<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
First State Bancorporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
First State Bancorporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
[_ ]
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] 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>
FIRST STATE BANCORPORATION
7900 JEFFERSON NE
ALBUQUERQUE, NEW MEXICO 87109
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
___________________________________
April 30, 1998
TO THE SHAREHOLDERS OF FIRST STATE BANCORPORATION:
The annual meeting of shareholders of First State Bancorporation, a New
Mexico corporation, will be held on Friday, June 5, 1998, at 2:00 p.m. local
time in the Crowne Plaza Pyramid, 5151 San Francisco Road NE, Albuquerque, New
Mexico, for the following purposes:
1. To elect 3 directors to hold office for a term ending at the 2001
annual meeting or until their successors are duly elected and
qualified.
2. To approve an amendment to the First State Bancorporation 1993 Stock
Option Plan (the "Plan") to increase the number of shares available
for grant from 225,000 to 400,000.
3. To ratify the appointment of KPMG Peat Marwick LLP as independent
public accountants for the year ending December 31, 1998.
4. To transact any other business which properly comes before the meeting
or any adjournment.
All shareholders of record on the Company's transfer books as of the close
of business on April 24, 1998, are entitled to vote at the annual meeting. A
complete list of shareholders entitled to vote at the annual meeting will be
available for examination by any Company shareholder at 7900 Jefferson NE,
Albuquerque, New Mexico, for purposes germane to the annual meeting, during
normal business hours for a period of ten days prior to the annual meeting.
<PAGE>
Please read the attached proxy statement carefully. PLEASE SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD AUTHORIZING REPRESENTATIVES OF THE
COMPANY'S MANAGEMENT TO VOTE ON YOUR BEHALF AT THE MEETING.
By the order of the Board
of Directors
FIRST STATE BANCORPORATION
/s/ MICHAEL R. STANFORD
Michael R. Stanford
President
<PAGE>
FIRST STATE BANCORPORATION
7900 JEFFERSON NE
ALBUQUERQUE, NEW MEXICO 87109
April 30, 1998
PROXY STATEMENT
THIS PROXY STATEMENT AND ACCOMPANYING PROXY CARD SUPPORT A PROXY
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST STATE BANCORPORATION
(THE "COMPANY") FOR USE AT THE JUNE 5, 1998 ANNUAL MEETING OF SHAREHOLDERS AND
AT ANY ADJOURNMENT OF THAT MEETING. This proxy statement and form of proxy will
be sent by mail to shareholders beginning approximately April 30, 1998.
The proxy card, when properly signed, dated and returned to the Company,
will be voted by the proxies at the annual meeting as directed. Proxy cards
returned without direction about business to be transacted at the meeting will
be voted in favor of (i) the nominees for director proposed by management, (ii)
approval of an amendment to the First State Bancorporation 1993 Stock Option
Plan to increase the number of shares available for grant from 225,000 to
400,000, and (iii) ratification of the appointment of KPMG Peat Marwick LLP as
independent public accountants for the year ending December 31, 1998. The
holders of the proxies will use their judgement regarding other matters that
properly come before the annual meeting. The Company is not aware of any
matters, other than those discussed in this proxy statement, that will be
presented at the annual meeting.
The Company can conduct business at the annual meeting only if holders of a
majority of the total outstanding shares of Common Stock entitled to vote are
present, either in person or by proxy. Assuming a quorum has been reached, the
affirmative vote of the majority of the shares represented is necessary to elect
directors and ratify the appointment of auditors. A majority of the total
outstanding shares of Common Stock is necessary to approve the proposed
amendment to the First State Bancorporation 1993 Stock Option Plan.
Under the rules of the Securities and Exchange Commission, boxes and a
designated blank space are provided on the proxy card for shareholders to mark
if they wish either to vote "for", "against" or "abstain" on one or more of the
proposals, or to withhold authority to vote for one or more of the Company's
nominees for director.
Votes withheld from director nominees and abstentions will be counted in
determining whether a quorum has been reached. Broker-dealer "non-votes" will
also be counted for quorum purposes.
1
<PAGE>
REVOCABILITY OF PROXY
Any shareholder giving a proxy may revoke it at any time prior to the
meeting either through submission of a later-dated proxy or by providing notice
of revocation to the Secretary of the Company at the address set forth above.
Shareholders may vote all their eligible shares if they are personally present
at the meeting. When a shareholder votes at the meeting, his or her vote will
revoke any proxy previously granted by the shareholder.
EXPENSE AND MANNER OF SOLICITATION
In addition to solicitation by mail, proxies may be solicited in person or
by telephone or telegram by directors and officers of the Company who will not
receive compensation for their soliciting activities. Brokers and other
nominees will solicit proxies or authorizations from beneficial owners and will
be reimbursed for their reasonable expenses. The Company has retained Corporate
Investor Communications, Inc., to assist in soliciting proxies from brokers,
bank nominees and other institutional holders for a fee estimated at $5,000;
plus expenses. The Company will bear all of the costs of the solicitation.
PROPOSAL 1
ELECTION OF DIRECTORS
All of the Common Stock represented by valid proxies received from
shareholders will be voted for the nominees for directors named below, unless
authority to do so is withheld. Each nominee for director has consented to his
nomination and to serve if elected. If any nominee is unable to serve, the proxy
will be voted to elect any other person for the office of director whom the
Board of Directors recommends in the place of that nominee.
Three directors are to be elected to serve until the 2001 Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of April 24, 1998, the record date, 2,588,042 shares of the Company's
Common Stock were outstanding and entitled to vote at the annual meeting.
Holders of shares of Common Stock may cast one vote for each share on each
matter of business properly brought before the meeting. Only shareholders of
record at the close of business on April 24, 1998 may vote. Shareholders are
not allowed to cumulate votes in the election of directors.
2
<PAGE>
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 24, 1998, by (i) each
shareholder known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) each director of the Company, and (iii) all
directors and executive officers as a group. Unless otherwise indicated, based
on information furnished by such owners, the Company believes that the
stockholders listed below have sole investment and voting power with respect to
their shares. Unless otherwise indicated, the address of such person is the
Company's address, 7900 Jefferson NE, Albuquerque, New Mexico 87109.
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME OWNED (1) OWNED
- -------------------------------------------------------------------------------
Financial Stocks, Inc.
507 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202 174,134 6.73%
John Hancock Advisors, Inc.
101 Humington Avenue
Boston, MA 02199 190,125 7.35%
First Union Corporation
One First Union Center
Charlottee, NC 28288-0137 144,261 5.58%
Michael R. Stanford 100,522 (2) 3.79%
H. Patrick Dee 59,801 (3) 2.26%
Eloy A. Jeantete 1,000 *
Leonard J. DeLayo, Jr. 86,893 (4) 3.34%
Bradford M. Johnson 164,008 6.34%
Douglas M. Smith, MD 23,750 *
Herman N. Wisenteiner 9,562 *
Marshall G. Martin 350 *
Kevin L. Reid -- --
All executive officers and directors
as a group (12 persons) 494,314 17.97%
- --------------------------------------
* Less than 1%
(1) Includes shares of Common Stock issuable on conversion of 7.5% Convertible
Debentures.
(2) Includes 6,612 shares that are subject to an option exercisable at $5.01
per share, 62,500 shares that are subject to an option which is exercisable
at $8.40 per share, and 4,000 shares that are subject to an option
exercisable at $17.25 per share.
(3) Includes 43,750 shares that are subject to an option which is exercisable
at $8.40 per share, and 2,000 shares that are subject to an option
exercisable at $17.25 per share.
(4) Includes 12,500 shares that are subject to an option which is exercisable
at $8.40 per share.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Certain biographical information, including principal occupation and
business experience during the last five years, of each nominee for director is
set forth below. Unless otherwise stated, the principal occupation of each
nominee has been the same for the past five years.
Name Age Position with Company
- --------------------------------------------------------------------------
H. Patrick Dee 43 Executive Vice President, Chief Operating
Officer, Secretary, Treasurer and Director
Leonard J. DeLayo, Jr. 49 Director
Bradford M. Johnson 47 Director
- --------------------------------------------------------------------------
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS VOTE FOR THE NOMINEES
---
FOR THE BOARD OF DIRECTORS.
There are no family relationships among any of the directors, officers or
key employees of the Company. The current authorized number of directors of the
Company is ten. The directors nominated herein will serve until the 2001 annual
meeting.
NOMINEES FOR ELECTION AT 1998 ANNUAL MEETING
H. Patrick Dee has been a Director of the Company since 1991 and presently
serves as Executive Vice President, Chief Operating Officer, and
Secretary/Treasurer of the Company, and Executive Vice President and Chief
Operating Officer of First State Bank, a position he has held since December
1991. Prior to joining the Company, Mr. Dee spent four years with New Mexico
Banquest Corporation and, after its acquisition by Livingston & Co. Southwest
L.P. in 1988, with National Bank of Albuquerque. In 1989, Mr. Dee became Senior
Vice President and Chief Financial Officer of Livingston & Co. Southwest, L.P.
Mr. Dee is a certified public accountant.
Leonard J. DeLayo, Jr., a Director of the Company since November 1993,
served as a director of First State Bank from 1988 to January 1992. Mr. DeLayo
has been engaged in a general corporate and commercial law practice in New
Mexico since 1974 and is the President and sole shareholder of Leonard J.
DeLayo, Jr., P.C., which currently provides legal services to the Company and
the Bank as outside counsel. Mr. DeLayo is President of the Albuquerque Board
of Education. See "Certain Business Relationships--Legal Services."
4
<PAGE>
Bradford M. Johnson, a Director of the Company since November 1993, is
President of Heron Hill Corporation, a private company engaged in investments
and financial consulting. From 1991 to November 1993, Mr. Johnson was a partner
and Director of Research of Sterne, Agee & Leach, Inc., an investment banking
firm in Atlanta, Georgia. Mr. Johnson studied at the University of Paris-
Sorbonne from 1987 to 1991.
Certain biographical information, including principal occupation and
business during the last five years of the current directors serving until the
1999 and 2000 Annual Meetings is set forth below. Unless otherwise stated, the
principal occupation of each director has been the same for the past five years.
CURRENT DIRECTORS SERVING UNTIL 1999 ANNUAL MEETING
Name Age Position with Company
- ------------------------------------------------------------------------
Douglas M. Smith, MD 64 Director
Herman N. Wisenteiner 67 Director
Kevin L. Reid 37 Director
- ------------------------------------------------------------------------
Douglas M. Smith, MD, a Director of the Company since November 1993, is a
Board Certified radiologist and the owner/general partner of The Historic Taos
Inn, Taos, New Mexico. Dr. Smith is the co-founder and former President of Palm
Beach Imaging, Inc., West Palm Beach, Florida, and a former member of the Board
of Directors of the PIE Medical Insurance Co., a physician-owned medical
malpractice insurance company headquartered in Cleveland, Ohio.
Herman N. Wisenteiner, a Director of the Company since November 1993, is
President and Chief Executive Officer of Horn Distributing Company, a real
estate holding company which he founded in 1971 in Santa Fe, New Mexico. In
addition to his many civic activities in northern New Mexico, from 1984 to 1993
Mr. Wisenteiner was also Chairman and Chief Executive Officer of CLX Exploration
Inc., a publicly traded oil and natural gas exploration and production company
headquartered in Denver, Colorado and served as a Director of First Interstate
Bank, Santa Fe, New Mexico from 1980 to 1993. See "Certain Business
Relationships--Santa Fe Branch Location."
Kevin L. Reid, was appointed by the Board of Directors to fill a vacancy
created by the resignation of Manuel Lujan, Jr. Mr. Reid will complete the term
created by that resignation which runs until the 1999 annual meeting. Mr. Reid
is President and Owner of Reid & Associates, a design / build construction
company, a position he has held since 1997, when he assumed the presidency of
Reid & Elliott and changed the name of the Company to Reid & Associates. Mr.
Reid co-founded Reid and Elliott in 1991.
5
<PAGE>
CURRENT DIRECTORS SERVING UNTIL THE 2000 ANNUAL MEETING
Name Age Position with Company
- ------------------------------------------------------------------------------
Eloy A. Jeantete 70 Chairman of the Board and Director
Michael R. Stanford 45 President, Chief Executive Officer and Director
Marshall G. Martin 59 Director
- ------------------------------------------------------------------------------
Eloy A. Jeantete, a Director of the Company since August 1993 and
Chairman of the Board since January 1994, joined the Bank 50 years ago as a
bookkeeper and has spent his entire working career with the Company's wholly
owned subsidary First State Bank (the "Bank") rising to his present position of
Chairman of the Board of the Company. As a lifetime resident of Taos, NM, Mr.
Jeantete has accumulated a long list of civic achievements and community
involvement, culminating with his election in 1990 as Mayor of Taos, New Mexico,
a position he held until March 1994.
Michael R. Stanford, a Director of the Company since its organization
in 1988, is President and Chief Executive Officer of the Company and First State
Bank. Mr. Stanford's entire career has been in the banking industry. Prior to
joining the Bank in 1987, Mr. Stanford spent five years with New Mexico Banquest
Corporation as Senior Vice President in charge of loan administration. Mr.
Stanford is a past director of the New Mexico Bankers Association. In
addition, Mr. Stanford is involved in a variety of civic organizations.
Marshall G. Martin, a Director of the Company since June 1997, is a
senior partner with the law firm of Hinkle, Cox, Eaton, Coffield & Hensley,
L.L.P., a position he has held since June 1997, and prior to January of 1997.
For the period from January 1997 through June 1997 Mr. Martin was Vice
President-General Counsel of Solv-Ex Corporation (on August 1, 1997, Solv-Ex
Corporation filed a Chapter 11 petition in bankruptcy). Hinkle, Cox, Eaton,
Coffield & Hensley, L.L.P., is the Company's corporate counsel. See "Certain
Business Relationships--Legal Services." Mr. Martin is involved in a variety of
civic organizations.
INFORMATION WITH RESPECT TO STANDING COMMITTEES OF THE
BOARD OF DIRECTORS AND MEETINGS
The Board of Directors held four meetings during the year ended
December 31, 1997. Each incumbent director attended 75% or more of the meetings
of the board of directors and committees on which he served.
6
<PAGE>
The Board of Directors has an executive committee, an audit committee and a
compensation committee. The Board of Directors does not have a standing
nominating committee. Nominations to the Board are determined by the entire
Board.
The executive committee members are Eloy A. Jeantete, Michael R. Stanford,
Bradford M. Johnson, and Douglas M. Smith. The executive committee held one
meeting during 1997. The executive committee meets periodically to explore and
consider issues in advance of the meetings of the entire Board of Directors and
makes recommendations to the Board of Directors concerning such issues.
The audit committee members are Douglas M. Smith and Bradford M. Johnson.
The audit committee held four quarterly meetings during the year ended December
31, 1997. The audit committee reviews with the independent and internal
auditors of the Company their respective audit and review programs, procedures,
the scope and results of their examinations, and their fees and related costs.
Additionally, the audit committee reviews the financial statements and the
adequacy of the Company's system of internal accounting controls. The audit
committee makes recommendations to the Board of Directors relating to the
independent auditors and to their engagement or discharge.
The compensation committee members are Leonard J. DeLayo, Jr. and Herman N.
Wisenteiner. The committee held four meetings during the year ended December
31, 1997. The purpose of the compensation committee is to determine the
compensation and benefits for executive officers of the Company.
CERTAIN BUSINESS RELATIONSHIPS
CREDIT TRANSACTIONS
The executive 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 collectability or present other unfavorable features. At December
31, 1997, the aggregate balance of the Bank's loans and advances under existing
lines of credit to these parties was $1,180,868, or 0.41% of the Bank's total
loans. All payments of principal and interest on these loans are current. These
loans represented 4.26% of the Company's equity as of December 31, 1997.
7
<PAGE>
LEGAL SERVICES
Mr. DeLayo was a director of First State Bank from 1988 through January
1992, was a director of the First State Bank of Santa Fe from March 1993 to June
1994 and was appointed as a director of the Company in November 1993. Mr.
DeLayo acts as general counsel to the Company and the Bank. Mr. DeLayo and his
firm, Leonard J. DeLayo, P.C., are involved in representing the Company in
numerous collection matters. The Company paid Mr. DeLayo's firm approximately
$205,000, $146,000, and $187,000 for its services in 1997, 1996 and 1995.
Marshall G. Martin was elected to the Board as a director in June 1997. Mr
Martin is a partner in the firm of Hinkle, Cox, Eaton, Coffield & Hensley,
L.L.P., which serves as the Company's corporate counsel. The Company paid
Hinkle, Cox, Eaton, Coffield & Hensley, L.L.P., approximately $85,000 for its
services in 1997.
SANTA FE BRANCH LOCATION
The Downtown Santa Fe location was constructed on land owned by Herman
Wisenteiner, a Director of the Company. The Company is leasing the site from
Mr. Wisenteiner for an initial term of 15 years. Lease payments made to Mr.
Wisenteiner were $61,800 for 1997 and $60,000 in 1996, respectively. In the
opinion of management, the lease is on terms similar to other third-party
commercial transactions in the ordinary course of business.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is paid an annual
fee of $3,000 and a per meeting fee of $500 and is reimbursed for expenses
incurred in attending meetings of the Board of Directors and the committee
meetings of the Board of Directors.
8
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth the compensation paid by the Company to
the two executive officers of the Company and one officer of the bank subsidiary
who received in excess of $100,000 in cash compensation.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation ----------------------
Name and ------------------------------------------ Stock
Principal Position Year Salary ($) Bonus ($) Other ($)(1) Options Granted (#)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael R. Stanford 1997 $220,833 -- $50,405 20,000
President and Chief 1996 $183,333 $ 24,000 $41,621 0
Executive Officer 1995 $175,000 $ 45,000 $42,636 0
H. Patrick Dee 1997 $154,583 -- $46,097 10,000
Secretary and 1996 $130,000 $ 16,000 $42,836 0
Treasurer 1995 $116,250 $ 30,000 $39,369 0
W. Gary Millhollon
Senior Vice President
Bank Subsidiary 1997 $ 70,000 $126,874 $ 8,100 0
Leasing division 1996 $ 60,000 $ 47,405 $ 6,000 0
- --------------------------------
</TABLE>
(1) Represents insurance premiums paid by the Company on behalf of the
employee, amounts contributed by the Company to the employee's Section 401(k)
plan, auto allowance, and dues.
Aggregated Option Exercises in Fiscal Year
------------------------------------------
and Fiscal Year-End Options Value
---------------------------------
<TABLE>
<CAPTION>
Number of
Unexercised Options Value of In-the-Money
Shares Value at 12/31/97 (#) Options at 12/31/97
Acquired on Realized Exercisable / ($) (1) Exercisable /
Name Exercise (#) ($) Unexercisable Unexercisable
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael R. Stanford 43,500 $470,253 73,112 $935,643
16,000 $ 66,000
H. Patrick Dee -- -- 45,750 $575,906
8,000 $ 33,000
- ---------------------
</TABLE>
(1)The closing price of the Company's Common Stock on December 31, 1997, was
$21.375 per share.
9
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
- -------------------------------------------------------------------------------------------------
Number of
securities Percent of
underlying total options Exercise
options granted to or base
granted employees in price Expiration Grant Date
Name (#)(1) fiscal year ($/Sh) date Present Value (2)
- -------------------- ----------- -------------- --------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Michael R. Stanford 20,000 17.48% $17.25 7/25/2007 149,200
H. Patrick Dee 10,000 8.74% $17.25 7/25/2007 74,600
- ---------------------
</TABLE>
(1) The closing market price for the Company's Common Stock on July 25, 1997,
the date the Board granted the stock options, approximately 80% of which are
subject to stockholder ratification, was $17.25 per share. Since that date, the
market price of the Company's Common Stock underlying the options has increased.
On April 22, 1998, the closing price for the Company's Common Stock was $25.75.
(2) Options were valued using the Black-Scholes option pricing model, which
generates a theoretical value based upon certain factors and assumptions.
Therefore, the value which is calculated is not intended to predict future
prices of the Company's Common Stock. The actual value of a stock option, if
any, is dependent on the future price of the stock, overall stock market
conditions, and continued service with the Corporation. The grant date present
value has not been adjusted for the impact of income tax to the option holder.
There can be no assurance that the values reflected in this table or any other
value will be achieved. In addition to the stock value at the date of grant and
the exercise price, the following assumptions were used to calculate the values
reflected in the table: dividend yield of 0.98%, expected volatility of 40.23%,
risk free interest rate of 5.50%, and the expected life of 5 years.
EXECUTIVE INSURANCE
The Bank has key-person insurance policies on each of Messrs. Stanford
and Dee. Under these policies, the Bank is named as beneficiary of $695,662 of
term life insurance on Mr. Stanford and $428,545 of term life insurance on Mr.
Dee (the "Term Life Policies"). In addition, the Bank also pays the premiums on
$804,338 of additional whole life insurance for Mr. Stanford and $771,455 for
Mr. Dee under which each of these individuals is able to name the beneficiary
(the "Whole Life Policies"). Under the provisions of the Term Life Policies the
amount of term insurance under each policy is gradually decreased over a period
of 10 years. However, the Bank's premium payments are kept level during the
entire 10 year period with the excess premiums from the Term Life Policies being
applied to the Whole Life Policies. As a result of the increasing portion of
the premiums which are allocated to the Whole Life Policies, at the end of the
10 year period the Whole Life Policies are fully paid. Upon termination of
employment, the Whole Life Policies would be transferable to Messrs. Stanford or
Dee, as the case may be, who could elect to continue making the premium payment
if such termination occurred prior to the tenth year of the policy. The annual
premium which will be paid for the Whole Life Policies will constitute
compensation to such individuals.
10
<PAGE>
STOCK OPTION AGREEMENT
Under the terms of a stock option agreement, Michael R. Stanford can
exercise an option to purchase 6,612 shares of Common Stock at a price of $5.01
per share. As originally granted, the option allowed Mr. Stanford to purchase
up to 10% of the common stock of New Mexico Bank Corporation ("NMBC"), the
parent holding company of National Bank of Albuquerque, at the book value of the
NMBC common stock as of November 19, 1990. In December 1991, the option was
converted to an option to purchase the Company's Common Stock when NMBC was
merged into the Company. The option may be exercised at any time by Mr.
Stanford and will expire on October 12, 2003.
EXECUTIVE INCOME PROTECTION PLAN
The Company has an Executive Income Protection Plan (the "Plan") with the
following participants: Patrick G. Cahalan, H. Patrick Dee, Brian C.
Reinhardt, and Michael R. Stanford, which provides for benefits upon a Control
Change (as defined in the Plan). Following a Control Change, the Plan provides
for a three-year employment term and specifies the employee's position, salary,
bonus, and benefits payable during that period. If the employee (i) resigns;
(ii) is discharged for any reason other than cause, death, or disability; (iii)
experiences a Reduction in Position (as defined in the Plan) within a three-year
period beginning on the date of the Control Change, then the employee shall have
income protection benefits consisting of (a) a compensation benefit, payable in
a single sum, equal to three times his Compensation (as defined in the Plan) in
the case of Messrs. Dee and Stanford and two times his Compensation in the case
of Messrs. Cahalan and Reinhardt; (b) the same level of fringe benefits as
existed on the date of the Control Change for a period ending three years after
the Control Change including, without limitation, any plan or arrangement to
receive and exercise stock options and/or stock appreciation rights, restricted
stock or grants thereof in which the employee is participating on the date of
the Control Change (or plans or arrangements providing him with substantially
similar benefits); (c) an amount equal to the employee's non-vested accrued
benefit in the Company's retirement plans, determined as of the last valuation
date under such plans, if the employee is not fully vested under the terms of
such plans; (d) up to a maximum of 30 percent of his Compensation for out-
placement services for the employee; and (e) a lump sum payment at the same time
as the compensation payment described in (a) above, if the Company has purchased
a split-dollar life insurance policy on the life of an employee.
"Control Change" is defined in the Plan as (i) a sale or sales (including an
exchange) of shares of the Company, other than pursuant to a public offering, at
one or more times by the Company, a stockholder or stockholders of the Company,
or by any combination of the foregoing, which in the aggregate results in the
beneficial ownership of more than 50% of the combined voting power of the
Company's outstanding securities after the sale or sales by one or more
stockholders who were not stockholders of the Company on April 19, 1996 (the
effective date of the Plan), and who were not controlled after the sale or
sales, directly or indirectly, by
11
<PAGE>
one or more of the stockholders of the Company on April 19, 1996; (ii) a sale or
sales by the Company of all or substantially all of its assets to one or more
persons or entities who were not stockholders of the Company on April 19, 1996,
and who are not controlled after the sale or sales, directly or indirectly, by
one or more of such stockholders; or (iii) a merger or other combination in
which the Company is either the surviving or disappearing corporation, which
results in the beneficial ownership of more than 50% of the combined voting
power of the outstanding securities of the surviving corporation by one or more
persons or entities which were not stockholders of the Company on April 19,
1996, and which are not controlled after such merger or other combination,
directly or indirectly, by one or more of such stockholders; (iv) the approval
by the stockholders of the Company of any plan or proposal to liquidate or
dissolve the Company; or (v) during any period of two consecutive years,
individuals who at the beginning of the period constitute the entire Board of
Directors of the Company cease for any reason to constitute a majority thereof,
unless the election or the nomination for election by the Company's stockholders
of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
"Compensation" means the sum of; (i) the employee's average taxable
compensation from the Company; (ii) the employee's average elective salary
reduction contributions to plans under Internal Revenue Code (the "Code")
Sections 401(k) and/or 125; and (iii) the product of the average percentage of
covered payroll contributed by the Company to the Company's 401(k) profit
sharing plan multiplied by the sum of (i) and (ii) in each case for the five
calendar years preceding the Control Change.
"Reduction in Position" shall occur if an employee (i) is removed as an
officer or director; (ii) experiences a significant decrease in managerial or
supervisory authority; (iii) experiences a reduction in salary or bonus; (iv)
is required by the Company to relocate to an office more than 50 miles from his
location before the Control Change; (v) is reduced in the rate of his awards
under any stock option plan in effect before the Control Change; (vi)
experiences a material adverse change in his terms and conditions of employment.
The Plan provides that the employees will be entitled to a gross-up payment
if it is determined that any payment would be subject to the excise tax imposed
by Section 4999 of the Code. The Plan also provides for the Company to pay the
employee's legal fees incurred in any contest relating to the Plan and certain
other indemnifications to the extent permitted under applicable New Mexico or
federal law and under the Company's Bylaws and Articles of Incorporation.
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<PAGE>
The aggregate cost to the Company of the requirements for payments to
employees covered under the Plan (including the cost of early vesting under
employee plans) would not exceed $2.5 million.
SECTION 401(k) PLAN
In 1991 the Company adopted a tax-qualified profit sharing 401(k) plan (the
"Saving Plan") covering all employees who have attained 21 years of age and have
completed one year of service with the Company. Each participant in the Saving
Plan may reduce his or her salary by as much as the lesser of 20% of his or her
compensation or $9,500, in 1997. The dollar limit is adjusted each year for
inflation. The Company is required to make matching contributions of up to 50%
of the first 6% of a participant's deferred compensation up to a maximum of 3%.
The Company may, but is not required to, contribute additional amounts to the
Saving Plan. Any such additional amounts are allocated to the accounts of
participants who were active participants on the last day of the plan year or
who retired or died or were disabled during the plan year. The allocation is in
proportion to the eligible participants' compensation. During 1997, 1996, and
1995, First State Bank made contributions to the Saving Plan of $125,000,
$106,000, and $70,000, respectively.
All contributions by a participant are 100% vested and nonforfeitable at
all times. The Company's contributions become 100% vested after three years of
service with the Company. A participant may direct the investment of his or her
account pursuant to the investment options offered by the trustee of the Saving
Plan. Distribution of a participant's account under the Saving Plan normally
occurs upon the participant's retirement or the participant's termination of
employment with the Company.
STOCK OPTION PLAN
Effective October 5, 1993, the Company adopted the First State
Bancorporation 1993 Stock Option Plan (the "Stock Option Plan"), which provides
for the granting of options to purchase up to 225,000 shares of the Company's
common stock. Exercise dates and prices for the options are set by a committee
of the Board of Directors. The Stock Option Plan also provides that options
other than those qualifying as incentive stock options may be granted. On July
25, 1997, the Board of Directors approved increasing the number of options
available for grant by 175,000. This action must be approved by a vote of the
common stockholders, by amending the Stock Option Plan--See "Proposal 2," before
grant of those options becomes effective. On July 25, 1997, the Board of
Directors granted 113,400 options at a price of $17.25 per share; 78,515 of
these options are subject to stockholder approval of the increase in number of
options available for grant. Vesting of these options is 20 percent at the date
of grant and 20 percent per year thereafter until fully vested.
13
<PAGE>
The Stock Option Plan is administered by a committee composed of
disinterested members of the Board of Directors (the "Committee"). Subject to
the terms of the Stock Option Plan, the Committee determines the persons to whom
awards are granted, the type of award granted, the number of shares granted, the
vesting schedule, the type of consideration to be paid to the Company upon
exercise of options, and the term of each option (not to exceed ten years).
Under the Stock Option Plan, the Company may grant both incentive stock
options ("incentive stock options") intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and options which are
not qualified as incentive stock options ("nonqualified stock options").
Incentive stock options must be granted at an exercise price equal to or greater
than the fair market value of the Common Stock on the date of grant. The
exercise price of nonqualified stock options granted under the Stock Option Plan
will be determined by the Committee on the date of grant. The exercise price of
incentive stock options granted to holders of more than 10% of the Common Stock
must be at least 110% of the fair market value of the Common Stock on the date
of grant, and the term of these options may not exceed five years.
The Stock Option Plan provides that the total number of shares covered by
the 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.
Upon a change in control of the Company, stock options outstanding under
the Stock Option Plan immediately become fully vested and exercisable. Also, in
the event of a merger or consolidation in which the Company is not the surviving
corporation, the sale of all or substantially all of the Company's assets,
certain reorganizations or the liquidation of the Company, each option granted
under the Stock Option Plan may, at the election of the holder, become
immediately exercisable.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than 10% of a registered class of
the Company's equity securities and certain other affiliated persons to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no other forms were required, the
Company believes that during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
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<PAGE>
PROPOSAL 2
PROPOSAL TO APPROVE AMENDMENT
TO THE
1993 STOCK OPTION PLAN
On October 5, 1993, the shareholders of the Company adopted the First State
Bancorporation 1993 Stock Option Plan (the "Plan"). The Board of Directors
amended the Plan on July 25, 1997, to increase the number of shares available
for grant from 225, 000 to 400,000, and to provide that an option granted under
the Plan may be assigned or transferred. The purposes of the Plan are to give
those who are selected for participation in the Plan added incentives to
continue in the long-term service of the Company and to create in them a more
direct interest in the future success of the operations of the Company by
relating incentive compensation to increase in stockholder value, so that the
income of those participating in the Plan is more closely aligned with the
income of the Company's shareholders. The Plan is also designed to provide a
financial incentive that will help the Company attract, retain, and motivate the
most qualified employees and consultants. The amendment is subject to approval
by the shareholders of the Company at the 1998 Annual Meeting of Shareholders.
The Plan provides for the grant of incentive stock options and non-
qualified stock options to employees of the Company. "Incentive stock options"
are options that meet the requirements of Section 422 of the Code, and "non-
qualified stock options" are options which do not meet the requirements of
Section 422. The Plan, as amended, increases the number of shares subject to the
Plan to 400,000 shares. As of March 31, 1998, an aggregate of 3,800 shares has
been issued under the Plan, 309,353 shares were subject to outstanding stock
options, 78,515 of which were subject to shareholder approval of this Proposal.
As of March 31, 1998, the Company has approximately 200 employees eligible to
participate in the Plan. The closing price of the Company's Common Stock as
reported by the NASDAQ National Market System for April 22, 1998, was $25.75.
The Plan, provides the option agreement may permit that the right or
interest of any holder in an option granted pursuant to the Plan may be assigned
or transferred during the option period. The Committee may include in the option
agreement any restrictions on assignments and transfers or subsequent
assignments and transfers as the Committee deems necessary and appropriate. Any
transferee option holder of a right or interest in an option must agree in
writing to the terms and conditions of the underlying option agreement, or the
transfer is null and void. In the event of a holder's death, a holder's rights
and interests in options shall be transferable by will or pursuant to the laws
of descent and distribution. Each option granted under the Plan shall be
exercisable only by the holder or, in the event of disability or incapacity, by
the holder's guardian or legal representative.
15
<PAGE>
The Plan is administered by a committee of the Board of Directors comprised
of disinterested directors (the "Committee"). The Plan gives broad powers to the
Committee to administer and interpret the Plan, including the authority to
select the persons to be granted options, to determine the number of shares
subject to each option, and to prescribe the particular form and conditions of
each option granted. The Plan requires that the option price of incentive stock
options granted under the Plan shall be not less than 100 percent of the fair
market value of the Company's Common Stock as of the date the option is granted,
and the terms of an incentive stock option may not exceed ten years. The
exercise price of any incentive stock option granted to an employee who owns
Common Stock representing more than 10 percent of the voting rights of the
Company's outstanding capital stock on the date of grant must be equal to at
least 110 percent of the fair market value on the date of grant. The Plan
provides that non-qualified stock options shall have an option price not less
than 100 percent of the fair market value of the Company's Common Stock on the
date of grant unless otherwise determined by the Committee. All options granted
under the Plan are subject to various other conditions and restrictions. Shares
subject to canceled options are available for options granted in the future
under the Plan.
Under the Code, there is no taxable income to an employee when an Incentive
Stock Option is granted or when it is exercised. The excess, however, of the
fair market value of the underlying shares on the date of exercise over the
option exercise price will be an item of tax preference and, accordingly, must
be taken into account in determining whether an employee is subject to the
alternative minimum tax for the year of exercise. If the employee does not
dispose of the shares within the later of two years from the date of option
grant or one year from the date of exercise, any gain realized upon the
disposition will be taxable as capital gain. However, if the employee does not
satisfy the applicable holding periods, the excess of the fair market value of
the shares on the date of exercise over the option exercise price (but not
exceeding the amount by which the sale price of the shares exceeds the option
exercise price) will be taxable as ordinary income for the year in which the
shares are sold. Upon the exercise of a non-qualified stock option, the excess
of the fair market value of the underlying shares on the date of exercise over
the option exercise price for the shares will be taxable to the optionee as
ordinary income. The Company will be entitled to a corresponding tax deduction
for any amounts which are taxable to an optionee as ordinary income.
In the event of an increase or decrease in the number of shares of Common
Stock resulting from a subdivision or consolidation of shares or the payment of
a share dividend or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company, the
number of shares of Common Stock covered by each outstanding option and the
price per share thereof shall be equitably adjusted by the Committee to reflect
the change.
Upon the occurrence of any of the following events, if the required notice
has been given, any options granted under the Plan shall automatically terminate
on: (a) the merger
16
<PAGE>
or consolidation of the Company (but only if the Company is not the surviving
corporation or if the Company becomes a subsidiary of another corporation) or
the acquisition of its assets or stock pursuant to a non-taxable reorganization,
unless the surviving or acquiring corporation assumes the outstanding options or
substitutes new options for them in a manner consistent with the regulations
promulgated under Section 424 of the Code as if the options were incentive stock
options; (b) the dissolution or liquidation of the Company; (c) the appointment
of a receiver for all, or substantially all, of the Company's assets or
business; (d) the appointment of a trustee for the Company after a petition has
been filed for the Company's reorganization under applicable statutes; or (e)
the sale, lease, or exchange of all, or substantially all, of the Company's
assets and business. At least 30 days' prior written notice of any event
described above shall be given by the Company to each Holder, except the
transactions described in clauses (c) or (d), as to which no notice shall be
required. Holders notified in accordance with the Plan may exercise their
options at any time before the event requiring the giving of notice (but subject
to its occurrence), regardless of whether all conditions of exercise relating to
length of service have been satisfied.
If a Change in Control (as defined below) occurs, all options shall become
exercisable in full, regardless of whether all conditions of exercise relating
to length of service have been satisfied. A "Change in Control" is deemed to
have occurred if (a) a person (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934) becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of shares of the Company having 25 percent or
more of the total number of votes that may be cast for the election of directors
of the Company without the prior approval of at least two-thirds of the members
of the Board unaffiliated with that person; or (b) persons who constitute the
directors of the Company at the beginning of a 24-month period cease to
constitute at least two-thirds of all directors at any time during the period,
unless the election of any new or replacement directors was approved by a vote
of at least a majority of the members of the Board in office immediately before
the period and of the new and replacement directors so approved; (c) the
adoption of any plan or proposal to liquidate or dissolve the Company; or (d)
any merger or consolidation of the Company unless thereafter (i) directors of
the Company immediately prior thereto continue to constitute at least two-thirds
of the directors of the surviving entity or transferee, or (ii) the Company's
securities continue to represent or are converted into securities that represent
more than 80 percent of the combined voting power of the surviving entity or
transferee. Notwithstanding anything to the contrary in the Plan, no option will
become exercisable because of a Change in Control if the holder of that option
or any group of which that holder is a member is the person whose acquisition
constituted the Change in Control.
17
<PAGE>
NEW PLAN BENEFITS
FIRST STATE BANCORPORATION
1993 STOCK OPTION PLAN
NAME AND POSITION NUMBER OF UNITS (1)
Michael R. Stanford
President and Chief Executive Officer 16,000
H. Patrick Dee
Executive Vice President,
Secretary and Treasurer 8,000
Executive Officers 14,000
Executive officers of Bank subsidiary 42,720
Non-executive officers of bank subsidiary 4,000
------
Total 84,720
======
(1) Granted on July 25, 1997, at an option price of $17.25 per share of the
Company's Common Stock, subject to shareholder approval of the amendment to
the Plan. The closing price of the Common Stock as reported by the NASDAQ
National Market System for April 22, 1998, was $25.75.
Approval of the amendment requires the affirmative vote of the holders of a
majority of the total outstanding shares of Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE
1993 STOCK OPTION PLAN.
18
<PAGE>
PROPOSAL 3
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP was the Company's independent public accounting firm
for 1997 and has been approved by the Directors to continue in that capacity in
1998.
A proposal to ratify the appointment of KPMG Peat Marwick LLP will be
presented to the shareholders at the annual meeting. Representatives of KPMG
Peat Marwick LLP will be present at the annual meeting and will have an
opportunity to make a statement if they desire to do so and respond to
appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP
19
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission and the Company's Bylaws. Should a shareholder wish to have a
proposal appear in the Company's proxy statement for next year's annual meeting,
under the regulations of the Securities and Exchange Commission it must be
received by the Secretary of the Company (at P.O. Box 3686, Albuquerque, New
Mexico, 87190) on or before December 15, 1998.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative shareholder return on the Company's
Common Stock since November 3, 1993, when the Common Stock began public trading,
with the cumulative total return on the Nasdaq Total US Index and the SNL less
than $500M Bank Index. The table below compares the cumulative total return of
the Common Stock as of December 31, 1993, 1994, 1995, 1996, and 1997, assuming a
$100 investment on November 3, 1993, and assuming reinvestment of all dividends.
This data was furnished by SNL Securities LC.
<TABLE>
<CAPTION>
PERIOD ENDING
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INDEX 11/3/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- -----------------------------------------------------------------------------------------
First State Bancorporation 100.00 109.09 109.75 140.48 176.51 254.77
NASDAQ - Total US 100.00 100.63 98.37 139.12 171.11 209.97
SNL less than $500M Bank Index 100.00 100.58 108.17 147.98 190.47 324.69
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This is a report of the Compensation Committee of the Board of Directors
(the "Committee"), which is composed of the following Board members, Leonard J.
DeLayo, Jr., and Herman N. Wisenteiner, both of whom are nonemployee Directors.
This report shall not be deemed incorporated by reference into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not
otherwise be deemed filed under either such Act.
In designing executive compensation, the Committee has adopted the policy
that the Company's executives should be paid fairly for the positions they hold
in view of the nature and size of the business which the Company operates. The
compensation level of the executives of the Company recognizes contributions
towards the Company's performance by the executives and is designed to attract
and retain competent executives who share the
20
<PAGE>
objectives of the Company and its stockholders. The goal of the Committee is to
ensure that the Company employs qualified, experienced executive officers whose
financial interest is aligned with that of the stockholders. The Committee
considers general industry practice, tax effects and other factors in
structuring executive compensation awards. Base salaries for each of the
executive officers of the Company are determined by taking into consideration
performance, length of tenure with the Company, compensation by industry for
comparable positions, and career achievements.
Michael R. Stanford, President and C.E.O., and H. Patrick Dee, Executive
Vice President and C.O.O., receive bonus compensation based on a formula
monitored by the Compensation Committee. The bonus formula awards compensation
as a percentage of base salary for the Company's actual performance relative to
its annual budget for earnings before income taxes, asset growth, and efficiency
ratio, and based upon certain levels of return on average equity.
The Company believes that its executives should have a vested interest in
the performance of the Common Stock and, therefore, stock options are used as an
integral part of creating incentives for executives. Option grants are dependent
upon individual performance, level of responsibility, and other relevant
factors. Options are used in order to align the benefits received by the
executive officers with the appreciation realized by stockholders.
Since going public in November 1993, the Company has experienced
significant growth in its interest earning assets, deposits, and net income. The
Committee believes that Mr. Stanford's performance as C.E.O. continues to be
important to the Company's success. His ongoing leadership is needed to achieve
meaningful financial results. His efforts encompass the strategic direction for
the Company's vision as well as direct involvement in driving the Company's
assets and income growth. The Committee believes Mr. Stanford's 1997
compensation was consistent with the overall executive officer compensation
structure.
All recommendations of the Committee have been and are subject to review
and approval of the Board of Directors.
FIRST STATE BANCORPORATION COMPENSATION COMMITTEE
Leonard J. DeLayo, Jr. Herman N. Wisenteiner
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<PAGE>
OTHER BUSINESS
All items of business to be brought before the meeting are set forth in
this proxy statement. Management knows of no other business to be presented. If
other matters of business not presently known to management are properly raised
at the meeting, the proxies will vote on the matters in accordance with their
best judgment.
By order of the Board of Directors
FIRST STATE BANCORPORATION
/s/ MICHAEL R. STANFORD
_____________________________
Michael R. Stanford
President
NOTE:
Shareholders are requested to sign, date and promptly return the enclosed
proxy card, using the enclosed envelope.
22
<PAGE>
FIRST STATE BANCORPORATION
7900 JEFFERSON NE
ALBUQUERQUE, NEW MEXICO 87109
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints H. Patrick Dee and Michael R. Stanford as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of First State Bancorporation held of record by the undersigned on April
24, 1998, at the annual meeting of shareholders to be held on June 5, 1998 or
any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1 AND "FOR"
ITEMS 2 AND 3.
Item 1--ELECTION OF DIRECTORS
[_] FOR all nominees
[_] WITHHOLD AUTHORITY to vote for all nominees
INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.
H. Patrick Dee, Leonard J. DeLayo, Jr., Bradford M. Johnson
Item 2--PROPOSAL TO APPROVE AN AMENDMENT TO FIRST STATE BANCORPORATION 1993
STOCK OPTION PLAN (THE "PLAN") to increase the number of shares available
for grant from 225,000 to 400,000.
[_] For [_] Against [_] Abstain
Item 3--PROPOSAL TO RATIFY THE SELECTION OF KPMG Peat Marwick LLP as the
independent public accountants of the Company.
[_] For [_] Against [_] Abstain
Item 4--In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof. This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder.
The shares represented by this proxy will be voted by the shareholder. If no
direction is given when the duly executed proxy is returned, such shares will
be voted "FOR all nominees" in Item 1 and '"FOR" Item 2 and 3.
PLEASE DATE AND SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please mark, sign, date and
return the proxy card promptly,
using the enclosed envelope.
Date ____________________________
---------------------------------
Signature
---------------------------------
Signature if held jointly
PLEASE SIGN EXACTLY AS NAME
APPEARS. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, AS
EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
