<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Frontier National
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[Logo of Frontier National Corporation appears here]
April 20, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Frontier National Corporation ("Frontier") to be held at 3:00 p.m. Central
Daylight Time on Monday, May 17, 1999, at B. B. Comer Memorial Public Library,
314 North Broadway, in Sylacauga, Alabama.
The shareholders are being asked to:
(i) elect the board of directors to serve until the next Annual Meeting
of Shareholders in 2000 or until their successors are duly elected and
qualified,
(ii) to approve a stock option plan,
(iii) to approve an amendment to Frontier's Articles of Incorporation
changing the principal address of Frontier, and
(iv) to ratify the appointment of Schauer, Taylor, Cox & Vise, P.C. as
Frontier's independent accountants and auditors for fiscal 1999.
Information about these matters is contained in the attached proxy
statement.
Detailed information relating to Frontier's activities and operating
performance during fiscal 1998 is contained in the Annual Report to
Shareholders of Frontier, which is being mailed to you with this proxy
statement, but is not a part of the proxy soliciting material. If you do not
receive or have access to the form of proxy or the 1998 Annual Report, please
notify Kerri C. Newton, Frontier National Corporation, 43 North Broadway,
Sylacauga, Alabama 35150, (256) 249-0341.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend, please complete, sign, and return the enclosed proxy
statement. If you are present at the meeting and desire to vote your shares
personally, your form of proxy will be withheld from voting upon your request
prior to balloting. I urge you to return your proxy card in the enclosed
envelope as soon as possible.
Sincerely yours,
/s/ Harry I. Brown, Jr.
-------------------------------
Harry I. Brown, Jr.
Chairman of the Board
<PAGE>
Frontier National Corporation
43 North Broadway
Sylacauga, Alabama 35150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 17, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Frontier
National Corporation ("Frontier"), will be held on May 17, 1999, at 3:00 p.m.,
Central Daylight Time, at B.B. Comer Memorial Public Library, 314 North
Broadway, Sylacauga, Alabama 35150, for the following purposes:
1. To elect the Board of Directors for the coming year, or until their
successors have been duly elected and qualified.
2. To approve Frontier's 1999 Statutory-Nonstatutory Stock Option Plan.
3. To approve an amendment to Frontier's Articles of Incorporation
changing the principal address of Frontier.
4. To ratify the appointment of Schauer, Taylor, Cox & Vise, P.C. as
Frontier's independent accountants and auditors for fiscal 1999.
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 19, 1999, are
entitled to notice of and to vote at the Annual Shareholders' Meeting and any
adjournment thereof.
The Proxy Statement describing matters to be considered at the Annual
Meeting is attached to this notice.
By Order of the Board of Directors
/s/ Kerri C. Newton
-----------------------------
Kerri C. Newton, Secretary
IMPORTANT
WHETHER YOU EXPECT TO ATTEND THE MEETING OR NOT, PLEASE MARK, SIGN, DATE,
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE, WHICH DOES NOT REQUIRE ANY POSTAGE IF MAILED IN THE UNITED
STATES. IN THE EVENT YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE YOUR SHARES IN PERSON AT ANY TIME BEFORE YOUR PROXY IS EXERCISED.
<PAGE>
Frontier National Corporation
43 North Broadway
Sylacauga, Alabama 35150
PROXY STATEMENT
Annual Meeting of Shareholders
May 17, 1999
INTRODUCTION
This Proxy Statement and accompanying proxy are furnished to record holders
of shares of Class A Common Stock, $.001 par value per share (the "Common
Stock"), of Frontier National Corporation, an Alabama corporation registered
as a bank holding company pursuant to the Bank Holding Company Act of 1956, as
amended ("Frontier"), in connection with the solicitation of proxies by the
Board of Directors to be used at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on May 17, 1999 at 3:00 p.m., Central Daylight
Time, at B. B. Comer Memorial Public Library, 314 North Broadway, Sylacauga,
Alabama 35150, and at any adjournment or adjournments thereof. A copy of
Frontier's 1998 Annual Report to Shareholders accompanies this Proxy
Statement.
At the Annual Meeting, the shareholders will vote to elect a board of
directors, to approve a stock option plan, and to ratify the appointment of
Schauer, Taylor, Cox & Vise, P.C. as Frontier's independent accountants and
auditors for fiscal 1999. The affirmative vote of a majority of the shares
present or represented at the meeting, if a quorum exists, is required to
elect the directors, approve the stock option plan as described herein, to
approve the amendment to Frontier's Articles of Incorporation changing the
principal address of Frontier, and to ratify the appointment of Schauer,
Taylor, Cox & Vise, P.C. as Frontier's independent accountants and auditors
for fiscal 1999. The holder of each share of Common Stock is entitled to one
vote on all matters submitted before the Annual Meeting or any adjournments of
the Annual Meeting. The presence in person or by proxy of the holders of a
majority of the issued and outstanding shares of the Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum.
Shareholders are urged to sign the enclosed form of proxy and return it
promptly in the envelope enclosed for that purpose. Proxies will be voted in
accordance with the shareholders' directions. If no directions are given,
proxies will be voted FOR the election of the nominees named herein as
directors, FOR the approval of a stock option plan as described herein, FOR
the amendment to Frontier's Articles of Incorporation, and FOR the
ratification of the appointment of Schauer, Taylor, Cox & Vise, P.C. as
Frontier's independent accountants and auditors for fiscal 1999.
The Board of Directors knows of no other business to be presented at the
Annual Meeting. If any other business is properly presented, the person named
in the enclosed proxy will use his discretion in voting the shares. The proxy
may be revoked at any time prior to the voting thereof by written request to
Frontier at 43 North Broadway, Sylacauga, Alabama 35150, Attention: Kerri C.
Newton, Secretary. The proxy may also be revoked by submission to Frontier of
a more recently dated proxy. The giving of the proxy will not affect the right
of a shareholder to attend the Annual Meeting and vote in person.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of Frontier. The entire cost of soliciting these proxies
will be borne by Frontier. In addition to being solicited through the mails,
proxies may be solicited personally or by telephone, facsimile, electronic
mail, or telegraph by officers, directors, and employees of Frontier who will
receive no additional compensation for such activities. Arrangements will also
be made with brokerage houses and other custodians, nominees, and fiduciaries
to forward solicitation materials to the beneficial owners of shares held of
record by such persons, who will be reimbursed for their reasonable expenses
incurred in such connection. This Proxy Statement and accompanying proxy will
be sent to shareholders of Frontier on or about May 1, 1999.
1
<PAGE>
OUTSTANDING VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Common Stock is the only class of outstanding voting securities. Only
holders of Common Stock of record on April 19, 1999 (the "Record Date"), are
entitled to notice of and to vote at the Annual Meeting. On that date, there
were 2,315,683 shares of Common Stock issued and outstanding. The holder of
each share of Common Stock is entitled to one vote on all matters submitted
before the Annual Meeting or any adjournments of the Annual Meeting.
Abstentions will be treated as present for purposes of determining a quorum,
but as unvoted shares for purposes of determining the approval of any matter
submitted to the shareholders for a vote. If a broker indicates that it does
not have discretionary authority as to certain shares to vote on a particular
matter, such shares will not be considered as present and entitled to vote
with respect to such matter.
The following table reflects the number of shares of Common Stock of
Frontier beneficially owned by (1) each director and nominee for director of
Frontier, (2) certain executive officers who are not directors, (3) all
persons who beneficially own 5% or more of the Common Stock, and (4) the
directors, nominees, and executive officers of Frontier as a group:
<TABLE>
<CAPTION>
Amount and Nature of Percent of Total
Beneficial Ownership(1) Common Stock
Name of Beneficial Owner as of April 1, 1999 Outstanding
- ------------------------ ----------------------- ----------------
<S> <C> <C>
DIRECTORS/NOMINEES(2)
Harry I. Brown, Jr.................... 62,550(3) 2.7%
Steven R. Townson..................... 123,769(4) 5.3%
Wesley L. Bowden, Jr.................. 10,913 *
Harry I. Brown, Sr.................... 206,857(5) 8.9%
Charles M. Reeves, Jr................. 572,703(6) 24.7%
Raymond C. Styres..................... 5,776 *
Christopher N. Zodrow................. 10,320(7) *
Steven E. Sprayberry.................. 12,285(8) *
DIRECTORS/NOMINEES AND EXECUTIVE
OFFICERS AS A GROUP (CONSISTING OF 9
PERSONS)............................. 1,006,973(9) 43.5%
</TABLE>
- --------
* Represents less than one percent.
NOTES
(1) The number of shares of Common Stock reflected are shares that, under
applicable regulations of the Securities and Exchange Commission, are
deemed to be beneficially owned. Under the rules of the Securities and
Exchange Commission, a person is deemed to beneficially own a security if
the person has or shares the power to vote or direct the voting of such
security, or the power to dispose or to direct the disposition of such
security. A person is also deemed to beneficially own any shares to which
that person has the right to acquire beneficial ownership within 60 days.
Shares of Common Stock subject to options exercisable within 60 days are
deemed outstanding for computing the percentage of class of the person
holding such options that are not deemed outstanding for computing the
percentage of class for any other person. The total number of shares
beneficially owned is divided, where applicable, into two categories:
shares as to which voting/investment power is held solely, and shares as
to which voting/investment power is shared.
2
<PAGE>
(2) The address of each of the following shareholders is c/o Frontier
National Corporation, 43 North Broadway, Sylacauga, Alabama 35150.
(3) Includes 1,110 shares held by Mr. Brown as custodian for his son, 3,600
shares held by The Harry Brown Foundation, Inc., over which Mr. Brown has
sole voting and dispositive power, and 40,000 shares which may be
acquired within 60 days pursuant to stock options.
(4) All of Mr. Townson's shares are subject to a voting agreement between Mr.
Townson and CM/FS Reeves Investments, LP, dated August 1998, which
require Mr. Townson and the LP (subject to regulatory approval) to vote
their shares together, and this total includes 50,000 shares which could
be acquired within 60 days pursuant to stock options and which are also
subject to the voting agreement.
(5) These shares are held by Harry I. Brown, Sr. Family, LLC, in which Mr.
Brown has sole voting and dispositive power.
(6) All of these shares are controlled through the CM/FS Reeves Investments,
LP and are subject to a voting agreement between Mr. Townson and CM/FS
Reeves Investments, LP, dated August 1998, which requires Mr. Townson and
the LP (subject to regulatory approval) to vote their shares together.
(7) These shares do not include 2,320 shares owned by Mr. Zodrow's wife and
1,280 shares owned by Mr. Zodrow's children, over which Mr. Zodrow has no
voting or investment power.
(8) These shares do not include 12,334 shares owned by Mr. Sprayberry's wife,
over which Mr. Sprayberry has no voting or investment power.
(9) Includes (a) 1,800 shares owned by Mark A. Payne, Executive Vice
President of Frontier, and (b) 90,000 shares that may be acquired within
60 days pursuant to stock options.
3
<PAGE>
Proposal 1. ELECTION OF DIRECTORS
At the Annual Meeting, the Board of Directors are elected to hold office for
a term of one year or until their successors are elected and qualified. If any
nominee should be unable to accept nomination or election as a director, which
is not expected, the proxies may be voted with discretionary authority for a
substitute designated by the Board of Directors. The election of a director
requires the affirmative vote of a plurality of shares present or represented
at the meeting.
NOMINEES FOR BOARD OF DIRECTORS
<TABLE>
<CAPTION>
Director Other
Name of Director Age Since Principal Occupation for Past 5 Years Directorships
- ---------------- --- -------- ------------------------------------------------------ -----------------
<S> <C> <C> <C> <C>
Harry I. Brown, Jr.(1) 51 1998 Chairman and CEO of Frontier from August 1998 First National-
(CEO and Chairman until present; President and CEO of First America's Bank;
of Frontier) National-America's Bank from February 1998 until Valley National
present; President and COO of First National- Bank
America's Bank from February 1992 until
February 1998
Steven R. Townson 41 1997 President and COO of Frontier from August 1997 First National-
(President and COO of to present; President and CEO of Valley National America's Bank;
Frontier) Corporation (name changed to Frontier National Valley National
Corporation on August 24, 1998), from December Bank
1996-August 1997; President and CEO of Valley
National Bank from August 1996 to present;
President and COO of BancAlabama, Inc.,
Huntsville from June 1995 to August 1996;
President and CEO of BankAlabama from June
1995 to August 1996; Vice President of the
Financial Institutions Division of First Tennessee
Bank National Association from May 1993 to May
1995
Wesley L. Bowden, Jr. 63 1998 President and CEO of Bowden Oil Company, Inc. First National-
and Shop n Fill Food Marts America's Bank
Harry I. Brown, Sr.(2) 78 1998 Chairman of First National-America's Bank from First National-
February, 1998 until present; Chairman and CEO America's Bank
of First National-America's Bank until February,
1998
Charles M. Reeves, Jr. 75 1997 Chairman of Valley National-Bank from August 23, Skinner Furniture
1998 until present; Vice-Chairman of Skinner Furniture Corp.; Valley
Corp. until August 20, 1998 National Bank
Raymond C. Styres 60 1998 Industrial Engineer; Sales Agent for Reiter Corp., First National-
a textile machinery sales business America's Bank
Christopher N. Zodrow 52 1998 Vice President, Secretary, and Assistant General Valley National
Counsel of West Point Stevens, Inc. since 1995; Bank
Secretary and Assistant General Counsel from
1994-1995
Steven E. Sprayberry 47 1998 President and CEO of The Frontier Agency, Inc.
d/b/a Wright and Sprayberry Insurance from
November 23, 1998, until present; Co-owner/
operator of Wright-Sprayberry Insurance, Inc.
until November 1998
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Director Other
Executive Officers Age Since Principal Occupation for Past 5 Years Directorships
- ------------------ --- -------- ----------------------------------------------- ---------------
<S> <C> <C> <C> <C>
Mark A. Payne 34 N/A Executive Vice President of Frontier from 1998 First National-
(Executive Vice until present; Senior Vice President of First America's Bank
President of National-America's Bank from 1995 until 1998;
Frontier) Vice President of First National-America's Bank
from 1993 to 1995
</TABLE>
- --------
(1) Mr. Brown is the son of Harry I. Brown, Sr., who is also a director of
Frontier.
(2) Mr. Brown is the father of Harry I. Brown, Jr., who is the CEO and
Chairman of the Board of Frontier.
The Board currently consists of the above-named eight directors. At the
Annual Meeting, successors to each director whose term expires at such meeting
will be elected to serve for one-year terms or until their successors are duly
elected and qualified. The Board has the power to appoint the officers of
Frontier. Each officer will hold office for such term as may be prescribed by
the Board and until such person's successor is chosen and qualified or until
such person's death, resignation, or removal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ELECTION OF DIRECTORS AS SET FORTH IN THIS PROXY STATEMENT.
Proposal 2. APPROVAL OF A STATUTORY-NONSTATUTORY STOCK OPTION PLAN FOR
FRONTIER
The second proposal is to approve and adopt the 1999 Statutory-Nonstatutory
Stock Option Plan for Frontier (the "Plan"), pursuant to which a Committee
chosen by the Board of Directors comprised of non-employee directors
("Committee") may grant incentive stock options within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code") and non-qualified
options (collectively, the "Options") to key employees and officers of
Frontier ("Participants") for the purchase of Common Stock. The purpose of the
Plan is to advance the interests of Frontier by stimulating the efforts of key
employees, directors, and consultants, increasing their desire to continue in
their employment with or services to Frontier, assisting Frontier in competing
effectively with other enterprises for the services of new employees and
directors necessary for the continued improvement of operations, and to
attract and retain the best possible personnel for service as employees,
officers, directors, and consultants of Frontier. Accordingly, the Plan is
designed to promote the interests of Frontier and its shareholders, and, by
facilitating stock ownership on the part of such Participants, to encourage
them to acquire a proprietary interest in Frontier and to remain in its employ
and service.
The option prices are determined by the Committee, but option prices may not
be less than 100% of the fair market value of the Common Stock on the date the
option is granted. An aggregate of one million shares of the Class A Common
Stock and one million shares of the Class B Common Stock has been reserved for
issuance under the Plan, subject to adjusting as set forth in the Plan. The
Committee may allocate the Options between Options which are Incentive Stock
Options and Options which are Non-Qualified Stock Options as the Committee
determines in its sole discretion.
Each Option must be exercised within ten (10) years of the date of its
grant. The Committee has the discretion to require a vesting period for all or
any part of an Option; provided, that upon a change in control of Frontier,
the unvested portion of any Option will immediately vest and upon the death or
disability of a Participant, the non-vested portion of any Option held by such
Participant will immediately vest. No Option may be issued under the Plan
after ten (10) years from the adoption of the Plan. No Option may be assigned,
pledged, hypothecated, or transferred, except an Option may be transferred
upon the death of a Participant, and a Participant may assign all or any
portion of non-qualified Options to certain persons enumerated in the Plan. A
Participant will not have the rights of a shareholder of Frontier by virtue of
an Option except with respect to stock previously issued.
5
<PAGE>
The Committee may at any time terminate, suspend, or amend the Plan, except
that the Committee shall not, without the authorization of the holders of a
majority of the Stock (as defined in the Plan) voted at a shareholders'
meeting duly called and held, change any provisions (other than those
adjustments for changes in capitalization) which determine (a) the aggregate
number of shares for which Options may be granted under the Plan or to any
person; (b) the classes of persons eligible for Options; or (c) the duration
of the Plan. The Committee may postpone any exercise of a Option for such time
as the Committee may deem necessary in order to permit Frontier (i) to effect,
amend, or maintain any necessary registration of the Plan or the Stock
issuable upon the exercise of an Option under the Securities Act of 1933, as
amended, or the securities laws of any applicable jurisdiction, (ii) to permit
any action to be taken in order to (A) list such Stock on a stock exchange if
Stock is then listed on such exchange or (B) comply with restrictions or
regulations incident to the maintenance of a public market for its Stock,
including any rules or regulations of any stock exchange on which the Stock is
listed, or (iii) to determine that such Stock and the Plan are exempt from
such registration or that no action of the kind referred to in (ii)(B) above
needs to be taken; and Frontier shall not be obligated by virtue of any terms
and conditions of any Option Agreement (as defined in the Plan) or any
provision of the Plan to recognize the exercise of an Option or to sell or
issue Stock in violation of the Securities Act of 1933 or the law of any
government having jurisdiction thereof. Any such postponement does not extend
the terms of an Option and neither Frontier nor its directors or officers have
any obligation or liability to any Participant or to any other person with
respect to any shares of Stock as to which the Option shall lapse because of
such postponement.
An employee to whom an incentive stock option ("ISO") which qualified under
Section 422 of the Code is granted will not recognize income at the time of
grant or exercise of such Option. However, upon the exercise of an ISO, any
excess in the fair market price of the Common Stock over the option price
constitutes a tax preference item which may have alternative minimum tax
consequences for the employee. If the employee sells such shares more than one
year after the date of transfer of such shares and more than two years after
the date of grant of such ISO, the employee will generally recognize a long-
term capital gain or loss equal to the difference, if any, between the sale
prices of such shares and the option price. Frontier will not be entitled to a
federal income tax deduction in connection with the grant or exercise of the
ISO. If the employee does not hold such shares for the required period, when
the employee sells such shares, the employee will recognize ordinary
compensation income and possible capital gain or loss (long-term or short-term
depending on the holding period of the stock sold) in such amounts as are
prescribed by the Code and the regulations thereunder, and Frontier will
generally be entitled to a Federal income tax deduction in the amount of such
ordinary compensation income recognized by the employee.
An employee to whom a nonqualified stock option ("NSO") is granted will not
recognize income at the time of grant of such Option. When such employee
exercises such NSO, the employee will recognize ordinary compensation income
equal to the excess, if any, of the fair market value, as of the date of
Option exercise, of the shares the employee receives upon such exercise over
the option price paid. The tax basis of such shares to such employee will be
equal to the option price paid plus the amount, if any, includible in the
employee's gross income, and the employee's holding period for such shares
will commence on the date on which the employee recognizes taxable income in
respect of such shares. Gain or loss upon a subsequent sale of any Common
Stock received upon the exercise of an NSO generally would be taxed as capital
gain or loss (long-term or short-term, depending upon the holding period of
the stock sold). Subject to the applicable provisions of the Code and
regulations thereunder, Frontier will generally be limited to a federal income
tax deduction in respect of an NSO in an amount equal to the ordinary
compensation income recognized by the employee. This deduction will, in
general, be allowed for the taxable year of Frontier in which the participant
recognizes such ordinary income. Currently there are no outstanding options
granted under the Plan.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock represented at the Annual Meeting and entitled to vote is
required to approve this Plan for Frontier.
The Board of Directors recommends voting FOR approval of this Plan for
Frontier.
6
<PAGE>
Proposal 3. AMENDMENT TO FRONTIER'S ARTICLES OF INCORPORATION
The Plan of Merger between First National Sylacauga Corporation and Valley
National Corporation, which has been made a part of Frontier's Articles of
Incorporation, provides that the principal office of Frontier is 1011 North
Lanier Avenue, Lanett, Alabama 36863-0682. The principal address of Frontier
is now 43 North Broadway, Sylacauga, Alabama 35150. Under Alabama law,
shareholders of a corporation must approve certain amendments to the Articles
of Incorporation, including an amendment that changes the corporation's
principal address.
The affirmative vote of the holders as a majority of the outstanding shares
of Common Stock represented at the Annual Meeting and entitled to vote is
required to approve the amendment to Frontier's Articles of Incorporation to
change the principal address of Frontier.
The Board of Directors recommends voting FOR approval of this plan for
Frontier.
Proposal 4. RATIFICATION OF THE APPOINTMENT OF SCHAUER, TAYLOR, COX & VISE,
P.C. AS FRONTIER'S INDEPENDENT ACCOUNTANTS AND AUDITORS FOR FISCAL
1999
The Board of Directors has confirmed the appointment by the Audit Committee
of Schauer, Taylor, Cox & Vise, P.C. as Frontier's independent accountants and
auditors for fiscal 1999. Schauer, Taylor, Cox & Vise, P.C. served as
independent accountants and auditors of Frontier for the year ended December
31, 1998. Representatives of the firm will be present at the Annual Meeting,
have an opportunity to make a statement if they so desire, and are expected to
be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock represented at the Annual Meeting and entitled to vote is
required to ratify the appointment of Schauer, Taylor, Cox & Vise, P.C. as
Frontier's independent accountants and auditors for fiscal 1999.
The Board of Directors recommends voting FOR ratification of the appointment
of Schauer, Taylor, Cox & Vise, P.C. as Frontier's independent accountants and
auditors for fiscal 1999.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The full Board of Directors met nine times during 1998, which includes two
meetings by the Valley National Corporation Board of Directors prior to the
merger with First National Sylacauga Corporation and seven meetings by the
Frontier Board after the merger. Directors of Frontier were paid $750 per
meeting of the Board for 1998 and $250 per meeting of Committees of the Board
for 1998. To assist the Board in carrying out its duties, the following
standing committees have been established: Audit Committee, Compensation
Committee, and Executive Committee. During 1998, all incumbent directors of
the Board of Frontier attended at least 75% of the total number of meetings of
the Board of Directors and meetings of the committees of which they were
members.
The Audit Committee consists of Mr. Reeves, Mr. Zodrow, and Mr. Styres. The
Compensation Committee consists of Mr. Styres, Mr. Brown, Sr., and Mr. Reeves.
The Executive Committee consists of Mr. Brown, Jr., Mr. Townson, Mr. Bowden,
Mr. Brown, Sr., Mr. Reeves, Mr. Styres, and Mr. Zodrow.
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND LEGAL PROCEEDINGS
Certain directors and executive officers of Frontier, and certain associates
and members of the immediate family of these individuals, were customers of,
and had loan transactions with, Frontier and its subsidiaries in the ordinary
course of business during 1998. In the opinion of the management of Frontier,
all such transactions
7
<PAGE>
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions of
other persons and corporations and did not involve more than the normal risk
of collectability or present or other unfavorable features. Transactions of a
similar nature will, in all probability, occur in the future in the ordinary
course of business.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
Frontier's executive officers and directors and persons who own more than 10%
of the Common Stock to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"), as well as to
furnish Frontier with a copy of such report. Additionally, SEC regulations
require Frontier to identify in its Proxy Statement those individuals for whom
one of the referenced reports was not filed on a timely basis during the most
recent fiscal year. During 1998, the directors and/or executive officers of
Frontier failed to make timely filings on Form 3 due to an administrative
error, but such filings were subsequently made. During 1998, all of the
directors and executive officers who were required to file their Form 4 timely
did so, except for Harry I. Brown, Jr., who filed his Form 4 late due to a
misunderstanding of the applicable reporting requirements.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
Harry I. Brown, Jr. and Steven R. Townson entered into employment agreements
with Frontier as a condition to but after its merger with First National
Sylacauga Corporation. Mr. Brown's agreement is for him to serve as Chairman
of the Board and Chief Executive Officer of Frontier and President and Chief
Executive Officer of First National-America's Bank. Mr. Townson's agreement is
for him to serve as Vice-Chairman of the Board, President, and Chief Operating
Officer of Frontier and President and Chief Executive Officer of Valley
National Bank. Mr. Brown's annual salary will be $125,000 while Mr. Townson's
salary will be $125,000. Both agreements are for five (5) years, and are
automatically extended each year by one (1) additional year unless one hundred
twenty (120) days prior to each year end the Frontier Board gives notice that
the agreement will not be extended. Upon a "change of control" as defined in
the agreements, in addition to any remaining payments due under the
agreements, Mr. Brown and Mr. Townson may be eligible for an additional
payment equal to the present value of 2.99 times their average annual
compensation payable under the agreement for the most recent five (5) taxable
years ending before the "change of control." Finally, as additional
compensation, both Mr. Brown and Mr. Townson received options to purchase
50,000 shares of Class A Common Stock at $10.00 per share for a period of ten
(10) years.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total amount of compensation paid or
accrued by Frontier to or for the account of Harry I. Brown, Jr., Frontier's
Chairman and CEO, and Steven R. Townson, Frontier's President and COO, for the
fiscal years ended December 31, 1998 and 1997 (no other executive officers of
Frontier received annual compensation in excess of $100,000 in 1998 or 1997):
<TABLE>
<CAPTION>
Annual Compensation
---------------------------------------------
Other
Annual Incentive
Compensation Plan All Other
Name and Principal Position Year Salary ($) Bonus ($) ($) Payouts ($) Compensation ($)
- --------------------------- ---- ---------- --------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Harry I. Brown, Jr...... 1998 125,000 0 0 5,250(2)
Chairman and CEO of 1997(3) 114,849 15,431 6,865 150 7,200
Frontier and President
and CEO of First
National-America's Bank
Steven R. Townson....... 1998 125,000 0 7,200(1) 5,650(2)
President and COO of 1997(4) 83,135 0 8,580 3,900(2)
Frontier and President
and CEO of Valley
National Bank
</TABLE>
- --------
NOTES
(1) Automobile allowance
(2) Director and Committee Fees
(3) This compensation is from Mr. Brown's employment as President and COO of
First National Sylacauga Corporation and First National-America's Bank.
(4) This compensation is from Mr. Townson's employment as Chief Executive
Officer of Valley National Corporation and Valley National Bank.
OPTIONS GRANTED IN LAST FISCAL YEAR
The following tabulation sets forth information regarding options granted to
the named executive officers in 1998:
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------
Number of
Securities Percent of Total
Underlying Options Granted to Exercise or Grant Date
Options Employees in Base Price Expiration Present
Name Granted (#) Fiscal Year ($/share) Date Value ($)
- ---- ----------- ------------------ ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Harry I. Brown, Jr.. 50,000 50% $10 August 24, 2008 36,500(1)
Steven R. Townson... 50,000 50% $10 August 24, 2008 36,500(1)
</TABLE>
- --------
(1) In accordance with FASB's SFAS No. 123 "Accounting for Stock-Based
Compensation," the weighted average fair value of options granted was
$.73 in 1998. Please see Notes 1 and 12 of the Consolidated Financial
Statements included in Frontier's Annual Report for further details.
9
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following tabulation sets forth information regarding options exercised
by named executive officers in 1998:
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of
Shares Value Unexercised Unexercised
Acquired Realized Options at In-the-Money Options
Name on Exercise (#) Upon Exercise ($) Fiscal Year End (#) at Fiscal Year-End ($)(1)
- ---- --------------- ----------------- ------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harry I. Brown, Jr...... 10,000 125,000(1) 40,000 0 500,000 0
Steven R. Townson....... 60,000(2) 0(3) 50,000 0 625,000 0
</TABLE>
- --------
(1) Based on the closing price of Common Stock of December 31, 1998 of $22.50
per share and an exercise price of $10 per share.
(2) Includes 60,000 shares issued by Valley National Corporation prior to its
merger with First National Sylacauga Corporation.
(3) Based on exercise price of $10 per share and approximate market price on
date of exercise of $10 per share.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee did not meet in 1998 to determine executive
officers' salaries because such salaries were determined by the Board of
Directors at the time of the merger between First National Sylacauga
Corporation and Valley National Corporation, which subsequently changed its
name to Frontier National Corporation. The Compensation Committee does not use
any formal policy or standard in making its decisions on compensation.
COMPENSATION INTERLOCK AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Styres, Mr. Brown Sr., and Mr.
Reeves. Mr. Brown Sr. was formerly the CEO of First National-America's Bank, a
subsidiary of Frontier, and is the father of Mr. Brown Jr., who is the CEO and
Chairman of Frontier.
10
<PAGE>
COMMON STOCK PERFORMANCE
The following graph shows the cumulative return since Frontier began trading
in October 1998 as compared to The Nasdaq Stock Market (US Companies) and
Nasdaq Bank Stocks:
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
10/1998 10/1998 11/1998 12/1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
FRONTIER NATIONAL CORPORATION 100.0 100.0 99.1 96.5
NASDAQ STOCK MARKET (US COMPANIES) 100.0 117.1 129.0 145.7
NASDAQ BANK STOCKS 100.0 113.7 117.2 120.4
SIC 6020-6029, 6710-6719 US &
FOREIGN
</TABLE>
11
<PAGE>
SHAREHOLDER PROPOSALS
It is currently contemplated that Frontier's 2000 Annual Meeting of
Shareholders will be held on or about May 17, 2000. In the event that a
shareholder desires to have a proposal considered for presentation at
Frontier's 2000 Annual Meeting of Shareholders and inclusion in the Proxy
Statement for such meeting, the proposal must be forwarded in writing to the
Secretary of Frontier so that it is received no later than December 31, 1999.
Any such proposal must comply with the requirement of Rule 14(a)-8 promulgated
under the Act.
If a shareholder, rather than placing a proposal in Frontier's Proxy as
discussed above, commences his or her own proxy solicitation for the 2000
Annual Meeting of Shareholders or seeks to nominate a candidate for election
or propose business for consideration at such meeting, the shareholder must
notify Frontier of such proposal by or before March 16, 2000. If notice is not
received by this date, Frontier may exercise discretionary voting authority as
to that matter under proxies solicited for the 2000 Annual Meeting of
Shareholders.
OTHER MATTERS
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
persons named in the enclosed Proxy will have discretionary authority to vote
all proxies in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kerri C. Newton
Kerri C. Newton, Secretary
Sylacauga, Alabama
April 20, 1999
12
<PAGE>
PROXY
Frontier National Corporation
43 North Broadway
Sylacauga, Alabama 35150
(256) 249-0341
ANNUAL MEETING OF SHAREHOLDERS
May 17, 1999
(1) As to the election of the board of directors listed in the Proxy Statement
delivered in connection with the Annual Meeting:
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote for all
nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below)
Harry I. Brown, Jr., Steven R. Townson, Wesley L. Bowden, Jr., Harry I. Brown,
Sr., Charles M. Reeves, Jr., Raymond C. Styres, Christopher N. Zodrow, Steven
E. Sprayberry
(2) As to the adoption of Frontier's stock option plan described in the Proxy
Statement delivered in connection with the Annual Meeting:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) As to the ratification of the appointment of Schauer, Taylor, Cox & Vise,
P.C. as Frontier's independent accountants and auditors for fiscal 1999.
[_] FOR [_] AGAINST [_] ABSTAIN
(4) As to the adoption of Frontier's amendment to its Articles of Incorporation
changing the principal address of Frontier:
[_] FOR [_] AGAINST [_] ABSTAIN
(5) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(continued on other side)
PLEASE SIGN AND RETURN PROMPTLY IN THE SELF-ADDRESSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven R. Townson or Harry I. Brown, Jr. as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of Common
Stock of Frontier National Corporation, which the undersigned is entitled to
vote at the Annual Meeting of Shareholders to be held at 43 North Broadway,
Sylacauga, Alabama 35150, on Monday, May 17, 1999, at 1:00 p.m. Central
Daylight Time, or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder(s). If no direction is made, this proxy will be
voted for proposals 1, 2, and 3.
Date: _________________________
-------------------------------
Signature of Shareholder(s)
Date: _________________________
-------------------------------
Signature of Joint Sharehold-
er(s)
PLEASE SIGN AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THIS IS THE ONLY DOCUMENT YOU NEED TO RETURN AT THIS TIME.
