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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Frontier Financial Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
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PRELIMINARY PROXY MATERIALS
FRONTIER FINANCIAL CORPORATION
332 S.W. EVERETT MALL WAY
P.O. BOX 2215
EVERETT, WASHINGTON 98203
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO THE SHAREOWNERS OF FRONTIER FINANCIAL CORPORATION
The 1998 annual meeting of shareowners of Frontier Financial Corporation will be
held at Everett Golf & Country Club, 1500 52nd Street, Everett, Washington on
Thursday, April 16, 1998, at 7:30 p.m. for the following purpose:
(1) To elect fourteen (14) members of the Board of Directors.
(2) To approve the Corporation's Amended and Restated Articles of
Incorporation.
(3) To approve an amendment to the Corporation's Incentive Stock
Option Plan.
(4) To act on such other matters as may properly come before the
meeting.
Only shareowners of record at the close of business on March 10, 1998, and
certain beneficial owners, are entitled to notice of and to vote at the meeting
and/or any adjournment thereof.
Whether or not you plan to attend the meeting, you may vote by completing,
signing, dating, and promptly returning the accompanying proxy in the enclosed
postage-paid envelope. Your proxy may be revoked at any time prior to the time
it is voted.
By Order of the Board of Directors
James F. Felicetty
Secretary/Treasurer
Everett, Washington
March 20, 1998
PLACE AND TIME OF Everett Golf & Country Club
ANNUAL MEETING: 1500 52nd Street
Everett, Washington
April 16, 1998, 7:30 p.m.
<PAGE> 3
PRELIMINARTY PROXY MATERIALS
FRONTIER FINANCIAL CORPORATION
332 S.W. EVERETT MALL WAY
P.O. BOX 2215
EVERETT, WASHINGTON 98203
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Frontier Financial Corporation (the "Corporation").
The proxy is to be voted at the annual meeting of the shareowners of the
Corporation on Thursday, April 16, 1998, at 7:30 p.m. at the Everett Golf &
Country Club, 1500 52nd Street, Everett, Washington, and any adjournment
thereof. If the enclosed proxy is properly completed in the appropriate spaces,
signed, dated, and returned, it will be voted as specified in the proxy. If no
specification is made on the proxy, it will be voted at the discretion of the
proxy holders in accordance with the recommendations of management on all
matters as may properly come before the meeting or any adjournment thereof. A
shareowner granting the enclosed proxy may revoke it prior to its exercise by
voting at the meeting in person, or by giving notice of his or her revocation of
the proxy to the Corporation's Secretary at the address shown on the Notice of
Meeting.
All costs of the solicitation of the proxies will be borne by the Corporation.
These proxy materials, together with the 1997 Annual Report to Shareowners, were
first mailed to shareowners of record on or about the 20th day of March, 1998.
PURPOSE OF THE MEETING
At the annual meeting, shareowners will be asked:
(1) To elect fourteen (14) members of the Board of Directors.
(2) To approve the Corporation's Amended and Restated Articles of
Incorporation.
(3) To approve an amendment to the Corporation's Incentive Stock
Option Plan
(4) To act on such other matters as may properly come before the
meeting.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
As of March 10, 1998, the Corporation had ___________ shares of Common Stock
("stock") outstanding, which represents the only class of stock of the
Corporation, and the only class of securities entitled to vote at the annual
meeting. Only shareowners of record at the close of business on March 10, 1998,
and certain beneficial owners will be entitled to notice of and to vote in
person at the meeting and/or any adjournment thereof. A majority of the
outstanding stock of the Corporation represented at the meeting in person or by
proxy shall constitute the quorum of shareowners necessary to transact business.
A plurality of the votes duly cast is required for the election of Directors
(i.e., the nominees receiving the greatest number of votes will be elected).
Shareowners are not entitled to cumulative voting rights in the election of
Directors. Abstentions from voting on the election of Directors have no effect
on the outcome of this proposal since the votes have not been cast in favor of
any nominee. The proposals to approve the Amended and Restated Articles of
Incorporation and to approve the amendment to the Corporation's Incentive Stock
Option Plan will be approved if the votes duly cast in favor of the applicable
proposal exceed the votes duly cast against such proposal. Abstention from
voting and broker nonvotes on
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these proposals will have no impact on the outcome of the applicable proposal
since no vote has been cast for or against it.
ELECTION OF DIRECTORS
Assuming adoption and effectiveness of the Corporation's proposed Amended and
Restated Articles of Incorporation, which provide for a classified Board of
Directors, the Board of Directors will be divided into three classes, each class
to be as nearly equal in number as possible. As indicated below, the Directors'
terms will expire at the first, second or third annual meeting of shareowners
after their election by the shareowners. Fourteen directors will be elected at
the 1998 Annual Meeting, to be divided into the classes and to hold office for
the terms specified below. If, for any reason, this proposed amendment and
restatement of the Corporation's articles of incorporation does not become
effective, each director elected at the 1998 Annual Meeting will hold office
until the next annual meeting of shareowners, and until a successor has been
elected and qualified.
Management and the Board recommend the election of the nominees listed below. In
the event any nominee should not continue to be available for election, the
discretionary authority provided in the proxy will be exercised to vote for the
remainder of those nominated or for such other person or persons as may be
designated by the Board. The Board is not presently aware of any circumstances
that would render any nominee unavailable for election to serve as a director.
All of the nominees named below are members of the present Board of Directors of
the Corporation. All nominees have been engaged in the described principal
occupation during the past five (5) years.
Nominees for Election -- Terms Expire in 1999 (Class 1). The following
individuals are the nominees of the Board of Directors to serve, following the
effectiveness of the proposal to amend and restate the Corporation's Articles of
Incorporation, until the 1999 annual meeting of shareowners:
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME AGE DIRECTOR PRINCIPAL OCCUPATION
- ----------------- -- ---- --------------------------------------
<S> <C> <C> <C>
Robert J. Dickson 64 1978 President and Chief Executive Officer,
the Corporation and Frontier Bank
Edward D. Hansen 58 1978 Mayor of Everett; President, Golf N.W.
William H. Lucas 70 1978 Chiropractor
Edward J. Novack 71 1978 Attorney
Darrell J. Storkson 55 1997 Owner, Evergreen Lanes
</TABLE>
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Nominees for Election -- Terms Expire in 2000 (Class 2). The following
individuals are the nominees of the Board of Directors to serve, following the
effectiveness of the proposal to amend and restate the Corporation's Articles of
Incorporation, until the 2000 annual meeting of shareowners:
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME AGE DIRECTOR PRINCIPAL OCCUPATION
- ----------------- -- ---- --------------------------------------
<S> <C> <C> <C>
Lucy DeYoung 48 1997 President, DeYoung & Company (financial
investment advisory services)
J. Donald Regan 72 1983 Retired dairyman
Roy A. Robinson 70 1978 President, Roy Robinson Chevrolet
William J. Robinson 54 1978 Partner, Robinson Properties and
Investments (real estate development)
Edward C. Rubatino 67 1978 President, Rubatino Refuse Removal, Inc.
</TABLE>
Nominees for Election -- Terms Expire in 2001 (Class 3). The following
individuals are the nominees of the Board of Directors to serve, following the
effectiveness of the proposal to amend and restate the Corporation's Articles of
Incorporation, until the 2001 annual meeting of shareowners:
<TABLE>
<CAPTION>
YEAR FIRST
BECAME A
NAME AGE DIRECTOR PRINCIPAL OCCUPATION
- ----------------- -- ---- --------------------------------------
<S> <C> <C> <C>
George E. Barber 55 1997 Chairman, First Western Investments
(hospitality, retail and other real
estate investments)
David A. Dujardin 66 1978 President, Dujardin Custom Homes
James H. Mulligan 66 1989 President, Emerald Development Company,
Inc. (real estate development)
Roger L. Rice 73 1978 Retired dentist
</TABLE>
IT IS THE INTENTION OF THE PERSON NAMED IN THE PROXY TO VOTE FOR THE ELECTION OF
THE NOMINEES ABOVE.
The Corporation's Board of Directors, once elected by the shareowners, will
appoint members of the Board of Directors of Frontier Bank and FFP, Inc., which
are each wholly subsidiaries of the Corporation. The present Board of Directors
of the Corporation has recommended that the above individuals be appointed
Directors of Frontier Bank and FFP, Inc.
DIRECTOR'S MEETINGS AND COMMITTEES
The Board of Directors of the Corporation held seven meetings in 1997. However,
since the Boards of Frontier Bank and the Corporation are the same, the
directors at each Board meeting of Frontier Bank, of which 12 were held in 1997,
review the financial records of the Corporation. Frontier Bank's Board of
Directors has established certain standing committees, including the Audit
Committee, and Personnel Committee. Each member of the Board of Directors
attended at least 75% of the Board and Committee meetings of which they were a
member.
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Audit Committee. The main function performed by the Audit Committee includes
making or causing to be made suitable audits of the Corporation and its
subsidiaries; review with the independent public accountants, the plan, scope,
and results of the audit engagement; review of the Federal Deposit Insurance
Corporation and State examination reports, and reviewing the adequacy of
internal accounting systems and controls. The results of the audits and
recommendations are reported to the full Boards of Directors of the Corporation
and Frontier Bank. The membership of the Audit Committee during 1997 was Mr.
Rice, Chairman of the committee, Mr. Dujardin, Mr. Novack, Mr. Regan, Mr.
Rubatino, Mr. Storkson and Ms. DeYoung. The committee held six meetings in 1997.
Personnel Committee. The functions of the Personnel Committee include
establishment of policies with respect to the compensation of officers and
employees of the Corporation and its subsidiaries. During 1997, the members of
the Personnel Committee were Mr. Novack, Chairman of the committee, Mr. Dickson,
Mr. Hansen, Mr. Lucas, Mr. Mulligan, Mr. Roy Robinson, and Mr. Storkson. The
Committee held one meeting in 1997.
No Nominating Committee has been established.
COMPENSATION OF DIRECTORS
All Directors of the Corporation and Frontier Bank receive an annual retainer of
$17,500 for service on the Corporation's board, and a fee of $1,800 for each
Frontier Bank board meeting attended. Directors do not receive any fees for
attendance at committee meetings. The Chairman of the Board receives an
additional fee of $200 for each Frontier Bank board meeting attended.
PROPOSAL TO APPROVE AMENDED AND RESTATED ARTICLES OF INCORPORATION
The Board of Directors believe that the best interests of the
Corporation and its shareowners will be served by adopting several changes to
the Corporation's current Articles of Incorporation (the "Articles"), all of
which are reflected in the Amended and Restated Articles of Incorporation
attached to this Proxy Statement as Appendix A (the "Amended and Restated
Articles"). The material changes to the Corporation's existing Articles that
would be effected by the adoption of the Amended and Restated Articles are
described below. As described more fully below, there are different reasons for
implementing each of the various changes, including clarifying or simplifying
the Corporation's Articles, giving the Board increased flexibility, providing
for Board continuity, and assisting the Board in attracting or retaining
qualified members by limiting personal liability of directors. Several of the
changes described below provide takeover protection for the Corporation. While
these provisions could have the effect of delaying, deterring or preventing a
takeover of the Corporation, the Board believes that they are in the best
interest of the Corporation's shareowners because these provisions will give the
Board additional rights and power to use in negotiating with a potential
acquirer. The Board believes that it will thereby be able to more effectively
fulfill its duty to obtain the maximum value possible for shareowners in the
event of a takeover of the Corporation, and to limit the ability of potential
acquirers of the Corporation to employ abusive takeover tactics.
RESTATEMENT OF OBJECTS AND PURPOSES; ELIMINATION OF PROVISION RELATING TO
DISTRIBUTIONS
The Corporation's Articles currently include a lengthy, detailed
statement of the objects and purposes for which the Corporation was created in
1983. Under Washington law, a corporation may provide in its articles of
incorporation that it may engage in any lawful act or activity for which
corporations may be organized under such law. Accordingly, the Board has deemed
it advisable to amend
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the Articles to so as to give the Corporation the broadest authorization
possible under the law and to eliminate any doubt that might arise as to any
activity which the Corporation may want to undertake.
Similarly, the Corporation's Articles currently include a provision
authorizing the Board to make certain distributions to shareowners. Because
under Washington law the Board has the power to declare and make distributions
to shareowners without any specific authorization in the Corporation's Articles,
and to eliminate any doubt that might arise as to whether the provision in the
Corporation's Articles in any way limits the Board's ability to declare
distributions under Washington law, the Amended and Restated Articles do not
contain any provisions relating to distributions, and the Corporation's Board
accordingly will have the full power to declare and make distributions to
shareowners under Washington law.
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND AUTHORIZATION OF
PREFERRED STOCK
The Corporation's Articles currently authorize the issuance of up to
20,000,000 shares of common stock. Of these authorized shares, as of the Record
Date for the Annual Meeting there were _______ shares outstanding, and _______
shares that are issuable upon exercise of outstanding options under the
Corporation's stock option plan. In addition, the Corporation has declared a 7%
stock dividend payable on March 16, 1998 (the "7% Stock Dividend"), which will
increase the number of outstanding shares by ________ shares. Adoption of the
Amended and Restated Articles would increase the total number of authorized
shares of Common Stock to 50,000,000 shares.
The Corporation's Articles do not currently authorize any Preferred
Stock. Under the Amended and Restated Articles, the Board would be authorized to
issue up to 10,000,000 shares of Preferred Stock in one or more series and to
fix the powers, designations, preferences and relative, participating, optional
or other rights thereof, including dividend rights, conversion rights, voting
rights, redemption terms, liquidation preferences and the number of shares
constituting each such series, without any further vote or action by the
Corporation's shareowners. The proposed increase in the number of authorized
shares of Common Stock and the authorization of Preferred Stock will not change
the number of shares of Common Stock currently outstanding or the rights of the
holders of such stock.
The Corporation does not currently have any specific plans with respect
to issuance of additional shares of Common Stock (except in connection with the
7% Stock Dividend and for issuances pursuant to options currently outstanding
and to be granted in the future under the Corporation's stock option plan) or
with respect to issuance of shares of Preferred Stock. In recent years, the
Corporation has issued shares of Common Stock primarily in connection with stock
dividends, acquisitions, and upon exercise of options granted under the
Corporation's stock option plan.
The Board believes that it is desirable to increase the number of
authorized shares of Common Stock and to authorize shares of Preferred Stock.
This action will provide the Corporation with flexibility in the future by
assuring the availability of sufficient authorized but unissued Common Stock and
Preferred Stock for valid corporate purposes such as stock dividends, mergers
and acquisitions and financings. The newly authorized shares of Common Stock and
Preferred Stock would be available for issuance without further action by
shareowners except as required by law or, upon the effectiveness of the
anticipated listing of the Corporation's Common Stock on the Nasdaq National
Market, the applicable rules of the Nasdaq National Market. For example, with
certain exceptions (such as stock splits) the current rules of the Nasdaq
National Market would require approval by the Corporation's shareowners for
sales or issuances by the Corporation of Common Stock (or securities convertible
into Common Stock) equal to 20% or more of the shares of Common Stock
outstanding immediately prior to such issuance.
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The Corporation has no current plan or commitment to issue shares of
stock for purposes other than those discussed above, including any plan or
intention to issue such shares as a takeover defense. Nevertheless, the
additional authorized shares could be used to discourage persons from attempting
to gain control of the Corporation or make more difficult the removal of
management. For example, additional shares could be used to dilute the voting
power of shares then outstanding or could be issued to persons who would support
the Board in opposing a takeover bid or a solicitation in opposition to
management. Management is not currently aware of any specific effort to obtain
control of the Corporation by means of a merger, tender offer, solicitation in
opposition to management, or otherwise.
CREATION OF CLASSIFIED BOARD OF DIRECTORS; REMOVAL OF DIRECTORS ONLY FOR CAUSE
Washington law authorizes corporations to stagger the terms of directors
by dividing the Board into two or three classes. The Amended and Restated
Articles provide that the Corporation's Board will be divided into three
classes, with one class elected each year, and the directors in that class being
elected to serve a three-year term. In order to implement the classified Board,
the 14 nominees for the Board of Directors at the Annual Meeting would be
assigned to Class 1, Class 2 or Class 3, with those directors assigned to Class
1 initially being elected to a one-year term, those directors assigned to Class
2 initially being elected to a two-year term, and those directors assigned to
Class 3 being elected to a three-year term. In addition, the Amended and
Restated Articles provide that a director may be removed from office only for
cause by shareowners of not less than two-thirds of the shares entitled to elect
the director or directors whose removal is sought. The Board believes it is
desirable to create a classified Board because it will promote continuity and
stability on the Board. The creation of a classified Board will make it more
difficult to change the composition of the Board of Directors. Without a
classified Board, directors stand for election each year, so it would only take
one year for the entire Board to be replaced. Following the creation of a
classified Board, at least two annual meetings, or a special meeting called for
the purpose of removing directors, will be required to effect a change in the
majority of the Board of Directors.
SPECIAL VOTING REQUIREMENTS
Washington law allows a public corporation to provide in its articles of
incorporation for approval by a majority of all votes entitled to be cast to
approve a sale of all, or substantially all, a corporation's assets other than
in the regular course of business, but provides the flexibility for the
corporation to require a supermajority shareholder approval. The Board believes
that a sale of all, or substantially all, a Corporation's assets other than in
the regular course of business is so significant to the Corporation that such
transaction should only occur on the approval of a supermajority of the votes
entitled to be cast, unless such transaction has been approved by the directors.
The Amended and Restated Articles of Incorporation provide that a merger, share
exchange or consolidation of all or a substantial part of the Corporation's
assets otherwise than in the regular course of business that is required by
Washington law to be approved by the shareowners be approved by either the
affirmative vote of the holders of not less than a two-thirds vote of the
outstanding shares entitled to vote thereon or, if the transaction has been
approved by a majority of the Continuing Directors (as defined in the Amended
and Restated Articles), the affirmative vote of a majority of the holders of the
outstanding shares entitled to vote.
LIMITATION OF DIRECTOR LIABILITY
Under Washington law, a corporation may provide in its articles of
incorporation for the elimination or limitation of personal liability of
directors to the corporation or its shareowners for monetary damages for their
conduct as directors, and the Amended and Restated Articles contain such a
provision. In accordance with Washington law, this provision does not eliminate
or limit the liability of a director for
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acts or omissions that involve intentional misconduct, a knowing violation of
law, conduct regarding liability for unlawful distributions, or for any
transaction from which the director will personally receive a benefit in money,
property or services to which the director is not legally entitled. The Board
believes that the large majority of Washington public companies provide for this
limitation on personal liability of directors, and that this provision will aid
the Corporation in attracting and retaining the services of qualified directors.
CERTAIN WASHINGTON LAW PROVISIONS
Certain of the changes described above that would be effected by the
approval of the Amended and Restated Articles may have the effect of impeding a
hostile takeover of the Corporation. In addition, Washington law contains
certain provisions that may have the effect of delaying, deterring or
preventing a takeover or change in control of the Corporation. Chapter 23B.19
of the Washington Act prohibits the company, with certain exceptions, from
engaging in certain significant business transactions with an "acquiring
person" (defined as a person who acquires 10% or more of the Corporation's
voting securities without the prior approval of the Corporation's Board of
Directors) for a period of five years after such acquisition. The prohibited
transactions include, among others, a merger with, disposition of assets to, or
issuance or redemption of stock to or from, the acquiring person, or otherwise
allowing the acquiring person to receive any disproportionate benefit as a
shareowner. After the five-year period, the Corporation may engage in otherwise
proscribed transactions, so long as the transaction complies with certain fair
price provisions of the statute or is approved by a majority of disinterested
shareowners within each voting group entitled to vote separately. The
Corporation may not exempt itself from coverage of this statute. These
statutory provisions may have the effect of delaying, deterring or preventing a
change in control of the Corporation.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDED AND
RESTATED ARTICLES OF INCORPORATION.
PROPOSAL TO APPROVE AMENDMENT TO INCENTIVE STOCK OPTION PLAN
The Corporation's Incentive Stock Option Plan (the "Option Plan")
provides a means whereby selected key management officers and employees may be
granted incentive stock options ("ISOs") to purchase shares of the Corporation's
Common Stock. The Option Plan was originally adopted by the Corporation's Board
of Directors on March 18, 1992, and was approved by the Corporation's
shareowners on April 22, 1992. The Option Plan previously provided that the
number of shares that may be granted under the Option Plan is 10% of the
authorized shares of the Corporation's Common Stock. As of the date the Option
Plan was originally adopted, the Corporation had 3,000,000 shares of Common
Stock authorized and therefore 300,000 shares were available for issuance
pursuant to the Plan. On February 23, 1998, the Board of Directors adopted an
amendment to the Option Plan that would, subject to shareowner approval,
establish 750,000 as the maximum number of shares of Common Stock that may be
issued under the Option Plan. As of December 31, 1997, a total of 288,678 shares
of Common Stock had been issued pursuant to options granted under the Option
Plan, or were subject to issuance upon exercise of outstanding options. As of
December 31, 1997, the fair market value of the Corporation's Common Stock was
$____ per share. The Option Plan expires on March 18, 2002, and no additional
options may be granted under the Option Plan after that date.
The Board of Directors believes that establishing the number of shares
to be issued under the Option Plan at 750,000 would, among other things, promote
the interests of the Corporation and its shareowners by assisting the
Corporation in attracting, retaining and stimulating the performance of key
management officers and employees. The Board believes that existing option
grants have contributed substantially to the successful achievement of these
objectives and that the granting of stock options for these purposes is
comparable with other regional banks.
DESCRIPTION OF THE OPTION PLAN
The Compensation (Personnel) Committee of the Board is currently the
administrator of the Option Plan (the "Option Plan Administrator"). Subject to
the terms of the Option Plan, the Option Plan Administrator determines the terms
and conditions of options granted under the Option Plan, including the exercise
price. All options granted under the Option Plan are intended to qualify as
incentive stock options under the Internal Revenue Code (the "Code"). The Option
Plan provides that the Option Plan Administrator must establish an exercise
price for options that is not less than the fair market value per share at the
date of grant. Each option must expire within ten years of the date of grant.
However, if options are granted to persons owning more than 10% of the voting
stock of the Corporation, the Option Plan and the tax laws for ISOs provide that
the exercise price may not be less than 110% of the fair market value per share
at the date of grant and that the term of the ISOs may not exceed five years.
Unless otherwise provided by the Option Plan Administrator, options granted
under the Option Plan vest fully six months from the date of grant.
No option may be transferred by the optionee except upon a court order
pursuant to a divorce decree, and except that upon the death of an optionee, the
optionee's spouse and/or children or personal representative has the right to
exercise the unexpired option for a period of three months. Options granted
under the Option Plan terminate and expire upon the termination of the
optionee's employment by the optionee by the Corporation for any reason (other
than death), unless the optionee has retired or been terminated with the
approval of the Board of Directors, in which case the Board may allow the
optionee to exercise the options for a three-month period following such
cessation of employment (unless such options terminate or expire sooner by their
terms).
In the event of a merger or consolidation in which the Corporation is
the surviving entity, any option granted under the Option Plan automatically
pertains to the securities to which a holder of the number of shares of Common
Stock subject to the option would have been entitled. In the event of a
dissolution or liquidation of the Corporation or a merger or consolidation in
which the Corporation is not the surviving entity, all outstanding options will
terminate, and immediately prior to such dissolution, liquidation, merger or
consolidation each holder of options under the Option Plan may exercise his or
her options in full, whether or not the vesting requirements relating to such
options have been met.
FEDERAL INCOME TAX CONSEQUENCES
The material U.S. federal income tax consequences to the Corporation and
to any person granted an option under the Option Plan who is subject to taxation
in the United States under the existing applicable provisions of the Code and
the underlying Treasury Regulations are substantially as follows. The following
summary does not address state, local or foreign tax consequences. Under present
law and regulations, no income will be recognized by a participant upon the
grant of stock options.
Upon the exercise of an ISO during employment or within three months
after the optionee's termination of employment (12 months in the case of
permanent and total disability), for regular tax purposes the optionee will
recognize no income at the time of exercise (although the optionee will have
income for alternative minimum income tax purposes at that time equal to the
excess of the fair market value of the shares over the exercise price). If the
acquired shares are sold or exchanged after the later of (a) one year from the
date of exercise of the option and (b) two years from the date of grant of the
option, the difference between the amount realized by the optionee on that sale
or exchange and the option exercise price will be taxed to the optionee as
capital gain or loss. If the shares are disposed of before such holding period
requirements are satisfied, then the optionee will recognize taxable ordinary
income in the year of disposition in an amount equal to the excess of the fair
market value on the exercise date of the shares received over the option price
paid (or generally, if less, the excess of the amount realized on the sale of
the shares over the option price), and the optionee will have capital gain or
loss, long-term, mid-term or short-term, as the case may be, in an amount equal
to the difference between (i) the amount realized by the optionee upon that
disposition of the shares and (ii) the option price paid by the optionee
increased by the amount of ordinary income, if any, so recognized by the
optionee. The Corporation will be entitled to a deduction at the same time and
in the same amount as the participant recognizes ordinary income, subject to
certain limitations. Among these limitations is Section 162(m) of the Code,
under which certain compensation payments in excess of $1 million are not
deductible by the Corporation.
If the optionee uses already-owned shares to pay the exercise price of
an option in whole or in part, the transaction will not be considered to be a
taxable disposition of the already-owned shares. The optionee's tax basis and
holding period of the already-owned shares will be carried over to the
equivalent number of shares received upon exercise. The tax basis of the
additional shares received upon exercise will be the fair market value of the
shares on the exercise date (but not less than the amount of cash, if any, used
in payment), and the holding period for such additional shares will begin on the
day after the exercise date.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
CORPORATION'S INCENTIVE STOCK OPTION PLAN.
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STOCK OWNERSHIP OF OFFICERS AND DIRECTORS
The beneficial ownership by executive officers and directors of the
Corporation's stock, and the percentages of such ownership to the total amount
of the Corporation's stock outstanding as of December 31, 1997, is set forth in
the following table:
<TABLE>
<CAPTION>
NAME OF NUMBER OF COMMON SHARES PERCENTAGE OF
BENEFICIAL OWNER BENEFICIALLY OWNED (1) OUTSTANDING STOCK
- ---------------- ---------------------- -----------------
<S> <C> <C>
Directors:
George E. Barber 63,726 *
Lucy DeYoung 313 *
Robert J. Dickson 282,950 (2) 3.85%
David A. Dujardin 21,583 *
Edward D. Hansen 123,201 1.68%
William H. Lucas 42,763 *
James H. Mulligan 76,556 1.04%
Edward J. Novack 123,595 1.68%
J. Donald Regan 98,563 1.34%
Roger L. Rice 94,323 1.28%
Roy A. Robinson 109,160 1.49%
William J. Robinson 139,932 1.90%
Edward C. Rubatino 121,644 1.65%
Darrell J. Storkson 119,265 1.62%
All directors and executive
officers as a group (16 in
number) (2)(3) 1,413,691 19.23%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes shares, if any, held by spouse, held by or for the benefit of the
director or one or more members of the immediate family.
(2) Includes 17,761 shares to which Mr. Dickson has the right to acquire by
virtue of options granted pursuant to the Corporation's Stock Option Plan.
(3) Includes 4,719 shares which the Corporation's executive officers (other than
Mr. Dickson) have the right to acquire by virtue of options granted pursuant
to the Corporation's Stock Option Plan.
As of March 1, 1998, there was no individual or entity known to the Corporation
to be the beneficial owner of more than 5% of the outstanding shares of its
stock.
-8-
<PAGE> 11
EXECUTIVE OFFICERS
The following table shows the name of each executive officer of the Corporation,
his age, and the offices he holds with the Corporation and Frontier Bank. All
offices are held at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE OFFICE AND YEAR ASSUMED OFFICE
---- --- ------------------------------
<S> <C> <C>
Robert J. Dickson 64 President and Chief Executive Officer of the
Corporation (1983) and Frontier Bank (1978)
James F. Felicetty 54 Secretary and Treasurer of the Corporation (1983)
Earl Carey 64 Vice President of the Corporation (1985) and Senior
Vice President of Frontier Bank (1986)
</TABLE>
COMPENSATION OF EXECUTIVES
The following table sets forth certain compensation information with respect to
the Corporation's Chief Executive Officer for the fiscal years ended December
31, 1997, 1996 and 1995. No other executive officer of the Corporation received
compensation in excess of $100,000 during the fiscal year ended December 31,
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) OPTIONS(#) ($)(2)
------------------ ---- ------ ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Dickson 1997 $240,000 $139,612 $65,785 2,700 $4,800
President and CEO 1996 225,000 111,416 68,390 3,200 4,500
1995 200,000 83,118 56,674 3,500 4,500
</TABLE>
- ---------------
(1) Includes Board fees and amounts paid pursuant to profit sharing and purchase
plans. Does not include earnings on prior years contributions to retirement
plans.
(2) With respect to the year ended December 31, 1997, includes $4,800 paid for a
matching contribution to the Corporation's 401(k) plan.
-9-
<PAGE> 12
OPTION GRANTS
The following table sets forth certain information regarding options to purchase
shares of the Corporation's Common Stock granted to the Corporation's Chief
Executive Officer during the fiscal year ended December 31, 1997.
OPTION GRANTS IN LAST YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED ANNUAL
SECURITIES TOTAL RATE OF STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------ --------- ---------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Dickson 2,700(1) 19.0% $37.00 2007 $62,827 $159,215
</TABLE>
- ---------------
(1) The exercise price of the options if the fair market value of the Common
Stock on the date of the grant, and the options are fully exercisable six
months from the date of grant.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding options exercised
in during the fiscal year ended December 31, 1997, and options held as of
December 31, 1997 by the Corporation's Chief Executive Officer.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR END($)
--------------- ----------------
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) (1) REALIZED ($) (1) UNEXERCISABLE UNEXERCISABLE
---- ------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Robert J. Dickson 4,153 $120,661 17,761/2,700 $304,457/0
</TABLE>
- ---------------
(1) The shares exercised were granted in 1990 and 1991 at the price of the stock
at that time. Any shareowner who purchased stock at that time would have the
same value realized in their holdings. The value realized is based on the
difference between the exercise price of the options and the value of the
Corporation's Common Stock on the date of exercise, and is not reduced to
reflect taxes payable with respect to such amount.
-10-
<PAGE> 13
COMPENSATION (PERSONNEL) COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONS
The following directors were members of the Personnel Committee (Compensation
Committee) during 1997, some of whom had loan transactions with Frontier Bank
during the year, and had outstanding balances at year-end 1997 as follows:
<TABLE>
<S> <C>
Robert J. Dickson, Director, President & CEO $ 44,856
Edward D. Hansen, Director 731,017
William H. Lucas, Director 625,735
James H. Mulligan, Director 3,186,402
Edward J. Novack, Director and Secretary of the Board of
Frontier Bank 223,172
Roy A. Robinson, Director --
Darrell J. Storkson 5,453,275
</TABLE>
The only director who is an officer of the Frontier Bank is Mr. Dickson. The
above directors are not compensated for Personnel Committee meetings.
BOARD COMPENSATION (PERSONNEL) COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In setting the compensation of the CEO, the Compensation Committee considers the
performance of the Corporation versus the peer group, the return to shareowners,
and a comparison level of compensation paid by other similar size financial
Corporations. In setting Mr. Dickson's compensation for 1997, the Compensation
Committee adhered to the above policies, and in particular they took into
consideration the Corporation's increased profits and the increase in the stock
price.
Robert J. Dickson
Edward D. Hansen
William H. Lucas
James H. Mulligan
Edward J. Novack
Roy A. Robinson
Darrell J. Storkson
-11-
<PAGE> 14
FIVE YEAR PERFORMANCE COMPARISON
TOTAL CUMULATIVE RETURN TO SHAREOWNERS
The graph below provides a comparison of the cumulative shareowner returns on
the Corporation's Common Stock as compared with the cumulative total return of
the S&P 500 and the S&P Major Regional Banks (MRB) index.
FRONTIER FINANCIAL CORPORATION
HISTORICAL PERFORMANCE COMPARISON
TOTAL CUMULATIVE RETURN TO SHAREOWNERS
[GRAPH]
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 110.01 108.32 149.03 183.28 246.57
Major Regional Banks 100 105.37 96.07 151.34 206.84 313.84
FFC 100 137.5 217.8 263.1 310.64 396.72
</TABLE>
The above presentation assumes $100 was invested on January 1, 1993 in the
Corporation's Common Stock, the S&P 500 index, and the S&P Major Regional Banks
index.
MISCELLANEOUS TRANSACTIONS
WITH DIRECTORS AND OFFICERS
The Corporation's subsidiary has as banking customers many of the Corporation's
directors and officers, as well as the businesses with which they are
associated. All loans made to such persons and entities during the past year
were made in Frontier Bank's ordinary course of business and on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time of comparable transactions with other persons. These loans do not
involve more than a normal risk of collectability, nor do they present any other
unfavorable feature. See "Compensation (Personnel) Committee Interlocks and
Insider Participations."
FINANCIAL INFORMATION
The Corporation's 1997 Annual Report, which contains the Corporation's financial
statements, is being sent to the shareowners with this Proxy Statement, and is
hereby incorporated by reference in its entirety.
-12-
<PAGE> 15
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The independent public accounting firm of Moss Adams audited the Corporation's
consolidated financial statements for the year 1997, and has been similarly
engaged in 1998.
Representatives from Moss Adams are expected to be present at the Annual Meeting
of Shareowners, and given the opportunity to make a statement if they desire to
do so. They will be available to respond to appropriate questions.
OTHER BUSINESS
The Board of Directors of the Corporation is not presently aware of any other
business to come before the Annual Meeting, as of the date of the preparation of
this Proxy Statement, no shareowner has submitted to the Board any proposal to
be acted on at the meeting. If any matters come before the meeting, not referred
to in the enclosed Proxy, including matters incident to the conduct of the
meeting, the proxy holders will vote the shares represented by the proxies in
accordance with their best judgment.
SHAREOWNER PROPOSALS FOR
1999 ANNUAL MEETING
In order for shareowner proposals to be included in the 1999 proxy materials,
and considered at the 1999 Annual Meeting of Shareowners, proposals must be
received by the Secretary of the Corporation at the address shown on the Notice
of Meeting no later than November 3, 1998.
IT IS EXTREMELY IMPORTANT THAT YOUR VOTE BE COUNTED AT THIS MEETING.
THE ENCLOSED PROXY SHOULD BE COMPLETED, DATED, SIGNED, AND RETURNED IN THE
ENCLOSED ENVELOPE, FOR WHICH POSTAGE HAS BEEN PAID. PROMPT MAILING OF THE PROXY
WILL BE APPRECIATED.
By Order of the Board of Directors,
James F. Felicetty, Secretary
--------------------------
The Corporation will furnish without charge to any shareowner submitting a
written request, a copy of the Corporation's Form 10-K Annual Report for 1997 to
the Securities and Exchange Commission, including the financial statements and
schedules thereto. Such written request should be addressed to James F.
Felicetty, Secretary/Treasurer, Frontier Financial Corporation, 332 S.W. Everett
Mall Way, P.O. Box 2215, Everett, Washington 98203.
-13-
<PAGE> 16
APPENDIX A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
FRONTIER FINANCIAL CORPORATION
Frontier Financial Corporation, a Washington corporation, by its
President, hereby submits the following Amended and Restated Articles of
Incorporation of said corporation, pursuant to provisions of RCW 23B.10.070, and
a resolution duly adopted by the Board of Directors on February 23, 1998 and the
Shareowners on _____________. These Amended and Restated Articles of
Incorporation supersede the original Articles of Incorporation and all
amendments and prior restatements thereto as of the date of their adoption.
ARTICLE I. NAME
The name of the corporation is Frontier Financial Corporation.
ARTICLE II. PURPOSES AND POWERS
This corporation is organized to engage in any business, trade or
activity which may lawfully be conducted by a corporation organized under the
Washington Business Corporation Act. This corporation shall have the authority
to engage in any and all such activities as are incidental or conducive to the
attainment of the foregoing purpose of this corporation and to exercise any and
all powers authorized or permitted under any laws that may now or hereafter be
applicable or available to this corporation.
ARTICLE III. EXISTENCE
The existence of this corporation is perpetual.
ARTICLE IV. SHARES
4.1 AUTHORIZED CAPITAL
The total number of shares which the corporation is authorized to issue
is 60,000,000, consisting of 50,000,000 shares of Common Stock without par value
and 10,000,000 shares of Preferred Stock without par value. The Common Stock is
subject to the rights and preferences of the Preferred Stock as hereinafter set
forth.
4.2 ISSUANCE OF PREFERRED STOCK IN SERIES
The Preferred Stock may be issued from time to time in one or more
series in any manner permitted by law and the provisions of these Articles of
Incorporation of the corporation, as determined from time to time by the Board
of Directors and stated in the resolution or resolutions providing for the
issuance thereof, prior to the issuance of any shares thereof. The Board of
Directors shall have the
<PAGE> 17
authority to fix and determine and to amend, subject to the provisions hereof,
the designation, preferences, limitations and relative rights of the shares of
any series that is wholly unissued or to be established. Unless otherwise
specifically provided in the resolution establishing any series, the Board of
Directors shall further have the authority, after the issuance of shares of a
series whose number it has designated, to amend the resolution establishing such
series to decrease the number of shares of that series, but not below the number
of shares of such series then outstanding.
4.5 DIVIDENDS
The holders of shares of the Preferred Stock shall be entitled to
receive dividends, out of the funds of the corporation legally available
therefor, at the rate and at the time or times, whether cumulative or
noncumulative, as may be provided by the Board of Directors in designating a
particular series of Preferred Stock. If such dividends on the Preferred Stock
are cumulative, then if dividends have not been paid, the deficiency shall be
fully paid or the dividends declared and set apart for payment at such rate, but
without interest on cumulative dividends, before any dividends on the Common
Stock may be paid or declared and set apart for payment. The holders of the
Preferred Stock shall not be entitled to receive any dividends thereon other
than the dividends referred to in this section.
4.6 REDEMPTION
The Preferred Stock may be redeemable at such price, in such amount, and
at such time or times as may be provided by the Board of Directors in
designating a particular series of Preferred Stock. In any event, such Preferred
Stock may be repurchased by the corporation to the extent legally permissible.
4.7 LIQUIDATION
In the event of any liquidation, dissolution, or winding up of the
affairs of the corporation, whether voluntary or involuntary, then, before any
distribution is made to the holders of the Common Stock, the holders of the
Preferred Stock at the time outstanding shall be entitled to be paid the
preferential amount or amounts per share as may be provided by the Board of
Directors in designating a particular series of Preferred Stock and dividends
accrued thereon to the date of such payment. The holders of the Preferred Stock
will not be entitled to receive any distributive amounts upon the liquidation,
dissolution, or winding up of the affairs of the corporation other than the
distributive amounts referred to in this section, unless otherwise provided by
the Board of Directors in designating a particular series of Preferred Stock.
4.8 CONVERSION
Shares of Preferred Stock may be convertible into Common Stock of the
corporation upon such terms and conditions, at such rate and subject to such
adjustments as may be provided by the Board of Directors in designating a
particular series of Preferred Stock.
4.9 VOTING RIGHTS
Holders of Preferred Stock shall have such voting rights as may be
provided by the Board of Directors in designating a particular series of
Preferred Stock.
-2-
<PAGE> 18
ARTICLE V. PREEMPTIVE RIGHTS
No shareowners shall have preemptive rights to acquire unissued shares
of the corporation.
ARTICLE VI. CUMULATIVE VOTING
Each share of Common Stock, when issued, shall be entitled to one vote.
Cumulative voting for directors shall not be allowed.
ARTICLE VII. CERTAIN TRANSACTIONS
No contracts or other transactions between the corporation any other
corporation (or partnership) and no act of the corporation shall in any way be
affected or invalidated by the fact that any of the directors of this
corporation are pecuniarily interested in, or are directors or officers of such
other corporation (or partnership): any director individually, or any firm of
which any director may be a member, may be a party to or may be pecuniarily or
otherwise interested in any contracts or transactions of the corporation,
provided that the fact that he or she or such corporation is so interested is
disclosed or known to the Board of Directors or a majority thereof; and any
director of the corporation who is also a director or officer of such other
corporation or who is so interested may be counted in determining the existence
of a quorum at any meeting of the Board of Directors of the corporation which
authorizes any such contracts or transactions with like form and effect as if he
or she were not such director or officer of such other corporation or not so
interested.
ARTICLE VIII. DIRECTORS
8.1 NUMBER AND TENURE
The directors who shall manage the affairs of the corporation shall not
be less than five (5) nor more than twenty-five (25) in number to be elected by
the common shareowners. The exact number shall be determined from time to time
by a resolution of the Board of Directors. In case of vacancies in the Board of
Directors by death, resignation or otherwise a majority of the remaining
directors may elect directors to fill the vacancies. Prior to the 1998 annual
election of Directors, unless a Director earlier dies, resigns or is removed,
his or her term of office shall expire at the next annual meeting of
shareowners. At the 1998 annual election of Directors, the Board of Directors
shall be divided into three classes, with said classes to be as equal in number
as may be possible, with any Director or Directors in excess of the number
divisible by three being assigned to Class 1 and Class 2, as the case may be. At
the first election of Directors to such classified Board of Directors, each
Class 1 Director shall be elected to serve until the next ensuing annual meeting
of shareowners, each Class 2 Director shall be elected to serve until the second
ensuing annual meeting of shareowners and each Class 3 Director shall be elected
to serve until the third ensuing annual meeting of shareowners. At each annual
meeting of shareowners following the meeting at which the Board of Directors is
initially classified, the number of Directors equal to the number of Directors
in the class whose term expires at the time of such meeting shall be elected to
serve until the third ensuing annual meeting of shareowners. Notwithstanding any
of the foregoing provisions of this Article, Directors shall serve until their
successors are elected and qualified or until their earlier death, resignation
or removal from office, or until there is a decrease in the number of Directors.
-3-
<PAGE> 19
8.2 REMOVAL FOR CAUSE
The Directors of this corporation may be removed only for cause by the
holders of not less than two-thirds of the shares entitled to elect the Director
or Directors whose removal is sought in the manner provided by the Bylaws.
ARTICLE IX. BY-LAWS
The Board of Directors has the power and authority to make, alter, amend
or repeal By-Laws of this corporation, subject to the power of the shareowners
having voting power to alter, amend or repeal the By-Laws.
ARTICLE X. EXECUTIVE COMMITTEE
The Board of Directors may by resolution passed by a majority of the
entire board of Directors designate one or more directors to constitute an
executive committee, which shall have and exercise the authority of the Board of
Directors in the management of the business of the corporation to the extent
provided in the resolution.
ARTICLE XI. SPECIAL VOTING REQUIREMENTS
In addition to any affirmative vote required by law, by these Restated
Articles of Incorporation or otherwise, any "Business Combination" (as
hereinafter defined) involving this corporation shall be subject to approval in
the manner set forth in this Article 11.
11.1 DEFINITIONS
For the purposes of this Article 11:
(a) "Business Combination" means (i) a merger, share exchange or
consolidation of this corporation or any of its Subsidiaries
with any other corporation; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition or encumbrance,
whether in one transaction or a series of transactions, by this
corporation or any of its Subsidiaries of all or a substantial
part of this corporation's assets otherwise than in the usual
and regular course of business; or (iii) any agreement, contract
or other arrangement providing for any of the foregoing
transactions.
(b) "Continuing Director" means any member of the Board of Directors
who was a member of the Board of Directors on February 23, 1998
or who is elected to the Board of Directors after February 23,
1998 upon the recommendation of a majority of the Continuing
Directors voting separately and as a subclass of Directors on
such recommendation.
(c) "Subsidiary" means a domestic or foreign corporation, a majority
of the outstanding voting shares of which are owned, directly or
indirectly, by this corporation.
-4-
<PAGE> 20
12.2 VOTE REQUIRED FOR BUSINESS COMBINATIONS
11.2.1 SUPERMAJORITY VOTE
Except as provided in subsections 11.2.2 and 11.2.3 hereof, the
affirmative vote of the holders of not less than two-thirds of the outstanding
shares entitled to vote thereon and, to the extent, if any, provided by
resolution adopted by the Board of Directors authorizing the issuance of a class
or series of Common Stock or Preferred Stock, the affirmative vote of the
holders of not less than two-thirds of the outstanding shares of such class or
series, voting as a separate voting group, shall be required for the adoption or
authorization of a Business Combination.
11.2.2 MAJORITY VOTE
Notwithstanding subsection 11.2.1 hereof, if a Business Combination
shall have been approved by a majority of the Continuing Directors, voting
separately and as a subclass of Directors, and if such Business Combination is
otherwise required to be approved by this corporation's shareowners pursuant to
the provisions of the Washington Business Corporation Act or of these Restated
Articles of Incorporation other than this Article 11, then the affirmative vote
of the holders of not less than a majority of the outstanding shares entitled to
vote thereon and, to the extent, if any, provided by resolution adopted by the
Board of Directors authorizing the issuance of a class or series of Common Stock
or Preferred Stock, the affirmative vote of the holders of not less than a
majority of the outstanding shares of such class or series, voting as a separate
voting group, shall be required for the adoption or authorization of such
Business Combination.
11.2.3 NO SHAREOWNER VOTE
Notwithstanding subsection 11.2.1 or 11.2.2 hereof, if a Business
Combination shall have been approved by a majority of the Continuing Directors,
voting separately and as a subclass of Directors, and if such Business
Combination is not otherwise required to be approved by this corporation's
shareowners pursuant to the provisions of the Washington Business Corporation
Act or of these Restated Articles of Incorporation other than this Article 11,
then no vote of the shareowners of this corporation shall be required for
approval of such Business Combination.
ARTICLE XII. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of Directors, a Director of this corporation shall
not be liable to this corporation or its shareowners for monetary damages for
conduct as a Director. Any amendments to or repeal of this Article 12 shall not
adversely affect any right or protection of a Director of this corporation for
or with respect to any acts or omissions of such Director occurring prior to
such amendment or repeal.
-5-
<PAGE> 21
PRELIMINARY PROXY MATERIALS
PROXY
This proxy is solicited by the Board of Directors
FRONTIER FINANCIAL CORPORATION
PROXY FOR 1998 ANNUAL MEETING OF SHAREOWNERS
The undersigned, having received the Notice of Meeting and Proxy
Statement dated March 20, 1998, hereby appoint Robert J. Dickson and William J.
Robinson, and each of them, proxies of the undersigned, with full power of
substitution, to attend the 1998 annual meeting of the shareowners of the
Corporation to be held at Everett Golf & Country Club, Everett, Washington, on
Thursday, April 16, 1998, at 7:30 p.m., and any at adjournment or adjournments
thereof, and thereat to vote as designated below, all of the shares of stock of
the undersigned in the Corporation which the undersigned would be entitled to
vote if personally present, as follows:
(1) To elect Directors to serve for the terms stated in the Proxy
Statement (or, in the event item (2) below is not approved,
until the next annual meeting of shareowners).
[ ] FOR ALL nominees listed below.
[ ] WITHHOLD AUTHORITY to vote for ALL nominees listed below.
[ ] WITHHOLD AUTHORITY to vote for ANY INDIVIDUAL nominee(s).
To withhold authority to vote for any individual
nominee(s), strike a line through the nominee's name in
the list below:
George E. Barber Edward J. Novack
Lucy DeYoung J. Donald Regan
Robert J. Dickson Roger J. Rice
David A. Dujardin Roy A. Robinson
Edward D. Hansen William J. Robinson
William H. Lucas Edward C. Rubatino
James H. Mulligan Darrell J. Storkson
(2) To approve the Corporation's Amended and Restated Articles of
Incorporation.
[ ] For [ ] Against [ ] Abstain
(3) To approve an amendment to the Corporation's Incentive Stock
Option Plan.
[ ] For [ ] Against [ ] Abstain
(4) In their discretion on any matters properly coming before the
meeting or any adjournments thereof.
This proxy will be voted as directed, or if no such direction is
indicated, it will be voted "FOR ALL nominees" in item (1) and "For" in items
(2) and (3).
Holder ID: 1
Dated: ____________________, 1998 ___________________________________
___________________________________
Signature(s)
Note: Please date, sign exactly as name or names appear hereon, and return in
the enclosed pre-paid envelope. When signing as Attorney, Executor, Trustee,
Guardian or Officer of a corporation, please give title as such.
