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:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Horizon Financial Corp.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Horizon Financial Corp.
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- ------------------------------------------------------------------------------
[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE>
June 18, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Horizon Financial Corp. to be held at the Best Western Lakeway Inn, 714
Lakeway Drive, Bellingham, Washington, on July 27, 1999 at 2:00 p.m., Pacific
Time.
The attached Notice of Annual Meeting of Shareholders and Proxy Statement
describe the formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Corporation. Directors
and officers of the Corporation, as well as a representative of Moss Adams
LLP, will be present to respond to any questions our shareholders may have.
Please sign, date and return the enclosed proxy card. If you attend the
meeting, you may vote in person even if you voted by proxy previously.
Your continued interest and support of the Corporation and Horizon Bank,
a savings bank, are sincerely appreciated.
Sincerely,
/s/ George W. Gust
George W. Gust
Chairman of the Board
<PAGE>
HORIZON FINANCIAL CORP.
1500 Cornwall Avenue
Bellingham, Washington 98225
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on July 27, 1999
NOTICE IS HEREBY GIVEN THAT the 1999 Annual Meeting of Shareholders
("Meeting") of Horizon Financial Corp. ("Corporation") will be held at the
Best Western Lakeway Inn which is located at 714 Lakeway Drive, Bellingham,
Washington on July 27, 1999 at 2:00 p.m., Pacific Time.
A Proxy Card and Proxy Statement for the Meeting are enclosed herewith.
The Meeting is for the purpose of considering and acting upon:
(1) The election of three directors of the Corporation;
(2) To approve an amendment to the Corporation's 1995 Stock Option Plan;
and
(3) Such other matters as may properly come before the Meeting or any
adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposal at the Meeting on the
date specified above, or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Shareholders of record at the
close of business on June 7, 1999, are the shareholders entitled to notice of
and to vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the Meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard P. Jacobson
RICHARD P. JACOBSON
SECRETARY
Bellingham, Washington
June 18, 1999
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. AN
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
OF
HORIZON FINANCIAL CORP.
1500 Cornwall Avenue
Bellingham, Washington 98225
(360) 733-3050
ANNUAL MEETING OF SHAREHOLDERS
July 27, 1999
- ------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Horizon Financial Corp. ("Corporation"),
the holding company for Horizon Bank, a savings bank ("Bank"), to be used at
the 1999 Annual Meeting of Shareholders of the Corporation ("Meeting") which
will be held at the Best Western Lakeway Inn, 714 Lakeway Drive, Bellingham,
Washington, on Tuesday, July 27, 1999 at 2:00 p.m., Pacific Time. The
accompanying Notice of Annual Meeting of Shareholders and this Proxy Statement
are being first mailed to shareholders on or about June 18, 1999.
REVOCATION OF PROXIES
---------------------
Shareholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted
at the Meeting and all adjournments thereof. Proxies may be revoked by
written notice to the Secretary of the Corporation or the filing of a later
proxy prior to a vote being taken on a particular proposal at the Meeting. An
executed proxy will not be voted if a shareholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors of the
Corporation will be voted in accordance with the directions given therein
provided they are executed. Where no instructions are indicated, executed
proxies will be voted for the nominees for directors set forth below and for
the approval of the amendment to the Corporation's 1995 Stock Option Plan.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
-----------------------------------------------
Shareholders of record as of the close of business on June 7, 1999 are
entitled to one vote for each share of common stock ("Common Stock") of the
Corporation then held. Shareholders are not permitted to cumulate their votes
for the election of directors. As of June 7, 1999, the Corporation had
7,526,245 shares of Common Stock issued and outstanding.
The presence, in person or by proxy, of at least one-third of the total
number of outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Meeting. The nominees for director who receive a
plurality of the votes cast by the holders of the outstanding Common Stock
entitled to vote at the Meeting will be elected. Votes may be cast for or
withheld from each nominee. Votes that are withheld will have no effect on
the outcome of the election because directors will be elected by a plurality
of votes cast. Abstentions, therefore, on the Corporation's proposal to
approve an amendment to the Corporation's 1995 Stock Option Plan will have the
effect of a vote against such proposal. Broker non-votes will be counted for
purposes of determining the existence of a quorum, but will not be counted for
determining the number of votes cast with respect to the election of directors
and the approval of the amendment to the Stock Option Plan, and accordingly,
will have no effect on the outcome these proposals.
If a shareholder is a participant in the Horizon Bank Employee Stock
Ownership Plan ("ESOP"), the proxy card represents a voting instruction to the
trustees of the ESOP as to the number of shares in the participant's plan
account. Each participant in the ESOP may direct the trustees as to the
manner in which shares of Common Stock allocated to the participant's plan
account are to be voted.
<PAGE>
Persons and groups who beneficially own in excess of five percent of the
Corporation's Common Stock are required to file certain reports with the
Securities and Exchange Commission ("SEC"), and provide a copy to the
Corporation, disclosing such ownership pursuant to the Securities Exchange Act
of 1934, as amended ("Exchange Act"). Based on such reports, management knows
of no person who owned more than five percent of the outstanding shares of
Common Stock at June 7, 1999. The following table sets forth, as of June 7,
1999, information as to the shares of the Common Stock beneficially owned by
each director of the Corporation and by all executive officers and directors
of the Corporation as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1)(2) Outstanding
- ---- ------------------------- -----------
Directors and Named Executive Officer(4)
Robert C. Diehl 32,504 0.43%
Fred R. Miller 70,879 0.94
George W. Gust 158,065 2.10
Frank G. Uhrig 80,904 1.08
L. M. (Larry) Strengholt 104,335 1.39
Richard R. Haggen 1,191 0.02
Gary E. Goodman 1,188 0.02
V. Lawrence Evans, President and
Chief Executive Officer 175,180 2.33
All Executive Officers and
Directors as a Group (11 persons) 679,300 9.03%
- ----------------
(1) Includes all shares owned directly by the named individuals or by the
individuals indirectly through a trust or corporation, or by the
individuals' spouses and minor children, except as otherwise noted. The
named individuals effectively exercise sole or shared voting and
investment power over these shares.
(2) Includes shares of Common Stock subject to outstanding stock options which
are exercisable within 60 days after June 7, 1999.
(3) Under SEC regulations the term "named executive officer(s)" is defined to
include the chief executive officer, regardless of compensation level, and
the four most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Mr. V. Lawrence Evans was the
Corporation's only "named executive officer" during the fiscal year ended
March 31, 1999.
PROPOSAL I -- ELECTION OF DIRECTORS
-----------------------------------
The Corporation's Board of Directors consists of eight directors. The
Corporation's bylaws provide that directors will be elected for three-year
staggered terms with approximately one-third of the directors elected each
year. Three directors will be elected at the Meeting to serve for a
three-year period, or until their respective successors have been duly elected
and qualified. The Board of Directors has nominated for election as directors
L. M. (Larry) Strengholt, Richard R. Haggen, and V. Lawrence Evans, each for
three-year terms. Messrs. Strengholt, Haggen and Evans are each current
members of the Board of Directors of the Corporation and the Bank.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the above named nominees for the terms specified
in the table below. If any nominee is unable to serve, the shares represented
by all valid proxies will be voted for the election of such substitute as the
Board of Directors may recommend or the Board may reduce the number of
directors to eliminate the vacancy. At this time the Board of Directors knows
of no reason why any nominee might be unavailable to serve.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES NAMED
BELOW FOR DIRECTORS OF THE CORPORATION.
The following table sets forth certain information regarding the nominees
for election at the Meeting and those directors continuing in office after the
Meeting.
Year First Elected Term to
Name Age or Appointed Director Expire
---- --- --------------------- ------
NOMINEES
--------
L. M. (Larry) Strengholt 70 1985 2002(1)
Richard R. Haggen 54 1994 2002(1)
V. Lawrence Evans 53 1990 2002(1)
CONTINUING DIRECTORS
--------------------
Robert C. Diehl 60 1976 2000
Fred R. Miller 63 1984 2000
Gary E. Goodman 51 1998 2000
George W. Gust 69 1976 2001
Frank G. Uhrig 68 1978 2001
- -------------
(1) Assuming the individual is elected or re-elected.
The principal occupation of each director nominee of the Corporation for
the last five years is set forth below. Unless otherwise stated, each
director resides in the State of Washington.
L.M. (LARRY) STRENGHOLT is the President of Strengholt Construction Co.,
Inc., Lynden, Washington, a general building contractor.
RICHARD R. HAGGEN is owner and co-chairman of the Board of Directors of
Haggen, Inc., a retail grocery chain.
V. LAWRENCE EVANS joined the Bank in 1972 and served as the Bank's
Executive Vice President from 1983 to 1990. Mr. Evans has served as President
of the Bank since May 14, 1990 and as Chief Executive Officer since March 26,
1991. He was elected Chairman of the Bank's Board of Directors in July 1997.
Mr. Evans also serves as President and Chief Executive Officer of the
Corporation.
ROBERT C. DIEHL is the President and General Manager of Diehl Ford, Inc.,
an automobile dealership.
FRED R. MILLER is the retired and former owner and President of the
Skagit Bonded Collectors, Inc., Mount Vernon, Washington.
GARY E. GOODMAN is the refinery manager for the Tosco Refinery in
Ferndale, Washington.
GEORGE W. GUST joined the Bank in 1975 and has served as the Bank's
Chairman of the Board of Directors since August 1984. Mr. Gust has served as
the Corporation's Chairman of the Board of Directors since October 1995.
FRANK G. UHRIG is the manager and the majority shareholder of Yeager's
Sporting Goods and Marina which sells sporting goods, boats, motors and
general merchandise.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
-------------------------------------------------
The Boards of Directors of the Corporation and the Bank conduct their
business through meetings of the Boards and through their committees. During
fiscal 1999, the Board of Directors of the Corporation held nine meetings. No
director of the Corporation attended fewer than 75% of the total number of
meetings of the Board of Directors and committees on which the director
served.
The full Board of Directors of the Corporation acts as a Nominating
Committee for the annual selection of its nominees for election as directors.
The Corporation's Bylaws provide that any nomination to the Board of Directors
(except one proposed by the existing Board of Directors of the Corporation)
must be in writing and delivered or mailed to the Chairman of the Board of the
Corporation at least 20 days prior to the meeting of shareholders called for
the election of directors. The Board of Directors met once during the 1999
fiscal year in its capacity as the Nominating Committee.
The Executive Committee of the Corporation is composed of Directors
Evans, Gust and Miller. This Committee meets at least monthly to advise
management of the Corporation between monthly meetings of the Board of
Directors. The Executive Committee met 12 times during the 1999 fiscal year.
The Audit Committee of the Corporation is composed of Directors Diehl,
Goodman, Haggen and Strengholt. The Audit Committee is responsible for
examining and evaluating the activities of the Corporation and reporting its
findings to the Board. This examination determines the reliability of
information produced on behalf of the Corporation and the effectiveness of
internal practices and procedures and the efficiency of operations. The Audit
Committee also assists the Board in the selection of independent accountants.
The Audit Committee met five times during the 1999 fiscal year.
The Compensation and Retirement Committee is composed of Directors Diehl,
Gust and Miller. This Committee makes recommendations to the Board of
Directors concerning corporation compensation packages and retirement plans.
The Compensation and Retirement Committee met two times during the 1999 fiscal
year.
DIRECTORS' COMPENSATION
-----------------------
Each director of the Corporation is also a director of the Bank.
Directors of the Corporation received no additional compensation for
attendance at any meeting of the Corporation's Board of Directors or
committees thereof during the 1999 fiscal year. Members of the Bank's Board
of Directors receive an annual retainer of $7,800 and $300 for attendance at
each Board meeting. The Chairman of the Board receives an additional $400 for
attendance at each Board meeting. Directors also receive $225 for each
committee meeting attended held on the day of a regular meeting or a special
board meeting held by telephone conference call, and $225 for attendance at a
special board meeting or a committee meeting held on a day other than the day
of a regular board meeting. Members of the Executive Committee receive $375
for each monthly meeting attended. Employees of the Bank who are also
directors do not receive compensation for their attendance at any board
committee meetings.
4
<PAGE>
EXECUTIVE COMPENSATION
----------------------
Summary Compensation Table. The following table sets forth the
compensation received by the named executive officer for each of the three
fiscal years ended March 31, 1999. All compensation is paid by the Bank.
Long-Term
Compensation
Annual Compensation Awards
---------------------------------- ------
Other All
Annual Other
Compen- Compen-
Name and sation Options sation
Position Year Salary($) Bonus($) ($)(1) (#) ($)
- -------- ---- --------- -------- ------ --- ---
V. Lawrence Evans 1999 174,000 22,747 -- 10,000 17,127(2)
President and Chief 1998 168,000 25,018 -- -- 19,136
Executive Officer 1997 162,000 24,611 -- -- 18,775
- -------------------
(1) Does not include perquisites which did not exceed the lesser of $50,000 or
10% of salary and bonus.
(2) Includes contributions to the Bank's ESOP of $3,451 and to the Bank's
Retirement Savings and Investment Plan ("401(k) Plan") of $10,020.
Option Exercise/Value Table. The following information with respect to
options exercised during the fiscal year ended March 31, 1999, and remaining
unexercised at the end of the fiscal year, is presented for Mr. Evans.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Fiscal Year End(#) Fiscal Year End($)
on Value ------------------ ------------------
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#) ($) cisable cisable cisable cisable
---- --- --- ------- ------- ------- ------
V. Lawrence Evans --- --- 69,274 10,000 298,838 4,375
Employment Agreements. The Corporation and the Bank are parties to an
employment contract with Mr. Evans. The agreement renews automatically for an
additional one year term until either of the parties notifies the other in
writing of its intent not to renew the contract. Under the agreement, Mr.
Evans' current annual base compensation is $174,000. In addition, Mr. Evans
is entitled to participate in and to receive all benefits which are applicable
to the Corporation's executive employees. The agreement also provides for
compensation to be paid to Mr. Evans in the event of his disability,
termination without cause or in the event of a change in control of the
Corporation. In the event of a change in control (as defined in the
agreement), Mr. Evans would be entitled to receive an amount equal to 2.99
times the average annual base compensation received prior to the date of
change of control for the most recent five taxable years. Assuming that a
change in control had occurred during fiscal 1999, Mr. Evans would have been
entitled to a cash payment equal to approximately $453,040 based on his
current annual compensation.
Deferred Compensation Plan. The Bank has established a deferred
compensation plan for certain of its officers, including Mr. Evans. The plan
provides for additional retirement benefits payable over a 12 to 17 year
period following retirement. In connection with the funding of the Bank's
obligation under the plan, the Bank has acquired life insurance policies on
the lives of plan participants. Deferred compensation expense for Mr. Evans
amounted to $36,000, $33,430 and $127,630 in 1999, 1998 and 1997,
respectively.
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended,
or the Exchange Act that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following Report of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
5
<PAGE>
Report of the Compensation Committee. The Compensation Committee's
duties are to recommend and administer policies that govern executive
compensation for the Corporation and the Bank. The Compensation Committee
evaluates executive performances, compensation policies and salaries. The
Compensation Committee recommends salaries to be paid to each executive
officer. The entire Board of Directors reviews the Compensation Committee's
recommendations as to executive compensation, including the Chief Executive
Officer, and sets these salaries.
The executive compensation policy of the Corporation and the Bank is
designed to establish an appropriate relationship between executive pay and
the Corporation's and the Bank's annual and long-term performance, long-term
growth objectives, and their ability to attract and retain qualified executive
officers. The principles underlying the program are:
- To attract and retain key executives who are vital to the long-term
success of the Corporation and the Bank and are of the highest caliber;
- To provide levels of compensation competitive with those offered
throughout the financial industry; and
- To motivate executives to enhance long-term stockholder value by
building their ownership in the Corporation.
The Committee also considered a variety of subjective and objective
factors in determining the compensation package for individual executives
including (1) the performance of the Corporation and the Bank as a whole with
an emphasis on annual and long-term performance, (2) the responsibilities
assigned to each executive, and (3) the performance of each executive of
assigned responsibilities as measured by the progress of the Corporation and
the Bank during the year.
Another factor the Compensation Committee (and the Board of Directors)
considered when making their decisions was the overall profitability of the
Corporation and Bank, rather than establishing compensation levels on the
basis of whether specific financial goals had been achieved by the Corporation
and the Bank.
Based on the various factors discussed above, the salary for V. Lawrence
Evans was increased 3.6% to $174,000 for fiscal 1999, compared to his salary
of $168,000 in the prior year. The bonus paid to Mr. Evans in each of these
years is based on the profitability of the Bank, using the same formula that
applies to all employees vested in the Bank's cash profit sharing program.
The Compensation Committee believes that Mr. Evans' compensation, and
management compensation levels as a whole, appropriately reflect the
application of the Corporation's and the Bank's executive compensation policy
and the progress of the Corporation and the Bank.
Compensation Committee
George W. Gust
Robert C. Diehl
Fred R. Miller
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee of the Board of Directors consists of Directors George
W. Gust, Robert C. Diehl and Fred R. Miller. During fiscal 1999, there were
no compensation committee interlocks between the Corporation and any other
entity.
Performance Graph. The following graph compares the cumulative total
shareholder return on the Corporation's Common Stock with the cumulative total
return on the Nasdaq Index and the SNL Western Thrift Index, which encompasses
ten western states. Total return assumes reinvestment of all dividends.
6
<PAGE>
[line graph is shown here]
Period Ending
---------------------------------------------------------
Index 3/31/94 3/31/95 3/31/96 3/31/97 3/31/98 3/31/99
- -----------------------------------------------------------------------------
Horizon Financial
Corp. 100.00 91.82 95.19 129.93 189.52 139.31
NASDAQ - Total US 100.00 111.25 151.06 167.83 254.43 342.44
SNL Western Thrift
Index 100.00 109.65 159.39 228.03 372.11 309.73
7
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and directors, and persons who own more than 10% of any registered
class of the Corporation's equity securities, to file reports of ownership and
changes in ownership with the SEC within prescribed time periods. Executive
officers, directors and greater than 10% shareholders are required by
regulation to furnish the Corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Corporation by the above
referenced persons, the Corporation believes that during the fiscal year ended
March 31, 1999 all filing requirements applicable to its reporting officers,
directors and greater than 10% shareholders were properly and timely complied
with, except for one report on Form 4, for Karen LePage. Ms. LePage filed a
report for a sale of stock on March 5, 1999 that should have been filed by
February 10, 1999; and one report on Form 5, for Director Fred Miller. Mr.
Miller filed a report for a sale of stock on May 13, 1999 that should have
been filed by May 15, 1996.
TRANSACTIONS WITH MANAGEMENT
----------------------------
Under federal law, officers and directors of the Bank are generally
prohibited from receiving any loan or extension of credit at other than market
rates and terms.
PROPOSAL II -- AMENDMENT TO THE 1995 STOCK OPTION PLAN
------------------------------------------------------
Under the Corporation's 1995 Stock Option Plan (the "1995 Plan"), any
employee, including any officer or employee-director, is eligible to receive
stock option grants. The purpose of the 1995 Plan is to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentives to the officers and employees to promote the
success of the Corporation. The number of shares of Common Stock available
for stock option awards under the 1995 Plan is currently 414,000; however,
options with respect to 307,580 shares have already been granted.
The Board of Directors has recommended an amendment to the 1995 Plan (the
"Amendment") in connection with the recent acquisition of Bellingham Bancorp.
The Amendment would increase the number of shares of the Corporation's Common
Stock available for stock option awards from 414,000 to 455,000 shares. The
Amendment would provide the Corporation with sufficient stock option award
shares to grant to certain employees of Bellingham Bancorp, who are now
employees of the Corporation and the Bank.
The vote of a majority of the stockholders of the Corporation present or
represented by proxy at the Meeting is required for approval of the Amendment.
The Board recommends a vote FOR the Amendment to the 1995 Stock Option
Plan.
The shares of Common Stock represented by properly executed proxies will
be voted FOR the Amendment to the 1995 Stock Option Plan unless otherwise
specified on the proxy.
AUDITORS
--------
Moss Adams LLP served as the Corporation's auditors for the 1999 fiscal
year. The Board of Directors currently anticipates appointing Moss Adams LLP
to be its auditors for the 2000 fiscal year. A representative of Moss Adams
LLP will be present at the Meeting to respond to questions from shareholders
and will have the opportunity to make a statement if he or she so desires.
8
<PAGE>
OTHER MATTERS
-------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
The cost of solicitation of proxies will be borne by the Corporation. In
addition to solicitations by mail, directors, officers, and regular employees
of the Corporation may solicit proxies personally or by telephone at their
regular salary or hourly compensation.
The Corporation's 1999 Annual Report to Shareholders has been mailed to
all shareholders of record as of the close of business on June 7, 1999. Any
shareholder who has not received a copy of such annual report may obtain a
copy without charge by writing the Corporation. Such annual report is not to
be treated as part of the proxy solicitation material nor having been
incorporated herein by reference.
SHAREHOLDER PROPOSALS
---------------------
In order to be eligible for inclusion in the proxy solicitation materials
of the Corporation for next year's Annual Meeting of Shareholders, any
shareholder proposal to take action at such meeting must be received at the
Corporation's main office at 1500 Cornwall Avenue, Bellingham, Washington, no
later than February 18, 2000. Any such proposals shall be subject to the
requirements of the proxy solicitation rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard P. Jacobson
RICHARD P. JACOBSON
SECRETARY
Bellingham, Washington
June 18, 1999
A COPY OF THE ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO SHAREHOLDERS OF RECORD
AS OF JUNE 7, 1999, UPON WRITTEN REQUEST TO RICHARD P. JACOBSON, SECRETARY,
HORIZON FINANCIAL CORP., 1500 CORNWALL AVENUE, BELLINGHAM, WASHINGTON 98225.
9
<PAGE>
REVOCABLE PROXY
HORIZON FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
July 27, 1999
The undersigned hereby appoints the Executive/Proxy Committee of the
Board of Directors of Horizon Financial Corp. ("Corporation") with full powers
of substitution to act as attorneys and proxies for the undersigned, to vote
all shares of Common Stock of the Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders ("Meeting"), to be held
at the Best Western Lakeway Inn, 714 Lakeway Drive, Bellingham, Washington, on
Tuesday, July 27, 1999, at 2:00 p.m., Pacific Time, and at any and all
adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
I. The election as directors of the nominees
listed below (except as marked to the [ ] [ ]
contrary below).
L. M. (Larry) Strengholt
Richard R. Haggen
V. Lawrence Evans
INSTRUCTIONS: To withhold your vote for
any individual nominees, write the
nominee's name on the line below.
-----------------------------------------
-----------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
II. The approval of an amendment to the
Corporation's 1995 Stock Option
Plan. [ ] [ ] [ ]
The Board of Directors recommends a vote "FOR" the listed propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE BOARD OF
DIRECTORS IN ITS BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY ALSO
CONFERS DISCRETIONARY AUTHORITY ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT
TO APPROVAL OF THE MINUTES OF THE PRIOR MEETING OF SHAREHOLDERS, THE ELECTION
OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE, AND MATTERS INCIDENT TO THE CONDUCT OF THE 1999 ANNUAL
MEETING.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the
Corporation at the Meeting of the shareholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Corporation, prior to the
execution of this proxy, of Notice of the Annual Meeting, a proxy statement
for the Annual Meeting and an Annual Report to Shareholders.
Dated: , 1999
--------------------
- ----------------------------------- ----------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ----------------------------------- ----------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
Please sign exactly as your name appears on the enclosed card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, only one signature is required, but
each holder should sign, if possible.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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