<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(c)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Horizon Financial Services Corporation
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other that Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 6-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid: $
-----------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
___________________________________________________________________________
1) Amount previously paid:
___________________________________________________________________________
2) Form Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[ON HORIZON FINANCIAL SERVICES CORPORATION LETTERHEAD]
September 27, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Horizon Financial Services
Corporation (the "Company"), we cordially invite you to attend the Annual
Meeting of Stockholders of the Company (the "Meeting"). The meeting will be held
at 3:00 p.m. local time, on October 24, 1996 at the main office of the Company
located at 301 First Avenue East, Oskaloosa, Iowa.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement
discuss the business to be conducted at the Meeting. We have also enclosed a
copy of Horizon Financial Services Corporation's fiscal 1996 Annual Report to
Stockholders. At the Meeting we will report on the Company's operation and
outlook for the year ahead.
We encourage you to attend the Meeting in person. Whether or not you plan to
attend, however, please read the enclosed Proxy Statement and then complete,
sign and date the enclosed proxy and return it in the accompanying postpaid
return envelope as promptly as possible. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented
at the Meeting.
Your Board of Directors and management are committed to the continued success of
Horizon Financial Services Corporation and the enhancement of your investment.
As Chairman of the Board, President and Chief Executive Officer, I want to
express my appreciation for your confidence and support.
Very truly yours,
/s/ Robert W. DeCook
- -----------------------------
Robert W. DeCook
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
HORIZON FINANCIAL SERVICES CORPORATION
301 First Avenue East
Oskaloosa, Iowa 52577
(515) 673-8328
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 24, 1996
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Horizon Financial Services Corporation (the "Company") will be
held at the main office of the Company located at 301 First Avenue East,
Oskaloosa, Iowa, at 3:00 p.m. local time, on October 24, 1996.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of one director of the Company;
2. The ratification of the appointment of KPMG Peat Marwick LLP as
auditors for the Company for the fiscal year ending June 30, 1997;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on September 13,
1996, are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
You are requested to complete and sign the enclosed form of proxy which
is solicited on behalf of the Board of Directors and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at the
Meeting.
By Order of the Board of Directors
/s/ Robert W. DeCook
-------------------------------------
Robert W. DeCook
Chairman of the Board, President and
Chief Executive Officer
Oskaloosa, Iowa
September 27, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING.
A PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
2
<PAGE>
PROXY STATEMENT
HORIZON FINANCIAL SERVICES CORPORATION
301 First Avenue East
Oskaloosa, Iowa 52577
(515) 673-8328
ANNUAL MEETING OF STOCKHOLDERS
October 24, 1996
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Horizon Financial Services Corporation
(the "Company") of proxies to be used at the Annual Meeting of Stockholders of
the Company (the "Meeting") which will be held at the main office of the Company
located at 301 First Avenue East, Oskaloosa, Iowa, on October 24, 1996, at 3:00
p.m. local time, and all adjournments of the Meeting. The accompanying Notice of
Meeting and this Proxy Statement are first being mailed to stockholders on or
about September 27, 1996. Certain of the information provided herein relates to
Horizon Federal Savings Bank ("Horizon Federal" or the "Bank"), a wholly owned
subsidiary of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the election of one director of the Company and a proposal to
ratify the appointment of KPMG Peat Marwick LLP as the Company's auditors for
the fiscal year ending June 30, 1997.
Vote Required and Proxy Information
All shares of Company common stock ("Common Stock") represented at the
Meeting by properly executed proxies received prior to or at the Meeting, and
not revoked will be voted at the Meeting in accordance with the instructions
thereon. If no instructions are indicated, properly executed proxies will be
voted for the nominee and the adoption of the proposal set forth in this Proxy
Statement. The Company does not know of any matters, other than as described in
the Notice of Meeting, that are to come before the Meeting. If any other matters
are properly presented at the Meeting for action, the persons named in the
enclosed form of proxy and acting thereunder will have the discretion to vote on
such matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. In all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or represented by
proxy at the Meeting and entitled to vote on the matter shall be the act of the
stockholders. Proxies marked to abstain with respect to a proposal have the same
effect as votes against the proposal. Broker non-votes have no effect on the
vote. One-third of the shares of the Company's Common Stock, present in person
or represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy; (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Sandra L.
Boender, Secretary, Horizon Financial Services Corporation, 301 First Avenue
East, Oskaloosa, Iowa 52577.
1
<PAGE>
Voting Securities and Principal Holders Thereof
Stockholders of record as of the close of business on September 13,
1996 (the "Voting Record Date"), will be entitled to one vote for each share
then held. As of that date, the Company had 447,937 shares of Common Stock
issued and outstanding. The following table sets forth information regarding
share ownership of: (i) those persons or entities known by management to
beneficially own more than five percent of the Company's Common Stock and (ii)
all directors and officers as a group. See "Proposal I - Election of Directors"
for information regarding share ownership of the Corporation's directors.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Beneficial Owner Owned of Class
---------------- ------------ ---------
<S> <C> <C> <C>
Horizon Financial Services Corporation Employee Stock Ownership Plan(1) 40,481 9.04%
301 First Avenue East
Oskaloosa, Iowa 52577
Robert W. DeCook(2) 36,426 7.97%
301 First Avenue East
Oskaloosa, Iowa 52577
Gary L. Rozenboom(3) 22,625 5.03%
301 First Avenue East
Oskaloosa, Iowa 52577
Directors and executive officers of the Company and the Bank as a group 111,073 23.70%
(7 persons)(4)
</TABLE>
- -----------------------
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), 15,591 shares of which were allocated to accounts of
participants. First Bankers Trust Company, N.A., the trustee of the ESOP,
may be deemed to beneficially own the shares held by the ESOP which have
not been allocated to the accounts of participants.
(2) Includes 19,700 shares held directly, as well as, jointly with family
members, and shares held in retirement accounts in a fiduciary capacity or
by certain family members, with respect to which shares Mr. DeCook may be
deemed to have sole or shared voting and investment power. The amount above
also includes 2,558 shares of Common Stock allocated to Mr. DeCook's
account under the ESOP, 5,060 shares of Common Stock awarded to Mr. DeCook
under the Recognition and Retention Plan (the "RRP") (of which 2,024 shares
are vested as of June 30, 1996) and options to purchase 9,108 shares of
Common Stock granted to him under the 1993 Stock Option and Incentive Plan
(the "Stock Option Plan") which are either currently exercisable or
exercisable within 60 days of the Voting Record Date. The amount above
excludes options to purchase 6,072 shares of Common Stock granted to Mr.
DeCook under the Stock Option Plan which are not currently exercisable nor
will be exercisable within 60 days of the Voting Record Date.
(3) Includes 20,500 shares held directly, as well as, jointly with family
members, and shares held in retirement accounts in a fiduciary capacity or
by certain family members, with respect to which shares Mr. Rozenboom may
be deemed to have sole or shared voting and investment power. The amount
above also includes 607 shares of Common Stock awarded to Mr. Rozenboom
under the RRP (of which 244 shares are vested as of June 30, 1996) and
options to purchase 1,518 shares of Common Stock granted to him under the
Stock Option Plan which are either currently exercisable or exercisable
within 60 days of the Voting Record Date. The amount above excludes options
to purchase 1,012 shares of Common Stock granted to Mr. Rozenboom under the
Stock Option Plan but which are not currently exercisable and will not be
exercisable within 60 days of the Voting Record Date.
(4) Includes shares held directly, as well as, jointly with family members, and
shares held in retirement accounts in a fiduciary capacity or by certain
family members, with respect to which shares the listed individuals or
group members may be deemed to have sole or shared voting and investment
power. The amount above includes 6,110 shares of Common Stock allocated to
the accounts of executive officers under the ESOP, 10,686 shares of Common
Stock awarded under the RRP and options to purchase 20,629 shares of Common
stock which are either currently exercisable or exercisable within 60 days
of the Voting Record Date. The amount above excludes options to purchase
14,875 shares of Common Stock which have been granted to directors and
executive officers which are not currently exercisable and will not be
exercisable within 60 days of the Voting Record Date.
2
<PAGE>
I. ELECTION OF DIRECTORS
General
The Company's Board of Directors is currently composed of five members,
each of whom is also a director of the Bank. Directors are generally elected to
serve for three-year terms or until their respective successors are elected and
qualified. The directors are divided into three classes, with approximately
one-third of the directors elected annually.
The table below sets forth certain information, as of the Voting Record
Date, regarding the composition of the Company's Board of Directors, including
each director's term of office. The Board of Directors acting as the nominating
committee has recommended and approved the nominees identified in the following
table. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to a nominee)
will be voted at the Meeting FOR the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why any nominee may be unable to serve, if elected. Except as disclosed herein,
there are no arrangements or understandings between the nominees and any other
person pursuant to which the nominees were selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Position(s) Held in Director Term to Beneficially Percent
Name Age(1) the Company Since(2) Expire Owned(3) of Class
- -------------------------- ------ ------------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
NOMINEES
Robert W. DeCook 54 Chairman of the Board, 1973 1999 36,426(4) 7.97%
President and Chief
Executive Officer
DIRECTORS CONTINUING IN OFFICE
Gary L. Rozenboom 56 Director 1982 1998 22,625 5.03%
Dwight L. Groves 57 Director 1995 1998 867 .19%
Thomas L. Gillespie 46 Director and Vice President 1992 1997 21,001(4) 4.64%
Norman P. Zimmerman 63 Director 1976 1997 11,417 2.54%
</TABLE>
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(1) At June 30, 1996.
(2) Includes service as a director of the Bank.
(3) Include shares held directly and jointly with family members, as well as
shares which are held in retirement accounts, or held by certain members of
the named individuals' families, or held by trusts of which the named
individual is a trustee or substantial beneficiary, with respect to which
shares the respective directors may be deemed to have sole or shared voting
and/or investment power. The amount above also includes options to purchase
9,108 shares, 1,518 shares, 344 shares, 4,554 shares and 1,518 shares of
Common Stock granted to Messrs. DeCook, Rozenboom, Groves, Gillespie and
Zimmerman, respectively, under the Company's Stock Option Plan which are
either currently exercisable or exercisable within 60 days of the Voting
Record Date.
(4) Includes 2,558 shares and 1,813 shares allocated to the accounts of Messrs.
DeCook and Gillespie, respectively, under the ESOP.
3
<PAGE>
The principal occupation of each director of the Company is set forth
below. All directors have held their present position for at least five years
unless otherwise indicated.
Robert W. DeCook - Mr. DeCook is the President and Chief Executive
Officer of Horizon Federal and its subsidiary SEI Service Corporation. Mr.
DeCook is a member of the Bar in the State of Iowa and practiced law for three
years in Oskaloosa, Iowa before joining Horizon Federal as a loan officer in
1972 and thereafter being appointed President and Chief Executive Officer in
1976. Mr. DeCook is currently serving as Chairman of the Board of Iowa Title
Guarantee, the State title insurance agency. Mr. DeCook has been the Chairman
and a member of the Board of Directors of the Iowa League of Savings
Institutions and Chairman of Legislative Committee of the Iowa League of Savings
Institutions. Mr. DeCook received his B.A. degree in Philosophy from Grinnell
College in 1964 and his Juris Doctorate from the University of Iowa in 1967.
Thomas L. Gillespie - Mr. Gillespie joined the Bank as a loan officer
in 1976 and was appointed Vice President - Residential Lending and Collections
in 1978. Mr. Gillespie graduated from the Savings and Loan Academy of Iowa in
1980 and in 1972 received his B.A. degree in Physical Education with a minor in
Science from Simpson College.
Dwight L. Groves - Mr. Groves is currently engaged in the business of
property management primarily in the Oskaloosa, Iowa area. Prior to his
involvement in property management, Mr. Groves spent twenty years in the
restaurant business as an owner/operator.
Gary L. Rozenboom - Mr. Rozenboom has owned and operated Rozenboom's
Decorating Center, a retail decorating supply store in Oskaloosa, Iowa since
1972. He has worked at the business since 1951. Mr. Rozenboom also is in the
business of finishing hardwood floors. Mr. Rozenboom has been active in
community affairs including serving a term on the Oskaloosa City Counsel.
Norman P. Zimmerman - Dr. Zimmerman practiced Dentistry in Oskaloosa
for 32 years prior to his retirement in the summer of 1992. Dr. Zimmerman has
been very active in church and community affairs in Oskaloosa. He is currently
serving as the mayor of the City of Oskaloosa, Iowa.
Meetings and Committees of the Board of Directors
Meetings and Committees of the Company. Meetings of the Company's Board
of Directors are generally held on a monthly basis. The Board of Directors met
12 times during fiscal 1996. During fiscal 1996, no incumbent director of the
Company attended fewer than 75% of the aggregate of the total number of Board
meetings and the total number of meetings held by the committees of the Board of
Directors on which he served.
The Board of Directors of the Company has standing Audit, Compensation
and Nominating Committees. The Company does not have a standing executive
committee.
The Audit Committee recommends independent auditors to the Board,
reviews the results of the auditors' services, reviews with management and the
internal auditors the systems of internal control and internal audit reports and
assures that the books and records of the Company are kept in accordance with
applicable accounting principles and standards. The members of the Audit
Committee are Directors Zimmerman, Rozenboom, Groves, Gillespie and DeCook. This
Committee met two times during fiscal 1996.
The Compensation Committee is currently composed of Directors Groves
and Zimmerman. This Committee is responsible for administering the Company's
Stock Option Plan and Recognition and Retention Plan. This Committee met two
times during the fiscal 1996.
The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. While the Board of Directors of
the Company will consider nominees recommended by stockholders, the Board has
not actively solicited such nominations. Pursuant to the Company's Bylaws,
nominations by stockholders must be delivered in writing to the Secretary of the
Company at least 30 days before the date of the Meeting.
4
<PAGE>
Meetings and Committees of the Bank. The Bank's Board of Directors
meets monthly and may have additional special meetings upon the written request
of the Chairman of the Board or at least three directors. The Board of Directors
met 12 times during fiscal 1996. During fiscal 1996, no director of the Bank
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which he served. Non-employee directors are paid a fee of $400 for
each regular and special meeting attended and receive no additional compensation
for service on any committees. Board members who are employees of the Bank
receive no fee for their service on the Board or any committees.
The Bank has Loan, Salary, Investment, Asset/Liability Management and
Audit committees. The Bank does not have a standing Executive Committee.
The Loan Committee meets weekly, or more frequently as needed, to
review and evaluate loans and approve loans and loan commitments, subject to
Board approval over certain dollar amounts. This committee is comprised of three
individuals who rotate on and off the committee and who are selected from among
several officers of the Bank and most of the members of the Board of Directors.
One outside director of the Bank is always required to be one of the three
members of the Loan Committee. The Loan Committee held 52 meetings during fiscal
1996.
The Salary Committee establishes compensation for the officers and
employees of the Bank. The current members of this committee are Directors
Groves and Zimmerman and President DeCook. The Salary Committee met two times
during fiscal 1996.
The Investment Committee meets monthly, or more frequently as
necessary, and is responsible for approving investment strategy, implementing
investment policy and monitoring of investment performance of the Bank. The
committee also considers investment recommendations and determines actions to be
taken thereon. The current members of this committee are Directors DeCook and
Zimmerman and Officers Sharon McCrea, Kent Frankenfeld and Sandra Boender. The
Investment Committee held 12 meetings during the fiscal 1996.
The Asset/Liability Management Committee meets monthly, or more
frequently as necessary, and is responsible for managing and setting the Bank's
policy, with respect to the Bank's interest rate risk and setting the interest
rates paid by the Bank. The Asset/Liability Management Committee is comprised of
Director Zimmerman, President DeCook and Officers McCrea, Frankenfeld and
Boender. This committee held 12 meetings during the fiscal 1996.
All of the outside directors of the Bank constitute the Bank's Audit
Committee, which selects the Bank's independent accountants and meets with these
accountants to discuss the scope and results of the annual audit. This committee
met twice during fiscal 1996.
Director Compensation
Cash Compensation. The Company's directors do not receive a fee for
serving on the Company's Board of Directors. No fee is paid for membership on
the Company's committees. All present members of the Company's Board of
Directors are also members of the Bank's Board of Directors. All of the Bank's
non-employee directors are paid a fee of $400 for each regular and special
meeting attended and receive no additional compensation for service on any
committees. Board members who are employees of the Bank receive no fee for their
service on the Board or any committees.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of business other than the Bank.
5
<PAGE>
The following table sets forth information regarding compensation paid
by the Bank to its Chief Executive Officer for services rendered during fiscal
1996. No executive officer made in excess of $100,000 (salary plus bonus) during
fiscal 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
---------------------------------- -----------------------
Other Annual Restricted All Other
Fiscal Salary Bonus Compensation Stock Options Compensation
Name and Principal Position Year ($) ($) ($)(1) Award($) (#) ($)
--------------------------- ------ ------ ----- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert W. DeCook, President 1996 $72,500 $2,175 $--- --- --- $12,397(4)
and Chief Executive Officer 1995 72,000 2,868 --- $55,660(2) 15,180(3) 11,994
1994 70,350 2,760 --- --- --- 1,997
</TABLE>
(1) Mr. DeCook did not receive any additional benefits or perquisites which, in
the aggregate, exceeded 10% of his salary and bonus or $50,000.
(2) Represents the dollar value of the restricted stock granted to Mr. DeCook
under the RRP, based on the $11.00 closing price per share of the Common
Stock on October 27, 1994, the date of grant. Any dividends paid on Common
Stock granted pursuant to the RRP are held in a restricted interest-bearing
account until such shares are no longer subject to restriction. Based on
the $14.125 closing price per share of the Common Stock on September 16,
1996 (the latest practicable date prior to mailing), the 5,060 shares
granted to Mr. DeCook, had an aggregate market value of $71,473.
(3) Represents options granted to Mr. DeCook to purchase 15,180 shares of
Common Stock, at an exercise price of $11.00 per share, the "Market Value
(as defined in the Stock Option Plan) of the Common Stock on the date of
the grant. As of June 30, 1996, 40 percent of these options were vested,
with the remaining 60 percent scheduled to vest in three equal annual
installments on October 27, 1996, 1997 and 1998, subject to Mr. DeCook's
"Continuous Service" as defined in the Stock Option Plan.
(4) Represents the Bank's ESOP contribution of $12,220 and life insurance
premiums of $177 paid by the Company on behalf of Mr. DeCook.
The following table provides information as to the value of the options
held by the Company's Chief Executive Officer on June 30, 1996, none of which
have been exercised. No stock options or stock appreciation rights were granted
during fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#)(1) FY-End ($)(2)
Shares ----------------------------- -----------------------------
Acquired on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Robert W. DeCook --- $--- 6,072 9,108 $24,288 $36,432
</TABLE>
(1) Represents an option to purchase Common Stock awarded to the Company's
Chief Executive Officer. The unexercisable options (i.e.,the unvested
options) will vest in three equal annual installments on October 27, 1996,
1997 and 1998.
(2) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the option granted based upon the average of
the closing bid and the asked price of $15.00 per share of the Common Stock
as reported on The Nasdaq SmallCap Market on June 28, 1996 (the last
trading day of the fiscal year).
6
<PAGE>
Employment Agreement
The Bank entered into an employment agreement with Robert W. DeCook for
a three year term. The employment agreement provides for an annual base salary
as determined by the Board of Directors, but in no event less than Mr. DeCook's
current salary. Salary increases are reviewed not less often than annually
thereafter, and are subject to the sole discretion of the Board of Directors.
The employment contract provides for an automatic extension for one additional
year upon review and authorization by the Board of Directors at the end of each
year. The contract provides for termination upon the employee's death, for cause
or upon certain events specified by OTS regulations. The employment contract is
terminable by the employee upon 90 days' notice to the Bank.
The employment agreement provides for payment to the employee of the
greater of his salary for the remainder of the term of the agreement, or 299% of
the employee's base compensation, in the event there is a "change in control" of
the Bank where employment terminates involuntarily in connection with such
change in control or within 12 months thereafter. This termination payment is
subject to reduction by the amount of all other compensation to the employee
deemed for purposes of the Internal Revenue Code of 1986, as amended (the
"Code") to be contingent on a "change in control," and may not exceed three
times the employee's average annual compensation over the most recent five year
period or be non-deductible by the Bank for federal income tax purposes. For the
purposes of the employment agreement, a "change in control" is defined as any
event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 4.
Such events are generally triggered prior to the acquisition of control of 10%
of the Corporation's common stock. The agreement guarantees participation in an
equitable manner in employee benefits applicable to executive personnel.
Based on his current salary, if Mr. DeCook was terminated as of July 1,
1996, under circumstances entitling him to severance pay as described above, he
would have been entitled to receive a lump sum cash payment of approximately
$214,000. The contract provides, among other things, for participation in an
equitable manner in employee benefits applicable to executive personnel.
Certain Transactions
The Bank, like many financial institutions, has followed a policy of
granting to officers, directors and employees loans secured by the borrower's
residence and consumer loans. All loans to the Bank's officers and directors are
made in the ordinary course of business and on the same terms, including
interest rate and collateral, and conditions as those of comparable transactions
prevailing at the time, and do not involve more than the normal risk of
collectibility or present other unfavorable features. All loans by the Bank to
its directors and executive officers are subject to OTS regulations restricting
loans and other transactions with affiliated persons of the Bank. All loans from
the Bank to its directors, executive officers or their affiliates are approved
or ratified by a majority of the independent and disinterested members of the
Bank's Board of Directors.
II -- RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for KPMG
Peat Marwick LLP to be its auditors for the 1997 fiscal year, subject to the
ratification of the appointment by the Company's stockholders. A representative
of KPMG Peat Marwick LLP is expected to attend the Annual Meeting to respond to
appropriate questions and will have an opportunity to make a statement if he or
she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1997.
7
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office located at
301 First Avenue East, Oskaloosa, Iowa 52577, no later than May 29, 1997. Any
such proposal shall be subject to the requirements of the proxy rules adopted
under the Exchange Act.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
8
<PAGE>
REVOCABLE PROXY
HORIZON FINANCIAL SERVICES CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 24, 1996
THE UNDERSIGNED HEREBY APPOINTS THE BOARD OF DIRECTORS OF HORIZON
FINANCIAL SERVICES CORPORATION (THE "COMPANY"), AND ITS SURVIVOR, WITH FULL
POWER OF SUBSTITUTION, TO ACT AS ATTORNEYS AND PROXIES FOR THE UNDERSIGNED TO
VOTE ALL SHARES OF COMMON STOCK OF THE COMPANY WHICH THE UNDERSIGNED IS ENTITLED
TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS (THE "MEETING"), TO BE HELD ON
OCTOBER 24, 1996 AT THE MAIN OFFICE OF THE COMPANY LOCATED AT 301 FIRST AVENUE
EAST, OSKALOOSA, IOWA, AT 3:00 P.M.
LOCAL TIME, AND AT ANY AND ALL ADJOURNMENTS THEREOF, AS FOLLOWS:
FOR WITHHELD
I. THE ELECTION OF ROBERT W. DECOOK
AS A DIRECTOR FOR A TERM TO ___ ___
EXPIRE IN 1999. |___| |___|
FOR AGAINST ABSTAIN
II. THE RATIFICATION OF THE APPOINTMENT
OF KPMG PEAT MARWICK LLP AS
AUDITORS FOR THE COMPANY FOR THE ___ ___ ___
FISCAL YEAR ENDING JUNE 30, 1997. |___| |___| |___|
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON ANY OTHER BUSINESS
THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED
PROPOSALS.
THIS PROXY WILL BE VOTED AS DIRECTED,
BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE
PROPOSALS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The stockholder may revoke this proxy by: (i) filing with the Secretary of the
Company at or before the Meeting a written notice of revocation bearing a later
date than the proxy; (ii) duly executing a subsequent proxy relating to the same
shares and delivering it to the Secretary of the Company at or before the
Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy).
The undersigned acknowledges receipt from the Company, prior to the execution of
this Proxy, of Notice of the Meeting, a Proxy Statement dated on or about
September 27, 1996 and the Company's Annual Report to Stockholders for the
fiscal year ended June 30, 1996.
Dated: ________________________
- ----------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ----------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE
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