide that, if the other members of
the Management Group so agree, a member of the Management Group may dispose of
his Shares without offering the Shares to the other Shareholders, and to extend
the right of first refusal to purchase Shares offered by a member of the
Management Group to members of the Bank Director Group.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CREDIT TRANSACTIONS
The officers, directors and principal stockholders of the Company and the
Bank, and members of their immediate families and businesses in which these
individuals hold controlling interests, are customers of the Bank and it is
anticipated that such parties will continue to be customers of the Bank in the
future. Credit transactions with these parties are subject to review by the
Bank's Board of Directors. All outstanding loans and extensions of credit by the
Bank to these parties were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and (in
the opinion of management) did not involve more than the normal risk of
collectibility or present other unfavorable features. At December 31, 1997, the
balance of the Bank's loans and advances under existing lines of credit to these
parties was approximately $2,707,148, or 2.2% of the Bank's total loans.
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<PAGE>
CERTAIN RELATIONSHIPS
Mr. Zueck is a director, treasurer, and beneficial owner of 7.4% of the
mortgage company with which the Bank conducts business.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Action is being taken by the Stockholders at the Annual Meeting with
respect to the ratification of the selection by the Company's Board of Directors
of Baird, Kurtz & Dobson to be independent auditors of the Company for the
current fiscal year. The Board of Directors has selected Baird, Kurtz & Dobson
as the independent certified public accountants to audit the Company's financial
statements for the fiscal year ending December 31, 1997. Baird, Kurtz & Dobson
does not have and has not had at any time any direct or indirect financial
interest in the Company and does not have and has not had at any time any
connection with the Company in the capacity of promoter, underwriter, voting
trustee, director, officer or employee. Neither the Company, nor any officer,
director, or associate of the Company, has any interest in Baird, Kurtz &
Dobson.
On July 24, 1996, the Board of Directors resolved to engage the accounting
firm of Baird, Kurtz & Dobson as the Registrant's independent accountant for its
fiscal year ending December 31, 1996. Effectively, the Registrant's former
independent accountant, McGladrey & Pullen, LLP, simultaneously resigned as of
July 24, 1996. The Denver office of McGladrey & Pullen was acquired by Baird,
Kurtz and Dobson on June 17, 1996. All former audit engagement members, with the
exception of the audit partner, are now with Baird, Kurtz and Dobson.
McGladrey & Pullen's report on the financial statements for the years
ended December 31, 1995 and 1994 contained no adverse opinion or disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles.
During the years ended December 31, 1995 and 1994 and interim period
subsequent to December 31, 1995, there were no disagreements with McGladrey &
Pullen on any matter of accounting principles or practices, financial statement
disclosure, auditing scope or procedure, or any reportable events.
McGladrey & Pullen has furnished the Company with a copy of its letter
addressed to the SEC stating that it agrees with the above statements.
A representative of Baird, Kurtz & Dobson will be present at the Annual
Meeting and will have the opportunity to make a statement if he or she so
desires and will be available to respond to appropriate questions.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AND IN FAVOR OF THE
RATIFICATION OF SUCH APPOINTMENT.
OTHER MATTERS
The Company knows of no business which will be presented for consideration
at the Annual Meeting other than that described above. However, if any other
business should come before the Annual Meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the Proxies in respect of
any such business in accordance with their best judgment.
PROPOSALS FOR 1999 ANNUAL MEETING
Stockholders who intend to present proposals at the 1999 annual meeting,
which the Company currently expects to hold in May 1999, must deliver them to
the Company at its principal executive offices at least 150 days prior to the
meeting or by December 23, 1998, whichever is earlier, for inclusion in the
proxy statement and form of proxy relating to that meeting. All proposals must
comply with the applicable requirements of the federal securities laws and the
Company's Bylaws.
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<PAGE>
PROXY
UNION BANKSHARES, LTD.
1825 LAWRENCE STREET
SUITE 444
DENVER, COLORADO 80202
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles R. Harrison, Bruce E. Hall and
Herman J. Zueck, and each of them, as Proxies, each with the power to appoint
his substitute, and hereby authorizes them to represent, and to vote as
designated on the reverse side, all the shares of Common Stock of Union
Bankshares, Ltd. held of record by the undersigned on April 17, 1998 at the
Annual Meeting of Stockholders to be held on May 27, 1998 or any adjournment
thereof upon the following matters, as set forth in the Notice of said Meeting
and Proxy Statement, dated April 17, 1998, copies of which have been received by
the undersigned.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR APPROVAL OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND
FOR THE APPROVAL OR RATIFICATION OF THE TWO-FOR-ONE STOCK SPLIT, FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR THE RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT AUDITORS OF THE COMPANY.
The election of the director-nominees below, and the ratification of the
appointment of Baird, Kurtz & Dobson as independent auditors of the Company are
proposed by the Company.
1. Proposal to approve the amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock
and to approve or ratify the two-for-one stock split in the form of a stock
dividend.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. ELECTION OF DIRECTORS:
[ ] FOR the nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK THE "FOR"
BOX ABOVE AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Charles R. Harrison, Harold R. Logan, Jr. and Richard C. Saunders
3. Proposal to ratify the appointment of Baird, Kurtz & Dobson as independent
auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may be incidental to the conduct of the meeting.
MARK HERE [ ]
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign exactly as your name
appears on this proxy. If the shares
represented by this proxy are held by
joint tenants, both must sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
stockholder is a corporation, please
sign in full corporate name by
President or other authorized officer.
If stockholder is a partnership, please
sign in partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED POSTAGE PRE-
PAID ENVELOPE.
Signature: Date
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Signature: Date
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